DOM Fund Manager Meeting February 19, 2015. EFM Visit ► Fund Closeout Workgroup.
Fund Manager Speak
-
Upload
vishnu-kumar -
Category
Documents
-
view
218 -
download
0
Transcript of Fund Manager Speak
-
8/3/2019 Fund Manager Speak
1/33
A Reliance Capital
Reliance Mutual Fund
Presents
Reliance Small Cap Fund
A Fund With
A Very Aggressive Investment Style
-
8/3/2019 Fund Manager Speak
2/33
A Reliance Capital
-
8/3/2019 Fund Manager Speak
3/33
q India Opportunity
q Why Invest in Small Caps
q Investment Case for Small Caps
q Success Essentials and Reliance Mutual Fund Advantage
q Reliance Small Cap Fund
Investment Strategy
Positioning
Product Features
Table Of Contents
-
8/3/2019 Fund Manager Speak
4/33
...despite concerns of coalition politics, bureaucracy & poor infrastructure
Estimated for 2009-2011Source: CIEC, RCAM Estimates
India Moving Towards Higher Growth Trajectory
-
8/3/2019 Fund Manager Speak
5/33
Estimated for 2010-2014
Source: CMIE, MOSL, RCAM Estimates
India - The Next Trillion Dollar Opportunity
q India took 60 years to get to its first USD 1 Trillion GDP in FY08, but the move to USD 2Trillion GDP will be in next 5-6 years, similar to that of China
q Due to the huge consumption and savings/investment boom, USD 2 Trillion GDP is not adestination, but a milestone in Indias ongoing journey towards USD 4 Trillion GDP in thesubsequent 5-7 years, and so on
INDIAS GDP IN USD TRILLION
-
8/3/2019 Fund Manager Speak
6/33
Presently, EM economies hold over 30%share in Global GDP, while their share inGlobal market cap is only 13%
Source: IMF GDP data, MSCI m-cap data, RCAM Estimates, DM : Developed Markets, EM: Emerging Markets
Period 1995-99 2000-04 2005-09 2009
Avg. World GDP $Bn 30,292 35,291 53,583 57,228
Proportion of the World Average GDP level (%)
DM countries 80.4 79.5 72.2 69.3
US 27.6 30.5 25.7 24.9
UK 4.4 4.9 4.6 3.8
Euro area 23.2 21.4 22.1 21.5
Japan 14.8 12.2 8.7 8.8
EM countries 19.6 20.5 27.8 30.7
Brazil 2.6 1.7 2.4 2.6
Russia 1.0 1.1 2.2 2.2
India 2.2 1.5 1.9 2.2
China 3.1 4.3 6.5 8.3
South Africa 0.5 0.4 0.5 0.5
Growing size of EM economy andfading distinction between EMand DM economies should lead toincreased capital allocation to EMeconomies
Period 1995-99 2000-04 2005-09 2009
Avg.World M-Cap 14,047,039 17,734,308 25,689,296 24,630,640
Proportion of the Average World M-Cap (%)
DM markets 94.1 95.3 90.1 86.8
United States 46.6 51.9 44.3 42.5
United Kingdom 9.7 10.4 9.6 9.0
Europe (ex-EM) 30.0 29.1 29.0 27.3
Japan 13.8 9.0 9.5 8.6EM markets 5.9 4.7 9.9 13.2
Brazil 0.7 0.4 1.3 2.2
Russia 0.2 0.2 0.8 0.8
India 0.4 0.3 0.7 1.0
China 0.0 0.3 1.5 2.4
Korea 0.6 0.8 1.4 1.7
MSCI Indices used as proxy for market-cap data (Units: USD million)
Emerging Markets To Attract Higher Inflows
-
8/3/2019 Fund Manager Speak
7/33
q In 2014, BRICs combined GDP will be equal to US GDP
q At Market Cap GDP ratio of 1, BRIC countries will have a market cap of USD 16.36 Trillion
q Significant FII money will flow into the BRIC markets India will gets its share of investments
Source - RCAM Estimates, *FII numbers are approximations, BRIC Brazil, Russia, India, China
Investments Will Flow To IndiaUSD (Trillion) CY2008 CY2014
BRIC
GDP 8.29 16.36
Market Cap 5.61 16.36
FII Investments* 1.00 ??
US
GDP 14.20 16.47
Market Cap 12.09 16.47
FII Investments* 10.64 ??
-
8/3/2019 Fund Manager Speak
8/33
q Currently market is evenly poised with positive bias
q India has emerged stronger from the global slump and is back on track to grow inexcess of 7-8% per annum
q For a sustained long term growth, the 3 growth drivers are in place:
Savings Domestic savings are among the highest in the world Consumption Set to explode
Investments At 34% of the GDP, again among the highest in the world
q Policy announcements will have significant impact on the direction of the market
q Themes for the coming year
Big valuation disparity among large, mid caps & small caps. Opportunity for alphacreation
Stock selection will be the key
Investment Outlook
Source: Bloomberg, RCAM Estimates
-
8/3/2019 Fund Manager Speak
9/33
Why Invest In Small Caps?
-
8/3/2019 Fund Manager Speak
10/33
Key Benefits Of Investing In Small Caps
Presence in Emerging Sectors Large Universe
Higher Earnings Growth
Und
er-Resea
rched
High
GrowthP
otential Scop
eof
Re-Rati
ng
Entrepreneuria
lPassion
SmallCap
-
8/3/2019 Fund Manager Speak
11/33
Todays
SmallCaps .
Are Tomorrows
PotentialMid Caps,
Which MayEventually Become
Large Caps
StartUp
Growth
Maturity
Small
Caps
Mid Caps Large
Caps
Emergence Of Small Caps To Large Caps
-
8/3/2019 Fund Manager Speak
12/33
Research Available
Small Cap
Limited Moderate Widely
Very
Limited
Moderate Large
Low Moderate Fair
Re Rating Potential For Small Caps
Mid Cap Large Cap
InstitutionalOwnership
Valuation Multiple
-
8/3/2019 Fund Manager Speak
13/33
q Indian entrepreneurial skills / mindset / spirit has been globally acknowledged over a
period of time
q End of License Raj has opened many business opportunities for entrepreneur
q Multiple sources of fund raising at various stage of business has been of tremendous
help
q Competitive talent is being attracted & retained by rewarding performance linked
incentives, ESOPs, etc
q In todays economic environment, individuals with entrepreneurial mindset are exploringnew business opportunities that will not only survive in a recession but will also thrive
q Thus, Emerging India is offering various growth opportunities to entrepreneurs, be it first
generation entrepreneur or otherwise
Entrepreneurial Passion
-
8/3/2019 Fund Manager Speak
14/33
q In a developing economy like India, multiple sectors provide opportunities for growth
Example: Retailing, Food Processing, Pharmaceuticals, Media & Entertainment,
Real Estate, Education, Hospitality etc
q Once established and successful, ramp up can be rapid
q Thus, emerging sectors are true reflection of entrepreneurial spirit, new opportunities
and creation of global behemoths
Emerging Sectors Offer Opportunities For Growth
-
8/3/2019 Fund Manager Speak
15/33
Dynamics Of Multi - Baggers
Market Capitalization = Net Profits X PerceptionMarket Price = EPS X PE
High Growth Potential / Scalability
Differentiated Business Model
Emergence of Educated &
Passionate Management
Niche focus & ability to attract
talent in form of Quasi
Entrepreneurs & Stock Options
Under Ownership, Under
Researched & Under Covered
Understanding Value of Market Cap
Various Modes of Fund Raising
Emerging Sectors start small
Technology, Retail, Real Estate,
Insurance etc
This simultaneous impact on both EPS & PE creates a MULTI BAGGER
-
8/3/2019 Fund Manager Speak
16/33
q There is no scientific methodology to classify Large Caps, Mid Caps and Small Caps
but there are pre-defined indices on BSE & NSE
q Mentioned below is the categorization of the same on the basis of market capitalization
as on August 2010
Indices CategorizationNo. Of
Companies
Index Market CapRange
(Rs. Crs)
Total MarketCap approx
(Rs Crs)
BSE SENSEX Large Cap 30 15,300 329,400 2,761,687
BSE Mid Cap Mid Cap 273 1000 12,350 1,078,821
BSE Small Cap Small Cap 534 170 2300 351,840
Source: www.bseindia.com, 5th August 2010 , Index Market Cap Range given implies companies with the smallest market cap and largest market cap in that particularindices respectively as on August 5, 2010. Small Cap stocks for the purpose of the Reliance Small Cap Fund are stocks whose market capitalization is in between thehighest and lowest market capitalization of companies on BSE Small Cap Index
How Small Caps Are Classified ?
http://www.bseindia.com/http://www.bseindia.com/ -
8/3/2019 Fund Manager Speak
17/33
Source : www.bseindia.com, Capitaline Neo as on 6th August 2010
q 4300+ Cos. listed on Bombay Stock Exchange
q1383 Cos. with Market Capitalization of over Rs 100 Cr
q 1065 Cos. with Market Capitalization of over Rs 200 Cr
q 664 Cos. with a Sales Turnover of over Rs. 200 Cr
q 613 Cos. with an Operating Profits over Rs 25 Cr
q 548 Cos. with net profits of over Rs 10 Cr
The Indian Small Cap Opportunity
http://www.bseindia.com/http://www.bseindia.com/ -
8/3/2019 Fund Manager Speak
18/33
Small Caps are still available at better valuations compared to Large Caps
Investment Case For Small Caps
Performance Over The Last 2 Years (31st July 08 - 30th July 10)
Index CAGR (%)Outperformance of
BSE SMALL CAPRelative To Indices
S&P CNX Nifty 11.32 5.00
BSE SENSEX 11.58 4.74
BSE MIDCAP 15.37 0.95
BSE SMALL CAP 16.32
Valuation As On 31st July 2010
Index P/E Price To Book Value
S&P CNX Nifty 22.31 3.78
BSE SENSEX 21.20 3.40
BSE MIDCAP 19.24 2.90
BSE SMALL CAP 15.66 2.34
Source : www.bseindia.com, Capitaline Neo as on 6th August 2010
http://www.bseindia.com/http://www.bseindia.com/ -
8/3/2019 Fund Manager Speak
19/33
Examples of how Small Cap companies have emergedas Large Cap companies over a period of time
creating wealth for the shareholders
The companies chosen herein are purely for illustrative purpose only Reliance Mutual Fund or Reliance Small Cap Fund may or may not invest in the shares of these companies The investment decision of Reliance Mutual Fund to invest in any company is based on several factors including
research, market potential, future outlook etc
-
8/3/2019 Fund Manager Speak
20/33
Company Name
Market Capitalization(July 30th 2001)
Market Capitalization(July 30th 2010)
Outperformance relative toBSESENSEX
(July 30th 2001- July 30th 2010)(Rs. Cr) (Rs. Cr)
Pantaloon Retail (India) 19.98 9457.13 19,316%
PATRs.140.58 Crs(30th June 2009)
PATRs.6.40 Crs
(30th June 2001)
Increase
dBy22T
imes
Retailing
Source as on 31st July 2010, Capitaline Neo
-
8/3/2019 Fund Manager Speak
21/33
Source as on 31st July 2010, Capitaline Neo
PATRs.1,195.53 Crs(31st March 2009)
PATRs.13.57 Crs
(31st March 2003)
Increased
By88Tim
es
Realty - Construction
Company Name
Market Capitalization(July 31st 2003)
Market Capitalization(July 30th 2010)
Outperformance relative toBSESENSEX
(July 31st 2003- July 30th 2010)(Rs. Cr) (Rs. Cr)
Unitech 72.44 20,457.53 17,550%
-
8/3/2019 Fund Manager Speak
22/33
Source as on 31st July 2010, Capitaline Neo
PATRs.140.33 Crs(31st March 2009)
PATRs.14.00 Crs
(31st March 2006)
Increased
By10Tim
es
Computers - Education
Company Name
Market Capitalization(Jan 31st 2006)
Market Capitalization(July 30th 2010)
Outperformance relative toBSESENSEX
(Jan 31st 2006- July 30th 2010)(Rs. Cr) (Rs. Cr)
Educomp Solutions 447.20 5,797.46 904%
-
8/3/2019 Fund Manager Speak
23/33
Source as on 31st July 2010, Capitaline Neo
PATRs.130.03 Crs(31st March 2010)
PATRs.30.92 Crs
(31st March 2002)
IncreasedBy4
Times
Healthcare
Company Name
Market Capitalization(Jan 31st 2001)
Market Capitalization(July 30th 2010)
Outperformance relative toBSESENSEX
(Jan 31st 2001- July 30th 2010)(Rs. Cr) (Rs. Cr)
Apollo Hospitals 715.31 4,841.08 20%
-
8/3/2019 Fund Manager Speak
24/33
Source as on 31st July 2010, Capitaline Neo
PATRs.46.71 Crs
(31st March 2010)
PATRs.0.94 Crs
(31st March 2003)
Increased
By49Tim
es
FMCG Food & Dairy Products
Company Name
Market Capitalization(July 1st 2003)
Market Capitalization(July 30th 2010)
Outperformance relative toBSESENSEX
(July 01st 2003- July 30th 2010)(Rs. Cr) (Rs. Cr)
Zydus Wellness 2.31 2,015.23 9,924%
-
8/3/2019 Fund Manager Speak
25/33
q Stock Selection
Small Cap investing is all about stock selection rather than asset allocation
q Stock selection based on
Size of opportunity
Possible higher growth and its sustainability
Emerging theme / sector (Example: real estate, retail, food processing etc)
Zeal of management to scale and grow
qStock price movement tend to be more volatile
Limited research
Lesser/negligible institutional ownership
q However the sharp volatility subsides over a longer period and makes way for
higher profitability
Dynamics Of Successful Small Cap Investing
-
8/3/2019 Fund Manager Speak
26/33
q Our Expertise
Bottom up approach has been strongly advocated as the key investment strategy
of
Reliance Mutual Fund. Well-experienced team of investment professionals having
Collective experience of over 150 years in Indian equities
Most members individually tracking Indian equity markets for well over 15
years
In depth research capabilities to identify small caps with huge growth potential
Our research capability empowers the Fund Manager to be BOLD in identifying high
growth potential stocks & manage the RISK associated with it
Only fund in RMFs product basket with a pre-dominant investment focus on
smallPast Performance may or may not be sustained in future
Reliance Mutual Fund Advantage
-
8/3/2019 Fund Manager Speak
27/33
q With an endeavor to maximize returns & minimize risks by reasonable diversification ,
primary focus would be on small cap stocks
Investment in Equities of Small Cap Companies : 65%-100%*
Investment in Equities of any other Companies : 0%-35%*
Investment in Debt & Money Market Securities : 0% - 35%*
q Small cap stocks, for the purpose of the fund are defined as stocks whose market
capitalization is in between the highest & lowest market capitalization of companies on
BSE Small Cap Index
q Investment with a longer term horizon
* Please refer detailed asset allocation on slide no 29. Market Capitalization: Market value of the listed company, which is
calculated by multiplying its current market price by number of its shares outstanding
Investment Philosophy
-
8/3/2019 Fund Manager Speak
28/33
q A very aggressive small cap oriented fund
q A relatively high risk/high return oriented fund characterized by volatility which will get
smoothened out over long term investment horizon
q Reliance Small Cap Fund will be a vital part of an investors core portfolio that aims
to create an alpha for their investments
Positioning Of Reliance Small Cap Fund
Risk
Returns
High Medium Low
HighReliance Small
Cap Fund
Medium
Low
-
8/3/2019 Fund Manager Speak
29/33
Equity & equity related securities of small cap companies including derivatives#- 65%-100%
Equity & equity related securities of any other companies including derivatives# -0%-35%
Debt & Money Market Securities **(including investments in securitised debt)- 0% - 35%
** including securitised debt up to 30%# The Scheme proposes to invest at least 65% of the corpus in Equity & equity related instruments of smallcap companies which may go upto 100% of the corpus. The investment in Equity & equity related instrumentsof any other companies other than small cap companies will be in the range of 0-35% of the corpus
BSE Small Cap Index
Proposed AssetAllocation
Fund Manager Sunil Singhania
Scheme Features
Investment Objective
The primary investment objective of the scheme is to generate long term capitalappreciation by investing predominantly in equity and equity related instrumentsof small cap companies and the secondary objective is to generate consistentreturns by investing in debt and money market securities
Benchmark
New Fund Offer Price: Rs.10/- per unit
-
8/3/2019 Fund Manager Speak
30/33
Load Structure : During New Fund Offer &Continuous Offer including SIP Installments
Entry Load: Nil
Exit Load: 2% If redeemed or switched out on or before completion of
12 months from the date of allotment of units
1% If redeemed or switched out after 12 months but on or
before completion of 24 months from the date of allotment
of units
Nil If redeemed or switched out after the completion of 24months from the date of allotment of units
In accordance with the requirements specified by the SEBI circular no. SEBI/IMD/CIRNo.4/168230/09 dated June 30, 2009 no entry load will be charged for purchase / additional
purchase / switch-in accepted by the Fund. Upfront commission shall be paid directly by theinvestor to the AMFI Registered Distributor based on the investors assessment of variousfactors including the services rendered by the AMFI Registered Distributor.
Choice of Plans/Options
Growth Plan:Growth & Bonus Option
Dividend Plan :
Dividend Payout OptionDividend Reinvestment Option
Minimum Application Amount
Rs.5000 & in multiples of Re. 1 thereafter
Additional Purchase AmountRs.1000 (plus in the multiple of Re.1)
SIP
Mode of Payment : Auto Debit/ECS
Scheme Features
-
8/3/2019 Fund Manager Speak
31/33
A Reliance Capital
Thank You
-
8/3/2019 Fund Manager Speak
32/33
Click icon to add table
-
8/3/2019 Fund Manager Speak
33/33
Click icon to add table
The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the readers. This information is
meant for general reading purpose only and is not meant to serve as a professional guide for the readers. This document has been prepared on the basis of publicly
available information, internally developed data and other sources believed to be reliable. The Sponsor, The Investment Manager, The Trustee or any of their respective
directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information.
Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given fair and
reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should
rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed investment decision
before making any investments. None of The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall beliable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this
material.
The Sponsor, The Investment Manager, The Trustee, any of their respective directors, employees including the fund managers, affiliates, representatives including persons
involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specific
sectors mentioned herein.
Terms of issue and mode of sale and redemption of units: The Scheme will offer for Subscription/ Switch-in and Redemption / Switch-out of Units on every Business Day
on an ongoing basis, within five business days of allotment. The redemption or repurchase proceeds shall be dispatched to the unitholders within 10 Business Days from the
date of redemption or repurchase.
Investor benefits and general services offered: The Scheme offers Systematic Investment Plan, Auto Switch facility, Online Transactions and Reliance Any Time Money
Card during the NFO period. The NAV of Scheme shall be published on a daily basis by the Mutual Fund at least in two daily newspapers and will also uploaded on the AMFI
site www.amfiindia.com and Reliance Mutual Fund site i.e. www.reliancemutual.com.Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882. Sponsor: Reliance Capital
Limited. Trustee: Reliance Capital Trustee Company Limited. Investment Manager: Reliance Capital Asset Management Limited (Registered Office of Trustee &
Investment Manager: Reliance House Nr. Mardia Plaza, Off. C.G. Road, Ahmedabad 380 006). The Sponsor, the Trustee and the Investment Manager are incorporated
under the Companies Act 1956. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh
towards the setting up of the Mutual Fund and such other accretions and additions to the corpus.
Risk Factors: Mutual Funds and securities investments are subject to market risks, and there is no assurance or guarantee that the objectives of the Scheme will
be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces
affecting the securities market.Reliance Small Cap Fund is only the name of the Scheme and does not in any manner indicates either the quality of the Scheme;
its future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The NAV of the Scheme
may be affected, interalia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. There are various risks
associated with investing in Equities, Bonds, Foreign Securities, investing and use of Derivatives, Securitised Debt and Short Selling & Securities Lending. For Scheme
Disclaimers
http://www.amfiindia.com/http://www.reliancemutual.com/http://www.reliancemutual.com/http://www.amfiindia.com/