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daiwa case analysis
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DAIWA EQUITY FUNDDAIWA EQUITY FUND
Section 1 Group 2PAAATH
FT 12113 Anuja Dash
FT 12189 Pramod Ravi Shankar
FT 12127 Harendra Singh
FT 12168 Tushar Arora
FT 12104 Abhilash Mohapatra
FT 12102 Abhay Bohra
Introduction : Introduction : DAIWA EQUITY FUND An open ended equity scheme
Offer of Units of Rs. 10/- each for cash during the New Fund Offer and continuous offer for Units at applicable NAV based prices
Name of Mutual Fund: Daiwa Mutual Fund
Name of Asset Management Company: Daiwa Asset Management (India) Private Limited
Sponsor : Daiwa Asset Management Co. Ltd. is the sponsor of Daiwa Mutual Fund
Name of Trustee Company: Daiwa Trustee Company (India) Private Limited which holds the property of the Mutual Fund in trust for the benefit of the unit holders .
Daiwa Equity Fund –Section 1, Group 2 2
History of DAIWA as an History of DAIWA as an AMCAMC Daiwa Securities Group Inc., the parent company was
established in 1902 Daiwa Securities Group ‘s three core business segments
◦ Retail Securities◦ Wholesale Securities ◦ Asset Management
Daiwa Asset Management Co. Ltd. ("DAM"), the asset management arm of the Daiwa Securities Group was incorporated in 1959
Second-largest mutual fund management company in Japan
More than 300 Mutual Funds Managed world-wide USD 126 billion of assets under management. 109 years old diversified group with 51 years of
experience in Asset managementDaiwa Equity Fund –Section 1, Group 2 3
Scheme DetailsScheme Details
For initial Purchase Rs. 5,000/- and in multiples of Re. 1/- thereafter
No Entry Load Exit load – 1% of applicable NAV if redeemed
within 1 year of allotment, none after that Portfolio turnover of the Scheme is not expected
to be very high The benchmark for the Scheme is BSE-200 index
due to is like appropriate composition Redemption Options:
Growth option: No Dividend will be declared. Dividend option: Dividend Payout and Dividend
Reinvestment sub options
Daiwa Equity Fund –Section 1, Group 2 4
Investment ObjectivesInvestment Objectives Main Objective: Growth and income The Scheme seeks to generate long-
term growth of capital by investing in a diversified portfolio of predominantly equity and equity-related securities
Stocks that have sustainable business models, and potential for income and capital appreciation
Debt would also be used in the fund portfolio besides a wide range of other investment options like money market and derivative instruments
Daiwa Equity Fund –Section 1, Group 2 5
Investment Instruments Investment Instruments OptionsOptions Equity and equity related securities Debt obligations of the Government of
India, state and local governments , government agencies, statutory bodies, public sector undertakings, etc
Money market instruments Pass through, Pay through or other
Participation certificates Deposits of Scheduled Commercial Banks Foreign Securities Derivative instruments Other mutual funds
Daiwa Equity Fund –Section 1, Group 2 6
Equity – Debt AllocationEquity – Debt Allocation
InstrumentAsset Allocation
Risk ProfileMinimum MaximumEquity and equity related securities 65 100 HighDebt and Money market Instruments 0 35 Low to Medium
Daiwa Equity Fund –Section 1, Group 2 7
A mix of Equity and Debt instruments selected
Invest in companies with good growth prospects available at reasonable valuations. Combination of Growth and Value strategies to manage the portfolio.Select companies which have a significant probability of a healthy appreciation in the medium term
Bench Mark IndexBench Mark IndexBSE 200 has grown at mean rate of
20.76% and standard deviation of growth rate is 41.76%, which is very high for the past 19 years
So the Returns are very low and volatile, not worth the risk we are taking
Even for the past 5 years ie 2006 -2010 mean rate of 30% with standard deviation of growth rate is 55%
Daiwa Equity Fund –Section 1, Group 2 8
StatisticsStatisticsGrowth 1991-2010
Mean 20.76427624Standard Error 9.581937257Median 16.06557377Mode #N/AStandard Deviation 41.76669619Sample Variance 1744.45691Kurtosis -0.346008768Skewness 0.247390374Range 150.8921473Minimum -56.47590361Maximum 94.41624365Sum 394.5212485Count 19
Daiwa Equity Fund –Section 1, Group 2 9
StatisticsStatisticsGrowth 2006-2010
Mean 29.66523Standard Error 24.61734Median 39.54469Mode #N/AStandard Deviation 55.04605Sample Variance 3030.068Kurtosis 1.265268Skewness -1.01648Range 145.0572Minimum -56.4759Maximum 88.58131Sum 148.3261Count 5
Daiwa Equity Fund –Section 1, Group 2 10
Investor Profile Investor Profile AssumptionsAssumptionsInvestor Profile 25 – year old Steady job Has adequate insurance cover Regular cash flows in terms of
Salary paycheck Enough Emergency Cash ReserveTime Horizon – 3 to 5 yearsReturn Expectations – Greater than
index returns High Risk Appetite
Daiwa Equity Fund –Section 1, Group 2 11
Recommendation Recommendation We recommend that given the
said Fund’s investment objective and returns strategy vis-à-vis the investor profile and risk appetite , the investor should
BUY !!
Daiwa Equity Fund –Section 1, Group 2 12
Reasons for the Reasons for the RecommendationRecommendation Daiwa Group’s 100 year legacy
makes it trustworthy Experience and expertise as Asset
managers in the Japanese Market Alignment of investor expectations
with the scheme goals Aggressive equity exposure
presents an opportunity to earn high returns
The associated risks are within the young investor’s risk appetite
Daiwa Equity Fund –Section 1, Group 2 13
Daiwa Equity Fund –Section 1, Group 2 14