mutual fund review

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

January 18, 2018

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 update .............................................................................................. 4 MF industry synopsis ........................................................................................... 5 MF Category Analysis ........................................................................................... 6

Equity funds ....................................................................................................... 6 Equity diversified funds ......................................................................................... 7 Equity infrastructure funds ................................................................................... 8 Equity banking funds ............................................................................................. 8 Equity FMCG Funds ............................................................................................... 9 Equity Pharma funds ............................................................................................. 9 Equity Technology Funds ...................................................................................... 9

Exchange Traded Funds (ETF) ......................................................................... 10 Balanced funds ................................................................................................ 11 Monthly Income Plans (MIP) .......................................................................... 12 Arbitrage Funds ............................................................................................... 12 Debt funds ........................................................................................................ 13

Liquid Funds 14 Income funds ....................................................................................................... 15 Gilt Funds 16 Gold: Outlook anchored to Fed movement ......................................................... 17 Model Portfolios .................................................................................................. 18

Equity funds model portfolio ........................................................................... 18 Debt funds model portfolio .............................................................................. 19

Top Picks ............................................................................................................. 20

January 18, 2018


Page 2

Equity Markets

Update

Indian headline benchmarks continued to trade in a narrow range near

all-time levels in the last three months since November 2017. However,

broader indices, as represented by midcaps and small caps, continued

their upward trajectory and made new highs almost on a daily basis in

December as well

The year 2017 has been an extremely rewarding one for retail mutual

fund investors. The category average returns of large cap funds, multi

cap funds as well as midcap and small cap funds in 2017 is around

30%, 32% and 41%, respectively

Global equity markets also witnessed a positive momentum in the last

year with most major markets delivering returns in the range of 15-30%.

The same has also supported markets while the market performance of

India is in sync with its global peers

The equity market performance in 2017 has been more well spread with

most sectors except pharma, which underperformed while real estate

(109%) outperformed delivering returns in the range of 30-50%

Corporate earnings in Q2FY18 have not belied expectations and have

led consensus EPS for FY18 and FY19 to remain stable. Retail consumer

focused sectors like automobiles, consumer durables, fast moving

consumer goods (FMCG), media & entertainment, hospitality and retail

posted strong double digit sales growth indicating a revival in

consumer demand. Sectors such as cement also reported better-than-

expected volume growth

Domestic mutual funds were dominant buyers in the CY17, pumping in

more than | 1.18 lakh crore. Investment by mutual funds is backed by

consistent strong inflows by retail investors. Equity oriented funds

averaged ~| 20000 crore of inflows every month in April-December

Outlook

The outlook for the market continues to remain positive. Q2FY18 results

were in line with expectations. They indicated at an earnings recovery,

going forward, that could be far better than widely expected. Results for

Q3FY18 earnings season will benefit from the low base in the

corresponding period last year that was directly impacted by

demonetisation

Relative unattractiveness of other asset classes is likely to continue to

attract inflows into the equity market

Investors who continued their SIP or systematic investment approach

benefited the most from the market rally in 2017. Year 2016 was very

volatile and saw sharp market movements dominated by global markets

and demonetisation. Investors who continued their investment during

this period accumulated funds at lower levels and later benefited from

the rally in recent months. Time and again it has been witnessed that

volatility is a blessing in disguise for long term investors

The overall bias remains positive. However, given the sharp rally in

recent months, it is better to avoid lumpsum investment and continue

with the staggered buying approach

Nifty 50: Markets at all-time highs

7500

8000

8500

9000

9500

10000

10500

11000

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Source: Bloomberg, ICICIdirect.com Research

Smallcap, midcap indices remain outperformer

10.3

7.1

5.5

4.9

4.5

4.1

0

2

4

6

8

10

12

BS

E S

mall cap

BS

E M

idcap

BS

E 5

00

BS

E 2

00

BS

E 1

00

Sensex

Source: Bloomberg

One month returns till January 12, 2018

Metals, capital goods bounce back, healthcare, IT

recover

16

16

9

7

7

5

3 2 2

-2

0

2

4

6

8

10

12

14

16

18

Metals

Real Estate

CG IT

Healthcare

Auto

FM

CG

Oil n G

as

Bankin

g

Source: Bloomberg

One month returns till January 12, 2018

Research Analyst

Sachin Jain

[email protected]

Jaimin Desai

[email protected]


Page 3

Debt Markets

Update

The Indian fixed income market remained under pressure with G-sec

yields continuing to inch upwards due to concerns arising from rising

inflation, fear of fiscal slippage, rising international crude oil prices and

higher global bond yields

There was increased volatility in mid-January. Bond markets saw a sell

off amid the RBI’s reluctance to provide special dispensation to banks to

spread their MTM losses over longer periods. However, a reduction in

the earlier announced additional borrowing programme by the

government helped ease concerns over fiscal slippage and provided

relief to the market

Yield on the 10-year benchmark crossed 7.2% in November and rose to

7.35% by early January 2018. Yield on the 10-year AAA corporate

bonds moved in tandem with G-sec yields and rose close to 8.1%

before decoupling and dropping back towards 7.8% by mid-January

RBI in its December monetary policy maintained status quo on the repo

rate at 6%, as expected. The monetary policy decision was favoured by

five of the six committee members, with the solitary dissent (Mr

Dholakia) in favour of a policy rate reduction of at least 25 bps

RBI retained its neutral policy stance, with GVA projections at 6.7%.

They marginally raised H2FY18 CPI estimates at 4.3-4.7%. Upside

inflationary risks are from higher oil prices, state’s HRA impact, fiscal

slippages, rising inflation expectations and higher input costs

From a significant surplus, domestic liquidity has continued to decline

on the back of currency leakage, open market sales and MSS. In the

post policy conference, RBI noted that it expects system liquidity to be

neutral by H1FY19. The clarity provided on RBI’s liquidity operations is

welcome. It seems OMO actions would be undertaken in response to

forex flows while OMO sale would not happen to drain liquidity

Outlook

We do not expect a reversal in the interest rate cycle in the near future

and expect RBI to keep repo rates unchanged at 6% during CY18

The recent up move in G-Sec yield with 10-year yield (new series)

moving to around 7.25% is more of a retracement of bullish positioning

as investors adjust from declining rate cycle to a prolonged status quo

phase in benchmark rates

Historically, 10-year G-sec yield spread over repo ranges between 40

bps and 120 bps for most of the period. We believe the current spread

of 125 bps will narrow down once negative sentiments fade. Corporate

bond spread is also likely to be at historic low levels as investors search

for higher accrual in a stable interest rate environment

Short-term accrual debt funds with mix of AAA/AA rated papers and

low expense ratio offer a better investment option

G-sec yields elevated around 7.25% mark

6.0

6.4

6.8

7.2

7.6

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Nov-17

Jan-18

Yie

ld (%

)

Source: Bloomberg

G-sec yield curve: Yields flattens for longer

maturities

6.61

7.06

7.26 7.28

6.29

6.62

6.99

7.19

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

1yr 3yr 5yr 10yr

Yie

ld (%

)

12-Jan-18 12-Dec-17


AAA corporate bond yield curve flattens for longer

maturities

7.35

7.67

7.86

7.81

7.01

7.38

7.56

7.96

6.4

6.8

7.2

7.6

8.0

1yr 3yr 5yr 10 yr

Yie

ld (%

)

12-Jan-18 12-Dec-17



Page 4

MF industry update

Amfi recently published a list of stocks based on their average market

cap for the period between July and December 2017. The list ranks

stocks 1-100 as large cap (market cap greater than at least | 29304

crore), 101-250 as midcap (market cap range | 8584 crore-29255 crore)

and 251 and beyond as small cap (market cap below | 8584 crore). As

per Sebi’s October 6 circular on MF scheme categorisation and

rationalisation, MF schemes will have to bring their portfolios in line

with this list by March

The circular says large cap funds need minimum 80% of the corpus in

large cap stocks, midcap funds need to invest minimum 65% of the

corpus in midcap stocks while small cap funds need to invest minimum

65% of the corpus in small cap stocks

We analysed existing funds for compliance in this regard and noted that

midcap funds are some way off the mandated level of 65% holding in

midcap stocks. The holding in midcap stocks is at ~39% with ~38% in

smallcap stocks and ~16% in largecap stocks

Exhibit 1: Midcap funds some way short of Sebi mandated holding in midcap stocks

19.9

17.7

16.4

35.1

37.7

38.7

37.9

37.7

37.9

0

10

20

30

40

50

60

70

80

90

100

Oct-17 Nov-17 Dec-17

% o

f M

idcap F

unds A

UM

Large Cap Mid Cap Small Cap

Mandated Midcap holding

Source: ACEMF, ICICIdirect.com Research

A recent Sebi circular now requires all MF schemes to benchmark their

performance against the Total Return Index (TRI) version of their

respective benchmarks. Currently, most MF schemes benchmark their

performance against the Price Return Index (PRI) version. The

difference between the two benchmarks would boil down to dividends

declared by the companies constituting the benchmark. PRI includes

only capital gains while TRI includes capital gains and dividends

declared, which are then assumed to be reinvested. Benchmarking

against TRI is a global best practice. This is a welcome move. The

change comes into effect from February 1, 2018


Page 5

MF industry synopsis

Total assets managed by mutual funds dropped to ~| 21.4 lakh crore in

December 2017, down ~6.6% from the November figure of | 22.8 lakh

crore. This represents a ~29.8 increase YoY. Of the total MF corpus,

~38% was held by income funds and ~36% by equity and ELSS funds

According to Amfi data, systematic investment plans (SIPs) inflows for

December were at ~| 6200 crore, up from ~| 5900 crore previously.

SIP inflows average ~| 5100 crore per month in FY18 against ~| 3600

crore per month in FY17, a rise of 42%. The trend of rise in SIP inflows

is a welcome one. However, SIP flows as a percentage of inflows into

equity and equity-oriented funds has reduced from ~36% in FY17 to

~25% in FY18. This suggests that while more and more investors are

turning to SIPs as a preferred investment mode (the number of SIP

folios has zoomed 33% in FY18), the majority of equity inflows are

lumpsum in nature

The number of SIP folios has increased from 1.35 crore in March 2017

to 1.88 crore in December 2017. This means that ~40% of SIP folios are

less than a year old

In the trailing 12 months, the mutual fund industry saw a net inflow of

| 4.19 lakh crore. Out of the total net inflow, | 1.46 lakh crore came into

equity and ELSS funds, about 35%

Thus far, inflows into equity and equity oriented flows in FY18 are

averaging ~| 20000 crore per month, nearly double that in FY17.

December saw a net inflow of ~| 21312 crore in equity and equity-

oriented funds

Exhibit 2: Equity, equity-oriented funds receiving ~| 20,000 crore per

month on average, thus far in FY18…

1000000

1200000

1400000

1600000

1800000

2000000

2200000

2400000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Total AUM

Source: Amfi

Exhibit 3: AUM of Top 10 AMCs

298,442

294,666

236,354

231,722

203,735

148,329

115,391

103,908

83,469

69,138

50000

100000

150000

200000

250000

300000

350000

400000

HD

FC

ICICI

Aditya

Birla

Reliance

SB

I

UTI

Kotak

Franklin

DS

P

IDFC

AUM

Source: ACE MF

Exhibit 4: SBI overtakes Franklin Templeton in terms of highest

proportion of equity AUM as percentage of its AUM

51%

49%

46%

44%

40%

38%

37%

35%

33%

25%

0%

20%

40%

60%

80%

SB

I

Franklin

DS

P

HD

FC

ICICI

Reliance

UTI

Kotak

Aditya B

irla

IDFC

Equity % Debt% Others%

Source: ACE MF. Data as of December 2017

Exhibit 5: Within retail category, equity funds witness significant inflows

in FY17…

-2000

4000

10000

16000

22000

28000

34000

40000

46000

52000

58000

EQ

UITY

BA

LA

NC

ED

OTH

ER

ETFs

ELS

S -

EQ

UITY

GO

LD

ETFs

GILT

FY16

Source: ACE MF. Data as on March 2017


Page 6

MF Category Analysis

Equity funds

FMCG funds emerged as the best performing category of sector funds.

This category along with infrastructure as well as banking funds

continued to outperform information technology (IT) and pharma funds

by wide margins. Pharma funds dragged once again, returning ~3.6%

In terms of market cap-based funds, midcap funds continued their

dominance over large cap funds. Overall, midcap funds were among

the best performing equity fund categories on a one-year basis

Structural industrywide problems continue to plague pharma and

technology funds. Pharma stocks delivered a muted performance in

Q2FY18 amid persistent pressure over pricing, compliance issues and a

fear of shrinking growth in the large US market. Challenges to

traditional services, H1B visa issues and US government action fears

persisted on overhangs over technology stocks and consequently,

technology funds

Exhibit 6: Midcap funds outperform other categories on one year basis with pharma funds still

under pressure (returns as on January 15, 2018)

S

44.6

44.5

41.9

35.7

34.0

29.7

23.3

3.6

18.9

15.6

15.5

10.2 13.4

10.6

6.1

3.6

25.9

18.2

17.8

12.7

18.2

15.0

16.7

15.7

0

5

10

15

20

25

30

35

40

45

50

Mid cap FMCG Infrastructure Banking Multi cap Large Cap Technology Pharma

Returns (%

)

1 year 3 Year 5 year

Source: Crisil, ICICIdirect.com Research ; Returns over one year are compounded annualised returns

Exhibit 7: Strong inflows continue into equity, ELSS schemes

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Net Inflo

w ( | C

r )

Equity + ELSS

Source: Amfi, ICICIdirect.com Research

Exhibit 8: Robust inflow in equity funds push up AUM to cross | 7.5 lakh

crore

350000

400000

450000

500000

550000

600000

650000

700000

750000

800000

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

| lakh C

rore

Equity +ELSS



Page 7

Equity diversified funds

Equity diversified funds witnessed robust growth over the last three

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

last three years in FY14-17, the AUM of large cap funds rose 125%,

multi cap funds AUM rose 109% while midcap funds AUM rose 196%

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

performance (Exhibit 8), midcap funds have done exceedingly well and

outperformed. This is reflected in the trend of broader indices

outperforming bellwether indices over this time frame. However, large

cap funds have reversed that trend at some points during the past few

months

Multicap funds are relatively more market cap agnostic and hold

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

pure midcap/small cap funds. Multicap funds generally hold around 50-

60% of their portfolio in large cap stocks and 30-40% in midcap stocks.

They have benefited by capturing a part of the midcap rally during this

period and, thus, outperformed pure large cap funds

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

market segment is more important than allocation to a particular

segment or sub sector. Multicap funds offer fund managers flexibility to

allocate funds across all market segment and are, therefore, relatively

better placed

Exhibit 9: Blistering AUM growth across all equity diversified fund sub-categories from 2014

44868

42961

68378

83216

96123

153862

70222

65727 111229

131870

147630

232716

16275

15232

42623

58607

71316

126241

0

30000

60000

90000

120000

150000

180000

210000

240000

270000

300000

Dec 1

2

Dec 1

3

Dec 1

4

Dec 1

5

Dec 1

6

Dec 1

7

|crs

Large Caps Multi Caps Mid Caps

Source: ACE MF

Recommended funds

Large cap

Birla Sunlife Frontline Equity

ICICI Prudential Focused Bluechip Equity

SBI Bluechip Fund

Multi cap

Franklin India Prima Plus Fund

Kotak Select Focus Fund

Motilal Oswal MOSt Focused Multicap 35 Fund

Midcap

HDFC Mid-Cap Opportunities Fund

Franklin India Smaller Companies Fund

L&T Emerging Businesses Fund

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

View

Short term: Positive

Long-term: Positive

http://content.icicidirect.com/newsiteContent/Research/MutualFunds.asp


Page 8

Equity infrastructure funds

Reduction of GST rates, re-stocking post GST implementation and a

gradual improvement in demand are expected to help building

materials companies post decent topline growth in Q3FY18. For cement

companies, reduction of sand mining issues in a few states coupled

with capacity expansion is expected to perk up growth. Capital goods

companies saw an encouraging pick-up in order inflows in Q3FY18.

This included a few large orders in urban infra (trans harbour link) and

hydrocarbon space (international + domestic markets). Power

generation in April-November 2017 was up 4.3% YoY while in

November 2017 the same was up marginally at ~1.7% YoY

The government recently announced its historic road building

programme to construct 83677 km of roads over the next five years at a

total outlay of | 6.92 lakh crore. This also includes phase 1 of

Bharatmala project, which includes construction of 34800 km of roads

at an investment of | 5.35 lakh crore in the next five years. This

programme could provide a huge fillip to the road awarding activity

over the next few years, which is beneficial for EPC players

A number of infrastructure related government schemes and the

introduction of new regulatory measures are expected to help

organised players in the infrastructure space over the medium to long

term, placing infrastructure and ancillary stocks on an attractive footing

Preferred Picks

Aditya Birla SL Infrastructure Fund Refer

www.icicidirect.com for

details of the fund

L&T Infrastructure Fund

Reliance Diversified Power Sector Fund

Equity banking funds

Owing to demonetisation last year in Q3FY17, the credit growth of the

banking system has increased to 10.6% YoY as on December 22, 2017.

Deposit growth, on the other hand, has fallen to 3.3% YoY. Thus, the

overall credit to deposit ratio (CD ratio) has improved ~100 bps QoQ to

73.6% while the incremental CD ratio has been >100% in Q3FY18.

Slippages for Q3FY18 are expected to remain steady on a QoQ basis. G-

sec yields have risen sharply by 67 bps to 7.32% in Q3FY18 and by 81

bps since early Q1FY18. Thus, treasury gains are seen muted with MTM

losses needing to be provided. Overall NII growth of the sector is

expected to be healthy in Q3FY18 owing to a rise in CD ratio, increased

credit growth and full impact of savings rate cut by most banks

We remain optimistic on the banking sector keeping in mind the

anticipated pick-up in credit offtake. Steady margins and peaking out of

the NPA cycle are expected to further aid profitability. From a long term

point of view, the PSU bank recapitalisation programme is a structural

positive. Finer details about recapitalisation bonds are awaited. The

continued government push on financial inclusion, enhanced

awareness and increased usage of digital or electronic payments will be

positives for the banking industry from an operating cost perspective

Preferred Picks

ICICI Prudential Banking & Financial Services Refer to


details of the fund

Reliance Banking Fund

UTI Banking Sector Fund

View

Short-term: Positive

Long-term: Positive

View


Long-term: Positive




Page 9

Equity FMCG Funds

In terms of Q3FY18 results, defensive sectors like FMCG and

discretionary consumption are expected to report revenue growth on

account of low base of a demonetisation impacted Q3FY17. In the

FMCG space, the positive impact of the low base was accentuated by a

swift recovery in rural demand

We maintain our positive outlook on the FMCG sector backed by the

rural consumption revival led by largely normal monsoons and the

government’s focus on increasing farm incomes. We also expect GST

implementation to eventually provide a big boost to FMCG companies,

particularly those present in personal care and household categories

Equity Pharma funds

In the healthcare space, a slowdown in the US is likely to overshadow

domestic growth, which is expected to grow from a low base. On the

hospital front, growth is likely to be driven by newly commissioned

hospitals and lower base of demonetisation impacted Q3FY17. The past

two quarters have been poor for the pharma sector. Despite faster

clearances for plants, price erosion is borne out by intense competition,

client consolidation in the US and a stronger rupee

However, despite these apprehensions, in the long term, we remain

optimistic about the sector’s prospects on the back of attractive

valuations and earnings momentum pick-up led by incremental product

launches in the US besides normalising Indian formulations growth

Preferred Picks

Reliance Pharma Fund Refer to

www.icicidirect.com

for details of the fund

SBI Pharma Fund

UTI-Pharma & Healthcare

Equity Technology Funds

Tier-1 IT companies are likely to report muted constant currency growth

in Q3FY18 as weak seasonality kicks in the quarter accompanied by the

transformation that the IT industry is going through. Slight rupee

depreciation in the past quarter would positively impact margins.

Subdued corporate results demonstrate the shifting business

environment in the technology sector. Future expectations would be

centred around management guidance

We maintain our neutral stance on the sector as the industry faces

challenges related to US immigration rules and growing protectionism

around the world leading to marginal IT spending by companies. The

industry would continue to witness pricing pressure in its traditional

business, which is currently unable to offset newer revenue streams

from digital areas that enjoys higher margins

Preferred Picks

ICICI Prudential Technology Fund Refer to


details of the fund

Preferred Picks

ICICI Prudential FMCG Fund Referwww.icicidirect.com

for details of the fund SBI FMCG Fund

View

Short-term: Neutral

Long-term: Neutral

View

Short-term: Neutral

Long-term: Positive

View


Long-term: Positive





Page 10

Exchange Traded Funds (ETF)

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

ETFs and gold ETFs

An equity index ETF tracks a particular equity index such as the BSE

Sensex, NSE Nifty, Nifty Junior, etc

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

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

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

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

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

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

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

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

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

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

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

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

on a closing NAV basis

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

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

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

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

Fund — SBI ETF Nifty and SBI Sensex ETF

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

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

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

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

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

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

April 2017

Over 400 ETFs are traded globally. ETFs are transparent and cost

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

by the decision on getting exposure to that asset class

Exhibit 10: ETFs recorded outflows for first time since July 2015

4349

6748

930

3599

456 5841365 1753 1513

1968 1675

12447

-1604-4000

-2000

0

2000

4000

6000

8000

10000

12000

14000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Net Inflo

w ( | C

r )


Exhibit 11: ETF AUMs remain strong

28834

37412

40147

44436

45899

47584

48359

52823

53734

55166

60107

70041

70353

0

10000

20000

30000

40000

50000

60000

70000

80000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

| C

rore

Other ETFs


Traded volumes should be the major criterion that is used

while deciding on investment in ETFs. Higher volumes

ensure lower spread and better pricing to investors...

Tracking error, though it should be considered, is not the

deciding factor as variation among funds is not huge...

..traded volume should be the major criteria to be

considered while deciding on investment in ETFs.

Higher volumes ensure lower spread and better

pricing to investors...

..tracking error though should be considered but is

not the deciding factors as variation among funds

is not huge...


Page 11

Balanced funds

The balanced funds category continued to receive significant flows,

with the average monthly inflow (net) for 12 months to December 2017

amounting to ~ | 6500 crore

The AUM of balanced funds has witnessed a stellar increase during this

period, more than doubling to | 167385 crore in December 2017 from

| 64954 crore in the year ago period

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

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

for first time retail equity investors. In FY17, balanced funds AUM

growth outpaced all other categories bar non-gold ETFs

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

is invested in equities. Hence, as per provisions of the Income Tax Act,

1961, any capital gains over a year become tax free. Also, dividends

declared by funds are tax free in the hands of the investor

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

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

corpus is invested in balanced funds, 100% shall have lower taxation

applicable as mentioned above. Thus, balanced funds offer the benefit

of equity taxation on debt component

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

investment avenue as the debt proportion serves to protect on

intermediate relief rallies or the downturn while providing minimum

65% participation on further upsides

Exhibit 12: Inflows into balanced funds bounce back after some

moderation in the previous two months

3,947

3,304

4,562

5,952

7,136

7,663

7,458

7,864

8,783

8,141

5,897

7,614

9,756

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Net Inflo

w ( | C

r )


Exhibit 13: YoY 156% growth in AUM of balanced funds

64954

71021

77126

84763

93530

102156

109513

121243

128320

134868

147460

155105

167385

13000

33000

53000

73000

93000

113000

133000

153000

173000

193000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

| C

rore

Balanced


Preferred Picks

ICICI Prudential Balanced Fund

HDFC Balanced Fund

Birla Sun Life Balanced 95 Fund

DSP Blackrock Balanced Fund

L&T India Prudence 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


Long-term: Positive



Page 12

Monthly Income Plans (MIP)

An MIP offers investors the option to invest in debt with some

participation in equity, ~10-25% of the portfolio. They are suitable for

investors who seek higher returns from a debt portfolio and are

comfortable taking nominal risk. The debt corpus of the portfolio

provides regular income while the equity portion of the fund provides

alpha. However, returns can also get eroded by a fall in equities

MIPs can be classified into aggressive MIP and conservative MIP based

on its equity allocation. Risk averse investors should invest in MIPs with

lower equity allocation to avoid capital erosion

The change in taxation announced in the Union Budget 2014, shall be

applicable to MIP funds (refer debt funds section for details)

Preferred Picks

Aditya Birla Sun Life MIP II - Wealth 25 Plan

ICICI Prudential MIP 25

SBI Magnum MIP Fund

SBI Magnum MIP Floater Fund

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

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 while cost of funding makes futures positions

biased

Arbitrage funds are classified as equity funds as they invest into equity

share and equity derivative instruments. Since these are classified as

equity funds for taxation, dividends declared by the funds are tax free.

No capital gains tax 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. A range bound market does

not give ample room to create arbitrage positions

Preferred Picks

ICICI Prudential Equity - Arbitrage Fund – Regular

IDFC Arbitrage Fund - (Regular)

Kotak Equity Arbitrage Fund

SBI Arbitrage Opportunities Fund


View

Short-term: Neutral

Long-term: Positive

View

Short-term: Neutral

Long-term: Neutral

MIP should be a preferred debt investment for funds that

need to be parked for over two years




Page 13

Debt funds

Exhibit 14: Category average returns

-2.5

1.6

7.2

1.3

3.4

7.1

4.4 5

.4

7.7

5.7

6.2

7.6

6.2

6.2 7

.1

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

6 months 1 year 3year

%

Gilt Funds Income LT Income ST Income UST Liquid

Source: ACE MF, ICICIdirect.com Research

Note : Returns as on January 15, 2018; All returns are compounded annualised

Exhibit 15: G-sec yield curve

6.61

7.06

7.26 7.28

6.29

6.62

6.99

7.19

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

1yr 3yr 5yr 10yr

Yie

ld (%

)

12-Jan-18 12-Dec-17


Exhibit 16: Corporate bond curve

7.35

7.67

7.86

7.81

7.01

7.38

7.56

7.96

6.4

6.8

7.2

7.6

8.0

1yr 3yr 5yr 10 yr

Yie

ld (%

)

12-Jan-18 12-Dec-17


Benchmark 10 year G-Sec has witnessed yields

hardening to 15 month highs in December

Interest rates moved up secularly across G-Sec and

corporate bond categories


Page 14

Liquid Funds

Yields on money market instruments viz. less than one year CDs and

CPs in which liquid fund predominantly invest, have spiked over the last

month in the face of reducing liquidity

In an uncertain environment, liquid funds remain well placed to park

money with low volatility

For less than a year, individuals in the higher tax bracket should opt for

dividend option as the dividend distribution tax @ 28.325% is

marginally lower. Also, though the tax arbitrage has reduced, they still

earn better pre-tax returns over bank savings (3-4%) and current

accounts (0-3%)

Changes in taxation rules announced in Union Budget 2014 are also

applicable to liquid funds, as post tax returns in less than a three-year

period get reduced for individuals in the higher tax bracket (30% tax

slab) and for corporate

Exhibit 17: Call rates below repo rate

5

5.4

5.8

6.2

6.6

7

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

%

Call rate


Exhibit 18: CP/CD yields

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

%

3M CD 3M CP


Exhibit 19: Flows into liquid funds remain volatile on institutional activity

26,943

10,541

8,227

-15,147

99,403

-64,692

-12,739

-19,511

21,352

4,833

-13,261

77,408

-127,597

-300,000

-260,000

-220,000

-180,000

-140,000

-100,000

-60,000

-20,000

20,000

60,000

100,000

140,000

180,000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Net Inflo

w ( | C

r )


Exhibit 20: AUM remains healthy

469675

496696

520020

543541

568770

583557

591377

629456

643926

659182

707989

733166

771134

300000

400000

500000

600000

700000

800000

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

| la

kh C

rore

Money Market


Preferred Picks

HDFC Cash Management Fund - Savings Plan

SBI Magnum InstaCash

Reliance Liquid Fund - Treasury Plan


View

Neutral



Page 15

Income funds

Benchmark G-Sec yields continued to be under pressure owing to a

steep rise in crude oil prices, higher inflation data and fears of fiscal

slippage. Bond markets were volatile in mid-January over concerns

regarding RBI’s reluctance to provide special dispensation to banks to

spread treasury losses over a longer period, and thereafter, on

reduction in earlier announced additional borrowing programme. A

pick-up in CPI inflation in December to a 17-month high of 5.21% was

slightly above expectations. It followed consecutively higher inflation

readings from July to November. The December MPC policy document

outlined aspects such as persistence in core & fuel inflation, HRA

implementation by the central government and the uncertainty

surrounding fiscal discipline as some factors influencing its decision to

maintain status quo on rates. Food prices rose in December on the back

of a spike in vegetables and eggs while the percolation effects of HRA

implementation for government employees and crude-led spurts in the

fuel basket were also apparent. The RBI marginally revised upwards its

inflation projection for H2FY18 by 10 bps to 4.3-4.7%

Short-term funds or short term funds with some dynamic allocation to

G-sec should be preferred over pure G-Sec funds or long-term duration

funds. Short-term debt funds remain a stable performing category,

especially in the current volatile environment. Credit funds with

reasonable credit quality should be preferred over an aggressive credit

fund

Exhibit 21: Income funds inflows

-33,1

82

28,5

88

10,8

64

-56,2

47

34,6

47

5,1

24

-20,6

85

60,0

84

8,3

90

-50,0

90

40,8

45

9,3

74

-60,1

51

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

Dec-1

6

Feb-1

7

Apr-

17

Jun-1

7

Aug-1

7

Oct-

17

Dec-1

7

Net In

flow

s

(| .

Cr)


Exhibit 22: AUM remains stable on consistent inflows 748071

783778

794679

743783

780797

792734

778266

845484

858188

809965

855478

867736

808252

400000

500000

600000

700000

800000

900000

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

| C

rore

Income


Recommended funds

Ultra Short Term Funds

Birla Sun Life Savings Fund

ICICI Prudential Flexible income

Short Term Funds

Birla Sunlife short term fund

HDFC Short Term Fund

ICICI Pru Short Term Plan

Short Term Funds – Credit opportunities

Axis Regular Savings Fund

Aditya Birla Sunlife Medium Term Plan

L&T Short Term Fund

Long term/Dynamic

Birla Sunlife income plus

ICICI Prudential Dynamic Bond Fund

IDFC dynamic bond fund


View

Ultra-short term: Neutral


Long-term: Neutral



Page 16

Gilt Funds

Yield on the benchmark 10-year government bond hardened

appreciably in early January towards the 7.4% mark (new series). Soft

inflation combined with strong institutional flows into debt markets

helped push down benchmark 10-year G-sec yield by ~45-50 points in

May-July. The markets were not enthused by the widely expected rate

cut in August and lower-than-expected dovish RBI commentary in

October. A significant rebound in July-December CPI readings was

followed by a rise in yields by ~85 bps from ~6.50% (early September)

to 7.36% (January 16)

RBI held status quo on policy rates and maintained a neutral stance in

its December 6 policy meet as expected. November’s pick-up in CPI

inflation to a 17 month high of 5.21% was marginally above

expectations. It followed consecutively higher inflation readings from

July to November. The December MPC policy document outlined

aspects such as persistence in core & fuel inflation, HRA implementation

by the central government and uncertainty surrounding fiscal discipline

as some factors influencing its decision to maintain status quo on rates.

Food prices rose in December on the back of a spike in vegetables and

eggs while the percolation effects of HRA implementation for

government employees and crude-led spurts in the fuel basket were

also apparent. The RBI marginally revised upwards its inflation

projection for H2FY18 by 10 bps to 4.3-4.7%

Given how inflation seems to be edging higher post June driven by

higher fuel prices, GST, HRA implementation, unfavourable base effect

in vegetable prices and US Fed rate hike in December, there appears

quite limited scope for yields to soften. Allocation to pure G-sec or

duration funds should be avoided given their historical outperformance

and G-sec yields trading at the lower end of their historical range.

Historically, it has been observed that years of good returns in G-sec

are followed by lower returns

Exhibit 23: Historical trend in return from G-sec indicates, going forward, returns likely to be lower

-15

-10

-5

0

5

10

15

20

25

30

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Crisil 10 Yr Gilt Index

%

Source: ACE MF

Preferred Picks

Aditya Birla Sun Life Gilt Plus – PF Plan

ICICI Pru LT Gilt Fund – PF Option


Allocation to pure G-Sec or duration funds should be

avoided given their historical outperformance and G-sec

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

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

three years. It is likely the return will be significantly

decline, going forward

View

Short-term: Neutral

Long-term: Neutral



Page 17

Gold: Outlook anchored to Fed movement

Global prices picked up after mid-December and continued to rise till

mid-January. Starting from a base of ~US$1280 per ounce

(December1), prices dipped to US$1244 (December 12) before going on

a sustained run towards ~US$1303 per ounce (December 31) and then

beyond it to ~US$1340 per ounce (January 15)

A sharp rupee appreciation in 2017 of ~5.9% against the US dollar

curbed gains in domestic gold prices, limiting them to ~5.2% for the

year against ~13.1% gain in global prices

Federal Reserve’s movement on US interest rates has driven the gold

price outlook in the absence of major concerns on the geopolitical front.

Earlier, the safe haven status of the yellow metal had sparked buying

interest as concerns surrounding North Korea escalated in August

The Fed hiked interest rates by 25 bps as expected in December. This

was the third hike in 2017 as per earlier outlined trajectory. US bond

yields and the US dollar both gained marginally in the days following

the hike decision. These movements could weigh on gold prices as the

metal is denominated in that currency (thus losing value when the

currency appreciates) and does not bear interest (thus suffering from a

higher opportunity cost)

US bond yields hardened towards the 2.4% mark in the run up to the

Fed meeting as expectations surrounding the rate hike gathered pace.

Thereafter, bond yields have move toward 2.5%

Weakness in the US dollar has helped drive gold prices upwards in

recent weeks. The dollar denominated metal gains when the currency

weakens

US inflation remains well below the targeted 2% mark but has seen a

marginal pick-up in recent months. Unemployment is at a multi-year

low. Three hikes are pencilled in for 2018 but decisions would be data

driven

Gold has historically been looked at as a relatively risk-free asset. Its

price movement both in India and globally, is impacted by any actual or

perceived risk build-up on economic, political or natural fronts

Exhibit 24: Gold prices perk up in December

1100

1200

1300

1400

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Price ($/ounce)


Exhibit 25: Indian price rise more subdued on YTD basis

26000

28000

30000

32000

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Nov-17

Dec-17

Jan-18

Price (|/10 grams)



Page 18

Model Portfolios

Equity funds model portfolio

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

returns almost as good as equity markets through the mutual fund route.

We have designed three mutual fund model portfolios, namely,

conservative, moderate and aggressive mutual fund portfolios. These

portfolios have been designed keeping in mind various key parameters like

investment horizon, investment objective, scheme ratings, and fund

management.

Exhibit 26: Equity model portfolio

Particulars Aggressive Moderate Conservative

Review Interval Monthly Monthly Quarterly

Risk Return High Risk- High

Return

Medium Risk -

Medium Return

Low Risk - Low

Return

Funds Allocation % Allocation

Franklin India Prima Plus 20 20 20

Birla Sunlife Frontline Equity - 20 20

ICICI Prudential Dynamic Plan - - 20

SBI Bluechip Fund 20 20 20

Kotak Select Focus Fund 20 20 -

HDFC Midcap Opportunities 20 10 -

Franklin India High Growth Companies Fund 20 - -

Birla SL Dynamic Bond Fund - 10 20

Total 100 100 100

Source: ICICIdirect.com Research

Exhibit 27: Model portfolio performance: One year performance (as on December 31, 2017)

33.4%

27.1%

23.8%

32.2%

14%

19%

24%

29%

34%

Aggressive Moderate Conservative BSE 100

%

Aggressive Moderate Conservative BSE 100

Source: Crisil Fund Analyser, ICICIdirect.com Research


Page 19

Debt funds model portfolio

We have designed three different mutual fund model portfolios for different

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

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

various key parameters like investment horizon, interest rate scenarios,

credit quality of the portfolio and fund management, etc.

Exhibit 28: Debt funds model portfolio

Particulars

0 – 6 months 6months - 1 Year Above 1 Year

Objective Liquidity

Liquidity with

moderate return Above FD

Review Interval Monthly Monthly Quarterly

Risk Return

Very Low Risk -

Nominal Return

Medium Risk -

Medium Return

Low Risk - High

Return

Funds Allocation

Ultra Short term Funds

Birla SL Savings Fund 20

ICICI Pru Flexible Income Plan 20

Short Term Debt Funds

Axis Regular Savings Fund 20

Birla Sunlife Short Term Fund 20 20

Birla Sunlife Short Term Opportunites Fund 20 20

Reliance Regular Savings Fund 20

HDFC Short Term Opportunities Fund 20 20

ICICI Prudential Regular Savings 20

ICICI Prudential Short Term Fund 20

IDFC SSI Short Term 20

UTI Short Term Income Fund 20

HDFC Corporate Debt opportunities fund 20

Total 100 100 100

Time Horizon

% Allocation

Source: ICICIdirect.com Research

Exhibit 32: Model portfolio performance: One year performance (as on December 31, 2017)

5.82 5.73

5.34

7.02

5.97

3.54

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

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 – Blended Index with 50% weight to Crisil

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


Page 20

Top Picks

Exhibit 33: Category wise top picks

Largecaps Birla Sun life Frontline Equity Fund

ICICI Pru Focused Bluechip Fund

SBI Bluechip Fund

Midcaps HDFC Midcap Opportunities Fund

Franklin India Smaller Companies Fund

L&T Emerging Businesses Fund

Multicaps Franklin India Prima Plus Fund

Kotak Select Focus Fund

Motilal Oswal MOSt Focussed Multicap 35 Fund

ELSS Aditya Birla Tax Relief 96 Fund

Axis Long Term Equity Fund

Reliance Tax Saver Fund

Franklin India Taxshield

Balanced HDFC Balanced Fund

ICICI Pru Balanced Fund

Birla Sun Life Balanced 95 Fund

DSP Blackrock Balanced Fund

L&T India Prudence Fund

Liquid HDFC Cash Mgmnt Saving Plan

ICICI Pru Liquid Plan

Reliance Liquid Treasury Plan

Ultra Short term Birla Sunlife Savings Fund

ICICI Pru Flexible Income Plan

UTI Treasury Advantage Fund-Inst

Short term Birla SL Short term Fund

HDFC Medium Term opportunities Fund

Kotak Banking and PSU Debt Fund

Credit Opportunities Axis Regular Savings Fund

Birla Sun Life Medium Term Plan

L&T Short Term Income Fund

Income Funds ICICI Pru Income Fund

Equity Funds & Equity-oriented Funds

Debt Funds & Debt-oriented Funds




Page 21

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st

Floor, Akruti Trade Centre,

Road No. 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]

Disclaimer

ANALYST CERTIFICATION

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

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

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) AMFI Regn. No.: ARN-0845. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990.Registered office of I-

Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate,Mumbai - 400020, India. ICICI Securities is a full-service, integrated investment banking and is, inter alia, engaged in the

business of stock broking and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries

engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, distribution of financial products etc. (“associates”), the details in

respect of which are available on www.icicibank.com.

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

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

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

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

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

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

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

investment objectives, financial positions and needs.

This may not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment risks. ICICI Securities and affiliates accept

no liabilities for any loss or damage of any kind arising out of the use of this indicative portfolio.

Past performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may be holding all or any of the units included

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

Discretionary) to its clients.

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

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

offered by I-Sec.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

in the preceding twelve months.

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

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

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

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

research report.

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