Mutual Fund Review - ICICI Directcontent.icicidirect.com/mailimages/ICICIdirect_MonthlyMFReport_Jul… · HDFC MF Reliance MF Ipru MF Birla Sunlife MF UTI MF SBI MF Franklin Tempelton

Mutual FundReview

October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund

November 19, 2009 | Mutual Fund Mutual Fund Review

ICICI Securities Ltd. | Retail MF Research

Note: Whenever, returns for the scheme are shown in the report, they are for the growth option of the scheme.

Mutual Fund Review

Equity Markets....................................................................................................2

Debt Markets ......................................................................................................3

MF industry synopsis .........................................................................................4

MF Category Analysis ........................................................................................5

Equity funds ................................................................................................... 5 Equity diversified funds .................................................................................... 6 Equity infrastructure fund ................................................................................. 7 Equity Banking Funds ....................................................................................... 7 Equity FMCG...................................................................................................... 7 Equity Pharma Funds ........................................................................................ 8 Equity Technology Funds ................................................................................. 8

Exchange Traded Funds (ETF).......................................................................... 9

Balanced Funds ............................................................................................... 10 Monthly Income Plans (MIP)........................................................................... 10 Arbitrage Funds............................................................................................... 11 Debt funds ....................................................................................................... 12

Union Budget 2014 : Change in debt funds taxation ................................. 13 Liquid Funds .................................................................................................... 14 Income funds................................................................................................... 16 Gilt Funds 17 Gold ETFs: International prices continue to trade with negative bias… ...... 18

Model Portfolios .............................................................................................19

Equity funds model portfolio....................................................................... 19 Debt funds model portfolio ......................................................................... 20

I direct Top Picks ............................................................................................21

July 22, 2014


Page 2

Equity Markets Update

Domestic equity markets continued to scale new highs and crossed 26000 levels on the S&P BSE Sensex and 7700 levels on the CNX Nifty on optimism the new government will take concrete policy action to improve economic growth

The Union Budget, unarguably the most anticipated in recent times, highlighted the structural reforms including increase in FDI in defence & insurance, private sector participation in railways, indication at GST rollout, commitment to no retrospective taxation and tax induced benefits to select sectors such as power, manufacturing, REITs and soaps for infrastructure development among others

Execution is key to the pace of improvement in the economy in terms of the various infrastructure projects getting implemented on the ground. History and the policy announcement so far in the short tenure of the BJP led government has infused confidence among investors with respect to execution and the resultant improvement in corporate earnings, going forward

Overall, the Budget has amply addressed the strategic need to improve the investment climate by emphasising on measures to create a framework for low & stable inflation, setting fiscal deficit on a sustainable path through tax and expenditure reforms and setting up a broad based inclusive growth framework for a sustainable market economy

Foreign institutional investors continue to be major drivers for the markets as they bought equities worth more than | 70000 crore in the calendar year 2014 so far

Outlook

The Union Budget has provided a road map for economic revival by channelising domestic savings into long term infrastructure development. The Budget focused on the long term picture rather than resorting to big bang announcements

The Union Budget is impressive as it has been able to provide a meaningful fillip to growth while keeping fiscal prudence in mind

History and policy announcements so far in the short tenure of the BJP led government has infused confidence among investors with respect to the execution and the resultant improvement in expected corporate earnings, going forward. Execution is key to the pace of improvement in the economy in terms of various infrastructure projects getting implemented on the ground

Overall, the Budget has amply addressed the strategic need to improve the investment climate by emphasising on measures to create a framework for low & stable inflation, setting fiscal deficit on a sustainable path through tax, expenditure reforms and setting up a broad based inclusive growth framework for a sustainable market economy

We are bullish on domestic oriented sectors like automobiles, cement, capital goods, power, infrastructure, metals, oil & gas and banks. Defensive sectors like FMCG, pharma and IT could lag broader markets

Although headline indices are already up around 22% since the start of the year discounting the positive impact of the election outcome to a certain extent, the structural medium term story has improved significantly. Therefore, investors should use any dips in the markets to accumulate

CNX Nifty: Rally continues post elections

5000

5500

6000

6500

7000

7500

8000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

Source: Bloomberg, ICICIdirect.com Research

Small caps rally on better growth prospects

3.1

2.4

1.6

1.6

1.1

01122334

BSE SmallCap

BSEMidcap

BSE 500 BSESensex

BSE 100

Retu

rn (%

)

Source: Bloomberg, ICICIdirect.com Research Returns : 1M (June 18- July 18, 2014)

Sectors where policy log jam was the hurdle rallied…

9.0

4.9

4.7

4.7

1.6

1.2

1.1

0.8

0.7

-4.1

-6.5

-1.1

-10

-5

0

5

10

Heal

thca

re

Auto IT

Con.

Dura

Sens

ex

FMCG

Bank

ing

Cap.

Good

s

Met

al

Real

ity

PSU

Oil &

Gas

Retu

rn (%

)

Source: Bloomberg, ICICIdirect.com Research Returns : 1M (June 18- July 18, 2014)

Analyst’s name

Sachin Jain [email protected] Sheetal Ashar [email protected]


Page 3

Debt Markets Update

The Union Budget has brought about significant changes in debt funds, whereby long-term capital gains tax has been increased from flat 10% to fixed 20% with indexation (no option). Also, investments need to be locked for three years instead of one year earlier to be eligible for long-term capital gains. Although a rate hike will not have any impact as earlier also retail investors used to get indexation benefit with 20% tax rate, increase in the holding period will have a major impact as now investment with less than three years will be treated as short-term capital gains and taxed at the marginal rate of tax applicable to investors (30% for highest income tax bracket investors). The tax impact on investments over three years remains the same

G-Sec funds and higher maturity income funds will be less attractive now as a longer holding period (more than three years) will neutralise any capital gains in the near term because of lower accrual income

Higher accrual short-term debt funds will be the most preferred segment in the debt funds category as they will offer higher accrual income with higher maturity papers due to three year holding period

The government has struck to the fiscal deficit target of 4.1% for FY15 and guided for 3.6% in FY16 and 3% in FY 17. The gross borrowing for the current financial year remains almost same at 6 lakh crore against market expectation of increased borrowing. The guidance for lower fiscal deficit in the next three years is positive for debt markets in the medium term in terms of G-Sec supply

CPI as well as WPI inflation for June 2014 came in lower than market expectation at 7.31% and 5.43% against expectation of 7.6% and 5.6%, respectively, mainly on account of the base effect. While the base effect is likely to support a downward trend in inflation, weak monsoons pose a risk. We expect the RBI to remain in a wait and watch mode in the August meeting in spite of June inflation coming in significantly below its glide path

Outlook

The structural positive outlook for the debt market remains with the pro-growth government expected to make structural changes in the economy to manage inflation and fiscal deficit. The government is also expected to adhere to its fiscal consolidation road map and improve the investment climate in the country

Some of the macroeconomic variables like current account deficit and currency volatility have already started showing improvement

Yields at the longer end of the yield curve may drift lower eventually on the back of improving macroeconomic data and some signs of action by the government on some major structural reforms

Liquid and ultra short-term debt funds remain better suited with better pre-tax return over short-term bank fixed deposits and liquidity advantage

Fixed maturity plans (FMPs) will be not be in favour now as they now attract tax at par with bank FDs

Investors who want to invest into short-term debt funds should consider accrual funds as they will be less volatile in nature. They have the same tax advantage with more than three year investment horizon while for less than three years they are at par with other bank deposits with potential to earn higher pre tax returns

G-Sec yield continues to trade in a narrow range

7.0

7.4

7.8

8.2

8.6

9.0

9.4

Feb

-13

Mar

-13

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep

-13

Oct

-13

Nov

-13

Dec

-13

Jan-

14F

eb-1

4M

ar-1

4A

pr-1

4M

ay-1

4Ju

n-14

Jul-1

4

Yie

ld (

%)


No change in borrowing schedule post Budget Month Gross

BorrowingRedemption Net Borrowing

April 68,000 40,751 27,249May 84,000 34,361 49,639June 46,000 11,984 34,016July 58,000 0 58,000August 70,000 0 70,000September 42,000 0 42,000Total 368,000 87,096 280,904

Source: RBI, ICICIdirect.com Research, Figures are in | crore

G-Sec yield curve flattens as short term yield rise

7.5

8.0

8.5

9.0

1yr 3yr 5yr 10yr

Yiel

d (%

)

18-Jul-14 18-Jun-14


Corporate bond yield curve remains largely unchanged

8.88.99.09.19.29.39.4

1yr 3yr 5yr 10 yr

Yiel

d (%

)

17-Jul-14 18-Jun-14



Page 4

MF industry synopsis Assets under management (AUM) of all schemes put together has

increased 18% to | 9.7 trillion with inflows in equity funds picking up Change in debt funds taxation may some pressure with respect lower

future inflows Exhibit 1: AUM grows to | 10 trillion

7608

33

7661

03

7459

69

8339

61

8899

52

8258

60

9032

55

8253

30

9453

21

1011

102

8114

81

9163

93

9747

15

-800000-600000-400000-200000

0200000400000600000800000

10000001200000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

| Cr

ore

-15%

-10%

-5%

0%

5%

10%

15%

20%

AUM Growth (YoY)

Source: AMFI, ICICIdirect.com Research

Exhibit 2: Equity funds AUM sees good rise as markets make fresh highs

Equity, 241024, 25%

Balanced, 15914, 2%

Other ETFs, 5048, 1%

FOF(Overseas), 3226, 0%Income, 478982,

48%

Money Market, 215995, 22%

Gilt, 5492, 1%Gold ETFs , 7943,

1%

Source: AMFI, ICICIdirect.com Research; Figures in % indicate share in total AUM

Top three AMCs manage over | 1 trillion of assets. ICICI Prudential AMC has gained market share to get ahead of Reliance AMC

Exhibit 3: HDFC AMC has highest AAUM…Reliance & ICICI Prudential competing for second

1300

36

1129

14

1180

56

9855

6

7944

1

6921

3

5098

7

3552

1

3311

3

4369

4

1049

77

9777

1

9169

5

7976

1

7470

7

5916

3

4172

2

3720

3

3304

1

3893

8

25000

50000

75000

100000

125000

150000

HDFC

MF

Relia

nce

MF

Ipru

MF

Birla

Sunl

ife M

F

UTI M

F

SBI M

F

Fran

klin

Tem

pelto

nKo

tak

Mah

indr

aDS

PBl

ackR

ock

IDFC

MF

| Cr

Jun-14 Jun-13


Exhibit 4: …Top 10 AMCs manage ~80% of industry AAUM

13.1

7

11.4

3

11.9

5

9.98

8.04

7.01

5.16

3.60

3.35 4.42

21.8

8

0.0

5.0

10.0

15.0

20.0

25.0

HDFC

MF

Relia

nce

MF

Ipru

MF

Birla

Sunl

ife M

F

UTI M

F

SBI M

F

Fran

klin

Tem

pelto

nKo

tak

Mah

indr

aDS

PBl

ackR

ock

IDFC

MF

Rest

all

%

Market share



Page 5

MF Category Analysis

Equity funds In the year so far, the formation of a new stable government at the

Centre has improved the growth outlook of banking and infrastructure stocks leading to the stocks zooming to 52-week highs. Among sector funds, infrastructure and banking funds delivered double digit returns (YTD)

Among diversified funds, midcap funds have outperformed the large cap funds. Majority of capital goods and infrastructure stocks have seen a stellar rally contributing to the returns of the midcap funds

Exhibit 5: Cyclical and industrials outplayed

34.2

32.7

22.4

22.4

18.6

15.4

8.7

0.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Infra

Mid

cap

Bank

ing

Mul

ticap

Larg

e Ca

p

Phar

ma IT

FMCG

Retu

rn %

YTD

Source: Crisil Fund Analyser, ICICIdirect.com Research; 1M absolute return Pre& Post Lok Sabha 2014 election results

Exhibit 6: Highest ever monthly inflow in pure equity schemes

872

-1827

458

-2231-3542

699 857 427 582

-1935-160

2022

7153

-4500-2500-50015003500550075009500

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

Net

Inflo

w (

| Cr

)

Net inflow (Equity + ELSS)


Exhibit 7: Equity AUM soared, post record inflows and rally in the equity markets

1701

09

1626

09

1569

04

1624

50

1734

53

1751

28

1826

82

1754

21

1811

27

1911

97

1922

46 2172

34 2410

24150000170000190000210000230000250000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

| Cr

ore

Equity +ELSS


Exhibit 8: \Deployment of equity funds (June 2014)

Allocation Banks Software Pharma Finance AutoConsumer

Non Durables

Petroleum

Construction Projects

Indusrial capitla goods

Indusrial Products

| crore 54746 26594 16834 13736 13607 11785 11788 12222 10127 7593

% of total 21.5 10.4 6.7 5.4 5.3 4.6 4.6 4.7 4.0 3.5

Source: SEBI, ICICIdirect.com Research , Sector Classification (as per AMFI)

The widespread anticipation among market experts about an economic turnaround after the Bharatiya Janata Party’s decisive poll victory has led money to be shifted from defensives to cyclicals and industrials


Page 6

Equity diversified funds

Post the election outcome, diversified equity funds have delivered returns that investors wanted to see for a long time. Many investors who were accumulating through the volatility that was there in the equities since 2008, have finally been rewarded

Formation of Mr. Modi-led single party majority government has fuelled hopes that the policy logjam will be undone and growth will get back on track. It has acted as a catalyst for a bull market rally

We expect the BSE Sensex EPS to grow 16.7% and 15.2% in FY15E and FY16E, respectively, to be at 1835 in FY16E. Even after the recent rally, the BSE Sensex is currently trading at a price to earning multiple of 14x FY16 EPS of 1835. We expect the Sensex to get further re-rated and trade at 16.5x FY16E at 30300 by December 2015 with the Nifty reaching 9050

Post the decisive mandate, equity market sentiments have improved. India continues to be a favoured destination among emerging economies. With the hopes of a strong macroeconomic recovery, FII investments may continue to be strong

We, therefore, recommend midcap funds will deliver better returns. The pro-growth government at the Centre augurs well for midcap companies to enter a high growth phase and see multiple re ratings. For long term SIPs, diversified funds can be preferred as they invest in both growth as well as value stocks

Though things have already started to look up for market participants, there is a risk of expectations not being met by the new government. A critical evaluation of the government's performance may lead to volatility in the markets

Recommended funds

Large cap

Franklin India Bluechip Fund Birla Sunlife Frontline Equity ICICI Prudential Focused Bluechip Equity UTI Opportunities Fund

Diversified

Franklin India Prima Plus Fund ICICI Prudential Dynamic Plan Reliance Equity Opportunities

Midcap

HDFC Mid-Cap Opportunities Fund ICICI Prudential Discovery Fund Franklin India Smaller Companies Fund SBI Magnum Global Fund

(Refer to www.icicidirect.com for details of the fund)

View Short term: Positive Long-term: Positive


Page 7

Equity Infrastructure fund After a clear mandate, the government has unveiled its 10 year agenda

to focus on infrastructure especially in road & railway such as dedicated freight corridor (US$80 billion), Diamond Quadrilateral (Mumbai Ahmedabad bullet train preliminary cost pegged at | 65,000 crore), Sagar Mela project ( | 1 lakh crore project). This lends comfort there will be tangible opportunities in the long run for infrastructure players

Secondly, the government progress towards speeding up the decision making process towards low hanging fruits/stuck project worth | 15-20 lakh crore would not only lead to better execution but also improve the liquidity of various infrastructure projects

Thirdly, the dovish tone from the RBI toward interest rate would also lead to better liquidity and interest outgo saving for the infrastructure

Fourthly, with RBI's recent action allowing banks to issue long term bonds for infrastructure with benefits such as relaxation of CRR & SLR norms and longer duration of bonds, we believe the pressure for funding infrastructure projects the developers would ease. Hence, cost of funds and strain on cash flow is likely to reduce, going ahead. While the valuation for the infrastructure sector has moved from distressed to reasonable, we still see significant scope for a re-rating of the sector

Though there has been a sharp run in prices, we believe any correction in stocks should be used as an opportunity to accumulate stocks

Recommended funds

Franklin Build India Fund HDFC Infrastructure Fund ICICI Prudential Infrastructure Fund

Refer to www.icicidirect.com

for details of the fund

Equity Banking Funds A turnaround in sentiment for the banking sector on hopes of an

expected improvement in the economy has resulted in a sharp appreciation in stock prices. Though the NPA cycle will take a while to recover, PSU banks are expected to continue their upturn in the near term as they still offer value. Private sector banks are trading at a premium and are expected to hold on to valuations

Credit and deposit growth are expected to improve from the current 13-15% range with an increase in capex. We remain positive on the sector with a long term bias

Recommended funds

ICICI Prudential Banking & Financial Services Reliance Banking Fund UTI Thematic - Banking Sector Fund



Equity FMCG With the visible demand slowdown in the FMCG industry, volume

growth has been muted in the last year Though rainfall deficit recovered to an extent in July, the possibility of

weaker monsoons on a full year basis may result in further demand deterioration, mainly from the rural side

Considering the visible slowdown and expensive valuation multiples, we believe FMCG stocks may not be in flavour in the next quarter. Our stance remains neutral for the FMCG sector

Recommended funds

ICICI Prudential FMCG Fund SBI FMCG Fund



View Short-term: Positive Long-term: Positive


View Short-term: Neutral Long-term: Neutral


Page 8

Equity Pharma Funds

The addition of 108 formulations to National List of Essential Medicines (NLEM) as per the new NPPA notification has certainly sounded alarm for the future. Although the impact remains marginal, any new addition can impact industry severely

We expect some tapering in the expected Indian pharma growth rate (8-10%). Overall, during the reported period, the BSEHC outperformed the broader indices for the second month in a row, driven by fresh buying in frontline pharma stocks

However, with a slew of positive announcements in the Union Budget for old economy stocks, we expect buying to resume in these stocks. We maintain our neutral view on the sector vis-à-vis the broader markets

Recommended funds

Reliance Pharma Fund SBI Pharma Fund UTI-Pharma & Healthcare



Equity Technology Funds

Technology funds, after putting up a stupendous performance, may see some profit booking in the near term

Dollar revenue growth for tier-Is picked up in the June quarter with TCS and Infosys reporting 5.5% and 2% sequential growth, respectively. This reflects healthy acceleration relative to the average 1.8% QoQ (tier-I) growth reported in Q4FY14. From an FY15E perspective, companies that reported Q1 earnings, emphasized on a demand uptick in the US, UK and Europe led by infrastructure services and banking vertical. Companies also saw project starts and a modest improvement in the budget spend patterns

Though growth has accelerated and valuations have moderated at ~15.6x blended one-year forward for tier-Is (~10% premium to Sensex), upsides are capped as valuations likely capture a majority of rupee tailwinds. Although long term growth prospects of the sector are intact, an appreciating rupee, may impact margins and earnings in FY15E, FY16E

Recommended funds

ICICI Prudential Technology Fund DSPBR Technology fund






Page 9

Exchange Traded Funds (ETF) In India, there are three kinds of ETFs available: Equity Index ETFs,

liquid ETFs and gold ETFs

An equity index ETF tracks a particular equity index such as the BSE Sensex, NSE Nifty, Nifty Junior, etc

An equity index ETF scores higher than index funds on several grounds. The expense of investing in ETFs is relatively less by 0.50-1.00% in comparison to an index fund. The expense ratio for ETFs is in the range of 0.50-0.75% excluding brokerage while for index funds the expense ratio varies in the range of 1.0-1.5%. However, brokerage (which varies) is applicable on ETFs while there are no entry loads now on index funds

The tracking error, which explains the extent of deviation of returns from the underlying index, is usually low in ETFs as it tracks the equity index on a real time basis whereas it is done only once in a day for index funds

ETFs also provide liquidity as they are traded on stock exchanges and investors may subscribe or redeem them even on an intra-day basis. This is unavailable in index funds, which are subscribed/redeemed only on a closing NAV basis

There are over 400 ETFs traded globally. ETFs are transparent and cost efficient. The decision on which ETF to buy should be largely governed by the decision on getting exposure in that asset class

Volumes are higher only in the Goldman Sachs Benchmark ETFs and tracking error is also lowest at 0.01%. Therefore, it is our top pick for investors wanting Nifty-linked returns

CPSE ETF is a new entry in the Goldman Sachs ETF offering. The ETF invests in selective 10 PSU stocks and is listed on the exchange since April. IT has delivered healthy 45% return since its launch. Also, bonus units at end of the year will provide additional benefit too.

Exhibit 9: CPSE ETF leads to higher inflows and outflows

-1

-26

5 31

-80 -19

3087

-1213

576

-133

-1500-1000-500

0500

100015002000250030003500

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

Net

Inflo

w (

| Cr

)


Exhibit 10: AUM also sees jump

1552

1394

1359

1392

1436

1437

1489

1371

1378

4528

3704

4829 5048

0

1000

2000

3000

4000

5000

6000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

| Cr

ore

Other ETFs


Traded volumes should be the major criterion that is used while deciding on investment in ETFs. Higher volumes ensure lower spread and better pricing to investors...

Tracking error, though it should be considered, is not the deciding factor as variation among funds is not huge...


Page 10

Balanced Funds Balanced funds are hybrid funds. More than 65% of the overall portfolio

is invested in equities. Hence, as per provisions of the Income Tax Act, 1961, any capital gains over one year become tax free. Also, dividends declared by funds are tax free

In case you separately invest 35% of your investible corpus in a debt fund, the same will be subject to higher taxation. However, if the whole of the corpus is invested in balanced funds, 100% shall have lower taxation applicable as mentioned above

After a sharp rally in equity markets, the funds can be a preferred investment avenue as the debt proportion serves to protect on intermediate relief rallies or the downturn while providing 65% participation on further upsides

Exhibit 11: Marginally better inflow

29

-163

-17

-289

-440

-270

25

-116

-402

-83

185-1

-108

-600

-400

-200

0

200

400

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

Net

Inflo

w (

| Cr

)


Exhibit 12: Equity led AUM growth…

1613

4

1515

7

1460

7

1521

8 1614

1

1613

5

1681

3

1604

7

1619

5

1679

3

1337

0 1472

8 1591

4

13000

14000

15000

16000

17000

18000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

| Cr

ore

Balanced


Recommended funds

ICICI Prudential Balanced - Advantage Fund

HDFC Balanced Fund

Tata Balanced Fund


Monthly Income Plans (MIP) An MIP offers investors an option to invest in debt with some

participation in equity, approximately 10-25% of the portfolio. They are suitable for investors who seek higher return from a debt portfolio and are comfortable taking nominal risk. The debt corpus of the portfolio provides regular income while the equity portion of the fund provides alpha. However, returns can also get eroded by a fall in equities

MIPs can be classified into aggressive MIP and conservative MIP based on its equity allocation. Risk averse investors should invest in MIPs with lower equity allocation to avoid capital erosion

Change in taxation announced in the Union Budget 2014, shall be applicable to MIP funds (refer to debt funds section for details)

Recommended funds

Birla Sun Life MIP II - Savings 5 Plan

ICICI Prudential MIP 25

Reliance Monthly Income Plan


Investors with a limited investible surplus and a lower risk appetite but with a willingness to invest in equities can look to invest in these funds



MIP should be a preferred debt investment for funds that need to be parked for over two years


Page 11

Arbitrage Funds Arbitrage funds seek to exploit market inefficiencies that get manifested

as mispricing in the cash (stock) and derivative markets

Availability of arbitrage positions depends very much on the market scenario. A directional movement in the broader index attracts speculators in the market and cost of funding makes futures positions biased

Arbitrage funds are classified as equity funds as they invest into equity share and equity derivative instruments. Since these are classified as equity funds for taxation, dividends declared by the funds are tax free. No capital gains will be applicable if they are sold after a year

These funds can be looked upon as an alternative to liquid funds. However, for these funds, returns totally depend on arbitrage opportunities available at a particular point of time and investors should consider reviewing the same before investing. Returns of arbitrage funds are non-linear and, therefore, unsuitable for investors who want consistent return across time period

Arbitrage funds should be used as a liquid investment and should not be a major part of the investor’s portfolio

Availability of arbitrage positions depends very much on the market scenario. Directional movement in the broader index attracts speculators in the market while cost of funding makes futures positions biased

In case of positive movement, long build-up in futures puts pricing in an upward bias and creates a window for direct arbitrage positions

On the other hand, negative bias attracts fresh sellers in the market and speculators try to sell the stock much cheaper than theoretical prices. In such situations, reverse arbitrage opportunities arise

On the other hand, a range bound market does not give ample room to create arbitrage positions

Recommended funds

ICICI Prudential Equity - Arbitrage Fund – Regular

IDFC Arbitrage Fund - (Regular)

Kotak Equity Arbitrage Fund

SBI Arbitrage Opportunities Fund




Page 12

Debt funds Exhibit 13: Long term funds delivered better returns

2.56 2.47 2.63 2.73 2.85

3.39

4.03 4.21 4.39

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

IncomeUST

Liquid CrisilLiquiFex

Income ST CrisilSTBx

Income LT CrisilComBex

Gilt Funds I-SECCom.Gilt

Retu

rns(

%)

Source: Crisil Fund Analyser ICICIdirect.com Research Note : FY 15 YTD (As on July 18, 2014)

Exhibit 14: Deployment of funds : June 2014

CP Bank CD

Bank CD

Bank CD

Corporate Debt

0

5000

0

1000

00

1500

00

2000

00

2500

00

3000

00

3500

00

4000

00

Less than 90 days

90 days to 182days

182 days to 1 year

1 year and above

Government Securities

CP

Bank CD

Treasury Bills

CBLO

Other Money MarketInvestmentsCorporate Debt

PSU Bonds

Securitised Debt

Bank FD Source: SEBI, ICICIdirect.com Research Note : Holding as percentage of total AUM

Exhibit 15: G-Sec yield curve

7.5

7.7

7.9

8.1

8.3

8.5

8.7

8.9

1yr 3yr 5yr 10yr

Yiel

d (%

)

18-Jul-14 18-Jun-14


Exhibit 16: Corporate bond curve

8.8

9.0

9.2

9.4

1yr 3yr 5yr 10 yr

Yield

(%)

17-Jul-14 18-Jun-14



Page 13

Union Budget 2014: Change in debt funds taxation Key Changes:

Change in holding period from 12 months to 36 months The choice of paying taxes at 10% without indexation on LTCG is

no longer available Dividend distribution tax (DDT) will be applied on the gross amount

distributed For debt funds to be considered as long term asset, the holding period has been increased from 12 months to 36 months. Hence, any capital gains arising on redemption prior to the end of 36 months from the date of investment will be treated as short-term capital gain and be subject to tax at the marginal rate of tax of the investor (nil, 10%, 20% or 30% as the case may be, plus applicable surcharge and cess). Also, the choice of paying taxes at 10% without indexation on long term capital gains (LTCG) is no longer available. Hence, for any gains arising on redemption beyond the holding period of 36 months, investors will have to pay tax @ 20% (plus surcharge and cess) with indexation. Earlier, for debt funds to be considered as long term capital asset, the holding period was one year. Any redemption from a debt mutual fund beyond the holding period of a year, an investor had the choice to pay tax at a lower rate of 10% without indexation or 20% with indexation. We believe the benefit of lower taxation enjoyed by debt mutual funds has been removed. They have been brought at par with fixed deposits for investments up to three years. Beyond three years, debt mutual funds continue to be a better option Earlier, DDT @ 28.33% (25% DDT + cess + surcharge) was applied on the net amount. Hence, the effective DDT deducted was lower. Now DDT will be deducted on the gross amount. Hence, if | 100 is the dividend declared, DDT deducted will be 28.33 while the balance will be distributed. Earlier After the effective date Amount of Dividend | 100 100 Rate of DDT 28.33% 28.33% Pay out to Investor | 77.92 71.67 Amount of Tax Payout | 22.08 28.33 Effective Rate of DDT 22.08% 28.33%

Apart from capital gains taxation, we believe this move may have implications on the overall debt markets as mutual funds are major participants in the corporate bond markets and major subscriber of certificate of deposit and commercial papers that are needed to meet short-term fund requirements.

The industry body, Association of Mutual Funds of India (AMFI) has written to Sebi for immediate intervention and also taken up matter with the Finance Ministry. They propose that above rules should be restricted to close ended debts funds and be applicable from next year. However, a clarification from the ministry is yet to come on the same.


Page 14

Liquid Funds The RBI aims to provide ample liquidity to make funds available for

credit via conducting term repos while restricting the daily borrowing under the liquidity adjustment facility. Also, RBI’s currency intervention leads to infusion of funds in to the systems. The certificate of deposit (CD) and the commercial paper (CP) yields, therefore, on the back off comfortable liquidity scenario have corrected by 30-40 bps from above 9% to 8.6% levels. Liquid funds primarily invest in these papers

Going forward, we may see more CD/CP issuances as we enter the second half of the financial year where demand for working capital loans is higher. This may lead to CD/CP yields again picking up other factors remaining constant. Liquid funds, therefore, may earn marginally better accrual and continue to deliver return of more than 8% (pre tax)

Changes in the taxation rules announced in Union Budget 2014, are applicable to liquid funds also, which may make them vulnerable to redemption pressures, as post tax returns in less than three year period gets reduced for individuals falling in the higher tax bracket (30% tax slab) and corporate

For less than a one year period, individuals in the higher tax bracket should prefer dividend option as the dividend distribution tax @ 28.325% is marginally lower. Also, though the tax arbitrage is reduced, they still have the potential to earn better pre-tax returns over fixed deposits

Exhibit 17: Call rates near MSF rate

6789

1011121314

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep-

13Oc

t-13

Nov

-13

Dec-

13Ja

n-14

Feb-

14M

ar-1

4A

pr-1

4M

ay-1

4Ju

n-14

Jul-1

4

%

Call rate


Exhibit 18: …CP/CD yields range bound

7.08.09.0

10.011.012.013.0

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep-

13Oc

t-13

Nov

-13

Dec-

13Ja

n-14

Feb-

14M

ar-1

4A

pr-1

4M

ay-1

4Ju

n-14

Jul-1

4

%

3M CD 3M CP


Exhibit 19: Borrowings under LAF window capped

-1500

-1300

-1100

-900

-700

-500

-300

-100

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

| bl

n

LAF

RBI capped borrowing under the LAF window


View Neutral


Page 15

Exhibit 20: Redemption may take place on increase in holding period

3212

3

-280

19

6751

5

5143

6

-663

13

7749

4

-962

9

-117

354

1238

75

2201

0

-452

96

-676

97

-200000-160000-120000-80000-40000

04000080000

120000160000

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

Net

Inflo

w (

| Cr

)


Exhibit 21: AUM above | 2 trillion but may see drop next month

1623

90

1290

00

1498

80

1221

42 1891

49 2464

01

1812

38

2589

80

2508

22

1332

80

2593

10

2827

00

2159

95

80000

130000

180000

230000

280000

330000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

| Cr

ore

Money Market


Recommended funds

HDFC Cash Management Fund - Savings Plan SBI Magnum InstaCash Reliance Liquid Fund - Treasury Plan


Exhibit 22: Returns may stay above 8% per annum

0.71

2.25

4.64

9.98

8.84

7.43

0.66

2.05

4.21

9.01

8.73

7.43

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

1 M 3 M 6 M 1 Yr 3Yr 5Yr

Retu

rns

%

Category Average Crisil liquid Fund Index

Source: Crisil Fund Analyser, , ICICIdirect.com Research Note : Absolute returns as on July 17, 2014


Page 16

Income funds The structural positive outlook for the debt market remains with the pro

growth government expected to make structural changes in the economy to manage inflation and fiscal deficit. Some of the macroeconomic variables like current account deficit and currency volatility have already started showing improvement

Yields at the longer end of the yield curve may drift lower eventually on the back of improving macroeconomic data and some signs of action by the government on some major structural reforms

Among income funds, ultra short-term debt funds remain better suited with the potential to earn better pre-tax return over that earned on short-term bank fixed deposits plus having the liquidity advantage. Long term income funds will be less attractive now as a longer holding period (more than three years) will neutralise any capital gains in the near term because of relatively lower accrual income

Fixed maturity plans (FMP) will be not be in favour now as the taxation has been brought at par as that of bank FDs

Investors who want to invest into short term debt funds should consider accrual funds as they will be less volatile in nature. The tax advantage for more than 3 year investment horizon stays while for less than 3 year taxation is now at par with other bank deposits

Exhibit 23: Higher yield attracts strong inflows

-450

1

-265

7

-927

4

-163

4

3123

-333

3

-895

4

5905

1295

5

7838

-992

7

1009

6

1307

-15000

-10000

-5000

0

5000

10000

15000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

Net

Inflo

ws

(| .C

r)


Exhibit 24: AUM steady

4413

11

4317

33

4202

66

4245

96

4339

70

4310

50

4244

45

4319

44

4471

81

4606

71

4580

09

4738

87

4789

82

300000

350000

400000

450000

500000

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-1

3

Nov

-13

Dec-

13

Jan-

14

Feb-

14

Mar

-14

Apr-1

4

May

-14

Jun-

14

| Cr

ore

Income


Exhibit 25: Periodic returns (category average)

0.1

3.1

4.5

7.1 8.

2

6.9

0.4

2.4

4.5

9.2

8.8

7.8

0.6

2.2

4.4

9.3

8.9

7.7

0.0

2.0

4.0

6.0

8.0

10.0

1 M 3 M 6 M 1 Yr 3Yr 5Yr

%

Long Term Short Term Ultra Short Term

Source: CRISIL Fund Analyser, ICICIdirect.com Research, Returns as on July 17, 2014; Returns above one year are CAGR returns

View Ultra-short term: Positive

Short-term: Positive Long-term: Positive


Page 17

Recommended funds

Ultra Short Term Funds

IDFC Money Manager - Investment Reliance Medium Term Templeton India Low Duration

Short Term Funds

Birla Sunlife Short Term Opportunities Plan ICICI Prudential Regular Savings Fund Franklin India Short Term Income Plan UTI Short Term Income Fund

Long term / Dynamic Bond Funds

IDFC Dynamic Bond Fund ICICI Prudential Income Plan - Regular Plan Birla Sun Life Income Plus - Regular Plan


Gilt Funds With a strong government in place, decisions around credible fiscal

compression, which were difficult in a coalition, can now potentially be made. Supply side measures that can ease input cost inflation and improve the potential growth rate can also help the disinflation process

The government has struck to the fiscal deficit target of 4.1% for FY15 and has guided for 3.6% in FY16 and 3% in FY 17. The gross borrowing for the current financial year remains almost same at | 6 lakh crore against market expectation of increased borrowing. The guidance for lower fiscal deficit in the next three years is positive for debt markets in the medium term in terms of G-sec supply

G-Sec funds will be less attractive now as the longer holding period (more than three years) will neutralise any capital gains in the near term because of lower accrual income

Recommended funds

Birla Sun Life Gilt Plus - PF Plan - Regular ICICI Prudential LT Gilt Fund - PF Option - Regular


Ultra-short-term fund returns are attractive on risk adjusted basis

Short-term funds will benefit as short-term yields are likely to decline first compared to long-term yields

Dynamic bond funds are suitable for all types of investors and for longer duration They can take exposure to all durations as per the interest rate outlook and switch between G secs and corporate bonds



Page 18

Gold ETFs: International prices continue to trade with negative bias…

International gold prices gained around 6% during June 2014 from the lows of around US$1250 per ounce. During the month, gold continued its winning streak as depreciation of the US dollar increased demand for alternative investments such as gold. Also, disappointing US GDP reading as well as weak European numbers boosted safe-haven appeal of the bullion. However, the yellow metal started to trim gains rapidly during the last week of June as investors still believed the US economy has strong potential to expand around 3.3% in the second quarter after shrinking 2.9% in the first quarter, the most since 2009. The safe-haven demand induced by geopolitical issues has been another factor helping the yellow metal

The following are the reasons for the subdued attraction for Indian gold:

a Improving US economy: The improvement in the US and global economy has led to a shift in demand, which was generated at the time when the US economy was in the doldrums and investors had no choice but to resort to gold. Investors were worried that the US government may default and started selling the US dollar to buy gold as a safe haven

b Import restrictions: Indian gold prices remain resilient even as global prices corrected from all-time highs as the UPA government had imposed import restrictions in order to bring down India's current account deficit and stem the rupee decline. We have already witnessed a sharp correction when there was an announcement of easing of restriction on gold imports by the Reserve Bank of India. A further correction is not ruled out if the new government decides to further remove import restrictions

c Currency volatility: One of the reasons for gold prices remaining high in India despite weak international prices was a sharp depreciation of the Indian rupee, which fell to a low of | 68.70 per dollar last August. Oil imports, FIIs outflows and an appreciating US dollar had kept the Indian currency under pressure. However, the rupee strengthened following measures by the previous Finance Minister and RBI Governor Raghuram Rajan. It bounced back to | 60 per dollar. Recent inflows in the Indian market on hopes of a stable government have strengthened the rupee further. The Indian currency is likely to be more stable with an appreciating bias and the same may keep Indian gold prices under pressure

d Better returns in equities: While gold has failed to give positive returns in the last year, investors are slowly moving back to equities after a five-year lull for better returns. While Indian equity markets witnessed a sharp up move and hit fresh all-time highs, gold has delivered negative returns

However, gold acts as a portfolio diversifier as fundamental factors that affect other financial assets do not affect gold in a similar fashion. Adding gold to the portfolio, helps improve the risk adjusted return of the portfolio. For Indian investors, gold acts as an even better portfolio diversifier. The fundamental factors that drive international gold prices also affect the rupee. Hence, the fall in international gold prices is compensated by a fall in the rupee

Also, since Indians do not have too many international investment options, gold can be a proxy for global diversification. Hence, at this juncture, we believe investment in gold should not be from an absolute return point of view but should be as a tool for diversification. Investment in gold should be restricted to around 5-10% of the portfolio

Gold($/Ounce)

10001050110011501200125013001350140014501500

Jun-

13

Aug

-13

Oct-1

3

Dec-

13

Feb-

14

Apr

-14

Jun-

14

$

Price ($/Ounce)


Gold (INR spot)

25000260002700028000290003000031000320003300034000

Apr

-13

Jun-

13

Aug

-13

Oct-1

3

Dec-

13

Feb-

14

Apr

-14

Jun-

14

|

Price (|/10 grams)


5

Profit booking in gold ETFs

-206 -1

07-5

88-2

94-2

88-1

31-1

57-1

65-1

78 -149

-146

-341 -2

27

-800

-600

-400

-200

0

Jun-

13Ju

l-13

Aug-

13Se

p-13

Oct-1

3N

ov-1

3De

c-13

Jan-

14Fe

b-14

Mar

-14

Apr-1

4M

ay-1

4Ju

n-14

Net

Inflo

w (

| Cr

)


AUM decline

9612 10

669

1182

810

415

9894

9325

8784

8996 9330

8676

8527

7781

7943

50006000700080009000

10000110001200013000

Jun-

13Ju

l-13

Aug-

13Se

p-13

Oct-1

3N

ov-1

3De

c-13

Jan-

14Fe

b-14

Mar

-14

Apr-1

4M

ay-1

4Ju

n-14

| Cr

ore

Gold ETFs


Page 19

Model Portfolios

Equity funds model portfolio Investors who are wary of investing directly into equities can still get returns almost as good as equity markets through the mutual fund route. We have designed three mutual fund model portfolios, namely, conservative, moderate and aggressive mutual fund portfolios. These portfolios have been designed keeping in mind various key parameters like investment horizon, investment objective, scheme ratings, and fund management. We have changed the mutual funds portfolio in July, to include midcap funds as we believe improvement in the growth scenario may generate better alpha in midcap stocks over large cap stocks Exhibit 26: Equity model portfolio Particu lars Ag g ressive Mod erate C onservativeR eview In terval Monthly Monthly Q uarterlyR isk R etu rn H igh R isk- H igh

R eturnMedium R isk -

Medium R eturnL ow R isk - L ow

R eturn

F und s Allocation

F ranklin India P rima P lus 20 20 20B irla S unlife F rontline E quity 20 20 20IC IC I P rudentia l D ynamic P lan - - 20U T I O pportunites - 20 20R e liance L ong T erm E quity 20 - -IC IC I P rudentia l V a lue D iscovery 20 20 20H D F C Midcap O pportunites 20 20 -

% Allocation

Source: ICICIdirect.com Research

Since inception, all three portfolios have outperformed the benchmark BSE 100. Exhibit 27: Model portfolio Performance (since inception)

204835.3

198350.3 197813.3

185187.5

175000.0

180000.0

185000.0

190000.0

195000.0

200000.0

205000.0

210000.0

Aggressive Moderate Conservative BSE 100

|

Source: : Crisil Fund Analyser, ICICIdirect.com Research Portfolio inception date : September 30, 2009; Returns as on June 30, 2014

Changes to model portfolio Fund Aggressive Previous CurrentFranklin India Prima Plus 25Birla Sunlife Frontline Equity 25ICICI Prudential Dynamic Plan 20UTI Opportunites 25 20Reliance Long Term Equity 20ICICI Prudential Value Discovery 20HDFC Midcap Opportunites 20ICICI Prudential Focussed Blue-Chip 25Moderate Previous CurrentFranklin India Prima Plus 25 20Birla Sunlife Frontline Equity 25 20ICICI Prudential Dynamic Plan 25 20UTI Opportunites 25ICICI Prudential Value Discovery 20HDFC Midcap Opportunites 20Conservative Previous CurrentFranklin India Prima Plus 25 20Birla Sunlife Frontline Equity 25 20ICICI Prudential Dynamic Plan 25 20UTI Opportunites 25 20HDFC Midcap Opportunites 20

Allocation (%)


Page 20

Debt funds model portfolio We have designed three different mutual fund model portfolios for different investment duration namely less than six months, six months to one year and above one year. These portfolios have been designed keeping in mind various key parameters like investment horizon, interest rate scenarios, credit quality of the portfolio and fund management, etc.

Exhibit 28: Debt funds model portfolio

Particulars

0 – 6 months 6months - 1 Year Above 1 Year

Objective LiquidityLiquidity with

moderate returnAbove FD

Review Interval Monthly Monthly Quarterly

Risk ReturnVery Low Risk - Nominal Return

Medium Risk - Medium Return

Low Risk - High Return

Funds Allocation

Ultra Short term FundsIDFC Money Manager Fund - Investment Plan 20 - -Templeton India Low Duration Fund 20 - -Reliance Medium term fund 20 - -Short Term Debt FundsTaurus Short Term Income Fund 20 - -Birla Sunlife Short Term Fund 20 - -Birla Sunlife Short Term Opportunites Fund

- 20 20ICICI Prudential Short Term - 20 -ICICI Prudential Regular Savings - - 20IDFC SSI Short Term - 20 -Sundaram Select Debt - 20 20UTI Short Term Fund - 20 -Tempelton Short term income - - 20Long Term/Dynamic Debt FundsIDFC Dynamic Bond fund - - 20Total 100 100 100

Time Horizon

% Allocation


Exhibit 29: Model portfolio performance : CY14 YTD June 30, 2014

4.70 4.96 5.254.56

5.15

6.69

0.01.02.03.04.05.06.07.08.0

0-6 Months 6Months - 1Year Above 1yr

%

Portfolio Index

Source: Crisil Fund Analyser, , ICICIdirect.com Research

*Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; 6 months-1 year – Crisil Short term Index Above 1 year: Crisil Composite Bond Index


Page 22

Exhibit 30: I-direct Top picks

Category Top Picks

Short Term Long TermLargecaps Positive Positive Birla Sunlife Frontline Equity

ICICI Prudential Focussed Equity Fund

SBI Bluechip Fund

UTI opportunites Fund

BNP Paribas Equity

Midcaps Positive Positive HDFC Midcap OpportunitiesICICI Prudential Discovery FundFranklin India Smaller Companies FundSBI Magnum Global Fund

Diversified Positive Positive Franklin India Prima PlusICICI Prudential Dynamic Plan

Reliance Equity Opportunites

ELSS Positive Positve BNP Paribas Tax advantageICICI Prudential Tax PlanFranklin India Tax shield

DebtCategory View Top PicksLiquid Funds Positive HDFC Cash Mgmnt Saving Plan

Reliance Liquid Treasury Plan

Ultra Short Term Positve IDFC Money Manager Fund - Investment Plan - P

Reliance Meduim TermTempleton India Low Duration Fund

Short Term Positive Birla Sunlife Short Term Opportunites FundICICI Prudential Regular SavingsFranklin India Short term Income PlanUTI Short Term

Income Funds Neutral Reliance Dynamic Bond FundIDFC Dynamic Bond FundSBI Dynamic Bond Fund

Gilts Funds Neutral ICICI Pru Gilt Inv. PF PlanBirla Sunlife Gilt Plus

MIP Positive Birla Sunlife Savings 5

Aggressive ICICI Prudential MIP 25

Reliance Monthly Income Plan

ViewEquity




Page 23

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai – 400 093

[email protected]

Disclaimer ICICI Securities Ltd. - AMFI Regn. No.: ARN-0845. Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India. The selection of the Mutual Funds for the purpose of including in the indicative portfolio does not in any way constitute any recommendation by ICICI Securities Limited (hereinafter referred to as ICICI Securities) with respect to the prospects or performance of these Mutual Funds. The same should also not be considered as solicitation of offer to buy or sell these securities/units. The investor has the discretion to buy all or any of the Mutual Fund units forming part of any of the indicative portfolios on icicidirect.com. Before placing an order to buy the securities/units forming part of the indicative portfolio, the investor has the discretion to deselect any of the securities/units, which he does not wish to buy. Nothing in the indicative portfolio constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the investor's specific circumstances. The details included in the indicative portfolio are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The securities included in the indicative portfolio may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs. This may not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment risks. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this indicative portfolio. Past performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may be holding all or any of the securities/units included in the indicative portfolio from time to time. ICICI Securities Limited is not providing the service of Portfolio Management Services (Discretionary or Non Discretionary) to its clients. Mutual fund investments are subject to market risks, read all scheme related documents carefully. Investors should consult their financial advisers if in doubt about whether the product is suitable for them. The information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities Limited. The contents of this mail are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. While due care has been taken in preparing this mail, I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance thereon. This mail/report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject I-Sec and affiliates to any registration or licensing requirement within such jurisdiction.

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