GEMGAZE

March 2018

All the GEMs from the 2017 GEMGAZE have performed reasonably well through thick and thin and figure prominently in the 2018 GEMGAZE too. 

Kotak Equity Arbitrage Fund Gem

Incorporated in September 2005, Kotak Equity Arbitrage Fund has an AUM of Rs 14,592 crore, a nearly three-fold increase over the AUM of Rs 5,629 crore in 2017. The fund is a blend of value and growth style of investing with an objective to generate income through arbitrage opportunities emerging out of pricing anomaly between the spot and futures market, and also through the deployment of surplus cash in fixed income instruments. 60% of the fund’s corpus is deployed in arbitrage trades and the rest is invested in FD, debt funds and securities. The fund has given annualized return of 7.66% since inception. The one-year return of the fund is 6.27% (6.77% for the direct plan) modestly trailing the category average of 6.28%. The top three sectors are finance, healthcare and communication. Top five holdings constitute 37.05% of the portfolio. The portfolio turnover ratio is 354% and the expense ratio is 0.89% (0.43% for the direct plan). The fund is benchmarked against the Nifty Fifty Arbitrage Index with Mr. Deepak Gupta efficiently managing the fund since September 2008.

JM Arbitrage Advantage Fund Gem

The Rs 3,763 crore JM Arbitrage Advantage Fund, incorporated in July 2006, has earned a one-year return of 5.25% (5.63% for the direct plan) trailing the category average return of 6.28%. Top five holdings constitute 29.87% of the portfolio with finance, FMCG and energy forming the top three sectors. Instruments in arbitrage trades constitute 65.21% of the portfolio with 35.02% in debt. The fund is benchmarked against the CRISIL Liquid Fund Index. The fund is managed by Chaitanya Choksi since February 2011 and Asit Bhandarkar and Sanjay Kumar Chhabaria since July 2014.

SBI Arbitrage Opportunities Fund Gem

SBI Arbitrage Opportunities Fund, incorporated in November 2006, has an AUM of Rs 1,239 crore. Its one-year return is 6.05% (6.6% for direct plan), as against the category average return of 6.28%. The top five holdings constitute 20.95% of the portfolio. Finance, communications and services are the top three sectors. 62.87% of the portfolio is made up of instruments in arbitrage trade with 37.31% in debt. The portfolio turnover ratio of the fund is a massive 1157%. The expense ratio is comparatively low at 0.8% (0.25% for direct plan). The fund is benchmarked against the CRISIL Liquid Fund Index. The fund is managed by Neeraj Kumar since October 2012.

IDFC Arbitrage Fund Gem

IDFC Arbitrage Fund is a nine-year old fund with an AUM of Rs 3,011 crore. The objective of the fund is to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and the derivative segments of the equity markets and the arbitrage opportunities available within the derivative segment and by investing the balance in debt and money market instruments The fund’s total exposure to arbitrage position is 62.29% of the portfolio and 37.83% is in debt and money market securities. The fund was launched in December 2006, and has given 7.33% since its launch. Its one-year return of 6% (6.66% for direct plan) is a tad lower than its category average of 6.28% at present. The fund is amongst the more consistent players in terms of beating the CRISIL Liquid fund Index over 70% of the times on a rolling–return basis. Top five holdings constitute 26.54% of the portfolio, with communication, finance and healthcare being the top three sectors. While the portfolio turnover ratio is high at 392%, the expense ratio is very low at 0.97% (0.27% for direct plan), an icing on the cake, indeed. The fund has been managed by Yogik Pitti since June 2013, Harshal Joshi since October 2016, and Arpit Kapoor since March 2017.

ICICI Prudential Equity Arbitrage Fund Gem

Incorporated in December 2006, ICICI Prudential Equity Arbitrage Fund has an AUM of Rs 11,845 crore. The fund’s objective is to generate low volatility returns by using arbitrage and other derivative strategies in equity markets and investments in a short-term debt portfolio. The fund manager employs Cash arbitrage strategy in which it pockets the difference in price of stocks between the cash market and futures market. In Index arbitrage strategy it takes equal and opposite positions in index futures and corresponding stock futures constituting the index in proportion to their respective weights in the index simultaneously, to lock in the price difference. The fund has performed consistently over a long period of time and has given annualized return of 7.85% since inception. The one-year return of the fund is 5.93% (6.6% for direct plans) slightly trailing the category average of 6.28%. The top three sectors are finance, healthcare and FMCG. Top five holdings constitute 13.26% of the portfolio, with the equity exposure at 2.74% and debt constituting 32.75% of the portfolio with the rest in cash and cash equivalents. The portfolio turnover ratio is a towering 1083% and the expense ratio is 1.06% (0.46% for direct plan). The fund is benchmarked against the Nifty Fifty Arbitrage Fund Index with Mr. Manish Banthia and Mr. Kayzad Eghlim efficiently managing the fund since November 2009 and February 2011 respectively.