Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.

Why India as the next manufacturing destination?

The rising demand in India along with the multinational’s desire to diversify their production to include low-cost plants in countries other than China, can help India’s manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 ‘Ds’ for business to thrive— democracy, demography and demand. Today, Indian manufacturing companies in several sectors are targeting global markets and are becoming formidable global competitors.

Demographic Advantage

· The country is expected to rank amongst the world’s top three growth economies and amongst the top three manufacturing destinations by 2020

· Favourable demographic dividends for the next 2-3 decades. Sustained availability of quality workforce

· Strong consumerism in the domestic market

· Strong technical and engineering capabilities backed by top-notch scientific and technical institutes

· The cost of manpower is relatively low as compared to other countries

Other changes/developments for promoting manufacturing

· Emphasis on infrastructure development (highest budgetary allocation to roads and railways in FY17 Union Budget)

· Incentives offered for manufacturing

· Improvement in ease of doing business

· Skill India mission (multi-skill development programme for job creation and encouraging entrepreneurship)

· Opening up FDI in Defence, Civil Aviation, Broadcasting Carriage Services, Pharmaceutical, Animal Husbandry, etc.

The country is witnessing a spate of positive changes in the economy, providing a much needed impetus to the industrial sector. For instance, a recent World Bank report pegs India to be the fastest growing economy in the world in the next three years, outpacing our neighbour country. McKinsey & Co highlights an upswing in India’s manufacturing sector, which is poised to touch $ 1 trillion by 2025 and potentially account for 25-30 percent of the country’s GDP, creating as many as 90 million jobs along the way.

BSL Manufacturing Equity Fund

Performance

BSL Manufacturing Equity Fund is India’s first manufacturing oriented fund launched on 31st Jan, 2015. Investors of BSL Manufacturing Fund have had a volatile journey since its inception due to global headwinds which have impacted the markets globally. However it has managed to bounce back sharply within a short span of time and is currently delivering better returns than the benchmark index S&P BSE 500. The same can be inferred from the below graph:

During the Union Budget, necessary reforms were announced in order to attract more investments in India along with structural changes which have been put in place. This has lead to a gradual turnaround in the performance of the fund.

Source: Morningstar

Slowdown in US, consistent debt problems rising in Europe, deflation problems persisting in Japan, economic slowdown in China, Brexit referendum, etc. are some of the factors that have impacted the markets globally in the last 1 year. However investors who have continued to stay invested in the BSL Manufacturing Fund have seen a turnaround in the fund’s performance. This indicates that investment made from a long term point of view along with sound fundamentals, deliver higher returns than the benchmark indices. In the last 1 year, BSL Manufacturing Fund delivered 1.80% compared to its benchmark S&P BSE 500 which delivered 1.15%. Fund has exposure to sectors which are focused towards the domestic economy. With an above average monsoon predicted for the current year along with implementation of 7th Pay commission, Indian economy is expected to see a cyclical upturn thereby helping the overall manufacturing sector.

Portfolio

· BSL Manufacturing fund remains true to its name and predominantly invests in companies that are engaged in manufacturing sector. With various reforms planned and initiated by the central government to grow the manufacturing sector of India, BSL Manufacturing intends to be a part of India’s long term growth as a global manufacturing and design hub. Some of the top holdings of the fund include Tata Chemicals, Maruti Suzuki, Sun Pharmaceuticals, Larsen & Toubro, ITC Limited, etc.

· Fund manager is overweight on sectors such as Automobile, Industrial Manufacturing, Pharma, Consumer Goods, Chemicals, Cement and Textiles. Fund’s overweight stance on some of the above mentioned sectors have been positive contributors to the fund.

Data as on 30th June 2016, Source: BSLAMC Internal Research

· We continue to remain positive on Automobiles due to gradual improvement in growth rates of two wheelers, passenger cars and M&HCVs

· Industrial manufacturing is expected to do well as the Power sector investments in the transmission space continues to grow while distribution would see uptick post UDAY reforms. Green energy & Emission based investment capex is at cusp of growth

· In pharmaceuticals business, export momentum continues despite increased compliance requirements from US FDA and weak EM currencies. Consumer goods are expected to do well owing to implementation of 7th Pay commission and an expected recovery in the rural economy

· The fund has a portfolio turnover strategy of 3.52% which indicates the buy-and-hold strategy of the fund manager. The ratio represents the percentage of a fund’s holdings that change every year. This signifies that the fund manager prefers having high-conviction stocks in the portfolio with a long term investment view

The various steps taken by the government in terms of measures for ease of doing business, creation of favourable environment for the manufacturing activities, focus on improving industrial policies and FDI enhancement would aid in reviving the manufacturing sector and achieving global competitiveness. Ultimately, the economic changes should contribute handsomely to the overweight sectors in the portfolio.

A strong proposition in current times

India is focusing on becoming a global manufacturing hub at a time when there is an economic slowdown in China. It must take advantage of this situation which can be a crucial contributor to the GDP. China is currently facing overcapacity issues and debt problems which is why they are shifting towards a more service oriented economy. On the other hand, setting up manufacturing centres in India will help generating employment, increase manufacturing and industrial output and help India to have a sustained economic growth in the years to come.

The government is opening various avenues for FDI investments in order to get the technical know-how and also urging multinational companies to set up their manufacturing facilities in India. Some of the local companies that have agreed to set up their manufacturing facilities are Celkon, Spice Group, Micromax while multinational companies include Samsung, Huawei, Foxconn, Xiaomi, Lenovo, Qualcomm, Vivo Mobiles, Oppo. Government is in talks with other global companies to make India as their manufacturing hub.

FDI money is flowing in India chasing growth coupled with an expected recovery in the rural economy. Government’s thrust on infrastructure development along with a favourable monsoon will lead in consumption led recovery for the Indian markets. Recovery in rural economy coupled with implementation of 7th Pay commission is likely to add more stimuli to consumption growth.

BSL Manufacturing Equity Fund is a fund for investors who are seeking long term capital growth by investing in companies engaged in manufacturing sector and have a high risk appetite. However we believe the portfolio’s sector exposure is in sweet spot to deliver higher risk-adjusted returns since it’s the only fund in the industry specifically focusing on manufacturing companies. We advice investors to stay invested for atleast 3-5 years in order to reap the benefits.

Scheme Name

1 Year

Since Inception

Birla Sun Life Manufacturing Equity Fund – Reg – Growth

1.80

1.06

S&P BSE 500

1.15

-1.98

Birla SunLife Small and Midcap Fund

Small cap stocks are not tracked closely by market analysts and that is why the real value of good small cap stocks can remain undiscovered for long. Also investing in them is risky due to unavailability of adequate research on them. But the rewards of finding a hidden gem are huge too, as such a stock may become a multibagger (midcap or even a large-cap stock over time), giving superlative returns.

BSL Small and Midcap Fund invests in equity and equity related securities of companies considered to be small and mid-cap and aims to achieve long term capital appreciation for its investors. The fund is declaring its annual dividend for FY 2016-17, an amount of Rs 1.85/unit (approx. dividend yield of 8.0% under Regular plan), record date being 31 August 2016. Following are few key features of this fund:

· With an AUM of 268 crores the fund has generated returns of 12.73% since inception (as on Aug 25 2016)

· In calendar year 2016 the fund has returned 16.12% outperforming the Nifty Free Float Midcap 100 by 3.4% which has generated returns of 12.7% (as on 25 Aug 2016)

· A SIP of Rs 10000 since inception in the fund would be worth Rs 28.6 lacs (CAGR: 19.74%) against Rs 22.3 lacs (CAGR: 14.58%) in the Nifty Free Float 100 (as on 25 Aug 2016)

· Over a 5 year period (daily rolling basis), since inception the fund has outperformed the Nifty Free Float 100 index 90.5% of the time and has generated positive returns 98% of the time (as on Aug 25 2016)

· The fund has outperformed the benchmark across time periods as can be seen from the graph below:

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Equity Market Update – June 2017

Equity Market Update – June 2017

Indian equity markets corrected for the first time in 2017 and were down ~1% in June.

Performance of global equity markets was mixed with Asian indices outperforming the European indices. The table below gives the details of performance of key domestic and global indices.

Performance of key commodities was also mixed during the month, Brent crude being the worst performer down 5%. Lead and zinc were up 8% and 6% respectively.

INR depreciated marginally by 0.1% against USD in June and closed at 64.6, INR has appreciated by 5.2% between December 16’ and June 17’.

FII’s bought Indian equities worth $0.6bn in June. Net inflows in domestic equity oriented mutual funds in May were ~Rs 16,000 crores. The chart below gives the net monthly inflows in equity oriented mutual funds for last 12 months:

During the month few states announced farm loan waiver and 12 large stressed accounts were referred to National Company Law Tribunal (NCLT). May CPI came in at a record low of 2.2% and 4QFY17 CAD came in at 0.6% of GDP.

Equity market have lagged nominal GDP growth for several years now. Profit growth is now improving and earnings growth for next 2-3 years is expected to be strong (Bloomberg consensus NIFTY EPS growth – 16% in FY18 and 22% in FY19). NIFTY 50 is currently trading at ~14.9xFY19E EPS which is reasonable in a low interest rate and strong earnings growth environment. In our opinion therefore, there is merit in increasing allocation to equities (for those with a medium to long term view) and to stay invested.

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Birla Sun Life Advantage Fund

Birla Sun Life Advantage Fund
(An Open-ended Growth Scheme)

With a superior track record of over 10 years, BSL Balanced Advantaged Fund, an open-ended diversified equity fund aims to offer long-term capital growth, at relatively moderate levels of risk through a research-based investment approach.

fund_img.jpg

Long-term Capital Growth
Investments in Equity and Equity related securities.

HDFC Equity Savings Fund

HDFC Equity Savings Fund – One fund

With the strength of three

HDFC Equity Savings Fund is suitable for investors who are seeking *

  • capital appreciation while generating income over medium to long term
  • provide capital appreciation and income distribution to the investors by using equity and equity related instruments, arbitrage opportunities, and investments in debt and money market instruments

HDFC Housing Opportunities Fund

HDFC Mutual Fund today sought SEBI approval to launch HDFC Housing Opportunities Fund – Series 1, a close-ended equity oriented hybrid fund.

As the name suggests the fund will invest in housing theme to take advantage of the expected growth in housing and allied business, said the fund house in a draft offer document.

Sharing the rationale behind launching this fund, a senior official of the fund house said, “In the budget 2017, the government has given a thrust to affordable housing sector. In fact, we have seen growing demand of housing sector among investors. Hence, we plan to launch a fund focussing on housing sector.”

The fund house plans to introduce three plans in the scheme depending on the tenure ranging between 24 and 66 months.

The scheme will invest a minimum of 70% in equity instruments of entities in housing and its allied business activities, which include the cement and steel industries. The fund can also take exposure of up to 10% of corpus in REITS and InvITs. It will also invest up to 30% in debt and money market instruments.

HDFC Housing Opportunities Fund is the first housing-oriented fund to seek SEBI approval. Experts say the fund is suitable for investors having high-risk appetite.

Srinivas Rao Ravuri will manage this fund.

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OR

You can write to us at

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OR

Call us on 94 8300 8300

BNP Paribas Dividend Yield Fund

BNP Paribas Dividend Yield Fund

Investment objective

The investment objective of the scheme is to generate long term capital growth from an actively managed portfolio of equity and equity related securities, primarily being high dividend yield stocks. High dividend yield stocks are defined as stocks of companies that have a dividend yield in

excess of 0.5 %, at the time of investment..

Why Dividend Yield Stocks

Relatively more stable business models with a history of consistent profitability, and a dividend payment track record

Companies pay dividends after attaining a sustainable level of growth

Need to pay dividends tends to make the management more accountable to shareholders and less prone to taking unwanted risks

In case of a market crash, the share price of these companies tend to fall less in comparison to growth stocks. Hence low-risk defensive stocks.

Performance:

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