HDFC Short Term Debt Fund (An open ended short term debt scheme investing in instruments such that the Macaulay Duration^ of the portfolio is between 1 year and 3 years) Giv ive a a boost st to to yo your inc income wit ith lo lower er vo vola lati tili lity! July 2020 Riskometer This product is suitable for investors who are seeking*: • Income over short term • To generate income/capital appreciation through investments in debt and money market instruments *Investors should consult their financial advisers, if in doubt about whether the product is suitable for them. 1
Positioning: Debt Funds Long Duration Funds Medium Duration Funds Short Duration Funds Low Duration Funds RETURN Money Market Funds Ultra Short Term Funds Liquid Funds RISK (Maturity) $ - Maximum Upto 91 3 -6 months^ Upto 1 year$ 6 -12 1-3 years^ 3-4 years^ 4-7 years^ maturity of a days$ months^ (1-4 years^ in (1-7 years^ in security adverse adverse ^ - Portfolio situation) situation) 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
HDFC Short Term Fund : Portfolio Positioning • Portfolio is focused on generating returns through interest accruals with relatively short duration. • Invests predominantly in AAA rated or equivalent securities (~85.8%* of AUM as on June 30, 2020) • Fund seeks to maintain the Macaulay duration of the portfolio between 1-3 years 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 returns on investments made in the scheme. The product positioning and intended duration is based on current view and is subject to change. * Includes G-sec, SDL, Cash & equivalent and Net current assets 3
Portfolio Statistics Portfolio Classification by % of Net Assets Portfolio Classification by % of Net Assets rating class asset class Sovereign 7.55 G-Sec, SDL 7.55 AAA/AAA(SO/CE)/A1+/A1+(SO/ 72.94 CE) & Equivalent Credit Exposure* 87.14 AA+/AA 12.30 Cash, Cash Equivalents and AA- / A+ 1.86 5.31 Net Current Assets Below investment grade 0.04 Cash, Cash Equivalents and Net 5.31 Current Assets Average Maturity Modified Duration Macaulay Duration Yield To Maturity 3.46 years 2.66 years 2.83 years 6.71% * Includes securitized debt instruments For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on June 30, 2020. 9
Well diversified exposures across sectors and corporate groups Diversified Group Exposure Diversified Sector Exposure Top 7 Sector Exposures Top 5 Non-GoI Group Exposures 51.2 FINANCIAL SERVICES 9.2 ENERGY 10.5 RIL Group 8.2 CONSTRUCTION 4.6 OIL & GAS 9.1 L&T Group 4.5 METALS 4.1 SERVICES HDFC Group 8.9 4.0 TELECOM 14.2 OTHERS 7.8 Tata Group 3.6 Vedanta Group Financial Services % 39.9 Sub-Total Public Financial Institutions (PFIs) 22.3 52.4 Total Non-GoI Groups Housing Finance Companies (HFCs) 12.0 NBFCs 8.6 Investments in 14 different groups Banks 8.5 For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as June 30, 2020. Portfolio holdings are as a percentage of total portfolio holdings. Debt instruments referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these instruments. 5
Attractive spread between Short term fund YTMs and Gsec Spread between Short Term Fund YTMs over 10Y Gsec 3.5 Spread between Short Term Fund YTMs over 3Y 3.00 Gsec 3.0 2.50 2.5 2.00 2.0 % 1.50 % 1.5 1.00 1.0 0.50 0.5 - - Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17 May-18 Oct-18 Mar-19 Aug-19 Jan-20 Spread of Short term fund YTMs over Gsec is significantly above long term average Sources: Bloomberg, NSE Index, HDFC calculations Past performance may or may not be sustained in the future. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteeing returns on investments made in the scheme. 6
Simulation for XYZ Ltd maturing on 05-Mar-24 Given below is the simulation of likely return (%)* of a ~3.7 year bond namely 8.79% XYZ Ltd maturing on March 05, 2024 (modified duration ~ 3.1 and YTM 6.22%), under various scenarios Tenor (years) 0.50 1.00 1.50 2.00 /Change in yield (%) 0.83 3.99 5.04 5.56 1.00% 2.14 4.54 5.33 5.72 0.75% 3.48 5.09 5.63 5.89 0.50% 0.25% 4.84 5.65 5.92 6.05 0.00% 6.22 6.22 6.22 6.22 7.63 6.79 6.52 6.39 -0.25% 9.06 7.37 6.83 6.56 -0.50% 10.51 7.96 7.13 6.73 -0.75% -1.00% 12.00 8.55 7.44 6.91 • XIRR returns for the instruments assuming the change in yield at the beginning of the respective period; without factoring re-investment risk Note 1: Above data shown is hypothetical in nature and based on assumptions, it does not reflect actual investment results, and do not guarantee future results. Changes in such assumptions could produce materially different results. Note 2: Instrument referred above are not recommended by HDFC Mutual Fund/HDFC AMC. The scheme may or may not have any present or future positions in the said instrument. *HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme 7
Analysis of Distribution of Returns since inception Annual Returns (%) % of times Annual Returns (%) % of times Less than 6% Less than 6% 6.27% 0.00% More than 6% More than 6% 93.73% 100.0% More than 7.5% More than 7.5% 82.44% 95.32% More than 9% More than 9% 50.14% 50.50% Annual Rolling - Since inception, the fund has given 3 year Rolling - Since inception, the fund has given more than 7.5% returns – 95.3% of the times. 6% or higher returns 93.7% of the times. 1 year and 3 year Rolling returns are calculated since inception of the fund based on daily frequency. For Detailed performance refer Slide no 13-15. Past performance may or may not be sustained in the future. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or returns on investments made in the scheme. Inception date: June 25, 2010 . Data is Upto June 30, 2020. 8
Short Term Funds are suitable for investors Desirous to take exposure in superior Tactically increasing allocation to non-AAA bonds % depending on spread attractiveness quality credit instruments bps 100 Allocation to AAA & Equivalent Securties 20 Spread between AAA and AA bonds,RHS (Inverted) o The Scheme maintained over 80% of 95 30 90 AUM in AAA or equivalent rated 40 85 securities since Feb’ 15 80 50 75 60 70 70 65 Having an investment horizon of more 60 80 than12 months With a need to park short term surpluses Using it as a channel to transfer funds systematically to other schemes For complete portfolio refer to our website www.hdfcfund.com. Investors should consult their financial advisers if in doubt about whether the product is suitable for them. 9
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