Review of Indian Market FY17 3. Outlook FY18 4. Snapshot of Mutual Funds Industry 5. Category-wise Return of Mutual Funds 6

Transcription

1 April 2017

2 Table of Content Page No. Review of Indian Market FY17 3 Outlook FY18 4 Snapshot of Mutual Funds Industry 5 Category-wise Return of Mutual Funds 6 Top Recommended Mutual Funds 7-12 Recommended Mutual Funds Category-wise

3 Review of Indian Market FY17 Fiscal year 2017 was a cherishing year for investors as the market reached an all time high in March 2017, backed by robust FII and DII flows. FII poured net Rs 50,206 crore into Indian equity market in FY17 compared to net outflow of Rs 17,579 crore in FY16. And domestic mutual funds pumped Rs 54,735 crore in the equity market, making them a significant contributor in the market besides FII. The Nifty 50 gained ~18.5% in FY17 against a decline of ~8.9% in FY16. Nifty Metal was the top gainer in the sector indices as the metal prices recovered in FY17 followed by Nifty PSU Banks and Nifty Commodity. Nifty IT and Nifty Pharma were the only indices in FY17 which ended in red because of US President Donald Trump s stance on outsourcing of jobs. During the fiscal year 2017, many unexpected events happened like Brexit outcome, Trump s victory and demonetization, which stunned the financial market. FY18 will be a significant year as Theresa May, the PM of UK, will trigger the Article 50 that will start the process of leaving the EU by April Trump s emphasis on infrastructure spending, optimizing corporate tax and cutting personal tax rates has brought hopes that US economy will grow at a higher pace. However, whether he will be able fulfill his promises will be seen in FY18 as he was not able to repeal and replace Obamacare. On the night of November 08, 2016 the nation was caught unaware by the unprecedented decision of the Narendra Modi government to demonetize Rs 500 and Rs 1,000 notes. It was a very significant decision as close to 86% of the money circulating in the economy was in the denomination of Rs 500 and Rs 1000 notes. The decision hit the Real Estate, Cement, Automobiles and Consumer Goods while it bring cheers to Banks as it improved their CASA. However, demonetization did not drag down the economy as it was argument by some scholars. Net Flows in Equity Market NIFTY FY15 FY16 FY17 FIIs Net Flows in equity (Rs cr) Domestic MFs Net Flows in Equity (Rs cr) *figures and returns as on March 31, Note: Net FII flows as on March 30, 2017 and net MF flows as on March 30,

4 Outlook FY18 The outlook for FY18 is positive considering strong macroeconomic indicators and the implementation of GST. However, there are some reports that India may receive below normal monsoon in Implementation of GST: GST is all set to be implemented from July 1, 2017 and will replace the current cumbersome taxation system in India. As per some estimates, the GDP will rise by 2% after the implementation of GST. With the implementation of GST, unorganized sector will come under the tax net and will lose the benefit of non-tax payments. Thus, the companies in the sector with a high market share of unorganized players will gain more market share. In addition, sectors such as pharma, FMCG, consumer durables etc., which have a long supply chain spread across multiple states, will be able to save on the transportation cost. However, with the implementation of GST, service tax is expected to go up from 14.5% which will impact hospitality, airlines, telecom and insurance in the short-term. Below Normal Monsoon and fear of El Nino: According to Skymet, India is expected to receive below normal monsoon in 2017 because of strengthening of El Nino in Pacific Ocean which has brought the fear of possible drought. India received normal monsoon in 2016 which revived the rural economy after two consecutive droughts in 2014 and But historic data shows that occurrence of 3 drought in 4 years and the occurrence of El Nino within 2 years after a strong La Nina is very unlikely. In addition, monsoon in India also depends upon Indian Ocean Dipole(IOD) which is positive and is expected to neutralize the impact of El Nino in India. Modi to speedup the reforms: The Modi government will increase the pace of reforms after BJP s spectacular performance in the latest five state elections with a behemoth victory in UP has boosting its confidence. The presence of BJP will rise in the Upper House which will support the government in passing bills. With the UP victory, PM Narendra Modi has also strengthen his chance to win the 2019 election. 4

5 Snapshot of Mutual Fund Industry The total AUM of mutual fund industry stood at ~Rs 18.8 lakh crore in Feb 2017 as compared to ~Rs 13 lakh crore in Feb Balanced funds have also seen impressive growth of 74% as investors are getting aware of its tax benefits and moderate risks. Ultra short term funds and Income funds have seen splendid growth in their AUMs in the last 1 year. Equity mutual funds have given enormous returns in the last 1 year, owing to the bounce back of equity markets in March 2017 driven by extensive FIIs buying in the month. On an average, equity mutual funds have given returns of ~29% in the past 1 year. Whereas, balanced funds have given a return of ~20% in the last 1 year. Gilt fund and long-term debt funds have given an average return of ~11% in the last 1 year because of their high modified duration. But going forward, the high duration funds may not be able to give high returns as the RBI has changed its policy stance to neutral from accommodative and the bonds yield have also declined significantly. There is a high probability that RBI will not cut the policy rates in According to AMFI, mutual fund houses has added 67 lakh investor accounts in first 11 months of FY17 to total 5.4 crore accounts which is already higher than the total account addition in FY16 i.e. 59 lakh accounts. In addition, the average SIP size was ~Rs 3,100 per month per SIP account. AUM (Type-wise) Type (Rs thousand cr) Feb-17 Feb-16 Change (yoy) Hybrid Funds % Debt Funds 1, % Equity Funds % Commodity Funds 8 8 3% Total 1,879 1,295 45% Source: Ace MF AUM (Category-wise) Category (Rs thousand cr) Feb-17 Feb-16 Change (yoy) Income % Diversified % Liquid % Ultra Short Term Plan % Balanced Funds % Fixed Maturity Plans % ELSS % Source: Ace MF 5

6 Category-wise Return of Mutual Funds Equity mutual funds category-wise returns Category 1 M (%) 3 M (%) 6 M (%) 1 Y (%) 3 Y (%) 5 Y (%) Equity-Oriented ELSS Large-cap Mid-cap Multi-cap Small-cap S&P BSE SENSEX S&P BSE Mid-Cap S&P BSE Small-Cap Debt mutual funds category-wise returns Category 1 M (%) 3 M (%) 6 M (%) 1 Y (%) 3 Y (%) 5 Y (%) Liquid funds Ultra-short term funds Short-term funds Medium-term Funds Long-term funds Gilt Funds MIP Crisil Liquid Fund Index Crisil Composite Bond Fund Index Corpus as on: Feb 2016; Returns and Ratios as on March 31,

7 Top Recommended Mutual Funds Scheme Name Fund Manager Corpus (Rs cr) 1 M (%) 6 M (%) 1 Y (%) 3 Y (%) 5 Y (%) HDFC Prudence Fund(G) Prashant Jain 17, SBI BlueChip Fund-Reg(G) Sohini Andani 11, IIFL India Growth Fund-Reg(G) Prashasta Seth Franklin India Smaller Cos Fund(G) R. Janakiraman 4, ICICI Pru Infrastructure Fund(G) Sankaran Naren 1, Corpus as on: Feb 2016; Returns and Ratios as on March 31,

8 HDFC Prudence Fund Fund Basic Details Fund Benchmark CRISIL Balanced Fund - Aggressive Index AUM (Rs cr) 17,776 Inception Date February 1, 1994 Exit Load NIL upto 15% of investment and 1% in excess of 15% of investment on or before 1Y, NIL after 1Y Fund Manager Prashant Jain Expense Ratio 2.26% HDFC Prudence Fund is a balanced equity-oriented fund, which has invested ~74% in equity (~49% in large-cap stocks and ~25% in mid-cap and small-cap stocks) and ~24% in debt instrument. Fund manager Prashant Jain, is the CIO of HDFC AMC and manages three equity funds. On an average his funds have given ~32% and ~18% CAGR returns in 1 year and 3 years respectively. From 2016, the fund is giving 1% dividend yield on a monthly basis. In last 15 years, its average annual dividend yield is ~12%. In last 5 years, the fund has outperformed its benchmark on yearly basis for ~60% of the weeks. Asset Allocation Returns Particulars Portfolio Characteristics Top Holdings Fund PE Ratio 23.1 PB Ratio 3.1 No of Stocks 95 Top 5 Stocks % Asset SBI 6.7 Larsen & Toubro 6.5 ICICI Bank 6.4 Infosys 5.9 Tata Steel 3.3 SIP Details - Invested Rs 5000 Every Month 24% 11% 14% 2% 49% Large Cap Mid Cap Small Cap Debt Cash 30% 20% 10% 0% 1 Year 3 Years 5 Years Fund CRISIL Balanced Fund - Aggressive Index S&P BSE SENSEX Period Total Investment (Rs) Scheme (Rs) 1 year 60,000 68,699 3 years 1,80, ,454 5 years 3,00, , years 6,00,000 1,404,744 Portfolio as on: Feb 2016; Returns and Ratios as on March 31,

9 SBI BlueChip Fund Fund Basic Details Fund Benchmark S&P BSE 100 AUM (Rs cr) 11,629 Inception Date January 20, 2006 Exit Load 1% on or before 1Y, Nil after 1Y Fund Manager Sohini Andani Expense Ratio 1.98% Portfolio Characteristics SBI BlueChip Fund is a large-cap equity fund, which has invested ~69% of its AUM in large-cap stocks to generate stable returns while ~16% in debt instruments to cap the downward risk. Fund manager Sohini Andani manages three equity funds. On an average her funds have given ~31% and ~24% CAGR returns in 1 year and 3 years respectively. In last 5 years, the fund has outperformed its benchmark on yearly basis for ~93% of the weeks. Particulars Top Holdings Fund Beta 0.92 PE Ratio 28.3 PB Ratio 5.2 No of Stocks 50 Top 5 Stocks % Asset HDFC Bank 6.7 Infosys 3.6 Larsen & Toubro 3.4 Nestle 3.3 Reliance Industries 3.2 Asset Allocation Returns SIP Details - Invested Rs 5000 Every Month 16% 25% 20% Period Total Investment (Rs) Scheme (Rs) 15% 15% 10% 1 year 60,000 66,073 69% 5% 0% 3 years 1,80, ,062 1 Year 3 Years 5 Years 5 years 3,00, ,591 Large Cap Mid Cap Debt & Cash Fund S&P BSE 100 S&P BSE SENSEX 10 years 6,00,000 1,315,313 Portfolio as on: Feb 2016; Returns and Ratios as on March 31,

10 IIFL India Growth Fund Fund Basic Details Fund Benchmark NIFTY 50 AUM (Rs cr) 345 Inception Date October 30, 2014 Exit Load Nil Fund Manager Prashasta Seth Expense Ratio 1.95% IIFL India Growth fund is a multi-cap equity mutual fund, which has invested 90% of its AUM in equity, particularly in large-cap companies for capital appreciation while ~10% is invested in debt instruments to cap the downside risk. The scheme invests in high conviction stocks rather than typical stocks in a mutual funds portfolio. This philosophy has generated significant alpha. It has no exit load and lowest expense ratio in equity mutual funds, ensuring liquidity and flexibility, and higher returns to investors. Since its inception, the fund has outperformed its benchmark on yearly basis for ~99% of the weeks. Particulars Portfolio Characteristics Top Holdings Fund Beta 1.05 PE Ratio 29.3 PB Ratio 6.4 No of Stocks 19 Top 5 Stocks % Asset Kotak Mahindra Bank 6.6 Sun Pharma Inds. 6.6 HCL Tech. 6.1 Castrol India 6.0 Power Grid Corpn. 5.5 Market Cap Allocation Returns SIP Details - Invested Rs 5000 Every Month 1% 9% 40% 30% Period Total Investment (Rs) Scheme (Rs) 26% 64% 20% 10% 0% 1 Year 1 year 60,000 67,648 3 years NA NA Large Cap Mid Cap Small Cap Debt & Cash Fund NIFTY 50 S&P BSE SENSEX 5 years NA NA Portfolio as on: Feb 2016; Returns and Ratios as on March 31,

11 Franklin India Smaller Cos Fund Fund Basic Details Fund Benchmark Nifty Free Float Midcap 100 AUM (Rs cr) 4,860 Inception Date January 13, 2006 Exit Load 1% on or before 1Y, Nil after 1Y Fund Manager R. Janakiraman, Hari Shyamsunder Expense Ratio 2.30% Portfolio Characteristics Franklin India Small Cos Fund is a small-cap equity fund, which has invested ~80% in mid-cap and small-cap companies, ~11% in large-cap companies and ~9% in debt instruments. It has a very well diversified portfolio of 72 stocks. Fund manager R. Janakiraman manages four equity funds. His funds have given an average CAGR returns of ~28% and ~25.6% in 1 year and 3 years respectively, best in their respective category. In last 5 years, the fund has outperformed its benchmark on yearly basis for ~97% of the weeks. Particulars Fund Beta 0.85 PE Ratio 28.6 PB Ratio 4.4 No of Stocks 72 Top 5 Stocks Top Holdings % Asset Finolex Cables 3.7 Equitas Holdings 3.2 HealthcareGlobal 2.8 Yes Bank 2.5 GMDC 2.3 Market Cap Allocation Returns SIP Details - Invested Rs 5000 Every Month 9% 11% 40% 30% Period Total Investment (Rs) Scheme (Rs) 20% 1 year 60,000 70,002 40% 40% 10% 0% 3 years 1,80, ,058 Large Cap Mid Cap Small Cap Debt & Cash Portfolio as on: Feb 2016; Returns and Ratios as on March 31, Year 3 Years 5 Years Fund NIFTY 50 S&P BSE SENSEX 5 years 3,00, , years 6,00,000 2,072,402 11

12 ICICI Prudential Infrastructure Fund Fund Basic Details Fund Benchmark Nifty Infra AUM (Rs cr) 1,435 Inception Date August 2005 Exit Load 1% on or before 1Y, Nil after 1Y Fund Manager Sankaran Naren, Atul Patel Expense Ratio 2.43% ICICI Prudential Infrastructure Fund is an infrastructure fund, which has invested ~45% of its AUM in large-cap stocks while ~45% in mid-cap and small-cap stocks. Fund manager Sankaran Naren, is the CIO of ICICI Pru AMC and manages five equity funds. On an average his funds have given ~30% and ~18% CAGR returns in 1 year and 3 years respectively. On the back of significant government spending on infrastructure, particularly on power sector, this fund is expected to outperform the market since it has invested ~27% of its AUM in Energy sector followed by Construction (~17.8%) and Services (~10.2%). In last 5 years, the fund has outperformed its benchmark on yearly basis for ~88% of the weeks. Top 5 Stocks Portfolio Characteristics Particulars Fund Beta 0.84 PE Ratio 24.3 PB Ratio 2.6 No of Stocks 40 Top Holdings % Asset Bharti Airtel 8.2 Power Grid Corpn. 6.0 ICICI Bank 4.9 Coal India 4.5 Tata Power 4.5 Market Cap Allocation Returns SIP Details - Invested Rs 5000 Every Month 10% 40% 30% Period Total Investment (Rs) Scheme (Rs) 19% 45% 20% 1 year 60,000 70,082 10% 26% 0% 1 Year 3 Years 5 Years 3 years 1,80, ,074 5 years 3,00, ,120 Large Cap Mid Cap Small Cap Debt & Cash Fund NIFTY INFRA S&P BSE SENSEX 10 years 6,00,000 1,017,477 Portfolio as on: Feb 2016; Returns and Ratios as on March 31,

13 Recommended Mutual Funds Category-wise Scheme Name Fund Manager Corpus (Rs cr) 1 M (%) 6 M (%) 1 Y (%) 3 Y (%) 5 Y (%) Balanced Fund HDFC Prudence Fund(G) Prashant Jain 17, ICICI Pru Balanced Fund(G) Sankaran Naren 7, Large Cap Reliance Growth Fund(G) Sunil Singhania 5, SBI BlueChip Fund-Reg(G) Sohini Andani 11, Multi-Cap Birla SL Equity Fund(G) Anil Shah 4, IIFL India Growth Fund-Reg(G) Prashasta Seth Mid-Cap UTI Mid Cap Fund(G) Lalit Nambiar 3, SBI Magnum MidCap Fund-Reg(G) Sohini Andani 3, Small-Cap Franklin India Smaller Cos Fund(G) R. Janakiraman 4, Reliance Small Cap Fund(G) Sunil Singhania 3, Corpus as on: Feb 2016; Returns and Ratios as on March 31,

14 Recommended Mutual Funds Category-wise Scheme Name Fund Manager Corpus (Rs cr) 1 M (%) 6 M (%) 1 Y (%) 3 Y (%) 5 Y (%) ELSS Birla SL Tax Relief '96(G) Mahesh Patil 2, Reliance Tax Saver (ELSS) Fund(G) Ashwani Kumar 6, Debt Mutual Funds HDFC Medium Term Opportunities Fund(G) Anupam Joshi 9, HDFC Short Term Opportunities Fund(G) Anil Bamboli 9, Reliance STF(G) Prashant Pimple 17, Reliance Money Manager Fund(G) Amit Tripathi 16, Corpus as on: Feb 2016; Returns and Ratios as on March 31,

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