HDFC Ultra Short Term Fund (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) Give an edge to short term surplus! April 2020 Riskometer ^ Please refer Slide 2 for definition of Macaulay Duration 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 *Investors should consult their financial advisers, if in doubt about whether the product is suitable for them. 1
Positioning: Debt Funds Medium to Long Duration Funds Medium Duration Funds Short Duration Funds Money Market Funds RETURN Low Duration Funds Ultra Short Term Funds Liquid Funds RISK (Maturity) $ - Maximum Upto 1 year $ Upto 91 3 -6 months^ 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. 2
HDFC Ultra Short Term Fund : Portfolio Positioning • Currently, Portfolio is focused on maintaining superior credit quality with focus on accruals. High proportion (100% of Net Assets as of 31 st March, 2020) of investments in AAA / A1+ or equivalent • rated securities • In general, Fund seeks to maintain the Macaulay duration^ of the portfolio between 3 months and 6 months ^ Please refer Slide 2 for definition of Macaulay Duration The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com. The product positioning and intended duration is based on current view and is subject to change. 3
HDFC Ultra Short Term Fund : Portfolio Statistics Portfolio Classification by % of Net Assets Portfolio Classification by % of Net Assets rating class asset class AAA/AAA(SO)/A1+/A1+(SO) & CP 26.14 99.43 Equivalent CD 29.72 Cash, Cash Equivalents and 0.57 Net Current Assets Credit Exposure 43.57 Cash, Cash Equivalents and Net 0.57 Current Assets Average Maturity Modified Duration Macaulay duration Yield To Maturity 237 Days 193 Days 209 Days 6.69% For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on March 31, 2020. 4
Why Ultra Short Term Fund ? 6,000 Interbank Liquidity (INR bn) Interbanking liquidity remains in surplus since 5,000 4,000 past 10 months 3,000 2,000 Upward sloping yield curve – giving faster roll 1,000 0 down benefits (Surplus inter-banking liquidity) -1,000 -2,000 Jun/18 Aug/18 Oct/18 Dec/18 Feb/19 Apr/19 Jun/19 Aug/19 Oct/19 Dec/19 Feb/20 Apr/20 Term spreads are reasonable Updated till 13 th April 2020 Yield to Maturity likely to be higher than liquid Reasonably Steep Yield Curve : Attractive Roll down opportunity funds* 1.25 Other benefits 1.00 0.75 Lower interest rate risk vis-à-vis other Debt funds Spread (%) 0.50 except Liquid Funds (Macaulay Duration between 0.25 3- 6 months) - 6m CD - 3m CD No lock-in, no entry / exit load 12m CD - 3m CD (0.25) Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 CD: Certificate of Deposit Source: Bloomberg, RBI * HDFC AMC/Mutual Fund is not assuring or guaranteeing any returns in the Scheme 5
HDFC Ultra Short Term Fund : Suitability Allocation to AAA and equivalent securities Suitable for investors, 100 98 96 Desiring a high degree of liquidity and lower 94 % of Net Assets 92 interest rate risk 90 88 Maintained over 90% of AUM in AAA/A1+ 86 84 or equivalent rated securities since 82 inception i.e. September 25, 2018 80 Having an investment horizon of 2-6 months 2.8 Spread between Month-end YTM and 91 days Tbills Investors with a need to park surplus cash yield* 2.3 2.3 flows 1.8 Using it as a channel to transfer funds 1.3 % systematically to other schemes. 0.8 0.3 -0.3 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 *Investors should consult their financial advisers, if in doubt about whether the product is suitable for them. For complete portfolio details refer www.hdfcfund.com * Spread between month-end YTMs and cut off yield of 91 days T-bill in last auction of the month 6
Fund Facts An open ended ultra-short term debt scheme investing in such that the Nature of Scheme Macaulay Duration^ of the portfolio is between 3 months and 6 months Category of Scheme Ultra Short Duration Fund Inception Date 25 th September, 2018 (Proposed Date of allotment) To generate income/ capital appreciation through investment in debt securities and money market Investment Objective instruments. There is no assurance that the investment objective of the Scheme will be realized. Fund Manager $ Anil Bamboli Investment Plan Regular Plan & Direct Plan Options under each plan: Growth and Dividend. Dividend Option offers Daily (Reinvestment), Weekly (Payout Investment Options and Reinvestment) and Monthly (Payout and Reinvestment) facility. Minimum Application Amount. Purchase: Rs. 5,000 and any amount thereafter Amount. (Under Each Additional Purchase: Rs. 1,000 and any amount thereafter Plan/Option) Load Structure Entry Load: Not Applicable. Exit Load: Nil CRISIL Ultra Short Term Debt Index Benchmark ^ Please refer Slide 2 for definition of Macaulay Duration. $ Dedicated Fund Manager for Overseas Investments: Mr Chirag Dagli 7
Disclaimer This presentation dated 24 th April, 2020 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. 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. Stocks/Sectors referred above are illustrative and not recommended by HDFC Mutual Fund / AMC. The Fund may or may not have any present or future positions in these stocks/ sectors. HDFC Mutual Fund/AMC is not guaranteeing any returns on investments made in the Scheme(s). 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. 8
Thank You 9
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