Presenting HDFC Capital Builder Value Fund. Capital... · March 20 (one of the sharpest monthly...
Transcript of Presenting HDFC Capital Builder Value Fund. Capital... · March 20 (one of the sharpest monthly...
Presenting HDFC Capital Builder Value Fund.
Discover the true value, before the world does.
• Investment primarily in undervalued stocks• To generate long-term capital appreciation/income in the long term
*Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.
Note: For further details, refer to the Scheme information Document/Key Information Memorandum available on www.hdfcfund.com or with ISCs or Distributors.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
HDFC Capital Builder Value Fund (An open ended equity scheme following a value investment strategy) is suitable for investors who are seeking*:
Riskometer
Table of Contents
Market Outlook..................................................................................................................................................................................................................................................
What is definition of Value for HDFC Capital Builder Value Fund?..........................................................................................................................
Why invest in HDFC Capital Builder Value Fund...................................................................................................................................................................
Investment Approach..................................................................................................................................................................................................................................
Stock Selection.................................................................................................................................................................................................................................................
Sector Allocation.............................................................................................................................................................................................................................................
Large/Mid/Small-Cap break-up............................................................................................................................................................................................................
Portfolio Characteristics.............................................................................................................................................................................................................................
Portfolio Statistics...........................................................................................................................................................................................................................................
Top 10 Holdings...............................................................................................................................................................................................................................................
Fund Suitability.................................................................................................................................................................................................................................................
Scheme Facts.....................................................................................................................................................................................................................................................
Scheme Performance.................................................................................................................................................................................................................................
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4
9
10
11
12
13
14
15
16
17
18
19
21
2
MarketOutlook
Equity Markets Update – Valuation near previous lows
3
Markets were down by 23% in March 20 (one of the sharpest monthly falls) led by highest ever monthly FPI outflows
FY21 P/E is less relevant due to significant dislocation of profits expected in several sectors. NIFTY 50 (30-June-20) is trading at FY22 P/E of 16.8 times (Source: Kotak Insti Equities)
Price / Book Value, Marketcap / GDP are better measures in current situation. Prevailing Price / Book Value , Marketcap / GDP are comparable with market bottoms in earlier crisis(refer adjacent chart)
Refer Disclaimer on Slide 23
Source: World Bank, Bloomberg, Kotak Insitutional Equities
Mcap as of June 30, 2020, Source: BSE, RBI, Kotak Institutional Equities
35 26 30 48 55
69 88
149
56
99 98
61 72 65
81 75 71 92
78 77 70 64
0
5
10
15
20
25
0 20 40 60 80
100 120 140 160
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
E
2021
E
no. o
f tim
es
%
Mcap/GDP (LHS) P/E (RHS)
India market cap to GDP ratio, calendar year-ends, 2000-21E (%)
Market valuations are attractive in the historical context on P/B basis1-year rolling forward PB of Nifty-50 Index, March fiscal year-ends, 2004-21 (X)
1.0
2.0
3.0
4.0
no. o
f tim
es
1-year rolling forward PB of Nifty-50 Index
P/B (X) Avg.
Jun-
05
Jun-
06
Jun-
07
Jun-
08
Jun-
09
Jun-
10
Jun-
11
Jun-
12
Jun-
13
Jun-
14
Jun-
15
Jun-
16
Jun-
17
Jun-
18
Jun-
20
Jun-
19
Source: Kotak Insti Equities, Bloomberg
2003
2004
2008
2011
2013
June 2020
48
55
56
61
65
~64
11%
36%
76%
28%
31%
?
111%
195%
113%
79%
30%
?
End of Calendar Year
Marketcap to GDP %
Next 1 yearNIFTY returns
Next 3 yearNIFTY returns
Low Market Cap to GDP – What does history tell us?
4
Past performance may or may not sustain in future. Returns are neither assured nor guaranteed.
Marketcap to GDP is close to 60% and reflects good value. In the past, similar valuations were followed by good returns over next 3 years
Significant correction in Indian equities led by global selloff in equities and FPI outflows from India. March 20 saw highest ever monthly FPI outflow of US$ 8.4bn
In the past, periods of heavy FPI outflows were followed by periods of sizeable inflows
Historically, sharp corrections in Indian markets triggered by global events were followed by good returns over medium to long term
Refer Disclaimer on Slide 23
Active Equity Funds & ETFs
5
FPIs selling, will the trend reverse?
5
Refer Disclaimer on Slide 23
29.3
(0.5)
24.5 20.0
16.2
3.3 2.9 8.0
(4.6)
14.2
(4.3) (10.0)
(5.0)
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
CY10CY11
CY12CY13
CY14CY15
CY16CY17
CY18CY19
CY20
Upto
A
pril
During the current COVID crisis, FPIs have sold more than Rs.50,000 crs as on 5-May-2020 on a 90 day rolling basis.
In the past, periods of major FPI selling, were followed by periods of sizeable FPI inflows
Source – Edelweiss; Maximum outflow on a 90 days rolling period
90 days period ending Outflows* Next
360 days
FPI Flows Rs crs
FPI outflows as % of India total Market Cap
% NIFTY Return next 360 days
2006
2008
2011
2013
2015
2016
2017
2018
2020
11-Aug-06
29-Oct-08
13-Dec-11
01-Oct-13
18-Dec-15
29-Feb-16
08-Feb-17
09-Nov-18
05-May-20
-4,758
-30,428
-12,680
-6,938
-30,179
-26,497
-30,414
-38,872
-50,000
-0.2%
-1.1%
-0.2%
-0.1%
-0.3%
-0.3%
-0.3%
-0.3%
-0.4%
95,307
1,11,664
2,00,042
1,71,914
73,552
93,963
44,457
68,564
??
33%
85%
23%
38%
5%
28%
23%
13%
Year
FPI flows USD bn
Active Equity Funds & ETFs
5
Equity Markets Summary : Opportunity in adversity
6
Significant impact on corporate profits in FY21 likely; however, minimal impact expected on intrinsic values of most businesses.
Indian equity markets in aggregate are trading at attractive valuations;
Historically, sharp corrections in Indian markets triggered by global events were followed by good returns over medium to long term.
10 year NIFTY returns are at 5% CAGR currently, this has happened after 15 years. Historically NIFTY returns below 5% CAGR for a 10 year period have been followed by good returns over next 3, 5 and 10 years
Significant increase in Covid-19 cases in India & across the world, sharp rise in oil prices, sharp escalation in border dispute with China, etc. are key risks in near term
Past performance may or may not sustain in future. Returns are neither assured nor guaranteed.Refer Disclaimer on Slide 23
Life is a cycle, always in motion, if good times have moved on so will times of trouble
Marketcap to GDP is ~64% and reflects good value. In the past , such levels were followed by good returns over next 3 years
The current Price to Book Value of the markets is comparable to earlier crisis such as GFC, IT Bubble and Asian Crisis.
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HDFC Capital Builder Value Fund
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What is definition of Value for this Fund ?
Companies trading below intrinsic value, as measured by potential earnings or asset values, and/or future cash flow growth
Companies in turnaround phase – Good businesses that have gone through a temporary difficult period and de-rated but are poised for turnaround in profitability
Companies trading below their historical average multiples
Provided that the fund shall invest at least 50% of the portfolio in companies which are trading at multiples lower than Median P/E (Price/Earnings) or Median P/B (Price/Book Value) of NIFTY 500 Index.
Investment strategy of this fund would be to focus on :
Why Invest in HDFC Capital Builder Value Fund?
Diversified multi-cap strategy with a value bias
Fund is managed true-to-mandate and invests at least 50% of the portfolio in companies which are trading at multiples lower than Median P/E (Price/Earnings) or Median P/B (Price/Book Value) of NIFTY 500 Index.
Emphasis on investing in undervalued stocks with a reasonable margin of safety
Investors with long term horizon can benefit not only from earnings growth but also re-rating of multiples
Actively managed diversified equity portfolio which invests across sectors without a market cap bias.
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HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions.
Emphasis on undervalued stocks
Preference for companies
(a) trading below intrinsic value
(b) In turnaround phase
(c) trading below historical average multiples
Investments across Market Capitalization range
Investment Approach
Stock SelectionNo Capitalization
Bias
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HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions.
Sector Allocation
Active Overweight/Underweight vs benchmark based on top down investment calls
Stock selection
At the time of stock selection there is a preference for companies trading below intrinsic value, companies trading blow historical average multiples and companies in turnaround phase.
As of June’20, 79% of the portfolio is in preferred category as follows :
Source – Bloomberg, Ratios /Growth estimates as of 6th July 2020, TTM – Trailing 12 months, P/E-Price/Earnings, P/B –Price/Book Value, EPS – Earnings per share ROE – Return on Equity computed for Fiscal Year ended 31st March 20.
The above is purely as per our internal analysis.The current investment strategy is subject to change depending on the market conditions. Refer disclaimers on Slide 23. Stocks/Sectors referred herein are illustrative and not recom-mended by HDFC Mutual Fund / AMC. The Fund may or may not have any present or future positions in these stocks/ sectors. The data/statistics are given on the basis of information which is already available in publicly accessible media. The same should not be construed as any research report/research recommendation to buy or sell any security covered under the respective sector/s. HDFC Mutual Fund/AMC is not guaranteeing returns on any investments.
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Companies trading below intrinsic value (Absolute Value)
Companies below historical average multiples (Relative Value)
Companies in Turnaround phase
Large Utility Co. in India, Large Tobacco Co. in India, Large Tech Co.in India
Large Private sector bank in India, Large Corporate Focused private sector bank, Large Auto Co. in India
Large Telecom Co. in India, Large Corporate focused Private Bank,Large Healthcare player in India.
31%
29%
19%
13.7
21.8
52.1
2.4
3.2
5.5
2%
16%
43%
18.3%
14.9%
12.2%
ParticularsDescription of some companies in the portfolio
% of Net Assets(Jun’20)
Average TTM P/E
Average TTM P/B
Average EPS Growth (Estimated) FY20-22E CAGR %
Average ROE(FY20) %
As of 30th June 20. Source: Bloomberg, Stocks/sectors referred above are illustrative and are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these stocks/sectors. The above statements / analysis should not be construed as an investment advice or a research report or a recommendation to buy or sell any security covered under the respective sector/s .The same has been prepared on the basis of information which is already available in publicly accessible media.
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Sector Allocation
The Scheme also uses sector allocation and takes top down investment calls.
The Scheme is positioned to benefit from sectors which are beneficiaries of accelerated adoption of technology (IT and Telecom) ; higher healthcare spends (Healthcare), government capex on infra and Defence (Industrials) and lower interest rate cycle (Utilities)
The fund is underweight Financials due to asset quality concerns and consumer staples due to expensive valuations
Key overweight/(underweights) –OW /(UW) are as mentioned in the table
Sectors Scheme Weight %
BenchmarkWeight %
OW/(UW) %
Jun’20P/E
Jun’20P/B
Industrials
Communication Services
Health Care
Information Technology
Utilities
Energy
Real Estate
Materials
Financials
Consumer Discretionary
Consumer Staples
9.6
6.5
7.7
12.1
3.6
11.6
-
7.8
27.7
4.5
6.8
5.9
3.5
6.3
10.9
3.2
11.2
0.6
8.6
30.5
8.2
11.2
3.7
3.0
1.4
1.2
0.4
0.4
(0.6)
(0.8)
(2.7)
(3.7)
(4.4)
21.5
NA
37.4
18
10.6
18.7
36.8
17
20.6
46.5
36.7
2.4
3.3
3.3
4.3
1.2
1.9
1.6
1.7
1.9
2.6
7.6
Large/Mid/Small Cap break-up
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As of 30th June 2020, Source :MFI Explorer
The Scheme invests across market capitalization
At present, the scheme has a large cap bias (~75% of Net Assets)
Market Cap Bias is an outcome of valuations and bottom up stock selection
Small Cap75
914
0
10
20
30
40
50
60
70
80
Large Cap Mid Cap Small Cap
% o
f Net
Ass
ets
Market cap break-up
Portfolio Characteristics
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Source :Bloomberg
$ As of 7th July 2020
Return on Equity (ROE) FY20
Trailing 12 Month - Price to Earnings Ratio (P/E) $
Trailing 12 Month - Price to Book Value Ratio (P/B) $
12.7%
27.6
2.1
Characteristics Scheme
9.4%
27.2
2.4
NIFTY 500
Portfolio Statistics (As of June 30, 2020)
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** Risk Free Rate 3.89% (Source FIMMDA, MIBOR)For complete portfolio details please visit www.hdfcfund.com
Top 10 Equity And Equity Related Holdings
Total Equity & Equity Related Holdings
Cash, Cash Equivalents And Net Current Assets
Assets Under Management (Rs. In Crore)
Standard Deviation**
Beta**
51.58%
97.95%
2.05%
3,595
6.573%
1.036
Characteristics % To Net Assets
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Top 10 Holdings (As of June 30, 2020)
HDFC Bank Ltd.
Reliance Industries Ltd.
ICICI Bank Ltd.
Infosys Limited
ITC Ltd.
Bharti Airtel Ltd.
Kotak Mahindra Bank Limited
Axis Bank Ltd.
Aurobindo Pharma Ltd.
NTPC Limited
Particulars GICS Sector % To Net Assets
Financials
Energy
Financials
Information Technology
Consumer Staples
Communication Services
Financials
Financials
Health Care
Utilities
9.27
8.36
7.12
6.18
5.32
4.25
3.11
2.83
2.82
2.32
Fund Suitability
Intend to invest in undervalued companies.
Would like to invest in a diversified portfolio with a long term horizon.
Want twin benefit of earnings growth as well as re-rating of valuation multiples
Are looking for a sound and disciplined approach to investing in volatile times.
The scheme is suitable for investors who
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Scheme Facts
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For further details, refer Scheme Information Document and Key Information Memorandum and addenda thereto available on www.hdfcfund.com and at Investor Service Centres of HDFC Mutual Fund. $ Dedicated fund manager for overseas investments Mr. Chirag Dagli
Inception Date (Date of allotment)
Investment Objective
Type of Scheme An open ended equity scheme following a value investment strategy
February 01, 1994
To achieve capital appreciation/ income in the long term by primarily investing in undervalued stocks
Mr Amit Ganatra
Direct Plan Regular Plan
Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility
Purchase: Rs. 5,000 and any amount thereafterAdditional Purchase: Rs. 1,000 and any amount thereafter
NIFTY 500
Fund Manager $
Plans
Sub-Options
Minimum Application Amount(Under Each Plan/Option)
Load Structure
Benchmark Index
Entry Load
Exit Load
Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered Distributor) based on the investors’ assessment of various factors including the service rendered by the ARN Holder.
In respect of each purchase / switch-in of Units, an Exit Load of 1.00% is payable if Units are redeemed / switched-out within 1 year from the date of allotment.
No Exit Load is payable if Units are redeemed / switched-out after 1 year from the date of allotment.
In respect of Systematic Transactions such as SIP, Flex SIP, GSIP, STP, Flex STP, Swing STP, Flex index, etc - Exit Load, if any, prevailing on the date of registration / enrolment shall be levied. For further details on load structure, please refer to the Scheme Information Document/Key information memorandum of the Scheme.
Asset Allocation Pattern
19
Asset Allocation Pattern
Equity and Equity related instruments
Debt Securities (including securitised debt) and money market instruments
Units issued by REITs and InvITs
Non-convertible preference shares
65-100
0-35
0-10
0-10
High
Low to Medium
Medium to High
Low to Medium
Characteristics Normal Allocation (%) Risk Profile
Under normal circumstances, the asset allocation (% of net assets) of the Scheme’s portfolio will be as follows.
The Scheme may invest in the schemes of Mutual Funds in accordance with the applicable extant SEBI (Mutual Funds) Regulations as amended from time to time. The Scheme may invest up to 35% of its net assets in foreign securities. The Scheme may invest up to 100% of its net assets in Derivatives.
For further details, refer Scheme Information Document and Key Information Memorandum and addenda thereto available on www.hdfcfund.com and at Investor Service Centres of HDFC Mutual Fund. $ Dedicated fund manager for overseas investments Mr. Chirag Dagli
The above scheme has been managed by Amit Ganatra, the fund manager since May 21, 2020 The performance of the Scheme is benchmarked to the Total Return Index (TRI) Variant of the Indices.Past performance may or may not be sustained in the future. The above returns are of Regular Plan – Growth Option. Returns greater than 1 year period are compounded annualized (CAGR). Load is not taken into consideration for computation of performance. Different Plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution expenses / commission charged in the Regular Plan. Returns as on 30th June 2020.
Asset Allocation PatternScheme Performance Summary –HDFC Capital Builder Value Fund
Last 1 Year
Last 3 Years
Last 5 Years
Since Inception
-18.49
-2.14
3.57
12.73
-11.13
1.76
5.45
NA
-11.51
3.95
5.55
9.56
8,151
9,371
11,920
237,092
8,887
10,536
13,041
NA
8,849
11,233
13,104
111,657
Additional Benchmark
(Rs)
Scheme Returns (%)
BenchmarkReturns (%)
Additional Benchmark Returns (%)
Scheme Benchmark
(Rs)
Value of Rs 10,000 invested
20
Asset Allocation PatternPerformance Summary of other Scheme(s) managed by the Fund Manager
Past performance may or may not be sustained in the future. The performance of the Scheme is benchmarked to the Total Return Index (TRI) Variant of the Indices. The above returns are of Regular Plan - Growth Option. Load is not taken into consideration for computation of performance. # The scheme is co managed by Amit Ganatra (Equities) and Anil Bamboli (Debt). ## The Scheme is co managed by Amit Ganatra (Equities), Anil Bamboli (Debt) and Krishan Daga (Gold related assets). Returns as on 30th June 2020. Different Plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution expenses/ commission charged in the Regular Plan. On account of difference in the type of the Scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly not comparable.
21
HDFC Dynamic PE Ratio Fund of Funds # 21-May-20
12-Jun-20
21-May-20
21-May-20
-4.84
-2.04
-0.63
1.85
22.16
-11.51
-20.34
1.85
2.00
6.23
2.87
7.64
-4.37
3.95
N.A
N.A
5.79
7.30
5.32
7.99
N.A
N.A
N.A
N.A
Amit Ganatra manages total 5 schemes
Scheme Managing scheme since 1 year
3 year
CAGR (in %)
5 year
CAGR (in %)
Returns (%)
HDFC EOF - II - 1126D May 2017 (1)
NIFTY 50 (Total Returns Index)
HDFC EOF - II - 1100D June 2017 (1)
NIFTY 50 (Total Returns Index)
HDFC Multi Asset Fund ##
90% NIFTY 50 Hybrid Composite Debt 65:35 Index + 10% Domestic Price of Gold
NIFTY 50 Hybrid Composite Debt 65:35 Index
The presentation dated 22nd July 2020 has been prepared by HDFC Asset Management Company Limited (HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information given is for general purposes only. Past performance may or may not be sustained in future. The statements are given in summary form and do not purport to be complete. The views / information provided do not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. The information/ data herein are not investment advice and alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Stocks/Sectors referred herein are illustrative and not recommended by HDFC Mutual Fund / AMC. The Fund may or may not have any present or future positions in these sectors. HDFC Mutual Fund/AMC is not guaranteeing returns on any investments. The data/statistics are given on the basis of information which is already available in publicly accessible media to explain general market trends in the securities market. The same should not be construed as any research report/research recommendation to buy or sell any security covered under the respective sector/s. Neither the AMC and HDFC Mutual Fund nor any person connected with them, accepts any liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS,READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
Disclaimer
Thank You