Ambit Good and Clean Mid Cap and Small Cap Fund Product note

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    Ambit Good & Clean Mid Cap & Small Cap Fund

    Investment Objective

    The investment objective of the Ambit Good & Clean Mid Cap & Small Cap Fund PMS is to invest in firms which are: (a) Good, on the basis of capital allocation track record and quality of improvement in financial metrics, and (b) Clean, on quality of their accounts and corporate governance.

    Portfolio is agnostic to market cap and can invest in companies across large/mid/small cap companies. The objective is to generate upside without compromising on the quality of companies (basis accounting quality, corporate governance and improvement in financials).

    Description of Securities and Basis of Selection

    Investments can be made in all the securities including cash equities, futures and options, money market instruments, mutual funds etc. to avail the opportunities available in the market.

    Investments in the Good & Clean portfolio are made only in cash equity markets and mutual funds (liquid or overnight). The fund philosophy is against investment in Futures & options, debt or commodity instruments. The investment in equity stocks is based on the proprietary framework adapted by the AMC.

    Allocation of portfolio across types of securities

    As mentioned above, the portfolio is comprised of long only equities from cash markets only.

    Appropriate benchmark to compare performance and basis for choice of benchmark

    For G&C Mid Cap – the benchmark is Nifty Mid-Cap Index, and for G&C Small Cap – the benchmark isNifty Small-Cap Index. The above benchmarkshave been selected as they have the closest resemblance to the underlying portfolio composition.

    Investment Approach and Strategy

    • To create a portfolio with an objective to generate capital appreciation over the long term using the above Good& Clean philosophy. The Portfolio Manager shall follow a research based approach for selecting stocks in the portfolio with a combination of top down and bottom up process.
    • The investment approach would be to generate equity returns by investing in firms which are 1) good on capital allocation and financial improvements, and 2) clean on accounting quality and corporate governance.
    • After screening through these frameworks, subjective assessments will be made to narrow down to the final portfolio of stocks.

    Indicative tenure / Investment Horizon: 3-5 years

    Investment Structure and Reporting

    The Ambit Good & Clean Mid Cap & Small Cap Fund shall be operated on “Client Level” basis. All investors’ assets will be in client wise individual separate Bank and Depository Account as the case may be. The Portfolio Manager may at its discretion ordinarily purchase or sell Securities in aggregate for economy of scale and thereafter inter se allocate the same amongst its client on pro-rata basis as per applicable regulations. The portfolio manager shall not hold any securities, belonging to the portfolio account, in its own name on behalf of the clients.

    Additionally, through the Agreement the investor shall provide a Power of Attorney authorizing the Portfolio Manager to perform all his investment decisions and all other obligations.

    All investors shall receive monthly transaction and performance Report. Further, at the year-end an audited performance report specifying the long term, short term and dividend received during the year shall be sent to the investor for assisting him/it to file the returns.

    Eligibility for Investment in the Ambit Good & Clean Mid Cap & Small Cap Fund

    • Resident Individuals, Proprietorship Firms, HUFs, Partnership Firms, Registered Trusts, Corporate, FII and any other eligible investors.
    • Non Residents Indians (NRIs) are eligible to invest in this portfolio but the derivative positions will not be held for NRI. , The portfolios for NRIs shall be managed keeping in view the list of stocks where Reserve Bank of India has barred investments by NRIs. Accordingly the NRIs portfolio may differ to that extent with the other persons in this Product.
    • Furthermore, the individual portfolio of each person may differ based on the various criteria like the corpus amount, residential status or such other criteria, as may be required by the regulations.
    • The portfolio of each client may differ from that of the other client in the same portfolio strategy, as per the discretion of the Portfolio Manager.

    Minimum Investment Amount

    To participate in the Ambit Good & Clean Mid Cap & Small Cap Fund the minimum investment by the investor shall be Rs. 25 lakhs or as may be provided in the applicable regulations. In the event the Client is interested in investing in the Minimum Investment amount in the form of traded shares or Mutual Fund units, the Client will have to liquidate and make payments to the Portfolio Manager.

    Risks associated with the Investment Approach

    Two risks exist for the portfolio – a) a macro driven even can drag the overall markets down thus impacting the performance of the portfolio, and b) individual companies may report earnings below expectations, acquire a business, take on debt and such company specific events which are considered normal and they can also impact the portfolio return.

    Risk factor (General)

    All investments under the portfolio are subject to market and other related risks and there is no assurance or guarantee that the value of or return on investments will always be accretive, it could depreciate to an unpredictable extent.

    Withdrawals or Redemption

    Withdrawals from the Ambit Good & Clean Mid Cap & Small Cap Fund can be requested on any working day and the liquation for the same may take up to 15 working days to execute depending on the liquidity of the portfolio constituents.

    Additionally for investors whose Portfolio value goes below the minimum threshold as provided in the regulations due to withdrawals as per the aforementioned terms and conditions then the Portfolio Manager will have the discretion to close the investors account by liquidation of his position and / or give the shares of the companies invested to the client and /or refund the balance.

     
     
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