Edelweiss Balanced Advantage FundMay 2019

Market kam ho ya zyada,

Advantage rakhne ka

ek balanced irada!

FOLLOWING ARE TYPES OF ASSET ALLOCATION

2

Asset Allocation – How?

Types of Asset

Allocation

Static:

Invest in various asset classes such as stocks and bonds with precise amount

within each type.

Dynamic:

Rotate among stocks, bonds and cash with changing market situations

DIFFICULTIES IN FOLLOWING ASSET ALLOCATION

3

Asset Allocation is easy said than done

Hence, most investors choose static50-50 Asset Allocation Strategy

Choosing right allocation in each asset class

Rebalance portfolio with frequently changing market dynamics

Market noise generally leads to bias opinions

Controlling Sentiments

Tax Efficiency while rebalancing the portfolio

4

Dynamic Asset Allocation – A superior approach

Dynamic Asset Allocation is best way of Asset Allocation as it• Reduces probability of negative return in short term• Provides better investment experience than pure equity or static asset allocation

Investment Period

Probability of negative returns (Days with negative returns/Total no. of days)

Pure EquityStatic Equity

Allocation(50% Eqt, 50% Debt)

Dynamic Equity Allocation (30-80%

Equity)

1 year 33% 21% 10%

3 year 20% 5% 0%

5 year 13% 0% 0%

10 years 1% 0% 0%

5

Two Dynamic Asset Allocation Models

Counter Cyclical vs Procyclical

Counter Cyclical

• Based on Fundamentals i.e. PE, PB andDividend Yield

• Aims to gradually reduce equityexposure in a bull cycle and increaseequity exposure during the bearmarket cycle

Edelweiss Procyclical Model

• Based on quantitative factors coupledwith fundamentals.

• Aims to have higher equity exposureduring the bull market and lowerequity exposure during the bearmarket cycle.

Market Market

Equity Level Equity Level

6

Edelweiss Procyclical Outperforms……..

Past Performance may or may not sustain in Future

Calendar year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total

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% 28.6% 3.2% 12.7%

Procyclical 27.5% 34.9% 37.2% -21.3% 47.8% 12.4% -9.5% 17.3% 6.0% 20.1% -1.2% 2.7% 18.7% 4.0% 12.5%

CounterCyclical 20.4% 21.1% 20.5% -26.5% 48.6% 9.0% -13.8% 19.3% 5.6% 18.3% -1.5% 1.9% 14.6% 2.1% 8.6%

Fund Net Equity Level

68% 68% 69% 54% 65% 65% 54% 64% 60% 67% 57% 62% 71% 55% -

-10

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total

YoY (%) Return Differential (Procyclical - Counter Cyclical)

A HISTORIC PERSPECTIVE VS COUNTERCYCLICAL

7

Edelweiss Balanced Advantage Fund

Equity Liked Returns High Liquidity

Lower VolatilityTAX Efficient Returns

The Fund aims to fulfill following investor expectations

It’s a dynamic asset allocation fund which aims to generate absolute returns with

low volatility over a longer tenure of time

Fund Invests in arbitrage opportunities, debt, pure equity based on its PROCYCLICAL

EEHI Model.

8

Investment Strategy

Equity

• 30% to 80% Net Equity

• MultiCap• GARP

Debt

• Active Duration Management

• Focus on Accrual

Arbitrage

• Hedging• Capture

Spreads• Corporate

Actions

Dynamic Equity Allocation

Net Equity exposure is equity exposure minus short derivative exposure. The scheme asset allocation allows to take derivative exposure up to 50% of the net asset.

9

Investment Strategy

Equity Fixed Income

QualityQuality ManagementHigh Free Cash FlowConsistency

GrowthStrong Earnings GrowthSector GrowthCompetitive Advantage

ValueAttractive ValuationsMargin of Safety

ObjectiveGeneral Accrual IncomeProvide StabilityExposure 0-35%

DurationActive Duration Management1 to 5 Year Range

Credit QualityRelatively Higher yielding corporate bondsAA and above rating

EDELWEISS EQUITY HEALTH INDEX (EEHI) IS A PROPRIETARY MODEL THAT INCORPORATES MARKET DIRECTIONS, VOLATILITY AND FUNDAMENTALS

10

Dynamic Asset Allocation using EEHI

Increase Equity Allocation

during Bull cycle

Reduce Equity Exposure

during bear cycle

80%

30%

How is Works?

• The main principle of the model is increasingexposure on winning side and reducing exposureon losing side.

• Thus harnessing the power of compounding in aneffective way.

How it is better than value only based approach?

• Avoids timing of market reversal• Captures bigger trends and limits drawdown• Superior risk adjusted returns

Net Equity exposure is equity exposure alone with corresponding equity derivative exposure. The scheme asset allocation allows to take derivative exposure up to 50% of the net asset.

11

EEHI – Factors considered in Model

• 1 week, 2 week, 1 month & 3 month Daily Moving Average (DMA) of Nifty 50

• Indicates bull or a bear market trendMarket Trend

• Market Volatility & Downside Deviation of Nifty 50

• Indicates the strength and sustainability of current bull/bear market trend

Trend Health

• Market Valuations and Macro-economic factors

• Indicates the overall economy trend and its strength

Fundamentals

Equity Market Health

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

6500

7500

8500

9500

10500

11500

No

v-1

5

De

c-1

5

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

De

c-1

6

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

De

c-1

7

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

De

c-1

8

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

AVERAGE EQUITY LEVELS HAVE BEEN HIGH DURING THE BULL MARKETS AND LOW DURING BEAR MARKETS PHASE

12

EEHI Model – Net Equity Level vs Nifty 50

Avg Equity 71% Avg Equity

51%

Avg Equity 48%

Avg Equity 61%

Avg Equity 71%

Market Fall

EHI IndicatorNifty 50

Actual equity levels since Jan 2017.

Avg Equity 41%

Avg Equity 50% Avg Equity

60%

13

Swift Equity Allocation

Nifty Return Average Net Equity Min Net Equity Max Net Equity

Feb-18 -4.85% 51% 40% 70%

Mar-18 -4.01% 50% 40% 65%

Apr-18 6.19% 59% 52% 68%

May-18 0.0% 57% 45% 68%

Jun-18 -0.2% 59% 50% 68%

Jul-18 5.99% 65% 50% 80%

Aug-18 2.85% 70% 60% 80%

Sep-18 -6.42% 44% 30% 55%

Oct-18 -4.98% 38% 30% 50%

Nov-18 4.72% 61% 50% 68%

Dec-18 -0.10% 61% 50% 78%

Jan-19 -0.30% 57% 50% 70.%

Feb-19 -0.36% 54% 40% 70%

Mar-19 7.70% 72% 60% 75%

Apr-19 1.07% 67% 50% 75%

High equity levels during healthy

markets

Swift change in equity levels during bear market cycles

Low equity levels during weak

markets

Actual Apr-19 net equity levels in Edelweiss Balanced Advantage Fund

14

Equity Quantitative Indicators

Net Equity 54.30%

Debt & Others 27.30%

Top 10 Holdings 33.54%

Fixed Income Quantitative Indicators

YTM 6.98%

Modified Duration 0.46 Yrs

Average Maturity 0.55 Yrs

Top Holdings (in %)

% NAV

HDFC Bank Ltd. 6.12%Reliance Industries Ltd. 5.14%Tata Consultancy Services 3.37%Infosys Ltd. 3.03%

ICICI Bank Ltd. 2.99%

Housing Development Finance Corporation 2.95%

Bajaj Finance Ltd. 2.57%ITC Ltd. 2.51%

HCL Technologies 2.51%GlaxoSmithKline Consumer Healthcare 2.35%

Larsen & Toubro Ltd. 2.19%

Data as on 30th April 2019.

Market Cap Allocation

Large Cap 77%

Mid Cap 17%

Small Cap 6%

Portfolio Snapshot

-2.00 0.00 2.00 4.00 6.00 8.00 10.00

Technology

PvtBanks

Oil & Gas

Telecom

Transport & Logistics

Cement

% Sector wt

Rolling Return – 5 Year Analysis

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Scheme Name Max. Min. Average STD Dev. Risk Return

Edelweiss Balanced Advantage Fund 14.00% 9.13% 11.26% 0.98 11.5%

Nifty 50 18.77% 5.64% 12.04% 2.58 4.67%

5

7

9

11

13

15

17

19

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

Dec

-17

Feb

-18

Ap

r-1

8

Jun

-18

Au

g-1

8

Oct

-18

Dec

-18

Feb

-19

Edelweiss BAF 5 Year Rolling Return vs Nifty 50

Edelweiss Balanced Advantage Fund NIFTY 50 -TRI

Low Volatility compared to market

Moves in line with Market

%

Edelweiss Balanced Advantage Fund’s Minimum Return on 5 Year rolling basis is 9.13% comparedto 5.64% of Nifty 50 TRI.

Standard Deviation of the fund is 2.5 times less than Nifty 50 with average returns almost same inlonger term

Market Cap Allocation

16

• Through measured allocation to Mid and small cap stocks the core Portfolio of Edelweiss BalancedAdvantage Fund has generated 3.6% (cagr) alpha over Nifty 50 in last 5 Years

Data as on 30th April 2019.

0%

20%

40%

60%

80%

100%

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

Market Cap Allocation (%)

Largecap Midcap Smallcap

17

Performance during Different Market Cycles

Performance Bear Cycle31-Jan-18 To 31-Mar-18

Bull Cycle01-Apr-18 To 31-Aug-18

Complete Cycle31-Jan-18 To 31-Aug-18

Market (Nifty 200 TRI) -7.7% 14.3% 5.48%

Edelweiss Balanced

Advantage Fund-4.0% 10.1% 5.63%

Edelweiss BAF – Average Net

Equity Levels49% 62% 55%

Past performance may not sustain in future

• The Fund has outperformed the Market in Bear as well as Bull Cycles.

• Even in Longer term the fund has performed better than market with lower risk (average net equity55%).

Performance

18

Scheme

Benchmark (60% Nifty 50 Index + 40% Crisil Composite

Bond Fund Index)

Additional BenchmarkNifty 50 TR Index

Period Returns*Value of Rs.

10000 InvestedReturns*

Value of Rs. 10000 Invested

Returns*Value of Rs.

10000 Invested

1 Year 2.88% 10,288 6.94 % 10,694 10.84% 11,084

3 Year 8.89% 12,916 11.47% 13,855 15.91% 15,580

5 Year 11.15% 16,973 11.84% 17,503 13.32% 18,693

Since Inception 9.26% 23,610 10.26% 25,778 11.84% 29,590

Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.* CAGR Return.- Different plans shall have different expense structure. The performance details provided herein are of Regular Plan of Edelweiss BalancedAdvantage Fund. Returns are for Growth Option only. Since Inception returns are calculated on Rs. 10/- invested at inception of the scheme. In casethe start/end date is non business day, the NAV of previous day is used for computation.- The scheme is currently managed by Mr. Bhavesh Jain (Managing this fund from August 7, 2013), Mr. Bharat Lahoti (Managing this fund from September 18, 2017) and Gautam Kaul (managing this fund from December 11, 2017).Data Source: Ace MF, Data as on 30th April 2019 In case the start/end date is non business day, the NAV of previous day is used for computation.Please click on http://edelweissmf.com/Download/factsheet.aspx for performance of other funds managed by fund manager.

19

Key Benefits of the Fund

Low risk equity linked return

No Need to time the market

Create wealth during bull market & protect during bear market

Tax Free capital gains after 1 year upto Rs. 1 lakh

Regular Cash flows from monthly & Quarterly dividends

True-to-Label approach

20Data as on 30th April 2019.

Conservative Approach

Major investment in Largecap, only small exposure to midcaps/small caps.

High Quality Investment

No allocation to bonds below ‘AA’ Credit rating

Well Diversified

• 68 Stocks• Low Sector biases with a

conservative approach.

Un-Biased Dynamic Asset Allocation

Asset Allocation Strategy is based on model and intervention of Fund manager

is mainly for stock selection

Consistent Quarterly Dividend

21

YearRecord

Date

Dividend /

Unit (Re.)

Record

Date NAV

Dividend

Amount

(Rs)

Dividend

Yield*

2011

28-Jan 0.165 11.20 143,603 6%

29-Apr 0.18 11.10 156,658 6%

29-Jul 0.18 11.05 156,658 6%

28-Oct 0.18 10.88 156,658 6%

2012

27-Jan 0.18 10.92 156,658 6%

27-Apr 0.18 10.84 156,658 6%

27-Jul 0.18 10.88 156,658 6%

29-Oct 0.18 11.06 156,658 6%

2013

24-Jan 0.18 11.08 156,658 6%

26-Apr 0.18 10.98 156,658 6%

26-Jul 0.22 11.06 191,471 8%

25-Oct 0.22 11.20 191,471 8%

2014

31-Jan 0.22 10.87 191,471 8%

25-Apr 0.22 11.16 191,471 8%

25-Jul 0.22 12.64 191,471 8%

31-Oct 0.22 13.24 191,471 8%

YearRecord

Date

Dividend

/Unit Re.

Record

Date NAV

Dividend

Amt (Rs)

Dividend

Yield*

2015

27-Jan 0.30 14.08 261,097 10%

22-Apr 0.22 13.81 191,471 8%

27-Jul 0.22 13.93 191,471 8%

27-Oct 0.22 13.37 191,471 8%

2016

25-Jan 0.30 12.54 261,097 10%

26-Apr 0.22 12.70 191,471 8%

25-Jul 0.22 12.85 191,471 8%

26-Oct 0.22 12.74 191,471 8%

2017

18-Jan 0.22 12.21 191,471 8%

04-May 0.22 13.24 191,471 8%

10-Jul 0.22 13.44 191,471 8%

21-Sep 0.22 13.55 191,471 8%

2018

22-Jan 0.22 14.02 191,471 8%

22-Mar 0.22 13.28 191,471 8%

25-Jun 0.22 13.49 191,471 8%

24-Sep 0.24 13.31 208,877 8%

24-Dec 0.25 12.90 208,877 9%

2019 25-Mar 0.15 12.76 115,579 5%

Total Dividend Paid 6,246,997

2019 24-Mar Investment Value 11,105,308

Rs. 1 crore initial investment in the fund has yielded a dividend of Rs. 62.46 lakh since Jan 2011

*Annualised dividend yield for each 3 month period is calculated on initial investment value.

Dividend is declared on the face value of Rs. 10 each /-. After payment of dividend, the NAV will

fall to the extent of dividend payout and statutory levy (if applicable). Past performance may or

may not be sustained in future.

Dividend is Declared on Face value of Rs. 10

Fund Features

22

Scheme Type An open ended dynamic asset allocation fund

Exit Load

10% of the units allotted shall be redeemed without any Exit Load on or before completion of 365 days from the date of allotment of units. Any redemption in excess of such limit within 365 days from the date of allotment shall be subject to the following Exit Load:• If redeemed or switched out on or before completion of 365 days from the date of allotment of units – 1.00%• If redeemed or switched out after completion of 365 days from the date of allotment of units – NILRedemption of units would be done on First in First out Basis (FIFO).

Plans & OptionsPlan: Regular & DirectOptions: Quarterly Dividend (Payout and Reinvestment) & GrowthMonthly Dividend (Payout, Reinvestment & Sweep)

Minimum Investment Amount

Rs. 5000/- per application & in multiples of Re. 1/- thereafter

Additional investment amount

Rs. 500/- per application & in multiples of Re. 1/- thereafter

Fund Manager Mr. Bhavesh Jain, Mr. Bharat Lahoti, Mr. Gautam Kaul

Disclaimer

23

This product is suitable for investors who are seeking*: Riskometer

•To create wealth over long term and prevent capital erosion in mediumterm•Investment predominantly in equity and equity related securitiesincluding through arbitrage opportunities with balance exposure to debtand money market securities

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

Investors understand that their principal will be at moderately high risk

This presentation is for information purposes only for distributors and does not constitute an offer orrecommendation to buy or sell any scheme of Edelweiss Mutual Fund. This presentation also does not constitutean offer or recommendation to buy or sell any financial products offered by Edelweiss. Any action taken by youon the basis of the information contained herein is your responsibility alone and Edelweiss Asset ManagementLimited (the AMC)/Edelweiss Trusteeship Company Limited/ Edelweiss Mutual Fund or its directors or employeeswill not be liable in any manner for the consequences of such action taken by you. The AMC takes noresponsibility of updating any data/information in this material from time to time. The information shall not bealtered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the mediaor reproduced in any form, without prior written consent of the AMC.

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