CANARA ROBECO CONSUMER TRENDS FUND JULY 2018
CONTENTS India Consumption Story Sector overview Risk-Reward Matrix Canara Robeco Consumer Trends Fund Investment Strategy Portfolio Snapshot Performance at a glance Product Positioning Why Canara Robeco Consumer Trends Fund Fund Facts
India Consumption Story
Real per capita GDP Growth Real GDP Growth INDIA- A GROWTH TRAJECTORY WORTH LOOKING AT. GDP growth has accelerated over the long run India s growth rate has consistently accelerated over the long run Per capita income growth has accelerated, too Source: Data from Central Statistics Office, and World Development Indicators. World Bank Report
INDIA- A GROWTH TRAJECTORY WORTH LOOKING AT. Building a $10 trillion economy! * Growing at the present rate, India could be a $5 Tn economy in 20 years *At a growth rate of 9%, India could be a $10 Tn economy, over the next 20 years Real GDP (US$, 2010 prices) Sources: PWC Report
Source: MOSPI, CLSA, Morgan Stanley Research, Bloomberg, Worldscope, RIMES, MSCI GDP INDIA ECONOMY- CONSUMPTION SHARE ON THE RISE Private consumption hold ~60% in our GDP Composition of GDP (at 2011-12 prices) Consumption Consumer Durable, Consumer Non-Durable, Services, Discretionary 90% 70% 50% Investment Raw Material & work in progress, inventory of unsold goods, plants & equipment, real estate 30% 10% Govt. Consumption Federal, state and local -10% 2014-15 (FE) 2015-16 (RE) 2016-17 (RE) 2017-18 (AE) Private Consumption Gross Fixed Capital Formation Government Consumption Net export Balance of Trade Export - Imports
INDIA'S REFORM PUSH COULD ACT AS CATALYST FOR CONSUMPTION GROWTH REFORM PUSH FOR INDIA GROWTH STORY Multi facted focus on doubling farm income Goods and Services Tax Regime Building Homes, Pradhan Mantri Aawas Yojna Jan Dhan Yojna, Financialisation Urbanisation through Smart Cities Insolvency and Bankruptcy Code, Recapitalisation of PSU Banks Pradhan Matri Gram Sadak Yojna FDI in several Sectors, Retail- 100%
INDIA: TEN VECTORS OF GROWTH CREATING WINNING LEAPS ACROSS THE 10 VECTORS (ESTIMATED) HUMAN DEVELOPMENT INSTITUTIONAL DEVELOPMENT ENABLERS Source: World Bank, government websites, PwC analysis
CONSUMPTION GROWTH DRIVERS. Broader access to products and services & formation of business linkages Digitization Improving Access to Finance Healthy retail credit growth and ease in access to credit to spur consumption Rising next billion income segment and shift in spending from basics to more Changing Aspiration Rise in Per Capita Income Potential to foster greater demand and boost economy
Opportunities ahead..
INDIA CONSUMPTION MARKET TO GROW SIGNIFICANTLY Rising affluence is the biggest driver of increasing consumption Share of Elite and Affluent households to reach 40% by 2025 Amidst rising income & evolving society, consumers behavior & spending pattern to shift Source: BCG Analysis, BCG CCI proprietary Income Database. Income distribution is calculated in constant 2015 $
INDIA CONSUMPTION MARKET TO GROW SIGNIFICANTLY Affluence to be significantly widespread by 2025 2016 2025 Fueled by rising affluence, Emerging cities will be the fastest growing Emerging cities: populations of less than 1 million Source: BCG Analysis, BCG CCI proprietary Income Database. Income distribution is calculated in constant 2015 $
CONSUMER DURABLES INDIA IS ONE OF THE LARGEST GROWING ELECTRONICS MARKET IN THE WORLD India is one of the largest growing electronics market in the world Consumer durables/light electricals industry is expected to reach Rs 3 trillion (US$ 46.54 billion) by 2020 Indian electronics market is expected to grow at 41% CAGR between 2017-20 to reach US$ 400 billion India has the world s third largest television industry and is expected to grow at a CAGR of 9.8% over CY16-20 Source: www.ibef.org
AUTOMOBILE AUTOMOBILE INDUSTRY IN INDIA IS EXPECTED TO BE THE WORLD'S THIRD LARGEST BY 2026 India became the largest two-wheeler market in the world after selling 17.7 million two-wheelers in 2016 Total production volume grew at a CAGR of 4.43% during FY12-17 Automobile exports from India increased 15.81% year-onyear in April-February 2017-18 Two and three-wheelers exports increased 20.30% and 37.02% in April-February 2017-18 Source: www.ibef.org
RETAIL STORY REMARKABLE POSITION IN GLOBAL RETAIL RANKINGS WITH HIGH MARKET POTENTIAL Source: www.ibef.org
CONSUMPTION STORY MEDIA VALIDATION
OUR DAILY LIFESTYLE EXPOSURE Consumer Non- Durables Auto Finance Bank Consumer Durables Media & Entertainment Britannia Industries Ltd Maruti Suzuki India Ltd. Bajaj Finance Ltd. HDFC Bank Ltd. Havells India Ltd Zee Entertainment Enterprises Ltd Sector/ Stocks mentioned are only for illustration purpose and are part of benchmark of the fund S&P BSE 100 TRI. The companies mentioned do not constitute any recommendation from Canara Robeco AMC Ltd. Portfolio of the scheme is subject to changes within the provision of the SID. Please refer SID for scheme related information
VOLATILITY RISK-REWARD MATRIX Broad gamut to operate with and invest in stock related to particular theme Higher risk and volatility as compared to other category Large Cap Fund Large & Mid Cap Funds Multi Cap /ELSS Thematic Funds Index Funds Balanced Fund LOW MEDIUM HIGH RETURN Thematic Funds have high risk as well as high reward as compared to Other Equity Funds
Capitalise on changing consumption pattern & Aim to gain from rising Indian consumer market
Presenting Canara Robeco Consumer Trends Fund
INVESTMENT PHILOSOPHY & OBJECTIVE We believe it is companies and not stocks that create wealth Investment Philosophy Investment Objective Invest in robust growth-oriented businesses with competent management at reasonable valuations
3 STEPS INVESTMENT PROCESS INVESTMENT PROCESS Macro Research Macro Research & Intelligence Identification of themes Tracking business cycles Stock - Specific Ideas In-house fundamental research Management meetings Sell-side research and sector specialists Behavioral screener Robust Business Fundamentals Competent Management Reasonable Valuations Regulatory Limits Individual Stock Limits Internal Risk Management Limits Tracking Error Ratio Var Beta Monitoring Investment Mandate Market Cap of the stock Investment Recording Captain s Log Investment process designed to achieve the investment objective in a disciplined manner Investment Checklist Investment Universe Investible Ideas Final Portfolio IDEATE SCREEN DESIGN
CANARA ROBECO CONSUMER TRENDS FUND Thematic - Consumption & Finance - An open ended equity scheme following the consumption and financial theme Benefit from the India Growth Story Designed to benefit from demographic advantage of YOUNG INDIA for the next decade and the rapid urbanization and evolution of the cities Investment Style Growth Value Blend Large Cap Mid Cap Small Cap Theme to Team with The fund identifies themes like changing consumption pattern emerging out of rising middle class and increase in per capita income potential Macro-economic fundamentals are slowly stabilizing; Banks & Financial Sector is a beta-play & any improvement in economic fundamentals is likely to benefit this sector The Government is believed to be committed towards boosting growth as well as taming inflation. This is on the back of expansion in the middle class consumers and the evolution of the Indian economy from largely informal to formal Diversified Thematic Sector Portfolio Quants: Quantitative Information Values Standard Deviation 16.57 Portfolio Beta 1.05 Portfolio Turnover Ratio 0.6 times R-Squared 0.85 Sharpe Ratio 0.50 Data as on 31 st July 18
INVESTMENT STRATEGY Consumer Trends Fund, being a thematic fund, invests in the niche space and follows a Growth style of investing The Fund invests in stocks across the Market Capitalization range and seeks to generate compounding returns from investing inhigh growth and competently managed companies Focus is on selective categories such as 1) discretionary consumption - supported by aspirational spending and rising disposable income and 2) the retail financers (banks and NBFCs) benefiting from the low credit penetration in the retail segment The fund participates in categories supported by regulatory or demand-backed tailwinds For stock selection, we spot the changing dynamics in an industry, identify winners early and then stay invested with superior executors to earn compounding returns The AMC focusses on the fundamentals of the business, the quality of management, sensitivity to economic factors and the financial strength of the company
SECTOR OUTLOOK Consumer Durable Sector is expected to witness good growth on the back of improving macro and demographic factors Consumer durables market in India is estimated to be Rs 1.4 trillion (US$ 20.3 billion) in 2017. The industry is expected to reach Rs 3 trillion (US$ 43.5 billion) by 2022 Auto We see huge penetration upside in 4-wheelers. 2-wheelers would continue seeing growth backed by premiumisataion and rural demand recovery. Pick-up in overall consumption and infrastructure segment to aid growth in MHCVs Retail Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion in 2017, with modern trade expected to grow at 20 25% per annum, which is likely to boost revenues of Indian companies Tourism Consumption theme also adds to the tourism and hotel industry in India. India witnessed foreign tourist arrivals growth rate in February 2018 over February 2017 was 10.1% Foreign tourist arrivals into the country is forecast to increase at a CAGR of 7.1% during 2005 25 Media & Entertain m-ent Banking & Finance The sector grew at a CAGR of 18.6% from 2011-2017; and is expected to grow at a CAGR of 14% to touch US$ 37.55 billion by 2021 from US$ 22.75 billion in 2017 Going forward, the advancement in digital technologies could significantly impact the consumer behavior across all segments Cedit off-take has been surging ahead over the past decade, aided by strong economic growth, rising discretionery spend, increasing consumerism & easier access to credit. With consumption the demand for loans has grown faster for retail segment aiding overall credit growth
PORTFOLIO SNAPSHOT Top 10 Holdings: Sector Holdings: Company Industry Classification % of Net Assets HDFC Bank Ltd Banks 8.41% Bajaj Finance Ltd Finance 8.39% HDFC Ltd Finance 5.55% Hindustan Unilever Ltd Consumer Non Durables 5.40% Titan Company Ltd Consumer Durables 4.74% Asian Paints Ltd Consumer Non Durables 4.67% Havells India Ltd Consumer Durables 4.64% IndusInd Bank Ltd Banks 4.53% Dabur India Ltd Consumer Non Durables 4.51% Avenue Supermarts Ltd Retailing 4.15% A concentrated portfolio with 28 stocks Top 3 sectors: 66.37% Top 5 Sectors: 88.22% Top 10 Stocks: 54.99% Source: Internal, Data as of July 18
PERFORMANCE AT A GLANCE Performance: Lumpsum Investment P2P Scheme has generate Rs.39,170 on an investment of Rs.10,000 Since inception Performance: SIP Monthly Particulars Total Amt invested (INR) Market Value (INR) Canara Robeco Consumer Trends Fund S&P BSE 100 TRI # S&P BSE Sensex TRI ## 1 year 1,20,000 1,30,170 16.16% 16.78% 23.95% 3 years 3,60,000 4,78,905 19.47% 17.60% 18.96% 5 years 6,00,000 9,72,611 19.41% 15.12% 15.01% 7 years 8,40,000 16,54,159 19.02% 15.09% 14.84% Since Inception 10,70,000 23,91,007 17.37% 13.43% 13.22% Fund has outperformed benchmark and broad market index over long term The past performance may or may not be sustained in the future. Returns are based on growth NAV and are calculated on compounded annualized basis for a period of more than (or equal to) a year and absolute basis for a period less than a year. Inception Date: September 14, 2009. Different plans have a different expense structure. Returns are based on NAV of Regular Plan - Growth Option. The current fund manager Ms. Cheenu Gupta is managing the scheme since 15-June-2018.Mr. Ravi Gopalakrishnan managed the scheme from 01-Oct-2017 till 15-June-2018 #Scheme Benchmark, ##Additional Benchmark. Load is not taken into consideration for computation of returns. Returns of dividend option under the scheme for the investor would be net of distribution tax as applicable. The performance of other funds managed by fund manager is on the slide number 31. Data as on 31 st July 18
Sep-09 Jan-10 May-10 Oct-10 Feb-11 Jun-11 Oct-11 Mar-12 Jul-12 Nov-12 Mar-13 Aug-13 Dec-13 Apr-14 Aug-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Oct-16 Feb-17 Jun-17 Oct-17 Mar-18 Jul-18 PERFORMANCE AT A GLANCE Canara Robeco Consumer Trends Fund has outperformed the benchmark since inception 42000 37000 Value of 10000 invested in Canara Robeco Consumer Trends Fund - Reg - Growth Value of 10000 invested in S&P BSE 100 TRI 35 30 30.37 3 Years Rolling Returns # 30.71 32000 25 23.41 27000 20 22000 17000 15 10 14.21 10.84 10.63 12000 5 0 1.27 0.89 7000 2000-5 Canara Robeco Consumer Trends Fund - Reg - Growth S&P BSE 100 TRI -1.78 S&P BSE Sensex TRI Minimum Maximum Average Investment date is taken to be 1 st of the month or subsequent day if 1 st is a holiday and investment of Rs.10,000 is taken. Return are as on 30 th Source: ICRA MFI Explorer, Returns are as on 31 Apr 18 and are CAGR. The calculations are based st July 18 and are CAGR. The calculation are based on the regular growth plan NAVs. # Returns shown are average of daily rolling (CAGR %) for 3 years period. Data under consideration is from since inception. Past on performance the regular may or growth may not be plan sustained NAVs. in the Past future. performance Scheme Benchmark#, may or Additional may not benchmark##. sustained Inception in Date the : September future. Scheme 14, 2009 Benchmark#, Additional Benchmark##. Inception Date: September 16, 2003
PRODUCT POSITIONING Multi Cap CR Equity Diversified Fund Large Cap CR Blue Chip Equity Fund CORE PORTFOLIO Large & Mid Cap CR Emerging Equities Thematic CR Infrastructure CR Consumer Trends Fund SATELITE PORTFOLIO ELSS CR Equity Tax Saver Fund NEED BASED Above positioning is for illustration purpose only
WHY CANARA ROBECO CONSUMER TRENDS FUND? Consumer Trends Fund, being a thematic fund, invests in the niche space and follows a Growth style of investing Expected turnaround in the economic cycle leading to increase in employment will boost discretionary consumption and benefit the sectors that fund invests in Fund would invest in stocks across the Market Capitalization range and seek to generate compounding returns from investing in high growth and competently managed companies
FUND FACTS Data as on 31 st May 18
FUND FACTS Rs. 256.13 Crs (Month End AUM) S&P BSE 100 TRI Ms. Cheenu Gupta Data as on 31 st July 18
Performance of Fund Manager The past performance may or may not be sustained in the future. Returns are based on growth NAV and are calculated on compounded annualized basis for a period of more than (or equal to) a year and absolute basis for a period less than a year. Inception Date: September 14, 2009. Different plans have a different expense structure. Returns are based on NAV of Regular Plan - Growth Option. The current fund manager Ms. Cheenu Gupta is managing the scheme since 15-June-2018. Data as as on on 31 st 31 July 18 st May 18
RISKOMETER Canara Robeco Consumer Trends Fund Thematic - Consumption & Finance Theme -An open ended equity scheme following the consumption and financial theme This product is suitable for investors who are seeking* Capital appreciation over long term Investing in equity and equity related securities of companies following the Consumption and Financial Theme *Investors should consult their financial advisers if in doubt about whether the product is suitable
DISCLAIMER The information used towards formulating the outlook have been obtained from sources published by third parties. While such publications are believed to be reliable, however, neither the AMC, its officers, the trustees, the Fund nor any of their affiliates or representatives assume any responsibility for the accuracy of such information. CRMF, its sponsors, its trustees, CRAMC, its employees, officer, directors, etc. assume no financial liability whatsoever to the user of this document. Mutual Fund Investments are subject to market risk. Investors are requested to read the Scheme related documents carefully before investing. Mutual Fund investments are subject to market risks, read all Scheme related documents carefully