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Page 1: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%
Page 2: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Table of Contents

• Sources Of Returns

• Investment Risk Profile

• Current Market Outlook

• Investment Strategy

• Portfolio Composition

• Fund Suitability

• Product Features and Asset Allocation Pattern

• Disclaimer

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Page 3: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Sources of Returns

• Interest accruals

• Capital gains arising during falling interest rates scenarios

• Gains from narrowing of spreads on corporate bonds over Government Securities

• Roll down on the yield curve

3

HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in thescheme.

Page 4: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Investment Risk Profile

4

Risk

Ret

urn

Short Term Plans

Liquid Funds

Ultra Short Term Funds

Short Term Plans

Income Funds

GILT Funds

In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

Page 5: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Key Interest Rate Determinants And Their Outlook

• Fiscal Deficit – Consolidation continues; from 4.9% in FY13 to 3.2% in FY18 BE

• Inflation – Likely to undershoot Mar’17 RBI target; average 4.5% in FY18

• CAD – Manageable, even with an increase to over 1% in FY18

• Global – Heightened external risks due to uncertain policy environment

• RBI Policy – “Neutral” stance to continue; prolonged pause

Source: Budget documents, publicly available information, HDFC AMC estimates 5

Page 6: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Source: Bloomberg, MOSPI

CPI – Expected To Be Range Bound Around 4.5%

6

Wts Apr-16 Apr-17 yoy chg

Combined CPI 100.0 5.47 2.99 -2.48

Food and beverages 45.9 2.98 0.61 -2.38

Pulses and Products 2.4 0.84 -0.50 -1.34

Cereals and products 9.7 0.24 0.48 0.24

Sugar and confectionery 1.4 0.12 0.13 0.01

Gold and silver 1.2 0.06 0.02 -0.04

Fuel 4.4 -0.06 0.40 0.46

True core 46.2 2.26 1.89 -0.38

Page 7: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Real Rates Still High Supportive Of Lower Yields

Consistently Positive Real Interest Rates Since Last 3 Years..

Source: Bloomberg, HDFC AMC. Data as of April 2017HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme 7

-4

-3

-2

-1

0

1

2

3

4

5

6

Real Interest Rates = Difference between 10Y G-Sec Yield and CPI

India Real Rates US Real Rates

Page 8: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Single “A” credits are at attractive spreads Debt weighted credit ratio is improving steadily

Credit Outlook – Significant Improvement

Source: Reuters, HDFC AMC, CRISILHDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme 8

Page 9: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Current Investment Strategy

• Focus on investing in instruments with higher accruals.

• Interest rates and bond prices have an inverse relationship. When interest rates fall, bond prices goup and vice versa. The scheme portfolio has a potential for capital gain in case of a reduction ininterest rates.

• Portfolio average maturity less 3 years, with max 20% investment in instruments between 3 to 5years maturity

• Controlled credit exposures (non – AAA)

• Well diversified investment across sectors & entities (see Portfolio breakup on slide 14 & 15)

• Allocate a reasonable investment in Money Market Instruments & / or AAA rated corporates tomaintain liquidity

9

The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com.HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the schemenor investment advice in the scheme mentioned.

Page 10: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

A Disciplined Credit Strategy

• Credit Risk Analysis – Emphasis on 4 C’s of Credit (refer slide No. 11)

• Investment Limit Setting through a Credit Scoring Model

• Comprehensive Credit Analysis

• Credit Monitoring & Review

• Synergies with Equity Research Team

10

The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com.HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the schemenor investment advice in the scheme mentioned.

Page 11: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

• Emphasis on Four C’s of Credit

Character of Management

Capacity to Pay

Collateral pledged to secure debt

Covenants of debt

• Credit Scoring Model factors – Parentage, Financials, Rating, & Outlook

• Investment limits are a function of credit score – better the score, higher the limit

• Cumulative absolute exposure limit across fund house for each credit

• Effective diversification to reduce correlation risk

• Credit monitoring and review is performed on a periodic basis.

Key Elements of Credit Risk Assessment Framework

11

The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com.HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the schemenor investment advice in the scheme mentioned.

Page 12: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

HDFC Regular Savings FundA Well Diversified Portfolio

12

Top Credit Exp. (non AAA)

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as April 30, 2017. Portfolio holdings are as a percentage of total portfolioholdings. Debt instruments referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or futurepositions in these instruments.

Across Individual Credits

Top Ten Credit Exp. (non AAA) = 36%

Exposure % AUM

Top 6

Top 5 22

Top 10 36

Top 20 52

Tata Motors Finance Limited,

5.6%

Vedanta Ltd., 5.3%

HPCL-Mittal Energy Limited, 3.9%

Nirchem Cement Limited, 3.8%

Adani Transmission Limited, 3.7%

Sadbhav Infrastructure

Project Limited, 3.6%

Adani Power Limited, 3.4%

Aditya Birla Retail Limited, 2.5%

Prism Cement Limited, 2.3%

EID Parry (India) Limited, 2.2%

Page 13: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

HDFC Regular Savings FundA Well Diversified Portfolio

13

Across Business Groups

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on April 30, 2017. Portfolio holdings are as a percentage of totalportfolio holdings. Debt instruments referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present orfuture positions in these instruments.

Top business group-wise exp. (non AAA)

Top Ten Credit Exp. (non AAA) = 41%

Exposure % AUM

Top 7

Top 5 26

Top 10 41

Top 20 58

Adani17%

Tata Motors Group14%

Vedanta13%

HPCL10%

Nirma9%

Sadbhav Group9%

Tata Sons Group9%

Murugappa7%

Aditya Birla Retail Ltd.6%

Zee Group (Sec by shares of Zee TV

and Dish TV)6%

Page 14: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

HDFC Regular Savings Fund Positioning based on fund mandate and risk-reward metrics

14

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on April 30, 2017. Portfolio holdings are as a percentage oftotal portfolio holdings.

AAA + Cash & Cash Equivalents28.1%

AA+7.1%

AA-16.1%

AA22.2%

A+16.1%

A-5.7%

A4.3%

Unrated0.4%

AAA + Cash & Cash Equivalents

AA+

AA-

AA

A+

A-

A

Unrated

Page 15: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

HDFC Regular Savings FundDiversification Across Sectors

Refer disclaimer/risk factors on slide

no 16 15

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on April 30, 2017. Portfolio holdings are as a percentage of totalportfolio holdings

16%

13%

8% 8% 8% 8%7% 7%

4% 4%3% 3% 3%

9%

Non BankingFinance

Companies

Promoter LAS ConstructionEPC

HousingFinance

Companies

Cement Metals Cash Power PublicFinancial

Institutions

PetroleumProducts

Retailing ConsumerNon Durables

Real Estate Others (8Sectors)

Page 16: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

HDFC Regular Savings FundPortfolio Statistics

16

Portfolio Classification by Rating Class (%)

AAA & Equivalent, A1+ & Equivalent 21.3%

AA+ & below 71.5%

Unrated 0.4%

Cash, Cash Equivalents and Net Current Assets

6.8%

AUM For the Month Ended April 30th

2017 (In Rs. Cr.)4,648

Average Maturity Modified Duration Yield To Maturity

1.78 years 1.53 years 8.46%

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on April 30, 2017.

88.06%

5.18% 6.76%

Credit Exposure CD/CP Cash & CashEquivalents

Portfolio Rating By Class (%)

Page 17: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Fund Suitability

• Investors looking to diversify their debt portfolios across the ratings spectrum

• Investors with a tolerance to moderate MTM and interest rate risk in return for moderately higher returns

• The scheme is ideal for an investment horizon of above 12 months

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Page 18: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Product Features

18

$ Mr. Rakesh Vyas. (Dedicated Fund Manager for Overseas Investments)

For further details refer SID/KIM available at HDFC Mutual Fund ISCs and on the website at www.hdfcfund.com

Type of Scheme An Open-ended Income Scheme

Inception Date February 28, 2002

Investment Plans Direct Plan, Regular Plan

Investment Options Under both the Plans: Growth Option and Dividend Option. Dividend Option offers Payout and Reinvestment facility.

Minimum ApplicationAmount (Under eachPlan/ Option)

Purchase:

Rs 5,000 and any amount thereafter

Additional Purchase:

Rs 1,000 and any amount thereafter

Load Structure

(w.e.f 27th July 2016)

Entry Load:

Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registeredDistributor) based on the investors’ assessment of various factors including the service rendered by the ARN Holder.

Exit LoadIn respect of each purchase / switch-in of Units, 15% of the units (“the limit”) may be redeemed without any exit Load from the date of allotment.

In respect of each purchase / switch-in of units, an exit load of 0.75% is payable if units are redeemed / switched-outwithin 12 months from the date of allotment.

No exit load is payable if units are redeemed / switched-out after 12 months from the date of allotment.

Fund Manager $ Anil Bamboli

Benchmark CRISIL Short Term Bond Fund Index

Page 19: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Asset Allocation Pattern

Types of InstrumentsAllocation (% of Net Assets)

Risk ProfileMinimum Maximum

Debt Securities with less than 3 yearsresidual maturity and Money MarketInstruments

80 100 Low to Medium

Debt Securities with less than 5 yearsresidual maturity

0 20 Low to Medium

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The scheme may seek investment opportunity in Foreign Debt Securities (max. 50% of net assets) subjectto SEBI (Mutual Funds) Regulations, 1996. The scheme may use derivatives mainly for the purpose ofhedging and portfolio balancing (max. 50% of net assets) based on the opportunities available subject toSEBI (Mutual Funds) Regulations, 1996. The scheme will not invest in foreign securitized debt.

Under normal circumstances, the asset allocation (% of net assets) of the Scheme’s portfolio will be as follows:

It is the intention of the Scheme that the investments in securitised debts will not, normally, exceed 60% of the Net Assets of the Scheme. Average Maturity shall be from 1 to 3 years.

Page 20: Table of Contents -  · PDF fileTable of Contents • Sources Of ... • Investment limits are a function of credit score ... Cash, Cash Equivalents and Net Current Assets 6.8%

Disclaimer & Risk Factors

This presentation dated 19th May 2017 has been prepared by HDFC Asset Management CompanyLimited (HDFC AMC) based on internal data, publicly available information and other sources believed tobe reliable. Any calculations made are approximations, meant as guidelines only, which you mustconfirm before relying on them. The information contained in this document is for general purposesonly. The document is given in summary form and does not purport to be complete. The document doesnot have regard to specific investment objectives, financial situation and the particular needs of anyspecific person who may receive this document. The information/ data herein alone are not sufficientand should not be used for the development or implementation of an investment strategy. Thestatements contained herein are based on our current views and involve known and unknown risks anduncertainties that could cause actual results, performance or events to differ materially from thoseexpressed or implied in such statements. Past performance may or may not be sustained in future.Neither HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any liabilityarising from the use of this document. The recipient(s) before acting on any information herein shouldmake his/her/their own investigation and seek appropriate professional advice and shall alone be fullyresponsible / liable for any decision taken on the basis of information contained herein.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

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Thank You