SUN F & C's scheme for high networth investors

By Our Corporate Reporter

CHENNAI, MAY 12. SUN F & C Mutual Fund has come out with a new scheme - Resurgent India Equity Fund (RIEF) - targeting high networth investors who can understand and are comfortable with the high-risk, high-potential-gain paradigm.

The theme fund will endeavour to generate long-term capital appreciation by investing in opportunities emanating from the turnaround, restructuring, privatisation and acquisition led transition expected in the Indian economy and industry over the next 10-15 years.

Mr. Gul Teckchandani, Chief Investment Officer, SUN F & C Asset Management (I) Pvt. Ltd. (investment managers of SUN Mutual Fund schemes) told The Hindu the entry level amount had been kept at Rs. 5 lakhs and in multiples of Rs. 1 lakh. Investors with a long term view point (minimum three years) would see at least 25 per cent appreciation in their investments annually, he said and added that investments would not be based on the expected rise in stock quotations but on the fundamentals of the company concerned. Also, the asset block of a company which was at a significant discount to the market value should be taken into account while investments were made, he said.

Fundamentally sound old-economy stocks would provide a decent return in the longer term while new-economy stocks (such as software) which were only facilitators for the growth of old economy companies would not sustain the appreciation.

He said turnaround opportunities related to corporates which were trying to reduce overheads, enhance marketing efforts and make themselves profitable again by introducing new management, streamlining operations, infusing capital and entering into strategic alliances. Also, companies involved in business and technological restructuring that included rethinking of corporate strategy, selling subsidiaries/group companies and the like provided an excellent investment opportunity.

He said the theme fund would also look at the opportunity arising out of the merger and acquisition activity currently taking place worldwide and in India. For, investments made in a potentially acquiring company (acquirer) or the target company was another avenue for significant capital appreciation.

He cited the example of Siemens which was in the process of hiving off its software division and carrying out restructuring plans.

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