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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
February 27, 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....................................................................................................7 Equity Pharma Funds.......................................................................................8 Equity Technology Funds................................................................................8
Exchange Traded Funds (ETF) ...................................................................... 9 Balanced funds............................................................................................. 10 Monthly Income Plans (MIP)........................................................................ 10 Arbitrage Funds............................................................................................ 11 Debt funds .................................................................................................... 12
Liquid Funds ..................................................................................................13 Income funds .................................................................................................14 Gilt Funds ...................................................................................................15 Gold ETFs: Global gold price to be volatile amidst central banks action.....16 Model Portfolios ...............................................................................................17
Equity funds model portfolio....................................................................... 17 Debt funds model portfolio ......................................................................... 18
Top Picks...........................................................................................................19
February 27, 2015
ICICI Securities Ltd. | Retail MF Research
Page 2
Equity Markets Update
The Indian equity markets witnessed some volatility during February 2015 as markets saw some profit booking during the first half of February after hitting all-time levels at the end of January 2015. The markets, however, revived and are trading near all-time levels ahead of the Union Budget
Global equity markets continued their positive momentum in February as well on the back of monetary stimulus announced by the European Central Bank (ECB)
Midcaps and small caps continued their outperformance and were more resilient in the recent volatility as investors continue to look for investment opportunity
On a revised base (2012 instead of earlier 2010), CPI January 2015 came in at 5.11%, softer than market expectation of 5.4%. WPI declined 0.39% as the fuel group index declined 10.6% YoY. Also, the WPI index continued to decline for a fourth consecutive month by ~1%. Core WPI further eased to 0.9%, aided by a drop in global commodity prices
The base revision of the CPI series is a good exercise as it captures the revised consumption pattern. The increase in income levels over the past decade has led to a consumption shift from food to non-food category. The weights of the sub-components within the new CPI basket are now based on the Consumer Expenditure Survey (CES) of 2011-12 against the old basket individual weights based on CES of 2004-05
Outlook
We believe the new CPI will stay on the RBI’s trajectory of January 2016 CPI at 6% on an assumption of a good monsoon and a stable currency. A benign outlook on international commodity prices and commitment of the government to prevent price shocks in seasonal commodities (effective price monitoring of essential commodities, utilisation of food stocks, creation of price stabilisation fund & improvement in the supply chain infrastructure and moderate MSP hikes) give us comfort that inflation may not accelerate at a more rapid pace
The RBI in its sixth bi-monthly monetary policy review re-stated “Also critical would be sustained high quality fiscal consolidation…” Therefore, post the Union Budget 2015, there is a probability the RBI may announce another rate cut as we do not expect the government to move away from its fiscal consolidation roadmap to bring down deficit to 3% of GDP in the next two years
The Union Budget will be keenly watched by the market as it will be the first full Budget to be announced by the Modi government. Market participants will look forward to not only the fiscal numbers for FY16 but more to the medium-term direction of the government’s finances and its intentions on structural reforms
The structural medium to long term outlook for Indian equity market 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
However, given the markets have rallied significantly in the last year, it is better to adopt a staggered investment approach by utilising volatility to build the equity portfolio
Midcaps have outperformed large caps in the last nine months since the formation of the government at the Centre. Therefore, cautions needs to be exercised while investing in it
CNX Nifty: Good show in CY14
5500
6000
6500
7000
7500
8000
8500
9000
Dec-
13Ja
n-14
Feb-
14M
ar-1
4Ap
r-14
May
-14
Jun-
14Ju
l-14
Aug-
14Se
p-14
Oct-1
4N
ov-1
4De
c-14
Jan-
15Fe
b-15
Source: Bloomberg, ICICIdirect.com Research
Midcap companies on rally
2.4
2.4
2.3
1.0
-0.6-1.0
-0.50.00.51.01.52.02.53.0
BSE 100 BSESensex
BSE 500 BSEMidcap
BSESmallCap
Retu
rn (%
)
Source: Bloomberg, ICICIdirect.com Research Returns : 1M (January 20 – February 19, 2015)
…falling commodity prices hit oil & gas and metal companies
9.3
6.4
5.6
4.4
3.8
3.7
2.7
2.4
1.0
-3.0
-0.5
-2.8
-4-202468
10
IT
Real
ity
Cap.
Good
s
Heal
thca
re
FMCG
Con.
Dura
Met
al
Sens
ex
Auto
Oil &
Gas
PSU
Bank
ing
Retu
rn (%
)
Source: Bloomberg, ICICIdirect.com Research Returns : 1M (January 20 – February 19, 2015)
Research Analyst
Sachin Jain [email protected] Sheetal Ashar [email protected]
ICICI Securities Ltd. | Retail MF Research
Page 3
Debt Markets Update
The year 2015 started with a change in the monetary policy stance by the Reserve Bank of India. The RBI in a surprising but long awaited decision cut the repo rate by 25 bps to 7.75% from 8% on January 15, 2015. Consequently, it kept repo rates unchanged in its monetary policy meeting on February 3, 2015
The rate cut in January by the RBI weighs more as it now marks the change of the monetary policy stance and beginning of the easing interest rate cycle. The RBI has repeatedly said that once the policy stance shifts it will be a definitive shift and further actions will be consistent with the new stance
In its monetary policy meeting on February 3, 2015, the RBI cut the SLR by 50 bps, increased the limit under liberalised remittance scheme (LRS) to US$250,000 per person per year, allowed reinvestment of coupon in government security investments by FPIs even though the current limit of US$30 billion is getting fully utilised and introduced minimum investment threshold of three years for FPI investment in corporate bonds in line with the regulation that exists for government bonds
Inflation, both WPI and CPI, eased sharply largely due to the base effect and a fall in crude oil prices. The hawkish stance adopted by the RBI by not resorting to rate cuts despite market pressure also helped to tame inflationary expectations
Foreign institutional investors continue to invest in Indian debt market. They have invested US$4.7 billion in 2015 so far after having invested a record net US$26.25 billion in 2014
Outlook
We believe the new CPI will stay on the RBI’s trajectory of January 2016 CPI at 6% on an assumption of a good monsoon and a stable currency
The RBI in its sixth bi-monthly monetary policy review re-stated “Also critical would be sustained high quality fiscal consolidation…” Therefore, post the Union Budget 2015, there is a probability the RBI may announce another rate cut as we do not expect the government to move away from its fiscal consolidation roadmap to bring down deficit to 3% of GDP in the next two years
We continue to maintain our view of 100 bps repo rate cut by the RBI in calendar year 2015 and, therefore, expect another 50-75 bps rate cut throughout the remainder of the year on the back of a benign outlook on international commodity prices and commitment of the government to prevent price shocks in seasonal commodities
We continue to 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 G-Sec funds and long duration income funds have outperformed as a result of the rally in G-Secs. The G-Sec funds and long duration income funds have outperformed as a result of the rally in G-Secs. The results in G-Sec or income funds are more volatile than short-term funds. Historically, higher returns in G-sec or income funds in a particular year are followed by a mediocre return in the following year. Although the current environment still remains conducive for duration funds, returns are likely to moderate in 2015
G-Sec rally as with sharp correction
7.6
8.0
8.4
8.8
9.2
9.6
Oct-1
3Oc
t-13
Nov
-13
Dec-
13Ja
n-14
Feb-
14M
ar-1
4Ap
r-14
May
-14
Jun-
14Ju
l-14
Aug-
14Se
p-14
Oct-1
4N
ov-1
4De
c-14
Jan-
15
Yiel
d (%
)
Source: Bloomberg, ICICIdirect.com Research
Second half calendar in line with expectation Month Gross
BorrowingRedemption Net Borrowing
October 45,000 19,755 25,245 November 58,000 52,500 5,500 December 56,000 - 56,000 January 55,000 - 55,000 February 26,000 6,430 19,570 March - - - Total 240,000 78,685 161,315
Source: RBI, ICICIdirect.com Research, Figures are in | crore
G-sec yield curve moves down
7.4
7.6
7.8
8.0
8.2
1yr 3yr 5yr 10yr
Yiel
d (%
)
19-Feb-15 20-Jan-15
Source: Bloomberg, ICICIdirect.com Research
Corporate bond yield curve inverted
8.2
8.3
8.4
8.5
8.6
8.7
1yr 3yr 5yr 10 yr
Yiel
d (%
)
17-Feb-15 20-Jan-15
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 4
MF industry synopsis Assets under management (AUM) of all schemes put together
registered 31% YoY increase to | 1.18 trillion Net inflows in the MF schemes were to the tune of | 106878 crore in
January 2015 majorly in the liquid funds (| 85848 crore). Equity funds (Equity + ELSS) inflow continued in January to the tune of | 6324 crore
Exhibit 1: Equity AUM pick-up pushes AUM growth
8899
52
8258
60
9032
55
9163
93
8253
30
9453
21
1011
102
1006
452
1012
824
9594
15
1051
343
8339
61
9747
15
1095
653
1012
8249%
12%9% 9%
13%
18%15%
16%20%
32% 32%29%
31%
23%
27%
0%
5%
10%
15%
20%
25%
30%
35%
Oct-1
3
Nov
-13
Dec-
13
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
| Cr
ore
0
200000
400000
600000
800000
1000000
1200000
Total AUM (RHS) Growth (YoY)
Source: AMFI, ICICIdirect.com Research
Exhibit 2: AUM break up January 2015
Equity, 340936, 29%Balanced, 25792, 2%
Other ETFs, 8216, 1%
FOF(Overseas), 2500, 0%Income, 520234, 44%
Money Market, 265358, 22%
Gilt, 11075, 1%
Gold ETFs , 7245, 1%
Source: AMFI, ICICIdirect.com Research
Exhibit 3: HDFC AMC has highest AAUM…ICICI Prudential gains market share
1504
68
1260
69
1367
63
1079
68
8739
0.1
7214
0.6
6364
2.8
3879
6.4
3753
2.1
4791
9.6
1089
90
1024
87
9719
1
8499
8
7435
1
6456
1
4425
8
3575
8
3264
1
4124
8
25000
50000
75000
100000
125000
150000
HDFC
MF
Relia
nce
MF
Ipru
MF
Birla
Sunl
ife M
F
UTI M
F
SBI M
F
Fran
klin
Tem
pelto
nKo
tak
Mah
indr
aDS
PBl
ackR
ock
IDFC
MF
| Cr
Dec-14 Dec-13
Source: AMFI, ICICIdirect.com Research
Exhibit 4: …HDFC, ICICI Prudential highest contributors to increase in AAUM
Others22%
IDFC MF3%DSP BlackRock
MF2%
Kotak Mahindra MF1%
Franklin Tempelton MF
8% SBI MF3%
UTI MF6%
Birla Sunlife MF10%
Ipru MF17%
Reliance MF10%
HDFC MF18%
Source: AMFI, ICICIdirect.com Research
Share of equity AUM has been increasing while that of gold ETFs has been losing sheen
ICICI Securities Ltd. | Retail MF Research
Page 5
MF Category Analysis
Equity funds Midcap funds continued the rally as sentiments remain upbeat post the
RBI cut in policy rates and likely earnings upgrade post the third quarter results
Banking and infrastructure funds gained led by 25 bps repo rate cut announced by the RBI, signalling a change in its stance
Exhibit 5: Midcap clear winners (Returns as on February19, 2015)
92.5
81.2
81.3
63.1
52.4
54.3
46.6
31.3
31.6
16.9
15.7 22
.1
34.3
20.2 27
.6
25.6
21.1
16.1
8.1 15
.9 26.0
14.6
26.5
17.8
0102030405060708090
100
Mid cap Banking Infrastructure Diversified Pharma Large Cap FMCG Technology
Retu
rns
(%)
1year 3 Year 5year
Source: Crisil Fund Analyser, ICICIdirect.com Research ; Returns over one year are compounded annualised returns
Exhibit 6: Retail investor sentiment strong post April 2014
427 582
-1935-160
2022
7153
10845
5364
794656004963
66516324
-4500-2500-50015003500550075009500
1150013500
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
Net
Inflo
w (
| Cr
)
Net inflow (Equity + ELSS)
Source: AMFI, ICICIdirect.com Research
Exhibit 7: Equity AUM soars led by record inflows and marker rally
1754
21
1811
27
1911
97
1922
46
2172
34
2410
24
2516
30
2667
42
2803
97
2971
60
3146
84
3194
78
3409
36
150000200000250000300000350000400000
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
| 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
Construction PetroleumIndustrial Products
| crore 76061 35462 24366 23178 21992 17718 15623 13984 13642 13589
% of total 21.4 10.0 6.6 6.5 6.2 5.0 4.4 3.9 3.8 3.8
Source: Sebi, ICICIdirect.com Research, Sector Classification (as per Amfi)
Cyclicals and high beta funds gained as sentiments
improve on growth prospects post formation of the NDA
government
Exposure to banks and finance stocks together account for
the highest proportion with 27% of the equity assets
followed by technology and pharma
ICICI Securities Ltd. | Retail MF Research
Page 6
Equity diversified funds
Equity diversified funds, we believe, are the best category of funds to stay invested at the current juncture. Post the healthy returns in CY14, we expect the positive momentum to further strengthen
Near term, there may be some hiccups led by stock specific correction based on how fast the companies are able to capture the benefit of the government reforms. While the Q3FY15 results were muted, management commentary however was neutral to positive.
Market participants will now look forward to Union Budget 2015-16 to be presented on February 28, 2015 for further cues. We expect a cut in the planned expenditure and subsidies and canalise the same towards reviving the capex and investment cycle
Small and midcap companies with healthy balance sheets are expected to emerge as winners as they will have the strength to capture the reforms improvement and achieve fast track growth
We believe midcap and small cap funds will deliver better returns as the pro-growth government at the Centre augurs well for midcap companies to enter a high growth phase and see multiple re ratings
For long term SIPs, one should opt for diversified funds as they invest in both growth as well as value stocks
Though things have already started to look up for market participants, there is a risk of expectations not being met by the new government. A critical evaluation of the government's performance may lead to volatility in the markets. Budget FY16 will set the long term path for reforms implementation
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
Small cap
DSPBR Micro Cap Reliance Small Cap SBI Small & Midcap
(Refer to www.icicidirect.com for details of the fund)
View Short term: Positive 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
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 the valuation for the infrastructure sector has moved from distressed to reasonable, we still see a significant scope for a re-rating of the sector
Though there has been a sharp run in prices, we believe any correction in stocks should be used as an opportunity to accumulate stocks
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 A turnaround in sentiment for the banking sector on hopes of an
improvement in the economy has resulted in a sharp appreciation in stock prices. Though the NPA cycle will take a while to recover, multiples may continue to expand. Credit and deposit growth are expected to improve from the current 13-15% range with an increase in capex. We remain positive on the sector with a long term bias
Banking being a relatively high beta sector has delivered higher returns vis-à-vis the broader market in upturns and can be a preferred sector in the current market dynamics
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
Equity FMCG For FMCG companies, we expect a steady pick-up in volumes as urban
discretionary demand continues to remain dismal
FMCG companies are expected to witness a significant improvement in operating margin with commodity prices declining sharply
The FMCG sector would be a major beneficiary of GST implementation, which has been reflected in the current premium multiple
We prefer cyclicals over defensive funds among sector funds
Recommended funds
ICICI Prudential FMCG Fund SBI FMCG Fund
Refer to www.icicidirect.com
for details of the fund
Also, we expect increased allocation and support to key
infrastructure segments like roads, ports and airports in the
Union Budget and extension of tax holidays and exemption
time lines for various infra players
View Short-term: Positive Long-term: Positive
View Short-term: Positive Long-term: Positive
View Short-term: Neutral Long-term: Neutral
ICICI Securities Ltd. | Retail MF Research
Page 8
Equity Pharma Funds After a prolonged stretch of strong growth trajectory in the last many
quarters, the growth pace for the sector has slowed down in Q3FY15 on account of slowdown in exports due to - 1) high base 2) delay in product approvals 3) volatile in emerging market currencies and 4) regulatory concerns. However, this was on expected lines. Domestic growth, on the other hand, continued to register sound growth albeit on lower base, even though this was still below our expectation.
Despite muted Q3, only a handful of stocks witness correction as most of the managements sounded optimism about the product approval revival in the US. The BSEHC is currently trading at ~21x on FY17EPS, almost 50% premium to the Sensex FY17 PE. Strong visibility on the back of robust product basket and a reasonable base business growth continue to attract buying interest in the healthcare sector despite premium valuations
Recommended funds
Reliance Pharma Fund SBI Pharma Fund UTI-Pharma & Healthcare
Refer to www.icicidirect.com
for details of the fund
Equity Technology Funds
IT companies reported better-than-expected Q3FY15 earnings in a seasonally weak quarter as ramp-ups in new deal wins led to healthy volume growth. Growth for tier-Is in constant currency terms was robust (3.8% vs. 3.7% in Q2FY15 and 2.2% in Q3FY14) led by the US and Europe. However, reported dollar growth was negatively impacted by cross currency (180-240 bps).
Positively, Nasscom guided for 12-14% YoY revenue growth in FY16E, in line with expected 13% in FY15E. This ties in well with the management commentary regarding broad based demand recovery and healthy order bookings
Blended valuations at ~18.5x FY16E earnings are reasonable and sharp sell-offs should be used to accumulate funds 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
View Short-term: Neutral Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 9
Exchange Traded Funds (ETF) In India, three kinds of ETFs are available: Equity Index ETFs, liquid
ETFs and gold ETFs
An equity index ETF tracks a particular equity index such as the BSE Sensex, NSE Nifty, Nifty Junior, etc
An equity index ETF scores higher than index funds on several grounds. The expense of investing in ETFs is relatively less by 0.50-1.00% 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
-80 -19
3087
-1213
576
-133
211 51
-439
429492773
128
-1500-1000-500
0500
100015002000250030003500
Sep-
13
Oct-1
3
Nov
-13
Dec-
13Ja
n-14
Feb-
14
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14Oc
t-14
Nov
-14
Dec-
14
Jan-
15
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
Exhibit 10: AUM also sees jump
1371
1378
4528
3704 48
29
5048
5083
5239
4737 54
65 5997 67
02 7056
010002000300040005000600070008000
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
| 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 10
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: Marginally better inflow
-116 -1-402
-108 -83185 348 448
20751789
835732
879
-1000
-500
0
500
1000
1500
2000
2500
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
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
Exhibit 12: Equity led AUM growth…
1604
7
1619
5
1679
3
1337
0
1472
8
1591
4
1621
7
1729
3
1827
7 2108
0
2276
9
2449
0
2579
2
1300015000170001900021000230002500027000
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
| 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
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 11
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 12
Debt funds Exhibit 13: Category average returns
8.6 9.0
8.910
.9
10.7
9.3
16.9
14.4
9.6
19.2
15.6
9.5
8.3 8.7 9.0
0.0
5.0
10.0
15.0
20.0
25.0
6 months 1 year 3year%
Income UST Income ST Income LT Gilt Funds Liquid
Source: ACE MF, ICICIdirect.com Research Note : Returns as on February 19, 2015; Returns over one year are compounded annualised returns
Exhibit 14: Deployment of funds: September 2014
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
5000
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
7.5
7.7
7.9
8.1
8.3
8.5
8.7
1yr 3yr 5yr 10yr
Yiel
d (%
)
26-Feb-15 27-Jan-15
Source: Bloomberg, ICICIdirect.com Research
Exhibit 16: Corporate bond curve
8.2
8.3
8.4
8.5
8.6
8.7
1yr 3yr 5yr 10 yr
Yiel
d (%
)
26-Feb-15 28-Jan-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 13
Liquid Funds Three month CP/CD rates and the call and the CBLO rates inched up
with increased volatility in the last week. Liquid funds pre tax earnings are directly linked to these papers and likely to be higher by 10-15bps on one month annualised basis to 8.15% from 8% as off today.
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 been 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 MSF 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-
15
%
Call rate
Source: Bloomberg, ICICIdirect.com Research
Exhibit 18: …CP/CD yields range bound
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-
15
%
3M CD 3M CP
Source: Bloomberg, ICICIdirect.com Research
Exhibit 19: Redemption may take place on increase in holding period
-962
9
-117
354
1238
75
2201
0
-676
97
25,5
89
-5,8
64
-67,
318
100,
611
-52,
460
7749
4
-50,
786
85,8
48
-200000-160000-120000-80000-40000
04000080000
120000160000
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
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
Exhibit 20: AUM above | 2 trillion but may see drop next month
2589
80
2508
22
1332
80
2593
10
2827
00
2159
95
2442
20
2450
35
1845
25
2788
07
2281
49
1784
91
2653
5880000
130000
180000
230000
280000
330000
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
| 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 14
Income funds We continue to 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
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. RBI had in its monetary policy disallowed FIIs to invest in corporate debt below three year maturities. Which indirectly provides mutual fund to command a higher yield on this papers which will likely benefit the short term bond funds
The Reserve Bank of India signalled the monetary policy stance shifts earlier than market anticipated by announcing a 25 bps repo rate cut post the lower inflation reading. This led to a rally in the bond market with yields easing across the curve.
We prefer credit opportunities fund in the income funds category as an inverted corporate bond curve offers an opportunity in the one to three year corporate bonds segment
Exhibit 21: Third consecutive month of outflow
5905
1295
5
7838
-992
7
1009
6
1307
-10,
080
-12,
696
-10,
567
15,4
46 19,8
44
-1,6
32
12,1
63
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
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
Net
Inflo
ws
(| .C
r)
Source: AMFI, ICICIdirect.com Research
Exhibit 22: AUM steady
4319
44
4471
81
4606
71
4580
09
4738
87
4789
82
4716
51
4611
14
4544
95
4759
68
5005
95
5021
54
5202
34
300000350000400000450000500000550000
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
| 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)
Union Budget 2015-16 will be closely watched by the
market participants for the fiscal deficit figure. We expect
the government to stick to its fiscal consolidation path of
3.8% of GDP, via spending cuts and reduced subsidies
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 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 15
Gilt Funds RBI in its sixth bi-monthly policy kept the rates unchanged on lack of
new data post its 25bps repo rate cut. Government securities yield therefore stayed in the range of 7.70%
G-Sec market participant widely expect the government to stick to its fiscal consolidation path of 3.6% of GDP by FY16 in the upcoming Union Budget 2016. The structure of government expenditure and the means of financing the deficit would also be closely watched. We, as well as the market, expect the government to curtail its social expenditure and divert subsidies to more productive sectors to stimulate the capex cycle
On the inflation trajectory, we expect it to stay closer to 5-5.5% for the near term on assumption of a normal monsoon and stable currency. The current easing interest rates cycle is expected to continue with further 50-75 bps rate cut during FY16
The government has stuck to the fiscal deficit target of 4.1% for FY15 and guided for 3.6% in FY16 and 3% in FY17. The guidance for lower fiscal deficit in the next three years is positive for debt markets in the medium-term in terms of G-sec supply
G-sec funds will be less attractive now as the longer holding period (more than three years) will neutralise any capital gains in the near term because of lower accrual income
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: Inflows in to gilt funds as yields take u turn
-135
-937
-377
-373 -318 -211 11
0
-209 13
2 367
814
2090
1813
-1500
-1000
-500
0
500
1000
1500
2000
2500
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
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
View Short-term: Neutral Long-term: Neutral
ICICI Securities Ltd. | Retail MF Research
Page 16
Gold ETFs: Global gold price to be volatile amidst central banks action
Global gold prices corrected sharply by more than 7% during February 2015 from the highs of above US$1300 per ounce in January as concerns over Greece exiting European Union moderates and demand for safe heaven abates
Indian gold prices followed the global prices and were down 5% from the recent peak of | 28000 per 10 gram during the same period
Overall, global gold prices may be volatile as major central bankers take policy actions to manage their own economy. The US Fed is likely to initiates its interest rate hike this year. Recent macroeconomic data from the US have been upbeat and reinforce the view of an interest rate lift-off in 2015. However, losses may be limited as the easy monetary policy stance by the BoJ and ECB is likely to partially offset monetary tightening by the Fed. An upside risk to prices could stem from any unfavourable geo-political event(s) that would boost the bullion’s safe-haven demand
Gold is supposedly a hedge against inflation and, hence, has a positive correlation with gold prices. Inflationary expectations in the US have reduced in the last two months due to a fall in global crude oil prices and other industrial commodities. In the near term, inflation is likely to remain subdued on weak commodity prices due to concerns over growth in China and Europe. The same may put pressure on gold prices. However, inflation in the medium-term is a risk because of the sustained near zero interest rate policy adopted by the US Federal Reserve since the Lehman crises
Indian gold prices, however, have been trading at a premium due to the 10% custom duty imposed by the Indian government. The improvement in outlook of other asset classes, mainly equity markets, has reduced the attractiveness of Indian gold on a relative basis. Investors should avoid investing in gold from an absolute return perspective and utilise it only as a hedge against uncertainty
Exhibit 24: Outflows for second year….
-36
5
-206
-107
-588
-294
-288
-131
-157
-165
-178 -149
-146
-341
-227
-105
-112
-47
-38
-32
-111
-131
-800
-600
-400
-200
0
200
Apr-1
3
May
-13
Jun-
13
Jul-1
3
Aug-
13
Sep-
13
Oct-1
3
Nov
-13
Dec-
13
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
Net
Inflo
w (
| Cr
)
Source: AMFI, ICICIdirect.com Research
After a multi-year bull phase during 2004-12, gold prices
continue to get dragged down. Technically, the violation of
the long term trend line highlights the breach of the decade
long trend of outperformance. From a medium-term
horizon, prices are expected to remain subdued with a
downward bias
ICICI Securities Ltd. | Retail MF Research
Page 17
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 25: 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 26: CY14 returns
58% 55%51%
38%
0%
10%
20%
30%
40%
50%
60%
70%
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 18
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 27: 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 28: Model portfolio performance : CY14
9.2210.23
11.61
8.8310.18
13.81
0.02.04.06.08.0
10.012.014.016.0
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 19
Top Picks Exhibit 29: 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 20
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