Religare Invesco Mid N Small Cap Fund An Open Ended Equity Scheme Suitable for investors who are seeking*: Capital appreciation over long term Investment predominantly in equity and equityrelated instruments of Mid and Small Cap companies *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
Why Midcaps?
Why Midcaps? Midcaps are better compounding machines than large cap companies to grow capital over the long term Midcaps are ideal way to gain exposure to some of the rapidly growing industries and business that are being driven by the structural changes in the economy The widening pool of entrepreneurial talent in India is best tapped in mid cap stocks Our bottom up stock picking strategy is well suited to capitalize on this opportunity Midcap companies provide an interesting investment opportunity whereby investors can benefit from earning growth and P/E multiples expansion in the future 3
Midcaps Wealth creators over the long term 1280 1080 880 Std Deviation CNX Mid Cap: 8.40% CNX Nifty: 7.18% CNX Midcap CNX Nifty Index Period: 30th June, 2003 30th June, 2015 680 480 280 Large Cap = 18.11% CAGR 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Over the last 12 years Midcaps has outperformed the Large caps The risks (as explained by price volatility) in midcaps are also higher relative to large caps Mid cap companies should continue to deliver better returns relative to large caps in the medium term, albeit with higher risks 4 Past performance may or may not be sustained in future. Dataason30 th June 2015. Source: MFIE. The base date of CNX Midcap is January 01, 2003. Mid caps and Large caps are represented by CNX Midcap Index & CNX Nifty Index respectively. The values has been rebased to 100 at the beginning of the period. The above simulation is for illustrationpurposeonlyandshouldnotbe construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or forecasting any returns. Data Period (30 th June, 2003 30 th June, 2015). CAGR: Compounded Annualised Growth Rate.
Midcaps dominance over Largecaps 25% Midcap Large Cap 20.94% 21.24% 20% 15% 17.24% 16.59% 13.87% 15.56% 14.18% 18.11% 10% 9.95% 9.85% 9.51% 10.96% 5% 0% 1 Year 3 Years 5 Years 7 Years 10 Years 12 Years Returns less than 1 year are absolute, greater than 1 year are compounded annualized Midcaps Outperform Largecaps Across Time Frame 5 Past performance may or may not be sustained in future. Data as on 30th June 2015. Source: MFIE. The base date of CNX Midcap is January 01, 2003. Mid caps and Large caps are represented by CNX Midcap Index & CNX Nifty Index respectively. The above simulation is for illustration purpose only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or forecasting any returns.
Market Inefficiencies are more pronounced in Midcaps Index No. of Analyst Covering Institutional Holdings Nifty 48 High CNX MidCap 23 Low Relatively midcaps are under researched in general, hence the probabilities of market inefficiency are higher in the midcap segment than in the large cap one This is reflected in just 23 analysts covering mid cap company versus 48 analysts tracking a large cap company Low coverage also results in limited institutional ownership Institutional holdings in Midcaps are low as compared to large caps Thus institutional investors, representing the largest pool of capital investing in markets, find it relatively difficult to invest in midcap companies 6 Source: Bloomberg. Data as on July 22 nd, 2015
Religare Invesco Mid N Small Cap Fund How Mid and Small caps are defined Midcaps:Companieswhichhaveamarket capitalisation of less than the highest stock of CNX Mid cap Index and more than last stock of CNX Midcap Index Small caps : Companies which have a market capitalisation of less than the highest stock of S&P BSE Small Cap Index and more than last stock of S&P BSE Small Cap Index Fund s market capitalisation is reviewed on a quarterly basis and the portfolio is rebalanced accordingly within one month from the date of review Market Capitalization Highest Market Cap (Rs. Crs) Lowest Market Cap (Rs. Crs) Weighted Average Market Cap (Rs. Crs) Benchmark (CNX Midcap) Religare Invesco Mid N Small Cap Fund 93,546 1,834 22,830 126,502 537 15,892 7 Data as on 30 th June, 2015. Note: The portfolio of Religare Invesco Mid N Small Cap Fund consists of few companies, which have a market capitalisation higher than the highest market capitalisation of constituent stock of CNX Midcap Index. However, the said companies market capitalisation was within the permissible limits as per the investment pattern of the scheme at the time of investment. The change in market capitalisation is pursuant to appreciation in market capitalisation of such companies. Source: Bloomberg.
Religare Invesco Mid N Small Cap Fund Investment Strategy & Portfolio Construction Guidelines Bottom up stock picking strategy The Scheme has a bias towards Growth Stocks Primary focus on companies that can grow in size & scale over time Quality, Scalability more important than cheap valuations Alpha generation is driven by stock selection Sector allocation adds a residual impact Well diversified portfolio 8
Top 10 Holdings / Sector Allocation Portfolio data as on 30 th June, 2015. Top 10 Holdings % of Net Assets Dish TV India Ltd. 4.96% Sector Classification (Top 10) % of Net Assets Media & Entertainment 13.10% Performance Attributes Standard Deviation (Monthly) Fund Benchmark Index* 5.01% 5.38% Aditya Birla Nuvo Ltd. 4.25% Finance 11.29% Sharpe Ratio (Monthly) 0.40 0.20 Biocon Ltd. 3.97% D.B.Corp Ltd. 3.96% LIC Housing Finance Ltd. 3.68% Sanofi India Ltd. 3.52% Divi's Laboratories Ltd. 3.52% Hindustan Petroleum Corporation Ltd. 3.48% The Federal Bank Ltd. 3.39% Pharmaceuticals 11.00% Banks 10.85% Industrial Products 8.83% Services 4.25% Construction Project 3.81% Transportation 3.65% Petroleum Products 3.48% Beta 0.87 1.00 R Squared 0.87 1.00 Market Cap Range (Rs. Bln) % of NAV 0 50 bln 21.83% 51 100 bln 31.20% 101 150 bln 11.78% 151 250 bln 23.76% 251 400 bln 3.44% > 1000 bln 3.96% Supreme Industries Ltd. 3.25% Gas 3.33% Weighted Average Market Cap Rs.159 bln Total 37.98% Total 73.59% Median Market Cap Rs. 68 bln Sector classification is as per AMFI industry classification 9 Past performance may or may not be sustained in future. *Figure based on 3 years monthly data history. Risk free rate of returns is assumed to be 7.64% p.a. (based on the prevailing yield of 91 day Treasury Bill). Data as on 30 th June, 2015. Benchmark CNX Mid cap
Portfolio Characteristics Characteristic Portfolio CNX Midcap CNX Nifty PE FY15 1 21.1 19.3 20.1 Historical 3 year EPS Growth 2 13.9% 16.0% 12.5% 12 Month Trailing Price to Cash flow 1 12.1 11.6 13.1 12 Month Trailing Price to Book Value 1 2.7 2.2 3.0 ROE FY16 1 15.5% 13.7% 17.0% 10 Source: Factset. Data as on June 30, 2015. 1 Weighted Harmonic Mean. 2 Weighted Arithmetic Mean. PE: Price Earning Ratio. ROE: Return On Equity. Weighted Harmonic Mean is an average resulting from the multiplication of the reciprocal of the observation for each component by the weightage of that stock in the portfolio/index. It reduces the impact of outliers. Weighted Arithmetic Mean is an average resulting from the multiplication of observation for each company by the weightage of that stock in the portfolio/index.
Religare Invesco Mid N Small Cap Fund Performance Current Value of Rs. 10,000 40000 35000 30000 25000 20000 15000 Religare Invesco Mid N Small Cap Fund Growth CNX Midcap CNX NIFTY 35,260 22,021 18,584 10000 5000 0 Mar 08 Jun 08 Sep 08 Dec 08 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 May 11 Aug 11 Nov 11 Feb 12 May 12 Aug 12 Nov 12 Feb 13 May 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Past performance may or may not be sustained in future. The above calculation is based on NAV since inception. As on 30 th June, 2015 Returns (%) Religare Invesco Mid N Small Cap Fund 1 Religare Invesco Mid N Small Cap Direct Plan Fund Manager: Vinay Paharia CNX Midcap 2 CNX Nifty 3 12 month performance till last calendar quarter NAV as on Jun. 30, 2015 (Rs.) 35.26 36.29 Jun. 30, 2014 to Jun. 30, 2015 29.02% 31.11% 17.24% 9.95% Jun. 28, 2013 to Jun. 30, 2014 65.28% 66.88% 50.79% 30.09% Jun. 29, 2012 to Jun. 28, 2013 14.36% 0.13% 10.67% 11 1 Year 29.02% 31.11% 17.24% 9.95% 3 Years 34.69% 20.93% 16.58% 5 Years 21.48% 9.85% 9.51% Since Inception (17 March 2008) 18.86% 11.43% 8.87% Current Value of Rs. 10,000 (Since Inception) 35,260 22,021 18,584 1 Past performance may or may not be sustained in future. 2 Scheme Benchmark. 3 Additional Benchmark. Please refer to the slide on Performance of other scheme managed by Vinay Paharia. Returns are of Growth Option. For calculating returns since inception, NAV as on date allotment is taken at Face Value i.e. Rs. 10. Returns above 1 year are Compounded Annualised Growth Rate (CAGR). Since inception returns for Direct Plan is not given as it has not completed 3 years. June 30 and June 29 being non business days, performance as on June 29 and June 28 has been given, wherever applicable.
Top Return Contributors Stock Movement Stock Movement 800 600 PI Industries CNX Midcap Index 650 600 500 400 Britannia Industries Limited CNX Midcap Index 526 400 300 200 177 200 100 177 0 0 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Stock Movement Stock Movement 400 Voltas Limited 500 Gujarat Pipavav Port 300 200 100 CNX Midcap Index 301 177 400 300 200 100 CNX Midcap Index 374 177 0 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 0 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 12 Past performance may or may not be sustained in future. Source: Internal. Date: 30/06/2012 30/06/2015. The stock referred above should not be construed as recommendations from Religare Invesco AMC / Religare Invesco Mutual Fund. The Scheme may or may not have any present or future positions in these stocks in the Scheme or in any other scheme of Religare Invesco Mutual Fund. The performance of above stocks should not be construed as performance of the Scheme as the portfolio of the Scheme would be constituted of number of stocks having different weights and the individual stock held by the Scheme may or may not give positive returns. Religare Invesco AMC / Religare Invesco Mutual Fund is not guaranteeing or promising or forecasting any returns.
Valuations Relative valuations of Midcaps vs Largecaps higher than long period average Valuation of Mid cap v/s Large Caps (trailing twelve months) 40% 20% Premium / (Discount) 0% 20% 40% 60% 8 Years Average: 16% 6% 80% 100% Jan 06 May 06 Sep 06 Jan 07 May 07 Sep 07 Jan 08 May 08 Sep 08 Jan 09 May 09 Sep 09 Jan 10 May 10 Sep 10 Jan 11 May 11 Sep 11 Jan 12 May 12 Sep 12 Jan 13 May 13 Sep 13 Jan 14 May 14 Sep 14 Jan 15 May 15 Midcaps are trading at minor discount to Large caps on a trailing twelve months P/E basis Over the last 8 years, on an average, midcaps have traded at a 16% discount to large caps 13 Source: Bloomberg. Data as on 30 th June, 2015.
Portfolio Update and Outlook The fund is growth biased and hence large proportion of the fund is invested in businesses where the intrinsic value is compounding at a pace faster than economic growth The fund has a balanced exposure across companies with businesses exposed to consumption demand and investment demand Midcaps are trading at a minor discount to Large caps on a trailing twelve months P/E basis 1 Earnings growth for Midcap companies is expected to improve with a recovery in domestic growth and a more benign monetary environment 14 Note: 1 For details kindly refer to slide 13.
Key Facts Category Investment Objective Asset Allocation An Open Ended Equity Scheme To provide long term capital appreciation by investing in a portfolio that is predominantly constituted of equity and equity related instruments of mid and small cap companies. Type of Instruments Indicative Allocations (% of corpus) Risk Profile Equity & Equity Related Instruments 2 of Mid 3 Cap Companies 65 95% High Equity & Equity Related Instruments 2 of Small 4 Cap Companies 5 5 35% High Equity & Equity Related Instruments 2 of companies other than mentioned above 0 30% High Debt 1 & Money Market Instruments 0 30% Low to medium 1 Debt instruments may include securitized debt upto 30% of the net assets. 2 Maximum exposure to the derivatives shall not be exceeding 50% of the Net assets of the Scheme, subject to the limits as specified by SEBI, from time to time. The cumulative gross exposure through equity, debt and derivative position shall not exceed 100% of the net assets of the scheme, subject to provisions of SEBI circular dated August 18, 2010 w.r.t investment in derivatives. 3 Companies which have a market capitalisation of more than the last stock of CNX Mid Cap Index and less than the highest market capitalisation of the constituent stock of the CNX Mid Cap Index. 4 Companies which have a market capitalisation of more than the last stock of S&P BSE Small Cap Index and less than the highest market capitalisation of the constituent stock of the S&P BSE Small Cap Index. For this purpose, the market capitalisation of the companies will be considered at the time of investment. 5 The Scheme will ideally invest in equity & equity related instruments of small cap companies in the range of 15 30% of the net assets. Minimum Application Amount Rs 5000/ per application and in multiples of Re. 1 thereafter. Systematic Investment Plan (SIP): Options Minimum Amount Minimum Installments Monthly Rs. 500 per month and in multiples of Re. 1 /thereafter (upto Rs. 1,000) 12 Rs. 1,000 or more per month and in multiples of Re. 1 thereafter 6 Quarterly Rs. 1,500 per quarter and in multiples of Re. 1 thereafter 4 Plans 6 / Options (Applicable for Direct Plan also) Growth Option Dividend Payout Dividend Reinvestment (if dividend payable under dividend option is equal or less than Rs. 500/ then the dividend would be compulsory reinvested) 15
Key Facts Contd Loads Entry Load: Nil 7 Exit Load 8 : 1% (if redeemed/switched out on or before 1 year from the date of allotment); Nil (if redeemed/switched out after 1 year from the date of allotment) SIP: 1% (if redeemed/switched out on or before 1 year from the date of allotment); Nil (if redeemed/switched out after 1 year from the date of allotment) Switch between the Plans under the Scheme: For switch to Direct Plan: Transaction not routed through Distributor: Nil, Transaction routed through Distributor: Applicable exit load, For switch from Direct Plan: Nil** **However, if the Unit holder redeems/switches out such switched units from existing plan before completing one year from the date of original purchase, applicable exit load will be charged. Fund Manager Vinay Paharia Benchmark CNX Mid cap Index A transaction charge, as follows, is payable to distributors 9 who have opted to receive transaction charge: i. For existing investor in a Mutual Fund: Rs.100/ per subscription of Rs.10,000/ and above; ii. For first time investor in Mutual Funds: Rs.150/ per subscription of Rs.10,000/ and above. In case of investment through systematic investment plan (SIPs), the transaction charge shall be applicable only if the total commitment through SIP (i.e. amount of each SIP installment X total number of SIP installments) amounts to Rs. 10,000/ and above. In such cases, the transaction charge shall be recovered in 3 4 installments, as may be decided by Religare Invesco AMC. Transaction Charge However, there will be no transaction charge on: i. Subscription of less than Rs. 10,000/ ; or ii. Transactions other than purchases / subscriptions relating to new inflows; or iii. Direct subscription (subscription not routed through distributor); or iv. Subscription routed through distributor who has chosen to Opt out of charging of transaction charge; or v. Transaction routed through Stock Exchange(s). The transaction charge, if any, will be deducted by AMC from subscription amount and shall be paid to distributor. The balance subscription amount, after deducting applicable transaction charges, will be invested. It is clarified that upfront commission to distributor will continue to be paid by the investor directly to distributor by a separate cheque. 16 6 Direct Plan will have a lower expense ratio excluding distribution expenses, commission for distribution of Units etc. 7 The upfront commission, if any, on investment made by the investor shall be paid by the investor directly to the Distributor, based on his assessment of various factors including the service rendered by the Distributor. 8 Exit load charged, if any, will be credited back to the scheme, net of service tax. 9 Distributors shall also have the option to either opt in or opt out of levying transaction charge based on type of the product.
Performance of other schemes managed Fund Manager Vetri Subramaniam & Vinay Paharia Returns (%) Religare Invesco Tax Plan 1 Religare Invesco Tax Plan Direct Plan S&P BSE 100 2 CNX Nifty 3 12 month performance till last calendar quarter NAV as on Jun. 30, 2015 (Rs.) 35.42 36.52 Jun. 30, 2014 to Jun. 30, 2015 26.91% 29.05% 9.32% 9.95% Jun. 28, 2013 to Jun. 30, 2014 44.77% 46.03% 33.23% 30.09% Jun. 29, 2012 to Jun. 28, 2013 12.32% 9.91% 10.67% 1 Year 26.91% 29.05% 9.32% 9.95% 3 Years 27.37% 17.02% 16.58% 5 Years 16.23% 9.09% 9.51% Since Inception (29 December 2006) 16.02% 9.05% 9.17% Current Value of Rs. 10,000 (Since Inception) 35,420 20,900 21,098 Returns (%) Religare Invesco Business Leaders Religare Invesco Business Leaders CNX Nifty 2 S&P BSE Sensex 3 Fund 1 Direct Plan 12 month performance till last calendar quarter NAV as on Jun. 30, 2015 (Rs.) 20.98 21.62 Jun. 30, 2014 to Jun. 30, 2015 23.05% 25.26% 9.95% 9.31% Jun. 28, 2013 to Jun. 30, 2014 29.47% 30.67% 30.09% 30.83% Jun. 29, 2012 to Jun. 28, 2013 13.75% 10.67% 11.28% 17 1 Year 23.05% 25.26% 9.95% 9.31% 3 Years 21.96% 16.58% 16.79% 5 Years 12.11% 9.51% 9.43% Since Inception (21 August 2009) 13.47% 11.04% 10.78% Current Value of Rs. 10,000 (Since Inception) 20,980 18,478 18,228 1 Past performance may or may not be sustained in future. 2 Scheme Benchmark. 3 Additional Benchmark. Returns are of Growth Option. For calculating returns since inception, NAV as on date allotment is taken at Face Value i.e. Rs. 10. Returns above 1 year are Compounded Annualised Growth Rate (CAGR). Since inception returns for Direct Plan isnotgivenasithasnotcompleted3 years. June 30 and June 29 being non business days, performance as on June 29 and June 28 has been given, wherever applicable.
Performance of other schemes managed Fund Manager Vinay Paharia Returns (%) Religare Invesco Mid Cap Fund 1 Religare Invesco Mid Cap Fund Direct Plan CNX Mid Cap 2 CNX Nifty 3 12 month performance till last calendar quarter NAV as on Jun. 30, 2015 (Rs.) 34.38 35.47 Jun. 30, 2014 to Jun. 30, 2015 30.62% 33.05% 17.24% 9.95% Jun. 28, 2013 to Jun. 30, 2014 64.77% 66.27% 50.79% 30.09% Jun. 29, 2012 to Jun. 28, 2013 10.40% 0.13% 10.67% 1 Year 30.62% 33.05% 17.24% 9.95% 3 Years 33.53% 20.93% 16.58% 5 Years 20.62% 9.85% 9.51% Since Inception (19 April 2007) 16.24% 12.06% 9.42% Current Value of Rs. 10,000 (Since Inception) 34,380 25,446 20,934 1 Past performance may or may not be sustained in future. 2 Scheme Benchmark. 3 Additional Benchmark. Returns are of Growth Option. For calculating returns since inception NAV as on the date of allotment is taken as Rs. 10. The face value per unit is Rs. 10. Returns greater than 1 year are compounded annualized. Since inception returns for Direct Plan is not given as it has not completed 3 years. June 30 and June 29 being non business days, performance as on June 29 and June 28 has been given, wherever applicable. 18
Disclaimer Disclaimer: This document alone is not sufficient and shouldn t be used for the development or implementation of an investment strategy. The companies/sectors referred in this presentation should not be construed as recommendations from Religare Invesco Asset Management Company Pvt. Ltd. (Religare Invesco AMC) / Religare Invesco Mutual Fund. The Fund may or may not have any present or future positions in these stocks. It should not be construed as investment advice to any party. All figures, charts/graphs and data included in this document are as on date and are subject to change without notice. The data used in this document is obtained by Religare Invesco AMC from the sources which it considers reliable. While utmost care has been exercised while preparing this document, Religare Invesco AMC does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The content of this document is intended solely for the use of the addressee. If you are not the addressee or the person responsible for delivering it to the addressee, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it is prohibited and may be unlawful. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. MKTG / Mid N Small Cap FUND PPT/ 0615/ C03104 19
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