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Why ELSS? • Deduction U/s 80C – Deduction can be claimed by investing in ELSS funds along with other prescribed investments u/s 80C upto Rs 1,50,000/- • Exposure to equities with a long term horizon • 3 Year lock in ensures money remains invested without taking into account volatility in equity markets. • Lock in period lower than other investment options like PPF, NSC or Tax Saving Bank FD`s • Options to Invest, Options to earn • Investments can be made in lump sums or by way of SIP`s as small as Rs 500/- • Income could potentially be earned by way of dividend or through capital appreciation based on the investors need The following example illustrates Tax Saving: Assume Gross Total Income for the year is Rs. 12,00,000 Investors can avail benefit of Rs. 46,800 under Section Investment in HDFC TaxSaver Rs. 1,50,000 80C* by investing in ELSS on day one of investments. This is apart from the returns ELSS could possibly earn Income on which tax will be paid Rs. 10,50,000 Tax Saved on Rs. 1,50,000/- Rs. 46,800* * Calculated for individuals in the highest tax bracket, having taxable income up to Rs. 50 lakh. Investors should be aware that the fiscal rules/ tax laws may change and there can be no guarantee that the current tax position may continue indefinitely. HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. In view of individual nature of tax consequences, each investor is advised to consult his/her own professional tax advisor. 2
HDFC TaxSaver - Current Portfolio Strategy • Focus on Large caps As on January 31, 2020: Large Cap Small Cap Exposure Scheme Name Mid Cap (%) (%) (%) HDFC Tax Saver (G) 82.25 8.12 4.05 Average of the 15 largest ELSS schemes* 65.78 20.67 10.24 * Source: MFI Explorer. The largest 15 open-ended ELSS Schemes in terms of asset under management have been considered in calculating the average. • In order to provide long term capital appreciation, the scheme will invest mainly in growth companies • The aim will be to create a portfolio, which represents a cross-section of strong growth companies in the prevailing market • With an aim to reduce the risk, the portfolio will target reasonable diversification • The fund aims to focus on growth at a reasonable price strategy HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions. Please refer Scheme Information Document for further details. Please refer the website www.hdfcfund.com for complete portfolio details. 3
Top 10 Holdings – January 31, 2020 Company Name % to NAV Description ICICI Bank Ltd. 9.63 Leading Private Sector Corporate Lender State Bank of India 7.51 Leading Public Sector Corporate Lender NTPC Limited 7.00 Largest power generator in the country HDFC Bank Ltd. 6.71 Leading Private Sector Retail Lender Infosys Limited 6.32 Leading IT company Leader in EPC (Engineering, Procurement, Larsen and Toubro Ltd. 6.09 Construction) Projects Multinational conglomerate engaged in Energy, Reliance Industries Ltd. 5.67 Petrochemicals, Retail, Media and Telecom One of the largest oil refining and marketing Bharat Petroleum Corporation Ltd. 5.47 company ITC Ltd. 3.96 Leading FMCG Company Leading natural gas processing and distribution GAIL (India) Ltd. 3.51 company Data is as on 31 January, 2020 For complete portfolio, please refer www.hdfcfund.com Stocks/sectors referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these stocks/sectors. The above statements / analysis should not be construed as an investment advice or a research report or a recommendation to buy or sell any security covered under the respective sector/s. 4
HDFC TaxSaver Sector Allocation vs Benchmark and Peers % Allocation Sector HDFC NIFTY 500 Peers* TaxSaver (Benchmark) Utilities 15.57 5.33 2.98 Major Overweight Sectors Corporate Bank & Financials 20.13 14.08 10.24 Major Underweight Sectors Industrials 13.06 11.02 6.71 Energy 13.01 6.84 9.03 Real Estate - 1.37 0.77 Communication Services 1.87 3.71 2.79 Other Financial Services - 4.32 2.78 Information Technology 8.62 8.41 10.15 Materials 6.30 9.45 8.29 Health Care 3.46 6.62 4.76 Consumer Staples 3.96 5.87 9.34 Consumer Discretionary 1.73 11.31 8.85 Retail Bank & Financials 7.95 14.95 23.30 Data is as on January 31, 2020 For complete portfolio, please refer www.hdfcfund.com *The average sector allocation of the 15 largest open ended ELSS schemes in terms of assets under management as on January 31, 2020 have been considered. Stocks/sectors referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these stocks/sectors. The above statements / analysis should not be construed as an investment advice or a research report or a recommendation to buy or sell any security covered under the respective sector/s. 5
Current Sectoral Rationale – Well positioned to benefit from earnings recovery Portfolio Weight Sector vis a vis Rationale Benchmark Corporate Banks & The recognition phase of NPAs is largely over; with falling slippages and increasing Overweight Financials resolution of NPAs, provisioning costs are expected to fall sharply. Change in CERC (Central Electricity Regulatory Commission) regulations; capacity - led Utilities Overweight growth; very attractive valuations versus history. Increase in tariffs and more to come for the larger gas transmission companies; positive Energy Overweight outlook for refining margins; marketing companies trading at very attractive valuations on low expectations Massive infrastructure spending thrust announced by Government of India; order books Industrials Overweight remain strong for most companies in the sector; resolution of IBC cases in core sector will aid capex cycle. Retail Banks & Financials Underweight Underweight on NBFCs due to an inherently risky business model and high valuations Revenue growth trajectory is slowing down; disruption from new technologies has shifted Information Technology Underweight the spend to Digital and increased pricing pressure in traditional areas of spend. Margins are also under pressure. Adverse action from US FDA has resulted in uncertainty. Growth in India business has Health Care Underweight continued, albeit a lower pace; R&D expenses are also increasing and margins are under pressure. Auto sector is facing multiple headwinds. The transition to BSVI will lead to higher vehicle prices and is a near term headwind. EVs are likely to emerge as a threat in 3Ws followed Consumer Discretionary Underweight by 2Ws over the next few years. Non auto consumer durable companies face headwinds such as lower demand and increased competition leading to lower margins. Stocks/sectors referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these sectors. The above should not be construed as an investment advice or a research report or a recommendation by HDFC Mutual Fund/HDFC AMC to buy or sell the stock or any other security covered under the respective sector/s. The above has been prepared on the basis of information which is already available in publicly accessible media and includes views of HDFC AMC. The recipient should understand that the information provided above may not contain all the material aspects relevant for making an investment decision. For complete portfolio details refer www.hdfcfund.com. The portfolio weights (Slide 5) used are as on January 31, 2020. 6
Valuations of key overweight and underweight sectors Underweight Sectors Overweight sectors NIFTY Auto Index NIFTY PSU Bank Index 22 1.8 20 1.6 18 1.4 16 1.2 1 14 0.8 12 0.6 10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Rolling 12-months P/B Ratio (Forward book value) Rolling 12-month PE Ratio (Bloomberg consensus estimates) BSE Power Index NIFTY FMCG Index 24 41 22 38 20 35 18 32 16 29 14 26 12 23 10 20 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Rolling 12 months PE Ratio (Bloomberg consensus estimates) Rolling 12-month PE Ratio (Bloomberg consensus estimates) Source: Bloomberg Stocks/sectors referred above are illustrative and are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these stocks/sectors. The above statements / analysis should not be construed as an investment advice or a research report or a recommendation to buy or sell any security covered under the respective sector/s .The same has been prepared on the basis of information which is already available in publicly accessible media. 8
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