HDFC Balanced Fund - May 2017 - HDFC Mutual...

This product is suitable for investors who are seeking*:

• Capital appreciation along with current income over long term.

• Investment predominantly in equity and equity related

instruments with balance exposure to debt and money market

instruments.

* Investors should consult their financial advisers if in doubt about

whether the product is suitable for them.

Riskometer

The growth of equity with the foundation of debt.

May 20171

Balanced Funds – A Mix of Equity & A Dash of Debt

• A balanced fund is a portfolio generally comprising equity shares and debt instruments

• Broadly, balanced funds target returns greater than debt schemes with lower volatility than equity schemes

• Balanced funds provide investors the growth of equity with the stability of debt

Re

turn

s

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.

RiskMIP – Monthly Income Plans

Debt Funds

MIP’s

Equity Savings Funds

Balanced Funds

Equity Funds

2

Portfolio Strategy• Steady Reduction In Exposure To Midcaps In CY15-16 and CY 16-17

• Midcaps have outperformed large caps by highest margins in CY14 in last 10 years

(% Return) CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 CY 11 CY 12 CY 13 CY 14 CY15 CY 16

NIFTY 50 36.3 39.8 54.8 -51.8 75.8 17.9 -24.6 27.7 6.8 31.4 -4.1 3.0

NIFTY Midcap 100 35.0 29.0 76.9 -59.4 99.0 19.2 -31.0 39.2 -5.1 55.9 6.5 7.1

Outperformance -1.3 -10.8 22.1 -7.6 23.2 1.3 -6.4 11.5 -11.9 24.5 10.6 4.1

Large cap stocks are comparatively cheaper as

compared to midcaps

Given the convergence in P/E multiples between midcaps vs. large caps, the fund has shifted

allocation towards large companies but continues to hold mid caps with good long term

prospects. Thus, HDFC Balanced Fund is well positioned in the current market environment

Source: Bloomberg, CY- Calendar Year, The current investment strategy is subject to change depending on the market conditions. All calculations are illustrative.

The scheme`s benchmark is the CRISIL Balanced Fund - Aggressive Index

3

200

250

In R

s. T

ho

usa

nd

Crs

Average Market Capitalization

Mid Cap To Large Cap – The ShiftAs Mid caps have become relatively expensive, the fund has shifted to Large Caps

16

18

20

Market Valuation

-

50

100

150

200

De

c/1

2

Ma

r/1

3

Jun

/13

Se

p/1

3

De

c/1

3

Ma

r/1

4

Jun

/14

Se

p/1

4

De

c/1

4

Ma

r/1

5

Jun

/15

Se

p/1

5

De

c/1

5

Ma

r/1

6

Jun

/16

Se

p/1

6

De

c/1

6

Ma

r/1

7

In R

s. T

ho

usa

nd

Crs

HDFC Balanced Fund NIFTY 50 NIFTY Midcap 100

Shift to large

cap stocks

Source: Bloomberg, BF – Blended Forward. Average market capitalisation calculated on weighted average basis based on weight in corresponding

portfolio/index as on quarter ended date. The current investment strategy is subject to change depending on the market conditions. All calculations are

for a clear market understanding and are illustrative. The scheme`s benchmark is the CRISIL Balanced Fund - Aggressive Index

0

2

4

6

8

10

12

14

16

BF P/E - NIFTY Midcap 100 BF P/E - NIFTY 50

Apr-15 Apr-17

4

Benchmark vs Portfolio

Consumer Non Durables

Software

Auto Ancillaries

Petroleum Products

Construction Project

Banks

Overweight Sectors


Power

Auto Ancillaries

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided are as on 30th April 2017 as a percentage of total equity exposure of the fund wherein equity

exposure of the Fund is rebased to 100% to arrive at above weights. The current investment strategy is subject to change depending on the market conditions. Stocks/sectors

referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these sectors. Past performance may or may

not be sustained in future.

Thus, well placed for economic recovery

0 5 10 15 20 25 30

Finance

Power

Auto

Pharmaceuticals


Benchmark Portfolio

Underweight Sectors

Software


5

Equity Play• The fund has a balanced mix between

consumption and investment themes.

• Lately, the allocation to economically

sensitive investment themes has increased.

• Lower Interest Rates

growth may provide

markets.

& strong earnings

impetus to equity

Fund Sectoral Break up

13.9

4.3

4.8

6.8

26.0

5.5

6.0

8.2

8.2

25.4

Software

Auto Ancillaries

Petroleum Products


Banks

markets.

• Next leg of market growth to be led by

earnings growth. Earnings are expected to

remain strong over a 3 year horizon.

• Improving growth prospects and margin

outlook for companies are having a positive

impact on Indian markets.

The current investment strategy is subject to change depending on the market conditions. Stocks/sectors referred above are not recommended by HDFC

Mutual Fund/AMC. The Fund may or may not have any present or future positions in these sectors. For complete portfolio details refer

www.hdfcfund.com. Portfolio details provided as on 30th April 2015 and 30th April2017 as a percentage of total equity exposure of the fund as on given

dates.

25.4

0.0

0.9

5.2

11.7

1.0

23.7

3.8

3.9

4.7

5.1

5.5

Others

Finance

Power

Auto

Pharmaceuticals

Consumer Non Durables Apr-15

Apr-17

6

Debt Play

• Portfolio positioned to take advantage of falling

interest rates and upswing in growth

momentum

• While interest rates may fall, the extent may be

limited. Hence, the fund has reduced duration

Portfolio Holdings

0 5 10 15 20 25 30

Cash & Cash Equivalents

Credit Exposure

G-Sec

Apr-17 Apr-15

The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com.

Portfolio details provided as on 30th April 2015 and 30th April2017. Portfolio holdings are as a percentage of total portfolio holdings. HDFC

Feb-15 Feb-17

Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme(s)

Apr-15 Apr-17

Average Maturity

(In Yrs.)

14.45 9.29

Modified

Duration

(In Yrs.)

7.04 5.28

Yield To Maturity 8.03 7.51

-

2

4

6

8

10

12

14

16

Ma

y-…

Oct

-09

Ma

r-1

0

Au

g-1

0

Jan

-11

Jun

-11

No

v-1

1

Ap

r-1

2

Sep

-12

Feb

-13

Jul-

13

De

c-1

3

Ma

y-…

Oct

-14

Ma

r-1

5

Au

g-1

5

Jan

-16

Jun

-16

No

v-1

6

Ap

r-1

7

Ye

ars

Average Maturity

Apr-17 Apr-15

7

A Look At Our Long Term Track Record

As the holding period increases, return profile improves

This is consistent with the belief that equities are a long term asset class and that risk reduces as holding period

increases

CAGR (%) 1 Year 3 Years 5 Years 10 Years 15 Years

HDFC Balanced Fund (Return profile – % of times)

Illustrative Study

CAGR (%) 1 Year 3 Years 5 Years 10 Years 15 Years

More than 20 42 51 30 6 0

More than 15 53 71 67 87 100

More than 10 66 87 95 100

More than 0 86 97 100

More than -10 95 100

More than -20 97

Less than -20 3

Past performance may or may not be sustained in the future. Refer slide titled “Scheme Performance Summary” for complete performance details.

Table represents rolling returns of HDFC Balanced Fund since inception distributed over different holding periods and return brackets, e.g., returns have been more than

20% p.a. in ~42% of 1 year holding periods, more than 20% p.a. in ~51% of 3 year holding periods, more than 20% p.a. in ~30% of 5 year holding periods , more than 20%

p.a. in ~6% of 10 year holding periods, more than 15% p.a. in ~100% of 15 years holding periods (Row 2) etc.

Date of inception for HDFC Balanced Fund: 11th Sept, 2000.

Performance data computed till 31st Mar 2017. Where NAV as on the end of a particular month is not available, NAV of the nearest date available is considered. Returns

are monthly rolling. The holding periods in the above simulation are purely an assumption and not the actual holding period of investors in the Fund. 8

A Track Record of Consistent^ Outperformance

Calendar Year 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

HDFC Balanced Fund -

Growth9.72 3.01 51.47 8.78 26.41 -10.6 25.49 73.42 -36.42 27.58 26.47 27.93 14.6 59.79

CRISIL Balanced Fund -

Aggressive Index6.64 0.48 25.34 6.05 21.21 -14.39 13.57 48.65 -34.34 36.77 25.15 23.22 8.29 43.4

Outperformance Viz-a-vizOutperformance Viz-a-viz

Benchmark3.08 2.53 26.13 2.73 5.2 3.79 11.92 24.77 -2.08 -9.19 1.32 4.71 6.31 16.39

^HDFC Balanced Fund has outperformed in 12 out of 14 calendar years since 2003

Past performance may or may not be sustained in the future . Performance shown since 2003 as the scheme benchmark was launched on 31st March

2002. For complete performance details refer slide no. 17 9

Consistent dividends

The dividends announced since 2013 are as follows :

• With effect from Sep’15, a quarterly frequency for dividend distribution in the existing Dividend Options of

Financial Year 2013 2014 2015

Dividend per unit (Rs) (A) 1.25 1.25 2.00

NAV (Record Date) (B) 19.322 20.682 29.333

Dividend Yield (%) (A/B) 6.5% 6.0% 6.8%

www.hdfcfund.com for Record Date-wise listing of dividends declared.

• With effect from Sep’15, a quarterly frequency for dividend distribution in the existing Dividend Options of

the Regular and Direct Plan of HDFC Balanced Fund has been fixed.

• The dividends announced since September 2015 is as under

^ Past performance may or may not be sustained in the future.

* Dividend Yield has been annualized (Dividend per unit/NAV as on Record date) * Number of quarters

All dividends are on face value of Rs. 10 per Unit. After payment of the dividend, the per Unit NAV falls to the extent of the payout and statutory levy, if any. There

is no assurance or guarantee to unit holders as to rate/quantum of dividend distribution nor that the dividends will be paid regularly. Please log on to

MonthSeptember

28, 2015

December

28, 2015

March 28,

2016

June 27,

2016

September

26, 2016

December

26, 2016

March 27,

2017

NAV/Unit (Record Date) 27.109 27.261 25.73 26.82 28.897 26.95 29.38

Dividend/Unit (Rs.) 0.5 0.5 0.6 0.5 0.5 0.5 0.5

Dividend Yield* 7.4% 7.3% 9.3% 7.5% 6.9% 7.4% 6.8%

10

3.9 3.73.1

5.4 5.7

7.77.2

7.6

1951-60 1961-70 1971-80 1981-90 1991-00 2001-10 2011-15 2016-20E

Real GDP growth (average % change)

Improving Macros FY16 FY17E FY18E

GDP Growth (%) 7.6 7.3 7.7

CPI Inflation 4.9 4.8 4.6

Fiscal Deficit (% Of GDP) 3.9 3.5 3.0

CAD(% of GDP) 1.1 0.8 1.0

FDI (% of GDP) 1.5 2.1 1.7

Healthy Economic Growth

India Calling

Source: Bloomberg, CEIC, CSO, RBI; E- Estimates. Forecast of 2016-2020 from IMF January 2017 World Economic Outlook.

Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation).

1951-60 1961-70 1971-80 1981-90 1991-00 2001-10 2011-15 2016-20E

India one of the better placed economies amongst large

economies of the world.

The impact of demonetization is expected to have a

limited impact on the country`s medium term GDP

growth rate.

With a focus on rejuvenating growth, the government

has undertaken a series of policy measures.

Real GDP Growth (IMF Forecasts) 2017 estimates

World Average 3.4%

United States 2.3%

United Kingdom 1.5%

Japan 0.8%

China 6.5%

Emerging Markets & Developing

Economies Average4.5%

Interest Rates (%) 7.5 6.9 - Latest NA

Source: Morgan Stanley Research

11

Equity Markets – Market Cap to GDP near 10 year lows, i.e. at long term average

India market cap to GDP ratio, calendar year-ends 2005-16 (%) Improving EBITDA margins

15

16

17

18

19

20

21

22

23

24

10

15

20

25

30

35

40

45

69 88

149

56

99 98

61 71 64 81 76 72 65 58

13.215.1

22.8

10.916.8 16.3

12.614.2

15.9

20.017.5

19.317.8

14.8

-

5

10

15

20

25

0

20

40

60

80

100

120

140

160

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

E

20

18

E

12

• S&P BSE SENSEX EBITDA margins are stable/improving

• Improving EBITDA margins, lower interest rates should lead to improved EPS/Profit growth in coming years

Source: BofAML

14

15

5

10

96 98 00 02 04 06 08 10 12 14 16

Consumer (%) Healthcare (%) S&P BSE Sensex EBITDA margin (%) - RHS

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

E

20

18

E

Mcap/GDP (%) Sensex PE - 12month forward Average PE

Source: World Bank, Kotak Institutional Equities, updated till 30th Dec, 2016

Source: BofAML

Interest rate likely to be range bound

5.5

6.5

7.5

8.5

9.5

10.5

10 Year Benchmark G-sec Yield v/s Repo Rate

10 year benchmark Repo

Fiscal Deficit – Consolidation continues; from 4.9% in FY13 to 3.2% in FY18BE

Inflation – Likely to undershoot Mar’17 RBI target; average 4.5% in FY18

CAD – Manageable, even with an increase to over 1% in FY18

Global – Heightened external risks due to uncertain policy environment

RBI Policy – “Neutral” stance to continue; prolonged pause

4.5

5.5

Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17

Source: Bloomberg, HDFC AMC

HDFC Mutual Fund/AMC is not guaranteeing any returns on investments made in this Fund. Past performance may or may not be sustained in future.13

Fund Suitability

• Looking for a unique proposition of spreading the investment into two broad divisions – equities

and debt.

• Looking for tax efficiency in asset allocation. Currently, the scheme has been investing in the

range of 65% – 72% of its corpus in equity. (Scheme having an equity corpus of 65% and above is

considered as an equity-oriented fund for taxation purpose)

• Looking for exposure to debt which creates the risk buffer that the investors desire

• Looking for a well diversified portfolio across asset classes:

– Benefit from the growth of equities and

– The stability of debt markets

HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions.

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 in the Scheme. Refer Slide 16

& 17 for detailed performance 14

Fund FactsNature of Scheme Open-ended Balanced Scheme

Inception Date (Date

of allotment)

September 11, 2000

Investment Objective To generate capital appreciation along with current income from a combined portfolio of equity and equity-related and

debt & money market instruments

Fund Manager Chirag Setalvad

Investment Plan Regular & Direct

Investment Options Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility

Minimum Application

Amount.

Purchase: Rs. 5,000 and any amount thereafter

Additional Purchase: Rs. 1,000 and any amount thereafter

For further details, please refer to the Scheme Information Document.

Amount.

(Under Each Plan/Option)Additional Purchase: Rs. 1,000 and any amount thereafter

Load Structure Entry Load:

• Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI

registered Distributor) based on the investors’ assessment of various factors including the service rendered by

the ARN Holder.

Exit Load:

In respect of each purchase / switch-in of Units, up to 15% of the units may be redeemed without any exit load from the

date of allotment.

• In respect of each purchase / switch-in of units, an exit load of 1.00% is payable if units are redeemed /

switched – out within 1 Year from the date of allotment.

• No exit load is payable if units are redeemed / switched – out after 1 Year from the date of allotment.

In case of Systematic Transactions such as SIP, GSIP, STP, Flex STP, Swing STP, Flexindex; Exit Load, if any, prevailing on the

date of registration / enrolment shall be levied.

Entry / Exit load shall not be levied on bonus units and units allotted on dividend reinvestment.

Benchmark CRISIL Balanced Fund - Aggressive Index

15

Asset Allocation Pattern

Under normal circumstances, the asset allocation of the Scheme’s portfolio will be as follows:

Types of Instruments Normal

Allocation

(% of Net

Assets)

Normal

Deviation

(% of Normal

Allocation)

Risk Profile

Equities & Equity related instruments 60 20 Medium to High

The scheme may seek investment opportunity in the ADR / GDR / Foreign Equity and Debt Securities subject to SEBI (Mutual Funds)

Regulations, 1996. Maximum exposure to investment in Foreign Securities will be restricted to 40% of the net assets. The scheme may

use derivatives mainly for the purpose of hedging and portfolio balancing (max 20% of net assets) based on the opportunities available

subject to SEBI (Mutual Funds) Regulations, 1996. The scheme will not invest in Foreign securitized debt.

Equities & Equity related instruments 60 20 Medium to High

Debt Securities (including securitized

debt) and Money Market instruments

40 30 Low to medium

16

Scheme Performance Summary

Value of Rs 10,000 invested

PeriodScheme

Returns (%)

Benchmark

Returns (%) #

Additional

Benchmark

Returns (%) ##

Scheme (Rs)Benchmark

(Rs) #

Additional

Benchmark

(Rs) ##

Last 1 year 24.12 15.69 18.53 12,404 11,564 11,847

Last 3 years 20.58 11.62 11.60 17,523 13,903 13,894

Last 5 years 17.97 11.40 12.14 22,836 17,150 17,728

Since inception 16.90 NA 11.79 134,454 NA 63,886

Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualized (CAGR).

Load is not taken into consideration for computation of performance. # CRISIL Balanced Fund - Agressive Index ## NIFTY 50 Index. N.A.

Not Available. Different plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under

the Scheme will be lower to the extent of the distribution expenses / commission charged in the Regular Plan. Returns as on 28th April

2017. Chirag Setalvad is managing the scheme since Apr 2, 2007. Scheme inception date: 11 Sep, 200017

Since Inception 10 year SIP 5 year SIP 3 year SIP 1 year SIP

Total Amount Invested (Rs.) 2,000,000 1,800,000 1,200,000 600,000 360,000

Market Value as on April 28, 2017 (Rs.) 10,646,031 7,848,832 2,985,930 969,355 452,455

SIP Returns

Returns (Annualised)*(%) 17.87% 17.78% 17.38% 19.33% 15.51%

Benchmark Returns (Annualised)(%)# N.A. 11.38% 9.80% 11.02% 9.30%

Additional Benchmark Returns (Annualised)(%)# # 13.47% 13.18% 9.86% 11.37% 8.75%

Past performance may or may not be sustained in the future. # CRISIL Balanced Fund - Aggressive Index ## NIFTY 50 Index N.A. Not Available.

Assuming ` 10,000 invested systematically on the first Business Day of every month over a period of time. CAGR returns are computed after accounting

for the cash flow by using XIRR method (investment internal rate of return) for Regular Plan - Growth Option. Load is not taken into consideration for

computation of performance. The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum

returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. 18

Performance of other Schemes managed by the Fund Manager

Scheme

Tenure for

managing the

scheme

Cumulative Performance

1 year3 year 5 year

CAGR (in %) CAGR (in %)

Chirag Setalvad manages 10 schemes

Performance of Top 3 schemes managed by Chirag Setalvad

HDFC Retirement Savings Fund - Hybrid- Equity Plan$ 25-Feb-16 29.09 NA NA

Crisil Balanced Fund - Aggressive 15.69 11.62 11.4

HDFC LONG TERM ADVANTAGE FUND 02-Apr-07 29.00 18.60 17.56

S&P BSE SENSEX 16.84 10.11 11.56S&P BSE SENSEX 16.84 10.11 11.56

HDFC Small Cap Fund 27-Jun-14 38.41 25.66 21.66

Nifty Free Float Smallcap 100 43.10 23.71 16.67

Performance of Bottom 3 schemes managed by Chirag Setalvad

HDFC CHILDREN’S GIFT FUND - SAVINGS PLAN 02-Apr-07 13.06 12.9 11.25

CRISIL MIP Blended Index 11.39 11.17 9.85

HDFC MULTIPLE YIELD FUND - PLAN 2005 # 02-Apr-07 12.17 10.80 10.26


HDFC Retirement Savings Fund - Hybrid-Debt Plan$ 26-Feb-16 13.80 15.48 NA


Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). The above returns are

of Regular plan -growth option. $ The Scheme is co - managed by Chirag Setalvad (Equities) and Shobhit Mehrotra (Debt).# The Scheme is co - managed by

Chirag Setalvad (Equities) and Anil Bamboli (Debt). Load is not taken into consideration for computation of performance. On account of difference in the type

of the Scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly not comparable. Top 3 and bottom 3

schemes managed by the Fund Manager have been derived on the basis of since inception returns. Returns as on 28th April 2017 . Different plans viz. Regular

Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution

expenses/ commission charged in the Regular Plan 19

Disclaimer & Risk Factors

This presentation dated 25th May 2017 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 andimplementation 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.

20

Thank You

21

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