Sundaram BNP Paribas has come out with 2 new fund offerings.
1) Sundaram BNP Paribas Select Thematic Funds Financial Services Opportunities - What is this ?
Sundaram BNP Paribas Select Thematic Funds Financial Services
Opportunities is intended to benefit from the growth underpinned by the demographic dividend theme in India (with
75%+ of population below the age of 40).
A growing opportunity: The financial services sector appears set for significant growth and possibly a few landmark
changes over the next five years. The following factors will play a key role:
• the overall growth of the Indian economy & rising trend in savings and investment
• expected boom in opportunities in financial services and expanding penetration of financial services
• likelihood of a benign interest rate environment once the current turmoil is past and the emphasis on inflation
in the Indian context, to an extent linked elections on the anvil, is placed on the backburner
• quality regulation that has led to a more prudent position for banks in India
• emerging changes that will allow for a greater role for foreign players in India
• likely consolidation
• expanding universe of players in financial services across geography
• an emerging larger share for private sector participants and non-capital based incomes in overall pie
• imminent listings from insurance, asset management, commodity-trading and financial distribution spaces, to
name a few
• attractiveness of Indian stock exchanges as a platform from a systems perspective
• internet-based products/services
• scope available for a fund focused on broader financial services theme than just banking.
An Attractive Opportunity, too: Sundaram BNP Paribas Asset Management believes financial services is an
attractive opportunity. The CNX Banks Index has risen ten-fold since January 2002 and outpaced the broad market
which has risen by about six fold. We do, however, expect scope for attractive long-term returns given the size of the
emerging opportunity. The recent corrective phase linked to the global meltdown triggered by the unfolding crisis in the
U.S and the negative view on banking stocks in the wake of the loan waiver proposed by the government only make
entry point more attractive for investors
65% in the financial services theme and the flexibility to invest up to 35% outside the theme. Sundaram BNP Paribas
Asset Management has, however, adhered to the mandate of the fund in letter and spirit. In Sundaram BNP Paribas
Capex Opportunities and Sundaram BNP Paribas Rural India Fund, 90%-95% of the portfolio on an average has been
in the designated themes. A similar approach is being adopted in Sundaram BNP Paribas Energy Opportunities and
will be the basis for portfolio construction in this proposed fund, too.
Security Minimum Maximum Risk Profile
% %
Equity & equity-related securities in
the financial services theme 65 100 High
Equity & equity-related securities outside
the target theme 0 35 High
Fixed income securities 0 15 Low
Asset Allocation for Financial Services Opportunities
Portfolio Manager: J Venkatesan. He has managed Sundaram BNP Paribas Rural India Fund since launch and has
taken over as fund manager for Growth, India Leadership and Global Advantage from January 1, 2008.
Benchmark: For regulation purposes, CNX Banks Index. As a concentrated index, it may not capture the overall trend.
As is the case with all thematic funds, investors should also compare the performance with a broad market index such
as the S & P CNX 500 or BSE 500. This is also important as thematic funds by their nature, and because of the higher
risks as compared to a diversified fund, should be expected to deliver higher return than the broad market
2) Sundaram BNP Paribas Select Thematic Funds Entertainment Opportunities
Sundaram BNP Paribas Select Thematic Funds Entertainment
Opportunities is intended to benefit from the growth underpinned by the demographic dividend theme in India (with
60%+ of population below the age of 40).
An emerging opportunity: The entertainment sector appears is on the cusp of a higher growth trajectory
accompanied by improving profitability. The following aspects are relevant to this nascent story:
• Expected to growth at more than 25% on a compounded annual basis over the next five years
• High growth rates likely in the electronic medium
• Steady rise in ad spends to provide a firm underpinning for growth
• More efficient distribution platforms to deliver better value for broadcasters
• Share of television likely to become dominant with convergence as a dominant theme
• Superior growth in vernacular medium (print, television and films)
• Rising consumerism and not confined just to urban India
• Favorable FDI policy framework except in print media
• Increasing interest of global majors
• Emergence of new genres such as sports, gaming, fashion and outsourcing
Expanding universe: There is a steady expansion in the listed stocks space. From just a Zee Telefilms, there are now
several stocks of decent pedigree available for investment. The investment universe may also include players in
spaces such as broadcasting, content providers, electronic news, print media, multiplexes, web-based services, leisure
services, distribution, IT & telecom services, gaming, retailing, luxury products & services and sports businesses as
well as other new segments that may emerge on the listed space. Beneficiaries and providers of
equipment/services/turnkey solutions to such players may also be part of the portfolio. There are IT companies that
develop back-end software for the entertainment sector and to enable telecom companies provide a higher degree of
convergence. Telecom companies are also likely to play an increasing role in entertainment, as there is a convergence
between various media and distribution of content.
Fund Objective: Seek capital appreciation by investing in the target theme. The offer document provides for at least
65% in the entertainment and the flexibility to invest up to 35% outside the theme. Sundaram BNP Paribas Asset
Management has, however, adhered to the mandate of the fund in letter and spirit. In Sundaram BNP Paribas Capex
Opportunities and Sundaram BNP Paribas Rural India Fund, 90%-95% of the portfolio on an average has been in the
designated themes. A similar approach is being adopted in Sundaram BNP Paribas Energy Opportunities and will be
the basis for portfolio construction in this proposed fund, too.
Minimum Maximum Risk
% % Profile
Equity & equity-related securities
in entertainment theme 65 100 High
Equity & equity-related securities
outside the target theme 0 30 High
Fixed income securities 0 15 Low
Asset Allocation for Entertainment Opportunities
Security
Portfolio Manager: Satish Ramanathan.. He manages Sundaram BNP Paribas Select Mid-Cap, Select Small-Cap,
Equity Multiplier and Tax Saver.
Benchmark: For regulation purposes, S & P CNX Media & Entertainment Index. As a concentrated index, it may not
capture the overall trend. As is the case with all thematic funds, investors should also compare the performance with a
broad market index such as the S & P CNX 500 or BSE 500. This is also important as thematic funds by their nature,
and because of the higher risks as compared to a diversified fund, should be expected to deliver higher return than the
broad market
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