Explore the Investment potential of your Savings. November 2017

Transcription

1 Explore the Investment potential of your Savings November 2017

2 Few questions that bother investors? Tax saving avenues: Traditional or New? What additional benefits do ELSS offer? Is ELSS* a prudent avenue? How important is market timing for investment? Which one / when / how to invest in ELSS? * Equity-linked tax saving schemes 1

3 Tax Saving Tax Planning: What really matters? WHERE ONE INVESTS? In Assets which offer only Regular Income Or Growth Potential also WHY ONE INVESTS? Only Tax Savings OR Wealth Creation also WHAT TIME PERIOD ONE INVESTS? Fixed OR Based on Risk Appetite and Cash Flow Requirements How ONE INVESTS? One Time OR Systematically Equity-linked Savings Schemes (ELSS) can be a one-stop solution for all these questions 2

4 Key Features - ELSS vs Traditional tax saving avenues Avenues Characteristics ELSS PPF NSC Bank FD Lock in period (in years) 3 15^ 5 5 Nature of gains Capital gains & Dividends Interest Interest Interest Tax treatment of gains^^ Long term Capital gains & Dividends are Tax-free Interest is Taxfree Interest is Taxable Interest is Taxable Type of returns Market Linked** Fixed Fixed Fixed ^Partial withdrawals are allowed from 7 th financial year and subject to conditions. However, full amount can only be withdrawn after 15 years. Source: for PPF and NSC and for Bank FD. ^^ The information provided is for general information purpose only and the disclosures in respect of the tax implications are in accordance with prevailing tax laws and there can be no assurance or guarantee that the tax implications prevailing at the time of investment in the scheme will endure indefinitely. Further, statements with regard to tax implications mentioned herein are mere expressions of opinion and are not representations of the mutual fund to induce any investor to acquire units of the schemes of the mutual fund. In view of the individual nature of the implications, each investor is advised to consult with his or her own tax advisors/authorised dealers with respect to the specific tax and other implications arising out of his or her participation in the schemes. **Returns are subject to market risks. 3

5 Tax savings under Section 80C Under section 80C, 80CCC, and 80 CCD (1) of Income Tax Act 1961, an Individual/HUF is entitled to an aggregate amount of deduction from Gross Total Income of up to Rs. 1.5 Lacs (from FY ) on specified qualifying investments/contributions/deposits/payments. Investments / Contributions / Deposits / Payments of Rs. 1,50,000 Tax savings upto Rs. 53,303* *Assuming maximum marginal tax rate of 35.54% (including 30% income tax, 15% surcharge applicable where income of individual/huf investor exceeds INR 1 crores, 2% education cess and 1% secondary and higher education cess). The information provided is for general information purpose only and is based on the relevant provisions of the Act prevailing as on date & to the best of our knowledge and belief. In view of the individual nature of the implications, you are advised to consult your tax advisors/authorised dealers with respect to the specific tax and other implications arising out of your participation in the schemes 4

6 ELSS Investment Rationale Better inflation adjusted returns Equities may generate real positive returns (adjusted for inflation) Wealth generation over long term Equities may help in generating wealth over long term Professional Management Active portfolio management with an objective to reduce Volatility and generate Alpha 5

7 Inflation and your returns 2000 Loaf of Bread 10 1 Litre Milk 25 1 Litre Petrol 28 Higher Education 3 lakhs lakhs * 57* 87* 21 lakhs* * 102* 156* 38 lakhs* *Assuming 6% for years 2020 and 2030 However, Equities may generate real positive returns (adjusted for inflation) Average 3 year rolling return** for S&P BSE Sensex 11.4% 7.5% Average Inflation^ *Assuming 6% for years 2020 and Past performance may or may not be sustained in future. **Returns: Compounded Annualized, 3 year rolling (with 1 month shift) over a 13-year period from 30-Sep-2004 to 31-Oct ^Inflation taken for period between 30-Sep-2004 & 31-Oct Up to Dec 2011 CPI IW data is taken. From Jan 2012 CPI Combined data (new series) is taken. 6

8 Equities (S&P BSE Sensex) - Long term potential 70.0% 60.0% 62.2% Historical instances of +ve Performance Historical instances of -ve Performance 50.0% 40.0% 30.0% 20.0% 47.2% 87.4% 98.3% 12.6% 1.7% 14.3% 15.2% 29.3% 100.0% 0.0% 15.0% 21.1% 100.0% 0.0% 14.4% 10.0% 3.7% 5.3% 0.0% -10.0% -20.0% -30.0% 3 Year 5 Year 7 Year 10 Year -1.5% -18.5% Maximum Returns Minimum Returns Average Returns On a 5 year rolling basis, Sensex has delivered a positive returns 82% of the times Equities may help in generating wealth over long term Past performance may or may not be sustained in future. Period to Returns greater than 1 year period are compounded annualized. Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7, and 10 years) 7

9 ELSS - Key Benefits Concet of ELSS Lower Lock-in period ELSS currently has lowest lock-in period (3 years) among all Tax saving avenues under section 80C of Income Tax Act,1961 Tax-free gains Gains (either dividends or long term capital gains) are tax free as per current tax laws Operational Ease Investment can be made either in lumpsum or systematically (SIPs) Power of two Tax Savings + Long Term Wealth Creation Potential 8

10 How can investors benefit from ELSS Presenting Franklin India Taxshield Product Label This product is suitable for investors who are seeking* Long term capital appreciation An ELSS fund offering tax benefits under Section 80C of the Income Tax Act *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. 9

11 About the Fund 10

12 Size (Market Cap) Fund Type Investment style Growth Blend Value Large Medium Small 11

13 Investing across Market Cap 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Franklin India Taxshield (FIT) (Allocation to Large Cap, Mid Cap, & Small Cap) Average Allocation to large caps on a monthly basis has been over 71% for last 10 years Oct- 07 Apr- 08 Oct- 08 Apr- 09 Oct- 09 Apr- 10 Oct- 10 Apr- 11 Oct- 11 Apr- 12 Oct- 12 Apr- 13 Oct- 13 Apr- 14 Oct- 14 Apr- 15 Oct- 15 Apr- 16 Oct- 16 Apr- Oct Large Cap (%) Mid Cap (%) Small Cap (%) Focused on identifying opportunities irrespective of market cap Source: As per the internal classification. Data is as on Oct 31, The graph shows large cap, mid cap and small cap break as a % of the total equity. Portfolio holdings are subject to change. 12

14 Stock picking remains key 5 Years (ending October 31, 17) Attribution Analysis Allocation Effect Selection Effect Interaction Effect Franklin India Taxshield Stock selection clearly the key contributor to performance Stock picking ability has ensured performance holds up well over the medium to long term, irrespective of how allocation decisions fared Allocation Effect: It measures the impact of decisions to overweight (OW) or underweight (UW) a particular sector relative to the benchmark. Positive allocation effect: Fund is (a) OW in a sector that outperforms (OP), and/or (b) UW in a sector that underperforms (UP), total returns of the benchmark. Negative allocation effect: Fund is (a) OW in a sector that UP, and/or (b) UW in a sector that OP, total returns of the benchmark. Selection Effect: It measures the impact of selecting securities that provide different returns for a particular sector, compared to the total benchmark returns. It evaluates the fund manager's skill in choosing securities that outperformed in a particular sector, compared to the benchmark. Interaction Effect: It measures the combined impact of allocation and selection effects. Positive interaction effect: Fund is (a) OW and OP, and/or (b) UW and UP, compared to the weights and returns of a particular sector in the benchmark. Negative interaction effect: Fund is (a) OW and UP, and/or (b) UW and OP, compared to the weights and returns of a particular sector in the benchmark. All attribution effects are computed daily and are linked through time by applying additional multi-period algorithms. Source: Factset. Data is as on October 31, Past performance may or may not be sustained in future 13

15 Contributors over last 3 years FIT Nifty 500 Sector Average Weight (%) Total Return (%) Average Weight (%) Total Return (%) Allocation Effect Selection Effect Interaction Effect Contributors Industrials Materials Health Care Consumer Staples Consumer Discretionary Information Technology Financials Utilities Telecommunication Services Detractor Energy Past performance may or may not be sustained in future. Source: Factset as on October 31, Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change. Indicates high contribution to the total effect. 14

16 Scheme Performance As on October 31, 2017 Scheme Compounded Annualised Growth Rate Performance (%) NAV as on Oct Since inception Value of Investment of 31, 2017 Last 1 year (Oct 28, Last 3 Years (Oct 31, Last 5 Years (Oct 31, Inception Date till Oct 31, 2017 Rs.10,000 since inception 2016 to Oct 31, 2017) 2014 to Oct 31, 2017) 2012 to Oct 31, 2017) NAV* Returns NAV* Returns NAV* Returns NAV* Returns Franklin India Taxshield (FIT)-Growth % % % % 543, B:Nifty % % % % 131,845 AB:Nifty % % % % 104,040 Performance of Top 3 and bottom 3 schemes managed by the fund managers of the scheme Franklin India Prima Fund (FIPF)-Growth % % % % 948, B:Nifty % % % % 108,449 B: Nifty Free Float Midcap % % % - N.A^^^ N.A^^^ AB:Nifty % % % % 102,537 Franklin India Prima Plus (FIPP) - Growth % % % % 574, B:Nifty % % % % 84,116 AB:Nifty % % % % 78,809 Franklin India Flexi Cap Fund (FIFCF) - Growth % % % % 78, B:Nifty % % % % 50,148 AB:Nifty % % % % 49,374 Franklin India Pension Plan (FIPEP) - Growth % % % % 120, Benchmark$ % % % - N.A^^^ N.A^^^ AB: Crisil 10 Year Gilt Index % % % - N.A^^^ N.A^^^ Franklin India Opportunities Fund (FIOF) - Growth % % % % 73, B:S&P BSE 200# % % % % 13,439 AB:Nifty % % % % 58,941 Franklin India Monthly Income Plan (FIMIP) - Growth % % % % 52, B: Crisil MIP Blended Fund Index % % % - N.A^^^ N.A^^^ AB: Crisil 10 Year Gilt Index % % % - N.A^^^ N.A^^^ Past performance may or may not be sustained in future. Fund Managers: FIT: Lakshmikanth Reddy (Managing Since 02-May-16) & R. Janakiraman (Managing Since 02-May-16), FIFCF: Lakshmikanth Reddy (Managing Since 02-May-16) & R. Janakiraman (Managing Since 21-Feb-14), FIPP: Anand Radhakrishnan (Managing Since 31-Mar-07) & R. Janakiraman (Managing Since 01-Feb-11), FIPF: R. Janakiraman (Managing Since 11-Feb-08) & Hari Shyamsunder (Managing Since 02-May-16), FIOF: R. Janakiraman (Managing Since 01-Apr-13) & Hari Shyamsunder (Managing Since 02-May-16), FIPEP: Equity-Lakshmikanth Reddy (Managing Since 02-May-16); Debt-Sachin Padwal-Desai (Managing Since 30-Nov-06), Umesh Sharma (Managing Since 05-Jul-10), FIMIP: Equity-Lakshmikanth Reddy (Managing Since 02-May-16); Debt-Sachin Padwal-Desai (Managing Since 05-Jul-10), Umesh Sharma (Managing Since 05-Jul-10). B: Benchmark. AB: Additional Benchmark. N.A.: Not Applicable. *NAV (beginning of period). The FIT fund manager Lakshmikanth Reddy & R. Janakiraman manages 5 & 6 schemes of Franklin Templeton Mutual Fund respectively. Period for which scheme s performance has been provided is computed basis last day of the month-end preceding the date of advertisement. The top three and bottom three funds managed by the fund manager(s) have been derived on the basis of the since inception returns. Different plans have a different expense structure. The performance details provided herein are of Regular Plan. $Benchmark: 40% Nifty % CRISIL Composite Bond Fund Index. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of these funds are not strictly comparable. Please refer to for details on performance of all schemes (including Direct Plans). # Index adjusted for the period February 21, 2000 to March 10, 2004 with the performance of ET Mindex. ^^^ As the scheme was launched before the launch of the benchmark index, benchmark index figures since inception are not available. 15

17 Apr-99 Jul-00 Sep-01 Dec-02 Mar-04 Jun-05 Sep-06 Dec-07 Feb-09 May-10 Aug-11 Nov-12 Feb-14 Apr-15 Jul-16 Oct-17 Rupees Portfolio Journey Movement of Rs. 10,000 invested in FIT, Nifty 500, & Nifty , ,000 FIT: Rs. 543, , , , ,000 B: Nifty 500 : Rs. 131,845 AB: Nifty 50 : Rs. 104,040 0 FIT B: Nifty 500 AB: Nifty 50 Period Past performance may or may not be sustained in future. The graph shows the movement of Rs. 10,000 invested in FIT Growth Plan, Nifty 500, and Nifty 50 since inception of the fund as on October 31, B: Benchmark and AB: Additional Benchmark. Inception Date: April 10, Please refer for details on performance of all schemes (including Direct Plans). 16

18 Absolute Returns (%) Calendar Year Performance (30) (60) 2017 YTD FIT - Growth (15) (49) (13) 2 B: Nifty (1) (27) (57) (23) (24) AB: Nifty (4) (25) (52) (16) (15) Outperformance over B (7) (2) 12 9 (10) 8 (6) (7) Outperformance over AB (2) (1) (13) Past performance may or may not be sustained in future. The chart shows calendar year performance of FIT Growth Plan, Nifty 500, and Nifty 50. B: Benchmark and AB: Additional Benchmark. Inception Date: April 10, YTD performance is as of October 31, Please refer for details on performance of all schemes (including Direct Plans). The superlative performance shown in 2003, 2007, 2009 & 2014 was on account of overall sharp rise in stock prices coupled with stock selection and fund s overweight position in outperforming sectors. 17

19 Fund Facts - Rolling Returns Franklin India Taxshield Historical instances of +ve Performance Historical instances of -ve Performance 80.0% 74.3% 70.0% 60.0% 50.0% 40.0% 30.0% 53.7% 94.5% 100% 100% 100% 5.5% 0% 44.7% 0% 0% 31.4% 22.8% 22.6% 21.7% 20.8% 20.0% 10.0% 3.7% 8.9% 11.3% 0.0% -10.0% -20.0% 3 Year 5 Year 7 Year 10 Year -12.9% Maximum Returns Minimum Returns Average Returns Past performance may or may not be sustained in future. Period to Load is not taken into consideration. Dividends are assumed to be reinvested. Returns greater than 1 year period are compounded annualized. Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years). 18

20 Rolling Returns Benchmark & Additional Benchmark B: Nifty 500 AB: Nifty % 50.0% 30.0% 10.0% 65.2% 48.1% 85.1% 98.1% 14.9% 1.9% 15.6% 15.9% 100% 100% 30.2% 0% 22.5% 0% 15.3% 14.8% 9.9% 6.6% 70.0% 50.0% 30.0% 10.0% 58.6% 44.5% 87.5% 98.8% 100% 12.5% 1.2% 28.4% 0% 14.0% 14.8% 14.7% 3.7% 100% 0% 20.6% 14.2% 5.8% -10.0% -30.0% 3 Year 5 Year -2.6% 7 Year 10 Year -23.5% Maximum Returns Minimum Returns Average Returns -10.0% 3 Year 5 Year 7 Year 10 Year -1.2% -16.4% -30.0% Maximum Returns Minimum Returns Average Returns Historical instances of +ve Performance Historical instances of -ve Performance Past performance may or may not be sustained in future. B: Benchmark, AB: Additional Benchmark for Franklin India Taxshield. Returns: Compounded Annualized. Period to Returns greater than 1 year period are compounded annualized. Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years). 19

21 Returns (%) Market resilience (as on Oct 31, 2017) (50) (100) P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 FIT 229 (35) (51) 79 (10) (12) B: Nifty (48) (58) 79 (19) 9 32 (19) AB: Nifty (36) (53) 71 (16) (21) Outperformance over B (6) 9 Outperformance over AB (1) 11 P1: Tech Bubble Peak: 10 th Apr th Feb 00. P2: Tech Crash and 9/11: 11 th Feb st Sep 01. P3: Recovery Post 9/11: 21 st Sep th Jan 04. P4: India Re-rating: 14 th Jan 04-8 th Jan 08. P5: Global Crisis Lows: 8 th Jan 08-9 th Mar 09. P6: Post Crisis Peak: 9 th Mar 09 9 th Nov 10. P7: High inflation, slow growth: 9 th Nov th Jan 12. P8: Rebound in US and QE3 buoying global rally: 30 th Jan th Jun 13. P9: Post European Crisis: 28 th Jun th Feb 15. P10: Chinese economic Slowdown: 27 th Feb th Feb 16. P11: Global Liquidity and Domestic Reforms: 29 th Feb st Oct 17. P12: Since inception: 10 th Apr st Oct 17 Past performance may or may not be sustained in future. Returns are calculated for growth plan and are compounded annualized for more than 1 year period. Inception Date: April Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration. B: Benchmark, AB: Additional Benchmark. The above graph depicts performance of the fund vis-à-vis benchmark and additional benchmark in the specified time periods which have displayed significant market movement due to change in domestic/global macroeconomic variables. 20

22 SIP Returns as on October 31, 2017 If you had invested Rs every month in FIT - Growth FIT 1 year 3 year 5 year 7 year 10 year Total amount Invested (Rs) Total value as on Oct 31, 2017 (Rs) Since Inception 120, , , ,000 1,200,000 2,230, , , ,677 1,575,231 2,920,933 20,651,088 Returns 21.08% 13.71% 18.42% 17.64% 16.95% 20.73% Total value of B: Nifty , , ,329 1,416,737 2,352,777 10,539,081 B:Nifty 500 Returns 28.92% 16.39% 16.42% 14.67% 12.91% 14.83% Total value of AB: Nifty , , ,597 1,293,210 2,143,477 9,044,520 AB: Nifty 50 Returns 24.80% 13.01% 13.01% 12.11% 11.17% 13.47% Past performance may or may not be sustained in future. B: Benchmark, AB: Additional Benchmark. Inception Date: April 10, Returns over 1 year period are compounded annualized. Calculations assume investment on the 1st day of every month. Load is not taken in to consideration. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of these funds are not strictly comparable. 21

23 Underweight Consumer Discretionary Utilities Telecommunication Services Financials Real Estate Health Care Information Technology Consumer Staples Energy Materials Industrials In (%) Overweight Fund Facts Overweights / Underweights as on October 31, Past performance may or may not be sustained in future. Source: Factset as on Oct 31, Calculations are done for the portfolio vis a vis its benchmark index Nifty 500 for determining overweights and underweights. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change. 22

24 Long term dividend History Year Record Date Dividend Per Unit (Rs.) (A) Record Date NAV (Rs.) Dividend Plan (B) Record Date NAV (Rs.) Direct Dividend Plan Dividend Yield* (A/B) 2017 January % 2016 January % 2015 January % 2014 January % 2013 January % 2012 February NA 10% 2011 January NA 12% 2010 January NA 9% 2008 December NA 15% 2007 November NA 17% January NA 20% 2006 February NA 9% 2005 March NA 11% 2004 February NA 17% 2001 March NA 11% May NA 30% 2000 March NA 26% Dividends on face value of Rs.10/-. Past performance may or may not be sustained in future. Pursuant to payment of dividend, the NAVs of the schemes would fall to the extent of payout and statutory levies (as applicable). *Dividend yield is mentioned for Dividend option. 23

25 24 Portfolio Composition Top 10 holdings Sector Share of equity AUM HDFC Bank Ltd. Banks 9.43% Axis Bank Ltd. Banks 6.06% Mahindra & Mahindra Ltd. Auto 4.35% State Bank of India Banks 3.54% Bharti Airtel Ltd. Telecom - Services 3.13% Yes Bank Ltd. Banks 3.13% Hindustan Unilever Ltd. Consumer Non Durables 2.91% IndusInd Bank Ltd. Banks 2.90% NTPC Ltd. Power 2.80% Power Grid Corp. of India Ltd. Power 2.49% Total (Top 10) 40.75% Total Equity 90.61% Top Sector Allocation Share of equity AUM Banks 27.36% Auto 11.23% Consumer Non Durables 7.26% Software 5.82% Power 5.30% Pharmaceuticals 3.92% Gas 3.89% Petroleum Products 3.86% Finance 3.60% Auto Ancillaries 3.14% Total 75.38% These securities represent the ten largest holdings held in the Fund as of the date indicated. All portfolio holdings are subject to change. The information stated above does not constitute an investment advice or recommendation to subscribe or transact in these securities. Sector classification based on AMFI. As of October 31, 2017

26 Why invest in Franklin India Taxshield? 1 Avail dual benefits Tax Savings + Growth potential (through equities) 2 Benefit from Blend Investment style (combination of Growth and Value) 3 Market Cap agnostic portfolio with focus on Bottom up stock selection 4 Long term performance + dividend track record. 25

27 26 Fund Characteristics as on October 31, 2017 Investment Objective To provide medium to long term growth of capital along with income tax rebate Inception Date April 10, 1999 Assets Rs crore (October 31, 2017) Managed by Investment Style Minimum Amount Benchmark Volatility Measures (3 years) (October 31, 2017) Portfolio Turnover (October 31, 2017) Exit Load Lock in period Lakshmikanth Reddy, R. Janakiraman Blend of Growth and Value Subscription: Fresh Purchase - Rs.5,000/-. Additional Purchase - Rs.1,000/-. Redemption: Rs.1,000/-. The amount for subscription and redemption in excess of the minimum amount specified above is any amount in multiple of Re. 1/-. Nifty 500 Standard deviation: 3.57% Beta: 0.84 Sharpe Ratio*: % Nil All subscriptions in FIT are subject to a lock in period of 3 years from the date of allotment and the unit holder cannot redeem, transfer, assign or pledge the units during the period. *Annualised. Risk free rate assumed to be 6.00% (FBIL overnight MIBOR)

28 Reward Risk Reward Matrix for select FT Equity Funds 27 Thematic Franklin Build India Fund Franklin India Smaller Companies Fund Franklin India Prima Fund Diversified Equity Franklin India High Growth Companies Fund Franklin India Taxshield Hybrid Income Franklin India Prima Plus Fund Franklin India Bluechip Fund Franklin India Flexi Cap Fund Liquid Risk 27

29 Risk Factors The information contained in this presentation is not a complete representation of every material fact regarding any industry, security or the fund and is neither an offer for units nor an invitation to invest. This communication is meant for use by the recipient and not for circulation/reproduction without prior approval. The views expressed by the portfolio managers are based on current market conditions and information available to them and do not constitute investment advice. Scheme Classification and Objective: Franklin India Taxshield (FIT): An open-ended Equity Linked Savings Scheme with an objective to provide medium to long term growth of capital along with income tax rebate. Load Structure: FIT Entry Load: Nil: Exit Load: Nil. Risk Factors: All subscriptions in FIT are subject to a lock in period of 3 years from the date of allotment and the unit holder cannot redeem, transfer, assign or pledge the during the period. The Trustee, AMC, their directors or their employees shall not be liable for any of the tax consequences that may arise, in the event that the schemes are wound up before the completion of the lock-in period. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 28

30 Franklin Templeton Asset Management (India) Pvt. Ltd. Indiabulls Finance Centre, Tower 2, 12 th and 13 th floor, Senapati Bapat Marg, Elphinstone (W) Mumbai Tel (91-22) Fax (91-22) Franklin Templeton Investments. All rights reserved. 29