UTI Dual Advantage Fixed Term Fund Series IV I (1279 days)

Transcription

1 UTI Dual Advantage Fixed Term Fund Series IV I (1279 days) (A Close-ended Hybrid Scheme) NFO Opens: November 22, 2016 NFO Closes: December 06, 2016 RISKOMETER The product is suitable for investors who are seeking*: Income over long term investment horizon Investments primarily in Debt instruments (65%-95%) and Money Market Securities (0%- 30%), with the balance exposure in Equity and Equity related securities (5%-35%) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. For Internal Circulation

2 Presentation Flow Macroeconomic linkages key to market growth What does the investor want? UTI Dual Advantage Fixed Term Fund Series IV I (1279 days) How does the fund work & Scenario Analysis Benefits of investing in the fund Fund suitability, who should invest & key features of the fund

3 Macroeconomic linkages key to market growth Inflation Global Liquidity & Capital Flows Corporate Profits & Equity Valuations Interest Rates & INR GDP & Fiscal Consolidation 3

4 Macroeconomic Environment - A positive for Fixed Income markets Inflation October 2016 came in at 4.2% compared to 4.4% in September 2016 Core inflation has inched up to 4.94% in October 2016 v/s 4.88% in Sep 2016 FY 17 inflation expected to average lower than 5% Interest Rates & INR GoI has withdrawn bank notes of Rs. 500 and Rs.1000 to tackle corruption and black money Due to the demonetization effect a few more rate cuts are expected After selection of Donald Trump as the new POTUS, INR has fallen with further negative bias Global Liquidity & Capital Flows ECB* extended quantitative easing up to Mar 2017 in a bid to revive growth and fend off deflation BoJ pledge to increase base money at an annual pace of 80 trillion yen ($666 billion) The US Fed raised benchmark rates in December 2015 projecting rate hike in 2016 which is expected in December 2016 GDP & Fiscal Consolidation GVA growth projections pegged at 7.4% for FY17 vs. 7.2% for FY16 FY17 poised for gradual recovery to be led by consumption rather than driven by investment Low inflation, monetary transmission, higher disposable income s will spur demand Corporate Profits & Equity Valuations Earnings likely to grow with expectation of improvement in EBITDA margin The implementation of the GST bill will be a trigger as it will positively affect corporate profits P/E valuations are currently near long term averages. 4 *European Central Bank

5 The investor s mindset What does the investor want? Prefer to play safe Uncomfortable with high volatility Stays away from equity markets As they carry a higher risk, higher returns trade off Still aspires for higher returns Investment avenues Traditional debt instruments typically comes with: Relatively stable returns, Low volatility & Lower risk lower return trade off Equity markets typically comes with : Relatively volatile returns, Higher risk higher return trade off which may also give negative returns Investor s Dilemma Willing to invest in equity markets but not take higher risk and volatility

6 Presenting UTI Dual Advantage Fixed Term Fund (DAFTF) Series IV I (1279 days) A close-ended hybrid scheme of 1279 days that aims to: Offer the stability of fixed income Generate capital appreciation through equities Equity allocation to be invested in diversified portfolio of stocks across market capitalization to benefit from equity market movement Debt allocation to be invested in high quality debt to provide superior risk adjusted returns Intends to generate income and reduce interest rate volatility by investing majority of the scheme portfolio in fixed income securities maturing on or before date of maturity Intends to generate Capital Appreciation by investing part of the scheme portfolio in equity and equity related instruments. Generate Income Capital Appreciation UTI Dual Advantage Fixed Term Fund Series IV-I (1279 days) Enjoy the growth potential of equity with the stability of debt

7 How does the fund work? The scheme is a close ended hybrid scheme whose investment allocation would typically be: Debt: Allocation towards high quality debt instruments that would provide superior risk adjusted returns Equity: Allocation towards diversified portfolio of stocks to benefit from equity market movement Equity markets move upwards Equity markets are flat Equity markets move downwards Growth in portfolio value Equity Equity Growth in portfolio value Equity Equity Growth in portfolio value Equity Equity Fixed Income Initial Investment Fixed Income On Maturity after 1279 days Fixed Income Initial Investment On Maturity after 1279 days Fixed Income Initial Investment Fixed Income On Maturity after 1279 days The above graphs are for illustration purpose only to enable investors to understand the investment strategy of the Scheme. Actual returns would depend upon the yield of fixed income instruments prevailing at the time of deployment and performance of equities. Further the above illustration does not take into consideration any credit downgrade/ default by the issuer of fixed income instruments. UTI AMC Ltd. does not assure/ guarantee any returns from the scheme or protection of capital invested in the scheme.

8 Amount (Rs.) Scenario Analysis based on equity market movement Assumptions undertaken for the purpose of scenario analysis: Composition of the scheme will be 70% in debt securities and 30% in equity stocks. The returns of the debt portfolio has been assumed at 7.25% CAGR across all scenarios Value of Rs. 1,00,000 invested in the scheme Growth in portfolio value across various scenarios Equity Market Scenarios (%) The above graph is for illustration purpose only to enable investors to understand the investment strategy of the Scheme. Actual returns would depend upon the yield of fixed income instruments prevailing at the time of deployment and performance of equities. UTI AMC Ltd. does not assure/ guarantee any returns from the scheme or protection of capital invested in the scheme.

9 Tax Efficiency Returns from hybrid schemes are tax efficient* Parameters $Proposed Tax Free Bonds #Domestic Term Deposit UTI Dual Advantage Fund Series IV I (1279 Days) Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 CAGR of Equity Portfolio (%) Initial Investment Amount (Rs.) Gross Yield debt portion of portfolio (%) NA NA -15% -10% 0% 10% 15% 100, , , , , , ,000 $6.70% #7.00% 7.25% 7.25% 7.25% 7.25% 7.25% Maturity value of portfolio (Rs.) 125, , , , , , ,360 Inflation Indexed Cost *- 6% p.a. (Rs.) NA NA 122, , , , ,623 Taxable Long Term Capital Gain Tax Rate* (%) Tax Liability (Rs.) NA 26,755 (16,206) (12,444) (3,191) 8,687 15,737 NA 30.90% 23.70% 23.70% 23.70% 23.70% 23.70% NA 8,267 (2,949) (756) 2,059 3,730 3,730 Amount Net of Tax (Rs.) 125, , , , , , ,630 Post Tax Returns to investors (CAGR) (%) **7.20% 4.96% 2.08% 3.26% 6.06% 8.87% 10.35% *Subject to prevailing tax laws. $ Government announces issuance of tax-free bonds wherein the ceiling coupon rate for AAA rated issuers shall be the reference G-sec rate less fifty five basis points for Retail Individual Investors as per CBDT circular no. 59/2015 dated 6 th Jul,2015.We have assumed the current G-Sec trading levels of 7.25% as the reference rate.# Domestic term deposit rates range from % for 3 to5 yr tenure, hence we have assumed the average of 7.00%. ** Assuming that the interest paid out annually is reinvested at the same rate as the principle investment. The above chart is for illustration purpose only to enable investors to understand the tax efficiency of the Scheme. Investors should consult their financial / tax advisor before taking any investment decision. Actual returns would depend upon the yield of fixed income instruments prevailing at the time of deployment and performance of equities. UTI AMC Ltd. does not assure/ guarantee any returns from the scheme or protection of capital invested in the scheme.

10 5 Reasons to invest in the fund 1 High quality debt to provide superior risk adjusted returns 2 Potential to generate capital appreciation through equities 3 Tax Efficiency vis-à-vis traditional savings instrument 4 Suitable for risk averse investors looking to enter equity markets 5 In-house research & fund management expertise

11 Who should invest in this fund? This fund is suitable for investors who are Risk averse investors who generally invest in to traditional forms of investments like Bank Fixed Deposits (FDs), Postal Saving Schemes, Corporate FDs, etc. can make a transition to this fund. Investors who want to participate in equities without risking their capital, can seek returns on their capital through the debt portfolio as well as take exposure to equities through this fund. Investors who want to benefit from the current interest rate scenario over the tenure of the scheme without taking any interest rate risk. Higher Tax bracket investors of traditional investments who seek tax efficiency can take benefit of indexation and get an opportunity to earn better tax adjusted returns.

12 Key features of UTI Dual Advantage Fixed Term Fund Series IV I (1279 days) Type of Scheme UTI Dual Advantage Fixed Term Fund - Series IV I (1279 days) is a close-ended hybrid Plan with a tenure of 1279 days. Investment Objective The investment objective of the Scheme is to generate income and reduce interest rate volatility by investing in fixed income securities that are maturing on or before the date of maturity of the Scheme and generate capital appreciation by investing in equity and equity related instruments. However there is no assurance that the investment objective of the Scheme will be achieved. Instruments Indicative Allocation (% of Total Assets) Risk Profile Asset Allocation Debt instruments 65% to 95% Low to Medium Money Market instruments 0% to 30% Low Equity & Equity related instruments 5%-35% Medium to High The Plan will invest in securitized debt up to 25% of the net assets of the plan Fund Manager Benchmark Load Structure Minimum Application Amount for NFO Mr. Sunil Patil (Debt Portfolio) and Mr. V. Srivatsa (Equity Portfolio) CRISIL MIP Blended Fund Index Entry Load: Not Applicable Exit Load: No Exit Load is applicable for the Plan. No redemption is permitted before maturity of the plan, being a close ended Plan. Minimum investment under Regular Sub Plan and Direct Sub Plan is Rs. 5,000/- and in multiples of Re. 1/- thereafter without any upper limit.

13 Key features of UTI Dual Advantage Fixed Term Fund Series IV I (1279 days) The Plan offers the following Sub Plans : Direct Sub Plan Regular Sub Plan Each Sub Plans offer the following Options: (i) Growth Option (ii) Dividend Option with Payout facility In case no option is indicated in the application form, then the default option will be the growth option. Plans & Options offered Direct Sub Plan : Direct Sub Plan is only for investors who purchase/subscribe units directly with UTI Mutual Fund and is not available for investors who route their investments through a Distributor. Regular Sub Plan : Regular Sub Plan is for investors who purchase/subscribe units in the Plan through a Distributor The Direct Sub Plan will be a separate sub plan under the Plan and shall have a lower expense ratio excluding distribution expenses, commission etc and will have a separate NAV. No commission shall be paid from Direct Sub Plan. The Direct and Regular Sub Plans will have a Common Portfolio Liquidity Transparency / NAV Disclosure During the New Fund Offer, the units of the Plan will be sold at the face value of Rs.10/- per unit. Redemption will be done on maturity date at NAV based price of the Plan. As per SEBI guidelines, the AMC / Mutual Fund shall not redeem the units of the Plan before the date of maturity. The units of the Plan will be listed on the Bombay Stock Exchange after the closure of the New Fund Offer period. Investors will be able to enter and exit the Plan through transactions in the secondary market within five business days of allotment. The AMC will calculate and disclose the first NAV within a period of 5 business days from the date of allotment. Subsequently, the NAV will be calculated and disclosed on every business day.

14 Glossary CPI: Consumer Price Index WPI: Wholesale Price Index RBI: Reserve Bank of India INR: Indian Rupee USD: US Dollar BoJ: Bank of Japan ECB: European Central Bank US Fed: US Federal Reserve GDP: Gross Domestic Product CAD: Current Account Deficit BoP: Balance of Payments EBITDA: Earning Before Interest, Tax, Depreciation, Amortization EPS: Earnings Per Share P/E: Price to Earning Multiple CAGR: Compounded Annualized Growth Rate SBI: State Bank of India GoI: Government of India POTUS: President of The United States of America

15 Disclaimer The information on this document is provided for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration. Users of this document should seek advice regarding the appropriateness of investing in any securities, financial instruments or investment strategies referred to on this document and should understand that statements regarding future prospects may not be realized. The recipient of this material is solely responsible for any action taken based on this material. Opinions, projections and estimates are subject to change without notice. UTI AMC Ltd is not an investment adviser, and is not purporting to provide you with investment, legal or tax advice. UTI AMC Ltd or UTI Mutual Fund (acting through UTI Trustee Company Pvt. Ltd) accepts no liability and will not be liable for any loss or damage arising directly or indirectly (including special, incidental or consequential loss or damage) from your use of this document, howsoever arising, and including any loss, damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy with this document, its contents or associated services, or due to any unavailability of the document or any part thereof or any contents or associated services.

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