"Sunrise Focused Equity Fund" Focuses to Provide Long Term Capital Appreciation By Minimizing Uncertainty in the Market: CEO Bijaya Lal Shrestha, Sunrise Capital

Sunrise Capital Limited has introduced third mutual fund scheme under Sunrise Mutual Fund. The IPO of the scheme is opened from Magh 10, 2079 to Magh 24, 2079. We have taken a brief interview with Mr. Bijaya Lal Shrestha, CEO of Sunrise Capital Limited about the new scheme and its benefits to the investors.

What kind of scheme is Sunrise Focused Equity Fund?

Sunrise Focused Equity Fund is third mutual fund scheme under Sunrise Mutual Fund.  Even though the concept of Focused Equity Fund is new to Nepalese capital market, this concept has already been initiated and successfully outlined under regulation of Securities and Exchange Board of India (SEBI). And yes, we are the pioneer to implement this concept in Nepal too. Sunrise Bank Limited is the Fund Sponsor of the scheme and Sunrise Capital Limited is the Fund Manager and Depository. It is a close ended fund that will be traded in Nepal Stock Exchange. Sunrise Focused Equity Fund is quite different from existing 30 mutual fund schemes in Nepal as the stocks selection criteria is based on the international practice. This entire process will be backed by our experienced research team and investment head.

What kind of scheme is Sunrise Focused Equity Fund?

Sunrise Focused Equity Fund is third mutual fund scheme under Sunrise Mutual Fund. Even though the concept of Focused Equity Fund is new to Nepalese capital market, this concept has already been initiated and successfully outlined under regulation of Securities and Exchange Board of India (SEBI). And yes, we are the pioneer to implement this concept in Nepal too. Sunrise Bank Limited is the Fund Sponsor of the scheme and Sunrise Capital Limited is the Fund Manager and Depository. It is a close ended fund that will be traded in Nepal Stock Exchange. Sunrise Focused Equity Fund is quite different from existing 30 mutual fund schemes in Nepal as the stocks selection criteria is based on the international practice. This entire process will be backed by our experienced research team and investment head.

Can you please highlight the fund specification of this scheme?

The scheme, Sunrise Focused Equity Fund is a close-ended fund carrying fund size of NRS. 120 Crores, which may reach a maximum up to 150 crores (25% more) if oversubscribed as allowed by the prevailing regulation of Mutual Fund. The maturity of the scheme last for 10 years and maximum of 1.20 Crores with NRs. 120,000,000 can be hold by the unit holders. Our new scheme will predominantly invest in top 10 focused stocks carrying 50% weight of overall portfolio. Next top 20 stocks will carry 50% weightage that are traded in NEPSE. Our primary objective is to provider long term capital appreciation, delivering liquidity and capital gain with minimizing uncertainty in the market.

Many investors might not know much about focused equity stocks. Can you please put light on the what focused equity stocks really are?

A focused equity fund is a type of mutual fund that invests in a limited number of equities, usually up to 30. The fund manager focuses on specific industries or sectors and invests mainly in equity & equity-related instrument and fixed-income instruments of those sectors. Focused equity are shares of very precise companies with potential of generating high returns in long run. These stocks are known to have capabilities to long term capital appreciation while minimizing risk in the market. Focused stocks generally risk moderate, as they are often market leaders in their respective industries.

However, a company might not always remain a growth focused. With the passage of time depending upon performance, some companies might get out of the category while some companies might get inside growth category. Fund Management and Research team of Sunrise Focused Equity Fund constantly monitors such changes and act accordingly.

What kind of return can investors expect from the Sunrise focused equity fund?

Basically, there are two different kinds of projected returns an investor can expect in this scheme. The investors will get real dividend which is expected to be distributed yearly with an annual average return of 20.77%. Investors can also expect a healthy sum of money as a NAV which is also expected to be 11.08 in the very first year and at the end of the period it will reach to 20.96. To sum up these, 29.66% average annual return has been expected from this scheme where the annual capital gain calculation has derived by considering the 7-year Compound Annual Growth Rate (CAGR) of the highly lucrative 30 companies of security market from the FY 2070/71 to 2077/78 and based on the return of fixed income instruments and Weighted Average Annual Rate of the current account.

What are the objectives of Sunrise Focused Equity Fund?

The primary investment objective of the Scheme is to provide long–term capital appreciation and liquidity from a portfolio that is invested predominantly in equity and equity–related securities of proven, performing and steady companies. The scheme is meant for investors (Individual and institutional) seeking to invest for long term in values stocks with high liquidity, strong fundamentals and maximum capital gain.

What are stock selection strategies of the scheme?

The scheme’s investment philosophy involves investing 50% weightage of the equity portfolio in top 10 proven, performing and steady stocks and the other 50% in the next 20 burgeoning, emerging and potential stocks. Focused funds will invest across market capitalization - i.e. large cap, mid-cap and small cap. There are many criteria that differentiates focused equity stocks from other stocks. However, Sunrise Focused Equity Fund shall focus on 5 broad criteria for selecting stocks.

• Analysis on company's financial health, growth prospects, and competitive advantages derived by our experts through grading parameters.
• Universe creation of solid growth prospects companies.
• Research recommendation incorporating Fundamentals and Technical aspects of the stocks, where major weightage falls on Fundamentals without ignoring technical aspects of the companies.
• Assessing the industry dynamics and the impact of macroeconomic conditions on the companies.
• In-depth analysis on horizontal and vertical aspects of focused company’s financials.

Among all thirty-six Mutual Funds, why do you suggest investors to invest in Sunrise Focused Equity Fund?

Well, Sunrise Focused Equity Fund is currently one of its kind in Nepalese mutual fund market. As, SFEF’s prime investment focus is on long term capital appreciation, liquidity, minimizing uncertainty and companies assuring high capital gain from different industries, this gives us an extra edge in the market.  Almost all the mutual fund in Nepal are concentrated into specific criteria of investing module. Investment in one strain modules creates either very high risk or very low risk in the market. Conversely, Investment of Sunrise Focused Mutual Fund (SFMF) comprises of all high, mid and small cap. companies enduring very high potential growth. As we discussed earlier, this is scientific module outlined by SEBI. 

Unlike, other funds, Sunrise Focused Equity Fund will be high growth potential and capable of enduring lucrative return capturing market movement. Also, the fund will be capable enough to deliver long term return to its unit holders. In nutshell, SFEF ensures security and best return to its unit holders.

Likewise, Sunrise Focused Equity Fund may help unitholders achieve their Targeted Financial Goals. Long Term goal such as children's education & their future, retirement, or any other long-term growth that needs a wealth creation plan might be fulfilled through this scheme. However, these return are not guaranteed by the scheme.

How strong is your supervisor team?

Our Fund Sponsor- Sunrise Bank Limited has appointed the Supervisor Team of Sunrise First Mutual Fund for Sunrise Focused Equity Fund too. Our team of supervisors consists of highly experienced members from different sectors of Nepalese economy and they have proven to be an asset to Sunrise Mutual Fund as a whole.

Mr. Krishna Bahadur Manandhar is Ex. Deputy Governor of NRB with 36 year's work experience in Nepal Rastra Bank. Similarly, Mr. Chandi Prashad Shresthai is Ex. Home Secretary of Government of Nepal with 28 year's work experience in high level of government services. Also, Mr. Purna Man Shakya who is currently serving as Chairman of Supreme Court Bar Association has 30 year's work experience as a Professor in TU, advocate and senior advocate. Mr. Buddhi Prashad Acharya who a Chartered Accountant by profession, is Ex. Managing Director of Nepal Telecom along with 18 Year's work experience in Audit Firm and Nepal Telecom. Lastly, Mr. Sudhir Kumar Sharma who is also a Chartered Accountant has 20 Year's work experience in various Banking and Financial Institutions.

Their valuable inputs have really played a key role in growth of NAV of SFMF & SBF and I believe that this will continue in SFEF too.

How is the NCM Mutual Fund, Sunrise First Mutual Fund and Sunrise Blue chip fund performing?

NCM mutual fund, the very first mutual fund that was floated on 2059 was able to provide total dividend of NPR 8.6 till it’s maturity period and NPR 46.52 at the maturity of the scheme. The average annual return of the scheme was 45.12%.

Sunrise First Mutual Fund floated its units to public when Nepalese capital market was in bearish trend and investors’ psychology was very week. Although, the market situation was not favorable during our entry, we were able to distribute 7% in the first nine months and 50% in the next nine months of our operation. We invested our significant portion of funds during the bearish period and that decision has really paid well. We were fully able to tap current bull run of the market with NAV of Rs. 12.40 till the month of Mansir 2079. The average annual return of the scheme as of Mangsir end, 2079 is 23%.

Talking about SBF, as the name suggest itself, our investment focus for this scheme is in bluechip and emerging bluechip company that has been backed by research. The wise decision of investment in bluechip companies has helped us in protecting the wealth of investors in adverse market conditions. The scheme has fallen just 14.26% against the fall of 31.55% NEPSE Benchmark.  

 At last, any suggestions to the existing and new investors?

Nepalese Capital Market has witnessed major developments in last few years in both primary and secondary market. Increasing participation in IPO and introduction of Online Trading System has really changed facet of Nepalese Capital Market in short period of time. Number of new investors entering secondary market is increasing day by day which is a very good thing for our market. However, one should not forget the risk side of the market too. I think investment in mutual funds really helps new investors to develop a good perspective of the market in their initial days in the market. Also, it is beneficial for other active and experienced investors to add some stability to their current portfolio. Thus, I urge all the investors to invest in SFEF. SFEF is knocking the doors of investors from Magh 10, 2079 to Magh 24, 2079. I hope it will receive a warm welcome from every investor especially from those who are looking for comparatively safer investment in stock market with best long term returns.