UTI Focussed Equity Fund - Series II - 1.2 - MARKET

UTI FOCUSSED EQUITY FUND – Series II
(1102 days) – a Close ended equity scheme
NFO Period: December 04, 2014 – December 18, 2014
This product is suitable for investors who are seeking*:
• Long term capital growth
• A close ended scheme that aims to provide capital appreciation by investing in equity and equity related securities
HIGH RISK
(Brown)
*Investors should consult their financial advisers if in doubt whether the product is suitable for them.
1
(Blue) investors understand
(Yellow) investors understand
(Brown) investors understand
that their principal will be at
low risk
that their principal will be at
medium risk
that their principal will be at
high risk
Agenda
2
•
Equity Markets: Report Card
•
Bull Markets in India – A brief study
•
UTI Focussed Equity Fund - Series II (1102 days)
Agenda
3
•
Equity Markets: Report Card
•
Bull Markets in India – A brief study
•
UTI Focussed Equity Fund - Series II (1102 days)
Equity Markets: Key Drivers for Growth
Inflation
Valuations
Key
Drivers
Corporate
Profits
4
Interest
Rate
Credit
Growth
Inflation expected to fall steadily…
CPI (IW)
16.0
WPI YoY
YoY, 6 Month Moving Average (MMA)
14.0
YoY % movement
12.0
10.0
8.0
6.0
WPI (6 MMA) has
steadily fallen since Aug
2014
4.0
2.0
5
Data Source: Bloomberg
Jun-14
Jun-13
Jun-12
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
0.0
…Leading to lower interest rates…
RBI Bank Rate
14
Reverse Repo
Repo Rate
Interest rate % movement
12
10
8
6
4
2
6
Data Source : Bloomberg
Note: Liquidity Adjustment Facility using repo and reverse repo started from 2001
Oct-14
Oct-13
Oct-12
Oct-11
Oct-10
Oct-09
Oct-08
Oct-07
Oct-06
Oct-05
Oct-04
Oct-03
Oct-02
Oct-01
Oct-00
Oct-99
Oct-98
Oct-97
Oct-96
Oct-95
Oct-94
Oct-93
Oct-92
Oct-91
Oct-90
0
…Fuelling credit growth going forward…
Year on Year (YoY) Credit Growth (%)
35
30.88 30.80
30
28.14
YoY %growth
25
23.67
23.65
22.30
20
21.49
19.86
18.19
16.41
17.51
17.31
15.31
15
16.91
16.99 16.99
15.49
14.00
13.82
10
Credit growth seems to
be bottoming out
9.60
9.72
5
7
Data Source : Bloomberg
Apr-14
Apr-13
Apr-12
Apr-11
Apr-10
Apr-09
Apr-08
Apr-07
Apr-06
Apr-05
Apr-04
Apr-03
Apr-02
Apr-01
Apr-00
Apr-99
Apr-98
Apr-97
Apr-96
Apr-95
0
Headroom for EBITDA margins improvement…
S&P BSE Sensex EBITDA Margin trend
S&P BSE Sensex EBITDA margins in %
36.8
33.5
30.3
30.0
28.5
28.3
26.4
26.1
28.0
25.5
25.4
26.2
S& P BSE Sensex Margin LPA: 25.1%
25.2
24.8
24.1 24.3
24.6
26.2
24.7
24.3
23.2
24.4
24.0
22.5
24.6
23.6
21.6
FY05
1Q
3Q
FY06
1Q
3Q
FY07
1Q
3Q
FY08
1Q
3Q
FY09
1Q
3Q
FY10
Data Source : Motilal Oswal Securities, LPA : Long Period Average
1Q
3Q
FY11
21.4
20.1
22.5
1Q
20.9
21.9
20.7
3Q
22.4
21.6
23.6
22.7
1Q
8
34.1
33.5
3Q
FY12
20.5
1Q
22.1 22.0
20.5 20.6
3Q
FY13
1Q
3Q
FY14
1Q
3QE
FY15
9
278
280
216
236
272
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Timeline
Data Source: Motilal Oswal Ltd., The vertical axis is on a logarithmic scale S&P BSE Sensex EPS: Refer Glossary
834
1,024
1,123
1,183
1,340
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-17E
Mar-16E
2,190
820
Mar-09
S& P BSE Sensex EPS trend
Mar-15E
833
718
523
450
Mar-08
Mar-07
Mar-06
Mar-05
348
291
Mar-98
Mar-04
266
Mar-97
181
129
250
81
Mar-96
Mar-95
Mar-94
Mar-93
Sensex EPS
….expected to result in earnings acceleration
Estimates revised
upwards to 2242
P/E Valuations near Long term average
+1 std dev
10 yr Avg
-1 std dev
NIFTY Trailing PE
28
25
NFITY trailing PE
23
20
Valuations improving
18
15
13
10
10
Data Source: Bloomberg
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
8
Equity Markets: Report Card
Inflation
Interest Rates
Credit Growth
Corporate Profits
Valuation
11
Agenda
12
•
Equity Markets: Report Card
•
Bull Markets in India – A Study
•
UTI Focussed Equity Fund - Series II (1102 days)
Key Question
We have already witnessed a significant rally ...
What next?
1. Will the equity market correct? If so, when should an investor
get into the market?
2. Will this bull market gain momentum in the future? How much
will it grow to?
3. What returns can an investor expect if they were to invest
now?
4. What sectors/stocks would lead the growth?
13
Definition of a Bull Market
• A Bull Market is measured by the extent of its
“Return” and the “Time” for which it persists
• A Bull Market is where the market movement
with more than “50%” return and lasting for at
least “6 months”
• Based on the above, Indian markets have
witnessed 8 uptrends
14
Bull Markets in India - A Study
•
Indian markets has seen 8 uptrends and we have shortlisted the top 6
by total returns and sustainability (Ref: S&P BSE Sensex)
•
On average, each rally lasted 112 weeks and gave a return of 295%.
•
The current rally is just ~58 weeks old and has given a 48% return
Start Date
End Date
Duration (Weeks)
Absolute Returns
(%)
09/05/1984
27/02/1986
94
185
233
665
08/02/1990
22/04/1992
115
578
659
4,467
19/07/1993
12/09/1994
60
121
2,098
4,631
20/10/1998
11/02/2000
68
115
2,764
5,934
25/04/2003
08/01/2008
246
614
2,924
20,873
09/03/2009
05/11/2010
87
157
8,160
21,005
21/08/2013
30/09/2014
~58
49
17,906
26,631
Average*
112
295
Median*
90
171
Reference Index: S&P BSE Sensex
The Current Rally **
15
Data Source: Bloomberg * Excluding current rally **In progress
Start Value
End Value
Bull markets
Fuelled by Earnings growth and/or PE expansion
•
Return Components of a Bull Rally: EPS Growth & PE Expansion
Rally
1984-86*
1990-92*
1993-94
1998-00
2003-08
2009-10
2013-14
Return Component
EPS Growth
16%
28%
59%
-2%
54%
15%
19%
Return Component
PE Expansion
84%
72%
41%
102%
46%
85%
81%
In the current rally, the scope for P/E expansion is limited from hereon as the
equity markets are fairly valued. Growth in earnings to be the key driver for
the current bull market to sustain
16
* Data for100 companies of S&P BSE National Index is used due to unavailability of S&P BSE Sensex data;
Source: Returns on Indian Equity Shares by L.C. Gupta
“Equity markets” will always have corrections
The longest “bull run” was from 2003 to 2008 and witnessed 6 corrections
The current rally is yet to witness a
correction…
Rebased to 100
800
'03-08
400
200
100
1
14
27
40
53
66
79
92
105 118 131 144 157 170 183 196 209 222 235
Reference Index: S&P BSE Sensex
Number of Weeks
Start Date
25/04/2003
17
End Date
8/01/2008
Duration (Weeks)
246
Magnitude (%)
614
Start Value
2924
End Value
20,873
Corrections
Duration (wks)
Magnitude (%)
Corrections
Duration (wks)
Magnitude (%)
Correction 1
17.7
-27%
Correction 4
5.0
-29%
Correction 2
6.0
-11%
Correction 5
3.6
-15%
Correction 3
3.4
-13%
Correction 6
4.0
-11%
Sector out performers in the 6 "bull rallies"
Rally
Auto Banks Cap. Goods Cement FMCG
1990-92
1993-94
1998-00
2003-08
2009-10
2013-14
IT
Metals Oil & Gas Pharma
Indicates outperformance relative to S&P BSE Sensex
•
Metals, Cement and Oil & Gas sectors have participated in most of the bull markets.
•
Cyclical sectors/stocks come into play every time an economy witnesses a turnaround
Sectors/Stocks that beat Earning estimates are likely to see meaningful
appreciation from current levels
18
Data Source: Bloomberg
Bull Markets in India - Conclusions
1. All Bull markets are supported by Earnings Growth and/or PE
expansion.
–
The current bull market is expected to sustain only if supported by earnings
growth.
–
There is limited upside possible due to any further P/E expansion.
–
Investors should expect returns in sync with earnings growth.
2. Bull markets do not grow in a steady manner.
–
Corrections are integral to a sustained rally
–
It is difficult to predict the timing and level of corrections.
3. Sectors and stocks that beat earning estimates are likely to benefit
from current levels.
–
Since the companies could be from a broad range of sectors, we believe
that the current bull market is expected to be broad based.
19
Our Equity Report Card and our study on Bull Markets
clearly indicate that our equity markets may continue
to offer depth & potential for returns going forward!
20
Agenda
21
•
Equity Markets: Report Card
•
Bull Markets in India – A Study
•
UTI Focussed Equity Fund - Series II (1102 days)
UTI Focussed Equity Fund – Series II
22
Name of the scheme
UTI Focussed Equity Fund – Series II (1102Days)
Type of Scheme
A Close ended equity scheme
Scheme Objective
The primary objective of the scheme is to generate long term capital
appreciation by investing predominantly in equity and equity related
securities of listed companies. The scheme will without any
capitalization bias endeavor to invest in either growth stocks or value
stocks or both. The Scheme will normally hold upto 30 stocks in the
portfolio. The Scheme does not guarantee/indicate any returns. There
can be no assurance that the Scheme’s objectives will be achieved.
Fund Manager
Anoop Bhaskar & Lalit Nambiar
Benchmark
S&P BSE200
NFO Period
December 04, 2014 to December 18, 2014
Tenure
1102 days
Minimum Application Amount
Rs. 5000/-
Plans Available
Regular & Direct
Load Structure
Entry Load: Not Applicable
Exit Load: For Redemptions made on the Maturity Date / Final
Redemption Date, the AMC will not charge any Exit Load.
Options Available
Growth & Dividend option with payout facility
NAV & BSE 100 Rebased at 100
UTI Opportunities Fund - A Recap
500
450
400
350
300
250
200
150
100
50
0
Jul-05
35,020
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
UTI Opportunities Fund - Growth
50
45,725
Rs.10,000 invested at inception: UTI Opportunities Fund Vs. S&P BSE 100
Jul-11
Jul-12
Jul-13
S&P BSE 100
Comparison of UTI Opportunities Fund with S&P BSE 100 Index and Value Research Large Cap peer set
45
Returns in %
40
35
30
25
20
15
10
5
0
1 Year
3 year
UTI Opportunities
23
Jul-14
5 Year
Value Research Large Cap Peer Average
7 Year
S&P BSE 100
Data Source: MFIE, Value Research Online; Returns are Compound Annualized Growth Rate as of Sep 30th 2014
NAV & BSE 100 Rebased at 100
UTI Opportunities Fund - A Recap
500
450
400
350
300
250
200
150
100
50
0
Period
Jul-05
45,725
Rs.10,000 invested at inception: UTI Opportunities Fund Vs. S&P BSE 100
35,020
Fund Performance Vs Benchmark
Fund Performance Vs Benchmark as on 30/09/2014
Jul-06
Jul-07
1st Oct 2011 to 30th Sep 2012
Jul-08
NAV (%)
Jul-09
Growth of Rs.10000
S&P BSE CNX Nifty
S&P BSE CNX Nifty
100 (%)
(%)Jul-11 NAV (Rs.)
100 (Rs.)
(Rs.) Jul-14
Jul-10
Jul-12
Jul-13
17.69
14.13
15.38
11769
11413
11538
1st
Oct 2012 to 30th Sep 2013
50
0.99
0.39
0.56
10099
10039
10056
1st
45 Oct 2013 to 30th Sep 2014
Since
40 Inception as on 30th Sep 2014
(CAGR)*
35
47.38
40.05
38.87
14738
14005
13880
17.96
14.59
14.77
45725
35020
35529
UTI Opportunities Fund - Growth
S&P BSE 100
Returns in %
Comparison of UTI Opportunities Fund with S&P BSE 100 Index and Value Research Large Cap peer set
The
30 above value is calculated on the basis of the return from Growth Option of the Scheme.
Past performance may or may not be sustained in future.
25
*Compounded
annualized Growth Rate
For
performance
details of other schemes managed by the Fund Managers, please refer slide nos: 33 to 35
20
Date of Inception for UTI Opportunities Fund: 20th July 2005
15
10
5
0
1 Year
3 year
UTI Opportunities
24
5 Year
Value Research Large Cap Peer Average
7 Year
S&P BSE 100
Data Source: MFIE, Value Research Online; Returns are Compound Annualized Growth Rate as of Sep 30th 2014
Power of concentration: Significant upside
potential as compared to a diversified portfolio
Excess 3 Years rolling absolute return in %
30.00
Excess Absolute Return in %
25.00
20.00
15.00
10.00
5.00
0.00
Excess Returns over UTI Opportuities Fund
25
Excess Returns over S&P BSE100
Methodology: Top 25 stocks of UTI Opportunities Fund portfolio has been taken on a month end since 1st March 2010 on a
monthly basis is considered as the Concentrated UTI Opportunities Fund’s Portfolio. These stocks have been scaled to 100%. The
single stock weight has been limited to 9% and where the limit has been crossed, the excess weight has been treated as cash
while simulating the portfolio. 3 year absolute rolling returns were generated from Mar 2013 to Sep 2014. Past performance may
or may not be sustained in future.
Concentration of Top 10 stocks
Top 10 stocks as % to NAV
70.00
Top 10 Stock % to NAV of Concentrated UTI Opportunities Fund’s Portfolio
Top 10 Stock % to NAV of UTI Opportunities Fund
% to NAV of Top 10 Stocks
60.00
50.00
40.00
30.00
20.00
10.00
TIme Line
The average concentration of Top 10 stocks in the concentrated UTI Opportunities
Fund’s Portfolio was ~55% as compared to ~45% in UTI Opportunities Fund
26
Methodology: Top 25 stocks of UTI Opportunities Fund Portfolio has been taken on a month end since 1st March 2010 on a
monthly basis is considered as the Concentrated UTI Opportunities Fund’s Portfolio. These stocks have been scaled to 100%. The
single stock weight has been limited to 9% and where the limit has been crossed, the excess weight has been treated as cash
while simulating the portfolio. Past performance may or may not be sustained in future. Data as of 30th Sept 2014
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
Feb-12
Dec-11
Oct-11
Aug-11
Jun-11
Apr-11
Feb-11
Dec-10
Oct-10
Aug-10
Jun-10
Apr-10
Feb-10
Dec-09
Oct-09
Aug-09
Jun-09
Apr-09
Feb-09
Dec-08
0.00
Concentration of Top 3 sectors
Top 3 Sectors as % to NAV
70.00
Top 3 Sectors % to NAV of Concentrated UTI Opportunities Fund's Portfolio
Top 3 Sectors % to NAV of UTI Opportunities Fund
Top 3 Sectos as % to NAV
60.00
50.00
40.00
30.00
20.00
10.00
0.00
TImeline
The average concentration of the Top 3 sectors in the concentrated UTI Opportunities
Fund’s Portfolio was ~55% as compared to ~47% in UTI Opportunities Fund
27
Methodology: Top 25 stocks of UTI Opportunities Fund Portfolio has been taken on a month end since 1st March 2010 on a
monthly basis is considered as the Concentrated UTI Opportunities Fund’s Portfolio. These stocks have been scaled to 100%. The
single stock weight has been limited to 9% and where the limit has been crossed, the excess weight has been treated as cash
while simulating the portfolio. Past performance may or may not be sustained in future. Data as of 30th Sept 2014
UTI Focused Equity Fund – Series – II (1102 Days)
Portfolio Construction
No. of stocks (Maximum): 30
Stock Universe: Predominantly Stocks held in UTI Opportunities
Fund
Single Stock Limit: 9%
Portfolio Churn: Expected to be low
28
UTI Opportunities Fund– an open ended equity scheme
This product is suitable for investors who are seeking*:
• Long term capital growth
• Investment in equity instruments by capitalizing on opportunities arising in the market dynamically
HIGH RISK
(Brown)
*Investors should consult their financial advisers if in doubt whether the product is suitable for them.
Note: Risk may be represented as:
29
(Blue) investors understand
(Yellow) investors understand
(Brown) investors understand
that their principal will be at
low risk
that their principal will be at
medium risk
that their principal will be at
high risk
Thank You
UTI Opportunities Fund - A Refresher
•
Investment Objective: generate capital appreciation and/ or income distribution
by investing in equity and equity related instruments
•
Investment Strategy:
–
GARP Oriented
•
Focus on Growth
–
Key Metric: Operating Cash Flow
–
Research led ideas
Sector Weightage
Not more than 30% in a given sector
Stock Weightage
Not more than 8% in a given stock and not more than 55% in the top 10
stocks
Cash Limit
Company Exposure
Transaction Limit
31
10% of the portfolio
Not more than 7% of company’s equity
No single transaction more than 2% of fund (on a daily basis)
UTI Opportunities Fund - Investment universe
Growth at reasonable
price
• Macro criteria
Growth with proven
business models
Investment
Universe ~
322 stocks
Qualifying
stocks* ~ 200
Growth Prospects
Mgmt. Competence
Business Fundamentals
Industry Scenario
• Micro Criteria
Portfolio
35 – 45 stocks
Operating cash flows
Valuation
*(Large caps & Midcaps>$500mn)
32
Schemes managed by Mr. Anoop Bhaskar, Head of Equity & Fund Manager
UTI Equity Fund
UTI Transportation & Logistics Fund
UTI Opportunities Fund
UTI Children’s Career Balanced PLan
UTI Midcap Fund
33
# Initial investment along with the value of Rights entitlement discounted at the scheme's CAGR, assuming all dividends were reinvested at the
immediate ex-div. NAV, till the growth option was not available and considering NAVs under growth option thereafter. Assuming that all payouts
during the period have been reinvested in the units of the scheme at the immediate ex-div NAV Past performance may or may not be sustained in
future. *Compounded annualized Growth Rate. Since Inception date:
UTI Equity Fund: 18th May 1992. UTI Opportunities Fund: 20th July 2005, UTI Midcap Fund: 7th April 2004, UTI Energy Fund:12th Nov 2007
UTI Transportation & Logistics Fund: 11th April 2008, UTI CCP- Balanced 12th July 1993
Schemes managed by Mr. Lalit Nambiar, Fund Manager
UTI India Lifestyle Fund
34
UTI Long Term Advantage Fund Series - II
UTI Wealth Builder Series-II
UTI Banking Sector Fund
UTI Pharma & Healthcare Fund
UTI Equity Tax Savings Plan
# Initial investment along with the value of Rights entitlement discounted at the scheme's CAGR, assuming all dividends were reinvested at the
immediate ex-div. NAV, till the growth option was not available and considering NAVs under growth option thereafter. Assuming that all payouts
during the period have been reinvested in the units of the scheme at the immediate ex-div NAV Past performance may or may not be sustained in
future. *Compounded annualized Growth Rate. Since Inception date:
UTI India Lifestyle Fund: 30th July 2007, UTI Long Term Advantage Fund Series – II: 19th March 2008,
UTI Wealth Builder Series – II: 19th November 2008, UTI Banking Sector Fund: 7th April 2004,
UTI Pharma & Health Care Fund: 28th June 1999, UTI Equity Tax Savings Plan: 15th December 1999
Schemes managed by Mr. Lalit Nambiar, Fund Manager
UTI Long Term Advantage Fund Series - I
UTI Multi Cap Fund
# Initial investment along with the value of Rights entitlement discounted at the scheme's CAGR, assuming all dividends were reinvested at the
immediate ex-div. NAV, till the growth option was not available and considering NAVs under growth option thereafter. Assuming that all payouts
during the period have been reinvested in the units of the scheme at the immediate ex-div NAV Past performance may or may not be sustained in
future. *Compounded annualized Growth Rate. Since Inception date:
UTI Long Term Advantage Fund Series – I:20th March 2007, UTI Multi Cap Fund: 22nd August 2014
35
Mutual Fund Investments are subject to market risks, read all scheme
related documents carefully
All figures and other data given in this document are as on 30th September 2014 unless stated otherwise. The
same may or may not be relevant at a future date. UTI AMC Ltd. takes no responsibility of updating any
data/information in this material from time to time. The information shall not be altered in any way, transmitted
to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form,
without prior written consent of UTI AMC Ltd.
Furthermore prospective investors are advised to consult their own legal, tax and financial advisors to
determine possible tax, legal and other financial implication or consequence of subscribing to the units of UTI
MF.
The information on this document is provided for information purposes only. It does not constitute any offer,
recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or
investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any
representation that any such future movements will not exceed those shown in any illustration. Users of this
document should seek advice regarding the appropriateness of investing in any securities, financial instruments
or investment strategies referred to on this document and should understand that statements regarding future
prospects may not be realized. The recipient of this material is solely responsible for any action taken based on
this material. Opinions, projections and estimates are subject to change without notice.
UTI AMC Ltd is not an investment adviser, and is not purporting to provide you with investment, legal or tax
advice. UTI AMC Ltd or UTI Mutual Fund (acting through UTI Trustee Company Pvt. Ltd) accepts no liability and
will not be liable for any loss or damage arising directly or indirectly (including special, incidental or
consequential loss or damage) from your use of this document, howsoever arising, and including any loss,
damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy
with this document, its contents or associated services, or due to any unavailability of the document or any part
thereof or any contents or associated services.
36
Glossary
GDP:
CPI (IW):
WPI:
EBITDA:
EPS:
CAGR:
Std. Dev:
AuM:
+/-1Std Dev:
S&P Sensex EPS:
NRI:
CASA:
CMIE:
MOSPI:
NFO:
YoY:
RBI:
MFIE:
Yr:
PE:
GARP:
LPA:
Mgmt.:
37
Gross Domestic Product
Consumer Price Index for Industrial Workers
Wholesale Price Index
Earnings before interest, taxes, depreciation and amortization
Earnings Per Share
Compound Annualized Growth Rate
Standard Deviation
Assets under management
68% of the values are within 1 standard deviation of the mean
Aggregated for 30 companies in the Sensex
A = ∑ (Absolute Adjusted PAT * Free Float Factor) =∑ Free Float PAT
For 30 companies,
B = ∑ Free Float Mkt Cap
P/E = Free float Mkt Cap / Free Float PAT
Sensex EPS = Sensex Value/ (P/E)
Non Resident Indian
Current Account Savings Account
Centre of Monitoring Indian Economy
Ministry of Statistics and Programme Implementations
New Fund Offer
Year on Year
Reserve Bank of India
Mutual Fund India Explorer
Year
Price to Earning multiple
Growth at Reasonable Price
Long Period Average
Management

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