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1Sundaram BNP Paribas Tax Saver Sundaram BNP Paribas Asset Management1www.sundarambnpparibas.inwww.sundarambnpparibas.in Sundaram BNP Paribas Asset Managementwww.sundarambnpparibas.in

SIP

SIP

Equity Market Insights

Sundaram SKORe

Sundaram Keys to Optimum Returns

An Investor Education Initiative


SIP

SIP Annual returns 17.6% for equity index

Figures as of July 2008; Data Source: Bloomberg; Analysis: In house

0

5000

10000

15000

20000

25000

Apr-79

Dec-80

Nov-82

Aug-84

May-86

Jan-88

Sep-89

Jun-91

Mar-93

Sep-94

Mar-96

Sep-97

Feb-99

Jul-00

Dec-01

May-03

Sep-04

Feb-06

Jul-07

First Major Bull Market

22% one-day decline in US, no

linkage thenHarshad Mehta

Scam

Asian Crisis; Unaffected

Tech bull market &

bust

Start of five-year

bull market

All time high & correction begins

BSE Sensitive Index

Deep corrections do not matter for long-term investors


SIP

SIPAverage Sensex levels for five-year blocks


0

2000

4000

6000

8000

10000

12000

Apr-79

Dec-80

Nov-82

Aug-84

May-86

Jan-88

Sep-89

Jun-91

Mar-93

Sep-94

Mar-96

Sep-97

Feb-99

Jul-00

Dec-01

May-03

Sep-04

Feb-06

Jul-07

1979–1984: 183 1984–1989: 480

1989–1994: 1876

1994–99: 3568 1999–2004: 3998

2004–2008 YTD: 11,078Average index level over 29-+ years: 3640

Almost 25 years of close to or below long-term average

Inde

x Le

vels


SIP

SIPBuild up of annual returns over the years


-5

0

5

10

15

20

25

30

Dec-79

Dec-81

Dec-83

Dec-85

Dec-87

Dec-89

Dec-91

Dec-93

Dec-95

Dec-97

Dec-99

Dec-01

Dec-03

Dec-05

Dec-07

Lowest level of annual returns over 25 years: 14.6%

Long-term average over 29 years: 17.6%


SIP

SIP Volatility of returns reduces over time

-30

-15

0

15

30

45

60

75

90

3 years 5 years 10 years 15 years 20 years

• Height of each bar shows the range of returns. Smaller the range shown by the bar, the better for investors

• Longer the time frame, the greater is the reduction in risk without an impact on returns

High 81.7 53.0 34.7 27.8 21.1

Low -15.5 -7.0 -2.1 7.7 13.7

Average 19.9 18.5 17.2 17.2 16.9Data Source: Bloomberg; Analysis: In house using

SKORe as of July 31, 2008

Effective Annual

Returns %

Retu

rns

%


SIP

SIP Benefit of discipline long-term investing

114

44

127

22

Alwaysinvested

Missed 10 BestDays

Missed 20 BestDays

Missed 30 BestDays

Missed 40 BestDays

Value now of Re 1 invested in SENSEX over a 29-year period

Significant gains only if you had remained invested at all timesDaily Returns since launch to July 2008

Data Source: Bloomberg; Analysis: In house using


Rs

Rs

RsRs

Rs

POWER OF COMPOUNDING ON BEST DAYS


SIP

SIP Emphatic NO to market timing


Average annual return: 17.35%

Average annual return: 17.27%

No Market Timing

Market Timing

• More certain outcome

• Low risk

Average Annual Returns provided based on the analysis given in the next slide

• Close-to-impossible outcome

• High risk


SIP

SIP

• Certain outcome over the past 29.3 years• Risk only in line with the market and no more

• Practical approach for every investor

Time matters, not timing

16.618.1 17.0 17.3

Highestvalue day

Lowestvalue day

Maximumgain day

Maximumloss day


One-timed investment every year (Rs 12000)

Amount Invested in Sensex: 3,52,000

Periodic investment every month (Rs 1000)

Amount Invested in Sensex: 3,52,000

One market-timed investment every year

69.4 96.2 77.4 83.0

CAGR %

17.4 17.3 17.3 17.4

1 5 10 20

Investment every month on specific dates

82.1 80.1 81.6 81.6

CAGR %

Value Rs

Lakh

Value Rs

Lakh

No Market TimingMarket Timing

DateDay

Probability of predicting each day every year

successfully is .0040 and over 29 years, almost no

chance – only more risk


SIP

SIP Equity is the superior asset class to beat inflation

Asset Class Years

25 20 15 10 5

Sensex 16.7 15.2 14.5 20.0 22.4

Gold 6.6 8.4 11.3 17.1 22.7

FD 9.2 9.2 8.8 7.5 6.6

Bond yield 10.1 10.2 9.9 8.8 7.8

Inflation 6.7 6.8 5.8 5.1 5.6

Compounded annual returns based on investing Rs 1000-a-month

Figures as of July 2008Data Source: Bloomberg; Analysis: In house

Returns in %

Only equity outpaces inflation comfortably across time periods


SIP

SIP Wealth creation in different asset classes

Asset Class Years

25 20 15 10 5

Investment 3.0 2.4 1.8 1.2 0.6

Equity 36.7 13.6 5.9 3.5 1.0

Gold 7.4 6.0 4.5 3.0 1.1

FD 11.8 6.8 3.7 1.9 0.8

Bond yield 14.1 7.9 4.1 2.0 0.8

Value in Rs lakh

Rs 1000-a-month invested over different time periods is now worth

Figures as of July 2008

Even after the deep correction in 2008, wealth creation in equity is significantly superior to other asset classes

Data Source: Bloomberg; Analysis: In house; Rs 1000-a-month invested n Equity is an investment made in Sensex


SIP

SIP

Rs 1000 a-month investment till age 55

Portfolio value reckoned at age 60

Asset Allocation: Equity 70% and Fixed Income 30%

Returns based on historical average. In the equity, based on the Sensex and in the Fixed income, based on the government bond yield

Returns assumed 15.3%

Start early to reap maximum benefits

155.4

71.6

32.5

14.35.8 1.8

25 years 30 years 35 years 40 years 45 years 50 years

Data Source & Analysis: In house

3.6 3.0 2.4 1.8 1.2 0.6

Starting age of investing

Value in Rs lakh

From age 25, Rs 1000-a-month could deliver Rs 1.55 crore at age 60

Amount Invested at Rs lakh


SIP

SIPEarly start also means more by way of gains

Starting Age

Year of investing

Amount Invested

Value of investment

Share Cost

Share Gain

Years Years Rs Lakh Rs Lakh % %

25 30 3.6 155.4 2.3 97.7

30 25 3.0 71.6 4.2 95.8

35 20 2.4 32.5 7.4 92.6

40 15 1.8 14.3 12.6 87.4

45 10 1.2 5.8 20.7 79.3

50 5 0.6 1.8 32.5 67.5

Data Source & Analysis: In houseThe returns and values are indicated and not assured

Early Start

Late Start


SIP

SIP

SIP period in months 12 36 60 120

% of SIP with positive returns 68 82 86 91

% of SIP with negative returns 32 18 14 9

Average annual returns 11 13 15 19

Multiple benefits for longer SIP periods

Data Source: Bloomberg; Analysis: In house using


Risk-return profile for SIPs over different periods in Sensex


SIP

SIPImportance of investing in difficult phases

Analysis based on Rs 1000-a-month SIP between 1997-2006

Daily Returns since launch to July 2008

Period Nature of Market Share in Wealth (%)

Average Sensex

1997 Lackluster, Poor Depth 11.5 3774


1999 Lackluster, tech boom starts 11.0 3990

2000 Tech-led boom & bust 9.4 4637



2003 Lackluster First Half 11.7 3789

2004 Bull market continues 7.8 5535

2005 More strength to bullish phase 6.0 7313

2006 Bullish Phase 3.8 11345

Data Source: Bloomberg; Analysis: In house

About 75% of wealth creation attributable to investing during tuff times


SIP

SIP Periodic Table of Investment Returns

1Diversified Fund

26.7

2CNX Mid Cap

20.2

3BSE 200

18.7

4BSE 100

18.6

5MSCI India

17.9

6Nifty

17.2


Diversified equity funds outpace indices comfortably over ten years

7Sensex

16.7

8Nifty Junior

16.4

9CNX 500

15.9

10MSCI EM

13.3

11Gold

12.3

12I-SEC Bond

10.0

RANK

RANK

1999-2008 YTD


SIP


Analysis: Sundaram BNP Paribas Asset Management; Methodology: www.sundarambnpparibas.in

Diversified equity funds: most top quartile presence & absent in 4th quartile


SIP



Diversified equity funds and mid cap stocks dominate top end


SIP

SIP Contact us

Call: 044 28578700

Toll Free: 1800-425-1000

www.sundarambnpparibas.in

SMS: SFUND to 56767

E-mail:[email protected]


SIP

SIP Disclaimer

Mutual fund investments are subject to market risks. Please read the offer document carefully before

taking an investment decision. Risk Factors: All mutual funds and securities investments are subject

to market risks, and there can be no assurance or guarantee that fund's objectives will be achieved.

NAV may go up or down, depending on the factors and forces affecting the securities market. There

is uncertainty of dividend distribution and risk of capital loss. Statutory: Mutual Fund Sundaram

BNP Paribas Mutual Fund is a trust under the Indian Trusts Act, 1882 Sponsors (Collective liability is

limited to Rs 1 lakh): Sundaram Finance Limited & BNP Paribas Asset Management. Investment

Manager: Sundaram BNP Paribas Asset Management Company Ltd. Trustee: Sundaram BNP Paribas

Trustee Company Ltd. Past performance of Sponsors//Asset Management Company/Fund does not

indicate or guarantee future performance. General Disclaimer: Equity Market Insights is for

information purposes only. Equity Market Insights should not be construed as prospectus, offer

document, offer, solicitation for an investment or investment advice. Information in this document

has been obtained from reliable sources in the opinion Sundaram BNP Paribas Asset Management.

Opinions expressed by authors may not necessarily represent that of the organization. The detailed

disclaimer/disclosures/risk factors available at www.sundarambnpparibas.in must also be treated as

an integral part of this communication.

1 sundaram bnp paribas tax saver sundaram bnp paribas asset management 1 sundaram bnp paribas asset...

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sip annual returns

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