Reliance Mutual Fund · PDF fileETFs are Mutual Fund schemes and listed & traded on the...
Transcript of Reliance Mutual Fund · PDF fileETFs are Mutual Fund schemes and listed & traded on the...
Reliance Mutual Fund
- “R*Shares Long Term Gilt ETF” (an open ended Index Linked Exchange Traded Fund)
India is in a sweet spot compared to rest of the world..
Short term Global India Interest rate
Rising Falling
Growth Subdued Rising
Reform momentum Muted Improving
Financial stability Weak Strong
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Long term Global India
Demographics Unfavorable Favorable
Savings Falling Rising
Growth Subdued Strong
Productivity Falling Rising
Both from medium to long term India is in a rare sweet spot
In the history of financial markets there will be very few markets which have
had these kind of edges over the rest of the world
Fixed Income – Current Scenario
Nifty 8-13 yr G-Sec Index
A route to Invest in Indian G-Sec market
Launched in January 2011, Nifty 8-13 yr G-Sec Index is designed to provide the broad
representation of the Government of India bonds having maturity of around 10 years.
The index aims to capture the performance of the most liquid bonds with maturities
between 8-13 years.
Nifty 8-13 yr G-Sec is constructed using the prices of top 5 (in terms of traded value)
liquid Government of India bonds with residual maturity between 8 to 13 years and
have outstanding issuance exceeding Rs. 5000 crores.
The individual bonds are assigned weights considering the traded value and
outstanding issuance in the ratio of 40:60
Nifty 8-13 yr G-Sec Index represents the most active tenor of the Indian G-Sec
market.
About Nifty 8-13 yr G-Sec Index
Source : IISL
Nifty 8-13 yr G-Sec – Index Methodology
Source : IISL
Index represents Government of India Bonds having residual maturity between
8-13 years.
Top 5 liquid bonds based on turnover during the month shall be eligible to be
part of the index with outstanding amount of the bond be more than Rs.5,000
crores
Each bond is assigned weight based on liquidity and outstanding amount,
liquidity of the bond has a weight of 40% and outstanding amount has weight
of 60%.
Weights of the bond are determined at beginning of the month and remain
constant during the entire month and Index is reviewed on a monthly basis
the index values will be live during the markets trading hours and closing price
published at end of the day
The index is computed using the total returns methodology and FIMMDA prices
are used for valuation of the bonds in the index.
Accrued interest is calculated using 30/360 day count convention
Nifty 8-13 yr G-Sec – Index Movement
Source : IISL
Past Performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other
investment.
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Nifty 8-13 Yr Benchmark G-Sec Index Values
Nifty 8-13 yr G-Sec Index – Calendar Year Returns
Source : IISL
Past Performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other
investment.
Calander Years Returns Average Maturity (In Yrs)
2011 4.64% 10.22
2012 11.17% 10.28
2013 -0.62% 10.35
2014 16.57% 10.7
2015 7.73% 10.53
YTD Returns as on 28th October 2016 is 12.37% on absolute basis
Constituents of Nifty 8-13 yr G- Sec Index
Source : IISL as on 28-Oct-2016
Sl No. Security ISIN Maturity Weights (%)
1 7.59% G.S. 2026 IN0020150093 11/01/2026 34.87
2 7.59% G.S. 2029 IN0020150069 20/03/2029 26.86
3 7.72% G.S. 2025 IN0020150036 25/05/2025 16.70
4 8.15% G.S. 2026 IN0020140060 24/11/2026 14.78
5 6.97% G.S. 2026 IN0020160035 06/09/2026 6.79
Why Invest In
Exchange Traded Fund (ETF)?
ETFs are Mutual Fund schemes and listed & traded on the
exchange like stocks
An ETF represents a basket of stocks that reflect an index
An ETF helps you to achieve portfolio diversification, risk
management & cash equitization at a relatively low cost
About Exchange Traded Funds (ETFs)
Basket of asset instead
of a single stock
Can be traded like a
stock
Bought and sold on a
stock exchange
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Structured like Mutual Funds, but listed & traded on the exchange
like stocks
An ETF represents a basket of stocks that reflect an index
An ETF helps you to achieve portfolio diversification, risk mitigation,
cash equitization & relatively low cost
Ease of transaction - Can be easily bought / sold like any other
stock on the exchange subject to availability of buyer and seller
through terminals spread across the country
Ease of Liquidity - Can be bought / sold anytime during market
hours at prices that are expected to be close to actual NAV of the
Scheme. Thus, investor transacts at real-time prices instead of end-
of-day prices subject to availability of buyer and seller
Other Special Features
Instant diversification through exposure to a large number of
stocks by purchasing as low as 1 unit
Efficient tool to execute strategies like arbitraging between
cash & futures market
Ability to put limit orders
ETF UNIT
ETF Fund
Basket of
Stocks
ETFs – Concepts
Low Cost Long Index Exposure – Derivatives have a high roll-over cost and
also known for short term gains, ETFs hence makes a cost efficient option for
maintaining long index positions.
Cash Equitization – Investors who maintain cash positions, awaiting suitable
investment options, can use ETFs to gain instant exposure to markets as per their
asset allocation, helping them access and not miss out on any market movements
Core / Satellite Investment Strategies - ETFs allow investors to maintain broad-
based / fundamental index ETF as their core and actively move satellite
investment exposure to momentum or sector ETFs as per the market movements
Sector Rotation / Tactical Allocation – ETFs can be used to add or be
overweight specific markets, sectors or industries to a core portfolio
Portfolio Completion - ETFs allow investors to fill gaps in a portfolio in specific
asset classes or sectors
Use of ETFs by Arbitragors - Low cost ETFs assist in arbitrages as buying ETF
is fairly convenient compared to buying the entire set of stocks in the index basket
*Subject to the market condition and availability of spread and liquidity.
ETFs – an effective tool for one’s portfolio
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Working Mechanism ETFs
Primary Market Secondary
Market
Authorized
Participants /
Financial Institutions Stock Exchange
Fund Buyer
Seller
Buy / Sell
Market making /
arbitrage
Cash ETF units
Cash ETF units Subscription /
redemption
in-kind
ETF Stocks
Exposure in G Sec Index Buying a Single unit Need to buy 5 Securities
Rebalancing Easy Difficult
Transaction Procedure Only a single unit needs to
be purchased
5 different securities in
different weightage needs to
be purchased
Minimum Investment
Single Unit Price depending
on the unit size For eg If one
unit is 1/10 of the Index,
1405/100= 14.05 one needs
to spend only 14.05 Rs to
buy one unit
The cost of buying 5
securities at their market
price.(Very High Cost as
compare to ETF &
Derivatives)
Above table only shows investment in Nifty 8-13 yr G-Sec through different modes. Investors may makes investment in Gsec via other modes
also. Investors are advised to consult their financial advisor before making any investment
Investment in G-Sec via different Modes
R*Shares Long Term Gilt ETF (An open-ended, Index Exchange Traded Fund)
Investment in R*Shares Gilt ETF is a route to G-Sec investing in India
It allows investors to take part in India growth story by essentially investing in
5 most liquid bonds in the G-Sec space with maturities between 8-13 years .
The index is designed to serve as both a benchmark and an investable index
and is comprised of securities providing representation of the Government of
India bonds having maturity of around 10 years.
Investments in R*Shares Gilt ETF can form part of “core debt portfolio”,
especially for Institutional investors
By investing in R*Shares Gilt ETF, strategies like “cash equitization” can be
effectively deployed because of its inherent advantages like one of the best
market representation.
Positioning –R*Shares Gilt ETF
ETI
About R*Shares Long Term Gilt ETF
R*Shares Long Term Gilt ETF will be listed as an Exchange Traded Fund (ETF) on
NSE Ltd. with Reliance Nippon Life Asset Management Limited (RNLAM) (formerly
Reliance Capital Asset Management Limited) being the Asset Manager of R*Shares
Long Term Gilt ETF
R*Shares Long Term Gilt ETF will invest in Nifty 8-13 yr G-Sec Index securities
only, in the same proportion as the underlying index, monitored and corrected (if
required) daily
Launched in January 20011, the Index is the structured to capture the performance
of the most liquid bonds in the G-Sec space with maturities between 8-13 years.
Investment objective or R*Shares Long Term Gilt ETF would be to provide returns
that, before expenses, closely correspond to the total returns of the securities as
represented by the Nifty 8-13 yr G- Sec Index subject to tracking errors. However
there can be no assurance or guarantee that the investment objective of the
scheme would be achieved
* - Source : www.nse-india.com
Scheme Features : R*Shares Long Term Gilt ETF
Investment Objective The investment objective of R*Shares Long Term Gilt ETF is to
provide returns that, before expenses, closely correspond to the
total returns of the securities as represented by the Nifty 8-13 yr G-
Sec Index subject to tracking errors. However there can be no
assurance or guarantee that the investment objective of the Scheme
will be achieved.
Nature of Scheme An Open Ended, Index Linked Exchange Traded Fund
Benchmark Nifty 8-13 yr G-Sec Index
Securities constituting Nifty 8-13 yr G Sec Index
95%-100%
Money Market instruments including CBLO 0%-5%
(with maturity not exceeding 91 days)
Asset Allocation
Liquidity Listed on Recognized Stock Exchanges & available for trade in 1
(one) unit and in multiples of 1 unit and with AMC in form of creation
unit size of 2,50,000units and multiples thereafter
Load Structure Entry & Exit Load : Nil
R*Shares Long Term Gilt ETF – Current Portfolio
Source : RMF Factsheet as on Oct 31, 2016
Past Performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other
investment.
Tradable Unit Composition Creation Unit Size
NAV
28-Oct-
16
Approx.
Basket
Value (Rs.)
1 Unit
R*Shares Long
Term Gilt ETF
~ 1/100 of Nifty 8-
13 yr G-sec Index
250000 units of
R*Shares Long
Term ETF
16.2261 40,88,700
Scheme Name Index
Value YTM
Average
Maturity
Modified
Duration
R*Shares Long Term
Gilt ETF 1636.63 6.95% 9.92 years 6.75 years
Creation Unit Size
Portfolio Details
Transparency/NAV Disclosure
The NAV will be calculated & disclosed on or
before 5 working days from the closure of NFO
and subsequently at the close of every
working day which shall be published in at
least two daily newspapers and also uploaded
on the AMFI website and RMF website.
Units of the scheme will be available in
Dematerialized (electronic) form only.
The applicant under the scheme will be
required to have a beneficiary account with a
Depository Participant of NSDL/CDSL and will
be required to indicate in the application the
Depository Participants (DP)name, DP ID
Number & the beneficiary account number of
the applicant.
Minimum Application Amount
Exchange : The minimum number of Units that
can be bought or sold on the exchange is 1
(one) unit and in multiples of 1 unit.
Directly from AMC : Restricted to Authorized
Participants & Large Investors in form of
creation unit size of 2,50,000 units & in
multiples thereafter
Dematerialization
Allotment of Units
The value of each unit of the Scheme would be
approximately equal to 1/100th of the value of
Nifty 8-13 yr G-Sec Index
Scheme Features : R*Shares Long Term Gilt ETF
Trading options available
Subscription Process Features
Through Stock
Exchange
online terminal
/ stock broker
• Can trade as less as 1 Unit
• Funding to be done on T+1
• Unit credit on T+2
• Transaction on Exchange traded price
• No paperwork
• Transaction on order matching and availability of quotes
Through AMC
(Authorized
Participants &
Large Investors)
Transaction
form with
requisite
documents
• Can transact in multiples of creation unit size
• Can happen in Cash or basket of stocks
• Transaction in exchange of Portfolio deposit & Cash
Component
Redemption Process Features
Through Stock
Exchange
online terminal
/ stock broker
• Can trade as less as 1 Unit
• Units taken on T+1
• Amount credited T+2
Through AMC
(Authorized
Participants &
Large Investors)
Redemption
Request
• Can trade in multiples of creation unit size
• Can happen in Cash or basket of stocks
• Transaction in exchange of Portfolio deposit & Cash
Component
Live Prices (NAV) with the basket is available on Bloomberg page “RITE” for
reference
Senior Fund Manger – Fixed
Income Investments.
Total work experience of over 14
years
Prashant R Pimple is Fund Manager of various
debt funds of Reliance Mutual fund i.e. Reliance
Short Term Fund, Reliance Income Fund, Reliance
Dynamic Bond Fund, Reliance Corporate Bond
Fund, Reliance Regular Saving Fund – Debt
option and Reliance gilt Securities Fund.
Previous stints include portfolio manager with
Fidelity International Limited Asset Management
Company and as Portfolio Manager in Investment
Advisory Services (Debt Institutional) in ICICI Bank
Ltd. From 2000 to 2003, he was a fixed income
trader with Bank of Bahrain and Kuwait, B.S.C.
and The Saraswat Co-operative Bank Ltd. He also
had a stint with SIDBI in the Project Finance
Division
Specialist in Duration Funds and Government
Securities dealings.
About the Fund Manager
Disclaimer
Scheme Specific Risk Factors: Trading volumes and settlement periods may restrict liquidity in equity and debt investments.
Investment in Debt is subject to price, credit, and interest rate risk. The NAV of the Scheme may be affected, inter alia, by changes in
the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The NAV may also be subjected to
risk associated with tracking error, investment in derivatives or script lending as may be permissible by the Scheme Information
Document.
NSE Disclaimer: It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that
the Scheme Information Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of
the contents of the Draft Scheme Information Document. The investors are advised to refer to the Scheme Information Document for
the full text of the Disclaimer Clause of NSE
Disclaimers
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and
therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and
statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-
party sources, which are deemed to be reliable. It may be noted that since RNLAM has not independently verified the accuracy or
authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and
information has been processed or arrived at; RNLAM does not in any manner assures the accuracy or authenticity of such data and
information. Some of the statements & assertions contained in these materials may reflect RNLAM’s views or opinions, which in turn
may have been formed on the basis of such data or information.
Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive
at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees,
affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary
damages, including on account of lost profits arising from the information contained in this material.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Thank You