( An open ended ultra-short term debt scheme investing in instruments such that the Macaulay Duration^ of the portfolio is between 3 months and 6 months ) Giv ive an an edge edge to to sh short t te term su surp rplu lus! NFO Opens: 18 th Sept,18 NFO Closes: 24 th Sept,18 # Riskometer ^ Please refer to Slide 7 on which the concept of Macaulay’s Duration has been explained. This product is suitable for investors who are seeking*: • Income over short term • income/capital appreciation through investments in debt securities and money market instruments # Scheme re-opens on: Within 5 Business Days from the date of allotment of units under NFO *Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Key interest rate determinants & their outlook Growth – India’s FY19 GDP growth likely to be better than FY18 Liquidity – Tightening due to high currency withdrawal, higher credit growth and RBI forex intervention. RBI OMO purchases could be high, to support reserve money Inflation – Headline inflation likely to remain range bound CAD – High crude oil prices putting pressure on CAD USD / INR – Strengthening Dollar and high US yields to adversely impact capital flows RBI Policy – Shallow rate hiking cycle, unless growth or inflation surprises on the upside or INR depreciates sharply 2
Why Ultra Short Term funds ? Absolute yield levels are attractive (refer slide 4) Term spreads are high (refer slide 5) Steep yield curve – giving faster roll down benefits (refer slide 6) Lower interest rate risk (Macaulay Duration between 3- 6 months) Yield to Maturity likely to be higher than liquid funds No lock-in, no entry / exit load Currently, the fund shall focus on maintaining superior credit quality 3
Attractive yields upto one year 9.0 3m CD 6m CD 1Y CD 8.5 8.0 (%) 7.5 7.0 6.5 6.0 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 CD: Certificate of Deposit Source: Reuters, FBIL 4
High term spreads - Spread between CDs and Repo are near 3 year highs 2.50 3m CD - Repo 6m CD - Repo 1Y CD - Repo 2.00 1.50 Spread (%) 1.00 0.50 0.00 -0.50 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 CD: Certificate of Deposit Source: Reuters, FBIL 5
Steep yield curve Attractive roll down opportunity 1.25 6m CD - 3m CD 12m CD - 3m CD 1.00 0.75 Spread (%) 0.50 0.25 - (0.25) Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 CD: Certificate of Deposit Source: Reuters, FBIL 6
Positioning (Debt Funds) Long Duration Medium Funds Duration Short Funds Duration Low Funds Duration URN RETURN Money Funds Market Funds Ultra Short Term Liquid Funds Funds RISK ( Matu turity ity ) Upto o 91 days$ 3 -6 months 3 nths^ Upto o 1 year$ ar$ 6 6 -12 2 months nths^ 1-3 years ars^ 3-4 years ars^ 4-7 years ars^ (1-4 years in (1 (1 (1-7 years in adverse situation) adverse situation) $ - Maximum maturity of a security ^ - Portfolio Macaulay Duration Macaulay Duration (Duration) measures the price volatility of fixed income securities. It is often used in the comparison of interest rate risk between securities with different coupons and different maturities. It is defined as the weighted average time to cash flows of a bond where the weights are nothing but the present value of the cash flows themselves. It is expressed in years. The duration of a fixed income security is always shorter than its term to maturity, except in the case of zero coupon securities where they are the same. 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. 7
Ultra Short Term Funds are suitable for investors: Desiring a high degree of liquidity with lower interest rate risk Having an investment horizon of 2-6 months Investors with a need to park short term surpluses Using it as a channel to transfer funds systematically to other schemes 8
Fund Facts An open ended ultra-short term debt scheme investing in such that the Natur ure of of Schem eme Macaulay Duration^ of the portfolio is between 3 months and 6 months Categ egor ory of of Schem eme Ultra Short Duration Fund Incep ception on Date 25 th September, 2018 (Prop opose osed Date of of allotm otment nt) To generate income/ capital appreciation through investment in debt securities and money market Invest vestmen ent Objec ective ve instruments. There is no assurance that the investment objective of the Scheme will be realized. Fund Fund Mana nage ger $ Anil Bamboli Invest vestmen ent Plan Regular Plan & Direct Plan Options under each plan: Growth and Dividend. Dividend Option offers Daily (Reinvestment), Weekly Invest vestmen ent Opti ption ons (Payout and Reinvestment) and Monthly (Payout and Reinvestment) facility. Minimum App pplicatio cation Purchase: Rs. 5,000 and any amount thereafter Amou ount nt. (Und nder er Each ach Additional Purchase: Rs. 1,000 and any amount thereafter Plan/O n/Opt ption on) CRISIL Ultra Short Term Debt Index Benchm chmark ark $ Dedicated Fund Manager for Overseas Investments: Mr Rakesh Vyas For further details, please refer to the Scheme Information Document. 9
Disclaimer & Risk Factors This presentation dated 14 th September, 2018 has been prepared by HDFC Asset Management Company Limited (HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed 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 liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / 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. 10
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