EDELWEISS DYNAMIC GROWTH EQUITY [EDGE] FUND –AUGUST’21
Transcript of EDELWEISS DYNAMIC GROWTH EQUITY [EDGE] FUND –AUGUST’21
85%
-22%
107%63%
Long Short Gross Net
Equity exposure
After three consecutive quarters of strong earnings upgrade, Q1FY22 took a pause and aligned with
elevated expectations. However, sectors barring Metals and IT saw downgrades across Auto, FMCG,
and Pharma.
We also saw the broader markets correct from their peak, with the BSE Midcap and Smallcap indices
underperforming to deliver 3.3% and 0.5%, respectively. Additionally, taper fears are getting more real
with every passing day.
Therefore, we maintained a highly defensive stance and ran a low net long portfolio along with
structured hedges to limit any potential downside due to the upcoming FED meeting. With this
positioning, we ended the month up 2.9%.
We continued to add banking names to our portfolio mainly due to their relative underperformance and
also reasonable valuation. We increased our weight to the domestic pharma theme, which outperformed
the entire sector by a wide margin.
With the Covid scare behind us and most sectors looking to open up, we bought into few sector leaders
like airlines and alco-bev, likely to benefit from this pent-up demand rage during the festive season.
We have added the required index hedges to protect the portfolio due to the heavy long retail and HNI
positioning in single stock futures.
Fund/ Benchmark 1 Month 2 Month 3 MonthSince
inception
EDGE 2.92% 4.60% 5.43% 12.63%
Nifty 5 0 TRI 8.74% 9.22% 10.46% 17.85%
How we performed NAV as of 31st Aug ’21: 11.2633
Returns are for A1 class, net of management fees and expenses, gross of performance fees and taxes. Fund inception date: 5th Apr’21
A look at our portfolio
Exposure excludes investment in mutual funds and other securities for margin or temporary deployment of surplus funds
EDELWEISS DYNAMIC GROWTH EQUITY [EDGE] FUND – AUGUST’21
Click here for an audible synopsis of the month by our Fund Managers
August saw the fastest 1k+ point surge in Nifty, which helped it cruise over the 17k mark. Five stocks
contributed to 60% of this rally - RIL, HDFC twins, HUL, TCS and Infosys.
Post the Q1FY22 results season, which saw upgrades in the Metals and Cement sectors, compensating for
the sharp downgrades in the Auto, Pharma & NBFC sectors.; aggregate Nifty FY22E/ FY23E EPS estimates
have remained unchanged.
The Chinese PMI data came in pretty soft for August at 47.5 vs the consensus of 52, down from 53.3 last
month due to lockdowns. On the other side of the globe, the housing starts data has also softened
significantly. We believe rising Covid cases in the US and the slowing Chinese economy pose a risk to global
growth estimates – necessitating a close watch.
The Fed continues to drive most of the global gains as investors celebrate Powell's dovish tone at Jackson
Hole. Although there are clear signs of the just right 'Goldilocks' period of peak earnings growth, liquidity,
and lower rates behind us, global markets have conveniently changed the narrative to their advantage.
Exposures are % of Total NAV; notional values for derivatives (including options) considered here
Top Five Stock Holdings
Quantitative
Indicators
Annualized
Volati l ity
Sharpe
RatioBeta
EDGE 6.17% 4.37 0.37
Nifty 5 0 TRI 12.32% 3.23 1
How we fared on the risk front
Our take on the month that was
ITC: We believe it's time for the market to accurately
value the growing, profitable FMCG business. And
any potential value unlocking could be an
additional trigger.
Bharti Airtel: Industry consolidation, improving
pricing scenario, and peak leverage give us comfort
for the next leg of growth and re-rating.
HDFC LTD: Valuation below 2x FY23 book, impeccable
asset quality and recovering real estate sector will
drive above-average growth.
HDFC Bank: Acceleration in growth post-Covid and
substantial liability franchise bodes well for
sustainable earnings growth.
5.0%
4.7%
4.4%
4.4%
3.8%
ITC
Bharti Airtel
HDFC
Just Dial
HDFC Bank
Fund type Open ended Category III AIF
Fund Managers Ajay Vora & Nikhil Ranka
Minimum Investment INR 1 Cr
Subscription 15th and last working day of every month
Redemption Last working day of every month
Placement Fee Upto 2%
Management Fee (p.a. on average AUM)
Performance Fee Classes Fixed Fee Classes
A1 A2 A3 A5 B1 B2 B5
1.75% 1.50% 1.00% 1.00% 2.25% 2.00% 1.75%
1-5 Cr 5-10 Cr 10-25 Cr 25 Cr + 1-5 Cr 5-10 Cr 10 Cr +
Performance Fee 15% for class A1, A2, A3 | 12.5% for Class A5 (No catch up)
Hurdle Rate 10% pre-tax, post expenses with high water mark
Exit Load 1 % for exit between 0-12 months
Fund Expenses At actuals, capped at 35 bps
Custodian Edelweiss Capital Services Limited
Disclaimer: Edelweiss Dynamic Growth Equity Fund ("the scheme") is Category III Alternative Investment Fund – a scheme of Edelweiss Alternative Strategies Trust having SEBI Registration Number -
IN/AIF3/20-21/0857. Past performance is not an indication of future performance. Investments in the Securities Market are subject to Market Risk. Please read the Private Placement Memorandum (PPM) and
Scheme related documents carefully before investing. For a detailed Disclaimer, please click here
1Consistent returns across market cycles 2
Lock-in returns at regular intervals 3
Limit drawdownsduring extremevolatility
Objectives we’re striving towards
Fund Terms
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AIF Benchmark indices as per benchmarking agency CRISIL – Not Applicable. The Scheme has not completed one year since its inception