Edelweiss MF’s IPO-focused scheme to go open-ended

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Edelweiss Mutual Fund recently announced that its IPO-focused closed-end equity scheme Edelweiss Maiden Opportunities Fund–Series 1 (EMOF) with AUM of Rs. 522 crore (as of April 2021) will be converted into an open-ended fund. Making it India’s first open-ended fund focused on investing in 100 recently listed IPOs and will be re-named as Edelweiss Recently Listed IPO Fund. This conversion will be effective from June 29, 2021.

This move comes at a time when dozens of companies are lining up their IPOs in the primary markets and have already filed draft red herring prospectus or DRHP with the market regulator SEBI.

Explaining the reasoning behind the conversion, Radhika Gupta, MD & CEO of Edelweiss Asset Management said, “we believe converting this fund into an open-ended one will give a wider base of investors access to this fund thereby democratizing the IPO opportunities for these investors. It is pertinent to note that an IPO opportunity is not just about listing gains but also about an earnings momentum that bodes well for the right selection of IPOs and Edelweiss Mutual Fund will bring that opportunity to the investor.”

EMOF was launched as a close-ended fund in February 2018, with a tenure of 3+ years, which ends in June 2021. The fund provides access and the right selection of IPOs to capture listing and post-listing gains and has returned 14.3% vs. 11.2% Nifty 500 TRI (benchmark). The fund has been investing in new-age businesses across multiple sectors that went public through IPO in recent years.

Existing unitholders of EMOF have an option to exit at the prevailing NAV, without exit load, from May 28, 2021, to June 28, 2021. While existing investors in the fund will not have to pay any exit load any time in future when they exit. New investors, who enter once the fund is converted to open-ended from June 29, will be charged 2% if they exit before six months.

The fund will invest in high-quality IPO stocks through its 3-step strategy of selecting the right post-IPO stocks for investment, providing access to these companies through the fund and taking advantage of post-listing gains by continuing to invest in the right selection of stocks.