SBI Magnum Income Fund

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Damian Matthews
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1 SBI Magnum Income Fund

This product is suitable for investors who are seeking: Investment in debt and money- market securities Regular income for medium term Moderate

2 This product is suitable for investors who are seeking: Investment in debt and money- market securities Regular income for medium term Moderate risk SBI Magnum Income Fund Disclaimer: Investors should consult their financial advisors if in doubt whether this product is suitable for them.

3 Performance against benchmark to to 31- Mar to 2015 Since Inception SBI Magnum Income Fund - Reg Plan - Growth Scheme Benchmark: - Crisil Composite Bond Fund Index Additional Benchmark: - Crisil 10 Yr Gilt Index 2016 to 31- Mar to to 2015 Since Inception Absolute Returns (%) CAGR Returns (%) PTP Returns (INR) SBI Magnum Income Fund Crisil Composite Bond Fund Index (Scheme Benchmark) Crisil 10 year Gilt Index (Additional benchmark) Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option of regular plan and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for long-term debt schemes is used for comparison purposes. Data as on March 31, , N.A. N.A N.A. N.A.

4 Broad Asset Allocation of the Portfolio Type of Instrument % of Total Corpus Risk Profile Corporate debentures & Bonds / PSU / FI / Govt. Guaranteed Bonds / Other including securitized Debt Securitized debt Upto 90% No more than 10% of the investment in debt Low to Medium Medium to High Government securities Upto 90% Low Cash and call money^ Upto 25% Low Money-market instruments* Upto 25% Low Units of other mutual funds Upto 5% Low ^ Pursuant to RBI Guidelines, presently Mutual Funds are not allowed to participate in Call Money. * Money Market Instruments will include Commercial Paper, Certificates of Deposit, Treasury Bills, Bills Rediscounting, Repos, short term bank deposits, short-term Government securities (of maturities less than 1 year) and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.

Detailed Asset Allocation of the Portfolio Interest Rate Sensitivity ZCB, 1.41 CBLO/Reverse Repo, 6.58 NCA, -0.24 Credit Quality High Medium Low High NCD, 63.31 Gsec, 28.

50 The 10 year government bond yield hardened during the month while those of SDL s, UDAY Bonds and AAA corporate bonds rallied leading to spread compression.

5 Detailed Asset Allocation of the Portfolio Interest Rate Sensitivity ZCB, 1.41 CBLO/Reverse Repo, 6.58 NCA, Credit Quality High Medium Low High NCD, Gsec, Medium Low NCA(Incl. Cash,Deposits and Equity), 6.34 SOV,AAA and Equivalent, Below AA+, AA+, The 10 year government bond yield hardened during the month while those of SDL s, UDAY Bonds and AAA corporate bonds rallied leading to spread compression. We had built positions in these assets during March 2017 with a view of spread compression. Currently the portfolio has 16% exposure to SDL s and UDAY and 13% to Government bonds while maintain a 6.33 year of average maturity with a portfolio yield of 7.88%. Data as on: April 30, 2017

6 Spreads Favoring Investments in Corporate Bonds Percentage Year Spread 5 Year Spread 10 Year Spread Due to favourable spreads available in AAA rated Corporate Bonds, funds have been deployed in that segment to benefit from the carry. The rest of the portfolio will be tactically deployed to Gsec to play with duration and earn capital gains. Source: Reuters/Bloomberg as on April 30, 2017

7 India Rates Snapshot for April 2017 Feb-17 Mar-17 Apr-17 m-o-m change (in bps) Change YTD (in bps) 1 Yr. T-Bill M T-Bill year GSec M CD*** M CD*** Yr Corp Bond* Yr Corp Bond* Yr Corp Bond* Yr IRS Yr IRS Overnight MIBOR Rate INR/USD # Crude Oil Indian Basket** # Indian bond yields rose dramatically in February as RBI changed its monetary policy stance from accommodative to neutral and continues to stay high relative to the start of the year. Money market rates, too, inched up a bit in April, post the RBI s decision to suck out nearly Rs. 1 trillion worth of liquidity via the issuance of CMBs. Crude oil prices rose 2.1% over the month but remains flat on YTD basis. Rupee has appreciated sharply on YTD basis owing to massive FII inflows in the debt and equity market. Source: Bloomberg, PPAC, SBIMF Research; NB: **Crude oil price is average $/barrel for the month, rest of the data are % month end; *Corporate bond rate is for AAA rated bonds,*** Refers to PSU Banks CD rate; # INR and Oil price changes are % change

8 Jun-05 Feb-06 Oct-06 Jun-07 Feb-08 Oct-08 Jun-09 Feb-10 Oct-10 Jun-11 Feb-12 Oct-12 Jun-13 Feb-14 Oct-14 Jun-15 Feb-16 Oct-16 Policy Rate Outlook Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.25% in its latest meeting on 6 th April It has however narrowed the policy corridor from 50bps on either side of the repo rate to 25bps to now. Accordingly, the reverse repo rate stands at 6% (5.75% before) and the rate under the marginal standing facility stands at 6.5% (6.75% before). The narrowing of the corridor has been done in response to the benign liquidity conditions which had led short-term rates to fall below the policy rate. The rate on the 3mth T-bill rate had fallen to almost 50bps below the repo rate in March. The narrowing of the band will increase the lower bound of the yield curve to 6% and also lower the volatility in short-term rates. The central bank has indicated that going forward, it will continue to use its existing bouquet of instruments (LAF, term repos, cash management bills, MSS) to manage the excess liquidity in the near-term. Looking ahead, the RBI remains cautious on the inflation trajectory and believes that achieving the 4% mark will not be easy. Seemingly, the central bank remains wary of upside risks to inflation more even though it highlighted that risks are evenly balanced. On the other hand, it expects the growth to improve in FY18 on the back of government spending, higher consumer spending and transmission of earlier rate cuts Repo Rate (mth end, %) In our opinion, given the current outlook on inflation and growth, additional policy rate cuts are unlikely in Source: RBI, CSO, SBIFM Research

9 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Debt Market Outlook Indian bond yields rose dramatically in February as RBI changed its monetary policy stance from accommodative to neutral and has continued to stay elevated there since. As of April end, 10 year G-sec yield stands at 6.87%, up 45bps from 6.41% in March. Massive foreign inflow during March and April (due to attractive valuations) also led to the increased demand for Indian G-sec and consequent fall in yields. Going forward, as US Fed is expected to hike rates and Indian inflation is expected to inch up, this attractiveness will likely reduce. Further, with surplus liquidity, no RBI OMO purchases and neutral policy stance, the yield curve would remain steeper in the coming months. For FY18 as a whole, supply-demand dynamics of the government bonds, liquidity situation of the banks once the pace of currency withdrawal normalized, bank credit outlook and, global outlook will take prominence in guiding the bond markets trajectory year GSec yield (mth end, %) Repo Rate (mth end, %) We remain constructive, but with a slightly longer term approach as average CPI settle lower and government s measures to widen the tax base leads to structural improvement in the fiscal balance. Accordingly, we keep taking tactical calls in duration at the opportune time (like last two months). Source: Bloomberg, SBIFM Research

Current Investment Strategy Portfolio = Strategic Allocation : 30% - 40 % + Tactical Allocation: 50% to 60% Strategic Allocation : Accruals This portion of the funds is invested in 2-5 years

10 Current Investment Strategy Portfolio = Strategic Allocation : 30% - 40 % + Tactical Allocation: 50% to 60% Strategic Allocation : Accruals This portion of the funds is invested in 2-5 years Corporate Bonds The segment currently looks attractive on account of comfortable liquidity outlook. This portion of the portfolio provides stable returns without too much volatility Tactical Allocation : Long Bonds The allocation to the long bonds/ GSecs would provide trading opportunities Long bonds yields may remain volatile in the near term. Attractive absolute yield levels provide an opportunity from a long term perspective. This portion of the portfolio may also be used to take defensive positions as per fund managers outlook The fund manager will actively manage the duration of the portfolio based on the combination of the above two strategies

11 Key Information SBI Magnum Income Fund An actively managed fund, maintaining a high quality portfolio while taking active calls on managing the duration of the portfolio. The portfolio switches actively among government and corporate debt depending on the market conditions and the fund managers views. Inception Date 25-Nov-98 Fund Manager Mr. Dinesh Ahuja Managing Since Jan-11 Minimum Investment Amount Rs Additional Investment Amount Rs Exit Load Investor Suitability For exit within 1 year from date of allotment Nil for 10% of investment & 1.00% for remaining amount For exit after 1 year Nil Investors having a investment horizon of minimum 1 year Investors having a reasonable risk appetite.

12 Fixed Income : Investment Process 12 Economic / Market Analysis Economic variables Debt indicators Fiscal & Monetary Policy FX dynamics Foreign Inflows/Capital inflows Market prices Top down Duration position Yield curve position Internal Mandate Regulatory guidelines Portfolio Position Concentration Portfolio Liquidity Duration constraint External research Credit rating agencies Management Interaction Credit Analysis Operating trends Financial strength Solvency indicators Management Quality Business Dynamics Competitive positioning Portfolio Construction Bottom-up Credit selection Security allocation Spread Dynamics Sector Allocation Tactical Management Trading allocation Market forecast Market Liquidity Price opportunity

13 Performance of other schemes managed by Mr. Dinesh Ahuja Managing since January, 2011 SBI Magnum Gilt Fund - Short Term - Growth 2016 to 31- Mar to 2016 Absolute Returns (%) 2014 to 2015 Since Inception CAGR Returns (%) PTP Returns (INR) ,711 Managing since January, 2011 SBI Magnum Gilt Fund - Long Term - Growth 2016 to 31- Mar to 31- Mar-2016 Absolute Returns (%) 2014 to 2015 Since Inception CAGR Returns (%) PTP Returns (INR) ,894 I Sec Si-BEX* N.A. N.A. I Sec Li-BEX* N.A. N.A. Crisil 1 Year T-Bill Index ,994 Crisil 10 Year Gilt Index N.A. N.A. *Returns for scheme benchmark index Isec and SI-BEX is calculated using CRISIL Fund Analyser Managing since January, to to 31- Mar-2016 Absolute Returns (%) 2014 to 31- Mar-2015 Since Inception CAGR Returns (%) PTP Returns (INR) SBI Dynamic Bond Fund - Reg Plan - Growth ,600 Crisil Composite Bond Fund Index ,617 *Returns for scheme benchmark index I Sec and Li-BEX is calculated using CRISIL Fund Analyser SBI Regular Savings Fund Crisil MIP Blended Index 2016 to to 31- Mar-2016 Absolute Returns (%) 2014 to 2015 Since Inception CAGR Returns (%) PTP Returns (INR) , ,483 Crisil 10 Yr Gilt Index Crisil 10 Yr Gilt Index , ,074 Past performance may or may not be sustained in the future. Returns (in %) other than since inception are absolute calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10, 000/-. Additional benchmark as prescribed by SEBI for long-term and short-term debt schemes is used for comparison purposes only. Performance calculated for regular plan.

14 Biographies Mr. Navneet Munot - CIO Navneet Munot joined SBI Funds Management as Chief Investment Officer in December He brings with him over 15 years of rich experience in Financial Markets. In his previous assignment, he was the Executive Director & Head - multi - strategy boutique with Morgan Stanley Investment Management. Prior to joining Morgan Stanley Investment Management, he worked as the CIO - Fixed Income and Hybrid Funds at Birla Sun Life Asset Management Company Ltd. Navneet had been associated with the financial services business of the group for over 13 years and worked in various areas such as fixed income, equities and foreign exchange. Navneet is a postgraduate in Accountancy and Business Statistics and a qualified Chartered Accountant. He is also a Charter holder of the CFA Institute USA and CAIA Institute USA. He is also an FRM Charter holder of Global Association of Risk Professionals (GARP). Mr. Dinesh Ahuja Portfolio Manager Dinesh Ahuja joined SBIFM in Prior to joining SBIFM, Dinesh was a portfolio manager at L&T Asset Management and Reliance Group for four years. Dinesh started his career in 1998 as a fixed income dealer on the sell side. Thereafter he worked in leading broking outfits for eight years before moving on the buy side in Dinesh is a Commerce graduate and holds his Masters degree in Finance from Mumbai University.

15 Disclaimer Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This presentation is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund units/securities. These views alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without notice. Neither SBI Funds Management Private Limited, nor any person connected with it, accepts any liability arising from the use of this information. The recipient of this material should rely on their investigations and take their own professional advice Website Call: SBI Funds Management Private Limited (A joint venture between SBI and AMUNDI) Registered Office: 9th Floor, Crescenzo, C-38 & 39, G Block, Bandra Kurla Complex, Bandra (E), Mumbai customer.delight@sbimf.com SMS: SBIMF to Visit Visit Board line: Fax:

SBI DYNAMIC BOND FUND

SBI DYNAMIC BOND FUND This product is suitable for investors who are seeking: Investment in debt and money- market securities Regular income for medium term Moderate risk SBI Dynamic Bond Fund Disclaimer: