NFO: Sundaram BNPP PSU Fund
Sundaram BNP Mutual Fund AMC has launched yet another Equity Fund - Sundaram BNP Paribas PSU Opportunities Fund. It is a diversified equity fund that will equity and equity-related securities of public sector companies to the extent of atleast 65%. The fund may also invest in bonds and other fixed-income instruments issued by public sector entities.
NFO start date: 25-November-2009
NFO End date: 23-December-2009
Issue price: Rs. 10.00
Sundaram BNPP PSU Fund’s other features:
Options: Growth and dividend
Entry load: Nil
Exit load: 1% for units redeemed within one year from allotment date
Minimum application: Rs 5,000 and in multiples of one rupee thereafter
Fund manager: Venkatesan
Sundaram BNP Paribas PSU Opportunities Fund - Download Form
Why you should invest in PSU Fund?
As per Sundaram BNP Paribas mutual fund AMC, following are the reasons to invest in this fund-
• PSUs are focussed on the high-growth sectors of the economy - energy, financial services, infrastructure and utilities.
• Demonstrated ability to create share holder value: Basket of 48 PSUs listed since 2000 have shown a CAGR of 24.2% as opposed to S&P CNX 500 which showed 13.5%.
• Robust financials: moderate leverage, sizeable cash & investments.
• As more equity is sold in existing PSUs, floating stock will improve as will institutional investor interest in PSUs.
• The ownership of floating stock is well distributed between FIIs, DIIs and retail investors indicating good appetite for PSU stocks.
• PSU stocks’ share in benchmarks likely to rise as floating stock improves. This will attract more funds, especially from FIIs and exchange-traded funds tracking India, which are becoming a dominant way to play the India story for foreign investors.
• The first few years as a post-privatised entity have led to robust improvement in operational efficiencies, stock price & valuation. This fund will also play this subtheme.
• PSUs trade at a discount of about 25% to the broad market and 40% discount to the private sector. If there is a 50% re-rating of PE multiples, potential increase in value of listed PSUs could increase by about $58 billion.
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Valuation wise PSU Companies are available at a discount of approx 25% to Sensex, giving adequate comfort in terms of safety.
Govt’s disinvestment programme will be a good booster for PSU companies. The disinvestment will also improve the free float which will in turn improve their weightage in Nifty, forcing Funds across the World with India exposure to increase exposure to PSUs and giving their Stocks a boost.
Lesser Govt intervention is helping manage the PSUs more professionally thus attacting more FII interest.
All these measure are expected to re-rate PSUs on par with Private Companies in terms of PE, if not more thus giving Above Average Gains.