StanC Crawford Market - HNI Meet
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Transcript of StanC Crawford Market - HNI Meet
May 3, 2023 2
Franklin Templeton Worldwide
• More than 50 years of experience in global
investing
• Third largest independent fund management
group in the US.
• First and only mutual fund company added
to the S&P 500
• Over US$ 315 billion assets under
management; over 10 million investor
accounts world-wide
• Winner of Dalbar Award for Service
Excellence in the US, for six out of past ten
years
May 3, 2023 3
Franklin Templeton India
One of the largest Mutual Funds in India with over Rs.14,000 crores in assets^ Close to 8.75 lakh shareholder accounts Fund Managers with combined investment experience of 85 years in the capital markets Healthy asset mix and great choice in equity and fixed- income investment management style Sizeable footprint in the country
- presence in all cities with greater than 1 million population
1 USD = Rs. 48.25^ As on October 31, 2003
May 3, 2023 4
Context of Investing
PROFESSION INVESTMENTS
INCOME
CURRENT EXPENDITUR
ESAVINGS
FUTURE EXPENDITUR
E
May 3, 2023 6
Creating Wealth:
Is not a function of income
Is not a function of investment expertise
Is really a matter of Regular Savings
May 3, 2023 7
FV = PV (1 + r)n
FV = Future ValuePV = Present Valuer = Rate of Return/ Coupon Raten = No. of compounding periods
A little bit of mathematics
May 3, 2023 8
FV = PV (1 + r)n
Enhancing Future Value
The more you The more you save, makes save, makes a differencea difference
The The sooner sooner
you start, you start, makes a makes a
differencedifference
PV nr
The more The more you earn, you earn, makes a makes a differencdifferenc
ee
May 3, 2023 9
The more you save, makes a difference
Growth Rate of 6% p.a.
Amount saved per month
5,000 1,200,000 2,278,2253,000 720,000 1,366,9352,000 480,000 911,2901,000 240,000 455,645
Total Amount Saved
Value after 20 years
The Power of Compounding
Past performance may or may not be sustained in future
May 3, 2023 10
The sooner you start, makes a difference
Rs 1000 per month @ 6%
Starting Age
25 420,000 1,380,29030 360,000 979,25035 300,000 679,58040 240,000 455,645
Total Amount Saved
Value at the age of 60
The Power of Compounding
Past performance may or may not be sustained in future
May 3, 2023 11
The more you earn, makes a difference
Rs 1000 p.m.
Growth Rate
6% 455,645 979,2558% 572,660 1,417,61010% 723,990 2,079,29012% 919,860 3,080,970
Value after 20 years
Value after 30 years
The Power of Compounding
Past performance may or may not be sustained in future
May 3, 2023 12
Savings Habits matter much more than the markets!
•If someone started saving at age 30, Rs 5000 per month and got a return of 10% on their investment – the wealth at age 60 would be Rs one crore three lacs.
•If someone delayed savings and started at age 40 and saved Rs 3000 per month and got a return of 8% on their investment – the wealth at age 60 would beRs Seventeen lacs.
Is it not the difference between being wealthy and not being wealthy?
May 3, 2023 13
BENEFITS OF A MUTUAL FUND
Professional ManagementService
Diversification
Affordability
May 3, 2023Source : ENAM Securities
INVESTMENT PYRAMID
Capital PreservationCapital Preservation
IncomeIncome
Capital GrowthCapital GrowthRisk: Medium to HighRisk: Medium to High
Risk: Medium to LowRisk: Medium to Low
Risk: Low to MediumRisk: Low to Medium
Period: 3 to 5 yearsPeriod: 3 to 5 years
Period: 1 to 3 yearsPeriod: 1 to 3 years
Period: Less than 1 yearsPeriod: Less than 1 years
Growth Funds
Stocks
Income/Bond FundsIncome/Bond FundsCompany Fixed DepositsCompany Fixed Deposits
BondsBondsDebenturesDebentures
Cash / Money Market FundsShort-term deposits /Government Paper
May 3, 2023 15
Process of Financial Planning
Set a goal
Prepare an investment plan
Implement the financial plan
Evaluate on a regular basis
May 3, 2023 16
Household ExpensesIn
flatio
n
Higher Life
Expectancy
Household Expenditures
are on the rise
New Products
May 3, 2023 17
Cost of LivingItems 1987
( Rs )1997( Rs. )
Colgate toothpaste( 100 gm tube )
8.05 18.90( 8.91 % )
Hamam Soap 3.05 7.85( 9.92 % )
Masala Dosa 3.50 14.00( 14.87 % )
Petrol( per litre )
7.99 25.48( 12.30 % )
L P G Cylinder 56.15 137.85( 9.40 % )
Zodiac men’s shirt 225.00 510.00( 8.53 % )
Source : Readers Digest – Nov 1997
May 3, 2023 18
Cost of LivingItems 1997
( Rs )2017( Rs. )
Colgate toothpaste( 100 gm tube )
18.90 104.00
Hamam Soap 7.85 52.00
Masala Dosa 14.00 224.00
Petrol( per litre )
25.48 259.12
L P G Cylinder 137.85 830.85Zodiac men’s shirt 510.00 2620.27
Assuming inflation to grow at the same rate during 1987-97
May 3, 2023 19
INFLATION ROBS YOUR PURCHASING POWER(Assuming inflation @ 8% p.a.)
21,50046,600
100,600
217,200
10 years 20 years 30 years 40 years
Rs. 10,000 today
May 3, 2023 20
17.130.8
56.3
103.9
9% 12% 15% 18%
REGULAR SAVINGSTHE SIMPLEST WAY TO COMBAT INCREASING HOUSEHOLD
EXPENDITURE
Rs. 1000 saved every month for 30 years can grow toa sizeable amount of wealth
depending on the return generated on these savings
Rs.
In L
acs
% Per annum
May 3, 2023 21
Equities are the best long term bet! Cumulative Annualised Returns
(1980-98)
Source : RBI Report on Currency and Finance (1997-98)BSE Sensitive Index of Equity Prices - BSE
9.19%7.62%
9.74%
14.47%
20.16%
Inflation Gold Bank FD Co. FD Equities
May 3, 2023 22
Behaviour of various mutua funds of Frankin Tempeton
5
15
25
35
45
55
656/
17/1
998
9/17
/199
8
12/1
7/19
98
3/17
/199
9
6/17
/199
9
9/17
/199
9
12/1
7/19
99
3/17
/200
0
6/17
/200
0
9/17
/200
0
12/1
7/20
00
3/17
/200
1
6/17
/200
1
9/17
/200
1
12/1
7/20
01
3/17
/200
2
6/17
/200
2
9/17
/200
2
12/1
7/20
02
3/17
/200
3
6/17
/200
3
9/17
/200
3
Time
Vaue
(Rs.
)
FIBCF FIPP FIPF TIGF
TIIBA TIIF TITMA TILF
May 3, 2023 23
consider this …..•Sensex was at 3292.85 on December 1, 1993 – the inception date of Bluechip fund•Sensex was at 4906.87 on November 25, 2003•This means, if someone invested Rs. 10,000 in Sensex, the value of his investments is Rs. 14,717
•However, if the investor invested Rs. 10,000 in Bluechip fund on inception …..•The value of holdings is Rs. 1,01,223
Note: Past performance may or may not be sustained in future.
May 3, 2023 25
What Should the Investor doIf equities consistently give better returns over the long-term, and I’m a long-term investor with no immediate cash flow needs, should I not invest all my money in equities?
Definitely NO
Should do an Asset Allocation
May 3, 2023 26
Asset Allocation is the best way to achieve long-term financial goals
Why?
Different asset classes do well at different points in time
The asset allocation strategy determines more than 90% of your portfolio returns
Resulting Total Portfolio15% Rate of Return – 0% SD
Two Risky Assets With Perfect Negative Correlation Equals ZeroRisk Portfolio
May 3, 2023 27
Issues with Asset Allocation approach
What is the most optimal asset allocation strategy?Market movements make asset allocation go haywire
Constant re-balancing is cumbersome, and may not be tax-efficient
Your suitable
allocation
Market Impact
Your new allocation
Equity 70 40% 98 = 75.2%
Debt 30 8% 32.4 = 24.8%
May 3, 2023 28
How would you ideally invest ?
Understand your Risk Profile
Allocate your assets in a way that best suits your risk profile, given market conditions
Choose funds that have a long-term track-record of consistent performance and are managed by a competent and trustworthy Portfolio Manager
Revisit portfolio and re-balance on the basis of fund performance and market condition
Here’s an investment that does all this… and more
FT India Life Stage Fund of Funds
A convenient solution for all your investment needs
Distributed by:
May 3, 2023 30
FT India Life Stage Fund of Funds
Two stage asset allocation process- Strategic Asset Allocation- Tactical Asset Allocation
Choice of five best funds from the Franklin Templeton stable
Automatic rebalancing
May 3, 2023 31
Underlying funds in FTLFEquity Income
Franklin India Bluechip Fund FIBCF: Large cap focussed, diversified equity fund
Templeton India Income Builder Account TIIBA: Moderately aggressive income fund
Franklin India Prima Fund FIPF: Medium & Small cap focussed, diversified equity fund
Templeton India Income FundTIIF: Conservatively managed income fund
Templeton India Growth Fund TIGF: Large cap, ‘Value’ focus, diversified equity fund
With one investment, you can buy into a portfolio of 5 well-performing funds, each with a distinct investment style
May 3, 2023 32
Underlying Funds
Please see slide 18 for methodology and other details. All data as on 31.10.2003
Past performance is no guarantee of future results
Annualised Compounded returns based on 31.10.2003 Growth Plan NAVs: Scheme, NAV, 1 year returns, 3 year returns, 5 year returns; Benchmark, 1 year returns, 3 year returns, 5 year returns, Inception returns. FIBCF, Rs.41.12, 103.4%, 25.4%, 36.3%; BSE Sensex, 66.4%, 9.8%, 11.8%, 4.1%; FIPF, Rs.56.93, 116.3%, 43.7%, 39.5%; S&P CNX 500, 76.1%, 12.7%, 16.4%, 3.8%; TIGF, Rs.24.11, 107.6%, 28.9%, 30.6%; BSE Sensex, 66.4%, 9.8%, 11.8%, 5.1%; MSCI India Value, 59.5%, 8.0%, 14.6%, N.A; TIIBA, Rs.23.1152, 13.3%, 15.6%, 13.8%; Crisil Composite Bond Fund Index, 11.1%, N.A, N.A, N.A; TIIF, Rs.23.4241, 12.1%, 14.4%, 13.5%; Dividend/Bonus assumed to be reinvested.
Past performance may or may not be sustained in future.
Scheme Inception Date
Inception Returns
Current AUM
Value Research Ratings*
FIBCF 1.12.1993 25.95% Rs.1143 crs
FIPF 1.12.1993 19.2% Rs.337 crs
TIGF 10.9.1996 14.8% Rs.304 crs
TIIBA 23.6.1997 14.1% Rs.2389 crs
TIIF 5.3.1997 13.6% Rs.1918 crs
May 3, 2023 33
Business Standard – Fund Manager of the Year 2003
• R Sukumar – CIO ( Franklin Equity)
Manages over Rs 3,140 crores across 25 schemes
• Nilesh Shah – Director & CIO (Fixed Income)
Manages over Rs. 10,870 crores across 16 schemes
Please see slide 19 for methodology and other details.
Past performance may or may not be sustained in future.
As on 31.10.2003
May 3, 2023 34
FT India Life Stage Fund of Funds
Choice of four plans makes the scheme suitable for you…whichever risk category you belong to
Each plan offers growth and dividend options Strategic Asset Allocation
Equity DebtThe 20s Plan: Aggressive 80% 20%The 30s Plan: Growth 55% 45%The 40s Plan: Balanced 35% 65%The 50s Plus Plan: Conservative 20% 80%
May 3, 2023 35
Tactical Asset Allocation
Overlays the Strategic Asset Allocation Strategy
Takes care of short term market factors like valuations, market sentiment, fundamental outlook etc.
Re-balanced depending on the fund manager’s call on the factors mentioned above.
Further smoothens the volatility of the portfolio, attempting to deliver superior risk adjusted returns.
May 3, 2023 36
Tactical Asset Allocation
Equity Debt
The 20s Plan 70% to 90% 10% to 30%
The 30s Plan 45% to 65% 35% to 55%
The 40s Plan 25% to 45% 55% to 75%
The 50s Plus Plan 10% to 30% 70% to 90%
Flexibility to make tactical changes to the asset allocation can enhance risk adjusted returns.
May 3, 2023 37
Summing Up
Asset Allocation determines how your portfolio will perform over a period of time.
Asset allocation based on MVO optimises the risk return equation.
FT India Life Stage Fund of Funds offers an easy solution for all asset allocation needs
In-built rebalancing feature enhances return potential, while reducing volatility
Flexibility to make tactical allocation can further reduce the volatility, to ensure a smooth journey towards your financial goals
May 3, 2023 38
RISK FACTORS
All investments in Mutual Funds securities are subject to market risks andthe NAV of the schemes may go up and down depending on the factors and forces affecting the securities market.There can be no assurance that
the scheme’s investment objectives will be achieved.The past performanceof the Mutual Funds is not necessarily indicative of the future performance of the scheme.The sponsor is not responsible or liable for any loss resulting
from the operation of the scheme beyond the initial contribution of an amount of Rs. 1 lac made by it towards setting up of the Mutual Fund.
Franklin India Bluechip Fund, Franklin India Prima Fund are only the namesof the schemes and do not in any manner indicate the quality of the schemes,its future prospects or returns. Please go through the offer document of the
respective Funds before investing.