MONTHLY BRSTBRSTBRS Communique BRvember … · checked over longer time frames,” said Harish Rao,...

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(Continued overleaf)

Dear Investors and My Dear Advisor Friends,

This month instead of writing a newsletter to you, I am taking the liberty of reproducing with permission extracts of an interesting article written by my friend Kayezad – Editor – Mutual Funds from one of the leading newspapers Mint. I find it extremely useful and I believe it would serve as very interesting reading.

Nearly eight years after it first initiated an attempt to standardise fund factsheets, the Association of Mutual Funds of India (AMFI); the Rs.13-trillion Indian mutual fund industry’s trade body sent out revised guidelines on how to standardise factsheets to all fund houses. This time, it has the blessings of the capital market regulator, Securities and Exchange Board of India’s (SEBI). In a circular dated 14 September 2015, a copy of which is with Mint, AMFI said that SEBI had observed that there was lack of uniformity despite AMFI having urged fund houses earlier. The new factsheet format has been effective from October 2015. Different ways of giving information, the circular attributed SEBI as having observed, could be confusing

to the investors.

We agree. Before you invest in a mutual fund (MF) scheme, it’s best to get to know as much as possible about it. Where it will invest your money, how good its performance has been, what is its objective and so on is just some of the information you’d like to get. A scheme information document (SID; formerly known as offer document) is always a good point to start. But the SID only tells you what the scheme will do; that’s not enough if you wish to invest in a scheme that is already in existence. Also, if you are already invested in a scheme and wish to check its progress, SID is not enough. Here’s where a fund factsheet comes into play.

Past performance

This is your starting point. Although past performance doesn’t guarantee future returns, it gives you a good indication of how your fund is likely to perform, and its pedigree. In 2011, SEBI came out with a detailed set of guidelines as to how fund houses should advertise their scheme performances.

For instance, if a scheme has been in existence for at least three years, it has to give returns of unique 12-month periods for the past three years, both in terms of how a standard investment of Rs.10,000 has grown in such time periods and in percentage terms. “All schemes are also mandated to give benchmark indices returns. You need to see if your funds beat the benchmark returns over longer time over periods of, say, two, three, five and 10 years,” said Gajendra Kothari, managing director and chief executive officer, Etica Wealth Management Pvt. Ltd.

Helpful Information

Go through a scheme’s factsheet to find information that helps you with investment decisions. Here are few examples

Sector allocation: Will show an equity scheme’s diversification and cash holding

1-year 3-year 5-year Since Inceptions

Total amount invested (`) 120,000 3,60,000 600,000 2,510,000

Total value as on Sep 30,2015(`) 122,613 523,323 1,006,940 4,4776,521

Returns 4.08% 25.92% 20.85% 23.15%

Total value of B: CNX 500 115,780 443,616 814,205 12,464,544

B: CNX 500 returns -6.48% 14.07% 12.17% 13.47%

Total value of AB: CNX Nifty 113,491 420,797 774,864 10,924,381

AB: CNX Nifty returns -9.94% 10.42% 10.18% 12.44%

B: Benchmark, AB: Additional Benchmark, Past performance many or may not be sustained in future Returns greater than 1 year period are compounded annualized Dividends assumed to be reinvestment and bonus us adjusted. Due to difference in asset allocation or investment strategy, inception dates, performance are not strictly comparable.

Expense ratio: Helps youchoose between direct anddistributor plans for equity

and debt funds.Expense ratio#

2.28%Expense ratio#

(Direct)0.97%

#Actual average expense charged for September 2015. The above ratio includes service tax on investment management fees. The above ratio also includes proportionate charge in respect of sales beyond T-15 cities.

Performance : See how Rs. 10,000 invest in systematic investment plan has returned this helps you check if the equity or debt fund beats benchmark over longer periods.

25.89%

10.98%

9.70%

7.29%5.54%

40.60%Banks

Software

Pharmaceuticals

Auto

Auto ancillaries

Other

22.27%

65.71%

3.36% 8.65%CARE AAA/CARE AAA(SO)/CRISIL AAA/SOVEREIGN (includes

call, cash and other current assets)

BWR AA- (SO)BWR AA+(SO)/CARE AA/CARE AA-/CARE

AA (SO)/ CRISIL AA-/FITCH AA-/ICRA AA/ICA AA-

BWR A/BWR A- (SO)/BWR A+(SO)/CARE A/CARE A+/CARE

A+(SO)/CRISIL A/CRISIAL A-/CRISIL A+/ICRA A+/IND A-/IND A+

PRIVATE RATING

Composition by rating: Especially useful for debt fund, this indicates the credit rating profile of a scheme.

Source : Mint research

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Although SEBI has prescribed for three unique, one-year time periods, many fund houses go an extra mile and give past performances across different time periods. Some others don’t. “The new method that SEBI had advocated doesn’t give a true picture of long-term wealth creation. Performance should be checked over longer time frames,” said Harish Rao, coach and trainer at financial planning training unit, Simple Equations.

Portfolio

You may have invested in an MF because you did not want to or could not pick stocks and bonds on your own. Either ways, one should check the scheme’s portfolio once in a while. Primarily, check whether your fund is adequately diversified across scrips and sectors. If you have invested in debt funds, take a look at credit profile. The new AMFI circular has recommended that fund houses present the credit rating profile and asset-wise breakup in either a tabular or graphical format.

But that may not be enough. “Often, investors look at rating profiles and think that XYZ company or ABC company is not a candidate for default. One doesn’t lose money only due to default; one can lose money even on downgrades, albeit not of the same magnitude,” said Aashish P. Somaiyaa, managing director and chief executive officer, Motilal Oswal Asset Management Co. Ltd. He suggests investors should also look at a debt fund’s exposure to “troubled sectors such as weaker non-banking financial companies and banks, global commodities, infrastructure, real estate, retailing and so on.”

Expenses

Take a look at the expense ratio, especially if you are invested in a debt fund. The lower a debt fund’s expense ratio, the better it is for you. “I would like to see if it (expense ratio) is in line with the industry (average) numbers, both for the regular (distributor) and the direct plans,” said Kothari.

At the same time, keep a track of the corpus. A drastic or a continuous fall in corpus should raise red flags. There may have been unavoidable factors that led to the steep reduction in corpus, but do check with your financial planner at least. “In debt funds, there is comfort to be had in a large sized fund. In fact, when institutional investors invest in debt funds, they take a look at fund sizes and avoid small-sized ones,” said Rao.

Other details

Some investors like to look at the dividend track record of a scheme, said Rao; something that factsheets provide. Although dividends come out of the scheme’s profits, it gives some comfort to those who want regular payouts from funds, especially senior citizens.

Most factsheets give out dividend details towards the end. “Predictability of dividends has a charm for some elderly investors. Some schemes have certain regularity in their dividend distribution pattern. Although dividends don’t mean you are getting extra money, for some investors that—and a pattern—is an attraction,” said Rao. Most factsheets also have market commentary at the beginning, which tells you how the markets behaved in the preceding month. You can skip this as the language of most market commentaries leave much to be desired.

“Some 40-odd fund houses write market updates. This has nothing to do with the investor or her goals. Stocks create wealth from earnings of companies but we (fund industry) write market updates. These updates make investors believe that returns are made from markets, whereas the actual role of markets is just to provide liquidity and price discovery. If the factsheet commentary is relevant to an investor’s perspective, then he should read it; otherwise, not,” said Somaiyaa.

Frequency of checking

Most experts advocate a regular check, though you shouldn’t go overboard. While Somaiyaa and Kothari feel a quarterly check is required, according to Rao, a half-yearly check will suffice. So, keep an eye on your factsheet and sit with your adviser or financial planner, if you have one, to get more clarity on how the scheme is doing.

Happy Investing,

Aashish P SomaiyaaManaging Director & CEO

Disclaimer: The graph is used to explain the concept and is for illustration purpose only and should not be used for development or implementation of an investment strategy. The sector mentioned herein are for general and comparison purpose only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. Past performance may or may not be sustained in future.

BRSTBRSTBRSTBRSTBRST

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Value Strategy

The Strategy aims to benefit from the long term

compounding effect on investments done in good

businesses, run by great business managers for

superior wealth creation.

Strategy Objective

3Portfolio Management Services | Regn No. PMS INP 000000670

Investment Strategy

• Value based stock selection

• Investment Approach: Buy & Hold

• Investments with Long term perspective

• Maximize post tax return due to Low Churn

Details

Fund Manager : Manish Sonthalia

Strategy Type : Open ended

Date of Inception : 24th March 2003

Benchmark : CNX Nifty

Investment Horizon : 3 Years +

Subscription : Daily

Redemption : Daily

Valuation Point : Daily

The Above strategy returns are of a Model Client. Returns of individual clients may differ depending on factors such as time of entry/exit/ additional inflows in the strategy. The Above returns are calculated on NAV basis and are based on the closing market prices as on 31st October 2015. Past performance may or may not be sustained in future. Returns above 1 year are annualized. Please refer to the disclosure document for further information.

Key Portfolio Analysis

Standard Deviation (%)

Beta

23.91

1.00

Performance Data CNX NiftyValue Strategy

21.46

0.81

Data as on 31st October 2015


Value Strategy CNX NiftyAll Figures in %

Period

% o

f re

turn

s

Top Sectors

Sector Allocation % Allocation*

*Above 5% & Cash

Banking & Finance

Auto & Auto Ancillaries

Pharmaceuticals

Oil and Gas

Infotech

FMCG

Alcoholic Beverages and Distilleries

Cash

30.82

27.90

11.54

6.80

6.43

6.34

5.10

0.19


Top Holdings

Particulars % Allocation*

*Above 5%

Sun Pharmaceuticals

HDFC Bank

Eicher Motors

Bosch

Housing Development Finance Corporation

Bharat Petroleum Corporation

Tata Consultancy Services

Asian Paints

Kotak Mahindra Bank

State Bank Of India

United Spirits

11.54

10.47

9.83

8.83

8.08

6.80

6.43

6.34

6.17

6.10

5.10


10.17

30.38

20.01

16.57

12.14

26.78

-1.27

13.5912.95

10.75

6.03

17.9

-5

0

5

10

15

20

25

30

35

1 Year 2 Year 3 Year 4 Year 5 Year Since Incep�on*


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Next Trillion Dollar Opportunity Strategy


Investment Strategy

• Stocks with Reasonable Valuation

• Concentration on Emerging Themes

• Buy & Hold Strategy

Details



Date of Inception : 11th Dec. 2007

Benchmark : CNX Midcap



Redemption : Daily


Strategy Objective

The Strategy aims to deliver superior returns by investing in stocks from sectors that can benefit from the Next Trillion Dollar GDP growth.

It aims to predominantly invest in Small and Mid Cap stocks with a focus on identifying potential winners that would participate in successive phases of GDP growth.

Top Sectors

Banking & Finance


FMCG

Oil and Gas

Engineering & Electricals

Diversified

Cash

27.23

24.29

18.59

10.57

6.29

6.09

0.28


*Above 5% & CashData as on 31st October 2015

Top Holdings

Eicher Motors

Bajaj Finance

H P C L

Page Industries

Bosch

Voltas

Max India

Cummins India


16.39

10.62

10.57

9.41

7.24

6.09

5.83

5.36

*Above 5%Data as on 31st October 2015



Beta

22.96

1.00

Performance Data CNX MidcapNTDOP

18.38

0.70


Period

% o

f re

turn

s

NTDOP Strategy CNX Midcap All Figures in %



34.34

51.27

38.1634.77

24.01

18.03

13.57

33.53

19.89

16.29

7.185.82

0

10

20

30

40

50

60

1 Year 2 Year 3 Year 4 Year 5 Year Since Inception *


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India Opportunity Portfolio Strategy

5

Investment Strategy

• Buy Growth Stocks across Market capitalization which have the potential to grow at 1.5 times the nominal GDP for next 5-7 years.

• BUY & HOLD strategy, leading to low to medium churn thereby enhancing post-tax returns

Details

Fund Manager : Varun Goel


Date of Inception : 11th Feb. 2010

Benchmark : BSE 200



Redemption : Daily


Portfolio Management Services | Regn No. PMS INP 000000670

Strategy Objective

The Strategy aims to generate long term capital

appreciation by creating a focused portfolio of

high growth stocks having the potential to grow

more than the nominal GDP for next 5-7 years

across market capitalization and which are

available at reasonable market prices.

Top Sectors

Banking & Finance


Pharmaceuticals

Oil and Gas


FMCG

Cash

32.98

16.86

16.22

10.39

6.58

5.10

1.15



Top Holdings


12.40

10.39

9.24

7.85

6.98

6.73

6.58

5.61

5.32

5.10

*Above 5%

Bajaj Finance

Hindustan Petroleum Corporation

Lupin

Eicher Motors

Ajanta Pharma

HDFC Bank

Larsen & Toubro

Housing Development Finance Corporation

State Bank Of India

Page Industries




Beta

16.25

1.00

Performance Data BSE 200IOPS

14.89

0.79Data as on 31st October 2015

% o

f re

turn

s

India Opportunity Portfolio Strategy BSE 200 All Figures in %

Period



15.71

25.88

18.17 17.17

8.39

13.34

2.13

17.39

14.56

12.00

6.02

9.42

0.00

5.00

10.00

15.00

20.00

25.00

30.00

1 Year 2 Year 3 Year 4 Year 5 Year Since Incep�on


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Focused Series IV - Flexi Cap Strategy

6

Investment Strategy

• Active Equity Allocation between Mid caps & Large caps

• Active Asset Allocation calls between Cash and Equity

• Strategy will follow a policy of profit booking with predefined price targets

• When the Client’s AUM appreciates by 15%, the appreciation amount will be automatically paid-out.

Details

Portfolio Manager : Kunal Jadhwani


Benchmark : BSE 200

Investment Horizon : 12 – 18 Months


Redemption : Daily



Strategy Objective

The Strategy aims to generate superior returns over a medium to long term by investing in only 8-10 companies across market capitalization. The Fund Manager will take active asset allocation calls between cash & equity. The strategy will also take active equity allocation calls between investments in large caps & mid caps & it will follow a policy of profit booking with predefined price targets.

Focused Series - IV BSE 200 All Figures in %

Period

% o

f re

turn

s

Top Sectors

Banking & Finance


FMCG


Pharmaceuticals

Cash

28.73

27.63

17.29

12.81

6.00

0.06



Top Holdings

Page Industries

Kotak Mahindra Bank

Eicher Motors

Bosch

HDFC Bank

Cummins India

Ipca Lab


17.29

15.85

14.73

12.91

12.89

7.99

6.00




Beta

16.42

1.00

Performance Data BSE 200Focused Series - IV

15.48

0.76




17.86

33.16

29.29

25.05

13.4414.89

0.35

16.91

14.3612.09

6.018.12

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00



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Focused Series V - A Contra Strategy

7

Investment Strategy

• Buy and hold philosophy – low portfolio churn

• Follows the principle to pick best rather than diversification

• Concentrated Strategy Structure of less than 10 stocks

• Investment Horizon : Medium to Long term

Details


Date of Inception : 27th Sept. 2010

Benchmark : BSE 200

Investment Horizon : 2 to 3 Years


Redemption : Daily


Top Holdings

Bharat Forge

Bharat Petroleum Corpn.

Kotak Mahindra Bank

Max India

Eicher Motors

Petronet LNG

ITC

Triveni Turbine

J&k Bank


14.19

14.16

14.11

12.72

9.45

9.00

8.54

7.24

6.79

*Above 5%


% o

f re

turn

s

Focused Series - V BSE 200 All Figures in %

Period

Top Sectors

Banking & Finance


Oil and Gas


FMCG

Cash

33.61

23.65

23.16

9.89

8.54

1.15


*Above 5% & Cash

Strategy Objective

The strategy aims to invest in fundamentally sound companies that can benefit from changes in a company's valuation which reflects a significant change in the markets view of the company over a horizon of three years. The Strategy focuses on investing in stocks that can benefit from growth in earnings, re-rating of business or higher valuation of assets. Objective is to increase return rather than reduce risk for Investors.





Beta

16.30

1.00

Performance Data BSE 200Focused Series - V

38.00

1.07




-2.78

-11.03

-0.11

5.88

26.71

20.07

9.43

1.56

-5.15

-0.61

0.35

16.91

14.36

5.90

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

1 Month 3 Month 6 Month 1 Year 2 Year 3 Year SinceIncep�on


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Bulls Eye Strategy

8

Investment Strategy

• Active management

• Multi Cap Stategy

• Regular Profit Booking

Details




Benchmark : BSE 200

Investment Horizon : 12 Months +


Redemption : Daily




Beta

23.73

1.00

Performance Data BSE 200

21.36

0.77


Strategy Objective

The Strategy aims to deliver returns in the short to

medium term by investing in fundamentally

sound stocks coupled with active profit booking.

Bulls Eye Strategy

% o

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turn

s

Period

Bulls Eye BSE 200 All Figures in %

Top Sectors

Banking & Finance



Miscellaneous

Pharmaceuticals

FMCG

Oil and Gas

Cash

25.72

15.13

12.27

8.95

7.88

7.01

5.51

0.57






Top Holdings

HDFC Bank

Bajaj Finance

Kajaria Cera

Lupin

Cummins India

Eicher Motors

Page Industries

H P C L


10.52

10.41

8.95

7.88

7.49

7.07

7.01

5.51


15.95

31.74

23.0721.03

11.36

15.51

0.35

16.91

14.36

12.09

6.01

14.39

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00



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Optima Strategy

9

Investment Strategy

• Growth At Reasonable Price (GARP)

• Active Portfolio Rebalancing

• Market Timing

• Situation based Multi Cap approach

Details



Date of Inception : 30th Dec 2008

Benchmark : BSE 200



Redemption : Daily



Strategy Objective

The Strategy aims to generate superior returns

over the long period by investing in companies

with growth potential and which are available at

reasonable market price.

Top Sectors

Banking & Finance



Miscellaneous

FMCG

Pharmaceuticals

Oil and Gas

Cash

25.65

14.70

12.02

8.24

8.03

7.92

5.70

1.24





Beta

19.46

1.00

Performance Data BSE 200Optima Strategy

16.09

0.67




Period

% o

f re

turn

s

Optima Strategy BSE 200 All Figures in %

Top Holdings

HDFC Bank

Bajaj Finance

Kajaria Cera

Page Industries

Lupin

Eicher Motors

Cummins India

Hindustan Petroleum Corporation


10.72

10.11

8.24

8.03

7.92

7.30

7.21

5.70


16.75

32.89

24.16

20.59

14.13

23.88

0.35

16.91

14.36

12.09

6.01

17.43

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00



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All opinions, figures, charts/graphs, estimates and data included in this document are as on date and are subject to change without notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management Company Limited does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. No part of this document may be duplicated in whole or in part in any form and/or redistributed without prior written consent of the Motilal Oswal Asset Management Company Limited. Readers should before investing in the Strategy make their own investigation and seek appropriate professional advice. Investments in Securities are subject to market and other risks and there is no assurance or guarantee that the objectives of any of the strategies of the Portfolio Management Services will be achieved. Clients under Portfolio Management Services are not being offered any guaranteed/assured returns. Past performance of the Portfolio Manager does not indicate the future performance of any of the strategies. The name of the Strategies do not in any manner indicate their prospects or return. The investments may not be suited to all categories of investors. Neither Motilal Oswal Asset Management Company Ltd. (MOAMC), nor any person connected with it, accepts any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. The Portfolio Manager is not responsible for any loss or shortfall resulting from the operation of the strategy. Recipient shall understand that the aforementioned statements cannot disclose all the risks and characteristics. The recipient is requested to take into consideration all the risk factors including their financial condition, suitability to risk return, etc. and take professional advice before investing. As with any investment in securities, the value of the portfolio under management may go up or down depending on the various factors and forces affecting the capital market. For tax consequences, each investor is advised to consult his / her own professional tax advisor. This document is not for public distribution and has been furnished solely for information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. No part of this material may be duplicated in any form and/or redistributed without' MOAMCs prior written consent. Distribution Restrictions - This material should not be circulated in countries where restrictions exist on soliciting business from potential clients residing in such countries. Recipients of this material should inform themselves about and observe any such restrictions. Recipients shall be solely liable for any liability incurred by them in this regard and will indemnify MOAMC for any liability it may incur in this respect. Securities investments are subject to market risk. Please read on carefully before investing.

Risk Disclosure And Disclaimer

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Sit Tight Approach

QGLP

BUY RIGHT : SIT TIGHTBuying quality companies and riding their growth cycle

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MONTHLY BRSTBRSTBRS Communique BRvember … · checked over longer time frames,” said Harish Rao,...

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Transcript of MONTHLY BRSTBRSTBRS Communique BRvember … · checked over longer time frames,” said Harish Rao,...