baroda mutual fund product presentation –oct’20

Baroda Mutual Fund

Product Presentation – Oct’20

Index

1. Equity Market Outlook

2. Introduction

– MFU tie-up

– Baroda AMC

3. Products Suite

4. Focused Products

– Baroda Dynamic Equity Fund

– Baroda Equity Savings Fund

– Baroda Large & Midcap Fund

– Baroda Short Term Bond Fund

5. Contact Us

Equity Market Outlook

• Global headwinds

– Second wave of Covid-19 pandemic continues to worsen & the pace of vaccine development is

adding to the impact

– US election outcome & delay in US fiscal stimulus

– Geo - political tensions

• India

– Valuations (P/E) are high due to earnings compression and abundant liquidity.

– Market cap to GDP ratio is low compared to previous peaks and is driven by few Mega cap stocks

– Credit growth is lagging deposit growth , coupled with low capacity utilization levels indicates that

Business Cycle is at the bottom

– Markets have delivered flat to negative returns in last 3 years as well as the earnings growth has

been negative.

Considering the above factors, equity markets are in the neutral zone making a case for staggered

investments in equity. We believe, staying investing in the markets through asset allocation strategy

would prove beneficial to the investors in times to come.

Baroda Dynamic Equity Fund & Baroda Equity Savings Fund are asset allocation funds which have a

proven track record & have delivered superlative performance across various timeframes.

Baroda Mutual Fund – MFU SAS Partner

• Auto – empanelment with

Baroda AMC

• Enables digitization of

transactions at source

• Ensures smooth flow of

brokerage payments for

transactions done on the

platform

• This facility provides

enhanced self service

capability & provides value

added services – alerts,

triggers, reminders, etc.

• Enhanced operational

efficiency with reduced risks

Why Baroda Mutual Fund

✓ Strong Sponsor – Bank of Baroda

✓ Varied Product offerings across Debt, Equity & Hybrid

funds

✓ Consistent track record

✓ Pan India presence

✓ Rewards & Recognition program

✓ Auto Empanelment with AMC

MFU SAS Partner

Baroda Asset Management India Limited

• Baroda Asset Management India Limited (“AMC”), investment manager to Baroda Mutual Fund

(“Mutual Fund”), is a wholly owned subsidiary of Bank of Baroda and is positioned to serve the

varied asset management needs of investors in India through a range of equity, debt and

money market offerings. The Mutual Fund has been working to create an operational and servicing

platform well suited to the exacting requirements of our existing and potential investors.

• Baroda Mutual Fund operates out of 40 locations in India and has QAAUM of Rs. 7646.26 cr. as on 30th

Sept’20.

• Bank of Baroda is a 110 years old State-owned Bank, offering

banking products and services to Large Industrial, SME, Retail

& Agricultural customers across India and 22 other countries.

• Post the amalgamation of erstwhile Dena Bank and erstwhile

Vijaya Bank , with Bank of Baroda the amalgamated entity /

bank has emerged as the 2nd largest bank in India in terms of

branch network and customers and 3rd largest bank in terms of

lending capacity.

• The combined bank has over 131 million customers, 9899 branches,

13,400 ATMs & over 85000 employees** .

Our Sponsor - Bank of Baroda

** Data as on 27th Aug’19

Source : www.bankofbaroda.in

^^ In Oct’19, BOB & BNPP AMC have entered into a binding agreement ,of creation of a composite scheme of amalgamation

of both the AMCs subject to regulatory approvals.

Products At a Glance

Only open ended schemes of Baroda Mutual Fund have been considered.

Past performance does not indicate the future performance of the schemes

and is no guarantee of future results

Surf through Markets with Ease.

Invest in Baroda Dynamic Equity Fund(An open ended dynamic asset allocation fund)

Baroda Dynamic Equity Fund

• An open-ended dynamic asset allocation fund which invests in equity & equity related

instruments with the primary aim to generate capital appreciation & secondary objective to

generate income through investments in debt and money market instruments. It also aims to

manage risk through active asset allocation.

• The Proprietary Model uses 10 year back tested data to evaluate the asset allocation. The

model comprises of multi parameters in order to arrive at the equity allocation

• The portfolio is constructed based on top down as

well as bottom up approach using GARP philosophy

(Growth At Reasonable Price)

• Capitalizing on the Pricing anomalies through

Arbitrage Strategies & Derivatives

• Exposure to high Quality Fixed Income instruments

to maintain liquidity

• Gross equity exposure will be maintained between

65% to 100% and the net long equity exposure will

be between 30% to 100%.

• Derivatives include Arbitrage allocation ; Investment

in units issued by REITs and InvITs upto 10%.

Investment in securitized debt will not exceed 10%

Benefits of Investing through Dynamic Equity Fund

• Eliminates market timing

• Thrifty investing style

• Elimination of Human bias during investing

• Multi-Parameters strategy used for deciding the equity allocation

• Reduced risk through Dynamic Asset Allocation

• Monthly rebalancing thereby diminishing the tendency of portfolio drift

• Downside protection through diversification

• Research based investing with a fundamental approach thereby contributing to alpha

generation across the portfolio

Baroda Dynamic Equity Fund - Proprietary Model

• These 4 parameterswill be compared to their historical 5 yr averages.

• The gross equity exposure will be maintained in the range of 65% to 100% while the net equity exposure

will be maintained between 30% to 100%. The difference between gross and net variation would

generally be invested in arbitrage or in arbitrage equity mutual funds. The exposure to Debt & Money

Market Instruments including cash and cash equivalents will be maintained in the range of 0% to 35%. The

model would follow the matrix approach for asset allocation based on different parameters.

Baroda Dynamic Equity Fund – Net Equity Movement

(Data As on 30th Sept’ ’20), Source : Factsheet , MFIE

• The fund was launched in Nov’18 & based on the Proprietary Model’s allocation, it has been

dynamically managed based on the Model’s outcome & is rebalanced each month.

• In the above table, the net equity allocation has been dynamically adjusted depending upon the

changes witnessed in the markets. The fund has increased its net equity allocation from Jan ‘20 –

July’20 due to enhanced market volatility (COVID effect) . From Mar’20 onwards, COVID induced

lockdown resulted in markets nosediving , while the net equity increased from 54% in Feb’20 to 68% in

Mar’20 which was later increased to 87% in Jul’20 . Post markets recovering with the Unlocking

phase, the net equity levels were reduced to 67% in Aug’20 & is currently at 70% in Sept’20 which is

significantly higher than its Pre-Covid phase.

40

65

54

68

87

6770

49154609 4719

3610

46534806 4782

0

1000

2000

3000

4000

5000

6000

0

10

20

30

40

50

60

70

80

90

100

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Mar

-20

Ap

r-2

0

May

'20

Jun

e'2

0

July

'20

Au

g'2

0

Sep

t'2

0

BSE

20

0 In

dex

Net

Eq

uit

y

Month

Net Equity v/s BSE 200 Index Movement

Net Equity BSE 200 Index Value

Baroda Dynamic Equity Fund - Current Positioning

(Data as on 30th Sept’ ’20), (Source : Factsheet, MFIe)

Debt, 30

Equity, 70

Asset Allocation - %

Debt Equity

Bonds & NCDs, 10.86

CGS, 6.43

CDs, 0.72

TREPS, 12.61

Net Receivables / Payable, -0.70

Credit Rating Allocation - %

The fund’s portfolio consists of an average of 35-45

stocks, while the category has an average of 53

stocks.

The debt portion of the fund has been deployed

conservatively & has predominantly invested in

AAA rated papers.

No. of Stocks 39

% of Top 10 Holdings 36 %

AUM in crs. 672

Baroda Equity Savings Fund - Proprietary Model & Asset

Allocation

These 4 parameters will be compared to their historical 5 yr

averages. The model would follow the matrix approach for

asset allocation based on different parameters.

The asset allocation pattern may change

depending upon the market conditions, market

opportunities, economic and political factors.

Please refer to the SID of the scheme for

investment strategy and risk factors.

Proprietary Model Asset Allocation

Equity

Based on the asset allocation determined by the proprietary model, the equity allocation would be primarily

invested in Multi-cap companies

Stock selection is conducted on a bottom up approach combined with top down analysis to capture macro-

economic trends

The model would follow the Matrix approach for Asset Allocation based on different parameters & would be

rebalanced on a monthly basis

Arbitrage

The fund would endeavor to capture the spread between cash equity market & derivatives market

Risk free returns with completely hedged arbitrage exposure

Fixed Income

Baroda Equity Savings Fund – Investment Strategy

Baroda Equity Savings Fund - Current Positioning

(Data as on 30th Sept’ ’20) (Source : Factsheet, MFIe)

Debt, 33

Net Equity, 29.77

Arbitrage, 37.23

Asset Allocation - %

Debt Net Equity Arbitrage

Bonds & NCDs, 13.00

MFs, …TDs, 7.92

TREPS, 4.59

Net Receivables / Payable, 5.43

Credit Rating Allocation - %

The fund’s equity allocation is dynamically

managed based on the Proprietary Model’s

allocation & is currently 29.77% in Equities,

37.23% in Arbitrage & 33% in Debt.

No. of Stocks 57


AUM in crs. 388

• July 2020

Baroda Large and Midcap Fund - NFO

Marketing Initiative

Baroda Large & Midcap Fund – Asset Allocation

Under normal circumstances , the indicative asset allocation would be as follows:

Investment in securitized debt will not exceed

20% of the net assets of the Scheme. The

scheme may take derivatives positions up to

65% of the net assets of the scheme. The

Scheme will not invest in foreign securitized

debt.

Market cap definition : Large Cap: 1st - 100th

company in terms of full market capitalization.

Mid Cap :101st to 250th company in terms of

full market capitalization. Other equities may

include small cap stocks. Small Cap : 251st

company onwards in terms of full market

capitalization. The exposure across these

stocks will be in line with limits/classification

defined by AMFI/SEBI from time to time

* Including derivatives in Large cap & midcap

as provided in the SID

Baroda Large & Midcap Fund – Investment Strategy

* As per the asset allocation as defined in SID

Baroda Large & Midcap Fund - Current Positioning


Market Cap Allocation - %

27%

TREPs

36

%

Mid Cap

37%

Large Cap

Top 5 Sector Allocation - %

The endeavour of the fund manager is to construct a portfolio with a judicious mix of defensives and

cyclicals. The fund would be dynamically invested across sectors & companies with a regulatory limit of

minimum 35% allocation each to large caps and Mid caps, the balance 30% can be deployed in other

equities including small caps. The fund manager is seeking to deploy the remaining funds in those

sectors which would generate optimum risk adjusted return with least volatility.

No. of Stocks 41


AUM in crs. 554

Baroda Large & Midcap Fund – Fund Positioning

• Large caps and mid caps behave differently over a market cycle. Midcaps tend to outperform bull

markets. During the recent times they fell equally but the pace of recovery is unequal. Historically Large

caps show more stability, over a market cycle of ups and downs. Hence to give an optimum return, they

are more effective together in optimum combination. By investing in mid caps earlier on, we are likely to

see attractive returns as they graduate to becoming large caps.

• Thus, investors looking for wealth creation over long term with diversified blended portfolio with above

average return potential with relatively less volatility Baroda Large and Midcap Fund would be suitable.

The flexibility to invest across market caps & sectors makes it an ideal fund to ride economic and

sectoral cycles.

Portfolio Positioning – Equity Funds

Top 10 Stocks Holdings % to AUM

Tata Consultancy Services Ltd. 4.5

HDFC Bank Ltd. 3.9

ICICI Bank Ltd. 3.2

Infosys Ltd. 3.1

Indraprastha Gas Ltd. 2.8

IPCA Laboratories Ltd. 2.74

Tata Power Company Ltd. 2.41

Crompton Greaves Consumer Electricals Ltd. 2.3

Aarti Industries Ltd. 2.29

Escorts Ltd. 2.14


Reliance Industries Ltd. 7.51

ICICI Bank Ltd. 4.62

Housing Development Finance Corporation Ltd. 4.17

Bharti Airtel Ltd. 3.83

HDFC Bank Ltd. 2.54

Infosys Ltd. 2.47

Dr. Reddy's Laboratories Ltd. 2.43

Maruti Suzuki India Ltd. 2.28

Tech Mahindra Ltd. 2.21

Axis Bank Ltd. 2.05


Reliance Industries Ltd. 7.64

ICICI Bank Ltd. 6.33

Infosys Ltd. 4.35

HDFC Bank Ltd. 4.25

Tata Consultancy Services Ltd. 2.97

Escorts Ltd. 2.16

Bharti Airtel Ltd. 2.13

SBI Cards & Payment Services Ltd. 2.08

Housing Development Finance Corporation Ltd. 2.07

Divi's Laboratories Ltd. 2.04

Baroda Large & Midcap Fund

Baroda Dynamic Equity Fund Baroda Equity Savings Fund


Baroda Short Term Bond FundAn open-ended short term debt scheme investing

in instruments such that the Macaulay duration*

of the portfolio is between 1 year and 3 years* (please refer to pg. 38 of SID)

Baroda Short Term Bond Fund – Current Positioning

• The Scheme predominantly invests in short to medium term debt instruments issued by corporates,

banks etc. & may invest in Gsec depending on the Fund Manager view.

• The broad investment pattern of the fund would be to invest predominantly into Debt & money

market instruments such that the Macaulay duration would be between 1 yr – 3yrs.

• It also aims to capture the credit spread opportunities to generate returns.

• The Scheme actively manages duration with an aim to generate capital appreciation & maintains its

duration in the range of 1 – 3 years

Source : Factsheet, (Data As on 30th Sept ’20)

Average Maturity

1037days

Portfolio Yield

5.27 %

Modified Duration 2.19 yrs.

Macaulay Duration 2.28yrs.

Baroda Short Term Bond Fund – Credit Profile

Source : Factsheet

(Data As on 30th Sept ‘20)

The fund has a conservative view & has majority of its

exposure across AAA & AA rated bonds which are

liquid & easily tradable.

Exposure towards NBFC & HFC has been reduced

over the past months & it stands at 7.27% as on

Sept’20.

Bonds & NCDs, 48.32

CGS, 22.01

CPs, 11.73

CDs, 3.67

Tbills, 5.12

TREPS, 7.13Net Receivable /

Payable, 2.02

% to Net Assets

Contact Us

Head Office:Baroda Asset Management India Ltd. (CIN : U65991MH1992PLC069414) 501, Titanium, 5th Floor,

Western Express Highway, Goregaon (E), Mumbai - 400063

Phone: 022 68481000 / 42197999, Fax: +91 22 6848 1001

Branch Offices:

Chennai:

Baroda Asset Management India Limited,

HP Complex, Flat No.12, 3rd Floor,

Door No. 24/1, 2&3 New No. 14,

G N Chetty Road, T.Nagar, Chennai - 600017

Phone: 044 28343530, Fax: 044 28343539

Delhi:


Flat No. 103 & 104, 1st Floor,

Prakash Deep Bldg,

7 Tolstoy Marg, New Delhi - 110001

Phone: 011-43514662, Fax: 011-4592117

Lucknow:


G - 101 Ground Floor,

SKI High Building, 11/05 Park Road,

Hazaratganj, Lucknow-226001

Phone: 0522 43514564

Email: [email protected] | Website: www.Barodamf.com

To access your folio online : Logon to : https://online.barodamf.com/online

Toll Free Number: 1-800-267 0189

(Monday to Saturday between 9am to 6pm on all business days)

(On 2nd & 4th Saturday of the month between 9am to 6pm)

Bangalore:


Raheja Arcade, No. 1/1, Commercial Premises No. 2

46, 2nd Floor, Koramangala Industrial layout,

Hosur Road, Bangalore - 560 095

Phone: 080 25521375

mailto:[email protected]

Disclaimer

In the preparation of the material contained in this document, Baroda Asset Management India Ltd. (“AMC”) has

used information that is publicly available, including information developed in-house. The AMC, however, does not

warrant the accuracy, reasonableness and/or completeness of any information. This document may contain

statements/opinions/ recommendations, which contain words, or phrases such as “expect”, “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 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), Baroda Mutual Fund (“Mutual Fund”), its sponsor / trustee and

any of its officers, directors, personnel and employees, shall not 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 document in any manner. The recipient alone shall be fully responsible / liable for any

decision taken based on this document. All figures and other data given in this document are dated and may or may

not be relevant at a future date. Prospective investors are therefore 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 the schemes of Baroda Mutual Fund. Past performance may or may not be sustained in the future.

Please refer to the Scheme Information Document of the schemes before investing for details of the scheme

including investment objective, asset allocation pattern, investment strategy, risk factors and taxation.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

baroda mutual fund product presentation –oct’20

Documents