icicidirect_monthlymfreport

7/31/2019 ICICIdirect_MonthlyMFReport

1/27

Mutual Fund

Review

November19, 2009 | Mutual Fundutual Fund Review


2/27CICI Securities Ltd. | Retail MF Research

Note: Whenever, returns for the scheme are shown in the report, they are for the growth option of the scheme.

Mutual Fund Review

........................................................................................................2..........................................................................................................3

..............................................................................................4

....................................................................................................5...................................................................................................6

Equity funds ........................................................................................................6Equity diversified funds...................................................................................7Equity infrastructure fund................................................................................8Equity Banking Funds......................................................................................9Equity Pharma Funds ....................................................................................10Equity FMCG.................................................................................................10Equity Technology Funds ..............................................................................11

Arbitrage Funds.................................................................................................12Exchange Traded Funds (ETF)...........................................................................13Balanced Funds.................................................................................................14Monthly Income Plans (MIP).............................................................................15Debt funds.........................................................................................................16

Liquid Funds..................................................................................................17Income Funds ...............................................................................................19Gilt Funds......................................................................................................21

Gold ETFs: Currency movements deciding the price trend ................................22....................................................................................................23

Equity funds model portfolio..............................................................................23Debt funds model portfolio ................................................................................23

...................................................................................................25

September 20, 2012


3/27ICICI Securities Ltd. | Retail MF Research Page 2

Equity Markets

The government tried to shrug off the "policy paralysis" concernsby announcing a few big reform decisions:

Subsidy reduction: By raising diesel price by | 5/litre andcapping subsidised LPG to six cylinders per annum, subsidiesare likely to come down by | 20000 crore

Disinvestments: The government expects to raise | 15000crore by lowering its stake in four PSUs

FDI: The government has allowed 51% FDI in multi-brandretail - where states are free to decide, 49% FDI in aviation,49% FDI in power exchanges and increase of FDI inbroadcasting services to 74% from 49%

Indian markets also reacted positively to the policy announcementand staged a sharp rally in the first half of September

Global equity markets also remain supportive on speculation thatpolicy makers in the US, Europe and China will ease monetarypolicy to boost growth, which they actually did and the samehelped to calm market nervousness

Foreign institutional investors (FIIs) participation in the Indianequity market was quite heartening. Despite the aforementionedeconomic factors, both global as well as domestic, FIIs exudedconfidence in the Indian equity market as they net bought to thetune of | 7000 crore in September till September 17 after buyingshares worth | 9730 crore in August, taking their YTD netpurchases to | 70,000 crore

However, domestic mutual funds, on the other hand, remained netseller at every higher level. They have sold shares worth | 700

crore in September till 17 after being net sellers of | 1600 crore inAugust, taking their total net sales YTD to | 10200 crore

We think that amid the current euphoria, words of caution arewarranted, particularly with regard to the evolving national politicallandscape. The government move seems to be more an act ofdesperation than a well-charted plan. In particular, by hurriedlypushing through the politically sensitive FDI in multi-brand retail,the government has pushed UPA allies (particularly TMC and evenSP) into a corner, forcing them to take a public stance by eithersupporting the government or pulling out of the coalition

In recent days, the government has acted boldly, undertakingseveral difficult reforms such as fuel price hike and FDIliberalisation in several sectors among others. These steps sendout a strong signal to investors, ratings agencies and even to theRBI that the government is serious about Indias macroenvironment. Some more action is expected in the near-term andthe same may provide a further boost to investors confidence

However, as more reforms follow and market moves todiscounting FY14 earnings, we see meaningful upsides from thecurrent levels in the next one or two years. However, since themarket has rallied sharply in the near term, buy on any correctionshould be the investment strategy

Our target investment plan (TIP) investment strategy is ideallysuited in the current investment market environment

S&P CNX Nifty : July 2012 , Not much return but highinterim volatility (300 points move between high & low)

4500

4650

4800

4950

51005250

5400

5550

5700

5850

6000

Dec-11

Mar-12

Jun-12

IndexValue

12.61% 0.14% 6%

Source: Bloomberg, ICICIdirect.com Research

Spree of reforms triggers rally across board

6.4

6.1

5.8

4.7 5

.2

0

5

10

BSE

Sensex

BSE 100 BSE 500 BSE

Small Cap

BSE

Midcap

Return(%)


Returns : July 2012

14.8

10.3

9.6

9.3

8.6

8.2

6.6

6.4

4.4

-1.5

-2.7

3.8

-10

0

10

20

Reality

Cap.Goods

Auto

Banking

Metal

Oil&Gas

Con.Durables

Sensex

PSU IT

Helathcare

FMCG

Return(%)


Returns : July 2012

Analysts name

Sachin Jain

[email protected]

Sheetal Ashar

[email protected]



Debt Markets

The RBI cut CRR by 25 bps to 4.5% while keeping all other ratesunchanged in its mid quarter policy meeting on September 17. TheCRR cut, which will infuse | 17,000 crore into the system, is aimedat mitigating liquidity deterioration on account of advance tax

outflows and possibility of wedge between credit and depositgrowth re-appearing over busy season on credit

The RBI welcomes recent steps by the Government of India (GoI)on fuel price hike (fiscal step) and FDI decisions (steps on supplyside) and promises to reinforce their positive impact; while keepingits focus on inflation management

Near term concerns on inflation are quite evident with supplyconstraints and rupee depreciation imparting stickiness to inflationeven as demand moderates. The RBI is also wary about effects oncommodity prices of recent easing measures undertaken by theFed and the ECB. Also, it notes that the 50 bps repo rate cutundertaken in April was on the back of assumption of some GoIaction

In the policy statement, while the RBI has focused on theinflationary persistence in the economy, it has taken cognizance ofthe fact that growth concerns have increased

Headline inflation came in at 7.55% YoY in August (as compared toour expectation of 7.1% YoY), sharply higher than the previousmonth's print of 6.87% YoY. The June number was revised upwardto 7.58% YoY. Fuel inflation rose sharply to 8.32% YoY from 5.98%YoY. Substantial upward risks to this index exists now that thegovernment has hiked diesel prices and international crude pricesare on an uptrend on account of geopolitical tensions and the

announcement of QE3 by the Fed Liquidity has improved substantially at the start of September as

can be seen in the magnitude of the fall in LAF infusions, whichaveraged around | 12500 crore from around | 45000 crore inAugust. However, it is expected to pick up, going forward, onexpectation of a pick-up in credit offtake with the beginning of thefestive season and advance tax outflows. The same may result infirming up of yields on money markets papers to a slight extent

Easing system liquidity, falling growth and the appetite of banks forgovernment bonds due to low credit offtake are positive for themarkets while controlling inflation on rising administered prices area major concern for the RBI

Corporate bonds will benefit from easing liquidity conditions.However, the same will be restricted to only the top rated (AAA)borrowers. Most of the short-term debt funds and dynamic bondfunds are increasing duration and exposure to corporate bonds totake advantage of the spread and the current steepening of theyield curve. Therefore, they remain a better investment option

The outlook for G-Secs has incrementally improved. However,since sustained supply concerns remain, there may not be asecular rally in the segment. It is better played through dynamic

funds with opportunistic exposure to government securities

G-Sec yield: Uptick at the fag end of month as July raideficit creates inflation worries

7.8

8.0

8.28.4

8.6

8.8

9.0

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Yield(%)

10-Year Benchmark G-Sec Yield


Steeping of the yield curve

7.8

7.9

8.0

8.1

8.2

8.3

1yr 3yr 5yr 10 yr

Yield(%)

31-Aug 14-Sep

ource: Bloomberg, ICICIdirect.com Research

back of improved liquidity

-2000

-1500

-1000

-500

0

500

1000

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

|C

r.

ource: Bloomberg, ICICIdirect.com Research



Institutional fund flow

After having bought equities worth | 44,036 crore in Q1CY12, FIIsturned sellers to the tune of | 1957 crore in Q2CY12. In the currentquarter FIIs have been buyers in the equity markets to the tune of| 25890 crore till September 14, 2012

Given the policy reforms that are being announced and assurancefrom the finance minister to announce further reforms and norollback of existing announcements, we expect strong FII flows inthe coming months

Also, monetary measures taken by the European Central Bank andthe US Federal Reserve should also increase global liquidity, whichshould support funds coming into Indian equities

-464

201

1201

652

2497

-777

-361

810

581

-1847

-2171

-1416

-527.6

-397.8

295.5

-1854

-1600

-608

7019

-5158

3311 7

411

-9537

-1457

2469

-4539 -1

29

1108

9

25217

7730

-568.4

-1522.3

133.4

10272

9729.6

5888

5610

-15000

-10000

-5000

0

5000

10000

15000

20000

25000

30000

Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

|Crore

4000

4200

4400

4600

4800

5000

52005400

5600

5800

6000

Series1 Series2 Series3


Mutual funds have always been sellers whenever the market hasrisen. Mutual funds sold | 10126 crore worth of equities in CY12 tillSeptember 14, 2012

Since December 2021, markets have risen from 4600 to 5600 leveldelivering 21% return CY13 till date. Fund managers as well asmutual fund investor have captured every rise to book profits

Fund managers have been sellers every single month. Hence,there have also been outflows from equity funds for each month inthe current calendar year

-1847-2171

-1416

-527.6 -397.8

295.5

-1854-1600

-380

-2809

71

-615

420

-286

-949

-2286

-3000

-2500

-2000

-1500

-1000

-500

0

5001000

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12

|crore

Outflow from Equity market Ouflow from Equity schemes

Source: Bloomberg, AMFI, ICICIdirect.com Research



Industry Synopsis

Assets under management (AUM) grew to | 7.5 trillion as on August 31,2012 from | 5.8 trillion as on March 31, 2012 registering growth of 28%.AUM under income & money market funds mainly accounted for the gains.Cumulative net inflows in FY13 till date for all schemes taken togetherwere | 153782 crore. Except for debt (| 50329 crore) and money market

funds (| 101859 crore) all other categories witnessed outflows.

696738

641937

695437

681655

611402

659153

675338

680154

699284

688835 7

52548

587197

730361

500000

550000

600000

650000

700000

750000

800000

Au

g-1

1

Sep-1

1

O

ct-11

Nov-1

1

Dec-1

1

Jan-1

2

Fe

b-1

2

M

ar-12

Apr-12

May-1

2

Jun-1

2

J

ul-12

Au

g-1

2

|Crore

Source: AMFI,ICICIdirect.com Research

318029

1

78062

16

8625

349311

176080

193466

100000

150000

200000

250000

300000

350000

400000

Income Equity Money Market

|Crore

Aug-11 Aug-12

Source: AMFI, ICICIdirect.com Research

3

140

4800

2063.02

2832.00

16409

3

282

10701

154

8

23

99

15761

1000

4000

7000

10000

13000

16000

19000

Balanced

GoldETFs

Gilt

OtherETFs

FOF(Overseas)

|Crore

Aug-11 Aug-12

Source: AMFI , ICICIdirect.com Research

92872

82888

7315267270

60923

50000

60000

70000

80000

90000

100000

110000

Jun-1

2

Mar-12

Dec-1

1

Sep-1

1

Jun-1

1

|Crore

HDFC Reliance ICICI Prudential Birla Sunlife UTI


With the objective of increasing penetration several measures

were announced by Sebi to be implemented for October 1,

2012

Expense ratio that is charged to the scheme (currentlyhighest that can be charged is 2.5%) can be increased by

additional 30 basis points if new inflows from beyond top

15 cities are at least (a) 30% of gross new inflows in the

scheme or (b) 15% of the average assets under

management (year to date) of the scheme, whichever is

higher

Such new inflows need to stay in the scheme for a yearelse, it has to be clawed back to the scheme

Service tax shall be charged to the scheme over andabove the expense ratio

Portfolio disclosure as on last day of the month to bemade on or before 10th of the next month

Fund houses are required to set apart at least two basispoints within the limit of TER for investor education

awareness programmes

Mutual funds/AMCs shall provide a separate plan fordirect investments, i.e., investments not routed through

a distributor, in existing as well as new schemes. Suchseparate plan shall have a lower expense ratio excluding

distribution expenses, commission, etc, and no

commission shall be paid from such plans. The plan shall

also have a separate NAV

Reforms will likely extend the reach but will be at 20-30bps

HDFC MF replaced Reliance MF as the top fund house in

the industry with market share of 13.4%

In Q1FY13, of the Top 10 AMCs, except for Kotak, all other

fund house saw an increase in AAUM. Highest AAUM

increase of 12% was of SBI Asset Management Company

followed by 9.96% increase in the AAUM of Birla Sun Life

Asset Management Company

In FY12, L&T Mutual Fund acquired the assets of Fidelity

Mutual Fund leading to an increase in its market share.

However, L&Ts management has been unable to retain the

confidence of the Fidelity fund investors as seen from a

QoQ decline in AAUM under Fidelity funds



Category Analysis

Equity funds

In equity funds, with the markets moving up in the last week allcategories delivered flat to positive average returns

IT/pharma funds outperformed other fund categories indicating exportoriented sector benefiting form the appreciated rupee

Category average returns were lower than the benchmarks returns asnot all fund managers could catch up with the sharp rally

6.68

2.66

3.683.32

0.82

2.57

4.62

2.44

7.0

0.7

4.84.5

0.1

4.5

5.2

2.4

0.00

4.00

8.00

IT

Pharma

LargeCap

Diversified

FMCG

Midcap

Banking

Infra

Return%

Source: Crisil Fund Analyser, ICICIdirect.com Research

Note : Returns : 1M (14 Aug 2012- 17thSep 2012)

-60-869

19861440

210

-52

472

-380

-2809

71

-615

420

-286-949

-2286-4000

-2000

0

2000

4000

Jun-1

1

Ju

l-11

Aug-1

1

Sep-1

1

Oct-11

Nov-1

1

Dec-1

1

Jan-1

2

Fe

b-1

2

Mar-12

Apr-12

May-1

2

Jun-1

2

Ju

l-12

Aug-1

2

Net

Inflow

(|

Cr)

Net inflow (Equity + ELSS)


191607

178062

177391

184993

170037

161242

179640

185722

182076

179620

170400

179618

178202

176080

160000

170000

180000

190000

200000

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

|Crore

AUM (Equity+ ELSS)


Banks Software Pharma

Consumer

Non

Durables

Petroleum Finance Auto PowerCpaital

GoodsOil

Aug-12 32970 18123 16495 15038 10436 9734 7917 6600 5296 5652

Mar-12 34000 18177 14610 15332 11255 9195 9431 7185 6369 5839

OoQ

change -1030 -54 1885 -293 -819 539 -1514 -585 -1073 -186 Source: SEBI, ICICIdirect.com Research , Sector Classification (as per AMFI)

No major change since the start of the financial year except

that allocation to interest sensitive has decreased



Equity diversified funds

The BSE Sensex has surged 443 points to close at 18,464. It ralliedby 1,151 points between September 6 and September 14,reporting its highest rise since June 2011

A spate of announcements by both global as well as domesticcentral authorities fuelled an equity market rally

Globally, the European Central Bank and the US Federal Reserveannounced monetary easing measures, which cheered markets

Back here diesel prices were finally hiked by | 5 p/litre and somerationalisation in usage of subsidised LPG cylinder was announced.Divestment in four companies was finalised. FDI was allowed incertain sectors

All these measures will not only help on the economic front butalso bring a sea change in the equity market sentiment

At 18500, the BSE Sensex is trading at price to equity (PE) of 12.5xFY14 EPS of | 1469.However, as more reforms follow and marketmoves to discounting FY14 earnings, we see meaningful upsidefrom current levels in the next one or two years

Unless political abuse leads to rollback of measures announced,markets may see good FII inflows coming in months ahead

An across the board rally may happen and diversified funds makeinvestment sense. Since the market has rallied sharply in the nearterm, buy on any correction should be the investment strategy

Large cap FundsScheme Name 6 M 1 Yr 3 Yr 5Yr

Franklin India Bluechip Fund 3.13 8.34 9.00 7.84HDFC Top 200 Fund 2.65 7.66 7.54 10.02

ICICI Prudential Focused Bluechip Equity Fund 5.67 11.74 10.87 N.A

UTI Opportunities Fund 5.42 12.58 10.20 11.96

Benchmark - BSE Sensex 6.13 9.44 3.52 3.64

Category Average 5.39 8.65 5.51 5.30

Diversified FundsScheme Name 6 M 1 Yr 3 Yr 5Yr

Franklin India Prima Plus 5.07 8.96 8.77 7.08

HDFC Equity Fund 1.65 5.77 9.25 9.31

ICICI Prudential Dynamic Plan 4.61 12.19 10.71 8.89

Benchmark - CNX Nifty 5.46 10.28 4.15 4.53

Cate or Avera e 4.44 7.56 5.98 4.74

Midcap Funds

Scheme Name 6 M 1 Yr 3 Yr 5 YrHDFC Mid-Cap Opportunities Fund 5.12 9.67 16.41 10.41

ICICI Prudential Discovery Fund 7.81 17.08 12.80 12.92

IDFC Premier Equity Fund plan A 6.28 6.52 15.09 13.73

SBI Emerging Bluechip 18.44 16.54 22.02 7.94

Benchmark - CNX Midcap -2.26 1.61 4.56 3.41



Note : % Returns are as on September 17, 2012, Returns above 1 yr are CAGR returns



Equity infrastructure fund

We remain neutral on the sector. Very selective individual stockswith strong execution capabilities and focus on de-leveraging thebalance sheet would outperform, going ahead

While the fundamentals of companies are yet to see animprovement, the recent government action on reform such ashike in diesel price and FDI in retail and aviation sectors haveraised some hopes on the better environment for the infrastructuresector, going ahead

Additionally, a slowdown in the economy also raises hopes for aninterest rate cut (though sticky inflation may delay the interest ratecut)

Overall, the sector may take longer to recover better to stayinvested in a diversified fund

2000

2200

2400

2600

2800

30003200

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

CNX Infrastructure Index


2.9

7.6

-1.5

-2.4

-6.8

-4.4

4.1

8.4

4.4

8.2

3.3 3

.6

-10

-5

0

5

10

1M 3M 6M 1 YR 3YR 5YR

Return(%)

Category Average BSE 100

Source: CRISIL Fund Analyser, ICICIdirect.com ResearchNote : % Returns are as on Sep 17, 2012, Returns above 1 yr are CAGR returns

To Recomeded E uit Infrastructure Funds

Scheme Name 6 M 1 Yr 3 Yrs 5 Yrs

Canara Robeco Infrastructure -0.23 1.72 3.4 3.68

Franklin Build India Fund 5.71 10.49 5.19 N.A

HDFC Infratructure Fund -4.27 -2.11 -0.18 N.A

ICICI Prudential Infrastructure Fund 0.43 -1.45 -2.02 1.68

Benchmark - BSE 100 4.39 8.16 3.25 3.62

Category Average -1.45 -2.35 -6.75 -4.38 Source: CRISIL Fund Analyser, ICICIdirect.com Research




Equity Banking Funds

Banking funds continue to be volatile reacting to variousmacroeconomic variables and ensuing changes on expectations on theRBIs stance towards a rate cut

In its Mid Quarter Review held on September 14, 2012, the RBI had cutthe CRR by 25 bps bringing it down to 4.50%. The banking sector willbenefit on the margins front as CRR funds kept with RBI, that are notearning anything, will start earning some return

We believe if the reforms process that has been initiated by thegovernment in past few days gains momentum that may help banks inthe form of higher credit growth and improved recovery of bad loans

Factors that need to be watched are credit pick up that should happenas we enter the busy season and rate cuts as and when it happens

Higher provisioning cost may still keep earnings lower. Reduction inFD rate may reduce cost of funds and add to net interest margin (NIM)

Banking being a relatively high beta sector has delivered higher returnsvis--vis the broader market in upturns. Entry into these funds duringbad times can add additional 10-15% once the cycle gets reversed.We, therefore, advise aggressive investors to start accumulatingbanking funds in their portfolio

6.1

13.3

5.2

8.4

5.1

13.0

10.1

9.2

4.81

9.20

6.13

9.44

-2.72

3.52

13.0

11.5

4.6

9.4

-10

-5

0

5

10

15


Return(%)

Category Average Bankex BSE Sensex

Source: CRISIL Fund Analyser, ICICIdirect.com Research

Note : % Returns are as on Sep 17, 2012, Returns above 1 yr are CAGR returns

Scheme Name 1 M 6 M 1 Yr 3 Yrs

Reliance Banking Fund 9 -5.54 37.52 27.49

UTI Thematic - Banking Sector Fund 9.81 -5.22 28.95 22.7ICICI Prudential Banking and Financial Services Fund 9.96 -5.15 26.52 N.A

Benchmark - BSE Bankex 9.91 -4.74 26.75 18.70

Category Average 9.48 -5.88 28.95 25.10 Source: CRISIL Fund Analyser, ICICIdirect.com Research


80009000

10000110001200013000140001500016000

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

BANKEX Index

Performance during up and down turns

Bankex Sensex Bankex Sensex

Feb 12 - Jun 12 11219 16454 -13% -11%

Dec 11 - Feb 12 12839 18429 40% 19%

Oct 10 - Dec 11 9153 15455 -37% -25%

Mar 09 - Oct 10 14479 20688 299% 154%

Jan 08 - Mar 09 3633 8160 -70% -61%

Jun 06- Jan 08 12087 20873 201% 134%

May 06 - Jun 06 4017 8929 -31% -29%

Jul 04 - May 06 5809 12612 144% 160%

Feb 04 - Jul 04 2381 4843 -22% -20%

Apr 03 - Feb 04 3063 6036 120% 104%

Index Returns %



Equity Pharma Funds

With ~25% YTD returns, the BSE Healthcare index maintainedoutright outperformance vis--vis the Sensex and broader BSE 500

The sector will continue to be sought after as it remains relativelyinsulated from global slowdown and domestic economic vagaries.However, the premium gap (~36% vis--vis) is expected to come

down on account of premium valuations at which most of thepharma stocks are now trading

2.7

14.7

19.016.8

24.8

20.5

0.7

12.0

16.2

23.2 22.8

15.0

0

5

10

15

20

25

30

1 M 3 M 6 M 1 Yr 3 Yr 5 Yr

Returns(%)

Reliance Pharma Fund BSE Healthcare



Equity FMCG

With the monsoon witnessing a revival in August end, we expectthe growth for FMCG companies in H2CY12 to be healthy with anequal mix of prices and volumes. Sales growth would also bedriven by festive season demand. Advertisement expenses would,

however, witness an uptrend driven by increasing fight for marketshare and new launches for the festive season

Valuations for the FMCG sector remain stretched and the risk-reward is unfavourable. A recent reversal in market sentiments hasled to some profit booking in the defensive sector and investorsare moving towards cyclical plays

With a reversal in market sentiment it is better to move fromdefensive to aggressive sector funds to generate alpha

0.8

7.0

19.5

2

3.8 2

7.7

16.4

0.8

7.4

2

3.7

31.7

33.9

2

3.9

0.1

7.5

21

.4

32.2

27.1

20.0

0

10

20

30

40

1 M 3 M 6 M 1 YR 3YR 5YR

Returns%

ICICI Prudential FMCG Fund - Growth SBI Magnum Sector Umbrella - FMCG Fund Index



In FY12, the defensive sector was the only category tosizeably increase investors wealth ~31%

Recent reversal in market sentiments has seen some profit

booking in FMCG stocks



Equity Technology Funds

Though IT stocks have run up in the past few days with thebackground of quantitative easing, the underlying concern ofCY12E IT budgets still remains. The demand environment in the USand BFS vertical continues to be challenging with IT budgets beingtrimmed across the board

Rising price-volume trade offs and increasing deal pipeline inemerging markets alone could bring downward pressure onmargins

The scenario is not that favourable for a broad based rally in ITstocks. Hence, these funds can be avoided specially after havingrallied so much

6.75.8

2.6

18.0

8.6

2.8

6.44.6

1.2

21.0

11.1

1.1

0

5

10

15

20

25

1 M 3 M 6 M 1 Yr 3 Yr 5Yr

Returns(%

)

Category Average BSE IT



45

47

49

51

53

55

57

59

Ja

n-1

2

Fe

b-1

2

Mar-12

Apr-12

Ma

y-1

2

Ju

n-1

2

J

ul-12

Au

g-1

2

Se

p-1

2

|/$


4500

5000

5500

6000

6500

7000

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

BSE IT




Arbitrage Funds

Arbitrage funds seek to exploit market inefficiencies that willmanifest as mispricing in cash (stock) and derivative markets

Since the inception of the July series, the markets have been rangebound and, thus, arbitrage opportunities are scarce, whencompared with May and June. Even in the recent sharp upward

movement not too many arbitrage opportunities were seen

Arbitrage funds are classified as equity funds as they invest intoequity share and equity derivative instruments. Since these areclassified as equity funds for taxation, dividends declared by thefunds are tax free. No capital gains will be applicable if they aresold after one year

These funds can be looked upon as an alternative to liquid funds.However, for these funds, returns totally depend on arbitrageopportunities available at a particular point of time and investorsshould consider reviewing the same before investing. Return ofarbitrage funds are not linear and, therefore, not suitable forinvestors who want consistent return across time period

Arbitrage funds should be used as a liquid investment and shouldnot be a major part of the investors portfolio

0.81

5.22

0.64

1.98

4.25

8.69

6.75

7.19

7.19

9.35

2.38

6.95

0

1

2

3

4

5

6

7

8

9

10


Return%

Category Average Crisil Liquid Fund Index

Source: Crisil Fund Analyser, , ICICIdirect.com Research

Note : % Returns are as on Sept 17, 2012 Returns above 1 yr are CAGR returns

Scheme Name 6M 1 Yr 3 Yrs 5 YrsICICI Prudential Equity and Derivatives Fund - Income

Optimiser Plan5.64 9.17 7.09 7.10

IDFC Arbitrage Fund - Plan A - (Regular) - Growth 5.22 9.52 7.17 6.67

Kotak Equity Arbitrage Fund 5.09 9.30 7.40 7.29

SBI Arbitrage Opportunities Fund - Growth 5.40 9.41 7.43 7.13

CRISIL Liquid Fund Index 4.25 8.69 6.75 6.95

Cate or Avera e 5.22 9.35 7.19 7.19


Note : % Returns are as September 17, 2012, Returns above 1 yr are CAGR returns

Availability of arbitrage positions depends very much on

the market scenario. Directional movement in the broader

index attracts speculators in the market and cost of

funding makes the futures positions biased

In case of positive movement, long build-up in futures puts

the pricing in the upward bias and creates a window for

direct arbitrage positions

On the other hand, negative bias attracts fresh sellers in

the market and speculators try to sell the stock at much

cheaper than the theoretical prices. In such situations,reverse arbitrage opportunities arise

On the other hand, a range bound market does not give

ample room to create arbitrage positions

Volatile markets in past one year had created various

arbitrage opportunities. This has helped arbitrage fundsdeliver close to 9% tax free return



Exchange Traded Funds (ETF)

In India, there are three kinds of ETFs available: Equity Index ETFs,liquid ETFs and gold ETFs

An equity index ETF tracks a particular equity index such as the BSESensex, NSE Nifty, Nifty Junior, etc

An equity index ETF scores higher than index funds on severalgrounds. The expense of investing in ETFs is relatively less by 0.50-1.00% in comparison to an index fund. The expense ratio for ETFs isin the range of 0.50-0.75% excluding brokerage while for index fundsthe expense ratio varies in the range of 1.0-1.5%. However,brokerage (which varies) is applicable on ETFs while there are noentry loads now on index funds

The tracking error, which explains the extent of deviation of returnsfrom the underlying index, is usually low in ETFs as it tracks theequity index on a real time basis whereas it is done only once in aday for index funds

ETFs also provide liquidity as they are traded on stock exchangesand investors may subscribe or redeem them even on an intra-daybasis. This is not available in index funds, which aresubscribed/redeemed only on a closing NAV basis

There are over 400 ETFs traded globally. ETFs are transparent andcost efficient. The decision on which ETF to buy should be largelygoverned by the decision on getting exposure in that asset class

Fund Name AAUM NAV 6M 1YR 3YR 5YR

HDFC Index Fund - Sensex Plan 43.92 155.19 6.91 10.05 3.52 1.88

HDFC Index Fund - Sensex Plus Plan 83.78 236.88 7.73 11.78 7.28 7.17

LIC NOMURA MF Index Fund - Sensex 23.73 35 7.11 10.17 3.94 1.93

LIC NOMURA MF Index Fund - Sensex Advantage 4.2 32.65 5.82 9.39 3.17 1.35

SENSEX Prudential ICICI ETFund (SPIcE) 0.91 201.45 8.99 12.5 5.17 4.78

Reliance Index Fund - Sensex Plan 2.73 9.09 7.25 10.39 N.A N.A

Tata Index Fund - SENSEX - Option A 6.04 45.26 6.84 9.7 3.42 2.9

Franklin India Index Fund - BSE Sensex pl 56.33 52.51 6.76 9.47 3.71 4.01

IDFC Nifty Fund 9.65 10.98 7.04 12.19 N.A N.A

Nifty BeES 552.27 568.67 6.66 9.63 4.53 5.03

Birla Sun Life Index Fund 22.88 55.13 5.63 9.68 3.51 3.63

Canara Robeco Nifty Index 4.2 29.8 5.89 10.37 4.22 4.24

HDFC Index Fund - Nifty Plan 101.69 48.52 6.18 9.88 3.63 2.25

IDBI Nifty Index Fund 138.56 10.61 5.91 10.15 N.A N.A

Principal Index Fund 12.9 38.27 5.09 9.67 3.97 3.65

LIC NOMURA MF Index Fund - Nifty Plan 28.83 31.33 6.04 10.57 4.59 2.61

ICICI Prudential Index Fund - Nifty Plan 90.27 52.55 5.76 10.14 4.53 5.36Quantum Index Fund 1.62 577 6.5 11.45 4.93 N.A

Reliance Index Fund - Nifty Plan 65.73 9.29 6.46 11.47 N.A N.A

SBI Magnum Index Fund 34.69 48.02 5.93 10.51 4.21 3.46

Tata Index Fund - NIFTY - Option A 8.25 33.67 6.45 11.03 4.31 3.93

Taurus Nifty Index Fund 1.34 10.55 6.37 8.98 N.A N.A

Franklin India Index Fund - NSE Nifty Plan 230.94 44.24 5.94 10.07 4.21 4.28

UTI Nifty Index Fund 164.36 35.04 3.45 10.55 4.04 3.97

Religare Nifty Exchange Traded Fund N.A 566.27 6.19 10.94 N.A N.A

BSE Sensex 18542.3 6.13 9.44 3.52 3.64

S&P CNX NIFTY 5610 5.46 10.28 4.15 4.53 Source: Crisil Fund Analyser, , ICICIdirect.com Research

Note : Returns above one year are Compounded Annualised return as on September 17, 2012, AUM as on 30th

June 2012

Traded volumes should be the major criterion that isused while deciding on investment in ETFs. Higher

volumes ensure lower spread and better pricing to

investors...

Tracking error, though it should be considered, is not the

deciding factor as variation among funds is not huge...

Volumes are higher only in the Goldman Sachs Benchmark

ETFs and tracking error is also lowest at 0.01%. Therefore,

it is our top pick for investors wanting Nifty-linked

returns



Balanced Funds

Balanced funds are hybrid funds. More than 65% of the overallportfolio is invested into equities. Hence, as per provisions of theIncome Tax Act, 1961, any capital gain over one year becomes taxfree. Also, dividends declared by the funds are tax free

In case you separately invest 35% of your investible corpus in adebt fund, the same will be subject to higher taxation. However, ifthe whole of the corpus is invested in balanced funds 100% shallhave the lower taxation applicable as mentioned above

The debt component provides protection in volatile markets likelast year. However, in a bull rally, the funds will underperform theirequity counterparts as they have done so far in CY12. The returngets reduced over diversified peers owing to the debt component

210

99

12 -9

-88 -101

-243

10561

-64

-158

19

-23

-400

-200

0

200

400

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

NetInflow(|C

r)


16409

16327

16799

15468

14556

16207

16752

16261

16224

15478

16231

16118

15

761

14000

15000

16000

17000

18000

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

|Crore

Balanced Funds AUM


6.7 8

.6

6.6

5.3

10.3

5.5 6

.58.3

4.4

7.6

6.0

4.7

4.9

7.5

6.2

0

5

10

15

3M 6M 1 YR 3YR 5YR

Returns(%)

Category Average Crisil Balance fund Index Diversified Funds

Source: Crisil Find Analyser, ICICIdirect.com Research, Returns as on Sep 14, 2012

Scheme Name 6M 1 Yr 3 Yrs 5 Yrs

Birla Sun Life 95 Fund 5.36 7.09 8.20 8.21

ICICI Prudential Balanced Fund 5.77 10.63 11.04 6.52

HDFC Prudence Fund 2.76 6.69 12.05 11.12

Tata Balanced Fund 8.95 13.95 11.24 9.50

Crisil Balanced Fund Index 5.32 10.29 5.45 6.45




Investors with a limited investible surplus and a lower risk

appetite but with a willingness to invest into equities can

look to invest in these funds

HDFC Prudence has been a consistent top performing fund

in the category. Higher exposure to equity helps the fund to

generate above average returns over long term. However,

the strategy proves to be too aggressive in case of a clear

downtrend



Monthly Income Plans (MIP)

An MIP offers investors an option to invest in debt with someparticipation in equity, approximately 10-25% of the portfolio

MIPs are suitable for investors who seek higher return from a debtportfolio and are comfortable in taking nominal risk

The debt corpus of the portfolio provides regular income while theequity portion of the fund provides extra return. However, returnscan also get eroded by a fall in equities

MIPs are currently can be classified in two types Aggressive MIPand Conservative MIP based on its equity allocation

Risk averse investors should invest in MIPs with lower equityallocation to avoid capital erosion and earn more stable returns

In the recommended MIPs, HDFC MIP LTP and Reliance MIP areaggressive MIPs (higher equity allocation) while Birla Sunlife MIP II Savings 5 Plan is a conservative MIP

HDFC MIP LTP and Reliance MIP have the highest average AUM.The large size helps to find better investment opportunities andlowers the expense ratio

Also, with a large size, the funds can hold papers up to its maturityperiod, without having to face unwarranted redemption pressure,thereby adding to the scheme returns

2.8

3.8

8.3

6.36.9

2.8

3.9

9.3

6.7 6.9

0.9 0.9

0

1

2

3

4

5

6

7

8

9

10


AbsoluteRetur(%)

Category Average Crisil MIPEX



Scheme Name 6M 1 Yr 3 Yrs 5 YrsBirla Sun Life MIP II - Savings 5 Plan 4.77 10.14 7.61 10.42

HDFC Monthly Income Plan - LTP 2.82 7.97 8.22 9.48

Reliance Monthly Income Plan 4.39 10.51 8.71 11.39

Crisil MIP Index 3.91 9.27 6.65 6.93

Category Average 3.79 8.34 6.34 6.92 Source: Crisil Fund Analyser, ICICIdirect.com Research


In the recommended MIP, HDFC MIPs exposure to

corporate debt has been increased while allocation to

equities has been reduced. Reliance MIPs exposure to G-

Secs has been increased. Reliance MIP is more aggressive

compared to HDFC MIP

Conservative Birla Sunlife MIP II savings 5 is very safe fund

with lower equity and a good credit profile



Debt funds

8.528.10

8.43

9.82 9.49

10.99

9.20 9.12

10.45

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Income

UST

Liquid Crisil

LiquiFex

Income

ST

Crisil

STBx

Income Crisil

ComBex

Gilt

MT&LT

I-SEC

Com.Gilt

Returns(%)

Source: Crisil Fund Analyser ICICIdirect.com Research

Note : 1Month annualized return as on September 17, 2012

0 50000 100000150000 200000 250000 300000

Less than 90

days

90 days to 182

days

182 days to 1

year

1 year and above

Government Securities

Commercial Paper

Bank Certificates of Deposit

Treasury Bills

CBLO

Other Money Market

InvestmentsCorporate Debt

PSU Bonds / Debt

Securitised Debt

Bank FD

Source: SEBI, ICICIdirect.com Research

Note : Holding as % of total AUM

7.5

7.7

7.9

8.1

8.3

8.5

1yr 3yr 5yr 10 yr

Yield(%)

4-Sep 18-Sep


9.0

9.1

9.2

9.3

9.4

9.5

9.69.7

9.8

1yr 3yr 5yr 10 yr

Yield(%)

31-Jul 17-Sep


Exposure to one year and above papers has increased via

increase in G sec and corporate papers

With liquidity scenario, improving, short term yields came

down while government borrowing pressure continued at

the longer end. Also, with liquidity improving there was

lack of OMO by RBI, which further pressurised yields

leading to steepening of the yield curve



Liquid Funds

Recommended liquid funds continued to deliver around 9%annualised return for one-year time period as short-terms ratescame off their peaks

Liquidity conditions have improved with the RBI infusing ~| 37000crore on a daily basis through the liquidity adjustment facility (LAF)in September against earlier | 1,00,000 crore

RBI in its mid quarter monetary policy review reduced CRR by 25bps. This will induce | 17000crore into the system

One round of easing in shorter term rates has already happened.We may now see pressure coming off in the two to four year

segment flattening the yield curve along with shifting downwards

Liquid funds should now be used only for parking the liquid surplus

7.00

7.50

8.00

8.50

9.00

31-Mar-12

15-Apr-12

30-Apr-12

15-May-12

30-May-12

14-Jun-12

29-Jun-12

14-Jul-12

29-Jul-12

13-Aug-12

28-Aug-12

12-Sep-12

Rate(%)


2.00

3.50

5.00

6.50

8.00

9.50

11.00

12.50

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

(%)

3M CD 3M CP


-2000

-1500

-1000

-500

0

500

1000

1-Nov-11

16-Nov-11

1-Dec-11

16-Dec-11

31-Dec-11

15-Jan-12

30-Jan-12

14-Feb-12

29-Feb-12

15-Mar-12

30-Mar-12

14-Apr-12

29-Apr-12

14-May-12

29-May-12

13-Jun-12

28-Jun-12

13-Jul-12

28-Jul-12

12-Aug-12

27-Aug-12

11-Sep-12

|C

r.


Liquidity situation improved cooling off short term rates.

CRR cut will add another | 17000 crore



-10066

-41078

32745

5861

-48839

264296860

-76537

75752

25052

-25128

1770814775

-120000

-80000

-40000

0

40000

80000

120000

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

NetInflow(|Cr

)


168625

1285

37 1

62553

166521

120713

147812

157455

80354

156844

182617

158853

178136

193466

80000

100000

120000

140000160000

180000

200000

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

|Crore

Liquid Funds


Particulars/Period 1 M 3 M 6 M 1 Yr 3Yr 5Yr

HDFC Cash Management Fund - Savings Plan 8.82 9.17 9.92 9.80 7.56 7.65

HDFC Liquid Fund 8.70 8.94 9.62 9.65 7.37 7.48

Reliance Liquid Fund - Treasury Plan 8.16 8.54 9.11 9.21 7.15 7.32Crisil liquid Fund Index 7.52 7.84 8.43 8.69 6.75 6.95

Category Average 8.10 8.48 9.11 9.14 6.96 6.96 Source: Crisil Fund Analyser, , ICICIdirect.com Research

Note : Returns are annualised returns as on September 17, 2012

Liquid funds will deliver better risk adjusted return

8.108.48

9.11 9.14

6.96 6.967.52 7.84

8.43 8.69

6.75 6.95

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

1 M 3 M 6 M 1 Yr 3Yr 5Yr

AnnualisedReturns%

Category Average Crisil liquid Fund Index





Income Funds

The RBI in its Mid quarter monetary policy review as expected didnot cut the repo rate but reduced CRR by 25 bps

The RBI welcomed recent steps by GoI on fuel price hike (fiscalstep) and FDI decisions (steps on supply side) and promised to

reinforce their positive impact; while keeping its focus on inflation

management

While near term focus on inflation was expected, there is also aclear commitment to support supply side and fiscal measures of

the GoI. Very importantly, the RBI is clearly not shirking its

responsibility on growth; just waiting for a more opportune time to

act

If the government were to follow through recent steps with moreon the fiscal side, we believe conditions will start to fall in place for

the RBI to support growth via rate cuts

Any mid term rise in yield should, therefore, be seen as anopportunity to enter into higher duration funds. Dynamic bond

funds in the income fund space are best suitable in currentsituation. As rates come down G sec curve will be the first to move

and dynamic funds can capture the same via increasing exposure

to government securities in the portfolio

-6925

-15263

8288

-1735

-15401

-2926-2527

-7654

17874

15801567

21670

7548

-20000

-15000-10000

-5000

0

5000

10000

15000

20000

25000

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

NetInflows

(|.Cr)


318029

304075

314680

313042

298569

297957

297540

290844

309738

313422

316735

340181

349311

0

100000

200000

300000

400000

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

|Crore

Income Funds AUM


8.5 8.99.6 9.3

7.3 7.5

9.8 9.610.3

9.6

7.68.2

11.0

9.410.0 9.6

7.0 7.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1 M 3 M 6 M 1 Yr 3Yr 5Yr

AnnualisedRetur

n%

Ultra Short Term Short Term Long term income

Source: CRISIL Fund Analyser, ICICIdirect.com Research, Returns are annualised returns as on September 17 ,2012

Ultra short-term and short-tern funds should be preferred




IDFC Money Manager 9.41 9.73 11.40 9.66 7.48 7.35

Reliance Meduim Term 9.60 9.97 10.96 9.81 7.74 7.59

Tempelton India Low Duration 9.52 9.82 10.68 10.26 N.A N.A

Crisil liquid Fund Index 7.52 7.84 8.43 8.69 6.75 6.95

Average 8.52 8.91 9.62 9.32 7.27 7.47 Source: CRISIL Fund Analyser, ICICIdirect.com Research



Birla Sun Life Dynamic Bond Fund 10.72 10.34 10.93 10.44 8.10 9.60

HDFC High Interest Fund - Short Term Plan 10.29 10.32 10.46 9.59 7.69 9.05

ICICI Prudential Short Term Plan 10.20 10.19 10.08 9.40 7.25 8.87

Templeton India Short Term Income Plan 10.94 10.36 11.09 9.78 8.22 9.21

Crisil Short Term Bond Fund Index 9.08 9.49 8.90 7.89 7.52 6.53

Average 9.82 9.62 10.29 9.55 7.57 8.24 Source: CRISIL Fund Analyser, ICICIdirect.com Research



IDFC Dynamic Bond Fund 10.27 9.45 11.38 11.38 7.18 9.25

Reliance Dynamic Bond Fund 12.01 9.45 11.38 11.36 7.69 5.19

SBI Dynamic Bond Fund 12.89 9.52 10.87 12.17 9.24 5.14

Crisil Composite Bond Fund Index 9.74 8.90 9.20 9.01 6.76 6.81

Category Average 10.99 9.43 9.98 9.58 7.04 7.28 Source: CRISIL Fund Analyser, ICICIdirect.com Research


Ultra-short-term...most of the gains has been achieved

Short-term funds will benefit as short-tern yields are likely

to decline first compared to long-term yields

Dynamic bond fund can capture the first downward

movement in the G sec curve



Gilt Funds

Gilt funds may remain volatile as supply concerns and rate cutexpectation may keep playing in the gilt market

Though from the recent policy RBIs stance towards growth thedebate now is not about whether interest rate would decline or notbut when that would the same happen

Second half borrowing calendar is due to be announced by themonth end and will be one factor to be watched

The outlook for G-Secs has incrementally improved. However,since sustained supply concerns remain, there may not be asecular rally in the segment. It is better played through dynamicfunds with opportunistic exposure to government securities

-117 -252 -107

420521

-88

53

-230-371

115 21 -31

-1500

-1000

-500

0

500

1000

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

NetInflow(|Cr)

Source: Company, ICICIdirect.com Research

3192

3140

3021

2743

2663 3

121 3

731

3675

3659

3442

3131

3266

3298

3282

1000

1500

20002500

3000

3500

4000

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

|Crore

Glt Funds AUM

Source: Company, ICICIdirect.com Research

7.46.4

7.5 7.6

9.08.4

6.9 7.1

10.8

7.9

10.510.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1 M 3 M 6 M 1 Yr

Gilt Short term Gilt Medium to long term I-SEC Composite Gilt Index

Source: Crisil Fund Analyser, ICICIdirect.com ResearchNote : Returns are annualised returns as September 17, 2012


ICICI Prudential Gilt - Investment - PF Option 8.97 4.97 8.15 7.80 5.32 11.41

Birla Sun Life Gilt Plus - Regular Plan 10.53 2.92 6.35 7.41 4.98 7.32I-SEC Composite Gilt Index 10.78 7.88 10.45 9.99 7.33 8.05





Gold ETFs: Currency movements deciding price trend

Gold prices touched a new all-time high of | 32,500 per 10 gram onseasonal demand amid strong global trend on speculations that afterECB, central banks from the US and China would bring in morestimulus measures to revive economic growth, raising the demandoutlook for the precious metal

Global prices rose more than 7% in the last month to currently aroundUS$1730 per tonne

Higher prices, however, have reduced the demand for the metalparticularly in China and India, which fell to its lowest level in morethan two years in the second quarter according to the World GoldCouncil. However, the demand from sovereign governments remainsrobust

Overall, jewellery and investment demand both fell substantially.Jewellery consumption was down 72.3 tonnes at 418.3 tonnes whileinvestment fell 88.3 tonne to 302 tonne. Investment and jewellerydemand from consumers in India, the world's No. 1 gold market,plummeted 38% to 181.3 tonnes in the second quarter

Indian policy makers are making every effort to reduce gold imports soas to manage the current account deficit. This along with high goldprices in rupee terms is likely to keep Indian demand subdued forsome more time

International as well as domestic gold prices are likely to trade in arange as higher prices are keeping investors cautious while globalmacros are providing support

Allocation to gold from an absolute return perspective should beavoided. It should form only a small part of the overall portfolio fordiversification purposes

5568

6119

7578

8173

9090

9568

9153

9614

9895

9866

10218

10312

10086

10398

10701

22550

23400

27620

26600

27550

29200

27300

28430

28950

28050

29450

29380

29950

30250

31050

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

Jun-11

Ju

l-11

Aug-11

Sep-11

Oc

t-11

Nov-11

Dec-11

Jan-12

Feb-12

Ma

r-12

Ap

r-12

May-12

Jun-12

Ju

l-12

Aug-12

15000

17000

19000

21000

23000

25000

27000

29000

31000

33000

AUM Spot price


1500

1600

1700

1800

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

$/Oz

ource: Bloomberg, , ICICIdirect.com Research

27000

28000

29000

30000

31000

32000

33000

Jan-

12

Feb-

12

Mar-

12

Apr-

12

May-

12

Jun-

12

Jul-

12

Aug-

12

Sep-

12

|

Mumbai Gold Spot Prices

ource: Bloomberg, , ICICIdirect.com Research

121

569

252

234

494

988

455

-22

157

82

85

231

50

-41

-227

95

88

31050

-400-200

0

200

400

600

800

1000

1200

Apr-11

Jun-1

1

Aug-1

1

Oct-11

Dec-1

1

Fe

b-1

2

Apr-12

Jun-1

2

Aug-1

2

|Crore

20000

22000

24000

26000

28000

30000

32000

|

Net inflows (LHS) Spot price



Model Portfolios

Equity funds model portfolio

Investors who are wary of investing directly into equities can still getreturns almost as good as equity markets through the mutual fund route.

We have designed three mutual fund model portfolios, namely,conservative, moderate and aggressive mutual fund portfolios. Theseportfolios have been designed keeping in mind various key parameters likeinvestment horizon, investment objective, scheme ratings, and fundmanagement.

Particulars Aggressive Moderate Conservative

Review Interval Monthly Monthly Quarterly

Risk Return High Risk- High Return Medium Risk - Medium

Return

Low Risk - Low Return

Funds Allocation

Franklin India Prima Plus 25 25 25HDFC Top 200 25 25 25

ICICI Prudential Dynamic Plan - 25 25

ICICI Prudential Focussed Bluechip Eq. 25 - -

UTI Opportunites 25 25 25

Grand Total(a+b) 100 100 100

% Allocation

Source: , ICICIdirect.com Research

Since inception, all three portfolios have outperformed thebenchmark BSE 100.

FY13 YTD, Conservative portfolio outperformed due to 20%allocation to Birla Sunlife Dynamic Bond Fund in the first twomonths

We have kept all portfolios fully invested since the last month.

64.57

58.46 57.92

49.86

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Aggressive Moderate Conservative BSE 100

%

Source: : Crisil Fund Analyser, ICICIdirect.com Research

Portfolio inception date : Sep 15, 2009; Returns as on September 17 ,2012,

4.564.20

5.284.98

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Aggressive Moderate Conservative BSE 100

%

Source: Crisil Fund Analyser , ICICIdirect.com Research

Returns for FY13 YTD (September 17,2012)

No changes have been made in the current month.



We have designed three different mutual fund model portfolios fordifferent investment duration namely less than six months, six months toone year and above one year. These portfolios have been designedkeeping in mind various key parameters like investment horizon, interestrate scenarios, credit quality of the portfolio and fund management, etc.

Keeping in mind current market scenario, allocation in the 0-6 monthsportfolio has been increased to 60% to ultra short term funds from 40%earlier. While keeping in mind the tactical G-sec opportunity, the allocationto dynamic bond funds has been increased in the six months to one yearand one year and above portfolio. Based on the portfolios of individualfunds, we have introduced new funds in the portfolio and replaced pureincome funds with dynamic bonds fundsParticulars

0 6 months 6months - 1 Year Above 1 Year

Objective Liquidity moderate return Above FD

Review Interval Monthly Monthly Quarterly

Risk Return Nominal Return Medium Return Return

Funds Allocation

Ultra Short term Funds-

20 -

Templeton India Low Duration Fund 20 - -

Reliance Medium term fund 20

Short Term Debt Funds

Taurus Short Term Income Fund 20

Birla Sunlife Dynamic Bond 20

ICICI Prudential Short Term 20 -

HDFC High Interest STP 20 20 20

ICICI Prudential Regular Saving 20Long Term/Dynamic Debt Funds

IDFC Dynamic Bond fund - 20 20

Reliance Dynamic Bond Fund - 20 20

SBI Dynamic Bond Fund - - 20

Total 100 100 100

Time Horizon

% Allocation

Source: ICICIdirect.com Research

4.77 4.915.02

3.834.39 4.65

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0-6 Months 6Months - 1Year Above 1yr

%

Portfolio Index


*Index: 0-6 months portfolio Crisil Liquid Fund Index, ; 6 months-1 year Crisil Short term Index

Above 1 year: Crisil Composite Bond Index

Debt funds model portfolio



I direct Top Picks

Category Top Picks

Short Term Long Term

Largecaps Positive Positive Franklin India Bluechip

HDFC Top 200 Fund

ICICI Prudential Focussed Equity Fund

UTI opportunites Fund

Midcaps Positive Positive HDFC Midcap Opportunities

ICICI Prudential Discovery Fund

IDFC Premier Equity

SBI Emerging Bluechip

ELSS Positive Positve HDFC Tax Saver

ICICI Prudential Tax Plan

Franklin India Tax shield

Category Top Picks

Liquid Funds Positive HDFC Cash Mgmnt Saving Plan

Reliance Liquid Treasury Plan

Ultra Short Term Positve IDFC Money Manager Fund - Investment Plan -

Plan A

Reliance Meduim Term

Templeton India Low Duration Fund

Short Term Positive Birla Sun Life Dynamic Bond Fund

HDFC High Interest STP

Templeton India Short term

ICICI Prudential Short Term

Income Funds Neutral Reliance Dynamic Bond Fund

IDFC Dynamic Bond Fund

SBI Dynamic Bond Fund

Gilts Funds Neutral ICICI Pru Gilt Inv. PF Plan

Birla Sunlife Gilt Plus

MIP Positive

Conservative Birla Sun Life MIP II Savings- 5

Aggressive HDFC MIP- LTP

Reliance Monthly Income Plan

View

Debt

View

Equity

Source: ICICIdirect.com Research


27/27

Pankaj Pandey Head Research [email protected]

ICICIdirect.com Research Desk,ICICI Securities Limited,

1st Floor, Akruti Trade Centre,Road No. 7, MIDC,Andheri (East)

Mumbai 400 093

[email protected]

sclaimer

CI Securities Ltd. - AMFI Regn. No.: ARN-0845. Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate,

umbai - 400020, India. The selection of the Mutual Funds for the purpose of including in the indicative portfolio does not in any way constitute any

commendation by ICICI Securities Limited (hereinafter referred to as ICICI Securities) with respect to the prospects or performance of these Mutual

nds. The same should also not be considered as solicitation of offer to buy or sell these securities/units. The investor has the discretion to buy all or

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dicative portfolio constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate

the investor's specific circumstances.

e details included in the indicative portfolio are based on information obtained from public sources and sources believed to be reliable, but no

dependent verification has been made nor is its accuracy or completeness guaranteed. The securities included in the indicative portfolio may not be

itable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs. This

ay not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment

ks. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this indicative portfolio. Past

rformance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may

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arket risks, read the offer document carefully before investing for full understanding and detail. ICICI Securities Limited is not providing the service ofrtfolio Management Services (Discretionary or Non Discretionary) to its clients.

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