mutual fund review -...

ICIC

I S

ecurit

ies –

Retail R

esearch

Monthly

Report

February 24, 2020

Mutual Fund Review

Equity Market

Update

After hitting an all-time high level, the market turned volatile but broader

market significantly underperformed since the start of CY20. The

performance is on expected lines towards some normalisation in terms of

performance with the broader market after outperforming headline indices.

The performance cycle, which was in favour of large caps in 2018 and 2019,

seems to have turned around in the last three to four months with midcaps

and small caps outperforming. However, the divergence in return is higher

within the midcap/small cap category. Therefore, proper diversification

among midcap/small cap funds is also required.

While in the long run, equity markets have trended upwards, there are many

bull and bear market phases within that larger uptrend. Within that market

phase, different category of funds viz. large cap, multicap and midcap/small

cap perform differently. In general, in a bull phase, midcap/small cap funds

perform better while in a bear phase, large cap funds outperform. In general,

multicap funds are a more stable category with performance ranging

between large caps and midcaps during all market phases.

No fund outperforms across all investment horizons. Every fund performs in

cycles. Hence, investors should be more cautious while investing in a best

performing fund.

While in the long run, equity markets have trended upwards, there are many

bull and bear market phases within that larger uptrend. Within that market

phase, different category of funds viz. large cap, multicap and midcap/small

cap perform differently. In general, in a bull phase, midcap/small cap funds

perform better while in a bear phase, large cap funds outperform. In general,

multicap funds are a more stable category with performance in between

large caps and midcaps during all market phases.

Outlook

In the near term, some consolidation amid profit booking is expected given

the sharp rally across segments in the last two to three months. Any

correction amid such profit booking should be used as a buying opportunity

to accumulate and increase equity allocation.

Markets perform in cycles. While investing, one needs to ensure that

investment is made at the lower end of the market cycle. Conversely,

lumpsum investment should be done when historical returns are negative

or lower than long term average.

While midcaps outperformed large caps significantly in FY15-18, they

witnessed a reversal in trend amid liquidity issues along with NBFC crisis

and other corporate defaults over the past 18 months. In turn, this skewed

investor’s focus towards quality companies, leading to underperformance

of the broader markets, in general. Quality companies in both large cap and

midcap/small cap have done well in 2019. We expect this trend to continue

even in 2020. Lumpsum investment in midcap/small cap funds at current

levels may be considered. However, the core portfolio should always

comprise multicap oriented funds with accumulation being done through an

SIP approach.

An important lesson learnt in 2019 was that predicting market performance

based on regular economic data prints is a futile exercise. Investors should

just focus on regular investment.

After hitting all time high level, Sensex

showing some volatility

Source: Bloomberg

Research Analyst

Sachin Jain

[email protected]

32000

34000

36000

38000

40000

42000

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

ICICI Securities | Retail Research 2

ICICI Direct Research

Monthly Report | Mutual Fund Review

Debt Market

Update

Year 2020 started on a positive note, particularly post the Union Budget and

RBI monetary policy. The benchmark 10 year G-Sec yield started January on

a cautious note with yields moving up towards 6.60% but correcting below

to 6.40% in the first week of February. The fall in short-term yields was

sharper with three year G-Sec yield falling more than 25-30 bps during the

same period.

The two major event, Union Budget and RBI policy rejuvenated investor

sentiments.

In the Budget, gross borrowings for FY21 are pegged at | 7.8 lakh crore

against FY20 number of | 7.1 lakh crore. Net borrowings for FY21 were

pegged at | 5.36 lakh against FY20 number of | 4.74 lakh crore. The

borrowing numbers were below market expectations. The Budget also

furthered the opening up of the local bond market to offshore investors by

increasing the participating limit for foreign portfolio investors (FPIs) in

corporate bonds hiked from 9% of outstanding currently to 15%. Also

importantly, certain specified categories of government securities would be

opened fully to non-resident investors, apart from also being available to

domestic investors. The same, along with comments from policy makers,

indicate that efforts are being made to include Indian debt into global bond

indices.

In its policy meeting, while RBI maintained status quo on rates, the positive

surprise came from announcement of long term repo operations (LTRO).

LTROs of one-year and three-year tenors for improving monetary

transmission has been introduced up to a total amount of | 1,00,000 crore

at the policy repo rate. This measure is likely to support yields at the short

to medium end of the curve. Effectively, RBI from the shorter end of the yield

curve has now moved up the yield curve to ensure yields move southwards

up to three to five years duration. Three year G-Sec yield corrected around

15 bps post policy announcement. While there are no explicit guidance on

operation twist or any other measure to support long tenure yields, the RBI

Governor has hinted that twist operation was to bring long bond yields down

and ensure transmission. More such operations cannot be ruled out as

spread between 10 year G-Sec yield and repo rate remained near all-time

highs. While inflation expectation has been revised sharply upwards till

H1FY2020-21, Q3FY2020-21 inflation is being projected at 3.2%. Effectively

with one year ahead inflation likely to be well below RBI’s 4.0% inflation

target, one more rate cut in the later part of the year is not ruled out.

Global bond yields have fallen sharply in the last month due to Coronavirus

on global growth. Almost all major commodity prices, particularly crude oil

prices, have corrected sharply.

Interest rates structurally shifting lower: Interest rates are slowly moving

down and are likely to move further down. Therefore, coupon or interest on

all fixed instruments are likely to be lower than historical averages. Investors

needs to lower their interest income expectations, in general.

Selective opportunity in non-AAA segment: Credit spreads continued to

remain high as risk aversion among investors remains high. There is a

selective investment opportunity in non-AAA rated segment of the market

both from a relative and absolute return perspective.

Expect overall yield curve to shift lower with

investors better off allocating higher amount to

higher duration funds




Industry Synopsis

The MF industry AUM increased 5.0% in January 2020 to a record ~| 27.86

lakh crore from 26.54 lakh crore in December 2019 on the back of higher

inflows into liquid and overnight schemes.

Apart from liquid funds, most of the debt fund category witnessed inflows.

Corporate bond fund, short duration funds and banking & PSU debt fund

category continues to receive consistent inflows.

Inflows into equity funds continue to recover from the lows in November

2019. Equity funds witnessed inflows of | 7877 crore in January 2020

compared to inflows of | 4499 crore in December 2019. Almost all category

of equity scheme witness higher inflows with midcap and small cap funds

witnessing higher inflows.

The equity ETF category witnessed inflows of | 1873 crore in January 2020.

ETF AUM has grown significantly in the last few years on the back of

institutional money (EPFO). This category now has the highest AUM among

all equity funds category. It is dominated by Nifty 50 and Sensex ETFs of SBI

and UTI with SBI getting ~75% of the institutional money.

Aggressive hybrid funds continued to witness outflows while equity savings

also witnessing consistent outflows.

Exhibit 1: Total AUM, break-up of major AMCs

Source: ACE MF. Data as on January month end

Exhibit 2: AMCs like Mirae, Invesco, Axis, Kotak continue to

see higher inflows leading to higher growth in equity AUM

in last year

Source: Amfi. Data as of Jan 2020. SBI & UTI AUM is considered ex-Sensex/Nifty ETF

Exhibit 3: In debt, Axis, IDFC, SBI witness highest growth in

AUM in last year

Source: Amfi. Data as of Jan 2020

51%

41%

37%

34%

50%

37%

48%

44%

40%

25%

42.7

% 52.5

%

52.8

%

60.1

%

41.6

%

54.2

%

45.6

%

45.9

%

50.8

%

67.9

%

6.7

%

6.8

%

10.3

%

5.9

%

8.5

%

9.0

%

6.3

%

10.0

%

9.0

%

7.0

%

382692

379108

368237

255305

207289

191224

160306

140575

124478

106251

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

0%

20%

40%

60%

80%

SB

I

HD

FC

ICIC

I P

ru

Bir

la

Nip

pon

Kotak

UTI

Axis

Franklin

IDFC

| c

rore

Equity % Debt% Others% AUM

0

50000

100000

0%

20%

40%

60%

80%

100%

Mir

ae

Invesco

Axis

Kotak

SB

I

Tata

DS

P

HD

FC

ICIC

I P

ru

UTI

Growth in Equity Scheme Equity Schemes Corpus(RHS)

0

40000

80000

120000

160000

200000

0%

20%

40%

60%

80%

Axis

IDFC

SB

I

Kotak

ICIC

I P

ru

HD

FC

L&

T

Bir

la

Franklin

DS

P

Growth in Debt Scheme Corpus(%) Debt Schemes Corpus




Category Analysis

Equity Funds

The year 2019 witnessed a divergent performance with large caps delivering

around 15% return while midcaps/small caps were down around 5-10%.

The benchmark heavyweight banking sector outperformed significantly

delivering around 20.0% return and was predominantly the driving force

behind the market making new all-time highs.

We expect midcap and small caps to outperform, going forward, and advise

investors to add our recommended funds in these category to their overall

portfolio after considering overall asset allocation and risk-return profile.

Investors should be extra cautious in investing in funds that have done well

in the last year as sector or market preference for specific style may change,

going forward.

Exhibit 4: Year 2019 belonged to large cap funds as they outperform small cap/midcap funds. Banking funds clear

outperformers as index heavyweight sector drives large cap performance

Source: CRISIL. Category average annualised returns as on February 20, 2020

Exhibit 5: Large cap funds continue to witness higher inflows on the back of superior

performance

Euuity Oriented CategoryInflow/(Outflow)

during Jan 2020

AUM

Multi Cap Fund 1,722 155,925

Large Cap Fund 1,154 154,135

Large & Mid Cap Fund 692 58,772

Mid Cap Fund 1,798 91,197

Small Cap Fund 1,073 52,482

Dividend Yield Fund (64) 4,416

Value Fund/Contra Fund (739) 55,675

Focused Fund 1,305 50,209

Sectoral/Thematic Funds 4 65,599

ELSS 932 101,228

Source: Amfi. AUM as on month end January 2020

23.7

20.9

20.0

19.6

17.8

17.5

16.9

16.5

15.5

15.1

12.6

11.31

2.9

10.3

8.0

9.4

2.9

10.1

9.0

9.2

4.2

4.0

9.9

6.5

10.2

8.2

8.0

8.2

2.2

7.1 7.7

7.5

7.5

4.2

6.9

6.6

-5

0

5

10

15

20

25

Bankin

g F

unds

Focused F

unds

Mid

cap

Large a

nd M

idcap

Pharm

a F

unds

Large C

ap

ELS

S

Mult

icap

Sm

all C

ap

Infr

a

Internatio

nal Equit

ies

Valu

e a

nd C

ontra

Returns (

%)

1 year 3 Year 5 year

The performance of only a few stocks has led to

overall returns being higher. Many stocks are trading

at far lower levels compared to their average

valuation or peak market levels. Hence, they offer an

investment opportunity

We have been positive on the banking sector and

continue to remain positive on the back of a revival

in earnings growth. We are also positive on capital

goods and consumer oriented stocks




Equity diversified funds

Inflows into equity funds continue to recover and came in at | 7877 crore in

January 2020 from | 4499 crore in December 2019. There was a sharp

recovery in last two months from the lows of | 1312 crore in November 2019.

Midcap and small cap funds category witnessed a sharp rise in inflows to

| 1798 crore and | 1073 crore in January from | 796 crore and | 422 crore,

respectively, in December 2019. Multi cap funds also witnessed higher

inflows at | 1722 crore in January from | 512 crore in December

Value/contra funds continued to see outflows as the category continued to

underperform in the growth rewarding market.

We prefer multicap funds as they offer fund managers flexibility to allocate

funds across all market segments, especially in the current market where

many smaller cap stocks offer a good investment opportunity. Investors may

also consider investing lumpsum amount in midcap/small cap funds from a

long term perspective.

Exhibit 6: Monthly flows: Midcap funds receive highest inflows during January 2020

Source: Amfi

Banking funds – In focus

Banking funds have been the best performing category in the last year. We

have been positive on banking funds and have been recommending these

funds as thematic allocation.

Corporate banks reported a strong operational performance in the last few

quarters. In the last quarter or two, while net profit was impacted by one-

time deferred tax adjustment, profit before taxes as well as overall credit

cost improved on expected lines. The operating performance was healthy

amid steady state gross NPA. Treasury gains and continuous traction in fee

income, however, led other income to grow significantly.

Going forward, earnings are expected to be driven by lower provisions and

lower tax rate for most banks from FY21E onwards. We remain positive on

corporate banks being beneficiaries post the recent NBFC related crisis.

Corporate banks had been the theme in the last two quarters while the

corporate tax cut by the GoI has further led the impetus. Corporate as well

as retail banks, where a slowdown was being built up, got a renewed

positive outlook. From the perspective of banks and NBFCs, a reduction in

tax rates will have two positives – higher profitability and, thereby, return

ratios for profitable lenders with capex to revive growth cycle back into

action. An improvement in corporate earnings and increased manufacturing

capex is expected to further add to the banking sector’s business potential.

A net profit rise would result in higher RoA, higher capital adequacy and

improve the ability of banks to pass on rate cuts. Similarly, well managed

stronger NBFCS would enjoy better availability of capital and flow of

liabilities that will enable it to face competition, especially from repo rate

based loans.

-1,000

-500

-

500

1,000

1,500

2,000

Mid

Cap F

und

Mult

i Cap

Fund

Focused F

und

Large C

ap

Fund

Sm

all C

ap

Fund

Large &

Mid

Cap F

und

Div

idend Y

ield

Fund

Valu

e

Fund/C

ontra

Fund

Jan-20 Dec-19 Nov-19

Inflows into equity funds continue their recovery in

January from the sharp decline in November

Recommended Funds

Nippon Banking Fund

ICICI Prudential Banking and Financial Services Fund




Exchange traded funds (ETFs)

Exhibit 7: ETF AUM increases to | 1.7 lakh crore in 2019 from

1.07 lakh core at the start of the year

Source: Amfi

Exhibit 8: ETFs witness significant inflows in December 2019

primarily led by institutional flows

Source: Amfi

Exhibit 9: Around 15 categories of ETFs available

Source: ACE MF

50000

100000

150000

200000

Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

| C

rore

Equity ETFs

721

5234

10540

-4241

2432

5383

12353

-1718

1033

5906

2954

12673

1873

-10000

-5000

0

5000

10000

15000

Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Net Inflow

( |

Cr )

Equity ETFs

Nos. Types of ETFs Name of ETF

I Largecap oriented ETFs

1 Nifty 50 ETF Most AMCs

2 Sensex ETF Most AMCs

3 BSE 100 ETF SBI-ETF BSE 100

4 Nifty 100 ETF ICICI Pru Nifty 100 ETF

LIC MF ETF-Nifty 100

Reliance ETF Nifty 100

5 Nifty 100 Quality 30 ETF Edelweiss ETF - Nifty 100 Quality 30

6 Nifty Low Vol 30 ETF ICICI Pru Nifty Low Vol 30 ETF

7 Nifty Next 50 ETF Aditya Birla SL Nifty Next 50 ETF

ICICI Pru Nifty Next 50 ETF

SBI-ETF Nifty Next 50

UTI-Nifty Next 50 ETF

8 Sensex Next 50 ETF SBI-ETF Sensex Next 50

UTI S&P BSE Sensex Next 50 ETF

9 NV 20 ETF ICICI Pru NV20 ETF

Kotak NV 20 ETF

Reliance ETF NV20

II Midcap Oriented ETFs

10 Midcap 100 ETF Motilal Oswal Midcap 100 ETF

11 Nifty Midcap 150 Reliance ETF Nifty Midcap 150

12 Midcap Select ETF ICICI Prudential Midcap Select ETF

III ETF in Multicap segment

13 S&P BSE 500 ETF ICICI Pru S&P BSE 500 ETF

IV ETFs based on sectors/Themes

14 Banking ETF Edelweiss ETF - Nifty Bank

Kotak Banking ETF

SBI-ETF Nifty Bank

15 PSU Bank ETF Kotak PSU Bank ETF

Reliance ETF PSU Bank BeES

ETFs, as a category, are gaining popularity. Apart

from Sensex or Nifty ETFs, many other equity

oriented ETFs are now available tracking various

indices across market cap and sectors




Hybrid funds

Hybrid funds category is dominated by aggressive hybrid funds (erstwhile

balanced funds) and balanced advantage or dynamic asset allocation funds.

The year 2019 witnessed a trend of outflows from aggressive hybrid funds

and inflows into balanced advantage funds. The same trend continues with

the start of the New Year.

Continuing with the trend, hybrid equity funds witnessed outflow of | 1260

crore in January 2020 while balanced advantage funds witnessed inflows of

| 1301 crore during the same period.

Arbitrage funds have become a significant category for parking funds for

short-term as a substitute to liquid or overnight funds.

Exhibit 10: Outflow in aggressive category continues

Source: Amfi

Exhibit 11: Trend of outflow in aggressive hybrid funds and

inflows in balanced advantage fund continues

Source: Amfi

Debt Funds

Exhibit 12: Sharp fall in G-sec yields lead duration/gilt funds to outperform significantly last year. Average return of credit

funds in near zero due to negative returns in few funds

Source: CRISIL. Category average annualised returns as on February 20, 2020

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

Jan-18

Apr-18

Jul-18

Oct-18

Jan-19

Apr-19

Jul-19

Oct-19

Jan-20

Net Inflow

( |

Cr )

Aggressive Hybrid

Hybrid Category

Inflow/(Outflow)

during January

2020

AUM

Balanced Hybrid Fund/Aggressive Hybrid Fund (1,260) 133,640

Dynamic Asset Allocation/Balanced Advantage 1,301 98,056

Arbitrage Fund 1,700 85,460

Equity Savings (416) 14,278

Multi Asset Allocation 260 13,305

Conservative Hybrid Fund (325) 12,732

10.2

9.7

9.7

7.7 7

.6

7.3

6.7

6.6

6.4

6.0

5.3

5.1

4.8

3.9

16.6

10.9

9.2

5.4

12.8

9.0

5.5

9.3

7.4

6.5

2.2

6.0

5.3

0.5

9.2

7.9

7.0

5.7

7.5

6.3

5.8 6.0

7.0

6.3

5.3

6.5

5.6

3.4

0

2

4

6

8

10

12

14

16

18

Long D

uratio

n

Bankin

g a

nd P

SU

Corporate B

ond

Short D

uratio

n

Gilt F

unds

Dynam

ic B

ond

Mediu

m D

uratio

n

Mediu

m t

o L

ong

Duratio

n

Money M

arket

Ult

ra S

hort

Duratio

n

Low

Duratio

n

Liq

uid

Overnig

ht

Credit

Ris

k

Returns (

%)

6 months 1 year 3year




Short-term debt allocation (investment horizon of less than a

year)

We believe ultra-short-term funds and low duration fund categories offer a

relatively better investment opportunity.

Ultra short-term bond funds and low duration funds are ideal options 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’ perspective.

Money market funds are also a worthwhile option from a liquidity and credit

quality perspective, particularly for conservative investors. However, the

return potential may be lower compared to ultra-short/low duration

categories.

Long term debt allocation (investment horizon of more than a

year)

We believe medium duration funds and credit risk funds categories offer a

relatively better investment opportunity based on the risk profile of

investors. 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.

We are cautious on credit risk funds as a category, especially in the current

weak credit environment. Credit risk fund category is only suitable for

aggressive investors who want to invest for the long term (more than three

years).

Categorisation of debt funds

Exhibit 13: Ultra short/low duration for short-term, corporate bond for long term

should in general be preferred category

Category Comment

Investment Horizon: Less than one year

Overnight funds Maturity up to 1 day

Liquid funds Maturity up to 91 days

Ultra short funds Maturity between 3-6 months

Low duration funds Maturity between 6-12 months

Money market funds Money market securities with maturity up to 1 year

Investment Horizon: More than one year

Short duration Maturity between 1-3 years

Medium duration Maturity between 1-4 years

Medium to long duration Maturity between 4-7 years

Long duration Maturity of more than 7 years

Dynamic bond funds Across duration

Corporate bond funds High rated instruments (AA+ and AAA)

Credit risk funds Below high rated instruments (below AA+)

Gilt funds G-Secs across maturity

Source: ICICI Direct Research

Ultra short-term funds and low duration funds with

optimal mix of credit quality better options to invest

for investment horizon of less than a year

Credit funds should be avoided in the current weak

credit environment. Corporate bond fund category is

best suited for long term debt allocation




Gold: Golden run continues amid multiple tailwinds

Gold prices continue their golden run in 2020 on the back of concerns

surrounding Coronavirus and its impact on global growth. Global prices

touched almost US$1700 per ounce while Indian prices are trading at all-

time high levels of above | 43000 per 10 gram, rising sharply aided by

depreciating currency.

The rally is following one of the best year in 2019 in terms of performance

getting a lift from Federal Reserve rate cuts and geopolitical tensions with

global prices rising around 18% and domestic prices rallying 24% during

CY19.

After consolidating in a narrow range for around three months, global gold

prices rallied during December and continued their positive momentum on

the back of heightened political tension between the US and Iran. The initial

part of the rally occurred alongside a weakening US$ and rising inflation

expectations combined with still weak economic growth.

The US Federal Reserve trimmed interest rates by 25 basis points in July,

September and October, before announcing a halt in December. The market

expects low interest rates to remain for long. There is very little expectation

of any hike in the near term. Low rates help the precious metal in several

ways in terms of lower opportunity cost and weak US dollar, which is good

for gold due to the historical inverse relationship between the two.

The historical negative correlation of gold prices with other asset classes

does not seem to be in sync in the near term. The year 2019 saw all three

major asset classes viz. global equity market, debt market as well as gold

delivering double digit returns. One of the likely reasons could be that even

gold has become a financial asset, which gets a premium in an environment

of surplus global liquidity. In times like these, investors need to be extra

vigilant in analysing asset class returns.

Exhibit 14: Global gold prices trend

Source: Bloomberg

Exhibit 15: Indian gold prices trend

Source: Bloomberg

1200

1300

1400

1500

1600

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

Global prices ($/ounce)

30000

32000

34000

36000

38000

40000

42000

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

Price (|/10 grams)

With gold prices having run up significantly,

investors should not over-allocate to the asset class.

The allocation to gold, particularly having run

significantly, should not be more than 5-10% of the

overall portfolio

Historically, the performance of gold is not

structural. Generally, it performs in specific short

periods of time, especially during capital market

meltdown, global recession, geopolitical tension,

etc. Therefore, it may not be an ideal long term asset

class




Model Portfolio: Equity

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, viz. 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 16: Equity model portfolio


Exhibit 17: Model portfolio performance

Source: ACE MF. Since inception (May 2009) CAGR return as on January 31, 2020

Particulars Aggressive Moderate Conservative

Risk ReturnHigh Risk- High

Return

Medium Risk -

Medium Return

Low Risk - Low

Return

Funds Allocation

Mirae Asset Largecap Fund 20 20 20

Kotak Emerging Equity Fund 20 20 20

ICICI Prudential Midcap Fund 20 20 -

HDFC Smallcap Fund 20 20 -

L&T Midcap Fund 20 - -

Principal Emerging Bluechip Fund - 20 20

Sundaram Large and Midcap Fund - - 20

SBI Large and Midcap Fund - - 20

Total 100 100 100

% Allocation

15.7%

14.5% 14.6%

13.6%

10.0%

12.0%

14.0%

16.0%

Aggressive Moderate Conservative BSE 100 TRI

%

Aggressive Moderate Conservative BSE 100 TRI




Model Portfolio: Debt

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, viz. 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 18: Equity model portfolio


Exhibit 19: Model portfolio performance

Source: ACE MF. Since inception (May 2009) CAGR return as on January 31, 2020

Note: 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

Objective 0-6 Months 6 months - 1 Year Above 1 Year

Funds Allocation

SBI Mag Ultra Short Duration 20 20

ICICI Pru Savings Plan 20

Kotak Savings Fund 20

HDFC Medium Term Fund 20 20

IDFC Low Duration Fund 20 20 20

IDFC Corporate Bond Fund 20 20

L&T Ultra Short Term Fund 20 20

SBI Corporate Bond Fund 20

Aditya Birla SL Corporate Bond Fund 20

Total 100 100 100

% Allocation

8.0% 8.0%

8.3%

7.4%

7.9%

8.3%

5.0%

6.0%

7.0%

8.0%

9.0%

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

%

Portfolio Index




Mutual Fund Recommendation

Exhibit 20: Equity oriented funds


Exhibit 21: Debt funds


Largecaps ICICI Prudential Bluechip Fund

IDFC Large Cap Fund

Mirae Asset Largecap Fund

Reliance Large Cap Fund

Large and Midcaps LIC Large and Midcap Fund

Kotak Equity Opportunities Fund

SBI Large and Midcap Fund

Sundaram Large and Midcap Fund

Multicaps ICICI Pru Multicap Fund

Invesco Multicap Fund

Reliance Multicap Fund

UTI Equity Fund

Midcaps Axis Midcap Fund

ICICI Prudential Midcap Fund

Kotak Emerging Equity Fund

L&T Midcap Fund

Smallcaps ICICI Pru Smallcap Fund

Invesco Smallcap Fund

Kotak Smallcap Fund

Nippon Small Cap Fund

Focused Franklin India Focused Equity Fund

Reliance Focused Equity Fund

SBI Focussed 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

Mirae Asset Hybrid Equity Fund

SBI Equity Hybrid Fund

Category wise top picks

Category Fund

Overnight / Liquid / Ultra Short Term Kotak Savings Fund

L&T Ultra Short Term Fund

SBI Magnum Ultra Short Duration Fund

Low Duration / Money Market ICICI Prudential Savings Fund

IDFC Low Duration Fund

SBI Low Duration Fund

Short Term HDFC Short Term Debt Fund

IDFC Bond Fund - Short Term

L&T Short Term Bond Fund

Medium Term HDFC Medium Term Debt Fund

IDFC Bond Fund - Medium Term Plan

SBI Magnum Medium Duration Fund

Medium to Long Term / Long Term Aditya Birla SL Income Fund

ICICI Pru Bond Fund

Reliance Income Fund

Dynamic Bond Fund ICICI Pru All Seasons Bond Fund

IDFC Dynamic Bond Fund

Kotak Dynamic Bond Fund

Corporate Bond Aditya Birla SL Corporate Bond Fund

IDFC Corporate Bond Fund

SBI Corporate Bond Fund

Credit Risk Axis Credit Risk Fund

IDFC Credit Risk Fund

SBI Credit Risk Fund

Gilt IDFC G-Sec Fund - Investment Plan

Reliance Gilt Securities Fund

UTI Gilt Fund

Category wise top picks




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, Research Analyst, author and the name 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 Registration. 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 Limited is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited Sebi Registration is INZ000183631 for stock broker. ICICI Securities is a 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, 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.

It is confirmed that Sachin Jain, 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..

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