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
October 17, 2017
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 Event update : Sebi circular on categorisation and rationalisation of mutual
fund schemes ...................................................................................................... 6 Equity diversified funds ...................................................................................... 7 Equity infrastructure funds ................................................................................. 8 Equity banking funds .......................................................................................... 8 Equity FMCG Funds ............................................................................................ 8 Equity Pharma funds ........................................................................................... 9 Equity Technology Funds .................................................................................... 9
Exchange Traded Funds (ETF) ....................................................................... 10 Balanced funds ............................................................................................. 11 Monthly Income Plans (MIP) ........................................................................ 12 Arbitrage Funds ............................................................................................. 12 Debt funds ..................................................................................................... 13
Liquid Funds 14 Income funds .................................................................................................... 15 Gilt Funds 16 Gold: Outlook anchored to geopolitical worries, Fed movement ..................... 17 Model Portfolios ................................................................................................ 18
Equity funds model portfolio ......................................................................... 18 Debt funds model portfolio ............................................................................ 19
Top Picks ........................................................................................................... 20
October 17, 2017
ICICI Securities Ltd. | Retail MF Research
Page 2
Equity Markets
Update
Indian equity market regained momentum in October to record a fresh
all-time high after having witnessed some profit booking in the later part
of September. Broader markets continued their upward trajectory as
midcaps and small caps continued to outperform large caps
Historically, bull markets tend to undergo periodic phases of secondary
correction. This, in turn, creates fresh buying opportunities. We believe
the index is undergoing a secondary corrective phase that forms part of
the larger degree uptrend. Therefore, investors should utilise this as an
opportunity to accumulate quality stocks in a staggered manner
Going forward, we expect the index to extend the time wise corrective
phase in the coming month while price wise correction will be limited.
We expect the index to hold the 9650-9700 support base in the present
scenario and extend the ongoing consolidation between 9650 and
10000 in the coming month. Only a decisive close below 9650 will
warrant extended profit booking towards 9450-9500, which will again
present an attractive buying opportunity
Broader markets outperformed the benchmark by a healthy margin
during the up move since the August 2017 bottom. The NSE midcap
and small cap indices surged to new life-time highs well ahead of the
benchmark. The ensuing market wide correction has seen the Nifty
wipe off the entire gains whereas the NSE midcap and small cap indices
have so far retraced the August-September rise by about 61.8%. The
relative outperformance of broader markets during the up move as well
as the corrective phase highlights the stock specific action in market
amid the broader consolidation on the benchmark front
Outlook
Structurally, broader markets have consistently outperformed the
benchmark in the entire up move since January 2017 till date barring
just one instance in May 2017. It highlights the overall robust price
structure and augurs well for the benchmark, going forward
Indian markets are witnessing a structural shift in terms of
financialisation of domestic savings. The same is evident through
robust mutual fund inflows with recent monthly inflow into equity
oriented schemes at a record high of ~| 29,000 crore. Average monthly
inflow into equity oriented schemes in YTD FY18 was at | 22,500 vs. the
monthly average of ~| 11,000 crore in FY17. Such has been the fund
flows that entire FII outflows in recent times have been more than
absorbed by domestic fund flows. Demonetisation acted as a catalyst
channelising financial savings, which coupled with diminishing returns
across other asset classes has resulted in buoyant inflows into Indian
equity markets
We reiterate our positive stance on the equity market over the medium
term perspective. Our positive stance on equity continues to be backed
by expectations of a pick-up in earnings and continuity of fund flows.
Subdued earnings, over the last four years, have led index valuations to
inch up. However, we believe the impact of one-offs like
demonetisation and GST on corporate earnings will go through in the
first half of FY18. From the second half onwards, earnings growth may
accelerate
However, given the sharp rally in recent months, it is better to avoid
lumpsum investment and continue with the staggered buying approach
Nifty 50: Markets scale new highs
7500
8000
8500
9000
9500
10000
10500
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Oct-17
Source: Bloomberg, ICICIdirect.com Research
Smallcap index outperformers sharply
2.5
0.8
0.8
0.6
0.6
0.3
0
1
2
3
BS
E S
mall cap
BS
E 5
00
Sensex
BS
E 2
00
BS
E 1
00
BS
E M
idcap
Source: Bloomberg
One month returns till October 13, 2017
Previous laggards IT and Healthcare enjoy a good
month; Real estate and Capital Goods underperform
4 4
3 3
2
0
-1
-4
-4-6
-4
-2
0
2
4
6
IT
Healthcare
Metals
Oil n G
as
Auto
FM
CG
Bankin
g
Real Estate
CG
Source: Bloomberg
One month returns till October 13, 2017
Research Analyst
Sachin Jain
Jaimin Desai
ICICI Securities Ltd. | Retail MF Research
Page 3
Debt Markets
Update
RBI in its monetary policy on October 4, kept policy rates unchanged as
was widely expected. The RBI lowered the statutory liquidity ratio (SLR)
to be maintained by banks by 50 bps from 20% to 19.5%
RBI acknowledged that food prices are likely to remain largely stable but
outlined building up of pricing pressures in fuel (largely from crude oil).
It mentioned that upside risks to the inflation trajectory could arise from
fiscal slippages due to farm loan waivers and state’s implementation of
salary and allowances. Factors like increased likelihood of US Fed rate
hike later in the year and quantitative easing (QE) retreat relatively soon
could have prevented a rate cut or change of policy stance
The 10-year benchmark G-sec yield hardened slightly by 7 bps to
~6.7% following the policy announcement and is currently trading at
around 6.75%
Foreign portfolio investors (FPI), who remained net sellers in 2016, have
turned significant buyers since February 2017, investing ~US$20 billion
thus far in calendar year 2017. The 10-year benchmark G-Sec yield had
softened to below 6.5% during this period
As per RBI, inflation is expected to rise from its current level and range
between 4.2% and 4.6% in the second half of FY18, marginally higher
than its projection of 4-4.5% for Q4FY18, made in its last policy
meeting. The upward revision in inflation outlook was largely
unexpected. The MPC acknowledged the likelihood of a growth
slowdown continuing but “requires more data to better ascertain the
transient versus sustained headwinds in the recent growth prints”
The policy statement did not include a softening of stance and delivered
a balanced commentary, perhaps disappointing some market quarters
who expected a slight dovish outlook on the back of slowing economic
growth. In the absence of fresh triggers and the slightly hawkish tone in
the inflation trajectory, the G-sec yield may trade in a narrow range in
the near term as participants wait on the sidelines
Outlook
In the last two months since the monetary policy on August 2, 2017, the
10 year benchmark G-Sec yield has hardened around 30 bps from
6.45% to 6.75% currently. Globally, the US 10 year yield has also
hardened around 30 bps to 2.36%. Corporate bond yields, however,
remained stable despite profit booking in G-Sec during the same period
Although the overall view on the Indian debt market remains positive,
exhaustion of the investment limit of foreign portfolio investors and
concerns over additional spending by the government to support
weakening growth may prevent yields from coming down meaningfully
in the near term
The India debt market is almost at the end of the interest rate cycle,
which started in January 2015 with the repo rate at 8%. RBI has since
then cut benchmark rates by 200 bps. The 10 year G-sec has corrected
from 9.1% in April 2014 to 6.45% currently. Therefore, room for further
downside remains narrow
System liquidity continues to remain in surplus leading to persistent
lower yields at the shorter end of the yield curve. With bank credit
growth remaining subdued, we expect rates to remain low in near term
G-sec funds or duration funds should be avoided. Credit opportunities
funds with stable asset quality offer the best investment opportunity in
the current market environment
G-sec yields rise marginally in days following
October RBI policy meet
5.5
5.8
6.0
6.3
6.5
6.8
7.0
7.3
7.5
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Oct-17
Source: Bloomberg
G-sec yield curve: Yields steepens for most
maturities
6.13
6.35
6.54
6.58
6.22
6.42
6.696.75
6.0
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
1yr 3yr 5yr 10yr
Yie
ld (%
)
12-Oct-17 13-Sep-17
Source: Bloomberg, ICICIdirect.com Research
AAA corporate bond yield curve steepens for 10
year maturity
6.82
7.137.12
7.66
6.997.13
7.35
7.78
6.4
6.8
7.2
7.6
8.0
1yr 3yr 5yr 10 yr
Yie
ld (%
)
12-Oct-17 13-Sep-17
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 4
MF industry synopsis
Mutual fund assets have shown remarkable growth over the last three
years, driven by record inflows into equity schemes and strong
performance. Total assets managed by mutual funds touched a record
high of | 20.59 lakh crore in August 2017, declining slightly by ~0.9% in
September 2017 to | 20.40 lakh crore. This represents a ~29.13%
increase YoY and an ~24% increase from December 2016. Of the total
MF corpus, ~40% was held by income funds and ~32% by equity and
ELSS funds
According to Amfi data, systematic investment plans (SIPs) inflows for
September were at ~| 5500 crore, up from ~| 5200 crore previously.
SIP inflows averaged ~ | 3600 crore per month in FY17
In the trailing 12 months, the mutual fund industry saw a net inflow of
| 3.43 lakh crore. Out of the total net inflow, | 1.13 lakh crore came into
equity and ELSS funds, about 33%
Despite volatility in equity markets, inflows in equity mutual funds have
remained steady. September saw a net inflow of ~| 26603 crore in
equity and equity-oriented funds, which is slightly below the multi-year
high seen in August. This trend reflects the increasing participation of
investors in mutual funds and use of correction as an opportunity to
deploy capital
Exhibit 1: While all equity-oriented schemes saw second largest monthly
inflow ever, large outflows from income schemes put net September
inflows at (-) |16604 crore
1000000
1200000
1400000
1600000
1800000
2000000
2200000
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Total AUM
Source: AMFI
Exhibit 2: AUM of Top 10 AMCs
271,094
268,245
225,811
222,900
183,622
141,427
110,847
95,758
78,472
65,000
50000
100000
150000
200000
250000
300000
350000
AUM
Source: ACE MF
Exhibit 3: Fraklin Templeton has highest proportion of equity AUM as
percentage of its AUM
48%
48%
41%
41%
37%
36%
35%
33%
31%
29%
0%
20%
40%
60%
80%
Equity % Debt% Others%
Source: ACE MF. Data as of September 2017
Exhibit 4: Within retail category, equity funds witness significant inflows
in FY17…
-2000
4000
10000
16000
22000
28000
34000
40000
46000
52000
58000
EQ
UITY
BA
LA
NC
ED
OTH
ER
ETFs
ELS
S -
EQ
UITY
GO
LD
ETFs
GILT
FY16
Source: ACE MF. Data as on March 2017
ICICI Securities Ltd. | Retail MF Research
Page 5
MF Category Analysis
Equity funds
Infrastructure funds emerged as the best performing category of equity
funds for a second consecutive month. This category along with
banking as well as FMCG funds continued to outperform information
technology (IT) and pharma funds by wide margins. Pharma funds were
in the red to the tune of ~9.7%
In terms of market cap-based funds, midcap funds continued their
dominance over large cap funds. Overall, midcap funds were among
the best performing equity fund categories on a one year basis
Structural industry-wide problems continue to plague pharma and
technology funds. Pharma stocks delivered a severely disappointing
Q1FY18 amid persistent pressure over pricing, compliance issues and a
fear of shrinking growth in the large US market. H1B visa issues and US
government action fears persisted on overhangs over technology
stocks and consequently, technology funds
Exhibit 5: Infrastructure funds outperform other categories while pharma funds continue to be
under pressure (returns as on October 13, 2017)
S
25.3
23.2
22.1
21.8
18.8
17.9
7.3
-9.7
15.4
15.0
15.5 1
9.8
14.4
12.0
3.2
4.0
15.8
14.0
14.9
24.9
18.0
15.3
16.0
15.2
-15
-10
-5
0
5
10
15
20
25
30
Infrastructure Banking FMCG Mid cap Multi cap Large Cap Technology Pharma
Returns (%
)
1 year 3 Year 5 year
Source: Crisil, ICICIdirect.com Research ; Returns over one year are compounded annualised returns
Exhibit 6: Strong flows continue into equity and ELSS schemes
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
22000
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan-1
7
Feb-1
7
Mar-
17
Apr-
17
May-1
7
Jun-1
7
Jul-17
Aug-1
7
Sep-1
7
Net In
flow
( |
Cr )
Equity + ELSS
Source: AMFI, ICICIdirect.com Research
Exhibit 7: Robust inflow in equity funds pushes up AUM to record high of
| 6.6 lakh crore
350000
400000
450000
500000
550000
600000
650000
700000
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan-1
7
Feb-1
7
Mar-
17
Apr-
17
May-1
7
Jun-1
7
Jul-17
Aug-1
7
Sep-1
7
| lakh C
rore
Equity +ELSS
Source: AMFI, ICICIdirect.com Research
Reshuffling of portfolio was seen post Union Budget with
beaten down sectors rallying sharply outperforming
defensive sectors
ICICI Securities Ltd. | Retail MF Research
Page 6
Event update : Sebi circular on categorisation and rationalisation of
mutual fund schemes
Sebi in its October 6 circular on ‘Categorisation and rationalisarion of
mutual fund schemes’ brought out several far reaching changes to the
existing operations of the mutual fund industry. It appears that the
proposed changes will bring greater uniformity in practice across asset
management companies (AMCs) and standardise categorisation of
schemes with respect to asset allocation, investment strategy, etc
The changes are expected to benefit investors by making their decision
making process clearer through better evaluation of the different
options available
From a research perspective, prima facie it appears that the changes
will enable more appropriate comparison and simplify identification and
tracking of mutual fund scheme performance
AMCs are required to analyse their existing schemes in light of the
proposed changes and submit their proposals (including course of
action viz. winding up, merger, fundamental attribute change, etc.) to
Sebi within two months from the date of the circular. After receiving
Sebi’s feedback and observations on the proposals, mutual funds would
have to carry out the necessary changes within a maximum period of
three months. Thus, the entire exercise would be completed within a
maximum period of five months
The circular is applicable to all open ended schemes currently in
existence and sought to be issued in the future.
Exhibit 8: Summary of changes proposed by circular
Section Prevailing Change proposed Comment
Scheme
Categorization
Presently schemes only mention whether
schemes are open/close ended and whether they
invest in equity, debt or a combination of both.
5 distinct categories
• Equity – 10 sub categories including Large cap, Mid cap, Small cap among others
• Debt – 16 sub categories including Liquid, Corporate Bond, Credit Risk among others
• Hybrid - 6 sub categories including Aggressive Hybrid Fund, Dynamic Asset Allocation
among others
• Solution Oriented – 2 sub categories : Retirement Fund, Children’s Fund
• Others – 2 sub categories : Index Funds/ETFs and Fund of Funds (FoFs)
Category based definition demarcates funds distnctly, thus enabling
investors to better select funds before investment and better compare
performance after investment. Additionally, there will now be limits on the
scope to stray from investment mandate.
Investment Universe
No standardization on investment universe of
schemes, lack of well-defined investment
uniiverses
Clear definition of what constitutes a large cap/mid cap/small cap stock on the equity side
and several duration-based ranges for debt schemes
• Large Cap: 1st-100th company based on full market cap
• Mid Cap: 101st-250th company based on full market cap
• Small Cap: 251st company onwards based on full market cap
Threshold limits have also been set for minimum investment into defined
universes for applicable schemes. For instance, a large cap fund would
need to maintain minimum 80% of its corpus in large cap stocks at all
times. In the case of equity funds, the list of stocks based on market cap
would be updated twice a year (June and December) and schemes would
have to carry out necessary rebalancing in their portfolios within one
month from the change.
Rationalization
No current provision on number of schemes
allowed per category Only one scheme allowed per sub-category, except Index funds/ETFs, FoFs with different
underlying schemes and sectoral/thematic funds with different underlying sectors/themes.
The move could narrow down the existing universe of schemes and make
available fewer but well defined, distinct schemes.
ICICI Securities Ltd. | Retail MF Research
Page 7
Equity diversified funds
Equity diversified funds witnessed robust growth over the last three
years, with AUM within each sub-category rising substantially. In the
last three years in FY14-17, the AUM of large cap funds rose 121%,
multi cap funds AUM rose 99% while midcap funds AUM rose 204%
Over this period, while all three sub-categories have delivered a strong
performance (Exhibit 9), midcap funds have done exceedingly well and
outperformed. This is reflected in the trend of broader indices
outperforming bellwether indices over this time frame. However, large
cap funds have reversed that trend at some points during the past few
months
Multicap funds are relatively more market cap agnostic and hold
positions in a wider range of companies than pure large cap funds or
pure midcap/small cap funds. Multicap funds generally hold around 50-
60% of their portfolio in large cap stocks and 30-40% in midcap stocks.
They have benefited by capturing a part of the midcap rally during this
period and, thus, outperformed pure large cap funds
In the present market scenario, bottom up stock picking across the
market segment is more important than allocation to a particular
segment or sub sector. Multicap funds offer fund managers flexibility to
allocate funds across all market segment and are, therefore, relatively
better placed
Exhibit 9: Robust AUM growth across all equity diversified fund sub-categories from 2014
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
|crs
Large Caps Multi Caps Mid Caps
Source: ACE MF
Recommended funds
Large cap
Birla Sunlife Frontline Equity
ICICI Prudential Focused Bluechip Equity
SBI Bluechip Fund
Multi cap
Franklin India Prima Plus Fund
Kotak Select Focus Fund
Midcap
HDFC Mid-Cap Opportunities Fund
Franklin India Smaller Companies Fund
(Refer to www.icicidirect.com for details of the fund)
View
Short term: Positive
Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 8
Equity infrastructure funds
Government spending and focused push towards sectors such as
roads, railways, housing and power could lead to greater opportunities
to infrastructure players, apart from the benefit of increased
transparency in the system
A number of infrastructure related government schemes and the
introduction of new regulatory measures are expected to help
organised players in the infrastructure space over the medium to long
term, placing infrastructure and ancillary stocks on an attractive footing
Preferred Picks
Aditya Birla SL Infrastructure Fund Refer
www.icicidirect.com for
details of the fund
L&T Infrastructure Fund
Reliance Diversified Power Sector Fund
Equity banking funds
Q1FY18 results showed that operating earnings increased decently.
However, there was no respite from asset quality concerns especially
for PSU banks. Of late, enhanced credit quality concerns and related
haircuts and credit costs apart from slower credit growth have put the
sector under some stress. However, increase in gross NPA of private
sector banks in absolute terms was lower than previous quarters, giving
some respite with further support expected from treasury gains and
sale of non-core assets
We remain optimistic on the banking sector keeping in mind the
anticipated pick-up in credit offtake. Steady margins and peaking out of
the NPA cycle is expected to further aid profitability
From a long term point of view, the continued government push on
financial inclusion is structurally positive for the financial industry.
Demonetisation-led reduction in the black economy, enhanced
awareness and increased usage of digital or electronic payments will be
positives for the banking industry from an operating cost perspective
Preferred Picks
ICICI Prudential Banking & Financial Services Refer to
www.icicidirect.com for
details of the fund
Reliance Banking Fund
UTI Banking Sector Fund
Equity FMCG Funds
Several companies from the consumer-oriented and FMCG space
witnessed GST led destocking impact in Q1FY18. This came on the
back of an improvement due to receding demonetisation-led disruption.
Many companies had reported decent earnings growth with an
improvement in margins and sequential improvement in volume growth
in Q4FY17
We maintain our positive outlook on the FMCG sector backed by the
rural consumption revival led by largely normal monsoons and the
government’s focus on increasing farm incomes. We also expect GST
implementation to eventually provide a big boost to FMCG companies,
particularly those present in personal care and household categories
Preferred Picks
ICICI Prudential FMCG Fund Refer
www.icicidirect.com for
details of the fund
SBI FMCG Fund
View
Short-term: Positive
Long-term: Positive
View
Short-term: Positive
Long-term: Positive
View
Short-term: Positive
Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 9
Equity Pharma funds
Q1FY18 was quite poor for pharmaceutical companies on the back of
concerns such as destocking necessitated by GST implementation,
higher-than-expected price pressure in the US generic space, high base
effect and rupee appreciation. Leading players in the US market
continue to face threats from price erosion borne out of intense
competition and client consolidation. Besides, other issues in the US
like pricing probe by the Department of Justice, adapting to the bidding
process and imposition of border tax on imported drugs are other near
term overhangs. An additional headwind for the sector has emerged in
the form of channel disturbances due to GST implementation. Pharma,
being a largely export-oriented sector, faces additional pressure from
emergence of a stronger rupee
However, despite these apprehensions, in the long term, we remain
optimistic about the sector’s prospects on the back of attractive
valuations and earnings momentum pick-up led by incremental product
launches in the US besides normalising Indian formulations growth
Preferred Picks
Reliance Pharma Fund Refer to
www.icicidirect.com
for details of the fund
SBI Pharma Fund
UTI-Pharma & Healthcare
Equity Technology Funds
Technology companies report muted results as expected. Subdued
corporate results demonstrate the pain in the technology sector. Future
expectations would be centred around management guidance. In the
short-term, persistent rupee strength, wage hikes and visa costs would
continue to weigh on the sector
We maintain our neutral stance on the sector as the industry faces
challenges related to US immigration rules and growing protectionism
around the world leading to marginal IT spending by companies. The
industry would continue to witness pricing pressure in its traditional
business, which is currently unable to offset newer revenue streams
from digital areas that enjoys higher margins
Preferred Picks
ICICI Prudential Technology Fund Refer to
www.icicidirect.com for
details of the fund
DSPBR Technology fund
View
Short-term: Neutral
Long-term: Neutral
View
Short-term: Neutral
Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 10
Exchange Traded Funds (ETF)
In India, three kinds of ETFs are available: Equity index ETFs, liquid
ETFs and gold ETFs
An equity index ETF tracks a particular equity index such as the BSE
Sensex, NSE Nifty, Nifty Junior, etc
An equity index ETF scores higher than index funds on several grounds.
The expense of investing in ETFs is relatively less by 0.50-0.75% in
comparison to an index fund. The expense ratio for equity ETFs is in the
range of 0.05-0.25% while for index funds the expense ratio varies in
the range of 0.50-1.25%. However, brokerage (which varies) is
applicable on ETFs while there are no entry loads now on index funds
Tracking error, which explains extent of deviation of returns from the
underlying index, is usually low in ETFs as it tracks the equity index on
a real time basis whereas it is done only once in a day for index funds
ETFs also provide liquidity as they are traded on stock exchanges and
investors may subscribe or redeem them even on an intra-day basis.
This is unavailable in index funds, which are subscribed/redeemed only
on a closing NAV basis
In August 2015, the Labour Ministry decided to invest 5% of
Employees’ Provident Fund Organisation’s (EPFO) incremental corpus
in ETFs. The investment in equities is split between the Nifty ETF (75%)
and Sensex ETFs 25%. EPFO chose two ETF schemes of SBI Mutual
Fund—SBI ETF Nifty and SBI Sensex ETF
In 2016, the EPFO hiked the limit from 5% to 10% of its incremental
corpus of investment in equities, which was further increased to 15% of
its incremental corpus in May 2017. This is a positive move since
retirement savings, which are long term in nature, will be invested in
equities that have the potential to generate higher returns. So far, EPFO
has invested a total of ~| 22,000 crore in exchange traded funds as of
April 2017
Over 400 ETFs are traded globally. ETFs are transparent and cost
efficient. The decision on which ETF to buy should be largely governed
by the decision on getting exposure to that asset class
Exhibit 10: Sensex/Nifty ETFs receiving consistently higher inflows…
1866
71
7661009
387
892
1533
940
2830
4349
6748
930
3599
456584
13651753
15131968
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
Mar-16
Jun-16
Sep-1
6
Dec-16
Mar-17
Jun-17
Sep-1
7
Net Inflo
w ( | C
r )
Source: AMFI, ICICIdirect.com Research
Exhibit 11: …leading to consistent increase in AUM
22740
23943
25211
28834
37412
40147
44436
45899
47584
48359
52823
53734
55166
0
10000
20000
30000
40000
50000
60000
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
| C
rore
Other ETFs
Source: AMFI, ICICIdirect.com Research
Traded volumes should be the major criterion that is used
while deciding on investment in ETFs. Higher volumes
ensure lower spread and better pricing to investors...
Tracking error, though it should be considered, is not the
deciding factor as variation among funds is not huge...
..traded volume should be the major criteria to be
considered while deciding on investment in ETFs.
Higher volumes ensure lower spread and better
pricing to investors...
..tracking error though should be considered but is
not the deciding factors as variation among funds
is not huge...
ICICI Securities Ltd. | Retail MF Research
Page 11
Balanced funds
The balanced funds category continued to receive significant flows,
with the average monthly inflow (net) for 12 months to September 2017
amounting to ~ | 8500 crore
The AUM of balanced funds has witnessed a stellar increase during this
period, more than doubling to | 134868 crore in September 2017 from
| 56816 crore in the year ago period
Over the last two or three years, the balanced space has emerged as
one of the fastest growing equity categories and offers an ideal gateway
for first time retail equity investors. In FY17, balanced funds AUM
growth outpaced all other categories bar non-gold ETFs
Balanced funds are hybrid funds. More than 65% of the overall portfolio
is invested in equities. Hence, as per provisions of the Income Tax Act,
1961, any capital gains over a year become tax free. Also, dividends
declared by funds are tax free in the hands of the investor
In case one separately invests 35% of one’s investible corpus in a debt
fund, the same will be subject to higher taxation. However, if the whole
corpus is invested in balanced funds, 100% shall have lower taxation
applicable as mentioned above. Thus, balanced funds offer the benefit
of equity taxation on debt component
After a sharp rally in equity markets, the funds can be a preferred
investment avenue as the debt proportion serves to protect on
intermediate relief rallies or the downturn while providing minimum
65% participation on further upsides
Exhibit 12: Strong inflow into balanced funds
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Sep-1
5
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-1
6
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-1
7
Net Inflo
w ( | C
r )
Source: AMFI, ICICIdirect.com Research
Exhibit 13: YoY 137% growth in AUM of balanced funds
56816
61107
62907
64954
71021
77126
84763
93530
102156
109513
121243
128320
134868
13000
33000
53000
73000
93000
113000
133000
153000
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
| C
rore
Balanced
Source: AMFI, ICICIdirect.com Research
Preferred Picks
ICICI Prudential Balanced Fund
HDFC Balanced Fund
Birla Sun Life Balanced 95 Fund
DSP Blackrock Balanced Fund
L&T India Prudence Fund
(Refer to www.icicidirect.com for details of the fund)
Investors with a limited investible surplus and a lower risk
appetite but with a willingness to invest in equities can
look to invest in these funds
View
Short-term: Positive
Long-term: Positive
ICICI Securities Ltd. | Retail MF Research
Page 12
Monthly Income Plans (MIP)
An MIP offers investors the option to invest in debt with some
participation in equity, ~10-25% of the portfolio. They are suitable for
investors who seek higher returns from a debt portfolio and are
comfortable taking nominal risk. The debt corpus of the portfolio
provides regular income while the equity portion of the fund provides
alpha. However, returns can also get eroded by a fall in equities
MIPs can be classified into aggressive MIP and conservative MIP based
on its equity allocation. Risk averse investors should invest in MIPs with
lower equity allocation to avoid capital erosion
The change in taxation announced in the Union Budget 2014, shall be
applicable to MIP funds (refer to debt funds section for details)
Preferred Picks
Aditya Birla Sun Life MIP II - Wealth 25 Plan
ICICI Prudential MIP 25
SBI Magnum MIP Fund
SBI Magnum MIP Floater Fund
(Refer www.icicidirect.com for details of the fund)
Arbitrage Funds
Arbitrage funds seek to exploit market inefficiencies that get manifested
as mispricing in the cash (stock) and derivative markets
Availability of arbitrage positions depends very much on the market
scenario. A directional movement in the broader index attracts
speculators in the market while cost of funding makes futures positions
biased
Arbitrage funds are classified as equity funds as they invest into equity
share and equity derivative instruments. Since these are classified as
equity funds for taxation, dividends declared by the funds are tax free.
No capital gains tax will be applicable if they are sold after a year
These funds can be looked upon as an alternative to liquid funds.
However, for these funds, returns totally depend on arbitrage
opportunities available at a particular point of time and investors should
consider reviewing the same before investing. Returns of arbitrage
funds are non-linear and, therefore, unsuitable for investors who want
consistent return across time period
Arbitrage funds should be used as a liquid investment and should not
be a major part of the investor’s portfolio. A range bound market does
not give ample room to create arbitrage positions
Preferred Picks
ICICI Prudential Equity - Arbitrage Fund – Regular
IDFC Arbitrage Fund - (Regular)
Kotak Equity Arbitrage Fund
SBI Arbitrage Opportunities Fund
(Refer to www.icicidirect.com for details of the fund)
View
Short-term: Neutral
Long-term: Positive
View
Short-term: Neutral
Long-term: Neutral
MIP should be a preferred debt investment for funds that
need to be parked for over two years
ICICI Securities Ltd. | Retail MF Research
Page 13
Debt funds
Exhibit 14: Category average returns
7.7
7.0
7.6
7.1
6.8
8.0
7.5
6.4
10.3
7.7
6.3
9.3
6.3
6.2
7.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
6 months 1 year 3year
%
Gilt Funds Income LT Income ST Income UST Liquid
Source: ACE MF, ICICIdirect.com Research
Note : Returns as on October 13, 2017; All returns are compounded annualised
Exhibit 15: G-sec yield curve
6.13
6.35
6.54
6.58
6.22
6.42
6.696.75
6.0
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
1yr 3yr 5yr 10yr
Yie
ld (%
)
12-Oct-17 13-Sep-17
Source: Bloomberg, ICICIdirect.com Research
Exhibit 16: Corporate bond curve
6.82
7.137.12
7.66
6.997.13
7.35
7.78
6.4
6.8
7.2
7.6
8.0
1yr 3yr 5yr 10 yr
Yie
ld (%
)
12-Oct-17 13-Sep-17
Source: Bloomberg, ICICIdirect.com Research
Benchmark 10 year G-Sec has witnessed yields
softening by ~20 bps since the end of April
Interest rates moved up on the longer end of the G-Sec and
corporate bond category
ICICI Securities Ltd. | Retail MF Research
Page 14
Liquid Funds
Yields on money market instruments viz. less than one year CDs and
CPs in which liquid fund predominantly invest, remain stable at lower
levels due to ample liquidity
In an uncertain environment, liquid funds remain well placed to park
money with low volatility
For less than a year, individuals in the higher tax bracket should opt for
dividend option as the dividend distribution tax @ 28.325% is
marginally lower. Also, though the tax arbitrage has reduced, they still
earn better pre-tax returns over bank savings (3-4%) and current
accounts (0-3%)
Changes in taxation rules announced in Union Budget 2014 are also
applicable to liquid funds, as post tax returns in less than a three-year
period get reduced for individuals in the higher tax bracket (30% tax
slab) and for corporate
Exhibit 17: Call rates below repo rate
5
5.4
5.8
6.2
6.6
7
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Oct-17
%
Call rate
Source: Bloomberg, ICICIdirect.com Research
Exhibit 18: CP/CD yields
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Oct-17
%3M CD 3M CP
Source: Bloomberg, ICICIdirect.com Research
Exhibit 19: Flows into liquid funds remain volatile on institutional activity
19630
-34,813
1,350
26,943
10,541
8,227
-15,147
99,403
-64,692
-12,739
-19,511
21,352
4,833
-200,000
-160,000
-120,000
-80,000
-40,000
0
40,000
80,000
120,000
160,000
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Net Inflo
w ( | C
r )
Source: AMFI, ICICIdirect.com Research
Exhibit 20: AUM remains healthy
468022
484802
468668
469675
496696
520020
543541
568770
583557
591377
629456
643926
659182
300000
400000
500000
600000
700000
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
| la
kh C
rore
Money Market
Source: AMFI, ICICIdirect.com Research
Preferred Picks
HDFC Cash Management Fund - Savings Plan
SBI Magnum InstaCash
Reliance Liquid Fund - Treasury Plan
(Refer to www.icicidirect.com for details of the fund)
View
Neutral
ICICI Securities Ltd. | Retail MF Research
Page 15
Income funds
RBI held the status quo on policy rates and maintained a neutral stance
in its October 4 policy meet. This followed consecutively higher inflation
readings in July (2.36% YoY) and August (3.28% YoY) than the series-
low June headline CPI print of 1.54%. The policy document outlined
aspects such as rebound in core & fuel inflation and the possibility of
fiscal slippages as some factors influencing its decision. Food prices
rose in July and August while the percolation effects of GST and HRA
implementation for government employees showed up in September
CPI as well. Core inflation rose to a six-month high in September.
Further, persistent stickiness could lead the RBI to maintain a prolonged
pause on rates. The RBI revised upwards its inflation projection for
H2FY18 to 4.2-4.6% from 3.5-4.5%. The policy statement was less
dovish in its commentary than was perhaps expected by the market.
The benchmark 10 year G-sec yield witnessed some pressure in the
following weeks, climbing by ~15 bps from end-September levels to
~6.73% (October 13)
Dynamic bond funds or short-term funds with some dynamic allocation
to G-Sec should be preferred over pure G-Sec funds or long-term
duration funds
Short-term debt funds remain a stable performing category, especially
in the current volatile environment. Credit funds with reasonable credit
quality should be preferred over an aggressive credit fund
Exhibit 21: Income funds witness significant outflow in September
-11,0
24
52,1
25
18,3
06
-33,1
82
28,5
88
10,8
64
-56,2
47
34,6
47
5,1
24
-20,6
85
60,0
84
8,3
90
-50,0
90
-80,000
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
80,000
Sep-1
6
Dec-1
6
Mar-
17
Jun-1
7
Sep-1
7
Net In
flow
s
(| .
Cr)
Source: AMFI, ICICIdirect.com Research
Exhibit 22: AUM remains stable on consistent inflows 698418
754662
784305
748071
783778
794679
743783
780797
792734
778266
845484
858188
809965
400000
500000
600000
700000
800000
900000
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan-1
7
Feb-1
7
Mar-
17
Apr-
17
May-1
7
Jun-1
7
Jul-17
Aug-1
7
Sep-1
7
| C
rore
Income
Source: AMFI, ICICIdirect.com Research
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
(Refer www.icicidirect.com for details of the fund)
View
Ultra-short term: Neutral
Short-term: Positive
Long-term: Neutral
ICICI Securities Ltd. | Retail MF Research
Page 16
Gilt Funds
Yield on the benchmark 10 year government bond had hardened
appreciably post the shift in RBI’s monetary policy stance from
‘accommodative to ‘neutral’. Softer than expected inflation prints in
April, May and June combined with strong institutional flows into debt
markets combined to push down benchmark 10 year G-sec yield by
~45-50 points in the period from May-July. The markets were not
enthused by the widely expected rate cut in August and the lesser than
expected dovish RBI commenatry in October. A significant rebound in
July, August and September CPI readings was followed by rise in yields
by ~25 bps from ~6.50% (end-June) to 6.73% (October 13). The yield
at 6.73% currently is up ~29 bps YTD. It briefly tested 6.95% in April
RBI held status quo on policy rates and maintained neutral stance in its
October 4 policy meet. This followed consecutively higher inflation
readings in July (2.36% YoY) and August (3.28% YoY) than the series-
low June headline CPI print of 1.54%. The policy document outlined
aspects such as rebound in core and fuel inflation and the possibility of
fiscal slippages as some factors influencing its decision. Food prices
rose in July and August while the percolation effects of GST and HRA
implementation for government employees showed up in September
CPI as well. Core inflation rose to a six-month high in September.
Further persistent stickiness could lead the RBI to maintain a prolonged
pause on rates. The RBI revised upwards its inflation projection for
H2FY18 to 4.2-4.6% from 3.5-4.5%
Given how inflation seems to be edging higher post June driven by
higher fuel prices, GST, HRA implementation and increasing likelihood
of a third 2017 rate hike by the Fed in December, there appears quite
limited scope for yields to soften. Allocation to pure G-Sec or duration
funds should be avoided given their historical outperformance and G-
sec yield trading at the lower end of its historical range. Historically, it
has been observed that years of good returns in G-sec are followed by
lower returns
Exhibit 23: Historical trend in return from G-Sec indicates, going forward, returns likely to be lower
-15
-10
-5
0
5
10
15
20
25
30
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 YTD
Crisil 10 Yr Gilt Index
%
Source: ACE MF
Preferred Picks
Aditya Birla Sun Life Gilt Plus – PF Plan
ICICI Pru LT Gilt Fund – PF Option
(Refer to www.icicidirect.com for details of the fund)
Allocation to pure G-Sec or duration funds should be
avoided given their historical outperformance and G-sec
yield trading at the lower end of its historical range. Crisil
10 year Gilt index has delivered 38% return in the last
three years. It is likely the return will be significantly
lower, going forward
View
Short-term: Neutral
Long-term: Neutral
ICICI Securities Ltd. | Retail MF Research
Page 17
Gold: Outlook anchored to geopolitical worries, Fed
movement
Global prices see-sawed in September. Starting from a base of
~US$1321 per ounce, prices gained smartly towards ~US$1349 per
ounce (September 7) before a sharp decline initially below US$1300 per
ounce and then bottoming out at ~US$1270 per ounce on October 3.
The metal bounced back in the second week of October towards
~US$1304/ounce (October 13). This represents a ~13.2% YTD return
The strong rupee appreciation during this period of ~4.2% has
prevented similar gains in Indian gold prices. Domestic rise has been
limited to just ~6.8% YTD as of October 12
Geopolitical concerns surrounding the US-North Korea situation had
provided buying interest in gold during much of August and early
September. However de-escalation of tensions in September helped
spark the sell-off, which reflected in prices. Firming of the US dollar
index also pushed gold prices lower
Gold has historically been looked at as a relatively risk-free asset. Its
price movement both in India and globally, is impacted by any actual or
perceived risk build-up on economic, political or natural fronts. The US
Dollar Index rose for most of September and further still in October,
touching a high of 93.96 on October 5. Dollar hardness leads to a fall in
gold prices as the metal is denominated in that currency
Fresh strength in gold prices in October was caused by weaker than
expected US inflation data, which cast some doubts on the Fed’s
interest hike trajectory. Further, geoplotical worries from Iraq also lent
support
There are growing expectations surrounding a Fed rate hike in
December. Apart from risk-off investment demand, gold direction
would continue to be impacted by developments on this front. The Fed
had last hiked rates twice thus far in 2017. Persistent undershooting of
inflation prints from the targeted level could impact this stated
trajectory. If US bond yields rise slower than expected, non-interest
bearing assets like gold could attract investment demand
Exhibit 24: Gold prices come off September highs
1100
1200
1300
1400
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Oct-17
Price ($/ounce)
Source: Bloomberg, ICICIdirect.com Research
Exhibit 25: Indian prices rise relatively less due to currency appreciation
26000
28000
30000
32000
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
Oct-17
Price (|/10 grams)
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 18
Model Portfolios
Equity funds model portfolio
Investors who are wary of investing directly into equities can still get
returns almost as good as equity markets through the mutual fund route.
We have designed three mutual fund model portfolios, namely,
conservative, moderate and aggressive mutual fund portfolios. These
portfolios have been designed keeping in mind various key parameters like
investment horizon, investment objective, scheme ratings, and fund
management.
Exhibit 26: Equity model portfolio
Particulars Aggressive Moderate Conservative
Review Interval Monthly Monthly Quarterly
Risk Return High Risk- High
Return
Medium Risk -
Medium Return
Low Risk - Low
Return
Funds Allocation % Allocation
Franklin India Prima Plus 20 20 20
Birla Sunlife Frontline Equity - 20 20
ICICI Prudential Dynamic Plan - - 20
SBI Bluechip Fund 20 20 20
Kotak Select Focus Fund 20 20 -
HDFC Midcap Opportunities 20 10 -
Franklin India High Growth Companies Fund 20 - -
Birla SL Dynamic Bond Fund - 10 20
Total 100 100 100
Source: ICICIdirect.com Research
Exhibit 27: Model portfolio performance: One year performance (as on September 30, 2017)
14.1%
13.0%
12.7%
15.5%
10%
11%
12%
13%
14%
15%
16%
Aggressive Moderate Conservative BSE 100
%
Aggressive Moderate Conservative BSE 100
Source: Crisil Fund Analyser, ICICIdirect.com Research
ICICI Securities Ltd. | Retail MF Research
Page 19
Debt funds model portfolio
We have designed three different mutual fund model portfolios for different
investment duration viz. less than six months, six months to one year and
above one year. These portfolios have been designed keeping in mind
various key parameters like investment horizon, interest rate scenarios,
credit quality of the portfolio and fund management, etc.
Exhibit 28: Debt funds model portfolio
Particulars
0 – 6 months 6months - 1 Year Above 1 Year
Objective Liquidity
Liquidity with
moderate return Above FD
Review Interval Monthly Monthly Quarterly
Risk Return
Very Low Risk -
Nominal Return
Medium Risk -
Medium Return
Low Risk - High
Return
Funds Allocation
Ultra Short term Funds
Birla SL Savings Fund 20
ICICI Pru Flexible Income Plan 20
Short Term Debt Funds
Axis Regular Savings Fund 20
Birla Sunlife Short Term Fund 20 20
Birla Sunlife Short Term Opportunites Fund 20 20
Reliance Regular Savings Fund 20
HDFC Short Term Opportunities Fund 20 20
ICICI Prudential Regular Savings 20
ICICI Prudential Short Term Fund 20
IDFC SSI Short Term 20
UTI Short Term Income Fund 20
HDFC Corporate Debt opportunities fund 20
Total 100 100 100
Time Horizon
% Allocation
Source: ICICIdirect.com Research
Exhibit 32: Model portfolio performance: One year performance (as on September 30, 2017)
7.70
8.40
8.10
7.10
8.008.10
6.0
6.5
7.0
7.5
8.0
8.5
0-6 Months 6Months - 1Year Above 1yr
%
Portfolio Index
Source: Crisil Fund Analyser, ICICIdirect.com Research
*Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; 6 months-1 year – Blended Index with 50% weight to Crisil
Liquid Index, 50% weight to Crisil Short Term Index; Above 1 year: Crisil Short Term Index
ICICI Securities Ltd. | Retail MF Research
Page 20
Top Picks
Exhibit 33: Category wise top picks
Largecaps Birla Sun life Frontline Equity Fund
ICICI Pru Focused Bluechip Fund
SBI Bluechip Fund
Midcaps HDFC Midcap Opportunities Fund
Franklin India Smaller Companies Fund
Multicaps Franklin India Prima Plus Fund
Kotak Select Focus Fund
ELSS Axis Long Term Equity Fund
ICICI Pru Tax Plan
Reliance Tax Saver Fund
Franklin India Taxshield
Balanced HDFC Balanced Fund
ICICI Pru Balanced Fund
Birla Sun Life Balanced 95 Fund
DSP Blackrock Balanced Fund
L&T India Prudence Fund
Liquid HDFC Cash Mgmnt Saving Plan
ICICI Pru Liquid Plan
Reliance Liquid Treasury Plan
Ultra Short term Birla Sunlife Savings Fund
ICICI Pru Flexible Income Plan
UTI Treasury Advantage Fund-Inst
Short term Birla SL Short term Fund
HDFC Medium Term opportunities Fund
Kotak Banking and PSU Debt Fund
Credit Opportunities Axis Regular Savings Fund
Birla Sun Life Medium Term Plan
L&T Short Term Income Fund
Income Funds ICICI Pru Income Fund
Birla SL Income Plus - Regular Plan
IDFC Dynamic Bond Fund
Equity Funds & Equity-oriented Funds
Debt Funds
(Refer www.icicidirect.com for details of the fund)
ICICI Securities Ltd. | Retail MF Research
Page 21
Pankaj Pandey Head – Research [email protected]
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st
Floor, Akruti Trade Centre,
Road No. 7, MIDC,
Andheri (East)
Mumbai – 400 093
Disclaimer
ANALYST CERTIFICATION
We, Sachin Jain, CA, and Jaimin Desai, CA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect
our views about the subject issuer(s) or Funds. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Terms & conditions and other disclosures:
ICICI Securities Limited (ICICI Securities) AMFI Regn. No.: ARN-0845. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990.Registered office of I-
Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate,Mumbai - 400020, India. ICICI Securities is a full-service, integrated investment banking and is, inter alia, engaged in the
business of stock broking and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries
engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, distribution of financial products etc. (“associates”), the details in
respect of which are available on www.icicibank.com.
ICICI Securities is one of the leading distributors of Mutual Funds and participate in distribution of Mutual Fund Schemes of almost all AMCs in India.
The selection of the Mutual Funds for the purpose of including in the indicative portfolio does not in any way constitute any recommendation by ICICI Securities Limited (hereinafter referred to as ICICI
Securities) with respect to the prospects or performance of these Mutual Funds. The investor has the discretion to buy all or any of the Mutual Fund units forming part of any of the indicative portfolios
on icicidirect.com. Before placing an order to buy the funds forming part of the indicative portfolio, the investor has the discretion to deselect any of the units, which he does not wish to buy. Nothing in
the indicative portfolio constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the investor's specific circumstances.
The details included in the indicative portfolio are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its
accuracy or completeness guaranteed. The funds included in the indicative portfolio may not be suitable for all investors, who must make their own investment decisions, based on their own
investment objectives, financial positions and needs.
This may not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment risks. ICICI Securities and affiliates accept
no liabilities for any loss or damage of any kind arising out of the use of this indicative portfolio.
Past performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may be holding all or any of the units included
in the indicative portfolio from time to time as part of our treasury management. ICICI Securities Limited is not providing the service of Portfolio Management Services (Discretionary or Non
Discretionary) to its clients.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Kindly note that such research recommended funds in indicative portfolio are not based on individual risk profile of each customer unless a customer has opted for a paid Investment Advisory Service
offered by I-Sec.
Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any
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such distribution, publication, availability or use would be contrary to law, regulation or which would subject I-Sec and affiliates to any registration or licensing requirement within such jurisdiction.
ICICI Securities and/or its associates receive compensation/ commission for distribution of Mutual Funds from various Asset Management Companies (AMCs). ICICI Securities host the details of the
commission rates earned by ICICI Securities from Mutual Fund houses on our website www.icicidirect.com. Hence, ICICI Securities or its associates may have received compensation from AMCs
whose funds are mentioned in the report during the period preceding twelve months from the date of this report for distribution of Mutual Funds or for providing marketing advertising support to these
AMCs. ICICI Securities also provides stock broking services to institutional clients including AMCs. Hence, ICICI Securities may have received brokerage for security transactions done by any of the
above AMCs during the period preceding twelve months from the date of this report.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive
any compensation or other benefits from the AMCs whose funds are mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities
nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.
It is confirmed that Sachin Jain, CA, and Jaimin Desai, CA, Research Analysts of this report have not received any compensation from the Mutual Funds house whose funds are mentioned in the report
in the preceding twelve months.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or is associates may be holding all or any of the units included in the indicative portfolio from time to time as part of our treasury management. Hence, ICICI Securities or its associates
may own 1% or more of the units of the Mutual Funds mentioned in the report as of the last day of the month preceding the publication of the research report.
Research Analysts or their relatives of this report do not own 1% or more of the units of the Mutual Funds mentioned in the report as of the last day of the month preceding the publication of the
research report.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies/ AMCs including the AMCs
whose funds are mentioned in this report or may have invested in the funds mentioned in this report .
ICICI Securities also distributes Mutual Fund Schemes of ICICI Prudential Asset Management Company which is an ICICI Group Company, scheme details of which might also be appearing in the report
above. However, the transactions are executed at Client's sole discretion and Clients make their own investment decisions, based on their own investment objectives, financial positions and needs..
It is confirmed that Sachin Jain, Research Analysts do not serve as an officer, director or employee of the AMCs whose funds mentioned in the report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies/funds mentioned in the report.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Research Analysis activities.
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The funds
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themselves of and to observe such restriction.