axis capital builder fund series 4 (1582 days) capital builder fund...axis capital builder fund –...
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Axis Capital Builder Fund – Series 4 (1582 days)
NFO period: 3rd Dec, 2018 to 14th Dec, 2018 (A close ended equity scheme investing across large cap, mid cap and small cap stocks)
1
This product is suitable for investors who are seeking*:
• capital appreciation over long term
• Investment in a diversified portfolio of predominantly equity
and equity related instruments across market capitalisation
*Investors should consult their financial advisers if in doubt
about whether the product is suitable for them.
Market Update
2
2018 has been a tough year
3
Market witnessed broad based correction & heightened volatility
Rising crude price Depreciating
currency Liquidity squeeze
Foreign investor selling
Rising interest rates
Concerns on NBFC sector
However, some hints of stabilisation
4
Source: Bloomberg, Past Performance may or may not be sustained in future. Data as on 14th Nov 2018
Sharp fall in crude has driven improvements in other metrics
Crude Currency
Markets Interest Rate
65
70
75
80
85
90
Aug-18 Sep-18 Oct-18 Nov-18
Crude - Brent (Last 3 months)
9,000
10,000
11,000
12,000
Aug-18 Sep-18 Oct-18 Nov-18
Nifty 50 Index (Last 3 months)
69
71
73
75
Aug-18 Sep-18 Oct-18 Nov-18
(Reversed scale)
INR/USD (Last 3 months)
7.7
7.8
7.9
8.0
8.1
8.2
Aug-18 Sep-18 Oct-18 Nov-18
10 year G-Sec (Last 3 months)
Significant easing of NBFC liquidity concerns
5
Source: Bloomberg, CLSA, Axis Capital, Data as on 31st Oct 2018. *Gross Non-performing loans as a % of Assets for banks under CLSA coverage in INR terms. * till 15th Nov 2018.
Swift and significant policy response helped
• RBI providing liquidity through OMOs, Banks acquiring portfolios from NBFCs using securitisation
• Benign inflation and smooth CP repayments during October and November have provided additional confidence
Benign Inflation RBI providing liquidity through OMOs
3
3.5
4
4.5
5
5.5
Oct-17 Jan-18 Apr-18 Jul-18 Oct-18
NBFCs have grown faster
6%
17%
19%
22%
Bank Loans NBFCs NBFCs +HFCs
HFCs
Growth in credit over FY16-18CL
780 435
10,360 10,300 10,000
20,000
48,000
32,002
Jan-18 Mar-18 May-18 Jun-18 Jul-18 Sep-18 Oct-18 Nov-18*
OMOs (INR cr)
Currency sell-off do not have a lasting effect
6
Source: Bloomberg, Axis MF Internal Analysis, data as on 9th Oct 2018 (Peak point for currency @ 74.39). Returns are in INR terms.
Equities tend to recover once currency stabilises
Rupee depreciation episodes
(3 month period with >12%
depreciation)
Currency & market performance in
depreciation episodes
Currency & market performance over the
next 3 months
INR/USD Nifty INR/USD Nifty
Oct 97 - Jan 98 -12.4 -14.0 2.4 21.9
Jul 08 - Oct 08 -18.6 -41.7 1.6 5.0
Aug 11 - Nov 11 -14.8 -4.9 5.9 19.1
Feb 12 - May 12 -14.7 -8.1 1.1 7.4
May 13-Aug 13 -23.0 -13.5 9.3 15.3
Aug 18- Oct 18 -8.3 -5.1 - -
Structural reforms support growth, reducing uncertainty
7
Source: CLSA, Trading economics, As on 30th Sep 2018, *Data as on 25th Nov 2018.
Ease of business seeing consistent improvement
Measure Outcome
Inflation targeting CPI halves; Positive real rates trigger jump
Inflation targeting in financial savings
NPL resolution
Corporate bankruptcies happen for the first
time in India, though process sees some
legal hurdles
GST Substantial simplification of indirect taxes
Financial
inclusion
Opening up 300m+ bank accounts
substantially boosts formal financial system
access across India
Subsidy reduction Deregulation of auto-fuel prices, DBT
mechanism a positive;
Ease of business Substantial process easing & digitisation
Rera Real estate sees regulatory body for first
time; push for affordable housing
Demonetisation Some improvement in formalised economy
0
50
100
150
200
250
300
Jan-03 Jan-06 Jan-09 Jan-12 Jan-15 Jan-18
India's economic policyuncertainty index
India’s policy uncertainty index
132 133
139
132 131 134 134
131 130
100
77
2008 2010 2012 2014 2016 2018
Ease of doing business India ranking*
Ease of doing business: India jumped 53
places in 2 years
Economy picking up growth momentum
8
Source: Bloomberg, CLSA, Axis Capital, Topline Growth indicates Net sales in case of Non-BFSI and NII incase of BFSI . Past performance may or may not be sustained in future. Data as on 31st Oct 2018
Growth came back to 8%+ level Nifty Earnings growth
Strong PMI numbers Strong corporate revenue growth
8.2
4.0
5.0
6.0
7.0
8.0
9.0
2012 2013 2014 2015 2015 2016 2017 2018
India Annual GDP Growth Rate
11.2 13.8
16.4
23.2
11.1 12.8
6
20.4
0
10
20
30
Q2FY18 Q3FY18 Q4FY18 Q1FY19
Topline Growth – Nifty 50 (yoy%)
Topline Growth (yoy%) BFSI Topline Growth (yoy%) Non-BFSI
7% 10%
3%
-4%
8%
14%
21% 16%
FY13 FY14 FY15 FY16 FY17 FY18CL FY19CL FY20CL
48.00
49.00
50.00
51.00
52.00
53.00
Oct-17 Jan-18 Apr-18 Jul-18 Oct-18
PMI - Sevices (3 month average%)
Government focusing on rural economy
9
Source: Axis Capital. CLSA. Data as on 30th Sep 2018
Will remain a priority in the run up to the general elections
Accelerated push towards rural housing Increase in farm support prices will
support incomes
Strong growth in tractor and two-
wheeler sales
0.2 0.3
1.1 1.1 1.2
1.8
3.2
4.5
0.9
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
# of rural houses built under central schemes (mn)
-5
0
5
10
15
20
25
30
FY01 FY04 FY07 FY10 FY13 FY16 FY19
Kharif MSPincrease (WPIwtd aggregate)
Rural wagegrowth (Indiaaverage)
-15
-10
-5
0
5
10
15
20
25
FY14 FY15 FY16 FY17 FY18
Annual growth (%)
Tractor Sales
Two-wheeler sales
India is witnessing a digital transformation
10
Source: CLSA, PMJDY, UIDAI, Company data, TRAI, IDC, NPCI, Morgan Stanley Research. Past Performance may or may not be sustained in future. Data as on 31st Oct 2018.
India likely to be 3rd biggest ecommerce market Most of the population is still untapped
11
30
40
41
71
76
97
114
132
383
629
710
Indonesia
Russia
India-2017
Canada
Korea
France
Germany
UK
Japan
India-2028
US
China
62 60
36
22 15
7
27
14
17 38
42
21
11
26
47 41 42
73
Japan USA China Brazil Mexico India
% of population
Online Shoppers Online but not shopping Not online
(US$bn)
0
100
200
300
400
500
FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
Total Data Subscribers (mn)
Total Data Subscribers
Valuations to get support from earnings pick up
11
Source: Motilal Oswal,. Past Performance may or may not be sustained in future. Data as on 31st Oct 2018.
Recent correction has brought valuation closer to long run averages Markets expecting uptick in earnings, RoE
17.6
9
13
17
21
25
Oct-
08
Oct-
09
Oct-
10
Oct-
11
Oct-
12
Oct-
13
Oct-
14
Oct-
15
Oct-
16
Oct-
17
Oct-
18
NIFTY P/E (x) - 1 Year Forward
10 Year Avg:
17.1x 15.4
12.5
13.9
15.3
16.7
18.1
Oct-
08
Oct-
09
Oct-
10
Oct-
11
Oct-
12
Oct-
13
Oct-
14
Oct-
15
Oct-
16
Oct-
17
Oct-
18
NIFTY RoE (%) - 1 Year Forward
10 Year Avg:
15.0%
Time in the market is more important than Timing the market.
12
Source: Bloomberg, Axis MF Research. Since Jan 2000 till 15th Nov 2018. Past performance may or may not be sustained in future.
Corrections offer suitable entry points for long term investors
• Markets tend to react to short
term events in a knee jerk
reaction and revert back to their
fundamental valuations once the
event is analyzed.
• So long as fundamentals remain
positive, markets will follow the
general trajectory of the
economy.
0
5000
10000
15000
20000
25000
30000
35000
40000
45000S&P BSE Sensex
Dot Com Bubble,
9/11 Twin Tower
attacks
Ketan Parekh
Scam
Sub Prime Crises
Euro Crises, PIIGS
Default
US loses AAA
rating
China Meltdown
Demonetisation & US
Presidential Elections
LTCG re-introduced
• Company fundamentals showing improvement
• Over the last two years earnings growth for stocks has been patchy and inconsistent.
• Q1FY19 was the first quarter, after the two patchy & inconsistent years where market wide earnings growth (ex-PSU banks) clocked a growth of 20%.
• A pick up in earnings can overshadow the other negatives and support markets
• We will be quality centric to stay with companies who have the strength to sail through
• Focus on bottom-up approach to find such stories
While some uncertainty remains in near term, we remain bullish in the medium to long term
13
Introducing Axis Capital Builder Fund – Series 4 (1582 days)
14
The portfolio allocation will be based on the prevailing market conditions and is subject to change depending on the fund management view. The scheme will invest as per asset allocation mentioned in scheme information document.
Aim to build a high quality portfolio with mid to high
growth than benchmark
Intend to invest across market cap
spectrum
Benchmark agnostic while
being diversified reducing
concentration risk
Equity Investment Approach Investment Objective
To generate income and long term capital
appreciation by investing in a diversified portfolio of
equity & equity related instruments across
market capitalization.
The above mentioned numbers are indicative. The portfolio allocation will be based on the prevailing market conditions and is subject to change depending on the fund management view. The
scheme will invest as per the overall investment objective & strategy in scheme information document.
Stock Selection
Total no of listed companies available for trade
(over 4000)
No of companies in Axis MF Universe
(around 350)
Diversified portfolio while being
benchmark agnostic
• Bottom up approach to investing
• Follow the Key pillars of Axis MF approach to investing which
are
• Growth biased - focusing on sustainable growth
• Look for quality businesses
• Aim to deliver superior risk adjusted returns
• High conviction Investing
• Disciplined investment process which is clearly articulated &
focused on risk mitigation
• Concentrated yet diversified portfolio of ‘best ideas’ generated
from in-depth research and articulated investment strategy
Why Axis Capital Builder Fund – Series 4 (1582 days)?
• Offers long term wealth creation opportunity
• Long term orientation for both investors and fund manager
• No liquidity pressure on the portfolio
Features at a glance
17
Fund
manager
Benchmark Min.
Application
amount
Plan/
Options
Type
A close ended
equity scheme
investing across
large cap, mid cap,
small cap stocks.
Anupam Tiwari Nifty 500 Index Rs. 5,000 and in
multiples of Re.
10/- thereafter
Regular & Direct
Plan - Growth and
Dividend Option
(Payout Facility)
Statutory Details and Risk Factors
18
Disclaimer: Past performance may or may not be sustained in the future. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) . Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Thank You