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Product Labeling This product is suitable for investors who are seeking*: Regular income and capital appreciation. To generate income by investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and capital appreciation through a moderate exposure in equity. Riskometer *Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Index Predicament of low risk hybrid strategies SBI Equity Savings Fund The Arbitrage Component Tax Efficiency Key Features Portfolio Holdings Why Invest? Performance About SBI Funds Management Pvt Ltd Investment Team
Predicament of Low Risk Hybrid Strategies
Difficulty of Low Risk Hybrid Strategies Low risk Hybrid Strategies - Two for One Benefits Equity (Less than 35%) Fixed Income (More than 65%) Capital Appreciation High Risk Regular Income Low Risk Taxation: Non Equity Scheme Problem: Tax Inefficiency
SBI Equity Savings Fund
Connecting the Strategies SBI Equity Savings Fund Bringing Tax Efficiency Net Long Equity Exposure 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cashfuture arbitrage 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Debt & Money Market 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
A 3 Pronged Strategy Equity - Generates capital appreciation by taking limited equity exposure - Stock selection is focused on 3 factors 1. Growth potential relative to peers 2. Valuations 3. Value add i.e., excess RoCE > WaCC Arbitrage - Generates income by exploiting the arbitrage opportunities in the market - Invests into equity stocks in the cash market & takes an equivalent short position in futures market - Captures spread between spot & futures market Debt - Generates regular income by investing in debt & money market instruments - Provides liquidity to the fund & also margin for derivatives - Maturity profile of debt instruments is based on interest rate outlook & current market conditions RoCE = Return on Capital Employed; WaCC = Weighted Average Cost of Capital
SBI Equity Savings Fund: Positioning Returns Multi Cap Equity Funds Mid Cap Equity Funds Balanced Funds SBI Equity Savings Fund Hybrid Debt Funds Debt Funds Arbitrage Funds Liquid Funds Risk
How does the Arbitrage Strategy work? Working of a Cash Future Arbitrage Strategy Start Date Price of Company A in Cash Market - Rs.200.30 Price of Company A in Futures Market - Rs. 203.35 1 Price in Cash & Futures Market Rs. 210 Profit in Cash Market: Rs.9.70 Loss in Future Market: Rs.6.65 On Expiry 2 Price in Cash & Futures Market Rs. 200.30 Profit /Loss in Cash Market: Rs.0 Profit in Future Market: Rs.3.05 Net Gain Rs. 3.05 3 Price in Cash & Futures Market Rs. 190 Loss in Cash Market: Rs.10.30 Profit in Future Market: Rs.13.35 The above is only to explain the concept of cash future arbitrage and should not be construed as any indication of future returns. The above illustration does not take costs into consideration.
How different is this fund from other strategies? Debt Hybrid Funds Balanced Funds Arbitrage Funds Equity Savings Funds Type of Scheme Debt Balanced Equity Equity Typical Equity Allocation Range (including equity derivatives) <=35% >=50% >=65% >=65% Cash Future Arbitrage Strategies followed X X Volatility Medium High Low Medium Equity Taxation* No May have Yes Yes *Please consult your tax advisor for details
Tax Efficiency Illustration Non-Equity Taxation Equity Taxation Gain required in nonequity tax product Amount of Investment 1,00,000 1,00,000 Assumed Pre-tax annualized return Gains/Interest Earned after 1 year Amount at the end of 1 year 9% 9% 9,000 9,000 1,09,000 1,09,000 Taxable Gains/ Income 9,000 9,000 Applicable Tax Rate 34.61% 0% To reproduce similar gains 1,00,000 14% 13,763 1,13,763 13,763 35% Tax Liability 3,115 0 4,763 Post Tax Gains/ Income 5,885 9,000 9,000 Post Tax Annualised Yield 5.89% 9.00% 9.00% *Assuming highest tax bracket. The above table is only to illustrate the tax treatment of different types of funds and in no way should be construed as any indication of returns. Past performance may or may not be sustained in future. This calculation is based on prevailing tax laws and is applicable only in case of resident investors. Please consult your tax advisor for details
Fund Philosophy & Asset Allocation Investment objective is to generate income by investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and capital appreciation through a moderate exposure in equity. Invests across equity, debt & equity derivatives Suitable for conservative investors looking for superior risk adjusted returns over the medium term Indicative Asset Allocation under normal circumstances: Instruments Equity and Equity related Instruments including derivatives Out of which: Indicative allocations (% of total assets) Risk Profile Minimum Maximum 65% 90% - Cash-future arbitrage: 15% 70% - Net long equity exposure: 20% 50% Medium to High Debt* and Money Market Instruments (including margin for derivatives) 10% 35% Low to Medium The cumulative gross exposure through Equity and Equity related Instruments including derivatives position, debt, Money Market Instruments /Units of debt & liquid mutual funds will not exceed 100% of the net assets of the scheme. *Exposure to domestic securitized debt may be to the extent of 20% of the net assets. The Scheme shall not invest in ADR/ GDR/ Foreign Securities / foreign securitized debt. The Scheme shall invest in repo in corporate debt. The Scheme shall not engage in Stock lending. The Scheme shall not engage in short selling. The scheme shall follow an alternate asset allocation on defensive considerations when there are not adequate arbitrage opportunities available in the Derivative and Equity markets. Investors are advised to refer to the Scheme Information Document or Key Information Memorandum for more details.
Key Features Plans/ Options The Scheme has two plans viz. Regular plan & Direct plan. Both plans would offer Growth & Dividend options. Dividend option has the facility of Reinvestment, Payout & Transfer Benchmark Fund Manager Load Structure Minimum Application Amount 30% Nifty 50 + 70% Crisil Liquid Fund Index Mr. Neeraj Kumar (Arbitrage portion) & Mr. Ruchit Mehta (Equity & Debt) Entry Load: Not Applicable Exit Load: For exit within 1 year from the date of allotment: For 9% of the investments Nil For remaining investments -1% Switches made to all open ended equity schemes of SBI Mutual Fund and SBI Magnum Balanced Fund within 1 year from the date of allotment Nil For exit after 1 year from the date of allotment - Nil Rs. 1,000/- and in multiples of Re. 1 thereafter Additional Purchase Amount Rs. 1,000/- and in multiples of Re. 1 thereafter
SBI Equity Savings Fund: Portfolio Holdings Portfolio classification by Asset Type Top 10 Holdings Stock Name % of Total AUM Stock Name % of Total AUM FINANCIAL SERVICES 31.22 HOUSING DEVELOPMENT FINANCE CORPORATION LTD. 7.44 CONSUMER GOODS 8.97 AUTOMOBILE 8.93 ENERGY 8.03 IT 5.31 CONSTRUCTION 4.94 SERVICES 4.81 METALS 3.79 PHARMA 3.12 SOVEREIGN 2.84 AU SMALL FINANCE BANK LTD. 3.80 ITC LTD. 3.70 TATA MOTORS LTD. 3.26 HDFC BANK LTD. 3.09 JET AIRWAYS (INDIA) LTD. 3.00 RELIANCE INDUSTRIES LTD. 2.89 GOVERNMENT OF HARYANA 2.84 FLOREAT INVESTMENT LTD. 2.83 YES BANK LTD. 2.48 Data as on 31.05.2017
SBI Equity Savings Fund: Asset Allocation Pattern 34.80% 35.92% 29.28% Jun-16 38.83% 35.69% 25.48% Jul-16 37.21% 33.47% 29.31% Aug-16 35.81% 33.95% 30.25% Sep-16 20.74% 48.11% 31.15% Oct-16 20.55% 48.28% 31.17% Nov-16 19.79% 49.03% 31.18% Dec-16 34.52% 33.83% 31.66% Jan-17 34.77% 33.84% 31.39% Feb-17 34.30% 33.55% 32.16% Mar-17 32.15% 34.28% 33.57% Apr-17 18.68% 49.04% 32.28% May-17 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Debt & MM MF UNITS Net Long Equity Arbitrage Month-end asset allocation
Why Invest? 1 Lower Volatility Net long equity exposure in the range of 20 50%; Limited directional equity exposure reduces the volatility compared to equity funds 2 Potential for capital appreciation Moderate exposure to equity allows the fund to participate in the long term growth of equity markets 3 Regular Rebalancing Directional equity exposure in the range of 20%- 50% ensures disciplined rebalancing; fund manager buys at market lows & sells at market peaks 4 Tax Efficiency Fund is an equity fund for tax purposes; endeavours to generate superior riskadjusted returns compared to hybrid funds* *Investors are advised to consult their Tax/ Financial Advisor before taking decision of Investment.
Performance 18 16 14 12 10 8 6 4 SBI Equity Savings Fund - Reg - Growth Scheme Benchmark: - 30% Nifty 50 + 70% Crisil Liquid Fund Index Additional Benchmark: - S&P BSE Sensex 2 0 31/03/2016 to 31/03/2017 Since inception 31/03/2016 to 30/03/2017 31/03/2015 to 31/03/2016 31/03/2014 to 31/03/2015 Since Inception SBI Equity Savings Fund-Regular- Growth 30% Nifty 50 Index + 70% Crisil Liquid Fund Index (Scheme Benchmark) S&P BSE Sensex (Additional Benchmark) Absolute Returns (%) CAGR Returns (%) PTP Returns (INR) 10.76 N.A. N.A. 8.05 11,537 10.60 N.A. N.A. 7.09 11,349 16.88 N.A. N.A. 3.97 10,746 Past performance may or may not be sustained in 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 equity schemes is used for comparison purposes. Performance calculated for Regular Plan Growth Option. Since inception NAV is assumed as 10 Inception Date: 27/05/2015
Performance of other Schemes Managed by Mr. Neeraj Kumar & Mr. Ruchit Mehta, Fund Managers of SBI Equity Savings Fund Schemes managed by Mr. Ruchit Mehta along with Mr. Dinesh Ahuja jointly 31/03/2016 to 30/03/2017 31/03/2015 to 31/03/2016 31/03/2014 to 31/03/2015 Since Inception SBI Magnum Monthly Income Plan* Crisil Short Term Bond Fund Index (Scheme Benchmark) Crisil 10 Yr Gilt Index (Additional Benchmark) Absolute Returns (%) CAGR Returns (%) PTP Returns (INR) 14.17 6.12 19.15 8.40 36,286 12.30 5.67 16.45 N.A. N.A. 11.87 7.97 14.57 N.A. N.A. Past performance may or may not be sustained in 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 debt schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception Date: 09/04/2001 * An open-ended debt scheme, monthly income is not assured and is subject to availability of distributable surplus
Performance of other Schemes Managed by Mr. Neeraj Kumar & Mr. Ruchit Mehta, Fund Managers of SBI Equity Savings Fund Schemes managed by Mr. Ruchit Mehta along with Mr. Dinesh Ahuja jointly 31/03/2016 to 30/03/2017 31/03/2015 to 31/03/2016 Absolute Returns (%) 31/03/2014 to 31/03/2015 CAGR Returns (%) Since Inception PTP Returns (INR) SBI Regular Savings Fund 13.29 6.67 16.18 8.06 28,221 Crisil MIP Blended Index (Scheme Benchmark) Crisil 10 Yr Gilt Index (Additional Benchmark) 12.30 5.67 16.45 8.13 28,483 11.87 7.97 14.57 5.72 21,074 Past performance may or may not be sustained in 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 debt schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception Date: 12/11/2003 31/03/2016 to 30/03/2017 31/03/2015 to 31/03/2016 Absolute Returns (%) 31/03/2014 to 31/03/2015 CAGR Returns (%) Since Inception PTP Returns (INR) SBI Magnum MIP Floater* 11.42 7.50 18.52 8.15 24,192 Crisil MIP Blended Index (Scheme Benchmark) Crisil 10 Yr Gilt Index (Additional Benchmark) 12.30 5.67 16.45 8.41 24,876 7.15 7.69 8.74 6.30 19,929 Past performance may or may not be sustained in 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 short term debt schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception Date: 21/12/2005 *An open-ended debt scheme, monthly income is not assured and is subject to availability of distributable surplus.
Performance of other Schemes Managed by Mr. Neeraj Kumar & Mr. Ruchit Mehta, Fund Managers of SBI Equity Savings Fund SBI Arbitrage Opportunities Fund Growth Crisil Liquid Fund Index (Scheme Benchmark) S&P BSE Sensex (Additional Benchmark) Scheme managed by Mr. Neeraj Kumar 31/03/2016 to 30/03/2017 31/03/2015 to 31/03/2016 Absolute Returns (%) 31/03/2014 to 31/03/2015 CAGR Returns (%) Since Inception PTP Returns (INR) 6.05 6.43 8.74 7.59 21,418 7.11 8.06 8.98 7.60 21,443 16.88-9.36 24.89 8.13 22,558 Past performance may or may not be sustained in 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 equity schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception date: 03/11/2006 NAV of Schemes for which performance is mentioned Scheme Name 31/03/2017 31/03/2016 31/03/2015 31/03/2014 SBI Equity Savings Fund - Reg - Growth 11.5373 10.4162 - - SBI Magnum MIP - Floater - Growth 24.1917 21.7115 20.1965 17.0401 SBI Magnum MIP - Growth 36.3691 31.8566 30.0184 25.1929 SBI Regular Savings Fund - Growth 28.2815 24.9638 23.4027 20.1442 SBI Arbitrage Opportunities Fund - Growth 21.4184 20.1961 18.9762 17.4505
SBI Funds Management India s premier and largest bank with over 200 years experience (Estd: 1806) Asset base of USD 465bn* Pan-India network of ~23,737 branches and 59,108 ATM s as at end of December 2016 Servicing over 299 million customers Only Indian bank in Fortune 500 list; ranked among the top 100 banks in the world Global leader in asset management Backed by Credit Agricole and Amundi, the parent company of Amundi Asset Management listed in Euronext Paris More than 2,000 institutional clients and distributors in 30 countries Over 100 million retail clients via its partner networks USD 1083 bn AuM as at end of December 2016 Ranking No 1 in Europe, Top 10 worldwide # 63% 37% *Source: SBI Analyst Presentation as on end December 2016. USD 1 = INR 66.95 # Source : Amundi website as on end DEcember 2016
SBI Funds Management: India s First Bank Sponsored Funds A leading asset manager in India INR 1,57,025 Crores* AAUM in mutual funds Asset management across mutual funds, segregated managed accounts, domestic advisory & offshore advisory business Multiple asset classes ranging from equities and debt, money market to ETFs and structured funds Investment team of 35 professionals with strong track record Broad customer base with ~ 5.10 million folios related to individual, corporate and institutional investors Wide Distribution Network Broad Investor Base Wide Distribution Network Broad Investor Base Extensive Product Range Extensive Product Range AUM USD 14.09 bn AAUM Rs. 1,57,025 crs Experienced Investment Team Experienced Investment Team * Quarterly average March 2017
Investment Team Mr. Navneet Munot Navneet joined SBIFM as Chief Investment Officer in 2008. In his role Navneet is responsible for overseeing investments across asset classes worth over $29.10 billion. His prior stint was with Morgan Stanley Investment Management as Executive Director and head- multi strategy boutique. Prior to that, Navneet was the Chief Investment Officer - Fixed Income and Hybrid Funds at Birla Sun Life Asset Management Company Ltd. Navneet had been associated with the financial services business of the Birla group for 14 years and worked in various areas such as fixed income, equities and foreign exchange. Navneet holds masters in accountancy and business statistics from the University of Ajmer and is a Chartered Accountant from ICAI. He is 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. Ruchit Mehta Ruchit joined SBIFM in 2010, Ruchit joins us from HSBC Asset Management where he was an analyst and assistant portfolio manager for four years. Prior to HSBC, Ruchit was as a sell side analyst with leading broking firms like ASK Raymond James and Prabhudas Liladhar for two years. Ruchit is a commerce graduate from Mumbai University and holds masters degree in finance from Lancaster University, UK. He is also a charter holder of the CFA Institute, USA Mr. Neeraj Kumar Neeraj joined SBIFM in 2006. Prior to joining SBIFM Neeraj was associated with Life Insurance Corporation of India (LIC) for 10 years. He started his career as an admin officer in finance and accounts department of LIC. Thereafter he worked as an equity analyst for five years and subsequently as a dealer for three years. Neeraj is a commerce graduate from Magadh University and chartered accountant from ICAI.
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. The views expressed herein are based on the basis of internal data, publicly available information & other sources believed to be reliable. Any calculations made are approximations meant as guidelines only, which need to be confirmed before relying on them. 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, SBI Mutual Fund 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