Download Birla Sun Life Focused Equity Fund - Series 4.cdr

Birla Sun Life Focused Equity Fund - Series 4
(A Close ended Equity Scheme investing in eligible securities as per Rajiv Gandhi Equity Savings Scheme, 2013)
This Product is suitable for investors who are seeking*:
•
Long term capital growth
•
investments in equity securities specified as Eligible Securities as per Rajiv Gandhi Equity Savings Scheme, 2013, as amended from time to time
•
High Risk
(BROWN)
*Investors should consult their financial advisers if in doubt whether the product is
suitable for them. Note: Risk is represented as:
(BLUE) investors understand that their
principal will be at low risk
(YELLOW) investors understand that their
principal will be at medium risk
(BROWN) investors understand that their
principal will be at high risk
With the new government having settled in, we have seen a lot of action on the reforms front and the government’s intent to walk on the promised path of
growth and development. The India story today does look far better than it what it was a year ago. The entire measurement matrixes look favorable at the
moment and Indian equities continues to march on from strength to strength.
The Macro story has improved
We believe India has attracted attention of global investors for all the right reasons.
FII inflows: Foreign investors have added net positions in 8 out of 10 months (Jan-14 to Oct-14) in Indian equities taking their total tally of Rs 93,000 crs in
2014. This number could scale up further on anticipation that a slew of reforms on important issues be announced by the govt. in the coming months.
Moderating CAD & Cooling Inflation: On the macro front, both the Current Account Deficit (CAD) and Consumer Price Inflation (CPI) have registered a
sharp decline in recent months. The CAD for FY15 looks more manageable this time than in FY14 due to a reduction in crude oil prices, which forms a major
proportion of India’s import basket. The Core inflation momentum too has been trending down v/s its historical average and has registered an all time low
number at 5.52% for Oct-14. This will help in creating the required headroom for monetary easing.
Policy Action: The government has taken an aggressive stance in rolling out reforms promised which would help the economy attain the right path of GDP
growth. Even in the last month, the govt. had come up with some key policy initiatives which include:
3 Diesel deregulation
3 Hike in the natural gas price to US$ 5.61 per mmbtu with effect from Nov 1,2014 and a system of half yearly review
3 Coal mine auction scheduled for the mines cancelled by the SC
3 Easier norms for FDI in construction with minimum foreign investment cut to $5mn from $10 Mn
3 100% FDI in Railways
3 NHAI bids for 4000 kms of road development
Improving Trade Deficit: India’s trade deficit has also been falling due to decrease in imports and rising exports. The trade deficit was further aided due to
a decline in oil prices globally and also a stable Indian Rupee which was amongst the best performing currency on an YTD basis.
Accelerating GDP growth: India’s GDP growth in 1QFY15 was recorded at 5.7% YoY, a 101bps sequential improvement compared to 4QFY14. On the
supply side, GDP growth was mainly driven by a sharp pick-up in industrial activity, which recorded a growth rate of 4.2% YoY after two consecutive
quarters of contraction. Services too showed signs of healthy growth at 6.8% YoY in 1QFY15 as compared to 6.4% YoY in 4QFY14.
Why is it time for equities?
There are 3 broad reasons why we think that this is time to be in equities as an asset class
1. There are reform executions which have been seen at the ground level. The government has realised the importance of the investment cycle and
undertook a series of measures to kick start stalled projects and reviving the investment cycle. India’s competitive advantage – abundant talent and
resources and recovery in global exports will drive exports. India’s favourable demographic dividend, which is high proportion of youth population,
falling dependency ration, rising middle class and higher savings rate will drive consumption demand for long period of time.
Internal views, estimates, opinions of BSLAMC expressed herein may or may not materialize. Forward looking statements are based on internal views and assumptions
and subject to known and unknown risks and uncertainties which could materially impact or differ the actual results or performance from those expressed or implied under
those statements. This document is strictly confidential and meant for private circulation only and is not an offer to sell or a solicitation to buy any mutual fund units/
securities. Neither Birla Sun Life Asset Management Co. Ltd., nor any person connected with it, accepts any liability arising from the use of this information. The recipient of
this material should rely on their investigations and take their own professional advice. Please refer to detailed disclaimers mentioned on the last page
1
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Birla Sun Life Focused Equity Fund - Series 4
(A Close ended Equity Scheme investing in eligible securities as per Rajiv Gandhi Equity Savings Scheme, 2013)
2. Since the lows of August 13, S&P BSE SENSEX has risen 56% (Source: Bloomberg) in little over one year. These days, recommendations to continue
to invest in equities after such a rise are met with cynicism. If one appreciates the power of compounding and understands the potential for equities
which can provide 6-10x returns over 10-15 year period, one would realise that intermittent rallies of two or three fold increase are only milestones and
still leave 2-5x returns on the table. Healthy scepticism that leads to sensible inquiry is required to avoid irrational decisions. At the same time adequate
conviction is needed to reap the rewards of investing.
3. Over next 5 years, stable political regime with key policy initiatives by the central government would aid revival in GDP growth. Therefore we believe
there is a strong potential upside from current levels on a 3 year basis. We believe the GDP growth can average 6.5% p.a. over that period and with exit
growth rate of 7-7.5%. Further, with increased economic activity (driving higher sales growth), operating leverage and financial leverage will aid
disproportionate improvement in corporate profitability. This would drive around 18% growth p.a. in profits (during 2003-2008 net profits grew by
27% p.a.). With earnings growth compounding at 18% for the next 5 years we believe that equity returns would be significantly higher and would
benefit investors who stay invested in asset class.
Why Large Caps?
Performance
20
Returns in % (CAGR)
The large cap index as represented by S&P BSE Sensex has seen
tremendous growth over the long term. The fact that it tends to be
lower in volatility compared to Midcaps (as represented by S&P BSE
Midcap) and generates outperformance makes it ideal for investors
looking for the best risk-return performance. Over the longer term, the
S&P BSE Sensex has outperformed the S&P BSE Midcap across all
time periods. (Data as on 31st October 2014)
16
12
8
4
0
3 Years
5 Years
7 Years
S&P BSE Sensex
16.3
11.9
5.0
10 Years
17.2
S&P BSE Midcap
16.0
10.3
2.7
15.3
Birla Sun Life Focused Equity Fund: Series 4
3 A 3-year closed ended equity scheme with objective to generate long term capital appreciation
3 Large Cap diversified fund which focuses on creating value by investing in shares of handpicked companies from S&P BSE 100, CNX 100 and PSU
Navratna, Maharatna and Miniratna
3 Additional Tax Benefit for eligible RGESS investors to claim benefits under section (80CCG) of the Income Tax Act, 1961, over and above section 80C
Asset Allocation Pattern of the Scheme
Under normal circumstances, the asset allocation of the Scheme will be as follows:
Instrument
Equity securities specified as eligible securities for RGESS
Cash, Money Market & Debt instruments
Risk Profile
Normal Allocation (% of total Assets)
Medium to High
95-100%
Low
0-5%
Internal views, estimates, opinions of BSLAMC expressed herein may or may not materialize. Forward looking statements are based on internal views and assumptions
and subject to known and unknown risks and uncertainties which could materially impact or differ the actual results or performance from those expressed or implied under
those statements. This document is strictly confidential and meant for private circulation only and is not an offer to sell or a solicitation to buy any mutual fund units/
securities. Neither Birla Sun Life Asset Management Co. Ltd., nor any person connected with it, accepts any liability arising from the use of this information. The recipient of
this material should rely on their investigations and take their own professional advice. Please refer to detailed disclaimers mentioned on the last page
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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Birla Sun Life Focused Equity Fund - Series 4
(A Close ended Equity Scheme investing in eligible securities as per Rajiv Gandhi Equity Savings Scheme, 2013)
Scheme Features
Name of the Scheme
Birla Sun Life Focused Equity Fund – Series 4
Structure
A Close Ended Equity Scheme investing in Eligible Securities as per Rajiv Gandhi Equity Savings Scheme,
2013
Fund Manager
Mr. Mahesh Patil
Investment Objective
The investment objective of the Scheme is to generate capital appreciation, from a portfolio of equity
securities specified as eligible securities for Rajiv Gandhi Equity Savings Scheme, 2013 (RGESS).
The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’
objectives will be achieved.
Tenure /Liquidity
A 3 Year Close ended Fund
No redemption/repurchase of units shall be allowed prior to the maturity of the scheme. Investors wishing to
exit may do so through stock exchange mode.
Benchmark Index
CNX 100
Plans/Options
The scheme will have Regular plan and Direct plan with a common portfolio and separate NAV’s.
Each of the above (Regular and Direct) plan under the scheme will have the following Options: (1) Growth
Option and (2) Dividend Option with Payout Facility
Minimum Application Amount
Minimum of Rs. 5,000/- and in multiples of Rs. 10/- thereafter during the New Fund Offer period.
Load Structure
Entry Load: Nil
Exit Load: Nil. No redemption/repurchase of units shall be allowed prior to the maturity of the scheme.
Investors wishing to exit may do so through stock exchange at prevailing listed price on such Stock Exchange,
subject to Lock-in Period under RGESS, if any
Risk Control Strategies: Since investing requires disciplined risk management, the AMC would incorporate adequate safeguards for controlling risks in
the portfolio construction process. The risk control process involves reducing risks through portfolio diversification, taking care however not to dilute
returns in the process. The AMC believes that this diversification would help achieve the desired level of consistency in returns. The AMC may also
implement certain internal control procedures / risk & exposure limits etc., which may be varied from time to time.
The AMC aims to identify securities, which offer superior levels of yield at lower levels of risks. With the aim of controlling risks, rigorous in-depth credit
evaluation of the securities proposed to be invested in will be carried out by the investment team of the AMC.
While these measures are expected to mitigate the above risks to a large extent, there can be no assurance that these risks would be completely eliminated.
DISCLAIMER CLAUSE OF NSE: It is to be distinctly understood that the permission given by National Stock Exchange of India Limited (NSE) should not in
any way be deemed or construed that the Scheme Information Document has been cleared or approved by NSE nor does it cer tify the correctness or
completeness of any of the contents of the Draft Scheme Information Document. The investors are advised to refer to the Scheme Information Document
for the full text of the 'Disclaimer Clause of NSE'
Disclaimers: This document is strictly confidential and meant for private circulation only and should not at any point of time be construed to be an
invitation to the public for subscribing to the units of Birla Sun Life Mutual Fund. Please note that this is not an advertisement. The document is solely for
the information and understanding of intended recipients only. If you are not the intended recipient, you are hereby notified that any use, distribution,
reproduction or any action taken or omitted to be taken in reliance upon the same is prohibited and may be unlawful. Views expressed herein should not be
construed as investment advice to any party and are not necessarily those of Birla Sun Life Asset Management Company Ltd.(BSLAMC) or any of their
officers, employees, personnel, directors and BSLAMC and its Officers, employees, personnel, directors do not accept responsibility for the editorial
content. Wherever possible, all the figures and data given are dated, and the same may or may not be relevant at a future date. Further the opinions
expressed and facts referred to in this document are subject to change without notice and BSLAMC is under no obligation to update the same. While
utmost care has been exercised, BSLAMC or any of its officers, employees, personnel, directors make no representation or warranty, express or implied,
as to the accuracy, completeness or reliability of the content and hereby disclaim any liability with regard to the same. Recipients of this material should
exercise due care and read the scheme information document (including if necessary, obtaining the advice of tax/legal/accounting/financial/other
professional(s) prior to taking of any decision, acting or omitting to act. Further, the recipient shall not copy/circulate/reproduce/quote contents of this
document, in part or in whole, or in any other manner whatsoever without prior and explicit approval of BSLAMC.
Mutual Fund: Birla Sun Life Mutual Fund Asset Management Company/ Investment Manager: Birla Sun Life Asset Management Company Limited
Registered Office: One India Bulls Centre, Tower - 1, 17th Floor Jupiter Mill Compound, 841, SB Marg, Elphinstone Road, Mumbai 400013 CIN:
U65991MH1994PLC080811
3
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.