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Good Morning!
Development Credit Bank & Franklin Templeton
A rewarding partnership
Program outlineBrief on debt market scenario and options for an investor
Option for a conservative investor Templeton Floating Rate Income Fund
Why MIP makes sense FT India MIP
Equity as an asset class Franklin India Bluechip FundTempleton India Growth FundFranklin India Prima PlusFranklin India Prima Fund
Asset allocation - a packaged approach to the above FT India Life Stage fund of funds
FIXED INCOME MARKET OUTLOOK
Calendar year performance
LIQUIDITY DECEMBER 2003BANKS DEPOSITS RS 1,403,322 CRFX RESERVES USD 98.95 BILLION
APRIL 1991FX RESERVES ALMOST ZERO
FX RESERVES GROWTH FROM 1991 TO 2003 RS 400,000 CREFFECT ON BANKING DEPOSIT RS 800,000 CR
Declining Bond Yields..
5.086.36
7.38
10.2710.87
12.0212.1213.4613.96
4
6
8
10
12
14
1995-1996
1996-1997
1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
10 Year Treasury Yield
Interest rate v/s Bond prices
YIELD
Price / NAV
DEBT FUNDS RETURN
WHEN RATES MOVE UP
Fund Apr-2004 May-2004
TIIF 0.38% -0.47%
TIIBA 0.45% -0.58%
WHEN RATES MOVE UP
Fund Apr-2004 May-2004
TIIF 0.38% -0.47%
TIIBA 0.45% -0.58%
10 yr Gilt 5.12% 5.27%
9.5000
10.0000
10.5000
11.0000
11.5000
12.0000
12.5000
13.00002/
11/2
002
3/11
/200
2
4/11
/200
2
5/11
/200
2
6/11
/200
2
7/11
/200
2
8/11
/200
2
9/11
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2
10/1
1/20
02
11/1
1/20
02
12/1
1/20
02
1/11
/200
3
2/11
/200
3
3/11
/200
3
4/11
/200
3
5/11
/200
3
6/11
/200
3
7/11
/200
3
8/11
/200
3
9/11
/200
3
10/1
1/20
03
11/1
1/20
03
12/1
1/20
03
1/11
/200
4
2/11
/200
4
3/11
/200
4
4/11
/200
4
5/11
/200
4
TIIBA
TFIF-LT
What do you expect from a debt fund?
What is a floating rate fund?
WHAT IS FLOATING RATE ?
GOES UP GOES DOWN REMAINS SAME
MARKET VALUE
INTEREST
RATE
FIXED RATE COUPON
FLOATING RATE FUNDS
Q1 Q2 Q3
SPREAD
BENCHMARK RATE
FIXED COUPON FLOATING COUPON
Q4
Floating Rate Funds
Templeton India Floating Rate Income Fund – Long Term
Templeton India Floating Rate Income Fund – Short Term
Templeton Floating Rate Income
Investment Objective: To provide income consistent with a prudent risk from a
portfolio comprising primarily of floating rate debt instruments.
Investment Style: Minimization of risk arising from interest rate fluctuations.
Long Term & Short Term Options available
Fund Category
TFIF (LT)
Risk: Medium to High
Risk: Medium to Low
Risk: Low to Medium
Templeton Floating Rate IncomeNAV Performance
* Past performance may or may not be sustained in future ^ Compounded & Annualized
SCHEMEPERFORMANCE
Last 3 months Last 6 months Last 1 year Since Inception*
Templeton Floating Rate Income Fund –
Long 1.28% 2.51% 5.32% 6.37%
Templeton Floating Rate Income Fund –
Short1.15% 2.32% 5.20% 6.23%
CRISIL Liquid Fund Index 1.00% 1.98% 4.13% N.A
As on April 30, 2004
Templeton Floating Rate Income
Fund Size: Rs. 286.06 crores
Average maturity: 0.1.05 years
YTM: 5.63%
Duration: 0.91 years
Long Term Plan
Short Term Plan
Fund Size: Rs. 1516.78 crores
Average maturity 0.28 years
YTM: 4.75%
Duration: 0.26 years
As on April 30, 2004
Call, Cash & Other Assets36%
Corporate Debt24%
MMI18%
MIBOR Linked 18%
PSU/ PFI Bonds4%
Templeton Floating Rate Income
COMPOSITION BY ASSETS
COMPOSITION BY RATING - DEBT
Short Term
NR0.28%
AAA/ A1+ 98.14%
AA1.58%
As on April 30, 2004
Templeton Floating Rate Income
COMPOSITION BY ASSETS
COMPOSITION BY RATING - DEBT
Long Term
Corporate Debt13%PSU / PFI Bonds
10%
MMI9%
Call, Cash & Other Assets61%
MIBOR Linked 7%
AAA/ A1+ 92%
AA8%
As on April 30, 2004
Floating Rate FundsSuitability
Great entry point option to the world of fixed income funds
Great standalone combination of low volatility and returns
But my client is not satisfied with such low returns …..
Returns from traditional fixed income investments have gradually declined over the years… Jan
1999Jan
2000Mar
2001Mar
2002Mar 2003
Public Provident Fund
12% 11% 9.5% 9% 8%
National Savings Certificate
12% 11.5% 9.5% 9% 8%
National Savings Scheme 1992
11% 10.5% 9% 8.5% 7.5%
Bank FDs – 1 year 9% to11%
8.5% to9.5%
8.5% to9.0%
7.5% to8.5%
5.5% to6.0%
Bank FDs – 3 years 10.5% to11.5%
10.0% to10.5%
9.5% to10.0%
8.0% to8.5%
5.75% to
6.25%Source: RBI
5.086.36
7.38
10.2710.87
12.0212.1213.4613.96
4
6
8
10
12
14
1995-1996
1996-1997
1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Falling rates have aided debt funds!
Yield of 10 year benchmark g-sec
Debt Funds have given good returns…(1)
Templeton India Income Fund (TIIF)
1 year 3 years 5 years InceptionTIIF 7.71% 12.07% 12.49% 12.92%Crisil CompositeBond Fund Index
7.40% N.A N.A N.A Annualised & Compounded based on 30.4.2004 Growth Plan NAV of Rs.23.8955; Inception date : March 5, 1997 Past performance may not be sustained in the future.
Asset Size : Rs.1296 crores (as of April 30, 2004)
Debt Funds have given good returns…(2)
Templeton India Income Builder Account (TIIBA)
Annualised & Compounded based on 30.4.2004.3 Growth Plan NAV of Rs.23.5805; Inception date : June 23, 1997 Past performance may not be sustained in the future.
Asset Size : Rs.1172 crores (as of April 30, 2004)
1 year 3 years 5 years InceptionTIIBA 8.17% 13.15% 12.94% 13.33%Crisil CompositeBond Fund Index
7.40% N.A N.A N.A
With interest rates not expected to decline as in the past, returns from income funds will largely be dependent on coupon rate and trading profits.
Investors need to add a slice of equity to their long term portfolio, to enhance return potential
Monthly Income Plans - an easy solution for investors desiring a debt oriented portfolio, with a marginal equity allocation.
Franklin Templeton offer a choice of two MIPs…
Investment Objective: To provide regular income through a
portfolio of high quality fixed income securities with a
maximum exposure of 15% to equities. Investment Style: Active management of funds portfolio on
interest rate movements & credit risks Fund Category
TMIP (G&H)
Risk: Medium to High
Risk: Medium to Low
Risk: Low to MediumTMIP (M&Q)
Templeton Monthly Income Plan (TMIP) …(1)
Templeton Monthly Income Plan (TMIP) …(2)
Started in February 2000The fund is ideally suited to meet the needs of individuals or institutions who need regular income, or are looking to enhance their overall portfolio returns with a slice of equities.Asset Size: Rs.470 crs (G&H); Rs.149 crs (M&Q) - as on April 30, 2004The monthly and quarterly plan are conservatively managed, with zero equity allocation
An open end income scheme with no-assured returns
As on April 30, 2004
TMIP (G&H) Average Maturity: 2.83 years YTM: 5.37 % Duration: 2.31 years Rating Allocation: AAA/P1+/PR1+/A1+/SOV= 87.00%; AA/AA+/AA- = 13.00% Asset Composition: Equity 13.86%, Corporate Debt 32.87%,
Gilts 19.48%, PSU/PFI Bonds 19.23%, Call, Cash & Other Assets 14.56%
Past performance may or may not be sustained in future
TMIP (M&Q) Average Maturity: 2.90 years YTM: 5.76 % Duration: 2.22 years Rating Allocation: AAA/P1+/PR1+/A1+/SOV= 87.66%; AA/AA+/AA- = 12.34% Asset Composition: Equity 0%, Corporate Debt 50.93%,
Gilts 18.65%, PSU/PFI Bonds 4.87%, Call, Cash & Other Assets 25.55%
Templeton Monthly Income Plan (TMIP)…(3)
Templeton Monthly Income Plan (TMIP)… (4) Performance Track Record
Annualised & Compounded returns based on 30.4.2003 Growth Plan NAV of Rs.16.0068; Half-yearly Plan NAV of Rs.11.5006; Monthly Plan NAV of Rs.10.2980 and Quarterly Plan NAV of Rs.10.1809. inception date : February 7, 2000. Dividends declared are assumed to be reinvested.
Past performance may or may not be sustained in future.
1 year 3 years InceptionGrowth Plan 19.01% 13.27% 11.76%Half-yearly Plan 18.94% 13.63% 11.63%Monthly Plan 5.51% 8.93% 9.35%Quarterly Plan 5.50% 9.07% 9.40%Crisil MIP Blended Index
18.29% N.A N.A
Templeton Monthly Income Plan (TMIP)… (5)
Dividend Track Record (Monthly) 0.85% - (Rs.0.085 per unit, Mar 2000 & Apr 2000) 0.70% - (Rs.0.070 per unit, May 2000) 0.60% - (Rs.0.060 per unit, Jun 2000, Aug 2000 to Jan 2001) 0.75% - (Rs.0.075 per unit, Feb 2001 to May 2001) 0.80% - (Rs.0.080 per unit, Jun 2001 to Nov 2001) 1.30% - (Rs.0.130 per unit, Dec 2001) 0.80% - (Rs.0.080 per unit, Jan 2002 to Oct 2002) 0.75% - (Rs.0.075 per unit, Nov 2002) 1.25% - (Rs.0.125 per unit, Dec 2002) 0.75% - (Rs.0.075 per unit, Jan 2003) 0.60% - (Rs.0.060 per unit, Feb 2003, Mar 2003) 0.53% - (Rs.0.053 per unit, Apr 2003) 0.44% - (Rs.0.044 per unit, May 2003 to May 2004)
Face Value of Rs.10
Past performance may or may not be sustained in future
FT India Monthly Income Plan (FTIMIP)…(1)
Investment Objective: To provide regular income through a
portfolio of predominantly high quality fixed income
securities with a maximum exposure of 20% to equities. Investment Style: Active management of funds portfolio on
interest rate movements & credit risks, while seeking to
enhance the returns with a marginal equity allocation. Fund Category
FTIMIP (G)
Risk: Medium to High
Risk: Medium to Low
Risk: Low to Medium
FT India Monthly Income Plan (FTIMIP)…(2)
Started in September 2000 Suited to meet the needs of individuals or institutions who need regular income, or are looking to enhance their overall portfolio returns with a slice of equities. Choice of monthly and quarterly dividend plans and growth plan Asset Size: Rs.1853.32 crores as on 30-April-2004
An open end income scheme with no-assured returns
FT India Monthly Income Plan (FTIMIP)…(3)
Steady and Consistent performance
Annualised & Compounded returns based on 30.4.2004 Growth Plan NAV of Rs.16.0857; Inception date : Sep 28, 2000
Dividend Track Record – Monthly Plan 0.90% - (Rs.0.090 per unit, Dec 2000 to Mar 2001) 0.75% - (Rs.0.075 per unit, Apr 2001 to Mar 2002) 1.50% - (Rs.0.15 per unit, May 2002, Aug 02, 2002) 0.75% - (Rs.0.075 per unit, Aug 2002 to Jan 2003) 0.65% - (Rs.0.065 per unit, Feb 2003 to Mar 2003) 0.58% - (Rs.0.058 per unit, Apr 2003) 0.53% - (Rs.0.053 per unit, May 2003) 0.70% - (Rs.0.070 per unit, June 2003, July 2003) 0.89% - (Rs.0.089 per unit, Aug 2003) 0.79% - (Rs.0.079 per unit, Sep 2003 to Nov 2003) 1.00% - (Rs.0.100 per unit, Dec-2003 to Apr-2004) 0.80% - (Rs.0.080 per unit, May-2004)
Past performance may or may not be sustained in future Face Value of Rs.10
1 year 3 years Inception FTIMIP 20.52% 14.40% 14.16%Crisil MIP Blended Index 18.29% N.A N.A
As on April 30, 2004
FT India Monthly Income Plan (FTIMIP)…(4)
For debt portfolio
Average Maturity: 2.75 years YTM: 5.48% Duration: 1.97 years Rating Allocation: AAA/P1+/SOV= 87.46%; AA/AA+/AA- = 12.49%,
N.R 0.05%
Asset Composition: Equity 16.17%, Corporate Debt 26.51%, Gilts 8.90%, PSU/PFI Bonds 18.85%, Call, Cash & Other Assets 26.90%
Past performance may or may not be sustained in future
Summing upWith falling interest rates, traditional fixed income investments have become unattractiveWhile debt funds are a superior alternative in terms of liquidity, tax efficiency and potential for capital appreciation, their potential for capital appreciation has reduced with interest rates appearing to have bottomed outMIPs, with their marginal equity allocation, can enhance overall portfolio returnsFranklin Templeton offers a choice of two Monthly Income PlansFTIMIP and TMIP - The complete solution for individuals and institutions with low risk appetite.
But can equities deliver?
Source : RBI Report on Currency and Finance (1997-98)
BSE Sensitive Index of Equity Prices - BSE
INVESTMENT PERFORMANCE(CAGR during 1980-98)
56% 63% 86%
37%
14%
44%
1 year 3 year 5 year
Other investment outperformed
Stocks outperformed
Source : RBI Report on Currency and Finance (1997-98) BSE Sensitive Index of Equity Prices - BSE
EQUITIES ARE THE BEST LONG TERM BET% OF STUDIED PERIOD IN WHICH
EQUITY INVESTING
There is often no relationship between
performance of a fund and
an investor’s performance
DOES TIMING REALLY MATTER IN THE LONG RUN?
Invests Every Month at the BSE Sensex PeakOver a Period of 22 Years
Invests Every Month at the BSE Sensex LowOver a Period of 22 Years
Rate of Return
14.19%
14.64%
Data over period of 22 years ( 1979– 2001)
If you had invested in Bluechip fund for any of the following time periods at any time since its inception
Returns are annualised and compounded based on Growth plan NAV of Rs. 20.17 as on 30-Sept-2002. Dividends assumed to be reinvested. Past performance may or may not be sustained in future.
1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs 7 yrs 8 yrs
The chances of making money
61.9% 66.0% 82.8%
99.5%
100.0%
100.0%
100.0%
100.0%
The chances of losing money
38.1% 33.9% 17.2%
0.5% 0.0% 0.0% 0.0% 0.0%
Max returns 199.4%
109.3%
80.9%
49.7%
35.4% 39.9% 30.2% 24.0%
Min returns -36.4%
-24.6%
-8.3% -0.3% 14.0% 12.4% 9.5% 12.5%
Avg of rolling returns 25.9% 22.8% 25.4%
25.7%
24.8% 22.0% 17.3% 18.1%
Equity FundsCategories
Diversified equity funds
Index Funds
Section 88 Funds
Sector funds
Hybrid funds
Equity FundsDiversified Equity Funds
Templeton India Growth Fund
Franklin India Bluechip Fund
Franklin India Prima Plus
Franklin India Prima Fund
Franklin India Growth Fund
Franklin India Tax shield
Franklin India Index Tax Fund
Franklin India Index Fund
Franklin India Bluechip Fund
Investment Objective: To provide medium to long term appreciation.
Investment Style: Steady & consistent growth by focusing on well established large
cap companies.
Fund Category : FIBCFRisk: Medium to High
Risk: Medium to Low
Risk: Low to Medium
Diversified Fund
48
Franklin India Bluechip FundNAV Performance
SCHEME
PERFORMANCE
Last 3 months Last 1 year Last 3 years* Last 5 years* Since inception*
FIBCF(G) 4.61% 136.22% 37.47% 36.39% 27.87%
BSE SENSEX (0.71%) 91.06% 17.11% 11.18% 5.33%
Fund Size : Rs. 1,842.70 crores
* Past performance may or may not be sustained in future *Compounded & Annualized
As on April 30, 2004
Franklin India Bluechip FundTop Ten Holdings
Company Name % HoldingBPCL 8.74%SBI 8.30%Grasim 7.72%Infosys 6.99%ITC 6.88%HPCL 5.75%Hindalco 4.84%Hero Honda 4.41%HCL Tech 4.32%L&T 4.31%
As on April 30, 2004
Franklin India Bluechip FundSector Allocation
As on April 30, 2004
23.54%
4.19%
4.31%
4.41%
4.68%
4.84%
6.88%
7.72%
10.95%
13.99%
14.49%
Rest
Commodity Chemicals
Construction & Engineering
Motorcycle Manufacturers
Automobile Manufacturers
Aluminium
Tobacco
Industrial Conglomerates
Banks
IT Consulting & Services
Oil & Gas Refining & Marketing
-
20,00040,000
60,00080,000
100,000120,000
140,000
Dec-
93
Dec-
94
Dec-
95
Dec-
96
Dec-
97
Dec-
98
Dec-
99
Dec-
00
Dec-
01
Dec-
02
Dec-
03
BLUECHIP FUND BSE SENSEX
Franklin India Bluechip FundNAV of BLUECHIP Vis-à-vis SENSEX
( Rs.10,000 invested in FIBCF & SENSEX) As on April 30, 2004
Rs. 1,29,558
Rs. 17,178
Templeton India Growth Fund
Investment Objective: To provide long term capital growth.
Investment Style: A long term disciplined approach to investing , widely known as “
Philosophy of Value Investing ”
Fund Category :
TIGFRisk: Medium to High
Risk: Medium to Low
Risk: Low to Medium
Diversified Fund
Templeton India Growth FundNAV Performance
SCHEMEPERFORMANCE
Last 3 months Last 1 year Last 3 years* Last 5 years* Since inception*
TIGF(G) (0.46%) 134.88% 37.06% 35.85% 17.04%
BSE SENSEX (0.71%) 91.06% 17.11% 11.18% 6.71%
MSCI India Value (1.05%) 94.89% 21.60% 17.46% N.A
Fund Size : Rs. 431.13 crores
* Past performance may or may not be sustained in future *Compounded & Annualized
As on April 30, 2004
Templeton India Growth FundSector Allocation
As on April 30, 2004
24.55%
4.29%
5.26%
5.33%
5.88%
5.95%
6.32%
8.37%
9.16%
10.77%
14.12%
Rest
Motorcycle Manufacturers
Pharmaceuticals
Gas Utilities
Automobile Manufacturers
Industrial Conglomerates
Packaged Foods
IT Consulting & Services
Auto Parts & Equipment
Oil & Gas Refining & Marketing
Banks
Templeton India Growth FundTop Ten Holdings
As on April 30, 2004
Company Name % HoldingSBI 10.43%MICO 9.16%HPCL 6.41%Grasim 5.95%Tata Tea 5.74%GAIL 5.33%Ashok Leyland 5.25%DRL 4.03%HCL Tech 3.83%BPCL 3.82%
0
10000
20000
30000
40000
Sep-
96
Sep-
97
Sep-
98
Sep-
99
Sep-
00
Sep-
01
Sep-
02
Sep-
03
TIGF BSE SENSEX
Templeton India Growth FundNAV of TIGF Vis-à-vis SENSEX
( Rs.10,000 invested in TIGF & SENSEX) As on April 30, 2004
Rs. 33,495
Rs.16,464
Franklin India Prima Plus
Investment Objective: To provide growth of capital and regular dividend.
Investment Style: Capital appreciation over the long term by focusing on wealth
creating companies across all sectors and market cap ranges.
Fund Category :
FIPPRisk: Medium to High
Risk: Medium to Low
Risk: Low to Medium
Diversified Fund
Franklin India Prima PlusNAV Performance
SCHEMEPERFORMANCE
Last 3 months Last 1 year Last 3 years* Last 5 years* Since inception*
FIPP(G) 7.85% 121.49% 38.29% 33.35% 18.74%
S&P CNX 500 3.27% 116.23% 26.39% 17.66% 3.46%
Fund Size : Rs. 366.40 crores
* Past performance may or may not be sustained in future *Compounded & Annualized
As on April 30, 2004
Franklin India Prima PlusSector Allocation
As on April 30, 2004
22.63%
4.42%
4.70%
4.80%
5.97%
6.34%
6.58%
6.73%
7.40%
14.75%
15.68%
Rest
Aluminium
Automobile Manufacturers
Construction & Engineering
Commodity Chemicals
Packaged Foods
Oil & Gas Refining & Marketing
Pharmaceuticals
Industrial Conglomerates
Banks
IT Consulting & Services
Franklin India Prima PlusTop Ten Holdings
Company Name % Holding
SBI 7.55%Nestle 6.34%Infosys 6.22%HPCL 5.67%Grasim 4.97%MUL 4.70%L&T 4.49%Hindalco 4.42%Satyam Computer 4.32%
ITC 4.01%
As on April 30, 2004
Franklin India Prima PlusNAV of FIPP vis-à-vis S&P CNX 500
( Rs.10,000 invested in FIPP & S&P CNX 500) As on April 30, 2004
0100002000030000400005000060000
Sep-
94
Sep-
95
Sep-
96
Sep-
97
Sep-
98
Sep-
99
Sep-
00
Sep-
01
Sep-
02
Sep-
03
PRIMA PLUS S&P CNX 500
Rs.51,940
Rs.13,853
Franklin India Prima Fund
Investment Objective: To provide long term appreciation being the primary objective
and income as the secondary objective.
Investment Style: Aggressive growth by focusing primarily on mid and small cap
companies.
Fund Category :
FIPFRisk: Medium to High
Risk: Medium to Low
Risk: Low to Medium
Diversified Fund
Franklin India Prima FundNAV Performance
SCHEMEPERFORMANCE
Last 3 months Last 1 year Last 3 years* Last 5 years* Since inception*
FIPF(G) 6.76% 156.82% 63.28% 41.55% 21.86%
S&PCNX 500 3.27% 116.23% 26.39% 17.66% 5.72%
Fund Size : Rs. 693.18 crores
* Past performance may or may not be sustained in future *Compounded & Annualized
As on April 30, 2004
Franklin India Prima FundSector Allocation
As on April 30, 2004
28.78%
3.98%
4.03%
4.66%
5.52%
5.66%
6.38%
7.65%
10.17%
12.96%
10.21%
Rest
Commodity Chemicals
Pharmaceuticals
Marine
Fertilizers & Agricultural Chemicals
Banks
Consumer Finance
Oil & Gas Refining & Marketing
Industrial Conglomerates
Automobile Manufacturers
Auto Parts & Equipment
Franklin India Prima FundTop Ten Holdings
Company Name % Holding
LIC HF 6.38%Ashok Leyland 5.61%MICO 5.59%GE Shipping 4.66%Eicher Motors 4.50%Amtek Auto 4.44%Raymond 3.77%Goodlass Nerolac 3.18%
IPCA Labs 3.10%Indian Rayon 2.15%
As on April 30, 2004
0
20000
40000
60000
80000
100000
Dec-
93
Dec-
94
Dec-
95
Dec-
96
Dec-
97
Dec-
98
Dec-
99
Dec-
00
Dec-
01
Dec-
02
Dec-
03
PRIMA FUND S&P CNX 500
Franklin India Prima FundNAV of FIPF vis-à-vis S&P CNX 500
( Rs.10,000 invested in FIPF & S&P CNX 500) As on April 30, 2004
Rs. 78,460
Rs. 17,861
How you invest can make a difference…
0
2000
4000
6000
8000
10000
12000
14000
Feb-
00
Jun-
00
Oct
-00
Feb-
01
Jun-
01
Oct
-01
Feb-
02
Jun-
02
Oct
-02
Feb-
03
Jun-
03
Oct
-03
Feb-
04
FIGF BSE 100
An investment in Franklin India Growth Fund at its inception.....
…may have just about broken even….
How you invest can make a difference…
0
2000
4000
6000
8000
10000
12000
14000
Feb-
00Ju
n-00
Oct
-00
Feb-
01Ju
n-01
Oct
-01
Feb-
02Ju
n-02
Oct
-02
Feb-
03Ju
n-03
Oct
-03
Feb-
04
FIGF BSE 100
An investment in Franklin India Growth Fund at its inception.....
…may have just about broken even….
Yet a systematic Yet a systematic investment of Rs 10,000 investment of Rs 10,000 per month…per month…
This example is provided for illustrative purposes only and returns are computed on XIRR basis. Calculations are based on NAV of Growth Plan. Load is taken into consideration in the calculations. Past performance may or may not be sustained in future
Total investment madeTotal investment madeRs.510,000Rs.510,000
Value of investment as Value of investment as on Apr 30, 2004on Apr 30, 2004
Rs.930,018Rs.930,018
Annualized Return on Annualized Return on investmentinvestment
29.11% p.a.29.11% p.a.
While SIP has its own benefits, Asset Allocation is another strategy to reduce portfolio risk
An investment solution… …for all stages of life!
Asset Allocation is the best way to achieve long-term financial goals
Why? Different asset classes do well at different points
in time By diversifying across asset classes, one can
enhance return potential while minimising risk
Resulting Total Portfolio15% Rate of Return – 0% SD
Two Risky Assets With Perfect Negative Correlation Equals ZeroRisk Portfolio
Issues with Asset Allocation approach
What is the most optimal asset allocation strategy?Market movements can make asset allocation go haywire
Constant re-balancing is cumbersome, and may not be tax-efficient
Your suitable allocatio
n
Market Impact
Your new
allocation
Equity
70 40% 98 = 75.2%
Debt 30 8% 32.4 = 24.8%
How would you ideally invest ?
Understand your risk profile and investment objectivesAllocate your investments in a way that best suits risk profile and needsChoose funds that have a long-term track record of consistent performance and are managed by Portfolio Managers who have the expertise and experience of investing across market cyclesRevisit your portfolio and re-balance on the basis of fund performance and market conditions
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
FT India Life Stage Fund of Funds Strategic Asset Allocation: Different plans for
different risk profiles
Choice of five best funds with different investment styles and a proven track record from the Franklin Templeton stable
Automatic rebalancing
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 fundWith one investment, you can buy into a portfolio of 5 well-performing funds, each with a distinct investment style
Strategic Asset Allocation
Tailored to four distinct risk categories: Conservative Balanced Growth and Aggressive
Making the scheme suitable for you… …which ever risk category you belong to!
FT India Life Stage Fund of Funds
The four plans and their asset allocation…
Each plan offers growth and dividend optionsIn-built flexibility to make a tactical asset allocation of 10% on either side of the steady state asset allocation
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%
The asset allocation matrix…
A combination of 5 top performing schemes from the Franklin Templeton stable
FIBCF FIPF TIGF TIIF TIIBAThe 20s Plan 50% 15% 15% 10% 10%The 30s Plan 35% 10% 10% 25% 20%The 40s Plan 15% 10% 10% 35% 30%The 50s Plus Plan
10% 0% 10% 40% 40%Strategic Asset Allocation
How has this strategy worked?
S.D. Standard Deviation of monthly returns for the preceding three years. Annualized Compounded returns based on 3.5.2004 Growth Plan NAVs: Scheme Name, NAV - FIBCF, Rs.52.66; FIPF, Rs.76.79; TIGF, Rs.23.39 (D); TIIBA, Rs.23.5774; TIIF, Rs.23.8969. Sales load has not been taken into consideration. Dividends assumed to be reinvested and bonus is adjusted. For illustrative purposes only, to enable prospective investors take an informed decision. Not the actual performance of FTLF.
S.D. 5 years 3 years 1 yearThe 20s Plan 6.24 32.83% 35.91% 103.32
%The 30s Plan 4.43 27.31% 29.45% 71.03%The 40s Plan 3.00 22.72% 24.70% 47.33%The 50s Plus Plan 1.87 18.05% 18.36% 29.30%Past performance may or may not be sustained in the future
Fund Facts
NAV (Rs.) Last 3 months
Since inception
The 20s Plan 11.2742 3.40% 12.74%The 30s Plan 10.9591 2.85% 9.59%The 40s Plan 10.7333 2.58% 7.33%The 50s Plus Plan 10.4983 1.76% 4.98%Past performance may or may not be sustained in the future. Absolute returns based on 30.4.2004 NAVs. There is no appropriate benchmark index for the scheme. Inception Date: Nov 29, 2003
Minimum Investment: Rs.5000 & multiples of Rs.1000Load Structure
Performance since inception
Entry Load Exit Load
The 20s Plan 2.00% NilThe 30s Plan 1.5% NilThe 40s Plan 1.0% NilThe 50s Plus Plan 0.5% Nil
Summing Up
Asset Allocation determines how your portfolio will perform over a period of time.FT India Life Stage Fund of Funds offers an easy solution for all asset allocation needsWith a single investment, you can buy into a portfolio of five schemesIn-built rebalancing feature enhances return potential and tax efficiency, while reducing volatilityMake the smart move. Invest in FT India Life Stage Fund of Funds… and say Good bye to your investment worries
Risk Factors Templeton India Income Builder Account (TIIBA) is an open ended scheme with an objective to provide investors regular income under the Dividend Plan and Capital appreciation under the Growth Plan. Templeton India Income Fund(TIIF) is an open end income scheme with the objective to generate a steady stream of income through investment in fixed income securities. Templeton Monthly Income Plan (TMIP) is an open-ended income scheme with no assured returns and having an objective to earn regular income for investors through investment primarily in high rated domestic fixed income securities. FT India Monthly Income Plan (FTIMIP) is an open ended income scheme with an objective to provide regular income from a portfolio that is invested in predominantly high quality fixed income securities with a maximum exposure of 20% to equities. Risk Factors : All investments in mutual funds and securities are subject to market risks and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. There can be no assurance that a schemes investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. The above are only the names of the scheme and 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. The Mutual Fund is also not assuring that it will make any dividend distributions under the dividend plans of the schemes though it has every intention of doing so. All dividend distributions are subject to the investment performance of the schemes. The investments made by the schemes are subject to external risks on transferring, pricing, trading volumes, settlement risks, etc. of securities and hence redemptions may be delayed inordinately. Please go through the offer documents before investing.
Statutory Details : Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seedcorpus of Rs.1 lac) with Templeton Trust Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trust Act 1882) and with Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. The Fund offers NAVs, purchases and redemptions on all business days.
Investment objective: FT India Life Stage Fund of Funds (FTLF): An open end fund of funds scheme. The primary objective is to generate superior risk adjusted returns to investors in line with their chosen asset allocation. Franklin India Bluechip Fund (FIBCF) is an open ended growth scheme with an objective to primarily provide medium to long term capital appreciation. Franklin India Prima Fund (FIPF) is an open ended growth scheme with an objective to provide medium to long term capital appreciation as a primary objective and income as a secondary objective. Templeton India Growth Fund (TIGF) is an open ended growth scheme with the objective to provide long-term capital growth. Templeton India Income Fund (TIIF) is an open end income scheme with the objective to generate a steady stream of income through investment in fixed income securities. Templeton India Income Builder Account (TIIBA) is an open ended scheme with an objective to provide investors regular income under the Dividend Plan and Capital appreciation under the Growth Plan. Risk Factors: Mutual Funds and Securities Investments are subject to market risks and the Net Asset Values of the schemes may fluctuate depending on factors affecting the capital/debt markets. Past performance is not an indicator of future performance and may not necessarily provide a basis for comparison with other instruments, and there can be no assurance that the scheme’s objective will be achieved. The name of the schemes do not in any way indicate the quality of the scheme or its future performance or returns. The mutual fund is not assuring or guaranteeing any dividend under the scheme. The investments made by the schemes are subject to external risks. FTLF: FTLF being a fund of funds, investors are bearing the recurring expenses of the scheme in addition to the expenses of the underlying schemes. FTLF: 2%; 1.5%; 1%; 0.5% in the 20s plan, the 30s plan, the 40s plan, and the 50s plan respectively; FIBCF, FIPF & TIGF: Load Structure: Entry load: 2.25%; Exit load: Nil. TIIBA (Plan A): Entry & Exit Load: Nil. TIIF& TIIBA (Plan B): Entry: Nil Load, Exit Load: Rs.10 lakhs & below - 0.5% (if redeemed within 6 months of allotment) - Above Rs.10 lakhs - 0.25%, if redeemed within 3 months of allotment. The Fund offers NAV’s, purchases and redemptions on all business days except during the period when there is a book closure. Investors are requested to study the Offer Document before investing. Statutory Details : Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trust Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trust Act 1882) and with Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager.
Disclaimer: Value Research: * Source : Value Research. A 5 star rating means that the fund figures among the top 10%, a 4 star rating means that the fund figures among the top 10% to 32.5% and a 3 star rating means that the fund figures among the top 32.5% to 77.5% of the funds in the category. The categories and no. of schemes in each category are: Equity: FIBCF, FIPF and TIGF: 101, Debt: TIIBA and TIIF: 92. The ratings are based on 3 year and 5 year performance in equity category and 18 month weekly risk adjusted performance in the debt category. The ratings reflect historical risk-adjusted performance as of April 30, 2004 and are subject to change every month. Value Research ratings are calculated from the funds’ returns in excess of risk-free index and a risk factor that reflects fund performance below risk-free index. Sales load was not taken into consideration. Value research does not guarantee the accuracy of this information.
Outlook Money Awards Methodology - The Wealth Creator AwardsThe annual awards take note of the achievements of organisations in facilitating wealth creation while protecting individuals' interests. All fund houses with assets under management of at least Rs 500 crore, as of 30 June 2003, were considered. A minimum track-record was also specified for various kinds of schemes: Equity - diversified: 5 years , Equity - tax-savings (ELSS): 5 years, Balanced: 3 years, Income: 3 years, Gilt: 2 years, Liquid: 2 years. Total number of fund houses considered : 23, Total number of equity schemes considered : 48, Total number of debt schemes considered : 80. Sales load was not taken into consideration. Publisher of the awards: Outlook Money.
Risk-adjusted returns -- returns adjusted for downside risk (negative variance from average returns) -- was the key parameter for evaluation. The database of Credence Analytics was the data source for this analysis. Fund houses were awarded points for schemes outperforming the category average risk-adjusted returns and for schemes figuring among the top five in their respective categories. Questionnaires were then sent to fund houses, asking them for information on operational aspects like: Nature of schemes (except ELSS and fixed maturity plans): • Open-ended/Closed-end • Online subscription and redemption facility • SIP and SWP options • Over the counter/chequebook facility • Trigger facility • No-load switching option • Quarterly newsletters • Information on web site. Weights were assigned to all parameters, and scores were tabulated to arrive at the winner and runner-up in each award segment.
* Past performance may or may not be sustained in the future
Ranking Methodology – Business Standard
Mutual fund schemes are ranked on the basis of the weighted average of their 2-year and 1-year returns. Like in the previous years, the Business Standard Fund Manager seeks to rank schemes and also rate the best Fund Manager of the Year. The process of ranking starts with defining the universe of schemes. While we provide data on all schemes, we rank only those schemes which have been operating for at least two years and have a minimum corpus of Rs.40 crore. There is, therefore, a time and a corpus cut-off for ranking purpose only. The equity and debt schemes, which have been impacted by a change in management, the 12 months prior to June 30, 2003, have not been considering for the rankings. For rankings, the principle, followed in the earliest issues, is to use a time-weighted rate of returns based on the net asset values (NAVs). The rate of return is calculated on the NAVs on a point-to-point basis for two years and one year. The schemes then get ranked on the basis for two year and one year. The schemes then get ranked on the basis of a weighted average of their 2-year and 1-year returns. The weights assigned to the current year’s return is 0.67, while the 2-year performance of the scheme gets a weight of 0.33. The higher weightage given to the current year’s performance is justified on the basis that the Fund Manager essentially tracks the annual performance of schemes. The ranking is done separately for equity (diversified), equity (special focus), debt, gilt and balanced funds. The return-based ranking makes on attempt to compare the performance of schemes across these categories. The ranks thus assigned are strictly within the category of funds to which they belong. However, to arrive at the Fund Manager of the Year, we have to make an exception to the rule. It is erroneous to compare a debt scheme with an equity scheme on the basis of return alone. In order to compare them, there has to be some standardization. Also, working on the well-accepted premise that fund management is not all about returns, we not only look at returns, but also the risks. What we have done is to calculate the risk-weighted returns across all schemes. An attempt has been made to estimate the return per unit of risk for the schemes. There is a small statistical issue which needs to be noted. Conventionally, at least 30 observations are needed to generate “statistically significant” results. However, we tried sensitivity of results to time period and found that the results are not sensitive. We continue to use the NAV-based rate of return over two years but go further and factor in the risks by calculating the “excess returns over benchmark” and accounting for volatility. This has been done by calculating the Sharpe ratio. The benchmark varies for different categories of funds. The benchmark for rating equity schemes is the Sensex, for debt schemes it is the return on risk-free paper and, for balanced schemes, it is 50:50 of sensex and risk-free return. The number of schemes considered in each category were Equity-72; Balanced-34; Gilt-49 and Debt-52. Once all the schemes are rated, the fund manager whose funds have got the maximum ranks across all categories is declared the Fund Manager of the Year. Normally, there is only one chief investment officer (CIO) for a fund. However, in the case of the fund that emerges at the top in our risk-adjusted ratings, there are two CIOs-one managing debt funds, and the other equity funds. Since the overall performance of these funds have been determined taking an aggregate of the performance of both types, it was decided that the two will share of the Fund Manager of the Year honour.
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