IPRU

Insights
October 2014

Understanding when
and why asset classes
perform is a homework
done well
.............................Pg.3

Why chasing returns

is detrimental to your
portfolio
.............................Pg.5

How to score more

financial goals
.............................Pg.7

Return chasing
behaviour
can be dangerous
for financial health
and more often
than not belies
expectations.

LETTER FROM THE CEO

e are pleased to present the issue of

our newsletter. It is designed to help
you understand the finer nuances of
mutual funds, to assist you in becoming an
informed mutual fund investor and aim to
get the advantage out of investing in
mutual funds.
These are heartening times to be a mutual
fund investor, and for me to be your Asset
Management Company CEO. The stock
market has been posting gains every
month since the beginning of this year, and
for all those investors who have stayed
invested, returns have been reasonable. In
the past few months, some investors have
been redeeming their holdings from equity
mutual funds at a time when investors
should ideally remain invested. The
economy is at the cusp of growth.
The 2014-15 Budget brought in no
unpleasant surprises for the markets. In
fact, the budget seems to have met the
market expectations, as we witnessed the
broader indices giving thumbs up to the
budget. The budget 2014 is also likely to
look at many ways to boost economic
growth and manufacturing activity in the
country. The budget could pave the way to
a healthier balance sheet of the country
and more investing opportunities for
investors.
As opposed to so many of the economic
signposts coming in the recent past,
currently, the improving industrial
production along with reducing inflation
and current account deficit(CAD) suggests
that the economy is on the way to recovery
from around the five per cent Gross
Domestic Product (GDP) growth rate it has
been seeing in lately. Sure, there is a lot of

02

work still left and the recovery may be

gradual, but there is no doubt that the
Indian economy can live up to its true
growth potential in the coming years.
I have never doubted that the Indian
economy can rebound sooner or later, and
that the Indian companies can deliver good
growth rates in the coming years. In fact,
some time back the markets were so
deeply discounted that it presented one of
the preferred opportunities for investors to
get into equity as an asset class and bag
some good investments at discounted
prices.
In fact, we launched a series of Value Funds
that garnered an average AUM of ` 1671.3
crore as on 30 June 2014 from new
investors. We are encouraged by the
investor response when we believed
the markets presented a discounted
opportunity for investors.
Speaking of opportunities, the Indian
economy and many companies are
expected to deliver growth in the coming
years. The economy is on the mend, and
even a small debottlenecking in
manufacturing process can see some
reasonable value accretion for Indian
companies. Over time, new capacities and
an increase in market penetration could offer
higher growth opportunities for Indian
companies. India is also likely to be a
manufacturing export hub once again.
Everywhere you look, whether it is
infrastructure, banking or exports, there is a
lot of growth potential, which can be tapped
by Indian companies in the coming years.
I can really go on and on about the growth
opportunities and why one should invest in

growth now, but let me take this

opportunity to talk a little about whats in
our first newsletter.
I want to highlight a common mistake that I
see many mutual fund investors commit
very often the cardinal sin of chasing
returns. Very often investors are drawn in
to believing that investing in a fund that has
done well in the past is the way to make a
quick gain from mutual funds. This return
chasing behaviour can be dangerous for
financial health and more often than not
belies expectations.
If you are looking at the past performance
and investing in funds, I would suggest do
not invest in mutual funds. It is not the way
to invest in mutual funds. I would urge you
to read and understand more about this
issue on page five, and even share it with
your friends and family members.
Recently, we saw the season of football
pass by, with the worlds biggest single
sporting event underway in Brazil- the time
to score goals. I would like to once again
make a suggestion to you of looking again
at your financial goals so you are able to
achieve financial success from your
investments. One thing I can tell you off the
bat: once you identify and set your goals,
stay disciplined. Have a look at the article
on pages seven and eight on financial
goals.
We also have some more articles that will
be of interest to you. Let me sign off by
reminding you to look at growth
opportunities for the long haul. We hope
you enjoy this issue and look forward to
hearing from many of you.
Happy investing!
IPRU Insights | October 2014

Understanding when
and why asset classes
perform is a
homework done well
Here are a few guiding
principles one can use
very effectively before
one enters or exits
any asset class.
LETTER FROM THE CIO

very now and then, I have been

noticing many investors making
needless mistakes of entering an asset
class much later than everybody else when
the cream of the returns have passed. At
other times, investors ignore obvious telltale signs of entering into an asset class
and overlooking some investment
opportunities to accumulate assets when
cheap.
It is because investors may be unaware of
certain conventional principles or fail to
notice them. I am listing a few principles for
your reference hoping that they serve you as
a guide for when to buy or sell various
assets. Let me add a caveat upfront, these
are just guiding principles. Markets have a
tendency to over react and so not all
indicators are perfect. Nevertheless, they
have served me well over the years and they,
I am sure, will help you gain authentic insight
into how asset classes generally perform in
all market conditions. Here they go.

IPRU Insights | October 2014

Going for assets that have done

badly
It is better to invest in an asset class that
has done badly than to invest in an asset
that has done well in the past 1-2 years.
One must also avoid buying an asset class
that everyone else is buying. It is better to
invest in equities as an asset class when
they have been under-delivering i.e.
making negative returns of say -20 or -40
percent in the past one year. This gives
investors reasonable buying opportunities
at discounted prices.
We have seen that happening in the Indian
equity markets very often in the past. For
example, during 1995-2002, equity
markets gave 0% returns. Pessimism
prevailed; everybody felt equities would
never deliver returns. Those who invested
during 2002-2003, when the markets were
at rock bottom, saw the markets deliver
significant returns over the next 6 years
(2003-2008). Heres a pertinent clich that

emphasizes this point well - in crisis there

can be an opportunity.
Interestingly, it may be a good idea to exit
out of assets that have done reasonably
well in the past year. Often when assets
have given returns in excess of 50 percent
in a year, in all probability, the asset class
might not deliver the desired returns in the
coming year. This may not hold true for
equities.
However, looking at the past 15 years, the
preferred time to invest in equities is when
the industrial production growth rate is
low; while, the preferred time to exit
equities is when the fiscal deficit is low.
Equities also do well as an asset class in
years following when their Price
Earning(PE) ratio is between 12 to 18
times. If the price-earnings rise higher than
18 times, returns from equities may not be
high in the subsequent years. But if the
price-earnings multiple is anywhere close
to 12 times, its a buying opportunity that
investors should consider.

03

Evaluating real estate

In real estate, look at the difference
between mortgage rate and rental yield. If
there is a difference of less than 5 percent,
then real estate may be an attractive
proposition. If the difference is above 7
percent, then real estate tends to become
unattractive.

Understanding international
funds
International funds may tend to do well
when inflation and the Current Account
Deficit (CAD) are high. In the year 2009,
inflation and the Current Account Deficit
(CAD) had risen. When inflation and CAD
rises, it is relatively a good time to invest in
international funds, and vice versa. Nobody
at that point of time was willing to invest in
international funds since they had
significantly under-performed.

A look at when gold funds

do well
Gold funds tend to perform well when
inflation is high. They also tend to do well
when the difference between international
gold prices and Brent crude oil price is
below 10 percent. On other occasions,
when every asset class is doing well, it is a
good time to invest in gold.

04

Grasping the intricacies of

debt funds
Debt does well when the one-year bank
Fixed Deposit rate is higher than inflation.
One has to look at both the wholesale and
consumer price indices to arrive at the
attractiveness of debt. Look at whether the
one-year bank fixed deposit rate is higher
than the Wholesale Price Index and also
the Consumer price Index. The sum total of
both the above ratios should be equal to or
more than two for debt to become
attractive. If the sum is below two, then
fixed income becomes unattractive.

How these guiding principles

can serve you
These thumb rules could have helped
investors in the past. Investors could have
avoided technology funds in 2000. During
1997-2000, all technology stocks gave
200% returns. Because of the past high
returns, one could have stayed away from
such funds.

investing in infrastructure funds in 2007.

Re t u r n s d u r i n g t h a t t i m e o f a l l
infrastructure funds were 70-80% and over
2 years, 100-130% returns. These high
returns were the indicator to stay away
from this sector.
Post the Lehman crisis, investors could
have looked at equity funds in Oct 2008.
The stock market had given a -40% return
in 2008, and it was the first sign that equity
had potential to deliver returns going
forward.
Income funds had become a big no-no in
June 2013. The year before that income
funds had delivered reasonable returns an
indicator that debt funds had become
unattractive.
Right now, income funds are giving
reasonable returns, while equities are fairly
valued. Debt as an asset class is showing
signs of attractiveness that investors could
look for the long-term.

Investors could have invested in equity

funds in 2002. Over the past 6-7 years,
return on equity was 0%. This was an
indicator that equity could offer potential
returns going ahead.
Again, investors could have avoided

IPRU Insights | October 2014

FIRST UP

Why chasing returns

is detrimental to your portfolio
Time and again investors are making an avoidable
mistake of going after past performance.
It is time now to change that.

et us say you are a new investor into

mutual funds, and you want to know
how they fared in the past year. You have
always been a careful investor in bank
deposits earlier and do a thorough
evaluation before making an investment or
parting with your hard-earned money. You
look up the newspapers and find out that
some of the preferred performing mutual
funds have given returns in excess of 50
percent in the past year.
You gulp. Soon you are lured into the
promise of superior returns, and before
you know it, you pull out your cheque book
and sign a princely sum chasing the skyhigh returns. You reason that even if the
fund manages to do half as well in the
future, or even one-fourth of its past
performance, you could still end up with
decent returns.
Hang on! The next time, you are tempted to
chase past performance, hold on to your
horses; thats not the way to invest in
mutual funds. No fair-minded mutual fund
investor chases past performance. If you
are lured or even thinking - mistakenly - the
returns of the past can be matched in the
future, think again.
That default thinking stems from the fact
that investors are psychologically attuned
to looking at assets such as bank deposits
that show their rates of investments.
Investors do not seem to remember that
returns from mutual funds can be very
different as against the past. Unlike bank
deposits that offer a predictable rate,

IPRU Insights | October 2014

Warren
Buffett

If the past history was

all there was to the game,
the richest people
would be librarians.
returns from mutual funds vary depending
on market conditions, asset selection and
so on.
In fact, even when mutual funds clearly
state that mutual fund investments are
subject to market risks, investors still look
at past performance. The writing is very
clear and when all the mutual funds put out
a disclaimer that past performance may or
may not be sustained in future investors
are looking time and again chasing one
fund to another trying to get higher returns.
In the end, a fund investor just ends up
churning his fund portfolio, incurring
higher costs, and finding that the endresult is nowhere as expected.
Fund investors should, instead, focus on
the future. Many gurus of investing have
pointed time and again that one should not
drive a car by looking at the rear-view mirror
(read past performance). One should
instead focus on the road ahead, and use

the rear-view mirror to navigate your

vehicle.
Past performance matters to an extent. It
helps individuals assess how the fund
manager has done in various market
conditions, how consistent a fund
manager has been in his ability to deploy
his corpus in the market, and whether a
fund manager is being able to beat and stay
a h e a d o f t h e b e n c h m a r k s . Pa s t
performance provides vital cues to the
mind of fund managers and a fund house.
Past performance helps in analytical
evaluation.
But they are never an indication of what the
future market conditions will be like, or
how each mutual fund portfolio will
perform. If you look at past performance
for evaluation and study current market
conditions and look for good undervalued
opportunities, you will see that you can
avoid chasing returns, and instead invest
with an understanding of the market.
RETURN CHASERS ARE NOT DOING
THEIR HOMEWORK
Chasing returns usually makes an investor
edgy if your fund does not match up to the
past and may set up an investor for
disappointment. Chasing returns hurts
most when market conditions are not
conducive for a replication of similar
performance. A similar thing happened in
the past when investors chased tech
stocks back in 2001, when eyeballs and ICE
investing (Information, Communication
and Entertainment) were the buzzwords,

05

only to see them crashing later. Core

economy stocks faced a similar situation in
2008-09, which led to a huge
disappointment later for investors.
Investors then were paying a huge price for
such companies that still had some way to
go to create earnings.
It was then that retail investors moved out
completely disillusioned by the markets.
And they have not been big players in the
market since, which has seen them lose
out on some good investment
opportunities particularly in staying
invested in good funds that managed to
increase their allocations to exportoriented growth companies and other
defensive plays.
When returns do not match expectations,
investors tend to make the mistake of selling
their investments, pulling out, and ending
up with losses. Investing gurus call it the
classical mistake of buying high and selling
low, which should be avoided at all costs.
Chasing returns always belies
expectations. Let us take an example of the
broader index such as the Sensex. If you
look at the market performance of the
bellwether Nifty every year end, in some
years you could see reasonable returns. In
other years, the market fell and the returns
were negative.

If you looked at the market performance in

calendar year 2007, Nifty returns were 53
percent. If you were chasing these returns of
the past, the following year 2008 returns from
the Niftys were -50 percent, burning a
significant hole in your pocket. (Source: NSE)
Again if you looked at the returns of
calendar year 2008, when the markets was
dormant, you could lose out on a good
investing opportunity the following year.
That was the time to remain invested as the
returns in 2009 were a significant 72
percent. This is an illustrative example for
you to understand and grasp the fact that
markets do not always perform as per the
past - market conditions change every year,
and return-chasing of the past will more
often see you making mistakes that you
shouldnt make. (See chart for a clearer
picture of how market returns have been in
each calendar years).
Even in debt funds, investors have to be very
careful when looking at the past returns. In
some years, you may see superior returns
from debt funds, and may want to get into
debt funds. But, in fact, you might be getting
into long-term debt funds when the rate
cycle has bottomed out.
However, one of the preferred times to
invest in debt funds is when debt funds
have not performed in the past year when
their returns are miserably lower in lower

single digits. That is the time when the ratecycle has peaked out. In fact, investors
might not be able to grab the opportunity of
investing in debt funds if they look at the
past performance, and thus could lose out
on the opportunity to make returns from
the debt market.
STICKING TO A PROCESS HELPS
Essentially, look at investing in mutual
funds from the point of view of how the
road ahead looks like and how the fund
manager is positioning his vehicle, and
what his investment objectives are.
Investors have to create a roadmap of
investment expectations, and the path
they can choose to reach to their
destinations.
Some questions to ask before investingWhether prices of assets are cheap? What
are the areas that are cheapest? What is
the fund manager largely going to invest
in? What is the growth potential of the
economy? And so on. These are questions
that can help you focus on where you are
investing and can help you achieve
efficiency in every rupee you invest.
Never forget to look at the long-term
because that is when returns can be made.
Instead of looking at year on year returns of
the Sensex as in the example above, look at
three-, five- or even 10-years performance
and remain invested. Returns from 200514, a 10-year window, have been 17 per
cent annualised. (Data source BSE) Your
investment aim should allow companies to
expand their businesses and scale up their
operations, which can be more useful in
increasing your net worth.
Focus on the process of investing that
involves buying into assets that are underpriced, investing regularly, and keeping a
long-term horizon. Instead of chasing fads,
if you can stick to an investing road map
that buys into investment opportunities
looking at the future growth and current
value, chances are you could end up doing
much better for yourself.
CNX Nifty
60

2014

2013

2011
2012

2010

2007

2006

0
-20

2005

20

2009

2008

40

2004

Performance (%)

80

-40
-60
Years

Past performance may or may not be

sustained in future. The above data is
provided only for information and to help
investors understand that there is no
certainty of returns from market. Investors
can also suffer entire loss of capital from
investing in markets. Investors need to
understand the various risks associated with
markets before investing.

06

IPRU Insights | October 2014

TIPS TO GET AHEAD

How to score more

financial goals
Now is the time to learn a few personal goal-scoring
lessons from the beautiful game - football.

IPRU Insights | October 2014

07

e had a great soccer season

recently. It was one of the biggest
sporting events of recent times that was
watched and enjoyed by millions of people
all across the world- the FIFA World Cup in
Brazil. The month-long extravaganza
produced abundance of goals. It has been
fun to watch the awe-inspiring skills on
display, and the even better ball-control in
the final stages of the beautiful game.
Yet, if there is anything about soccer that
decides the winning team, it is the team
that scores more goals. Football reminds
many of us that to win a match, one has to
score as many goals as possible, higher
than the opponent team. As it is in football,
so is it in personal life. We need to score
more goals, and importantly more financial
goals. So now, since it is the time to talk
about goals, let us look at a few ways to
score more financial goals to win the
financial game.
GOAL NUMBER 1 EARN YOUR
PRACTICE
On top priority in the list of goals that most
people have is one item earning more
money. Without a proper approach and
the right road map, this is one of those
goals that may continue to stay on that list,
without you being able to fulfill it to your
satisfaction.
The important thing is to plan ways for
earning more money earning secondary
income through an alternate career,
investing more in mutual funds, creating
assets and building wealth for more
income.
GOAL NUMBER 2 SWEAT YOUR
SAVINGS SOME MORE

GOAL NUMBER 3 START SMALL, AIM

HIGHER

GOAL NUMBER 4 GET COACHING AND

TRAIN REGULARLY

When you want to score a financial victory,

one can start small too. You can probably
start by making some small goals of as little
as `1000 a month, i.e. sock away `1000 in a
mutual fund.

All great football teams have excellent

coaches. The same goes with your need to
score more financial goals. Here you may
need a financial coach. You can have a
financial planner who will give you the
technical aspects of crafting an investment
strategy that is suited to your strengths. A
good advisor will break-down your goals
into short- and long-term goals, and create
a roadmap for you to achieve them.

As you gain in confidence, start to increase

the amount of investment you make every
month. The important thing is to climb the
ladder and increase your investment
amounts to funds, which could be every
year or every six months, i.e. take longer
shots at the goal such as `5000-10000
every month. After a few years, when you
look back your small investments could
have turned into a small fortune.

It is equally important to get a hang of

investments by researching and reading
some more, and some more. There are
plenty of good books available which can
enable you to take steps towards your
financial goals better.

The winning goal - Get on the field

All the above goals are useless if you do not get on the field and start
playing. That is the only way you will start to score goals and successes in
your financial life. The moot point is that even if you do not know how to
do the right thing, the important thing is to slowly start and build the
required expertise and the right financial muscle to be able to make the
right financial moves to strike a goal.
If that is not-so-easy as it sounds for you, there are systems available that
can help you automate some of your financial tasks. Sometimes, for a
few of us taking the trouble to fill out a form can be a chore. Here is when
you can take advantage of the systematic investment plan, which
automatically sees money going out from your account into an
investment of your choice. With a system of learning, practice and
savings in place you should be able to score more financial goals and
successes.

This should probably be a very important

goal. Most of us can spend a lot of money
on simple joys of life such as going out to
the movies, or buying the next and latest
hot gadget. It is not that you should not. In
fact, you should give your-self some leg
room to spend.
But sometimes the better thing to do is to
tell yourself to stop spending on things you
do not need, and instead channel that
money into mutual funds. If you imagine it
as an expense account for example, you
will not find the need to track it, and this
way you can give it the time it needs to
mature and grow in a good mutual fund.
In the beginning, however, it is very critical
that you save as you go. You have to make
savings a vital, must-do task on your list. In
the beginning, you may not know where to
save (this can come later), but socking
some money away is crucial. Maybe one
can begin by a liquid or short-term debt
fund, or even sock the money under your
mattress, but saving regularly and slowly
increasing your savings is important.

08

IPRU Insights | October 2014

FUNDACLEAR

What is net asset

value

or NAV?
And why investors should not mistake it with the
concept of par-value at all

IPRU Insights | October 2014

09

t is the one of the most common term

you will come across when dealing in
mutual funds. It is also the most vital metric
which every investor must know
thoroughly as it assesses the worth of your
mutual fund holdings. Since, investors
invariably deal with it on a regular basis,
perhaps even daily, if you are following the
newspapers price-listing columns, it is
essential that you know what its
components are and how it is calculated.
Net asset value, or the more often used
nomenclature NAV, is the total value of all
the schemes assets and holdings such as
investment in shares, warrants or
debentures, corporate bonds, and other
securities, out of which any liabilities or
payables are reduced, and this is adjusted
or divided by the number of mutual fund
units that are outstanding.
Essentially, it is the value of a single unit of
a mutual fund scheme.
Net asset value (NAV) is the price that you
pay for a unit that is calculated on a daily
basis by asset management companies
and it provides the reference point on

which investors are able to transact (buy or

sell) mutual fund units.
IT IS NOT PAR VALUE
Sometimes many mutual fund investors
may mistakenly think that if the net asset
value of a mutual unit is `10, then it is par
value. That is incorrect.
The concept of par value should not and
does not apply to NAV. Net asset value is
the sum of all assets and holdings of a
mutual fund unit. These prices are
determined by the movements taking
place in the market. If the prices of the
holdings rise, then the net asset value will
rise, and if prices fall, then the NAV dips
too.
Investors may mistakenly confuse
between two very inherently different
structures of equity investment of - equity
at face value and mutual fund units at par
value. But investors should avoid thinking
that it represents face value of an equity
share or the par value.
The confusion arises because new fund
offerings (NFOs) are normally launched at a

unit price of `10, which will be its initial

NAV to start with. In this case, the funds
holdings will largely comprise of cash
which the investors have parked with the
fund. This cash will then later be deployed
in the market at then prevailing prices, or
the prices at which the securities are
traded.
At any given time, as the mutual fund units
are a net representation of the market value
of a funds holdings per unit, the concept of
par value should not apply at all. So even if a
funds NAV is 15, it does not mean that
investors are getting into a fund that is
expensive, it just simply means that
investors are getting in a fund at current
prices.
If the NAV is higher than NAV you bought
into a mutual fund, then you would have
made gains, and vice versa. Hence, NAVs
should just be used to gauge only at what
the price you are entering and exiting a
fund, and whether you have been able to
gain from the market and the fund
managers expertise or not.

HOW NAV IS CALCULATED

As it refers to the value of a single fund or unit, it is very simple to
understand how it is calculated.

The formula to calculate the NAV:

NAV = Assets - Current liabilities (if any) /
number of units outstanding

HOW NAV WORKS

Essentially, it is calculated based on the closing prices of the stocks and other holdings it has
every day. Let us take an example to explain this. Assume that ABC Mutual fund holds shares
whose market worth as on yesterdays closing prices on the stock exchange totals `1 crore.
ABC Fund also has cash balance of `12 lakh, and liabilities of `2 lakh. If the fund has 10 lakh
outstanding units, then the yesterdays NAV would be calculated as follows:
NAV = (`1 crore + `12 lakh `2 lakh) / 10 lakh units = `11.00
Hence, the Net Asset value of ABC fund is `11 yesterdays close.
A mutual funds NAV can rise or fall depending on how the value of its holdings rises or falls
in the markets. NAVs will fall when a fund declares a dividend in the scheme. Let us take an
example again to explain this. Assume ABC Fund declares a dividend of `1 per unit. The fund
will distribute `10 lakh as dividend to its existing unit holders. This will bring down the net
asset value of ABC Fund to `10. Investors buying the shares after the dividend is announced
will not be entitled to the dividends, and will get new units at the unit value of `10.

10

IPRU Insights | October 2014

Product of the Month

ICICI Prudential

Dynamic Plan
T

investment-worthy sectors and to get a view

of large cap versus mid-cap allocation.

ICICI Prudential Dynamic Plan seeks to

capture upside by increasing allocation to
equity when the markets are declining and
by reducing exposure to equities when
markets are rising- completely reverse of
what retail investors normally do.

For stock selection, both the macro and

bottom-up factors are taken into
consideration. The fund gradually
builds/brings down a sector or stock skew
based on the valuation or conviction. The
scheme invests across market capitalisation
(large, mid and small) based on
attractiveness of valuation across the
segments. The Fund Manager actively
manages exposure to those sectors on
which he holds a contrarian view.

he equity markets have soared to new

heights and a general tendency of Indian
investors is to invest in equity when the
markets are surging high, while pull
out money when the markets are
underperforming- which may not necessarily
lead to the best investment experience.

The defensive asset allocation and fund

managers stock selection strategy has led
this fund to outperform its benchmark
index over various time periods and create
wealth for its investors. Even during a weak
market sentiment, the fund had shown
prowess and more so, has been able to
limit the volatility.
Strategy
Top-down and bottom-up strategies, both
play an important role. The fund starts with a
top-down strategy to reach at the

The flexibility of higher allocation to cash in an

expensive/volatile market and higher
allocation to equity during inexpensive
market is one of the distinguishing features of
the Scheme. The scheme is structured with
an intent to benefit from volatility.

Outlook
There is a sense of optimism and
increase in confidence about the
outlook of Indian economy. A stable
and strong government is expected to
create a conducive environment for
business and provide a clear frame
work for growth and investment revival
which could ultimately lead to
economic recovery. The interest rates
and inflation are likely to moderate
towards the downward trajectory. The
fund is positioned with intent to benefit
from the economic revival in the offing.
The fund is currently overweight on
Power sector considering it as a
defensive bet in terms of valuations. It is
also a direct beneficiary of reforms in the
Public Sector Undertaking (PSU) space.

The composition of scheme in terms of

equity, fixed income and cash is guided by
an in-house Price to Book Value (PBV) model
in which current market levels are compared
to the fair value range to determine under or
over valuation of the market.

Lumpsum Returns of Regular Plan - Growth Option as on June 30, 2014

June 30, 2013 to
June 30, 2014

June 30, 2012 to

June 30, 2013

June 30, 2011 to

June 30, 2012

Absolute Returns
(%)

Absolute Returns
(%)

Absolute Returns
(%)

Scheme

54.48

4.01

CNX Nifty Index

30.28

NAV (`) Per Unit

(as on June 30,
2014: 169.0694)

109.45

Particulars

IPRU Insights | October 2014

Since Inception*
Current Value
of Investment
of `10000

CAGR (%)

-2.51

169069.40

27.42

10.67

-6.53

80001.58

19.50

105.23

107.94

10.00

11

SIP Returns for Regular Plan Growth Option as on June 30, 2014
Since
Inception* SIP

10 years SIP

5 years SIP

3 years SIP

1 year SIP

282

240

120

72

24

Market Value as on Month

End (`000)

1178.10

664.51

193.87

108.37

31.63

Scheme Returns (%) CAGR

22.54

19.34

19.28

28.49

64.13

CNX Nifty Returns (%) CAGR

15.11

12.92

13.07

20.53

45.12

SIP Investments
Total Amount Invested
(`000)

Past performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with
other investment. For lump sum - For computation of since inception returns (%) the allotment NAV has been taken as `10.00. Load
is not considered for computation of returns. In case, the start/end date of the concerned period is a non-business date, the NAV of
the previous date is considered for computation of returns. In case of SIP, returns are calculated by XIRR approach assuming
investment of `2000/- on the 1st working day of every month. XIRR helps in calculating return on investments given an initial and
final value and a series of cash inflows and outflows with the correct allowance for the time impact of the transactions. Total
schemes managed by Mr. Sankaran Naren is 5 (5 are jointly managed) and Mr. Mittul Kalawadia is 3 (3 are jointly managed). Refer to
the table below for performance of schemes currently managed by fund managers. *Date of inception: 31-Oct-02. Benchmark is
CNX NIFTY Index.

Performance of other open-ended scheme managed by Mr.Sankaran Naren & Mr. Mittul Kalawadia
June 30,
2013 to
June 30,
2014

June 30,
2012 to
June 30,
2013

June 30,
2011 to
June 30,
2012

Since Inception*

Absolute
Returns
(%)

Absolute
Returns
(%)

Absolute
Returns
(%)

Current Value CAGR

of Investment (%)
of `10000

ICICI Prudential Top 100 Fund

47.67

6.68

1.18

215780

21.18

CNX Nifty Index

30.28

10.67

-6.53

79198.27

13.82

NAV (`) Per Unit

(as on June 30,
2014 : 215.78)

146.12

136.97

135.37

10.00

Scheme Name

Inception
Date

Fund Managed by Mr. Sankaran

Naren & Mr. Mittul Kalawadia
9-Jul-98

Past performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison
with other investment. For computation of since inception returns the allotment NAV has been taken as Rs. 10.00. Load is not
considered for computation of returns. In case, the start/end date of the concerned period is non business date (NBD), the NAV
of the previous date is considered for computation of returns. The NAV per unit shown in the table is as on the start date of the
said period.

12

IPRU Insights | October 2014

Growth of `1,00,000

Past performance may or may not be sustained in future. The above data has been prepared
showing CAGR returns on an investment of `1, 00,000.

Equity Allocation Vs Market Movement

LHS: Equity exposure of ICICI Prudential Dynamic Plan in percentage (%) terms
RHS: CNX Nifty Index

ICICI Prudential Dynamic Plan

This product is suitable for investors who are seeking*:

Long term wealth creation solution

A diversified equity fund that aims for growth by investing in equity & debt
(for defensive considerations)

High Risk
(BROWN)

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
Note - Risk may be represented as:
(BLUE) investors understand
that their principal will be at
low risk

IPRU Insights | October 2014

(YELLOW) investors
understand that their principal
will be at medium risk

(BROWN) investors
understand that their principal
will be at high risk

13

HAPPENINGS AT ICICI PRUDENTIAL MUTUAL FUND

A low down on
ICICI Prudential Mutual Fund
Pru Tracker
D

o you want a single window to see all

your mutual funds at one place? Do
you want to buy or redeem mutual funds
easily with the click of a button? Or even
set triggers of entering and exiting a fund?
Or switch and invest in a new fund? Then
you must check out the ICICI Prudential
Mutual Fund Pru Tracker.
Many of our investors are using the Pru
Tracker to easily navigate through a host of
mutual fund functions and make the most

of their investments. In fact, Pru Tracker

allows you to do to more than just transact
in mutual funds. It gives you a complete
picture of your investments with us and
makes mutual fund investing with us a
good investment experience.
Investors can not only have a look at their
account statements, but also set multiple
triggers and set up their limits for
automatic investments. In fact, if you have
not yet seen the Pru Tracker, then you are

probably missing a vital tool that can help

you to connect with us regularly and stay in
touch with your investments with us.
In fact, we think you must check out the link
now:
https://www.icicipruamc.com/PruTracker/
APP/ASPX/frmLogin.aspx
If you have any suggestions for
improvement, please feel free email us.
Enjoy!

PRU TRACKER

14

IPRU Insights | October 2014

Contact Us
Ahmedabad: 307, 3rd Floor, Zodiac Plaza, Beside Nabard Vihar, Near
St. Xaviers College Corner, H.L. Collage Road, Off C. G. Road,
Ahmedabad 380009, Gujarat

Mumbai Fort: ICICI Prudential Asset Management Co Ltd, 2nd Floor,

Brady House,12/14 Veer Nariman Road Fort, Mumbai 400001,
Maharashtra

Anand: 109-110, Maruti Sharnam Complex, Opp. Nandbhumi Party

Plot Anand Vallabh Vidyanagar Road, Anand - 388001, Gujarat

Mumbai - Goregaon: 2nd Floor, Block B-2, Nirlon Knowledge Park,

Western Express Highway, Goregaon, Mumbai 400013, Maharashtra

Bangalore (M G Road): Phoenix Pinnacle, First Floor, Unit 101 -104,

No 46, Ulsoor Road, Bangalore 560042, Karnataka

Mumbai-Borivli: ICICI Prudential Mutual Fund, Ground Floor,

Suchitra Enclave Maharashtra Lane, Borivali (West), Mumbai 400092,
Maharashtra

Baroda: 2nd Floor, Offc No 202, Goldcroft, Jetalpur Road, Alkapuri,

Vadodara 390007, Gujarat
Bhopal: MF-26/27 Block- C, Mezzanine Floor, Mansarovar Complex,
Hoshangabad Road, Bhopal-462016, Madhya Pradesh
Bhubhaneshwar: Rajdhani House, 1st Floor, Front Wing, 77, Janpath,
Kharvel Nagar, Bhubhaneshwar 751001, Orissa
Chandigarh: SCO 137-138, F.F, Sec-9C, Chandigarh 160017,
Chandigarh
Chennai- Lloyds Road: Abithil Square,189, Lloyds Road,Royapettah,
Chennai 600014, Tamil Nadu

Mumbai-Khar: ICICI Prudential Mutual Fund, 101, 1st Floor, Abbas

Manzil, Opposite Khar Police Station, S. V. Road, Khar (W), Mumbai
400052, Maharashtra
Mumbai-Thane: ICICI Prudential Mutual Fund, Ground Floor, Mahavir
Arcade,Ghantali Road, Naupada, Thane West, Thane 400602,
Maharashtra
Mumbai-Vashi: ICICI Prudential AMC Ltd, Devavrata Co-op Premises,
Plot No 83, Office No 26, Gr Floor, Sector 17, Vashi, Navi Mumbai
400703, Maharashtra

Cochin: #956/3 & 956/4 2nd Floor, Teepeyam Towers, Kurushupally

Road, Off MG Road, Ravipuram , Kochi 682015, Kerala

Nagpur: 1st Floor, Mona Enclave, WHC Road, Near Coffee House
Square, Above Titan Eye Showroom, Dharampeth, Nagpur 440010,
Maharashtra

Coimbatore: Shylaja Complex, First Floor, No 575 C, D.B. Road,

Near Post Office Signal, R. S. Puram, Coimbatore 641002, Tamil Nadu

Nashik: Shop No 1 Rajeev Enclave Near Old Muncipal Corporation,

New Pandit Colony, Nashik 422002, Maharashtra

Dehradun: 1st Floor, Opp. St. Joseph school back gate, 33, Subhash
road, Dehradun 248001, Uttaranchal

New Delhi: 12th Floor Narain Manzil,23 Barakhamba Road, New Delhi

Durgapur: Mezzanine Floor, Lokenath Mansion, Sahid Khudiram

Sarani, CityCentre, Durgapur 713216, West Bengal
Guwahati: Jadavbora Complex, M.Dewanpath, Ullubari, Guwahati
781007, Assam
Hyderabad-Begumpet: Gowra Plaza, 1st Floor, No: 1-8-304307/381/444, S.P.
Road, Begumpet, Secunderabad, Hyderabad
500003, Andhra Pradesh
Indore: 310-311 Starlit Tower,29/1 Y N Road, Indore 452001, Madhya
Pradesh
Jaipur: Building No 1, Opp Amrapura Sthaan, M.I. Road, Jaipur
302001, Rajasthan
Jamshedpur: Office # 7, II Floor, Bharat Business Centre, Holding # 2,
Ram Mandir Area, Bistupur, Jamshedpur 831001, Jharkhand
Kalyani: B- 9/14 (C.A), 1st Floor, Central Park, Dist- Nadia, Kalyani
741235, West Bengal
Kanpur: 516-518, Krishna Tower, 15/63, Civil Lines,Opp. U.P. Stock
Exchange, Kanpur 208001, Uttar Pradesh
Kolhapur: 1089, E Ward, Anand Plaza, Rajaram Road, Kolhapur
416001, Maharashtra
Kolkata - Dalhousie: Room no. 302, 3rd Floor, Oswal Chambers,2,
Church Lane, Kolkata 700001, West Bengal
Kolkata - Lords : 227, AJC Bose Road, Anandalok, 1st Floor, Room
No. 103/103 A, Block - B, Kolkata 700020, West Bengal
Lucknow: 1st Floor, Modern Business Center,19 Vidhan Sabha Marg,
Lucknow, 226001, Uttar Pradesh
Ludhiana: SCO 121, Ground Floor, Feroze Gandhi Market, Ludhiana
141001, Punjab

IPRU Insights | October 2014

110001, New Delhi

Noida: F-25, 26 & 27, First Floor,Savitri market, Sector-18, Noida
201301, Uttar Pradesh
Panjim: Sandeep Apts, Shop No. 5 & 6, Grond Floor, Next to Hotel
Samrat, Dr. Dada Vaidya Road, Panaji 403001, Goa
Patna: 1st Floor, Kashi Place, Dak Bungalow Road, Patna 800001,
Bihar
Pune: 1205 /4/6 Shivaji Nagar, Chimbalkar House, Opp Sambhaji
Park, J M Road, Pune 411004, Maharashtra
Raipur: 3rd Floor, Tank Business Tower, Near Fafadih Chowk, Raipur 492001
Rajkot: Office no 201, 2nd Floor, Akshar X, Jagannath-3, Dr. Yagnik
Road, Rajkot 360001, Gujarat
Siliguri: Ganapati Plaza, 2nd Floor, Sevoke Road, Siliguri 734001,
West Bengal
Surat: HG 30, B Block, International Trade Center, Majura Gate, Surat
395002, Gujarat
Udaipur: Shukrana, 6 Durga Nursery Road, Near Sukhadia Memorial,
Udaipur 313001, Rajasthan
Varanasi: D-58/2, Unit No.52 & 53,Ist Floor, Kuber Complex,Rath
Yatra Crossing, Varanasi 221010, Uttar Pradesh
Email:trxn@icicipruamc.com
Toll Free Numbers: (MTNL/BSNL) 1800222999; (Others)
18002006666.
For additional official transaction acceptance points visit our Website:
www.icicipruamc.com

15

16

IPRU Insights | October 2014

IPRU Insights | October 2014

17

ICICI Prudential Value Fund- Series 1, Series 2, Series 3, Series 4

This product is suitable for investors who are seeking*:

Long term wealth creation solution

Close-ended diversified equity funds that aims to provide capital appreciation by
investing in a well diversified portfolio of stocks through fundamental analysis.

High Risk
(BROWN)

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Note - Risk may be represented as:

(BLUE) investors understand

that their principal will be at
low risk

(YELLOW) investors understand

that their principal will be at
medium risk

BROWN) investors understand

that their principal will be at
high risk

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Limited (the AMC) has
used information that is publicly available, including information developed in-house. Some of the material used in the document
may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available
to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources.
The AMC, however, does not warrant the accuracy, reasonableness and / or completeness of any information. We have included
statements / opinions / recommendations in this document, which contain words, or phrases such as will, expect , should,
believe and similar expressions or variations of such expressions that are forward looking statements. Actual results may differ
materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations
with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries
globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation,
unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, etc. The AMC (including its
affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not be liable for any loss,
damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of
profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any
decision taken on this material. All figures and other data given in this document are dated and the same may or may not be relevant
in future. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other
financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. The sector(s) mentioned in this
newsletter do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future
position in these sector(s).

18

IPRU Insights | October 2014