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Celebrating 20
years*of Prudent
investing
Launched as Centurion Prudence Fund in January 1994, it was renamed as Zurich India Prudence Fund
and finally HDFC Prudence Fund in June 2003.
HDFC Prudence Fund is today the largest balanced Fund in India with a AUM of ~ INR 7000 crores as
on 30th September, 2014 and ~ 3 lac investors
In this journey of over 20 years, Rs 10,000 has become ~Rs 4.5 lacs (~45 times) at CAGR of ~20.3%
Our sincere thanks to all investors, distributors, well wishers etc. in making this possible
A special thanks to 2,500 investors who have stayed with us right through this 20 year journey
**
Albert Einstein
* Source: AMFI - Average AUM : Rs 7,058 crs (July Sep 2014), ** Past performance may or may not be sustained in Future, Refer Slide No. 16
A disciplined approach to investing with a long term focus has enabled HDFC Prudence Fund
to weather all of the above and generate ~20.3%* CAGR over 20 years
* Past performance may or may not be sustained in Future, Refer Slide No 16
0.67 lacs
0.49 lacs
Sensex Levels
~4,000
~5,000
~10,000
~20,000
~9,000
~20,000
~27,000
Reference made to SENSEX in this slide is only for easy understanding of market movement. The Benchmark for this FUND
is CRISIL Balanced Fund Index. * Past performance may or may not be sustained in Future, Refer Slide No 16
Equity strategy
Debt Strategy
Portfolio duration is actively managed based on outlook for interest rates with a 2-3 year view
Strong preference for good credit quality
For details on Investment Strategy refer Scheme Information Document available on www.hdfcfund.com
Consistent dividends
In last 15 years
1999
2000
2001
2002
2003
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2.0
1.5
0.9
1.0
2.0
3.0
1.5
5.0
5.0
5.0
5.0
2.5
3.5
3.5
3.5
3.0
3.0
17.7
15.2
12.7
13.9
18.7
23.7
20.2
25.3
30.5
32.5
33.5
17.4
31.2
31.3
29.5
27.5
25.7
11
10
11
13
20
16
15
15
14
11
11
12
11
12
^ Past performance may or may not be sustained in the future. There is no assurance or guarantee to Unit holders as to rate/quantum of dividend distribution nor that the
dividends will be paid regularly
All dividends are on face value of Rs. 10 per Unit. After payment of the dividend, the per Unit NAV falls to the extent of the payout and statutory levy, if any. Please log on to
www.hdfcfund.com for Record Date-wise listing of dividends declared.
GDP growth, CAD, Fiscal deficit (FD), IIP, CPI, WPI are showing encouraging trend
A strong, pro economy, pro business government bodes well for economy and for businesses
Recent sharp fall in crude oil prices, should lead to sharply lower CAD, FD and inflation
Source : Citi Research, Internal estimates, Colored rows refer to yearly data; other represent quarterly data
45
Roll PE (LHS)
40
22.0
**
run up
30,000
Average (LHS)
SENSEX (RHS)
25,000
**
35
30
20.0
20,000
25
18.0
15,000
20
15
10,000
10
16.0
5,000
5
14.0FY
93
0
95
Source : BAML
97
99
01
03
05
07
09
11
13
0
91
93
95
97
99
01
03
05
07
09
11
13
Source : CLSA
Reasonable P/Es at cyclically low margins leads to positive outlook for equities
Reference made to S&P BSE SENSEX in this presentation is only for easy understanding of market movement and must not be construed as future performance of
S&P BSE SENSEX. The Benchmark for this fund is Crisil Balanced Fund Index. Refer Disclaimer / Risk Factors on Slide 20
Falling fiscal deficit, low CAD, falling inflation and likely further fall in inflation should lead to
lower rates
Past
Future
INR depreciation
Stable INR
Stable prices
(Source : CLSA)
Interest rates are near peak and are likely to come down in medium term
HDFC Prudence Fund, offers a simple solution to benefit from both equities and bonds
Leonardo da Vinci
10
Debt %
Value at Year
10
100
404
15.0
80
20
367
13.9
60
40
328
12.6
40
60
291
11.3
20
80
253
9.7
100
216
8.0
CAGR (%)
For illustration purposes only. For calculation purpose CAGR returns for equities has been taken as 15% CAGR and for debt as 8% CAGR.
In India, household allocation to equity funds is minimal, there is a strong case to increase it.
11
11
1 Year
49
57
65
76
89
96
4
3 Years
46
63
75
96
100
100
0
5 Years
55
81
96
100
100
100
0
10 Years
83
100
100
100
100
100
0
15 Years
94
100
100
100
100
100
0
20 Years
56
100
100
100
100
100
0
It can be clearly seen, that as the holding period increases, return profile improves
This is consistent with the belief that equities are a long term asset class and that risk reduces as holding
period increases
12
12
2004
H
D
F
E
B
C
A
I
G
J
2005
H
D
G
F
I
E
B
A
C
J
2006
G
A
B
I
C
H
F
D
E
J
2007
H
B
A
I
F
D
J
C
E
G
2008
E
G
J
F
B
C
A
D
I
H
2009
D
H
F
A
J
E
C
I
G
B
2010
D
E
F
C
G
J
A
H
B
I
2011
E
C
J
B
G
A
F
D
H
I
2012
H
A
D
F
J
G
B
E
I
C
2013
G
A
J
C
F
D
B
E
I
H
The above data illustrates the calendar year performance of 10 largest diversified Equity /
Balanced funds as on Dec 31, 2013 for last 10 years
It is evident that flavor of the season investing does not work. There is merit in sticking
with funds that have a disciplined approach to investments and have performed
across cycles
If investing is entertaining, if you're having fun, you're probably not making any money.
George Soros
13
Equity valuations are attractive and interest rates are likely to come down in medium term
HDFC Prudence Fund, a balanced fund with a track record of 20 years across several cycles,
across good and bad times, is well positioned to benefit from improving economic environment,
and from positive outlook of equities and bonds
14
Performance
(As on September 30, 2014)
Slide 15
15
Product Features
Type of Scheme
Inception
allotment)
Date
of
February 1, 1994
Investment Objective
To provide periodic returns and capital appreciation over a long period of time from a judicious mix of equity
and debt investments with an aim to prevent / minimise any capital erosion
Fund Manager $
Investment Plan
Investment Option
Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility.
Load Structure
Entry Load:
Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI
registered Distributor) based on the investors assessment of various factors including the service
rendered by the ARN Holder.
Exit Load:
In respect of each purchase / switch in of units, an exit load of 1.00% is payable if units are
redeemed / switched out within 18 months from the date of allotment.
No exit load is payable if units are redeemed / switched out after 18 months from the date of
allotment.
For further details on load structure, please refer to the Scheme Information Document / Key Information
Memorandum
of the Scheme.
Benchmark
Type of the
Instruments
Minimum
Allocation
(% of Net Assets)
Maximum
Allocation
(% of Net Assets)
40
75
High
Debt
Securities
and money market
instruments*
25
60
Low to Medium
*Investment in Securitised debt, if undertaken, would not exceed 10% of the net assets of the Scheme.
The scheme may seek investment opportunity in the ADR / GDR / Foreign Equity and Debt Securities (max. 40% of net assets) subject to SEBI (Mutual Funds)
Regulations, 1996. The scheme may use derivatives mainly for the purpose of hedging and portfolio balancing (max 25% of net assets) based on the
opportunities available subject to SEBI (Mutual Funds) Regulations, 1996.
18
18
Glossary
CAD
FD
Fiscal Deficit
GDP
MSP
EBITDA
19
Thank You
20
20
DISCLAIMER
The views expressed herein are based on the basis of internal data, publicly available information and other
sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which
you must confirm before relying on them. The information contained in this document is for general purposes
only and is not an offer to sell or a solicitation to buy/sell any mutual fund units/securities. The document is
given in summary form and does not purport to be complete. The document does not have regard to specific
investment objectives, financial situation and the particular needs of any specific person who may receive this
document. The information/ data herein alone are not sufficient and should not be used for the development or
implementation of an investment strategy. The same should not be construed as investment advice to any
party. The statements contained herein are based on our current views and involve known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those
expressed or implied in such statements. Neither HDFC Asset Management Company (HDFC AMC) and
HDFC Mutual Fund (the Fund) nor any person connected with them, accepts any liability arising from the use
of this document. The recipient(s) before acting on any information herein should make his/her/their own
investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any
decision taken on the basis of information contained herein.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME
RELATED DOCUMENTS CAREFULLY.
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