mutual fund review -...
TRANSCRIPT
ICIC
I S
ecurit
ies –
Retail R
esearch
Monthly
Report
February 24, 2020
Mutual Fund Review
Equity Market
Update
After hitting an all-time high level, the market turned volatile but broader
market significantly underperformed since the start of CY20. The
performance is on expected lines towards some normalisation in terms of
performance with the broader market after outperforming headline indices.
The performance cycle, which was in favour of large caps in 2018 and 2019,
seems to have turned around in the last three to four months with midcaps
and small caps outperforming. However, the divergence in return is higher
within the midcap/small cap category. Therefore, proper diversification
among midcap/small cap funds is also required.
While in the long run, equity markets have trended upwards, there are many
bull and bear market phases within that larger uptrend. Within that market
phase, different category of funds viz. large cap, multicap and midcap/small
cap perform differently. In general, in a bull phase, midcap/small cap funds
perform better while in a bear phase, large cap funds outperform. In general,
multicap funds are a more stable category with performance ranging
between large caps and midcaps during all market phases.
No fund outperforms across all investment horizons. Every fund performs in
cycles. Hence, investors should be more cautious while investing in a best
performing fund.
While in the long run, equity markets have trended upwards, there are many
bull and bear market phases within that larger uptrend. Within that market
phase, different category of funds viz. large cap, multicap and midcap/small
cap perform differently. In general, in a bull phase, midcap/small cap funds
perform better while in a bear phase, large cap funds outperform. In general,
multicap funds are a more stable category with performance in between
large caps and midcaps during all market phases.
Outlook
In the near term, some consolidation amid profit booking is expected given
the sharp rally across segments in the last two to three months. Any
correction amid such profit booking should be used as a buying opportunity
to accumulate and increase equity allocation.
Markets perform in cycles. While investing, one needs to ensure that
investment is made at the lower end of the market cycle. Conversely,
lumpsum investment should be done when historical returns are negative
or lower than long term average.
While midcaps outperformed large caps significantly in FY15-18, they
witnessed a reversal in trend amid liquidity issues along with NBFC crisis
and other corporate defaults over the past 18 months. In turn, this skewed
investor’s focus towards quality companies, leading to underperformance
of the broader markets, in general. Quality companies in both large cap and
midcap/small cap have done well in 2019. We expect this trend to continue
even in 2020. Lumpsum investment in midcap/small cap funds at current
levels may be considered. However, the core portfolio should always
comprise multicap oriented funds with accumulation being done through an
SIP approach.
An important lesson learnt in 2019 was that predicting market performance
based on regular economic data prints is a futile exercise. Investors should
just focus on regular investment.
After hitting all time high level, Sensex
showing some volatility
Source: Bloomberg
Research Analyst
Sachin Jain
32000
34000
36000
38000
40000
42000
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
ICICI Securities | Retail Research 2
ICICI Direct Research
Monthly Report | Mutual Fund Review
Debt Market
Update
Year 2020 started on a positive note, particularly post the Union Budget and
RBI monetary policy. The benchmark 10 year G-Sec yield started January on
a cautious note with yields moving up towards 6.60% but correcting below
to 6.40% in the first week of February. The fall in short-term yields was
sharper with three year G-Sec yield falling more than 25-30 bps during the
same period.
The two major event, Union Budget and RBI policy rejuvenated investor
sentiments.
In the Budget, gross borrowings for FY21 are pegged at | 7.8 lakh crore
against FY20 number of | 7.1 lakh crore. Net borrowings for FY21 were
pegged at | 5.36 lakh against FY20 number of | 4.74 lakh crore. The
borrowing numbers were below market expectations. The Budget also
furthered the opening up of the local bond market to offshore investors by
increasing the participating limit for foreign portfolio investors (FPIs) in
corporate bonds hiked from 9% of outstanding currently to 15%. Also
importantly, certain specified categories of government securities would be
opened fully to non-resident investors, apart from also being available to
domestic investors. The same, along with comments from policy makers,
indicate that efforts are being made to include Indian debt into global bond
indices.
In its policy meeting, while RBI maintained status quo on rates, the positive
surprise came from announcement of long term repo operations (LTRO).
LTROs of one-year and three-year tenors for improving monetary
transmission has been introduced up to a total amount of | 1,00,000 crore
at the policy repo rate. This measure is likely to support yields at the short
to medium end of the curve. Effectively, RBI from the shorter end of the yield
curve has now moved up the yield curve to ensure yields move southwards
up to three to five years duration. Three year G-Sec yield corrected around
15 bps post policy announcement. While there are no explicit guidance on
operation twist or any other measure to support long tenure yields, the RBI
Governor has hinted that twist operation was to bring long bond yields down
and ensure transmission. More such operations cannot be ruled out as
spread between 10 year G-Sec yield and repo rate remained near all-time
highs. While inflation expectation has been revised sharply upwards till
H1FY2020-21, Q3FY2020-21 inflation is being projected at 3.2%. Effectively
with one year ahead inflation likely to be well below RBI’s 4.0% inflation
target, one more rate cut in the later part of the year is not ruled out.
Global bond yields have fallen sharply in the last month due to Coronavirus
on global growth. Almost all major commodity prices, particularly crude oil
prices, have corrected sharply.
Interest rates structurally shifting lower: Interest rates are slowly moving
down and are likely to move further down. Therefore, coupon or interest on
all fixed instruments are likely to be lower than historical averages. Investors
needs to lower their interest income expectations, in general.
Selective opportunity in non-AAA segment: Credit spreads continued to
remain high as risk aversion among investors remains high. There is a
selective investment opportunity in non-AAA rated segment of the market
both from a relative and absolute return perspective.
Expect overall yield curve to shift lower with
investors better off allocating higher amount to
higher duration funds
ICICI Securities | Retail Research 3
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Monthly Report | Mutual Fund Review
Industry Synopsis
The MF industry AUM increased 5.0% in January 2020 to a record ~| 27.86
lakh crore from 26.54 lakh crore in December 2019 on the back of higher
inflows into liquid and overnight schemes.
Apart from liquid funds, most of the debt fund category witnessed inflows.
Corporate bond fund, short duration funds and banking & PSU debt fund
category continues to receive consistent inflows.
Inflows into equity funds continue to recover from the lows in November
2019. Equity funds witnessed inflows of | 7877 crore in January 2020
compared to inflows of | 4499 crore in December 2019. Almost all category
of equity scheme witness higher inflows with midcap and small cap funds
witnessing higher inflows.
The equity ETF category witnessed inflows of | 1873 crore in January 2020.
ETF AUM has grown significantly in the last few years on the back of
institutional money (EPFO). This category now has the highest AUM among
all equity funds category. It is dominated by Nifty 50 and Sensex ETFs of SBI
and UTI with SBI getting ~75% of the institutional money.
Aggressive hybrid funds continued to witness outflows while equity savings
also witnessing consistent outflows.
Exhibit 1: Total AUM, break-up of major AMCs
Source: ACE MF. Data as on January month end
Exhibit 2: AMCs like Mirae, Invesco, Axis, Kotak continue to
see higher inflows leading to higher growth in equity AUM
in last year
Source: Amfi. Data as of Jan 2020. SBI & UTI AUM is considered ex-Sensex/Nifty ETF
Exhibit 3: In debt, Axis, IDFC, SBI witness highest growth in
AUM in last year
Source: Amfi. Data as of Jan 2020
51%
41%
37%
34%
50%
37%
48%
44%
40%
25%
42.7
% 52.5
%
52.8
%
60.1
%
41.6
%
54.2
%
45.6
%
45.9
%
50.8
%
67.9
%
6.7
%
6.8
%
10.3
%
5.9
%
8.5
%
9.0
%
6.3
%
10.0
%
9.0
%
7.0
%
382692
379108
368237
255305
207289
191224
160306
140575
124478
106251
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
0%
20%
40%
60%
80%
SB
I
HD
FC
ICIC
I P
ru
Bir
la
Nip
pon
Kotak
UTI
Axis
Franklin
IDFC
| c
rore
Equity % Debt% Others% AUM
0
50000
100000
0%
20%
40%
60%
80%
100%
Mir
ae
Invesco
Axis
Kotak
SB
I
Tata
DS
P
HD
FC
ICIC
I P
ru
UTI
Growth in Equity Scheme Equity Schemes Corpus(RHS)
0
40000
80000
120000
160000
200000
0%
20%
40%
60%
80%
Axis
IDFC
SB
I
Kotak
ICIC
I P
ru
HD
FC
L&
T
Bir
la
Franklin
DS
P
Growth in Debt Scheme Corpus(%) Debt Schemes Corpus
ICICI Securities | Retail Research 4
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Monthly Report | Mutual Fund Review
Category Analysis
Equity Funds
The year 2019 witnessed a divergent performance with large caps delivering
around 15% return while midcaps/small caps were down around 5-10%.
The benchmark heavyweight banking sector outperformed significantly
delivering around 20.0% return and was predominantly the driving force
behind the market making new all-time highs.
We expect midcap and small caps to outperform, going forward, and advise
investors to add our recommended funds in these category to their overall
portfolio after considering overall asset allocation and risk-return profile.
Investors should be extra cautious in investing in funds that have done well
in the last year as sector or market preference for specific style may change,
going forward.
Exhibit 4: Year 2019 belonged to large cap funds as they outperform small cap/midcap funds. Banking funds clear
outperformers as index heavyweight sector drives large cap performance
Source: CRISIL. Category average annualised returns as on February 20, 2020
Exhibit 5: Large cap funds continue to witness higher inflows on the back of superior
performance
Euuity Oriented CategoryInflow/(Outflow)
during Jan 2020
AUM
Multi Cap Fund 1,722 155,925
Large Cap Fund 1,154 154,135
Large & Mid Cap Fund 692 58,772
Mid Cap Fund 1,798 91,197
Small Cap Fund 1,073 52,482
Dividend Yield Fund (64) 4,416
Value Fund/Contra Fund (739) 55,675
Focused Fund 1,305 50,209
Sectoral/Thematic Funds 4 65,599
ELSS 932 101,228
Source: Amfi. AUM as on month end January 2020
23.7
20.9
20.0
19.6
17.8
17.5
16.9
16.5
15.5
15.1
12.6
11.31
2.9
10.3
8.0
9.4
2.9
10.1
9.0
9.2
4.2
4.0
9.9
6.5
10.2
8.2
8.0
8.2
2.2
7.1 7.7
7.5
7.5
4.2
6.9
6.6
-5
0
5
10
15
20
25
Bankin
g F
unds
Focused F
unds
Mid
cap
Large a
nd M
idcap
Pharm
a F
unds
Large C
ap
ELS
S
Mult
icap
Sm
all C
ap
Infr
a
Internatio
nal Equit
ies
Valu
e a
nd C
ontra
Returns (
%)
1 year 3 Year 5 year
The performance of only a few stocks has led to
overall returns being higher. Many stocks are trading
at far lower levels compared to their average
valuation or peak market levels. Hence, they offer an
investment opportunity
We have been positive on the banking sector and
continue to remain positive on the back of a revival
in earnings growth. We are also positive on capital
goods and consumer oriented stocks
ICICI Securities | Retail Research 5
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Equity diversified funds
Inflows into equity funds continue to recover and came in at | 7877 crore in
January 2020 from | 4499 crore in December 2019. There was a sharp
recovery in last two months from the lows of | 1312 crore in November 2019.
Midcap and small cap funds category witnessed a sharp rise in inflows to
| 1798 crore and | 1073 crore in January from | 796 crore and | 422 crore,
respectively, in December 2019. Multi cap funds also witnessed higher
inflows at | 1722 crore in January from | 512 crore in December
Value/contra funds continued to see outflows as the category continued to
underperform in the growth rewarding market.
We prefer multicap funds as they offer fund managers flexibility to allocate
funds across all market segments, especially in the current market where
many smaller cap stocks offer a good investment opportunity. Investors may
also consider investing lumpsum amount in midcap/small cap funds from a
long term perspective.
Exhibit 6: Monthly flows: Midcap funds receive highest inflows during January 2020
Source: Amfi
Banking funds – In focus
Banking funds have been the best performing category in the last year. We
have been positive on banking funds and have been recommending these
funds as thematic allocation.
Corporate banks reported a strong operational performance in the last few
quarters. In the last quarter or two, while net profit was impacted by one-
time deferred tax adjustment, profit before taxes as well as overall credit
cost improved on expected lines. The operating performance was healthy
amid steady state gross NPA. Treasury gains and continuous traction in fee
income, however, led other income to grow significantly.
Going forward, earnings are expected to be driven by lower provisions and
lower tax rate for most banks from FY21E onwards. We remain positive on
corporate banks being beneficiaries post the recent NBFC related crisis.
Corporate banks had been the theme in the last two quarters while the
corporate tax cut by the GoI has further led the impetus. Corporate as well
as retail banks, where a slowdown was being built up, got a renewed
positive outlook. From the perspective of banks and NBFCs, a reduction in
tax rates will have two positives – higher profitability and, thereby, return
ratios for profitable lenders with capex to revive growth cycle back into
action. An improvement in corporate earnings and increased manufacturing
capex is expected to further add to the banking sector’s business potential.
A net profit rise would result in higher RoA, higher capital adequacy and
improve the ability of banks to pass on rate cuts. Similarly, well managed
stronger NBFCS would enjoy better availability of capital and flow of
liabilities that will enable it to face competition, especially from repo rate
based loans.
-1,000
-500
-
500
1,000
1,500
2,000
Mid
Cap F
und
Mult
i Cap
Fund
Focused F
und
Large C
ap
Fund
Sm
all C
ap
Fund
Large &
Mid
Cap F
und
Div
idend Y
ield
Fund
Valu
e
Fund/C
ontra
Fund
Jan-20 Dec-19 Nov-19
Inflows into equity funds continue their recovery in
January from the sharp decline in November
Recommended Funds
Nippon Banking Fund
ICICI Prudential Banking and Financial Services Fund
ICICI Securities | Retail Research 6
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Monthly Report | Mutual Fund Review
Exchange traded funds (ETFs)
Exhibit 7: ETF AUM increases to | 1.7 lakh crore in 2019 from
1.07 lakh core at the start of the year
Source: Amfi
Exhibit 8: ETFs witness significant inflows in December 2019
primarily led by institutional flows
Source: Amfi
Exhibit 9: Around 15 categories of ETFs available
Source: ACE MF
50000
100000
150000
200000
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
| C
rore
Equity ETFs
721
5234
10540
-4241
2432
5383
12353
-1718
1033
5906
2954
12673
1873
-10000
-5000
0
5000
10000
15000
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Net Inflow
( |
Cr )
Equity ETFs
Nos. Types of ETFs Name of ETF
I Largecap oriented ETFs
1 Nifty 50 ETF Most AMCs
2 Sensex ETF Most AMCs
3 BSE 100 ETF SBI-ETF BSE 100
4 Nifty 100 ETF ICICI Pru Nifty 100 ETF
LIC MF ETF-Nifty 100
Reliance ETF Nifty 100
5 Nifty 100 Quality 30 ETF Edelweiss ETF - Nifty 100 Quality 30
6 Nifty Low Vol 30 ETF ICICI Pru Nifty Low Vol 30 ETF
7 Nifty Next 50 ETF Aditya Birla SL Nifty Next 50 ETF
ICICI Pru Nifty Next 50 ETF
SBI-ETF Nifty Next 50
UTI-Nifty Next 50 ETF
8 Sensex Next 50 ETF SBI-ETF Sensex Next 50
UTI S&P BSE Sensex Next 50 ETF
9 NV 20 ETF ICICI Pru NV20 ETF
Kotak NV 20 ETF
Reliance ETF NV20
II Midcap Oriented ETFs
10 Midcap 100 ETF Motilal Oswal Midcap 100 ETF
11 Nifty Midcap 150 Reliance ETF Nifty Midcap 150
12 Midcap Select ETF ICICI Prudential Midcap Select ETF
III ETF in Multicap segment
13 S&P BSE 500 ETF ICICI Pru S&P BSE 500 ETF
IV ETFs based on sectors/Themes
14 Banking ETF Edelweiss ETF - Nifty Bank
Kotak Banking ETF
SBI-ETF Nifty Bank
15 PSU Bank ETF Kotak PSU Bank ETF
Reliance ETF PSU Bank BeES
ETFs, as a category, are gaining popularity. Apart
from Sensex or Nifty ETFs, many other equity
oriented ETFs are now available tracking various
indices across market cap and sectors
ICICI Securities | Retail Research 7
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Hybrid funds
Hybrid funds category is dominated by aggressive hybrid funds (erstwhile
balanced funds) and balanced advantage or dynamic asset allocation funds.
The year 2019 witnessed a trend of outflows from aggressive hybrid funds
and inflows into balanced advantage funds. The same trend continues with
the start of the New Year.
Continuing with the trend, hybrid equity funds witnessed outflow of | 1260
crore in January 2020 while balanced advantage funds witnessed inflows of
| 1301 crore during the same period.
Arbitrage funds have become a significant category for parking funds for
short-term as a substitute to liquid or overnight funds.
Exhibit 10: Outflow in aggressive category continues
Source: Amfi
Exhibit 11: Trend of outflow in aggressive hybrid funds and
inflows in balanced advantage fund continues
Source: Amfi
Debt Funds
Exhibit 12: Sharp fall in G-sec yields lead duration/gilt funds to outperform significantly last year. Average return of credit
funds in near zero due to negative returns in few funds
Source: CRISIL. Category average annualised returns as on February 20, 2020
-6000
-4000
-2000
0
2000
4000
6000
8000
10000
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Net Inflow
( |
Cr )
Aggressive Hybrid
Hybrid Category
Inflow/(Outflow)
during January
2020
AUM
Balanced Hybrid Fund/Aggressive Hybrid Fund (1,260) 133,640
Dynamic Asset Allocation/Balanced Advantage 1,301 98,056
Arbitrage Fund 1,700 85,460
Equity Savings (416) 14,278
Multi Asset Allocation 260 13,305
Conservative Hybrid Fund (325) 12,732
10.2
9.7
9.7
7.7 7
.6
7.3
6.7
6.6
6.4
6.0
5.3
5.1
4.8
3.9
16.6
10.9
9.2
5.4
12.8
9.0
5.5
9.3
7.4
6.5
2.2
6.0
5.3
0.5
9.2
7.9
7.0
5.7
7.5
6.3
5.8 6.0
7.0
6.3
5.3
6.5
5.6
3.4
0
2
4
6
8
10
12
14
16
18
Long D
uratio
n
Bankin
g a
nd P
SU
Corporate B
ond
Short D
uratio
n
Gilt F
unds
Dynam
ic B
ond
Mediu
m D
uratio
n
Mediu
m t
o L
ong
Duratio
n
Money M
arket
Ult
ra S
hort
Duratio
n
Low
Duratio
n
Liq
uid
Overnig
ht
Credit
Ris
k
Returns (
%)
6 months 1 year 3year
ICICI Securities | Retail Research 8
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Short-term debt allocation (investment horizon of less than a
year)
We believe ultra-short-term funds and low duration fund categories offer a
relatively better investment opportunity.
Ultra short-term bond funds and low duration funds are ideal options to park
money temporarily compared to overnight or liquid fund categories. They
offer higher return potential by investing a higher proportion in a mix of
corporate bonds and commercial papers compared to overnight/liquid
funds. At the same time, most funds in these categories do not have exit
load restrictions, thereby making them liquid from an investors’ perspective.
Money market funds are also a worthwhile option from a liquidity and credit
quality perspective, particularly for conservative investors. However, the
return potential may be lower compared to ultra-short/low duration
categories.
Long term debt allocation (investment horizon of more than a
year)
We believe medium duration funds and credit risk funds categories offer a
relatively better investment opportunity based on the risk profile of
investors. Short-term funds are also a worthwhile option for conservative
investors. However, the return potential may be lower compared to medium
duration and credit risk categories due to higher credit quality.
In the medium duration category, many funds offer an optimum mix of credit
quality along with higher return potential. Credit quality in this category is
lower than short duration funds but higher than credit risk category.
We are cautious on credit risk funds as a category, especially in the current
weak credit environment. Credit risk fund category is only suitable for
aggressive investors who want to invest for the long term (more than three
years).
Categorisation of debt funds
Exhibit 13: Ultra short/low duration for short-term, corporate bond for long term
should in general be preferred category
Category Comment
Investment Horizon: Less than one year
Overnight funds Maturity up to 1 day
Liquid funds Maturity up to 91 days
Ultra short funds Maturity between 3-6 months
Low duration funds Maturity between 6-12 months
Money market funds Money market securities with maturity up to 1 year
Investment Horizon: More than one year
Short duration Maturity between 1-3 years
Medium duration Maturity between 1-4 years
Medium to long duration Maturity between 4-7 years
Long duration Maturity of more than 7 years
Dynamic bond funds Across duration
Corporate bond funds High rated instruments (AA+ and AAA)
Credit risk funds Below high rated instruments (below AA+)
Gilt funds G-Secs across maturity
Source: ICICI Direct Research
Ultra short-term funds and low duration funds with
optimal mix of credit quality better options to invest
for investment horizon of less than a year
Credit funds should be avoided in the current weak
credit environment. Corporate bond fund category is
best suited for long term debt allocation
ICICI Securities | Retail Research 9
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Gold: Golden run continues amid multiple tailwinds
Gold prices continue their golden run in 2020 on the back of concerns
surrounding Coronavirus and its impact on global growth. Global prices
touched almost US$1700 per ounce while Indian prices are trading at all-
time high levels of above | 43000 per 10 gram, rising sharply aided by
depreciating currency.
The rally is following one of the best year in 2019 in terms of performance
getting a lift from Federal Reserve rate cuts and geopolitical tensions with
global prices rising around 18% and domestic prices rallying 24% during
CY19.
After consolidating in a narrow range for around three months, global gold
prices rallied during December and continued their positive momentum on
the back of heightened political tension between the US and Iran. The initial
part of the rally occurred alongside a weakening US$ and rising inflation
expectations combined with still weak economic growth.
The US Federal Reserve trimmed interest rates by 25 basis points in July,
September and October, before announcing a halt in December. The market
expects low interest rates to remain for long. There is very little expectation
of any hike in the near term. Low rates help the precious metal in several
ways in terms of lower opportunity cost and weak US dollar, which is good
for gold due to the historical inverse relationship between the two.
The historical negative correlation of gold prices with other asset classes
does not seem to be in sync in the near term. The year 2019 saw all three
major asset classes viz. global equity market, debt market as well as gold
delivering double digit returns. One of the likely reasons could be that even
gold has become a financial asset, which gets a premium in an environment
of surplus global liquidity. In times like these, investors need to be extra
vigilant in analysing asset class returns.
Exhibit 14: Global gold prices trend
Source: Bloomberg
Exhibit 15: Indian gold prices trend
Source: Bloomberg
1200
1300
1400
1500
1600
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Global prices ($/ounce)
30000
32000
34000
36000
38000
40000
42000
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Price (|/10 grams)
With gold prices having run up significantly,
investors should not over-allocate to the asset class.
The allocation to gold, particularly having run
significantly, should not be more than 5-10% of the
overall portfolio
Historically, the performance of gold is not
structural. Generally, it performs in specific short
periods of time, especially during capital market
meltdown, global recession, geopolitical tension,
etc. Therefore, it may not be an ideal long term asset
class
ICICI Securities | Retail Research 10
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Model Portfolio: Equity
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, viz. 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 16: Equity model portfolio
Source: ICICI Direct Research
Exhibit 17: Model portfolio performance
Source: ACE MF. Since inception (May 2009) CAGR return as on January 31, 2020
Particulars Aggressive Moderate Conservative
Risk ReturnHigh Risk- High
Return
Medium Risk -
Medium Return
Low Risk - Low
Return
Funds Allocation
Mirae Asset Largecap Fund 20 20 20
Kotak Emerging Equity Fund 20 20 20
ICICI Prudential Midcap Fund 20 20 -
HDFC Smallcap Fund 20 20 -
L&T Midcap Fund 20 - -
Principal Emerging Bluechip Fund - 20 20
Sundaram Large and Midcap Fund - - 20
SBI Large and Midcap Fund - - 20
Total 100 100 100
% Allocation
15.7%
14.5% 14.6%
13.6%
10.0%
12.0%
14.0%
16.0%
Aggressive Moderate Conservative BSE 100 TRI
%
Aggressive Moderate Conservative BSE 100 TRI
ICICI Securities | Retail Research 11
ICICI Direct Research
Monthly Report | Mutual Fund Review
Model Portfolio: Debt
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, viz. 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 18: Equity model portfolio
Source: ICICI Direct Research
Exhibit 19: Model portfolio performance
Source: ACE MF. Since inception (May 2009) CAGR return as on January 31, 2020
Note: Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; six months-one year – Blended Index with 50% weight to Crisil
Liquid Index, 50% weight to Crisil Short Term Bond Fund Index; Above 1 year: Crisil Short Term Bond Fund Index
Objective 0-6 Months 6 months - 1 Year Above 1 Year
Funds Allocation
SBI Mag Ultra Short Duration 20 20
ICICI Pru Savings Plan 20
Kotak Savings Fund 20
HDFC Medium Term Fund 20 20
IDFC Low Duration Fund 20 20 20
IDFC Corporate Bond Fund 20 20
L&T Ultra Short Term Fund 20 20
SBI Corporate Bond Fund 20
Aditya Birla SL Corporate Bond Fund 20
Total 100 100 100
% Allocation
8.0% 8.0%
8.3%
7.4%
7.9%
8.3%
5.0%
6.0%
7.0%
8.0%
9.0%
0-6 Months 6Months - 1Year Above 1yr
%
Portfolio Index
ICICI Securities | Retail Research 12
ICICI Direct Research
Monthly Report | Mutual Fund Review
Mutual Fund Recommendation
Exhibit 20: Equity oriented funds
Source: ICICI Direct Research
Exhibit 21: Debt funds
Source: ICICI Direct Research
Largecaps ICICI Prudential Bluechip Fund
IDFC Large Cap Fund
Mirae Asset Largecap Fund
Reliance Large Cap Fund
Large and Midcaps LIC Large and Midcap Fund
Kotak Equity Opportunities Fund
SBI Large and Midcap Fund
Sundaram Large and Midcap Fund
Multicaps ICICI Pru Multicap Fund
Invesco Multicap Fund
Reliance Multicap Fund
UTI Equity Fund
Midcaps Axis Midcap Fund
ICICI Prudential Midcap Fund
Kotak Emerging Equity Fund
L&T Midcap Fund
Smallcaps ICICI Pru Smallcap Fund
Invesco Smallcap Fund
Kotak Smallcap Fund
Nippon Small Cap Fund
Focused Franklin India Focused Equity Fund
Reliance Focused Equity Fund
SBI Focussed Equity Fund
ELSS Aditya Birla Tax Relief 96 Fund
DSP Blackrock Tax Saver Fund
IDFC Tax Advantage Fund
Aggressive Hybrid HDFC Hybrid Equity Fund
ICICI Pru Equity & Debt Fund
Mirae Asset Hybrid Equity Fund
SBI Equity Hybrid Fund
Category wise top picks
Category Fund
Overnight / Liquid / Ultra Short Term Kotak Savings Fund
L&T Ultra Short Term Fund
SBI Magnum Ultra Short Duration Fund
Low Duration / Money Market ICICI Prudential Savings Fund
IDFC Low Duration Fund
SBI Low Duration Fund
Short Term HDFC Short Term Debt Fund
IDFC Bond Fund - Short Term
L&T Short Term Bond Fund
Medium Term HDFC Medium Term Debt Fund
IDFC Bond Fund - Medium Term Plan
SBI Magnum Medium Duration Fund
Medium to Long Term / Long Term Aditya Birla SL Income Fund
ICICI Pru Bond Fund
Reliance Income Fund
Dynamic Bond Fund ICICI Pru All Seasons Bond Fund
IDFC Dynamic Bond Fund
Kotak Dynamic Bond Fund
Corporate Bond Aditya Birla SL Corporate Bond Fund
IDFC Corporate Bond Fund
SBI Corporate Bond Fund
Credit Risk Axis Credit Risk Fund
IDFC Credit Risk Fund
SBI Credit Risk Fund
Gilt IDFC G-Sec Fund - Investment Plan
Reliance Gilt Securities Fund
UTI Gilt Fund
Category wise top picks
ICICI Securities | Retail Research 13
ICICI Direct Research
Monthly Report | Mutual Fund Review
Pankaj Pandey Head – Research [email protected]
ICICI Direct 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, Research Analyst, author and the name 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 Registration. No.: ARN-0845. Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India. ICICI
Securities Limited is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited Sebi Registration is INZ000183631 for stock broker. ICICI Securities is a 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, etc. (“associates”), the details in respect of which are available on www.icicibank.com.
ICICI Securities is one of the leading distributors of Mutual Funds and participate in distribution of Mutual Fund Schemes of almost all AMCs in India.
The selection of the Mutual Funds for the purpose of including in the indicative portfolio does not in any way constitute any recommendation by ICICI Securities Limited (hereinafter referred to as ICICI
Securities) with respect to the prospects or performance of these Mutual Funds. The investor has the discretion to buy all or any of the Mutual Fund units forming part of any of the indicative portfolios on
icicidirect.com. Before placing an order to buy the funds forming part of the indicative portfolio, the investor has the discretion to deselect any of the units, which he does not wish to buy. Nothing in the
indicative portfolio constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the investor's specific circumstances.
The details included in the indicative portfolio are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy
or completeness guaranteed. The funds included in the indicative portfolio may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs.
This may not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment risks. ICICI Securities and affiliates accept no
liabilities for any loss or damage of any kind arising out of the use of this indicative portfolio.
Past performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may be holding all or any of the units included in
the indicative portfolio from time to time as part of our treasury management. ICICI Securities Limited is not providing the service of Portfolio Management Services (Discretionary or Non Discretionary) to
its clients.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Kindly note that such research recommended funds in indicative portfolio are not based on individual risk profile of each customer unless a customer has opted for a paid Investment Advisory Service
offered by I-Sec. Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other
person or to the media or reproduced in any form, without prior written consent of ICICI Securities Limited. The contents of this mail are solely for informational purpose and may not be used or considered
as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. While due care has been taken in preparing this mail, I-Sec and
affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance thereon. This mail/report is not directed
or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject I-SEC and affiliates to any registration or licensing requirement within such jurisdiction.
ICICI Securities and/or its associates receive compensation/ commission for distribution of Mutual Funds from various Asset Management Companies (AMCs). ICICI Securities host the details of the
commission rates earned by ICICI Securities from Mutual Fund houses on our website www.icicidirect.com. Hence, ICICI Securities or its associates may have received compensation from AMCs whose
funds are mentioned in the report during the period preceding twelve months from the date of this report for distribution of Mutual Funds or for providing marketing advertising support to these AMCs.
ICICI Securities also provides stock broking services to institutional clients including AMCs. Hence, ICICI Securities may have received brokerage for security transactions done by any of the above AMCs
during the period preceding twelve months from the date of this report.
It is confirmed that Sachin Jain, 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..