hdfc balanced fund - may 2017 - hdfc mutual...
TRANSCRIPT
This product is suitable for investors who are seeking*:
• Capital appreciation along with current income over long term.
• Investment predominantly in equity and equity related
instruments with balance exposure to debt and money market
instruments.
* Investors should consult their financial advisers if in doubt about
whether the product is suitable for them.
Riskometer
The growth of equity with the foundation of debt.
May 20171
Balanced Funds – A Mix of Equity & A Dash of Debt
• A balanced fund is a portfolio generally comprising equity shares and debt instruments
• Broadly, balanced funds target returns greater than debt schemes with lower volatility than equity schemes
• Balanced funds provide investors the growth of equity with the stability of debt
Re
turn
s
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.
RiskMIP – Monthly Income Plans
Debt Funds
MIP’s
Equity Savings Funds
Balanced Funds
Equity Funds
2
Portfolio Strategy• Steady Reduction In Exposure To Midcaps In CY15-16 and CY 16-17
• Midcaps have outperformed large caps by highest margins in CY14 in last 10 years
(% Return) CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 CY 11 CY 12 CY 13 CY 14 CY15 CY 16
NIFTY 50 36.3 39.8 54.8 -51.8 75.8 17.9 -24.6 27.7 6.8 31.4 -4.1 3.0
NIFTY Midcap 100 35.0 29.0 76.9 -59.4 99.0 19.2 -31.0 39.2 -5.1 55.9 6.5 7.1
Outperformance -1.3 -10.8 22.1 -7.6 23.2 1.3 -6.4 11.5 -11.9 24.5 10.6 4.1
Large cap stocks are comparatively cheaper as
compared to midcaps
Given the convergence in P/E multiples between midcaps vs. large caps, the fund has shifted
allocation towards large companies but continues to hold mid caps with good long term
prospects. Thus, HDFC Balanced Fund is well positioned in the current market environment
Source: Bloomberg, CY- Calendar Year, The current investment strategy is subject to change depending on the market conditions. All calculations are illustrative.
The scheme`s benchmark is the CRISIL Balanced Fund - Aggressive Index
3
200
250
In R
s. T
ho
usa
nd
Crs
Average Market Capitalization
Mid Cap To Large Cap – The ShiftAs Mid caps have become relatively expensive, the fund has shifted to Large Caps
16
18
20
Market Valuation
-
50
100
150
200
De
c/1
2
Ma
r/1
3
Jun
/13
Se
p/1
3
De
c/1
3
Ma
r/1
4
Jun
/14
Se
p/1
4
De
c/1
4
Ma
r/1
5
Jun
/15
Se
p/1
5
De
c/1
5
Ma
r/1
6
Jun
/16
Se
p/1
6
De
c/1
6
Ma
r/1
7
In R
s. T
ho
usa
nd
Crs
HDFC Balanced Fund NIFTY 50 NIFTY Midcap 100
Shift to large
cap stocks
Source: Bloomberg, BF – Blended Forward. Average market capitalisation calculated on weighted average basis based on weight in corresponding
portfolio/index as on quarter ended date. The current investment strategy is subject to change depending on the market conditions. All calculations are
for a clear market understanding and are illustrative. The scheme`s benchmark is the CRISIL Balanced Fund - Aggressive Index
0
2
4
6
8
10
12
14
16
BF P/E - NIFTY Midcap 100 BF P/E - NIFTY 50
Apr-15 Apr-17
4
Benchmark vs Portfolio
Consumer Non Durables
Software
Auto Ancillaries
Petroleum Products
Construction Project
Banks
Overweight Sectors
Construction Project
Power
Auto Ancillaries
For complete portfolio details refer www.hdfcfund.com. Portfolio details provided are as on 30th April 2017 as a percentage of total equity exposure of the fund wherein equity
exposure of the Fund is rebased to 100% to arrive at above weights. The current investment strategy is subject to change depending on the market conditions. Stocks/sectors
referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these sectors. Past performance may or may
not be sustained in future.
Thus, well placed for economic recovery
0 5 10 15 20 25 30
Finance
Power
Auto
Pharmaceuticals
Consumer Non Durables
Benchmark Portfolio
Underweight Sectors
Software
Consumer Non Durables
5
Equity Play• The fund has a balanced mix between
consumption and investment themes.
• Lately, the allocation to economically
sensitive investment themes has increased.
• Lower Interest Rates
growth may provide
markets.
& strong earnings
impetus to equity
Fund Sectoral Break up
13.9
4.3
4.8
6.8
26.0
5.5
6.0
8.2
8.2
25.4
Software
Auto Ancillaries
Petroleum Products
Construction Project
Banks
markets.
• Next leg of market growth to be led by
earnings growth. Earnings are expected to
remain strong over a 3 year horizon.
• Improving growth prospects and margin
outlook for companies are having a positive
impact on Indian markets.
The current investment strategy is subject to change depending on the market conditions. Stocks/sectors referred above are not recommended by HDFC
Mutual Fund/AMC. The Fund may or may not have any present or future positions in these sectors. For complete portfolio details refer
www.hdfcfund.com. Portfolio details provided as on 30th April 2015 and 30th April2017 as a percentage of total equity exposure of the fund as on given
dates.
25.4
0.0
0.9
5.2
11.7
1.0
23.7
3.8
3.9
4.7
5.1
5.5
Others
Finance
Power
Auto
Pharmaceuticals
Consumer Non Durables Apr-15
Apr-17
6
Debt Play
• Portfolio positioned to take advantage of falling
interest rates and upswing in growth
momentum
• While interest rates may fall, the extent may be
limited. Hence, the fund has reduced duration
Portfolio Holdings
0 5 10 15 20 25 30
Cash & Cash Equivalents
Credit Exposure
G-Sec
Apr-17 Apr-15
The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com.
Portfolio details provided as on 30th April 2015 and 30th April2017. Portfolio holdings are as a percentage of total portfolio holdings. HDFC
Feb-15 Feb-17
Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme(s)
Apr-15 Apr-17
Average Maturity
(In Yrs.)
14.45 9.29
Modified
Duration
(In Yrs.)
7.04 5.28
Yield To Maturity 8.03 7.51
-
2
4
6
8
10
12
14
16
Ma
y-…
Oct
-09
Ma
r-1
0
Au
g-1
0
Jan
-11
Jun
-11
No
v-1
1
Ap
r-1
2
Sep
-12
Feb
-13
Jul-
13
De
c-1
3
Ma
y-…
Oct
-14
Ma
r-1
5
Au
g-1
5
Jan
-16
Jun
-16
No
v-1
6
Ap
r-1
7
Ye
ars
Average Maturity
Apr-17 Apr-15
7
A Look At Our Long Term Track Record
As the holding period increases, return profile improves
This is consistent with the belief that equities are a long term asset class and that risk reduces as holding period
increases
CAGR (%) 1 Year 3 Years 5 Years 10 Years 15 Years
HDFC Balanced Fund (Return profile – % of times)
Illustrative Study
CAGR (%) 1 Year 3 Years 5 Years 10 Years 15 Years
More than 20 42 51 30 6 0
More than 15 53 71 67 87 100
More than 10 66 87 95 100
More than 0 86 97 100
More than -10 95 100
More than -20 97
Less than -20 3
Past performance may or may not be sustained in the future. Refer slide titled “Scheme Performance Summary” for complete performance details.
Table represents rolling returns of HDFC Balanced Fund since inception distributed over different holding periods and return brackets, e.g., returns have been more than
20% p.a. in ~42% of 1 year holding periods, more than 20% p.a. in ~51% of 3 year holding periods, more than 20% p.a. in ~30% of 5 year holding periods , more than 20%
p.a. in ~6% of 10 year holding periods, more than 15% p.a. in ~100% of 15 years holding periods (Row 2) etc.
Date of inception for HDFC Balanced Fund: 11th Sept, 2000.
Performance data computed till 31st Mar 2017. Where NAV as on the end of a particular month is not available, NAV of the nearest date available is considered. Returns
are monthly rolling. The holding periods in the above simulation are purely an assumption and not the actual holding period of investors in the Fund. 8
A Track Record of Consistent^ Outperformance
Calendar Year 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
HDFC Balanced Fund -
Growth9.72 3.01 51.47 8.78 26.41 -10.6 25.49 73.42 -36.42 27.58 26.47 27.93 14.6 59.79
CRISIL Balanced Fund -
Aggressive Index6.64 0.48 25.34 6.05 21.21 -14.39 13.57 48.65 -34.34 36.77 25.15 23.22 8.29 43.4
Outperformance Viz-a-vizOutperformance Viz-a-viz
Benchmark3.08 2.53 26.13 2.73 5.2 3.79 11.92 24.77 -2.08 -9.19 1.32 4.71 6.31 16.39
^HDFC Balanced Fund has outperformed in 12 out of 14 calendar years since 2003
Past performance may or may not be sustained in the future . Performance shown since 2003 as the scheme benchmark was launched on 31st March
2002. For complete performance details refer slide no. 17 9
Consistent dividends
The dividends announced since 2013 are as follows :
• With effect from Sep’15, a quarterly frequency for dividend distribution in the existing Dividend Options of
Financial Year 2013 2014 2015
Dividend per unit (Rs) (A) 1.25 1.25 2.00
NAV (Record Date) (B) 19.322 20.682 29.333
Dividend Yield (%) (A/B) 6.5% 6.0% 6.8%
www.hdfcfund.com for Record Date-wise listing of dividends declared.
• With effect from Sep’15, a quarterly frequency for dividend distribution in the existing Dividend Options of
the Regular and Direct Plan of HDFC Balanced Fund has been fixed.
• The dividends announced since September 2015 is as under
^ Past performance may or may not be sustained in the future.
* Dividend Yield has been annualized (Dividend per unit/NAV as on Record date) * Number of quarters
All dividends are on face value of Rs. 10 per Unit. After payment of the dividend, the per Unit NAV falls to the extent of the payout and statutory levy, if any. There
is no assurance or guarantee to unit holders as to rate/quantum of dividend distribution nor that the dividends will be paid regularly. Please log on to
MonthSeptember
28, 2015
December
28, 2015
March 28,
2016
June 27,
2016
September
26, 2016
December
26, 2016
March 27,
2017
NAV/Unit (Record Date) 27.109 27.261 25.73 26.82 28.897 26.95 29.38
Dividend/Unit (Rs.) 0.5 0.5 0.6 0.5 0.5 0.5 0.5
Dividend Yield* 7.4% 7.3% 9.3% 7.5% 6.9% 7.4% 6.8%
10
3.9 3.73.1
5.4 5.7
7.77.2
7.6
1951-60 1961-70 1971-80 1981-90 1991-00 2001-10 2011-15 2016-20E
Real GDP growth (average % change)
Improving Macros FY16 FY17E FY18E
GDP Growth (%) 7.6 7.3 7.7
CPI Inflation 4.9 4.8 4.6
Fiscal Deficit (% Of GDP) 3.9 3.5 3.0
CAD(% of GDP) 1.1 0.8 1.0
FDI (% of GDP) 1.5 2.1 1.7
Healthy Economic Growth
India Calling
Source: Bloomberg, CEIC, CSO, RBI; E- Estimates. Forecast of 2016-2020 from IMF January 2017 World Economic Outlook.
Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation).
1951-60 1961-70 1971-80 1981-90 1991-00 2001-10 2011-15 2016-20E
India one of the better placed economies amongst large
economies of the world.
The impact of demonetization is expected to have a
limited impact on the country`s medium term GDP
growth rate.
With a focus on rejuvenating growth, the government
has undertaken a series of policy measures.
Real GDP Growth (IMF Forecasts) 2017 estimates
World Average 3.4%
United States 2.3%
United Kingdom 1.5%
Japan 0.8%
China 6.5%
Emerging Markets & Developing
Economies Average4.5%
Interest Rates (%) 7.5 6.9 - Latest NA
Source: Morgan Stanley Research
11
Equity Markets – Market Cap to GDP near 10 year lows, i.e. at long term average
India market cap to GDP ratio, calendar year-ends 2005-16 (%) Improving EBITDA margins
15
16
17
18
19
20
21
22
23
24
10
15
20
25
30
35
40
45
69 88
149
56
99 98
61 71 64 81 76 72 65 58
13.215.1
22.8
10.916.8 16.3
12.614.2
15.9
20.017.5
19.317.8
14.8
-
5
10
15
20
25
0
20
40
60
80
100
120
140
160
20
05
20
06
20
07
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09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
E
20
18
E
12
• S&P BSE SENSEX EBITDA margins are stable/improving
• Improving EBITDA margins, lower interest rates should lead to improved EPS/Profit growth in coming years
Source: BofAML
14
15
5
10
96 98 00 02 04 06 08 10 12 14 16
Consumer (%) Healthcare (%) S&P BSE Sensex EBITDA margin (%) - RHS
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
E
20
18
E
Mcap/GDP (%) Sensex PE - 12month forward Average PE
Source: World Bank, Kotak Institutional Equities, updated till 30th Dec, 2016
Source: BofAML
Interest rate likely to be range bound
5.5
6.5
7.5
8.5
9.5
10.5
10 Year Benchmark G-sec Yield v/s Repo Rate
10 year benchmark Repo
Fiscal Deficit – Consolidation continues; from 4.9% in FY13 to 3.2% in FY18BE
Inflation – Likely to undershoot Mar’17 RBI target; average 4.5% in FY18
CAD – Manageable, even with an increase to over 1% in FY18
Global – Heightened external risks due to uncertain policy environment
RBI Policy – “Neutral” stance to continue; prolonged pause
4.5
5.5
Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17
Source: Bloomberg, HDFC AMC
HDFC Mutual Fund/AMC is not guaranteeing any returns on investments made in this Fund. Past performance may or may not be sustained in future.13
Fund Suitability
• Looking for a unique proposition of spreading the investment into two broad divisions – equities
and debt.
• Looking for tax efficiency in asset allocation. Currently, the scheme has been investing in the
range of 65% – 72% of its corpus in equity. (Scheme having an equity corpus of 65% and above is
considered as an equity-oriented fund for taxation purpose)
• Looking for exposure to debt which creates the risk buffer that the investors desire
• Looking for a well diversified portfolio across asset classes:
– Benefit from the growth of equities and
– The stability of debt markets
HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest in the Scheme. Refer Slide 16
& 17 for detailed performance 14
Fund FactsNature of Scheme Open-ended Balanced Scheme
Inception Date (Date
of allotment)
September 11, 2000
Investment Objective To generate capital appreciation along with current income from a combined portfolio of equity and equity-related and
debt & money market instruments
Fund Manager Chirag Setalvad
Investment Plan Regular & Direct
Investment Options Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility
Minimum Application
Amount.
Purchase: Rs. 5,000 and any amount thereafter
Additional Purchase: Rs. 1,000 and any amount thereafter
For further details, please refer to the Scheme Information Document.
Amount.
(Under Each Plan/Option)Additional Purchase: Rs. 1,000 and any amount thereafter
Load Structure Entry Load:
• Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI
registered Distributor) based on the investors’ assessment of various factors including the service rendered by
the ARN Holder.
Exit Load:
In respect of each purchase / switch-in of Units, up to 15% of the units may be redeemed without any exit load from the
date of allotment.
• In respect of each purchase / switch-in of units, an exit load of 1.00% is payable if units are redeemed /
switched – out within 1 Year from the date of allotment.
• No exit load is payable if units are redeemed / switched – out after 1 Year from the date of allotment.
In case of Systematic Transactions such as SIP, GSIP, STP, Flex STP, Swing STP, Flexindex; Exit Load, if any, prevailing on the
date of registration / enrolment shall be levied.
Entry / Exit load shall not be levied on bonus units and units allotted on dividend reinvestment.
Benchmark CRISIL Balanced Fund - Aggressive Index
15
Asset Allocation Pattern
Under normal circumstances, the asset allocation of the Scheme’s portfolio will be as follows:
Types of Instruments Normal
Allocation
(% of Net
Assets)
Normal
Deviation
(% of Normal
Allocation)
Risk Profile
Equities & Equity related instruments 60 20 Medium to High
The scheme may seek investment opportunity in the ADR / GDR / Foreign Equity and Debt Securities subject to SEBI (Mutual Funds)
Regulations, 1996. Maximum exposure to investment in Foreign Securities will be restricted to 40% of the net assets. The scheme may
use derivatives mainly for the purpose of hedging and portfolio balancing (max 20% of net assets) based on the opportunities available
subject to SEBI (Mutual Funds) Regulations, 1996. The scheme will not invest in Foreign securitized debt.
Equities & Equity related instruments 60 20 Medium to High
Debt Securities (including securitized
debt) and Money Market instruments
40 30 Low to medium
16
Scheme Performance Summary
Value of Rs 10,000 invested
PeriodScheme
Returns (%)
Benchmark
Returns (%) #
Additional
Benchmark
Returns (%) ##
Scheme (Rs)Benchmark
(Rs) #
Additional
Benchmark
(Rs) ##
Last 1 year 24.12 15.69 18.53 12,404 11,564 11,847
Last 3 years 20.58 11.62 11.60 17,523 13,903 13,894
Last 5 years 17.97 11.40 12.14 22,836 17,150 17,728
Since inception 16.90 NA 11.79 134,454 NA 63,886
Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualized (CAGR).
Load is not taken into consideration for computation of performance. # CRISIL Balanced Fund - Agressive Index ## NIFTY 50 Index. N.A.
Not Available. Different plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under
the Scheme will be lower to the extent of the distribution expenses / commission charged in the Regular Plan. Returns as on 28th April
2017. Chirag Setalvad is managing the scheme since Apr 2, 2007. Scheme inception date: 11 Sep, 200017
Since Inception 10 year SIP 5 year SIP 3 year SIP 1 year SIP
Total Amount Invested (Rs.) 2,000,000 1,800,000 1,200,000 600,000 360,000
Market Value as on April 28, 2017 (Rs.) 10,646,031 7,848,832 2,985,930 969,355 452,455
SIP Returns
Returns (Annualised)*(%) 17.87% 17.78% 17.38% 19.33% 15.51%
Benchmark Returns (Annualised)(%)# N.A. 11.38% 9.80% 11.02% 9.30%
Additional Benchmark Returns (Annualised)(%)# # 13.47% 13.18% 9.86% 11.37% 8.75%
Past performance may or may not be sustained in the future. # CRISIL Balanced Fund - Aggressive Index ## NIFTY 50 Index N.A. Not Available.
Assuming ` 10,000 invested systematically on the first Business Day of every month over a period of time. CAGR returns are computed after accounting
for the cash flow by using XIRR method (investment internal rate of return) for Regular Plan - Growth Option. Load is not taken into consideration for
computation of performance. The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum
returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. 18
Performance of other Schemes managed by the Fund Manager
Scheme
Tenure for
managing the
scheme
Cumulative Performance
1 year3 year 5 year
CAGR (in %) CAGR (in %)
Chirag Setalvad manages 10 schemes
Performance of Top 3 schemes managed by Chirag Setalvad
HDFC Retirement Savings Fund - Hybrid- Equity Plan$ 25-Feb-16 29.09 NA NA
Crisil Balanced Fund - Aggressive 15.69 11.62 11.4
HDFC LONG TERM ADVANTAGE FUND 02-Apr-07 29.00 18.60 17.56
S&P BSE SENSEX 16.84 10.11 11.56S&P BSE SENSEX 16.84 10.11 11.56
HDFC Small Cap Fund 27-Jun-14 38.41 25.66 21.66
Nifty Free Float Smallcap 100 43.10 23.71 16.67
Performance of Bottom 3 schemes managed by Chirag Setalvad
HDFC CHILDREN’S GIFT FUND - SAVINGS PLAN 02-Apr-07 13.06 12.9 11.25
CRISIL MIP Blended Index 11.39 11.17 9.85
HDFC MULTIPLE YIELD FUND - PLAN 2005 # 02-Apr-07 12.17 10.80 10.26
CRISIL MIP Blended Index 11.39 11.17 9.85
HDFC Retirement Savings Fund - Hybrid-Debt Plan$ 26-Feb-16 13.80 15.48 NA
CRISIL MIP Blended Index 11.39 11.17 9.85
Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). The above returns are
of Regular plan -growth option. $ The Scheme is co - managed by Chirag Setalvad (Equities) and Shobhit Mehrotra (Debt).# The Scheme is co - managed by
Chirag Setalvad (Equities) and Anil Bamboli (Debt). Load is not taken into consideration for computation of performance. On account of difference in the type
of the Scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly not comparable. Top 3 and bottom 3
schemes managed by the Fund Manager have been derived on the basis of since inception returns. Returns as on 28th April 2017 . Different plans viz. Regular
Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution
expenses/ commission charged in the Regular Plan 19
Disclaimer & Risk Factors
This presentation dated 25th May 2017 has been prepared by HDFC Asset Management Company Limited
(HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable. Any
calculations made are approximations, meant as guidelines only, which you must confirm before relying on
them. The information contained in this document is for general purposes only. The document is given in
summary form and does not purport to be complete. The document does not have regard to specific investment
objectives, financial situation and the particular needs of any specific person who may receive this document.
The information/ data herein alone are not sufficient and should not be used for the development or
implementation of an investment strategy. The statements contained herein are based on our current views andimplementation of an investment strategy. The statements contained herein are based on our current views and
involve known and unknown risks and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. Past performance may or may not be
sustained in future. Neither HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any
liability arising from the use of this document. The recipient(s) before acting on any information herein should
make his/her/their own investigation and seek appropriate professional advice and shall alone be fully
responsible / liable for any decision taken on the basis of information contained herein.
Mutual fund investments are subject to market risks, read all scheme related
documents carefully.
20
Thank You
21