Professional Documents
Culture Documents
Reliance Mutual Fund Reliance Small Cap Fund: Presents
Reliance Mutual Fund Reliance Small Cap Fund: Presents
Presents
A Reliance Capital
A Reliance Capital
Table Of Contents
q q q q q
India Opportunity Why Invest in Small Caps Investment Case for Small Caps Success Essentials and Reliance Mutual Fund Advantage Reliance Small Cap Fund
q q
India took 60 years to get to its first USD 1 Trillion GDP in FY08, but the move to USD 2 Trillion GDP will be in next 5-6 years, similar to that of China Due to the huge consumption and savings/investment boom, USD 2 Trillion GDP is not a destination, but a milestone in Indias ongoing journey towards USD 4 Trillion GDP in the subsequent 5-7 years, and so on
Estimated for 2010-2014 Source: CMIE, MOSL, RCAM Estimates
Growing size of EM economy and fading distinction between EM and DM economies should lead to increased capital allocation to EM economies
Period 1995-99 2000-04 2005-09 2009 Avg.World M-Cap 14,047,039 17,734,308 25,689,296 24,630,640 Proportion of the Average World M-Cap (%) DM markets 94.1 95.3 90.1 86.8 United States 46.6 51.9 44.3 42.5 United Kingdom 9.7 10.4 9.6 9.0 Europe (ex-EM) 30.0 29.1 29.0 27.3 Japan 13.8 9.0 9.5 8.6 EM markets 5.9 4.7 9.9 13.2 Brazil 0.7 0.4 1.3 2.2 Russia 0.2 0.2 0.8 0.8 India 0.4 0.3 0.7 1.0 China 0.0 0.3 1.5 2.4 Korea 0.6 0.8 1.4 1.7
MSCI Indices used as proxy for market-cap data (Units: USD million)
Presently, EM economies hold over 30% share in Global GDP, while their share in Global market cap is only 13%
Source: IMF GDP data, MSCI m-cap data, RCAM Estimates, DM : Developed Markets, EM: Emerging Markets
In 2014, BRICs combined GDP will be equal to US GDP At Market Cap GDP ratio of 1, BRIC countries will have a market cap of USD 16.36 Trillion Significant FII money will flow into the BRIC markets India will gets its share of investments
Source - RCAM Estimates, *FII numbers are approximations, BRIC Brazil, Russia, India, China
Investment Outlook
q q q
q q
Currently market is evenly poised with positive bias India has emerged stronger from the global slump and is back on track to grow in excess of 7-8% per annum For a sustained long term growth, the 3 growth drivers are in place: Savings Domestic savings are among the highest in the world Consumption Set to explode Investments At 34% of the GDP, again among the highest in the world Policy announcements will have significant impact on the direction of the market Themes for the coming year Big valuation disparity among large, mid caps & small caps. Opportunity for alpha creation Stock selection will be the key
r eu en pr tre En
Un de r
-R
es ea rc he d
P ial
H ig
Small Cap
Po te nt ia l
ro w th
e op Sc
R eR of
in at
n sio as
g
Large Universe
U tar t S
Small Caps
Mid Caps
Large Caps
Research Available
Limited
Moderate
Widely
Institutional Ownership
Very Limited
Moderate
Large
Valuation Multiple
Low
Moderate
Fair
Entrepreneurial Passion
q
Indian entrepreneurial skills / mindset / spirit has been globally acknowledged over a period of time End of License Raj has opened many business opportunities for entrepreneur Multiple sources of fund raising at various stage of business has been of tremendous help Competitive talent is being attracted & retained by rewarding performance linked incentives, ESOPs, etc In todays economic environment, individuals with entrepreneurial mindset are exploring new business opportunities that will not only survive in a recession but will also thrive Thus, Emerging India is offering various growth opportunities to entrepreneurs, be it first generation entrepreneur or otherwise
q q
In a developing economy like India, multiple sectors provide opportunities for growth
Example: Retailing, Food Processing, Pharmaceuticals, Media & Entertainment, Real Estate, Education, Hospitality etc
q q
Once established and successful, ramp up can be rapid Thus, emerging sectors are true reflection of entrepreneurial spirit, new opportunities and creation of global behemoths
High Growth Potential / Scalability Differentiated Business Model Emergence of Educated & Passionate Management
Under Ownership, Under Researched & Under Covered Understanding Value of Market Cap Various Modes of Fund Raising Emerging Sectors start small Technology, Retail, Real Estate, Insurance etc
Niche focus & ability to attract talent in form of Quasi Entrepreneurs & Stock Options
as on August 2010
Index Market Cap Range (Rs. Crs) 15,300 329,400 1000 12,350 170 2300 Total Market Cap approx (Rs Crs) 2,761,687 1,078,821 351,840
Source: www.bseindia.com, 5th August 2010 , Index Market Cap Range given implies companies with the smallest market cap and largest market cap in that particular indices respectively as on August 5, 2010. Small Cap stocks for the purpose of the Reliance Small Cap Fund are stocks whose market capitalization is in between the highest and lowest market capitalization of companies on BSE Small Cap Index
Performance Over The Last 2 Years (31st July 08 - 30th July 10) Index S&P CNX Nifty BSE SENSEX BSE MIDCAP BSE SMALL CAP CAGR (%) 11.32 11.58 15.37 16.32 Outperformance of BSE SMALL CAP Relative To Indices 5.00 4.74 0.95
Valuation As On 31st July 2010 Index S&P CNX Nifty BSE SENSEX BSE MIDCAP BSE SMALL CAP P/E 22.31 21.20 19.24 15.66 Price To Book Value 3.78 3.40 2.90 2.34
Small Caps are still available at better valuations compared to Large Caps
Examples of how Small Cap companies have emerged as Large Cap companies over a period of time creating wealth for the shareholders
The companies chosen herein are purely for illustrative purpose only Reliance Mutual Fund or Reliance Small Cap Fund may or may not invest in the shares of these companies The investment decision of Reliance Mutual Fund to invest in any company is based on several factors including research, market potential, future outlook etc
Retailing
Company Name Market Capitalization (July 30th 2001) (Rs. Cr) Pantaloon Retail (India) 19.98 Market Capitalization (July 30th 2010) (Rs. Cr) 9457.13 Outperformance relative to BSESENSEX (July 30th 2001- July 30th 2010) 19,316%
In
Realty - Construction
Company Name Market Capitalization (July 31st 2003) (Rs. Cr) Unitech 72.44 Market Capitalization (July 30th 2010) (Rs. Cr) 20,457.53 Outperformance relative to BSESENSEX (July 31st 2003- July 30th 2010) 17,550%
88 ed By creas In
s Time
Computers - Education
Company Name Market Capitalization (Jan 31st 2006) (Rs. Cr) Educomp Solutions 447.20 Market Capitalization (July 30th 2010) (Rs. Cr) 5,797.46 Outperformance relative to BSESENSEX (Jan 31st 2006- July 30th 2010) 904%
1 d By ease Incr
es 0 Tim
Healthcare
Company Name Market Capitalization (Jan 31st 2001) (Rs. Cr) Apollo Hospitals 715.31 Market Capitalization (July 30th 2010) (Rs. Cr) 4,841.08 Outperformance relative to BSESENSEX (Jan 31st 2001- July 30th 2010) 20%
ed B Increas
y 4 Tim
es
49 d By rease Inc
s Time
higher profitability
Bottom up approach has been strongly advocated as the key investment strategy
years
In depth research capabilities to identify small caps with huge growth potential Our research capability empowers the Fund Manager to be BOLD in identifying high
small
Investment Philosophy
q
With an endeavor to maximize returns & minimize risks by reasonable diversification , primary focus would be on small cap stocks
Investment in Equities of Small Cap Companies : 65%-100%* Investment in Equities of any other Companies : 0%-35%* Investment in Debt & Money Market Securities : 0% - 35%*
Small cap stocks, for the purpose of the fund are defined as stocks whose market capitalization is in between the highest & lowest market capitalization of companies on BSE Small Cap Index
* Please refer detailed asset allocation on slide no 29. Market Capitalization: Market value of the listed company, which is calculated by multiplying its current market price by number of its shares outstanding
Medium
Low
Risk
q q
A very aggressive small cap oriented fund A relatively high risk/high return oriented fund characterized by volatility which will get smoothened out over long term investment horizon
Reliance Small Cap Fund will be a vital part of an investors core portfolio that aims to create an alpha for their investments
Scheme Features
Investment Objective
The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of small cap companies and the secondary objective is to generate consistent returns by investing in debt and money market securities BSE Small Cap Index Equity & equity related securities of small cap companies including derivatives# - 65%-100% Equity & equity related securities of any other companies including derivatives# 0%-35% Debt & Money Market Securities **(including investments in securitised debt) - 0% - 35%
** including securitised debt up to 30% # The Scheme proposes to invest at least 65% of the corpus in Equity & equity related instruments of small cap companies which may go upto 100% of the corpus. The investment in Equity & equity related instruments of any other companies other than small cap companies will be in the range of 0-35% of the corpus
Benchmark
Fund Manager
Sunil Singhania
Scheme Features
Choice of Plans/Options
Growth Plan: Growth & Bonus Option Dividend Plan : Dividend Payout Option Dividend Reinvestment Option
Load Structure : During New Fund Offer & Continuous Offer including SIP Installments
Entry Load: Nil Exit Load:
2% If redeemed or switched out on or before completion of 12 months from the date of allotment of units 1% If redeemed or switched out after 12 months but on or before completion of 24 months from the date of allotment of units
Nil If redeemed or switched out after the completion of 24 months from the date of allotment of units
SIP
Mode of Payment : Auto Debit/ECS
In accordance with the requirements specified by the SEBI circular no. SEBI/IMD/CIR No.4/168230/09 dated June 30, 2009 no entry load will be charged for purchase / additional purchase / switch-in accepted by the Fund. Upfront commission shall be paid directly by the investor to the AMFI Registered Distributor based on the investors assessment of various factors including the services rendered by the AMFI Registered Distributor.
Thank You
A Reliance Capital