Principal Mutual Fund AMC, the popular name for Principal Pnb Asset Management Company, operates as the investment manager for Principal Mutual Fund. The AMC, a leading player in the mutual fund’s landscape of India, is a joint venture between Principal Financial Group (Principal), a globally recognized investment management company, and Punjab National Bank (Pnb), one of India’s largest public sector banks. The Principal Mutual Fund AMC JV thus combines the global asset management experience of Principal with the local market expertise of Pnb to provide tailor-made mutual fund solutions suited to investors from all walks of life.
About Principal Financial Group
The Principal Financial Group (Principal) is one of the world’s leading financial investment management organizations based out of Des Moines, Iowa in the United States. The key offerings of Principal include various individual and institution-oriented financial services and solutions including but not limited to insurance, asset management, and retirement. At present, this leading financial company employs over 14,000 individuals in 18 countries worldwide across North America, Europe, Asia, Australia and Latin America. Founded in 1879, Principal was ranked at the 298th position on Fortune Magazine’s list of Top 500 largest companies in the United States for the year 2014. The Global Delivery Centre of Principal Global Services is located in Pune, Maharashtra in India.
About Punjab National Bank
Punjab National Bank (Pnb), one of India’s oldest banks was established in 1894. It is headquartered in New Delhi, India and considered to be one of the country’s largest public sector banks. With global operations in various countries, Pnb is has emerged as a financial services power house with over 70,000 employees, 80 million customers, 6937 branches and over 10,000 ATMs globally as of March 2017. Pnb boasts a number of overseas tie-ups across the world including a UK banking subsidiary – PNB International Bank, which also has branches at key global locations such as Kabul, Dubai, Kowloon and Hong Kong. PNB is also a stakeholder in some other key international banks such as JSC (SB) PNB Bank in Kazakhstan, Everest Bank Limited in Nepal and Druk PNB Bank in Bhutan.
Highlights of Principal Mutual Fund
As a leading asset management company in India, Principal Mutual Fund is engaged in offering a wide range of innovative investment options suited to the requirements of various investor groups in both the institutional and retail segments. Principal Mutual Fund AMC boasts a wide network of 102 investor centres and over 20,000 empanelled distributor locations situated across the country, which is engaged in providing a range of services the AMC’s over 4 lakh customers.
Fund Snapshot –Funds managed by Principal Mutual Fund and Key Features
The following is a list of the equity, debt, fund of funds as well as hybrid funds offered by Principal Mutual Fund AMC in India. The table also contains key fund details of each fund such as fund type, NAV(regular growth option) and 1, 3, 5-year returns (regular growth option) as of 4th August, 2017*.
|Fund Name||Fund Type||NAV||1 Year Returns||3 Year Returns||5 Year Returns|
|Principal Dividend Yield Fund||Equity – Multi Cap||Rs. 47.78||25.87%||14.25%||16.38%|
|Principal Large Cap Fund||Equity – Large Cap||Rs. 59.24||20.33%||13.05%||17.14%|
|Principal Emerging Bluechip Fund||Equity – Mid Cap||Rs. 100.52||30.90%||25.39%||29.33%|
|Principal Growth Fund||Equity – Multi Cap||Rs. 133.75||31.29%||17.05%||22.78%|
|Principal Smart Equity Fund||Hybrid – Asset Allocation||Rs. 19.36||10.06%||8.37%||13.75%|
|Principal Index Fund – Nifty||Equity – Large Cap||Rs. 69.80||17.97%||9.71%||14.22%|
|Principal Arbitrage Fund||Hybrid – Arbitrage||Rs. 10.72||5.13%||_||_|
|Principal Equity Savings Fund||Hybrid – Equity Oriented||Rs. 33.66||12.45%||8.75%||7.82%|
|Principal Personal Tax Saver Fund||Equity – Tax Planning||Rs. 191.30||17.90%||12.29%||16.77%|
|Principal Tax Savings Fund||Equity – Tax Planning||Rs. 196.77||30.95%||16.91%||22.81%|
|Principal Balanced Fund||Hybrid – Equity Oriented||Rs. 69.70||26.64%||15.51%||18.55%|
|Principal Dynamic Bond Fund||Debt – Dynamic Bond||Rs. 29.27||9.54%||10.59%||8.97%|
|Principal Low Duration Fund||Debt – Ultra Short Term||Rs. 2654.15||8.03%||8.37%||8.56%|
|Principal Short Term Income Fund||Debt – Short Term||Rs. 29.66||8.35%||8.99%||8.78%|
|Principal Credit Opportunities Fund||Debt – Credit Opportunities||Rs. 2607.39||8.29%||8.89%||8.55%|
|Principal Debt Savings Fund||Debt – Income||Rs. 29.54||8.72%||8.73%||8.43%|
|Principal Government Securities Fund||Equity – Multi Cap||Rs. 133.57||31.29%||17.05%||22.78%|
|Principal Money Manager Fund||Debt – Ultra Short Term||Rs. 1886.62||6.92%||8.18%||8.76%|
|Principal Cash Management Fund||Debt – Liquid||Rs. 1615.30||6.89%||7.92%||8.40%|
|Principal Global Opportunities Fund||Fund of Funds (Equity – International)||Rs. 26.56||20.66%||4.56%||5.99%|
|Principal Asset Allocation Fund of Funds Aggressive Plan||Fund of Funds (Hybrid – Others)||Rs. 13.02||18.97%||–||–|
|Principal Asset Allocation Fund of Funds Conservative Plan||Fund of Funds (Hybrid – Debt Oriented Conservative)||Rs. 11.76||10.18%||_||_|
|Principal Asset Allocation Fund of Funds Moderate Plan||Fund of Funds (Hybrid – Others)||Rs. 12.09||13.69%||_||_|
*The facts and figures in the above table are indicative and subject to periodic change as per changing market conditions and other criteria deemed important by individual fund’s management team.
Investment Philosophy of Principal Mutual Fund AMC
The AMC utilizes a disciplined and long term investment approach which takes only carefully monitored levels of risk through robust research in order to protect, grow and create wealth for its investors. The company’s products list features myriad investment options developed with the focused of providing long term and high-quality investment solutions to its customers whether they are individuals or institutions. The trust that Principal Mutual Fund AMC has earned among its investors stems from the organization’s high levels of transparency and integrity with respect to its investment products that have historically featured exceptional performance while treating its investors with fairness and respect. By generating synergy between international expertise and local experience, Principal Mutual Fund AMC has managed the assets of its clients through various economic conditions/market cycles and provided superior risk adjusted returns.
Key Risk Mitigation Strategies followed by Principal Mutual Funds
Probably the most commonly used (and also the most commonly ignored) phrase with respect to mutual fund investments is – “Mutual Funds are subject to market risk. Please read all scheme related documents carefully before investing”. Fortunately, in most cases, such risk is predictable to a certain extent. As a result, leading fund houses such as Principal Mutual Fund AMC, implement a range of risk strategies in order to mitigate the various risks inherent in key types of mutual fund schemes.
Sector Agnostic Investment: One of the key risks for equity mutual funds is having a higher degree of exposure to a specific sector or industry. Though this risk can unfortunately not be easily mitigated in the case of sectoral or thematic funds (which focus on a particular industry), other types of equity funds can manage this risk to a great degree by following a sector agnostic investment strategy. The sector agnostic investment style ensures that the equity fund is not overly exposed to a particular sector, hence even in cases of cyclic fluctuations, the fund itself will show less volatility that any particular sector the fund is invested in.
Market Cap Diversification: Equity market investments are usually differentiated into 3 categories based on the company’s market capitalization – large cap, mid cap and small cap. Small cap and mid cap companies are usually emerging players in their segment and have high growth potential, however, this comes with an additional volatility risk attached to these investments. Mid and small cap sectors might perform well during bull runs but are notorious for their poor performance during equity market bear runs. Large Cap companies, on the other hand, are more established players hence they tend to be less volatile during even the most volatile market phases. Therefore, many equity funds of Principal Mutual Fund AMC follow a multi-cap approach that balances the risk of volatility with reasonable returns provided on the investments made.
Liquidity Risk Management: Equity funds are most prone to liquidity risk as a majority of redemptions in the case of these funds happen when equity markets are performing poorly. This can strain the liquidity available to the equity scheme and reduce investor confidence in the mutual fund. In order to manage the risk of liquidity inherent in these schemes, their stated investments often include a minor portfolio allocation to debt and money market schemes, which can provide a higher degree of liquidity to the equity mutual fund. Liquidity risk can also occur in the case of specific debt funds especially those that are invested in schemes of longer maturity such as Gilt funds that are mainly invested in government securities featuring maturities of around 10 years. In such cases, the fund may choose to invest in money market schemes such as cash or call instruments that have a higher degree of liquidity attached to them so as to enhance the liquidity of the debt scheme.
Interest Rate Risk Management: Debt schemes are mainly invested in a range of corporate bonds, which feature a fixed maturity as well as fixed yield (coupon rate). Bonds are subject to interest rate risk i.e. changes in the rate of interest offered by other fixed interest rate instruments can push bond prices up or down. Just like equity shares are traded on equity markets, bonds are traded on the bond market. On average bonds offer a higher interest than other fixed interest rate instruments such as FDs, PPF, etc. albeit at a higher risk (bond issuer default risk). Thus when interest rates rise, investors perceive bond yields as less lucrative which decrease the overall value of the bond and by extension the value of the debt fund’s portfolio. For this reason, many of the debt funds managed by Principal Mutual Fund AMC invest in diverse bonds including those that have low-interest rate risk in order to mitigate their overall risk in the market.
Credit Risk Management: A key point to note when choosing debt mutual funds is the quality of bonds and debt securities the fund is invested in. At present, various rating agencies such as ICRA, CRISIL, BrickWorks, etc. rate the debt investments of a mutual fund according to their chosen criteria using the letters of the alphabet. Hence, we get bond ratings such as AAA, AA, A+ and so on. The higher the rating of a particular security, the safer it is determined to be i.e. lower risk of default. However, lower risk of default allows bonds to be released with lower coupon rates, which decreases the potential returns for the investor. Lower rated bonds, on the other hand, feature a higher coupon rate simply because they are perceived to be riskier to invest in as compared to their peers and need to offer higher potential returns to keep investors interested. As a result, a majority of debt funds follow a balanced approach i.e. they mainly invest in high-quality bonds and money market instruments to provide consistency of returns, while at the same time make smaller allocations in lower quality bonds and debt securities. This increases the overall potential returns from the portfolio, while simultaneously lowering the overall risk of the scheme for investors.
Top Management of Principal Mutual Fund AMC
The following are the short biographies of the key management figures of Principal Mutual Fund AMC.
Mr. Rajat Jain, Chief Investment Officer
Mr. Rajat Jain is a capital market veteran with over 28 years of experience in India’s financial industry. Prior to joining as the Chief Investment Officer of Principal Mutual Fund AMC, Mr. Jain was working in a similar role with another leading fund house – SBI Mutual Fund AMC. When working with SBI AMC, he also held other key positions such as Equities Dealer, Head of Research and Fund Manager. He is a Mechanical Engineering Graduate and also holds a PG Diploma in Management from IIM, Lucknow.
Mr. P.V.K. Mohan, Head – Equity
Mr. P.V.K. Mohan is an equity markets veteran with over 21 years of expertise in fund management and equity research. He initially joined Principal Mutual Fund AMC as a Senior Fund Manager – Equities and was later elevated to Head – Equity. Prior to joining Principal, he had worked in various capacities at leading national and international financial institutions including ICICI Prudential Mutual Fund, DSP BlackRock Mutual Fund, CIBC Oppenheimer and IL&FS Mutual Fund. Mr. Mohan is an Electrical Engineer from REC Calicut and Management PG Diploma holder from IIM, Bangalore.
Ms. Bekxy Kuriakose, Head – Fixed Income
With over 14 years of experience in the financial sector, Ms. Bekxy Kuriakose is the current Head of Fixed Income products at Principal Mutual Funds AMC. Prior to working with the current organization, she was working with other leading players in the mutual fund’s industry such as L&T Mutual Fund AMC, SBI Mutual Fund AMC and Reliance Life Insurance. In all her previous roles she has handled various fixed income and debt schemes. She is a PGDBM holder from IIM, Bangalore and has an economics degree from Dehli University’s Lady Shri Ram College.
Mr. Dhimant Shah, Senior Fund Manager – Equity
Mr. Dhimant Shah, the Senior Fund Manager – Equity at Principal Mutual Fund AMC is a stock market veteran with over 19 years of relevant experience. Before he joined Principal Mutual Fund AMC, he worked with leading players in India’s financial sector such as UTI Asset Management Company Ltd. (earlier IL&FS Asset Management Co. Pvt. Ltd.), ASK Raymond James Securities Pvt. Ltd., Reliance Capital Asset Management Ltd. and HSBC Asset Management (India) Private Ltd. He is B. Com graduate and a certified Chartered Accountant.
Mr. Pankaj Jain, Senior Fund Manager – Fixed Income
As the senior fund manager of fixed income products, Mr. Pankaj Jain plays a pivotal role when handling various debt products managed by Principal Mutual Fund, AMC. He has substantial experience in handling various debt schemes including dynamic, short-term and liquid schemes. Additionally, he has also some exposure in Forex schemes during his time at a previous organization. Prior to his association with Principal Mutual Fund AMC, he worked with leading Indian companies such as Thermax Ltd., State Bank of India (Treasury), Edelweiss Capital, Edelweiss Mutual Fund and Taurus Mutual Fund. He is a Mechanical Engineer from REC, Nagpur with a PG Diploma in Management from IIM, Bangalore.
Mr. Gurvinder Singh Wasan, Fund Manager – Debt
As one of the leading fund managers for the debt business of Principal Mutual Fund AMC, Mr. Gurvinder Singh Wasan plays a key role in ensuring that Principal’s investors get the best value for their debt investments. He has 10+ years of experience in key areas of financial markets such as structured finance, credit analysis, and fixed income markets. His prior employers in India’s financial sector include ICICI Bank Ltd. and CRISIL Ltd. His educational qualifications include a Master’s degree in Commerce and he is also a qualified CFA and CA.
Ms. Rupali Pandit, Equity Dealer
Ms. Rupali Pandit is an equity dealer with Principal Pnb Asset Management Company. She is a Commerce graduate with over 15 years’ experience in India’s equity market. Prior to her current role as an equity dealer with Principal Mutual Fund AMC, she worked with India’s leading fund houses such as GIC Mutual Fund, IL&FS Mutual Fund, and ABN AMRO Mutual Fund.
Mr. Prateek Jain, Fixed Income Dealer
Mr. Prateek Jain has over 5 years of experience in India’s financial sector and is currently a Fixed Income Dealer with Principal Mutual Fund AMC. In his earlier roles within the industry, he worked with financial industry giants such as Edelweiss Capital and Taurus Corporate Advisory services. Mr. Jain has a Post Graduate Commerce degree from Mumbai University and Bachelor’s Degree in Management from Narsee Monjee College of Commerce and Economics in Mumbai.