Burgundy INVESTMENT Perspective presentation-Apr-June 2015_01.pdf
Transcript of Burgundy INVESTMENT Perspective presentation-Apr-June 2015_01.pdf
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APRIL - JUNE, 2015
I N V E S T M E N T P E R S P E C T I V E S
V I E W S A N D R E C O M M E N D AT I O N S
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1
Indian equity markets continued their positive streak during the quarter
Markets remained volatile during the quarter due to key events like Union Budget, RBI policy action and monetary actions by
ECB and US Fed. The Q3 corporate results turned out to be a disappointment which further added to market volatility
Large Caps outperformed both Mid Caps and Small Caps during the quarter
Union Budget for FY 16 was presented in the back drop of huge expectations. The Union Budget was a step in the right
direction by boosting infrastructure investments, encouraging financial savings, taking measures to ease business and
maintaining fiscal credibility in the medium term We are positive on the equity markets on the back of reforms push agenda of the government, improving macro domestic
& external factors and likely re-rating of India
RBI also provided couple of off-cycle rate cuts (in Jan & Mar) of 25 bps each driven by strong disinflationary force and
expectation of better than reported fiscal consolidation
We maintain our outlook on Indian equity markets of Marginal Overweight. Investors can accumulate equities from a 3 to 5
year perspective
Bond yields could fall further in the medium to long term on the back of decline in inflation
Investors with an investment horizon of at least 18 to 24 months can look at investing in long term income, gilt and dynamic
bond funds
Short term income funds can be recommended for investors with an investment horizon of at least 12 to 18 months
We are positive from a medium to long term perspective with a pro-active inflation targeting RBI and a credible government
at the Centre
INVESTMENT PERSPECTIVES APRIL, 2015
MARKET OVERVIEW
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Sensex gained by 3.6% during 1stJanuary 2015 to 15thMarch 2015, the Mid Cap index gained by 3.4%, while Small Cap Index lost 0.13%
On the sector front, the gainers between 1stJanuary 2015 to 15thMarch 2015 were Healthcare (14.8%), Capital Goods (12.1%) & Realty(11.6%), while Metal (-10.7%), Oil &Gas (-4.9%) and Bankex (0.23%) were laggards
Among Sensex stocks Hindustan Unilever (24.2%), Sun Pharma (22.8%) & HDFC (18.2%) were the top performers during 1stJanuary 2015to 15thMarch 2015. While Tata Steel (-19.3%), Bajaj Auto (-17.6%) & Hindalco (-17%) were laggards
During 1stJanuary 2015 to 15thMarch 2015, FIIs were net buyers of equity to the tune of `44,433 Cr, DIIs were net sellers to the tune of`6,091 Cr and the domestic MFs bought `8,483 cr worth of equity
Equity markets continued to track both domestic and global cues during the quarter
As per the Economy Survey 2015, India is in a sweet spot due to lower deficits and high growth. It projected Indias GDP for FY 16 inthe range of 8.1-8.5%. As per IMF, India is poised to be the fastest growing economy in the world overtaking China
Inflation (CPI: 5.37%) was also within RBIs Jan 2016 CPI target of 6%
Globally, ECB started its Quantitative Easing (QE) programme in March to arrest slide in growth and inflation in the Euro Zone. US Fed in itsrecent minutes signalled that it is likely to raise interest rates at some point in 2015
With the major event of Budget behind, the Govt is likely to take steps such as implementation of GST, plugging the subsidy leakages usingAdhaar and Direct Benefit Transfer, enhance industrialization etc. to steer the economy on growth path
SEBIs reforms to allow raising municipal bonds, conversion of bad loans into equity would help deepen the financial markets and attract moreforeign inflows in the country
The next event lined up for the markets is Q4FY15 results and guidance (if any) given by the corporates about future. We expect the Q4 resultsto be muted and ~20% CAGR growth over next 2 years
We maintain our outlook of Marginal Overweight on Indian markets. At current levels we recommend accumulating equities with a 3 to5 year investment perspective
Large Cap, Diversified equity and Mid and small cap mutual funds are advisable
EQUITY MARKET RECAP
EQUITY MARKET OUTLOOK & RECOMMENDATIONS
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EQUITY MARKET UPDATE
INVESTMENT PERSPECTIVES APRIL, 2015
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COMPANY NAME
DISH TV LTD.
LARSEN & TOUBRO LTD.
`77
`
1,670
`96
`
2,000
CMP* TARGET PRICEHIGH CONVICTION STOCK IDEAS
MARKET CAPITALISATION VIEW
OVERALL VIEW ON EQUITY Marginal Overweight
*CMP is the Current Market Price as on 20th March 2015.High Conviction Stocks recommended with an Investment horizon of 12 months and above.
* Source: Axis Direct
LARGE CAP STOCKS
Marginal Overweight Marginal Overweight Marginal Overweight
MID-CAP STOCKS SMALL-CAP STOCKS
3
EQUITY BASED RECOMMENDATIONS
INVESTMENT PERSPECTIVES APRIL, 2015
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AXIS EQUITY FUND
1 YEAR 2 YEARS 3 YEARS
41.65 26.78
BIRLA SUN LIFE EQUITY FUND 60.70 36.39
FRANKLIN INDIA HIGH GROWTH COMPANIES FUND 84.49 46.40
HDFC CAPITAL BUILDER FUND 51.17 32.99
ICICI PRUDENTIAL DYNAMIC PLAN 38.64 29.02
KOTAK SELECT FOCUS FUND 59.55 35.38
FRANKLIN INDIA PRIMA PLUS FUND 60.25 34.90
FUND NAME
4*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
41.79 24.44 18.03CNX 500
56.61 32.52 23.55CATEGORY*
BIRLA SUN LIFE LONG TERM ADVANTAGE FUND 57.57 34.88
23.39
26.85
35.45
24.29
21.47
27.20
RELIANCE EQUITY OPPORTUNITIES FUND 61.35 34.61 27.88
26.21
25.95
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DIVERSIFIED EQUITY FUNDS PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
EQUITY BASED RECOMMENDATIONS
INVESTMENT PERSPECTIVES APRIL, 2015
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UTI EQUITY FUND 50.36 30.67
UTI OPPORTUNITIES FUND 43.74 27.47
AXIS FOCUSED 25 FUND
1 YEAR 2 YEARS 3 YEARS
47.78 25.97
BIRLA SUNLIFE FRONTLINE EQUITY FUND 49.05 30.08
BIRLA SUNLIFE TOP 100 FUND 49.90 31.59
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND 43.98 28.54
ICICI PRUDENTIAL TOP 100 FUND 39.66 27.23
SBI BLUECHIP FUND 54.09 31.15
SBI MAGNUM EQUITY FUND 45.78 26.11
23.50
19.96
_
25.22
24.96
21.92
21.10
27.11
20.70
FUND NAME
33.18 21.57 16.78
43.80 26.77 20.73
CNX NIFTY
CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
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LARGE CAP EQUITY FUNDS
EQUITY BASED RECOMMENDATIONS
INVESTMENT PERSPECTIVES APRIL, 2015
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
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AXIS MIDCAP FUND
1 YEAR 2 YEARS 3 YEARS
79.54 42.40 34.60
FRANKLIN INDIA PRIMA FUND 81.96 46.70 35.54
FRANKLIN INDIA SMALLER COMPANIES FUND 90.22 54.84 41.59
HDFC SMALL AND MID-CAP FUND 48.42 31.23 23.62
ICICI PRUDENTIAL VALUE DISCOVERY FUND 81.06 45.16 33.83
SBI MAGNUM GLOBAL FUND - 1994 76.16 42.92 32.82
UTI MIDCAP FUND 88.65 55.52 37.55
FUND NAME
63.30 30.47 18.87CNX MIDCAP
80.92 45.05 32.41CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
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EQUITY BASED RECOMMENDATIONS
SMALL & MIDCAP EQUITY FUNDS
INVESTMENT PERSPECTIVES APRIL, 2015
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
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FUND NAME
AXIS LONG TERM EQUITY FUND
1 YEAR 2 YEARS 3 YEARS
47.21 35.64
FRANKLIN INDIA TAXSHIELD
ICICI PRUDENTIAL TAX PLAN
34.87 25.90
34.54 25.99
FUND NAME
41.79 24.44 18.03CNX 500
58.94 34.95 25.80CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
70.70
33.39 26.00DSP BLACK ROCK TAX SAVER FUND 56.55
59.86
54.35
SBI MAGNUM TAXGAIN SCHEME 1993 33.64 25.1153.26
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EQUITY LINKED SAVINGS SCHEMES (ELSS)
EQUITY BASED RECOMMENDATIONS
INVESTMENT PERSPECTIVES APRIL, 2015
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
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FUND NAME
BIRLA SUN LIFE 95 FUND
1 YEAR 2 YEARS 3 YEARS
28.91 22.42
HDFC BALANCED FUNDICICI PRUDENTIAL BALANCED FUND
32.66 22.7529.57 23.90
FUND NAME
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
49.85
29.47 22.30FRANKLIN INDIA BALANCED FUND 48.65
51.8546.06
SBI MAGNUM BALANCED FUND 30.56 25.8348.70
TATA BALANCED FUND 33.76 26.3859.46
27.61 17.56 15.06CRISIL BALANCE FUND INDEX
47.15 27.98 21.60CATEGORY*
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BALANCED FUNDS
EQUITY BASED RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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Lower crude prices improve macros: limits CAD, eases subsidy burden and keeps inflation benign
9
DEBT AND MACROECONOMIC UPDATE
INVESTMENT PERSPECTIVES APRIL, 2015
IIP growth in FY15 (YTD January) at 2.5% despite
Consumer Durables segment contracting 14%
Improvement in Basic Goods (especially electricity) and
Capital Goods support growth
INDUSTRIAL PRODUCTIONINFLATION
RBI cuts off-cycle again: Repo rate lowered by
25 bps to 7.50%
CPI inflation though rises marginally in February, contained
at 5.4% YoY, Core inflation remains flat at 4.2%
Adoption of monetary policy framework with inflation at
4% +/-2%: Gradual decline over next 2 years, if realised,allows room for further cuts
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DEBT AND MACROECONOMIC UPDATE
INVESTMENT PERSPECTIVES APRIL, 2015
FISCAL DEFICIT
Passage of Insurance, Coal and Minerals related bills
sets Govts reforms ball rolling
Fiscal deficit target at 3.9% though higher than fiscal
consolidation path; higher capital expenditure and support
for reforms augurs well for Indias rating quality and rates
positives
Q3 CAD at 1.6% of GDP on increase in services
surplus and lower investment outflow
Lower cost of oil (net) imports matched by
increased gold imports in Q3. Increase in
banking capital drives BOP surplus
Low trade deficit for Jan and Feb at USD 7.3bn
and USD 6.8bn, respectively, suggests a marginal
CAD in Q3 given exports spike in March
CURRENT ACCOUNT
DEFICIT
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DEBT AND MACROECONOMIC UPDATE
INVESTMENT PERSPECTIVES APRIL, 2015
Excessively strong INR also likely to have played
a part in RBIs unscheduled easing
One measure sees INR as strong as in Apr 2013,
ahead of taper led sell-off
INR
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Yields on benchmark 10 yr paper (8.40% 2024) found support at 7.65%-7.70% despite the surprise rate cut by RBI
PSU banks were seen selling paper, while there was limited interest from other traders in current year GOI carried out debt switch with FY16 paper on RBI balance sheet. Limited OMO sale stock (FY17 and 18 papers only just enough for debt switch)
increase longer run supply
GOI H1 issuance calendar is at Rs. 3.6 tn, with higher supply of long end paper. 40 year paper sale is envisioned
Further cuts of 25-50 bps are likely in FY16, subject to continued reforms, progress on high quality consolidation, pass- through of past rate cuts, a
supportive monsoon and stable external conditions
Liquidity is likely to remain neutral in Q4, as RBI FX intervention is matched by government cash absorption to meet fiscal targets, as well as by seasonal
currency leakages. Liquidity is expected to improve sharply in mid Q1 2015, requiring RBI to absorb this through OMO sales
Despite the higher fiscal deficit announced in the Budget, the net borrowings for FY16 remain largely flat. The demand- supply dynamics for G-Secs
looks favourable for FY 16
Yields may be range bound in the near term. However, we are positive from a medium to long term perspective with a pro-active inflation targeting
RBI and a credible government at the Centre
Investors who have an investment horizon of at least 18 to 24 months can look at investing in long term income and gilt funds and dynamic bond funds
Investors can look at short term income funds with an investment horizon of at least 12 to 18 months
Short term funds, via active fund management, can take advantage of current yields by investing in G-Secs, corp. bonds, CPs & CDs to gain from high
accruals & capital appreciation, if any
DEBT MARKET OUTLOOKAND RECOMMENDATIONS
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DEBT AND MACROECONOMIC UPDATE
INVESTMENT PERSPECTIVES APRIL, 2015
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AXIS INCOME FUND
1 YEAR 2 YEARS 3 YEARS
15.30 9.80 _
IDFC SUPER SAVER INCOME FUND - INVESTMENT PLAN 15.81 9.46 10.39
KOTAK MAHINDRA BOND UNIT SCHEME 99 15.76 8.29 9.40
SBI MAGNUM INCOME FUND 13.22 7.71 9.44
TATA INCOME FUND 13.35 9.74 10.31
UTI BOND FUND 16.59 9.27 10.08
FUND NAME
14.88CRISIL COMPOSITE BOND FUND INDEX
15.31
9.25 9.26
CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
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LONG-TERM INCOME FUNDS PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
DEBT FUND RECOMMENDATIONS
INVESTMENT PERSPECTIVES APRIL, 2015
9.01 9.70
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BIRLA SUNLIFE GOVT. SECURITIES LONG TERM FUND
1 YEAR 2 YEARS 3 YEARS
18.32
IDFC GOVERNMENT SECURITIES FUND - INVESTMENT PLAN 17.02 10.48 11.49
10.29
KOTAK MAHINDRA GILT UNIT SCHEME 98 - INVESTMENT PLAN 18.13 8.18 9.67
RELIANCE GILT SECURITIES FUND 19.05 10.45 11.11
SBI MAGNUM GILT FUND - LONG TERM 21.36 12.83 12.45
TATA GILT SECURITIES FUND 18.14 11.19 10.83
FUND NAME
14.11 6.34 7.50CRISIL 10 YEAR GILT INDEX
18.41 9.84 10.09CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
9.61
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LONG-TERM GILT FUNDS
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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BIRLA SUNLIFE DYNAMIC BOND FUND
1 YEAR 2 YEARS 3 YEARS
15.40
HDFC HIGH INTEREST FUND 16.95 10.64 10.64
IDFC DYNAMIC BOND FUND 15.69 9.23 10.34
RELIANCE DYNAMIC BOND FUND 15.75 9.76 10.41
UTI DYNAMIC BOND FUND 14.82 11.07 10.88
FUND NAME
14.88 9.25 9.26CRISIL COMPOSITE BOND FUND INDEX
15.18 9.86 10.24CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
10.95 10.79
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DYNAMIC BOND FUNDS
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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AXIS INCOME SAVER
1 YEAR 2 YEARS 3 YEARS
21.42
BIRLA SUNLIFE MONTHLY INCOME PLAN II - WEALTH 25 PLAN 29.06 19.08
FRANKLIN INDIA MONTHLY INCOME PLAN 23.56 15.27
ICICI PRUDENTIAL MIP 25 25.16 15.75
IDFC MONTHLY INCOME PLAN 21.17 12.76
FUND NAME
17.43 10.95CRISIL MIP BLENDED INDEX
22.66 14.42CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
14.19
15.73
13.60
13.82
12.88
RELIANCE MONTHLY INCOME PLAN 25.02 14.84 13.06
10.50
12.76
11.95
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MIPS - AGGRESSIVE FUNDS
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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BIRLA SUNLIFE MONTHLY INCOME PLAN II - SAVINGS 5 PLAN
1 YEAR 2 YEARS 3 YEARS
18.44
ICICI PRUDENTIAL MONTHLY INCOME PLAN 21.16 13.31
SBI MAGNUM INCOME PLAN 20.30 11.98
FUND NAME
17.43 10.95CRISIL MIP BLENDED INDEX
18.50 12.18CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
12.35
11.98
12.09
10.50
11.10
11.39
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MIPS - CONSERVATIVE FUNDS
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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9 MONTHS I YEAR 2 YEARS
AXIS FIXED INCOME OPPORTUNITIES FUND
HDFC SHORT TERM PLAN
TATA SHORT TERM BOND FUND
UTI SHORT TERM INCOME FUND
FUND NAME
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
CRISIL SHORT TERM BOND FUND INDEX
-
10.41
9.56
9.88
9.80
9.96
-
11.20
10.67
11.01
10.49
11.08
-
9.35
9.76
9.61
9.54
9.30CATEGORY*
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SHORT-TERM INCOME FUNDS - AGGRESSIVE
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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9 MONTHS I YEAR 2 YEARS
AXIS SHORT TERM FUND
BIRLA SUNLIFE SHORT TERM FUND
HDFC SHORT TERM OPPORTUNITIES FUND
FUND NAME
CRISIL SHORT TERM BOND FUND INDEX
9.32
9.92
9.61
9.62
9.53
10.03
11.08
10.45
10.52
10.57
8.75
9.76
9.51
9.34
9.08CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
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SHORT-TERM INCOME FUNDS - CONSERVATIVE
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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AXIS LIQUID FUND
1 MONTH 3 MONTHS 6 MONTHS
8.43 8.46 8.65
BIRLA SUNLIFE CASH PLUS 8.43 8.45 8.63
HDFC LIQUID FUND 8.46 8.46 8.64
ICICI PRUDENTIAL LIQUID FUND 8.44 8.47 8.65
KOTAK FLOATER - SHORT TERM 8.49 8.48 8.66
RELIANCE LIQUID FUND - TREASURY PLAN 8.45 8.45 8.63
RELIANCE LIQUIDITY FUND 8.45 8.44 8.61
SBI PREMIER LIQUID FUND 8.43 8.41 8.59
UTI LIQUID FUND - CASH PLAN 8.39 8.43 8.61
FUND NAME
9.03 8.35 8.56CRISIL LIQUID FUND INDEX
8.22 8.22 8.39CATEGORY*
*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
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DEBT FUND RECOMMENDATIONS
LIQUID FUNDS PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
BIRLA SUNLIFE SAVINGS FUND
1 MONTH 3 MONTHS 6 MONTHS
9.43 8.13 9.07
FRANKLIN INDIA ULTRA SHORT BOND FUND 10.46 9.11 9.57
ICICI PRUDENTIAL FLEXIBLE INCOME PLAN 9.81 8.37 9.02
9.68 7.86 8.41RELIANCE MONEY MANAGER FUND
9.39 8.29 8.76TATA FLOATER FUND
8.53 8.52 9.05UTI TREASURY ADVANTAGE FUND
FUND NAME
9.03 8.35 8.56CRISIL LIQUID FUND INDEX
9.23 8.16 8.85CATEGORY*
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ULTRA SHORT-TERM FUNDS - CONSERVATIVE
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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*Category refers to Axis Banks internally defined peer group average.Data Source: ACE MF
FRANKLIN INDIA LOW DURATION FUND
1 MONTH 3 MONTHS 6 MONTHS
10.73 9.35 9.80
HDFC FLOATING RATE INCOME FUND - LONG TERM PLAN 7.45 8.06 8.79
FUND NAME
9.03 8.35 8.56CRISIL LIQUID FUND INDEX
9.37 9.17 9.37CATEGORY*
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ULTRA SHORT-TERM FUNDS - MODERATE
DEBT FUND RECOMMENDATIONS
PAST PERFORMANCE (CAGR% RETURNS AS ON 15th MARCH, 2015)
INVESTMENT PERSPECTIVES APRIL, 2015
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GDP and Inflation in New Series
SPECIAL ECONOMIC UPDATE
23INVESTMENT PERSPECTIVES APRIL, 2015
INFLATION - CPI
CPI revision aligns consumption basket to latest
consumption pattern
Base year revised from 2010 to 2012 (based on
consumption pattern of 2012)
Weight of food in New Series lower at 45.9% (compared
to 47.6% in Old Series), Fuel & Light lower at 6.8% (9.5%
in OS) while that of Services is higher at 28.3% (26.3% in OS)
Resorts to Geometric mean instead of Arithmetic mean:Lowers volatility and biases price readings downwards
by capturing shift to consuming lower variety products
during periods of price spikes
Headline Inflation reading lower in New Series in Dec 14
at 4.3% YoY (compared to 4.9% in Old series) primarily
due to lower inflation in Housing segment
GDP revision aligns methodology to international standard
Base year revised to 2011-12 (New Series) from
previous 2004-05 (Old Series)
GDP growth now refers to growth in GDP (GVA +
Indirect taxes) at Market Prices compared to growth in
GVA (Gross Value Added) in Old Series
Absolute GDP revised lower in New Series for FY12 to
FY14, however, growth rates move up New Series has increased coverage of companies and
incorporation of results of latest surveys on
Consumption, Employment, Economic units, and Debt
FY15 growth in New Series at 7.4% (Advance
Estimate); Industry and Services more than offset
weak Agriculture growth
GDP
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Axis Ban k rec omme nds tha t you independe ntly eva lua te par tic ula r invest ment s and str ate gie s and encour age s you to seek adv ice from a fin anc ial adv ise r reg ard ing the sui tab ili ty of suc h sec uri tie s and /or
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DISCLAIMER
INVESTMENT PERSPECTIVES APRIL, 2015