uti mutual fund largest mf in the country with aum of about
DESCRIPTION
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UTI MUTUAL FUND
Largest MF in the Country with AUM of About Rs.
25228 crores (as on Dec 31, 2005)
Equity AUM of approx. Rs 12,100 crores
55 Domestic Funds, 5 Offshore Funds
29 Equity, 24 Debt and 2 Balanced Domestic Funds
Dedicated Equity Research Cell to assist Fund
Managers
Comprehensive risk management practices
Most extensive marketing network - 67 UFCs, 340
District representatives
3
INDIAN ECONOMY
&
STOCK MARKET
4
India among the fastest growth economies of the wor
ld
Domestically driven economy
India Getting Younger and Richer
Economic growth led by Consumption
Corporate India getting Healthier
CAPEX in a competitive environment
Infrastructure Spending on an anvil
Reflation Theory may work in future
Be a Winner by investing in UTI Leadership Fund
STRONG ECONOMIC GROWTH
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ECONOMIC GROWTH AND EQUITY MARKETSECONOMIC GROWTH AND EQUITY MARKETS
During Periods of Strong Economic Growth, Equity Markets Perform
Strongly
Two Prominent Cases
Domestic Investment Led Growth in the US A(1948-1964)
Export Led Growth in Japan (1970-1985)
Several Countries Have Gone Through Similar Inflection Periods
Chinese Growth Led By Manufacturing Outsourcing
Indian Growth Led By Services Outsourcing and Domestic
Demand Driven By Increased Consumption and Current Low
Leverage
6
Global Indices – YTD trends
Relative valuations
(1,000)
(500)
0
500
1,000
1,500
2,000
2,500
Jan-
05
Feb-
05
Mar
-05
Apr
-05
May
-05
Jun-
05
Jul-0
5
Aug
-05
Sep-
05
Oct
-05
Nov
-05
(USD mn)
MF US $mn (LHS) FII US $mn (LHS) Sensex (RHS)
0
2,000
4,000
6,000
8,000
10,000
Valuations much lower than at historic peaks
Indian economy and companies have highersustainable growth rates
Indian economy is relatively more insulated froma global slowdown
Indian companies have better operating and financial parameters
India is quoting at about 14 times FY07 earnings
80
90
100
110
120
130
140
150
160
170
180
Jan-0
5
Feb-0
5
Mar
-05
Apr-
05
May
-05
Jun-0
5
Jul-05
Aug-0
5
Sep
-05
Oct
-05
Nov-
05
Dec
-05
India Brazil China Russia Korea
Source :Bloomberg
Country Trailing PE FWD PERussia 14.3 11.6Korea 11.5 12.2Brazil 10.1 9.4India 20.4 16.61China 13.3 11
INDIA VALUATION COMPARABLE TO EMERGING MARKET
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LEADERSHIP CONCEPT
&
CHARACTERSTICS
8
UTI LEADERSHIP EQUITY FUND - CONCEPT
Investing in stocks that are ‘Leaders’ in their
respective industries/ sectors /sub-sectors
Leaders are those companies having
• Higher market shares
• Strong brand equity
• Better operating efficiencies
• Better access to capital
• Significant / sustainable competitive advantages
9
LEADERS HAVE A PROVEN TRACK RECORD
Tend to have long history of operations
Experience of going through economic cycles
Achieving leadership position by building
economies of scale and Sustainable competitive
advantage
10
HIGHER DEGREE OF TRANSPARENCY
High degree of corporate governance Professionally driven companies Management actions directed to enhance
shareholder’s value
‘Corporate Governance and Equity Prices’ by Paul Gompers
of Harvard and Andrew Metrick of the University of
Pennsylvania’s Wharton School found that ‘firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth.’
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MODEL PORTFOLIO OF LEADERS - A BACK TESTING
Portfolio of Leaders• A portfolio of leaders was constructed by choosing 35
companies from 34 sectors/sub-sectors who are leaders in the respective sector/subsectors.
CNX Mid Cap Indices• It consist of companies which are not leaders in
respective sectors
Stock market performance and Financial performance of Portfolio of leaders are compared with indices containing non - leaders
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LEADERS DO WELL IN RISING MARKET
Leaders give higher return in the rising market
0.00
500.00
1000.00
1500.00
2000.00
2500.00
3000.00
3500.00
4000.00
4500.00
5000.00
5500.00Portfolio of Leaders
CNXMID Index ( 200)
CNXMCAP Index (100)
Nifty
CNX Midcap index (200) is discontinued after July 2005
Time Period Portfolio of Leaders
CNXMID Index ( 200)
CNXMCAP Index (100)
Nifty
May 2003 - Feb 2004 125% 105% 109% 98%Jan 2005-Dec 2005 68% NA 33% 34%
13
LEADERS PROTECT THE GAINS IN FALLING MARKET
Leaders decline less in the falling market
CNX Mcap Index (100) is available from Jan 2001
0.00
500.00
1000.00
1500.00
2000.00
2500.00
3000.00
3500.00
4000.00
4500.00
5000.00
5500.00Portfolio of Leaders
CNXMID Index ( 200)
CNXMCAP Index (100)
Nifty
Time Period Portfolio of Leaders
CNXMID Index ( 200)
CNXMCAP Index (100)
Nifty
Feb 2000- Sep 2001 -42% -62% NA -50%Feb 2004-July 2004 -12% -11% -16% -19%
CNX Midcap index (100) is available from Jan 2001
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LEADERS DO WELL OVER SHORT AND LONG PERIODS
Be a winner by staying invested with Leaders
Time Period ( As on Dec 23, 2005)
Portfolio of Leaders
CNXMCAP Index (100)
Last One year 68% 33%Last Two years 126% 60%Last Three years 449% 296%Last Four years 570% 381%Last Five years 473% 240%
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LEADERS DO WELL COMPARED TO BROADER MARKET
Be a winner by staying invested with Leaders
Time Period ( As on Dec 23, 2005)
Portfolio of Leaders
CNX500 Nifty
Last One year 68% 34% 35%Last Two years 126% 51% 44%Last Three years 449% 213% 157%Last Four years 570% 233% 156%Last Five years 473% 152% 111%Last Six years 426% 101% 89%
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LEADERS DO WELL DURING ECONOMIC UPSWING
Leaders are major beneficiaries during Economic upswing
Period of 2000-05 was marked with economic upswing with India’s GDP has grown in
excess of 6% 2000-05 (Multiple) Portfolio of leaders CNX 200Sales growth 1.98 1.80OP Profit growth 2.91 1.82PAT growth 2.93 2.27
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
550000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
SALES of 'Portfolio of Leaders'
SALES of CNX 200
OPof 'Portfolio of Leaders'
OP of CNX 200
PATof 'Portfolio of Leaders'
PAT of CNX 200
Rs in crores
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LEADERS - ABILITY TO WITHSTAND DOWNTURNS
1995-00 ( Multiple) Portfolio of leaders CNX 200Sales growth 2.19 2.01OP Profit growth 2.95 1.91PAT growth 2.13 1.35
Leaders can withstand tremors of the economy better
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
550000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
SALES of 'Portfolio of Leaders'
SALES of CNX 200
OPof 'Portfolio of Leaders'
OP of CNX 200
PATof 'Portfolio of Leaders'
PAT of CNX 200
Rs in crores
Period of 1995-2000 was marked with economic slowdown after liberalization of economy in 91-92
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LEADERS DO WELL EVEN DURING FULL ECONOMIC CYCLE
1995 - 2000 was a period of slowdown while 2000 -
2005 was period of economic upswing
1995-2005 (CAGR) Portfolio of leaders CNX 200Sales growth 15.79% 13.73%OP Profit growth 23.96% 13.26%PAT growth 20.08% 11.87%
Growth in sales, Op. profit and PAT of companies in ‘Portfolio of Leaders’ have been higher compared to that of non-leaders over last ten year period
Leaders have sustainable earnings and hence give sustainable returns
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EARNINGS OF LEADERS HAVE LOW VOLATILITY
Leaders have sustainable earnings and hence give sustainable returns
PAT Growth0%
5%
10%
15%
20%
25%
30%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
CNX 200
PORTFOLIO OF LEADERS
Sales Growth
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
CNX 200
PORTFOLIO OF LEADERS
PAT Growth
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LEADERS ARE GLOBALLY COMPETITIVE
Liberalisation of economy in 1991
Peak custom duty cut from over 100% in ‘93 to about 20% in
2005.
Operational and financial restructuring leading to higher margins.
OPM improved for companies in ‘portfolio of leaders’ from 6.28%
in 1993 to 13.82% in 2005
NPM improved for ‘portfolio of leaders’ from 5.05% in 1993 to
11.32% in 2005
21
INDIAN LEADERS CAN BE TOMORROW’S GLOBAL MNCS
Be a winner by staying invested with Leaders
Indian CompaniesSales Rev Turn
(USD Bn)Global companies
Sales Rev Turn (USD Bn)
INDIAN OIL CORP 29.66 ROYAL DUTCH/SHEL 265.0 RELIANCE INDS 14.72 EXXON MOBIL CORP 263.0 OIL & NATURAL GA 12.95 BP PLC 285.1 STATE BANK IND 11.13 HSBC HLDGS PLC 72.6 TATA MOTORS LTD 4.35 GENERAL MOTORS 193.5 TISCO 3.53 THYSSENKRUPP AG 53.4 LARSEN & TOUBRO 3.21 ABB ASEA BROWN 30.9 MARUTI UDYOG LTD 2.48 DAIMLERCHRYSLER 176.6 HINDUSTAN LEVER 2.37 KIMBERLY-CLARK 15.1
TATA CONSULTANCY 2.18 IBM 96.3 MAHINDRA & MAHIN 2.09 TOYOTA MOTOR 172.6 BHARTI TELEVEN 1.81 AMERICA MOVIL-A 134.7 ITC LTD 1.79 ALTRIA GROUP INC 64.0 HERO HONDA MOTOR 1.65 FORD MOTOR CO-B 171.7 RANBAXY LABS LTD 1.16 TEVA PHARMA 4.8 AIR INDIA 1.03 AIR FRANCE-KLM 24.0 Pantaloon Retail 0.24 WAL-MART STORES 285.2
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UTI LEADERSHIP EQUITY FUND
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A FUND TO CAPITALISE ON GROWING ECONOMY
Secular underlying growth story of Indian Economy
Leaders performing well in future
Quality Portfolio at reasonable valuations
Global Competitiveness
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SCHEME FEATURES
INVESTMENT OBJECTIVE: Long-term capital appreciation and/or dividend
distribution. Investing in stocks that are ‘Leaders’ in their respective
industries / sectors / sub-sectors.
The investments restricted to the top five leading companies of an industry / sector / sub-sector in terms of sales turnover / market share.
BENCHMARK INDEX : S & P CNX Nifty
ASSET ALLOCATION:
Invest in Leadership Fund from a Leader in Mutual Fund Industry
Instrument % of NetAssets
Equity of “leaders” 65 - 100%Equity of potential leaders 0 – 35%Debt and Money Market Instruments 0-10%
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INVESTMENT STRATEGY
Stock Selection:
An industry or sector that the Fund Manager feels will
outperform others will be selected and then leading
companies within that industry / sectors will be picked.
Portfolio of the fund would be focussed
• Number of stocks around 25-30.
• To invest 75-80% in leaders and 20-25% in potential
leaders.
Single stroke to success is being with Leaders
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SECTOR
FUND
SECTOR ROTATION FUND
UTI LEADERSHIP
FUND
DIVERSIFIED FUND
INDEX FUND
Risk
Leadership fund can give higher and sustainable return
Return
FUND POSITIONING
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SCHEME DETAILS
Type of Scheme : Open Ended Diversified Equity Fund Options Available
• Growth Option• Dividend Option with Payout and Reinvestment facilities
Sale and Repurchase Price • During the NFO, the units of the fund will be sold at Rs. 10 subject
to Load applicable.• The Scheme will offer purchase and redemption of units at NAV
based prices on every business day on an ongoing basis, commencing from 28th February 2006.
Investment Amount • Minimum initial investment is Rs.5,000/-. Subsequent
minimum investment under a folio is Rs.1,000/- and in multiples of Re.1/- thereafter
Facilities Available : Systematic Investment Plan (SIP) and Automatic Trigger facilities
Be a Winner by investing in UTI Leadership Equity Fund
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SCHEME DETAILS (Contd….)
Load Structure
NFO Opens On :9th January 2006
NFO Closes On : 30th January 2006
Be a Winner by Investing in UTI Leadership Equity Fund
Application Size Entry Load (% of NAV) Exit Load (% of NAV)
< Rs. 2 Crore 2.25% Nil
.=> Rs. 2 Crore Nil0.5% If Exited within 6
months from the date off investment.
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RISK FACTORS
All investments in Mutual Funds and securities are subject to market risk and the NAV of the Funds may go up or down depending on the factors & forces affecting the securities market. Past performance of the Sponsor/Mutual Fund/ Scheme(s)/AMC is not necessarily indicative of the future results. UTI Leadership Equity Fund is just the name of the scheme and does not in any manner indicate the quality of the scheme, its future prospects or returns. The scheme is subjected to the risks relating to interest rate, liquidity, securities lending, investment in overseas market, trading in equity and debt derivatives. There may be instances where no income distribution could be made. Please read the Offer Document carefully and do consult your financial advisor before investing.
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INDIA AMONGST THE FASTEST GROWING ECONOMIES
Growth has been accelerating in each decadeIndustry + services (78% of GDP) growing @ +8%Impact of agriculture on overall growth is steadily reducing Per capita income has grown by 7% CAGR over the past decade and is projected to cross $1,000 by the end of the decade
8.6
6.25.0 5.0 4.8 4.6 4.2
3.5 3.1 2.8
0
3
6
9
12
Chi
na
Indi
a
Mal
ay
Kor
ea
Sin
g
Taiw
an Phil
HK
Thai
Indo
10 year real GDP cagr (%)
46 39 31 25 22
16 2022 27 27
38 41 47 48 51
0
20
40
60
80
100
120
FY-71 FY-81 FY-91 FY-01 FY-04Agriculture Industry Services
Rapidly changing composition of GDP (%)
Source: Var Brokerge housess
32
INDIA GETTING YOUNGER AND RICHER
Explosive effect of rising Per capita Income: Currently at ~USD 750
Historically, at 1% growth, PCI doubled in a life time
At current 4% growth, PCI will reach ~USD 1000 in ~8 years
PCI of top 20% of population (>200mn people) is growing at 9% - doubling in 8 years
Young and richer India has huge implication in terms of multiplier effect on consumption and economic growth
0
4 0 0
8 0 0
1 , 2 0 0
2 0 0 1 2 0 1 6
0 to 1 4 y r s 1 5 to 5 9 y r s 6 0 y r s & ab o v e
T o ta l 1 , 0 2 7 m
T o ta l 1 , 2 6 8 mO v e r a l l g r o w th
2 3 %
S e g m e n t g r o w th 3 6 %
F a s t g r o w in g co n s u m e r c la s s
5 9 8 m
8 1 1 m
Source : planning commission of India
Increasing consuming group
33
ECONOMIC GROWTH LED BY CONSUMPTION
8 1 32 6
3 65 8
0
2 0
4 0
6 0
I n d i a T h a i l a n d M a l a y s i a T a i w a n K o r e a
( % )
4 9 1 3 1 7
3 7
0
2 0
4 0
6 0
I n d i a T h a i l a n d K o r e a M a l a y s i a T a i w a n
( % )
0 . 4 2 . 8 9 . 8
8 2 . 4
1 2 2
0
4 0
8 0
1 2 0
1 6 0
I n d i a T h a i l a n d M a l a y s i a T a i w a n K o r e a
( % )
4 81 6 1 7
4 1
0
2 0
4 0
6 0
I n d i a T h a i l a n d T a i w a n M a l a y s i a K o r e a
( % )
Indian economy is domestically driven economy (85% from dom. Mkt.) unlike emerging markets which are linked to export growth
Consumer loans/ GDPMortgages/ GDP
Credit cards/ GDP Other retail loans/ GDP
Source : RBI, Var brokerage house
34
CORPORATE INDIA GETTING HEALTHIER
Peak Rate of Custom Duty: Operating in a Competitive environment
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
19
93
19
95
19
97
19
99
20
01
20
03
20
05
( % )
Growing Profitability
0
1 0
2 0
3 0
4 0
5 0
1997
1998
1999
2000
2001
2002
2003
2004
2005
( % )
S a l e s P B I TEfficiently managed: Working Capital/ Sales
1 5
2 0
2 5
3 0
3 5
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
( % )Healthy balance sheets
0 . 0
0 . 4
0 . 8
1 . 2
1 . 6
2 . 0
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
( % )
D e b t/ E q u ity* P u b lic s e c to r P r iva te S e c to r
Source : CMIE
35
CAPEX IN A COMPETITIVE ENVIRONMENT
20,000
65,000
110,000
155,000
200,000
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
5.0
7.5
10.0
12.5
15.0
Investments in new projects (LHS) Interest Rates (RHS)
Key differences between the capex cycle of 1995-97 and the current one: Current capex in a competitive environment, duties down to WTO levels Interest rate differentials with regional economies have shrunk,
making India more competitive Current capex also aimed at servicing export markets given India’s
emerging competitiveness in manufacturing
1,500
2,250
3,000
3,750
4,500
FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05
0.0
10.0
20.0
30.0
40.0O/ s investments Steel Aluminium Copper
Duties (RHS)
Source: CMIE
36
INFRASTRUCTURE SPENDING ON ANVIL
0
500
1000
1500
2000
Road
s
Pow
er
Saga
rmal
a
Urb
an inf
ra
Pipel
ines
Railw
ays
Port
s
Airp
orts
SEZ
Wat
er
Rs bn
Infrastructure investments – the key driver to feed the imminent capex boom and drive industrial growth to double digit
37
REFLATION THEORY MAY WORK IN FUTURE
Low level of Local Investment
8 . 8 6 . 3 9 . 7 8 . 9 1 0 . 5 9 . 2
3 6 . 3 4 0 . 9
1 2 . 31 5 . 7 1 7 . 9 1 7 . 4
2 0 . 2
3 4 . 9 3 2 . 9 3 0 . 3 3 1 . 1 2 7 . 6 2 6 . 3
1 1 . 0
3 9 . 43 9 . 4 4 1 . 64 1 . 03 9 . 0
1 4 . 02 4 . 0
1 .10 .11 .72 .74 .17 .73 .0
3 4 . 0
0 %
2 0 %
4 0 %
6 0 %
8 0 %
1 0 0 %
1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5
C o n t ra c tu a l S a v in g s ( L I C , P ro v id e n t a n d P e n s io n F u n d s )I n v e s tm e n t i n S h a r e s a n d D e b e n tu r e sC la im s O n G o v e rn m e n tsD e p o s it sC u rre n c y
Ownership of equities
0
5 0
1 0 0
1 5 0
2 0 0
2 5 0
S e p - 0 3 S e p - 0 5P ro m o te rs G o v tF I I 's I n d ia n P u b licM F s + U T I + L I C
( U S D b n )
Ownership of equities
4 74 8
1 92 51 81 091 067
0 %
2 0 %
4 0 %
6 0 %
8 0 %
1 0 0 %
S e p - 0 3 S e p - 0 5
P ro m o te rs G o v tF I I 's I n d ia n P u b licM F s + U T I + L I C
Source : Var Brokerage Houses
38
INDIA VALUATION - REASONABLE RELATIVE TO GROWTH
1 ,5 0 0
3 ,5 0 0
5 ,5 0 0
7 ,5 0 0
9 ,5 0 0
1 1 ,5 0 0De
c-95
Dec-
96
Dec-
97
Dec-
98
Dec-
99
Dec-
00
Dec-
01
Dec-
02
Dec-
03
Dec-
04
Dec-
05
1 6
1 4 x
1 2 x
P/E EPS EPS Growth (x) (INR) (%)
FY04 24.9 373 62.3FY05 20.4 456 22.1FY06E 16.6 562 23.4FY07E 14.0 668 18.8
14.0x FY07E of Rs.668
16.6x FY06E of Rs.562
Sensex 9300
Source :Bloomberg
39
USA (Dow Jones Industrial Index)
120
220
320
420
520
620
720
820
920Jan-4
8
Jan-5
0
Jan-5
2
Jan-5
4
Jan-5
6
Jan-5
8
Jan-6
0
Jan-6
2
Jan-6
4
Dow Jones performanceDow Jones performance
40
Japan (Nikkei)
0
5000
10000
15000
20000
25000
30000
35000
Jan-7
0
Jan-7
2
Jan-7
4
Jan-7
6
Jan-7
8
Jan-8
0
Jan-8
2
Jan-8
4
Jan-8
6
Jan-8
8
Nikkei performanceNikkei performance