IDFC Mutual Fund announced the launch of the IDFC Transportation and Logistics Fund, an open-ended equity scheme investing in transportation and logistics sector, intending to benefit from the multi-year growth opportunity in the mobility services sector. The New Fund Offer closes on October 18, 2022. Investment can be made through licensed mutual fund distributors and online platforms as well as directly on the IDFC MF website https://idfcmf.com/.
Highlighting the rationale behind launching the IDFC Transportation and Logistics Fund, Mr. Vishal Kapoor, CEO, IDFC AMC, said: “Rapid urbanization is accelerating growth in personal mobility requirements. Additionally, powerful enablers like a strong demand-led recovery cycle and margin improvement provides visibility for strong earnings growth for the transportation and logistics sector. Growth in this sector is expected to be driven by rising aspirations, enhanced infrastructure, a surge in volumes and export-driven opportunities. The IDFC Transportation and Logistics Fund will be actively managed by a team which has a strong pedigree and expertise in leveraging the vast opportunities across this attractive value chain.”
Mr. Daylynn Pinto, Fund Manager for IDFC Transportation and Logistics Fund, added: “The Transportation and Logistics sector consists of 16 sub-sectors, providing a wide spectrum of investment opportunities and facilitating effective diversification of the portfolio. NSE data as of August 2022 indicates that the Nifty Transportation and Logistics Index has outperformed the Nifty 500 Index in 8 out of 11 calendar years from 2012 to 2022 (YTD Aug’22), demonstrating the potential of this sector to provide relatively higher returns over the long term. The IDFC Transportation and Logistics Fund has a bottom-up stock selection approach with investment across market cap segments, facilitating focus on the business-specific aspects and aligning the execution with a medium to long-term view. The fund invests predominantly in companies that are part of the Transportation and Logistics sector with the flexibility to allocate up to 20% of its net assets to international businesses and companies of other sectors that have a compelling risk-reward opportunity.”
A key differentiator for the IDFC Transportation and Logistics Fund is its approach to stock selection and portfolio construction. In building the portfolio, the fund manager will prioritize the stock’s Competitive Positioning, Management Quality, and Earnings Trajectory (CME Approach), thereby focusing on both the quality and growth of the portfolio. Competitive Positioning involves selecting companies based on fundamental factors such as higher capital efficiency, greater pricing power compared to peers, a robust business model, and relatively higher operating margins, which could create value for shareholders. Management Quality is an important parameter that enables the fund manager to assess the ability of the management to strategize and execute the business plans while ensuring that their interest is aligned to that of the shareholders. Screening companies that are on an improving Earnings Trajectory supported by several factors such as macroeconomic developments, expansion of distribution channels, and new product launches could boost the growth potential of the portfolio in the long term.