reliance banking psu debt fund product presentation call mutual fund advisor ananadaraman @ 944...
Post on 15-Jul-2015
45 Views
Preview:
TRANSCRIPT
With An Aim To Capitalize on the Story of Expected Bull Steepening
RCAM Offers
Reliance Banking & PSU Debt Fund
An Open Ended Income SchemeOffer for Sale of Units at Rs.10/- per unit during the new fund offer period and Continuous offer for Units at NAV based prices
NFO : 5th May – 12th May 2015
Positioning
Ultra Short Term Fund (UST)
Reliance Banking & PSU Debt FundA longer maturity, high quality UST variant focusing on
benefits of steepening & roll down at shorter end of the curve, along with spreads between G-Secs & Corporate Bonds
This product is suitable for investors who are seeking*:· Income over short to medium term· Investments in debt and money market instruments of various maturities, consisting predominantly of securities issued by Banks,
Public Sector undertakings & Public Financial Institutions· Low risk (BLUE)
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.Note: Risk is 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
Distinct Positioning Vis – a - Vis UST & Short Term Funds
The above credit & duration profile for the schemes is proposed and may vary according to the market conditions
FY16 : Rate Cut + Liquidity = Bull Steepening
Expectations on Rate Cut : Visibility of 50 Bps rate cut in FY16, in a gradual manner
Factors determining RBI’s action on rate cuts:
Continuing disinflationary pressure (Maintaining Real Rates of 1.5% – 2%):
CPI inflation expected to be ~5% - 5.5% in FY16
Easing oil and commodity prices
Lower MSP and rural wage growth
Supply side management by both government and RBI
High quality Fiscal Consolidation (A realistic 3.9% Vs an Expected 3.6%)
May be achieved with no expenditure cuts & without compromising on growth
FY16 borrowings – favourable for demand supply dynamics
Decrease in subsidies from 2.1% in FY15 to 1.7% in FY16
Revenue targets seems realistic even at current growth rate
Transmission of Policy Rates
Banks are expected to pass on the benefit of the previous rate cuts in January & March 2015 into their
lending ratesCommon Source: Bloomberg, RCAM Research
FY16 : Rate Cut + Liquidity = Bull Steepening
Favorable Liquidity Conditions: The Return Catalyst For FY16
Factors determining comfortable liquidity conditions:
Core Liquidity to further improve :
Robust Forex Flows: India placed better in the emerging market space
Improvement in Credit Environment:
Lower inflation and rate expectations may lead to higher credit growth
Also increase mobilization of deposit due to credit growth is expected to increase money supply
Stabilization in Currency circulation : Due to fiscal discipline & benign inflation expectations
Lower Inflation: Positive Real Rates may lead to Higher financial savings
Micro management of liquidity by RBI in proactive & consistent manner : For effective
transmission of rate cuts in real economy
Bottom-line Adequate liquidity in the system + further rate cuts + Better transmission of policy rates
May Result In Shorter end of the yield curve to correct downwards due to better liquidity conditions & longer end of
the curve to stay supported on account of gradual rate cutsCommon Source: Bloomberg, RCAM Research
FY16 : May Be The Year Of Easy Liquidity Conditions
In the past, it has been witnessed that years wherein system liquidity is ample and demand for lower durationassets increases, the yield curve has shown the characteristics of steepening
The below charts of FY05 and FY10 shows clear trend of steepening of the curve:
FY16 : A Strong Case For Curve Steepener
We expect FY16 to be the year wherein
adequate system liquidity along with
gradual rate cuts would result in a steeper
yield curve, when compared to last 3 years
of tight liquidity conditions
Common Source: Bloomberg, RCAM Research
Opportune Time To Take Advantage Of The Expected Bull Steepening….
…….Through Reliance Banking & PSU Debt Fund
How Will The Fund Work ?
Asset Profile:
~80% investments in bonds & CDs/CPs issued by Banks, PSUs & Public Financial Institutions
Rest of the investments (~20%) in G-Secs/SDLs and other debt/money market securities
Rating Profile: 80% in AAA & 20% in good quality AA+/AA assets
Duration Profile The fund would endeavour to run a duration of ~1.5 yrs through investments in the
above mentioned securities whose duration individually may vary in range of 3 months – 3 yrs
PORTFOLIO ATTRIBUTES
Aims to capture short to medium end of the yield curve with a focus on giving consistentreturns with low to moderate volatility
Focus on potential capital gains in the portfolio by maintaining a duration of ~1.50 yrs
Credit profile skewed towards superior credit quality to ensure a healthy risk return ratio
Predominantly invests in AAA PSU/Banking Space, thus giving an opportunity to capitalize onthe attractive absolute levels of corporate bonds when compared to G-Secs
The right blend of asset class, credit profile & duration, makes a strong case for low volatility,accrual strategy and eventually benefit from downward correction in the shorter end of the curve
CURRENT INVESTMENT PHILOSOPHY
Ideal for conservative investors with appetite for low to moderate volatility in the markets
In the current market scenario, investment horizon should be at least 6 – 12 months in light of
higher gross yields which endeavour to provide attractive returns & and a moderate duration to
curb volatility in near term
SUITABILITY
Managed By Anju Chhajer
Investment Objective
To generate income through investments in debt and money market instruments of various maturities,
consisting predominantly of securities issued by entities such as Banks, Public Sector Undertakings
(PSUs) and Public Financial Institutions (PFIs).However, there is no assurance that the investment
objective of the Scheme will be achieved
Asset Allocation
Debt* and Money Market Instruments issued by Banks,
Public Sector Undertakings (PSUs) and Public Financial Institutions (PFIs) - 80% - 100%
Debt* and Money Market Instruments issued by other Entities, Gilt securities & State Development
Loans (SDLs) - 0% - 20%
*Including investments in securitized debt which may be upto 50% of the net assets of the scheme.
Benchmark Crisil Short Term Bond Fund Index
Exit LoadNil
(If charged, the same shall be credited to the scheme immediately net of service tax, if any)
Plans & Options
Minimum Investment : Rs.5,000 & in multiples of Re1 thereafter
Growth Plan & Direct Plan – Growth Plan :
Growth & Bonus Option
Dividend Plan & Direct Plan – Dividend Plan (Payout & Reinvestment Options)
- Weekly Frequency
- Monthly Frequency
- Quarterly Frequency
- With no Frequency
Scheme Attributes
Product Label of Ultra Short Term & Short Term Funds
This product is suitable for investors who are seeking*:· income over short term.
· investment in debt and money market instruments
· low risk. (BLUE)
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Reliance Money Manager Fund (An Open Ended Income Scheme)
Reliance Medium Term Fund (An Open Ended Income Scheme With No Assured Returns)
This product is suitable for investors who are seeking*:· income over short term.· investment in debt and money market instruments with tenure not exceeding 3 years.· low risk. (BLUE)*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Reliance Short Term Fund (An Open Ended Income Scheme)
This product is suitable for investors who are seeking*:· income over short term.· investment in debt and money market instruments, with the scheme would have maximum weighted average duration between 0.75-2.75 years· low risk. (BLUE)*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
Disclaimer
Scheme Specific Risk Factors: With regard to the specific investments made by this scheme, the performance of bankingcompanies are dependent on broad macro economic factors like interest rates and credit growth, apart from specific factors that mayaffect their borrowers which may in turn affect the level of Non-performing assets held by banks. This may have an impact on thebank’s credit ratings. Public sector undertakings may also see a change in their operating environments due to change in governmentpolicies or divestment of the government’s stake and /or privatization of the enterprise.
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions andtherefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual andstatistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-party sources, which are deemed to be reliable. It may be noted that since RCAM has not independently verified the accuracy orauthenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data andinformation has been processed or arrived at; RCAM does not in any manner assures the accuracy or authenticity of such data andinformation. Some of the statements & assertions contained in these materials may reflect RCAM’s views or opinions, which in turnmay have been formed on the basis of such data or information.
The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affiliates or representatives do notassume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such data or information. Whilst noaction has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurateand opinions given are fair and reasonable, to the extent possible.
This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipientsof this information should rely on information/data arising out of their own investigations. Before making any investments, the readersare advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision.None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shallbe liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account oflost profits arising from the information contained in this material.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
top related