lic mf balanced advantage fund

Equity Market – Wealth Creator Machine In Long Run…

What 1 lakh Invested 40 Years ago could have fetched today…

Particulars

Current Value

CAGR %

What can be bought?

1330

6.7%

28,61,078

8.7%

SUV worth 28 Lakhs

29,05,276

8.8%

SUV + iWatch (Rs.29 lakh)

39,15,912

9.6%

SUVs + Ninja(Rs. 40 lakhs)

3,39,25,424

15.7%

House worth (Rs. 2 crores) + Child’s overseas education (1.3 crores) + SUV (20 lakhs)

Gold SensexInflation (B:100) PPFFD

--

Disclaimer: The above Nifty 50 returns are used to show the non-linear movement of equity market returns only and should not be construed as recommendation from LIC Mutual Fund. LIC Mutual Fund is not

guaranteeing or promising or forecasting any returns. Source: BSE, Bloomberg (Data is from 1981 to 2021) 02

Equity Market – A Good Option To Fight Inflation

But it requires Patience...

Disclaimer: The above Nifty 50 returns are used to show the non-linear movement of equity market returns only and should not be construed as recommendation from LIC Mutual Fund. LIC Mutual Fund is

not guaranteeing or promising or forecasting any returns. Source: Bloomberg, RBI 03

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

17,000

19,000

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

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Jan

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Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

Jan

-19

Jan

-20

Jan

-21

Cost Inflation Index Nifty 50 TRI G sec indexed FD Index

Nifty50 TRI CAGR : 16.1%

G-Sec CAGR : 7.6%

FD CAGR : 7.5%

Cost inflation index –CAGR – 6.0%

…But High Return Expectation Comes With Higher Volatility

Just like sound waves travel in non-linear frequencies, Stock prices too follow non-linear path.

Sound wave frequencies

Stock price chart

This phenomenon of dynamic change in prices is called Volatility.

Disclaimer: For illustrative purpose only 04

Sharp volatility in market sometime plays with investor’s mind and may give investor sleepless nights.

0

2000

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Nifty 50 Index

Chal chal chalmere saathi ….

Ab tu Bhaag Milka……

Yeh kya hua…. Kaise hua…..

Bach ke rehna re baba…bach ke rehna re….

Mere sapno ki rally kab aayegi tu…..

Jaane kahaan gaye woh din….

Aaj main upar.. asmaan niche..

Mujhe chod do mere haal pe..zinda hoon yaar kaafi hai…..

The Rollercoaster Ride of Investor Emotions

Disclaimer: The above Nifty 50 returns are used to show the non-linear movement of equity market returns only and should not be construed as recommendation from LIC Mutual Fund. LIC Mutual Fund is not guaranteeing or promising or forecasting any returns. Past Performance may or may not be sustained in future. Source: Internal, Bloomberg 05

How Volatility Can Be Harmful For Your Portfolio ?

Index Performance during sharp correction - Drop in the returns from its immediate peak

06

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Nifty 50 draw down from its immediate peak

…Hence Revising Equity Exposure Is Necessary

Disclaimer: LIC Mutual Fund is not guaranteeing or promising or forecasting any returns. Future performance may differ from past performance. Source: NSE, Internal

What Causes Volatility ?

07

Global Economic outlook

Government policiesGeopolitical issues

Domestic Economic outlook

Volatility

Behavioral Bias – Emotion & Herd Mentality

* Average monthly inflows in Equity MF in Rs crores (Data from April 2004 onwards)

Disclaimer: For illustrative purpose only. Source: NSE India, AMFI India.

How equity allocation trend should ideally be…..

Valuations

Cheap Costly

High

Low

Cheap

08

2040 146511238

39834

<12 12 to 16 16 to 20 >20

Inflows chasing rising Forward PE

….How it is in Reality!

Valuations

Costly

Equity allocationHighest

Equity allocationMedium to Low

Equity allocationLowest

Equity allocationHigh to Medium

How Can One Manage Volatility?

09Disclaimer: For illustrative purpose only

Inte

rest

Rat

esHigh

Low

Low High

Stock valuations

Is There A Simpler Way To Do It?

10

About LICMF Balanced Advantage Fund (LICMF BAF)

A type of Hybrid Fund

Adopts asset allocation strategy

Using FDMM (Fundamental Driven Mathematical Model)

Equity allocation may increase or decrease depending on the model output.

Our Model considers current economic outlook & fundamentals of corporate world.

LICMF BAF Portfolio Construct

Equity❖ Stock Selection

❖ Capital Appreciation

Arbitrage ❖ Provide Hedge

❖ Endeavour Equity Tax Benefit

Debt❖ Stability

❖ Liquidity

11

LICMF BAF Risk Positioning

High

Low

Low High

LIC MF Debt Hybrid Fund

LIC MF Overnight Fund

LIC MF Liquid Fund

LIC MF Arbitrage Fund

LIC MF Short Term Debt Fund

LIC MF Bond Fund

Ris

k

Relative Return

LIC MF Equity Hybrid Fund

LIC MF Large Cap Fund

LIC MF Large & Mid Cap Fund

LIC MF Flexi Cap Fund

LIC MF Tax Plan

LIC MF Infrastructure Fund

LIC MF Banking & Financial Services Fund

Disclaimer: For illustrative purpose only. Returns of the individual schemes may vary from scheme to scheme12

Debt Funds

Hybrid Funds

Equity Funds

Our Approach – How Did We Arrive At Our VariablesFundamental Driven Mathematical Model (FDMM) Determines Asset Allocation

13

Did an extensive regression analysis to select input variables.

Interest rate has a negative correlation with equity market.

Model uses prevailing Interest rates and Forward earnings to arrive at asset allocation.

Equity allocation will range from 0% – 100%.

Why Interest Rate Is Important Parameter


Interest Rate Outlook

Liquidity

Inflation

Currency Effect

Trade Deficit

Fiscal Deficit

Domestic & Global

Economic outlook

Relationship Between Interest And Equity Markets


▪ Historically, Interest rate and Equity valuation has shown a high negative correlation, i.e. If interest rates goes down, it pushes up the equity valuations higher.

▪ The negative correlation can also be seen while calculating the DCF valuation or present value of future cash flows.

Interest rate

Equity Valuation

How Interest Rate Changes PE Band Of Equity Markets?


• Equity valuations directly or indirectly depends on Interest rate

• It captures most of the current economic activities and outlook.

• Direct & indirect impact on most of the asset classes.

• Close to ground realities.

How PE Band Is Calculated?

17

• In any country, Cost of capital is equal Opportunity cost is equal required return in Equity ~

>nominal GDP(in last 20 yrs Data)

• ~Risk premium + Risk free return

• Estimating future equity returns is difficult, but can be arrived at using earnings-based or

dividend-based approach

• Why Earning Yield ? - We are taking debt yield easier to collate or compare so total yield from

equity = (Earning Yield + Debt yield).

Why Did We Choose Forward PE?

18

Market are always forward looking and forward PE helps in capturing future

earnings.

Trailing PE may not give correct impression about the valuations at the turn of the cycle.

Structural change – Sovereign rating upgrade, government policies, regulatory

changes etc.

“Rather than spending time on what company has earned in the past, one should focus on what we can expect the business to earn in future”

- Benjamin Graham

Source: Bloomberg, Internal. Note: PE Chart is as on Sep 2021

How Did We Arrive At Our Variables – Forward PE Band

19

Interest Rates

Interest rate

Earnings Yield

Lower band X - Factor Higher band

Disclaimer: For illustrative purpose only

PE Band

Interest Rates Earnings Yield

1

Interest Rate

How Did We Arrive At Our Variables – Forward PE Band

20

6.2%

6.2%

4.5%

Lower band: 16x 1.7x Higher band: 29x

Disclaimer: For illustrative purpose only

PE Band

6.2% 4.5%

1

6.2%

How Did We Arrive At Our Variables – Earning Spreads

21Disclaimer: The above illustration is to explain allocation of assets between equity and cash / debt and should not be construed as any asset allocation recommendation from LIC Mutual Fund.

*Earnings yield spread = Earnings yield – G sec yield

-4%

Earning Yield Spread (Risk Premium)

0%

Equity allocation – 90%

Equity allocation: 10% Equity allocation: 10%

Spread analysis has been done based on past 10-year data

-4%

Flow Chart Of Model Process

22

1-year Forward PE

Earnings yield spread

Weightage: 80%

Weightage: 20%

Equity allocation

✓ Regular rebalancing

✓ Allocation based on change in variables

✓ Minimum Gross equity - 65%

Disclaimer: For illustrative purpose only*Earnings yield spread = Earnings yield – G sec yield

Weighted G Sec rate Earning yield Forward PE band Equity allocation

6%

4%8%

10%

4%

2%6%

8%

50%

25%75%

100%

Minimum Maximum

6.0% 4.5%

16 29

22

57%

10%

6.2%

10 17

16.04

11.8%

7.6% 5.0%

13 21

19.77

Scenario 1

Scenario 2

Scenario 3

How Equity Allocation Changes With Changing Interest Rates?

23

22%

Disclaimer: All figures pertaining to equity levels are used for the purpose of Illustration and understanding only.

LICMF BAF Salient Feature

24

Dynamic Asset allocation using Fundamental Parameters

Net Equity allocation can range from 0% to 100%

Rebalancing of portfolio happens on dynamic basis

1% exit load for redemption before 1 year to be charged only above 12% of units allotted

Model performance

25

Equity Allocation – Historical Range

26Disclaimer: The above data (till 30th September 2021) is illustration of back testing results of our Fundamental Driven Mathematical Model (FDMM). Source : Bloomberg

The above illustration is to explain allocation of assets between equity and cash / debt and should not be construed as any asset allocation recommendation from LIC Mutual Fund.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

500

2500

4500

6500

8500

10500

12500

14500

16500

18500

20500Se

p-0

1

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

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Sep

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Sep

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Sep

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Equity Allocation Nifty 50

Back Testing Results: Equity Asset Allocation Across Time Period

27Disclaimer: The above data is illustration of back testing results of FDMM.

Note: Weighted G Sec yield would be combination of 10 year G sec, 1 Year G sec & Repo Rate

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Sep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

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Sep

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Sep

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Equity Allocation Weighted G Sec yield(RHS)

Back Testing Results: Model Performance Vs Nifty 50 TRI

28

0

5000

10000

15000

20000

25000

30000

35000

40000

Nifty 50 TRI Model Value 36153

25234

Disclaimer: The above data is illustration of back testing results of our FDMM. Source : Bloomberg

Note: The model value indicates the model value has been rebased to Nifty 50 TRI at the start date i.e. 30/03/2001

Back Testing Results: Model Performance Vs Nifty 50

28

As on 30th Sept 2021

Disclaimer: The above data is illustration of back testing results of FDMM.

Particulars 3 Year 5 Year 10 Year 15 Year

Model Performance 20.15% 16.45% 14.39% 15.02%

Nifty 50 Returns 17.53% 15.38% 13.54% 11.18%

Model Standard Deviation 1.03% 0.82% 0.70% 0.93%

Nifty 50 Standard Deviation 1.38% 1.15% 1.08% 1.40%

Back Testing Results: Model Indicates Protection Against Downside Risk

-48.44%

-22.42% -20.41%

-36.82%

-12.87%

-6.22%

-0.55%

-26.93%

-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

Jan 2008 to March 2009 Nov 2010 to Dec 2011 April 2015 to Feb 2016 Feb 2020 to March 2020

Nifty 50 Model

Extent of loss, had you held on to your investment in Nifty50 vs LICMF BAF model


Back Testing Results: Model Performance In Flat Market


Period Nifty Return Model Return

May 2010 to May 2012 0.1% 17.7%

Period Nifty Return Model Return

June 2014 to Jan 2016 -0.1% 10.6%

Back Testing Results: Equity Asset Allocation Across Time Period

32

Market Scenario Type of Market Time period Nifty 50 Model Outperformed

Flat Market May-10 to May-12 0.06% 17.68% Yes

Falling Market Nov-10 to Dec-11 -22.42% -6.22% Yes

1 top to other top Oct-10 to Mar-15 45.43% 50.18% Yes

Rising Market Dec-16 to Nov-17 26.09% 19.24% No

Volatile Market Nov-10 to Feb-16 11.23% 47.22% Yes

Flat Market July-14 to Mar-16 -0.16% 13.77% Yes

Falling market Feb-20 to Mar-20 -36.82% -26.93% Yes


Back Testing Results – Attribution of Model performance

33

17.90% 5.94%

1.87%

10.09%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Total Debt Arbitrage Equity

Returns from different asset classes - Last 21 years

16.22% 5.71%

2.05%

8.45%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Total Debt Arbitrage Equity

Returns from different asset classes - Last 5 years

As on 30th Sept 2021 As on 30th Sept 2021


Back Testing Results: Model Promises To Have Higher Success Rate

34Disclaimer: The above data is illustration of back testing results of FDMM. The period range is 30th March 2001 to 30th Sep 2021.

Model provides 30%

higher probability of

generating returns

Back Testing Results: Performance Over 3 Years & 5 Years

35Disclaimer: The above data is illustration of back testing results of FDMM. The period range is 30th March 2001 to 30th Sep 2021. * Only 2 observation out of 4347

Back testing result indicates model captured higher number of above 10% bracket thus providing sustainability of performance

PERIOD 3 YEAR 5 YEAR

Model NIFTY 50 TRI MODEL NIFTY 50 TRI

Min -1.26% -4.4% 3.10% -1.6%

Max 54.15% 60.8% 39.78% 47.2%

Average 18.37% 16.7% 18.15% 16.1%

Stnd Deviation 9.96% 12.6% 8.47% 9.8%

Negative Observation Negligible* 1.7% 0.00% 0.1%

0% to 6% 1% 14.9% 0.42% 10.2%

6% to 10% 12% 16.4% 7.05% 17.8%

10% to 15% 39% 26.5% 45.21% 31.7%

Above 15% 48% 40.4% 47.32% 40.2%

Total Observation 4347 4347 3842 3842

Reducing The Volatility


Period: 1-Apr-2001 to 30-Sep-2021

LIC BAF = 0.78 Nifty + 0.038

R square = 0.853

On an average, LIC BAF has added an average alpha of 0.038 on daily basis with a beta of only 0.78

Criteria Nifty 50 TRI Model Value

Maximum One day return 17.74% 15.63%

Minimum One day return -12.91% -11.21%

Average daily return 0.07% 0.07%

Absolute return 1969% 2839%

CAGR 15.89% 17.89%

Daily Return comparison of LICM FBAF Model & Nifty 50 TRI

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

-15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00%

Total number of observations: 5098

Analysis Of Rolling Return Across Time Period – 1 To 15 Years


13.37%

20.97%

17.56%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

1 Y E A R 2 Y E A R 3 Y E A R 5 Y E A R 7 Y E A R 8 Y E A R 1 0 Y E A R 1 2 Y E A R 1 5 Y E A R

Min Max Average

LICMF BAF Endeavors To Offer Benefit Of Equity Taxation

38Disclaimer: For illustrative purpose only. The above illustration is to explain allocation of assets between equity and debt and should not be construed as any asset allocation recommendation from LIC Mutual Fund.

25%

50%65%

80%40%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Net Equity Arbitrage

65% 65%

80%

65%

Net Equity - 25%Gross Equity - 65%

Debt – 35%


Debt – 35%


Debt – 35%


Debt – 20%

Note: The fund endeavors to keep its gross equity exposure greater than or equal to 65% to enable investors to avail equity taxation Benefit.

Irrespective of how much is the net equity, gross will remain 65% or more

Minimum Equity Allocation for Tax Benefit is 65%

Arbitrage position

How Equity Investment Shall Be Done

39

❑ Active Fund Management

❑ Preferably large-cap stocks

❑ Follow Top down and Bottoms-up approach (Micro & Macro)

❑ Business sustainability & Management quality and Corporate

Governance

❑ Scalable businesses, having clear competitive advantage and

capital efficiency

Business

Sustainability

Governance &

Management

quality

Risk parameters

RAR Framework

Business Scalability

How Debt Investment Shall Be Done

40

❑ Debt will include G sec, PSU and AAA corporate bonds

❑ Involves a top- down approach

❑ Follow SLR Process where:

SLR Framework

Return

"S" stands for Safety of Investment,

"L" stands for Liquidity of the Portfolio, and

"R" stands for Returns of the Portfolio.

Benefit To Investor

41

Diversification of portfolio

Dynamic asset allocation

Margin of Safety

Protect downside by reducing the drawdown and participate in the upside by

asset allocation

Aims to generate near equity return with relatively

lower volatility

Equity tax benefit

Who Can Choose To Invest ?

42

FD Investor

Equity Investor

Tangible asset investor

Other asset class

Winner Changes Across The Asset Class..


Equity is must for long term

wealth creation.

There is no consistent

winner every year.

Timing the market is

very difficult.

Right mix of asset

allocation may deliver

optimum return.

Source : MFI Explorer. Above returns are Absolute Return.

Back Testing result shows LICMF BAF Model has generated positive returns in almost all the years

Back Testing Result: SIP Performance

44

Note: Above Returns are Back tested results as on 31st Aug 2021. Past performance may or may not be sustained in the future. Assuming Rs. 10,000 invested systematically onthe first Business Day of every month over a period of time. CAGR returns are computed after accounting for the cash by using XIRR method (investment internal rate ofreturn) for Growth Option. Load is not taken into consideration for computation of performance. The above investment simulation is for illustrative purposes only and shouldnot be construed as a promise on minimum returns and safeguard of capital. The Mutual Fund is not guaranteeing or promising or forecasting any returns.

SIP Period Total Amount Invested (In Rs) Current Value (in Rs) SIP Returns

3 Years 360,000 533,650 27.31%

4 Years 480,000 745,548 22.44%

5 Years 600,000 985,779 19.95%

6 Years 720,000 1,257,227 18.44%

7 Years 840,000 1,548,413 17.16%

8 Years 960,000 1,879,255 16.33%

9 Years 1,080,000 2,248,183 15.70%

10 Years 1,200,000 2,674,945 15.31%

Tax Savings On SWP - Calculation On Investment Of 20 Lakh

45

Note: Above valuation as on 31st Aug 2021. Past performance may or may not be sustained in the future. Assuming Rs. 15,000 withdrawn systematically on the 15th Business Day of every month over a period of time. CAGRreturns are computed after accounting for the cash by using XIRR method (investment internal rate of return) for Growth Option. Load is not taken into consideration for computation of performance. The above investmentsimulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The Mutual Fund is not guaranteeing or promising or forecasting any returns. For taxpurpose please contact your tax advisor. It is advisable to consult with your financial advisor to understand the terms and conditions of this feature before investing. Tax impact is basis prevailing tax laws. STT & Stamp Duty isignored for ease of calculation. STCG Tax is assumed to be 17.94% (15%+15% Surchage+4% Cess) & LTCG Tax at 11.96% (10%+15% Surcharge+4% Cess) for the purpose of above calculation. The above illustration highlightsthe impact, if the proposed LTCG taxation was applicable from 2013. ^The above table assumes that investor has no other LTCG from other investment (Hence, first 1 Lac Rs. Capital Gain is tax free). In the above calculationwe have not consider the grandfathering clause i.e. fair value as on Jan 31, 2018

Date NAV Units Outstanding Monthly SWP Units Withdrawn Principle Amount Capital Gain/Loss Capital Gain TypeCapital Gain Tax (Set-Off)

01-Apr-10 71.6342 27,920 0 0

15-Apr-10 71.6581 27,710 15,000 209 14,995 5 STCG 1

17-May-10 69.9830 27,496 15,000 214 15,354 -354 STCG -63

15-Jun-10 72.2811 27,288 15,000 208 14,866 134 STCG 24

15-Jul-10 74.0494 27,086 15,000 203 14,511 489 STCG 88

16-Aug-10 74.6303 26,885 15,000 201 14,398 602 STCG 108

15-Sep-10 78.4194 26,694 15,000 191 13,702 1,298 STCG 233

15-Oct-10 79.9705 26,506 15,000 188 13,436 1,564 STCG 281

15-Nov-10 80.9095 26,321 15,000 185 13,280 1,720 STCG 308

15-Dec-10 80.2562 26,134 15,000 187 13,389 1,611 STCG 289

17-Jan-11 79.1962 25,944 15,000 189 13,568 1,432 STCG 257

15-Feb-11 78.2531 25,753 15,000 192 13,731 1,269 STCG 228

15-Mar-11 78.3731 25,561 15,000 191 13,710 1,290 STCG 231

15-Apr-11 82.0181 25,378 15,000 183 13,101 1,899 LTCG

-- -- -- -- -- -- -- -- --

-- -- -- -- -- -- -- -- --

15-Mar-21 256.5977 11,054 15,000 58 4,188 10,812 LTCG Partially Applicable16-Aug-21 281.8878 10,774 15,000 53 3,812 11,188 LTCG

ParticularsTotal SWP

AmountTotal Income Tax to be paid Tax as a % of SWP Units Outstanding

Valuation of Outstanding Units

XIRR %

Amount 2,055,000 826,781 5,623 0.27% 10,774 3,104,205 12.02%

Note: Above valuation as on 31st Aug 2021. Past performance may or may not be sustained in the future. Assuming Rs. 75,000 withdrawn systematically on the 15th Business Day of every month over a period of time. CAGRreturns are computed after accounting for the cash by using XIRR method (investment internal rate of return) for Growth Option. Load is not taken into consideration for computation of performance. The above investmentsimulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The Mutual Fund is not guaranteeing or promising or forecasting any returns. For taxpurpose please contact your tax advisor. It is advisable to consult with your financial advisor to understand the terms and conditions of this feature before investing. Tax impact is basis prevailing tax laws. STT & Stamp Duty isignored for ease of calculation. STCG Tax is assumed to be 17.94% (15%+15% Surchage+4% Cess) & LTCG Tax at 11.96% (10%+15% Surcharge+4% Cess) for the purpose of above calculation. The above illustration highlightsthe impact, if the proposed LTCG taxation was applicable from 2013. ^The above table assumes that investor has no other LTCG from other investment (Hence, first 1 Lac Rs. Capital Gain is tax free). In the above calculationwe have not consider the grandfathering clause i.e. fair value as on Jan 31, 2018

ParticularsTotal SWP

AmountTotal Income Tax to be paid Tax as a % of SWP Units Outstanding

Valuation of Outstanding Units

XIRR %

Amount 10,275,000 4,133,903 366,733 3.57% 53,870 15,521,024 12.02%

Tax Savings On SWP - Calculation On Investment Of Rs. 1 Crores

46

Date NAV Units Outstanding Monthly SWP Units Withdrawn Principle Amount Capital Gain/Loss Capital Gain TypeCapital Gain Tax (Set-Off)

01-Apr-10 71.6342 139,598 0 0

15-Apr-10 71.6581 138,551 75,000 1,047 74,975 25 STCG 4

17-May-10 69.9830 137,480 75,000 1,072 76,770 -1,770 STCG -317

15-Jun-10 72.2811 136,442 75,000 1,038 74,329 671 STCG 120

15-Jul-10 74.0494 135,429 75,000 1,013 72,554 2,446 STCG 439

16-Aug-10 74.6303 134,424 75,000 1,005 71,989 3,011 STCG 540

15-Sep-10 78.4194 133,468 75,000 956 68,511 6,489 STCG 1,164

15-Oct-10 79.9705 132,530 75,000 938 67,182 7,818 STCG 1,403

15-Nov-10 80.9095 131,603 75,000 927 66,402 8,598 STCG 1,542

15-Dec-10 80.2562 130,669 75,000 935 66,943 8,057 STCG 1,445

17-Jan-11 79.1962 129,722 75,000 947 67,839 7,161 STCG 1,285

15-Feb-11 78.2531 128,763 75,000 958 68,656 6,344 STCG 1,138

15-Mar-11 78.3731 127,806 75,000 957 68,551 6,449 STCG 1,157

15-Apr-11 82.0181 126,892 75,000 914 65,505 9,495 LTCG

-- -- -- -- -- -- -- -- --

-- -- -- -- -- -- -- -- --

15-Mar-21 256.5977 55,271 75,000 292 20,938 54,062 LTCG Partially Applicable16-Aug-21 281.8878 53,870 75,000 266 19,059 55,941 LTCG

Tax Saving Analysis LICMF BAF Vs Debt Funds Vs FD

47

Note: Above calculation is for illustrative purpose only. Consult your tax advisor before investing or taxation. The tax rate assumed is the highest rate based on the current tax slabsfor individual/HUFs with income above Rs 5 Crore. For domestic corporate corresponding tax rate applicable would be 34.94% for interest on term deposits and 23.30% for longterm Capital gains for open ended debt funds. Assuming investment is done in Oct 2016, Indexation cost is considered as FY2016-17 = 246 and FY2021-22 = 317

Particulars LICMF BAF Model Debt Mutual Fund Fixed Deposit

Amount Invested (in Rs) 100,000 100,000 100,000

Assumed rate of return (Annualised) 9% 9% 9%

Value at Redemption/Maturity after 5 years 153,862 153,862 153,862

Indexed Cost of Acquisition after 5 years - 120,076 -

Capital Gain (in Rs) 53,862 33,787 53,862

Tax Rate 0 28.496% 42.744%

Taxable Gain (in Rs) 53,862 33,787 53,862

Tax Payable (in Rs) 0 9,628 23,023

Post Tax Value (in Rs) 153,862 144,235 130,839

Profit earned (in Rs) 53,862 44,235 30,839

CAGR Investment Yield (Post Tax) 9.00% 7.60% 5.52%

About Our Sponsor

48

LIC MUTUAL FUND ASSET

MANAGEMENT LTD.

(LICMF AMC)

GIC HOUSING FINANCE LTD. (11.70%)

LIC OF INDIA (45%)SOLE SPONSOR OF LIC

MUTUAL FUND

UNION BANK OF INDIA (4%)

LIC HOUSING FINANCE LTD. (39.30%)

About Our Shareholders

49Source: http://www.lichousing.com/aboutus.php, http://gichfindia.com/, https://www.unionbankofindia.co.in/english/aboutus-profile.aspx

About LIC Of India

50

Fund Facts

51

Category of Scheme Balanced Advantage

Type of Scheme An open ended Dynamic Asset Allocation Fund

Investment Objective

The investment objective of the scheme is to provide capital appreciation/ income to the investors from a dynamic mix of equity, debt and money market instruments. The Scheme seeks to reduce the volatility by diversifying the assets across equity, debt and money market instruments.

However, there is no assurance or guarantee that the investment objective of the Scheme will be realized.

Asset Allocation

Fund Facts

52

Scheme Name The product is suitable for investors who are seeking* Riskometer

LIC MF Banking & Financial Services Fund

• Capital appreciation over long term.• Investing predominantly in portfolio of equity and

equity related securities of companies engaged in banking and financial services.

• Risk – Very High

LIC MF Infrastructure Fund • Long Term Capital Growth• Investment in equity and equity related instruments of

companies engaged either directly or indirectly in infrastructure sector.

• Risk – Very High

LIC MF Large Cap Fund • Long Term Capital Appreciation• A Fund that primarily invest in large-cap stock.• Risk – Very High

LIC MF Large & Mid Cap Fund • Long Term Capital Appreciation.• A fund that primarily invests in Large and Mid-cap

stocks• Risk – Very High

LIC MF Flexi Cap Fund • Long term capital appreciation• Investing across Large, Mid & Small Cap stocks.• Risk - Very High

LIC MF Tax Plan • Long Term Capital Growth• Investment in equity and equity related securities• Risk - Very High

LIC MF Equity Hybrid Fund • Long term capital appreciation with current income• A fund that invests both in stocks and fixed income

instruments. • Risk - Very High

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Riskometer

53


LIC MF Debt Hybrid Fund • Medium term capital appreciation with current income• A fund that invests predominantly in debt instruments

with marginal equity exposure.• Risk – Moderate

LIC MF Short Term Debt Fund • Generation of reasonable returns over short to medium term.

• Investment in Debt securities and money market instruments.

• Risk –Moderate

LIC MF Bond Fund • Income Over Medium to long term• To generate income/capital appreciation through

investments in Debt / Money Market Instruments• Risk –Moderate


Riskometer

54


LIC MF Liquid Fund • Regular income for short term• Investment in Debt/Money Market Instruments with

maturity of upto 91 days.• Risk – Low to Moderate

LIC MF Arbitrage Fund

• Income over a short term investment horizon• Income through arbitrage opportunities between cash

and derivative market and arbitrage opportunities within the derivative segment of the equity market

• Risk – Low

LIC MF Overnight Fund• Regular income with high levels of safety and liquidity

over short term.• Investment in debt and money market instruments

with overnight maturity.• Risk – Low


Risk-o-meter is based on evaluation of risk level of Scheme’s portfolio as on 30th September 2021 and the change in Risk-o-meter will be evaluatedon a monthly basis.

Riskometer

55

56

Thank You

Extensive Analysis To Arrive At Appropriate Variables

57

Interest Rate

Forward Earnings

Asset Allocation

Interest Rate

Price to Book

Trailing PEForward

PE

Market cap to GDP

Back Testing Results: Model Performance Vs Composite Benchmark

58Disclaimer: The above data is illustration of back testing results of FDMM. Custom benchmark is LICMF Hybrid Composite 50-50 Index

3 Year 5 Year 10 Year

Model Performance 20.15% 16.45% 14.39%

Composite Benchmark Returns 14.53% 11.98% 11.57%

Model Standard Deviation 1.03% 0.82% 0.70%

Composite Benchmark Standard Deviation 0.58% 0.49% 0.48%

Back Testing Results: Equity Allocation Trend vs Forward PE

59

Model shows promising result of switch in Equity allocation during attractive valuations


The above illustration is to explain allocation of assets between equity and cash / debt and should not be construed as any asset allocation recommendation from LIC Mutual Fund.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0

5

10

15

20

25

30

Sep

-10

De

c-1

0M

ar-1

1Ju

n-1

1Se

p-1

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ec-

11

Mar

-12

Jun

-12

Sep

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De

c-1

2M

ar-1

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n-1

3Se

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ec-

13

Mar

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Jun

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Sep

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De

c-1

4M

ar-1

5Ju

n-1

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15

Mar

-16

Jun

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Sep

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De

c-1

6M

ar-1

7Ju

n-1

7Se

p-1

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ec-

17

Mar

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Jun

-18

Sep

-18

De

c-1

8M

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19

Mar

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Jun

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De

c-2

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1Ju

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p-2

1

Equity Allocation (S. axis) 1 year Fwd PE

Back Testing Results: Consistent Performance Over Long Term


Note: The model rebase indicates the model value has been rebased to Nifty 50 TRI at the start date

25,368

42,814

2000

7000

12000

17000

22000

27000

32000

37000

42000

47000

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

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May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Jan

-16

May

-16

Sep

-16

Jan

-17

May

-17

Sep

-17

Jan

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May

-18

Sep

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Jan

-19

May

-19

Sep

-19

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Jan

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-21

Sep

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Nifty 50 TRI Model Rebase

Back Testing Results: Model Performance Vs Benchmark

61Disclaimer: The above data is illustration of back testing results of FDMM. Custom benchmark is LICMF Hybrid Composite 50-50 Index

Note: The model rebase indicates the model value has been rebased to Nifty 50 TRI at the start date

3,569

2,731

500

1000

1500

2000

2500

3000

3500

4000

Jan

-11

Sep

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May

-12

Jan

-13

Sep

-13

May

-14

Jan

-15

Sep

-15

May

-16

Jan

-17

Sep

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Jan

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Sep

-19

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Jan

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Sep

-21

Model Rebase Custom Bench

lic mf balanced advantage fund

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