Nippon India Mutual Fund – Nippon India ETF offerings July 2020 1
What is an EXCHANGE TRADED FUND (ETF)? An ETF is a MF Scheme or security that endeavor to replicate the value of an underlying i.e index or a commodity & listed on the exchange 2
About Exchange Traded Funds (ETFs) ETFs are simple to understand and are transparent to track Can be bought / sold like any other stock on the exchange (Where the scheme is listed ) through terminals Generally less expensive than investing in multiple individual securities. Can be bought / sold anytime during market hours at real- time prices instead of end-of-day prices 3
Benefits of investing in ETFs – Key Highlights Liquidity • ETFs can be used to provide a liquidity buffer across the asset allocation.# Management Portfolio • ETFs allow investors to gain exposure to an asset class that may be underrepresented in the asset allocation of investor’s Completion portfolio. • ETFs assist in remaining fully invested while maintaining Cash Equitization liquidity, thus minimizing the cash drag effect on the portfolio. • Since ETFs are passive funds which may help to maintain market exposure while there are changes in sector/stock Portfolio Transitions allocations in a portfolio, it avoids the risk of missing any market movement. #Subject to the market condition and availability of spread and liquidity 4
Exchange Traded Funds (ETFs) Global and Indian Scenario 5
Global ETF market growth Global ETF and ETP assets growth as at the end of June 2020 ETF – Exchange Traded Fund; ETP – Exchange Traded Product Data as on June 30, 2020 Source: ETFGI 6
Overview of ETF market in India 2,000 100 1,862 1,800 90 1,543 1,600 80 1,396 1,400 70 1,200 60 1,000 50 788 800 40 600 30 502 400 20 207 114 128 200 10 102 8 59 87 4 34 13 24 37 0 0 1 0 0 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Jun-20 Total Corpus (in Rs. Bn) - LHS Number of Schemes - RHS Data as on June 30, 2020 AUM as of month end date Source: MFI 7
Working Mechanism of ETFs in India Secondary Primary Market Market Seller Cash ETF units Authorized Participants / Buy / Sell Stock Exchange Financial Institutions Market making / Arbitrage Subscription / Cash ETF units redemption in cash / kind Fund Buyer 8
Nippon India Mutual Funds - Portfolio Products Equity • Our equity offerings cater to all type of investors’ risk profile • Investment style approach varies from conservative, moderate, aggressive to very aggressive • Our products include: • Market – Cap Based – Large Cap, Large & Mid Cap, Mid Cap, Small Cap, Multi Cap • Sector Focus – Banking, Power, Pharma • Theme Based – Power & Infrastructure, Consumption • Exchange Traded Funds Debt • Our portfolio comprises of well diversified, fixed income papers which aims to deliver relatively stable returns • Our products are present across the yield curve: • Liquid – Nil mark to market component & low volatility • Ultra – Short Term & Short Term - Short to medium term horizon with medium risk appetite • Long Term - Credit specific & gilt funds • Hybrid - Stability of Debt + Power of Equity Gold • Gold portfolio consists of Exchange Traded Fund & Fund of Fund which aim to reap the returns of gold in non-physical form in a relatively cost effective & convenient way 9
NAM India Objective • To be a significant player in the ETF segment – Nippon Life India Asset Management Limited (NAM India) (formerly known as Reliance Nippon Life Asset Management Limited) is committed towards increasing its number of products, AAUM and market share over the next few years. • To offer a bouquet of ETFs including Generic, Thematic, Sector Specific and Active ETFs – NAM India is committed towards bringing out ETFs across various categories. • To focus on product innovation – NAM India is focused on innovating its product offerings and is exploring opportunities like Sector ETFs, Commodity ETFs, Derivative ETFs, Style ETFs, Bond/Liquid ETFs, Inverse ETFs, Leveraged ETFs, Synthetic ETFs. • To create a market through substantial education & awareness – As the Indian ETF market is at a nascent stage, NAM India is committed towards the growth of the market by means of education and awareness. 10 10
Nippon India Mutual Fund: ETF Offerings ❑ 16 Equity ETFs: ❑ 2 Debt ETFs: • Nippon India ETF Nifty BeES • Nippon India ETF Liquid BeES • Nippon India ETF Sensex • Nippon India ETF Junior BeES • Nippon India ETF Long Term Gilt • Nippon India ETF Nifty 100 • Nippon India ETF Nifty Midcap 150 ❑ 1 Commodity ETF • Nippon India ETF Sensex Next 50 • Nippon India ETF NV20 • Nippon India ETF Gold BeES • Nippon India ETF Bank BeES • Nippon India ETF PSU Bank BeES Nippon India ETF positioning: Having a foresight into • Nippon India ETF Nifty IT the growth of the segment, at Nippon India Mutual Fund, the ETF offerings were re-branded as “Nippon • CPSE ETF India ETFs” to create a distinct identity between • Nippon India ETF Consumption passively managed listed products and actively managed offerings. Nippon India ETFs give choice to • Nippon India ETF Dividend Opportunities the investors to participate in the equity, debt & commodity markets at low cost as they are generally • Nippon India ETF Infra BeES less expensive than investing in multiple individual • Nippon India ETF Shariah BeES securities or in physical gold. • Nippon India ETF Hang Seng BeES 11 11
Nippon India ETF Nifty BeES • Investment Objective The investment objective of the scheme is to provide investment returns that, before expenses, closely correspond to the total returns of the securities as represented by the Nifty 50 index. However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved. • About the Benchmark: Nifty 50 Index The Nifty 50 is a well-diversified 50 stock index accurately reflecting overall market conditions. Nifty 50 Index comprises of 50 stocks and is computed based on free float market capitalisation weighted method. Stocks are selected based on their float adjusted market capitalization, liquidity and other factors. Nifty 50 Index is a broad based diversified index. Nifty 50 has a base period of November 3, 1995 with a base index value of 1000. Note: The performance of the scheme is benchmarked to the Total Return variant of the Index. Source: www.nseindia.com 12 12
Nippon India ETF Nifty BeES Top 10 Stocks Top 10 Industry Allocation Stock Allocation (%) Industry Allocation (%) 12.43% Reliance Industries Limited 24.81% Banks 10.63% HDFC Bank Limited 14.15% Software 6.99% HDFC Ltd 13.62% Petroleum Products 6.20% Infosys Limited 12.53% Consumer Non Durables 5.24% ICICI Bank Limited 9.53% Finance 5.04% Tata Consultancy Services Limited 5.53% Auto 4.59% Kotak Mahindra Bank Limited 3.09% Telecom - Services 4.48% Hindustan Unilever Limited 3.03% Pharmaceuticals 3.91% 2.65% ITC Limited Construction Project 3.09% 2.30% Bharti Airtel Limited Cement AMFI Classification Note: This is with reference to Gazette notification (Reference no: G.S.R.174(E)) issued by Ministry of Finance on 13th March 2020, for Yes Bank Limited reconstruction scheme, 2020. As per point 3(8)(a) of the notification, there shall be a lock-in period of three years from the commencement of the above said scheme to the extent of 75% of shares held by existing shareholders on the date of commencement of the scheme which came into force from March 13, 2020. Taking into account the above development, the valuation committee of Nippon India Mutual Fund has decided to markdown the 75% locked-in shares of YES Bank to ZERO, as on March 16, 2020. Note: The industries mentioned in the table is not a recommendation to buy/sell in the said industries. The scheme is currently holding investments in the said industries and may or may not have future position in the same. The stocks mentioned forms a part of the portfolio of the scheme and may or may not form a part of the portfolio in future. Please read Scheme Information Document carefully for more details and risk factors. Data: As on June 30, 2020 13 13
Nippon India ETF Sensex • Investment Objective The investment objective of the scheme is to provide investment returns closely corresponding to the total returns of the securities as represented by the S&P BSE Sensex Index before expenses, subject to tracking errors. However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved • About the Benchmark: S&P BSE Sensex Index S&P BSE Sensex, first compiled in 1986, was calculated on a “Market Capitalization- Weighted” methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors. S&P BSE Sensex today is widely reported in both domestic and international markets. Note: The performance of the scheme is benchmarked to the Total Return variant of the Index. Source: www.bseindia.com 14 14
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