1. DSP Index Funds
DSP NIFTY 50 INDEX FUND
DSP NIFTY NEXT 50 INDEX FUND
May 2020
2. 2
Why Passive: Features & Advantages
No human intervention
Lower cost as compared to active mutual funds
Invests in survivors & lets go of losers at every rebalance
1.
2.
3.
Core investment in the investor’s portfolio4.
Complimentary strategy to investor’s active portfolio5.
3. • Introduction of SEBI re-categorization have confined the universe for active large cap fund managers
• Introduction of TRI indices
Why are index funds relevant today?
3
Why are index funds relevant today?
Phase 1: CY 2000 to 2009 – good outperformance in the range of 4.4 to 4.9
Phase 2: CY 2010 to 2019 – visible reduction in the outperformance
3 year daily rolling MF Nifty 50 TRI Alpha
2000 to 2009 25.8 21.3 4.5
2010 to YTD 2020 10.7 10.8 -0.1
5 year daily rolling MF Nifty 50 TRI Alpha
2000 to 2009 28.5 23.6 4.9
2010 to YTD 2020 11.6 11.5 0.1
Source – MFIE. Active funds which have the same performance track record as the Nifty 50 TRI have been taken into consideration for the purpose of this exercise. MF stands for SEBI
defined large cap funds. For MF SEBI defined large cap funds with daily rolling return have been taken into consideration. Data as on 29th May 2020. Past performance may or may not
be sustained in the future and the same should not be used as a basis for comparison with other investments. These figures pertain to performance of the index and do not in any
manner indicate the returns/performance of the Scheme. It is not possible to invest directly in an index.
First Meet the Market, Then try to Beat the Market
Proof
5. 5
Source –NSE
Nifty 50 Explained
LEADERS IN THEIR SECTOR
EXPERIENCED MULTIPLE
BUSINESS & ECONOMIC
CYCLES
History of over 29 years starting from July 19901.
Diversified Index with allocation to top 50 stocks and 14 sectors2.
3.
4.
Follows free float market cap weight methodology to weight constituents
Rebalanced semi annually to capture real trends in the economy
TRUE REPRESENTATION OF
THE ECONOMY
6. 6
Nifty 50 Index has grown ~34 times in the past 30 years
Nifty 50 Index
Rs 1 L
via LUMP SUM
Rs 10,000
via MONTHLY SIP
(invested amount = Rs 35.9L)
Rs 34.34 L
CAGR 12.54%
Rs 2.17 Cr
CAGR 10.26%
Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. These figures pertain to performance of the index and do not in any manner
indicate the returns/performance of the Scheme. It is not possible to invest directly in an index.
Historical Performance: Nifty 50 Index
Source –NSE. Data from 03 July 1990 to 29 May 2020
7. 7
The Nifty 50 Index is well diversified index across sectors and stocks
Sector Weights (%)
Financial Services 33.3
IT 14.7
Oil & Gas 14.3
Consumer Goods 13.4
Automobile 5.5
Telecom 3.6
Pharma 3.3
Construction 2.9
Metals 2.7
Cement & Cement Products 2.4
Power 2.2
Services 0.6
Fertilisers & Pesticides 0.6
Media & Entertainment 0.4
TOTAL 100.0
Top 10 companies
Weights
(%)
Reliance Industries Ltd. 11.9
HDFC Bank Ltd. 10.3
Housing Development Finance Corporation Ltd. 7.2
Infosys Ltd. 6.4
ICICI Bank Ltd. 5.4
Tata Consultancy Services Ltd. 5.2
ITC Ltd. 4.3
Kotak Mahindra Bank Ltd. 4.1
Hindustan Unilever Ltd. 3.7
Bharti Airtel Ltd. 3.1
TOTAL 61.6
Source – NSE. Data as on May 29 2020
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these
sector(s)/stock(s)/issuer(s).
Sectors & Top Stocks: Nifty 50 Index
9. 9
Nifty Next 50 Explained
MEGA CAPS OF
TOMORROW
CAUGHT EARLY
History of over 23 years with a base date of November 19961.
Diversified Index with allocation to next 50 stocks and 15 sectors2.
3.
4.
Follows free float market cap weight methodology to weight constituents
Rebalanced semi annually
Source –NSE
10. 10
Calendar Year
No of stocks moved from Nifty Next 50 to Nifty 50
Index
2014 3
2015 4
2016 3
2017 6
2018 3
2019 1
YTD 2020 1
Source – NSE ; Data as on 29 May 2020
Why invest in Nifty Next 50?
The Nifty Next 50 Index enables an investor to invest in the mega caps of tomorrow as some of the better performing stocks
move from Nifty Next 50 Index to the Nifty 50 Index.
Following are the number of stocks which moved on a Calendar Year basis
Nifty Next 50 index captures mega caps early
11. 11
We conducted a study to analyze the performance of the best performing large cap funds vs. a diversified index with the
following assumptions:
• At the start of every calendar year, an investor would allocate equally amongst the top 5 ranked active large cap funds
based on the past calendar year performance
• This exercise is repeated on an annual basis at the start of every calendar year
Active Large Cap Funds Nifty Next 50 TRI *
Value 6.41 6.53
CAGR 12.8% 12.9%
Investing in Nifty Next 50 index has been in line with the best performing active funds
Data till 29 May 2020 | Source – MFIE, Internal. SEBI defined large cap funds are taken into consideration for the purpose of this study. This study is conducted from the time at least
10 active large cap funds were in existence. Reason to start investment from 2005 is to have 1 year look back performance period to select funds.
Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. These figures pertain to performance of the index and do not in any
manner indicate the returns/performance of the Scheme. It is not possible to invest directly in an index.
* Excluding expense
Why invest in Nifty Next 50? (cont’d)
Value of Rs. 100,000 invested since 2005 In lakhs
12. 12
NIFTY Next 50 Index has grown ~26 times in the past ~23 years
NIFTY Next 50 Index
INR 1 L
via LUMP SUM
INR 10,000
via MONTHLY SIP
(invested amount = Rs 28.2 L)
INR 25.78 L
CAGR 14.83%
INR 1.79 Cr
CAGR 13.58%
Historical Performance: Nifty Next 50 Index
Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. These figures pertain to performance of the index and do not in any manner
indicate the returns/performance of the Scheme. It is not possible to invest directly in an index.
Source – NSE. Data from 03 Dec 1996 to 29 May 2020
13. 13
The Nifty Next 50 Index is well diversified index across sectors and stocks
Sector Weights (%)
Consumer Goods 28.2
Financial Services 27.9
Pharma 15.0
Oil & Gas 5.2
Automobile 4.0
Cement & Cement Products 3.8
Chemicals 3.5
Services 3.0
Metals 1.7
Textiles 1.7
Industrial Manufacturing 1.5
Construction 1.4
Power 1.4
IT 0.9
Telecom 0.7
TOTAL 100.0
Top 10 companies Weights (%)
Avenue Supermarts Ltd. 5.2
HDFC Life Insurance Company Ltd. 4.7
Divi‘s Laboratories Ltd. 4.7
SBI Life Insurance Company Ltd. 4.4
Dabur India Ltd. 4.1
ICICI Lombard General Insurance
Company Ltd.
4.0
Godrej Consumer Products Ltd. 3.7
Pidilite Industries Ltd. 3.5
Aurobindo Pharma Ltd. 3.2
Lupin Ltd. 3.2
TOTAL 40.8
Sectors & Top Stocks: Nifty Next 50 Index
Source – NSE. Data as on 29 May 2020
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
15. 15
Investment Objective
The investment objective of the Scheme is to generate returns that are commensurate with the performance of the
NIFTY 50 Index, subject to tracking error.
There is no assurance that the investment objective of the Schemes will be realized.
Benchmark Nifty 50 Index TRI (Total Returns Index)
Fund Manager Anil Ghelani
Asset Allocation
Under normal circumstances, it is anticipated that the asset allocation of the Schemes shall be as follows:
A. Equity and equity related securities covered by Nifty 50 Index TRI : 95% to 100%
B. Debt and money market instruments*: 0% to 5%.
Exit Load Nil
Minimum Application
Amount (First purchase
& subsequent purchase)
Applicable to both Regular & Direct Plan: For first investment – Rs. 500 and any amount thereafter.
DSP Nifty 50 Index Fund : Scheme Features
* Money Market Instruments will include TREPs, Commercial Paper, Certificates of Deposit, Treasury Bills, Bills Rediscounting, Repos, short term bank deposits, short-term Government
securities and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.
16. 16
Investment Objective
To invest in companies which are constituents of NIFTY Next 50 Index (underlying Index) in the same proportion as in
the index and seeks to generate returns that are commensurate (before fees and expenses) with the performance of the
underlying Index.
There is no assurance that the investment objective of the Schemes will be realized.
Benchmark Nifty Next 50 Index TRI (Total Return Index)
Fund Manager Anil Ghelani
Asset Allocation
Under normal circumstances, it is anticipated that the asset allocation of the Schemes shall be as follows:
A. Equity and equity related securities covered by Nifty Next 50 Index TRI : 95% to 100%
B. Debt and money market instruments* : 0% to 5%.
Exit Load Nil
Minimum Application
Amount (First purchase
& subsequent purchase)
Applicable to both Regular & Direct Plan: For first investment – Rs. 500 and any amount thereafter.
DSP Nifty Next 50 Index Fund: Scheme Features
* Money Market Instruments will include TREPs, Commercial Paper, Certificates of Deposit, Treasury Bills, Bills Rediscounting, Repos, short term bank deposits, short-term Government
securities and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.
17. 17
Who should invest?
First time investors who want to access the equity markets
Investors who want to meet the market at a low cost
Investors looking for a diversified equity exposure
1.
2.
3.
Investors who are looking for positive real return in the long run4.
Seasoned investors looking to add a core allocation to their portfolio5.
18. 18
Fund Manager: Anil Ghelani
Chartered Financial Analyst (CFA Institute USA)
Chartered Accountant (ICAI India)
Bachelors of Commerce, Mumbai University
2003
Anil has been working with DSP Group since 2003 and is currently Head of Passive
Investments & Products. Previously, he served as the Business Head & Chief Investment
Officer at DSP Pension Fund Managers and prior to that leading the Risk and Quantitative
Analysis team at DSP Mutual Fund responsible for monitoring of portfolio risk and buy-side
credit research on companies across various sectors.
Prior to joining DSP, he has worked IL&FS Asset Management Company and at S.R. Batliboi a
member firm of EY. He is currently serving in volunteer capacity as a Director and Vice Chairman
of the CFA Society India.
DSPIM
Head of Passive Investments & Products
Business Head and Chief Investment Officer of DSP Pension Fund Managers Pvt. Ltd.
Head of Risk & Quantitative Analysis (RQA) team
2018 - Present
IL&FS Asset
Management Co.
Education
Worked as a part of Fund Operations
2006 - 2012
2013
2003 - 2005 Joined DSP Investment Managers Pvt Ltd. as an Assistant Vice President in Fund
Administration team
S.R. Batliboi
(member firm of Ernst
& Young)
2000 - 2003 From February 2002 till February 2003 worked as an executive
CA articleship till January 2002
19. 19
Disclaimer:
This presentation / note is for information purposes only. In this material DSP Investment Managers Private Limited (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. While utmost care has been exercised while
preparing this document, the AMC nor any person connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and
damages arising out of the use of this information. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate
professional advice. All opinions, figures, charts/graphs and data included in this presentation are as on May 29, 2020 (unless otherwise specified) and are subject to change
without notice. 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.There is no assurance of any returns/potential/capital protection/capital
guarantee to the investors in this Scheme. For Index disclaimer click here.
The sector(s)/ stock(s)/ issuer(s) mentioned in this presentation do not constitute any research report/ recommendation of the same and the Fund 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. Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments. The figures pertain
to performance of the index and do not in any manner indicate the returns/performance of the Scheme. It is not possible to invest directly in an index.
An investor, by subscribing or purchasing an interest in the Product(s), will be regarded as having acknowledged, understood and accepted the disclaimer referred to in
Clauses above and will be bound by it.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
DSP Nifty 50 Index Fund
An open ended scheme replicating NIFTY 50 Index
DSP Nifty Next 50 Index Fund
An open ended scheme replicating NIFTY Next 50 Index
Product Labelling, Suitability and Disclaimers
