One of the reputed asset management companies, BNP Paribas, is expected to launch its NFO “BNP Paribas Global Innovative Technology Fund”.
Is BNP Paribas Global Innovative Technology Fund a good fund to invest?
Let’s see what this fund has to offer—its risks and other insights in this review of BNP Paribas Global Innovative Technology Fund.
Features of BNP Paribas Global Innovative Technology Fund
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Fund Name: Global Innovative Technology Fund
Fund House: BNP Paribas
Issue Opens On: 16 August, 2019.
Issue Closes On: 30 August, 2019.
Fund Type: Open-ended Fund
Fund Category: Equity: International
Master Fund: Parvest Disruptive Technology Fund.
| Basic Investment Details | |
|---|---|
| Available Plans | Growth & Dividend |
| Benchmark | MSCI World Net Return |
| Riskometer | High |
| Minimum Investment | ₹5000 |
| Minimum Additional Investment | ₹1000 |
| Minimum SIP Investment | ₹300 |
| Minimum Instalments | 20 |
| Minimum SWP | ₹1000 |
| Exit Load | 1% (for redemption within 365 days) |
Quick Review of BNP Paribas Mutual Fund Amc
BNP Paribas Mutual Fund is one of the early AMCs in India. It was setup in the year 2004.
Mr Sharad Kumar Sharma is the CEO of BNP Paribas Mutual Fund. At present, BNP Paribas Mutual Fund has 24 schemes under its name.
It has an AUM of ₹7,243.52 crores as of first quarter end of 2019-20 (June-30-2019). Out of these 24 schemes, 8 of them have outperformed their indexes in the last quarter. That is, one-third of all their schemes are outperforming.
BNP Paribas Global Innovative Technology Fund will be joining the list of schemes when the issue opens on 16 August, 2019.
The BNP Paribas Global Innovative Technology Fund will be co-managed by fund managers Mr Abhijeet Dey and Mr Karthikraj Lakshmanan.
Both of the fund managers are already managing multiple schemes from the fund house BNP Paribas Mutual Fund.
Let us review their performance and how they are delivering for BNP Paribas Mutual Fund.
Fund Managers: Common Fund Performance Review
The fund managers Mr Abhijeet Dey and Mr Karthikraj Lakshmanan are co-managing 7 existing funds of the BNP Paribas Mutual Fund.
One such fund co-managed by the same fund managers is the BNP Paribas Multi Cap Fund. So as to understand how these fund managers’s will perform let us analyse on the funds managed by them in detail.
Let’s see the basic details of the fund before we jump into the review of BNP Paribas Multi Cap Fund performance.
| BNP Paribas Multi Cap Fund | |
|---|---|
| Fund Category | Equity: Multi Cap |
| Benchmark | NIFTY 500 TRI |
| Riskometer | Moderately High |
| Launch Date | Sep 15, 2005 |
| Return Since Launch | 11.62% |
| AUM | ₹745 crores |
| *Data as on June 30, 2019 | |
Following table shows the CAGR of the BNP Paribas Multi Cap Fund in comparison to its Benchmark index and the fund category.
| Trailing Returns | YTD | 5 Year | 10 Year |
|---|---|---|---|
| Fund | 2.38% | 9.67% | 14.54% |
| Benchmark | 1.43% | 9.47% | 11.56% |
| Category | 1.73% | 9.80% | 12.67% |
| *Data as on July 22, 2019 | |||
The BNP Paribas Multi Cap Fund has outperformed the benchmark index at all times since the 5 year mark. However, the fund BNP Paribas Multi Cap Fund is not—the best—but one of the average performers in the category of similar funds.
Risk Analysis of BNP Paribas Multi Cap Fund
Understanding the risks has always been a tough job for any investor. What risk is good risk? Which one is bad risk? How to take a calculated risk while investing?
This risk analysis review of BNP Paribas Multi Cap Fund could help you find answers to those questions.
| Risk Measures | Std Deviation | Beta | Alpha |
|---|---|---|---|
| Fund | 10.81% | 1.00% | -2.16% |
| S&P BSE 500 TRI | 12.98% | – | – |
| Category | 13.42% | 0.95% | -0.94% |
| *Data as on June 30, 2019 | |||
Reviewing Risk with Alpha:
Alpha values directly represent the performance of a fund manager(s). It is calculated by comparing a fund’s CAGR against the benchmark index’s performance.
Here, the BNP Paribas Multi Cap Fund has an alpha of -2.16%. That is, the actively managed fund is having a return 2.16% lesser than the benchmark index. This is a poor performance from the fund managers’ side.
It is advised that an actively managed fund which requires a fee should perform better than the index at any time. Alpha value greater than 1 is always desirable.
Reviewing Risk with Beta:
The beta value represents the volatility of the scheme with respect to its benchmark index’s volatility. Even though the beta value does not represent the performance of a scheme, a lesser value, lesser than index’s value 1, is good to have.
A greater beta value means it is open to higher risks and higher returns potential. Here, a beta value of 1% is not bad. However, in comparison to the alpha value, which is in negative, the fund is underperforming and not worth the risks.
Reviewing Risk with Standard Deviation:
Like Beta value, Standard Deviation also measures the volatility of a scheme, but with respect to its average return.
Here, the BNP Paribas Multi Cap Fund has an average return of 11.62% since launch. On the other hand, it has a standard deviation of 10.81%. There is a possibility that the fund can fluctuate between ± 10.81% from its average return value.
Even though it is lesser than the standard deviation value of the index and fund category average, it is still highly volatile. Ergo, the fund has higher risks and obviously for lower returns.
This could have given you an idea about the fund managers’s past track record. Let us move back to the review of BNP Paribas Global innovative technology fund.
Review: What Is Special About BNP Paribas Global Innovative Technology Fund?
One of the special things about BNP Paribas Global Innovative Fund is that it is an international equity fund.
Even though it is an international fund, it does not directly invest directly in international equities. Instead of investing directly in international holding companies, it will serve as a feeder fund for another international fund.
The investments in BNP Paribas Global Innovative Technology Fund will be redirected to feed the Parvest Disruptive Technology Fund, also by BNP Paribas.
Investing in international funds like Parvest Disruptive Technology Fund can increase the diversification of your portfolio by a huge number.
Review of Parvest Disruptive Technology Fund
The master fund—Parvest Disruptive Technology Fund invests predominantly in the companies that focus on innovative technology products.
These are the companies that are bringing about the technology revolution in several industries. It includes Healthcare, Automobile, Banking, Automation, Smart Home, etc.
As on 31 May, 2019: BNP Paribas Parvest Disruptive Technology Fund has 45 holdings in its portfolio—most of which are large and mid-cap companies from 23 developed countries. Some of the main holdings include: Apple Inc., Visa Inc., Amazon, Alphabet Inc.(Parent Company of Google Inc.), Cisco Systems Inc., etc.
Let’s see the calendar performance of Parvest Disruptive Technology Fund since launch in relation to its benchmark.
| Calendar Performance | 2014 | 2015 | 2016 | 2017 | 2018 |
|---|---|---|---|---|---|
| Fund | 27.88% | 19.63% | 10.64% | 18.89% | 7.93% |
| Benchmark | 31.05% | 17.18% | 15.18% | 25.04% | -4.11% |
The benchmark of the fund is MSCI World Net Return, which will be the same for BNP Paribas Global Innovative Technology Fund. The fund has a net asset of € 667 millions.
Review of Risks in Global Innovative Technology Fund
Even though the Parvest Disruptive Technology Fund invests in large and maid-cap companies in developed countries, the fund scores a very high risk.
This is due to multiple risks including:
Market Risks:
arising from market fluctuations which may result in capital loss.
Liquidity Risk:
arising from difficulty in selling an asset at fair price due to lack of buyers.
Operational and Custody Risk:
Since the fund invests in multiple international markets some of them may have regulation issues, this could increase the custody and liquidation services risks.
The same level of risk will directly reflect on the BNP Paribas Global Innovative Technology Fund.
It may also face risks due to policy changes by the Government or the regulations body of India with regards to international investments. In addition, the fluctuations in the currency value of the base currency of master fund and the Indian currency will also have impact on the CAGR value.
Should You Invest In BNP Paribas Global Innovative Technology Fund?
BNP Paribas Global Innovative Fund is in short only a feeder fund for Parvest Disruptive Technology Fund.
Even though this fund could give exposure to international holdings, they are not diversified. All of its funds are concentrated in technology sector. This lack of diversification tends to be extremely risky for an Indian investor. The reviewing of the existing common fund did not put the fund managers in the brightest light either.
Correlating all these facts and data, it is not advisable to invest in BNP Paribas Global Innovative Technology Fund.
Instead you can invest in diversified equity mutual fund schemes that have good track records over the years. For diversification of your portfolio you could consult a Certified Financial Advisor.
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