HDFC Short Term Debt Fund(An open ended short term debt scheme investing in instruments such that the Macaulay Duration^ of
the portfolio is between 1 year and 3 years)
July 2020
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This product is suitable for investors who are seeking*:• Income over short term• To generate income/capital appreciation through investments in debt and
money market instruments
Riskometer
*Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.
Give a boost to your income with lower volatility!
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision toinvest.
Positioning: Debt Funds
Liquid Funds
Ultra Short Term Funds
Money Market Funds
Low Duration Funds
Short Duration Funds
Medium Duration Funds
Long Duration Funds
RISK (Maturity)
RE
TU
RN
Upto 91
days$
3 -6 months^ Upto 1 year$ 6 -12
months^
1-3 years^ 3-4 years^
(1-4 years^ in
adverse
situation)
4-7 years^
(1-7 years^ in
adverse
situation)
$ - Maximum
maturity of a
security
^ - Portfolio
Macaulay
Duration
Macaulay Duration (Duration) measures the price volatility of fixed income securities. It is often used in the comparison of interest rate risk betweensecurities with different coupons and different maturities. It is defined as the weighted average time to cash flows of a bond where the weights arenothing but the present value of the cash flows themselves. It is expressed in years. The duration of a fixed income security is always shorter than its termto maturity, except in the case of zero coupon securities where they are the same.
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HDFC Short Term Fund : Portfolio Positioning
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• Portfolio is focused on generating returns through interest accruals with relatively
short duration.
• Invests predominantly in AAA rated or equivalent securities (~85.8%* of AUM as on
June 30, 2020)
• Fund seeks to maintain the Macaulay duration of the portfolio between 1-3 years
The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com. HDFC MutualFund/AMC is not guaranteeing/offering/communicating any indicative yields or returns on investments made in the scheme. The product positioning andintended duration is based on current view and is subject to change.
* Includes G-sec, SDL, Cash & equivalent and Net current assets
Portfolio Statistics
Portfolio Classification by
rating class
% of Net Assets
Sovereign 7.55
AAA/AAA(SO/CE)/A1+/A1+(SO/
CE) & Equivalent72.94
AA+/AA 12.30
AA- / A+ 1.86
Below investment grade 0.04
Cash, Cash Equivalents and Net
Current Assets5.31
Average Maturity Modified Duration Macaulay Duration Yield To Maturity
3.46 years 2.66 years 2.83 years 6.71%
Portfolio Classification by
asset class
% of Net Assets
G-Sec, SDL 7.55
Credit Exposure* 87.14
Cash, Cash Equivalents and
Net Current Assets5.31
* Includes securitized debt instrumentsFor complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on June 30, 2020.
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Well diversified exposures across sectors and corporate groups
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For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as June 30, 2020. Portfolio holdings are as a percentage of total portfolioholdings. Debt instruments referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or futurepositions in these instruments.
Diversified Group Exposure
Financial Services %
Public Financial Institutions (PFIs) 22.3
Housing Finance Companies (HFCs) 12.0
NBFCs 8.6
Banks 8.5
Top 5 Non-GoI Group Exposures
10.5 RIL Group
9.1 L&T Group
8.9 HDFC Group
7.8 Tata Group
3.6 Vedanta Group
39.9 Sub-Total
52.4 Total Non-GoI Groups
Investments in 14 different groups
Top 7 Sector Exposures
51.2 FINANCIAL SERVICES
9.2 ENERGY
8.2 CONSTRUCTION
4.6 OIL & GAS
4.5 METALS
4.1 SERVICES
4.0 TELECOM
14.2 OTHERS
Diversified Sector Exposure
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Attractive spread between Short term fund YTMs and Gsec
Sources: Bloomberg, NSE Index, HDFC calculationsPast performance may or may not be sustained in the future. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteeingreturns on investments made in the scheme.
Spread of Short term fund YTMs over Gsec is significantly above long term average
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jul-12
Dec-
12
May-1
3
Oct
-13
Mar-
14
Aug-1
4
Jan-1
5
Jun-1
5
Nov-1
5
Apr-
16
Sep-1
6
Feb-1
7
Jul-17
Dec-
17
May-1
8
Oct
-18
Mar-
19
Aug-1
9
Jan-2
0
%
Spread between Short Term Fund YTMs over 3Y Gsec
-
0.50
1.00
1.50
2.00
2.50
3.00
Jul-1
2
Nov-1
2
Ma
r-13
Jul-1
3
Nov-1
3
Ma
r-14
Jul-1
4
Nov-1
4
Ma
r-15
Jul-1
5
Nov-1
5
Ma
r-16
Jul-1
6
Nov-1
6
Ma
r-17
Jul-1
7
Nov-1
7
Ma
r-18
Jul-1
8
Nov-1
8
Ma
r-19
Jul-1
9
Nov-1
9
Ma
r-20
%
Spread between Short Term Fund YTMs over 10Y Gsec
Simulation for XYZ Ltd maturing on 05-Mar-24
Given below is the simulation of likely return (%)* of a ~3.7 year bond namely 8.79% XYZ Ltd maturing
on March 05, 2024 (modified duration ~ 3.1 and YTM 6.22%), under various scenarios
•XIRR returns for the instruments assuming the change in yield at the beginning of the respective period; without factoring re-investment
risk
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*HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme
Note 1: Above data shown is hypothetical in nature and based on assumptions, it does not reflect actual
investment results, and do not guarantee future results. Changes in such assumptions could produce
materially different results.
Note 2: Instrument referred above are not recommended by HDFC Mutual Fund/HDFC AMC. The scheme
may or may not have any present or future positions in the said instrument.
Tenor (years)
/Change in yield (%)0.50 1.00 1.50 2.00
1.00% 0.83 3.99 5.04 5.56
0.75% 2.14 4.54 5.33 5.72
0.50% 3.48 5.09 5.63 5.89
0.25% 4.84 5.65 5.92 6.05
0.00% 6.22 6.22 6.22 6.22
-0.25% 7.63 6.79 6.52 6.39
-0.50% 9.06 7.37 6.83 6.56
-0.75% 10.51 7.96 7.13 6.73
-1.00% 12.00 8.55 7.44 6.91
Analysis of Distribution of Returns since inception
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Annual Rolling - Since inception, the fund has given
6% or higher returns 93.7% of the times.
3 year Rolling - Since inception, the fund has given
more than 7.5% returns – 95.3% of the times.
1 year and 3 year Rolling returns are calculated since inception of the fund based on daily frequency. For Detailed performance refer Slide no 13-15. Pastperformance may or may not be sustained in the future. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or returns oninvestments made in the scheme. Inception date: June 25, 2010 . Data is Upto June 30, 2020.
Annual Returns (%) % of times
Less than 6% 6.27%
More than 6% 93.73%
More than 7.5% 82.44%
More than 9% 50.14%
Annual Returns (%) % of times
Less than 6% 0.00%
More than 6% 100.0%
More than 7.5% 95.32%
More than 9% 50.50%
Short Term Funds are suitable for investors
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Desirous to take exposure in superiorquality credit instruments
o The Scheme maintained over 80% ofAUM in AAA or equivalent ratedsecurities since Feb’15
Having an investment horizon of morethan12 months
With a need to park short term surpluses
Using it as a channel to transfer funds systematically to other schemes
For complete portfolio refer to our website www.hdfcfund.com.
Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
20
30
40
50
60
70
8060
65
70
75
80
85
90
95
100
bps%
Tactically increasing allocation to non-AAA bonds depending on spread attractiveness
Allocation to AAA & Equivalent Securties
Spread between AAA and AA bonds,RHS (Inverted)
How do we control risk ?
• Key strategies for risk control:
Risk Assessment - Intense focus on underlying credit evaluation, focus on 4 C’s
Risk Mitigation - Adequate covenants, right sizing, diversification, regular monitoring etc
Risk Pricing – Take risk only when it pays
• Emphasis on Four C’s of Credit
Character of Management (e.g. avoided exposure to a large distressed housing finance company)
Capacity to Pay (e.g. avoided exposure to a large distressed infrastructure company)
Collateral pledged to secure debt (e.g. recovered large portion of investment backed by shares of large media company)
Covenants of debt (e.g. recovered investment from a MFI player due to covenants)
Risk Control achieved through conservative sizing of exposure based on proprietary Credit Scoring Model which factors
in – Parentage, Financials, Rating & Outlook.List of companies / Groups which faced stress*
Deccan Chronicle
GroupReligare Group
Dewan Housing
Group
Amtek Auto Limited Vodafone Idea Ltd.Anil Ambani
Group
Jindal Steel & Power
- GroupSintex Group Cox & Kings Ltd
Ballarpur (BILT)
Group
IL&FS Group
(other than SPVs)
Cafe Coffee Day
Group
Yes Bank Altico Capital
IDBI BankJana Small
Finance Bank
Zee Promoter
Group
IL&FS SPVs$
(backed by NHAI
annuity)
Simplex
Infrastructures$
• Over last decade, in our assessment, MFs have experienced instances of creditstress* in nearly 18 companies / Groups.
• HDFC MF was not exposed to most such stressed cases (Highlighted in Red)
• Even is cases where HDFC MF had exposure, we recovered major portion of ourinvestment due to Covenants, good business/Collateral and parentage (Highlighted inGreen)
• Overall credit costs have been minimal for HDFC MF (Stressed exposures at ~0.66% ofAUM of affected schemes as on 30th June 2020)
$ Principal exposure to IL&FS SPV and Simplex Infrastructure at time of credit stress was ~Rs. 358 cr. As of June’20 after the 50% haircut the market value of these exposure was ~Rs. 179 cr or
~0.66% of total AUM of affected schemes. *Stress is defined as companies whose ratings were eventually downgrade to BBB or below rating category
Refer disclaimer on slide 1610
Interest Rates Outlook
Factors supporting lower yields
• Sharp rate cuts by RBI and major central banks; easing bias
likely to continue
• Accommodative stance to remain till “it is necessary to revive
growth & mitigate the impact of COVID-19 on the economy” -
RBI
• Concerns over global growth due to disruption caused by
spread of coronavirus
• Weak growth and soft commodity prices likely to result in
lower inflation in medium term
• Unconventional tools used by RBI to improve transmission of
rate cuts (Operation TWIST, LTROs, Targeted LTROs)
• Muted credit growth vs. deposit growth; Ample global and
domestic liquidity
Factors opposing lower yields
• Excess SLR securities holding of PSU banks
• Large supply of dated securities by Central and State
Governments
• Food prices may keep near term inflation over RBI’s
target of 4%
• Sharp reductions in oil production might lead to higher
oil prices over a year
Short to medium end of the yield curve offers better risk adjusted returns, in our judgement
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Fund Facts
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Nature of SchemeAn open ended short term debt scheme investing in instruments such that the
Macaulay Duration^ of the portfolio is between 1 year and 3 years
Category of Scheme Short Duration Fund
Inception Date
(Proposed Date of
allotment)
25th
June, 2010
Investment Objective
To generate income/ capital appreciation through investment in debt and money market
instruments. There is no assurance that the investment objective of the Scheme will be realized.
Fund Manager $ Anil Bamboli
Investment Plan Regular Plan & Direct Plan
Investment Options
Options under each plan: Growth and Dividend. Dividend Option offers Normal & Fortnightly (Payout
and Reinvestment) facility.
Minimum Application
Amount. (Under Each
Plan/Option)
Purchase: Rs. 5,000 and any amount thereafter
Additional Purchase: Rs. 1,000 and any amount thereafter
Benchmark CRISIL Short Term Bond Fund Index
$ excluding Overseas investments, if any. Fund Manager for overseas investments: Mr. Chirag Dagli (since July 22, 2019)
Scheme Performance Summary
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Value of Rs 10,000 invested
Scheme Returns (%)
Benchmark Returns (%)
#
Additional Benchmark Returns (%)
## $
Scheme (Rs)
Benchmark (Rs)#
Additional Benchmark
(Rs)##
Last 1 year 11.47 11.44 7.69 11,147 11,144 10,769
Last 3 years 8.59 8.36 7.14 12,806 12,726 12,302
Last 5 years 8.59 8.57 7.12 15,107 15,094 14,111
Since inception – June25, 2010
8.88 8.48 7.01 23,468 22,614 19,719
Past performance may or may not be sustained in futureReturns greater than 1 year are compounded annualized (CAGR). The above scheme has been managed by Anil Bamboli since June 25, 2010.The above returns are of Regular Plan - Growth Option. #CRISIL Short Term Bond Fund Index. ##CRISIL 1 Year T-Bill Index. Different plans viz. Regular Plan andDirect Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution expenses /commission charged in the Regular Plan. Returns as on 30th June, 2020.
SIP Performance Summary
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ParticularsSince
Inception$ 10 Years 5 Years 3 Years 1 year
Total Amount Invested (Rs. in ‘000) 1210.00 1200.00 600.00 360.00 120.00
Mkt Value As on June 30, 2020 (Rs. in ‘000)
1924.67 1901.20 751.87 417.58 127.70
Returns (%) 8.91% 8.91% 8.97% 9.89% 12.17%
Benchmark Returns (%) # 8.77% 8.78% 8.89% 9.83% 11.93%
Addl. Benchmark Returns (%) ## 7.25% 7.25% 7.18% 7.54% 7.73%
HDFC Short Term Debt Fund – Assuming Investment of ` 10,000 on the first Business Day of every Month over a period of time.
Past performance may or may not be sustained in the future. CAGR returns are computed after accounting for the cash flow by using XIRR method (investmentinternal rate of return) for Regular Plan - Growth Option. Load is not taken into consideration for computation of performance. Different plans viz. Regular Planand Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution expenses /commission charged in the Regular Plan. Managing Scheme since Jun 25, 2010. The above investment simulation is for illustrative purposes only and should notbe construed as a promise on minimum returns and safeguard of capital. # CRISIL Short Term Bond Fund Index. ## CRISIL 1 Year T-Bill Index. $ Scheme InceptionDate : Jun 25, 2010. Returns as on June 30, 2020.
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Performance of other schemes managed by the Fund manager
(Top 3 & Bottom 3)
Scheme Managing scheme since
1 year3 year 5 year
CAGR (in %) CAGR (in %)
Anil Bamboli manages 35 other schemes in existence for more than 1 year
Performance of Top 3 schemes managed by Anil Bamboli
HDFC Banking & PSU Debt Fund Mar 26, 14 11.36 8.26 8.70
NIFTY Banking & PSU Debt Index # 11.66 7.91 8.31
HDFC Overnight Fund Feb 06, 02 4.31 5.46 5.84
CRISIL Overnight Index # 4.48 5.58 5.96
HDFC Ultra Short Term Fund Sep 25, 18 7.61 NA NA
CRISIL Ultra Short Term Debt Index # 7.43 NA NA
Performance of Bottom 3 schemes managed by Anil Bamboli
HDFC FMP 1146D February 2019 Feb 21, 19 11.40 NA NA
CRISIL Composite Bond Fund Index # 13.08 NA NA
HDFC FMP 1344D October 2018 Oct 24, 18 10.15 NA NA
CRISIL Composite Bond Fund Index # 13.08 NA NA
HDFC FMP 1146D April 2018 May 10, 18 8.08 NA NA
CRISIL Composite Bond Fund Index # 13.08 NA NA
Past performance may or may not be sustained in the future. The above returns are of Regular Plan – Growth Option. Load is not taken into consideration for computation ofperformance. On account of difference in the type of the Scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly not comparable.Performance of close-ended schemes is not strictly comparable with that of open-ended schemes since the investment strategy for close-ended schemes is primarily buy-and-holdwhereas open-ended schemes are actively managed. Top 3 and bottom 3 schemes managed by the Fund Manager have been derived on the basis of returns since inception vis-à-visthe benchmark. In case the benchmark is not available on the Scheme’s inception date, the returns for the concerned scheme is considered from the date the benchmark is available.Returns as on 30th June, 2020. Different plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower tothe extent of the distribution expenses/ commission charged in the Regular Plan. NA – Not Available. # Benchmark of the Scheme.
Disclaimer
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This presentation dated July 14, 2020 has been prepared by HDFC Asset Management Company Limited
(HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable.
Any calculations made are approximations, meant as guidelines only, which you must confirm before relying
on them. Past Performance may or may not be sustained in future. HDFC AMC/MF is not
assuring/guaranteeing any returns in the Scheme. The information contained in this document is for general
purposes only. The document is given in summary form and does not purport to be complete. The document
does not have regard to specific investment objectives, financial situation and the particular needs of any
specific person who may receive this document. The information/ data herein alone are not sufficient and
should not be used for the development or implementation of an investment strategy. The statements
contained herein are based on our current views and involve known and unknown risks and uncertainties that
could cause actual results, performance or events to differ materially from those expressed or implied in such
statements. Past performance may or may not be sustained in future. Neither HDFC AMC and HDFC Mutual
Fund nor any person connected with them, accepts any liability arising from the use of this document. The
recipient(s) before acting on any information herein should make his/her/their own investigation and seek
appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis
of information contained herein.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Thank You
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