Balance your asset allocation Dynamically Franklin India Dynamic PE Ratio Fund of Funds

Transcription

1 Balance your asset allocation Dynamically Franklin India Dynamic PE Ratio Fund of Funds November 2017

2 Return What does an investor expect from Investments? Moderate Return Moderate Risk Risk The Average investor aims to earn Returns with moderate Risks 1

3 Return Risk-Return of popular Investment Options Ideally an investor desires Returns with moderate Risk Equity High Return High Risk The Middle Path Debt Low Return Low Risk Risk How can an investor achieve the middle path? 2

4 Average Returns Wisdom of the Middle Path Investing in both Debt and Equity High Volatility, High Return 20% 16% The Middle Path 50% Debt 50% Equity 30% Debt 70% Equity 100% Equity 12% 80% Debt 20% Equity 8% 4% 100% Debt Low Volatility, Low Return Average Inflation = 7.08% 0% 0% 5% 10% 15% 20% 25% 30% Standard Deviation of Returns Diversifying across Asset Classes may help in generating better Risk adjusted Returns Past performance may or may not be sustained in the future. The aforesaid portfolios are for illustration purposes only and should not be construed as investment strategies / investment advice. Investors should consult their investment advisor and construct their portfolios based on their risk appetite, time horizon, investment goals, etc. Equity: Nifty 50, Debt: Crisil Composite Bond Fund Index. Returns are one year rolling Returns in Monthly steps. Data from 31-Mar-2003 to 31-Oct Source: Inflation: RBI. The average inflation is for period 31-Mar-2003 to 31-Oct For Mar-2004 to Dec-2011: Consumer Price Index (CPI) Industrial Workers, while Jan-2012 onwards: Consumer Price Index (CPI) combined data (new series) is used. For CPI Industrial Workers, inflation data is not available for the months of Jan 2006 to Dec 2006, as the base year 2001 index series started from Jan

5 Hybrid Funds An efficient investment option providing the middle path Diversification by investing in both Debt and Equity Strategic Asset Allocation to ensure exposure to both Asset Classes Hybrid Funds Tactical Tilts in Asset Allocation to take advantage of market conditions as per fund mandate Regular Monitoring & Re-balancing 4

6 Winners Rotate No asset class continues to outperform or underperform 80% 60% Equity Outperformance Debt Outperformance 40% 20% 0% -20% -40% -60% 1-Year Equity Returns 1-Year Debt Returns With exposure to both asset classes, Hybrid Funds may continue to benefit Past performance may or may not be sustained in the future. Source: Debt: Crisil 10-Year Gilt Index; Equity: Nifty 50. Returns for each year are 1-year returns from 31 March of the previous year to 31 March of current year. So, represents 1 year returns from 31-Mar-2005 to 31-Mar Source: NSE, Crisil 5

7 Mar-04 Dec-04 Aug-05 Apr-06 Dec-06 Aug-07 Apr-08 Dec-08 Aug-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Sep-15 Jun-16 Feb-17 Oct-17 Dynamic Asset Allocation Tactical shifts in Asset Allocation to capitalize on short-term opportunities Month end Nifty Month end Nifty PE An underweight allocation to Equity would have helped contain losses during the crash Overweight allocation to Equity would have helped portfolio participate in the market rally Month end Crisil 10-Year Gilt Index In 2007, Equity Markets were at a high and debt markets were underperforming. In 2008, when Equity markets crashed, Debt markets generated attractive returns Tactical asset allocation can help an investor generate returns by going overweight on an undervalued asset class and underweight on an overvalued one Past performance may or may not be sustained in the future. Source: NSE, Crisil. Data from 31-Mar-2004 to 31-Oct

8 How can investors capitalize on Asset Class cycles through Dynamic Allocation to Debt and Equity? Presenting Franklin India Dynamic PE Ratio Fund of Funds Product Label This product is suitable for investors who are seeking* Long term capital appreciation A hybrid fund of funds investing in equity and debt mutual funds. Investors should consult their financial advisors if in doubt about whether the product is suitable for them. 7

9 About the Fund 8

10 Underlying Funds Franklin India Dynamic PE Fund of Funds (FIDPEF) is a Fund of Fund investing in other Franklin Templeton Funds The Fund allocates it Equity and Debt component to Franklin India Prima Plus (FIPP) and Franklin India Income Opportunities Fund (FIIOF) respectively only if the proportion of FIDPEF in the primary funds Franklin India Bluechip fund (FIBCF) and Franklin India Short Term Income Plan (FISTIP) reaches 20%. Fund of Fund FIDPEF Franklin India Bluechip fund (FIBCF) Franklin India Short Term Income Plan (FISTIP) Franklin India Prima Plus (FIPP) Franklin India Income Opportunities Fund (FIIOF) EQUITY FUNDS DEBT FUNDS For Product Labels of scheme please refer annexures 9

11 Asset Allocation Strategy Regular Re-balancing through a seamless system, that is triggered by changes in month end weighted average PE ratio of NSE Nifty Index Increase in equity exposure when Nifty is undervalued and vice versa Pre-defined range of allocation reduces risk of discretionary decisions or emotional bias Under normal circumstances, investment range would be as follows If weighted average PE ratio of NSE Nifty falls in this band the equity component will be (%) and the debt component will be (%) Upto Above

12 Mar-04 Sep-04 Apr-05 Nov-05 Jun-06 Jan-07 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Jan-16 Aug-16 Mar-17 Oct-17 Equity Allocation (%) Nifty PE Nifty 50 Benefits of Dynamic Asset Allocation Month end Nifty 50 Month end Nifty 50 PE Month End Equity Allocation in FIDPEF(%) % - Average Equity Allocation FIDPEF 30 Tactical Asset Allocation to take advantage of mispricing opportunities Lower Allocation to Equity in high PE markets helps protect portfolio from market crashes Higher Allocation to Equity in low PE markets provides participation in markets recovery Past performance may or may not be sustained in the future. Information is historical and may not reflect current or future portfolio characteristics. Data as on last working day of the month. Data from 31-Mar-2004 to 31-Oct

13 Scheme Performance As on October 31, 2017 Scheme NAV as on Oct 31, 2017 Compounded Annualised Growth Rate Performance (%) Last 1 year (Oct 28, 2016 to Oct 31, 2017) Last 3 Years (Oct 31, 2014 to Oct 31, 2017) Last 5 Years (Oct 31, 2012 to Oct 31, 2017) Since inception till Oct 31, 2017 NAV* Returns NAV* Returns NAV* Returns NAV* Returns Value of Investment of Inception Date Rs.10,000 since inception Franklin India Dynamic PE Ratio Fund of Funds (FIDPEF) - Growth % % % % 76, B: S&P BSE Sensex % % % % 67,687 B :CRISIL Balanced Fund Aggressive Index % % % % 49,898 Additional Benchmark - - N.A - N.A - N.A - N.A N.A Performance of Top 3 and bottom 3 schemes managed by the fund managers of the scheme Franklin India Bluechip Fund (FIBCF) - Growth % % % % 1,091, B:S&P BSE SENSEX % % % % 100,864 AB:Nifty % % % % 102,537 Franklin Build India Fund (FBIF) - Growth % % % % 41, B: Nifty % % % % 23,851 AB: Nifty % % % % 22,082 Franklin India Prima Plus (FIPP) - Growth % % % % 574, B:Nifty % % % % 84,116 AB:Nifty % % % % 78,809 Franklin India Life Stage Fund of Funds (FILSF) - The 50s Plus Floating Rate % % % % 34, Plan - Growth Benchmark$ % % % % 32,042 Additional Benchmark - - N.A - N.A - N.A - N.A N.A FILSF - The 50s Plus Plan - Growth % % % % 33, Benchmark$ % % % % 31,892 Additional Benchmark - - N.A - N.A - N.A - N.A N.A Franklin India Multi Asset Solution Fund (FIMAS) - Growth** % N.A N.A N.A N.A % 12, B :CRISIL Balanced Fund Aggressive Index % - N.A - N.A % 12,468 Additional Benchmark - - N.A - N.A - N.A - N.A N.A Past performance may or may not be sustained in future. Fund Managers: FIDPEF: Anand Radhakrishnan (Managing Since 01-Feb-11), FIBCF: Anand Radhakrishnan (Managing Since 31-Mar-07) & Roshi Jain (Managing Since 02-May- 16), FBIF: Roshi Jain (Managing Since 01-Feb-11) & Anand Radhakrishnan (Managing Since 04-Sep-09), FIPP: Anand Radhakrishnan (Managing Since 31-Mar-07) & R. Janakiraman(Managing Since 01-Feb-11), FILSF: Equity-Anand Radhakrishnan (Managing Since 01-Feb-11); Debt-Sachin Padwal-Desai (Managing Since 07-Aug-06), Pallab Roy (Managing Since 25-Jun-08), FIMAS: Anand Radhakrishnan (Managing Since 27-Feb-15). B: Benchmark. AB: Additional Benchmark. N.A.: Not Applicable. *NAV (beginning of period). The FIDPEF fund manager Anand Radhakrishnan 12 schemes/plans of Franklin Templeton Mutual Fund respctively. 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: The 50s Plus Plan - 20% S&P BSE Sensex+ 80% Crisil Composite Bond Fund Index, The 50s Plus Floating Rate Plan - 20% S&P BSE Sensex + 80% Crisil Liquid Fund Index.Returns are compounded annualized. 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).**This scheme has been in existence for more than 1 year but less than 3 years/5 years. 12

14 Absolute Returns (%) Calendar Year Performance (20) (40) (60) 2017 YTD FIDPEF - Growth (5) (25) B1: S&P BSE Sensex 25 2 (5) (25) (52) B2: CRISIL Balanced Fund - Aggressive Index (14) (34) Outperformance over B1 (10) 6 10 (5) (5) (6) 19 (6) (27) 27 (20) (13) (11) 8 Outperformance over B2 (4) 1 5 (1) (2) (1) 9 (3) 5 9 (9) Past performance may or may not be sustained in future. Inception Date: October 31, Load is not taken into consideration. reinvested and bonus is adjusted. YTD is as on October 31, B1 & B2: Benchmark, AB: Additional Benchmark. Dividends assumed to be 13

15 Returns (%) Market Resilience As of 31 st October 2017 Initial Rise: 31 st Oct th Jan 04. India Re-rating: 14 th Jan th May Peak: 10 th May 06-8 th Jan 08. Global Crisis Lows: 8 th Jan 08-9 th Mar 09. Post Crisis Peak: 9 th Mar 09 9 th Nov 10. Current: 9 th Nov st Oct (20) (40) (60) (80) Participated in Equity market bull runs Initial Rise India Rerating 2008 Peak Weathered the Global Financial Crisis Global crisis lows Post-Crisis Peak Current FIDPEF (31) Returns since inception B1: S&P BSE Sensex (55) B2: Crisil Balanced Fund - Aggressive Index (36) Outperformance over B1 (1) (7) (12) 25 (27) 3 1 Outperformance over B2 9 9 (3) Past performance may or may not be sustained in future. Returns are compounded and annualized for more than 1 year period. Inception Date: October 31, Load is not taken into consideration. B1 & B2: Benchmark. Given the asset allocation, hybrid fund/fund of funds performance are not comparable with pure equity/debt fund performance and that of Additional Benchmarks. Additional Benchmark: Not Applicable 14

16 SIP Returns as on October 31, 2017 FIDPEF 1 year 3 year 5 year 7 year 10 year Since Oct 2003 Total amount Invested (Rs) 120, , , ,000 1,200,000 1,680,000 Total value as on Oct 31, 2017 (Rs) 128, , ,832 1,266,536 2,169,985 4,436,403 Returns 14.16% 10.92% 12.05% 11.53% 11.40% 12.89% Total value of B: S&P BSE SENSEX 134, , ,188 1,255,688 2,073,893 4,066,978 B:S&P BSE SENSEX Returns 23.72% 11.79% 11.91% 11.29% 10.55% 11.78% Total value of AB: CRISIL Balanced Fund Aggressive Index AB: CRISIL Balanced Fund Aggressive Index Returns 131, , ,417 1,259,279 2,079,761 3,804, % 11.79% 12.02% 11.37% 10.60% 10.93% Past performance may or may not be sustained in future. B1 & B2: Benchmark, AB: Additional Benchmark. Inception Date: October 31, 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. 15

17 Dividend History FIDPEF Dividend Plan Record Date Div Per Unit (Rs.) (A) Record Nav (Rs.) - Dividend Plan (B) Record Date NAV (Rs.) Direct Dividend Plan Dividend Yield (A/B)* 27/10/ % 28/07/ % 28/04/ % 27/01/ % 28/10/ % 22/04/ % 29/01/ % 23/10/ % 31/07/ % 24/04/ % 23/01/ % 31/10/ % 25/07/ % 17/04/ % 17/01/ % 25/10/ % 19/07/ % 18/04/ % 24/01/ % 12/10/ NA 6% 20/07/ NA 6% 20/04/ NA 6% 27/01/ NA 6% 21/10/ NA 6% 29/07/ NA 6% 21/04/ NA 6% 19/11/ NA 8% 11/11/ NA 8% 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). * Per annum 16

18 Details of Underlying Funds - Primary Funds FIDPEF primarily invests in these funds Equity Fund - Franklin India Bluechip Fund (FIBCF) Pure Large Cap Fund Blend of Growth and Value Debt Fund - Franklin India Short Term Income Plan (FISTIP) Low Interest Rate Sensitivity Medium to High Credit Quality Track Record of over 23 years Exposure to Bluechips - Matured Businesses with Stability and Visibility. Buy and Hold Strategy - Well managed companies that are able to deliver sustainable growth in earnings. Focus on fundamentals, stock weightages based on Valuation and Potential. AUM of Rs. 8, Cr as on 31 st October 2017 Track Record of over 15 years. Invests primarily in corporate bonds with a focus on higher accrual income. Low average maturity profile to minimize interest rate risk - Weighted Average Maturity of 2.33 years on 31 st October Aim to hold securities to maturity to minimize impact of interest rate volatility on prices. AUM of Rs. 8, Cr as on 31 st October

19 Details of Underlying Funds - Secondary Funds FIDPEF will invest in these funds only if investment limit in primary funds has been reached Equity Fund - Franklin India Prima Plus (FIPP) Primarily Growth Large Cap with some exposure to mid/small cap Debt Fund - Franklin India Income Opportunities Fund (FIIOF) Medium Interest Rate Sensitivity Medium to High Credit Quality Track Record of 23 years. Typically large and mid cap ratio of 80:20. Buy and Hold Strategy - Well managed companies that are able to deliver sustainable growth in earnings. Wealth creating companies that generate a return on capital in excess of their cost of capital. AUM of Rs. 11, Cr as on 31 st October Regular income and capital appreciation by investing in fixed income securities across the yield curve Low to moderate average maturity profile to minimize interest rate risk - Weighted Average Maturity of 2.23 years on 31 st October Higher yields with relatively lower interest rate risks by primarily concentrating in corporate debt and securitized debt paper AUM of Rs. 3, Cr as on 31 st October

20 Fund Snapshot as on October 31, 2017 Fund Description Open-end fund that dynamically balanced portfolio of equity and income funds. Inception Date October 31, 2003 Assets Rs crore (October 31, 2017) Managed by Anand Radhakrishnan Investment Style Dynamic Asset allocation strategy Minimum Amount 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/-. Benchmark Exit Load CRISIL Balanced Fund Aggressive Index, S&P BSE Sensex 1% if the units are redeemed/switched-out within one year of allotment 19

21 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 Dynamic PE Fund of Funds (FIDPEF): An open end fund of funds scheme seeking to provide long-term capital appreciation with relatively lower volatility through a dynamically balanced portfolio of equity and income funds. Franklin India Bluechip Fund (FIBCF): An open-end growth scheme with an objective primarily to provide medium to long - term capital appreciation. Franklin India Prima Plus (FIPP): An open end growth scheme with an objective to provide growth of capital plus regular dividend through a diversified portfolio of equities, fixed income securities and money market instruments. Franklin India Short Term Income Plan (FISTIP): An open end income scheme with an objective to provide stable returns by investing in fixed income securities. Franklin India Income Opportunities Fund (FIIOF): An open end income fund that seeks to provide regular income and capital appreciation by investing in fixed income securities across the yield curve. Load Structure: The investors are requested to check the prevailing load structure of the scheme before investing. Please refer website/latest SID/addenda for the latest load structure of the respective schemes.risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 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. The expenses of the Fund of Funds scheme will be over and above the expenses charged by the underlying schemes. At the peak of a bull market in FTDPEF, a portfolio balanced on PE ratios may not outperform a fully invested portfolio. The existence, accuracy and performance of the Nifty 50 Index will directly affect the scheme s performance. The investors may refer to the Scheme Information Documents and the related Addenda of the Underlying Funds for the Scheme Specific Risk Factors and Special Considerations of the respective schemes. 20

22 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.