4. I. Access to established Industries and Global
Leaders that may not be available in India
Industries:
Defense / Aerospac Semiconducto Internet and Ecommerce Services
Global Leaders: Some of the world’s biggest public companies are from USA
Source: Forbes 2012, Global 2000, world’s biggest public companies
Listed companies in the US represent 62 different industries. Most of these industries are not available or poorly
represented in the listed space in India.
Source: Credit Suisse. Sectors and Industries forming part of S&P 500 Index
4
5. II. US offers Diversification Benefits
Correlation between Nifty and S&P 500 (Daily returns)
Indian and US markets, signifying potential 1 Year 3 Year 5 Year 10 Year
diversification benefits to Indian investors
Correlation 0.28 0.27 0.30 0.23
Source: Credit Suisse. Correlation is a statistical measure of how two securities/indices
move in relation to each other. Data as on May 31, 2012
Performance of S&P500 in years of high volatility in Nifty
S&P 500 S&P 500* Relative
Year Nifty
the US equity market as compared to the Indian (in USD terms) (in INR terms) Performance
equity market in years of high volatility
2008 -49.88% -38.49% -23.83% 26.05%
2011 -23.88% -0.00% 18.70% 42.58%
Only the years where NIfty has been most volatile in past 10 years are considered. In
other years Nifty might have outperformed S&P 500.
per the rate on the 1st day of 2008 & 2011 respectively and as per the last date of 2008
& 2011 respectively. Source: Bloomberg.
Past performance may or may not be sustained in future.
5
6. III. Size, Scale and Depth
USA has highest share of world’s GDP & the world’s largest Equity Market
US - 33.29% of the world’s
total market capitalisation.
California - largest US state is India - 2.26% of the world’s
as big as India in GDP terms total market capitalisation.
With such size, scale and depth, the movement of US market to a great extent influences global markets.
Source: International Monetary Fund, World Economic Outlook April 2012, Bloomberg. GDP is Gross Domestic Product. 6
7. IV. US – A country of Global Brands
US brands are a part of your daily life
10:00 PM 6:00AM
Entertainment Daily Chores
Sports channel Toothpaste
7:00 PM Shaving Cream
Shopping 7:00 AM
Credit Card Gym / Jog
Running Shoes
Track suit
2:00PM
Presentation/Client Call
8:00AM
Laptop Breakfast
Mobile Phone Cereal
Juice
1:00PM 9:00AM
Lunch meeting Daily update
Burger News paper
French Fries Magazine
7
8. VI. Concluding points
- Why invest in the US?
depth and breadth of the market
half of the MSCI World
index
16 of the 20 largest companies in the world^
more investible companies than any other single country market
diversification across industries
innovative and entrepreneurial
fewer challenges in the US than in other parts of the world, and solutions to key
macroeconomic issues
Source: Bloomberg, Data as on 03/06/12 ^Forming part of the MSCI World Index as on 31/05/2012
8
10. I. Lead Economic Indicators positive
US Unemployment Rate Continuing Jobless claims(in 000s)
12% 7000
10% 6000
8% 5000
4000
6%
3000
4% 2000
2% 1000
0% 0
Mar-67
Mar-70
Mar-73
Mar-76
Mar-79
Mar-82
Mar-85
Mar-88
Mar-91
Mar-94
Mar-97
Mar-00
Mar-03
Mar-06
Mar-09
Mar-12
Mar-48
Mar-52
Mar-56
Mar-60
Mar-64
Mar-68
Mar-72
Mar-76
Mar-80
Mar-84
Mar-88
Mar-92
Mar-96
Mar-00
Mar-04
Mar-08
Mar-12
Unemployment rate fast falling from post crisis high Jobless claims already reaching pre-crisis levels
ISM Manufacturing PMI CEO confidence index (range of 1 to 10)
70 9
60 8
7
50
6
40 5
30 4
20 3
2
10
1
0 0
Sep-10
Sep-11
Sep-07
Sep-08
Sep-09
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Mar-11
Mar-12
Mar-07
Mar-08
Mar-09
Mar-10
Mar-03
Mar-04
Mar-05
Mar-06
Mar -11
Sep-11
Mar -12
Mar -07
Sep-07
Mar -08
Sep-08
Mar -09
Sep-09
Mar -10
Sep-10
Sep-02
Mar -03
Sep-03
Mar -04
Sep-04
Mar -05
Sep-05
Mar -06
Sep-06
A PMI (Purchasing Managers Index) reading of greater than Confidence levels in the country is expected to soon reach
50 is indication of healthy growth in manufacturing pre-crisis levels
business confidence
Source: Bloomberg 10
11. II (a). Corporate America is Healthy
S&P 500 use of free cash flow (% of total) Russell 1000 announced and completed deals
60
125% 50
100% 40
% of FCF
75% 30
50% 20
25% 10
0% 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011P
Acquisitions Share Repurchases Dividends
Source: Mergerstat; Russell Investment Group; Bank of America;
Source: Bank of America Merrill Lynch as of 09/11/11. Merrill Lynch Small Cap Research as of 09/11.
Companies are redeploying cash, signaling confidence in the Merger & acquisition activity is healthy
economy
11
12. II (b). Corporate America is Healthy
companies have started to redeploy it
12
13. III. Triggers for structural growth in US
(a) The Next Middle East
US Natural Gas Prices are lowest on earth US Annual Crude Oil imports (mm barrels)
18
Natural gas ( / MMBtu) 5,500
16 Japan
5,000
14
4,500
12 Europe
4,000
10
3,500
8 UK
3,000
6
US 2,500
4
2,000
2
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Jan-07 Nov-07 Sep-08 Jul-09 May-10 Mar-11 Jan-12
Source: BofA Merrill Lynch Global Research, Bloomberg Source: EIA, BofA Merrill Lynch Global Research
of the source for US manufacturers
13
14. III. Triggers for structural growth in US
(b) A Manufacturing Powerhouse
Global GDP comparisons (2010, nominal U.S.$, billions)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
U.S.
U. K.
Italy
China
India
Japan
France
Spain
Canada
Mexico
Germany
U.S. Mfg.
South Korea
Source: International Monetary Fund, BofA ML research.
were a country
2010 and the 2008 crisis has helped realign labor costs
14
15. III. Triggers for structural growth in US
(c) FDI destination
Foreign direct investment (stock), annual, 1980-2010
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
France Germany Netherlands
Russia UK U.S.
15
16. IV. US market is trading at a discount
P/E E arget
29.0x
24.0x
19.0x
13.7x 14.3x
14.0x
13.0x
9.0x
4.0x
1/00 1/01 1/02 1/03 1/04 1/05 1/06 1/07 1/08 1/09 1/10 1/11 1/12 1/13
.
valuations
debt
Source: J.P. Morgan, FactSet, and Dataquery
16
17. V. Valuations are more attractive than in 2004
+1 std dev -1 std dev
Stocks cheap 1.75
1.65
1.25
0.75
0.25
-0.25
-0.75
-1.25
-1.75
Stocks -2.25
expensive -2.75
1/87 1/89 1/91 1/93 1/95 1/97 1/99 1/01 1/03 1/05 1/07 1/09 1/11 1/13
. 1.65 standard
average is even larger than in 2004…
Source: J.P. Morgan, FactSet, and Dataquery
17
18. VI. A compelling long term investment
opportunity
US Large Cap Common Stock –
10 Year Compounded Returns Annualized (1835 to 31/03/11)
25% bullish equity
sentiment
20%
15%
10%
5%
bearish equity
sentiment
0%
-5%
1835 1860 1885 1910 1935 1960 1985 2010
strong performance and increased their equity allocation after 10 years of weak performance
Source: Empirical Research and FactSet
18
19. VII. Resilience of US markets rewards
long-term investors
A look at historical events in the US equity market (S&P 500) between 1980 - 2010 and the corresponding compounded
return generated shows that:
and financial crisis
level issues
Past performance may or may not be sustained in future.
Source: Bloomberg
19
21. I. About the Scheme
exchanges of the United States of America
for research services on US stock selection
21
22. II. Stock Selection Process
Broad universe
of stocks listed
on NYSE &
Independent internal
research (quantitative and
qualitative) and inputs
from other external
research agencies to
arrive at final
Equity concentrated portfolio of
research from 25-40 bluechip stocks
Morningstar
22
23. III. Use Rupees to buy shares in US companies
Indian mutual fund
ICICI Prudential US Bluechip Equity Fund for a high conviction US Bluechip portfolio
23
24. V. The Investment Process Flow
India Day T and T+1
India Day T 7.30 PM 2.30 AM India Day T+2
9.00 A 3.00 PM (NASDA / NYSE Market ours) 9.00 A 3.00 PM
Investors submit Based on available funds / FX rate will be fixed by
request for investment report, the Fund the FM for purchase
purchase or Manager (FM) shall place purchase / orders and accordingly
redemption of sell orders with broker(s). Orders funds will be remitted
units at official then will be queued for execution to the custodian for
acceptance points wire to USD account
India Day T + 3 and T+4
7.30 PM 2.30 AM India Day T +5
(NASDA / NYSE Market ours) 9.00 A 3.00 PM
Settlement of deals based on the Monies for
purchase / sell trades executed in US redemption
market. FX rate will be fixed by the request will be
FM for sell orders and accordingly credited to
funds will be wired from USD Investor Account
account to INR account
24
25. VI. Scheme Features
Options Regular option with Growth & Dividend sub-option with Dividend payout and
Dividend reinvestment facility
Minimum Application Amount ` 5,000 (plus in multiples of ` 1)
Minimum Additional
Application Amount ` 1,000 (plus in multiples of ` 1)
Minimum Redemption Amount ` 500 (plus in multiples of ` 1)
Entry Load Not Applicable
Exit Load For redemption/switch-out of units within 3 months (including the 3% of the
last day of the third month) from the date of allotment applicable NAV
For redemption/switch-out of units after 3 months but before 1 1% of the
year (including the last day of a year) from the date of allotment applicable NAV
For redemption/switch-out of units after 1 year from the date of Nil
allotment
Benchmark Index S&P 500
25
26. Risk Disclosures and Disclaimers
Disclaimer: ICICI Prudential Mutual Fund (the Fund) has used information that is publicly available, including information developed in-house.
Some of the material used in the document may have been obtained from members/persons other than the Fund and/or its affiliates and which
may have been made available to the Fund and/or to its affiliates. Information gathered and material used in this document is believed to be from
any third party in this material no such party will assume any liability for the same. We have included statements/opinions/recommendations in this
document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions,
which are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk
or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political
conditions in India and other countries globally, which have an impact on our services and / or investments, the monitory and interest policies of
India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance
of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the
industry. All data/information used in the preparation of this material is specific to a time and may or may not be relevant in future post issuance of
Document and Key Information Memorandum, contact your financial advisor or log onto www.icicipruamc.com or visit any of the branches of the
of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising
from the use of this material in any
material.
Mutual Fund in them.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
26
