Axis Growth Opportunities Fund

Transcription

1 Axis Growth Opportunities Fund NFO period: 1 st Oct, 2018 to 15 th Oct, 2018 This product is suitable for investors who are seeking*: capital appreciation over long term investment in a diversified portfolio predominantly consisting of equity and equity related instruments both in India as well as overseas *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. (An Open-ended Equity Scheme investing in both large cap and mid cap stocks) 1

2 Domestic mutual fund s universe as a % of available opportunities COUNTRY MARKET CAP AS A % OF WORLD MARKET CAP 41% United States 3% Germany 3% FRANCE 11% CHINA 8% Japan 3% INDIA 2% South Africa Domestic MF investors are not exposed to 97% of the world Source: World Bank. Data as on 31 st Aug

3 Global diversification creates opportunity Different markets perform at different times Calendar Year MSCI China Index MSCI Europe Index MSCI India Index MSCI Japan Index MSCI US Index CY % -48% -65% -31% -39% CY % 31% 100% 5% 24% CY % 1% 19% 13% 13% CY % -15% -38% -18% 0% CY % 17% 23% 8% 13% CY % 22% -5% 24% 30% CY % -9% 22% -5% 11% CY % -5% -7% 7% -1% CY % -3% -3% 1% 9% CY % 22% 37% 22% 20% Source: Bloomberg Returns in USD. Past performance may or may not be sustained in future. 3

4 with low correlations amongst each other MSCI China Index MSCI Europe Index MSCI India Index MSCI Japan Index MSCI US Index MSCI China Index NA MSCI Europe Index 0.44 NA MSCI India Index NA MSCI Japan Index NA 0.01 MSCI US Index NA Above data is based on daily return over last 10 years. Data as on Aug Past performance may or may not be sustained in future. 4

5 Global allocations help better withstand event shocks GLOBAL events DOMESTIC events SCENARIO MSCI WORLD INDEX MSCI INDIA INDEX SCENARIO MSCI WORLD INDEX MSCI INDIA INDEX CY 2000 Dot com bubble -14.0% -22.8% CY 2008 CY 2011 Subprime mortgage crisis US credit rating downgrade, European sovereign debt crisis -42.1% -65.0% -8.0% -37.5% CY 1998 Sanctions imposed on India post nuclear tests 22.8% -22.9% CY 2013 Taper tantrum 24.1% -5.3% CY 2016 Demonetisation & growth concerns 5.3% -2.9% Combined observation indicate need for global diversification Source: Bloomberg Returns in USD. Past performance may or may not be sustained in future. 5

6 Global exposure can bring down risk of the overall portfolio Return (CAGR) (10 year) Risk (Std Dev) (10 year) Minimum 1 year return Domestic Portfolio (Nifty 50 Index) 10.4% 20.7% -24% Global Portfolio (MSCI World Index) 10.1% 16.7% -12% 70 Domestic + 30 Global 10.7% 16.6% -18% Source: Bloomberg, Returns are in INR. Data as on 31 st Aug Past performance may or may not be sustained in future. Risk is depicted by Standard Deviation for daily returns over last 10 years. Minimum 1 year return in the last 10 years (daily basis) is used to show the downside risk of each of the portfolios. 6

7 Opportunity to invest in unexplored themes and bluest of the blue chips Amazon $952bn (USA) Alphabet $814bn (USA) Facebook $471bn (USA) Johnson & Johnson $368bn (USA) Alibaba $421bn (China) LVMH $166bn (France) Intel $214bn (USA) Visa $291bn (USA) Adidas $50bn (Germany) Toyota $200 bn (Japan) Source: Bloomberg. Data as on 31 st Aug Above stocks may or may not be a part of portfolio. Fund manager will take the final call based on the views on markets. 7

8 The RESPONSIBLE Mutual Fund Axis Growth Opportunities Fund 8

9 Introducing Axis Growth Opportunities Fund Domestic large caps - Typically 30-35% 1 Domestic equities : Diversified multicap portfolio Foreign securities: Total large caps: 35-65% 2 Overseas equities : Invest directly in overseas stocks in compact large cap portfolio (Investment Advisor (Proposed): Schroders Investment PLc.) Up to 35% (predominantly large caps) Domestic midcaps Typically 35-40% Total mid caps: 35-65% Please refer to the Scheme Information document of the document for detailed asset allocation and investment strategy. Axis AMC may appoint investment advisors for overseas investments. Axis AMC proposes to appoint Schroders Investment PLc. to provide investment advice for investment in foreign securities. 9

10 AXIS APPROACH EQUITY KEY PILLARS OF OUR INVESTMENT APPROACH Axis is a bottom-up investor that focuses on fundamental research driven investing Our philosophy is focused on identifying quality companies that have a sustainable medium to long term growth potential run by capable managements Look for quality businesses Growth biased focusing on sustainable AMELIA PEARCY growth Designer Aim to deliver superior risk adjusted returns High conviction investors 10

11 What do we mean by quality businesses? Bottom-Up approach with 2-3 year view looking for Strong corporate governance/stro ng promoter pedigree Strong business model, which demonstrates its pricing power in the product category and the business it is in, and ultimately Secular growth rate of the sector, which is anywhere around 1.5 to 2x of GDP; Good ROE s and cash flows Source: Axis 11

12 How will we manage overseas allocation? GLOBAL ADVICE INVESTMENT Overseas investments will be advised by Schroders International PLc. Invest directly in overseas securities EXECUTION Transaction executed through key intermediaries (broking/custody) in US and other major markets PHILOSOPHY Aligned with domestic investment philosophy of quality high growth stories 12

13 About Schroders Group Assets under management and administration billion 4,800+ employees Operating in 30 countries across Europe, the Americas, Asia, Middle East and Africa 1,000+ Company engagements on ESG globally in 2017 Over 200 years experience of investment markets Source: Schroders, as at 30 June

14 Schroders Global presence Global investment resource: over 700 investment professionals worldwide The Americas Argentina Bermuda Brazil Chile Mexico United States UK and Channel Islands Guernsey Jersey United Kingdom Asia and Australasia Australia China Hong Kong Indonesia Japan Republic of Korea Singapore Taiwan Investment centres Wealth Management. Source: Schroders, as at 30 June Europe, Middle East and Africa Denmark France Germany Gibraltar Italy Israel Luxembourg Netherlands South Africa Spain Sweden Switzerland United Arab Emirates 14

15 Schroders Global Equity capabilities Five pillars of value creation 15

16 Schroders Investment Philosophy Focus on un-anticipated growth Seek to exploit 3 persistent inefficiencies Markets over-react to short term news flow Markets extrapolate historic growth and fail to correctly interpret catalysts that change the trajectory of growth Markets fail to look far enough ahead when appraising the earnings power of companies The Growth Gap Market inefficiencies often drive material differences between underlying company fundamentals and market estimates (the Growth Gap ) Discipline Disciplined investment in stocks which deliver positive earnings surprise can deliver consistent 16

17 Schroders approach to stock picking The Growth Gap Core Growth Markets often fail to look far enough ahead Opportunistic Growth Consensus often fails to anticipate inflection Positive Growth Gap Positive Growth Gap FY1 FY2 FY3 FY4 FY5 Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Company Earnings Consensus Estimates Consensus Estimates Company Fundamentals Structural Sustainable Competitive Advantage Innovation Cyclical Transitional growth Turnarounds / Restructuring The "company earnings" line in the graph represents Schroders forecast (as opposed to the consensus estimates). The opinions statedinthis presentation include some forecasted views. Schroders believe that they are basing their expectations and beliefs on reasonable assumptions within the bounds of what they currently know. However, there is no guarantee that any forecasts or opinions will be realised. For illustrative purposes only. Past Performance is not a guide to future performance and may not be repeated 17

18 Investment approach for overseas investments Country exposure Typically key exposures will be in Americas, Europe ex- UK middle east, Emerging Markets & Japan Sector allocation Typically the top sectors will be Information Technology, Financials, Consumer Discretionary and Healthcare Market Cap The fund aims to capture the global opportunities that are unavailable for domestic investors. Predominantly large caps (typically companies with >$5bn market cap) Investment Focus High conviction ideas where Current price doesn t reflect future prospects Expected to deliver future earnings growth above consensus over 3-5-year horizon. Also looks at material environmental, social and governance (ESG) factors Source: Schroders 18

19 The fund aims for opportunities that are best of both worlds New opportunities Opportunity to invest in world Global Diversification Domestic quality portfolio with GLOBAL DIVERSIFICATION NEW OPPORTUNITIES EXPERTISE class companies and themes, which are not available in India Expertise global diversification can reduce volatility and drawdowns The fund aims to provide Axis s domestic research & investing capabilities + Schroders global expertise 19

20 Features at a glance Category Fund manager Investment Horizon Benchmark Min. Application amount Large & Midcap Fund Jinesh Gopani Hitesh Das (Foreign Securities) 5+years S&P BSE 200 Rs 5,000 and in multiples of Re. 1/- thereafter 20

21 Market Outlook 21

22 Pace of economic growth accelerating, to support earnings Strong GDP growth (%) Dec-12 Sep-13 Jun-14 Mar-15 Dec-15 Sep-16 Jun-17 Mar-18 India Annual GDP Growth Rate India's relative growth turning - case for outperformance 50% 40% 30% 20% 10% 0% -10% -20% -30% 3-year fwd India EPS growth relative to EM -40% 3-year fwd India returns relative to EM - RS % 80% 60% 40% 20% 0% -20% -40% Strong IIP numbers (3m rolling average %) Nifty Earnings growth 7% 10% 3% 8% 14% 21% 16% Source: Morgan Stanley Research, CLSA (CL CLSA estimate), Bloomberg, Data as on 30 th Aug % FY13 FY14 FY15 FY16 FY17 FY18CL FY19CL FY20CL 22

23 Supported by robust macro indicators Inflation (%) Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Forex reserves (USD bn) Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Fiscal Deficit (% GDP) Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Current Account Deficit (% GDP) Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Source: Bloomberg, Data as on 31 st Aug

24 Structural reforms support growth, reducing uncertainty Measure Inflation targeting NPL resolution GST Financial inclusion Subsidy reduction Ease of business Rera Demonetisation Outcome Consumer price inflation halves; consequent positive real rates trigger jump Inflation targeting in financial savings Corporate bankruptcies happen for the first time in India, though process sees some legal hurdles Substantial simplification of indirect taxes; anti-evasion measures yet to be tightened Opening up 300m+ bank accounts substantially boosts formal financial system access across India Deregulation of auto-fuel prices, DBT mechanism a positive; food/farm subsidy bill sees expansion Substantial process easing, digitisation of processes; However major labour and land reforms elusive Real estate sees regulatory body for first time; push for affordable housing Some improvement in formalised economy; economic disruption lasted about a year Source: CLSA. As on 31 st Aug

25 Dec-08 Jun-10 Dec-11 Jun-13 Dec-14 Jun-16 Dec-17 We are seeing initial signs of capex revival Demand is making a comeback; synchronous recovery of consumption and exports should help lift capacity utilization Recovery in capex cycle evident in order books Improvement in Capacity Utilisation 60% 50% 82% 40% 30% 79% 20% 10% 0% 74% 76% 75% -10% -20% 72% -30% -40% Order Book, Quarterly Order Inflows, Trailing 4-Quarter sum FY13 FY14E FY15 FY16E FY18 FY19E Source: Morgan Stanley. Data as on 31 st July

26 Consumption indicators are strong Urbanization with rural overlay supported by government reforms is expected to push growth Vehicle production in India ( 000 units) 30,231 24,169 10,000 4, ,350 Passenger Vehicles Commercial Vehicles 2&3 Wheelers FY 18 FY 21E Source: CLSA; Data as on 20 th Aug

27 Policy thrust to remain on rural economy Signs of revival in the rural economy Tractor sales volume and growth (3MMA, %y-y) Indicates a strong recovery Consumer volume growth: Rural vs urban Strong recovery over the past two quarters Source: Nomura Research. Data as on 6 th Aug

28 Financial inclusion, digital revolution is transformational JAM trinity leading to dramatic shifts in consumer behaviour Mn of Bank A/cs opened under PMJDY Aadhaar Assigned (Mn) Aadhaar Saturation (%), RS FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 (Until Aug 18) May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 95% 90% 85% 80% 75% 70% 500 Total Data Subscribers (mn) UPI Transactions Amount (Rs. bn) FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Source: PMJDY, UIDAI, Company data, TRAI, IDC, NPCI, Morgan Stanley Research, Data available as on 30 th Aug

29 Retail investors shifting towards financial savings Big portion of household savings is untapped 7% 16% 5% 5% 11% 3% 53% Property Gold Deposits Insuance Funds Provident Fund & Pension Fund Equities Cash Key retail savings avenues(us$tn) 0.20 Mutual fund AUMretail total 0.50 Life insurance AUM 0.90 Gold holding 1.20 Retail bank deposits Expect the trend in growth of financial and physical savings to reverse over next 5 years (Rstn) FY14 FY18CL FY23CL Household gross financial savings Household physical savings Source: CLSA; Data as on 20 th Aug

30 F1992 F1993 F1994 F1995 F1996 F1997 F1998 F1999 F2000 F2001 F2002 F2003 F2004 F2005 F2006 F2007 F2008 F2009 F2010 F2011 F2012 F2013 F2014 F2015 F2016 F2017E Current valuations are high relative to history However, earnings growth kicking in will help normalise Nifty 50 Index Forward P/E India vs. US: Corporate Profits to GDP 12% 10% India US 8% 6% 4% Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17 2% 0% Nifty 50 Index Forward P/E Average Source: Bloomberg, P/E Price to Earnings, Source: Bloomberg, Corporate profits- Source: Morgan Stanley. Data as on 30 th Aug

31 Disclaimer, Statutory Details and Risk Factors Disclaimer: Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time. Scheme specific risk factors: Apart from the risks associated with domestic investments, the scheme may invest in overseas markets which carry risks related to fluctuations in the foreign exchange rates, the nature of the securities market of the country, repatriation of capital due to exchange controls and political circumstances. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The material should not be construed as issued by Government of India or any of its authority. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. 31

32 Thank You Mutual Fund investments are subject to market risks, read all scheme related documents carefully