EDELWEISS DYNAMIC GROWTH EQUITY [EDGE] FUND - OCT’21
Transcript of EDELWEISS DYNAMIC GROWTH EQUITY [EDGE] FUND - OCT’21
73%
-27%
100%
46%
Long Short Gross Net
Equity exposure
We saw NIFTY correcting by 5% from its peak but our cautious stance and agility to have
adequate hedges and stock shorts ensured we end the month on a positive note and
also marginally outperform the index.
Broader markets too corrected sharply, with the BSE Midcap and Smallcap indices underperforming to
deliver just 0.3% and 0.1%, respectively. Our contra call to be relatively positive on banking added to
the overall outperformance. Bank NIFTY was up 4.5% for the month.
Our key contributors for the month were our top weights, ITC and RIL. In addition, our negative view on
certain expensive names like Asian Paints, Polycab & others played out well in near term. We reduced
our overall net delta exposure to 55%-60% from almost 65% last month.
We continued to add banking names to our portfolio mainly due to their relative underperformance and
also reasonable valuation. We increased our weight to few reopening themes which reported stellar
results. We saw option segment starting to contribute as most company results failed to surprise street
expectation.
We have added the required index hedges to protect the portfolio due to the heavy long retail and HNI
positioning in single stock futures. Quality big ticket IPO pipeline will act as a major hurdle for market to
rally and make new highs in near term.
Fund/ Benchmark 1 Month 3 Month 6 MonthSince
inception
EDGE 0.91% 7.75% 16.98% 17.92%
Nifty 5 0 TRI 0.42% 12.35% 21.77% 21.76%
How we performed NAV as of 29th Oct ’21: 11.7921
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 - OCT’21
Click here for an audible synopsis of the month by our Fund Managers
So far 2/3rd of NIFTY companies have reported results and NIFTY earnings estimates at aggregate level
remains unchanged. However the internals continue to deteriorate with Auto and FMCG seeing significant
downgrades. This to some extent is offset by Banks. IT and Metals which has driven large part of upgrades
so far which have been broadly in line.
Government revenues are in very good shape with direct and indirect taxes surpassing budgeted estimates
which will ensure lower borrowing and range bound interest rates. We see housing sector continuing
to gain momentum. This will aid broad based improvement in economic activity.
We see growing risks to the market from ‘higher-for-longer’ inflation. We note that historical deep
corrections in the Indian market took place on specific events and/or earnings misses. We can only hope
this time it is not so because of negative inflation surprises.
Chinese economy is slowing down more than expectation which may pose threat to global GDP estimates
at a time when global liquidity will likely be withdrawn from January onwards. With this backdrop we will
continue to have a cautious stance and look for specific medium and long term growth opportunities.
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 6.30% 4.34 0.40
Nifty 5 0 TRI 12.01% 2.83 1
How we fared on the risk front
Our take on the month that was
HDFC LTD: Valuation below 2x FY23 book, impeccable
asset quality and recovering real estate sector will
drive above-average growth.
L&T: Beginning of the capex cycle with very low
competition will drive earnings for the company.
In addition, subsidiaries valuation have also increased
significantly.
Reliance Industries Ltd: GRMs have increased sharply
over last few months which will drive earnings
upgrade. With retail also re opening it will add to the
over profitability.
SBI LIFE: Strong growth in ULIP along with high VNB
margins will drive earnings growth.
5.8%
3.4%
3.4%
3.2%
2.9%
HDFC LTD
L&T LTD
RELIANCE
HCL TECH
SBI LIFE
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