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Page 1: Mutual Fund Review - ICICI Directcontent.icicidirect.com/mailimages/IDirect_MonthlyMF... · 2018-11-02 · Mutual Fund Review Equity Markets ... improving the business sentiment

Mutual FundReview

October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund

November 19, 2009 | Mutual Fund Mutual Fund Review September 21, 2018

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ICICI 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

Equity Markets .................................................................................................... 2

Debt Markets ....................................................................................................... 3

MF Category Analysis ......................................................................................... 5

Equity funds..................................................................................................... 5

Equity diversified funds ...................................................................................... 6

Equity infrastructure funds ................................................................................. 7

Equity banking funds .......................................................................................... 7

Equity FMCG Funds ............................................................................................ 8

Equity Pharma funds ........................................................................................... 8

Equity Technology Funds .................................................................................... 8

Exchange Traded Funds (ETF) ......................................................................... 9

Aggressive hybrid funds ................................................................................ 10

Arbitrage Funds ............................................................................................. 11

Debt funds ..................................................................................................... 12

Short term fixed income allocation (less than 1 year) ..................................... 13

Long term fixed income allocation (more than 1 year) .................................... 14

Gold: Outlook anchored to Fed movement ....................................................... 15

Model Portfolios ................................................................................................ 16

Equity funds model portfolio ......................................................................... 16

Debt funds model portfolio ............................................................................ 17

Top Picks ........................................................................................................... 18

September 21, 2018

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ICICI Securities Ltd. | Retail MF Research Page 2

Equity Markets

Update

Indian headline equity benchmark indices, after making new highs in

August 2018, witnessed some profit booking during September. Rising

global crude oil prices, a sharp depreciation in currency and rising trade

war concerns weighed on market sentiments

Macroeconomic concerns emerged over the last few months with rising

concerns on fiscal deficit, inflation and rising interest rates. The same

coupled with elevated market levels accentuated the recent broad-

based market fall

The recent market correction has to be viewed as a correction of the

sharp rally in the last year and the overall around 60% rally since

February 2016

Globally, turmoil in the currency market on trade war concerns has been

the epicentre of the recent global volatility. Emerging market currencies

witnessed sharp depreciation against the US dollar. The global currency

crises got aggravated after the Turkish lira’s sharp depreciation due to

sanctions by the US and followed by the debt crises in Argentina. The

sharp falls in the value of the Turkish lira and Argentina's peso led to

fears of contagion effect on other market currencies

The broader market, represented by midcaps and small caps, has

underperformed recently. However, most of the midcap and small cap

funds have done well in containing the market fall

The healthcare or pharma sector outperformed as value buying

emerged at lower levels. The healthcare sector had underperformed

significantly prior to this recent performance. Hence, value had

emerged in the sector. We are positive on the healthcare sector from a

near to medium term perspective

Although inflows into domestic mutual funds have moderated in the

last couple of month, they remain strong. Average monthly inflows into

equity oriented funds, including equity component of balanced funds in

the first four months of FY19, were around | 13800. The similar average

during FY18 was | 21500. The outlook for domestic inflows remains

strong with higher SIP inflows and low penetration. SIP inflows have

seen a consistent rise and were at | 7500 crore in August 2018.

Consistent domestic inflows are expected to prevent any significant

downside and will act as strong support at lower levels as seen in the

last few months where buying interest was seen at lower levels

Outlook

Analysis of the Q1FY19 results that were declared indicate that earnings

recovery, which we were expecting in the current and next financial

year, is on track. So far, Q1FY19 results were largely in line or better

than market expectations. The consumption segment of the market

remains strong with companies in FMCG, consumer durables, paints,

auto, etc, delivering double digit volume growth. Loan growth remains

strong for large retail banks and rural & consumer finance NBFCs. IT

displayed better growth, improving the business sentiment

commentary by the managements

While the recent correction at the broad headline index level looks

marginal, the correction in individual stocks has been far significant and

offers investment opportunity

We believe the recent correction offers a good investment opportunity

for long term investors. Investors should increase allocation to equity

market in a gradual manner through fresh SIPs

Nifty 50: Markets rebound sharply in recent weeks

9000

9500

10000

10500

11000

11500

12000

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-1

8

Source: Bloomberg

Flattish month for markets…

0.9

0.8

0.7

0.7

0.6

-0.4

-3

-2

-1

0

1

2

BS

E 1

00

BS

E 2

00

BS

E M

idcap

BS

E 5

00

Sensex

BS

E S

mall cap

Source: Bloomberg

One month returns till September 14, 2018

Healthcare continues to lead the way among sectors

10.6

8.8

5.5

3.4

0.2

0.1

-1.7

-2.9

-3.3

-7

-5

-3

-1

1

3

5

7

9

11

Healthcare

Metals IT

CG

Auto

Oil n G

as

FM

CG

Real Estate

Bankin

g

8ource: Bloomberg

One month returns till September 14, 2018

Research Analyst

Sachin Jain

[email protected]

Jaimin Desai

[email protected]

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ICICI Securities Ltd. | Retail MF Research Page 3

Debt Markets

Update

The Indian fixed income market has come under severe pressure in the

last month with yields rising sharply across market segment. G-Sec and

corporate bond yields have risen 30-40 bps since August 2018

The 10-year benchmark G-Sec yield has touched 8.1%. The three-year

AAA and AA rated corporate bond yields (segments in which majority

of the short-term and credit fund invest) have touched 8.9% and 9.3%,

respectively, the highest since November 2014

Elevated crude oil prices and a sharp depreciation in the Indian

currency have led to increased concerns over fiscal deficit and inflation.

Globally, sentiments have been negative for the fixed income market

with a rise in yields across emerging markets. The global currency

crises got aggravated after the Turkish lira’s sharp depreciation due to

sanctions by the US and followed by the debt crises in Argentina. The

sharp falls in the value of Turkey's lira and Argentina's peso led to fears

of contagion effect on other market currencies

Foreign portfolio investors (FPIs) have turned net sellers over the last

few sessions as risk aversion increased on heightened currency and

bond market volatility, especially in emerging markets. In India, FPIs

have again turned net sellers since the later part of August

Outlook

Structurally, interest rates have seen a sharp up move in the last

year on the back of global factors like a rise in crude oil prices,

commodity prices and currency depreciation across emerging

markets. Interest rates offered by AAA-rated corporates have also

seen a sharp up move with yield on three-year AAA rated bonds

rising from 7.1% in September 2017 to 8.8% in September 2018, a

rise of 170 bps in one year. Yield on corporate bonds has moved up

to levels last seen in November 2014

While some concern is legitimate in terms of inflationary concerns,

the sharp up move in interest rates is discounting higher concern

than warranted. RBI expect inflations to remain around 5% by

Q1FY20. Inflation has structurally moved down and is likely to

remain around 5% over the medium term, going forward. With

inflation structurally likely to remain far lower than earlier years,

corporate bond yields are unlikely to remain at 2014 levels

The higher spread between inflation and bond yield is indicating

that the current higher yield offered by good rated companies is a

good investment opportunity

Markets currently seem to be pricing in more than two rate hikes of

25 bps by March 2019 with the change in liquidity stance from

neutral to withdrawal. However, we believe that the worst has

already been discounted and do not expect any significant up move

in G-Secs yields irrespective of rate hike by RBI. We have been

positive on debt markets because of attractive absolute higher

levels of yields across duration. We maintain our positive stance

remaining relatively overweight on corporate bonds and neutral

stance on G-Sec

Accrual/credit funds with predominant exposure in AA (double A)

rated bonds and lower expense ratio are best placed. Investors

should avoid funds with higher single A rated corporate exposure to

reduce credit risk

G-sec yields range boundabove 8%

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

8.0

8.2

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-1

8

Yie

ld (%

)

Source: Bloomberg

G-sec yield curve

7.40

8.05 7.927.86

7.31

7.73

8.158.10

6.9

7.2

7.5

7.8

8.1

8.4

1yr 3yr 5yr 10yr

Yie

ld (%

)

17-Sep-18 16-Aug-18

Source: Bloomberg

AAA corporate bond yield curve

8.68

9.06 9.03

8.73

8.27

8.56

8.67

9.05

8.0

8.3

8.6

8.9

9.2

1yr 3yr 5yr 10 yr

Yie

ld (%

)

14-Sep-18 16-Aug-18

Source: Bloomberg

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ICICI Securities Ltd. | Retail MF Research Page 4

MF industry synopsis

MF industry AUM rose ~9.3% in August to a record ~| 25.20 lakh crore

driven by a positive month for equity markets. Of the total AUM, ~30%

was held by income funds, ~43% by equity and equity-oriented funds,

~24% by liquid funds

During August, equity and equity oriented funds (i.e. equity, arbitrage,

balanced, ELSS, non-gold ETFs) received ~| 9500 crore net inflows,

hurt by higher redemptions in equity segment. In FY19TD, equity and

equity oriented funds have averaged ~| 13150 net inflows per month

against FY18 average of ~| 21000 crore per month

According to Amfi data, SIP inflows for August 2018 were at | 7658

crore. SIP inflows averaged ~| 5600 crore/month in FY18 vs. ~| 3600

crore/month in FY17, a rise of ~52%. The number of SIP folios has

increased from 1.35 crore in March 2017 to 2.38 crore in August 2018

In 2017, the MF industry recorded net inflow of | 2.44 lakh crore, of

which | 2.42 lakh crore came into equity and equity-oriented funds

Exhibit 1: Monthly inflows into equity-oriented funds average ~| 21500

crore in FY18

1000000

1200000

1400000

1600000

1800000

2000000

2200000

2400000

2600000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Total AUM

Source: AMFI

Exhibit 2: AUM of Top 10 AMCs

319,640

313,872

261,357

259,796

255,919

175,750

137,738

116,184

98,790

92,870

50000

100000

150000

200000

250000

300000

350000

400000

ICICI P

ru

HD

FC

SB

I

Aditya B

irla

Reliance

UTI

Kotak

Franklin

DS

P

Axis

AUM

Source: ACE MF

Exhibit 3: SBI has highest proportion of equity AUM as percentage of its

AUM

51%

45%

45%

42%

40%

38%

38%

37%

37%

33%

0%

20%

40%

60%

80%

SB

I

HD

FC

Franklin

Axis

DS

P

ICICI P

ru

Reliance

UTI

Kotak

Aditya B

irla

Equity % Debt% Others%

Source: ACE MF. Data as of July 2018

Exhibit 4: Equity funds witness significant inflows in FY18…

-10000

10000

30000

50000

70000

90000

110000

130000

150000

170000

EQ

UIT

Y

BA

LA

NCED

OTH

ER

ETFs

ELS

S -

EQ

UIT

Y

GO

LD

ETFs

GIL

T

|cro

re

Source: ACE MF. Data as of March 2018

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ICICI Securities Ltd. | Retail MF Research Page 5

MF Category Analysis

Equity funds

Technology funds remained the best performing category of sector

funds. This category, along with FMCG, continued to outperform

pharma funds by wide margins. IT funds have staged a comeback

over the last six months while previously laggard pharma funds

have also done well in the past couple of months

Pharma funds have also staged a smart recovery over the last few

months after having underperformed prior to that

In terms of market cap-based funds, large cap funds outperformed

multi cap and midcap funds on a one year basis. After a strong run

from mid 2013 to 2016 for midcaps and small caps, large caps had a

good calendar year 2017 and continued their relative dominance on

a YTD basis as well

Exhibit 5: IT funds continue to outperform other categories on one year basis while pharma funds

stage recovery (returns as on September 18, 2018)

S

44.2

15.6

9.5

4.9

4.7

2.9

2.7

2.7 2.2

-0.6

-1.4

-2.3

-6.3

12.7

-0.8

13.9

12.4

11.1

13.3

12.9

11.7

12.3

14.6

11.8

13.4

9.7

17.4

14.9

17.3

18.9

16.8 2

1.8

20.2

18.8

19.4

20.3 2

5.3

28.0

19.5

-20

-10

0

10

20

30

40

50

Technolog

y

Pharm

a

FM

CG

Focused

Large C

ap

Valu

e and C

ontra

Large and M

id C

ap

Multi cap

ELS

S

Bankin

g

Mid c

ap

Sm

all C

ap

Infrastructure

Returns (%

)

1 year 3 Year 5 year

Source: Crisil, ICICI Direct Research ; Returns over one year are compounded annualised returns

Exhibit 6: Inflows into equity funds plunge post March

0

4000

8000

12000

16000

20000

24000

28000

32000

36000

40000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Net Inflo

w ( | C

r )

Eq+ELSS+ETF+Balanced

Source: AMFI, ICICI Direct Research

Exhibit 7: Equity funds AUM

550000

600000

650000

700000

750000

800000

850000

900000

950000

1000000

1050000

1100000

1150000

1200000

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-18

Aug-1

8

| C

rore

Total Equity AUM

Source: AMFI, ICICI Direct Research

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ICICI Securities Ltd. | Retail MF Research Page 6

Equity diversified funds

Equity diversified funds witnessed robust growth in the last three

years, with AUM within each sub-category rising substantially. In

FY14-17, AUM of large cap funds were up 112%, multi cap funds

AUM up 123%, midcap funds AUM up 100% with small cap funds

AUM rising 267%(all CAGR)

Over this period, while all sub-categories delivered a strong

performance, midcap and smallcap funds have done exceedingly

well and outperformed. This reflects in the trend of broader indices

outperforming bellwether indices in this time frame. However, large

cap funds have reversed that trend since January this year

Multicap funds are relatively more market cap agnostic and hold

positions in a wider range of companies than pure large cap funds

or pure midcap/small cap funds. Multicap funds generally hold

around 50-60% of their portfolio in large cap stocks and 30-40% in

midcap stocks

In the present market scenario, bottom up stock picking across the

market segment is more important than allocation to a particular

segment or sub sector. Multicap funds offer fund managers

flexibility to allocate funds across all market segments and are,

therefore, relatively better placed

Exhibit 8: Blistering AUM growth across all equity diversified fund sub-categories from 2014

31491

48001

61435

79876 106275

130530

28310

48754

66020

77448 103803

146986

11580

24045

38657

47799

64084

77129

1746

5956

11201

15598

25889

41119

0

30000

60000

90000

120000

150000

180000

August 1

3

August 1

4

August 1

5

August 1

6

August 1

7

August 1

8

|crs

Large Caps Multi Caps Mid Caps Small Caps

Source: ACE MF

Recommended funds

Large cap

Reliance Large Cap Fund

ICICI Prudential Bluechip Equity Fund

SBI Bluechip Fund

Multi cap

Mirae Asset India Equity Fund

Kotak Standard Multicap Fund

HDFC Equity Fund

Midcap

HDFC Mid-Cap Opportunities Fund

Kotak Emerging Equity Fund

L&T Emerging Businesses Fund

Smallcap

HDFC Small Cap Fund

L&T Emerging Businesses Fund

Reliance Small Cap Fund

(Refer to www.icicidirect.com for details of the fund)

View

Short term: Positive

Long-term: Positive

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ICICI Securities Ltd. | Retail MF Research Page 7

Equity infrastructure funds

Q1FY19E has been a strong quarter for several capital goods

companies with robust order wins across segments. Power T&D EPC

companies are expected to report strong revenue growth. Bearings

companies are likely to report strong double digit topline growth due to

robust production volume growth

On the tendering side, there has been a strong pick-up in the road

sector with road tenders growing 36.4% YoY to | 85,000 crore in

Q1FY19. This strong tendering activity suggests order inflows could

remain robust, going ahead

FY18 saw a strong awarding pace, led by awarding under the

Bharatmala project picking up pace. Given the huge size of the

Bharatmala Pariyojana, the awarding could remain robust, going

forward. The Roads Ministry has set road construction, awarding target

of 16420 km, 20000 km, respectively, for FY19E. This strong awarding

activity could translate into robust awarding opportunities for various

construction players

Infrastructure funds focusing on specific companies capitalising on

growth potential in the sector are offering a good investment option to

investors. Aggressive investors may consider investing in the

recommended infrastructure funds as part of their thematic allocation

Preferred Picks

L&T Infrastructure Fund Refer www.icicidirect.com

for details of the fund Reliance Diversified Power Sector Fund

Equity banking funds

Post a surge in slippages in Q4FY18 led by RBI’s February circular, asset

quality concerns seem to have peaked out with a decline in absolute

NPA in Q1FY19. Absolute GNPA of PSU banks witnessed marginal

decline QoQ in absolute terms to | 8.82 lakh crore. Private banks

reported flat growth QoQ and 33.7% YoY increase in GNPA to | 1.28

lakh crore. Industry GNPA ratio was at ~11.7% as on Q1FY19

Credit growth of the industry revived to ~13% YoY to | 86.55 lakh

crore, led by healthy growth in retail segment. Growth of private banks

continued to remain higher at 15-20%, thereby gaining market share.

With a decline in slippages and interest recovery from resolved

accounts, NII growth revived 28.2% YoY, not seen in the last several

quarters. PSU banks saw 37.8% YoY growth in NII. However, rise in G-

sec yields impacted non-interest income, especially for PSU banks

However, in the long term, we remain optimistic on the banking sector

keeping in mind the anticipated pick-up in credit offtake. Steady

margins and peaking out of the NPA cycle are expected to further aid

profitability. From a long term point of view, the PSU bank

recapitalisation programme is a structural positive. The continued

government push on financial inclusion, enhanced awareness and

increased usage of digital or electronic payments will be positives for

the banking industry from an operating cost perspective

Preferred Picks

ICICI Prudential Banking & Financial Services Refer

www.icicidirect.com for

details of the fund

Reliance Banking Fund

UTI Banking Sector Fund

View

Short-term: Positive

Long-term: Positive

View

Short-term: Neutral

Long-term: Positive

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ICICI Securities Ltd. | Retail MF Research

Page 8

Equity FMCG Funds

FMCG companies recorded robust growth in the June quarter primarily

led by double digit volume growth in several companies. The select

pack of companies continued to invest aggressively in advertisement

and promotions to augment growth, helping the revenue base to grow

in low double digits. Rural consumption outpaced urban growth in the

June quarter as FMCG companies focused on increasing their direct

distribution network in rural areas

Although our outlook remains positive on the sector, given the

valuation premium commanded by the consumption space, investors

would be better off adopting an SIP approach in FMCG funds

Equity Pharma funds

The pharma results were a mixed bag as Indian formulation growth

was strong on expected lines but US growth was below

expectatiosn. On the margins front, the results were mixed as

favourable currency benefits were mitigated by Chinese sourcing

pressure and APIs that are pegged with crude prices. On the

geographical front, the challenging environment in the US generic

pricing space continued to impact overall US growth

Our view on the sector has turned positive. The sharp correction in

most stocks was higher than the earnings downgrades, thus

effectively pulling down PE ratios below their historic averages. This

has effectively created a favourable risk-reward situation in some

stocks

Preferred Picks

Reliance Pharma Fund

UTI Healthcare Fund

Refer to

www.icicidirect.com

for details of the fund

Equity Technology Funds

The Q1FY19 performance and management commentaries by IT

companies indicate signs of an improving demand environment (led

by higher spend in BFSI, increase in digital pie and healthy deal

wins). Companies tend to pace up their digital contribution to keep

in line with the changing IT landscape. Now it forms ~25-28% of

overall revenues (vs. 19-24% in Q1FY18) with strong double digit

growth. From a deal signing perspective, Q1FY19 proved to be a

good quarter as Tier-I IT companies have good deal signings and

healthy order bookings. On the revenue front, Tier-I IT companies

witnessed an average growth of 2.3% QoQ in constant currency

(CC) terms in a seasonally strong quarter

Our view on the sector has turned positive owing to strong growth

in the digital vertica, an improving deal pipeline, a revival in the

BFSI vertical in North America, scope for margin expansion and

support from cross currency tailwinds

Preferred Picks

ICICI Prudential Technology Fund Refer to

www.icicidirect.com

for details of the fund

Preferred Picks

ICICI Prudential FMCG Fund Referwww.icicidirect.com

for details of the fund SBI Consumption Opportunities Fund

View

Short-term: Positive

Long-term: Positive

View

Short-term: Positive

Long-term: Positive

View

Short-term: Positive

Long-term: Positive

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ICICI Securities Ltd. | Retail MF Research Page 9

Exchange Traded Funds (ETF)

In India, three kinds of ETFs are available: Equity index ETFs, liquid

ETFs and gold ETFs. An equity index ETF tracks a particular equity

index such as the BSE Sensex, NSE Nifty, Nifty Junior, etc.

An equity index ETF scores higher than index funds on several grounds.

The expense of investing in ETFs is relatively less by 0.50-0.75% in

comparison to an index fund. The expense ratio for equity ETFs is in the

range of 0.05-0.25% while for index funds the expense ratio varies in

the range of 0.50-1.25%. However, brokerage (which varies) is

applicable on ETFs while there are no entry loads now on index funds.

Tracking error, which explains extent of deviation of returns from the

underlying index, is usually low in ETFs as it tracks the equity index on

a real time basis whereas it is done only once in a day for index funds.

ETFs also provide liquidity as they are traded on stock exchanges and

investors may subscribe or redeem them even on an intra-day basis.

This is unavailable in index funds, which are subscribed/redeemed only

on a closing NAV basis.

In August 2015, the Labour Ministry decided to invest 5% of

Employees’ Provident Fund Organisation’s (EPFO) incremental corpus

in ETFs. The investment in equities is split between the Nifty ETF (75%)

and Sensex ETFs (25%). EPFO chose two ETF schemes of SBI Mutual

Fund — SBI ETF Nifty and SBI Sensex ETF

In 2016, EPFO hiked the limit from 5% to 10% of its incremental corpus

of investment in equities, which was further increased to 15% of its

incremental corpus in May 2017. This is a positive move since

retirement savings, which are long term in nature, will be invested in

equities that have the potential to generate higher returns. So far, EPFO

has invested a total of ~| 22,000 crore in exchange traded funds as of

April 2017. Over 400 ETFs are traded globally. ETFs are transparent and

cost efficient. The decision on which ETF to buy should be largely

governed by the decision on getting exposure to that asset class

Exhibit 9: ETFs inflows intact

15131968 1675

12447

-1604-2234

953

5082

305

2694

8313

-3982

1785

-5000

0

5000

10000

15000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Net Inflo

w ( | C

r )

OTHER ETFs

Source: AMFI, ICICI Direct Research

Exhibit 10: ETF AUMs remain strong

53734

55166

60107

70041

70353

72879

69848

72888

77501

81272

88122

89765

94406

40000

50000

60000

70000

80000

90000

100000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

| C

rore

Other ETFs

Source: AMFI, ICICI Direct Research

Traded volumes should be the major criterion that is used

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...

..traded volume should be the major criteria to be

considered while deciding on investment in ETFs.

Higher volumes ensure lower spread and better

pricing to investors...

..tracking error though should be considered but is

not the deciding factors as variation among funds

is not huge...

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Aggressive hybrid funds

Inflows into balanced funds have slowed considerably in this

financial year. Average net monthly inflow in 2017 of ~ | 7000 crore

dropped to | 3500 crore in April, ~| 2700 crore in May, ~| 1500

crore in June and ~| 300 crore in July, before recovering slightly to

~| 2600 crore in August. Imposition of dividend distribution tax

(DDT) on equity mutual funds and re-introduction of LTCG tax

seems to have dealt a double whammy to investor preference for

balanced funds. With bond yields remaining elevated and equity

markets also consolidating over the last few months, performance

of balanced funds has dipped recently

Over the last two or three years, the balanced space has emerged

as one of the fastest growing equity categories and offers an ideal

gateway for first time retail equity investors. In FY17, balanced

funds AUM growth outpaced all other categories bar non-gold ETFs

Balanced funds are hybrid funds. More than 65% of the overall

portfolio is invested in equities. Hence, as per provisions of the

Income Tax Act, 1961, any capital gains over a year will be taxed at

10%. Also, dividends declared by funds are taxed at 10%

In case one separately invests 35% of one’s investible corpus in a

debt fund, the same will be subject to higher taxation. However, if

the whole corpus is invested in balanced funds, 100% shall have

lower taxation applicable as mentioned above. Thus, balanced

funds offer the benefit of equity taxation on debt component

After a sharp rally in equity markets, the funds can be a preferred

investment avenue as the debt proportion serves to protect on

intermediate relief rallies or the downturn while providing minimum

65% participation on further upsides

Exhibit 11: Inflows into balanced funds fall sharply in FY19

8,783

8,141

5,897

7,614

9,756

7,665

5,026

6,754

3,500

2,666

1,482

287

2,630

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Net Inflo

w ( | C

r )

BALANCED

Source: AMFI, ICICI Direct Research

Exhibit 12: YoY 46% growth in AUM of balanced funds

128320

134868

147460

155105

167385

176087

174468

172151

181306

177995

174737

180647

187924

93000

113000

133000

153000

173000

193000

213000

233000

253000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

| C

rore

Balanced

Source: AMFI, ICICI Direct Research

Preferred Picks

ICICI Prudential Equity & Debt Fund

HDFC Hybrid Equity Fund

DSP Blackrock Equity & Bond Fund

(Refer to www.icicidirect.com for details of the fund)

Investors with a limited investible surplus and a lower risk

appetite but with a willingness to invest in equities can

look to invest in these funds

View

Short-term: Positive

Long-term: Positive

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Arbitrage Funds

Arbitrage funds seek to exploit market inefficiencies that get

manifested as mispricing in the cash (stock) and derivative markets

Availability of arbitrage positions very much depends on the market

scenario. A directional movement in the broader index attracts

speculators in the market while cost of funding makes futures

positions biased

Arbitrage funds are classified as equity funds as they invest into

equity share and equity derivative instruments. Since these are

classified as equity funds for taxation, dividends declared by the

funds are taxed at 10%. Capital gains tax will be applicable at 10% if

they are sold after a year

These funds can be looked upon as an alternative to liquid funds.

However, for these funds, returns totally depend on arbitrage

opportunities available at a particular point of time and investors

should consider reviewing the same before investing. Returns of

arbitrage funds are non-linear and, therefore, unsuitable for

investors who want consistent return across time period

Arbitrage funds should be used as a liquid investment and should

not be a major part of the investor’s portfolio. A range bound

market does not give ample room to create arbitrage positions

Preferred Picks

ICICI Prudential Equity - Arbitrage Fund

IDFC Arbitrage Fund

Kotak Equity Arbitrage Fund

SBI Arbitrage Opportunities Fund

(Refer to www.icicidirect.com for details of the fund)

View

Short-term: Neutral

Long-term: Neutral

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ICICI Securities Ltd. | Retail MF Research Page 12

Debt funds

Exhibit 13: Category average returns

6.8

6.9

6.1

6.2

4.0 4.4

3.8

3.6

3.0

0.8

2.5

6.7

6.7

6.2

6.2

4.5

4.3

3.6

3.3

1.1

-0.8

-1.1

7.02

7.21

7.26

7.36

7.70

6.82

7.36

6.74

6.50

5.56

6.15

-2

0

2

4

6

8

10

12

Liq

uid

Money M

arket

Ultra Short Term

Low

D

uratio

n

Credit R

isk

Short T

erm

Medium

D

uratio

n

Corporate B

ond

Dynam

ic B

ond

Long Term

Gilt

Returns (%

)

6 months 1 year 3year

Source: Crisil, ICICI Direct Research

Note : Returns as on September 18, 2018; All returns are compounded annualised

Exhibit 14: G-sec yield curve

7.40

8.05 7.927.86

7.31

7.73

8.158.10

6.9

7.2

7.5

7.8

8.1

8.4

1yr 3yr 5yr 10yr

Yie

ld (%

)

17-Sep-18 16-Aug-18

Source: Bloomberg

Exhibit 15: Corporate bond curve

8.68

9.06 9.03

8.73

8.27

8.56

8.67

9.05

8.0

8.3

8.6

8.9

9.2

1yr 3yr 5yr 10 yr

Yie

ld (%

)

14-Sep-18 16-Aug-18

Source: Bloomberg

Benchmark 10 year G sec yield near the 7.8% mark

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ICICI Securities Ltd. | Retail MF Research Page 13

Short term fixed income allocation (less than 1 year)

Investment into debt funds for short term investment horizon of less

than a year can be considered in the following categories:

a. Overnight funds – invest in securities having maturity of a day

b. Liquid funds – invest in securities having maturity up to 91 days

c. Ultra short funds – invest in securities having maturity between

three and six months

d. Low duration funds – invest in securities having maturity

between six and 12 months

e. Money market funds – invest in money market securities having

maturity up to a year

Among these categories, we believe that ultra short term funds and

low duration funds categories offer a relatively better investment

opportunity

Ultra short-term bond funds and low duration funds are an ideal

option to park money temporarily compared to overnight or liquid

fund categories. They offer higher return potential by investing a

higher proportion in a mix of corporate bonds and commercial

papers compared to overnight/liquid funds. At the same time, most

funds in these categories do not have exit load restrictions, thereby

making them liquid from an investors’s perspective

Money market funds are also a worthwhile option from liquidity and

credit quality perspective, particularly for conservative investors.

However, the return potential may be lower compared to ultra

short/low duration categories

Exhibit 16: Call rates below repo rate

5.6

5.8

6

6.2

6.4

6.6

6.8

7

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-1

8

%

Call rate

Source: Bloomberg, ICICI Direct Research

Exhibit 17: Short-term CP/CD yields

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Sep-1

6

Dec-16

Mar-17

Jun-17

Sep-1

7

Dec-17

Mar-18

Jun-18

Sep-1

8

%

3M CP 3M CD

Source: Bloomberg, ICICI Direct Research

Preferred Picks

Ultra Short Term

Aditya Birla SL Savings Fund

Franklin India Ultra Short Term Bond Fund

L&T Ultra Short Term Fund

Low Duration

L&T Low Duration Fund

Kotak Low Duration Fund

ICICI Pru Savings Fund

(Refer to www.icicidirect.com for details of the fund)

Positive View

Ultra-short term

Low Duration

Short term Commercial Paper (CP) and Corporate

Deposit (CD) rates have risen sharply in past few months

thereby offering a good opportunity in these segments

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Long term fixed income allocation (more than 1 year)

Investment into debt funds for long term investment horizon of

more than a year can be considered in following categories:

i. Short duration funds – invest in securities having duration

between one and three years

ii. Medium duration funds – invest in securities having duration

between one and four years

iii. Medium to long/long duration funds – invest in securities

having duration between four and seven years/more than

seven years, respectively. Funds in theses categories invest in

a mix of corporate debt and G-secs

iv. Dynamic bond funds - invest across duration

v. Corporate bond funds – invest in highest rated instruments

(AA+ and AAA)

vi. Credit risk funds – invest in below highest rated instruments

(below AA+)

vii. Gilt funds – invest in G-secs across maturity

Among these categories, we believe medium duration funds and

credit risk funds categories offer relatively better investment

opportunity. Short term funds are also a worthwhile option for

conservative investors. However, the return potential may be lower

compared to medium duration and credit risk categories due to

higher credit quality

In the medium duration category, many funds offer an optimum mix

of credit quality along with higher return potential. Credit quality in

this category is lower than short duration funds but higher than

credit risk category

Credit risk funds are more suitable for aggressive investors as they

fall within higher risk-higher return potential. However, few funds

are offering optimal mix of credit risk for reasonable return potential

and can be considered from a long term point of view

Exhibit 18: Income funds flows

8,390

-50,090

40,845

9,374

-60,151

-9,871

-9,799

-13,719 5

,220

-20,407

-23,119

-7,950

-6,520

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Net Inflo

ws

(| .C

r)

INCOME

Source: AMFI, ICICI Direct Research

Exhibit 19: AUM remains stable on consistent inflows

845484

858188

809965

855478

867736

808252

801405

791494

785553

790016

784822

760715

759479

600000

700000

800000

900000

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

| C

rore

Income

Source: AMFI, ICICI Direct Research

Recommended funds

Allocation to pure G-Sec or duration funds should be

avoided given their historical outperformance and G-sec

yield trading at the lower end of its historical range. Crisil

10-year Gilt index has delivered 38% return in the last

three years. It is likely the return will be significantly

decline, going forward

Medium Term Funds

Axis Strategic Bond Fund

DSP Bond Fund

UTI Medium Term Fund

Credit Risk Funds

Franklin India Credit Risk Fund

Aditya Birla SL Credit Risk Fund

Reliance Credit Risk Fund

(Refer www.icicidirect.com for details of the fund)

Positive View

Medium Duration

Credit Risk

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ICICI Securities Ltd. | Retail MF Research Page 15

Gold: Outlook anchored to Fed movement

Gold endured a flat month within the range of ~US$1175-1215 per

ounce. Starting August at US$1224 per ounce, prices briefly dipped

as low as US$1175 per ounce before recovering a bit to end August

at US$1200 per ounce and have remained around that level

thereafter. Thus, global prices are ~8% lower than in YTD terms

On the other hand, Indian prices, having remained largely flat at

~| 29900-30000 per 10 gram during August, have steadily risen

during the first two weeks of September, touching ~| 30600 per 10

gram on September 17

Geopolitical fears have resurfaced in recent months. Gold could

provide a safe haven in the short-term in the event of a risk off

environment. Worries surrounding tensions between US-Iran and

US-China could lend support to the yellow metal

The Fed held rates steady at its August meeting as expected.

Earlier, the Fed had raised rates thrice in 2017 and twice in 2018.

Structurally, a rate hike programme by the US Federal Reserve this

year and in following years along with other central banks like the

European Central Bank and the Bank of Japan scaling back stimulus

may prevent any sustained medium term rally in gold price

The US dollar continued to remain strong against a basket of major

currencies. The Dollar Index rose from an average of 94.3 in June to

94.6 in July and 95.4 in August. Dollar strength is negative for gold

since the metal is priced in that currency

Exhibit 20: Gold: Globally loses sheen

1100

1150

1200

1250

1300

1350

1400

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-1

8

Price ($/ounce)

Source: Bloomberg

Exhibit 21: Indian prices on stronger footing compared to global prices

28000

29000

30000

31000

32000

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-1

8

Price (|/10 grams)

Source: Bloomberg

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Model Portfolios

Equity funds model portfolio

Investors who are wary of investing directly into equities can still get

returns 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. These

portfolios have been designed keeping in mind various key parameters like

investment horizon, investment objective, scheme ratings, and fund

management.

Exhibit 22: Equity model portfolio

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 % Allocation % Allocation % Allocation

Franklin India Focused Equity Fund 20 - -

Principal Emerging Bluechip Fund - 20 20

HDFC Smallcap Fund 20 20 -

SBI Bluechip Fund - - 20

Kotak Standard Multicap Fund 20 20 -

HDFC Midcap Opportunities Fund 20 20 -

L&T Midcap Fund 20 - -

Mirae Asset India Equity Fund - 20 20

ICICI Prudential Bluechip Fund - - 20

Reliance Large Cap Fund - - 20

Total 100 100 100

Source: ICICI Direct Research

Exhibit 23: Model portfolio performance since inception

18.3%

17.0%16.4%

15.4%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

Aggressive Moderate Conservative BSE 100 TRI

%

Aggressive Moderate Conservative BSE 100 TRI

Source: Crisil Fund Analyser, ICICI Direct Research; CAGR performance as on 31 August 2018

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Debt funds model portfolio

We have designed three different mutual fund model portfolios for different

investment duration viz. less than six months, six months to one year and

above one year. These portfolios have been designed keeping in mind

various key parameters like investment horizon, interest rate scenarios,

credit quality of the portfolio and fund management, etc.

Exhibit 24: Debt funds model portfolio

Objective Liquidity

Liquidity with

moderate return Above FD

Review Interval Monthly Monthly Quarterly

Funds Allocation

Aditya Birla SL Savings Fund 20 20

ICICI Pru Savings Plan 20

Franklin India Ultra Short Bond Fund 20

DSP Bond Fund 20 20

Kotak Low Duration Fund 20 20

Franklin India Corporate Debt Fund 20

L&T Ultra Short Term Fund 20 20

Aditya Birla Sun Life Credit Risk Fund 20

UTI Medium Term Fund 20

L&T Low Duration Fund 20 20

Total 100 100 100

% Allocation

Source: ICICI Direct Research

Exhibit 32: Model portfolio performance since inception

8.1% 8.2%8.4%

7.7% 7.9% 8.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

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

%

Portfolio Index

Source: Crisil Fund Analyser, ICICI Direct Research; CAGR performance as on 31 August 2018

*Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; six months-one year – Blended Index with 50% weight to

Crisil Liquid Index, 50% weight to Crisil Short Term Bond Fund Index; Above 1 year: Crisil Short Term Bond Fund

Index

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Top Picks

Exhibit 33: Category wise top picks

Largecaps ICICI Pru Focused Bluechip Fund

SBI Bluechip Fund

Reliance Large Cap Fund

Large and Midcaps DSP Blackrock Equity Opportunities Fund

IDFC Core Equity Fund

Principal Emerging Bluechip Fund

Multicaps HDFC Equity Fund

Kotak Standard Multicap Fund

Mirae Asset India Equity Fund

Midcaps HDFC Midcap Opportunities Fund

Kotak Emerging Equity Fund

L&T Midcap Fund

Smallcaps L&T Emerging Businesses Fund

Reliance Small Cap Fund

HDFC Small Cap Fund

Focused ICICI Pru Focused Equity Fund

Franklin India Focused Equity Fund

Reliance Focused Equity Fund

ELSS Aditya Birla Tax Relief 96 Fund

DSP Blackrock Tax Saver Fund

IDFC Tax Advantage Fund

Aggressive Hybrid HDFC Hybrid Equity Fund

ICICI Pru Equity & Debt Fund

DSP Equity and Bond Fund

Equity Funds & Equity-oriented Funds

Category Fund Category Comment

Overnight / Liquid / Ultra Short Term Aditya Birla SL Savings Fund Volatility - low

Franklin India Ultra Short Bond Fund Investment horizon - 0-6m

L&T Ultra Short Term Fund

Low Duration / Money Market L&T Low Duration Fund Volatility - low

Kotak Low Duration Fund Investment horizon - 0-12m

ICICI Pru Savings Fund

Short Term HDFC Short Term Debt Fund Volatility - low

Aditya Birla SL Short Term Opportunities Fund Investment horizon - more than 1 year

L&T Short Term Bond Fund Credit risk - low

Medium Term UTI Medium Term Fund Volatility - medium

Axis Strategic Bond Fund Investment horizon - more than 1 year

DSP Bond Fund Credit risk - medium

Medium to Long Term / Long Term Aditya Birla SL Income Fund Volatility - high

ICICI Pru Bond Fund Investment horizon - more than 1 year

Reliance Nivesh Lakshya Fund Credit risk - low

Dynamic Bond Fund Aditya Birla SL Dynamic Bond Fund Volatility - high

UTI Dynamic Bond Fund Investment horizon - more than 1 year

IDFC Dynamic Bond Fund Credit risk - medium

Corporate Bond Franklin India Corporate Debt Fund Volatility - low

HDFC Corporate Bond Fund Investment horizon - more than 1 year

Aditya Birla SL Corporate Bond Fund Credit risk - low

Credit Risk Franklin India Credit Risk Fund Volatility - medium

Aditya Birla SL Credit Risk Fund Investment horizon - more than 1 year

Reliance Credit Risk Fund Credit risk - high

Gilt IDFC G-Sec Fund - Investment Plan Volatility - high

Aditya Birla SL G-Sec Fund Investment horizon - more than 1 year

ICICI Pru Gilt Fund Credit risk - low

Debt Funds

(Refer www.icicidirect.com for details of the fund)

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ICICI Securities Ltd. | Retail MF Research Page 19

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st

Floor, Akruti Trade Centre,

Road No. 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]

Disclaimer

ANALYST CERTIFICATION

We, Sachin Jain, CA, and Jaimin Desai, CA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect

our views about the subject issuer(s) or Funds. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) AMFI Regn. No.: ARN-0845. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities

Limited Sebi Single Registration is INZ000183631 for stock broker. Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate,Mumbai - 400020, India. ICICI

Securities is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock broking and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of

ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital

fund management, distribution of financial products etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading distributors of Mutual Funds and participate in distribution of Mutual Fund Schemes of almost all AMCs in India.

The selection of the Mutual Funds for the purpose of including in the indicative portfolio does not in any way constitute any recommendation by ICICI Securities Limited (hereinafter referred to as ICICI

Securities) with respect to the prospects or performance of these Mutual Funds. The investor has the discretion to buy all or any of the Mutual Fund units forming part of any of the indicative portfolios

on icicidirect.com. Before placing an order to buy the funds forming part of the indicative portfolio, the investor has the discretion to deselect any of the units, which he does not wish to buy. Nothing in

the indicative portfolio constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the investor's specific circumstances.

The details included in the indicative portfolio are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its

accuracy or completeness guaranteed. The funds included in the indicative portfolio may not be suitable for all investors, who must make their own investment decisions, based on their own

investment objectives, financial positions and needs.

This may not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment risks. 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 performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may be holding all or any of the units included

in the indicative portfolio from time to time as part of our treasury management. ICICI Securities Limited is not providing the service of Portfolio Management Services (Discretionary or Non

Discretionary) to its clients.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Kindly note that such research recommended funds in indicative portfolio are not based on individual risk profile of each customer unless a customer has opted for a paid Investment Advisory Service

offered by I-Sec.

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

The information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any

other person or to the media or reproduced in any form, without prior written consent of ICICI Securities Limited. The contents of this mail are solely for informational purpose and may not be used or

considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. While due care has been taken in

preparing this mail, I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance

thereon. This mail/report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where

such distribution, publication, availability or use would be contrary to law, regulation or which would subject I-Sec and affiliates to any registration or licensing requirement within such jurisdiction.

ICICI Securities and/or its associates receive compensation/ commission for distribution of Mutual Funds from various Asset Management Companies (AMCs). ICICI Securities host the details of the

commission rates earned by ICICI Securities from Mutual Fund houses on our website www.icicidirect.com. Hence, ICICI Securities or its associates may have received compensation from AMCs

whose funds are mentioned in the report during the period preceding twelve months from the date of this report for distribution of Mutual Funds or for providing marketing advertising support to these

AMCs. ICICI Securities also provides stock broking services to institutional clients including AMCs. Hence, ICICI Securities may have received brokerage for security transactions done by any of the

above AMCs during the period preceding twelve months from the date of this report.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive

any compensation or other benefits from the AMCs whose funds are mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities

nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Sachin Jain, CA, and Jaimin Desai, CA, Research Analysts of this report have not received any compensation from the Mutual Funds house whose funds are mentioned in the report

in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or is associates may be holding all or any of the units included in the indicative portfolio from time to time as part of our treasury management. Hence, ICICI Securities or its associates

may own 1% or more of the units of the Mutual Funds mentioned in the report as of the last day of the month preceding the publication of the research report.

Research Analysts or their relatives of this report do not own 1% or more of the units of the Mutual Funds mentioned in the report as of the last day of the month preceding the publication of the

research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies/ AMCs including the AMCs

whose funds are mentioned in this report or may have invested in the funds mentioned in this report .

ICICI Securities also distributes Mutual Fund Schemes of ICICI Prudential Asset Management Company which is an ICICI Group Company, scheme details of which might also be appearing in the report

above. However, the transactions are executed at Client's sole discretion and Clients make their own investment decisions, based on their own investment objectives, financial positions and needs..

It is confirmed that Sachin Jain and Jaimin Desai, Research Analysts do not serve as an officer, director or employee of the AMCs whose funds mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies/funds mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Research Analysis activities.

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distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction.

The funds described herein may or may not be eligible for subscription in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to

inform themselves of and to observe such restriction.