MAHINDRA PRAGATI BLUECHIP YOJANA

Transcription

1 EMERGING TRENDS INDIA s BIG 100 MAHINDRA PRAGATI BLUECHIP YOJANA ECONOMY GAUGE PRAGATI KE LIYE BLUECHIP TOH BANTA HAI STABILITY 1

2 WHAT S INSIDE Market Scope Large Cap Advantage Product Introduction Investment Style Scheme Details for Investment 2

3 MARKET SCOPE Contributes 70% of Total Market Cap Invests in Top 1 st -100 th companies by Average Full Market Cap 1: TCS (M-CAP: Rs Cr ) 100: SAIL (M-CAP: Rs Cr) Contributes 16% of Total Market Cap Invests in 101 st 250 th companies by Average Full Market Cap 101: TORRENT PHARMA (M-CAP: Rs Cr) 250: RELIANCE POWER (M-CAP: Rs Cr) Contributes 14% of Total Market Cap Invests in 251 st company onwards by Average Full Market Cap 251: V-GUARD IND (M-CAP: Rs Cr) 4895: CITIZEN YARNS (M-CAP: Rs 0.02 Cr) MCap positions as of December 31, 2018 Source AMFI The data provided above is for illustrative purpose only. The companies/stocks referred above should not be construed as recommendations from Mahindra Asset Management Company Private Limited / Mahindra Mutual Fund. Schemes of Mahindra 3 Mutual Fund may or may not have any present or future positions in these companies/stocks. Mahindra Asset Management Company Private Limited/Mahindra Mutual Fund is not guaranteeing or forecasting any returns.

4 THE LARGE CAP ADVANTAGE The Big 100 4

5 LEADERS Established businesses, large scale of operations and diversified distribution Scalable business models ECONOMY GAUGE Is a good measure of economic health and impact of policy reforms STRONG FUNDAMENTALS Capital efficient with robust balance-sheets Better access to capital Resilient earnings growth LARGE CAP ADVANTAGE QUALITY INVESTMENT Well-researched companies with good corporate governance High liquidity high volume stocks, diversified shareholding 5

6 Consistent Participation in Economic Growth Stable growth potential in long term 4 REASONS WHY YOU NEED LARGE CAPS Represents Major Sectors and Trends Reasonably valued with relatively lower volatility 6

7 GDP in USD Bln BE WHERE THE ACTION IS A 1 INDIA S GDP GROWTH 2 trillion 2 MARKET CAP TO GDP RATIO 3 INDIA 74.6 USA % 60% 50% 40% 30% 37% LARGE CAP MARKET CAPITALIZATION TO GDP 64% 63% 38% 47% 45% 53% 49% 48% 59% 20% Liberalization 1 trillion 0.5 trillion Data as on Dec 31, 2018 Data Period: UK Data as on Dec 31, India s GDP has shown a strong growth 2. India s Market Cap to GDP is lower than that of developed markets 3. India s Large Cap Market Cap to GDP has shown a positive trend 4. Large Caps have historically represented more than half the market JAPAN % 0% CY 08 CY 09 CY 10 CY 11 CY 12 CY 13 CY 14 CY 15 CY 16 CY 17 NIFTY 50 MARKET CAP TO OVERALL MARKET CAP % Data as on Dec 31, FY05 FY08 FY11 FY14 FY17 FY18 Jan-19 Data period: Mar to Jan 15, 2019 FY -Financial year end Data Source: Bloomberg 7

8 B STAY ON TRACK WITH EMERGING TRENDS NIFTY COMPOSITION* BY SECTOR (%) Nifty 50 is made of the best performers in terms of earnings and volumes Best performers push out others to occupy place in the Big 100 Identifying these trends early from macro economic indicators can help generate alpha Capex-linked: Industrials, Utilities, Materials, Telecom, Energy Financial Services: Banks and Financial Services Export-oriented: IT, Pharmaceuticals Consumption-linked: Consumer Staples, Consumer Discretionary There should be enough agility to take required exposures for making the most of such emerging trend The above is as per internal thematic classification of index sectors Source: Bloomberg, NSE Data as of Dec 31 st, 2018 *Internal thematic classification of Index as per MSCI sectors 8

9 C LOOK FOR STABILITY FROM MOST OF YOUR PORTFOLIO STANDARD DEVIATION A MEASURE OF VOLITILITY Index 1 year Standard Deviation 3 years Source: Bloomberg, NSE Data as of Dec 31 st, years Nifty Nifty Midcap Nifty Smallcap Large Caps have shown lesser volatility in different market cycles Large Cap valuations have also remained relatively reasonable over these market cycles, making it an all season choice NIFTY 50 VALUATION - 1 YEAR FORWARD PE FY15 FY16 FY17 FY18 FY19E FY20E FY21E Source: Kotak Securities, Bloomberg Data as of Jan 31, 2019 Note: For FY20E & FY21E PE Index value has been taken as on Jan 31,

10 D BUILD WEALTH IN LONG TERM Return Analysis of Monthly SIP Period of SIP NIFTY 50 TRI (CAGR) NIFTY NEXT 50 TRI (CAGR) NIFTY 100 TRI (CAGR) 3 Year 12.20% 6.59% 11.40% 5 Year 11.02% 11.16% 11.09% Lumpsum Period Risk Return Analysis of Average Monthly Rolling Returns on Lumpsums CAGR NIFTY 50 TRI NIFTY NEXT 50 TRI NIFTY 100 TRI Standard Deviation CAGR Standard Deviation CAGR Standard Deviation 3 Year 11.27% 2.60% 19.64% 4.98% 12.58% 2.71% 5 Year 12.81% 4.29% 19.99% 6.25% 13.94% 4.39% The data provided above is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. Mahindra Asset Management Company Private Limited/Mahindra Mutual Fund is not guaranteeing or forecasting any returns. Past performance may or may not be sustained in future. Source: ICRA Data as on: Jan CAGR: Compounded Annual Growth Rate TRI Total Return Index 10

11 LARGE CAPS MAKE FOR MORE THAN HALF THE MARKET ACROSS SEASONS. THAT IS THE EMPHASIS IT DESERVES IN YOUR PORTFOLIO TOO. Market Cap Weightages 14% Large Cap 16% Mid Cap Small Cap 70% Mcap positions as of December 31, 2018 Source AMFI 11

12 MAHINDRA PRAGATI BLUECHIP YOJANA Large Cap Fund - An open ended equity scheme predominantly investing in large cap stocks NFO Opens: February 22, 2019 NFO Closes: March 8, 2019 Scheme reopens for continuous sale and repurchase from: within 5 business days from the date of allotment 12

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14 REASONS TO INVEST IN MAHINDRA PRAGATI BLUECHIP YOJANA Agile quality portfolio from India s Big 100 Exposure to the more stable half of the market High conviction bottom up stock picking with a focus on alpha generation 14

15 INVESTMENT STYLE 15

16 INVESTMENT STYLE High conviction * concentrated portfolio with a focus to generate alpha Blended style of growth and value stocks Top down approach to identify sectors with potential across different periods based on emerging macro trends Bottom up stock selection, that have good governance and strong leadership Agile portfolio management Tactical calls for short to medium investment horizons *Conviction will be based on internal evaluation and price performance position keeping investor interest in mind 16

17 FOCUSED APPROACH TOWARDS IDENTIFYING EARLY STRUCTURAL TRENDS Fund would be focused on identifying structural trends which may play out over medium to long term. These could include, but not limited to - CASE STUDY 1: CONSUMPTION SECTOR Per Capita Income of India vs China Increase in penetration in certain segments as per capita income of the country increases Large market share shifts either from unorganized to organized sectors or between segments of players in the market place Major economic transitions in the country such as infrastructure creation, policy reforms, socio economic transitions Technological disruptions/enablers which could alter the construct of businesses in the country By doing the above, the fund would aim to capture the changes in the index constituents over a period in time even before the same plays out A case study provided in the adjacent infographics demonstrates the large gap between India and China in consumer durables penetration which could be bridged as per capita income improves Low penetration in consumer durables segment Refrigerators Washing machines Air-conditioners INDIA $1, x 21 CHINA $8, China India Source: Haitong Securities research, Bloomberg Data as on Mar

18 CAPTURING STRUCTURAL TRENDS CREATES MEANINGFUL ALPHA Case Study 2: PSU Banks vs Private Banks The extent of market share shift and asset quality difference between PSU banks and private banks would have been difficult to envisage 3 to 5 years back Return difference between PSU Banks and private banks* But investors who bet on the same would have benefitted significantly over the same period as demonstrated by the returns for these indices - 3YR CAGR NIFTY PSU Bank Index PSU Bank Index 5YR CAGR NIFTY Bank Index Bank Index Sharp rise in NPA ratio for PSU Banks FY13 FY15 FY18 Source: RBI, Bloomberg * Nifty Bank index considered as proxy for private bank returns as PSU representation is fairly low Data as on Dec 30, 2018as on 30 December, Market share shift from PSU banks to private sector Market-share banks FY13 FY15 FY18 5 YR change PSU Banks (10.93%) Private Banks % Foreign Banks (0.4%) Small Finance Banks % The data provided above is for illustrative purpose only. Mahindra Asset Management Company Private Limited/Mahindra Mutual Fund is not guaranteeing or forecastin any returns. Past performance may or may not be sustained in future.

19 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 TACTICAL CALLS TO CAPTURE SHORT TERM SECTOR ROTATION CASE STUDY 3: METAL AND IT SECTORS Periodically, opportunities arise across sectors to benefit from some macro theme impacting the sector Cases in point being metal stocks which have strong correlation to commodity prices or IT sector s dependence on currency Metal sector performance highly correlated to steel prices STEEL vs NSEMET NSEMET STEELPrice Periods* of correlation between exchange rate and IT sector performance (10.0) (20.0) 6.7 PERFORMANCE: USDINR & NSEIT INDEX (5.3) (10.1) (7.3) (10.3) 21.2 Jan'06 - Jul'06 May'10 - Nov'10 Jan'15 - Jul'15 Nov'16 - May'17 USDINR Source: Bloomberg Data as on Dec 31, 2018 Source: Bloomberg Data as on Dec 31, 2018 NSEIT * Only those periods that have exhibited a correlation between exchange rate and IT sector performance have been considered for this analysis The data provided above is for illustrative purpose only. Mahindra Asset Management Company Private Limited/Mahindra Mutual Fund is not guaranteeing or forecasting any returns. Past performance may or may not be sustained in future. 19

20 MARKET OUTLOOK 20

21 MARKET OUTLOOK Election results is the most keenly awaited event We do not expect any major market movement before that Earnings growth visible despite challenges Valuation gap between midcap and large cap has narrowed. Markets awaiting clarity on formation of new government, adherence to fiscal deficit target for FY 19 and end to U.S.A. China trade war. FY 19 EPS FY 19 PE FY 20 EPS FY 20 PE Nifty Nifty Midcap , All figures are estimates INDEX RETURNS FOR CALENDAR 2018 (Absolute Returns) NIFTY % Nifty Midcap % Nifty Smallcap % The data provided above is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. Mahindra Asset Management Company Private Limited/Mahindra Mutual Fund is not guaranteeing or forecasting any returns. Past performance may or may not be sustained in future. Data Source: Bloomberg Consensus Estimates Data as on 31 Jan

22 SHOULD YOU WORRY ABOUT ELECTION RESULTS? There isn t any statistical data showing election outcome or government in power or tenure to have any correlation with market performance Source: Value Research : 22

23 FUND MANAGER PROFILE 23

24 FUND MANAGER Mr. V. Balasubramanian Chief Portfolio Strategist (Equity) Mr. V. Balasubramanian has over 38 years of work experience of which around 20 years have been in the Mutual Fund Industry and 8 years in Treasury of a nationalized bank. Prior to joining Mahindra Asset Management Company Private Limited, he was the Chief Investment Officer at IDBI Mutual Fund. 24

25 SCHEME DETAILS FOR INVESTMENT 25

26 ASSET ALLOCATION Instruments Indicative Allocation (% of assets) Risk Profile Minimum Maximum High/Medium/Low Equity and Equity related Securities of Large Cap companies^* Equity and Equity Related Securities of other companies^ Debt and Money Market Securities^ (including CBLO and Reverse Repo) High 0 20 High 0 20 Low to Medium Units issued by REITs & InvITs 0 10 Medium to High *Definition of Large Cap Companies: 1 st 100 th company in terms of full Market Capitalization. For the purpose of this definition, the list of stocks prepared by AMFI in this regard will be adopted. ^ including derivative instruments to the extent of 50% of the Net Assets of the Scheme. For detailed asset allocation refer SID of the Scheme available at or visit nearest Investor Service Centre. Benchmark: Nifty 50 26

27 Available plans for subscription by investors Available option under each plan Available Facilities under Dividend Option Loads Minimum Application/ Additional Purchase Amount Minimum Amount for Switch-in Minimum Amount for Redemption/ Switch-outs Minimum SIP Amount Direct (D), Regular Growth (D), Dividend Dividend Payout, Dividend Reinvestment (D) Entry Load: NA Exit Load: -An Exit Load of 1% is payable if Units are redeemed / switched-out upto 1 year from the date of allotment; -Nil if Units are redeemed / switched-out after 1 year from the date of allotment. Rs. 1,000/- and in multiples of Re. 1/- thereafter Rs. 1,000/- and in multiples of Re. 0.01/- thereafter. Rs. 1,000/- or 100 units or account balance, whichever is lower Rs 500 under monthly frequency; Rs 1500 under quarterly frequency D- Default 27

28 PRODUCT LABELING Riskometer This product is suitable for investors who are seeking* Long term capital appreciation; Investment predominantly in equity and equity related securities including derivatives of large cap companies. Investors understand that their principal will be moderately high risk * Investors should consult their financial advisers if in doubt about whether the product is suitable for them. 28

29 ANNEXURES FOR IN-DEPTH DISCUSSIONS 29

30 ANNEXURE 1: LARGE CAP POTENTIAL Strong nominal GDP growth Rise in Market Cap to GDP ratio Increase in India s Market Capitalization 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% India s market-cap/gdp ratio is below Developed Market peers 75% Market-cap to GDP (Sep-18) 128% Data Source: Bloomberg, NSE As on 30 Sep, % India Japan US Return drivers GDP growth and rising Market-cap/GDP ratio US$ trillion Mar'18 Mar'25E CAGR (%) Market-cap GDP Market-cap / GDP (%) There can be a 1.2x growth in Market-Cap/GDP Ratio Assumption: India will become a 5.8Tr USD economy (which is the current GDP of China), by Mar 25 assuming nominal GDP CAGR over FY18-25 continues to grow at the current rate of 12%*. Taking a conservative stand on Market Cap to GDP ratio for developed markets, we forecast a Market Cap to GDP ratio of 100% for India in Mar Data Source: Bloomberg, NSE As on 30 Sep, 2018 *Based on average nominal GDP over

31 ANNEXURE 2: LARGE CAP POTENTIAL (Cont..) Just the Top 6 US companies are 2x the Market Cap of entire India s listed space India s top 50 companies are less than US$1tn in market cap Projected Market Capitalization India $2.2tn India FY25E $5.8tn Market Capitalization Top-6 US companies market-cap US$ mn Microsoft Corp 788 Amazon 770 Google 747 Apple 704 Berkshire Hathaway 480 Facebook 397 Total - top 6 US companies 3,886 India - overall market-cap 2,050 Data Source: Bloomberg As of 7 th Jan 2019 Data Source: Bloomberg As of 7 th Jan

32 ANNEXURE 3: COMPARISON WITH DEVELOPED ECONOMIES LARGE CAP MARKET CAPITALIZATION TO COUNTRY GDP (% ) India - NIFTY + NIFTYJR TO GDP 8 YEAR AVERAGE : 67.4% Japan - NIKKEI225 TO GDP 8 YEAR AVERAGE: 60.7% US - S&P500 TO GDP 8 YEAR AVERAGE: 77.6% UK - FTSE100 TO GDP 8 YEAR AVERAGE: 77.4% CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 India Japan US UK Source: Bloomberg CY18 Data on Sep 30,

33 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 ANNEXURE 4: VOLATILITY ACROSS MARKET CAPS Lower volatility in large caps compared to mid and small caps Lower risk of draw downs compared to mid and small caps during corrections NIFTY NIFTY Midcap 100 NIFTY Smallcap 100 Source: Bloomberg, NSE Data as of Dec 31 st,

34 ANNEXURE 5.A: THEMES PLAYING OUT IN THE INDEX NIFTY COMPOSITION* BY SECTOR (%) Changing complexion of economy reflected in Nifty mix change : A period of high gross fixed capital formation growth; Rising share of investment linked segment in Nifty reflected this mix well : Consumption growth showed strong uptick even as capex slowed down; Pharma exports saw strong traction; Retail financing took strong roots and gained share from unorganized segments; Same got reflected in index mix; 31.4 Capex-linked: Industrials, Utilities, Materials, Telecom, Energy Financial Services: Banks and Financial Services Export-oriented: IT, Pharmaceuticals Consumption-linked: Consumer Staples, Consumer Discretionary Source: Bloomberg, NSE : Above trends got accentuated; So did their reflection in Nifty. Many new NBFCs, private banks saw inclusion in index : Moderation in exports; Consumption and Financials services theme continue to see strong growth in economy; Capex stabilizes; All trend captured in Nifty mix; *Internal thematic classification of Index as per MSCI sectors 34

35 ANNEXURE 5.B: THEMATIC SPLIT OF THE INDEX CONSUMPTION LINKED* EXPORT ORIENTED* FINANCIALS SERVICES* CAPEX LINKED* Automobile - 4 Wheelers Computers - Software Banks and Financial Institutions Engineering Cigarettes Pharmaceuticals Power Diversified Mining Automohiles - 2 And 3 Wheelers Cement & Cement Products Paints Telecommunication - Services Media & Entertainment Oil Exploration / Production Auto Ancillaries Steel & Steel Products Aluminium Gas Shipping PESTICIDES AND AGROCHEMICALS Telecommunication - Equipment Electrical Equipment Construction Metals The above classification has been used to demonstrate category movements in NIFTY over years in previous slide *Internal thematic classification of Index as per MSCI sectors 35

36 Disclaimer The views expressed here in this presentation are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader / user of this presentation. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader / user. This presentation has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. While utmost care has been exercised while preparing this presentation, Mahindra Asset Management Company Private Limited (Mahindra AMC) 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. The data/statistics, wherever provided, are given to explain general market trends in the securities market, it should not be construed as any research report/research recommendation. Readers / users of this presentation should rely on information / data arising out of their own investigations and are advised to seek independent professional advice and arrive at an informed decision before making any investments. Neither Mahindra Mutual Fund, Mahindra AMC nor Mahindra Trustee Company Private Limited, its directors or associates shall be liable for any damages that may arise from the use of the information contained herein. For detailed asset allocation, investment strategy, scheme specific risk factors and more details, please read the Scheme Information Document and Key Information Memorandum of Mahindra Pragati Bluechip Yojana available at the ISCs of Mahindra AMC and Computer Age Management Services Private Limited and are also available on Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments. Mutual fund investments are subject to market risks read all scheme related documents carefully. CNo

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