In April 2018, Ocean Dial Asset Management launched third, daily dealing, sub-fund under its UCITS umbrella, Ocean Dial Composite India Fund. The Fund is an Open-Ended Investment Company (OEIC).
The Fund portfolio consists of Indian equities and bonds. It comprises of three strategies:
1. A portfolio of multi-cap listed Indian equities, mirroring Ocean Dial’s existing Gateway to India Fund – Target allocation ~60%
2. AAA domestic rated Indian corporate bonds (traded onshore & offshore) – Target allocation ~30%
3. Ocean Dial’s Systematic India Return Fund – Target allocation upto 10%
The Fund has been seeded with an initial investment of USD 73 million.
The investment manager’s strategy is principally based on investing in listed Indian equities which will be selected based on fundamental analysis and research. It seeks to identify companies whose stock prices are deemed to be undervalued in relation to their historic prices, their direct industry competitors or the overall market and have prospects of above average earnings growth in the future and thus delivering superior shareholder value. Analysis typically includes an evaluation of the financial strengths and weaknesses of the business, the company’s earnings outlook, corporate strategy as well as management quality. Valuation models are created internally on potential investments which provide an estimate of fair value from which a target price to buy or sell can be determined.
In addition to the equity component, the portfolio will also consist of a basket of Indian bonds. This investible universe is limited to companies whose credit quality is AAA/AA/A or equivalent in Indian Rupees. There is a preference in general for higher credit rating/quasi sovereigns and “fallen angels” (i.e. bonds whose credit rating has slipped from the top notch credit rating), with an emphasis on quality even at the cost of lower return. The broad strategy is to “buy and hold”, with any disinvestment being driven by specific better opportunities that may arise based on the implementation of the above investment strategy.
The Fund also intends to invest in collective investment schemes (upto a maximum of 10%) that provide exposure to assets consistent with the investment policy of the Fund.
