Collecting banker, Capacity of collecting Banker, conditions under section 13...
DSP Equity & Bond Fund
1. [Title to come]
[Sub-Title to come]
Strictly for Intended Recipients OnlyDate
* DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class
March 2020
| People | Processes | Performance |
DSP Equity & Bond Fund
2. 2
How equity & debt perform during various market phases?
Huge diversion in performance between equity & debt across market cycles
Period
Nifty 50
TRI
CRISIL 10
Year Gilt
Index
Returns
Differential
Feb-08 to
Mar-09
-38% 8% -46%
Nov-10 to
Dec-11
-21% 4% -25%
Mar-15 to
Feb-16
-21% 7% -28%
Period
Nifty 50
TRI
CRISIL 10
Year Gilt
Index
Returns
Differential
Jan-04 to
Jan-08
30% 3% 27%
Apr-09 to
Oct-10
55% 3% 53%
Jan-12 to
Feb-15
24% 8% 16%
Mar-16 to
Jan-18
26% 6% 20%
Bull Phase Bear Phase Calendar Year
Source: AMFI Website. Data as on 31 March 2020. Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is
not possible to invest directly in an index. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments.
Calendar
Year
Nifty 50
TRI
CRISIL 10
Y Gilt
Returns
Differential
2004 13% -5% 18%
2005 39% 4% 35%
2006 42% 5% 37%
2007 57% 6% 50%
2008 -51% 28% -79%
2009 78% -9% 86%
2010 19% 3% 16%
2011 -24% 2% -26%
2012 29% 11% 19%
2013 8% -1% 9%
2014 33% 14% 19%
2015 -3% 7% -10%
2016 4% 15% -11%
2017 30% 0% 30%
2018 5% 6% -1%
2019 13% 10% 3%
YTD2020 -29% 5% -34%
CAGR 11% 6% 5%
3. 3
Performance outcomes from different combination of equity & debt
Mixing debt & equity (hybrid funds) has the potential to provide a smoother investor experience
11.1%
10.4%
9.8%
9.1%
Source: AMFI website. Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an
index. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. Data as on 31st March 2020. The figure mentioned for
performance of the index should not construe as returns/performance of the Scheme. It is not possible to invest directly in an index.
NIFTY 50 Hybrid Composite
Debt 65:35 Index
NIFTY 50 Hybrid Short
Duration Debt 25:75 Index
NIFTY 50 Hybrid Composite
Debt 50:50 Index
Nifty 50 TRI
CAGR 10.35% 9.14% 9.79% 11.13%
Standard Deviation 14.86% 5.85% 11.52% 22.97%
Return per unit of risk 0.70 1.56 0.85 0.48
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Jan-04
Jun-04
Nov-04
Apr-05
Oct-05
Mar-06
Aug-06
Jan-07
Jul-07
Dec-07
May-08
Oct-08
Apr-09
Sep-09
Feb-10
Jul-10
Jan-11
Jun-11
Nov-11
Apr-12
Oct-12
Mar-13
Aug-13
Jan-14
Jul-14
Dec-14
May-15
Oct-15
Apr-16
Sep-16
Feb-17
Jul-17
Jan-18
Jun-18
Nov-18
May-19
Oct-19
Mar-20
NIFTY 50 Hybrid Composite Debt 65:35 Index NIFTY 50 Hybrid Composite Debt 50:50 Index
NIFTY 50 Hybrid Short Duration Debt 25:75 Index Nifty 50 TRI
4. 4
Hybrid Funds reduce volatility during investment journey
Volatility reduction gives investors confidence to stay invested in order to capture upsides
Positive difference between volatility of Nifty 50 TRI & CRISIL Hybrid 35+65 - Aggressive Index
Source: AMFI website Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. Data as on 31st March
2020. The figure mentioned for performance of the index should not construe as returns/performance of the Scheme. It is not possible to invest directly in an index.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Apr-03
1 Year Rolling Std. Dev of Nifty 50 TRI – 1 year Rolling Std. Dev of CRISIL Hybrid 35+65 - Aggressive Index
5. 5
What is DSP Equity & Bond Fund?
AGGRESSIVE
HYBRID
FUND
INVESTS IN A MIX OF
EQUITY & DEBT
Equities for capital
appreciation
Debt for income
generation
AUTO REBALANCING
Portfolio rebalanced by
the manager to
maintain the ~ 65 - 35
equity to debt
allocation.
INVESTMENT
FRAMEWORK
Equity: Seeks long term
growth opportunities
across market caps
Debt: Highly rated debt
instruments with short
term maturity profile
TAX EFFICIENT
Min 65% investment in
equity makes the fund
eligible for equity
taxation
Rebalancing between
equity and debt
without tax incidence
Mix of equity & debt aims to provides capital appreciation with volatility reduction
6. 6
Why invest in DSP Equity & Bond Fund?
CORE
PORTFOLIO
ALLOCATION
With long term track
record of existence since
1999, the fund has gone
through various market
cycles
Combines capital
appreciation potential
with income generation
and volatility reduction
Equity + Debt mix helps
potentially smoothen
investment experience
Suitable for both new
and experienced
investors to seek growth
across market cycles
LONG TERM INVESTMENT
TRACK RECORD*
ONE STOP SOLUTION
FOR INVESTORS
SUITABLE FOR A LARGE
VARIETY OF INVESTORS
Suitable for the core long term portfolio allocation in an investment portfolio
* Inception date of DSP Equity & Bond Fund is May 27, 1999
7. Business
Management
Growth
7
Equity & Debt Investment Framework
ASSET ALLOCATION REVIEW & REBALANCING
Robust investment framework followed for equity and debt investment
Debt
~ 35%
Equity
> 65%
Equity Investment Framework
Debt Investment Framework
Minimize interest
rate and credit risk
Holds high quality
short term debt
instruments
Active portfolio rebalancing:
When equity allocation goes below 65%
When debt allocation goes above 35%
=> Buy low Sell high built into product
SECURITY SELECTION
Source: Internal
8. 8
Equity Investment Framework
Business
Management
Growth
STOCK SELECTION
Framework for identifying
quality businesses
PORTFOLIO CONSTRUCTION
Core
portfolio
Tactical
portfolio
Core portfolio of quality businesses
based on long term themes
REVIEW & REBALANCING
Stock
prices
Competitive
positioning of quality
businesses
Use market corrections to add to
quality business at lower prices
Buy quality businesses, stay invested and use market corrections to average down costs
9. 9
Debt Investment Framework
Impact on Yield Curve
The frameworks helps make an informed decision on the rate cycle
Domestic
Macros
Global
Macros
M.I.P. Framework *
(Understand the relationship between factors)
* M = Macro Stability
I = Impact
P = In the price
10. 10
Debt framework – M.I.P.* in detail
FISCAL
DEFICIT Liquidity
Macro Stability Impact In the Price
CURRENT ACCOUNT DEFICIT
INFLATION
GROWTH
GLOBAL SCENARIO
Demand –Supply (of Bonds)
Currency
Repo
Vs
1 year Treasury bill
10 Year Benchmark
Yield Curves
1
3
4
2
1. With the intent to keep fiscal and CAD are under control
2. Interest rates would bear lesser upside risks from inflation and growth
3. Global scenario can have a bearing on the currency; triggering central bank to control momentum of the currency trend
4. Extent of central bank intervention has a bearing on currency thereby impacting liquidity conditions
* M = Macro Stability, I = Impact, P = In the price
11. 11
Fund Managers
EQUITY & EQUITY
RELATED SECURITIES
INCL. DERIVATIVES
(65% – 75%)
Seek Capital
appreciation plus
Income
DEBT & MONEY
MARKET (MM)
INSTRUMENTS
(25%-35%)
Seek Income
Atul Bhole - Portfolio Manager
for equity allocation
• 14 year experience in fund
management and equity research
• Masters in Mgmt. Studies from JBIMS
and has cleared his CA exams.
Vikram Chopra - Portfolio Manager
for debt & money market allocation
• 17 year experience in fund management
• Masters in Mgmt. Studies (PGDM) and
Bachelors in Commerce (Hons)
DESCRIPTION, PORTFOLIO MANAGERS
12. 12
How DSP Equity & Bond Fund fared over a period of time?
Asset allocation + Stock selection = Significant alpha generation + volatility reduction
Source: Internal, AMFI Website. Click here for performance in SEBI prescribed format and of other schemes managed by Fund Managers. Past performance may or may not sustain in future and
should not be used as a basis for comparison with other investments. Data as on 31st Mar 2020. The figure mentioned for performance of the index should not construe as returns/performance
of the Scheme. It is not possible to invest directly in an index.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
DSP Equity & Bond Fund - Growth
CRISIL 10 Y Gilt
Nifty 50 TRI
CRISIL Hybrid 35+65 - Aggressive Index
DSP Equity & Bond Fund Nifty 50 TRI CRISIL 10 Year Gilt Index
CRISIL Hybrid 35+65 -
Aggressive Index
CAGR 15.57% 13.53% 6.90% 12.39%
Standard Deviation 14.41% 22.54% 6.07% 14.57%
Return Per unit of Risk 1.08 0.60 1.14 0.85
13. 13
Performance Scorecard
Source: MFIE; Rolling Returns of DSP Equity & Bond Fund are shown as on March 31, 2020 for Growth Option and Regular Plan. Rolling frequency is daily. Standard Deviation of DSP Equity & Bond Fund and
CRISIL Hybrid 35+65 - Aggressive Index is calculated on the basis of daily returns. Benchmark values are available only since March 28, 2002 hence since inception return for benchmark is not available and
rolling returns are calculated from benchmark inception date. Click here for performance in SEBI prescribed format and of other schemes managed by Fund Managers. Past performance may or may not
sustain in future and should not be used as a basis for comparison with other investments. The figure mentioned for performance of the index should not construe as returns/performance of the Scheme.
It is not possible to invest directly in an index.
DSP Equity & Bond Fund aims to provide better risk adjusted returns profile across periods
ROLLING RETURNS
DSP Equity &
Bond Fund
CRISIL Hybrid 35+65 -
Aggressive Index
DSP Equity &
Bond Fund
CRISIL Hybrid 35+65
- Aggressive Index
DSP Equity &
Bond Fund
CRISIL Hybrid 35+65
- Aggressive Index
DSP Equity &
Bond Fund
CRISIL Hybrid 35+65
- Aggressive Index
Average Annual Returns 20.0 15.8 17.6 14.1 16.4 13.2 15.0 12.3
Median Annual Returns 16.8 13.6 15.1 12.2 14.7 12.4 14.5 11.9
Minimum Annual Returns -39.9 -41.4 -2.8 -2.8 3.0 2.7 7.6 6.8
Maximum Annual Returns 89.6 74.8 51.1 40.1 42.5 32.1 22.7 17.1
Returns / Risk 1.30 1.09 1.14 0.97 1.06 0.90 0.98 0.84
1 YEAR ROLLING RETURNS (%) 3 YEARS ROLLING RETURNS(%) 5 YEARS ROLLING RETURNS (%) 10 YEARS ROLLING RETURNS (%)
TIME PERIOD DSP Equity & Bond Fund
CRISIL Hybrid 35+65 - Aggressive
Index
ALPHA
1 year -12.1 -12.9 0.8
3 years 0.5 1.9 -1.4
5 years 4.4 4.5 -0.1
10 years 8.3 7.6 0.7
Since Inception 13.2 NA NA
POINT TO POINT RETURNS
14. 14
Performance Scorecard
DSP Equity & Bond Fund aims to provide better risk adjusted returns profile across periods
AVERAGE ROLLING RETURNS
RETURN PER UNIT OF RISK
Source: MFIE; Rolling Returns of DSP Equity & Bond Fund are shown as on March 31, 2020 for Growth Option and Regular Plan. Rolling frequency is daily. Standard Deviation of DSP Equity &
Bond Fund and CRISIL Hybrid 35+65 - Aggressive Index is calculated on the basis of daily returns. Benchmark values are available only since March 28, 2002 hence since inception return for
benchmark is not available. Click here for performance in SEBI prescribed format and of other schemes managed by Fund Managers. Past performance may or may not sustain in future and
should not be used as a basis for comparison with other investments. The figure mentioned for performance of the index should not construe as returns/performance of the Scheme. It is not
possible to invest directly in an index.
20.0
17.6
16.4
15.015.8
14.1
13.2
12.3
0.0
5.0
10.0
15.0
20.0
25.0
1 yr RR 3 yr RR 5 yr RR 10 yr RR
DSP Equity & Bond Fund CRISIL Hybrid 35+65 - Aggressive Index
1.30
1.14
1.06
0.98
1.09
0.97
0.90
0.84
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1 yr RR 3 yr RR 5 yr RR 10 yr RR
DSP Equity & Bond Fund CRISIL Hybrid 35+65 - Aggressive Index
15. 15
Portfolio Asset Allocation – Equity v/s Debt
DSP Equity & Bond Fund has been keeping higher equity exposure
Source: MFIE; Portfolio data as on March 31, 2020. The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may
not have any future position in these sector(s)/stock(s)/issuer.
ASSET ALLOCATION TREND (%)
Average Equity
Allocation: 74%
Average Debt
Allocation: 24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Equity Debt Others
16. 16
Equity Portfolio details – sector exposure
Significant exposure in Financials and Materials during Atul’s tenure
Source: MFIE; GICS Classification has been considered for sectoral break-up. Portfolio data as on March 31, 2020. The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute
any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer | More than 10% allocation highlighted in Orange and more than
5% allocation highlighted in grey
Sectors Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Mar-20
Energy 5.0% 5.6% 3.8% 3.4% 0.4% 2.2%
Materials 12.5% 10.2% 12.9% 11.7% 8.8% 8.6% 7.6% 8.5% 12.3%
Industrials 8.1% 14.1% 13.3% 11.9% 11.5% 10.1% 8.0% 6.3% 5.9%
Consumer Discretionary 10.2% 7.9% 7.7% 10.7% 11.8% 9.3% 7.2% 7.6% 5.7%
Consumer Staples 4.5% 5.1% 5.6% 3.6% 5.4% 6.3% 7.7% 5.6% 5.2%
Healthcare 5.3% 4.1% 1.6% 3.6% 5.0% 5.8% 5.6% 5.8% 7.2%
Financials 20.2% 19.2% 24.1% 21.1% 24.8% 26.0% 30.0% 31.4% 27.1%
Information Technology 4.6% 2.9% 1.1% 0.8% 5.5% 6.1% 6.6% 3.8% 3.3%
Communication Services 1.0% 1.4% 3.2%
Utilities 2.3% 3.6% 2.5% 3.8% 0.8% 0.5% 0.7%
Real Estate 1.8% 1.3%
Total Equity 72.8% 72.7% 72.7% 71.6% 74.1% 72.7% 73.4% 74.3% 71.2%
17. 0%
20%
40%
60%
80%
100%
MARKET CAP BREAK UP
Large Cap Mid Cap Small Cap
17
Equity Portfolio details – concentration and market cap trends
Increase in stock & sector concentration during Atul’s tenure
Source: MFIE; Portfolio data as on March 31, 2020. The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not
have any future position in these sector(s)/stock(s)/issuer. Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 stocks, small-caps 251 stock onwards.
53%
17%
5%
51%
4%
5%
27%
47%
58%
10%
20%
30%
40%
50%
60%
70%
SECTOR CONCENTRATION TRENDS
Top Sector Top 3 Sector Top 5 Sector
23%
36%
48
0
10
20
30
40
50
60
70
10%
15%
20%
25%
30%
35%
40%
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
STOCK CONCENTRATION TRENDS
Top 5 stocks (LHS) Top 10 stocks (LHS) Total No of stocks
18. 18
Equity Top Holdings as on March 31, 2020
Source: Internal. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The sector(s)/stock(s)/issuer(s) mentioned in this
presentation do not constitute any research report/recommendation of the same and may or may not have any future position in these sector(s)/stock(s)/issuer(s).
TOP 5 STOCKS
PORTFOLIO
WEIGHT (%)
BUSINESS MANAGEMENT GROWTH COMMENTS ON VALUATION
HDFC BANK
LIMITED
6.28
Strong process driven
organization
Optimal mix of profitable
retail segment
Focused on profitable
growth
Prudent in credit quality
and ALM management
Advances growth
expected to be better
than industry average
Visibility of earnings
growth for next 2 years
Long term valuation
reasonable &
compounding of
earnings provides
comfort
ICICI BANK
LIMITED
5.18
Right mix of retail &
corporate loan
Strong franchise in terms
of distribution branch
network
Focused on profitable
growth
Advances growth
expected to be better
than industry average
Visibility of earnings
growth for next 2 years
Core banking business
attractively valued with
probability of rerating
BAJAJ FINANCE
LIMITED
4.95
Spread across 20 sub
verticals
First mover advantage
from huge investments in
technology & analytics
Opportunity in retail credit
market
Strong execution
capabilities
Product launches at regular
intervals
Prudent in credit quality
and ALM management
AUM growth of > 40% in
last 3 years
Growth visibility @ 25%
given the opportunity
size
Compounding of
earnings justifies current
valuation
KOTAK
MAHINDRA
BANK LIMITED
3.76
Conservative lending with
prudent risk management
Long runway for growth
given opportunity size and
size of bank
Conservative Management Offers steady &
predictable growth
Predictability & long
runway for growth
justifies valuation over
medium to long term
BHARTI AIRTEL
LIMITED
3.25
Built and preserved
formidable telecom franchise
across voice & data defying
severe competition pressures
Capex intensive business
model offering huge
operating leverage
Strong and able Management
Focused on costs, continuous
investments in network &
timely fund raisings which
helped company to survive
and take advantage of
eventual consolidation
Profit & cashflow growth
expected to pick up
sustainably due to sector
consolidation
Tariff hikes & volume gains
expected to drive profits &
cashflows
Very good turnaround
opportunity after 10 years
of fierce competition and
eventual sector
consolidation
APPLYING THE INVESTMENT FRAMEWORK IN STOCK SELECTION & PORTFOLIO CONSTRUCTION
Investment framework is the key driver for building portfolio positions
19. 19
Debt Portfolio details
DSP Equity & Bond Fund has invested in highly rated instruments
Source: MFIE; Portfolio data as on March 31, 2020. The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not
have any future position in these sector(s)/stock(s)/issuer. Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 stocks, small-caps 251 stock onwards.
RATING PROFILE MATURITY PROFILE
TOP 5 HOLDING QUANTITATIVE INFORMATION
NAME OF INSTRUMENT CREDIT RATING
% OF NET
ASSETS
7.27 GOI Apr 8 2026 Sovereign 4.9%
8.85 HDFC Bank Ltd. AA+ 3.1%
7.59 GOI Jan 11 2026 Sovereign 2.2%
7.32 GOI Jan 28 2024 Sovereign 1.5%
8.6 Bank of Baroda AA+ 1.4%
0
5
10
15
20
25
30
Sovereign AAA & Equivalent AA & Equivalent A & Equivalent BBB- BB D
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0
1
2
3
4
5
6
7
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Average Maturity (yrs) YTM
Mar-20
Average Maturity (yrs) 3.71
Modified Duration (yrs) 2.92
YTM 6.54%
20. 20
Disclaimer & Product Labeling Details
In this material DSP Investment Managers Pvt. Ltd. (the AMC) has used information that is publicly available, including information developed in-house. Information gathered and used in this material is
believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. The data/statistics are given to explain general market
trends in the securities market, it should not be construed as any research report/research recommendation. 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 that 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 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 monetary and interest policies of India, inflation, deflation, unanticipated turbulence in
interest rates, foreign exchange rates, equity prices or other rates or prices etc. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of
the same and may or may not have any future position in these sector(s)/stock(s)/issuer(s). The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of
the scheme. Please refer to the SID for investment pattern, strategy and risk factors. Past performance may or may not sustain in future and should not be used as a basis for comparison with other
investments. For Schemes Performance in SEBI prescribed format refer annexure as attached with this presentation. All figures and other data given in this document are as on March 31st, 2020 (unless
otherwise specified) and the same may or may not be relevant in future and the same should not be considered as solicitation/ recommendation/guarantee of future investments by the AMC or its
affiliates. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of DSP Mutual
Fund. For scheme specific risk factors and more details, please read the Scheme Information Document, Statement of Additional Information and Key Information Memorandum of respective Scheme
available on ISC of AMC and also available on www.dspim.com. For Index disclaimer click here
The distribution of this material in certain jurisdictions may be restricted or subject to registration requirements and, accordingly, persons who come into possession of this material in such jurisdictions are
required to inform themselves about, and to observe, any such restrictions
Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 , small-caps as 251 and above.
The strategy mentioned has been currently followed by the Scheme and the same may change in future depending on market conditions and other factors
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
*Investors should consult their financial advisors if in doubt about whether the Scheme is suitable for them.
Scheme Product Suitability Riskometer
DSP Equity & Bond Fund
(An open ended hybrid scheme investing
predominantly in equity and equity related
instruments)
The Open ended aggressive hybrid scheme is suitable for investors who are seeking*
Capital growth and income over a long-term investment horizon
Investment primarily in equity/equity-related securities, with balance exposure in
money market and debt securities