INVESTMENT STRATEGY

3 MUTUAL FUND PORTFOLIOS TO BUILD IN THIS MARKET

April 2020
INDEX

1. EQUITY MARKET UPDATE AND OUTLOOK

Deep Corrections Once Again
Where We Are Now?
Handsome Returns Follow Sharp Corrections
Take Bigger Sips In Volatile Times

DEBT/ FIXED INCOME UPDATE & OUTLOOK

2. Monetary Policy: RBI Gets Into Action
Debt Market Wrap
Debt Market Outlook

MUTUAL FUND PORTFOLIOS

3. Aggressive
Moderate
Conservative
EQUITY MARKET UPDATE & OUTLOOK
DEEP CORRECTION ONCE AGAIN
Deep corrections have happened earlier too. In the years 2000 and 2008 also, the equity market corrected sharply across the
globe.

Indian stock markets retracted by 60-70% in previous severe global corrections. The carnage in the broader markets was all the
more severe!
EQUITY MARKET UPDATE & OUTLOOK
WHERE ARE WE NOW?

Though there could be further 10-12% downside based on trough trailing price-earnings (PE) basis, the valuations seem to be
near bottom level on Price-to-Book Value (PBV) and Market Cap-to-GDP ratio basis.

NIFTY trailing P/BV (Mar 2019 – Mar 2020) Market Cap to GDP Ratio (%)
149.7
3.2

3.0

2.8 3.0 3.0 90.2

2.9
77.6 80.685.478.483.5 84.0
2.6 2.7 72.3 70.766.4
60.5 65.0 64.9
2.4 49.0 45.6 50.0
40.5
2.2
2.3
2.0
Oct-19

Dec-19

Jan-20
Nov-19
Mar-19

May-19

Aug-19

Mar-20
Jul-19
Apr-19

Jun-19

Sep-19

Feb-20

Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Mar-20
Nifty P/BV (TTM)
EQUITY MARKET UPDATE & OUTLOOK
HANDSOME RETURNS FOLLOW SHARP CORRECTIONS
500%

405%
400% 387%

300%

200%

103% 92%
100% 79%
34%
6% 14% 23% 20% 13% 11% 9% 7%
0%
-4%
-37% -30%
-60%
-100%
Asian Financial Crisis Dot Com Bubble Global Financial Crisis

Trough 1M post Trough 3M post Trough 6M post Trough 12M post Trough Peak
EQUITY MARKET UPDATE & OUTLOOK
TAKE BIGGER SIPS IN VOLATILE TIMES

• Like many crisis this too will come to an end and it is extremely important to maintain asset allocation discipline.

• The correction in stock prices owing to Corona virus have increased the margin of safety and investor should allocate
investment in favor of equities after considering his risk appetite.

• Considering the current market correction, investor should rebalance their equity exposure. i.e. if an investor had asset
allocation of 70:30 in equity-debt and in current scenario if it has come down to 50:50 due to under performance of equity
then investor should rebalance it back to actual allocation by investing in equities based on risk profile in staggered
manger.

• Current times remind us of famous quote by Warren Buffett “Be fearful when others are greedy, and be greedy when
others are fearful”

• Investor should continue SIP in all market conditions.

DEBT/ FIXED INCOME UPDATE & OUTLOOK
MONETARY POLICY: RBI GETS INTO ACTION

RBI announces slew of measures to support economy through rate cuts, infusion of additional liquidity and relief to
borrowers.

• Policy rate cut sharply: Repo rate cut by 75 bps from 5.15% to 4.40% and reverse repo rate by 90bps from 4.90% to 4.00%
with immediate effect.

• Liquidity infusion: Liquidity infusion of Rs 3.74 lakh crore (Rs 3.74 trillion) through cut in CRR by 100 bps (releases Rs 1.37
lakh crore for banks), marginal standing facility (MSF) rate (another Rs 1.37 lakh crore) and another Rs 1 lakh crore will be
pumped through TLTRO mechanism.

• Relief to borrowers: Three months moratorium in respect on all term loans of commercial banks, all India financial
institutions and NBFCs outstanding as on 1 March 2020.

Abnormal times require unconventional policy response and RBI has taken some measures along with the central
government’s fiscal policy response.
DEBT/ FIXED INCOME UPDATE & OUTLOOK
DEBT MARKET WRAP

• Liquidity – In surplus zone

During the week March 16-20, 2020 the weighted average call rate averaged to 4.92% and continued to remain below the
RBI’s repo rate of 5.15% with comfortable level of liquidity in banking system

• Bond Prices & other Updates

The benchmark 10-year GSec yields till 23rd March 2020 averaged 6.25%, a 19 bps fall from previous month average and
ranged between 6% to 6.4% during the month till 23rd March 2020.

For the month of Feb-2020, the retail inflation moderated to a 3-month low of 6.6% which is 1% lower than a month ago
inflation of 7.6% but still more than RBI’s upper band inflation target. The WPI inflation also moderated.
DEBT/ FIXED INCOME UPDATE & OUTLOOK
DEBT MARKET OUTLOOK

Inflation to be in downward trajectory and attractive yields in quality debt instruments

Downward inflation trajectory of CPI has been aided by the easing inflation witnessed in the food as well as non-food segments.
We expect inflation to remain on a downward trajectory over the coming months because of expected slower growth, normal
monsoons and lower oil prices.

We had seen spike in bond yields from 2nd to 23rd Mar-2020 in short term/corporate bond space. It happened because of the
large redemption from corporate and preference for liquidity in the current scenario. As on 27th Mar-2020, RBI cut repo rate by
75bps, CRR by 100 bps and reverse repo by 90bps.

In next few months, RBI may additionally cut repo rate and keep the liquidity in surplus which will help to bring down the current
yields. Currently the yields are attractive in high quality debt instruments.

Strategy: Prefer high credit quality Short duration and corporate bond funds
Currently the yields are attractive in quality debt instruments and investor should invest in high quality short duration and
corporate bond category schemes. Considering the current market scenario, investor with short term tenure should prefer liquid
category schemes than arbitrage schemes.
MUTUAL FUND PORTFOLIO | AGGRESSIVE
AMC SCHEME NAME
LARGE CAP
Portfolio Composition
Axis Axis Bluechip Fund
BNP Paribas BNP Paribas Large Cap Fund
Canara Robeco Canara Robeco Bluechip Equity Fund Mid Multi
Large Cap
HDFC HDFC Top 100 Fund Cap Cap
HSBC HSBC Large Cap Equity Fund 65%
15% 20%
ICICI Prudential ICICI Prudential Bluechip Fund
Kotak Kotak Bluechip Fund
Mirae Mirae Asset Large Cap Fund
Nippon India Nippon India Large Cap Fund
UTI UTI Mastershare Unit Scheme
MID CAP Minimum Time Horizon: 5 years
Axis Axis Midcap Fund Review Frequency: 6 months
BNP Paribas BNP Paribas Mid Cap Fund
DSP DSP Midcap Fund
Edelweiss Edelweiss Mid Cap Fund
Franklin Templeton Franklin India Prima Fund
ICICI Prudential ICICI Prudential MidCap Fund
Aggressive Investor
Kotak Kotak Emerging Equity Scheme
Nippon India Nippon India Growth Fund You are ready to take high risks, and very easily adapt
Principal Principal Midcap Fund when things don't go as you had planned, financially.
MULTI CAP
Aditya Birla Sun Life Aditya Birla Sun Life Equity Fund
Your objective is to get the highest return possible in
BNP Paribas BNP Paribas Multi Cap Fund the long term, and you accept the ups and downs
Canara Robeco Canara Robeco Equity Diversified Fund along the way
HDFC HDFC Equity Fund
ICICI Prudential ICICI Prudential Multicap Fund
Kotak Kotak Standard Multicap Fund
Nippon India Nippon India Multi Cap Fund
Principal Principal Multi Cap Growth Fund
SBI SBI Magnum Multi Cap Fund
MUTUAL FUND PORTFOLIO | MODERATE
AMC SCHEME NAME
DEBT CORPORATE BOND / SHORT DURATION
Portfolio Composition
ICICI Prudential ICICI Prudential Corporate Bond Fund
Aditya Birla Sun Life Aditya Birla Sun Life Corporate Bond Fund Dynamic
IDFC IDFC Corporate Bond Fund Debt Corporate Bond /
Asset Large Cap
Kotak Kotak Corporate Bond Fund Short Duration
Allocation 30%
ICICI Prudential ICICI Prudential Short Term Fund 50%
IDFC IDFC Bond Fund - Short Term Plan
20%
L&T L&T Short Term Bond Fund
SBI SBI Short Term Debt Fund
DYNAMIC ASSET ALLOCATION
IDFC IDFC Dynamic Equity Fund Minimum Time Horizon: 3 years
Axis Axis Dynamic Equity Fund
DSP DSP Dynamic Asset Allocation Fund
Review Frequency: 12 months
ICICI Prudential ICICI Prudential Balanced Advantage Fund
ICICI Prudential ICICI Prudential Asset Allocator Fund
Nippon India Nippon India Balanced Advantage Fund
Tata Tata Balanced Advantage Fund
Moderate Investor
LARGE CAP
Axis Axis Bluechip Fund You are an average risk taker, and try to adapt when
BNP Paribas BNP Paribas Large Cap Fund things don't go as you had planned, financially. Your
Canara Robeco Canara Robeco Bluechip Equity Fund long term objective is to get a better return than a
HDFC HDFC Top 100 Fund
HSBC HSBC Large Cap Equity Fund
Fixed Deposit, net of tax, even if the short term
ICICI Prudential ICICI Prudential Bluechip Fund performance could sometime be below expectations
Kotak Kotak Bluechip Fund
Mirae Mirae Asset Large Cap Fund
Nippon India Nippon India Large Cap Fund
UTI UTI Mastershare Unit Scheme
MUTUAL FUND PORTFOLIO | CONSERVATIVE
AMC SCHEME NAME Portfolio Composition
CORPORATE BOND
Aditya Birla Sun Life Aditya Birla Sun Life Corporate Bond Fund
ICICI Prudential ICICI Prudential Corporate Bond Fund Corporate Short Low
IDFC IDFC Corporate Bond Fund Bond Duration Duration
50% 30% 20%
Kotak Kotak Corporate Bond Fund
SHORT DURATION
ICICI Prudentiial ICICI Prudential Short Term Fund
IDFC IDFC Bond Fund - Short Term Plan
L&T L&T Short Term Bond Fund
Minimum Time Horizon: 3 years
SBI SBI Short Term Debt Fund
Review Frequency: 12 months
LOW DURATION
ICICI Prudential ICICI Prudential Savings Fund
IDFC IDFC Low Duration Fund
Conservative Investor
You are unwilling to take risks, and get very uneasy
when things don't go as you had planned, financially.
Your long term objective is to try to get a slightly
better return than a fixed deposit, net of tax.
THANK YOU
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