LIC MF Short Term Debt Fund

Transcription

1 LIC MF Short Term Debt Fund An Open Ended Short Term Debt scheme investing in instruments with Macaulay duration between 1 year and 3 years (Please refer SID Page No.33)

2 1 Fund Positioning of Short Term Debt Fund Yield Liquid Fund Ultra Short Duration Fund Low Duration Fund Short Duration Fund Long Duration Fund Duration Note: Above category of schemes are based on SEBI Circular on categorization and rationalization of schemes dated 6thOctober Few categories of schemes are selected for positioning of short duration fund. Depends upon Investor's risk pro le, they are is advised to consult their investment advisor before making a decision to invest in this schemes.

3 Market Outlook Concerns Fiscal Slippages - Low GST Collection, Farm loan Waiver. Positives In ation below RBI medium term target of 4%. Oil prices decline from $85 to $55 a barrel. FPIs turning positive (` crs in ow in Nov-Dec 18). Regular OMO stabilizing markets. Globally in U.S. unemployment and growth have peaked FFIP indicating reversal in trend. Possibility of change in stance from MPC 2

4 Investment Policy and Risk Management- Debt Investment Policy Risk Parameters: The investments will be made with an objective to minimize the following risks in the order of priority: Liquidity risk- By selecting the securities and maturities such that the schemes would be in a position to service the redemption obligations. Default risk- By selecting the debt / money market instruments such that the probability of default during tenure is minimum. The fund house will have an internal research process apart from considering the rating given by the rating agency. Interest rate risk- By positioning the duration and consequent convexity of the portfolio such that the key rate shifts are least adverse. Re-investment risk- By positioning the duration of the portfolio such that the key rate shifts are most bene cial. Scheme specific Risk factors- Refer SID/ KIM of respective scheme. Diversified Decision Making Process The above objectives are achieved through a robust process of diversi ed decision making at every stage of investments, namely. Investment idea - by fundamental research on the issuer. Selection of a best t - by Investment Committee (IC). Portfolio management that optimizes risk and return while. Operating within the universe of instruments cleared by the Investment Committee and Operating within the boundaries set by the Risk Management Committee. Monitoring the investments and businesses that are lent to, continuously and executing temporal tasks that minimize the errors, time lags and deviations (if any) in stated terms. 3

5 Investment Policy and Risk Management- Debt Credit Approval and Monitoring of Debt Investment LIC MF has a team of 3 credit analysts and the credit universe is divided among the three analysts. Individual credit is a responsibility of the analyst assigned to it. Analysts maintain a detailed credit report on the company along with information regarding the company, line of business with breakup of revenues, management quality, sector situation, earnings ratios, liquidity ratios, debt structure and other nancial ratios. These reports are reviewed and approved by the Fund Managers, CIO and CEO. Such reports are updated and reviewed on an annual/semi-annual basis depending on the quality of the issuer. Apart from these, the analysts maintain: Quality sell-side Broking rm s reports Reports by Credit Rating Agencies Takeaway points/note prepared after meeting or conference call with the issuer Credit Investment Research and Monitoring the Credits All credit proposals is discussed in detail among the Fund Managers and Credit analyst. Detailed questionnaire used while attending issuer meetings (Internal or external). The news/information on the issuer is closely monitored through Google alerts. Report on meeting with management and sell side analysts are maintained. Broker reports used for reference to interact with rating agencies. Fraternity networking. Independent monitoring by Risk Management Team and alerts. 4

6 Investment Policy and Risk Management- Debt Current Credit Universe Short Term credits with A1+ rating*. Long Term - 76 credits, out of which 52 are AAA rated rest are all good quality names*. Note: Short term and long term credit exclude Government Security and Treasury bill. Stress Testing of Credit Portfolio Stress test of Liquid Fund is conducted by the Risk team as per SEBI Regulations and their views are shared with the concerned Teams and the management level Risk Management Committee. Compliance and Risk Monitoring A robust Compliance and Risk oversight is in place. In order to identify, manage & mitigate the residual risks of operational, investment, compliance, legal or information technology, a structured review is conducted by Compliance & Risk team as under: A regular review of Scheme portfolio & related reports Independent monitoring of investment limits Regular checks on stress testing of Liquid Fund Internal Control review through self-assessment Review of Internal, External, Statutory & Regulatory audit reports Bi-Monthly Risk Committee Review Independent reporting to Trustee Board * As on 31/12/2018 5

7 6 LIC MF Short Term Debt Fund Scheme Type An Open Ended Short Term Debt scheme investing in instruments with Macaulay duration between 1 year and 3 years (Please refer SID Page No.33). Investment Objective The primary investment objective of the scheme is to generate returns commensurate with risk from a portfolio constituted of Debt securities and/or Money Market instruments. However, there can be no assurance that the investment objective of the scheme will be achieved. Investment Strategy The Investment Manager will invest in those debt securities that are rated investment grade by credit rating agencies or in unrated debt securities, which the Investment Manager believes to be of equivalent quality. In-house research by the Investment Manager will emphasize on credit analysis, in order to determine credit risk. The investment process follows a top down approach taking into account aspects like interest rate view, term structure of interest rates, systemic liquidity, RBI s policy stance, in ationary expectations, Government borrowing program, scal de cit, global interest rates, currency movements, etc. Source : Scheme Information Document.

8 7 LIC MF Short Term Debt Fund Where will the scheme invest? The corpus of the Scheme will be invested in debt and money market instruments. Money market securities include commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity up to one year, call or notice money, certi cate of deposit, usance bills, Triparty Repo etc. Securities created and issued by the Central and State Governments and Reverse Repos in such Government Securities as may be permitted by RBI/SEBI. Securities guaranteed by the Central and State Governments. Debt obligations of domestic Government agencies and statutory bodies, which may or may not carry a Central/State Government guarantee. Securitized Debt obligations. The non-convertible part of convertible securities. Any other like instruments as may be permitted by SEBI from time to time. Source : Scheme Information Document.

9 8 LIC MF Short Term Debt Fund What are the investment strategies? The Investment Manager will invest in those debt securities that are rated investment grade by credit rating agencies or in unrated debt securities, which the Investment Manager believes to be of equivalent quality. In-house research by the Investment Manager will emphasize on credit analysis, in order to determine credit risk. The investment process follows a top down approach taking into account aspects like interest rate view, term structure of interest rates, systemic liquidity, RBI s policy stance, in ationary expectations, Government borrowing program, scal de cit, global interest rates, currency movements, etc. Who should invest? Investors who are looking for reasonable returns over short to medium term. Investors who are looking for investment in debt securities and money market instruments with a Macaulay Duration between 1 year and 3 years. Investors who has a moderate risk appetite. Investors who has an investment horizon of around 3 years. Source : Scheme Information Document.

10 9 LIC MF Short Term Debt Fund What are the Tax Implication* of investing in this Fund? Long term capital gains (LTCG) (plus surcharge, if applicable and cess) with indexation if units held for more than 36 months. Short term capital gains (STCG) tax at the income tax slab rate if units are held for less than 36 months Investor does not pay any tax on dividends but a Dividend Distribution Tax (DDT) is deducted at ( 25% + 12% surcharge + 4% Health & education cess) for Individuals % ( 30% + 12% surcharge + 4% Health & education cess) for any other person^^. In case of an investor being NRI, LTCG tax are 10% (plus surcharge, if applicable and cess) without indexation relating to units redeemed from unlisted schemes. ^^ The DDT is to be paid by the mutual fund after grossing-up income distributed to the investor. * Investors are advised to speak to their tax consultant.

11 Fund Manager Mr. Marzban Irani Fund Manager Fund Manager Fixed Income - LIC Mutual Fund Asset Management Ltd. (w.e.f. 4th Aug 2016) VP Fixed Income - DSP BlackRock Investment Managers (Jun Jul 2016) Senior Fund Manager Fixed Income - TATA Asset Management (Jun May 2014) Fund Manager Fixed Income - Metlife India Insurance (Sep May 2011) Fund Manager Fixed Income - Mirae Asset Global Investment Mgmt India (Jan Jul 2010 Fund Manager Fixed Income - TATA Asset Management (Sep Nov 2007) 10

12 11 Asset Allocation Under normal circumstances, the asset allocation of the Scheme will be as follows:- Instruments Indicative Allocation (% of total assets) Risk Pro le Minimum Maximum Debt* & Money Market Securities 0% 100% Low to medium *Debt Securities may include securitized debts up to 50% of the net assets. The Scheme will invest in Debt and Money Market instruments such that the Macaulay duration of the portfolio is between 1 year 3 year The cumulative gross exposure through debt securities, money market securities/ instruments and derivatives will not exceed 100% of the net assets of the Scheme.

13 12 Fund Features Scheme Name Scheme Type Scheme Objective Plan Option LIC MF Short Term Debt Fund An Open Ended Short Term Debt scheme investing in instruments with Macaulay duration between 1 year and years (Please refer SID Page No.33). The primary investment objective of the scheme is to generate returns commensurate with risk from a portfolio constituted of Debt securities and/or Money Market instruments. However, there can be no assurance that the investment objective of the scheme will be achieved. Regular Plan & Direct Plan Growth & Dividend Minimum Application Amount Minimum of ` 5,000 and in multiples of ` 1 thereafter. For Systematic Investment Plan (SIP), the minimum amount is ` 300 (Daily), ` 1,000 (Monthly) & ` 3,000 (Quarterly) & in multiples of ` 1 thereafter. Benchmark Index Entry Load Exit Load CRISIL Short Term Bond Fund Index Nil Nil

14 Riskometer Name of The Scheme This product is suitable for investors who are seeking* Riskometer LIC MF Short Term Debt Fund Generation of reasonable returns over short to medium term. Investment in Debt securities and money market instruments. Risk - Moderate RISKOMETER Investors understand that their principal will be at Moderately Low Risk *Investors should consult their nancial advisers if in doubt whether the product is suitable for them. 13

15 14 Thank You! Disclaimer: The views expressed herein are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must con rm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to speci c investment objectives, nancial situation and the particular needs of any speci c person who may receive this document. The information / data herein alone are not suf cient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risk and uncertainties that could cause actual results, performance or event to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in the future. LIC Mutual Fund Asset Management Ltd. / LIC Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investment made in the scheme(s). Neither LIC Mutual Fund Asset Management Ltd. and LIC Mutual Fund (the Fund) nor any person connected with them, accepts any liability arising from the use of this document. The recipients(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein. Statutory Details Sponsor: Life Insurance Corporation of India. Investment manager: LIC Mutual Fund Asset Management Ltd. CIN: U67190MH1994PLC For further details, please refer to the Scheme Information Document, Statement of Additional Information & Key Information Memorandum cum Application forms, available on our website and at the official points of acceptance of LIC Mutual Fund Asset Management Ltd.

16 LIC Mutual Fund Asset Management Ltd. For more details, contact: Investment Managers to LIC Mutual Fund Formerly known as LIC Nomura utual Fund Asset Management Co. Ltd. th Industrial Assurance Building, 4 Floor, Opp. Churchgate Station, Mumbai To know more, please visit call us at - Office Toll free number Connect with us: /LICMutual /company/licmutual /LICMutual MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. 15