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1 Tax efficient returns # The best of three asset classes HDFC - PowerPoint PPT Presentation

Jan 30, 2024 •203 likes •429 views

1 Tax efficient returns # The best of three asset classes HDFC Equity Savings Fund (An open ended scheme investing in equity, arbitrage and debt) Unhedged Debt Equity 10% to 35% 15% to 40% Arbitrage This product is suitable for investors

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  2. Tax efficient returns # The best of three asset classes HDFC Equity Savings Fund (An open ended scheme investing in equity, arbitrage and debt) Unhedged Debt Equity 10% to 35% 15% to 40% Arbitrage This product is suitable for investors who are seeking*: 25% to 75% • Capital appreciation while generating income over medium to long term • Provide capital appreciation and income distribution to the Riskometer investors by using equity and equity related instruments, arbitrage opportunities, and investments in debt and money market instruments *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. # In view of individual nature of tax consequences. Each unit holder is advised to consult his/her own professional tax advisors. March 2019 2

  3. HDFC Equity Savings Fund – The best of three asset classes A Fund with an optimal mix of equity, debt and arbitrage opportunities Key advantages of HDFC Equity Savings Fund • Volatility lower than Equity Funds Unhedged Debt Equity • 10% to 35% Potential returns* higher than Debt Funds 15% to 40% • Tax efficiency of Equity Funds Arbitrage 25% to 75% *HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the Scheme 2

  4. Why HDFC Equity Savings Scheme? • Long Term Growth – Controlled equity allocation to take advantage of the long term potential of equities (15-40%) • Regular Income – Debt securities (10-35%) and arbitrage opportunities (25-75%) reduce volatility and aid regular income • Low Fund Volatility – Fixed Income exposure and hedged equity exposure (arbitrage) reduces fund volatility inherent to directional equity exposure (refer Slide 9) • Efficient Taxation – Better tax efficiency than debt funds # • Diversified Asset Allocation – Regular balancing between asset classes based on market conditions and outlook HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the scheme. # In view of individual nature of tax consequences, each unit holder is advised to consult his/her own professional tax advisors 3 4

  5. HDFC Equity Savings Fund – Investment strategy • Equity Strategy – Maintains an effectively diversified portfolio – Follows a multi cap strategy, flexibility to invest across large cap, midcap and small cap stocks • Fixed Income Strategy – The fixed income portion is invested in corporate bonds and bank perpetual bonds and GILTS – The maturity profile of debt portion depends on interest rate outlook. Modified duration as on February, 2019 is 1.42 years • Equity Arbitrage Strategy – Hedged equity allocation to gain from spread between future and spot prices The current investment strategy is subject to change depending on the market conditions. For complete details on investment strategy, refer SID/KIM of the scheme. For complete portfolio details visit www.hdfcfund.com 4 5

  6. Fund Positioning Risk Quotient • • HDFC Equity Savings Fund is less volatile than hybrid Aims to provide returns while managing risks equity funds since it has a limited exposure to efficiently. unhedged equity (max up to 40%) Equity Taxation # – Better tax efficiency than debt • • Suitable for conservative investors. funds Equity Funds Product Return Hybrid Equity Funds Equity Savings Funds Hybrid Debt Funds Debt Funds Product Risk # Provided the scheme meets the criteria as an equity oriented scheme as per prevalent Income tax laws. HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the scheme. In view of individual nature of tax consequences. Each unit holder is advised to consult his/her own 5 6 professional tax advisors.

  7. Performance Scenario Analysis of Hybrid Portfolio Strategy Scenario Analysis Assumed Un-hedged Equity Portion returns (35% weight) 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Assumed 9% 14.6% 12.9% 11.1% 9.4% 7.6% 5.9% 4.1% 2.4% 0.6% -1.2% -2.9% Hedged + Fixed Income returns (65% 8% 14.0% 12.2% 10.4% 8.7% 7.0% 5.2% 3.5% 1.7% -0.1% -1.8% -3.6% weight) 7% 13.3% 11.6% 9.8% 8.1% 6.3% 4.6% 2.8% 1.1% -0.7% -2.5% -4.2% How to read the table? Lets take an example of the cell shaded in red Arbitrage & Fixed Income: 8% return * 65% exposure = 5.2% contribution; Equity: 15% return * 35% exposure = 5.2% contribution Performance of the Hybrid Portfolio Strategy = 10.4% return The scenarios of hybrid portfolio of equity, arbitrage and fixed income provided in the table above does not in any manner offer any assured returns and is subject to market risks. The above scenario analysis does not take fund expenses into account. The rates of return shown are assumed figures and not to be construed as actual returns and/or guaranteed returns. HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in the Scheme. The information provided herein is used to explain the concept and is given for illustrative purposes only. The same is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It should not be construed as an investment advice to any party. Past performance may or may not be sustained in future. 6 7

  8. Fund Facts ( As on February 28, 2019) Gross Equity Exposure 66.8% Hedged Equity Exposure (Arbitrage) 32.1% Unhedged Equity Exposure 34.7% Monthly Average AUM (Rs in crores) 6085 Equity (Unhedged) Debt Total Number of stocks in the 53 Average Maturity 1.74 years Portfolio Top 10 Holdings (%) 25.8 Macaulay Duration* 1.54 years Large Cap (%) 30.4 Modified Duration* 1.42 years Mid Cap (%) 2.1 Yield to Maturity* 8.75% Small Cap (%) 2.4 For complete portfolio details refer www.hdfcfund.com * Computed on the invested amount for debt portfolio. 7

  9. Low Fund Volatility Std. Year Scheme/Benchmark Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Deviation Scheme -2.54 -3.56 6.21 1.96 1.28 2.11 4.33 2.69 0.87 1.95 -0.67 -0.48 2.73 2016 Benchmark -1.34 -2.07 3.83 0.88 1.42 1.09 1.89 0.96 0.00 0.63 -0.96 -0.02 1.57 NIFTY50 TRI -5.12 -7.10 10.98 1.49 4.01 1.96 4.74 1.71 -1.93 0.27 -4.46 -0.49 4.84 Scheme 3.05 1.93 2.43 1.48 0.56 0.53 1.92 -0.37 0.14 2.05 0.41 1.27 1.03 2017 Benchmark 1.28 1.03 1.29 0.40 1.07 0.22 2.10 -0.28 -0.33 1.55 -0.23 1.17 0.80 NIFTY50 TRI 4.46 3.83 3.47 1.52 3.25 -0.66 6.12 -1.48 -1.29 5.49 -1.01 3.18 2.74 Scheme 0.80 -1.70 -1.04 1.29 -0.33 -0.63 1.89 1.59 -1.94 -0.66 0.68 0.61 1.28 2018 Benchmark 1.15 -1.47 -0.68 1.47 0.26 -0.09 1.97 1.03 -1.74 -0.92 1.69 0.07 1.25 NIFTY50 TRI 4.47 -4.69 -3.80 5.62 0.18 0.03 6.03 3.01 -6.83 -4.58 4.74 -0.13 4.49 Monthly Returns of the Scheme and NIFTY50 depicts that HDFC Equity Savings Fund has been less volatile as compared to NIFTY50 Monthly Returns are as on the end of the respective month and have been shown since Jan’16 as there was a change in the fundamental attributes of the scheme viz; from HDFC Multiple Yield Fund, open ended Income Scheme to HDFC Equity Savings Fund. For complete performance details, please refer slide 15-18. Scheme performance may not strictly be comparable with that of NIFTY 50 in view of hybrid nature of the scheme where the investments are made in equity (hedged and unhedged) and debt instruments. 8 Benchmark - 40% NIFTY 50 Arbitrage Index, 30% CRISIL Short Term Bond Fund Index and 30% NIFTY 50 (Total Returns Index)

  10. Return Profile 2 Year Rolling Returns (15 th Dec 2015* – 28 th Feb 2019) Particul ticulars % Number of Observations 298 % Minimum 5.23 Less than 5% 0 0% Maximum 18.92 5% - 8% 73 24.5% Average 11.29 Greater than 8% 225 75.5% Std.Deviation 3.84  The fund has given average returns of 11.29% based on 2 year rolling basis with very low volatility.  The fund has never given less than 5% return on 2 year rolling basis.  The fund has delivered greater than 8% return in 75.5% observations based on 2 rolling basis. * Returns have been shown since 15 th Dec’15 as there was a change in the fundamental attributes of the scheme viz; from HDFC Multiple Yield Fund, open ended Income Scheme to HDFC Equity Savings Fund. For complete performance details, please refer slide 15-18. 9

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