AMC Speak Wealth Forum 09th October 2014 Taking distributor engagement a notch higher Amar Shah, Head - Retail Business, ICICI Prudential MF ICICI Prudential MF has been deepening its distributor engagement significantly in the last 3 years. Not content to rest on past initiatives, Amar and his team have introduced Tarakki Times - a monthly distributor newsletter which complements I Pru Touch - their mobile investment solution enabler. I Pru Insights is a recent investor engagement initiative that has also been launched. Engagement is not an end in itself - it's a way to build trust and confidence, which is perhaps the biggest business enabler in the money management business. Amar discusses not only his engagement initiatives, but also what his company is doing to build trust and confidence and thus scale higher. WF : What was the thinking behind launching "Tarakki Times"? When was it launched? Amar : "Tarakki Times" is a monthly newsletter from ICICI Prudential AMC for the esteemed advisor community, launched in this fiscal year as an effort to constantly deepen engagement with them. Our objective for launching "Tarakki Times" has been to communicate key views of the fund house to the financial advisors; and aid them to serve investors better. This newsletter also recognizes the achievements of advisors, through its segment "Tarakki Corner" which features Tarakki stories of advisors every month. Further, the newsletter captures various congregations and events held for the advisors. WF : What has been the main focus of content in this publication? How often is this publication produced? How is it circulated? Can your distributors access Tarakki Times on I Pru Touch? Amar : Tarakki Times compiles our key views published in the important and reputed media platforms, in form of authored articles and interviews from ICICI Prudential AMC spokespersons along with product reviews published by various third party research agencies. The intent is to get our key communication messages in one place. The informative content is centered around our belief as a fund house on different subjects like the latest macro- and micro-economic trends, investment themes and products for the relevant scenario. It is published every month, and the printed copy reaches the doorstep of advisors in the first week of the month. It is also circulated by e-mails, and uploaded on our advisor mobile application- IPRU Touch. Click Here to view the latest edition of Tarakki Times
WF : There are two information sources that you have recently started promoting - Tarakki Times and I Pru Touch. How are the two different and how do they complement each other? Amar : The two communication initiatives complement each other very well. IPRU touch is a useful tool which helps advisors to tailor investment solutions using investment planning tools in form of several calculators (For example-sip planner, Retirement Planner, Child's marriage & Education planners). It gives the required NFO updates, quantitative data for schemes, news and market updates, concept videos and product presentations. On the other hand, Tarakki Times captures the relevant investment themes in a particular market scenario. Also, Tarakki Times is a step to strengthen the bond with advisors, by acknowledging and highlighting their achievements in the industry. Both these communication tools together equip the advisor with informative content that could help them in recommending the right product to investors for long-term wealth creation. WF : A common refrain we hear from distributors is information overload from the MF industry. In this context, how do you try to ensure relevance and topicality of information you are putting out through these media? Amar : 'Tarakki Times' being a monthly property, ensures that every month the latest views of the fund house relevant to the market scenario reach the IFA channel. As for IPRU Touch, the application has consistently demonstrated systematic and regular upload of fresh content to deliver an optimal content experience. WF : Has the experience in terms of new flows into equity funds in recent NFOs been good? Are you seeing healthy flows into existing schemes with track records? Amar : Since September 2013, ICICI Prudential AMC has been launching closed-ended schemes through a series of fund launches that focus on the value theme and with economic revival in the offing, the focus moves to growth strategies. We are witnessing consistent flows across our NFOs as well as existing schemes. The flows through the closed ended schemes account for around 15% of our total gross equity sales in FYTD August 14. A total of 1.03 lac folios were created across the closed ended products launched since November 2013. Out of these approx. 45% are unique investors. We believe that the strategy of launching close-ended NFOs has seen success since the investor experience on the basis of returns has been very good. Close-ended funds offer a good investment vehicle to investors, with a focused vision and a long term view that capitalizes on certain themes and sections of the market. At ICICI Prudential AMC, new products are launched only based on an investment / market view rather than a sales view. Products based on methods of investing than sector / market cap criteria The closed ended schemes that we have launched are not based on sectors or market cap criteria. Some of the closed ended schemes that were launched by industry in past failed
because of this. Our closed ended schemes are based on themes of value and growth which are methods of investing. Launched right products at appropriate time In 2007, while industry focused on infra theme despite the fact that we were managing the largest infra fund that time with best track record, we did not push the theme. Instead, we launched Focused Bluechip Equity Fund in May 2008. In August - September 2009, we introduced RIGHT Fund, a 10 year closed ended equity fund which is rated 5 star by Value Research and has been a top quartile performer. In 2012 we launched US Bluechip Equity Fund. All these products have given investors a very good performance. In the middle of last year many stocks were available at bargain prices, especially those of small- and mid-cap companies, some with extremely strong balance sheets but a temporary blip showed up in their profit-and-loss accounts. The slowing economy saw profit growth of these companies slip and, therefore, the prices of their stocks not just went for a toss, but took a huge tumble. Spotting a turnaround in them whenever the economy rebounded, we were amongst the first to launch a series of closed-ended NFOs around the value investing theme focusing on small- and mid-caps that were available quite inexpensive just before the cycle turned. Thus, a closed-ended fund also allows product houses to tailor investments according to the opportunities in the market, with a play on the various themes that are current. Currently, with economic revival in the offing, growth strategy also has the potential to offer reasonable returns to investors over a 3-5 year period. Better choice to fund managers Such schemes allow a fund manager leeway in picking less-liquid stocks without worrying about redemptions and instead concentrating on building a good portfolio. Further, Most investors miss out on making gains, probably because they moved out too early. A closedended fund of three years or more ensures that investors stay invested for the entire duration of the fund. Large investment team The team size of 17 experienced people in the equity investment side gives us comfort that there are adequate resources for managing a large product suite. Dividend option only The uniqueness in terms of our product offering lies also in that fact that we have launched funds with dividend options only. Obviously when the next bear market happens when the funds are in existence, the NAV will fall but we are confident that the only dividend option would have given the investor a better experience.
Investment Experience We believe that the strategy has seen initial success since the investor experience on the basis of returns and dividends declared has been very good. Investment experience through our Recent NFOs (Dividend Pay-out for our Close-ended Schemes) Past performance may or may not be sustained in future. After payment of dividend the NAV has fallen to the extent of payout and distribution taxes if applicable. Less than 1 year on absolute basis.nav of the schemes are adjusted for dividend WF : What more should we be doing to bring in more new investors into mutual funds and spread the "Tarakki" wider? Have there been any new initiatives on the investor front? Amar : We believe that the Indian mutual fund industry is poised to grow with good fundamentals - good number of healthy asset management firms and robust regulations. The product is well built in terms of transparency, product positioning and performance, running on a relative return basis. A fund house that performs well will be in a position to gather investor's money for all categories of funds-be it equity, or debt. Product Suite It is also important to create a product suite that meets the latent needs of investors or ensures suitability. For example, a general tendency of Indian investors is to invest in equity when markets are surging high and pull out money when the markets are underperformingwhich may not necessarily lead to the best investment experience. For such investors, we have products like ICICI Prudential Balanced Advantage Fund, a fund that seeks to capture upside by increasing allocation to equity when the markets are declining, and protects downside by reducing exposure to equities when markets are rising- completely reverse of what retail investors normally do.
This could also be a product for maiden investors to start off with, owing to Lower volatility and equity taxation. It is a suitable bet for investors with moderate risk profile as the portfolio is constructed keeping in mind the conservative risk profile of investors. Investor-Friendly Communication It is also important to create investor-friendly communication to educate the investor and help them take the right investment decisions in order to meet their financial goals. ICICI Prudential AMC has been very actively conducting initiatives on this front. The fund house has adopted various mediums - print, outdoor, digital, investor camps - to grow investor awareness and education. Investor Awareness Camps With support from an active panel of prominent and professional trainers, and by tie-ups with leading media houses the company is regularly conducting awareness camps. The content is structured based on the target audience. We have tie-ups with well-known financial experts for targeting specific groups. For example, we conducted Investor awareness camps for Army through Karthik Jhaveri (Transcend), Doctors, Lawyers, Journalists, corporate employees, colleges and institutes. For instance, in smaller cities and towns, the content is elementary in nature and the company prefers to deliver these workshops in local languages. In case of the top 15 cities, the content includes technical aspects. These camps demystify the world of investments including mutual funds and address specific queries raised by investors. In addition to these camps, the company has been extensively engaging the youth through social media platforms. There are regular posts on the Facebook page where investment concepts are explained in simple language, articles on investments and best practices are shared. The company also uses the direct mailers route to communicate with existing and prospective investors on simple information on concepts that may help them make informed investment decisions. Investor Newsletter Apart from our investor education initiatives, we have launched a monthly newsletter for investors - "IPRU Insights" in October 2014. We recognize that a dose of relevant insights on markets and investment concepts is crucial for investors to help them build a portfolio that can ensure achievement of financial goals. This newsletter is an endeavour to give relevant investment guidance and help investors make an informed decision about their investments for long term wealth creation. The newsletter consists of several segments which include- product of the month (highlights a product from ICICI Prudential Stable, which we believe is relevant in the current scenario, fundaclear (concept based articles) tips to invest better, articles on relevant investment themes and a lot more. Currently, the newsletter has been launched in a digital version, which will reach the inbox of every investor. Going forward, we plan to take this initiative to the next level, by sending printed copies to our investors.
ICICI Prudential Balanced Advantage Fund (An Open Ended Equity Fund) This Product is suitable for investors who are seeking*: long term wealth creation solution An equity fund that aims for growth by investing in equity and derivatives. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Style Box Debt Equity Fund Details Fund Managers** : Equity : Manish Gunwani (Managing this fund from Jan 2012 & Overall 17 years of experience) Debt : Manish Banthia (Managing this fund since Nov, 2009 & Overall 9 years of experience) Indicative Investment Horizon: 3yrs & more Inception date: 30-Dec-06 AAUM as on 30-Sep-14 : Rs. 3122.06 crores NAV (As on 30-Sep-14): Regular Plan Growth Option : 23.4900 Regular Plan Dividend Option : 15.2900 Direct Plan Growth Option : 23.8500 Direct Plan Dividend Option : 17.3200 Plans : Regular & Direct Options : Growth & Dividend (Monthly Dividend, Quarterly Dividend & Dividend Others) Application Amount for fresh Subscription : Rs.5,000 (plus in multiples of Re.1) Min.Addl.Investment : Rs.1000/- (plus in multiples of Re.1/-) Exit load for Redemption / Switch out :- Lumpsum & SIP / STP / SWP Investment Option Upto 18 Months fro m allotment - 1% of applicable NAV, more than 18 Months - Nil SIP : Monthly: Minimum Rs. 1,000/- plus 5 post dated cheques for a minimum of Rs. 1,000/- each; Quarterly: Minimum Rs. 5,000/- plus 3 post dated cheques of Rs. 5,000/- each. SWP : Rs.500 and in multiples of Re. 1/- STP : Minimum Amount Rs. 1,000/-; Maximum Period: 10 years : STP In : Available Min.Redemption Amt. : Rs.500 & in multiples thereof Particulars Scheme Benchmark CNX NIFTY Index Equity Shares 66.29% -17.96% Auto 3.44% -0.49% Mahindra & Mahindra Ltd. 1.62% Maruti Suzuki India Ltd. 0.92% Tata Motors Ltd. 0.90% Tata Motors Ltd. - Futures -0.49% Auto Ancillaries 2.10% -0.21% Motherson Sumi Systems Ltd. 1.71% Apollo Tyres Ltd. 0.21% Apollo Tyres Ltd. - Futures -0.21% Balkrishna Industries Ltd. 0.18% Banks 13.75% -3.23% HDFC Bank Ltd. 4.01% HDFC Bank Ltd. - Futures -0.32% ICICI Bank Ltd. 3.67% ICICI Bank Ltd. - Futures -0.67% State Bank Of India 1.83% State Bank Of India - Futures -1.08% ING Vysya Bank Ltd. 1.21% IndusInd Bank Ltd. 0.71% Yes Bank Ltd. 0.70% Yes Bank Ltd. - Futures -0.69% Kotak Mahindra Bank Ltd. 0.47% Axis Bank Ltd. 0.42% City Union Bank Ltd. 0.26% Bank Of India 0.24% Bank Of India - Futures -0.25% Punjab National Bank 0.12% Punjab National Bank - Futures -0.12% Union Bank Of India 0.11% Union Bank Of India - Futures -0.10% Cement 0.93% -0.57% Grasim Industries Ltd. 0.49% Grasim Industries Ltd. - Futures -0.14% ACC Ltd. 0.43% ACC Ltd. - Futures -0.43% Construction 0.14% -0.14% Jaiprakash Associates Ltd. 0.14% Jaiprakash Associates Ltd. - Futures -0.14% Construction Project 0.94% -0.28% Larsen & Toubro Ltd. 0.94% Larsen & Toubro Ltd. - Futures -0.28% Consumer Non Durables 4.04% -0.51% ITC Ltd. 2.79% ITC Ltd. - Futures -0.39% Britannia Industries Ltd. 1.14% Tata Global Beverages Ltd. 0.12% Tata Global Beverages Ltd. - Futures -0.12% Ferrous Metals 1.18% -0.27% Steel Authority Of India Ltd. 0.91% Tata Steel Ltd. 0.27% Tata Steel Ltd. - Futures -0.27% Finance 7.36% -0.73% HDFC Ltd. 2.15% HDFC Ltd. - Futures -0.36% Bajaj Finserv Ltd. 1.84% Max India Ltd. 1.34% IDFC Ltd. 0.61% IDFC Ltd. - Futures -0.29% SKS Microfinance Ltd. 0.51% Muthoot Finance Ltd. 0.43% Repco Home Finance Ltd. 0.41% LIC Housing Finance Ltd. 0.09% LIC Housing Finance Ltd. - Futures -0.09% Gas 2.12% GAIL (India) Ltd. 1.67% Petronet LNG Ltd. 0.46% Healthcare Services 0.17% Apollo Hospitals Enterprise Ltd. 0.17% Industrial Capital Goods 0.42% ABB India Ltd. 0.42% Industrial Products 1.75% Bharat Forge Ltd. 1.75% Minerals/Mining 2.24% -0.55% Coal India Ltd. 1.69% Sesa Sterlite Ltd. 0.55% Sesa Sterlite Ltd. - Futures -0.55% Oil 3.00% -0.16% Oil & Natural Gas Corporation Ltd. 1.45% Oil & Natural Gas Corporation Ltd. - Futures -0.05% Oil India Ltd. 0.88% Quantitative Indicators Average Maturity : 3.72 Years Returns of Regular Plan - Growth Option as on September 30, 2014 September 30, 2013 to September 30, 2014 Maturity Profile (as % of debt holding) HIGH RISK (BROWN) Since inception Absolute Returns (%) Absolute Returns (%) Absolute Returns (%) Current Value of Investment of Rs. 10000 35.70 28.89 38.87 CAGR (%) NAV (Rs.) Per Unit (as on 17.31 16.18 13.55 10.00 Sep 30, 2014 : 23.49) Past performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other investment. Date of inception: 30-Dec-06. Performance of dividend option would be Net of Dividend distribution tax, if any. Benchmark is Crisil Balanced Fund Index. For computation of since inception returns (%) the allotment NAV has been taken as Rs. 10.00. Load is not considered for computation of returns. In case, the start/end date of the concerned period is a nonbusiness date (NBD), the NAV of the previous date is considered for computation of returns. The NAV per unit shown in the table is as on the start date of the said period. Total Schemes managed by Mr. Manish Gunwani (Equity) is 5 and Mr. Manish Banthia (Debt) is 15. Refer annexure from page no. 58 for performance of schemes currently managed by fund managers. Company/Issuer Rating % to % to NAV NAV Derivatives September 30, 2012 to September 30, 2013 Portfolio as on September 30, 2014 Top Ten Holdings Derivatives are considered at exposure value. @ Short Term < 8 Years, Long Term > 8 Years. Modified Duration : 2.25 Years Yield To Maturity : 8.44% Annual Portfolio Turnover Ratio : 0.52 times Average P/E : 21.44 Average P/BV : 5.22 Average Dividend Yield : 1.43 Std Dev (Annualised) : 10.46% 6.98 1.87 0.56 23490.00 20031.01 20085.62 Company/Issuer Rating % to % to NAV NAV Derivatives Aban Offshore Ltd. 0.56% Cairn India Ltd. 0.11% Cairn India Ltd. - Futures -0.11% Pesticides 1.26% PI Industries Ltd. 0.71% Rallis India Ltd. 0.55% Petroleum Products 3.96% -1.17% Reliance Industries Ltd. 3.36% Reliance Industries Ltd. - Futures -1.09% Indian Oil Corporation Ltd. 0.52% Hindustan Petroleum Corporation Ltd. 0.08% Hindustan Petroleum Corporation Ltd. - Futures -0.08% Pharmaceuticals 4.35% -0.24% Divi's Laboratories Ltd. 1.10% Dr. Reddy's Laboratories Ltd. 1.03% Cipla Ltd. 1.00% Glenmark Pharmaceuticals Ltd. 0.77% Sun Pharmaceutical Industries Ltd. 0.24% Sun Pharmaceutical Industries Ltd. - Futures -0.24% Sanofi India Ltd. 0.22% Power 3.39% -0.83% Power Grid Corporation Of India Ltd. 2.27% Power Grid Corporation Of India Ltd. - Futures -0.43% NTPC Ltd. 1.01% NTPC Ltd. - Futures -0.29% Reliance Power Ltd. 0.11% Reliance Power Ltd. - Futures -0.11% Software 9.40% -2.13% Infosys Ltd. 3.75% Infosys Ltd. - Futures -1.08% Tech Mahindra Ltd. 2.50% Tech Mahindra Ltd. - Futures -0.99% Wipro Ltd. 1.70% HCL Technologies Ltd. 0.89% HCL Technologies Ltd. - Futures -0.06% Info Edge (India) Ltd. 0.55% Trading 0.23% Redington (India) Ltd. 0.23% Transportation 0.11% Container Corporation Of India Ltd. 0.11% Index Futures/Options -6.44% CNX Nifty Index - Futures -6.44% Debt Holdings 34.09% CPs and CDs 6.16% IDBI Bank Ltd. CRISIL A1+ 4.59% The Jammu & Kashmir Bank Ltd. CRISIL A1+ 1.57% Government Securities 23.11% @ Short Terms 1.42% 08.27% GOI 2020 SOV 1.42% @ Long Terms 21.69% 08.60% GOI 2028 SOV 7.84% 01.44% GOI IIB 2023 SOV 7.29% 08.40% GOI 2024 SOV 3.39% 08.28% GOI 2027 SOV 1.82% 08.24% GOI 2027 SOV 1.35% Cash, Call, CBLO & Term Deposits 4.83% Other Current Assets -0.38% Total Net Assets 100.00% Other Current Assets > 10 years 5-10 years <182 days September 30, 2011 to September 30, 2012 Sharpe Ratio : 1.00 Portfolio Beta : 0.84 R squared : 0.86 Portfolio turnover has been computed as the ratio of the lower value of average purchase and average sales, to the average net assets in the past one year (since inception for schemes that have not completed a year). The figures are not netted for derivative transactions. Risk-free rate based on the last 91-day T-Bill cut-off of 8.5201%. **In addition to the fund manager managing this fund, the ADR/GDR exposure is managed by Mr. Ashwin Jain. 19.41 13.72 15.38 9.31% 21.30% 34.02% 35.37% 0.00% 10.00% 20.00% 30.00% 40.00% 11.64 9.37 9.40 31 32
Private and Confidential for reading and understanding only for Distributors and Advisors of ICICI Prudential Mutual Fund. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The information contained herein is only for the reading/understanding of the registered Advisors/Distributors. All data/information used in the preparation of this material is specific to a time and may or may not be relevant in future post issuance of this material. ICICI Prudential Asset Management Company Limited (the AMC) takes no responsibility of updating any data/information in this material from time to time. The AMC (including its affiliates), the Fund, ICICI Prudential Trust Limited (the Trust) and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. Nothing contained in this document shall be construed to be an investment advise or an assurance of the benefits of investing in the any of the Schemes of the Fund. Sectors/stocks mentioned in the article do not constitute any recommendation and the Fund through its schemes may or may not have any future position in these sectors/stocks. Recipient alone shall be fully responsible for any decision taken on the basis of this document.