INVESTMENT AND PORTFOLIO STRATEGYmail.hsbc.com.hk/in/mm_ws_juy_sep_12/images/Wealth Strategies...

July-September 2012

In this issue• Global economy• Indian equity• India outlook• Debt markets• Investment and

portfolio strategy• Funds in focus

�GLOBAL ECONOMY �INVESTMENT AND PORTFOLIO STRATEGY

2 Wealth Strategies - July-September 2012

Disclaimer:

© The Hongkong and Shanghai Banking Corporation Limited, India 2005

52/60 Mahatma Gandhi Road, Mumbai 400 001

For private circulation only. This publication has been issued by The Hongkong and Shanghai Banking Corporation Limited in India (HSBC), incorporated in Hong Kong SAR with limited liability, for the information of its customers who are resident in India. This publication should not be distributed to any other persons and in particular should not be distributed to customers nationals/residents of the United States of America, Canada, Australia and New Zealand. It cannot be reproduced or further disseminated.

This publication does not constitute investment advice or an offer to sell, or a solicitation of an offer to purchase or subscribe for any investment. The information herein is derived from publicly available sources that HSBC considers reliable but which has not been independently verifi ed. Whilst every care has been taken in compiling the information, HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Some of the information in this document is derived from third party sources as specifi ed at the relevant places where such information is set out. The Bank believes such information to be reliable but it has not independently verifi ed the same. Expressions of opinion are those of HSBC only and are subject to change without notice. Opinions expressed herein do not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this publication. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed in this publication and should understand that the views regarding future prospects may or may not be realized. This document is for circulation in India. The Bank makes no representations that the products or services mentioned in this document are available to persons of any other country or are necessarily suitable for any particular person or appropriate in accordance with their local law. Among other things, this means that the disclosures set forth in this document may not conform to rules of the regulatory bodies of any other country and investment in the products discussed will not afford the protection offered by the local regulatory regime in any other country. The information contained herein is confi dential to the recipients thereof and may not be reproduced or otherwise disseminated. The Bank or its affi liates or their offi cers, directors and employees may have investments in any of the products mentioned in this publication (or in any related products) and may from time to time, add to or dispose off any such investment.

Investment involves risk, value of investment may increase or decrease, and may become valueless. Past performance fi gures shown are not indicative of future performance. The relevant product offering documents should be read for further details.


GLOBAL ECONOMY 05

INDIAN EQUITY 09

INDIA OUTLOOK 11

DEBT UPDATE 14

INVESTMENT AND PORTFOLIO STRATEGY 18

Investment Strategy 19

Invest at attractive valuations 20

Portfolio positioning in volatile markets 21

Hedge against agri-based infl ation 22

Diversifi cation 22

Tactical investment opportunities 23

FUNDS IN FOCUS 24


Infl ation in most emerging markets begins to ease due to fallingcrude prices.

Co-ordinated policy action in theEuro-zone has helped stabilizefi nancial markets.

Global economic recoveryremains choppy.

Global Economy

� Global economic conditions have once again turned uncertain on the back of the severe debt crisis in Europe and the prospect of reduced growth in the US as indicated by the US Federal Reserve.

� The US showed initial signs of growth early this year across various key economic indicators; however they have now turned downwards showing weakness. These parameters include increase in the unemployment rate to 8.2%, increase in the initial jobless claims, continuing claims and a steadily decreasing composite PMI. Furthermore, the US Federal Reserve has downgraded the growth outlook for the US GDP in CY12 to 1.9-2.4% from 2.4-2.9%, indicating a tepid recovery.

� In Europe, volatility in fi nancial markets re-appeared as initial relief from the European Central Bank’s 3-year LTRO subsided. The ensuing risk aversion from investors has driven the economic outlook weaker in the region. Risk aversion was further heightened in April and May by the elections held in France and Greece where there was a change in governments as well as a change in political outlook.

��The European Union Summit held in Brussels in June, came up with a road map for the recovery of the European Union with the primary objectives being lowering borrowing costs and establishing a Euro-zone banking union. Equity and debt markets will take cues from the implementation of the same.

��Emerging nations have seen a further slowdown in growth as they face multiple headwinds like weak global demand and indecisive policy action in Europe. This slowdown has been exacerbated by a slowdown in discretionary spending, a decrease in capital investments and sticky infl ation. The ability of the BRIIC nations to reverse this economic slump would lie in their ability to provide a fi scal stimulus as well as an improvement in the global economy as a whole.

BRIIC: Brazil, Russia, India, Indonesia and China

Developed nations GDP slow-down

Source: Bloomberg

0

0. 5

1

1.5

2

2.5

3

3.5

-1

-0.5

0

0.5

1

1.5

Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

EU UK Germany France Spain Italy US - RHS

Emerging nations GDP

Source: Bloomberg

0

2

4

6

8

10

12

14

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep-

10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Brazil Russia India Indonesia China


� Weak global growth outlook has kept manufacturing and industrial activity subdued across economies; Chinese and Brazilian industrial production fell to 9.6%, and -4.3% respectively. This has been further compounded by slowing consumer demand; Chinese and Brazilian retail sales fell from 18.1% to 13.8% and 12.5% to 6% respectively.

� Infl ation within the BRIIC nations has continued to see a downward trajectory due to a drop in energy prices, global slowdown and a softening of hard commodity prices. This has also prompted central banks in countries like Brazil, China and Indonesia to cut their lending rates and reserve ratios.

World PMI

Source: Bloomberg

Emerging market infl ation

Source: Bloomberg

US UK EU GER Italy France China

40

45

50

55

60

65

Jan-1

1

Feb-1

1

Mar-

11

Apr-11

May

-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-1

2Fe

b-12

Mar-

12

Apr-12

May

-12

Jun-1

223456789

10

May

-11

Jun-1

1

Jul-1

1Aug

-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-1

2

Feb-1

2

Mar-

12

Apr-12

May

-12

Brazil Russia India Indonesia China

� The cost of borrowing for distressed economies like Spain and Italy has steadily increased coupled with heightened volatility, since March 2012. The main reasons for this are (i) continued uncertainty over political consensus in Europe on fiscal consolidation (ii) stressed Spanish banking system due to the collapsed local real estate market and (iii) lack of further monetary easing in Europe.

� However this steep increase in borrowing costs was partially curtailed only after the ECB came out with firm measures to reduce these costs which included an enhanced stimulus of €100 billion and a proposal where the ESM would be able to directly fund banks without affecting the deficit of the nations.

��The ECB further announced a €100 billion bailout package for Spanish banks after the 10 year Spanish bond yield touched an all-time high of 7.11%.

��The positive impact of the June European Union summit is visible in Credit Default Swap spreads of Spain and Italy which have declined sharply over 1 and 3 month perspective respectively. This implies that the cost of insurance of a debt security (across maturities) has declined and the expectation of default by Spain and Italy is now lower.

ECB: European Central Bank, ESM: European Stability Mechanism

Cost of borrowing

Source: Bloomberg

Change in credit default swaps for Spain and Italy

Source: Bloomberg

0

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-1

2

Feb-1

2

Mar-

12

Apr-12

May

-12

Jun-1

2

1234567

US UK Germany France Spain Italy

-50

0

50

100

150

200

250

300

6M 1Y 2Y 3Y 4Y 5Y 7Y 10Y

Spain-1 Month Difference

Spain-3 Month Difference

Italy-1 Month Difference

Italy-3 Month Difference


� Crude prices have steadily declined since touching a high in February to an 18-month low of USD 89/bbl in June. This has been largely due to the global economic slowdown coupled with the OPEC production quotas which are at all-time highs.

� The OPEC, during its recent meeting, indicated that it might maintain crude prices at USD 100/bbl. Going forward, a few key factors that could decide the direction of crude include (i) pace of global economic recovery (ii) a resolution to the embargo imposed on Iran and (iii) the production quotas OPEC members impose upon themselves.

��Gold prices have come off from their historical highs as 'risk off' sentiments have decreased. Global investors have also started re-investing into US Treasuries which has led to a strengthening of the US Dollar index.

��Amongst the BRIIC nations the worst performing currencies have been the Indian Rupee and the Brazilian Real which have fallen by 17% and 23% respectively.

Crude, gold and USD price movement

Source: Bloomberg

Currency movement

Source: Bloomberg

90.00

Jul-1

1

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-1

2

Feb-1

2

Mar-

12

Apr-12

May

-12

Jun-1

2

105.00

120.00

135.00

DXY Index Crude Gold

90.00

100.00

110.00

120.00

130.00

9/2/

2011

9/16

/201

1

9/30

/201

1

10/1

4/20

11

10/2

8/20

11

11/1

1/20

11

11/2

5/20

11

12/9

/201

1

12/2

3/20

11

1/6/

2012

1/20

/201

2

2/3/

2012

2/17

/201

2

3/2/

2012

3/16

/201

2

3/30

/201

2

4/13

/201

2

4/27

/201

2

5/11

/201

2

5/25

/201

2

6/8/

2012

6/22

/201

2

DXY Index

Eur

GBP

Yen

INR

BRL

� World commodity prices continue to move downwards from H2CY11. This is largely due to an overall slow down across the globe. Commodity prices have also faced a downward pressure due to weaker Chinese growth.

� The Baltic Dry Index, a key indicator of global trade via sea, had touched a historic low in January and has remained range bound, indicating that global trade has remained subdued despite various efforts by nations to boost economic output.

World commodity movement

Source: Bloomberg

Baltic Dry Index

Source: Bloomberg

55.0065.0075.0085.0095.00

105.00115.00125.00

7/1/

2011

7/15

/201

1

7/29

/201

1

8/12

/201

1

8/26

/201

1

9/9/

2011

9/23

/201

1

10/7

/201

1

10/2

1/20

11

11/4

/201

1

11/1

8/20

11

12/2

/201

1

12/1

6/20

11

12/3

0/20

11

1/13

/201

2

1/27

/201

2

2/10

/201

2

2/24

/201

2

3/9/

2012

3/23

/201

2

4/6/

2012

4/20

/201

2

5/4/

2012

5/18

/201

2

6/1/

2012

6/15

/201

2

COMMODITY COPPER ALUMINIUM STEEL

0

500

1000

1500

2000

2500

Jul-1

1

Jul-1

1

Jul-1

1

Aug

-11

Aug

-11

Sep

-11

Sep

-11

Oct

-11

Oct

-11

Nov

-11

Nov

-11

Dec

-11

Dec

-11

Dec

-11

Jan-

12

Jan-

12

Feb-

12

Feb-

12

Mar

-12

Mar

-12

Apr

-12

Apr

-12

May

-12

May

-12

Jun-

12

Jun-

12


� Equity markets saw a broad-based rally till March 2012 on the back of multiple monetary stimuli. But post March, due to a deterioration of the political crisis in Greece, high crude prices, meagre monetary stimuli and speculation over Spanish and Italian fi scal health has pushed the markets lower.

� Equity markets in emerging economies took a marked downturn in the previous quarter. This is largely due to(i) global economic slowdown (ii) reduced FII infl ows and (iii) political uncertainty in Europe.

Developed market indices Emerging market indices

Source: Bloomberg Source: Bloomberg

World S&P 500 FTSE 100 Germany France

65.00

7/5/20

11

8/5/20

11

9/5/20

11

10/5/

2011

11/5/

2011

12/5/

2011

1/5/20

12

2/5/20

12

3/5/20

12

4/5/20

12

5/5/20

12

6/5/20

12

70.0075.0080.0085.0090.0095.00

100.00105.00110.00115.00 Greek political crisis

deepens

French elections andGreek political drama

EM's Brazil India China Nikkie Hong Kong

60.00

7/5/20

11

8/5/20

11

9/5/20

11

10/5/

2011

11/5/

2011

12/5/

2011

1/5/20

12

2/5/20

12

3/5/20

12

4/5/20

12

5/5/20

12

6/5/20

12

65.0070.0075.0080.0085.0090.0095.00

100.003 Year LTRO 1

3 Year LTRO 2

Operation Twist


� Indian equity markets have shown resilience during the past few months due to strong foreign fund fl ows. Indian markets are the best performing markets amongst the BRIIC nations, gaining c13% as on 29 June 2012 (yeartill- date) and declining by c1.5% in the previous quarter where as emerging markets have fallen by c10%.

� Liquidity induction by global central banks resulted in strong foreign fund fl ows into Indian equities during the quarter. Between the two LTRO’s conducted by the European Central Bank in December '11 and February '12,the total foreign fund infl ows is USD c9 B that contributed to the Sensex rising by c13%.

The equity indices are:

MSCI World MSCI Emerging markets MSCI Brazil MSCI Russia

MSCI India MSCI Indonesia MSCI China

Source: Bloomberg (data as on 29 June 2012)(equity indices mentioned below)

Indian equity markets v/s Global equity markets Indian equity markets

Source: Bloomberg (data as on 29 June 2012)

3M YTD-2012

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

China

Indones

ia

World

EMBra

zil

Russia

India

Sensex FII Inflow-RHSFII Inflow-RHS

800

1200

3200

5200

7200

9200

15000

15500

16000

16500

17000

17500

18000

18500

Sep

-11

Sep

-11

Sep

-11

Oct

-11

Oct

-11

Nov

-11

Nov

-11

Dec

-11

Dec

-11

Jan-

12

Jan-

12

Feb-

12

Feb-

12

Mar

-12

Mar

-12

Mar

-12

Apr

-12

Apr

-12

May

-12

May

-12

Jun-

12

Jun-

12

Operation Operation

3 Year 3 Year

Indian Equity The Sensex PE still remains belowits historical average.

FII infl ows have remained sticky despite global turmoil.

Indian equity markets outperform global markets on a year todate basis.


� On the sectoral front, the defensive sectors, FMCG and healthcare were the top two sectors during the previous quarter, though banking has gained c30% (year till-date) on account of continued expectations of global quantitative easing.

� The Sensex at 17000 is trading below its historical average making it a fairly priced market. Going ahead, markets are likely to take cues from global developments such as the political resolution to the Euro-zone debt crisis, growth momentum of the US economy, pace of economic recovery in China and a resolution over Iran’s nuclear programme standoff. Key domestic events which are likely to keep markets interested in the near term include reforms undertaken by the government, monetary policy action by the central bank, infl ation numbers and the progress of the monsoon.


Historical PE


Indian sectoral indices

-10.00% FMCG

Health

care

Banks

Capita

l goods

Oil and G

as

Consum

er

Meta

lPower

IT

Technology

Realty

Auto

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

3M YTD -12

7

12

17

22

27

Jan-

00

Jul-0

0Ja

n-01

Jul-0

1Ja

n-02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2


Easing global crude oil and goldprices narrowing CAD.

Global slowdown impacting foreigntrade and capital fl ows affectingthe Indian Rupee.

Domestic economy witnessing slowdown.

India Outlook

� Indian GDP growth for Q4FY12 came at 5.3% y-o-y, well below market expectations on account of sluggish growth in both expenditure and production components. Registered growth for the quarter was worst than the 2008 crisis period. On the production front, agriculture growth came in at 1.7% y-o-y below the average trend of 3%. Manufacturing growth further deteriorated with growth of -0.3% y-o-y.

� On the expenditure front, consumption expenditure took a hit with both government and private consumption edging lower to 4.13% y-o-y and 6.13% y-o-y against 4.65% y-o-y and 6.42% y-o-y in Q3FY12. On the positive front, investment growth came at 3.6% y-o-y against a contraction of 0.32% y-o-y in previous quarter.

� The sharp deceleration in growth resulted in deterioration in credit outlook by rating agencies, such as Fitch and S&P which cited concerns on government inaction on policy reforms to support growth.

��Going forward, revival of growth is likely to depend on policy measures by the government and central bank to boost consumption and investments both public as well as private, global environment and progress of monsoons.

Growth hinders as consumption and investment slows down

Source: Bloomberg

On the supply side, major contributors take hit

Source: Bloomberg

PFCE GFCE GFCF GDP

0

1

2

3

4

5

6

7

8

9

10

-5

0

5

10

15

20

25

(%)

(%)

3

4

5

Mar-10 Jun-10 Sep-10 Dec-10 Jun-11 Sep-11Mar-11 Dec-11 Mar-12

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Agriculture Mining Manufacturing Electricity Construction Trade/Tpt/Comm Fin/Ins/Real Est Community Svcs

FY 11 FY 12


� On the industrial production front, slowdown was more broad-based with the core industries registering a fall in production on account of issues like high input cost, shortage of coal, environment clearance, etc.

� Key leading indicators too witnessed subdued growth, with cement and car sales numbers falling on account of high petrol prices, weak consumer sentiments and postponement of construction activity.

Broad-based slowdown in key industries

Source: Bloomberg

Lead indicators fall as consumption and industrial activity enters rough patch

Source: Bloomberg

0

1

2

3

4

5

6

7

8

9

May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12

(%)

Core Industries Growth

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

-30.00%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12

Car Sales Volume Cement Sales

� The Euro-region debt crisis continues to impact global sentiment and the weak recovery in the US has led to risk aversion adversely impacting external trade and capital fl ows.

� India’s foreign exchange reserves witnessed a drawdown of USD 5.7 billion during Q4FY12 with the trade defi cit widening to over USD 50 billion (10.6% of GDP). The current account defi cit rose to USD 22 billion (4.5% of GDP) largely refl ecting subdued external demand and the relatively inelastic import demand of petroleum products, gold and silver.

��Meanwhile, capital and fi nancial account balances were higher during Q4FY12 at USD 16.5 billion supported by portfolio infl ows and measures announced by the RBI to deregulate interest rates on non-resident Rupee deposits.

Trade hit on account of global economic slowdown

Source: Bloomberg

Foreign capital fl ows adversely impacted by risk aversion in USD billion

Items FY11 FY12

Current account (45.90) (78.20)

Capital and fi nancial account 59.00 67.80

Accretion / Drawdown of reserves 13.10 (12.80)

Source: Bloomberg RBI

Import (%) Export (%)

-10

0

10

20

30

40

50

60

70

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12

(%)


Trade defi cit has started to cool off on account of depreciating Indian Rupee and falling crude price

Fall in crude oil prices outpacing Indian Rupee depreciation

Source: BloombergSource: Bloomberg

� Slowing global demand has resulted in a sell-off in commodity prices. The fall in prices has also been accentuated due to strengthening of the underlying currency viz. USD. Crude oil prices have declined by 20% fall in the previous quarter.

� On the other hand, most emerging economies have seen a depreciation in their currencies vis-à-vis the USD on fl ight of capital to safer-haven. The Indian Rupee has been among the worst performers, depreciating 9% during Q2CY12 against the USD.

��The fall in crude oil prices has been sharper than the weakening of Indian Rupee and has resulted in net benefi t by bringing down cost of imports. Over time, weak Indian Rupee will be a stimulus for contraction of the current account defi cit by expanding exports and curtailing imports.

��Going forward, sustenance of crude oil prices at these levels is expected to aid in; i) bringing down the government’s fuel subsidy burden ii) current account and fi scal defi cit consolidation iii) curtail infl ationary pressures, etc.

-020.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12

(%) r 12

Currency (m-o-m) Crude (m-o-m) CRY Index (m-om) Trade Deficit USD Million

-20000

-18000

-16000

-14000

-12000

-10000

-8000

-6000

-4000

-2000

0Jan-11 Feb-11Mar-11 Apr-11May-11Jun-11 Jul-11 Aug-11Sep-11 Oct-11Nov-11Dec-11 Jan-12 Feb-12Mar-12 Apr-12


Debt Market Update Improvement in liquidity tightness

benefi tting yields of money market instruments.

Nascent concerns on infl ation emerging.

G-secs outperform corporate bonds during the quarter on OMO support.

Bond yields ease on RBI’srate-cut action.

� Bond markets gained in April quarter by 20-80 bps following RBI’s rate-cut announcement of 50 bps in April. G-secs outperformed corporate bonds during the quarter as the market sentiment was supported by the announcement of Open Market Operations (OMOs) during the quarter. The RBI conducted OMOs totaling to `693 billion during the quarter supporting 40% of government’s g-sec borrowings.

� Improvement in liquidity conditions during the quarter also supported yields of money market instruments. Money market instruments yield eased by 60-250 bps during the quarter. The yields were also supported by a slowdown in the credit growth that eased from 21% in March to 18% in June.

Bond markets gain during the quarter in response to rate-cut action and improvement in liquidity

Money market instrument 29-Jun-12 30-Mar-12 Change in bps

CP 1M 9.50 11.56 (206.25)

CP 3M 9.59 11.27 (167.75)

CP 6M 9.84 11.20 (136.25)

CP 12M 10.00 10.93 (93.25)

CD 1M 8.98 11.45 (247.00)

CD 3M 9.05 10.70 (165.00)

CD 6M 9.30 10.50 (120.00)

CD 12M 9.52 10.15 (63.00)

Source: Bloomberg

Change in yields of money market instruments

TenureGovernment securities Corporate bond

29-Jun-12 Change (in bps) 29-Jun-12 Change (in bps)

3MO 8.27 (66.00) 9.71 (55.65)

6MO 8.21 (41.00) 9.73 (46.27)

1YR 8.06 (32.00) 9.63 (27.50)

3YR 7.96 (45.10) 9.49 (21.00)

5YR 8.19 (38.80) 9.44 (13.50)

8YR 8.09 (80.70) 9.68 5.23

10Y 8.46 (39.40) 9.37 (16.00)

15Y 8.18 (62.80) 9.71 20.47

Source: Bloomberg

G-sec and corporate bond yield movement


Liquidity tightness eases duringthe quarter

� Average borrowings under the LAF windows fell from `2 trillion during end of March to `700 billion during end of June. The factors supporting liquidity were i) pick-up in government spending (government deposits with RBI down c`390 billion during the quarter) ii) slowdown in credit growth (down to c18% in June from c21% in March) iii) Open market operations (OMOs) of `693 billion conducted by RBI so far to support G-sec auctions.

� Also, the move by RBI to support G-secs by conducting OMOs has prevented the yields from running up sharply and crowding out private investments.

Improvement in liquidity conditions

Source: Bloomberg, RBI WSS Statements

� WPI increased by 7.55% (y-o-y) in May and the March fi gure was also revised upwards to 7.69%. While the data on core infl ation has been showing signs of slowing, other components viz. primary article and fuel are showing an upward trend. Fuel infl ation in the coming months will benefi t from the easing global prices (cut of `2.46 per litre announced in petrol prices last month). The recent announcement to increase the power tariffs will however prevent infl ation from reducing sharply. Progress of monsoon will also be critical for agri-based infl ation.

� Crude oil prices have witnessed a c20% fall globally during the quarter; however the Indian Rupee depreciation against the USD of c9% has limited gains. Nevertheless, India remains a net benefi ciary, gaining c11% from the fall in oil prices.

Infl ationary pressures emerging

RBI surprises markets with infl ation concerns in the mid-quarter review� After reducing the policy rates by a 50 bps in its

April policy announcement, the RBI surprised the markets with a status-quo in June. Contrary to market expectations of a 25 bps rate-cut on weak growth numbers reported in May, the RBI left key policy rates unchanged highlighting infl ationary concerns.

LAF (INR B) -1% of NDTL Balance

-2500

-2000

-1500

-1000

-500

0

500

1000

1-Ja

n

8-Ja

n

15-J

an

22-J

an

29-J

an

5-Fe

b

12-F

eb

19-F

eb

26-F

eb

4-M

ar

11-M

ar

18-M

ar

25-M

ar

1-Ap

r

8-Ap

r

15-A

pr

22-A

pr

29-A

pr

6-M

ay

13-M

ay

20-M

ay

27-M

ay

3-Ju

n

10-J

un

Improvement in liquidity aided by government spending and OMOs

Infl ation remaining sticky at levels of 7%

Source: Bloomberg

0

Dec-11

Jan-1

1

Feb-1

1

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-1

2

Feb-1

2

Mar-12

Apr-12

May-12

2

4

6

8

10

12

14

16

18

20

Inflation holding above 7%

Primary Mfg Fuel WPI

Growth-Infl ation and RBI policy action

Source: Bloomberg

0

Dec-10

Feb-1

1

Apr-11

Jun-1

1

Aug-11

Oct-11

Dec-11

Feb-1

2

Apr-12

Jun-1

2

2

4

6

8

10

12

%

monetary easing by RBI

growth slowing

inflation cooling

GDP (qoq) Repo Rate Inflation


Debt market outlook� Going forward, the bond yield curve will likely take cues from:

i. Improvement in liquidity conditions in the coming months will be critical in the transmission of interest rate-cuts.

ii. Pace of growth in the coming months and the infl ation trajectory going forward impacted by developments on global crude oil prices, Indian Rupee levels against the USD, underlying components of infl ation including food and non-food, progress of monsoon. Infl ation pressures will impact the pace of monetary easing.

iii. Movement of Indian Rupee against the USD taking cues from foreign infl ows, crude oil prices and global developments. The Indian Rupee is expected to benefi t from the recent measures by the RBI to attract infl ows into debt and support the currency. This will however be impacted by risk appetite and outlook on India infl uenced by the rating agencies.

iv. Global developments impacting risk aversion diverting fl ows into riskier assets.

Liquidity conditions and CRR cuts

Source: Bloomberg, RBI WSS Statements

� For addressing tight liquidity conditions, the RBI enhanced the limit of export credit refi nance of outstanding export credit of banks from 15% to 50% which will potentially be equivalent a 50 bps cut in Cash Reserve Ratio (CRR). The move followed a 75 bps reduction in CRR in March which infused c`500 billion into the banking system.

� The RBI further pointed that the recent Indian Rupee depreciation against the USD is expected to act as a stimulus by supporting exports and contracting imports.

LAF (INR B) CRR Infusion -1% of NDTL Balance

-2500

-2000

-1500

-1000

-500

0

500

1000

25-M

ar-1

1

25-A

pr-1

1

25-M

ay-1

1

25-J

un-1

1

25-J

ul-1

1

25-A

ug-1

1

25-S

ep-1

1

25-O

ct-1

1

25-N

ov-1

1

25-D

ec-1

1

25-J

an-1

2

25-F

eb-1

2

25-M

ar-1

2

25-A

pr-1

2

25-M

ay-1

2

A million unique experiences.One unique card.

Enjoy complimentary access to select airport lounges and golf courses in India.

Live life without boundaries.

SMS HSBCPREMIER to 575750

Issued by The Hongkong and Shanghai Banking Corporation Limited, India (HSBC India). Incorporated in Hong Kong SAR with limited liability.The information provided here is intended for reference and is applicable in countries or locations where HSBC Premier is offered. Benefits and features may be subject to local country regulatory restrictions and applicable terms and conditions. Please refer to the HSBC Premier services guide on www.hsbcpremier.co.in for detailed information.


Investment and

Portfolio StrategyInvestment strategy 19

Invest at attractive valuations 20

Portfolio positioning in volatile markets 21

Hedge against agri-based infl ation 22

Diversifi cation 22

Tactical investment opportunities 23

The above should be read in conjunction with all the disclaimers appearing in the publication.


Global markets continued to watch for developments on resolution of the Euro-region debt crisis including elections in Europe and the monetary actions of central banks across the globe for signs of liquidity support. Nascent signs of growth were seen in the US; however data on employment and housing continues to remain a concern. Meanwhile, bond yields on inched higher as growth faltered and uncertainty prevailed. Outcomes of elections in Greece and France provided short-term relief to markets. Central banks in the region continued to provide support to markets but the impact has been superfi cial as underlying economic data fl ows show little signs of improvement.

In the emerging economies, markets have benefi tted from global liquidity. While central banks in the region have remained dovish on weak growth outlook and easing commodity prices, they have remained cautious of infl ationary pressures resurfacing on return of risk appetite.

Going forward, global markets will take cues from political willingness and ability of nations to undertake measures to limit the debt contagion as well as efforts to revive growth and employment while addressing problems of defi cit.

Domestic equities have witnessed gains in the recent weeks supported by i) signs of risk appetite on global developments ii) easing commodity prices iii) attractive valuations after the recent sell-off iv) policy action by government including increase in fuel prices, power tariffs, clarifi cation on taxation v) RBI’s rate-cut action.

In the coming months, domestic equity markets will be impacted by various global and domestic factors such as i) global risk environment ii) crude oil prices iii) progress of monsoon iv) infl ation data and RBI’s monetary actions v) corporate earnings results for Q1FY13 vi) progress on reforms and policy announcements vii) actions of rating agencies on sovereign and currency ratings and outlook.

Given this market scenario, investors should consider adopting an asset allocation in line with their risk profi le and use a systematic investment and transfer approach to investing.

The recent sell-off in the equity markets and lower market valuations vis-à-vis long-term averages offer opportunities for the discerning investor. The investor may consider aligning their portfolios towards actively managed asset allocation products, large cap oriented equity funds, funds that are nimble in their approach to capitalise on opportunities and funds investing into high dividend yield companies.

On the fi xed income side, after surprising the markets on the upside with a 50 bps rate-cut in April the RBI refrained from cutting rates further in June citing infl ationary pressures. The RBI has taken steps to improve liquidity conditions in the market through Open Market Operations (OMOs) and ancillary measures to attract infl ows and support the Indian Rupee. The OMOs have also supported the high G-sec supply and prevented the yields from spiraling and crowding out private investment.

In the coming months, bond yields are expected to ease on improvement in liquidity and monetary easing by RBI which will be determined by developments on infl ation and growth. Concerns of fi scal slippages and G-sec supply pressures remain and will limit the gains on bonds. Therefore, despite expectations of a steepening in the yield curve going forward, return opportunities on a risk-return basis remain favourable at the shorter end of the curve.

Investment strategy


Invest at attractive valuationsThe recent slowdown in growth with the GDP for FY12 clocking a sub-7% fi gure has taken the government and RBI by surprise. Concerted efforts by the government and the RBI to support growth through policy measures are expected to bring back the growth trajectory on track. Moreover subdued global commodity prices will aid Indian economy in bringing down the government’s subsidy burden aiding fi scal defi cit consolidation and attracting foreign infl ows. This recovery in growth will also refl ect in the broad equity markets. Moreover, the recent sell-off in the equity markets is offering lower market valuations vis-à-vis long-term averages. Also while, the recent sell-off in the market has been broad-based, select stocks spread across sectors have displayed strong resilience in the midst of volatility and offer growth opportunities for investors. �� Large cap oriented funds – Large cap stocks are typically better positioned to tide through market volatility

when compared to mid and small cap stocks on account of deeper and greater participation, comprehensive coverage and higher liquidity.

�� Funds adopting a nimble approach – This style of investing focusses on capitalising on opportunities from steep market movements while being nimble in their approach to investing.

�� Dividend yield funds – These funds invest a considerable part of their portfolio into high dividend yield companies offering stability in returns in the form of dividends.

Product category�� Products predominantly maintaining a sizeable exposure to large caps vis-à-vis mid and small cap stocks.

� Products that adopt a bottom-up style of portfolio management focussing on individual stock valuations and not driven by near term market momentum.

� Products that are diversifi ed in nature, avoiding sizeable exposure to a particular sector.

� Products adopting a bottom-up nimble approach to investing capitalising on opportunities presented by sharp market movements.

� Products predominantly investing into dividend yield stocks.

Risks�� Global developments, especially development on the sovereign debt situation in the Euro region and efforts by the

US to revive growth, resulting in change in risk appetite and capital fl ows in the markets.

�� Domestic factors / developments on corporate result season, policy uncertainties, infl ation, etc. may impactinvestor sentiment.

�� Products adopting a nimble approach to investing could add to the portfolio turnover adding to the volatility in returns.

�� Products investing into dividend yielding stocks usually defensive in nature and this approach could result in relative underperformance in bullish markets.


Risks�� Global events especially development on the sovereign debt situation in the Euro region and efforts by the US to

revive growth, resulting in change in risk appetite and capital fl ows in the markets.

� Domestic factors/ developments on corporate result season, policy uncertainties, infl ation etc may impact investor sentiment.

� Products adopting a pre-determined asset allocation approach towards investing typically tend to underperform during a surge in an asset class as these products will have limited exposure to it.

� During periods of prolonged volatility, periodic rebalancing would lead to higher expenses.

Markets are expected to remain volatile on developments in the Euro region debt situation, domestic news fl ows on infl ation, corporate earnings results, pace of economic growth, etc. Also with the expected increase in global liquidity on stimulus measures adopted by various governments (i.e. Euro and US region) to support their economies, degree of risk aversion will determine the allocations to markets adding to volatility. � Dynamic funds – Adopting an active management style that seeks to play out market trends and developments

across a host of sectors and themes while dynamically changing its asset allocation may help check theportfolio volatility.

�� Asset allocation funds – Funds that do not get carried away by market movement and instead focus on disciplined asset allocation aiding in times of market volatility. Asset allocation also enables profi t booking during times of optimism while ensuring capital infusion during times of pessimism.

Portfolio positioning in volatile markets

Product category�� Products that are dynamically managed generating alpha through adjusting asset allocation based on volatility.

�� Products that adopt a pre-determined approach towards asset allocation regardless of market movement, removing the element of emotion while investing (e.g. PE and EYG-based products).


� Rising food prices – Rising population globally is putting enormous pressures on the global food supply which is further adversely impacted by environmental pressures and increasing urbanisation leading to infl ationary pressures.

Hedge against agri-based infl ation

Product category�� Products that offer investment opportunity to capture value at various points along the 'food chain' investing

across the spectrum from agricultural commodities to consumer products.

Risks�� Climatic / environmental changes could lead to volatility in prices.

� Such theme-based funds have higher concentration risks as compared to funds that are well diversifi ed.

� Such products are exposed to region specifi c risks.

� Products that invest in companies across the world are exposed to currency risks.

� Regions – Indian equity markets have remained largely range-bound over the past 2 years facing signifi cant resistance primarily on account of valuation concerns, underlying infl ation and very recently, high commodity prices. The current investment proposition of investing in companies participating in other growth regions can complement the customers’ portfolios and provide diversifi cation benefi ts while retaining high growth orientation.

� Gold – Historically, gold has been considered a hedge against global uncertainties and during times of economic instability, gold acts as an effective hedge against other investments acting as a store of value.

Diversifi cation

Product category�� Products investing in companies listed in other growth regions offering opportunities of diversifi cation.

� Products that maintain exposure to gold through ETFs.

Risks�� Many emerging market countries are still in the early stages of modern development and are subject to abrupt and

unexpected changes.

� Product is exposed to region specifi c risks.

� Such products that invest in companies across the world are exposed to currency risks.

� Financial / speculative interest in gold / related instruments may add to volatility in gold prices.


� Short-term opportunities – Yields at shorter end of the yield curve are expected to fall in response to rate-cut action by the RBI to support growth. Longer term yields while benefi ting from a steepening yield curve will be volatile on concerns of fi scal consolidations and supply pressure.

Tactical investment opportunities

Product category�� Products are positioned to capitalise on opportunities available at the shorter end of the yield curve.

Risks�� Tightness in systemic liquidity.

� Slowdown in the pace of infl ation’s downward trajectory.

� Pick-up in credit growth.

� Slipages in the fi scal consolidation.


FT India Dynamic PE Ratio Fund of Funds 25

HSBC Dynamic Fund 26

ICICI Prudential Dynamic Plan 27

DSP BlackRock Top 100 Fund 28

Franklin India Bluechip Fund 29

ICICI Prudential Focused Bluechip Equity Fund 30

HSBC India Opportunities Fund 31

Reliance Equity Opportunities Fund 32

Birla Sun Life Dividend Yield Plus 33

UTI Dividend Yield Fund 34

DWS Global Agribusiness Off-Shore Fund 35

HSBC Brazil Fund 36

JP Morgan JF ASEAN Equity Off-Shore Fund 37

Reliance Gold Savings Fund 38

FT India Monthly Income Plan 39

HDFC MF Monthly Income Plan - Long-Term Plan 40

HSBC MIP - Savings Plan 41

Reliance Monthly Income Plan 42

Birla Sun Life Dynamic Bond 43

HSBC Income Fund - Short-Term Plan 44

ICICI Prudential Short-Term Plan 45

IDFC Super Saver Income Fund - Short-Term Plan 46

Funds in Focus

Disclaimer:

The funds mentioned in the following pages have been included after considering various quantitative and qualitative factors, including past performance and observed investment style and is based on data which HSBC believes to be accurate but have not been independently verifi ed. Inclusion in the 'Funds in Focus' neither suggests that funds is suitable for you, nor that it will continue to perform as it has in the past. 'Funds in Focus' should not be considered as buy or sell recommendations. Investors should carefully consider whether any/all of these funds are appropriate for them in view of their investment experience, objectives, fi nancial resources and relevant circumstances. For further risk disclosures, please refer to the disclaimer on the fi rst page of this publication.

Mutual funds and the underlying investments are subject to market risks and there is no guarantee, implied or otherwise, that the general objectives of the fund or any other specifi c performance targets will be achieved. In particular, investment returns, repayment of capital and the distribution of dividends or income are not guaranteed and the Sponsor of the fund is not responsible or liable for any loss or shortfall resulting from the operations of the fund. Please read the scheme information document carefully before investing.

25

Funds in Focus

Wealth Strategies - July-September 2012

Inception date: 31-Oct-03

Fund manager: Anand Radhakrishnan

Investment objective: An open-end Fund of Funds Scheme with an objective to provide long-term capital appreciation with relatively lower volatility through a dynamically balanced portfolio of equity and income funds.

(Exit loads mentioned are from the date of allotment)

Load structure:

Entry load Not applicable

Exit load <= 1 year: 1%> 1 year: Nil

Fund manager's views:

FTDPEF, India’s fi rst fund of funds, is designed to have a smoother ride through volatile markets. The fund helps investors take advantage of India’s long-term growth story through a tactical approach to equities and achieve stability from the increased allocation to debt at times of over valuation. It has a unique in-built buy-sell system, which determines tactical allocation between equity and debt based on PE multiples of Nifty which helps in minimising volatility. This discipline takes sentiment away from decision-making and is an ideal product for all long-term investors, irrespective of risk profi le. The fund currently has an allocation of 70% to bluechip fund and 30% to Templeton India Income Fund considering the Nifty's weighted average PE level of 16.66 (As on 31 May 2012).

Risk factors: Mutual fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fl uctuations in the interest rates and there can be no assurance that the schemes’ investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affi liates is not necessarily indicative of future performance of the schemes. The names of the schemes do not in any manner indicate the quality of the schemes, their future prospects or returns. The mutual fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus and the investment performance of the schemes. The investments made by the schemes are subject to external risks.Disclaimer: The expenses of the scheme will be over and above the expenses charged by the underlying schemes. At the peak of a bullish market, a portfolio balanced on PE ratios may not outperform a fully-invested portfolio. The existence, accuracy and performance of the S&P CNX Nifty Index will directly affect the scheme's performance.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

FT India Dynamic PE Ratio Fund of Funds (FTDPEF) As on 30 June '12

26

Funds in Focus


Inception date: 24-Sep-07

Fund manager: Tushar Pradhan andSanjay Shah

Investment objective: To provide long-term capital appreciation by allocating funds in equity and equity-related instruments. It also has the fl exibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative.


There is a new overlay in the fund introduced in April 2012 that helps the fund manager allocate between the assets across equities and debt instruments. This new overlay works on the earnings versus yield gap methodology, commonly understood as the EYG gap. The logic is intuitive - the model signals a higher allocation to equities when the valuations are attractive compared to the returns to be made in fi xed income and vice versa. The Indian long-term growth story remains strong but the market environment is likely to get increasingly volatile. In such a scenario, HSBC Dynamic Fund, with its active management seeks to add an aggressive edge to one’s portfolio.

Disclaimer: Expression of opinions are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised.© Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED.Mutual fund investments are subject to market risks, read all scheme related documents carefully.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

HSBC Dynamic Fund (HDF) As on 30 June '12

Load structure:

Entry load Nil

Exit load 1%, if redeemed/switched out within 1 year from the date of investments.

27

Funds in Focus


Investment objective: ICICI Prudential Dynamic Plan is an open-ended equity scheme seeking to generate capital appreciation by actively investing in equity and equity-related securities. For defensive considerations, the scheme may invest in debt, money market instruments and derivatives. The investment manager will have the discretion to take aggressive asset calls i.e. by staying 100% invested in equity market/equity related instruments at a given point of time and 0% at another, in which case, the fund may be invested in debt related instruments at its discretion. The AMC may choose to churn the portfolio of the scheme in order to achieve the investment objective. The scheme is suitable for investors seeking high returns and for those who are willing to take commensurate risks. Given the dynamic nature of the investment objective of this scheme and factors such as market volatility and macroeconomic factors, which may at times be unpredictable, there is no assurance that the investment objectives of the scheme will be met.

Risk factors: Mutual fund investments are subject to market risks, read all scheme related documents carefully. Nothing contained in this document shall be construed to be an investment advise or an assurance of the benefi ts of investing in any of the schemes of ICICI Prudential Mutual Fund. Recipient alone shall be fully responsible for any decision taken on the basis of this document.Disclaimer: In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affi liates and which may have been made available to the AMC and/or to its affi liates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and/or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as 'will', 'expect', 'should', 'believe' and similar expressions or variations of such expressions, that are 'forward looking statements'. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and/or investments, the monetary and interest policies of India, infl ation, defl ation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, etc. The AMC (including its affi liates), the mutual fund, the trust and any of its offi cers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profi t be in any way arising from the use of this material in any manner. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Inception date: 31-Oct-02

Fund manager: Sankaran Naren andMittul Kalawadia


The measures agreed at the euro-zone summit while providing temporary relief did not solve many of the euro's longer-term debt problems and Europe's economic problems remain huge. The sovereign-debt crisis will only be over when investors believe that euro-zone government bonds are safe. This remains a long way off, requires a road-map toward greater integration and policies by individual countries to boost their growth potential and reduce their debt. The U.S. economy is likely to drive market sentiment as immediate worries from Europe ebb, for now. Locally the valuations today are attractive and provide an interesting entry point. However returns will come as and when there are policy reforms leading to further reduction in current account defi cit and fi scal defi cit. Monsoon will be another crucial factor in the current context. The global correction in crude prices is a big positive for the Indian economy, the corporate and the equity market; however, the depreciating currency has muted the benefi t to some extent. The domestic political situation has turned more conducive. Amidst these triggers volatility isclearly a given. Indian investors are signifi cantly underinvested in Indian equities since 4 years. Given the sharp correction in global crude prices and attractive valuations there is a strong case for maintaining asset allocation in equities which will require investors to invest regularly. We recommend that investors capitalise on volatility by investing in funds like ICICI Prudential Dynamic Plan that help leverage on volatility.

ICICI Prudential Dynamic Plan (Open Ended Diversifi ed Equity Fund) As on 30 June '12


Load structure:


Exit load up to 1 year: 1%more than 1 year: Nil

28

Funds in Focus


As on 30 June '12

Investment objective: DSPBR Top 100 is an open-ended growth scheme seeking to generate capital appreciation, from a portfolio that is substantially constituted of equity securities and equity-related securities of the 100 largest corporates, by market capitalisation, listed in India.

Disclaimer and risk factors:Statutory Details: DSP BlackRock Mutual Fund was set up as a Trust and the settlors/sponsors are DSP ADIKO Holdings Pvt. Ltd. and DSP HMK Holdings Pvt. Ltd. (collectively) and BlackRock Inc. (Combined liability restricted to `1 lakh). Trustee: DSP BlackRock Trustee Company Pvt. Ltd.Investment Manager: DSP BlackRock Investment Managers Pvt. Ltd. Risk factors: Mutual funds, like securities investments, are subject to market and other risks and there can be no assurance that the Schemes’ objectives will be achieved. As with any investment in securities, the NAV of units issued under the Schemes can go up or down depending on the factors and forces affecting capital markets. Past performance of the sponsor/AMC/mutual fund does not indicate the future performance of the Schemes. Investors in the Schemes are not being offered a guaranteed or assured rate of return. Each Scheme/Plan is required to have (i) minimum 20 investors and (ii) no single investor holding>25% of corpus. If the aforesaid point (i) is not fulfi lled within the prescribed time, the Scheme/Plan concerned will be wound up and in case of breach of the aforesaid point (ii) at the end of the prescribed period, the investor’s holding in excess of 25% of the corpus will be redeemed as per SEBI guidelines. The names of the Schemes do not in any manner indicate the quality of the Schemes, their future prospects or returns. For scheme specifi c risk factors, please refer the SID. For more details, please refer the Key Information Memorandum cum Application Forms, which are available on the website, www.dspblackrock.com, and at the ISCs/distributors. Please read the Scheme Information Document and Statement ofAdditional Information carefully before investing.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Allotment date: 10-Mar-03

Fund manager: Apoorva Shah


The fund has outperformed its benchmark (BSE 100 Index) in the year-to-date period superior stock selection that led to the outperformance. We have increased weight-to-rate sensitive’s via consumer discretionary (autos) and select private sector banks. The fund has added exposure to Information Technology owing to the sharp depreciation in the Rupee which should bode well for selective companies in the sector. We have trimmed our position in the pharmaceutical sector as the sector has performed well in the last two years and has near term headwinds like the Drug Price Control Order (DPCO) and the worry of opportunities beyond the patent expiration. Rich valuations also makes the sector vulnerable to any disappointments. The fund has been successful in moving across sectors which has helped the funds performance in an environment where the mid caps have outperformed the large caps. Overall the fund is positioned to benefi t from an economic recovery which we believe will happen over the next few months.

DSP BlackRock Top 100 Fund (DSPBR Top 100)


Load structure:


Exit load <1 year: 1%> =1 year: Nil

29

Funds in Focus


Investment objective: An open-end growth scheme with an objective primarily to provide medium to long-term capital appreciation.

Risk factors: Mutual fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fl uctuations in the interest rates and there can be no assurance that the schemes’ investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affi liates is not necessarily indicative of future performance of the schemes. The names of the schemes do not in any manner indicate the quality of the schemes, their future prospects or returns. The mutual fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus and the investment performance of the schemes. The investments made by the schemes are subject to external risks.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Inception date: 01-Dec-93

Fund manager: Anand Radhakrishnan andAnand Vasudevan


FIBCF is an open-end diversifi ed equity fund that seeks to achieve capital appreciation through investments in large cap companies. Launched in 1993, it is one of the oldest equity funds in the country.The fund follows a bottom-up approach to stock selection with a medium to long-term perspective and ignores momentum stocks. The companies that the fund seeks to invest in (a) are well managed (b) generate high ROCE and (c) demonstrate the ability to deliver sustainable growth in earnings. Our strategy remains focused on the medium-to-long term opportunities based on investment and consumption themes.

Franklin India Bluechip Fund (FIBCF) As on 30 June '12


Load structure:



30

Funds in Focus


Inception date: 23-May-08

Fund manager: Manish Gunwani

Investment objective: ICICI Prudential Focused Bluechip Equity Fund is an open-ended equity scheme that seeks to generate long-term capital appreciation and income distribution to unitholders from a portfolio that is invested in equity and equity-related securities of about 25 to 30 companies selected from the Top 200 stocks in terms of market capitalisation listed on the NSE. If the total assets under management under this scheme goes above `1000 crores the Fund Manager reserves the right to increase the number of companies to more than 20.

Risk factors: Mutual fund investments are subject to market risks, read all scheme related documents carefully. Nothing contained in this document shall be construed to be an investment advise or an assurance of the benefi ts of investing in any of the schemes of ICICI Prudential Mutual Fund. Recipient alone shall be fully responsible for any decision taken on the basis of this document.Disclaimer: In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affi liates and which may have been made available to the AMC and/or to its affi liates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and/or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as 'will', 'expect', 'should', 'believe' and similar expressions or variations of such expressions, that are 'forward looking statements'. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and/or investments, the monetary and interest policies of India, infl ation, defl ation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. The AMC (including its affi liates), the mutual fund, the trust and any of its offi cers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profi t in any way arising from the use of this material in any manner. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.


The global markets have been on the edge on the back of the European debt crisis. While there is a push from world leaders on Euro leaders to take concrete steps to resolve the crisis, we think that there is no easy solution to the ongoing issues which will likely come and go at different time intervals. So the hanging swords in the form of Euro-zone disintegration remain and will likely keep equity markets volatile. The current growth slowdown in India has been triggered due to a lack of economic reforms, which the government is committed to implementing in the long-term. The slowdown therefore in our view is temporary and can be corrected by bringing in reforms, particularly in the energy sector. Affi rmative action on reforms like a diesel price hike supported by recent correction in global crude prices and a normal monsoon will provide the necessary impetus (lower interest rates) for the economy to trigger the growth cycle. Indian investors are signifi cantly underinvested in Indian equities since four years. In our view, while the triggers are positive than sometime back, investor sentiment is extremely negative towards equities. Historically whenever money is invested in a situation where investor sentiments are extremely negative, interest rates are at highs and markets at attractive valuations; returns in the near future generally have beaten expectations of gloom that were prevailing then. Relative to its benchmark, the fund is overweight non-ferrous metals, software, telecom and pharmaceuticals. The fund is underweight oil, ferrous metals, petroleum products, construction, banking and fi nancial services. The fund manager will add beta to the portfolio on signs of macro improving.

ICICI Prudential Focused Bluechip Equity Fund (IPFBF) (an open-ended equity fund)

As on 30 June '12


Load structure:


Exit load up to 1 year: 1%more than 1 year: Nil

31

Funds in Focus


As on 30 June '12

Investment objective: Seeks long-term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related securities. However, it could move a signifi cant portion of its assets towards fi xed income securities, if the fund manager becomes negative on equity markets.

Disclaimer: Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised.© Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED. Mutual fund investments are subject to market risks, read all scheme related documents carefully.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Inception date: 24-Feb-04

Fund manager: Tushar Pradhan


The global outlook remains challenging and the focus remains on visible cash fl ow generators in the portfolio. We have a cautious approach on the Indian economy as signs of slowing Industrial Production indicate softening of manufacturing demand. Our investment philosophy continues to be driven by our globally adopted PB-ROE model, which will help our stock selection to remain focussed on quality and in turn, help achieve our endeavour to deliver long-term performance. 'Best of both worlds approach' – In cricketing lingo, a look at the portfolio will highlight that the top order will share commonality with large cap portfolios with the bottom order aiming for alpha creation through a rich sprinkling of mid caps. These bring in a healthy combination of stability (large caps tend to have lower volatility) and better growth prospects (mid caps tend to have higher growth) to the portfolio.

HSBC India Opportunities Fund (HIOF)

Load structure:

Entry load Nil


32

Funds in Focus


Inception date: 28-Mar-05

Fund manager: Sailesh Raj Bhan andViral Berawala

Investment objective: The primary investment objective of the scheme is to seek to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio constituted of equity securities and equity-related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Risk factors: The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verifi ed any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials refl ect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affi liates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any fi nancial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affi liates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profi ts arising in any way from the information contained in this material. The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, affi liates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specifi c economic sectors mentioned herein. The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verifi ed any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials refl ect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affi liates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any fi nancial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affi liates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profi ts arising in any way from the information contained in this material. The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, affi liates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specifi c economic sectors mentioned herein.Mutual fund Investments are subject to market risks, read all scheme related documents carefully.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.


Reliance Equity Opportunities Fund is a multi-cap, low risk diversifi ed equity fund which invests in stable large cap and growth oriented mid and small cap companies belonging to emerging themes/sectors which would enable to identify the opportunity much ahead of time. The fund offers an optimal blend of stability of large caps, growth of mid caps, exposure to undiscovered, non-traditional emerging themes and investments in out of favour stocks available at distress valuation and a potential to outperform in the medium term.

Reliance Equity Opportunities Fund (REOF) As on 30 June '12


Load structure:



33

Funds in Focus



Fund manager: Nishit Dholakia

Investment objective: The objective of the scheme is to provide capital growth and income by investing primarily in a well-diversifi ed portfolio of dividend paying companies that have a relatively high dividend yield.

Statutory details: Constitution: Birla Sun Life Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: Aditya Birla Financial Services Private Limited and Sun Life (India) AMC Investments Inc (liability restricted to seed corpus of `1 lakh). Trustee: Birla Sun Life Trustee Company Pvt. Ltd. Risk factors: Mutual funds and securities investments are subject to market risks and there can be no assurance or guarantee that the objective of the scheme will be achieved. As with any investment in securities, the NAV of the units issued under the scheme may go up or down depending on the various factors and forces affecting capital markets and money markets. Past performance of the sponsor/investment manager/mutual fund does not indicate the future performance of the scheme and may not necessarily provide a basis of comparison with other investments. The name of the scheme does not, in any manner, indicate either the quality of the scheme or its future prospects or returns. Unitholders in the scheme are not being offered any guaranteed/assured returns. Investors should read the Scheme Information Document/Statement of Additional Information/Key Information Memorandum available at Investor Service Centres and with distributors carefully before investing.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.


Birla Sunlife Dividend Yield Fund launched in February 2003 was the fi rst dividend yield fund in India. The fund invests in companies having dividend yield in excess of twice that of sensex at the time of making the investment. This high dividend paying companies generally have stable cash fl ows, steady growth in earnings, a healthy balance sheet and superior return on capital/equity. Also, there is empirical evidence which suggests that returns from dividend and reinvestment of dividends are signifi cant contributors to total returns produced by equities. This fund is conventionally considered to provide decent capital appreciation in rising markets and a cushion for investors in falling markets. This fund is a suitable alternative for the more conservative investors who are wary of volatile equity markets and want to limit their downside risks. Dividend yield strategy is considered to yield superior risk-adjusted returns with less volatility over a longer time period. The fund maintains a very well-diversifi ed equity portfolio. The portfolio dividend yield as on end of 31 May 2012 was 2.8% against 1.7% dividend yield of sensex stocks. The cash level in the fund was around 5%. The key sector exposures in the fund are banking and fi nancial services, consumer non-durables and oil, gas and petroleum products and auto. Fund had around 35% of the portfolio of invested in large cap stocks while balance portfolio is invested in mid cap and small cap stocks.

Birla Sun Life Dividend Yield Plus (BDYP) As on 30 June '12


Load structure:



34

Funds in Focus


As on 30 June '12

Investment objective: UTI Dividend Yield Fund is an open-ended equity oriented scheme. The investment objective of the scheme is to provide medium-to-long term capital gains and/or dividend distribution by investing predominantly in equity and equity-related instruments, which offer high dividend yield. There can be no assurance that the investment objectives of the scheme will be realised.

Statutory details: UTI-Dividend Yield Fund: An open-ended equity oriented scheme. Investment objective: To provide mediu-to-long term capital gains and/or dividend distribution by investing predominantly in equity and equity related instruments, which offer high dividend yield. There can be no assurance that the investment objectives of the scheme will be realised. Load structure: Entry Load - Nil / Exit Load – 1% for < 1 year and nil for >= 1 year. Asset allocation: High dividend yield equity and equity related instrument 65% - 100%. Risk profi le: High, other equity or equity related instruments 0-35%, Risk profi le: High, debt and money market instruments 0-10%, Risk profi le: Low to medium. Dividend yield is considered as high if it is greater than the dividend yield of the Nifty last released/published by the NSE. While no fi xed allocation will normally be made for investment in money market instruments like Call Deposits, Commercial Papers, Treasury Bills, etc. the same may be kept to the minimum generally to meet the liquidity needs of the scheme. UTI-Dividend Yield Fund retains the option to alter the asset allocation for short-term periods on defensive considerations.General services: Daily NAV, Sale Price/Redemption Price available for Sale/Redemption on all business days. Registered offi ce: UTI Tower, 'Gn' Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051. Phone: 022 – 66786666.Statutory details: UTI Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India (liability of sponsors limited to `10,000). Investment manager: UTI Asset Management Co. Ltd. (incorporated under the Companies Act, 1956). Trustee: UTI Trustee Co. (P) Ltd. (incorporated under the Companies Act, 1956).Risk factors: All investments in mutual funds and securities are subject to market risks and the NAV of the units issued under the scheme may go up or down depending upon the factors and forces affecting the securities market. Past performance of the sponsor/mutual fund/scheme(s)/AMC is not necessarily an indication of future results and may not necessarily provide a basis for comparison with other investments. All mutual funds and securities investments are subject to market risks and there can be no assurance or guarantee that the objectives of the scheme will be achieved. Statements/observations made are subject to the laws of the land as they exist at any relevant point of time. Growth, appreciation and income, if any, referred to are subject to the laws of the land as they exist from time to time. UTI Dividend Yield Fund is only the name of the scheme and does not in any manner indicate either the quality of the scheme, its future prospects or returns. The scheme is subject to risks relating to credit, interest rates, liquidity, securities lending, reinvestment risk , default risk and investment in overseas markets, trading in debt and equity derivatives (the specifi c risk could be credit, market, illiquidity, judgmental error, interest rate swaps and forward rate agreements), investment in securitised papers and scheme specifi c risk. Please contact the nearest UTI Financial Centre, Business Development Associate (BDA) or AMFI/NISM certifi ed UTI Mutual Fund Independent Financial Advisor (IFA) for a copy of the Key Information Memorandum-cum-Application Form and Scheme Information Document. Please read the Scheme Information Document carefully before investing. Website: www.utimf.com Registrar: M/s. Karvy Computershare Pvt. Ltd., Narayani Mansion, H. No. 1-90-2/10/E, Vittalrao Nagar, Madhapur, Hyderabad - 500 081. Tel.: 040 – 23421944 to 47, Fax: 040 – 23115503, Email:[email protected] *Value Research Fund Rating (Risk-adjusted rating) is a convenient composite measure of both returns and risk. It is purely quantitative and there is no subjective component to the fund rating. The assessment does not refl ect value research’s opinion of the future potential of any fund. It only gives a quick summary of how a fund has performed historically relative to its peers. For equity and hybrid funds, the fund ratings for the two time periods (3 and 5 years) are combined to give a single assessment of each fund’s risk rating vis-à-vis other funds in each fund category. For debt funds, the fund ratings are based on an 18-month weekly risk adjusted performance, relative to the other funds in category. Value research does not rate an equity or hybrid fund with less than 3-year performance and a debt fund with less than 18-month performance track records. Each category must have a minimum of 10 fi nds for it to be rated. Effective, July 2008, we have put additional qualifying criteria, whereby a fund with less than `5 crore of average AUM in the past six months will not be eligible for rating. (www.valueresearchonline.com) CRISIL CPR Ranking Scale and Defi nition based on percentile of number of schemes considered in the category: CRISIL CPR~1 - Very Good performance in the category (Top 10 percentile of universe)*. CRISIL CPR~2 – Good performance in the category. CRISIL CPR~3 - Average performance in the category. CRISIL CPR~4 - Below average performance in the category. CRISIL CPR~5 - Relatively weak performance in the category. * - If the top 10 percentile fi gure is not an integer, the same is rounded off to the next integer.The same approach is adopted for CPR 2 (11th to 30th percentile), CPR 5 (last 91st to 100th percentile) and CPR 4 (71st to 90th percentile) clusters.The residual schemes in the universe are placed in the CPR 3 cluster. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.


Fund manager: Swati Kulkarni


We have increased exposure to fi nancial services in the past 6 months, mainly with a view that the interest rates have peaked. The incremental exposure is diversifi ed across private retail banks, housing fi nance companies and PSU banks. The thought process is to progressively reduce exposure to sectors that are insensitive to interest rate changes. We had maintained an overweight position in PSU oil companies considering the valuation support; with the sharp fall in crude oil prices, PSU oil stocks have started to outperform, fuel pass through mechanism could be an additional re-rating trigger in the long run. Overall, we intend to keep the focus of portfolio on companies with sustainable cash fl ow, strong balance sheet and earnings resilience.

UTI Dividend Yield Fund (UTI DYF)


Load structure:



35

Funds in Focus


As on 30 June '12

Investment objective: To generate long-term capital growth by investing predominantly in units of overseas mutual funds, focussing on agriculture and/or would be direct and indirect benefi ciaries of the anticipated growth in the agriculture and/or affi liated/allied sectors.

Disclaimer: The views of the fund manager should not be construed as an advice and investors must make their own investment decisionsregarding suitability of the funds based on their specifi c investment objectives and fi nancial positions and using such independent advisors as they believe necessary.Mutual fund investments are subject to market risks, read all scheme related documents carefully.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.


Fund manager: Aniket Inamdar and Kumaresh Ramakrishnan

Fund manager's views:Even in the face of macroeconomic questions regarding the growth rate of China and the debt-to-GDP sustainability of various EU countries, the operating environment in agribusiness has strong tailwinds. In this environment the companies under our coverage are generating respectable profi ts. The earnings announcements from our investments have met expectations on a broad level, and the respective business leaders have not witnessed any signifi cant deterioration in operating conditions. While the outlook provided by management teams has been at times cautious, their capital allocation plans paint a different picture. Expenditures are moving forward, employees have been retained, share buybacks and dividend payouts are increasing, and M&A activity continues. Viewing these actions as a proxy for business health, the rapid deterioration in stock prices does not refl ect the on-ground fundamentals. The reality of agribusiness is that the void created by lack of investment today must be fi lled tomorrow. Agronomic needs and economic incentives to invest are present - this makes it easy to see why we are passionate about current investment opportunities. Agribusiness companies matter to society. They have diverse geographical, product and asset footprints and are often as safe as many other perceived 'escape asset classes'. It is in these good businesses that we continue to commit capital. In times of higher market volatility a sound check for the relevance of agribusiness themes and milestones for our stocks is necessary. Our research focused fi rst on the longevity and relevancy of our investments, second on stress testing for exogenous factors, third for valuation as an indicator for attractiveness relative to our investment history and fourth for catalysts for closing our variant perceptions. Even with a potential slowdown in emerging market growth the lowest income decile will have plenty of opportunities to increase income. Levels aboveUSD 2,500 per annum historically have been accompanied by a tripling of protein consumption, specifi cally animal protein. Current food prices are not as high as 2008 and should put limited additional pressure on emerging markets' private consumption of food.

DWS Global Agribusiness Off-Shore Fund (DWS GABF)


Load structure:



36

Funds in Focus



Although the global macro-economic environment remains uncertain, our positive outlook on Brazilian equities is driven primarily by strong local factors: 1. Continuation of further monetary easing post the start of rate-cuts in August 2011, which should be

favourable for equities2. Comfortable valuations with 12-month forward price-earning multiple and price-book multiple remaining

cheaper than other emerging markets and some developed markets as well3. Strong support to domestic growth in the coming years from infrastructure development spending towards

the World Cup in 2014 and Olympics in 20164. Brazil being one of the most favoured investment destinations across the globe – the country ranked fourth

in global FDI with USD 67 billion in 20115. Healthy domestic macro parameters – unemployment rate at only 5.5% in Dec 2011; healthy credit growth

of 15-17% expected in 2012


HSBC Brazil Fund (HBF)

Investment objective: The primary investment objective of the scheme is to provide long-term capital appreciation by investing predominantly in units/shares of HSBC Global Investment Funds (HGIF) Brazil Equity Fund. The scheme may, at the discretion of the investment manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a signifi cant part of its corpus. The scheme may also invest a certain proportion of its corpus in money market instruments and/or units of liquid mutual fund schemes, in order to meet liquidity requirements from time-to-time.


Fund manager: Piyush Harlalka(dedicated fund managerfor overseas investments)

As on 30 June '12

Load structure:

Entry load Nil

Exit load 1%, if redeemed/switched out within 1 year from the date of investments; otherwise Nil

37

Funds in Focus



With the ongoing Europe sovereign debt crisis, a slowing China and a weakly recovering US weighing down on global growth, the ASEAN region may prove to be a relatively bright spot with the potential to outperform some of the other major economies struggling with the current diffi cult environment. Taken collectively, the region has some promising developments within its diverse constituents, while investment-led growth means that some of the negative effects of external shocks can be offset. Rapid infrastructure development, demographics and modernisation should also help support growth prospects in the region. We remain most constructive on the outlook for Thailand as we believe private and government investment should underpin economic growth.

Standard risk factors: 1. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal2. As the price/value/interest rates of the securities in which the scheme invests fl uctuates, the value of your investment in the scheme may go up or down.3. Mutual funds, like securities investments, are subject to market and other risks and there can be no guarantee against loss resulting from an investment in the scheme nor can there be any assurance that the scheme’s objectives will be achieved4. Past performance of the sponsor/AMC/mutual fund does not guarantee future performance of the scheme5. JP Morgan JF ASEAN Equity Off-Shore Fund is only the name of the scheme and does not in any manner indicate either the quality of the scheme or its future prospects and returns.6. The sponsor is not responsible or liable for any loss resulting from the operation of the scheme beyond the initial contribution of `1,00,000 (One lakh Indian Rupees) made by it towards setting up the mutual fund7. The present scheme is not a guaranteed or assured return schemeScheme-specifi c risk factors: 1. The scheme will be investing primarily in shares/units of the underlying fund, which in turn invests in equity and equity-linked securities of companies of countries which are members of Association of South East Asian Nations (ASEAN) and those that are incorporated under the laws of, and have their registered offi ce in, an ASEAN country or that derive the predominant part of their economic activity from ASEAN countries, even if listed elsewhere. The scheme’s performance will predominantly depend upon the performance of the underlying fund.2. Any change in the investment policy or the fundamental attributes of the underlying fund will affect the performance of the scheme3. Investments in the underlying fund, which is an equity fund, will have all the risks associated with investments in equity and the off-shore markets4. The portfolio disclosure of the scheme will be largely limited to the particulars of the underlying fund and investments by the scheme in money market instruments. Therefore, investors may not be able to obtain specifi c details of the scheme5. In addition to the recurring expenses of the scheme, the investor shall also bear the applicable expenses of the underlying fund. Therefore, the returns that the investor may receive shall be substantially impacted or may, at times, be lower than the returns that an investor, directly investing in the underlying fund could obtainMutual fund investments are subject to market risks, read all scheme related documents carefully.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

JP Morgan JF ASEAN Equity Off-Shore Fund (JPAEF)

Investment objective: The primary investment objective of the scheme is to provide long-term capital growth by investing predominantly in JP Morgan Funds – JF ASEAN Equity Fund, an equity fund which invests primarily in companies of countries which are members of the Association of South East Asian Nations (ASEAN).

However, there can be no assurance that the investment objective of the scheme will be realised.

Inception date: 5-Jul-11

Fund manager: Namdev Chougale

As on 30 June '12

Load structure:


Entry load Not applicableExit load <= 6 months 2.0%

> 6 months <= 12 months 1.5%>12 months <= 18 months 1.0%

38

Funds in Focus


Investment objective: The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical gold (and gold-related securities as permitted by regulators from time-to-time). However, performance of the scheme may differ from that of the domestic prices of gold due to expenses and/or other related factors.

Risk factors: The views expressed herein constitute only opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purpose only and is not meant to serve as a professional guide for readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verifi ed any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Furthermore, many of the statements and assertions contained in these materials refl ect the belief of RCAM, which may be based in whole or in part on such data and other information. The sponsor, the investment manager, the trustee or any of their respective directors, employees, affi liates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based on the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any fi nancial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the sponsors, the investment managers, the trustees, their respective directors, employees, affi liates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profi ts arising in any way from the information contained in this material. The sponsor, the investment manager, the trustee, any of their respective directors, employees including the fund managers, affi liates, representatives including persons involved in the preparation or issuance of this material may from time-to-time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specifi c economic sectors mentioned herein. Reliance Gold Savings Fund (An open-ended fund of fund scheme): The investment objective of the scheme is to seek to provide returns that closely correspond to returns provided by Reliance Gold Exchange Traded Fund (RGETF). Asset allocation pattern: Units of RGETF - 95 to 100%, reverse repo and/or CBLO and/or short-term fi xed deposits and/or schemes which invest predominantly in the money market securities or liquid schemes* - 0 to 5%. *The fund manager may invest in liquid schemes of Reliance mutual fund. However, the fund manager may invest in any other scheme of a mutual fund registered with SEBI, which invests predominantly in the money market securities. Load structure: Entry load: Nil. Exit load: 2% - If redeemed or switched out on or before completion of 1 year from the date of allotment of units, nil thereafter. Terms of issue: The NAV of the scheme will be calculated and declared on every working day. The scheme provides sale/switch-in and repurchase/switch-out facility on all business days at NAV-based prices. RGETF is an open-ended Gold Exchange Traded Fund that tracks the domestic prices of gold through investments in physical gold. The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical gold (and gold-related securities as permitted by regulators from time-to-time). However, the performance of the scheme may differ from that of the domestic prices of gold due to expenses and/or other related factors. Asset allocation pattern: Physical gold or gold-related instruments as permitted by regulators from time-to-time - 90 to 100%, money market instruments, bonds, debentures, government securities including T-Bills, securitised debt and other debt securities as permitted by regulators from time-to-time - 0 to 10%. Load structure: Entry load and exit load - nil. Terms of issue: As the units of the scheme are listed on the Exchange, subsequent buying or selling (trading) by unitholders can be made from the secondary market on all trading days. The minimum number of units that can be bought or sold on the Exchange is 1 (one) unit. Statutory details: Reliance mutual fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882. Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment manager: Reliance Capital Asset Management Limited (Registered offi ce of trustee and investment manager: 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi Mumbai - 400 710, Maharashtra). The sponsor, the trustee and the investment manager are incorporated under the Companies Act, 1956. The sponsor is not responsible or liable for any loss resulting from the operation of the scheme beyond their initial contribution of `1 lakh towards the setting up of the mutual fund and such other accretions and additions to the corpus. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Inception date: 11-Mar-11

Fund manager: Hiren Chandaria

Fund manager's views:Globally, negative real interest rates, longer term infl ationary concerns, currency debasement, stronger physical demands of gold especially from China, central bank’s accumulation of gold and thrust for portfolio diversifi cation are key factors in support of gold prices. Gold is one of the asset classes which tend to benefi t during falling currency value and hence its value as a portfolio diversifi er increases as most of the assets are positively related to local currency. Again, gold does not have statistically signifi cant correlation with other fi nancial assets and has comparatively lower volatility. The long-term outlook for gold looks positive. Any correction can be looked as opportunity to accumulate and long-term prudent investor should continue investing in gold in a phased manner as it is likely to improve risk-adjusted returns for the portfolio.Common source for gold view: Bloomberg, Reuters, World Gold Council

Reliance Gold Savings Fund (RGSF) As on 30 June '12


Load structure:



39

Funds in Focus



The investment strategy for the fi xed income component is to maintain a relatively higher credit quality portfolio with an intermediate maturity level. On the equity side, the portfolio is conservatively managed keeping in mind the investment profi le of investors in such schemes - for instance, the exposure to a particular stock rarely exceeds 2%, while the exposure to a single sector is normally maintained below 5%. Moreover, the portfolio manager follows an active profi t booking strategy to reduce the downside risk on the equity component. On the debt side, we will continue to maintain portfolio maturity at relatively lower levels and try to take advantage of the high accruals available at the short end of the curve. On the equity side, our focus remains on quality companies with the potential to deliver over the medium-to-long term. Rising input prices and borrowing costs make stock selection an important factor and the fund's equity exposure is towards companies in sectors like banking, software and telecom. Notwithstanding near-term challenges, these companies are well positioned to take advantage of long-term growth drivers such as consumption and rising infrastructure spending/capex.

Risk factors: Mutual fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fl uctuations in the interest rates and there can be no assurance that the schemes’ investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affi liates is not necessarily indicative of future performance of the schemes. The names of the schemes do not in any manner indicate the quality of the schemes, their future prospects or returns. The mutual fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus and the investment performance of the schemes. The investments made by the schemes are subject to external risks.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Investment objective: An open-end income scheme (with no assured returns) with an objective to provide regular income through a portfolio of predominantly high quality fi xed income securities with a maximum exposure of 20% to equities.

Inception date: 28-Sep-00

Fund manager: Anand Radhakrishnan,Anil Prabhudas,Sachin Padwal-Desai andUmesh Sharma

FT India Monthly Income Plan (FTMIP)(Income is not assured, and is subject to the availability of distributable surplus.)

As on 30 June '12


Load structure:



40

Funds in Focus


HDFC MF Monthly Income Plan - Long-Term Plan (HDFC MIP LT)

Investment objective: The primary objective of the scheme is to generate regular returns through investment primarily in debt and money market instruments. The secondary objective of the scheme is to generate long-term capital appreciation by investing a portfolio of the scheme’s assets in equity and equity-related instruments. However, there can be no assurance that the investment objective of the scheme will be achieved.


Fund manager: Prashant Jain (Equity) andShobhit Mehrotra (Debt)

Fund manager's views:The debt component of HDFC MIP - LTP which constitutes over 75% of the portfolio continues to maintain a longer duration. This is in line with the expectation of easing of interest rates during the second half ofFY 2012-13. The equity component of the fund is overweight banking and fi nancial services, petroleum products, etc. With overall interest rates peaking out in the economy and equity valuations being reasonably attractive, MIP-LTP is favourably positioned in the current environment. It is a good asset allocation product for investors seeking controlled exposure to equities.

Risk factors: All mutual funds and securities investments are subject to market risks and there can be no assurance that the schemes’ objectives will be achieved and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market. Past performance of the sponsors and their affi liates/AMC/mutual fund and its scheme(s) do not indicate the future performance of the scheme of the mutual fund. There is no assurance or guarantee to unitholders as to the rate of dividend distribution nor that dividends will be paid regularly. Investors in the schemes are not being offered any guaranteed/assured returns. The NAV of the units issued under the schemes may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities. The NAV with inter-alia be exposed to price/interest rate risk and credit risk. Long-Term Plan of HDFC MF Monthly Income Plan, an open-ended income scheme (monthly income is not assured and is subject to availability of distributable surplus), is only the name of the scheme and does not in any manner indicate either the quality of the scheme, its future prospects and returns. Please read the Scheme Information Document and Statement of Additional Information before investing. Investment objective: To generate regular returns through investment primarily in debt and money market instruments. The secondary objective of the scheme is to generate long-term capital appreciation by investing a portion of the scheme’s assets in equity and equity-related instruments. Asset allocation pattern: Equity and equity-related instruments (25%); debt and money market instruments (75%). 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, 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 view of the individual nature of tax consequences, each investor is advised to consult his/her professional tax advisor. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

As on 30 June '12


Load structure:



41

Funds in Focus



Equity strategy: We continue to keep a higher bias towards large caps keeping in mind the risk appetite of investors in the fund. The two things that are important to any investment decision are the quality and the stability of the portfolio. Over the last few months, we had reduced some risk in the portfolio since some stocks had risen very sharply in a short span of time. Stock selection has been key to short-term performance as some stocks have done very well over the last couple of quarters but we also need to recognise that we have held most of these stocks for close to two years and only now have they delivered value. This refl ects our long-term view when we take equity investment decision.Debt strategy: Liquidity scenario is being managed proactively by RBI given the forex intervention and on-going currency demand from public. RBI has already cut the CRR by 125 bps to ease liquidity. We believe that further cut of interest rates (repo rate) is dependent on fi scal situation, commodity prices and currency levels. The liquidity easing has given us an opportunity in HMIP to build some duration, which will benefi t from the softer interest rates. Keeping in mind the conservative nature of the investors, we have cautiously built duration in our fund to about 2 years with some G-Secs and medium tenure corporate bonds. The short-end segment, currently yielding higher than the long-end corporate bonds, also provides an opportunity to earn higher accrual with expectation of gains as the curve normalises again. Thus, HMIP has built some short-end position as well.

Disclaimer: Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised.© Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED. Mutual fund investments are subject to market risks, read all scheme related documents carefully.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Investment objective: HSBC MIP seeks to generate reasonable returns through investments in debt and money market instruments. The secondary objective of the scheme is to invest in equity and equity-related instruments to seek capital appreciation.


Fund manager: Aditya Khemani (Equity);Sanjay Shah andRuchir Parekh (Debt)

HSBC MIP - Savings Plan (Monthly income is not assured and is subject to availability of distributable surplus.)

As on 30 June '12

Load structure:

Entry load Nil


42

Funds in Focus


Investment objective: To generate regular income in order to make regular dividend payments to unitholders and the secondary objective is growth of capital.

Inception date: 13-Jan-04

Fund manager: Amit Tripathi andAshwani Kumar

Fund manager's views:Emphasis is more on accrual-based returns than on active trading. MIP portfolio refl ects an optimum blend of both fi xed and fl oating rate instruments comprising of certifi cate of deposits to take care of liquidity needs and plain vanilla bonds specially to take care of yield enhancement, govenment securities enchance the credit quality and shall enable in benefi tting from the bond market play. Bonds are expected to fi nd support from increased risk aversion on Euro-zone crisis, loss of momentum in global growth, lower commodity prices including crude oil prices, slowing domestic growth and continuous liquidity support by RBI. Though investment into equity and equity-linked securities forms a minor part (maximum 20%) of the portfolio, right timing and selection of stocks have been able to generate the alpha returns, thus resulting in the growth of capital.

Risk factors: The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purpose only and is not meant to serve as a professional guide for readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verifi ed any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials refl ect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The sponsor, the investment manager, the trustee or any of their respective directors, employees, affi liates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any fi nancial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the sponsor, the investment manager, the trustee, their respective directors, employees, affi liates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profi ts arising in any way from the information contained in this material. The sponsor, the investment manager, the trustee, any of their respective directors, employees including the fund managers, affi liates, representatives including persons involved in the preparation or issuance of this material may from time-to-time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specifi c economic sectors mentioned herein. Reliance Monthly Income Plan (an open-ended fund - Monthly Income is not assured and is subject to the availability of distributable surplus): The primary investment objective of the scheme is to generate regular income in order to make regular dividend payments to unitholders and the secondary objective is growth of capital. Asset allocation: Equities and equity-related securities - 0 to 20%, fi xed income securities (debt and money market) – 80 to 100%. Entry load: nil, Exit load: 1%, if redeemed or switched out onor before completion of 1 year from the date of allotment of units, nil thereafter. Terms of issue: The NAV of the scheme will be calculated and declaredon every working day. The schemes provide sale/switch-in and repurchase/switch-out facility on all business days at NAV-based prices. Risk factors: Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the scheme will be achieved. As with any investment in securities, the NAV of the units issued under the scheme can go up or down depending on the factors and forces affecting the capital markets. Reliance Monthly Income Plan is the name of the scheme and does not in any manner indicate either the quality of the scheme; its future prospects or returns. Past performance of the sponsor/AMC/mutual fund is not indicative of the future performance of the scheme. The NAV of the scheme may be affected, inter-alia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The mutual fund is not assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend distributions are subject to the availability of distributable surplus in the scheme. Please read the Scheme Information Document (SID) and Statement of Additional Information (SAI) carefully before investing. Copies of SID and SAI is available at all the DISC, distributors and www.reliancemutual.comStatutory details: Reliance mutual fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882. Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment manager: Reliance Capital Asset Management Limited (Registered offi ceof trustee and investment manager: 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi Mumbai - 400 710, Maharashtra). The sponsor, the trustee and the investment manager are incorporated under the Companies Act, 1956. The sponsor is not responsible or liable for any loss resulting from the operation of the scheme beyond their initial contribution of `1 lakh towards the setting up of the mutual fund and such other accretions and additions to the corpus.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Reliance Monthly Income Plan (RMIP) As on 30 June '12


Load structure:



43

Funds in Focus


As on 30 June '12

Investment objective: An open-ended income scheme with the objective to generate optimal returns with high liquidity through active management of the portfolio by investing in high quality debt and money market instruments.

Disclaimer and risk factors:Statutory details: Constitution: Birla Sun Life Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: Aditya Birla Financial Services Private Limited and Sun Life (India) AMC Investments Inc. [liability restricted to seed corpus of `1 lakh]. Trustee: Birla Sun Life Trustee Company Pvt. Ltd. Risk factors: Mutual funds and securities investments are subject to market risks and there can be no assurance or guarantee that the objective of the Scheme will be achieved. As with any investment in securities, the NAV of the units issued under the Scheme may go up or down depending on the various factors and forces affecting capital markets and money markets. Past performance of the sponsor/investment manager/mutual fund does not indicate the future performance of the scheme and may not necessarily provide a basis of comparison with other investments. The name of the scheme does not, in any manner, indicate either the quality of the scheme or its future prospects or returns. Unitholders in the scheme are not being offered any guaranteed/assured returns. Investors should read the Scheme Information Document / Statement of Additional Information / Key Information Memorandum available at Investor Service Centres and with distributors carefully before investing.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees.The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

Allotment Date: 27-Sep-04

Fund manager: Maneesh Dangi


Birla Sun Life Dynamic Bond Fund is an actively managed short-term income scheme with a primary objective to preserve the purchasing power of your capital. We believe it is harder to do so with a duration of over 3.5 years. So that is our outer limit. Our second priority is to earn you more than the other fi xed income options. DBF generates returns in two ways. One, interest income earned, and two, an appreciation of the capital price paid for bonds. We allocate the principal amount between government, corporate bonds, and structured credit instruments; each of which offers a trade-off between higher rates of interest, and avenues for capital appreciation. For example, a structured credit instrument offers a higher rate of interest than government securities but affords no potential for capital appreciation. Government securities on the other hand offer lower interest but would provide the most capital appreciation potential in a falling interest rate environment. Corporate bonds, offer a mix of the two, providing some capital appreciation potential (better than structured credit securities) and a higher interest rate than government securities.To sum it up, our focus is to generate 'total returns' that comprises of capital gains and interest income. In the process of doing this, we continuously analyse factors that infl uence interest rate changes, such as monetary policy, economic activity, infl ation and credit worthiness of borrowers which allows us to make active calls on interest rate direction, the shape of the yield curve and the credit spreads.As on 30 June 2012, around 75-85% of the portfolio is invested at the shorter end of the yield curve (1/3 years) to capture curve dislocation. In the expectation of rate easing by RBI in the next 6-12 months, as on 30 June 2012, around 15-20% of the portfolio is invested in 5 or 10 year corporate bonds. It can be considered by investors with an investment horizon of 9 months and above.

Birla Sun Life Dynamic Bond (BDB)

(Exit loads applicable from the date of allotment ofunits to unitholder)

Load structure:


Exit load <=180 days: 0.5%>180 days: Nil

44

Funds in Focus



We expect HIF - ST to benefi t from an easing liquidity scenario over the near-term driven mainly by RBI stance on maintaining liquidity within its comfort zone of +/-1% of NDTL and seasonal trends of reduced demand for currency in circulation during the monsoon. We believe that the yield curve is likely to steepen over this period and the 1-3 year segment is likely to outperform in the near-term. While we continue to maintain a bias towards softer interest rates in the fi nancial year 2012-13, one could expect some volatility due to uncertainties with regards to the timing and extent of policy rate cuts. HIF - ST has built some duration recently by increasing exposure in the 2-3 year segment of the yield curve.


HSBC Income Fund - Short-Term Plan (HIF - STP)

Investment objective: Aims to provide reasonable income through a diversifi ed portfolio of fi xed income securities. The AMC’s view of interest rate trends and the nature of the plans will be refl ected in the type and maturities of securities in which the Short-Term and Investment Plans are invested.


Fund manager: Ruchir Parekh andSanjay Shah

Load structure:

Entry load Nil

Exit load Regular, Institutional and Institutional Plus Option – 0.50% if redeemed/switched out within 6 months from the date of investment

As on 30 June '12

45

Funds in Focus


Inception date: 25-Oct-01 Growth option03-Apr-03 Institutional option

Fund manager: Manish Banthia

Investment objective: Is to generate income through investments in a range of debt and money market instruments of various maturities with a view to maximising income while maintaining the optimum balance of yield, safety and liquidity.

Load structure:



Exit load <= 6 months: 0.75%> 6 months: Nil

Statutory Details: Mutual fund investments are subject to market risks, read all scheme related documents carefully. Nothing contained in this document shall be construed to be an investment advise or an assurance of the benefi ts of investing in any of the schemes of ICICI Prudential Mutual Fund. Recipient alone shall be fully responsible for any decision taken on the basis of this document.Disclaimer: In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affi liates and which may have been made available to the AMC and/or to its affi liates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and/or completeness of any information. We have included statements/opinions/recommendations in this document, which contain words, or phrases such as 'will', 'expect', 'should', 'believe' and similar expressions or variations of such expressions, that are 'forward-looking' statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries, which have an impact on our services and/or investments, the monetary and interest policies of India, infl ation, defl ation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, etc. The AMC (including its affi liates), the mutual fund, the trust and any of its offi cers, directors, personnel and employees, shall not be liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profi t in any way arising from the use of this material in any manner.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.


By keeping policy rates unchanged RBI has acted contrary to market expectations. We were also expecting RBI to confi rm its pro-growth bias with at least a 25 bps repo or a 50 bps CRR cut. We think that RBI has simply pushed its decision of a rate-cut to the next policy. Having said this, management of liquidity remains a priority for the RBI and has expressed its intent of continuing to use OMOs as and when warranted to contain liquidity pressures and also will respond rapidly in case of any global event.We continue to believe that the 1-3 year space in the short end of the yield curve is most attractive in terms of risk-adjusted returns. We still continue to believe that short-term rates are high. We expect yield curve to steepen as RBI cuts rates further. This will likely benefi t 2-3 year maturity space and hence investments in short-term fund with an investment horizon of 9-12 months is recommended.

ICICI Prudential Short- Term Plan (An Open-Ended Income Fund) As on 30 June '12

46

Funds in Focus


Investment objective: Seek to generate stable returns with a low-risk strategy by investing in good quality fi xed income securities and money market securities.


Fund manager: Suyash Choudhary


Load structure:


Exit load <= 6 months: 0.5%> 6 months: Nil

Fund manager's views:The current economic cycle is based on a consumption stimulus in absence of rise in productive capacity of the economy. Hence, the traditional outcomes like slower growth leading to slower infl ation are not visible. For the same reason, the RBI fi nds itself constrained to provide aggressive monetary stimulus. Therefore, fi xed income investment solutions also need to factor this in. On one hand, short-term funds provide good stable returns on account of elevated rates. On the other, active managed income funds can add to returns via selective duration plays.

Risk factors: Mutual funds and securities investments are subject to market risks, reinvestment risk, changes in political, economic environment and government policy and there is no assurance or guarantee that the objectives of the scheme(s) will be achieved. The NAV of the scheme(s) can go up or down depending on factors and forces affecting the securities market including fl uctuation in interest rates, trading volumes and reinvestment risk. Past performance of the sponsor/AMC/mutual fund is not necessarily indicative of the future performance of the scheme(s) and may not necessarily provide a basis for comparison with other investments. IDFC Super Saver Income Fund - Short-Term (IDFC-SSIF- ST), is the name of the scheme and does not in any manner indicate either the quality of the schemes, their future prospects or returns. The sponsor or any of its associates is not responsible or liable for any loss resulting from the operation of the schemes beyond the corpus of the Trust of `30,000. Terms of issue and load structure: During the continuous offer, the AMC calculates and publishes NAVs and offers for sale and redemption of units of the scheme on all business days. Entry loads: nil for all the schemes. Exit load: IDFC-SSIF Short-Term Plan (ST) – Plan A, B, C, D and F: 0.50% of NAV on investors who purchase/switch-in and seek to redeem/switch-out such units within 6 months from the date of affecting such purchase/switch-in. Investors opting for PEP/dividend re-investment option/SWP or switch between options will not be levied an exit load. (with effect from March 01, 2011). Investment objective: IDFC-SSIF-ST: Seek to generate stable returns with a low-risk strategy by investing in good quality fi xed income securities and money market securities. However, there is no assurance that the investment objective of the scheme will be realised.Statutory details: IDFC mutual fund has been set up as a trust by Infrastructure Development Finance Company Limited (IDFC) (liability restricted to corpus of Trust of `30,000) with IDFC AMC Trustee Company Ltd. as the trustee and IDFC Asset Management Company Ltd. as the investment manager. Investors in the scheme(s) are not being offered any guaranteed or assured rate of return. Copy of Scheme Information Document and Key Information Memorandum along with application form for all the schemes may be obtained from the offi ce of IDFC Mutual Fund, One India Bulls Centre, 841, Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road, (West), Mumbai - 400 013. Contact: 1-800-226622 for details.For details, please read the respective Scheme Information Document (SID) (including those of FMPs)/offer document (OD)/Statement of Additional Information (SAI) carefully before investing.The disclosures of opinions/in-house views incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The company reserves the right to make modifi cations and alterations to this statement as may be required from time-to-time. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. Neither IDFC mutual fund / Board of Trustee / IDFC Asset Management Co. Pvt. Ltd. nor IDFC, its directors or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profi ts that may arise from or in connection with the use of the information.Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not refl ect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.Please read the Scheme Information Document carefully before investing.

IDFC Super Saver Income Fund - Short-Term (ISSIF ST) As on 30 June '12

Issued by The Hongkong and Shanghai Banking Corporation Limited, India (HSBC India). Incorporated in Hong Kong SAR with limited liability.

INVESTMENT AND PORTFOLIO STRATEGYmail.hsbc.com.hk/in/mm_ws_juy_sep_12/images/Wealth Strategies...

Documents

Transcript of INVESTMENT AND PORTFOLIO STRATEGYmail.hsbc.com.hk/in/mm_ws_juy_sep_12/images/Wealth Strategies...