Interested in long term capital appreciation & income.
Interested in investing in an equity scheme which invests in undervalued securities.

The scheme’s investment objective is to generate long-term capital appreciation by investing in stocks facing special situations. The Special situations can occur due to companies facing / undergoing issues like technology led disruption and innovation, regulatory/policy changes, management restructuring, or any prolonged cyclical challenges in the operating environment. The effect of these special situations on the companies’ business model could be medium to long term in nature.

The fund will look to invest in stocks that are:

– Benefiting from disruptive change (disruptors, enablers, adaptors) on account of technology, regulatory, or any other factors or

– Witnessing a significant turnaround potential from a prolonged cyclical slowdown.

Such opportunities can be available at company level, industry/sector level or market level. The special situations which cover some of the disruptive changes are given below:

1) Shift from unorganized to organized: Across a host of sectors, reforms such as GST are pushing businesses to get more formalized. This trend is likely to get further enhanced by reforms in tax, labour and other regulations going forward and will allow the organized businesses to gain market share from the unorganized. Pushing this trend further is the restructuring of the supply chains and the formalization of retail trade. This is a fundamental shift that will transform the way business is done in India and is likely to benefit the players that can adapt their business models and make themselves more efficient.

2) Change in lifestyle aspiration leading to premiumisation: As per capita income grows in India the middle class and upper middle class is growing in size and consumer trends are transforming. The most notable feature is the move from a value approach towards a desire for premium branded products. At the same time value for money instincts of the Indian consumer have not gone away. So there is a challenge for companies to provide an aspirational product with the right branding and at the right price point in order to exploit the opportunity.

3) Technology led disruption in business model Technolgical change is transforming entire sectors practically overnight. Whether it is in terms of how businesses are using tech to innovate and create new product propostions, to better segment their customer base or to innovate their service delivery and customer engagement. Further tech innovation can produce winners and losers as many new business models are born and the old unresponsive managements are left behind – the trends accelerated by massive infusion of private equity money in favour of the new innovators.

4) Effect of internet/ digital delivery channels on traditional businesses The internet/ social media/ e-commerce/ mobile app ecosystem has transformed our consumption patterns and they are likely to continue doing so going forward. Especially for the retail and services sector, service delivery over digital channels is transforming the existing cost structures and delivery margins and forcing market share shifts in favour of the nimble and techaware businesses.

5) Business process innovation – Innovation in the business processes can change the fortune of a sector. By identifying an unmet consumer need or pain point and finding a profitable way of addressing it, new businesses can successfully take on existing leaders and generate lasting wealth for their investor base.

The above are some of the special situations which the scheme seeks to invest in. The fund manager may identify any other special situation from time to time and make investments in such companies, industries/ sectors and markets.