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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
May 20, 2015
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 industry synopsis ............................................................................ 4 MF Category Analysis............................................................................ 5
Equity funds...................................................................................... 5
Equity diversified funds....................................................................... 6 Equity Infrastructure fund.................................................................... 7 Equity Banking Funds.......................................................................... 7 Equity FMCG........................................................................................ 8 Equity Pharma Funds .......................................................................... 8 Equity Technology Funds.................................................................... 9
Exchange Traded Funds (ETF) ....................................................... 10 Balanced funds ............................................................................... 11 Monthly Income Plans (MIP) .......................................................... 11 Arbitrage Funds .............................................................................. 12 Debt funds ...................................................................................... 13
Liquid Funds ...................................................................................... 14 Income funds..................................................................................... 15 Gilt Funds ........................................................................................ 16 Gold ETFs: Medium term outlook benign......................................... 17 Model Portfolios .................................................................................. 18
Equity funds model portfolio.......................................................... 18 Debt funds model portfolio ............................................................ 19
Top Picks.............................................................................................. 20
May 20, 2015
ICICI Securities Ltd. | Retail MF Research
Page 2
Equity Markets Update
Indian equity markets were extremely volatile during April. They witnessed a sharp correction on lower-than-expected Q4 results, concerns over weak monsoons, uncertainty surrounding applicability of minimum alternative tax (MAT) on FIIs, a sharp rise in global commodity prices, particularly crude oil and weak global markets
Expectations in domestic markets were running high. Therefore, some profit was expected. However, the fall was aided by global weakness
The results declared so far continue to remain subdued with lower-than-expected results from IT, cement and a few of the PSU banks. However, private sector bank results announced so far have shown a healthy performance with reduced concerns over asset quality
Indian markets have been underperforming other global markets in the last few month after being among the best performing markets in 2014 as investors looked to book some profit
Overall, inflation continues to trend down with both latest CPI and WPI data prints coming in below market expectations. CPI April 2015 came in at 4.87% while WPI softened to -2.65%. Prices of vegetables have been declining in the last few months. The same coupled with a high base led food inflation to ease to 5.1%
The recent market correction has been led by a sell-off from FIIs, who sold off equities worth | 16000 crore in the recent correction, a change in the recent trend
Outlook
Although earnings growth may remain muted in the next couple of quarter, it is expected to improve significantly in FY17 and FY18 on the back of an improvement in sales growth, decline in interest rates and reduced input cost of commodities. The same may keep market sentiments upbeat
The structural medium to long term outlook for the Indian equity market remains positive on lower commodity prices, particularly crude oil, expectations of further rate cuts by the RBI and policy announcements by the government to spur investments and, consequently, overall growth
We believe price wise correction is approaching maturity as benchmarks have already corrected over 10% from recent life-time highs (30024, 9119) and are poised near the key medium-term value area of 27000-26300, 8185-8000, which is also the confluence of many technical support areas
We expect markets to remain in consolidation mode and undergo a base building process in the coming month while stock specific activity will dominate trade as the result season peters out
Long term investors should utilise the recent correction to start accumulating and put money systematically at current levels as well as on any sharp correction in the near future
CNX Nifty: Volatility increases in the last few months
6500
7000
7500
8000
8500
9000
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Source: Bloomberg, ICICIdirect.com Research
Negative returns across indices…
-3.9
-4.7 -4.9
-5.0
-6.4
-7.0-6.0-5.0-4.0-3.0-2.0-1.00.0
BSEMidcap
BSESensex
BSE 500 BSE 100 BSESmallCap
Retu
rn (%
)
Source: Bloomberg, ICICIdirect.com Research Returns : April 16, 2015– May 15, 2015
…Reality and Cap goods witness largest fall
-1.3
-2.5
-5.3 -4
.7
-4.7
-6.2
-6.8
-10.
3
-1.3
-7.2
-7.5
-7.5
-12
-10
-8
-6
-4
-2
0
Met
al
Auto
Bank
ing
Oil &
Gas
PSU
Sens
ex
FMCG
Con.
Dura IT
Heal
thca
re
Cap.
Good
s
Real
ity
Retu
rn (%
)
Source: Bloomberg, ICICIdirect.com Research Returns : April 16, 2015– May 15, 2015
Research Analyst
Sachin Jain [email protected] Sheetal Ashar [email protected]
ICICI Securities Ltd. | Retail MF Research
Page 3
Debt Markets Update
Globally, debt markets witnessed a sharp sell-off last month as market sentiments turned sharply negative after comments from the US Federal Reserve Chair Janet Yellen warning of high valuations in both global debt as well as equity markets. A sharp rise in crude oil prices by more than 40% in the last three months from US$45/barrel to US$64/barrel also raised concerns over inflation and the impact on the global economy
The sharp fall in global debt market benchmark yields was also on the back of a sustained unprecedented rally in the last few years. German 10 year G-Sec yields, which rallied from 1.9% in January 2014 to 0.07% in April 2015, witnessed a correction to 0.6% in the last few days. Similar was the case with many other European nations
Indian bond yields were always under pressure as they touched 8% again on concerns over the impact of unseasonal rains and as rising concerns over below normal monsoons added to concerns on a sharp rise in crude oil prices and its impact on inflation. No further hike in the FII debt limit in government securities by the government also weighed on sentiments
Credit spreads, however, remain more stable while AAA spreads remain at around 50 bps
CPI inflation for March 2015 was at 5.17% with WPI at -2.3%. Both moderated faster-than-expected on easing food inflation. Markets had widely expected food inflation to inch up as a consequence of the crop damage caused by unseasonal rains. On the contrary, CFPI moderated from 6.8% to 6.1%, which also dragged the headline CPI lower. Going forward, we expect CPI to average close to 5% in FY16E partly on account of the base effect
Outlook
The interest rate outlook in the next year or two remains promising with expectations of a downward shift in system interest rates and the yield curve across duration. The RBI’s 4% CPI inflation target, progressive reform oriented government, extremely benign global interest rate environment, stable global commodities and stable currency will eventually allow RBI to resort to multiple rate cuts over the next one or two years
We remain positive on the Indian debt markets as it is well placed to benefit from the structural improvement in macroeconomic data and expect the positive undertone of the debt market to sustain, going forward
The recent sell-off in yields of government securities provide an investment opportunity for aggressive investors to add duration funds with a one or two year investment horizon
Credit opportunities funds remain better placed for stable returns and lower volatility
G-Sec yields turned volatile after having rallied significantly in the last one year
7.6
8.0
8.4
8.8
9.2
9.6
Apr-1
4M
ay-1
4M
ay-1
4Ju
n-14
Jul-1
4Au
g-14
Sep-
14Oc
t-14
Nov
-14
Dec-
14Ja
n-15
Feb-
15M
ar-1
5Ap
r-15
Yiel
d (%
)
Source: Bloomberg, ICICIdirect.com Research
Fiscal roadmap Fiscal Deficit as % of GDP TargetFY15 (Revised Estimates) 4.1FY16 3.9FY17 3.5FY18 3.0
Source: RBI, ICICIdirect.com Research
G-sec yield curve moves up
8.0 7.9 8.0 7.97.9
7.8 7.8 7.8
7.4
7.6
7.8
8.0
1yr 3yr 5yr 10yr
Yiel
d (%
)
15-May-15 16-Apr-15
Source: Bloomberg, ICICIdirect.com Research
Corporate bond yield curve flattish
8.58.5 8.6 8.5
8.4 8.3 8.38.4
8.2
8.3
8.4
8.5
8.6
1yr 3yr 5yr 10 yr
Yiel
d (%
)
15-May-15 16-Apr-15
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 4
MF industry synopsis In April 2015, assets under management (AUM) grew 25% YoY to
| 1186364 crore with share of equity oriented funds at 29% from 20% in April 2014
Net inflows in MF schemes were to the tune of | 110569 crore in April 2015. Money market funds garnered | 101592 crore as compared to outflow of | 112810 crore in March 2015
Exhibit 1: Equity AUM pick-up pushes AUM growth
1011
102
9747
15
1006
452
1012
824
9594
15
1095
653
1090
309
1181
356
1202
196
1082
807
9453
21
1051
343
1186
364
15%16%
20%
32% 32%29%
31%
23%
27%31% 31% 31%
25%
0%
5%
10%
15%
20%
25%
30%
35%
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
| Cr
ore
0
200000
400000
600000
800000
1000000
1200000
1400000
Total AUM (RHS) Growth (YoY)
Source: AMFI, ICICIdirect.com Research Exhibit 2: Share of equity oriented funds at 29%
AUM
Equity, 345129, 29%
Balanced, 27015, 2%
Other ETFs, 8822, 1%
FOF(Overseas), 2491, 0%
Income, 514628, 44%
Money Market, 266722, 22%
Gilt, 14739, 1%
Gold ETFs , 6818, 1%
Source: AMFI, ICICIdirect.com Research
Exhibit 3: HDFC AMC maintain top position, Franklin Templeton record highest YoY growth
1616
34
1485
59
1371
24
1197
52
9275
1
7494
2
7044
4
5171
5
4137
8
3783
8
1129
63
1068
22
1035
42
8905
1
7423
3
6549
9
4540
4
4134
9
3307
9
3163
1
2500050000
75000100000
125000150000
175000200000
HDFC
MF
Ipru
MF
Relia
nce
MF
Birla
Sunl
ife M
F
UTI M
F
SBI M
F
Fran
klin
Tem
pelto
n
IDFC
MF
Kota
kM
ahin
dra
DSP
Blac
kRoc
k
| Cr
Mar- 15 Mar- 14
Exhibit 4: HDFC, ICICI Pru highest contributors to increase in AAUM
HDFC MF17%
Reliance MF12%
Ipru MF15%
Birla Sunlife MF11%UTI MF
7%
SBI MF3%
Franklin Tempelton MF
9%
Kotak Mahindra MF3%
DSP BlackRock MF2%
IDFC MF4%
Others17%
Source: AMFI, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 5
MF Category Analysis
Equity funds Midcap funds have significantly outperformed large cap funds in the
last one year Among sector funds, pharma funds delivered highest returns in the last
one year Exhibit 5: Midcap clear winners (returns as on May 15, 2015)
58.8
58.4
35.4
34.2
26.2
25.7
25.3
22.8
33.2 35.1
24.3
20.5
22.2
22.2 24
.7
21.3
18.7 24
.1
13.5
6.1 12
.2
11.7 14
.3
24.3
0
10
20
30
40
50
60
70
Mid cap Pharma Diversified Infrastructure Large Cap Banking Technology FMCG
Retu
rns
(%)
1year 3 Year 5year
Source: Crisil Fund Analyser, ICICIdirect.com Research ; Returns over one year are compounded annualised returns
Exhibit 6: Inflow into equity funds at near record high levels
-1935-160
2022
7153
10845
5364
794656004963
665163245840
848110584
-4500-2500
-50015003500550075009500
1150013500
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
w (
| Cr
)
Net inflow (Equity + ELSS)
Source: AMFI, ICICIdirect.com Research
Exhibit 7: Equity AUM soars led by record inflows and market rally
1911
97
1922
46
2172
34
2410
24
2516
30
2667
42
2803
97
2971
60
3146
84
3194
78
3409
36
3457
39
3451
39
3451
29
150000200000250000300000350000400000
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
| Cr
ore
Equity +ELSS
Source: AMFI, ICICIdirect.com Research
Exhibit 8: \Deployment of equity funds
Allocation Banks Software Pharma Auto FinanceConsumer
Durables
Industrial Capital Goods
ConstructionIndustrial Products
Petroleum
| crore 74810 34100 27587 24544 22425 18221 15625 15239 14044 13472
% of total 20.7 9.4 7.6 6.8 6.2 5.0 4.3 4.2 3.9 3.7
Source: Sebi, ICICIdirect.com Research, Sector Classification (as per Amfi)
Midcap funds gained on multiple re-rating as sentiments improved on growth prospects post formation of the new stable government at the centre
Exposure to banks and finance stocks together account for the highest proportion with 21% of equity assets followed by technology and pharma
ICICI Securities Ltd. | Retail MF Research
Page 6
Equity diversified funds
Equity diversified funds delivered healthy returns in the last one year. Midcap funds were outperformers with 59% one year average return followed by multicap funds with one year average return of 35% and then large caps with 26% return against BSE Sensex return of 14%
Indian equity markets were extremely volatile during April and May 2015. It witnessed a sharp correction on lower-than-expected Q4 results, concerns over weak monsoons, uncertainty surrounding applicability of minimum alternative tax (MAT) on FIIs, a sharp rise in global commodity prices, particularly crude oil and weak global markets
Although earnings growth may remain muted in the next couple of quarters, it is expected to improve significantly in FY17 and FY18. The same may keep market sentiments upbeat
The structural medium to long term outlook for Indian equity markets remains positive on lower commodity prices, particularly crude oil, expectations of further rate cuts by RBI and policy announcements by the government to spur investments and, consequently, overall growth
Volatility, however, in the near term is likely to increase on global cues, especially at current higher levels where the Sensex is trading at 16.6x FY16E EPS of | 1674 and 14x FY17E EPS of | 1972. Investors should avoid investing lumpsum amounts at current levels. However, any sharp correction should be utilised to accumulate following a buy on dips strategy
Caution is required in midcap and small cap mutual funds as they have significantly outperformed large caps in the current market rally since September 2013. Therefore, if the overall market volatility increases, midcap and small caps may underperform
Recommended funds Large cap
Axis Equity Birla Sunlife Frontline Equity ICICI Prudential Focused Bluechip Equity UTI Opportunities Fund
Diversified
Franklin India Prima Plus Fund ICICI Prudential Dynamic Plan Reliance Equity Opportunities
Midcap
HDFC Mid-Cap Opportunities Fund ICICI Prudential Discovery Fund Franklin India Smaller Companies Fund SBI Magnum Global Fund
(Refer to www.icicidirect.com for details of the fund)
View Short term: Neutral Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 7
Equity Infrastructure fund After a clear mandate, the government unveiled its 10-year agenda to
focus on infrastructure, especially in road & railways like the dedicated freight corridor (US$80 billion), Diamond Quadrilateral (Mumbai Ahmedabad bullet train preliminary cost pegged at | 65,000 crore) and Sagar Mala project (| 1 lakh crore project). This lends comfort there will be tangible opportunities in the long run for infrastructure players
Secondly, the government’s progress towards speeding up the decision making process towards low hanging fruits/stuck project worth | 25 lakh crore would not only lead to better execution but also improve the liquidity of various infrastructure projects
Also, increase in allocation to road sector & ports, rationalisation of capital tax gains regime for sponsors & tax pass through status for infrastructure investment trusts (InvITs) and establishment of National Investment and Infrastructure Fund (NIIF) with initial annual outflow of | 20,000 crore in the recent Union Budget would pave the way for greater opportunities for various infrastructure players
Thirdly, the dovish tone from the RBI towards interest rate would also lead to better liquidity and savings on interest outgo for infrastructure
Fourthly, with the RBI's recent action allowing banks to issue long term bonds for infrastructure with benefits such as relaxation of CRR & SLR norms and longer duration of bonds, we believe the pressure to fund infrastructure projects on developers would ease. Hence, cost of funds and strain on cash flow are likely to reduce, going ahead
While valuations for the infrastructure sector have moved from distressed to reasonable, we still see a significant scope for a re-rating of the sector
Infrastructure funds, therefore, can yield alpha over the next two to three years time horizon
Recommended funds
Franklin Build India Fund HDFC Infrastructure Fund ICICI Prudential Infrastructure Fund
Refer to www.icicidirect.com for
details of the fund
Equity Banking Funds In the last two or three quarters, excluding the recent fall in banking
stocks, private banks have performed better on the bourses compared to their PSU peers. Private banks have managed their asset quality and operational performance well despite the economy failing to provide much cheer. This is owing to their focus on the retail segment of the business, which has provided private banks with growth and healthy RoEs. PSU banks, on the other hand, continue to reel under asset quality pressure, thus impacting their P&L performance heavily
We believe that, going ahead, asset quality woes and, consequently,
growth concerns for PSU banks will continue for a bulk of FY16E. Hence, one should consider PSU bank stocks for at least a two-year horizon. Though private bank multiples have got re-rated upwards, a steady operational performance ahead should provide investors with healthy return opportunities for the next two or three years at the CMP. The expected turnaround in the economy, going ahead, should augur well for the banking sector, as a whole. Hence, we remain positive on the sector on a long term basis
View Short-term: Positive Long-term: Positive
View Short-term: Neutral Long-term: Positive
Recommended funds
ICICI Prudential Banking & Financial Services Reliance Banking Fund UTI Thematic - Banking Sector Fund
Refer to www.icicidirect.com for
details of the fund
ICICI Securities Ltd. | Retail MF Research
Page 8
Equity FMCG Volume growth for FMCG remained dismal as a recovery in urban
demand remained slows. Simultaneously, rural demand has also been impacted due to unseasonal rains. With the aggressive price cuts by FMCG companies, sales growth is expected to remain muted. However, considering the sharp decline in commodity prices, most companies would continue to witness a 100-300 bps improvement in operating margins along with an increase in A&P spend over the next few quarters
With the expected implementation of GST by FY17E, the sector would be the biggest beneficiary
Recommended funds
ICICI Prudential FMCG Fund SBI FMCG Fund
Refer to www.icicidirect.com
for details of the fund
Equity Pharma Funds
Strong visibility on the back of a good product basket and a reasonable base business growth continue to attract buying interest in the pharma sector despite premium valuations
US and Indian formulations remain the main growth drivers for the sector on the back of a strong pipeline and incremental product launches. Healthy operating margins, relatively low leverage and strong return ratios are some of the other attributes for most pharma players
Recommended funds
Reliance Pharma Fund SBI Pharma Fund UTI-Pharma & Healthcare
Refer to www.icicidirect.com
for details of the fund
View Short-term: Neutral Long-term: Positive
View Short-term: Neutral Long-term: Neutral
ICICI Securities Ltd. | Retail MF Research
Page 9
Equity Technology Funds
Tier-I IT companies reported weak Q4FY15 earnings as constant currency revenues grew 1.3% QoQ vs. 3.8% in Q3 and 1.7% in Q4FY14. Company specific headwinds (select verticals and clients) coupled with cross currency headwinds dragged overall revenue growth. However, the management commentary on FY16E growth was upbeat led by healthy deal signings and order backlog
Operationally, Europe continues to see demand uptick in cost-optimisation deals while discretionary spending remains healthy in the US. Insurance, telecom and oil & gas verticals are structurally challenged and seeing a reduction in capex and discretionary spends
Upsides could be in line with earnings upgrades given blended valuations are at ~15.5x FY17E. However, sharp sell-offs should be used to accumulate given longer-term growth prospects
Recommended funds
ICICI Prudential Technology Fund DSPBR Technology fund
Refer to www.icicidirect.com for
details of the fund
View Short-term: Neutral Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 10
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 0.50-1.00% in comparison to an index fund. The expense ratio for ETFs is in the range of 0.50-0.75% excluding brokerage while for index funds the expense ratio varies in the range of 1.0-1.5%. However, brokerage (which varies) is applicable on ETFs while there are no entry loads now on index funds
The tracking error, which explains the 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
There are over 400 ETFs 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 in that asset class
Volumes are higher only in the Goldman Sachs Benchmark ETFs and tracking error is also lowest at 0.01%. Therefore, it is our top pick for investors wanting Nifty-linked returns
CPSE ETF is a new entry in the Goldman Sachs ETF offering. The ETF invests in selective 10 PSU stocks and has been listed on the exchange since April. It has delivered healthy 45% return since its launch. Also, bonus units at the end of the year will also provide additional benefit
Exhibit 9: CPSE ETF leads higher inflows
3087
-1213
576
-133
211 51
-439
429 492773
128
752 623
-579-1500-1000
-5000
500100015002000250030003500
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
Exhibit 10: AUM also sees jump
4528
3704 48
29
5048
5083
5239
4737 54
65 5997 67
02
7056 77
95
8060
7404
0
2000
4000
6000
8000
10000
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
| Cr
ore
Other ETFs
Source: AMFI, ICICIdirect.com 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...
ICICI Securities Ltd. | Retail MF Research
Page 11
Balanced funds 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 one year become tax free. Also, dividends declared by funds are tax free
In case you separately invest 35% of your 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
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 65% participation on further upsides
Exhibit 11: Strong inflow…
-402-108
732
20751789
12351491
1183
-83
185
348 448879
835
-1000
-500
0
500
1000
1500
2000
2500
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
Exhibit 12: …leads to AUM growth
1679
3
1337
0
1472
8
1591
4
1621
7
1729
3
1827
7 2108
0
2276
9
2449
0
2579
2
2650
7
2636
8
2701
5
13000
18000
23000
28000
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
| Cr
ore
Balanced
Source: AMFI, ICICIdirect.com Research
Recommended funds
ICICI Prudential Balanced - Advantage Fund
HDFC Balanced Fund
Tata Balanced Fund
(Refer to www.icicidirect.com for details of the fund)
Monthly Income Plans (MIP) An MIP offers investors an option to invest in debt with some
participation in equity, ~10-25% of the portfolio. They are suitable for investors who seek higher return from a debt portfolio and are comfortable taking nominal risk. The debt corpus of the portfolio provides regular income while the equity portion of the fund provides alpha. However, returns can also get eroded by a fall in equities
MIPs can be classified into aggressive MIP and conservative MIP based on its equity allocation. Risk averse investors should invest in MIPs with lower equity allocation to avoid capital erosion
The change in taxation announced in the Union Budget 2014, shall be applicable to MIP funds (refer to debt funds section for details)
Recommended funds
Birla Sun Life MIP II - Savings 5 Plan
ICICI Prudential MIP 25
DSPBR MIP 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: Neutral
View Short-term: Neutral Long-term: Positive
MIP should be a preferred debt investment for funds that need to be parked for over two years
ICICI Securities Ltd. | Retail MF Research
Page 12
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 depends very much on the market scenario. A directional movement in the broader index attracts speculators in the market and 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 tax free. No capital gains will be applicable 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
Availability of arbitrage positions depends very much on the market scenario. Directional movement in the broader index attracts speculators in the market while cost of funding makes future positions biased
In case of positive movement, long build-up in futures puts pricing in an upward bias and creates a window for direct arbitrage positions
On the other hand, negative bias attracts fresh sellers in the market and speculators try to sell the stock much cheaper than theoretical prices. In such situations, reverse arbitrage opportunities arise
On the other hand, a range bound market does not give ample room to create arbitrage positions
Recommended funds
ICICI Prudential Equity - Arbitrage Fund – Regular IDFC Arbitrage Fund - (Regular) Kotak Equity Arbitrage Fund SBI Arbitrage Opportunities Fund
(Refer to www.icicidirect.com for details of the fund)
View Short-term: Positive Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 13
Debt funds Exhibit 13: Category average returns
8.2 8.7
8.8
8.6 9.
7
9.19.6
11.5
9.010
.1
12.6
9.1
8.3 8.6 8.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
6 months 1 year 3year%
Income UST Income ST Income LT Gilt Funds Liquid
Source: ACE MF, ICICIdirect.com Research Note : Returns as on May 15, 2015; Returns over one year are compounded annualised returns
Exhibit 14: Deployment of funds: April 2015
CP Bank CD
Bank CD
Bank CD
Corporate Debt
0
5000
0
1000
00
1500
00
2000
00
2500
00
3000
00
3500
00
4000
00
4500
00
Less than 90 days
90 days to 182days
182 days to 1 year
1 year and above
Government Securities
CP
Bank CD
Treasury Bills
CBLO
Other Money MarketInvestmentsCorporate Debt
PSU Bonds
Securitised Debt
Bank FD
Source: SEBI, ICICIdirect.com Research Note : Holding as percentage of total AUM
Exhibit 15: G-Sec yield curve
8.07.9
8.0 7.97.9
7.8 7.8 7.8
7.5
7.7
7.9
8.1
1yr 3yr 5yr 10yr
Yiel
d (%
)
15-May-15 16-Apr-15
Source: Bloomberg, ICICIdirect.com Research
Exhibit 16: Corporate bond curve
8.5
8.5 8.68.5
8.48.3 8.3
8.4
8.28.38.38.48.48.58.58.68.6
1yr 3yr 5yr 10 yr
Yiel
d (%
)
15-May-15 16-Apr-15
Source: Bloomberg, ICICIdirect.com Research
Short-term (credit opportunities) funds deliver better returns over a longer period and are more consistent performers while a drop in yields to 7.70% led gilt funds to outperform
Mutual fund investments into money market instrument increased. They were especially major lenders under the CBLO
ICICI Securities Ltd. | Retail MF Research
Page 14
Liquid Funds Liquid fund returns moderated to 8.3-8.7% pre tax from over 9% earned
in the previous year The Reserve Bank’s pro-active liquidity management operations
ensured that Call rates stayed range bound around the policy rate (7.5%), reducing day-to-day volatility. The CBLO rates also hovered in the 8-7.5% range. With an improvement in liquidity conditions, the certificate of deposit and commercial paper rates in the three month bracket also eased by 80 bps to the 8.3-8.7% range from 9.1-9.3%. This led to a moderation in liquid fund returns
For less than a year, individuals in the higher tax bracket should opt for dividend option as the dividend distribution tax @ 28.325% is marginally lower. Also, though the tax arbitrage has reduced, they still earn better pre-tax returns over bank savings (3-4%) and current accounts (0-3%)
Changes in taxation rules announced in Union Budget 2014 are also applicable to liquid funds, which may make them vulnerable to redemption pressures, as post tax returns in less than a three-year period get reduced for individuals falling in the higher tax bracket (30% tax slab) and corporate and returns may, to that extent, be lower
Exhibit 17: Call rates near repo rate
6
7
8
9
10
11
12
Apr-1
4M
ay-1
4Ju
n-14
Jul-1
4Au
g-14
Sep-
14Oc
t-14
Nov
-14
Dec-
14Ja
n-15
Feb-
15M
ar-1
5Ap
r-15
May
-15
%
Call rate
Source: Bloomberg, ICICIdirect.com Research
Exhibit 18: …CP/CD yields again increases
8.0
8.5
9.0
9.5
10.0
Apr-1
4M
ay-1
4Ju
n-14
Jul-1
4Au
g-14
Sep-
14Oc
t-14
Nov
-14
Dec-
14Ja
n-15
Feb-
15M
ar-1
5Ap
r-15
May
-15
%
3M CD 3M CP
Source: Bloomberg, ICICIdirect.com Research
Exhibit 19: Redemption may take place on increase in holding period
1238
75
2201
0
-676
97
25,5
89
-5,8
64
-67,
318
100,
611
-52,
460
-50,
786
85,8
48
101,
592
-117
354
8,78
4
-112
,810
-200000-160000-120000
-80000-40000
040000
80000120000160000
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
Exhibit 20: AUM increases in April
1332
80
2593
10
2827
00
2159
95
2442
20
2450
35
1845
25
2788
07
2281
49
1784
91
2653
58
2760
70
1625
62
2667
22
80000
130000
180000
230000
280000
330000
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
| Cr
ore
Money Market
Source: AMFI, ICICIdirect.com Research
Recommended funds
HDFC Cash Management Fund - Savings Plan SBI Magnum InstaCash Reliance Liquid Fund - Treasury Plan
(Refer to www.icicidirect.com for details of the fund)
View Neutral
ICICI Securities Ltd. | Retail MF Research
Page 15
Income funds In the income funds category, long term debt funds outperformed
delivering 12% absolute return in last one year (as on May 15, 2015)
We continue to remain positive on the Indian debt markets as they are well placed to benefit from a structural improvement in macroeconomic data and expect the positive undertone of the debt market to sustain
The corporate bond market segment continues to be attractive over the medium term, especially with expectations of an improvement in corporate profitability and an improved economic outlook. The credit opportunities funds are better placed due to stable returns and a change in taxation warranting a minimum holding period of three years to avail indexation benefits.
We prefer credit opportunities fund in the income funds category as a flat corporate bond curve offers an opportunity in the one to three year corporate bonds segment
The recent sell-off in yields of government securities provide an investment opportunity for aggressive investors to add duration funds with a one or two year investment horizon
Exhibit 21: Outflow indicates profit booking
-992
7
1009
6
1307
-10,
080
-12,
696
-10,
567
15,4
46 19,8
44
-1,6
32
12,1
63
-152
-8,9
27
-2,5
10
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
ws
(| .C
r)
Source: AMFI, ICICIdirect.com Research
Exhibit 22: AUM steady
4606
71
4580
09
4738
87
4789
82
4716
51
4611
14
4544
95
4759
68
5005
95
5021
54
5202
34
5223
66
5146
28
5157
73
300000350000400000450000500000550000
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
| Cr
ore
Income
Source: AMFI, ICICIdirect.com Research
Recommended funds
Ultra Short Term Funds Birla Sun Life Savings Fund Franklin India Ultra Short Term Bond Fund ICICI Prudential Flexible income
Short Term Funds Birla Sunlife short term fund HDFC Short Term Opportunities Fund ICICI Pru Short Term Plan
Short Term Funds – Credit opportunities Birla Sunlife Medium term Franklin India Short term Plan HDFC Corporate debt opportunities ICICI Prudential Regular Savings
Long term/Dynamic Birla Sunlife income plus ICICI Prudential Dynamic Bond Fund IDFC dynamic bond fund
(Refer to www.icicidirect.com for details of the fund)
View Ultra-short term: Positive
Short-term: Positive Long-term: Positive
Ultra-short-term fund returns are attractive on risk adjusted basis Short-term funds will benefit as the bond curve reverts to an upward slopping curve. Credit opportunities funds earn the highest accrual and are the best in the category Dynamic bond funds are suitable for all types of investors and for longer duration. They can take exposure to all durations as per the interest rate outlook and switch between G secs and corporate bonds
ICICI Securities Ltd. | Retail MF Research
Page 16
Gilt Funds In April 2015, gilt funds delivered 13% absolute return in the last year,
the highest among debt funds. We believe the odds remain in favour of the government securities yield trending down over the next one or two years. However, gilt funds will be less attractive due to the longer holding period (more than three years) due to lower accrual income will neutralise the impact of moderate capital gains in the near term
The front loaded rate cuts by the RBI can push overall interest rates down depending on how soon banks transit it into the system by re-pricing their assets and liabilities lower
The central government has signed a memorandum with the RBI setting out a clear inflation objective to bring the inflation rate to the mid-point of the band of 4 +/- 2%. CPI, as per our assessment, should average close to 5% for FY16 (on assumption of normal monsoon and a stable currency).The government’s commitment towards controlling price shocks and steps taken to improve the supply chain are commendable. Also, global prices that have corrected sharply are supportive be they crude, metal or food prices. Hence, inflation should likely stay on the intended path. This creates room for the RBI to cut rates by another 25 bps to earn a real return of 2%
On the supply front, the Budget has pegged the market borrowing for FY16 at | 6 lakh crore on a gross basis and | 4.56 lakh crore on a net basis. Both gross and net market borrowings were close to market expectations. Borrowings related concern is expected to come down, given the government’s commitment towards reducing the fiscal deficit to 3% of GDP by FY17
Aggressive investor can invest in gilt funds with an investment horizon of one or two years
Recommended funds
Birla Sun Life Gilt Plus - PF Plan - Regular ICICI Prudential LT Gilt Fund - PF Option - Regular
(Refer to www.icicidirect.com for details of the fund) Exhibit 23: Outflows in Gilt funds in April indicates profit booking
-377
-373 -318 -211
110
-209
132 36
7
814
2090
1813 20
58
1439
164
-1000
-500
0
500
1000
1500
2000
2500
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
View Short-term: Neutral Long-term: Neutral
ICICI Securities Ltd. | Retail MF Research
Page 17
Gold ETFs: Medium term outlook benign Global gold prices traded in a narrow range in recent months despite
volatility in other asset classes. Global gold prices hovered around US$1200 per ounce during April 2015. However, it moved up in May towards US$1225 per ounce. Indian prices tracked global prices and were also range bound during April 2015 around | 26800 per 10 gram before inching up towards | 27500 per 10 gram
The investment demand for gold is largely governed by the broader economic climate. One of the major determinants of the investment demand is inflationary concerns. With a low global economic growth environment adding to deflationary pressure, inflationary demand factor for gold remains absent in the near term
Another major determinant for global gold prices is real interest rates. With the US Federal Reserve likely to raise interest rates, going forward, the opportunity cost of holding gold will increase while the same is likely to put pressure on gold prices from a medium-term perspective
Technically, after the multiyear bull phase during 2004-12, gold prices corrected significantly. The violation of the long term trend line highlights the breach of a decade long trend of outperformance. This breach of long term up trend support, signals a period of medium-term consolidation
Exhibit 24: International gold price benign…
1100
1150
1200
1250
1300
1350
1400
Jan-
14
Feb-
14
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Price ($/Ounce)
Source: Company, ICICIdirect.com Research
Exhibit 25: …domestic prices follows global trend
25000
26000
27000
28000
29000
30000
31000
Jan-
14
Feb-
14
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Price (|/10 grams)
Source: Company, ICICIdirect.com Research
Exhibit 26: Outflows for second year….
-149
-146
-341
-227
-105
-112
-47 -38 -32
-111
-131
-74
-111
-69
-400
-200
0
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct-1
4
Nov
-14
Dec-
14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
Net
Inflo
w (
| Cr
)
Two years of outflow
Source: AMFI, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 18
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. We have changed the mutual funds portfolio in July, to include midcap funds as we believe an improvement in the growth scenario may generate better alpha in midcap stocks over large cap stocks Exhibit 27: Equity model portfolio Particulars Aggressive Moderate ConservativeReview Interval Monthly Monthly QuarterlyRisk Return High Risk- High Return Medium Risk -
Medium ReturnLow Risk - Low Return
Funds Allocation % AllocationFranklin India Prima Plus 20 20 20Birla Sunlife Frontline Equity 20 20 20ICICI Prudential Dynamic Plan - - 20UTI Opportunites Fund - 20 20Reliance Long term Equity 20 - -ICICI Prudential Value Discovery 20 20 20HDFC Midcap Opportunities 20 20Grand Total(a+b) 100 100 100
Source: ICICIdirect.com Research
Exhibit 28: Model portfolio performance : FY15
48%45%
41%
28%
0%
10%
20%
30%
40%
50%
60%
Aggressive Moderate Conservative BSE 100
%
Aggressive Moderate Conservative BSE 100
Source: Crisil Fund Analyser, ICICIdirect.com Research Portfolio inception date : April 15, 2009
ICICI Securities Ltd. | Retail MF Research
Page 19
Debt funds model portfolio We have designed three different mutual fund model portfolios for different investment duration namely 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 29: Debt funds model portfolio
Particulars
0 – 6 months 6months - 1 Year Above 1 Year
Objective LiquidityLiquidity with
moderate return Above FDReview Interval Monthly Monthly Quarterly
Risk ReturnVery Low Risk - Nominal Return
Medium Risk - Medium Return
Low Risk - High Return
Funds AllocationUltra Short term FundsBirla SL Savings Fund 20Franklin India Ultra Short Bond Fund 20ICICI Pru Flexible Income Plan 20Short Term Debt FundsBirla Sunlife Medium Term Plan 20Birla Sunlife Short Term Fund 20 20Birla Sunlife Short Term Opportunites Fund 20Franklin India Short Term Income Fund 20HDFC Medium Term Opportunities Fund 20HDFC Short Term Opportunities Fund 20 20ICICI Prudential Regular Savings 20ICICI Prudential Short Term Fund 20IDFC SSI Short TermSundaram Select Debt 20UTI Short Term FundLong Term/Dynamic Debt FundsIDFC Dynamic Bond fund 20Total 100 100 100
Time Horizon
% Allocation
Source: ICICIdirect.com Research
Exhibit 30: Model portfolio performance : FY15
9.1710.19
11.72
8.6610.12
14.25
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0-6 Months 6Months - 1Year Above 1yr
%
Portfolio Index
Source: Crisil Fund Analyser, , ICICIdirect.com Research
*Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; 6 months-1 year – Crisil Short term Index Above 1 year: Crisil Composite Bond Index
ICICI Securities Ltd. | Retail MF Research
Page 20
Top Picks Exhibit 31: Category wise top picks
Category Top Picks
Largecaps Axis Equity Fund
Birla Sunlife Frontline equity Fund
ICICI Pru Focussed Bluechip Equity Fund
UTI Opportunities Fund
Midcaps HDFC Midcap Opportunities Fund
ICICI Prudential Value Discovery Fund
Franklin India Smaller Companies Fund
SBI Magnum Global Fund
Diversified Franklin India Prima Plus
ICICI Prudential Dynamic Plan
Reliance Equity Opportunities
ELSS Axis Long Term Equity
ICICI Prudential Tax Plan
Franklin India Tax shield
Liquid Funds HDFC Cash Mgmnt Saving Plan
ICIC Pru Liquid Plan
Reliance Liquid Treasury PlanUltra Short Term Birla Sunlife Savings Fund
Franklin India Ultra Short Term Bond Fund
ICICI Pru Flexible Income Plan
Short Term Birla Sunlife Short Term FundHDFC Short Term Opportunities Fund
ICICI Pru Short Term Plan
Credit Opportunities Fund Birla Sunlife Medium Term Plan
Franklin India Short term Plan
ICICI Prudential Regular Savings
Income Funds ICICI Prudenti Dynamic Bond Fund
Birla Sun Life Income Plus - Regular Plan
IDFC Dynamic Bond Fund
Gilts Funds ICICI Pru Gilt Inv. PF Plan
Birla Sunlife Gilt Plus
MIP Birla Sunlife Savings 5
ICICI Prudential MIP 25
DSP Blackrock MIP
Debt
Equity
(Refer www.icicidirect.com for details of the fund)
ICICI Securities Ltd. | Retail MF Research
Page 21
Pankaj Pandey Head – Research [email protected]
ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai – 400 093
Disclaimer ICICI Securities Ltd. - AMFI Regn. No.: ARN-0845. Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, 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 same should also not be considered as solicitation of offer to buy or sell these securities/units. The investor has the discretion to buy all or any of the Mutual Fund units forming part of any of the indicative portfolios on icicidirect.com. Before placing an order to buy the securities/units forming part of the indicative portfolio, the investor has the discretion to deselect any of the securities/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 securities 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 securities/units included in the indicative portfolio from time to time. 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. 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.
Pankaj Pandey Head – Research [email protected]
ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai – 400 093
[email protected] Disclaimer ANALYST CERTIFICATION We Sachin Jain, CA and Sheetal Ashar, 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. 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