Mahindra Mutual Fund has announced a new fund offer (NFO) for the Mahindra Rural Bharat and Consumption Yojana. The NFO period of this scheme started on 19th October and will end on 2nd November 2018. The scheme is an open-ended equity fund that focuses on the rural India theme i.e. investments would include equity/equity derivatives of companies that benefit from growth in India’s rural economy. Being an open-ended scheme, you will be able to invest/redeem units of the scheme on any day when the markets are open. This new scheme from Mahindra Mutual Fund follows a theme which is similar to the recently launched BNP Paribas India Consumption Fund.
Being an equity scheme, between 80 to 100% of scheme assets will be invested in equity/equity derivatives of companies that have exposure to India’s rural economy. The scheme may also invest up to 20% of available assets either in equity/equity derivatives of companies without exposure to rural India or in various debt/money market instruments including reverse repo and CBLO (collateralized borrowing and lending obligations). The scheme is also required to limit its exposure to units of InvITs (Infrastructure Investment Trusts) and REITs (Real Estate Investment Trusts) at 10% of total assets. This new fund will not invest in foreign securities, corporate bond repos, credit default swaps and securitized debt.
Some of the top sectors that this scheme will invest in are agriculture-related industries including farm equipment, farm input/output companies; rural infrastructure such as roads, irrigation, cement/metals; consumption such as FMCG, automobiles, consumer durables; and financial services such as micro finance companies, retail/housing finance, insurance and vehicle/tractor finance.
The broad based Nifty 200 Index will be utilized as the benchmark for the Mahindra Rural Bharat and Consumption Yojana. The utilization of this diversified index instead of a more consumption-theme oriented index is a cause for concern as there might be significant variation between benchmark and scheme performance in the longer term. As of 28th September 2018, this diversified index has recorded 1 year and 5 year returns of 9.33% and 16.57% respectively. Top 5 sectors featured on this index (by weight) are financial services (32%), energy (14%), consumer goods (13%), IT (13%) and automobile (8%).
V. Balasubramanyam will manage the Mahindra Rural Bharat and Consumption Yojana. Other popular schemes he currently manages include Mahindra Kar Bachat Yojana (AUM Rs. 297 crore) and Mahindra Unnati Emerging Business Yojana (AUM Rs. 424 crore as of 30th September 2018). The most popular Mahindra MF scheme currently is the Mahindra Liquid Fund which featured AUM of Rs. 1649 crore as of 30th September 2018.
Key Information about the Mahindra Rural Bharat and Consumption Yojana:
| NFO Period | 19th October to 2nd November 2018 |
| Minimum Investment | Rs. 1000 |
| Benchmark Index | Nifty 200 Index |
| Fund Manager | V. Balasubramanyam |