Its time to Invest in Trust Flexi Cap Fund

  

Trust Mutual Fund launched its Maiden Fund Called Trust Flexi Cap Fund in the Month of June 19^th 2024. Its pretty short time frame to write anything on this type of fund but still we find some interesting data points accentuating on the sector allocation executed within the last 2 months. This insight analyses the changes in sector allocation between May 2024 and June 2024 followed with getting in deep about the investment philosophy in simple language. The data provides insights into shifts in investment focus across various sectors, highlighting trends and potential strategic adjustments by fund managers.

 The fund follows a Unique Investment Philosophy:

Differentiated Equity Investment Approaches: 1)Terminal Value Investing and 2) Growth at Reasonable Valuations (GARV)

Terminal Value Investing framework and Growth at Reasonable Valuations (GARV) approach offer a unique alternative for equity fund investors.

Terminal Value Investing Framework

To explain the Terminal Value framework, this assess the value of a company beyond the foreseeable future by examining three key factors:

1. Megatrends: Long-term trends that drive significant changes in the market.

2. Leadership: The quality and vision of a company's management team.

3. Intangible Factors: Elements such as brand value, intellectual property, and corporate culture.

 By focusing on these aspects, they can identify the true potential of a growing company and capture its full value creation.

 Growth at Reasonable Valuations (GARV)

GARV is an investment approach that targets stocks with strong growth potential at reasonable valuations. This strategy ensures that we invest in companies poised for growth without overpaying for their stocks.

The TRUSTMF Flexi Cap Fund embodies this philosophy, allowing the fund to adapt to and navigate various market conditions for sustainable investment success. By integrating the principles of Terminal Value Investing and GARV, the fund aims to deliver consistent returns and long-term value for investors. The current market dynamics needs this type of philosophy to play since reasonable valuations is a biggest dilemma when the markets are rising one way up. This type of strategy helps the Fund House to garner stable growth married with right judgement skills of valuations and gaps.

 Sector Allocation Analysis Report: May 2024 vs. June 2024

 

1. Automobile & Ancillaries

·       May 2024: 13.99%

·       June 2024: 13.78%

·       Change: -0.21%

    Analysis: Slight decrease, possibly indicating a minor reduction in exposure to the automobile sector.

 

2. Bank

·       May 2024: 16.47%

·       June 2024: 17.00%

·       Change:+0.53%

    Analysis: Increased allocation suggests a growing confidence in the banking sector, possibly due to improved financial performance or favorable economic conditions.

 

3. Capital Goods

·       May 2024: 13.98%

·       June 2024: 11.71%

·       Change: -2.27%

    Analysis: Significant reduction in allocation, which may indicate a shift away from capital goods, possibly due to lower expected growth or profitability.

 

4. Chemicals

·       May 2024: 0.81%

·       June 2024: 1.19%

·       Change: +0.38%

   Analysis: Increased interest in the chemicals sector, potentially driven by new opportunities or improved market conditions.

 

5.Construction Materials

·       May 2024: 1.21%

·       June 2024: 1.28%

·       Change: +0.07%

    Analysis: Slight increase, indicating stable or growing investment in construction materials.

 

6. Consumer Durables

·       May 2024: 4.95%

·       June 2024: 5.80%

·       Change: +0.85%

    Analysis: Higher allocation suggests increased confidence in consumer durables, possibly due to rising consumer demand.

 

7. Crude Oil

·       May 2024: 2.63%

·       June 2024: 3.71%

·       Change: +1.08%

    Analysis: Significant increase in allocation, possibly reflecting expectations of rising oil prices or improved profitability in the sector.

 

8. Diamond & Jewellery

·       May 2024: 0.00%

·       June 2024: 1.20%

·       Change: +1.20%

    Analysis: New allocation indicates a strategic entry into the diamond and jewellery sector, likely due to emerging opportunities or favourable market conditions.

 

9. Electricals

·       May 2024: 3.82%

·       June 2024: 3.92%

·       Change: +0.10%

    Analysis: Minor increase, suggesting steady or slightly growing investment in electricals.

 

10. Finance

·       May 2024: 5.40%

·       June 2024 6.80%

·       Change: +1.40%

    Analysis: Significant increase, indicating enhanced confidence in the financial sector, possibly driven by strong performance or growth prospects

11. FMCG

·       May 2024: 4.88%

·       June 2024: 5.25%

·       Change: +0.37%

    Analysis: Increased allocation reflects growing confidence in the FMCG sector, potentially due to stable demand and strong market performance.

 

12. Healthcare

·       May 2024: 5.72%

·       June 2024: 6.35%

·       Change:+0.63%

    Analysis: Increased investment in healthcare, likely due to ongoing sector growth and innovation.

 

13. Infrastructure

·       May 2024: 0.95%

·       June 2024:1.88%

·       Change: +0.93%

    Analysis: Significant increase, possibly reflecting new projects or enhanced focus on infrastructure development.

 

14. Iron & Steel

·       May 2024: 2.47%

·       June 2024: 2.20%

·       Change:-0.27%

   Analysis: Slight reduction, potentially indicating a decrease in expected profitability or market conditions.

15.IT

·       May 2024: 4.90%

·       June 2024: 5.01%

·       Change: +0.11%

    Analysis: Minor increase, showing steady investment in the IT sector.

 

16. Logistics

·       May 2024: 0.71%

·       June 2024: 0.80%

·       Change: +0.09%

    Analysis: Slight increase, indicating stable or growing interest in logistics.

 

17. Power

·       May 2024: 2.12%

·       June 2024: 0.73%

·       Change: -1.39%

   Analysis: Significant decrease, possibly due to lower expected growth or sector challenges.

 

18.Realty

·       May 2024: 2.28%

·       June 2024:2.18%

·       Change-0.10%

    Analysis: Minor decrease, suggesting stable but slightly reduced investment in realty.

 

19. Retailing

·       May 2024:2.85%

·       June 2024: 2.89%

·       Change: +0.04%

    Analysis: Slight increase, reflecting stable investment in the retail sector.

 

20. Telecom

·       May 2024: 2.63%

·       June 2024: 2.52%

·       Change: -0.11%

    Analysis: Minor decrease, indicating a stable but slightly reduced focus on telecom.

Conclusion

The allocation changes from May 2024 to June 2024 reflect a strategic rebalancing of investments across various sectors. Key trends include increased focus on banking, finance, consumer durables, and healthcare, while there is reduced emphasis on capital goods and power. The entry into the diamond and jewelry sector and the significant increase in crude oil and infrastructure allocations indicate new strategic interests. Understanding these changes can help investors align their portfolios with emerging trends and opportunities. One should investigate allocation in this fund keeping the current market and sector outlook for the next 5 years. The fund has a balanced approach towards its various sectors.  One must keep a mind that small AUM funds always excel well at all times particularly when the market is at a higher valuation.  A mild correction in the market brings opportunity for investments in this fund and also the long-term growth prospect of these funds becomes more stable with inflows.  Investors should make sure that they are choosing a scheme that is in line with their risk appetite.