Presenting HDFC Prudence Fund - · PDF filePresenting HDFC Prudence Fund ... The scheme may...

PresentingHDFC Prudence Fund

(An Open-Ended Balanced Scheme)October 2012

1

Table of Contents

Definition and Positioning

Product Rationale and Investment Strategy

Portfolio Composition

Product Features and Asset Allocation Pattern

Performance and Dividend History

Fund Suitability

Disclaimer

2

What is a balanced fund?

A balanced fund is one that has a portfolio comprising debtinstruments, convertible securities, preference and equity shares

Assets are generally held in predefined proportion of debt / money marketsecurities and equities

Broadly, balanced funds target returns greater than debt schemes with lowerBroadly, balanced funds target returns greater than debt schemes with lowervolatility than equity schemes

Balanced funds provide investors the growth of equity with the stability of debt

3

Positioning of balanced fundsRETURN

Monthly Income Plans

Balanced Funds

Index Funds

Equity Funds

Sectoral Funds

RISK

RETURN

Liquid Funds

Income Funds

Gilt Funds

Monthly Income Plans

4

Product Rationale

Hassle free investing Investors save time, effort and costs. No need to constantly monitor the portfolioto maintain the target asset allocation

Buy low Sell High A Predefined asset allocation results in buying more equities when markets fallsharply (selling bonds) and selling equities when markets rally sharply (buyingbonds)

� HDFC Prudence Fund has further flexibility to take advantage of market� HDFC Prudence Fund has further flexibility to take advantage of market

movement due to the range of 40-75% in equities and balance in debt.

Cost effective Lower transaction cost and tax efficient* alternative for individuals to maintainconstant asset allocation

5

* Income of mutual fund is exempt from tax u/s 10 (23D) of the Income Tax Act, 1961

Investment Strategy

In the long term, the mix between debt and equity instruments is targetedbetween 40:60 and 25:75 respectively

When the interest rates are high and equities are expensive, investments in debtwould be generally more attractive versus equities and accordingly the fund wouldincrease the debt component in the portfolio

Similarly in times when the interest rates are low and equity valuations arecheap, the fund would increase equity exposure while lowering its debtcomponent in the portfolio

The exact mix of the portfolio will be a function of interest rates, equityvaluations, outlook for growth of earnings and liquidity needs

6

Current Investment Strategy(Equities)

Maintains an effectively diversified portfolio

No cap / style bias

Focus is on:

� Sound quality companies� Sound quality companies

� Companies that enjoy Leadership / near leadership position

� Companies / businesses with superior growth prospects available at a reasonable price

7

Current Investment Strategy(Fixed Income)

The fund would invest in debt instruments such as governmentsecurities, securitised debts, corporate debentures and bonds, quasi governmentbonds and money market instruments

Preference for high quality assets

Actively managed debt portfolio based on interest rate outlook; investmentActively managed debt portfolio based on interest rate outlook; investmentopportunity is assessed with regard to credit, interest rate and liquidity risk

The exact proportion in money market instruments will be a function of the liquidityneeds and the attractiveness of the debt/equity markets

8

Portfolio Composition(As on September 30, 2012)(As on September 30, 2012)

9

Industry Allocation - % of Net Assets(As at September 30, 2012)

Finance

Industrial Capital Goods

Media & Entertainment

Ferrous Metals

Petroleum Products

Auto

Industrial Products

Consumer Non Durables

Textile Products

Pharmaceuticals

Software

Banks

2.15

2.15

2.16

2.17

2.20

2.702.80

3.24

3.58

4.425.63

5.95

21.34

Transportation

Cement

Consumer Durables

Paper

Power

Chemicals

Construction Project

Others

Auto Ancillaries

Oil

Construction

0.89

0.93

1.01

1.03

1.44

1.58

1.90

1.971.98

2.042.15

Others include: Non - Ferrous Metals (0.70%), Telecom - Services (0.53%), Textile - Cotton (0.39%), Pesticides (0.35%)

10

Portfolio Composition(As at September 30, 2012)

% to Net Assets

Total of Top 10 equity holdings 31.18

Total Equity & Equity Related Holdings 75.26

Total Government Securities, Money Market Instruments and Other CreditExposures

21.89

Short Term Deposits as margin for Futures & Options 0.80

Other Cash, Cash Equivalents and Net Current Assets 2.05

Grand Total 100.00

Net Assets (`̀̀̀ In crore) 6,032.60**

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** Average AUM for the quarter ended September 30, 2012

Product Features

Type of Scheme An Open-ended Balanced Scheme

Inception Date (Date of allotment) February 1, 1994

Investment Objective To provide periodic returns and capital appreciation over a long period of time from a judicious mix ofequity and debt investments with an aim to prevent / minimise any capital erosion

Fund Manager $ Prashant Jain (Since June 19, 2003)*

Plans / Options Growth and Dividend – The Dividend Option offers Dividend Payout and Reinvestment facility

Minimum Application Amount

(Under Each Option)

Purchase: ` 5,000 and any amount thereafter

Additional Purchase: ` 1,000 and any amount thereafter

Load Structure Entry Load:Load Structure Entry Load:Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder(AMFI registered Distributor) based on the investors’ assessment of various factors includingthe service rendered by the ARN Holder.

Exit Load:

In respect of each purchase / switch-in of units, an exit load of 1.00% is payable if units areredeemed / switched – out within 1 year from the date of allotment.

No exit load is payable if units are redeemed / switched – out after 1 year from the date ofallotment.

Entry / Exit load shall not be levied on bonus units and units allotted on dividend reinvestment.

Benchmark CRISIL Balanced Fund Index

* Date of migration from Zurich India Mutual Fund. $ Dedicated Fund Manager for Overseas Investments: Mr. Rakesh Vyas since May 10, 2012.

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Asset Allocation Pattern

Type of the Instruments Minimum Allocation

(% of Net Assets)

Maximum Allocation

(% of Net Assets)

Risk Profile of the Instrument

Equity & Equity linkedinstruments

40 75 High

Under normal circumstances, the asset allocation (% of the net assets) of the Scheme’s portfolio will be as follows:

Debt Securities andmoney marketinstruments*

25 60 Low to Medium

*Investment in Securitised debt, if undertaken, would not exceed 10% of the net assets of the Scheme.The scheme may seek investment opportunity in the ADR / GDR / Foreign Equity and Debt Securities (max. 40% of netassets) subject to SEBI (Mutual Funds) Regulations, 1996. The scheme may use derivatives mainly for the purpose ofhedging and portfolio balancing (max 25% of net assets including cash) based on the opportunities available subject toSEBI (Mutual Funds) Regulations, 1996. 13

Performance (As on September 28, 2012)(As on September 28, 2012)

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Date Period

NAV

Per

Unit (`)

Scheme

Returns

(%) ^ $$ *

Crisil

Balanced

Fund Index

(%) #

S & P CNX

NIFTY (%)

##

Scheme

(`)

Crisil

Balanced

Fund (`) #

S & P CNX

NIFTY (%)

(`) ##

Crisil

Balanced S & P CNX

HDFC Prudence Fund - Growth Option NAV as at September 28, 2012 ` 228.625HDFC Prudence Fund - Growth Option NAV as at September 28, 2012 ` 228.625HDFC Prudence Fund - Growth Option NAV as at September 28, 2012 ` 228.625HDFC Prudence Fund - Growth Option NAV as at September 28, 2012 ` 228.625

Value of Investment of `10,000@

B. Discrete 12 Month Return (%)

A. Cumulative Performance

SCHEME PERFORMANCE SUMMARY

^ Past performance may or may not be sustained in the future.Returns greater than 1 year period are compounded annualised (CAGR). N.A: Not Available$$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevaling NAV(ex-Dividend NAV). # Benchmark of the Scheme. ## Additional Benchmark of the Scheme . @shows the current value of ` 10,000/-invested at the beginning of a given period.Performance of dividend option under the schemes for the investors would be net of distribution tax applicable.* Scheme performance may not strictly be comparable with that of its Additional Benchmark in view of Balanced nature of the scheme where a portion of scheme’s investments are made in debt instruments.

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28-Sep-11 Last 1 Year 203.450 12.37 13.65 15.31 11,237 11,365 11,531 Period

Scheme

^ $$ *

Balanced

Fund Index

#

S & P CNX

NIFTY (%)

##

28-Sep-10 Last 2 Years 220.470 1.83 1.15 -2.74 10,370 10,232 9,459 Sep 28, 11 to Sep 28, 12 12.37 13.65 15.31

25-Sep-09 Last 3 Years 158.640 12.90 5.88 4.75 14,412 11,876 11,501 Sep 28, 10 to Sep 28, 11 -7.72 -9.97 -17.97

01-Feb-94 Since Inception 10.000 19.89 N.A 8.56 295,498 N.A 46,371 Sep 25, 09 to Sep 28, 10 38.98 16.07 21.59

SCHEME PERFORMANCE SUMMARYOf other schemes managed by Prashant Jain

Date Period

NAV

Per

Unit (`)

Scheme

Returns

(%) ^

S & P CNX

500 (%) #

S & P CNX

NIFTY (%)

##

Scheme

(`)

S & P CNX

500 (`) #

S & P CNX

NIFTY (`)

##


Scheme

^

S & P CNX

500 #

S & P CNX

NIFTY ##

28-Sep-10 Last 2 Years 298.361 -3.72 -4.70 -2.74 9,270 9,080 9,459 Sep 28, 11 to Sep 28, 12 12.16 12.96 15.31


01-Jan-95 Since Inception 10.000 20.56 9.01 N.A 276,571 46,250 N.A Sep 25, 09 to Sep 28, 10 43.92 22.75 21.59

HDFC Equity Fund - Growth Option NAV as at September 28, 2012 ` 276.571HDFC Equity Fund - Growth Option NAV as at September 28, 2012 ` 276.571HDFC Equity Fund - Growth Option NAV as at September 28, 2012 ` 276.571HDFC Equity Fund - Growth Option NAV as at September 28, 2012 ` 276.571




HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299

^ Past performance may or may not be sustained in the future.Returns greater than 1 year period are compounded annualised (CAGR). # Benchmark of the Scheme. ## Additional Benchmark of the Scheme. N.A : Not Available . $$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevaling NAV(ex-Dividend NAV).@shows the current value of ` 10,000/-invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable.

16

Date Period

NAV

Per

Unit (`)

Scheme

Returns

(%) ^ $$

BSE 200

(%) #

SENSEX

(%) ##

Scheme

(`)

BSE 200

(`)#

SENSEX

(`) ##


Scheme

^ $$ BSE 200 # Sensex ##



11-Oct-96 Since Inception 10.000 22.66 13.31 11.78 261,295 73,595 59,281 Sep 25, 09 to Sep 28, 10 34.43 23.97 20.44




HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299HDFC Top 200 Fund - Growth Option NAV as at September 28, 2012 ` 214.299

SCHEME PERFORMANCE SUMMARYOf other schemes managed by Prashant Jain

The scheme is co-managed by Prashant Jain and Srinivas Rao Ravuri

Date Period

NAV

Per

Unit (`)

Scheme

Returns

(%) ^

S & P CNX

500 (%) #

S & P CNX

NIFTY (%)

##

Scheme

(`)

S & P CNX

500 (`)#

S & P CNX

NIFTY (`)

##


Scheme

^

S & P CNX

500 #

S & P CNX

NIFTY ##



10-Mar-08 Since Inception 10.000 1.22 3.05 3.86 10,570 11,468 11,881 Sep 25, 09 to Sep 28, 10 33.01 22.75 21.59

HDFC INFRASTRUCTURE FUND - Growth Option NAV as at September 28, 2012 ` 10.570HDFC INFRASTRUCTURE FUND - Growth Option NAV as at September 28, 2012 ` 10.570HDFC INFRASTRUCTURE FUND - Growth Option NAV as at September 28, 2012 ` 10.570HDFC INFRASTRUCTURE FUND - Growth Option NAV as at September 28, 2012 ` 10.570




^ Past performance may or may not be sustained in the future.Returns greater than 1 year period are compounded annualised (CAGR).# Benchmark of the Scheme. ## Additional Benchmark of the Scheme

@shows the current value of ` 10,000/- invested at the beginning of a given period.

Performance of dividend option under the schemes for the investors would be net of distribution tax applicable.** Scheme performance may not strictly be comparable with that of its Additional Benchmark in view of hybrid nature of the scheme where a portion of scheme’s investments are made in equity instruments.

The scheme is co-managed by Prashant Jain (Equities) and Shobhit Mehrotra (Debt).

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Date Period

NAV

Per

Unit (`)

Scheme

Returns

(%) ^ **

Crisil MIP

Blended

Index (%) #

Crisil 10

Year Gilt

Index (%)

##

Scheme

(`)

Crisil MIP

Blended

Index (`)#

Crisil 10

Year Gilt

Index (`)

##


Scheme

^ **

Crisil MIP

Blended

Index #

Crisil 10

Year Gilt

Index ##

28-Sep-10 Last 2 Years 22.8135 5.85 6.17 5.61 11,206 11,275 11,155 Sep 28, 11 to Sep 28, 12 10.47 10.51 7.37

25-Sep-09 Last 3 Years 19.9810 8.53 6.74 4.98 12,795 12,170 11,575 Sep 28, 10 to Sep 28, 11 1.45 2.02 3.89

26-Dec-03 Since Inception 10.0000 11.30 7.10 4.36 25,566 18,239 14,537 Sep 25, 09 to Sep 28, 10 14.18 7.94 3.76




HDFC MF MIP LONG TERM PLAN - Growth Option NAV as at September 28, 2012 ` 25.5658HDFC MF MIP LONG TERM PLAN - Growth Option NAV as at September 28, 2012 ` 25.5658HDFC MF MIP LONG TERM PLAN - Growth Option NAV as at September 28, 2012 ` 25.5658HDFC MF MIP LONG TERM PLAN - Growth Option NAV as at September 28, 2012 ` 25.5658

Dividend History(Since 1999)

Record Date Cum Dividend

NAV per Unit (`)(`)(`)(`)

Dividend ^

Per Unit (`)(`)(`)(`)

August 06, 1999 16.450 2.00

November 29,1999 17.730 2.00

April 07, 2000 15.200 1.50

March 09, 2001 12.700 0.90

March 15, 2002 13.900 1.00

July 15, 2003 18.737 2.00

December 26, 2003 23.711 3.00

March 15, 2004 20.247 1.50

^Past performance may or may not be sustained in the future.All dividends are on face value of ` 10 per unit. After payment of the dividend, the per Unit NAV falls to the extent of the

payout and statutory levy (if applicable)

March 15, 2004 20.247 1.50

March 18, 2005 25.265 5.00

March 03, 2006 30.543 5.00

February 21, 2007 32.483 5.00

February 21, 2008 33.503 5.00

March 19, 2009 17.393 2.50

March 18, 2010 31.238 3.50

March 17, 2011 31.286 3.50

March 15, 2012 29.516 3.50

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Fund Suitability

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Why HDFC Prudence Fund?

One of the oldest balanced funds in the industry, with an established trackrecord of over 18 years

Strong emphasis on managing and controlling portfolio risk

Targets to assume higher risk only when justified by potentially higher returns

Helps investors maintain their asset allocation discipline at all times and not getcarried away by the cycle of fear and greed as a result of market swings

The targets / objectives of the scheme may or may not be achieved.

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HDFC Prudence Fund is suitable for investors:

As a building block for their mutual fund portfolio

Looking for a well diversified portfolio across asset classes

Desiring a mixture of income and capital appreciation

Looking to maintain their asset allocation in a convenient, tax efficient andLooking to maintain their asset allocation in a convenient, tax efficient andtimely manner

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DISCLAIMER: This presentation has been prepared by HDFC Asset Management Company Limited (“HDFC AMC”) on the basis of internal data, publiclyavailable information and other sources believed to be reliable. The information contained in this document is for general purposes only. The document isgiven in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situationand the particular needs of any specific person who may receive this document. The information/ data herein alone are not sufficient and should not beused for the development or implementation of an investment strategy. The same should not be construed as investment advice to any party. NeitherHDFC AMC and HDFC Mutual Fund (the Fund) nor any person connected with them, accepts any liability arising from the use of this document. Therecipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alonebe fully responsible / liable for any decision taken on the basis of information contained herein. This document has been made available in confidenceand may not be reproduced or disclosed to third parties or made public in any way without the written permission of HDFC AMC.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

Disclaimer & Risk Factors

22

Thank You

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