Aditya Birla Sun Life AMC, a subsidiary of Aditya Birla Capital Limited, has introduced a new investment opportunity for investors. The Aditya Birla Sun Life Transport and Logistics Fund, an open-ended equity scheme, is now open for subscription from October 27, 2023, to November 10, 2023. The new fund offer's (NFO's) benchmark index is the Nifty Transportation and Logistics TRI.

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This scheme aims to achieve long-term capital appreciation by investing in equity and equity-related securities of companies following the transportation and logistics theme. However, as with all investments, there's no guaranteed assurance of achieving this objective, the fund house said.

Understanding the theme

The transportation theme includes areas such as automobiles and auto ancillary, while the logistics theme encompasses ports, warehousing/supply chain, e-commerce, and allied sectors. Sectors common to both themes include shipping, railways, infrastructure, and airlines.

With approximately 200 companies forming a part of the listed universe across 20 basic industries, this fund provides investors with a broad spectrum of investment opportunities. Furthermore, it offers a blend of urban and rural, domestic and international prospects. Innovation and new technologies are integral components of this theme, ensuring that investors stay aligned with industry developments, Aditya Birla Sun Life AMC stated.

The equity portion of the portfolio follows a growth at a reasonable price (GARP) strategy and can invest across various sectors within the transportation and logistics theme.

Expert insights

Commenting on the new fund launch, A Balasubramanian, Managing Director & CEO of Aditya Birla Sun Life AMC stated, "The transportation and logistics sector offers a plethora of opportunities for an investor. Some of these include the low penetration of passenger vehicles, rising aspirations of buyers backed by increasing per capita income and improving affordability of passenger vehicles, strong government support to EVs, export growth, and good domestic manufacturing capabilities of auto ancillaries, and the boost to logistics due to expanded interconnectivity of rail, road, and ports to improve mobility with efficiency.”

Investment plans/options offered

The scheme offers both regular and direct plans with a common portfolio and separate net asset values (NAVs). Investors can choose between the Growth Option and the Income Distribution cum Capital Withdrawal (IDCW) Option.

Liquidity and flexibility

The fund is open-ended, allowing investors to buy and sell units at NAV-based prices on every business day, with redemption proceeds transferred within three working days. Investors also have the flexibility to switch investments from other schemes managed by the AMC.

Minimum application amount

During the New Fund Offer period, the minimum application amount is ₹500 and in multiples of ₹1 thereafter. In the ongoing offer period, the same minimums apply for fresh purchases, additional purchases, and repurchases.

Load structure

During the New Fund Offer period and the ongoing offer period, there is no entry load. However, for redemption or switch-out of units within 365 days from the date of allotment, an exit load of 1.00% of the applicable NAV applies. Beyond 365 days, there is no exit load.

Asset allocation and investment pattern

Under normal circumstances, the scheme allocates 80% to 100% to equity and equity-related instruments of companies following the transportation and logistics theme, 0% to 20% to equity and equity-related instruments outside the theme, and 0% to 20% to debt and money market instruments.

Investment strategy

The scheme follows a bottom-up approach to stock-picking, analysing companies based on factors like business fundamentals, future growth prospects, valuations, and financial strength. It aims to optimize returns while managing risk.

Fees and expenses

Expenses incurred during the New Fund Offer are borne by the AMC. Annual scheme recurring expenses include fees for operating the scheme and are as per industry standards.

A look at returns of similar funds

(Source: Value research)

Conclusion

The Aditya Birla Sun Life Transport and Logistics Fund provides an opportunity for investors to participate in the transportation and logistics sector's growth. It offers a diverse portfolio and follows a GARP strategy, making it a decent option for those seeking long-term capital appreciation. However, as with any investment, it is essential to consider one's financial goals, risk tolerance, and consult with a financial advisor before making any investment decisions.