idbi basic of mf & sbi product

A joint venture between SBI and Société Genéralé Asset Management

SBI MUTUAL FUND


CONCEPT AND ROLE OF A MUTUAL FUND

How Mutual Fund works? A vehicle for investing in portfolio of stocks and bonds


Mutual Fund

Mutual fund is a vehicle to mobilize moneys from investors, to invest in different markets and securities, in line with the investment objectives agreed upon, between the mutual fund and the investors.


Schemes Earnings

• Investments can be said to have been handled profitably, if the following profitability metric is positive:

(A) +Interest income(B) + Dividend income(C) + Realized capital gains(D) + Valuation gains(E) – Realized capital losses(F) – Valuation losses(G) – Scheme expenses


How do Mutual Fund Schemes Operate?

• The relative size of mutual fund companies is assessed by their assets under management (AUM).

• When a scheme is first launched, assets under management would be the amount mobilized from investors.

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New Fund Offer

• When a scheme is first made available for investment, it is called a ‘New Fund Offer’ (NFO).

• During the NFO, investors may have the chance of buying the units at their face value.

• Post- NFO, when they buy into a scheme, they need to pay a price that is linked to its NAV.


Asset Under Management

• The relative size of mutual fund companies is assessed by their assets under management (AUM).

• When a scheme is first launched, assets under management would be the amount mobilized from investors. Thereafter, if the scheme has a positive profitability metric, its AUM goes up; a negative profitability metric will pull it down.

• Further, if the scheme is open to receiving money from investors even post-NFO, then such contributions from investors boost the AUM.

• Conversely, if the scheme pays any money to the investors, either as dividend or as consideration for buying back the units of investors, the AUM falls.


Advantages of Mutual Funds for Investors

• Professional Management• Affordable Portfolio Diversification• Liquidity• Tax Deferral• Tax benefits• Convenient Options• Investment Comfort• Regulatory Comfort


Limitations of a Mutual Fund

• Lack of portfolio customization• Choice overload• No control over costs


Types of Mutual Funds…

Mutual Funds

Equity Funds Debt Funds Balanced Funds

Diversified Mid Cap Large Cap ELSS

Gift Funds Income Funds

MIPS Short Term Plans Funds

Liquid Funds


Debt, Equity and Hybrid Funds

• A scheme might have an investment objective to invest largely in equity shares and equity related investments like convertible debentures. Such schemes are called equity schemes.

• Schemes with an investment objective that limits them to investments in debt securities like Treasury Bills, Government Securities, Bonds and Debentures are called debt funds.

• Hybrid funds have an investment charter that provides for investment in both debt and equity. Of late, there have been funds that also invest in Gold along with either debt or equity or both.


Open-Ended Funds

• Open-ended funds are open for investors to enter or exit at any time, even after the NFO.

• When existing investors buy additional units or new investors buy units of the open-ended scheme, it is called a purchase transaction. It happens at a sale price, which is equal to the NAV.


Close-Ended Funds• Close-ended funds have a fixed maturity. Investors can buy

units of a close-ended scheme, from the fund, only during its NFO.

• The fund makes arrangements for the units to be traded, post-NFO in a stock exchange. This is done through a listing of the scheme in a stock exchange. Such listing is compulsory for close-ended schemes.

• After the NFO, investors who want to buy Units will have to find a seller for those units in the stock exchange. Similarly, investors who want to sell Units will have to find a buyer for those units in the stock exchange.

• Since post-NFO, sale and purchase of units happen to or from a counter-party in the stock exchange – and not to or from the mutual fund – the unit capital of the scheme remains stable.


Interval Funds

• Interval funds combine features of both open-ended and close-ended schemes.

• They are largely close-ended, but become open-ended at pre-specified intervals.

• between these intervals, the Units have to be compulsorily listed on stock exchanges to allow investors an exit route.

• The periods when an interval scheme becomes open-ended, are called ‘transaction periods’;

• The period between the close of a transaction period, and the opening of the next transaction period is called ‘interval period minimum duration of interval period is 15 days


Actively Managed Funds

• Actively managed funds are funds where the fund manager has the flexibility to choose the investment portfolio, within the broad parameters of the investment objective of the scheme.

• Since this increases the role of the fund manager, the expenses for running the fund turn out to be higher.

• Investors expect actively managed funds to perform better than the market.


Passive Funds• Passive funds invest on the basis of a specified

index, whose performance it seeks to track.• They are not designed to perform better than the

market. Such schemes are also called index schemes. • Since the portfolio is determined by the index itself, the

fund manager has no role in deciding on investments. • Therefore, these schemes have low running costs.


Low Risk

HighRisk


FINANCIAL PLANNING


Financial Planning

• Financial planning is a planned and

systematic approach to provide for the

financial goals that will help people realise

their needs and aspirations, and be happy.


Assessment of Financial Goals

• An estimate of these future expenses (the financial goals) requires the following inputs:– How much would be the expense, if it were incurred today?– How many years down the line, the expense will be incurred?– During this period, how much will the expense rise on account of

inflation?– If any of these expenses are to be incurred in foreign currency,

then how would changes in exchange rate affect the financial commitment?

• This is done using the formula A = P X (1 + i)n

– A = Rupee requirement in future, where,– P = Cost in today’s terms– i = inflation– n = Number of years into the future, when the expense will be

incurred.


Assessing the Fund Requirement

• This can be calculated using a variation of the formula used earlier i.e. P = A ÷ (1 + r) n– P, A and n have the same meaning as in the

earlier formula, where:– r represents the return expected out of the

investment portfolio.


INVESTMENT SERVICES


Investment Services

• Systematic Investment Plan (SIP)• Systematic Withdrawal Plan• Systematic Transfer Plan• Nomination• Pledge


SIP

• A systematic investment plan (SIP) is an option where you invest a fixed amount in a mutual fund at pre-defined regular intervals. It is a disciplined investment plan and cost averaging helps reduce impact of market volatility

SBI MUTUAL FUND

A joint venture between SBI and Société Genéralé Asset Management SBI MUTUAL FUND


RECOMMENDING MODEL PORTFOLIOS


Risk Profiling

• Risk profiling is an approach to understand the risk appetite of investors - an essential prerequisite to advise investors on their investments.

• The investment advice is dependent on understanding both aspects of risk:– Risk appetite of the investor– Risk level of the investment options being

considered.


Factors that Influence the Investor’s Risk Profile


Model Portfolios


Selection of Fund/ Scheme


Selection of Fund/ Scheme

• Within a category the right scheme can be selected based on criteria such as

– Past performance of the scheme,

– Comparison with peer set

– Benchmark

– Scheme size,

– Expense ratio of the scheme etc


SBI MF PRODUCTS- EQUITY SCHEMES

Equity/ Growth Funds • SBI Magnum Equity fund • SBI BlueChip Fund • SBI Magnum Multicap Fund • SBI Magnum Multiplier Plus

1993 • SBI Magnum Global Fund• SBI Small and Midcap Fund • SBI Midcap Fund

Sectoral Funds • SBI Emerging Business Fund • SBI Contra Fund • SBI FMCG Fund • SBI IT Fund • SBI Pharma Fund

Hybrid Fund•SBI Magnum Balanced Fund•SBI EDGE Fund

Thematic Funds •SBI Magnum COMMA Fund •SBI Infrastructure Fund •SBI PSU Fund

ELSS Funds •SBI Magnum TaxGain Scheme 1993

------------------------------•SBI Arbitrage opportunities Fund


SBI BlueChip Fund:A largecap fund with upto 20% flexibility to invest in midcaps

• Positioning:• Pre-dominantly large cap, up to 20% flexibility to invest

into mid caps• SBI Bluechip fund is higher on risk and potential return

than any pure large cap fund as it may take an opportunistic exposure of to midcap stocks;

• We don’t take active cash calls. Cash is maintained at a max of 10% for liquidity and portfolio rebalance purposes.

• Investment perspective – medium to long term, 3-5 years

• Benchmark: S&P BSE 100


SBI BLUE CHIP FUND• Investment Process:• The portfolio follows a bottom- up strategy combined with a focus on

change in sector dynamics, that leads to sector overweight / underweight decision.

• Focus on generating alpha by better stock selection within a sector Stock selection is done based on the below parameters:

- Management who tend to consistently perform in terms of growth and efficient capital allocation

- Valuations: relative to own history and change in growth profile- Change in leadership which can impact significantly positively or

negatively.- Monitoring key strategic decisions by the management which will drive

the growth in next 3-5years• Midcap allocation is with a view of better growth outlook and valuation

gap vis-à-vis large cap peers.


Top 10 Holding

Stock Name (%) Of Total AUM

HDFC BANK LIMITED 7.97%TATA CONSULTANCY SERVICES LTD. 4.23%HCL TECHNOLOGIES LIMITED 3.94%MARUTI SUZUKI INDIA LIMITED 3.73%TATA MOTORS LTD 3.54%LARSEN & TOUBRO LIMITED 3.42%MOTHERSON SUMI SYSTEMS LIMITED 3.41%STATE BANK OF INDIA 3.18%INFOSYS LIMITED 3.17%ICICI BANK LTD 3.15%TOTAL 39.74%


Performance: Lumpsum As on 09/04/2015

6 Months 1 Year 3 Years 5 YearsSBI Bluechip Fund 21.1 51.6 28.8 15.4S&P BSE 100 11.1 30.8 19.1 10.1

SBI Magnum Bluechip Fund

SIP Investments 1 Year SIP

3 Year SIP 5 Year SIP 7 Year SIP Since Inception (14 - Feb, 2006)

Total Amount Invested 12,000 36,000 60,000 84,000 108,000

Market Value as on Jan 30, 2015 15,360 58,872 106,518 171,353 229,491

Returns (% Annualized) 55.85 34.74 23.17 20.02 16.27

S&P BSE 100 Ret (% Annualized) 39.77 25.72 16.78 15.29 13.20

S&P BSE Sensex Ret (% Annualized) 36.16 24.94 16.55 15.04 12.95


SBI MAGNUM BALANCED FUND Positioning:• Invests in a mix of equity & debt securities• Exposure in equity is at least 50% and exposure

in debt & money market securities can be upto 50%

• Equity portion is invested in a diversified portfolio of large & mid caps

• Debt portion is invested in investment grade securities with active duration management

Benchmark: CRISIL Balanced Index


SBI MAGNUM BALANCED FUNDInvestment Process:• The Equity allocation of the fund is divided into two

buckets; 40% large cap and 60% concentrated high conviction bets (likely mid-and-small caps)

• The fund targets a benchmark coverage of 25%• The fund will maintain max 10% cash (of the entire

portfolio, including debt)• Investment perspective - medium term, 3-5 years


SBI MAGNUM BALANCED FUND

Performance: Lumpsum

As on 09/04/2015

6 Months 1 Year 3 Years 5 Years

SBIMagnum Balanced Fund18.4 45.8 27.5 14.7

Crisil Balanced Fund Index 11.6 33.1 16.0 9.7

SBI Magnum Balanced Fund

SIP Investments 1 Year SIP 3 Year SIP 5 Year SIP 7 Year SIP 10 Year SIP 15 Year SIP Since Inception (9 - Oct, 1995)

Total Amount Invested 12,000 36,000 60,000 84,000 120,000 180,000 229,000

Market Value as on Jan 30, 2015 15,373 58,864 106,127 169,107 288,977 902,310 1,814,396

Returns (% Annualized) 56.06 34.73 23.02 19.64 16.75 19.35 18.84

Crisil Balanced Fund Ret (% Annualized) 33.27 20.92 14.81 13.48 12.28 13.18 11.69

S&P BSE Sensex Ret (% Annualized) 36.16 24.94 16.55 15.04 13.57 16.25 14.41


SBI MAGNUM GLOBAL FUND• Positioning:• SBI Magnum Global Fund is a midcap biased fund which

can invest up to 25% of its assets in large caps.• Large cap investments in the lower bracket of large cap

capitalization, which makes it quasi-mid cap.• SBI Magnum Global Fund follows a “Quality” philosophy of

investing.• over 3-5 year period, SMGF should outperform peers and

benchmark.

• Benchmark: S&P BSE Midcap Index


SBI MAGNUM GLOBAL FUND Performance: Lumpsum

As on 09/04/2015

6 Months 1 Year 3 Years 5 YearsSBIMagnum Global Fund 25.1 70.4 33.9 21.9S&P BSE Midcap 15.4 51.7 20.1 9.3

SBI Magnum Global Fund

SIP Investments 1 Year SIP

3 Year SIP 5 Year SIP 7 Year SIP 10 Year

SIP 15 Year SIPSince

Inception (30 - Sep, 1994)

Total Amount Invested 12,000 36,000 60,000 84,000 120,000 180,000 245,000

Market Value as on Jan 30, 2015 16,649 67,271 125,671 221,517 375,092 1,690,019 3,361,820


S&P BSE MidCap (% Annualized) 55.25 31.68 18.07 16.08 12.48 18.24 16.04



SBI MAGNUM MID CAP FUND• Positioning:• SBI Magnum Midcap fund can invest 65% - 100 % of its

assets in midcap stocks.• The fund can have opportunistic exposure to large cap to

a maximum of 20%• It also selectively invests in small cap stocks to generate

alpha and in large cap stocks from liquidity perspective• The fund follows a bottom up strategy and focuses on

generating absolute returns with a three years perspective.

• The fund is sector agnostic• Benchmark: S&P BSE Midcap Index


SBI MAGNUM MIDCAP FUNDPerformance: Lumpsum 6 Months 1 Year 3 Years 5 YearsSBIMagnum Global Fund

25.9 72.0 40.1 21.0

S&P BSE Midcap 15.4 51.7 20.1 9.3

SBI Magnum Midcap FundSIP Investments 1 Year SIP 3 Year SIP 5 Year SIP 7 Year SIP Since Inception (15- Apr, 2005)

Total Amount Invested

12,000 36,000 60,000 84,000 118,000

Market Value as on Jan 30, 2015

16,254 70,877 130,110 212,934 317,634

Returns (% Annualized)

71.86 49.41 31.58 26.15 19.29

S&P BSE Mid Cap (% Annualized)

55.25 31.68 18.07 16.08 12.44

S&P BSE Sensex Ret (% Annualized)

36.16 24.94 16.55 15.04 13.48


SBI MAGNUM TAX GAIN SCHEME• Positioning:• Pre-dominantly large cap fund with minimum 70% in

large caps, large caps defined as the top 100 companies in terms of market cap rank

• We don’t take active cash calls. Cash is maintained at a max of 10% for liquidity and portfolio rebalancing

• purposes.• Investment perspective – medium to long term, 3-5 years• Investment in SMTGS is eligible for deduction under

section 80C up to amount of INR 150,000/-

• Benchmark: BSE 100 Index


SBI MAGNUM TAX GAIN SCHEME• Investment Philosophy and Process:• MTGS usually operates with market cap based allocation

of 75%-80% large cap and 20%-25% mid cap.• The fund takes sector allocation calls on very few

sectors and decides to go overweight / underweight the sectors. The sector deviation is usually maintained between 2% - 5%.

• Considering the size of the Fund of more than 5,000 crores, liquidity is an important criteria for stock selection


SBI MAGNUMTAX GAIN SCHEME


As on 09/04/2015

6 Months 1 Year 3 Years 5 YearsSBI Magnum Taxgain Scheme 17.2 50.0 26.4 14.9S&P BSE 100 11.1 30.8 19.1 10.1SBI Magnum Taxgain Scheme

SIP Investments 1 Year SIP 3 Year SIP 5 Year SIP 7 Year SIP 10 Year SIP 15 Year

SIP

Since Inception (31 -

Mar, 1993)Total Amount Invested 12,000 36,000 60,000 84,000 120,000 180,000 263,000

Market Value as on Jan 30, 2015 15,475 59,639 106,952 172,418 299,172 1,456,104 4,029,550


S&P BSE 100 Ret (% Annualized) 39.77 25.72 16.78 15.29 13.70 16.62 13.97



SBI MF PRODUCTS- DEBT SCHEMES

DEBT SCHEMES• SBI Ultra short term Debt

fund• SBI Short term Debt fund• SBI Magnum Monthly

income plan• SBI Premier Liquid Fund• SBI Magnum Gilt Fund-

ST• SBI Magnum Gilt Fund-

LT• SBI savings Fund

DEBT SCHEMES

SBI Dynamic Bond Fund

SBI Magnum Insta Cash Fund

SBI Treasury Advantage Fund

SBI Corporate Bond Fund


Risk

Return

Managing debt strategies across risk spectrum

Money Market

Ultra Short Term Bond

Short Term Bond

Fixed Maturity Plan

Short Term GILT

Bond Fund

Long Term

Dynamic Bond SBI Dynamic Bond Fund

Magnum GILT Fund - Long Term Plan

Magnum Income Fund

Magnum GILT Fund - Short Term Plan

SBI Short Horizon Debt Fund

SBI Select Debt Fund Series

SBI Short Horizon Debt Fund - Ultra Short Term Fund

Magnum Insta Cash, Magnum Insta Cash - Liquid Floater, SBI Premier Liquid Fund


Portfolio Construction of Liquid and Ultra Short Term funds


SBI Premier Liquid Fund

• SBI Premier Liquid Fund (SPLF) is a liquid fund and the scheme investments would be made in securities with maturity less than or equal to 91 days. The investments in the scheme would be made only in debt/ money market securities.


SBI Premier Liquid FundDate of Inception 24/11/2003

Fund Manager Mr. Rajeev Radhakrishnan

Minimum Application Rs. 50,000/- and in multiples of Rs. 1 thereafter

Entry Load N.A.

Exit Load Nil

SIP N.A.



As on 09/04/2015

6 Months 1 Year 3 Years 5 YearsSBI Premier Liquid Plan 4.3 8.9 9.2 8.7SBI Insta Cash Fund 4.3 8.9 9.1 8.6


SBI SAVINGS FUND FORMARLY KNOWN AS SBI Magnum Income Fund – Floating Rate Plan – Savings Plus Bond Plan

• To endeavour to mitigate interest rate risk and seek to generate regular income alongwith opportunities for capital appreciation through a portfolio investing in Floating rate debt securities, Fixed rate securities, derivative instruments as well as in Money Market instruments


This product is suitable for investors who are seeking:

• Regular income for medium term• Investment in floating rate Debt and Money

Market securities• Best suited for conservative investors • This Plan will be ideal for investors with a short-

term investment horizon of not more than 1 year.


• EXIT LOAD: FOR EXIT WITHIN 3 BUSINESS DAYS :-

0.10%

Performance as on 9th April 2015

1-Year 3-Year 5-Year 10-YearSBI Savings Fund 8.79 9.19 8.84 7.69


What is Monthly Income Plan?

• Monthly Income Plans or MIPs are debt-oriented products designed with the objective of giving

a regular return (in the form of dividend) in addition to capital appreciation to investors. However

Monthly Income is not assured and is subject to the availability of distributable surplus

• The periodicity of return depends upon the option chosen by the investor. MIPs generally come

with the monthly, quarterly, half-yearly, yearly dividend and growth options.

• Investors, who choose the growth option, are entitled for a return by way of gains in the form of

capital appreciation.

• MIP generally invests some portion of its assets (about 10-25%) in equities and the balance in

debt and money-market instruments.

• Having exposure in debt & money market instruments takes benefit of relatively safer

investment avenue with moderate returns.

• Having exposure in equity takes benefit of capital appreciation with high expected returns


Who should invest in MIP?

• Retired or near to retirement investors who can get regular

monthly/quarterly/yearly income through dividends.

• Age group of 50+ years: Conservative investors who want to earn marginally

better returns than a debt-only portfolio.

• Young investors, HNIs, Institutions & Trusts, Pension funds who can match

their regular normal outflows with regular inflows from the MIP.


Features: SBI Magnum Monthly Income Plan (AN OPEN-ENDED DEBT SCHEME, MONTHLY INCOME IS NOT ASSURED AND IS SUBJECT TO AVAILABILITY OF DISTRIBUTABLE SURPLUS)

• An Investment in actively managed portfolio of equity, debt & money market instruments

• Aims to provide regular income, liquidity and attractive returns through equity ,debt and money market instruments.

• Minimum Investment – Rs. 5000

• Exit load: : For exit within 1 year from the date of allotment, For 10% of investment : Nil ; For remaining investment: 1.00% ; For exit after one year from the date of allotment – Nil (w.e.f. February 13, 2014)

• Systematic Investment Plan (SIP): Monthly- Minimum Rs. 1000 & in multiples of Rs. 1 thereafter for a minimum six months (or) Minimum Rs. 500 & in multiple of Rs. 1 thereafter for a minimum one year. Quarterly – Minimum Rs 1500 & in multiple of Rs. 1 thereafter for minimum one year.


Features: SBI Magnum Monthly Income Plan (AN OPEN-ENDED DEBT SCHEME, MONTHLY INCOME IS NOT ASSURED AND IS SUBJECT TO AVAILABILITY OF DISTRIBUTABLE SURPLUS)

Performance As on 09/04/15

6 month 1Y 3Y 5Y

Fund % 10.5 19.9 12.3 9.3

Crisil MIP Blended Index %6.9 13.5 7.6 4.8


Performance As on 09/04/15

Data as on July 8 ,2014

SBI Corporate Bond Fund

3 mth (%) 6 mth (%) 1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns 2.6 6.2 11.1 10.8 10.2 9.5

Category avg 2.1 4.6 9.2 9.1 9.0 8.5


http://grietinfo.in/projects/MAIN/MBA2012/cd-6-MUTUL%20FUNDS.pdf

idbi basic of mf & sbi product

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