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Key rates
Closing
value
Weekly
Mthly
Yearly
Inflation*
-2.06
-2.06
-0.39
5.03
91 Days T-Bill
8.27
8.36
8.18
9.07
8.12
7.97
8.05
8.97
7.72
7.69
7.69
8.86
MIBOR
7.79
7.90
7.53
8.08
0.38
0.39
0.36
0.33
7.55
7.64
7.72
8.02
Repo Rate^
7.50
7.50
7.75
8.00
Reverse Repo^
6.50
6.50
6.75
7.00
CRR
4.00
4.00
4.00
4.00
SLR
21.50
21.50
22.00
23.00
8.75
8.75
8.75
9.00
Bank Rate
Government data showed that the Wholesale Price Inflation (WPI) fell to (-) 2.06% in February. This is the fourth consecutive month
when the WPI-based inflation remained in the negative zone. The wholesale price-based inflation stood at (-) 0.39% in January.
On the global front, the European Central Bank (ECB) revised its inflation forecast for this year to 0% from its previous 2015 inflation
forecast of 0.7%. The ECB further added that it will commence its monthly 60-billion ($66.3 billion) bond purchases on March 9. The
U.S. Federal Reserve Chief in her testimony said that changing the language of its forward guidance does not mean that a rate hike is
imminent.
After falling in the last five months, bond yields rose marginally in February. Bond yields rose initially as the Central Bank did not give
any indication as to when further interest rate easing may take place. Sharp rise in international crude oil prices raised domestic
inflationary concerns which further hit the bond markets. Yields rose further on reports that the Government will complete its bond
buyback/switch program by March 31 for which Rs. 50,000 crore was provided in the Union Budget 2014-15. The Government has
bought back securities worth Rs. 18,800 crore during the current financial year. However, buying by Foreign Portfolio Investors on
hopes of monetary policy easing and growing optimism over a reforms-oriented Budget provided some support to the bond market.
The yield on the 10-year benchmark bond increased 3 bps to close at 7.72% against the previous months close of 7.69%, after moving
in the broad range of 7.65% to 7.74% over the month.
Bond / Debt Outlook: Investors will continue to track the movement of the rupee and global crude oil prices. The stance to be adopted by
the FPIs and developments in the Euro (especially Greeces Debt situation) and U.S. region will also remain in sharp focus. Steps taken by
the Government in bringing fiscal consolidations and implementing its budgetary proposals will also be closely watched. Along with it,
market participants will also track monetary policies adopted by the Central Banks across the globe. During March, the Central Bank will
conduct auction of 91-days, 182-days and 364-days Government of India Treasury Bills for an aggregate amount of Rs. 56,000 crore.
Conservative
70-75%
15-20%
10-15%
10-15%
5-10%
10-15%
20-25%
Moderately Conservative
75-80%
10-15%
10-15%
5-10%
10-15%
20-25%
15-20%
Sharekhan
Moderately Aggressive
80-85%
5-10%
5-10%
5-10%
15-20%
25-35%
10-15%
Mutual Gains
Investment strategy
The RBI cut interest rates for the second time since the beginning of 2015, both times outside its monetary policy review. Even though the
rate cut, caught the markets by surprise, bond yields did not plummet. Instead, the rise in global crude prices exerted pressure on bond
yields. The Union Budget was on expected lines with respect to fiscal consolidation. In the absence of major triggers, the movement of
bond yields is likely to remain muted till the next monetary policy on April 7. As a result, investors can continue to invest in a portfolio
similar to Moderately Aggressive funds as a fall in yields will improve returns.
Research Process
The model portfolio has been determined on the basis of the risk-return trade-off offered by various asset classes. As the risk appetite of
the investor increases, the return expectation also increases. The portfolio volatility as measured by the standard deviation of the
inherent asset classes has been used as a surrogate of risk. Allocation has been ascertained keeping in mind the trade-off between higher
volatility in returns and the safety of capital. Therefore, while gilt funds are the most secure, the relatively higher volatility in returns may
not be suitable for a conservative investor; at the same time a moderately conservative investor will be able to absorb the gyrations in
returns. The model portfolio has been expressed in ranges to offer flexibility in creating actual portfolios.
Scheme Name
Returns (%)
(Simple Annualized)
AAUM **
(Rs Crs)
1Mth
3 Mths
6Mths
Exp*
Ratio
(%)
Avg.
Mat
(Days)
1 Yr
AA/AA+
Below
AA
Cash &
Call
353.3
0.4
19.3
28.9
30.8
0.4
--
57.8
2.7
1.4
38.2
328.4
-2.6
17.6
23.3
25.2
2.3
2909
51.0
20.2
--
28.8
186.7
-5.3
7.4
11.0
20.7
1.8
244
63.4
--
--
36.6
475.9
1.8
14.5
19.5
24.1
1.7
2030
51.4
19.4
--
29.2
226.7
1.4
14.5
20.1
20.0
1.3
--
65.4
9.2
4.2
21.2
4.5
13.7
17.8
19.3
Income Funds
Funds that invest in income bearing instruments with any maturity and across the yield curve to generate regular income, such as
corporate bonds, gilts, treasury bills, certificates of deposit and commercial papers etc.
Scheme Name
Returns (%)
(Simple Annualised)
AAUM **
(Rs Crs)
1Mth
3 Mths
6Mths
Exp*
Ratio
(%)
Avg.
Mat
(Days)
1 Yr
AA/AA+
Below
AA
Cash &
Call
612.6
9.1
8.4
8.7
9.5
0.4
357
99.6
--
--
0.4
1528.1
7.0
12.3
15.1
14.3
1.9
1770
21.4
43.0
31.0
4.7
431.6
6.4
17.2
16.7
15.9
1.2
4979
87.9
7.1
--
5.0
222.4
5.8
19.8
20.0
15.5
2.0
3971
86.6
--
--
13.4
160.6
7.0
19.5
21.5
16.7
1.9
6086
86.6
9.5
--
3.9
5.5
13.4
16.7
15.5
Sharekhan
Mutual Gains
Scheme Name
Returns (%)
(Simple Annualised)
AAUM **
(Rs Crs)
1Mth
2459.7
1531.4
405.6
9638.2
5426.3
3 Mths
Exp*
Ratio
(%)
6Mths
Avg.
Mat
(Days)
1 Yr
6.4
7.2
2.3
5.2
6.1
11.3
10.4
11.0
17.2
9.5
13.9
11.9
11.4
19.8
11.4
13.0
11.6
10.7
16.0
11.4
6.9
9.2
10.5
10.7
0.6
1.7
1.5
1.3
0.3
-1482
1332
---
AA/AA+
Below
AA
Cash &
Call
80.4
37.8
61.3
67.5
81.2
8.6
19.5
21.0
3.4
13.5
-39.5
----
11.0
3.3
17.8
29.1
5.4
Scheme Name
Returns (%)
(Simple Annualised)
AAUM **
(Rs Crs)
10908.8
2721.3
1066.2
2346.2
1738.0
1Mth
3 Mths
7.5
7.5
6.4
7.6
9.9
8.0
Exp*
Ratio
(%)
6Mths
1 Yr
8.2
9.4
7.3
7.6
8.7
9.0
9.9
7.9
7.7
8.9
9.6
10.3
8.6
8.1
9.4
8.3
8.6
9.2
0.2
0.8
2.0
1.8
0.5
Avg.
Mat
(Days)
-405
137
27
1011
AA/AA+
Below
AA
Cash &
Call
63.7
19.9
78.2
86.2
74.3
17.7
38.1
22.0
3.5
14.8
-32.5
----
18.5
9.6
-0.2
10.3
10.9
Scheme Name
Returns (%)
(Simple Annualised)
AAUM **
(Rs Crs)
860.6
4064.3
417.6
225.2
1938.5
1Mth
3 Mths
7.0
8.2
7.0
6.9
8.1
8.0
Exp*
Ratio
(%)
6Mths
1 Yr
7.7
8.3
8.0
7.6
8.4
8.3
8.6
9.1
8.8
8.9
8.9
8.9
9.2
9.1
9.3
8.3
8.6
9.2
1.2
0.6
0.9
0.6
0.1
Avg.
Mat
(Days)
150
730
369
221
21
AA/AA+
72.7
76.8
91.3
82.0
99.9
12.1
18.6
7.8
12.5
--
Below
AA
------
Cash &
Call
15.2
4.7
0.9
5.5
0.1
Liquid Fund
Funds investing only in short-term money market and debt instruments that mature in up to 91 days such as treasury bills, commercial
paper and certificates of deposit.
Scheme Name
Returns (%)
(Simple Annualised)
AAUM **
(Rs Crs)
1Mth
3 Mths
Exp*
Ratio
(%)
6Mths
Avg.
Mat
(Days)
1 Yr
AA/AA+
Below
AA
Cash &
Call
1674.4
8.3
8.4
8.6
9.0
0.1
33
97.7
--
--
2.3
17292.3
8.4
8.4
8.6
9.1
0.1
21
81.2
0.4
--
18.4
5989.1
8.4
8.5
8.7
9.1
0.1
27
91.0
--
--
9.1
2022.6
8.4
8.4
8.6
9.0
0.1
33
76.2
0.8
--
23.0
5959.7
8.3
8.4
8.6
9.0
0.1
30
94.2
--
--
5.8
8.0
8.3
8.6
9.2
Sharekhan
Mutual Gains
Gilt Funds
Funds which invest only in government securities of different maturities with virtually no default risk.
Scheme Name
Returns (%)
(Simple Annualised)
AAUM **
(Rs Crs)
1Mth
287.8
191.7
463.0
299.4
427.1
3 Mths
Exp*
Ratio
(%)
6Mths
Avg.
Mat
(Days)
1 Yr
9.3
8.5
6.6
6.5
6.5
27.9
26.4
23.8
24.2
23.1
29.0
28.6
26.2
27.1
26.3
23.2
23.7
20.9
23.3
20.4
1.3
13.6
13.1
12.1
1.3
0.8
1.7
0.6
1.4
7450
9413
6939
7096
--
97.7
95.1
96.7
97.7
95.8
AA/AA+
Below
AA
------
Cash &
Call
------
2.3
5.0
3.3
2.3
4.2
Methodology
We have identified the best debt-oriented schemes available in the market today based on the following 5 parameters: Avg. rolling returns
for one and two years, Sharpe ratio, Fama (net selectivity), Credit quality and Average Maturity. Credit quality-10%, Avg.Maturity-10%,
Avg.rolling returns for 1 and 2 years 20% each, Sharpe-20% and FAMA (net selectivity)-20%.
Tax rates
Tax on distributed income (payable by the scheme) rates
Scheme Type
Individual
Domestic Companies
NRI
Nil
Nil
Nil
28.84%
25% + 12% Surcharge** + 3% Cess
34.608%
30% + 12% Surcharge** +3% Cess
28.84%
25% + 12% Surcharge** + 3% Cess
28.84%
25% + 12% Surcharge** + 3% Cess
34.608%
30% + 12% Surcharge** + 3% Cess
28.84%
25% + 12% Surcharge** + 3% Cess
28.84%
25% + 12% Surcharge** + 3% Cess
34.608%
30% + 12% Surcharge** + 3% Cess
5.768%
5% + 10% Surcharge** + 3% Cess
Individual/ HUF
Domestic Company
NRI
Nil
Nil
Nil
Nil
Nil
Nil
Capital Gains
Long Term Capital Gains (Units Held for more than 12 months)
Scheme Type
Equity oriented schemes
Individual/ HUF$
Domestic Company @
NRI$/#
Nil
Nil
Nil
Sharekhan
Mutual Gains
Short Term Capital Gains (Units Held for 12 months or less)
Scheme Type
Individual/ HUF$
Domestic Company @
NRI$/#
15%
15%
15%
30%^
30%
30%^
15%
Nil
30%
20%##
30%
10%
* Securities transaction tax (STT) will be deducted on equity funds at the time of redemption/ switch to the other schemes/ sale of units.
** Effective from June 1, 2013.
$ - Surcharge at the rate of 10% is proposed to be levied in case of individual/ HUF unit holders where their income exceeds Rs 1 crore.
@ - Surcharge at the rate of @ 5% is proposed to be levied for domestic corporate unit holders where the income exceeds Rs 1 crore but less than Rs. 10 crore and at the rate of
10% where income exceeds Rs. 10 crore.
# - Short term/ long term capital gain tax will be deducted at the time of redemption of units in case of NRI investors only.
## - After providing for indexation ^ Assuming the investor falls into highest tax bracket.
Category Write-up
India equity markets recorded moderate gains with the key benchmark indices, S&P BSE Sensex and CNX Nifty, rising by 0.61% and 1.06%,
respectively. Proposals made in the Union Budget for 2015-16, outcome of Delhi elections and recovery in global crude oil prices mainly
impacted the movement of markets over the month. The returns in the MIP category fell marginally, to 17.49%.
Bond yields rose marginally in February, after falling in the last five months. The Central Banks Monetary Policy, domestic inflation
numbers and international oil prices mainly dictated the movement in the bond market over the month. Later during the month, market
participants did not take large positions ahead of the first full Budget of the Government, which limited the movement of bond yields.
Rise in yields during the month trimmed returns (one-year period and one-month rolling returns) across the debt categories except Debt
floating rate and Liquid funds. The major impact of rise in yields was witnessed on the Gilt Long Term and Debt Income categories where
rolling returns stood at 15.25% and 11.74%, respectively. Returns also slowed down in Gilt ST, Debt Short Term and Ultra Short Term
categories to 9.42%, 9.98% and 8.43%, respectively. On the contrary, returns from Floating Rate Funds improved to 9.02% while returns in
the Liquid category remained steady at 8.22%.
Sharekhan
Mutual Gains
Methodology
The bubble diagram gives you a snapshot of how the mutual funds have performed on the risk return parameter in the past. We have used
bubble analysis method to measure their performance on two parameters i.e. Average rolling returns and Standard deviation. For all
funds, we have considered one month rolling and periodic frequency for the period of one year, as on February 28, 2015.
Forthcoming NFOs
Fund House
Scheme Name
Open Date
Close Date
Structure
Nature
24-Mar-15
07-Apr-15
Close Ended
27-Mar-15
30-Mar-15
Close Ended
12-Mar-15
25-Mar-15
Close Ended
19-Mar-15
23-Mar-15
Close Ended
18-Mar-15
23-Mar-15
Close Ended
24-Mar-15
24-Mar-15
Close Ended
Disclaimer
Nothing in this report constitutes investment advice or tax advice in any form and these products may or may not be suitable for you. Investors should make independent judgment taking into account specific investment objectives,
financial situations and needs before taking any investment decision. Mutual fund investments are subject to market risk. Please read the offer document carefully before investing. Past performance may or may not be sustained in the
future.
This document has been prepared by Sharekhan Ltd. (SHAREKHAN) and is intended for use only by the person or entity to which it is addressed to. This document may contain confidential and/or privileged material and is not for any type
of circulation and any review, retransmission, or any other use is strictly prohibited. This document is subject to changes without prior notice. This document does not constitute an offer to sell or solicitation for the purchase or sale of
any financial instrument or as an official confirmation of any transaction. Though disseminated to all customers who are due to receive the same, not all customers may receive this report at the same time. SHAREKHAN will not treat
recipients as customers by virtue of their receiving this report.
The information contained herein is obtained from publicly available data or other sources believed to be reliable and SHAREKHAN has not independently verified the accuracy and completeness of the said data and hence it should not
be relied upon as such. While we would endeavour to update the information herein on a reasonable basis, SHAREKHAN, its subsidiaries and associated companies, their directors and employees (SHAREKHAN and affiliates) are under
no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. Sharekhan provides non-advisory/order execution services
for Mutual Funds. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Mutual fund investments are subject to market risk. Please read the offer
document carefully before investing. Also, Recipients of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The user assumes the entire
risk of any use made of this information. Each recipient of this document should make such investigations as he deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do
not undertake to advise you as to any change of our views. Affiliates of SHAREKHAN may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
This 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 SHAREKHAN and affiliates to any registration or licencing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Either SHAREKHAN or its affiliates or its directors or employees/
representatives/clients or their relatives may have position(s), make market, act as principal or engage in transactions of purchase or sell of securities, from time to time or may be materially interested in any of the securities or related
securities referred to in this report and they may have used the information set forth herein before publication. SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company
mentioned herein. Without limiting any of the foregoing, in no event shall SHAREKHAN, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any
kind. The analyst certifies that all of the views expressed in this document accurately reflect his or her personal views about the subject company or companies and its or their securities and do not necessarily reflect those of SHAREKHAN.
Further, no part of the analysts compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document.
Compliance Officer: Ms. Namita Amod Godbole; Tel: 022-6115000; e-mail: compliance@sharekhan.com Contact: myaccount@sharekhan.com
Sharekhan