Risk comes from not knowing what you are doing

Equity Market

World Markets:

• Major global equity indices ended lower for the month ended 16th April 2012, attributed to the renewed concerns about the situation in Europe coupled with weaker economic data from some of the major economies, resulting to weakening in investor sentiments across the world.

• Though, the period started on the back of improved sentiments expecting continued measures to push economic recovery especially in US, the Federal Open Market Committee indicated towards their Federal bank refraining form implementation of the any further stimulus package unless the US economy falters or the price rise is slower than its targeted 2%. This is expected to put the earlier stimulus plans to test for its effectiveness in stoking the economic activity.

• Consumer confidence in US witnessed a decline attributed to the lower job additions for March, much lower at 120,000 as against market expectation of about 205,000 jobs.

• Concerns about European crisis re-emerged with Spain, Euro-region's fourth largest economy, indicating for bailout requirement on the back of being unable to mobilize the targeted amount of 3.5billion euros, instead being able to garner only 2.59billion euros.

• Crude oil witnessed a decline during the month ended 16th March 2012 closing at USD 118.68 per barrel as against USD 122 per barrel a month ago. The fall can be attributed to the slowdown in the GDP growth rate in China, the second largest oil-consumer in the world, increasing speculation of lower fuel demand.

Indian Markets:

• Indian equity indices in line with its most of the major global counterparts declined, with SENSEX and NIFTY ending lower by 1.80% and 1.72% respectively, marking their second consecutive decline.

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M F P O I N T E RIssue - 77

April, 2012

For Private Circulation only

Global Indices

Bench Mark Closing 16-Mar-12

to 16-Apr-12

Bovespa 61,955 -8.46

CAC 40 3,205 -10.84

DAX 6,625 -7.44

Dow Jones 12,921 -2.35

FTSE 100 5,666 -5.02

Hang Seng 20,611 -3.32

Nikkei 225 9,471 -6.51

Shanghai Composite 2,357 -1.98

1April 2012 Smart investing starts here(continued on page 2)

2 April 2012

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Smart investing starts here

• The decline has been on account of the rising risk aversion globally coupled with increased discomfort among investors with the direction of policy making domestically and slowing economic activity in the country.

• Slowdown was witnessed in the Index of Industrial Production (IIP) that indicated growth rate at 4.0% for February 2012. However, revision of the growth rate for January 2012 to 1.1% against 6.8% reported earlier has raised doubts about the effectiveness of the such figures for making policy decisions.

• Inflation has been moderating over the last few months. However, with March inflation levels being reported at 9.47% increasing from 8.83% a month earlier. Increased inflationary pressure is being expected to be witnessed in view of the rising global crude oil prices and also on account of government's stand to reduce fuel subsidy burden.

• Amongst the sectoral indices, IT-indices underperformed the most declining by 11.39% during the period on account of cautious outlook indicated by the industry majors while declaring their quarterly results.

• Rupee declined further during the period to close at ̀ 51.81 against dollar from 50.39 a month earlier.`

Debt Market

• Bond prices fell during the one month ended 16th April 2012 with yields on the 10-year benchmark yields touching 8.46% from 8.36% a month earlier. The decline maybe attributed to the improved liquidity in the system in line with the rate cuts by RBI to stoke momentum in the economy.

• A huge spike in the yields was witnessed during the first half of the period, with yields touching its four-month high on account of the increased government borrowing program coupled with failed bond auction exercise by RBI. However some recovery was witnessed with reduction in the scheduled borrowing plan in the following week.

RupeeGold

Top 5/Bottom 5

Equity Schemes

Top Performers Under Performers

Absolute Absolute Scheme Name Return(%)* Scheme Name Return(%)*

SBI Magnum FMCG 12.28 Sundaram-Select Them Funds-Energy -6.76

ICICI Pru FMCG 9.80 Birla SL New Millennium -6.84

Reliance Pharma 8.81 SBI Magnum IT -9.27

SBI Magnum Emerging Businesses 7.01 DSPBR Technology.com -9.31

SBI Magnum Pharma 5.90 Franklin Infotech -9.94

Debt Schemes

Top Performers Under Performers

Annualised AnnualisedScheme Name Return(%)* Scheme Name Return(%)*

BNP Paribas Flexi Debt Fund(G) 1.78 Taurus Gilt -1.80

Tata FRF-LTP(G) 1.72 Escorts Income Bond -1.26

Kotak Gilt-Invest-Reg(G) 1.52 ING Gilt-PF-Dynamic -0.50

IDFC Money Mgr-IP-A(G) 1.52 Principal Govt Sec Fund -0.41

Morgan Stanley ST Bond-Reg(G) 1.49 ING Income-Ret -0.21

*Returns as on 16th April 2012

Category Returns: For the one month ended 16th April 2012, most equity fund categories ended weaker in line with the benchmark indices except for FMCG Funds gaining 11.04%. Increased risk aversion among investors has resulted in the increase in gold prices both domestically and internationally, resulting in the Gold ETF as well as fund of funds closing strong during the period.

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3April 2012 Smart investing starts here

*Returns as on 16th April 2012

Very recently, there was an interesting article in one of the

leading newspaper which enumerated that an individual

investing into fixed deposits of a commercial bank would

make more money than by investing in the equity market

over a 20 year time horizon. This really got us thinking – Is

that so? How is it possible that a risk free instrument will give

a return higher than a risk instrument and that too over a

longer tenure. This was going against our basic belief that

“risk reduces with increase in time”. The article is indeed very

well articulated but we feel there are a few points which one

needs to look at before coming to a conclusion and we hope that this article will provide some clarity

and value-add. Our objective is not to say, that investing into FD's is wrong. The goal of any

investment should be to derive the maximum possible benefit because, ultimately it is our hard

earned money that is being invested.

Point of Entry: The premise of the analysis is based on the assumption that the investor would have

made the investment on a particular day in March 1992 in Sensex. Sensex in 1992 can be considered

to be at the peak of a pushed up rally spearheaded by Harshad Mehta, which led to a steep correction

in the following year and stagnancy for a couple more years. However, by just changing the entry

point by a year on either side the returns would have witnessed a major change. Had the investor

started investing in 1991, he would have made a return of 13.38% p.a. instead of 7.26% p.a. as

claimed by the author of the article. Likewise an investment started from 1993, the investor would

have made a return of 10.91% p.a., much better than the returns from the FD for similar tenure. This

tantamount to a nearly 84.30% increase in the returns. A million dollar question which arises is; What

is the right time of Entry? There is no right time or wrong time for equity markets. These will always

be volatile and the best method is to invest regularly over a period of time. See our point below for

more elaboration.

Dividend Yield: Benefits derived in the form of dividends

declared by underlying companies has not been considered

in the analysis. This is an important indicator as it provides a

regular and consistent tax free income stream in the hands of

the investors. Though the portfolio is assumed to replicate

the Sensex returns, the constituent companies do declare

dividends to its holders. The average Dividend yield of Sensex

constituent, for the period in consideration, works out to

1.45% p.a. If this yield is added, the equity returns would

work out to be 8.71% p.a., which would be higher than the

post tax returns earned by an individual in the lowest tax

bracket (explanation in the following section). This additional benefit is totally absent in FD's and they

would not gain anything more than the stated interest rate at the time of issue.

MF POINTER

4 April 2012Smart investing starts here

Risk comes from not knowing what you are doingRisk comes from not knowing what you are doing

Impact of Taxation: A critical aspect for any type of

investment is the impact of taxation. The analysis ignored the

impact of taxation on the returns earned by the individual.

The returns on Fixed Deposits are compared at pre-tax level,

whereas in reality interest income is taxable as per the tax

slab of the individual (which at present ranges from 10%-

30%) while gains on equity shares held for more than a year is

tax exempt. If we factor this impact on the returns, then for

an individual in the highest tax bracket (30%, assuming that

the same rate prevailed throughout the period, though the

highest tax rate was about 40% in early 1990's), the value of

`1000 invested in 1992 as per the article would be worth

3,509 today, a post-tax growth rate of 6.16% p.a. which is

less than that of the equity returns of 7.26% p.a. Following is

the graphical representation of the returns at different tax slabs. As can be seen, at any tax bracket, in

the long-run taxation significantly alters the total returns earned.

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5April 2012 Smart investing starts here

Tax Slab 10% 20% 30%

Investment (`) 1000 1000 1000

Post tax Return ( ) 4952 4172 3509

Rate of Return (%) 7.92% 7.04% 6.16%

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Regular Investment: One of the major shortcomings in the study was the assumption that all

investment was made on the last day of the financial year 1991-92, and completely overlooks the

benefits derived from investing on a regular basis. To be successful in any facet of life, there is one

thing which is most important – discipline. Investing activity should neither be a Year-end exercise or

some lumpsum investment made on a irrational basis but should be done on a regular basis. Had the

same individual had made fixed monthly investment into Sensex from March 1992, he would have

earned a return of 11.60% p.a. during the period and in addition would have received a dividend

yield of 1.45% p.a.

Conclusion:

The article acts as a myth buster even for us, as many a times we take such analysis at face value

without giving a second thought about the completeness and effectiveness of it. Today we have a lot

of media overload and one needs to be careful before taking a decision. One needs to spend a few

minutes in knowing whether even our understanding is attuned with it.

To sum-up, as Warren Buffet says “Risk comes from not knowing what you are doing”. A little bit

of homework on your investments not only would improve your understanding about it but will also

enable you to question your advisor.

ICICI Pru Focused Bluechip Equity Fund

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6 April 2012Smart investing starts here

TYPE OF SCHEMEOpen ended Fund of Fund

DATE OF INCEPTION 23/05/2008

FUND MANAGER Manish Gunwani, Rajat Chandak

FUND SIZEMar, 2012 `3,805Dec, 2011 `3,532Sep, 2011 `3,105Jun, 2011 `2,545

LATEST NAV NAV-Growth(G) `16.03(16-Apr-12)NAV-Dividend(D) `15.29(16-Apr-12)

52 WEEK HIGH 52 WEEK LOW

` 17.19 ` 14.31

FUND STATISTICSStandard Deviation 23.02Beta 0.92Sharpe Ratio 0.85R Squared 0.99Portfolio T/O (Mar-12) 0.61Expense Ratio (Mar-12) 1.82%

BENCHAMRKS&P Nifty

MINIMUM INVESTMENT` 5,000/- in multiples of 100/- thereafter

LOAD STRUCTUREEntry Load NILExit Load Upto 1 Year from allotment

- 1% of applicable NAV, more than 1 Year - Nil

`

*Ratios are calculated on annualised basis using 3 yrs history of half yearly data; Risk free return: 8%

Fund focus: As the name suggests ICICI Prudential Focused Bluechip Equity Fund aims at building a focused portfolio by maintaining lesser number of stocks and ride on these selective bets. This strategy is expected to make monitoring of portfolio easy for both the fund manager as well as the investor. The fund mandate enables the fund Manager to take concentrated exposure to generate potentially higher returns, through his buy and hold strategy.

Portfolio: The investment objective of the fund is to build an equity portfolio with about 20 companies for the purpose of the maintaining a focused portfolio. However, during the last one year, the fund has added additional 7 stocks. These additions could be to seek increased opportunities with the fund witnessing steady flow of mobilization on account of the fund's performance coupled with aggressive fund management style adopted by the fund manager. At present, the portfolio is diversified into 13 major sectors, with 24.35% of its assets being invested into Banking and Finance Sector followed by IT-sector with 14.92%. Further, fund with the objective being to invest only in Blue-chip companies has 100% of fund's equity portfolio invested into large cap stocks. The top 5 stocks form about 34.52% of the total portfolio.

AUM Change: AUM of the fund has increased by 1,836crores ( 93.28%) to `3805crores on March

2012 from 1,969crores a year ago. The increase in AUM can be attributed to the higher inflows into the fund amounting to 1947crores ( 98.87%) even though its market value declined by 110crores ( 5.59%).

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7April 2012 Smart investing starts here

Performance: It has been around three and a half years since the fund has come into existence. However, throughout this period, the fund has been an outstanding performer when compared to its benchmark S&P CNX NIFTY, outperforming index in 14 out of 15 previous quarters by a considerable margin. During the last one year, the fund has declined by 5.59% as compared to the decline of 10.27% by its benchmark. The outperformance can be attributed to fund's exposure into stocks like ITC, Bajaj Auto, HDFC Bank Ltd., Grasim, which were amongst the gainers during the period. The outperformance can also be attributed to the funds ability to stay invested even in a volatile market situation on account of the steady inflow into the fund.

Top 5 Companies Holding (%) Top 5 Sectors Holding (%)

Company % N.A. Company % N.A.

Infosys Ltd. 7.71 Banking & Finance 24.35

ITC Ltd. 7.71 Computers 14.92

HDFC Bank Ltd. 7.39 Oil & Gas 12.38

Reliance Industries Ltd. 6.44 Auto 8.03

Bajaj Auto Ltd. 5.27 FMCG 7.71

Total 34.52 Total 67.38

Total No.of Companies 27 Total No.of Sectors 13

Corporate Office Address : Website :

A1, Kailash Industrial Complex, Park Site, Off LBS Marg, Vikhroli West, Mumbai - 400 079. Tel: +91-22-6754 7000 • E mail : mutualfunds@ventura1.com • www.ventura1.com

This document is solely for private circulation only. Mutual funds like securities investments are subject to market risks and other risks. Investors are advised to read the offer document before investing.

Performing Mutual Fund Plans

Scheme Name Corpus NAV (`) Annualised %

(` Crs)# Gr Div 1 mth 3 mths 6 mths 1 yrIncome Funds

Birla SL Dynamic Bond Fund 5,348 18.08 10.58

HDFC High Interest-STP 1,410 21.18 10.61

Ultra Short Term Plan

HDFC Cash Mgmt-TA 15,232 23.27 10.13

Reliance Money Manager 7,279 1,450.94 1,016.98

Tata Floater 2,109 16.13 10.10

13.51 9.64 10.92 9.93

12.92 8.71 9.60 8.81

12.19 9.76 9.15 9.04

11.04 9.40 9.16 9.13

11.20 9.65 9.54 9.53

*Returns for less than 1 year is absolute (in case of MIP, it is annualized) and more than 1 year are compounded annualized as on 16th April 2012.#Corpus as on March 2012. ** Corpus as on December 2012.

Scheme Name* Corpus NAV (`) 6 mths 1 yr 3 yrs 5 yrs

(` Crs)# Gr Div (%) (%) (%) (%)Hybrid - Monthly Income Plans (MIPs)HDFC MIP-LTP Fund 6,636 24.32 12.82Reliance MIP Fund 4,142 23.43 10.91Balanced FundHDFC Prudence 6,249 215.40 25.85Equity – Large CapDSPBR Top 100 Equity-Reg 3,274 99.81 20.06Franklin India Bluechip 4,625 208.80 34.36HDFC Top 200 11,381 199.92 39.24ICICI Pru Dynamic 4,119 103.85 17.01ICICI Pru Focused Blue Chip Equity-Ret 3,805 16.03 15.29Equity – Multi capBirla SL Dividend Yield Plus 1,163 85.16 12.77HDFC Equity 9,916 259.97 39.92IDFC Premier Equity-A 2,561 33.51 22.08Reliance Equity Oppor-Ret 3,340 36.80 23.47UTI Dividend Yield 3,713 31.13 13.37Equity – MidCapDSPBR Small & Mid Cap-Reg 1,201 17.18 13.40HDFC Mid-Cap Oppor 1,860 16.62 15.07ICICI Pru Discovery 1,779 48.76 18.60SBI Magnum Emerging Businesses 561 46.57 15.02Sundaram Select Midcap 2,062 145.47 16.47Equity - Thematic HDFC Infrastructure 746 10.33 10.33Reliance Banking 1,731 95.99 34.86Reliance Pharma 564 58.58 39.65Tax Saving Scheme (ELSS)Fidelity Tax Advt 1,040** 20.98 16.43HDFC TaxSaver 3,114 220.44 50.09ICICI Pru Tax Plan 1,278 133.07 16.91Fund Of FundsDSPBR World Gold-Reg 865 17.34 14.20Sensex 17,150.95Nifty 5,226.20

10.07 4.93 13.04 10.2314.81 7.55 11.29 11.54

10.25 28.47 13.46

14.09 21.05 11.454.64 23.00 10.258.03 24.60 12.839.82 23.70 9.614.92 24.86

8.61 29.94 15.277.93 28.14 11.746.60 1.66 32.36 18.90

15.11 1.78 34.74 11.650.70 23.87 14.14

4.98 34.09 10.7017.78 6.21 36.3522.90 36.39 13.9713.88 12.50 41.76 9.68

6.01 31.22 10.26

6.71 20.5313.03 31.65 21.1813.79 4.69 41.79 23.04

2.68 24.62 10.467.79 26.62 9.303.09 28.33 9.32

15.460.79 16.13 4.603.61 15.74 5.42

-0.41

-2.08-5.03-7.50-5.30-5.56

-1.74-9.03

-6.23

-5.00

-1.53

-4.30

-14.58-12.61

-7.21-7.03-7.13

-20.46 -7.45-11.47-10.22

8 April 2012Smart investing starts here

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