market kam ho ya zyada, advantage rakhne ka ek …...market kam ho ya zyada, advantage rakhne ka ek...
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Edelweiss Balanced Advantage FundMay 2019
Market kam ho ya zyada,
Advantage rakhne ka
ek balanced irada!
FOLLOWING ARE TYPES OF ASSET ALLOCATION
2
Asset Allocation – How?
Types of Asset
Allocation
Static:
Invest in various asset classes such as stocks and bonds with precise amount
within each type.
Dynamic:
Rotate among stocks, bonds and cash with changing market situations
DIFFICULTIES IN FOLLOWING ASSET ALLOCATION
3
Asset Allocation is easy said than done
Hence, most investors choose static50-50 Asset Allocation Strategy
Choosing right allocation in each asset class
Rebalance portfolio with frequently changing market dynamics
Market noise generally leads to bias opinions
Controlling Sentiments
Tax Efficiency while rebalancing the portfolio
4
Dynamic Asset Allocation – A superior approach
Dynamic Asset Allocation is best way of Asset Allocation as it• Reduces probability of negative return in short term• Provides better investment experience than pure equity or static asset allocation
Investment Period
Probability of negative returns (Days with negative returns/Total no. of days)
Pure EquityStatic Equity
Allocation(50% Eqt, 50% Debt)
Dynamic Equity Allocation (30-80%
Equity)
1 year 33% 21% 10%
3 year 20% 5% 0%
5 year 13% 0% 0%
10 years 1% 0% 0%
5
Two Dynamic Asset Allocation Models
Counter Cyclical vs Procyclical
Counter Cyclical
• Based on Fundamentals i.e. PE, PB andDividend Yield
• Aims to gradually reduce equityexposure in a bull cycle and increaseequity exposure during the bearmarket cycle
Edelweiss Procyclical Model
• Based on quantitative factors coupledwith fundamentals.
• Aims to have higher equity exposureduring the bull market and lowerequity exposure during the bearmarket cycle.
Market Market
Equity Level Equity Level
6
Edelweiss Procyclical Outperforms……..
Past Performance may or may not sustain in Future
Calendar year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total
Nifty 50 36.3% 39.8% 54.8% -51.8% 75.8% 17.9% -24.6% 27.7% 6.8% 31.4% -4.1% 3.0% 28.6% 3.2% 12.7%
Procyclical 27.5% 34.9% 37.2% -21.3% 47.8% 12.4% -9.5% 17.3% 6.0% 20.1% -1.2% 2.7% 18.7% 4.0% 12.5%
CounterCyclical 20.4% 21.1% 20.5% -26.5% 48.6% 9.0% -13.8% 19.3% 5.6% 18.3% -1.5% 1.9% 14.6% 2.1% 8.6%
Fund Net Equity Level
68% 68% 69% 54% 65% 65% 54% 64% 60% 67% 57% 62% 71% 55% -
-10
0
10
20
30
40
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total
YoY (%) Return Differential (Procyclical - Counter Cyclical)
A HISTORIC PERSPECTIVE VS COUNTERCYCLICAL
7
Edelweiss Balanced Advantage Fund
Equity Liked Returns High Liquidity
Lower VolatilityTAX Efficient Returns
The Fund aims to fulfill following investor expectations
It’s a dynamic asset allocation fund which aims to generate absolute returns with
low volatility over a longer tenure of time
Fund Invests in arbitrage opportunities, debt, pure equity based on its PROCYCLICAL
EEHI Model.
8
Investment Strategy
Equity
• 30% to 80% Net Equity
• MultiCap• GARP
Debt
• Active Duration Management
• Focus on Accrual
Arbitrage
• Hedging• Capture
Spreads• Corporate
Actions
Dynamic Equity Allocation
Net Equity exposure is equity exposure minus short derivative exposure. The scheme asset allocation allows to take derivative exposure up to 50% of the net asset.
9
Investment Strategy
Equity Fixed Income
QualityQuality ManagementHigh Free Cash FlowConsistency
GrowthStrong Earnings GrowthSector GrowthCompetitive Advantage
ValueAttractive ValuationsMargin of Safety
ObjectiveGeneral Accrual IncomeProvide StabilityExposure 0-35%
DurationActive Duration Management1 to 5 Year Range
Credit QualityRelatively Higher yielding corporate bondsAA and above rating
EDELWEISS EQUITY HEALTH INDEX (EEHI) IS A PROPRIETARY MODEL THAT INCORPORATES MARKET DIRECTIONS, VOLATILITY AND FUNDAMENTALS
10
Dynamic Asset Allocation using EEHI
Increase Equity Allocation
during Bull cycle
Reduce Equity Exposure
during bear cycle
80%
30%
How is Works?
• The main principle of the model is increasingexposure on winning side and reducing exposureon losing side.
• Thus harnessing the power of compounding in aneffective way.
How it is better than value only based approach?
• Avoids timing of market reversal• Captures bigger trends and limits drawdown• Superior risk adjusted returns
Net Equity exposure is equity exposure alone with corresponding equity derivative exposure. The scheme asset allocation allows to take derivative exposure up to 50% of the net asset.
11
EEHI – Factors considered in Model
• 1 week, 2 week, 1 month & 3 month Daily Moving Average (DMA) of Nifty 50
• Indicates bull or a bear market trendMarket Trend
• Market Volatility & Downside Deviation of Nifty 50
• Indicates the strength and sustainability of current bull/bear market trend
Trend Health
• Market Valuations and Macro-economic factors
• Indicates the overall economy trend and its strength
Fundamentals
Equity Market Health
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
6500
7500
8500
9500
10500
11500
No
v-1
5
De
c-1
5
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
De
c-1
7
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
De
c-1
8
Jan
-19
Feb
-19
Mar
-19
Ap
r-1
9
AVERAGE EQUITY LEVELS HAVE BEEN HIGH DURING THE BULL MARKETS AND LOW DURING BEAR MARKETS PHASE
12
EEHI Model – Net Equity Level vs Nifty 50
Avg Equity 71% Avg Equity
51%
Avg Equity 48%
Avg Equity 61%
Avg Equity 71%
Market Fall
EHI IndicatorNifty 50
Actual equity levels since Jan 2017.
Avg Equity 41%
Avg Equity 50% Avg Equity
60%
13
Swift Equity Allocation
Nifty Return Average Net Equity Min Net Equity Max Net Equity
Feb-18 -4.85% 51% 40% 70%
Mar-18 -4.01% 50% 40% 65%
Apr-18 6.19% 59% 52% 68%
May-18 0.0% 57% 45% 68%
Jun-18 -0.2% 59% 50% 68%
Jul-18 5.99% 65% 50% 80%
Aug-18 2.85% 70% 60% 80%
Sep-18 -6.42% 44% 30% 55%
Oct-18 -4.98% 38% 30% 50%
Nov-18 4.72% 61% 50% 68%
Dec-18 -0.10% 61% 50% 78%
Jan-19 -0.30% 57% 50% 70.%
Feb-19 -0.36% 54% 40% 70%
Mar-19 7.70% 72% 60% 75%
Apr-19 1.07% 67% 50% 75%
High equity levels during healthy
markets
Swift change in equity levels during bear market cycles
Low equity levels during weak
markets
Actual Apr-19 net equity levels in Edelweiss Balanced Advantage Fund
14
Equity Quantitative Indicators
Net Equity 54.30%
Debt & Others 27.30%
Top 10 Holdings 33.54%
Fixed Income Quantitative Indicators
YTM 6.98%
Modified Duration 0.46 Yrs
Average Maturity 0.55 Yrs
Top Holdings (in %)
% NAV
HDFC Bank Ltd. 6.12%Reliance Industries Ltd. 5.14%Tata Consultancy Services 3.37%Infosys Ltd. 3.03%
ICICI Bank Ltd. 2.99%
Housing Development Finance Corporation 2.95%
Bajaj Finance Ltd. 2.57%ITC Ltd. 2.51%
HCL Technologies 2.51%GlaxoSmithKline Consumer Healthcare 2.35%
Larsen & Toubro Ltd. 2.19%
Data as on 30th April 2019.
Market Cap Allocation
Large Cap 77%
Mid Cap 17%
Small Cap 6%
Portfolio Snapshot
-2.00 0.00 2.00 4.00 6.00 8.00 10.00
Technology
PvtBanks
Oil & Gas
Telecom
Transport & Logistics
Cement
% Sector wt
Rolling Return – 5 Year Analysis
15
Scheme Name Max. Min. Average STD Dev. Risk Return
Edelweiss Balanced Advantage Fund 14.00% 9.13% 11.26% 0.98 11.5%
Nifty 50 18.77% 5.64% 12.04% 2.58 4.67%
5
7
9
11
13
15
17
19
Au
g-1
4
Oct
-14
Dec
-14
Feb
-15
Ap
r-1
5
Jun
-15
Au
g-1
5
Oct
-15
Dec
-15
Feb
-16
Ap
r-1
6
Jun
-16
Au
g-1
6
Oct
-16
Dec
-16
Feb
-17
Ap
r-1
7
Jun
-17
Au
g-1
7
Oct
-17
Dec
-17
Feb
-18
Ap
r-1
8
Jun
-18
Au
g-1
8
Oct
-18
Dec
-18
Feb
-19
Edelweiss BAF 5 Year Rolling Return vs Nifty 50
Edelweiss Balanced Advantage Fund NIFTY 50 -TRI
Low Volatility compared to market
Moves in line with Market
%
Edelweiss Balanced Advantage Fund’s Minimum Return on 5 Year rolling basis is 9.13% comparedto 5.64% of Nifty 50 TRI.
Standard Deviation of the fund is 2.5 times less than Nifty 50 with average returns almost same inlonger term
Market Cap Allocation
16
• Through measured allocation to Mid and small cap stocks the core Portfolio of Edelweiss BalancedAdvantage Fund has generated 3.6% (cagr) alpha over Nifty 50 in last 5 Years
Data as on 30th April 2019.
0%
20%
40%
60%
80%
100%
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
Ap
r-1
9
Market Cap Allocation (%)
Largecap Midcap Smallcap
17
Performance during Different Market Cycles
Performance Bear Cycle31-Jan-18 To 31-Mar-18
Bull Cycle01-Apr-18 To 31-Aug-18
Complete Cycle31-Jan-18 To 31-Aug-18
Market (Nifty 200 TRI) -7.7% 14.3% 5.48%
Edelweiss Balanced
Advantage Fund-4.0% 10.1% 5.63%
Edelweiss BAF – Average Net
Equity Levels49% 62% 55%
Past performance may not sustain in future
• The Fund has outperformed the Market in Bear as well as Bull Cycles.
• Even in Longer term the fund has performed better than market with lower risk (average net equity55%).
Performance
18
Scheme
Benchmark (60% Nifty 50 Index + 40% Crisil Composite
Bond Fund Index)
Additional BenchmarkNifty 50 TR Index
Period Returns*Value of Rs.
10000 InvestedReturns*
Value of Rs. 10000 Invested
Returns*Value of Rs.
10000 Invested
1 Year 2.88% 10,288 6.94 % 10,694 10.84% 11,084
3 Year 8.89% 12,916 11.47% 13,855 15.91% 15,580
5 Year 11.15% 16,973 11.84% 17,503 13.32% 18,693
Since Inception 9.26% 23,610 10.26% 25,778 11.84% 29,590
Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.* CAGR Return.- Different plans shall have different expense structure. The performance details provided herein are of Regular Plan of Edelweiss BalancedAdvantage Fund. Returns are for Growth Option only. Since Inception returns are calculated on Rs. 10/- invested at inception of the scheme. In casethe start/end date is non business day, the NAV of previous day is used for computation.- The scheme is currently managed by Mr. Bhavesh Jain (Managing this fund from August 7, 2013), Mr. Bharat Lahoti (Managing this fund from September 18, 2017) and Gautam Kaul (managing this fund from December 11, 2017).Data Source: Ace MF, Data as on 30th April 2019 In case the start/end date is non business day, the NAV of previous day is used for computation.Please click on http://edelweissmf.com/Download/factsheet.aspx for performance of other funds managed by fund manager.
19
Key Benefits of the Fund
Low risk equity linked return
No Need to time the market
Create wealth during bull market & protect during bear market
Tax Free capital gains after 1 year upto Rs. 1 lakh
Regular Cash flows from monthly & Quarterly dividends
True-to-Label approach
20Data as on 30th April 2019.
Conservative Approach
Major investment in Largecap, only small exposure to midcaps/small caps.
High Quality Investment
No allocation to bonds below ‘AA’ Credit rating
Well Diversified
• 68 Stocks• Low Sector biases with a
conservative approach.
Un-Biased Dynamic Asset Allocation
Asset Allocation Strategy is based on model and intervention of Fund manager
is mainly for stock selection
Consistent Quarterly Dividend
21
YearRecord
Date
Dividend /
Unit (Re.)
Record
Date NAV
Dividend
Amount
(Rs)
Dividend
Yield*
2011
28-Jan 0.165 11.20 143,603 6%
29-Apr 0.18 11.10 156,658 6%
29-Jul 0.18 11.05 156,658 6%
28-Oct 0.18 10.88 156,658 6%
2012
27-Jan 0.18 10.92 156,658 6%
27-Apr 0.18 10.84 156,658 6%
27-Jul 0.18 10.88 156,658 6%
29-Oct 0.18 11.06 156,658 6%
2013
24-Jan 0.18 11.08 156,658 6%
26-Apr 0.18 10.98 156,658 6%
26-Jul 0.22 11.06 191,471 8%
25-Oct 0.22 11.20 191,471 8%
2014
31-Jan 0.22 10.87 191,471 8%
25-Apr 0.22 11.16 191,471 8%
25-Jul 0.22 12.64 191,471 8%
31-Oct 0.22 13.24 191,471 8%
YearRecord
Date
Dividend
/Unit Re.
Record
Date NAV
Dividend
Amt (Rs)
Dividend
Yield*
2015
27-Jan 0.30 14.08 261,097 10%
22-Apr 0.22 13.81 191,471 8%
27-Jul 0.22 13.93 191,471 8%
27-Oct 0.22 13.37 191,471 8%
2016
25-Jan 0.30 12.54 261,097 10%
26-Apr 0.22 12.70 191,471 8%
25-Jul 0.22 12.85 191,471 8%
26-Oct 0.22 12.74 191,471 8%
2017
18-Jan 0.22 12.21 191,471 8%
04-May 0.22 13.24 191,471 8%
10-Jul 0.22 13.44 191,471 8%
21-Sep 0.22 13.55 191,471 8%
2018
22-Jan 0.22 14.02 191,471 8%
22-Mar 0.22 13.28 191,471 8%
25-Jun 0.22 13.49 191,471 8%
24-Sep 0.24 13.31 208,877 8%
24-Dec 0.25 12.90 208,877 9%
2019 25-Mar 0.15 12.76 115,579 5%
Total Dividend Paid 6,246,997
2019 24-Mar Investment Value 11,105,308
Rs. 1 crore initial investment in the fund has yielded a dividend of Rs. 62.46 lakh since Jan 2011
*Annualised dividend yield for each 3 month period is calculated on initial investment value.
Dividend is declared on the face value of Rs. 10 each /-. After payment of dividend, the NAV will
fall to the extent of dividend payout and statutory levy (if applicable). Past performance may or
may not be sustained in future.
Dividend is Declared on Face value of Rs. 10
Fund Features
22
Scheme Type An open ended dynamic asset allocation fund
Exit Load
10% of the units allotted shall be redeemed without any Exit Load on or before completion of 365 days from the date of allotment of units. Any redemption in excess of such limit within 365 days from the date of allotment shall be subject to the following Exit Load:• If redeemed or switched out on or before completion of 365 days from the date of allotment of units – 1.00%• If redeemed or switched out after completion of 365 days from the date of allotment of units – NILRedemption of units would be done on First in First out Basis (FIFO).
Plans & OptionsPlan: Regular & DirectOptions: Quarterly Dividend (Payout and Reinvestment) & GrowthMonthly Dividend (Payout, Reinvestment & Sweep)
Minimum Investment Amount
Rs. 5000/- per application & in multiples of Re. 1/- thereafter
Additional investment amount
Rs. 500/- per application & in multiples of Re. 1/- thereafter
Fund Manager Mr. Bhavesh Jain, Mr. Bharat Lahoti, Mr. Gautam Kaul
Disclaimer
23
This product is suitable for investors who are seeking*: Riskometer
•To create wealth over long term and prevent capital erosion in mediumterm•Investment predominantly in equity and equity related securitiesincluding through arbitrage opportunities with balance exposure to debtand money market securities
*Investors should consult their financial advisers if in doubt aboutwhether the product is suitable for them.
Investors understand that their principal will be at moderately high risk
This presentation is for information purposes only for distributors and does not constitute an offer orrecommendation to buy or sell any scheme of Edelweiss Mutual Fund. This presentation also does not constitutean offer or recommendation to buy or sell any financial products offered by Edelweiss. Any action taken by youon the basis of the information contained herein is your responsibility alone and Edelweiss Asset ManagementLimited (the AMC)/Edelweiss Trusteeship Company Limited/ Edelweiss Mutual Fund or its directors or employeeswill not be liable in any manner for the consequences of such action taken by you. The AMC takes noresponsibility of updating any data/information in this material from time to time. The information shall not bealtered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the mediaor reproduced in any form, without prior written consent of the AMC.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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