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Mutual FundReview

October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund

November 19, 2009 | Mutual Fund Mutual Fund Review

August 22, 2016

ICICI Securities Ltd. | Retail MF Research

Note: Whenever, returns for the scheme are shown in the report, they are for the growth option of the scheme.

Mutual Fund Review

Equity Markets ........................................................................................................ 2 Debt Markets ........................................................................................................... 3 MF industry synopsis .............................................................................................. 4 MF Category Analysis ............................................................................................. 5

Equity funds .......................................................................................................5 Equity diversified funds.........................................................................................6 Equity Infrastructure fund.....................................................................................7 Equity Banking Funds............................................................................................8 Equity FMCG 8 Equity Pharma funds .............................................................................................9 Equity Technology Funds ......................................................................................9

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

Liquid Funds Income funds.......................................................................................................15 Gilt Funds Gold: Likely to consolidate in near term ...............................................................17 Model Portfolios .................................................................................................... 19

Equity funds model portfolio ...........................................................................19 Debt funds model portfolio..............................................................................20

Top Picks ............................................................................................................... 21

August 22, 2016


Page 2

Equity Markets Update

Indian equity markets continue to gain momentum during August 2016 to make a fresh 52-week high on the back of positive global markets and expectations of the GST bill getting passed in the Rajya Sabha. Above average rainfall during July (most crucial month for sowing season) also helped gain momentum

The expectation of monetary stimulus by central bankers to prevent fallout of Brexit turned global risk sentiment benign

Global equity markets continued their positive momentum during June, 2016 and move higher. Markets witnessed heightened volatility intra-month following the declaration of results of the UK referendum on EU membership. While UK’s exit from EU could hurt UK’s long term growth prospects, its effects on the rest of the world in the near future are more uncertain. After the initial knee jerk reaction, markets seem to have settled down. Key global equity markets had recovered their losses by the end of the month

Headline indices, after having fallen 23% from the peak in 2015 till February 2016, have recovered 22% since then till August 2016. Disciplined investors who continued to invest during the market fall have benefited the most

Midcap funds continue their outperformance over largecap funds as investors continue to search for growth opportunities amid a positive macroeconomic outlook

The sector leadership seems to have changed in the recent market pullback. While healthcare and IT sector were outperforming sectors till 2015, interest rate sensitive/domestic growth related/high beta sectors have taken the leadership in 2016 so far

Mutual funds have been significant net buyers in the last two years. Inflows into equity mutual funds continue to remain healthy. Inflows into pure equity funds have reached | 1.46 lakh crore since April 2014 to June 2016

Outlook

The broader markets, as represented by the midcap and small cap indices, have displayed a strong outperformance over the last month. The same clearly highlights increased market participation and the inherent strength in the trend. We expect this outperforming trend of broader markets to continue in the short-term

The progress of monsoons, so far, has been quite satisfactory and has largely been in line with the forecast made by the Indian Meteorological Department (IMD). In July, which marks the most important month both in term of quantum (accounts for 33% of total seasonal rainfall) as well as timing of rainfall (germination of seeds and plant growth), rainfall was abundant at 107% of LPA (7% surplus) thereby resulting in at par (100% of LPA) rainfall in the first half of the current monsoon season. Going forward, IMD has maintained its monsoon forecast for 2016 at 106% of LPA with rainfall in the second half of the monsoon season expected at 107% of LPA with rainfall in August expected at 104% of LPA

If global markets remain supportive, Indian markets are likely to perform well as the domestic economic outlook is improving on normal monsoons, government policy action and improved liquidity from the RBI. Seventh Pay Commission and OROP remain triggers for a consumption boost for the economy

We believe investors should be constructive on equity markets and accumulate on dips for the next two to three years

CNX Nifty: Market rebounds sharply regaining losses for year post Budget

6500

7000

7500

8000

8500

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

Jul-1

6

Aug-

16

Source: Bloomberg, ICICIdirect.com Research

Midcap/small cap continue to outperform post Union Budget…

20

24

28

32

36

BSEMidcap

BSESmallcap

BSE 500 BSE 100 BSESensex

Retu

rn (%

)

Source: Bloomberg, ICICIdirect.com Research Returns : Feb 29, 2016– Aug 19, 2016

Sector leadership changes to interest ratesensitive/domestic growth related/high beta sectorsfrom healthcare, IT sector

01020304050

Real

ity

Met

al

Bank

ing

PSU

Aut

o

Cap.

Good

s

Oil &

Gas

FMCG

Sens

ex

Con.

Dura

Heal

thca

re IT

Retu

rn (%

)

Source: Bloomberg, ICICIdirect.com Research Returns : February 29, 2016– July 20, 2016

Research Analyst

Sachin Jain [email protected]


Page 3

Debt Markets Update

The Indian debt market witnessed one of the periods in July/August 2016 with benchmark 10 year G-Sec yield rallying round 30 bps to its three year low of 7.10%. Short-term rates also fell further around 20-50 bps on the back of surplus system liquidity

The event of Brexit led to increased expectation of further monetary/fiscal stimulus by the central bankers to support economic growth. The same along with benign global growth outlook led to a rally in global fixed income markets. Sovereign yields of most major economies fell sharply post Brexit.

Domestically, market speculation that the next RBI governor could follow a more accommodative stance than outgoing governor Raghuram Rajan also added to positive global market sentiments

Liquidity in the Indian debt market improved significantly over the last month on the back of a significant amount of OMOs done by the RBI

System liquidity, which was in deficit, to the extent of around | 1.8 lakh crore in the first quarter of 2016, has turned into surplus. Borrowing under liquidity adjustment facility (LAF) has fallen into the negative territory indicating that banks/financial institutions are not borrowing any more from the RBI

Money market rates fell to multi year lows with three month, six months and 12 month CD falling to around 6.5%, 6.75% and 7.25%, respectively

G-sec yields have also fallen in the range of 20-50 bps since February 2016. Globally, the yield on sovereign papers has fallen significantly post Brexit event on rising risk aversion. The same has helped ease domestic yields as well

Expectations on the announcement of new RBI Governor have also pushed the long term G-Sec yield down, which were otherwise stuck in a range. The market is expecting the new RBI Governor to adopt a dovish stance on the inflation targeting regime

Outlook

Although the latest PCI inflation was higher than market expectations, the medium-term outlook remains positive on normal monsoon. The monsoon after a delayed start has progressed rapidly in July and August covering almost all parts of country. Going forward, IMD has maintained its monsoon forecast for 2016 at 106% of LPA with rainfall in the second half of the monsoon season expected at 107% of LPA with rainfall in August expected at 104% of LPA

Although the outlook on G-Sec yields remains positive, the scope of a further fall in yields has reduced given the recent sharp fall. Duration strategy should be played through actively managed income or dynamic bond funds. They will be able to make swift duration change within G-Secs or switch between corporate bonds and G-Sec within specific duration

As the outlook on system liquidity is positive, short-term debt funds are best placed. Credit opportunities funds with consistent track record and exposure to stable sectors offer good investment opportunity to earn higher accrual. Ultra short-term debt fund and liquid funds remain well placed but returns are likely to be lower as short-term CP/CD rates have already fallen significantly

10 year G-sec yields corrected post Brexit event

7.0

7.2

7.4

7.6

7.8

Aug

-15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16M

ar-1

6

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug

-16

Yiel

d (%

)

Source: Bloomberg

May CPI came marginally higher at 5.77% Items Weights(%) May-16 Jun-16 Jul-16CPI 100.0 5.76 5.77 6.07CFPI 39.1 7.50 7.77 8.39Core CPI 47.3 4.69 4.55 4.63Fuel 6.8 2.94 2.92 2.75

Source: mospi.nic.in

G-sec yields curve moved down as liquidity improves

6.8

6.9 7.0 7.16.8 7.0

7.17.3

6.6

6.8

7.0

7.2

7.4

1yr 3yr 5yr 10yr

Yiel

d (%

)

19-Aug-16 19-Jul-16

Source: Bloomberg

Corporate bond yield followed G-Sec curve and went down around 20bps across the curve

7.5 7.67.7

7.97.7

7.98.0

8.2

6.8

7.3

7.8

8.3

8.8

1yr 3yr 5yr 10 yr

Yiel

d (%

)

18-Aug-16 19-Jul-16

Source: Bloomberg


Page 4

MF industry synopsis In FY16, there was an inflow of | 103288 crore into the Indian mutual

fund industry. Out of the total inflow, | 74024 crore came into equity and ELSS funds. Income funds were able to collect | 14738 crore in FY16. Total AUM at the end of FY16 was | 1232824 crore, increasing 14% YoY, of which 46% was held by income funds and 31% by equity funds. In the first four months of the new financial year, there was a net inflow of | 193161 crore of which | 175023 crore was in income funds and liquid funds as institutional money flowed in due to surplus liquidity. Equity funds witness inflow of ~ | 10500 crore in equity funds.

Exhibit 1: Growth of total industry AUM over the years…

10000001100000

12000001300000

14000001500000

1600000

Jul-1

4

Oct-1

4

Jan-

15

Apr-1

5

Jul-1

5

Oct-1

5

Jan-

16

Apr-1

6

Jul-1

6

-5%

0%

5%

10%

15%

Total AUM Growth (QoQ)(RHS)

Source: AMFI, ICICIdirect.com, Research

Exhibit 2: Category-wise inflow/outflow for FY16 & FY15…

-10000

10000

30000

50000

70000

EQUI

TY

BALA

NCE

D

LIQU

ID/M

ONEY

MAR

KET

INCO

ME

ELSS

- EQ

UITY

GILT

GOLD

ETF

s

OTHE

R ET

Fs

FY16 FY15

Source: Company, ICICIdirect.com, Research

Exhibit 3: Category wise AUM share at end of FY16 of major AMCs

0%

20%

40%

60%

80%

Fran

klin

Tem

plet

o n

DSP

Bla c

kRoc

k

UTI

HDFC SB

I

ICIC

I Pru

dent

ial

Relia

nce

Capi

tal

Birla

Sun

life

Kota

k M

ahin

dra

IDF C

Equity % Debt% Others%

Source: ACE MF, ICICIdirect.com Research

Exhibit 4: AUM share March 2016…share of equity AUM maintained YoY

Income47%

Gilt1%Money Market

16%

Gold ETFs 1%

Equity31%

Other ETFs1%

FOF(Overseas)0%

Balanced3%

Source: AMFI, ICICIdirect.com Research

Exhibit 5: Top 10 AMCs based on average AUM

1758

81

1757

79

1584

08

1365

03

1067

81

1063

09

6694

7

5849

5

5212

9

3913

3

1485

59

1616

34

1371

24

1197

52

7494

2

9275

1

7044

4

4137

8

5171

5

3783

8

25000

50000

75000

100000

125000

150000

175000

200000

Ipru

MF

HDFC

MF

Relia

nce

MF

Birla

Sunl

ife M

F

SBI M

F

UTI M

F

Fran

klin

Tem

pelto

nKo

tak

Mah

indr

a

IDFC

MF

DSP

Blac

kRoc

k

| Cr

Mar-16 Mar-15


Exhibit 6: Fastest growing AMCs in FY16

0%

40%

80%

120%

Edel

wei

ss

Mot

ilal

Mira

e

Indi

abul

ls

SBI

Axis

Kota

kM

ahin

dra

LIC

Nom

ura

IIFL

Baro

daPi

onee

r

0

20000

40000

60000

80000

100000

YoY Growth in AUM Total AUM (| Cr.)



Page 5

MF Category Analysis

Equity funds FMCG funds continue to remain consistent performers and have been

best performers in the last year Pharma funds continue to underperform on negative news flows and

are the worst performers in the last year. However, over a longer period of time, they remain the best performing category

IT funds also among the worst performing category as concerns impact on business and IT spending post Brexit and lower guidance by the managements having impact on stock prices

Exhibit 7: IT, FMCG funds continue to be stable performing category (returns as on July 18, 2016)

12.8

6.2

5.9

4.6

3.5

2.6

-7.8 -8.7

18.7

39.5

27.7

27.2 30

.0

21.9

16.3

26.6

18.8 23

.1

13.4 16

.7

11.6 14

.6 17.9 22

.5

-20

-10

0

10

20

30

40

50

FMCG Mid cap Banking Diversified Infrastructure Large Cap Technology Pharma

Retu

rns

(%)

1 year 3 Year 5 year

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

Exhibit 8: Pure equity funds witness outflows during May but ELSS witness inflow resulting in total positive inflows

-2000

2000

6000

10000

14000

Dec-

14Ja

n-15

Feb-

15M

ar-1

5Ap

r-15

May

-15

Jun-

15Ju

l-15

Aug-

15Se

p-15

Oct-1

5N

ov-1

5De

c-15

Jan-

16Fe

b-16

Mar

-16

Apr-1

6M

ay-1

6

Net

Inflo

w (

| Cr

)

Net inflow (Equity + ELSS)


Exhibit 9: Equity AUM at all-time high levels

3723

13 3936

02

3817

23

3865

17

3967

65

4026

71

4056

62

3843

50

3546

42 3864

03

3997

75

4150

87

4282

12

300000

350000

400000

450000

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

| la

kh C

rore

Equity +ELSS


Exhibit 10: Deployment of equity funds

Allocation Banks Software Pharma AutoConsumer

Non-Durables

Finance Petroleum Construction CementIndustrial Products

| crore 82196 41563 31617 27526 24134 23716 18230 16477 15876 14583

% of total 19.9 10.1 7.7 6.7 5.9 5.8 4.4 4.0 3.9 3.5

Source: Sebi, ICICIdirect.com Research, Sector Classification (as per Amfi)

Inflows into equity schemes have increased and have

remained consistent in the last two years. Higher inflows

have flowed into midcap funds leading to an increase.

There was an inflow of | 74024 crore into equity funds in

FY16. However, equity AUM increased only by | 41264

crore. This was mainly led by a decline in market value

Exposure to banks and finance stocks together account for

the highest proportion with 25% of equity assets followed

by technology and pharma


Page 6

Equity diversified funds

Indian markets, after being in a declining trend from March 2015 to February 2016, recovered some of their gains post Budget. Markets seem to have formed a near term bottom in February 2016. Indian markets may consolidate in the near term but the overall downward trend, which started last year, seems to have reversed

Midcap and small cap funds continue to outperform largecap and diversified funds. S&P BSE Sensex has risen 22% from since March 2016 while BSE Midcap is up 36% during the same period

Beaten down sectors like banking, real estate, consumer goods and capital goods outperformed since the Budget in the market recovery. The pharma sector has been underperforming on regulatory concerns and pricing pressure in export markets in the last few months

Global equity markets continued their positive momentum during June, 2016 and move higher. Markets witnessed heightened volatility intra-month following the declaration of results of the UK referendum on EU membership. While UK’s exit from EU could hurt UK’s long term growth prospects, its effects on the rest of the world in the near future are more uncertain. After the initial knee jerk reaction, markets seem to have settled down. Key global equity markets had recovered their losses by the end of the month

The broader markets, as represented by the midcap and small cap indices continue to display a strong outperformance over the last month. This clearly highlights increased market participation and inherent strength in the trend. We expect this outperforming trend of broader markets to continue in the short-term

We expect markets to enter a consolidation phase, going forward, to work off the overbought conditions developed after the strong rally since March. We believe any dips from current levels in the coming months should be used as an incremental buying opportunity.

Recommended funds Large cap

Birla Sunlife Frontline Equity ICICI Prudential Focused Bluechip Equity SBI Bluechip Fund

Diversified

Franklin India Prima Plus Fund Reliance Equity Opportunities ICICI Prudential Value Discovery Fund

Midcap

HDFC Mid-Cap Opportunities Fund Franklin India Smaller Companies Fund SBI Magnum Global Fund

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

View Short term: Positive Long-term: Positive


Page 7

Equity Infrastructure fund The investment cycle that has been under pressure in the last few

years, has started showing signs of emerging green shoots as the government is focusing on infrastructure development (accounts for ~60% of planned investment vs. ~50% few years back). Furthermore, instances of stalled projects in the government vertical have come down sharply whereas the private sector is still seeing a slow recovery in stalled projects

We have also analysed the pattern of tendering in the last 18 months, which further validates that the government is reviving the investment cycle as the government accounts for ~99% of total tenders floated

In terms of segments, road, railways, water and power T&D lead the recovery, which is expected to continue, going ahead, into FY17E as well. Out of total tenders floated in FY16 worth | 6.2 lakh crore, the share of the above segments comprised ~64.7% of overall tendering activity amounting to ~| 4 lakh crore

Going ahead, while we believe there would be opportunities in infrastructure, we remain selectively positive on the sector

Preferred Picks

Franklin Build India Fund L&T Infrastructure Fund ICICI Prudential Infrastructure Fund

Refer www.icicidirect.com for

details of the fund

View Short-term: Positive Long-term: Positive


Page 8

Equity Banking Funds FY16 has been a tough year for banks with significant addition to NPAs,

SDR and 5/25 cases resulting from troubled corporate in infra, metals, textile and power

GNPA surged 90% YoY to | 567937 crore. Accordingly, the GNPA ratio rose ~160 bps QoQ to 7.7%. Private banks also saw higher stress with 60% YoY GNPA surge. Stressed assets under 5:25 scheme & strategic debt restructuring (SDR) continued. Accordingly, provisions jumped 140% YoY and 57% QoQ to | 76632 crore. Infra, metals, steel, textiles & power largely contributed the asset quality pains. Despite a large amount of NPA stress recognised by banks in H2FY16 owing to RBI’s asset quality review, all major banks still expect the next two or three quarters to be challenging on the asset quality and credit growth front

One of the highlight of Q4 was the “watchlist” of stressed booked provided by large banks like SBI of | 31000 crore and Axis Bank of | 22000 crore; of which ~60-70% could slip into NPA over the next four to eight quarters

With lower credit growth remaining a hindrance and pressure of incremental NPA still hovering around, we continue to remain cautious on banks. Among peers, private banks are expected to continue to outperform. However, sticking to quality large caps is recommended

We continue to maintain our underperform stance on the sector Preferred Picks

ICICI Prudential Banking & Financial Services Reliance Banking Fund UTI Thematic - Banking Sector Fund

Refer to www.icicidirect.com for

details of the fund

Equity FMCG Our FMCG coverage universe is expected to witness higher revenue

growth as we believe the expected above normal monsoon may spur volume growth from rural India while an urban recovery continues to remain slow

Benign input costs are likely to limit the extent of price-led sales growth. However, operating margins continue to remain at elevated levels due to continued benefits of lower raw material cost. RM cost (percentage of sales) for our coverage universe is expected to fall ~100 bps. We believe companies would increase promotional spends significantly to drive urban demand

We expect GST implementation to lead to a reduction in logistics cost along with a simplified tax structure and level playing field for organised players in categories dominated by highly unorganised entities

Preferred Picks

ICICI Prudential FMCG Fund SBI FMCG Fund

Refer www.icicidirect.com

for details of the fund

View Short-term: Negative Long-term: Neutral



Page 9

Equity Pharma funds FY16 turned out to be a demanding fiscal for pharma players after a

near hassle-free ride for five years. This was attributable to the triple whammy impact of 1) USFDA issues (483s and warning letters), 2) NLEM/FDC impact in the domestic market and 3) political turmoil and adverse currency shock in EMs. Indian companies received nine USFDA warning letters in FY16, by far the highest run rate over the years

The concerns increased due to high frequency of inspections and the random nature of issues flagged in the scrutiny. Paradoxically, however, the fiscal also witnessed highest ever ANDA approvals for Indian companies (177 approvals vs. 92 in FY15). However, investors, by and large, remained sceptical as almost all players received either warning letters or critical Form 483 observations

Profitability growth, however, continues to remain healthy as reflected even in the latest quarterly results

The underperformance in the last year has to be viewed in conjunction with the significant outperformance in the last five years

We continue to maintain our positive view on the sector on the back of earning visibility, consistent operating cash flows, healthy operating margins, relatively low leverage and strong return ratios

Preferred Picks

Reliance Pharma Fund SBI Pharma Fund UTI-Pharma & Healthcare

Refer to www.icicidirect.com

for details of the fund

Equity Technology Funds

Tier-I IT companies reported average 1.7% QoQ dollar revenue growth in Q4FY16 (below our 2.2% growth estimates) vs. 0.5% in Q3FY16 and 1.2% decline in Q4FY15. Constant currency revenues grew 2.1% as dollar growth was negatively impacted (~40 bps) by cross currency headwinds. Inorganic investments were key margin headwinds partially offset by currency tailwinds and operational efficiency. CY16E IT budget commentary was consistent while FY17E earnings commentary was stable led by healthy deal signings and traction in digital technologies

Operationally, discretionary spending remains healthy in the US while Europe rebounded and led quarterly growth. Insurance, telecom and oil & gas verticals are structurally challenged and growth continues to be uneven

Upsides could be in line with earnings upgrades given blended valuations are at ~16x FY17E earnings. However, sharp sell-offs should be used to accumulate given long-term growth prospects

Preferred Picks

ICICI Prudential Technology Fund DSPBR Technology fund

Refer to www.icicidirect.com for

details of the fund

View Short-term: Neutral Long-term: Neutral



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 0.50-1.00% in comparison to an index fund. The expense ratio for ETFs is in the range of 0.50-0.75%, excluding brokerage, while for index funds the expense ratio varies in the range of 1.0-1.5%. However, brokerage (which varies) is applicable on ETFs while there are no entry loads now on index funds

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

There are over 400 ETFs traded globally. ETFs are transparent and cost efficient. The decision on which ETF to buy should be largely governed by the decision on getting exposure in that asset class

Volumes are higher only in the Goldman Sachs Benchmark ETFs and tracking error is also lowest at 0.01%. Therefore, it is our top pick for investors wanting Nifty-linked returns

Gold ETF witnessed a decline in AUM post February as investors booked profit after the recent rally

Other ETFs, which are mainly equity ETF has gained significantly in the last year with the corpus now at | 20449 crore

Exhibit 11: Gold ETF corpus has been stable at around 6500 crores

5957

6323

6215

6226

5830

5773

6096

6672

6346 64

80

6159

6645

6499

55005700590061006300650067006900

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

Jul-1

6

| Cr

ore

Gold ETFs


Exhibit 12: AUM of Equity ETFs crossed | 20000 crores in July 2016…

7170

7032 89

20 1003

1

1119

7

1188

7

1264

5

1284

6

1606

3

1640

0

1774

3

1915

9

2044

9

0

5000

10000

15000

20000

25000

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

Jul-1

6

| Cr

ore

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...


Page 11

Balanced funds Balanced funds continue to gain traction from investors as moderate

risk profile and tax benefit attracted investors to the category Balanced funds witnessed inflows of | 2079 crore in July 2016. Inflows

in the last 25 months since June 2014-July 2016 has touched | 35581 crore

Over the last two years, the balanced space has emerged as one of the fastest growing equity categories and offers an ideal investment option for first-time equity investors

Balanced funds are hybrid funds. More than 65% of the overall portfolio is invested in equities. Hence, as per provisions of the Income Tax Act, 1961, any capital gains over one year become tax free. Also, dividends declared by funds are tax free

In case 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

After a sharp rally in equity markets, the funds can be a preferred investment avenue as the debt proportion serves to protect on intermediate relief rallies or the downturn while providing 65% participation on further upsides

Exhibit 13: Balanced funds consistent inflows since June 2014

0

1000

2000

3000

4000

5000

Jul-1

4

Oct-1

4

Jan-

15

Apr-1

5

Jul-1

5

Oct-1

5

Jan-

16

Apr-1

6

Jul-1

6

Net

Inflo

w (

| Cr

)


Exhibit 14: AUM increases…

2579

226

507

2636

827

015

2874

932

259

3455

034

660

3663

337

682

3855

942

193

4112

139

104

3914

640

764

4269

545

992

4999

4

13000

23000

33000

43000

53000Ja

n-15

Feb-

15M

ar-1

5Ap

r-15

May

-15

Jun-

15Ju

l-15

Aug-

15Se

p-15

Oct-1

5N

ov-1

5De

c-15

Jan-

16Fe

b-16

Mar

-16

Apr-1

6M

ay-1

6Ju

n-16

Jul-1

6

| Cr

ore

Balanced


Preferred Picks

HDFC Balanced Fund

ICICI Prudential Balanced - Advantage Fund

SBI Balanced Fund

Tata Balanced Fund


Monthly Income Plans (MIP) An MIP offers investors an option to invest in debt with some

participation in equity, ~10-25% of the portfolio. They are suitable for investors who seek higher return from a debt portfolio and are comfortable taking nominal risk. The debt corpus of the portfolio provides regular income while the equity portion of the fund provides alpha. However, returns can also get eroded by a fall in equities

MIPs can be classified into aggressive MIP and conservative MIP based on its equity allocation. Risk averse investors should invest in MIPs with lower equity allocation to avoid capital erosion

Investors with a limited investible surplus and a lower risk

appetite but with a willingness to invest in equities can

look to invest in these funds


View Short-term: Neutral Long-term: Positive

MIP should be a preferred debt investment for funds that need to be parked for over two years


Page 12

Preferred Picks

Birla Sun Life MIP II - Savings 5 Plan

ICICI Prudential MIP 25

DSPBR MIP 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 in 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

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 future positions biased

In case of positive movement, long build-up in futures puts pricing in an upward bias and creates a window for direct arbitrage positions

On the other hand, negative bias attracts fresh sellers in the market. Speculators try to sell the stock much cheaper than theoretical prices. In such situations, a reverse arbitrage opportunities arise

On the other hand, a range bound market does not give ample room to create arbitrage positions

Currently, there are few arbitrage opportunities available in the market, which can lead to lower returns

Preferred Picks

ICICI Prudential Equity - Arbitrage Fund – Regular IDFC Arbitrage Fund - (Regular) Kotak Equity Arbitrage Fund SBI Arbitrage Opportunities Fund




Page 13

Debt funds Exhibit 15: Category average returns

9.35

8.34 9.

10

7.57

7.58 8.

42

11.3

6

8.94 9.

93

15.6

3

10.0

4

11.1

0

19.5

7

11.8

4

11.9

7

0.002.004.006.008.00

10.0012.0014.0016.0018.0020.00

6 months 1 year 3year%

Income UST Liquid Income ST Income LT Gilt Funds

Source: CRISIL Note : Annualised returns as on August 19, 2016

Exhibit 16: Deployment of funds: March 2016

CP Bank CD

Bank CD

Bank CD

Corporate Debt

0

1000

00

2000

00

3000

00

4000

00

Less than 90 days

90 days to 182 days

182 days to 1 year

1 year and above

Government Securities

CP

Bank CD

Treasury Bills

CBLO

Other Money Market Investments

Corporate Debt

PSU Bonds

Securitised Debt

Bank FD

Source: SEBI, ICICIdirect.com Research Note : Holding as percentage of total AUM

Exhibit 17: G-Sec yield curve shifts lower…

6.8

6.9 7.0 7.16.8 7.0

7.17.3

6.6

6.8

7.0

7.2

7.4

1yr 3yr 5yr 10yr

Yiel

d (%

)

19-Aug-16 19-Jul-16

Source: Bloomberg

Exhibit 18: ..so does corporate bond yield curve

7.5 7.67.7

7.97.7

7.98.0

8.2

6.8

7.3

7.8

8.3

8.8

1yr 3yr 5yr 10 yr

Yiel

d (%

)

18-Aug-16 19-Jul-16

Source: Bloomberg

Benchmark 10 year G-sec yield has witnessed correction of around 30 bps post Brexit event and announcement of new RBI Governor resulting in outperformance of duration funds

Investment into securities with maturity of less than 90 days and more than a year dominate total investments by mutual funds


Page 14

Liquid Funds Liquid fund returns have moderated to sub 7.00% as short-term has

fallen significantly in the last few months. Returns, going forward, are likely to be in the range of around 6.5%

Liquid funds witnessed an inflow of | 92277 crore in July 2016 as surplus liquidity prompted institutional investors to park their money in to mutual funds

Short term rates (T-bills, CBLO rates) hovered around repo rate. With an improvement in liquidity conditions, the certificate of deposit and commercial paper rates in the three month bracket have fallen significantly. Currently three-month CD rates are trading at around 6.5% while three-month CPs rates are around 7.0%

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 falling in the higher tax bracket (30% tax slab) and for corporates

Exhibit 19: Call rates near repo rate

5

5.5

6

6.5

7

7.5

8

Jul-1

5A

ug-1

5Se

p-15

Oct-1

5N

ov-1

5De

c-15

Jan-

16Fe

b-16

Mar

-16

Apr

-16

May

-16

Jun-

16Ju

l-16

Aug

-16

%

Call rate


Exhibit 20: CP/CD rates have fallen sharply

6.06.57.07.58.08.59.09.5

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

Jul-1

6

%

3M CD 3M CP


Exhibit 21: Flows into liquid funds remain volatile on institutional activity

-47,

330

89,9

78

103,

306

-5,2

60

2,45

5

20,0

39

-58,

605

134,

311

-693

99 -268

47

5421

2

-70,

489

-60,

861

-42,

059

-200,000-160,000-120,000-80,000-40,000

040,00080,000

120,000160,000

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Net

Inflo

w (

| Cr

)


Exhibit 22: AUM increased after falling for 2 months

2069

79

3007

38

2341

41

1785

07

2766

55

2364

86

2329

70

2367

00

2579

86

1994

04

3370

49

2697

46

2441

29 3009

95

80000130000180000230000280000330000380000

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

Jul-1

6

| Cr

ore

Money Market


Preferred Picks

HDFC Cash Management Fund - Savings Plan ICICI Pru Liquid Plan Reliance Liquid Fund - Treasury Plan


View Neutral


Page 15

Income funds System liquidity improved significantly in the last one month with yield

on money market instruments declined by 50bps and yield on long term government securities declined by around 30bps. Income funds overall delivered superior return on the back of fall in yields across the yield curve

One month annualized return in the short-term debt funds category was around 13.0% while income fund category delivered around 21.3% annualized return during the same period

Long term income funds performed well in the last few months post the Union Budget as the fall in G-Sec yields helped them deliver better returns

Overall, the direction of G-sec yield remains southward given the overall improvement in macro economic data. However, higher supply, particularly from state governments because of higher UDAY bonds, may continue to put pressure on yields. Therefore, dynamic bond funds are better placed than pure duration or G-Sec 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 23: Income funds flows remain volatile…

5,86

121

,713

12,6

71

-26,

717

22,8

75

2,47

4

-25,

875

15,0

14

-925

-14,

048

31,4

485,

688

1,69

7

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

Jun-

15

Jul-1

5

Aug

-15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Net

Inflo

ws

(| .C

r)


Exhibit 24: AUM increases on account of inflows

5289

00

5558

84

5710

89

5495

63

5753

24

5791

18

5553

64

5719

33

5711

92

5654

59

6016

09

6111

30

6173

03

400000450000500000550000600000650000

Jun-

15

Jul-1

5

Aug

-15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

| Cr

ore

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 Birla Sunlife Short Term opportunities term HDFC Corporate debt opportunities ICICI Prudential Regular Savings

Long term/Dynamic Birla Sunlife income plus ICICI Prudential Dynamic Bond Fund IDFC dynamic bond fund


View Ultra-short term: Neutral

Short-term: Positive Long-term: Positive

Ultra-short-term fund returns are attractive on risk adjusted basis Short-term funds will benefit as the bond curve reverts to an upward slopping curve. Credit opportunities funds earn the highest accrual and are the best in the category Dynamic bond funds are suitable for all types of investors and for longer duration. They can take exposure to all durations as per the interest rate outlook and switch between G secs and corporate bonds


Page 16

Gilt Funds Gilt funds delivered an annualised return of 27% in the last one month

as G-sec yields have fallen around 30 bps post the Brexit event and announcement of new RBI Governor

The liquidity situation was tight at the start of the year 2016 but eased off significantly post March. RBI has done significant amount of bond purchases through OMO (open market operation) and the same has eased off liquidity pressure

The progress of monsoons, so far, has been quite satisfactory and has largely been in line with the forecast made by the Indian Meteorological Department (IMD). In July, which marks the most important month both in term of quantum (accounts for 33% of total seasonal rainfall) as well as timing of rainfall (germination of seeds and plant growth), rainfall was abundant at 107% of LPA (7% surplus) thereby resulting in at par (100% of LPA) rainfall in the first half of the current monsoon season. Going forward, IMD has maintained its monsoon forecast for 2016 at 106% of LPA with rainfall in the second half of the monsoon season expected at 107% of LPA with rainfall in August expected at 104% of LPA

The combination of better liquidity conditions, increased OMO purchases by RBI and quarterly increases in FPI debt limit is a positive development for the overall debt market

Although the outlook on G-sec yields remains positive, the duration strategy should be played through actively managed income or dynamic bond funds. They will be able to make swift duration change within G-secs or switch between corporate bonds and G-secs within specific duration

Recommended funds

Birla Sun Life Gilt Plus - PF Plan - Regular ICICI Prudential LT Gilt Fund - PF Option - Regular

(Refer to www.icicidirect.com for details of the fund) Exhibit 25: Investors continue to book profit leading to outflows from gilt funds

2090

1813 20

58

1439

164

875

-279

190

143

1183

428

-80

-243 23

-572

-107

3

-372

-837

-171

7

-1500

-1000

-500

0

500

1000

1500

2000

2500

Dec-

14

Jan-

15

Feb-

15

Mar

-15

Apr-1

5

May

-15

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

6

May

-16

Jun-

16

Jul-1

6

Net

Inflo

w (

| Cr

)




Page 17

Gold: Likely to consolidate in near term Global gold prices witness a consolidation after having rallied to a two

year high in the first week of July 2016 on the back of heightened risk aversion post the unexpected Brexit event. The global risk-off trade was visible across asset classes with perceived safe haven assets like gold and treasuries attracting investor’s interest

Global gold prices crossed US$1360 per ounce in July 2016 rising sharply by almost 12% since June. Indian prices also crossed | 31000 per 10 gram on MCX

As the UK decided to exit European Union, concerns were raised on negative implications on international trade. Many analysts believe the Brexit could have a severe impact on the recovery efforts of both the UK and EU. Currency movement was extremely sharp further accentuating the impact of the event

Gold has witnessed a spectacular rally since the start of calendar year 2016. Global prices have rallied 28% since the star of the year. The rally was triggered by fears on a hard landing in China, which resulted in a sharp sell-off in Chinese equities that extended to other parts of the world. This sent investors toward safe-haven assets, boosting ETF holdings. Buying pressure in gold was bolstered by downward revisions to the expected path of US interest rates from investors and the Fed. Fed tightening expectations through the first quarter pushed gold higher by pressurising the dollar 4% lower and by moving real yields on the 10-year US treasuries to their lowest since April 2015

The expectation of quantum of rate hike by the US Fed has declined significantly post recent turmoil in global capital markets. The market is now factoring in just one rate hike in the whole of calendar year 2016 especially post the dovish statement from the US Fed Chair. Interest rate hikes, in general, are negative for gold prices. With rate hike concerns receding, the overhang on prices also abates in the near term

The steep fall in industrial commodity prices, including crude oil, led to a sharp fall in inflation and inflationary expectations across the globe and particularly in developed economies. The same led to reduced demand for gold as an inflationary hedge investment

Medium-term demand will, however, continue to be impacted by the overall global environment, particularly the US Fed rate hike trajectory

Exhibit 26: Gold prices trade around 2 year levels

1000

1100

1200

1300

1400

Aug-

14

Nov

-14

Feb-

15

May

-15

Aug-

15

Nov

-15

Feb-

16

May

-16

Aug-

16

Price ($/Ounce)

Source: Company, ICICIdirect.com Research

Exhibit 27: …domestic prices follows global trend

24000

26000

28000

30000

32000

Feb-

15M

ar-1

5

Apr-1

5M

ay-1

5

Jun-

15Ju

l-15

Aug

-15

Sep-

15Oc

t-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16M

ar-1

6

Apr-1

6M

ay-1

6

Jun-

16Ju

l-16

|

Price (|/10 grams)

Source: Company, ICICIdirect.com Research

Investment demand for gold is also governed by the

broader economic climate. Currently, there is a lot of

uncertainty surrounding currency devaluation, global

economic growth prospects and equity & commodity

market turmoil. The same is likely to keep demand for

gold as a safe haven asset upbeat in the near term


Page 18

Exhibit 28: Outflows from gold ETFs continue…

-165

-178 -1

49

-146

-341

-227

-105

-112

-47 -38 -32

-111

-131

-74

-111

-69

-86 -76 -5

0

-82 -5

7

-69 -4

0

-46

-81

-142

-105

-69

-79

-80

-183

-400

-200

0

Dec-

13

Mar

-14

Jun-

14

Sep-

14

Dec-

14

Mar

-15

Jun-

15

Sep-

15

Dec-

15

Mar

-16

Jun-

16

Net

Inflo

w (

| Cr

)

Source: Amfi, ICICIdirect.com Research

There has been an outflow from gold ETFs in the past two

years. After the surge in gold prices since December 2015,

investors have preferred sovereign gold bonds over gold

ETFs and gold ETFs have witnessed outflows


Page 19

Model Portfolios

Equity funds model portfolio Investors who are wary of investing directly into equities can still get returns almost as good as equity markets through the mutual fund route. We have designed three mutual fund model portfolios, namely, conservative, moderate and aggressive mutual fund portfolios. These portfolios have been designed keeping in mind various key parameters like investment horizon, investment objective, scheme ratings, and fund management. We have changed the mutual funds portfolio in July, to include midcap funds as we believe an improvement in the growth scenario may generate better alpha in midcap stocks over large cap stocks Exhibit 29: Equity model portfolio Particulars Aggressive Moderate ConservativeReview Interval Monthly Monthly QuarterlyRisk Return High Risk- High

ReturnMedium Risk -

Medium ReturnLow Risk - Low

ReturnFunds Allocation % AllocationFranklin India Prima Plus - - 20Birla Sunlife Frontline Equity 20 20 20ICICI Prudential Dynamic Plan - - 20SBI Bluechip Fund 20 20 20ICICI Prudential Value Discovery 20 20 20HDFC Midcap Opportunities 20 20 -Franklin India Smaller Companies 20 20 -Total 100 100 100

Source: ICICIdirect.com Research

Exhibit 30: Model portfolio performance: One year performance (as on July 31, 2016)

11%

7%

5%

-3%-4%

-2%

0%

2%

4%

6%

8%

10%

12%Aggressive Moderate Conservative BSE 100

%

Aggressive Moderate Conservative BSE 100

Source: ACE MF, ICICIdirect.com Research


Page 20

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 31: Debt funds model portfolio

Particulars

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

Objective LiquidityLiquidity with

moderate return Above FDReview Interval Monthly Monthly Quarterly

Risk ReturnVery Low Risk - Nominal Return

Medium Risk - Medium Return

Low Risk - High Return

Funds AllocationUltra Short term FundsBirla SL Savings Fund 20ICICI Pru Flexible Income Plan 20Short Term Debt FundsBirla Sunlife Short Term Fund 20 20 20Birla Sunlife Short Term Opportunites Fund 20Reliance Regular Savings Fund 20HDFC Short Term Opportunities Fund 20 20ICICI Prudential Regular Savings 20ICICI Prudential Short Term Fund 20IDFC SSI Short Term 20 20UTI Short Term Income Fund 20HDFC Corporate Debt opportunities fund 20Total 100 100 100

Time Horizon

% Allocation

Source: ICICIdirect.com Research

Exhibit 32: Model portfolio performance: One year performance (as on July 31, 2016)

8.48 8.60 8.527.63

8.599.76

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0-6 Months 6Months - 1Year Above 1yr

%

Portfolio Index

Source: Crisil Fund Analyser, , ICICIdirect.com Research

*Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; 6 months-1 year – Crisil Short term Index Above 1 year: Crisil Composite Bond Index


Page 21

Top Picks Exhibit 33: Category wise top picks

Category Top Picks

Largecaps Birla Sunlife Frontline equity Fund

ICICI Pru Focussed Bluechip Equity Fund

SBI Bluechip Fund

Midcaps HDFC Midcap Opportunities Fund

Franklin India Smaller Companies Fund

SBI Magnum Global Fund

Diversified Franklin India Prima Plus

Reliance Equity Opportunities

ICICI Prudential Value Discovery Fund

ELSS Axis Long Term Equity

ICICI Prudential Tax Plan

Franklin India Tax shield

Category Top Picks

Liquid Funds HDFC Cash Mgmnt Saving Plan

ICIC Pru Liquid Plan

Reliance Liquid Treasury Plan

Ultra Short Term Birla Sunlife Savings Fund

Reliance Medium Term Fund

ICICI Pru Flexible Income Plan

Short Term Birla Sunlife Short Term FundHDFC Short Term Opportunities Fund

ICICI Pru Short Term Plan

Credit Opportunities Fund Birla Sunlife Short Term Opportunities Plan

Reliance Regular Savings Fund

ICICI Prudential Regular Savings

Income Funds ICICI PrudenIncome Fund

Birla Sun Life Income Plus - Regular Plan

UTI Bond Fund

Gilts Funds ICICI Pru Gilt Inv. PF Plan

Birla Sunlife Constant Maturity 10 year

gilt plan

MIP Birla Sunlife Savings 5Aggressive ICICI Prudential MIP 25

DSP Blackrock MIP

Equity

Debt



Page 22

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 I Sachin Jain, CA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or Funds. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) AMFI Regn. No.: ARN-0845. Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai – 400020. India ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH000000990. 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

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