Sundaram Asset Management February 2014 1
Quick background Investment manager for Sundaram Mutual Fund sponsored by Sundaram Finance & Newton Group in 1996. Newton exited in 2002 BNP Paribas Asset Management (BNPP AM) became a partner in 2006. In 2010, as part of a global acquisition, the parent company of BNP Paribas Asset Management has acquired the banking and financial services activities of the Fortis Group. Hence, Sundaram Finance has fully bought-out BNP Paribas stake and has taken 100% charge of the business. The mutual fund is now fully sponsored by Sundaram Finance and it holds a 100% stake in the Asset Management Company and the Trustee Company 2
Vision, Mission & Philosophy To be a significant player in the Indian asset management space and be one of the top ten asset managers To take the least cost and most effective solution Never ever take short cuts To provide people Admit and share mistakes - internally Take necessary steps to avoid repetition of work the best experience Respect others, their needs, religion and sentiments in accessing Be on time always financial markets Communicate freely and maintain confidentiality Develop and maintain trust Work as a coherent team Respect others, their needs and sentiments Develop and maintain trust Communicate freely and maintain confidentiality Be on time always Never ever take short cuts Admit and share mistakes 3
Key strengths Robust and transparent investment process Process is as important as the end result Process is meant to control emotions Stay true to defined parameters All actions should be explainable A disciplined team approach To build a group where every member understands the goals Fund managers are expected to adhere to the investment objectives of individual funds at all times Clearly defined products An extensive product range for all risk/return profiles Quality service Emphasis on quality at all levels is the key to long-term success 4
Key strengths Robust in-house research Ability to identify ideas early zero in on the right stocks show patience be disciplined in selling Rigorous risk management and compliance to contain risks without sacrificing performance Acclaimed track record for several products 5
Structure for mutual fund business Investor Sponsor Sundaram Finance Limited Trustee Sundaram Trustee Company Limited Investment Manager Sundaram Asset Management Company Limited Mutual Fund Sundaram Mutual Fund Custodians Standard Chartered / HDFC Bank / HSBC SEBI Transfer Agent Sundaram BNP Paribas Fund Services 6
Role profile & ownership pattern Organised as a Trust Sundaram Trustee Company Sundaram Mutual Fund Launches funds Sundaram Asset Management Company Safeguard interest of investors in the mutual fund Oversight of the Investment Manager Ownership Investment manager for mutual fund Investment advisory Portfolio management services Sundaram Finance 7
Sponsor - Sundaram Finance 8
Origin of Sundaram Finance TVS - a reputed & diversified business group The group was founded by Mr. T V Sundaram Iyengar in 1911 as a bus service Considered as one of the most respected names in Indian business Leaders in quality management Pioneers in employee welfare, customer satisfaction and values 9
Origin of Sundaram Finance TVS automobile business Established in 1954 as a subsidiary of Madras Motor and General Insurance (part of the TVS Group) Founded by Sri T S Santhanam (1912-2005) IPO in 1972 1990s- 1970-1990 1954 Established a strong presence in financing commercial vehicles Targeted capture of retail space in financial services Reliance on organic growth and joint ventures with foreign partners to capitalise on new opportunities Founded to serve TVS group customers 10
Positive brand experience Brand survey findings Perceived as higher on all parameters reinforcing positive experience Fair play Service Openness Performance has always exceeded promise Highest level of word-ofmouth recommendation Integrity Discipline Customer loyalty deepens with longer association Relationships Prudence 11
The Sundaram Finance group Sundaram Finance Distribution Sundaram Trustee Company Sundaram Asset Management LGF Services Limited Sundaram Business Services Sundaram Info Tech Solutions Infreight Logistics Solutions Royal Sundaram General Insurance Joint venture between Royal & Sun Alliance UK and Sundaram Finance Sundaram BNP Paribas Home Finance Joint venture between Sundaram Finance and BNP Paribas Group Sundaram BNP Paribas Fund Services Joint venture between Sundaram Finance and BNP Paribas Group 12
Portfolio Construction Approval of Stocks Idea Flow & Research Equity Investment process An active fundamental approach Fund Mangers+ Economist RESEARCH TEAM External Research Published Information Company Visit Idea Generation Recommended List Fundamentals & Management Assessment Internal Investment Committee Norms Executive Committee APPROVED BUY LIST Fund Themes Top-Down Approach STOCK SELECTION Sector and Stock Limits Bottom-Up Stock Picking Best Trade Execution Risk Management Final Fund Portfolio Diversification Liquidity 13
Portfolio Construction Approval of Securities Idea Flow & Research Fixed-Income Investment process An active fundamental approach Fund Mangers+ Economist RESEARCH TEAM External Research Published Information Company Visit Idea Generation Recommended List Fundamentals & Management Assessment Internal Investment Committee Norms Executive Committee of the Board APPROVED BUY LIST Fund Positioning Top-Down Approach SECURITY SELECTION Issuer & Security Allocation Limits Asset Quality Evaluation & External Ratings Best Trade Execution Risk Management Dynamic Fund Portfolio Diversification Liquidity 14
Risk management A vital part of the process Risk management as an independent function ensures effective risk control Risk management is a complement to the investment process The objective of the risk management process is to monitor and measure the risks of portfolio construction, diversification and holdings and their contribution to the overall risk profile of each fund with clear definitions of process and procedures Investment risk: Market risk: Identification, measurement and control of market risks Credit risk: Maintenance and control of target limits & risk measurement Valuation risk: Mark-to-market & definition of processes and methodology Support to investment team in performance analysis Risk control parameters for new products & risk disclosures in Scheme Information Document To perform risk analysis, third-party as well as proprietary tools are used 15
Risk management A clear risk organisation Managing Director Risk Team Monitor internal risk budget Measure performance Analyze funds risk Review of new products risk Risk Committee Establish risk policy Evaluate performance Review major risk factors Confirm risk action plan Compliance Officer Govern internal control Compliance monitoring Review legal documents New product filings Monthly Meeting Regular meeting with the Risk Committee of the Board Discuss investment strategy & performance and review risk 16
Disclaimer Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Copies of the Statement of Additional Information, Scheme Information Document and application form with Key Information Memorandum may be obtained from the offices / Investor Service Centres of Sundaram Mutual or its authorized distributors or downloaded from www.sundarammutual.com. Past performance is no guarantee of future result. General Risk Factors: There can be no assurance or guarantee that fund's objectives will be achieved. NAV may go up or down, depending on the factors and forces affecting the securities market. Main types are market risk, liquidity risk, credit risk and systemic risks. At times, liquidity of investments may be impaired. There is uncertainty of dividend distribution and risk of capital loss. Past performance of the Sponsor/Asset Management Company/Fund does not indicate the future performance. Investors in the schemes are not being offered any guaranteed or indicated returns. General Disclaimer: This document is issued by Sundaram Asset Management, an Investment Manager registered with the Securities and Exchange Board of India in India and is produced for information purposes only. It is not a prospectus or Offer Document or Scheme Information Document or an offer or solicitation to buy any securities or other investment. Information and opinion contained in this document are published for the assistance of the recipient only; they are not to be relied upon as authoritative or taken as a substitution for exercise of judgment by any recipient. They are subject to change without any notice and not intended to provide the sole basis of any evaluation of the instrument discussed or offer to buy. It is neither a solicitation to sell nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or be taken as investment advice. The information and opinions contained in this communication have been obtained from sources that Sundaram Asset Management believes to be reliable; no representation or warranty, express or implied, is made that such information is accurate or complete and it should not be relied upon as such. Sundaram Asset Management neither guarantees its accuracy and/or completeness nor does it guarantee to update the information from time to time. This communication is for private circulation only and for the exclusive and confidential use of the intended recipient(s) only. Any other distribution, use or reproduction of this communication in its entirety or any part thereof is unauthorized and strictly prohibited. By accepting this document you agree to be bound by the foregoing limitations. This communication is for general information only without regard to specific objectives, financial situations and needs of any particular person who may receive it and Sundaram Asset Management is not soliciting any action based on this document. Sundaram Asset Management in the discharge of its functions, may use any of the data presented in this document for its decision-making purpose and is not bound to disclose the same. For scheme specific risk factors, asset allocation, load structure, fund facts and taxation aspects please refer the Statement of Additional Information and Scheme Information Document available online and at branches/investor Service Centres. Statutory: Mutual Fund: Sundaram Mutual Fund is a trust under Indian Trusts Act, 1882 Liability for sponsor is limited to Rs. 1 lakh. Sponsor: Sundaram Finance Ltd. Investment Manager: Sundaram Asset Management Company Ltd. Trustee: Sundaram Trustee Company Ltd. 17