NFO Period: August 12 - August 25, 2021 - SBI Mutual Fund
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NFO Period: August 12 – August 25, 2021
“You only have to do a very few things
right in your life so long as you don’t do
too many things wrong.”
- Warren Buffett
“Doing well with money isn't necessarily
about what you know. It's about how you
behave.”
– Morgan Housel
Equity Markets go through Cycles, so does investor behaviour
What we do… Maximum Financial Risk
Euphoria; Want to buy more
Excitement; Over-confidence
Complacency / Ignorance
Thrill to invest more
Anxiety
Optimism
Denial
Positive outlook
Optimism
Fear
Relief
Panic
Hope for survival
Depression; Want to sell off all
Minimum Financial Risk
Buy low, Sell high
What we should do…
For a volatile and unpredictable market…
Increase allocation
to other asset
classes
Increase allocation
to Equity Hedge with a
portion of Arbitrage
Buy low, Sell high strategy
To navigate through volatile market, investor should ignore the noise and focus on things under their control to build wealth in the long term
Asset Allocation Diversification Periodic Rebalancing
But does it really happen?
Instead, Investors end up Buying High & Selling Low
• Highest average net inflows were seen when market was
overvalued
• Most often, investor returns are lower than the investment
PE range for Avg. Monthly Net
Valuation returns
S&P BSE Sensex Inflow in Equity Mutual
Fund (Rs. crores)
This difference is mostly attributed to the Behavioural biases.
Average 15 - 20 4,339
Greed/Buy
Expensive 20 - 25 11,986 …Repeat Until
Broke !
Super Expensive Above 25 2,163
Fear/Sell
Index: S&P BSE Sensex; Source : Historical PE value – BSE India, Monthly Net inflow in MF – Internal data (for 96% of the MF industry): represents Equity net flow (including ETF) Data above is for March 2014 –
March 2021 period
Timing the market within a particular asset class like equities
is difficult…
Equity Net Sales vs. 1-year historical return trend
Past 1 year return (%, LHS) Total equity net sales (Rs. crores, RHS)
Inflows in equity-oriented schemes have broadly
tracked the past 1-year returns historically
Attempt to time the market in the short term
has led to below par results most of the time
For example, equity category inflows peaked in
2017 on the back of good past performance.
However, markets witnessed volatility in the short
term thereafter in 2018
(Source: AMFI, Internal analysis, Bloomberg. Historical 1-year returns is for Nifty 50 TRI Index. Equity net sales data is for equity/growth-oriented schemes which includes ELSS category but excludes Arbitrage and
Hybrid EquityCategory)
…Even timing within broad asset classes is difficult in short term
Winners keep rotating 1 - Year Returns (%)
between various asset classes
2008 9.03 8.41 -51.18
2009 3.50 4.86 77.59
2010 4.96 5.12 19.22
• Predominant equity allocation is a must for a long- 2011 6.92 8.17 -23.87
term focused portfolio for wealth creation 2012 9.34 8.50 29.26
2013 3.79 9.03 8.07
• However, winners across asset classes keep rotating 2014 14.31 9.21 32.90
in the short term 2015 8.63 8.23 -3.01
- making asset allocation timing a difficult task 2016 12.91 7.48 4.39
- need for having a right mix of these for consistent 2017 4.71 6.66 30.35
returns 2018 5.91 7.58 4.61
2019 10.72 6.86 13.48
2020 12.25 4.60 16.09
Equities outperformed in 7 out of 13 years
Year Debt Cash Equity
(Source: ICRA mfie, Crisil, Bloomberg. Debt represented by Crisil Composite Bond Fund Index, Cash represented by Crisil Liquid Fund Index and Equity represented by Nifty 50 TRI Index)
Relatively lower risk-return asset classes have a role in the portfolio
Rolling 3 years Standard Deviation Rolling 3 years Correlation with Nifty 50 TRI
CRISIL Composite Bond Fund Index
Nifty 50 TRI
CRISIL Liquid Fund Index
CRISIL Composite Bond Fund Index
CRISIL Liquid Fund Index
• Debt and Cash as an asset class display significantly lower volatility as compared to equities as an asset class
• The correlation of Debt and Cash asset classes with equities also has been relatively low to negative correlation across mosttime periods
Combining asset classes with different risk-return profile in a single portfolio, can help in generating optimal risk-adjusted returns
(Source: Crisil, Bloomberg. Standard deviation and correlation based on 3 years monthly rolling returns)
So how to get the right Asset Mix?
Option 1 Option 2
Understand the Equity & Fixed Income market
Select Stocks / Instruments / Funds Invest in
Keep a close watch on how equity & debt market is SBI Balanced Advantage Fund
changing
&
Devise a strategy to calculate the asset mix and adjust
for changing market conditions Relax
Buy / Sell securities / stocks / funds accordingly
Pay taxes whenever exiting a stock while rebalancing
your portfolio
Presenting
SBI Balanced Advantage Fund – Fine tune your asset allocation needs!
To provide investors with an opportunity for
WHAT DO long-term capital appreciation.
WE AIM It aims to capture the potential upside and limit
the downside in volatile equity markets. LONG
EQUITY
ARBITRAGE
FIXED
Basis several parameters, the fund manager will INCOME
DYNAMIC have complete flexibility to manoeuvre
ALLOCATION assets in the range of 0 – 100% across asset
EDGE classes
TRUE TO LABEL
DYNAMIC FLEXIBILITY TO ARRIVE AT THE OPTIMUM ASSET ALLOCATION
ASSET
ALLOCATION
FOCUS ON ACHIEVING RISK ADJUSTED RETURNS
MACRO FIXED
TRENDS EQUITY INCOME TAXATIONSBI Balanced Advantage Fund – Intended Template
Long Equity
Fixed Income (for Wealth
(to provide Stability) creation)
Equity
0%-35%
65%-100%
Arbitrage
(to limit the
downside risk)
Taxation
The Scheme will have Equity taxation when the allocation to Equity is >=65%
* Though it is a dynamic asset allocation scheme, the endeavour will be to keep atleast 65% of the total proceeds of the fund in domestic equity & equity related instruments (based on annual average of the monthly
averages of opening and closing figures) to attract equity taxation benefits as per prevailing tax laws.Three-tiered Investment Strategy
(Proposed strategy)
Proposed Investment Strategy
Asset Allocation Strategy Tilt Stock / Security Selection
• Asset allocation at any given point of time will be decided by the Fund Managers, using parameters such as
Sentiment Indicator, Valuations and Earnings Drivers
• Depending on the opportunity to generate higher alpha, Fund Managers will move between the asset classes
without any restrictionTier 1: Finding the right Asset mix
Step 1:
Sentiment Indicator Valuations
Multiple parameters to determine a value Metrics used for evaluation
• Breadth of the market • Trailing PE
• Retail participation • Shiller PE
• Mutual Fund flows • Earnings yield/ Shiller Earnings yield
• Primary market activities, etc. • Bond yield spread
Broad allocation towards Equity
Step 2:
Earnings Drivers
The Asset Allocation decision is taken basis various macro inputs like:
Fiscal/Monetary positions, real rates, monetary policy framework, variables of offshore markets, etc.
Allocation band for EquityTier 2, 3: Strategy Tilt & Stock Selection
Quantitative Framework to determine the Strategy Tilt
Tier 2: Strategy tilt in terms of market cap allocation, style skewness –
Strategy Tilt Value/ Growth/Quality and sector preference is determined using a
quantitative framework
Equity
• Stock picking based on Fund Manager conviction
• Portfolios are based on the highest conviction ideas of the analyst team
Tier 3:
Stock / Security
Selection
Fixed Income
• High credit / sovereign portfolio to maintain liquidity
• Duration management to generate alpha – across the yield curveStock Selection Process
Asset Allocation Stock / Security
Model Selection
Determining the style skewness
• Market capitalization
• Value / Growth / Quality • Generating alpha through Equity
• Sector preference • Stability through Debt
Deciding the asset mix • Equity: Portfolios based on high
between Equity and Debt conviction ideas of analyst team
and Fund Manager discretion
• Debt: Duration management
Quantitative Framework Portfolio ConstructionSimplifying investments
Asset Allocation
Experts to manage
Dynamically managed
Why struggle when you Asset allocation basis the
can leave the work for the market outlook
experts
Diversification Complete flexibility
Diversification across Few things to keep Uniqueness of the
asset classes to investment simple asset allocation range
balance the risk and with i.e., from 0 – 100% for
reward SBI Balanced Advantage Fund both Debt & EquityWho should invest?
TARGET AUDIENCE
Investors looking for a
Investors looking for Risk-averse Equity
Dynamic solution
long-term Investors with minimum
for the right mix of
Wealth Creation 3 years+ of Investment
Debt & Equity
HorizonSBI Balanced Advantage Fund – Fund Facts
Type of
Scheme
An open-ended dynamic asset allocation fund
Fund • Mr. Dinesh Balachandran & Mr. Gaurav Mehta for Equity portion
Managers • Mr. Dinesh Ahuja for Debt portion
• Mr. Mohit Jain is the dedicated fund manager for managing overseas investments
Benchmark
CRISIL Hybrid 50+50 – Moderate Index TRI
Index
• NIL - If units purchased or switched in from another scheme of the Fund are redeemed or switched out
up to 10% of the units (the limit) purchased or switched on or before 1 year from the date of allotment
• 1% of the applicable NAV - If units purchased or switched in from another scheme of the Fund are
Exit Load
redeemed or switched out in excess of the limit on or before 1 year from the date of allotment
• NIL - If units purchased or switched in from another scheme of the Fund are redeemed or switched out
after 1 year from the date of allotment
Application • Rs. 5000/- and in multiples of Rs. 1 thereafter
Amount • Additional Purchase: Rs. 1000/- and in multiples of Rs. 1 thereafterSWP (A) for regular cash flow requirements
We talked about Investments, but what about the Withdrawal plan?
Need
We make investments to plan for a better future. But all of us have the need for regular cash flow.
Systematic Withdrawal Plan (SWP) is a ready-made tool to get regular cash flows in a very simple and
tax-efficient manner.
How does it work?
Opt for SWP (A) in The remaining
Analyze your
Make an Growth or IDCW option corpus will
cash flow
investment for the desired amount, continue to
requirement
frequency earn returnsSWP (A) for regular cash flow requirements
Benefits:
SWPs provide the confidence of getting a fixed Indexation Indexation benefit on LTCG for non-equity funds.
Confidence
amount at a pre-determined frequency.
Wealth Long-term wealth creation opportunity along with Allows the investor to change the withdrawal
regular & steady cash flow. Flexibility amount and frequency of withdrawal at any time.
Creation
Smooth &
Tax Tax efficient option as compared to traditional Transparent The entire process is hassle-free and transparent.
Efficient withdrawal plans (Dividend, MIP etc.) Process
Any amount > Rs. 500
(Monthly) (Quarterly) (Half Yearly) (Yearly) (Monthly/Quarterly/
0.5% 1.5% 3% 6% Half Yearly/Yearly)
Under SWP(A) facility, investors will have the option to withdraw fixed % of the cost of investment or any specified amount to
meet their regular cashflow needs at various frequencies
Multiple options
Applicable months for different frequency: Monthly– All months; Quarterly - December, March, June, September; Half yearly – March & September; Yearly – March; Any amount – Applicable months as per chosen frequencyStrong Established Partnership
Strong Indian presence:
extended international reach
India’s premier and largest bank with over
200 years experience (Estd: 1806) € 1.750 trillion in Assets under Management
Ranked 43rd among the top banks globally in N°1 in Europe by AuM and in the Top 10 worldwide
terms of assets; asset base of USD 663.41 bn*
N°1 publicly traded asset manager in Europe
Second largest footprint globally, ~22,219 in terms of market capitalization
branches and 62,617 ATM’s as at end of
March 2021 6 investments hubs in key international financial
Servicing about 448.9 million customers centres and offices in 35 countries
Over 100 million retail, institutional and
~39% of SBI employees are certified to cross-sell corporate clients worldwide
subsidiary products
4,800 team members and market professionals
62.9261^% 36.9566%
*Source: Fortune Global 500 List; SBI Analyst Presentation as on end March end. 1 USD = Rs. 73.0407 Source: Amundi website as on March end 2021 ^SBI along with its nominees. The nominee shareholders
hold only 2000 shares in the Company. Individuals hold 0.1173% of shares of the company which are shares allotted under ESOPscheme 2018.SBI Funds Management Private Limited
Broad Investor Base
Rs. 5,23,198 crores* AAUM in mutual funds
AAUM Rs. 5,23,198 crores
Asset management across mutual funds, segregated
managed accounts, domestic advisory & offshore
Experienced Investment Team advisory business
Multiple asset classes ranging from equities and debt,
money market to ETFs and structured funds
Extensive Product Range
Investment team of 57 professionals with a strong
Wide Distribution Network track record
Broad customer base with ~10 million folios related to
individual, corporate and institutional investors
*Quarterly Average AUM as on June 30, 2021. Source: AMFI IndiaFund Managers’ Profile
Dinesh Balachandran, CFA Gaurav Mehta, CFA Dinesh Ahuja Mohit Jain, CFA
Fund Manager - Overseas
Fund Manager - Equity Fund Manager - Equity Fund Manager - Debt Investments
Industry Experience: 20 years Industry Experience: 15 Years Industry Experience: 23 years Industry Experience: 9 years
Dinesh Balachandran joined SBI Dinesh Ahuja joined SBI Funds Mohit Jain joined SBI Funds
Gaurav Mehta joined SBI Funds
Funds Management Private Management Private Limited Management Private Limited
Management Private Limited
Limited in 2012. Prior to being (SBIFM) in 2010. Prior to joining (SBIFM) in 2015. Mohit is a credit
(SBIFM) in November 2018. Prior
nominated as Portfolio Manager, SBIFM, Dinesh was a portfolio analyst and has fund management
to joining SBIFM, he worked as
he was the Head of Research. He manager at L&T Asset responsibilities. Prior to joining
Portfolio Manager at Ambit
joined as a Senior Credit Analyst. Management and Reliance Group SBIFM, Mohit was working as a
Investment Advisors. Previously,
Dinesh started his career with for four years. Dinesh started his Senior Research Analyst in CRISIL
he worked with Ambit Capital and
Fidelity in Boston, USA in 2001, career in 1998 as a fixed income Limited. He is a Charter holder of
Edelweiss Capital. Gaurav has
where as an analyst he covered dealer on the sell side. Thereafter the CFA Institute, USA.
completed B.Tech (Chemical
Structured Finance, and local US he worked in leading broking
Engineering) from IIT, Bombay and
fixed income market over 10 outfits for eight years before
holds a post graduate diploma in
years. Dinesh holds a B.Tech moving on the buy side in 2006.
Management from IIM,
degree from IIT, Mumbai and M.S.
Lucknow. Gaurav is also a Charter
degree from Massachusetts Dinesh is a Commerce graduate
holder of the CFA Institute, USA.
Institute of Technology (MIT). He and holds his Masters degree in
is also a Charter holder of the Finance from Mumbai University.
CFA Institute, USA.Disclaimer
This presentation is for information purposes only and is not an offer to sell or a solicitation to buy
any mutual fund units/securities. The views expressed herein are based on the basis of internal
data, publicly available information & other sources believed to be reliable. Any calculations made
are approximations meant as guidelines only, which need to be confirmed before relying on them.
These views alone are not sufficient and should not be used for the development or
implementation of an investment strategy. It should not be construed as investment advice to any
party. All opinions and estimates included here constitute our view as of this date and are subject
to change without notice. Neither SBI Funds Management Private Limited, SBI Mutual Fund nor
any person connected with it, accepts any liability arising from the use of this information. The
recipient of this material should rely on their investigations and take their own professional advice.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.You can also read
