magnum equity fund - sbi mutual fund leaflet and brochure/sbi equity... · • predicament of low...

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

Product Labeling

This product is suitable for investors who are seeking*:

Riskometer

Regular income and capital appreciation.

To generate income by investing in

arbitrage opportunities in the cash and

derivatives segment of the equity market,

and capital appreciation through a

moderate exposure in equity.

Index

• Predicament of low risk hybrid strategies

• SBI Equity Savings Fund

• The Arbitrage Component

• Tax Efficiency

• Key Features

• Portfolio Holdings

• Why Invest?

• Performance

• About SBI Funds Management Pvt Ltd

• Investment Team

Predicament of Low Risk Hybrid Strategies

Difficulty of Low Risk Hybrid Strategies

Equity (Less than 35%)

Fixed Income (More than 65%)

Capital Appreciation

High Risk

Regular Income

Low Risk

Problem: Tax Inefficiency

Low risk Hybrid Strategies - Two for One Benefits

Taxation: Non Equity Scheme

SBI Equity Savings Fund

Connecting the Strategies

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Net Long Equity

Exposure

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cash-future

arbitrage

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Debt & Money Market

SBI E

qu

ity

Savi

ngs

Fu

nd

Bringing Tax Efficiency

A 3 Pronged Strategy

Equity

Arbitrage

Debt

- Generates capital appreciation by taking limited equity exposure - Stock selection is focused on 3 factors

1. Growth potential relative to peers 2. Valuations 3. Value add i.e., excess RoCE > WaCC

- Generates income by exploiting the arbitrage opportunities in the market - Invests into equity stocks in the cash market & takes an equivalent short position in futures market - Captures spread between spot & futures market - Generates regular income by investing in debt & money market instruments - Provides liquidity to the fund & also margin for derivatives - Maturity profile of debt instruments is based on interest rate outlook & current market conditions

RoCE = Return on Capital Employed; WaCC = Weighted Average Cost of Capital

SBI Equity Savings Fund: Positioning Retu

rns

Risk

Liquid Funds

Arbitrage Funds

Debt Funds

Hybrid Debt Funds

SBI Equity Savings

Fund

Balanced Funds

Multi Cap Equity Funds

Mid Cap Equity Funds

How does the Arbitrage Strategy work?

Working of a Cash Future Arbitrage Strategy

Price of Company A in Cash Market - Rs .200.30 Price of Company A in Futures Market - Rs. 203.35

Start Date

On Expiry

Price in Cash & Futures Market

Rs. 210

Profit in Cash Market: Rs.9.70

Loss in Future Market: Rs.6.65


Rs. 200.30

Profit /Loss in Cash Market: Rs.0

Profit in Future Market: Rs.3.05


Rs. 190

Loss in Cash Market: Rs.10.30

Profit in Future Market: Rs.13.35

Net Gain

Rs. 3.05

The above is only to explain the concept of cash future arbitrage and should not be construed as any indication of future returns. The above illustration does not take costs into consideration.

1

2

3

How different is this fund from other strategies?

Debt Hybrid Funds

Balanced Funds

Arbitrage Funds

Equity Savings Funds

Type of Scheme Debt Balanced Equity Equity

Typical Equity Allocation Range (including equity derivatives)

<=35% >=50% >=65% >=65%

Cash – Future Arbitrage Strategies followed X X

Volatility Medium High Low Medium

Equity Taxation* No May have Yes Yes

*Please consult your tax advisor for details

Tax Efficiency

Non-Equity Taxation

Equity Taxation

Amount of Investment 1,00,000 1,00,000

Assumed Pre-tax annualized return

9% 9%

Gains/Interest Earned after 1 year

9,000 9,000

Amount at the end of 1 year

1,09,000 1,09,000

Taxable Gains/ Income 9,000 9,000

Applicable Tax Rate 34.61% 0%

Tax Liability 3,115 0

Post Tax Gains/ Income 5,885 9,000

Post Tax Annualised Yield 5.89% 9.00%

*Assuming highest tax bracket. The above table is only to illustrate the tax treatment of different types of funds and in no way should be construed as any indication of returns. Past performance may or may not be sustained in future. This calculation is based on prevailing tax laws and is applicable only in case of resident investors. Please consult your tax advisor for details

Gain required in non-equity tax product

1,00,000

14%

13,763

1,13,763

13,763

35%

4,763

9,000

9.00%

To reproduce

similar gains

Illustration

Fund Philosophy & Asset Allocation

• Investment objective is to generate income by investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and capital appreciation through a moderate exposure in equity.

• Invests across equity, debt & equity derivatives • Suitable for conservative investors looking for superior risk adjusted returns over the

medium term • Indicative Asset Allocation under normal circumstances:

The cumulative gross exposure through Equity and Equity related Instruments including derivatives position, debt, Money Market Instruments /Units of debt & liquid mutual funds will not exceed 100% of the net assets of the scheme. *Exposure to domestic securitized debt may be to the extent of 20% of the net assets. The Scheme shall not invest in ADR/ GDR/ Foreign Securities / foreign securitized debt. The Scheme shall invest in repo in corporate debt. The Scheme shall not engage in Stock lending. The Scheme shall not engage in short selling. The scheme shall follow an alternate asset allocation on defensive considerations when there are not adequate arbitrage opportunities available in the Derivative and Equity markets. Investors are advised to refer to the Scheme Information Document or Key Information Memorandum for more details.

Instruments

Indicative allocations (% of total assets) Risk Profile

Minimum Maximum Equity and Equity related Instruments including derivatives Out of which:

65% 90%

Medium to High - Cash-future arbitrage: 15% 70%

- Net long equity exposure: 20% 50%

Debt* and Money Market Instruments (including margin for derivatives)

10% 35% Low to Medium

Key Features

Plans/ Options The Scheme has two plans viz. Regular plan & Direct plan. Both plans would offer Growth & Dividend options. Dividend option has the facility of Reinvestment, Payout & Transfer

Benchmark 30% Nifty 50 + 70% Crisil Liquid Fund Index

Fund Manager Mr. Neeraj Kumar (Arbitrage portion) & Mr. Ruchit Mehta (Equity & Debt)

Load Structure

Entry Load: Not Applicable Exit Load: For exit within 1 year from the date of allotment: For 9% of the investments – Nil For remaining investments -1% Switches made to all open ended equity schemes of SBI Mutual Fund and SBI Magnum Balanced Fund within 1 year from the date of allotment – Nil For exit after 1 year from the date of allotment - Nil

Minimum Application Amount

Rs. 1,000/- and in multiples of Re. 1 thereafter

Additional Purchase Amount

Rs. 1,000/- and in multiples of Re. 1 thereafter

SBI Equity Savings Fund: Portfolio Holdings

Data as on 31.05.2017

Portfolio classification by Asset Type Top 10 Holdings

Stock Name % of Total AUM

HOUSING DEVELOPMENT FINANCE

CORPORATION LTD. 7.44

AU SMALL FINANCE BANK LTD. 3.80

ITC LTD. 3.70

TATA MOTORS LTD. 3.26

HDFC BANK LTD. 3.09

JET AIRWAYS (INDIA) LTD. 3.00

RELIANCE INDUSTRIES LTD. 2.89

GOVERNMENT OF HARYANA 2.84

FLOREAT INVESTMENT LTD. 2.83

YES BANK LTD. 2.48

Stock Name % of Total AUM

FINANCIAL SERVICES 31.22

CONSUMER GOODS 8.97

AUTOMOBILE 8.93

ENERGY 8.03

IT 5.31

CONSTRUCTION 4.94

SERVICES 4.81

METALS 3.79

PHARMA 3.12

SOVEREIGN 2.84

SBI Equity Savings Fund: Asset Allocation Pattern

Month-end asset allocation

29

.28

%

25

.48

%

29

.31

%

30

.25

%

31

.15

%

31

.17

%

31

.18

%

31

.66

%

31

.39

%

32

.16

%

33

.57

%

32

.28

%

35

.92

%

35

.69

%

33

.47

%

33

.95

%

48

.11

%

48

.28

%

49

.03

%

33

.83

%

33

.84

%

33

.55

%

34

.28

%

49

.04

%

34

.80

%

38

.83

%

37

.21

%

35

.81

%

20

.74

%

20

.55

%

19

.79

%

34

.52

%

34

.77

%

34

.30

%

32

.15

%

18

.68

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Ju

n-1

6

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

De

c-1

6

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Debt & MM MF UNITS Net Long Equity Arbitrage

Why Invest?

Lower Volatility Net long equity exposure in the range of 20 – 50%; Limited directional equity

exposure reduces the volatility compared to equity funds

Potential for capital appreciation Moderate exposure to equity allows the fund to participate in the long term growth

of equity markets

1

2

Regular Rebalancing Directional equity exposure in the range of 20%- 50% ensures disciplined rebalancing; fund manager buys at market lows & sells at market peaks

3

Tax Efficiency Fund is an equity fund for tax purposes; endeavours to generate superior risk-

adjusted returns compared to hybrid funds* 4

*Investors are advised to consult their Tax/ Financial Advisor before taking decision of Investment.

Performance

31/03/2016 to

30/03/2017

31/03/2015 to

31/03/2016

31/03/2014 to

31/03/2015 Since Inception

Absolute Returns (%)

CAGR Returns (%)

PTP Returns (INR)

SBI Equity Savings Fund-Regular-Growth

10.76 N.A. N.A. 8.05 11,537

30% Nifty 50 Index + 70% Crisil Liquid Fund Index (Scheme Benchmark)

10.60 N.A. N.A. 7.09 11,349

S&P BSE Sensex (Additional Benchmark)

16.88 N.A. N.A. 3.97 10,746

Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for equity schemes is used for comparison purposes. Performance calculated for Regular Plan Growth Option. Since inception NAV is assumed as 10 Inception Date: 27/05/2015

0

2

4

6

8

10

12

14

16

18

31/03/2016 to 31/03/2017 Since inception

SBI Equity Savings Fund - Reg - Growth

Scheme Benchmark: - 30% Nifty 50 + 70% CrisilLiquid Fund Index

Additional Benchmark: - S&P BSE Sensex

Performance of other Schemes Managed by Mr. Neeraj Kumar & Mr. Ruchit Mehta, Fund Managers of SBI Equity Savings Fund

31/03/2016 to 30/03/2017

31/03/2015 to 31/03/2016

31/03/2014 to 31/03/2015 Since Inception

Absolute Returns (%) CAGR

Returns (%) PTP Returns

(INR)

SBI Magnum Monthly Income Plan*

14.17 6.12 19.15 8.40 36,286

Crisil Short Term Bond Fund Index (Scheme Benchmark)

12.30 5.67 16.45 N.A. N.A.

Crisil 10 Yr Gilt Index (Additional Benchmark)

11.87 7.97 14.57 N.A. N.A.

Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for long term debt schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception Date: 09/04/2001 * An open-ended debt scheme, monthly income is not assured and is subject to availability of distributable surplus

Schemes managed by Mr. Ruchit Mehta along with Mr. Dinesh Ahuja jointly

31/03/2016 to

30/03/2017

31/03/2015 to

31/03/2016

31/03/2014 to


Absolute Returns (%) CAGR Returns

(%) PTP Returns

(INR)

SBI Regular Savings Fund 13.29 6.67 16.18 8.06 28,221

Crisil MIP Blended Index (Scheme Benchmark)

12.30 5.67 16.45 8.13 28,483


11.87 7.97 14.57 5.72 21,074

Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for long term debt schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception Date: 12/11/2003


Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for short term debt schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception Date: 21/12/2005 *An open-ended debt scheme, monthly income is not assured and is subject to availability of distributable surplus.

Schemes managed by Mr. Ruchit Mehta along with Mr. Dinesh Ahuja jointly

31/03/2016 to

30/03/2017

31/03/2015 to

31/03/2016

31/03/2014 to



(%) PTP Returns

(INR)

SBI Magnum MIP – Floater* 11.42 7.50 18.52 8.15 24,192

Crisil MIP Blended Index (Scheme Benchmark)

12.30 5.67 16.45 8.41 24,876


7.15 7.69 8.74 6.30 19,929

31/03/2016 to

30/03/2017

31/03/2015 to

31/03/2016

31/03/2014 to



(%) PTP Returns

(INR)

SBI Arbitrage Opportunities Fund – Growth

6.05 6.43 8.74 7.59 21,418

Crisil Liquid Fund Index (Scheme Benchmark)

7.11 8.06 8.98 7.60 21,443

S&P BSE Sensex (Additional Benchmark)

16.88 -9.36 24.89 8.13 22,558

Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for equity schemes is used for comparison purposes. Performance calculated for Regular Plan. Since inception NAV is assumed as 10. Inception date: 03/11/2006


NAV of Schemes for which performance is mentioned

Scheme Name 31/03/2017 31/03/2016 31/03/2015 31/03/2014

SBI Equity Savings Fund - Reg - Growth 11.5373 10.4162 - -

SBI Magnum MIP - Floater - Growth 24.1917 21.7115 20.1965 17.0401

SBI Magnum MIP - Growth 36.3691 31.8566 30.0184 25.1929

SBI Regular Savings Fund - Growth 28.2815 24.9638 23.4027 20.1442

SBI Arbitrage Opportunities Fund - Growth 21.4184 20.1961 18.9762 17.4505

Scheme managed by Mr. Neeraj Kumar

SBI Funds Management

63% 37%

India’s premier and largest bank with over 200

years experience (Estd: 1806)

Asset base of USD 465bn*

Pan-India network of ~23,737 branches and

59,108 ATM’s as at end of December 2016

Servicing over 299 million customers

Only Indian bank in Fortune 500 list; ranked

among the top 100 banks in the world

Global leader in asset management

Backed by Credit Agricole and Amundi, the parent

company of Amundi Asset Management listed in

Euronext Paris

More than 2,000 institutional clients and

distributors in 30 countries

Over 100 million retail clients via its partner

networks

USD 1083 bn AuM as at end of December 2016

Ranking No 1 in Europe, Top 10 worldwide #

*Source: SBI Analyst Presentation as on end December 2016. USD 1 = INR 66.95

# Source : Amundi website as on end DEcember 2016

SBI Funds Management: India’s First Bank Sponsored Funds

A leading asset manager in India

Broad

Investor

Base

AUM

USD 14.09 bn

Wide

Distribution

Network

Experienced

Investment

Team

Extensive

Product

Range

Broad

Investor

Base

AAUM

Rs. 1,57,025 crs

Wide

Distribution

Network

Experienced

Investment

Team

Extensive

Product

Range

INR 1,57,025 Crores* AAUM in mutual funds

Asset management across mutual funds, segregated managed accounts, domestic advisory & offshore advisory business

Multiple asset classes ranging from equities and debt, money market to ETFs and structured funds

Investment team of 35 professionals with strong track record

Broad customer base with ~ 5.10 million folios related to individual, corporate and institutional investors

* Quarterly average March 2017

• Mr. Navneet Munot

Navneet joined SBIFM as Chief Investment Officer in 2008. In his role Navneet is responsible for overseeing

investments across asset classes worth over $29.10 billion. His prior stint was with Morgan Stanley Investment

Management as Executive Director and head- multi strategy boutique. Prior to that, Navneet was the Chief

Investment Officer - Fixed Income and Hybrid Funds at Birla Sun Life Asset Management Company Ltd. Navneet

had been associated with the financial services business of the Birla group for 14 years and worked in various

areas such as fixed income, equities and foreign exchange.

Navneet holds masters in accountancy and business statistics from the University of Ajmer and is a Chartered

Accountant from ICAI. He is a charter holder of the CFA Institute USA and CAIA Institute USA. He is also an FRM

charter holder of Global Association of Risk professionals (GARP).

• Mr. Ruchit Mehta

Ruchit joined SBIFM in 2010, Ruchit joins us from HSBC Asset Management where he was an analyst and

assistant portfolio manager for four years. Prior to HSBC, Ruchit was as a sell side analyst with leading broking

firms like ASK Raymond James and Prabhudas Liladhar for two years. Ruchit is a commerce graduate from

Mumbai University and holds masters degree in finance from Lancaster University, UK. He is also a charter

holder of the CFA Institute, USA

• Mr. Neeraj Kumar

Neeraj joined SBIFM in 2006. Prior to joining SBIFM Neeraj was associated with Life Insurance Corporation of

India (LIC) for 10 years. He started his career as an admin officer in finance and accounts department of LIC.

Thereafter he worked as an equity analyst for five years and subsequently as a dealer for three years. Neeraj is

a commerce graduate from Magadh University and chartered accountant from ICAI.

Investment Team

Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This presentation is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund units/securities. The views expressed herein are based on the basis of internal data, publicly available information & other sources believed to be reliable. Any calculations made are approximations meant as guidelines only, which need to be confirmed before relying on them. These views alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without notice. Neither SBI Funds Management Private Limited, SBI Mutual Fund nor any person connected with it, accepts any liability arising from the use of this information. The recipient of this material should rely on their investigations and take their own professional advice

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