Aditya Birla Sun Life Mutual Fund has launched the Aditya Birla Sun Life PSU Equity Fund, an open-ended equity scheme that will follow the PSU theme. According to a press release, the new scheme will focus on investing predominantly in Public Sector Undertakings (PSUs) or companies where the government is a majority shareholder with at least 51% shareholding.
The new fund offer is open for subscription. It will close for subscription on December 23. The minimum application amount required is Rs 500 and in multiples of Re 1 thereafter, during the New Fund Offer period.
The fund house said they believe that the PSUs which dominate many key sectors of the economy would grow in the coming time, especially in industries where setting up a new business unit requires huge capital, regulatory clearances and/or expertise. Government policies, reform plans and economic growth agenda will trigger the comeback for many of these companies going forward.
“PSUs typically dominate sectors that are core to the economy and its growth such as Utilities, Oil & Gas, Metals & Mining, Infrastructure, Defence, Engineering, Banking etc. Often, they have a monopolistic position or large scale, with strong Return on Equity (RoE) and steady cash flow from operations which allow them to give out high dividends. Many of these have characteristics of blue chips in their respective industries,” said A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.
“Most PSUs are quality companies with strong balance sheets and a potential to get re- rated over a period of time. The government’s increasing focus on strategic divestment plans will also help unlock value for some of the PSUs. This combined with the attractive valuations and their underlying intrinsic value make them a compelling investment choice,” added Balasubramanian.