Alpha edge April 2016
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Transcript of Alpha edge April 2016
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“Liquef-action”
India Strategy | April 2016
April 2016 3
Liquef-action India Strategy | April, 2016
Foreword
Dear Investor,
Unlike the 2015 fiscal which could be described as a year of optimism and hope starting with formation of a strong government, the 2016 fiscal could be said as the year of realism, an eye opener both locally and globally. Nifty ended the lackluster fiscal down around 9%. This fiscal we saw FII’s which made huge investments in FY15 turning net sellers in equities on the back of global slowdown concerns, continuing weakness in crude oil prices, cooling off in Chinese economy and deflationary forces around the world. Another factor that led to withdrawal of money by FII’s was earnings failing to pick up in the current fiscal. Having said that, March month was a pleasant end to a not so good year for the markets where we saw a comeback of FIIs to the Indian markets post a strong budget.
Globally, the month was dominated by news flow relating to ECB QE & US interest rate decision that led to a global risk on rally with FII money finding its way in to equities worldwide. In the month of March, ECB announced further expansion of its QE scheme, US did a flip flop and again turned dovish in its interest rate hike stance. The central bankers around the world since 2008 crisis have been trying hard to revive the demand, so much so that their efforts over the years has resulted in $7 trillion (Almost one third) of government bonds around the world yielding negative returns which has in turn resulted in banks bleeding due to margin pressures. The issue here is all of this has not truly resulted in the desired effects of increase in demand and inflation, in fact during this period we have only seen a collapse of both along with an ever so persistent bleak global outlook, which makes us think that have Central bankers lost their powers? With already negative yields, what is the ammunition left with the central bankers? It has been observed over the years that monetary policies globally have now become more of a sentiment booster which results in volatility of flows rather than affecting the underlying economy. It is this “Liquef-action” that has resulted in equities being the best performer for the month worldwide and may continue to do so.
Locally, we started the year with good macro numbers including GDP, inflation and CAD projecting a stable economy. Along with sharp fall in the commodities helping to lower input cost it was expected by markets that it will lead to higher margins and eventually it would result in higher earnings growth. So what went wrong?
We start with the factors that raised the expectations. Firstly, the GDP numbers have been one of the best in the emerging economies in FY 2015 -16. However, it has been the change in methodology from earlier cost of production method to value add method that has made the major difference. As we can see that this has not correlated with corporate earnings or for that matter, the IIP numbers. Further as we have highlighted earlier that falling commodity prices wouldn’t lead into improved corporate earnings growth, as it could be a misplaced belief. It was our reading, which is turning out to be true, that the current phase of falling commodity prices were more reflective of a weakening demand than the excess supply, with exception of oil.
However, all is not dark. A few green shoots of demand recovery are evident in the Auto numbers especially Commercial Vehicles. Ditto with cement offtake numbers. Further a good monsoon is expected to revive the rural demand which would provide impetus to earnings recovery aided by an accommodative policy from RBI & reform action from government especially on the GST front could set the ball rolling for the economy.
From here on we expects markets to be volatile with events earnings recovery, global flows dictating the. India may continue to command higher valuations compared to its EM peers unless there is a further delay in earnings recovery. In which case, valuations that fully capture current earnings trend may need to adjust lower.
Warm Regards,
A V Srikanth
April 2016 4
Alpha Edge | “Liquef-action”
Asset Class performance
Asset Class returns for March 2016
Source: Bloomberg
With the support of strong FII flows, recovery in Oil prices and a strong budget, the equity markets had shown a good trend reversal from the previous month. Equity markets have gained 7.62% last month. CNX midcap ended up by 10.33% vs 7.30% down for the previous month. Small cap index too had a good month with 12% gains as compared to -13.28% for the previous month.
Whereas, the long term yields have come down and has resulted in a strong performance of 3.27%. Due to the change of direction in FII flows, investors have surpassed gold and hence it has been laggard with -1.2%.
Though the Sensex and the Nifty ended fiscal 2016 on a weak note with both the benchmark indices dropping 9% each as foreign funds trimmed positions in Indian equities for most of the months during the fiscal except March.
FII Flows for Calendar Year 2016
Source: ACEMF
FII’s reversed their selling spree of recent months on the back of dovish central banks around the world, recovering oil prices and a strong budget.
FII’s bought around 24,201 cr. (highest in around 2 years) in Indian equities in the month of March, which is higher than CY2015 flows. On the contrary DII’s became net sellers after 4 months of continuous buying. DII’s sold 16,891 (Highest in over 3 years).
Flows in Rs cr March
Feb-16 2016
Domestic Institutional Investors (DIIs)
-16,891 10,491
Foreign Institutional Investors (FIIs)
24,201 12,513
Sector Returns for March 2016
Source: Bloomberg
Realty, Bankex and Capital Goods Indices have been
outperformers for March 2016. Healthcare, Consumer
Durables and FMCG have been the laggards during the
same period.
10.75%
3.27%0.61%
-1.20%-5.00%
0.00%
5.00%
10.00%
15.00%
Equity 10 yrTreasuries
Cash Gold
Asset Class Returns For Mar 2016
Equity 10 yr Treasuries Cash Gold
47 3771
-53
83133
-3
128 113 97
18 4-6
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-51
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Equity Debt
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16.9
-35.0 -21.0 -7.0 7.0 21.0 35.0
S&P BSE Health Care
S&P BSE Consumer Durables
S&P BSE FMCG
S&P BSE SENSEX
S&P BSE Small-Cap
S&P BSE PSU
S&P BSE TECk Index
S&P BSE Mid-Cap
S&P BSE IT
S&P BSE OIL & GAS Index
S&P BSE METAL Index
S&P BSE Power Index
S&P BSE AUTO Index
S&P BSE Capital Goods
S&P BSE BANKEX
S&P BSE Realty Index
Sector Returns for Mar 2016(%)
April 2016 5
Alpha Edge | “Liquef-action”
Oil – Rally fizzling out?
Since the beginning of the year Crude oil prices have
rallied almost from under $30 to $40, and this has
happened amid a deteriorating oil supply situation. So
what really started the rally this year? This year the rally
was primarily fueled by speculations that an agreement
of a freeze was in works by few OPEC members to balance
the supply. It was important to note that this was a freeze
at current levels (which were anyways at peak) and not a
cut in production. It is important to understand that a glut
in supply has majorly contributed towards the fall in crude
over last 18 months, hence it is important that we see cut
in production levels before we conclude that Oil has
bottomed out. Another major development in the current
year was Iran, which was back in to the market after
western sanctions on it were lifted in January 2016.
Tehran, which wants to recover market share it lost under
sanctions, has said it will not take part in the production
freeze. So essentially, with Iran returning to the market
and determined to return to pre-sanction production
levels, the market should expect the supply situation to
put pressure on Oil prices. With Iran not in agreement
with the production freeze, it would be difficult that we
see Saudi Arabia cutting its production. Also, higher oil
prices would mean an increase in shale gas production
activity which would led to reining the prices again.
US rate Hike – The flip flop continues
The signals given by Fed these days are about as confusing
as they have ever been. In one of the latest speech which
was also one of the most highly anticipated speech said
that Fed would move cautiously in adjusting the policy
rates due to global risks. Fed started the year with
expectations of 4 rate hikes this year and in March policy
meet the same was reduced to 2. Even before the speech,
various Fed officials mentioned independently that US
economy remains on track for gradual path of interest
rate hikes. This made the market participants believe that
Fed’s tone would be more hawkish, however, Yellen’s
comments about a more cautious approach was well
taken by the markets which led to a fall in USD & gains in
equity markets globally. We believe that considerations
towards the global economy while deciding on the rate
hikes have increased and with a view of subdued growth
world-wide and ever so confusing signals of US economy,
Fed would be extremely cautious of the timing of its next
move. All said, we believe there is a very low probability
of April hike and a slightly higher probability of a June
hike. Given the recent flip flops it is best to see the global
& US economic data in the forthcoming months which
would give a key to when would the next hike happen.
Until then any dovish tone by Fed would be taken
positively and result in higher equity markets and a lower
dollar.
Mario Draghi’s bazooka…markets cheer but give up
gains later
The European Central Bank has surprised financial
markets by cutting interest rates in the Eurozone to zero,
expanding its money printing programme from 60 billion
euros to 80 billion euros and reducing a key deposit rate
further into negative territory as it seeks to revive the
economy and fend off deflation. This announcement
surprised markets which was followed by gains in equity
markets across Europe and EURO falling. However, even
though Draghi implied rates would remain low, he did also
mention he does not see rates going further below which
was taken negatively by markets and then was followed
by retracement of all the gains. But the latest moves come
amid growing skepticism on financial markets that central
banks have enough ammunition left to bolster growth and
stop falling prices becoming entrenched.
Are central banks losing their power?
Institutions which managed to drag the world out of one
of the worst financial crisis are slowly seeing their power
waning. Since 2008, global central banks have cut interest
rates 637 times, they have injected $12.3 trillion into the
global financial system through various quantitative
easing programs. But despite these unprecedented
measures, the global economy is still deeply struggling
with most of the developed nations facing deflation. In a
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Crude oil
April 2016 6
Alpha Edge | “Liquef-action”
-2.0%
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Euro QE Vs Inflation
Euro area inflation ECB benchmark rates
desperate attempt to spur economic activity, central
banks in Europe and in Japan are playing around with
negative interest rates, and so far, they seem to only have
had a limited effect. In fact, around one third of the bonds
issued in the world now yields negative return. With such
low or negative rates it is obvious that the central banks
are rapidly running out of ammunition, as you can only go
in to the negative territory to an extent before it creates
more havoc in the banking system (For eg. European
banks). So much so that people have started discussing a
term called ‘Helicopter money’ which basically means
that Central banks would create money out of thin air and
would just give it to national governments or ordinary
citizens in order to induce them to spend and revive the
economy, a farfetched thought though. All this just to
show how much of panic now surrounds them as they try
to stabilize the ship.
As central banks power seems to fade world is now
scrambling to find what now? We believe it is wise to not
go for further rate cuts or easing unless we see benefits
of previous easing resulting in increased demand as it has
been seen with the recent oil crash that consumers are
not ready to spend any free windfalls and are actually
paying down debts or saving for a rainy day. This easing
has resulted in huge increase in debt levels across the
globe and has dented the bank margins to a great extent.
Few people are now talking about governments acting
through fiscal measures to support shaky global recovery.
Fiscal policy has been largely dormant in the wake of the
crisis as countries have concentrated on bringing down
debt and deficits levels, binding themselves to stringent
spending rules in the process.
We believe that any further easing would result in more
of a sentimental impact on the markets rather than
impacting economy, which may lead to free money
finding its way in to risky assets like equities making them
more expensive given the lack of growth in earnings.
Indian Economy
Jan IIP disappoints, greenshoots in core industries
growth
India's IIP contracted 1.5% in January compared to
contraction of 1.2% in the previous month following
sharp decline in production of capital goods and
consumables. In January mining and electricity
sectors grew 1.2% and 6.6% respectively suggesting
that the growth momentum remains vulnerable and
volatile. The slowdown is led by manufacturing,
which contracted 3% YoY. The drop in manufacturing
was caused by capital goods — decline of 20.4% vs.
+12.4% YoY and -19% sequentially. Electricity grew
6.6% vs. 3.3% YoY and 3.2% sequentially. Likewise,
mining activity grew 1.2% vs. -1.8%YoY and 2.7%
sequentially, signifying a presence of favourable
base. Going ahead, the allocations for roads, rails and
power sectors in the Union Budget should provide a
fillip to industrial production going forward. One of
the key parameters affecting IIP is decline in exports
and weakening rural consumption.
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US QE vs Inflation
Fed Rate Inflation
April 2016 7
Alpha Edge | “Liquef-action”
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Growth rates Core sector %
Even though IIP has disappointed the latest core
industry data was a bit encouraging which grew at
5.7 % in February due to sharp pick-up in natural gas,
refinery products, fertiliser, cement and electricity
generation. The eight sectors - coal, crude oil, natural
gas, refinery products, fertilisers, steel, cement and
electricity - comprising nearly 38% of India’s total
industrial production, had grown at 2.3 per cent in
February last year. It is the highest growth since
November 2014, when these sectors had witnessed
a growth of 6.7 per cent. Even though we haven’t
seen much one to one correlation in Core industry
data and IIP numbers, this jump in core industry
growth data looks encouraging and could mean a
slightly higher IIP data for February 2016.
Trade deficit narrows, exports shirnk
Continuing their downtrend for the 15th consecutive
month, India's merchandise exports declined by 5.66
percent to $ 20.738 billion in February 2016 from $
21.983 billion during the same month of the previous
year. Imports fell 5.03 percent from USD 28.71 billion
to USD 27.28 billion. Within imports, oil imports
stood at USD 4.77 billion (down from USD 5.03 billion
MoM) while non-oil imports stood at USD 22.51
billion (versus USD 23.69 billion). While the fall in
imports provides comfort on the current account, a
bigger fall in exports presents a worrying picture of
the state of the global economy. Fall in exports was
in tandem with other major world economies. The
growth in exports has fallen for the United States
(10.35%), European Union (7.62%) and China (1.67%)
for December 2015 over the corresponding period
previous year as per WTO statistics.
Recovery in CV numbers – CV makers post double
digit growth in March 2016
Domestic sales of commercial vehicle makers grew
substantially in March 2016 as compared to vehicles sold
in March 2015. Ashok Leyland, Tata Motors, Eicher
Motors and Mahindra reported growth in the range of 20
to 44 percent.
In the M&HCV segment, Ashok Leyland saw a 32% yoy
growth, M&M saw a robust 86.2% yoy growth, Eicher
Motors volumes doubled on yoy basis and Tata Motors
reported 24.6% yoy growth. Fundamental factors such as
lower fuel prices, recovery in infrastructure investments,
expectations of recovery in industrial activity and lower
interest costs continued to provide support to the growth
for the M&HCV segment in March 2016. In the LCV
segment, Tata Motors, Eicher Motors, M&M and Ashok
Leyland saw a growth of 15.1% yoy, 47.5% yoy, 21.4% yoy
and 27% yoy respectively. After a sustained downtrend,
LCVs sales have picked up since last few months and are
showing signs of bottoming out. Commercial vehicle
numbers generally used as a proxy to gauge early signs of
recovery in the economy as higher growth numbers
indicate increased activity in the economy.
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IIP 6m moving average
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Exports Imports Trade balance
April 2016 8
Alpha Edge | “Liquef-action”
Equity – On sticky grounds
The Sensex and the Nifty ended fiscal 2016 on a
weak note with both the benchmark indices
dropping 9% each as foreign funds trimmed
positions in Indian equities for most of the months
during the fiscal except March. March saw the best
month of FY16 with Nifty gaining 11% backed by
strong FII flows, recovery in Oil prices and a strong
budget. CNX midcap ended up by 10.33% vs 7.30%
down for the previous month. Small cap index too
had a good month with 12% gains as compared to -
13.28% for the previous month.
Outlook
The Budget 2016-17 inspired the markets to bottom out
and saw frontline indices rally by over 10 per cent nearly
recouping all of the losses of the month of February and
little of January. Action was broad- based and driven by
fresh buying interest from FIIs. With the budget now
behind us we believe in the near term from a domestic
stand point, markets would be watching out for numbers
for Q4 FY16 earnings to get any sense of revival. Another
major domestic factor for the next quarter would be
monsoons. A strong monsoon will help revive the rural
consumption which has been one of the major
contributor towards earnings declining in the recent
quarters.
As we can see lately the performance of Indian markets
have been aligned with the FII flows and we expect the
trend to continue until sometime. So what domestic
factors would attract more FII flows in the short term?
An earnings revival, strong reforms like the GST bill,
strong monsoon season etc.
Yes, India is one of the best performing EM’s currently,
which also can be seen in the near to all time high
valuations as compared to its peers. However given the
precarious global environment and volatility, the flows
may be affected too. We live in a globalized world and
anything affects global growth will also have a bearing
on the flows as investors seek safe havens during testing
times. US interest rate decision would also be a key in
determining the extent of flows received by Indian
markets.
From valuation stand point given the fact that we are
looking at a first year of negative growth in a financial
year since 2009 we believe we are more on the
expensive side. Currently we are above long term
averages and the lack of clarity in the earnings along
with precarious global growth environment could lead to
moderation in valuations and with low growth in
earnings it would mean a price correction.
We still feel Indian economy is better poised for a
growth in the long term given the structural shifts
currently happening and a pro-reform government
focused on long term drivers of growth. In the shorter
term however, the price performance of the market
would be determined primarily by earnings and global
liquidity which in turn would affect FII flows. Having said
that, we do feel FY17 would be a great year to build an
equity portfolio from a longer term perspective as we
see more consolidation.
Valuations moderating
Debt
India Consumer Inflation cools off from highs
January’s Consumer Price Index (CPI) came in at 5.7% in
contrast to 5.6% in December as food inflation soared to
an 11-month high. Core CPI eased marginally to 5.4%
from 5.5%. Wholesale Price Index (WPI) shrunk for the
15th consecutive month as it came in at -0.9% in contrast
to -0.73% in the previous month due to food inflation.
Inflation surprised on the downside in February as food
prices, particularly vegetables corrected. The trajectory
of food inflation from here depends squarely on weather
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NIfty PE
Nifty PE Average +1 Stdev
+2 Stdev -1 Stdev -2 Stdev
April 2016 9
Alpha Edge | “Liquef-action”
conditions improving through the summer months, given
low water storage levels in reservoirs. On the positive
side, international weather offices expect El Nino
conditions to recede, which in turn could improve
monsoon rains. Meanwhile, Core inflation remained high
at 4.9% indicating price pressures in services like health
and education. A similar trend was also observed in WPI,
where inflation in primary articles fell but core prices
(non-food manufacturing) remained unchanged.
RBI cuts Repo by 25 bps, rates lowest since 2011
With continuing fiscal discipline through recent
Union budget and inflationary expectation in a
comfortable range markets already formed a base
for a logical cut of 25 bps points cut by RBI, and the
governor did oblige. Unlike previous times where
the RBI has unexpectedly cut rates this time around
RBI and markets were on the same page. In its first
bi-monthly policy of FY17 RBI reduced policy repo
rate by 25 bps from 6.75% to 6.5%. It has also
reduced the minimum requirement of daily CRR
from 95% to 90%.
The main highlight of this policy is not the rate cut
announced by RBI but the liquidity measures
announced by the RBI signaling a fundamental
change in the approach. Since 2010, RBI has kept
the banking system liquidity in deficit but now it
wants to bring the deficit to neutral. It has also
announced the narrowing of policy rate corridor
from 100 bps to 50 bps. All in all, RBI has cut rates
by 125 bps until now with only 60-70 bps being
transferred to the end consumer. This move has
mainly been aimed to improve the transmission of
the rate cut to end consumer, to encourage banks
to give out more credit even if deposit growth is
subdued which will now be under pressure to
transmit the rate cut to the end consumer.
Outlook
We mentioned in our last report that by maintaining
fiscal discipline in the FY16-17 union budget the
government had in effect put the ball In RBI’s court
to act further and the RBI governor did act, he acted
smartly by further putting the ball in banks courts
and putting pressure on them to cut interest rates
for the end consumer which would help revive
demand in the economy.
Having said that we believe that we have seen most
of the rate cuts by RBI in the current cycle and there
may not be much room left for FY17. RBI’s target of
5% inflation by march 2017 means it does not have
much room left in terms of its target real return of
1.5%-2% that it intends to keep, unless we see the
inflation undershooting the RBI target by a big
margin. The risks that we believe to the inflation
target could be a bad monsoon, stronger
consumption demand due to 7th pay commission
and OROP and on the other side we have fading
impact of lower commodity prices which was the
main catalyst for bringing down inflation. We
believe there is not much room for the yields on the
longer end of the curve and believe that there is
merit in investing in dynamic bond funds.
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Inflation
CPI WPI
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-…Repo vs Real return
Repo Rate CPI Inflation + Real return target
April 2016 10
Alpha Edge | “Liquef-action”
Citadelle Growth Opportunities Portfolio
Company Name 3 yr Avg ROE PAT 3yr CAGR Dividend Yield(%)
Star Rating
Ahluwalia Contracts (India) Ltd. 1.04 133.11 0.00
AIA Engineering Ltd. 19.71 33.44 0.64
Ajanta Pharma Ltd. 41.05 58.81 0.49
Aurobindo Pharma Ltd. 27.95 236.96 0.37
Avanti Feeds Ltd. 41.93 60.69 1.79
Bajaj Corp Ltd. 33.50 12.86 2.50
Bajaj Finance Ltd. 20.11 30.20 0.44
Bajaj Finserv Ltd. 27.26 8.42 0.13
Bosch Ltd. 17.71 6.01 0.33
Cadila Healthcare Ltd. 27.33 20.28 0.69
Caplin Point Laboratories Ltd. 49.84 72.28 0.54
CCL Products (India) Ltd. 21.00 37.34 0.84
Cholamandalam Investment & Finance Company Ltd. 17.88 37.96 0.60
DB Corp Ltd. 25.60 16.06 2.09
Gillette India Ltd. 14.84 27.78 0.33
Gujarat Pipavav Port Ltd. 15.43 89.17 0.00
Gulf Oil Lubricants India Ltd. 24.48 356.17 1.08
Himachal Futuristic Communications Ltd. 88.88 179.95 0.00
Honeywell Automation India Ltd. 12.70 2.15 0.15
JM Financial Ltd. 11.29 43.00 2.81
Kitex Garments Ltd. 36.80 53.67 0.23
KRBL Ltd. 23.73 63.85 1.02
Lupin Ltd. 30.37 40.13 0.37
Marksans Pharma Ltd. 39.39 117.64 0.19
Navneet Education Ltd. 26.35 18.83 2.22
Procter & Gamble Hygiene & Health Care Ltd. 30.49 24.03 0.45
Skipper Ltd. 19.20 107.95 0.85
Sonata Software Ltd. 15.69 204.12 3.93
Tata Elxsi Ltd. 28.13 38.09 0.95
Vinati Organics Ltd. 31.48 28.29 0.67
Note: Post changes in portfolio from 8th Jan ’16, portfolio construct has become more diversified, hence we have changed the benchmark to Nifty 500 from Nifty 50.
90%
10%
Citadelle Growth Opportunities Portfolio Current Asset Allocation
Equity Cash
91.80
82.6380859095
100105110115120
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-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Citadelle Growth Opportunities Portfolio Performance
Citadelle Growth Opportunities Portfolio NAV Benchmark*
100.78
91.45
80859095
100105110115120
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Citadelle Growth Opportunities Portfolio Performance
Citadelle Growth Opportunities Portfolio NAV Benchmark*
April 2016 11
Alpha Edge | “Liquef-action”
Model Portfolio: Conservative
Conservative Market Cap wise (%)
Asset Class Sub-Asset Class Mutual Fund Schemes
Strategic
Tactical
Large cap Mid &
Small cap
Others
Equity - - PMS - - Large Cap - - ICICI Pru Focused BlueChip Eq Fund - - 82.4 9.4 8.2
Birla SL Frontline Equity Fund
- - 88.9 3.0 8.1
Mid & Small Cap - - BNP Paribas Mid Cap Fund - - 28.2 66.7 5.1
Edelweiss Emerging Leaders Fund - - 15.8 77.8 6.4
Mirae Asset Emerging BlueChip - - 30.3 65.7 4.0
Multi Cap - - MOSt Focused Multicap 35 Fund - - 87.8 12.1 0.0
Birla SL Pure Value Fund - - 17.4 76.0 6.6
Franklin India High Growth Cos Fund - - 57.3 24.9 17.8
Thematic / Sectoral Funds - - Equity Hybrid Funds - - Average
Maturity Years
Mod
Duration Years
YTM
(%)
Debt 90.0% 90.0% Short Term 30.0% 30.0% Axis Short Term Fund 10.0% 10.0% 2.7 2.0 8.0
Franklin India ST Income Plan 10.0% 10.0% 2.5 2.3 10.5
HDFC STP 10.0% 10.0% 2.2 1.8 9.8
Dynamic Bond Funds 30.0% 30.0% IDFC Dynamic Bond Fund-Reg 10.0% 10.0% 15.9 8.7 7.8
SBI Dynamic Bond 10.0% 10.0% 17.5 8.5 7.8
UTI Dynamic Bond Fund-Reg 10.0% 10.0% 14.8 7.2 8.1
Income Funds 30.0% 30.0% DWS Premier Bond Fund 10.0% 10.0% 1.8 1.5 8.0
HDFC Income Fund 10.0% 10.0% 16.4 8.1 8.0
UTI Bond Fund 10.0% 10.0% 16.3 7.9 8.2
Gilt - - Debt Hybrid Funds - -
Cash 5.0% 5.0% Liquid Funds - - Ultra Short Term 5.0% 5.0%
Gold 5.0% 5.0% Gold 5.0% 5.0% Total 100.0% 100.0%
0.0%
90.0%
5.0%5.0%
Strategic Portfolio
Equity Debt Cash Gold
0.0%
90.0%
5.0%5.0%
Tactical Portfolio
Equity Debt Cash Gold
90
95
100
105
110
115
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5M
ay-1
5Ju
n-1
5Ju
l-1
5A
ug-
15
Sep
-15
Oct
-15
No
v-1
5D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6
Conservative UCI Index
April 2016 12
Alpha Edge | “Liquef-action”
Model Portfolio: Moderately Conservative
Mod Conservative Market Cap wise (%)
Asset Class Sub-Asset Class Mutual Fund Schemes
Strategic
Tactical
Large cap Mid &
Small cap
Others
Equity 25.0% 25.0% PMS - - Large Cap 25.0% 25.0% ICICI Pru Focused BlueChip Eq Fund 12.5% 12.5% 82.4 9.4 8.2
Birla SL Frontline Equity Fund
12.5% 12.5% 88.9 3.0 8.1
Mid & Small Cap - - BNP Paribas Mid Cap Fund - - 28.2 66.7 5.1
Edelweiss Emerging Leaders Fund - - 15.8 77.8 6.4
Mirae Asset Emerging BlueChip - - 30.3 65.7 4.0
Multi Cap - - MOSt Focused Multicap 35 Fund - - 87.8 12.1 0.0
Birla SL Pure Value Fund - - 17.4 76.0 6.6
Franklin India High Growth Cos Fund - - 57.3 24.9 17.8
Thematic / Sectoral Funds - - Equity Hybrid Funds - - Average
Maturity Years
Mod
Duration Years
YTM
(%)
Debt 65.0% 65.0% Short Term 30.0% 30.0% Axis Short Term Fund 10.0% 10.0% 2.7 2.0 8.0
Franklin India ST Income Plan 10.0% 10.0% 2.5 2.3 10.5
HDFC STP 10.0% 10.0% 2.2 1.8 9.8
Dynamic Bond Funds 30.0% 30.0% IDFC Dynamic Bond Fund-Reg 10.0% 10.0% 15.9 8.7 7.8
SBI Dynamic Bond 10.0% 10.0% 17.5 8.5 7.8
UTI Dynamic Bond Fund-Reg 10.0% 10.0% 14.8 7.2 8.1
Income Funds 5.0% 5.0% DWS Premier Bond Fund - - 1.8 1.5 8.0
HDFC Income Fund - - 16.4 8.1 8.0
UTI Bond Fund 5.0% 5.0% 16.3 7.9 8.2
Gilt - - Debt Hybrid Funds - -
Cash 5.0% 5.0% Liquid Funds - - Ultra Short Term 5.0% 5.0%
Gold 5.0% 2.5% Gold 5.0% 2.5% Total 100.0% 100.0%
80
100
120
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5M
ay-1
5Ju
n-1
5Ju
l-1
5A
ug-
15
Sep
-15
Oct
-15
No
v-1
5D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6
Mod Conservative
25.0%
65.0%
5.0%5.0%
Strategic Portfolio
Equity Debt Cash Gold
25.0%
65.0%
5.0%5.0%
Tactical Portfolio
Equity Debt Cash Gold
95
100
105
110
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5M
ay-1
5Ju
n-1
5Ju
l-1
5A
ug-
15
Sep
-15
Oct
-15
No
v-1
5D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6
Mod Conservative UCI Index
April 2016 13
Alpha Edge | “Liquef-action”
Model Portfolio: Balanced
Balanced Market Cap wise (%)
Asset Class Sub-Asset Class Mutual Fund Schemes
Strategic
Tactical
Large cap Mid & Small cap
Others
Equity 45.0% 45.0% PMS - - Large Cap 30.0% 30.0% ICICI Pru Focused BlueChip Eq Fund 15.0% 15.0% 82.4 9.4 8.2
Birla SL Frontline Equity Fund
15.0% 15.0% 88.9 3.0 8.1
Mid & Small Cap 15.0% 10.0% BNP Paribas Mid Cap Fund 7.5% 5.0% 28.2 66.7 5.1
Edelweiss Emerging Leaders Fund - - 15.8 77.8 6.4
Mirae Asset Emerging BlueChip 7.5% 5.0% 30.3 65.7 4.0
Multi Cap - - MOSt Focused Multicap 35 Fund - - 87.8 12.1 0.0
Birla SL Pure Value Fund - - 17.4 76.0 6.6
Franklin India High Growth Cos Fund - - 57.3 24.9 17.8
Thematic / Sectoral Funds - - Equity Hybrid Funds - 5.0% Edelweiss Absolute Return Fund 5.0%
%
Average Maturity Years
Mod Duration Years
YTM (%)
Debt 45.0% 45.0% Short Term 30.0% 30.0% Axis Short Term Fund 10.0% 10.0% 2.7 2.0 8.0
Franklin India ST Income Plan 10.0% 10.0% 2.5 2.3 10.5
HDFC STP 10.0% 10.0% 2.2 1.8 9.8
Dynamic Bond Funds 15.0% 15.0% IDFC Dynamic Bond Fund-Reg 7.5% 7.5% 15.9 8.7 7.8
SBI Dynamic Bond - - 17.5 8.5 7.8
UTI Dynamic Bond Fund-Reg 7.5% 7.5% 14.8 7.2 8.1
Income Funds - - DWS Premier Bond Fund - - 1.8 1.5 8.0
HDFC Income Fund - - 16.4 8.1 8.0
UTI Bond Fund - - 16.3 7.9 8.2
Gilt - - Debt Hybrid Funds - - DSPBR Dynamic Asset Allocation Fund - - - - -
Cash - - Liquid Funds - - Ultra Short Term - -
Gold 10.0% 10.0% Gold 100.0% 100.0%
45.0%
45.0%
0.0%
10.0%
Strategic Portfolio
Equity Debt Cash Gold
45.0%50.0%
0.0%
5.0%
Tactical Portfolio
Equity Debt Cash Gold
45.0%
45.0%
0.0%10.0%
Tactical Portfolio
Equity Debt Cash Gold
949698
100102104106108
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5M
ay-1
5Ju
n-1
5Ju
l-1
5A
ug-
15
Sep
-15
Oct
-15
No
v-1
5D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6
Balanced UCI Index
April 2016 14
Alpha Edge | “Liquef-action”
Model Portfolio: Moderately Aggressive
Mod Aggressive Market Cap wise (%)
Asset Class Sub-Asset Class Mutual Fund Schemes
Strategic
Tactical
Large cap Mid & Small cap
Others
Equity 70.0% 70.0% PMS - - Large Cap 30.0% 30.0% ICICI Pru Focused BlueChip Eq Fund 15.0% 15.0% 82.4 9.4 8.2
Birla SL Frontline Equity Fund
15.0% 15.0% 88.9 3.0 8.1
Mid & Small Cap 30.0% 18.0% BNP Paribas Mid Cap Fund 10.0% 6.0% 28.2 66.7 5.1
Edelweiss Emerging Leaders Fund 10.0% 6.0% 15.8 77.8 6.4
Mirae Asset Emerging BlueChip 10.0% 6.0% 30.3 65.7 4.0
Multi Cap 10.0% 10.0% MOSt Focused Multicap 35 Fund 10.0% 10.0% 87.8 12.1 0.0
Birla SL Pure Value Fund - - 17.4 76.0 6.6
Franklin India High Growth Cos Fund - - 57.3 24.9 17.8
Thematic / Sectoral Funds - - Equity Hybrid Funds - 12.0% Edelweiss Absolute Return Fund 12.0% Average
Maturity Years
Mod Duration Years
YTM (%)
Debt 20.0% 20.0% Short Term 20.0% 20.0% Axis Short Term Fund 10.0% 10.0% 2.7 2.0 8.0
Franklin India ST Income Plan 10.0% 10.0% 2.5 2.3 10.5
HDFC STP - - 2.2 1.8 9.8
Dynamic Bond Funds - - IDFC Dynamic Bond Fund-Reg - - 15.9 8.7 7.8
SBI Dynamic Bond - - 17.5 8.5 7.8
UTI Dynamic Bond Fund-Reg - - 14.8 7.2 8.1
Income Funds - - DWS Premier Bond Fund - - 1.8 1.5 8.0
HDFC Income Fund - - 16.4 8.1 8.0
UTI Bond Fund - - 16.3 7.9 8.2
Gilt - - Debt Hybrid Funds - - DSPBR Dynamic Asset Allocation Fund - - - - -
Cash - -
Liquid Funds - - Ultra Short Term - -
Gold 10.0% 10.0%
Gold 10.0% 10.0% Total 100.0% 100.0%
70.0%
20.0%
0.0%10.0%
Strategic Portfolio
Equity Debt Cash Gold
70.0%
25.0%
0.0%5.0%
Tactical Portfolio
Equity Debt Cash Gold
70.0%
20.0%
0.0%10.0%
Tactical Portfolio
Equity Debt Cash Gold
80
90
100
110
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5M
ay-1
5Ju
n-1
5Ju
l-1
5A
ug-
15
Sep
-15
Oct
-15
No
v-1
5D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6
Mod Aggressive UCI Index
April 2016 15
Alpha Edge | “Liquef-action”
Model Portfolio: Aggressive
Aggressive Market Cap wise (%)
Asset Class Sub-Asset Class Mutual Fund Schemes
Strategic
Tactical
Large cap Mid & Small cap
Others
Equity 90.0% 90.0% PMS - - Large Cap 30.0% 30.0% ICICI Pru Focused BlueChip Eq Fund 15.0% 15.0% 82.4 9.4 8.2
Birla SL Frontline Equity Fund
15.0% 15.0% 88.9 3.0 8.1
Mid & Small Cap 30.0% 20.0% BNP Paribas Mid Cap Fund 10.0% 6.6% 28.2 66.7 5.1
Edelweiss Emerging Leaders Fund 10.0% 6.6% 15.8 77.8 6.4
Mirae Asset Emerging BlueChip 10.0% 6.6% 30.3 65.7 4.0
Multi Cap 30.0% 30.0% MOSt Focused Multicap 35 Fund 10.0% 10.0% 87.8 12.1 0.0
Birla SL Pure Value Fund 10.0% 10.0% 17.4 76.0 6.6
Franklin India High Growth Cos Fund 10.0% 10.0% 57.3 24.9 17.8
Thematic / Sectoral Funds - - Equity Hybrid Funds - 10.0% Edelweiss Absolute Return Fund 10.0% Average
Maturity Years
Mod
Duration Years
YTM
(%)
Debt - - Short Term - - Axis Short Term Fund - - 2.7 2.0 8.0
Franklin India ST Income Plan - - 2.5 2.3 10.5
HDFC STP - - 2.2 1.8 9.8
Dynamic Bond Funds - - IDFC Dynamic Bond Fund-Reg - - 15.9 8.7 7.8
SBI Dynamic Bond - - 17.5 8.5 7.8
UTI Dynamic Bond Fund-Reg - - 14.8 7.2 8.1
Income Funds - - DWS Premier Bond Fund - - 1.8 1.5 8.0
HDFC Income Fund - - 16.4 8.1 8.0
UTI Bond Fund - - 16.3 7.9 8.2
Gilt - - Debt Hybrid Funds - - DSPBR Dynamic Asset Allocation Fund - - - - -
Cash - - Liquid Funds - - Ultra Short Term - -
Gold 10.0% 10.0% Gold 10.0% 10.0% Total 100.0% 100.0%
90.0%
0.0%0.0%10.0%
Strategic Portfolio
Equity Debt Cash Gold
90.0%
0.0%0.0%
10.0%Tactical Portfolio
Equity Debt Cash Gold
80.00
90.00
100.00
110.00
120.00
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5M
ay-1
5Ju
n-1
5Ju
l-1
5A
ug-
15
Sep
-15
Oct
-15
No
v-1
5D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6
Aggressive Nifty
April 2016 16
Alpha Edge | “Liquef-action”
Thank you for your time!
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