UTI FOCUSSED EQUITY FUND Series II (1102 days) a Close ended equity scheme NFO Period: December 04, 2014 December 18, 2014 This product is suitable for investors who are seeking*: Long term capital growth A close ended scheme that aims to provide capital appreciation by investing in equity and equity related securities HIGH RISK (Brown) *Investors should consult their financial advisers if in doubt whether the product is suitable for them. (Blue) investors understand that their principal will be at low risk (Yellow) investors understand that their principal will be at medium risk (Brown) investors understand that their principal will be at high risk 1
Agenda Equity Markets: Report Card Bull Markets in India A brief study UTI Focussed Equity Fund - Series II (1102 days) 2
Equity Markets: Key Drivers for Growth Inflation Valuations Key Drivers Interest Rate Corporate Profits Credit Growth 3
Inflation expected to fall steadily 4 Data Source: Bloomberg
interest rates poised for a cut 5 Data Source : Bloomberg Note: Liquidity Adjustment Facility using repo and reverse repo started from 2001
Credit growth appears to be bottoming 6 Data Source : Bloomberg
Headroom for EBITDA margins improvement 7 Data Source : Motilal Oswal Securities, LPA : Long Period Average
.expected to result in earnings acceleration 8 Data Source: Motilal Oswal Ltd., The vertical axis is on a logarithmic scale. S&P BSE Sensex EPS: Refer Glossary
P/E Valuations near long term averages 9 Data Source: Bloomberg
Equity Markets: Report Card Inflation Interest Rates Credit Growth Corporate Profits Valuation 10
Key Questions at this stage 1. Will the current uptrend transform into a bull market? 2. Market corrections friend or foe? 3. What do past uptrends tell us about returns and sustainability? 4. What sectors/stocks would lead the rally? 11
Agenda Equity Markets: Report Card Bull Markets in India A Study UTI Focussed Equity Fund - Series II (1102 days) 12
Data Source: Bloomberg Bull Markets in India - A Study
Bull Markets in India - A Study Indian markets has seen 8 uptrends and we have shortlisted the top 6 by total returns and sustainability (Ref: S&P BSE Sensex) On average, the smallest 3 rallies returned 131%. The current rally is just ~58 weeks old and has given a 49% return Start Date End Date Absolute Returns Duration (Weeks) (%) Start Value End Value 09/05/1984 27/02/1986 94 185 233 665 08/02/1990 22/04/1992 115 578 659 4,467 19/07/1993 12/09/1994 60 121 @ 2,098 4,631 20/10/1998 11/02/2000 68 115 @ 2,764 5,934 25/04/2003 08/01/2008 246 614 2,924 20,873 09/03/2009 05/11/2010 87 157 @ 8,160 21,005 Median* 90 171 Smallest 3 rallies Average @ 72 131 Reference Index: S&P BSE Sensex 14 Data Source: Bloomberg
Bull markets Fuelled by Earnings growth and PE expansion Return Components of a Bull Rally: EPS Growth & PE Expansion Rally Return Component EPS Growth Return Component PE Expansion 1984-86* 16% 84% 1990-92* 28% 72% 1993-94 59% 41% 1998-00 -2% 102% 2003-08 54% 46% 2009-10 15% 85% 2003 08: Growth in EPS led by a cyclical recovery transformed the uptrend into a MULTI YEAR BULL MARKET! 15 * Data for100 companies of S&P BSE National Index is used due to unavailability of S&P BSE Sensex data; Source: Returns on Indian Equity Shares by L.C. Gupta
16 Source: MoSPI & Bloomberg Bull markets will always have corrections
Focus on quality pays even in a bull market 17 Data Source: Bloomberg Methodology: The weighted average absolute returns of the stocks in the respective quadrants have been taken after removing the top two and bottom two outliers in each quadrant. * Lehman Crisis of Sep 2008
Focus on quality pays even in a bull market 18 Data Source: Bloomberg, Methodology: The weighted average absolute returns of the stocks in the respective quadrants have been taken after removing the top two and bottom two outliers in each quadrant. * Lehman Crisis of Sep 2008
Bull Markets in India - Conclusions 1. Pre-requisite for Multi-year Bull market is sustained growth in earnings Upside from P/E expansion appears limited The first signs of acceleration in earnings growth are visible 2. Bull markets do not grow in a steady manner Corrections are integral and difficult to predict They provide opportunities for participation 3. Sector leadership has been disparate across rallies Focus on quality and earnings visibility rather than past trends At this stage, sustained earnings growth is the key to a multi-year bull market 19
Agenda Equity Markets: Report Card Bull Markets in India A Study UTI Focussed Equity Fund - Series II (1102 days) 20
UTI Focussed Equity Fund Series II Name of the scheme Type of Scheme Scheme Objective UTI Focussed Equity Fund Series II (1102 Days) A Close ended equity scheme The primary objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related securities of listed companies. The scheme will without any capitalization bias endeavor to invest in either growth stocks or value stocks or both. The Scheme will normally hold upto 30 stocks in the portfolio. The Scheme does not guarantee/indicate any returns. There can be no assurance that the Scheme s objectives will be achieved. Fund Manager Anoop Bhaskar & Lalit Nambiar Benchmark S&P BSE200 NFO Period December 04, 2014 to December 18, 2014 Tenure 1102 days Minimum Application Amount Rs. 5000/- Plans Available Load Structure Options Available Regular & Direct Entry Load: Not Applicable Exit Load: For Redemptions made on the Maturity Date / Final Redemption Date, the AMC will not charge any Exit Load. Growth & Dividend option with payout facility 21
UTI Opportunities Fund - A Recap 22 Data Source: MFIE, Value Research Online; Returns are Compound Annualized Growth Rate as of Sep 30 th 2014
UTI Opportunities Fund - A Recap 23 Data Source: MFIE, Value Research Online; Returns are Compound Annualized Growth Rate as of Sep 30 th 2014
Power of concentration 24 Methodology: Top 25 stocks of UTI Opportunities Fund portfolio has been taken on a month end since 1 st March 2010 on a monthly basis is considered as the Concentrated UTI Opportunities Fund s Portfolio. These stocks have been scaled to 100%. The single stock weight has been limited to 9% and where the limit has been crossed, the excess weight has been treated as cash while simulating the portfolio. 3 year absolute rolling returns were generated from Mar 2013 to Sep 2014. Past performance may or may not be sustained in future. The above is only for illustrative purposes. Past performance is not an indication of future performance.
Concentration of Top 10 stocks 25 Methodology: Top 25 stocks of UTI Opportunities Fund Portfolio has been taken on a month end since 1 st March 2010 on a monthly basis is considered as the Concentrated UTI Opportunities Fund s Portfolio. These stocks have been scaled to 100%. The single stock weight has been limited to 9% and where the limit has been crossed, the excess weight has been treated as cash while simulating the portfolio. Past performance may or may not be sustained in future. Data as of 30 th Sept 2014. The above is only for illustrative purposes. Past performance is not an indication of future performance.
Concentration of Top 3 sectors 26 Methodology: Top 25 stocks of UTI Opportunities Fund Portfolio has been taken on a month end since 1 st March 2010 on a monthly basis is considered as the Concentrated UTI Opportunities Fund s Portfolio. These stocks have been scaled to 100%. The single stock weight has been limited to 9% and where the limit has been crossed, the excess weight has been treated as cash while simulating the portfolio. Past performance may or may not be sustained in future. Data as of 30 th Sept 2014. The above is only for illustrative purposes. Past performance is not an indication of future performance.
In Short...
UTI Opportunities Fund an open ended equity scheme This product is suitable for investors who are seeking*: Long term capital growth Investment in equity instruments by capitalizing on opportunities arising in the market dynamically HIGH RISK (Brown) *Investors should consult their financial advisers if in doubt whether the product is suitable for them. Note: Risk may be represented as: (Blue) investors understand that their principal will be at low risk (Yellow) investors understand that their principal will be at medium risk (Brown) investors understand that their principal will be at high risk 28
Thank You
30 Annexures
A great business at a fair price is superior to a fair business at a great price Charlie Munger Focus on quality is the cornerstone of our investment process 95% of our AUM is in the Evergreens and Potential Potential - 4 out of 5 years -Companies: 108 Evergreen - 5 out of 5 years - Companies: 167 Fairweather -2 to 3 out of 5 years - Companies: 209 Positive OCF* & PAT >50 Crs Hope- less - Less than 2 out of 5 years - Companies: 50 *OCF: Operating Cash Flow = Profit After Tax (PAT)+Depreciation + Changes in working capital Universe of Companies : CNX500 and Companies that UTI Mutual Fund is currently invested in.
Schemes managed by Mr. Anoop Bhaskar, Head of Equity & Fund Manager UTI Equity Fund UTI Transportation & Logistics Fund UTI Opportunities Fund UTI Children s Career Balanced Plan 13,887 UTI Midcap Fund 13,887 32 Assuming that all payouts during the period have been reinvested in the units of the scheme at the immediate ex-div NAV Past performance may or may not be sustained in future. *Compounded annualized Growth Rate. Since Inception date: UTI Equity Fund: 18 th May 1992. UTI Opportunities Fund: 20 th July 2005, UTI Midcap Fund: 7 th April 2004, UTI Energy Fund:12 th Nov 2007 UTI Transportation & Logistics Fund: 11 th April 2008, UTI CCP- Balanced 12 th July 1993
Schemes managed by Mr. Lalit Nambiar, Fund Manager UTI India Lifestyle Fund UTI Long Term Advantage Fund Series - II UTI Wealth Builder Series-II UTI Banking Sector Fund UTI Pharma & Healthcare Fund UTI Equity Tax Savings Plan 33 Assuming that all payouts during the period have been reinvested in the units of the scheme at the immediate ex-div NAV Past performance may or may not be sustained in future. *Compounded annualized Growth Rate. Since Inception date: UTI India Lifestyle Fund: 30 th July 2007, UTI Long Term Advantage Fund Series II: 19 th March 2008, UTI Wealth Builder Series II: 19 th November 2008, UTI Banking Sector Fund: 7 th April 2004, UTI Pharma & Health Care Fund: 28 th June 1999, UTI Equity Tax Savings Plan: 15 th December 1999
Schemes managed by Mr. Lalit Nambiar, Fund Manager UTI Long Term Advantage Fund Series - I UTI Multi Cap Fund Assuming that all payouts during the period have been reinvested in the units of the scheme at the immediate ex-div NAV Past performance may or may not be sustained in future. *Compounded annualized Growth Rate. Since Inception date: UTI Long Term Advantage Fund Series I:20 th March 2007, UTI Multi Cap Fund: 22 nd August 2014 34
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully All figures and other data given in this document are as on 30th September 2014 unless stated otherwise. The same may or may not be relevant at a future date. UTI AMC Ltd. takes no responsibility of updating any data/information in this material from time to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of UTI AMC Ltd. Furthermore prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of UTI MF Schemes. The information on this document is provided for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration. Users of this document should seek advice regarding the appropriateness of investing in any securities, financial instruments or investment strategies referred to on this document and should understand that statements regarding future prospects may not be realized. The recipient of this material is solely responsible for any action taken based on this material. Opinions, projections and estimates are subject to change without notice. UTI AMC Ltd is not an investment adviser, and is not purporting to provide you with investment, legal or tax advice. UTI AMC Ltd or UTI Mutual Fund (acting through UTI Trustee Company Pvt. Ltd) accepts no liability and will not be liable for any loss or damage arising directly or indirectly (including special, incidental or consequential loss or damage) from your use of this document, howsoever arising, and including any loss, damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy with this document, its contents or associated services, or due to any unavailability of the document or any part thereof or any contents or associated services. 35
Glossary GDP: CPI (IW): WPI: EBITDA: EPS: CAGR: Std. Dev: AuM: +/-1Std Dev: S&P Sensex EPS: NRI: CASA: CMIE: MOSPI: NFO: YoY: RBI: MFIE: Yr: PE: GARP: LPA: Mgmt.: Charlie Munger : Gross Domestic Product Consumer Price Index for Industrial Workers Wholesale Price Index Earnings before interest, taxes, depreciation and amortization Earnings Per Share Compound Annualized Growth Rate Standard Deviation Assets under management 68% of the values are within 1 standard deviation of the mean Aggregated for 30 companies in the Sensex A = (Absolute Adjusted PAT * Free Float Factor) = Free Float PAT For 30 companies, B = Free Float Mkt Cap P/E = Free float Mkt Cap / Free Float PAT Sensex EPS = Sensex Value/ (P/E) Non Resident Indian Current Account Savings Account Centre of Monitoring Indian Economy Ministry of Statistics and Programme Implementations New Fund Offer Year on Year Reserve Bank of India Mutual Fund India Explorer Year Price to Earning multiple Growth at Reasonable Price Long Period Average Management He is an American business magnate, lawyer, investor, and philanthropist. He is Vice-Chairman of Berkshire Hathaway Corporation, the diversified investment corporation chaired by Warren Buffett 36