basic sip asst allocat producttraining

8/12/2019 Basic SIP Asst Allocat ProductTraining

1/46


2/46

Franklin Templeton Worldwide

More than 50 years of experience in

global investing

Third largest independent fund

management group in the US.

First and only mutual fund company

added to the S&P 500

Over US$ 267 billion assets under

management; over 10 million

investor accounts world-wide


3/46

FRANKLIN TEMPLETON INVESTMENTS

As on 30 May, 03

India

One of the largest Mutual Funds with over

Rs.10,720 crores@in assets.

Close to 1 million shareholder accounts

Healthy asset mix and great choice in equity and fixedincome

investment management style

Sizeable footprint in the country presence in 33 cities


4/46

BEST PERFORMING OPEN END FUNDS IN 5 OUT OF 5 CATEGORIES

Equity - Franklin India Prima Fund, Franklin India Prima Plus

BalancedFranklin India Balanced Fund

Income - Templeton India Income Builder Account

Gilt - Templeton India Government Securities Fund

Liquid - Templeton India Treasury Management Account

For the quarter Oct-Dec 2002. Past performance is not indicative of future results. Ranking Source:CRIS-RISC (a wholly owned subsidiary of CRISIL); Methodology of ranking: CRISIL ~ CPR-1 indicates very

good performance in the category (Top 10% of the universe). The number of schemes considered for the

analysis are: Diversified Equity 35; Income / General debt 22; Gilt - 12; Liquid 19; Balanced 20.

The criteria used for computing the CRISIL CPR are Superior Return Scorecard based on NAVs,

Concentration, Liquidity and Asset Size of the scheme. Sales load has not been taken into consideration.

CRISIL BEST FUNDS AWARDS Dec-2002


5/46

Source:

Star Ratings : Value Research fund rankings are based on 18 month weekly risk adjusted performance. Forequity funds , a minimum performance history of 3 years is required and for debt funds a minimum history of 18 months

is required.

FRANKLIN TEMPLETON FUNDS

RANKINGS & RATINGS

Value Research Fund Ratings

Month ended December,02

BLUECHIP,PRIMA, PRIMA PLUS ,TMA

TIGF,Taxshield (Open), IBA


6/46

BENEFITS OF A MUTUAL FUND

Professional

Management

Service

Diversification

Affordability


7/46

INVESTMENT PYRAMID

Capital Preservation

Income

Capital GrowthRisk: Medium to High

Risk: Medium to Low

Risk: Low to Medium

Period: 3 to 5 years

Period: 1 to 3 years

Period: Less than 1 years

Growth

Funds

Stocks

Income/Bond Funds

Company Fixed Deposits

Bonds

Debentures

Cash / Money Market Funds

Short-term deposits /Government Paper


8/46

Risk

Liquid Funds

Debt Funds

THE RISK RETURN TRADE-OFF

Growth Funds

Balanced Funds

Sectoral Funds

Gilt Funds, Bond Funds, Hi Yield Funds

Ratio of Debt : Equity

Aggressive, Value, Growth


9/46

SOMETHING ABOUT INCOME FUNDS?

MONITORS Credit Ratings continuously for you while investing inFIXED INCOME instruments only

Enables you to SPREAD your investment over a number of FIXEDINCOME instruments

NO LOCK-IN period, redemption requests are processed within twoworking days

AFFORDABLE to invest - Minimum investment of Rs. 10000/-

CONVENIENT - No TDS, No renewals, No worry of losing certificates


10/46

Context of Investing

PROFESSION INVESTMENTS

INCOME

CURRENT

EXPENDITURE

SAVINGS

FUTUREEXPENDITURE


11/46

Process of Financial Planning

Set a goal

Prepare an investment plan

Implement the financial plan

Evaluate on a regular basis


12/46

Household Expenses

Householdxpenditures

are on the riseNew Products


13/46

Household ExpensesIn the good old days many of these products were LUXURIES

but today most are NECESSITIES

Items 1987 1997

Cable T. V. No Yes

Colour T. V. No Yes

Telephone No Yes

Washing Machine No Yes

Microwave No Yes

Two-wheeler/Car No Yes


14/46

Cost of Living

Items 1987

( Rs )

1997

( Rs. )

Colgate toothpaste( 100 gm tube )

8.05 18.90( 8.91 % )

Hamam Soap 3.05 7.85( 9.92 % )

Masala Dosa 3.50 14.00( 14.87 % )

Petrol( per litre )

7.99 25.48( 12.30 % )

L P G Cylinder 56.15 137.85( 9.40 % )

Zodiac mens shirt 225.00 510.00( 8.53 % )

Source : Readers Digest

Nov 1997


15/46

Cost of Living

Items 1997

( Rs )

2017

( Rs. )

Colgate toothpaste( 100 gm tube )

18.90 104.00

Hamam Soap 7.85 52.00

MasalaDosa 14.00 224.00

Petrol( per litre )

25.48 259.12

L P G Cylinder 137.85 830.85

Zodiac mens shirt 510.00 2620.27

Assuming inflation to grow at the same rate during 1987-97


16/46

INFLATION ROBS YOUR PURCHASING POWER(Assuming inflation @ 8% p.a.)

21,50046,600

100,600

217,200

10 years 20 years 30 years 40 years

Rs. 10,000 today


17/46

17.1

30.8

56.3

103.9

9% 12% 15% 18%

REGULAR SAVINGSTHE SIMPLEST WAY TO COMBAT INCREASING HOUSEHOLD

EXPENDITURE

Rs. 1000 saved every month for 30 years can grow to

a sizeable amount of wealth

depending on the return generated on these savings

% Per annum


18/46

Equities are the best long term bet!Cumulative Annualised Returns

(1980-98)

Source : RBI Report on Currency and Finance (1997-98)

BSE Sensitive Index of Equity Prices - BSE

9.19%7.62%

9.74%

14.47%

20.16%

Inflation Gold Bank FD Co. FD Equities


19/46

consider this ..

Sensex was at 3292.85 on December 1, 1993the inception

date of Bluechip fund

Sensex was at 3337.31 on June 9, 2003

This means, if someone invested Rs. 100000 in Sensex, thevalue of his investments is Rs. 97,891

However, if the investor invested Rs. 100000 in Bluechip fundon inception ..

The value of holdings is Rs. 506137


20/46

Yes, they go up and down in short-term

However, with time risk comes down

1 3 5 7 9

Years

Risko

f

capitalero

sion


21/46

If that is what equities can deliver .


22/46

What Should the Investor do

If equities consistently give better returns over the long-

term, and Im a long-term investor with no immediate cashflow needs, should I not invest all my money in equities?

Definitely NO

Should do an Asset Allocation


23/46

What is Asset Allocation?

Its about diversifying ones portfolio among asset classes such as

bonds, stocks, real estate, or cash.

Its referred to in terms of the target percentages for each asset

class. For example, a portfolio could have a mix of 60 percentstocks, 30 percent bonds and 10 percent cash.

Its the financial representation of an investors personality: the

ideal asset allocation is one that best balances an investors

profile and objectives


24/46

NEED BASED INVESTMENT STRATEGY

Age Group

(Years)

Growth

(Equity)

Income

(Bonds)

Liquidity

(Banks)

25- 40 75% 15% 10%

41- 50 50% 35% 15%

51- 60 25% 55% 20%

Above 60 15% 60% 25%


25/46

Periodic Review

Making Asset Allocation Work

Review of objective - EXAMPLEYears to goal Equity Allocation %

TODAY 10 70%

After 5 yrs 5 60%

After 7 yrs 3 40%

After 9 yrs 1 10%

A periodic review of objectives can ensure an investor is not leftat the mercy of the equity markets when he needs his money


26/46

Periodic Rebalancing

EXAMPLE Growth Funds Income Funds

Frozen Allocation 40% 60%

45% 55%

Switch from Growth Funds to Income Fundsto rebalance

40% 60%

REBALANCING HELPS INVESTORS ENTER

EQUITIES AT LOWS AND EXIT AT HIGHSWITHOUT HAVING TO TIME THE MARKET

Making Asset Allocation Work

Bull Market skew


27/46

Summing Up

Asset Allocation helps:

1. Control Portfolio Risk

2. Increase the predictability of portfolio returns

3. Steer the portfolio towards ones financial goals


28/46

Eighth wonder of the world:

S I P

It can create wealth forevery person in the world


29/46

FV = PV(1 + r)n

FV = Future Value

PV = Present Value

r = Rate of Return/ Coupon Rate

n = No. of compounding periods


30/46

FV = PV(1 + r)n

Applications aside, what do you think this equation reallysignifies?

The essence of how to create wealth!


31/46

Wealth creation is nothing but enhancement of future value

FV = PV (1 + r)n

Enhancing Future Value

The more yousave, makes a

difference

The sooneryou start,makes a

difference

PV nr

The moreyou earn,

makes adifference


32/46

HYPOTHETICAL EXAMPLE OF AN SIP

Rs. 1000 invested every month

Average Price per unit: Rs. 10.00 Average Cost per unit : Rs. 9.83

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

1stMonth 2ndMonth

3rdMonth

NAV = 12.00Units = 83.3

NV = 10.0Units = 100

NAV = 8.0

Units = 125

NAV = 10.0

Units = 100

4thMonth


33/46

Making Volatility Work for you

Rupee Cost Averaging

Month Amount Invested(Rs.)

Purchase Price(Rs.)

No. of UnitsPurchased

1 1000 12 83.333

2 1000 15 66.667

3 1000 9 111.111

4 1000 12 83.333

TOTAL 4000 48 344.444

Average Sales Price of Units : Rs. 12 ( i.e. Rs. 48/4 months)Average Purchase Cost of Units : Rs 11.61 ( i.e. Rs. 4000/344.444units)


34/46

Themore you save,makesadifference

Growth rate of 7% p.a.

Amount saved per month

5,000 1,500,000 4,073,986

3,000 900,000 2,444,391

1,500 450,000 1,222,1961,000 300,000 814,797

Total Amount

Saved

Value after

25 years

The Power of Compounding


35/46

Themoreyouearn,makesadifference

Rs. 1000 invested p.m.

Growth Rate

8% 184,166 957,367

10% 206,552 1,337,890

15% 278,657 3,284,07420% 382,364 8,626,708

Value after 10

years

Value after

25 years

The Power of Compounding


36/46

The Simple Solution

An SIP with Franklin Templeton Funds

1. Convenient

2. Affordable

3. Widest choice of top performing funds

4. No Entry Load for Equity Funds

START EARLY; SAVE REGULARLY


37/46

350,000

10,133,456

330,000

7,643,653

300,000

4,999,569

Saves from 25 to

60

Saves from 27 to

60

Saves from 30 to

60

Savings

Returns

Assuming an annual savings of Rs. 10,000 in an instrument

providing return of 15 % p.a.

START EARLY; SAVE REGULARLY

Every Year Counts


38/46

Let us look at some investment options fromFranklin Templeton funds


39/46

DIVERSIFIED DEBT FUNDS

Templeton India Income Fund

Templeton India Income Builder Account

Templeton Monthly Income Plan (Debt)

SUITABILITY

Good standalone combination of risk diversification, liquidity & returns

Great complement to equity in portfolio asset allocation


40/46

DEBT FUNDS WITH MARGINAL EQUITY

Templeton Monthly Income Plan

Equity

FT Monthly Income Plan

SUITABILITY

A slice of equity to beat inflation.

The complete solution for investors with low risk appetite


41/46

LIQUID & MONEY MARKET FUNDS

FIXED INCOME FUNDS

Templeton India Liquid Fund

Templeton Treasury Management Account

Templeton Government Securities fund (Treasury Plan)

FT India Gilt Fund ( Liquid Plan)


42/46

Diversified Equity Schemes

Franklin India Bluechip Fund - Large Caps

Franklin India Prima Plus80% Large Caps , 20% Medium Caps

Franklin India Prima FundMedium & Small Caps Stock

Templeton India Growth FundValue InvestingLarge Caps


43/46

WHY INVEST IN EQUITY TODAY

Equity Market at the bottom (Minimum downside but offers

good upside potential in the long term)

Attractive valuations

Improved economic and earnings growth ( Low PE Ratio,Improved Earning Ratios indicates sound fundamentals)

Positive Current Account Surplus ( One of the prime reason forHigh Liquidity in the market )

Ample Forex Reserves should mitigate the impact of highinflation


44/46

Invest in FRANKLIN INDIA BLUECHIP FUND

A Very disciplined & focused investment approach

Only Private Sector Equity Fund to have Consistent performanceover Nine Long Years

Invests only in Large Caps Stocks

Annualised Return of 19.75% (as on 31.03.03)since Inception

Annualised Return of 18.97% ( as on 31.03.03)in case of MonthlySystematic Investment Plans

(Past performance may or may not be sustained)


45/46

EquityFund

LatestNAV

90 Days 180Days

OneYear

TwoYear

ThreeYear

FiveYear

Bluechip 25.50 8.10% 17.03% 20.17% 6.96% 5.62% 21.85%

TIGF 14.34 8.88% 15.18% 14.35% 7.15% 5.31% 8.36%

PrimaPlus

25.77 9.29% 15.25% 15.20% 9.71% 6.26% 21.38%

PrimaFund

36.88 25.40% 33.14% 37.15% 34.06% 21.52% 25.45%

DebtFund

LatestNAV

90 Days 180Days

OneYear

TwoYear

ThreeYear

FiveYear

IncomeBuilder

22.1239 3.17% 5.88% 16.50% 15.69% 14.73% 14.02%

TIIF 22.4630 2.90% 5.36% 14.72% 14.21% 13.63% 13.70%


46/46

Thank You

basic sip asst allocat producttraining

Documents