daiwa case analysis

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daiwa case analysis

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  • 1. DAIWA EQUITY FUNDSection 1 Group 2PAAATHFT 12113 Anuja DashFT 12189 Pramod Ravi ShankarFT 12127 Harendra SinghFT 12168 Tushar AroraFT 12104 Abhilash MohapatraFT 12102 Abhay Bohra

2. Introduction : DAIWA EQUITY FUND An open ended equity scheme Offer of Units of Rs. 10/- each for cash during the New Fund Offerand continuous offer for Units at applicable NAV based prices Name of Mutual Fund: Daiwa Mutual Fund Name of Asset Management Company: Daiwa AssetManagement (India) Private Limited Sponsor : Daiwa Asset Management Co. Ltd. is the sponsor ofDaiwa Mutual Fund Name of Trustee Company: Daiwa Trustee Company (India)Private Limited which holds the property of the Mutual Fund intrust for the benefit of the unit holders . Daiwa Equity Fund Section 1, Group 2 2 3. History of DAIWA as an AMC Daiwa Securities Group Inc., the parent company was establishedin 1902 Daiwa Securities Group s three core business segments Retail Securities Wholesale Securities Asset Management Daiwa Asset Management Co. Ltd. ("DAM"), the assetmanagement arm of the Daiwa Securities Group was incorporatedin 1959Second-largest mutual fund management company in JapanMore than 300 Mutual Funds Managed world-wideUSD 126 billion of assets under management.109 years old diversified group with 51 years of experience inAsset management Daiwa Equity Fund Section 1, Group 2 3 4. Scheme DetailsFor initial Purchase Rs. 5,000/- and in multiples of Re. 1/-thereafter No Entry Load Exit load 1% of applicable NAV if redeemed within 1 yearof allotment, none after that Portfolio turnover of the Scheme is not expected to be veryhigh The benchmark for the Scheme is BSE-200 index due to islike appropriate composition Redemption Options: Growth option: No Dividend will be declared. Dividend option: Dividend Payout and Dividend Reinvestmentsub options Daiwa Equity Fund Section 1, Group 2 4 5. Investment Objectives Main Objective: Growth and income The Scheme seeks to generate long-termgrowth of capital by investing in a diversifiedportfolio of predominantly equity and equity-related securities Stocks that have sustainable businessmodels, and potential for income and capitalappreciation Debt would also be used in the fundportfolio besides a wide range of otherinvestment options like money market andderivative instrumentsDaiwa Equity Fund Section 1, Group 2 5 6. Investment Instruments Options Equity and equity related securities Debt obligations of the Government of India,state and local governments , governmentagencies, statutory bodies, public sectorundertakings, etc Money market instruments Pass through, Pay through or other Participationcertificates Deposits of Scheduled Commercial Banks Foreign Securities Derivative instruments Other mutual fundsDaiwa Equity Fund Section 1, Group 2 6 7. Equity Debt Allocation A mix of Equity and Debt instruments selected Asset AllocationInstrumentMinimum MaximumRisk ProfileEquity and equity relatedsecurities 65100 HighDebt and Money marketInstruments035 Low to MediumInvest in companies with good growth prospects available atreasonable valuations.Combination of Growth and Value strategies to manage theportfolio.Select companies which have a significant probability of ahealthy appreciation in the medium termDaiwa Equity Fund Section 1, Group 2 7 8. Bench Mark Index BSE200 has grown at mean rate of20.76% and standard deviation of growthrate is 41.76%, which is very high for thepast 19 years So the Returns are very low and volatile,not worth the risk we are taking Even for the past 5 years ie 2006 -2010mean rate of 30% with standard deviationof growth rate is 55% Daiwa Equity Fund Section 1, Group 2 8 9. Statistics Growth 1991-2010Mean 20.76427624Standard Error 9.581937257Median 16.06557377Mode #N/AStandard Deviation41.76669619Sample Variance1744.45691Kurtosis -0.346008768Skewness0.247390374Range 150.8921473Minimum-56.47590361Maximum 94.41624365Sum 394.5212485Count19Daiwa Equity Fund Section 1, Group 2 9 10. Statistics Growth 2006-2010Mean29.66523Standard Error24.61734Median39.54469Mode#N/AStandard Deviation55.04605Sample Variance 3030.068Kurtosis1.265268Skewness-1.01648Range 145.0572Minimum -56.4759Maximum 88.58131Sum 148.3261Count5Daiwa Equity Fund Section 1, Group 2 10 11. Investor Profile AssumptionsInvestor Profile 25 year old Steady job Has adequate insurance cover Regular cash flows in terms of Salarypaycheck Enough Emergency Cash ReserveTime Horizon 3 to 5 yearsReturn Expectations Greater than indexreturns High Risk Appetite Daiwa Equity Fund Section 1, Group 2 11 12. Recommendation We recommend that given the saidFunds investment objective and returnsstrategy vis--vis the investor profile andrisk appetite , the investor shouldBUY !! Daiwa Equity Fund Section 1, Group 2 12 13. Reasons for the RecommendationDaiwa Groups 100 year legacy makes ittrustworthyExperience and expertise as Asset managersin the Japanese Market Alignment of investor expectations with thescheme goals Aggressive equity exposure presents anopportunity to earn high returns The associated risks are within the younginvestors risk appetiteDaiwa Equity Fund Section 1, Group 2 13 14. Daiwa Equity Fund Section 1, Group 2 14