This product is suitable for investors who are seeking:
Investment in debt and money-
market securities
Regular income for medium term
Low risk
Disclaimer: Investors should consult their financial advisors if in doubt whether this product is suitable for them.
SBI Magnum Income Fund
Performance against benchmark
Data as on September 30, 2016
Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option of regular plan and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for long-term debt schemes is used for comparison purposes.
30-Sep-2015 to 30-Sep-2016
30-Sep-2014 to 30-Sep-2015
30-Sep-2013 to 30-Sep-2014
Since Inception
Absolute Returns (%) CAGR Returns (%) PTP Returns (INR)
SBI Magnum Income Fund 9.64 12.53 7.35 7.79 38,194
Crisil Composite Bond Fund Index (Scheme Benchmark) 11.51 12.56 11.61 N.A. N.A.
Crisil 10 year Gilt Index (Additional benchmark) 11.11 13.76 6.85 N.A. N.A.
0
2
4
6
8
10
12
14
16
30-Sep-2015 to30-Sep-2016
30-Sep-2014 to30-Sep-2015
30-Sep-2013 to30-Sep-2014
Since Inception
SBI Magnum Income Fund - Reg Plan -Growth
Scheme Benchmark: - Crisil CompositeBond Fund Index
Additional Benchmark: - Crisil 10 Yr GiltIndex
Type of Instrument % of Total Corpus Risk Profile
Corporate debentures & Bonds / PSU / FI / Govt.
Guaranteed Bonds / Other including securitized
Debt
Upto 90%
Low to Medium
Securitized debt No more than 10% of the investment in debt
Medium to High
Government securities Upto 90% Low
Cash and call money^ Upto 25% Low
Money-market instruments* Upto 25% Low
Units of other mutual funds Upto 5% Low
Broad Asset Allocation of the Portfolio
^ Pursuant to RBI Guidelines, presently Mutual Funds are not allowed to participate in Call Money.
* Money Market Instruments will include Commercial Paper, Certificates of Deposit, Treasury Bills, Bills Rediscounting, Repos, short term bank deposits, short-term Government securities (of maturities less than 1 year) and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.
Detailed Asset Allocation of the Portfolio
Data as on: October 31, 2016
In
terest
Rate
Sen
sit
ivit
y
Credit Quality
High Medium Low
High
Medium
Low
DATED GOVT SECURITIES,
48.19 NON-CONVERTIBLE DEBENTURE,
29.83
ZERO COUPON
BOND, 1.58
CBLO/REVERSE REPO, 4.37
NCA, 16.03
Below AA+, 18.55
AA+, 0.81
SOV,AAA and Equivalent,
60.24
NCA(Incl. Cash,Deposits and Equity),
20.40
Bond Spreads Favoring Investment in G-Sec
Source: Reuters/Bloomberg as on October 31, 2016
Corporate Bonds spreads have narrowed significantly due to fall in interest rates.
We found spreads narrowing from 150bps to 50 bps during this period.
We expect spreads to remain at current levels and could widen on resumption of fresh supply.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
No
v-1
4
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
Per
cen
tage
3 Year Spread 5 Year Spread 10 Year Spread
India Rates Snapshot for October 2016
• Indian bond yields have softened massively with 10-year G-sec trading at 6.79% as of September end and down another 11bps at
6.68% as of 10th November.
• The withdrawal of the high denomination notes as legal tender could lead to large deposits of money at bank branches. Given the
ceiling on withdrawal of cash at Rs4,000 and that of Rs10,000 through cheque at bank branches, the liquidity is likely to stay within
the banking system in the short term. This augurs well for interest rates, besides boosting liquidity. Consequently, money-market
rates, too, softened on the back of anticipation of improvement in liquidity.
• Crude oil prices rose 9.1% over the month and 38% YTD.
• Rupee continues to hover around 66-67 levels against the US Dollar.
Source: Bloomberg, PPAC, SBIMF Research; NB: **Crude oil
price is average $/barrel for the month, rest of the data are %
month end; *Corporate bond rate is for AAA rated bonds ,***
Refers to PSU Banks CD rate; # INR and Oil price changes are
% change YTD
Aug-16 Sep-16 Oct-16 Change YTD (in bps)
1 Yr. T-Bill 6.68 6.55 6.44 -79
3M T-Bill 6.56 6.42 6.37 -78
10 year GSec 7.11 6.82 6.79 -97
3M CD*** 6.63 6.61 6.58 -63
12M CD*** 7.18 7.06 6.93 -78
3 Yr Corp Bond* 7.60 7.55 7.48 -85
5 Yr Corp Bond* 7.69 7.60 7.52 -87
10 Yr Corp Bond* 7.80 7.67 7.65 -76
1 Yr IRS 6.57 6.47 6.35 -72
5 Yr IRS 6.49 6.36 6.35 -61
Overnight MIBOR Rate 6.54 6.50 6.24 -79
INR/USD 67.0 66.6 66.8 0.9#
Crude Oil Indian Basket** 44.4 45.1 49.2 37.9#
RBI, on 4th October, delivered its first monetary policy decision under
governor Patel and newly-formed India’s 6-member Monetary Policy
Committee (MPC). The formation of MPC has been a landmark
institutional reform and all the members unanimously voted for a rate
cut.
The Reserve Bank’s repo rate cut of 25 bps was balanced by a
rather less dovish statement on future inflation trajectory.
The highlights of latest monetary policy was the change in stance on
the timeframe to reach the 4% inflation target (March 2018 earlier)
and the desired range for real rate.
While the self-imposed glide path to 5% by Q4 2016-17 has been
retained, the journey thereafter seems to be mired with known and
unknown upside risks to headline retail inflation.
The desired range for real rates (3m/1 year T-bill rate minus inflation
expectation) has been allowed to dip to 125bps from earlier 150-
200bps as the central bank opined that neutral rate is dynamic and
trending downwards globally.
We expect inflation to fall to 4% by November before it starts to pick-
up again in last quarter. For FY17 as a whole, the CPI inflation is
likely to average around 5%. That said, with shifting of the 4% goal
posts and removing the rigidity in real rates, the central bank has
kept the options open for itself to deliver more rate cuts in case the
global and domestic growth situations warrant.
Rate Outlook
Source: RBI, CSO, SBIFM Research
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Jun
-05
Feb
-06
Oct
-06
Jun
-07
Feb
-08
Oct
-08
Jun
-09
Feb
-10
Oct
-10
Jun
-11
Feb
-12
Oct
-12
Jun
-13
Feb
-14
Oct
-14
Jun
-15
Feb
-16
Oct
-16
Repo Rate (mth end, %)
There has been a subtle shift in the direction of global bond yields over
the last month with markets doubting the incremental effectiveness of
additional QE/Monetary easing measures on aggregate demand.
With the election results in the US, there has been a further rise in
treasury yields, increase in long term market implied inflation
expectations and curve steepening.
The recent demonetisation of high value notes can have major medium-
long term positive structural effects such as: a) potential additional
government tax revenues from better compliance over the coming
years, b) increase in tax/GDP ratios seen in conjunction with GST and
c) reducing the role of cash economy and additional access to formal
financial sector.
Also potential short term gains arising from a) possible one-time gains
to government from FY18 arising from cancellation of illegal high value
notes which may impact next year borrowings, b) slowdown in
discretionary consumption and its cumulative impact on demand and
inflation and, c) improvement in banking liquidity as currency partially
returns to the system.
Weak near term credit demand can support bonds, until the working
capital demand shifts to banking channels from the cash based
channel.
While fiscal situation can improve significantly over medium term, the
market can also take comfort from near term weakness in headline CPI.
In this environment, the trend for a medium term easing in market yields
remains intact driven by incremental news flow on potential benefits to
government revenues over the medium term.
In the very short term, global yield volatility , shifting expectations of US
Fed stance and lack of OMO’s /higher net supply can provide 2 way
movement in bond yields.
Market Outlook
Source: RBI, Bloomberg, SBIFM Research
6.00
6.50
7.00
7.50
8.00
8.50
9.00
9.50
Jan
-11
Jun
-11
No
v-1
1
Ap
r-1
2
Sep
-12
Feb
-13
Jul-
13
De
c-1
3
May
-14
Oct
-14
Mar
-15
Au
g-1
5
Jan
-16
Jun
-16
10 year GSec yield (mth end, %) Repo Rate (mth end, %)
Average spread between G-sec and Repo in last 10 years: 75bps
Current Investment Strategy
Portfolio Tactical Allocation: 50% to
60% Strategic Allocation : 30% -
40 % ₌ ₊
The fund manager will actively manage the duration of the portfolio based on the combination of the above two strategies
This portion of the funds is invested in 2-5 years Corporate Bonds
Strategic Allocation : Accruals
Tactical Allocation : Long Bonds
The segment currently looks attractive on account of comfortable liquidity outlook.
This portion of the portfolio provides stable returns without too much volatility
The allocation to the long bonds/ GSecs would provide trading opportunities
Long bonds yields may remain volatile in the near term. Attractive absolute yield levels provide an opportunity from a long term perspective.
This portion of the portfolio may also be used to take defensive positions as per fund managers outlook
Key Information
SBI Magnum Income Fund
An actively managed fund , maintaining a high quality portfolio while taking active calls on managing the duration of the portfolio. The portfolio switches actively among government and corporate debt depending on the market conditions and the fund managers views.
Inception Date
25-Nov-98
Fund Manager
Mr. Dinesh Ahuja
Managing Since
Jan-11
Minimum Investment Amount
Rs. 5000
Additional Investment Amount
Rs. 1000
Exit Load For exit within 1 year from date of allotment –
Nil for 10% of investment & 1.00% for remaining amount For exit after 1 year – Nil
Investor Suitability Investors having a investment horizon of minimum 1 year
Investors having a reasonable risk appetite.
Economic / Market Analysis
Economic variables
Debt indicators Fiscal & Monetary Policy FX dynamics Foreign Inflows/Capital inflows Market prices
Credit selection
Security allocation
Spread Dynamics
Sector Allocation
12
Internal Mandate Regulatory guidelines Portfolio Position Concentration Portfolio Liquidity Duration constraint
Tactical Management Trading allocation Market forecast Market Liquidity Price opportunity
Credit Analysis
• Operating trends
Financial strength Solvency indicators Management Quality Business Dynamics Competitive positioning
External research Credit rating agencies Management Interaction
Duration position
Yield curve position
Portfolio Construction
Top down
Bottom-up
Fixed Income : Investment Process
Performance of other schemes managed by Mr. Dinesh Ahuja
Past performance may or may not be sustained in the future. Returns (in %) other than since inception are absolute calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10, 000/-. Additional benchmark as prescribed by SEBI for long-term and short-term debt schemes is used for comparison purposes only. Performance calculated for regular plan.
*Returns for scheme benchmark index I Sec and Li-BEX is calculated using CRISIL Fund Analyser *Returns for scheme benchmark index Isec and SI-BEX is calculated using CRISIL Fund Analyser
Managing since
January, 2011
30-Sep-2015 to 30-Sep-
2016
30-Sep-2014 to 30-
Sep-2015
30-Sep-2013 to 30-Sep-
2014
Since Inception
Absolute Returns (%)
CAGR Returns
(%) PTP Returns
(INR)
Dynamic Bond Fund
10.47 13.41 6.99 5.49 19,653
Crisil Composite
Bond Fund Index
(Scheme Benchmark) 11.51 12.56 11.61 6.75 22,850
Crisil 10 year Gilt
Index (Additional
benchmark) 11.11 13.76 6.85 5.68 20,109
Managing since January,
2011
30-Sep-2015 to 30-
Sep-2016
30-Sep-2014 to 30-Sep-
2015
30-Sep-2013 to 30-Sep-
2014
Since Inception
Absolute Returns (%) CAGR
Returns (%)
PTP Returns
(INR)
SBI Magnum Gilt Fund -
Short Term - Growth 10.39 12.47 10.06 7.85 32,822
I Sec Si-BEX* (Scheme
Benchmark) 8.74 9.91 8.93 N.A. N.A.
Crisil 1 Year T-Bill Index
(Additional benchmark) 7.36 8.86 8.35 6.30 26,152
Managing since January,
2011
30-Sep-2015 to 30-
Sep-2016
30-Sep-2014 to 30-
Sep-2015
30-Sep-2013 to 30-Sep-
2014
Since Inception
Absolute Returns (%) CAGR
Returns (%)
PTP Returns
(INR)
SBI Magnum Gilt Fund - Long
Term - Growth 10.88 17.81 11.60 8.28 35,031
I Sec Li-BEX* (Scheme
Benchmark) 13.80 15.70 12.85 N.A. N.A.
Crisil 10 Year Gilt Index
(Additional benchmark) 11.11 13.76 6.85 N.A. N.A.
30-Sep-2015 to 30-Sep-
2016
30-Sep-2014 to 30-Sep-
2015
30-Sep-2013 to 30-Sep-
2014
Since Inception
Absolute Returns (%)
CAGR Returns
(%)
PTP Returns
(INR)
SBI Corporate Bond Fund 10.11 11.49 N.A. 10.68 12511.72
Crisil Composite Bond
Fund Index 11.51 12.56 N.A. 11.89 12814.60
Crisil 10 Yr Gilt Index 11.11 13.76 N.A. 12.12 12872.71
Mr. Navneet Munot - CIO
Navneet Munot joined SBI Funds Management as Chief Investment Officer in December 2008. He brings
with him over 15 years of rich experience in Financial Markets. In his previous assignment, he was the
Executive Director & Head - multi - strategy boutique with Morgan Stanley Investment Management. Prior
to joining Morgan Stanley Investment Management, he worked as the CIO - Fixed Income and Hybrid
Funds at Birla Sun Life Asset Management Company Ltd. Navneet had been associated with the financial
services business of the group for over 13 years and worked in various areas such as fixed income, equities
and foreign exchange. Navneet is a postgraduate in Accountancy and Business Statistics and a qualified
Chartered Accountant. He is also a Charter holder of the CFA Institute USA and CAIA Institute USA. He is
also an FRM Charter holder of Global Association of Risk Professionals (GARP).
Mr. Dinesh Ahuja – Portfolio Manager
Dinesh Ahuja joined SBIFM in 2010. Prior to joining SBIFM, Dinesh was a portfolio manager at L&T Asset
Management and Reliance Group for four years. Dinesh started his career in 1998 as a fixed income dealer
on the sell side. Thereafter he worked in leading broking outfits for eight years before moving on the buy
side in 2006. Dinesh is a Commerce graduate and holds his Masters degree in Finance from Mumbai
University.
Biographies
Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This presentation is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund units/securities. These views alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without notice. Neither SBI Funds Management Private Limited, 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
SBI Funds Management Private Limited (A joint venture between SBI and AMUNDI) Registered Office: 9th Floor, Crescenzo, C-38 & 39, ‘G’ Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Board line: +91 22 61793000 Fax: +91 22 67425687
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