SBI Mutual Fund Launches. NFO CLOSES: September 05, 2011

Transcription

1 SBI Mutual Fund Launches NFO OPENS: August 22, 2011 NFO CLOSES: September 05, 2011

2 Flow of Presentation the Gold Scenario - India Gold as an Asset Class Why Gold Fund? Introducing SBI Gold Fund About SBI Mutual Fund Disclaimer & Risk Factors

3 Gold Scenario - India

4 Gold in India India is the World s largest Gold consumer Societal impulse of saving Gold for many Indians Indian investors preferred holding Gold in the physical form Gold is culturally ingrained into our lives Gold for every occasion Gold has been a traditional means of storing wealth in India 11% 2% 16% 52% 19% Jewellery Private Investment Official Holding Other Fabrication Others India is the largest consumer of the gold in world & about 52% of its gold demand is on account of jewellery. Source: World Gold Council, Data as on June 30, 2011

5 Future demand of gold - India World Gold Council says, About 50% of India's 1.2 billion population is below 25 years of age. Going by the numbers, it is estimated that over the next decade, every year there would be about 1.5 crores weddings in the country. And since gold is an integral part of most Indian weddings, this itself, will create an additional demand of about 500 tonnes of gold annually, the report said. And this is over and above an estimated 500 tonnes of gold that would be transferred between the families involved in each wedding. India potentially has perennial demand for gold. Source: World Gold Council

6 Gold as an asset class

7 Why gold as an asset? A safe haven Hedge against currency devaluation & inflation An effective portfolio diversifier - low correlation with other asset class A wealth creator Gold A multi purpose p asset class

8 A safe haven During the times of financial crisis, economic downturns, national crisis, emergencies and wars etc; Gold has been a safe refuge. The official gold holdings globally further strengthens the point. Country Tonnes (As on June 2011) % of reserves United States Germany France Italy Switzerland India Gold An ideal investment vehicle during the periods of financial crisis. The percentage share held edin gold of total foreign oeg reserves, es, as calculated cu ated by the World Gold Council. The value aueof gold holdings is calculated using the end of month London pm fix gold price published daily by the LBMA. In April, the end of month gold price was $ Data for the value of other reserves are taken from IFS, table Total Reserves minus Gold.

9 Hedge against currency devaluation Generally, the relationship between the gold prices and the dollar is inverse and this gives the hedge against price movements of the dollar. Source: Bloomberg as on 31/7/2011

10 Hedge against inflation The purchasing power of gold has remained stable over a longer time period. Source: Bloomberg

11 An effective portfolio diversifier Correlation with other asset classes Correlation is a statistical measure of how two asset classes move in relation to each other. Gold has significantly low correlation with other asset classes e.g. equities, fixed income and commodities This low correlation provides an excellent opportunity for: - Effective portfolio diversification - Maintaining stability in the portfolio returns Source: Bloomberg, from Aug 01, July 29, 2011

12 Gold versus other asset class 10 Year return of gold shows that it has performed relatively better than many asset classes. Past performance may or may not be sustained in future. Source: Bloomberg; Data in USD; Data as on July 29, 2011; Returns are CAGR

13 Gold: A significant upward rally MCX Gold Pric ces (INR) Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-11 Gold has been on an upward rally from last few years and has delivered a CAGR of 22.04% during the period of to Past performance may or may not be sustained in future. Source: Bloomberg

14 Gold as a consistent performer 45% 40% 39.29% 35% 30% 25% 20% 15% 19.77% 20.70% 20.98% 10% 5% 0% 10 Years 5 Years 3 Years 1 Year Gold has performed consistently over different time periods in last 10 years. Past performance may or may not be sustained in future. Source: Bloomberg; Data in USD; Data as on July 29, 2011; Returns are CAGR

15 SIP The wealth creator 1 Year 3 Years 5 Years 7 Years 10 Years Amount Invested (In Rs.) 60, , , , , SIP Start Date 01/08/ /08/ /08/ /08/ /08/2001 Gold Value per gram (as on July 29, 2011) (In Rs.) 2, , , , , Units Accumulated (in grams) Investment Value (as on July 29, 2011) (In Rs.) 68, , , ,640 1,758,806 Returns 28.63% 23.94% 23.44% 22.80% 20.41% Returns are as on 29/07/2011 with SIP being done on 1 st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future. Example given above is for illustration purpose only and for understanding the concept of SIP. Mutual Fund/AMC does not assure any safeguard of capital, promise, guarantee or forecast any minimum returns and the illustration should not be construed as indicative of future results. Source: Bloomberg

16 SIP The wealth creator 35.00% SIP Return (%) 30.00% 28.63% 25.00% 20.00% 00% 23.94% 23.44% 22.80% 20.41% 15.00% 10.00% 5.00% 0.00% 1 Year 3 Years 5 Years 7 Years 10 Years Returns are as on 29/07/2011 with SIP being done on 1 st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future Source: Bloomberg

17 Why Gold Fund?

18 Various options of investing in gold Gold jewellery Gold coins and bar Gold instruments (futures) Gold ETF And now Gold Fund

19 Comparison of Gold Fund with other gold instruments Benefit Physical Gold Commodity Exchange Gold ETF Gold Fund Good control on quality of gold No Yes Yes Yes Lower cost of holding Yes High Brokerage Cost Yes Yes Risk of theft Yes No No No Availability in smaller denomination Yes Yes Yes Yes Wealth Tax Yes No No No Long term investment Yes Speculation or Trading Yes Yes Long term capital gain tax After 3 years No After 1 year After 1 year Auto SIP facility No No No Yes Fragment holdings Yes No No Yes Purchase price Dealer price Stock exchange price Stock exchange price NAV related price Gold Fund is one of the most economic and efficient way of investing in gold.

20 What is a Gold Fund? A Fund of Fund" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. In this case, SBI Gold Fund will be investing into SBI Gold Exchange Traded Scheme

21 Only one word describes this opportunity Golden! INTRODUCING

22 SBI Gold Fund Features Type of the scheme -: An Open Ended Fund of Fund. Minimum Amount of Investment -: Rs and in multiples of Re. 1 thereafter Load Structure Entry Load N.A Exit Load Exit within 1 year from the date of allotment 1 % Exit after 1 year from the date of allotment Nil SIP Facility: The minimum amount of investment for SIP transactions is Rs (aggregate) either through: (1) Rs.100/- per month and in multiples of Re. 1/- thereafter for minimum 60 months* (2) Rs.500/- per month and in multiples of Re. 1/- thereafter for minimum 12 months (3) Rs.1000/- per month and in multiples of Re. 1/- thereafter for minimum 6 months (4) Rs.500/- per quarter and in multiples of Re. 1/- thereafter for minimum 12 quarters (5) Rs.1500/- per quarter and in multiples of Re. 1/- thereafter for minimum 4 quarters *Shall be available only through the direct debit mode of SBI & associate banks

23 SBI Gold Fund Features Investment Objective of the Scheme -: The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS) Asset Allocation -: Instruments As % of Net Assets (Min.-Max.) Risk Profile Units of SBI GETS 95% - 100% Medium to high Reverse repo and /or CBLO and/or short-term fixed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes 0% - 5% Low to medium Benchmark -:The Scheme s performance will be benchmarked against the price of physical gold. As there are no indices catering to the gold sector or securities linked to the Gold, currently SBI Gold Fund shall be benchmarked against the domestic price of gold. The price here refers to the morning fixing of Gold by London Bullion Market association (LBMA). Expenses -: 0.75% on average weekly assets (The investors in the Scheme will be charged a maximum of 1.50% of the daily or average weekly net assets of SBI Gold Fund including the expenses charged in its underlying investments in SBI GETS)

24 Significance of SBI Gold Fund Purity : The underlying gold is the LBMA standard gold Safe Custody : Gold held by SBI GETS is kept in the vaults of Bank of Nova Scotia Low tracking error : The fund will track the performance of SBI GETS Easy liquidity : The units can be easily redeemed through the AMC at NAV related prices SIP facility : SIP option provides a regular and the easy way of investing in gold Cost Effective : The fund does not charge any management fee and is cost effective

25 About SBI Mutual Fund

26 Combining the strength of two leaders

27 SBI Mutual Fund: One of the leading fund houses in India Established in 1987: A leading Asset Manager in India Rs.47,874 crores of quarterly average AUM as on June 30, Portfolio strategies across asset classes and risk spectrum Investment team of 31 professionals with strong track record Broad customer base with around 6 million individual, corporate and institutional investors 500 staff including 330 sales (Mumbai corporate office & 80 investors & sales support centers)

28 Expertise managing the fund Raviprakash Sharma Mr. Ravi Prakash is the fund manager of SBI Gold Fund. Mr. Sharma has over 12 years of experience in Indian capital markets in various capacities including Portfolio Management and Dealing in equity shares on behalf of clients. Prior to join SBI Fund Management Pvt. Ltd. he was working as Sr. Manager - Portfolio Management Services with HDFC Asset Management Co. Ltd. Raviprakash has done his B.Com, C.A. and is a charter holder of the CFA Institute, USA. Mr. Navneet Munot Mr. Navneet Munot is the Chief Investment Officer of the SBI Funds Management Pvt. Ltd. Mr. Navneet Munot joined SBI Funds Management Pvt. Ltd. as Chief Investment Officer in Dec Most recently he was the Head of Multi Strategies fund at Morgan Stanley Investment Management. Prior to joining Morgan Stanley Investment Management, he worked as the Chief Investment Officer (Fixed Income and Hybrid Funds) of Birla Sun Life Asset Management Company Ltd. Several funds managed by Navneet got recognition for their consistent superior risk-adjusted performance and won several awards from independent agencies such as CRISIL, CNBC TV 18, ICRA, Reuters Lipper and got top ranking in Value Research. Navneet has been associated with the financial services business of the Birla group for over 13 years and worked in various areas such as fixed income, equities and foreign exchange. His articles on matters related to financial markets have widely been published. Navneet holds a Masters in Commerce and is also a rank holder Chartered Accountant. He is a charter holder of Chartered Financial Analyst Institute, US and Chartered Alternative Analyst Institute, US. He has also done Financial Risk Management, FRM from Global Association of Risk Professionals (GARP).

29 Disclaimer & Risk Factors The investor will be bearing the recurring expenses of the Scheme, in addition to the expenses of underlying scheme. Name of Scheme: SBI Gold Fund Type of Scheme: An open ended fund of fund scheme Investment Objective: The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS). Asset Allocation: Units of SBI GETS 95% to 100%, Reverse repo and /or CBLO and/or short-term fixed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes*- 0 to 5%, The Scheme shall not invest in securitized debt. *The Fund Manager may invest in Liquid Schemes of SBI Mutual Fund. However, the Fund Manager may invest in any other scheme of a mutual fund registered with SEBI, which invest predominantly in the money market securities. Minimum Investment size: Rs. 5000/- and in multiples of Rs. 1/- thereafter Load Structure: Entry Load: Not Applicable Exit Load: Exit within 1 year from the date of allotment 1 %, Exit after 1 year from the date of allotment Nil Terms of Issue: Sale of units - Rs. 10/- per unit during NFO and at NAV related prices on all business days on continuous basis, Liquidity: The scheme would provide repurchase facility to investors on an ongoing basis on all business day. Investor benefits and general services offered The Scheme offers Systematic Investment Plan during the NFO period. NAV of the Scheme would be computed and declared on all business day. AMC shall disclose the NAV on the AMFI website ( and on the website of the Fund by a.m. the following business day. Risk Factors: Mutual Funds and Securities i Investments are subject to market risks and there is noassuranceor guarantee that the objective of scheme will be achieved. As with any other 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. Past performance of the Sponsor/AMC/Mutual Fund/Scheme(s) and their affiliates do not indicate the future performance of the scheme of the Mutual Fund. SBI Gold Fund is only the name of the scheme and does not, in any manner, indicates either the quality of the scheme or its future prospects and returns. SBI Gold Fund would be investing in the units of SBI GETS. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by the underlying scheme of mutual funds wherein the Scheme has invested. As a result, the time taken by the Mutual Fund for the redemption of units may be significant in the event of a high number of redemption requests or a restructuring of the scheme. The Mutual Fund is not assuring any dividend nor is it assuring thatt it will make any dividendid d distributions. ib ti All dividendid d distributions ib ti are subject to the availability of distributable ib t bl surplus and would dependd on the performance of the scheme. The Scheme s NAV will react to the prices of gold. The investor could lose money over short periods due to fluctuation in the Scheme s NAV in response to factors such as economic and political developments, changes in interest rates and perceived trends in gold prices, market movements and over longer periods during market upturns. Additionally, the prices of gold may be affected by several factors such as global gold supply and demand, investors expectations with respect to the rate of inflation, currency exchange rates, interest rates, etc. Crises may motivate large-scale sales of gold, which could decrease the domestic price of gold. The Investor will be bearing the recurring expenses of the Scheme, in addition to the expenses of underlying Scheme and also risk of the underlying Scheme. The Scheme (at Portfolio level) to have >/= 20 investors and no investor to account for > 25% of the corpus of the Scheme. In case of non fulfillment with either of the above two conditions, the AMC shall comply with the specified SEBI Guidelines in this regard. The Mutual Fund is not assuring any returns nor is it assuring thatt it will make periodic distributions ib ti by wayof dividends. id d Statutoryt t details: SBI Mutual Fund has been set up as a trust under the Indian Trusts Act, State Bank of India ( SBI ), the sponsor is not responsible or liable for any loss resulting from the operation of the schemes beyond the initial contribution made by it of an amount of Rs. 5 lakhs towards setting up of the mutual fund. Asset Management Company: SBI Funds Management Private Limited (A joint venture between SBI & AMUNDI). Trustee Company: SBI Mutual Fund Trustee Company Private Limited. A copy of the Scheme Information Document & Statement of Additional Information and Key Information Memorandum along with the application form may be obtained from our ISC s, ISD s, SBI Mutual Fund Corporate Office, SBI MF agents or can be downloaded from website Please read the Scheme Information Document & Statement of Additional Information carefully before investing.

30 Thank you