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Common Concerns of
Investors regarding Equity Investment
Secure? Safe ?
Risk ?
em
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Common Concerns of
Investors regarding Equity Investment
Common Concerns of
Investors regarding Equity Investment
em
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Concern 1
Equity Markets are RISKY,
I want Safety First
My Bank FD is giving me 9% (Guaranteed), Why should I invest in equity?
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What Is The Meaning Of Safety? PRESERVING THE CAPITAL OR PRESERVING THE PURCHASING POWER
Key Objective of Investing : Enhancing Purchasing Power Over FY 1979–2013 CPI inflation has been 8.6%, eroding purchasing power of Rupee by 94%
Inflation erodes purchasing power of money Inflation erodes purchasing power of money
CPI =CPI Consumer Price Price IndexIndex = Consumer
Source: Centre for Monitoring Indian Economy (CMIE), Motilal Oswal Financial Services Ltd (MOFSL), Bloomberg, Motilal Oswal Asset Management Company (MOAMC) Internal Analysis. Data as on 31st October, 2013.
1
Real Life Example
Nominal Value
Key Objective of Investing : Enhancing Purchasing Power
Sensex (Cum div.) Sensex Gold Fixed Deposit
Current Value CAGR(%) Times 35420 18.55% 354.20 21165 16.79% 211.65 4085 11.35% 40.85 1619 8.41% 16.19
Source: Bloomberg, MOAMC Internal Analysis. Data as on 31st October, 2013.
2
Key Objective of Investing : Enhancing Purchasing Power
Purchasing Power
Equities significantly enhance purchasing power of portfolios Inflation-adjusted returns of different assets
Sensex (Cum div.) Sensex Gold Fixed Deposit
Current Value CAGR(%) Times 2175 9.34% 21.75 1300 7.72% 13.00 251 2.70% 2.51 99 -0.03% 0.99
Source: Bloomberg, MOAMC Internal Analysis. Data as on 31st October, 2013.
Reality VS Illation Normally House hold expense gets double at every 5 years due to CPI and lifestyle inflation.
You think you are safe, but you are not: Ostrich Mentality Today House Hold 25,000 Expenses 25,000 FD
After 15 years Rs.2,00,000, Rs.91062*
Biggest Risk in Equity market “Not investing into it” *9% interest is assumed in Bank FD
3
4
Concern 2
Let The Market Correct
Then I Will Enter
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5
Time Is More Important Name
Mr. Sharma
Mr. Mehta
19
26
50000
50000
25
65
65
65
350000
2000000
52572371
42957119
Investment Started at Age Annual Investment Investment con nued ll Age Investment Held ll age Total Investment Wealth At age 65* 60100000
52572371 42957119
50100000 40100000 30100000 20100000 10100000
350000
Wealth At age 65
2000000
100000
Total Investment Mr. Sharma Mr. Mehta Total Investment Wealth At age 65
GREAT MOMENTS IN SCIENCE:
EINSTEIN DISCOVERS THAT TIME IS ACTUALL MONEY.
6
Effect Of Compounding Vs. Time Value of Investment: 15000/- Per month No of Years
Savings A/c
Bank FD
4%
9%
Equity Mutual Fund 12%
15%
18%
2
3,75,390
3,95,773
4,08,648
4,22,032
4,35,945
5
9,97,800
11,39,847
12,37,295
13,45,225
14,64,868
10
22,16,110
29,24,485
34,85,086
41,79,859
50,43,863
15
37,03,662
57,18,657
75,68,640
1,01,52,946
1,37,88,133
20
55,19,958
1,00,93,440 1,49,87,219
2,27,39,325
3,51,52,308
25
77,37,650
1,69,42,955 2,84,64,526
4,92,61,106
8,73,49,682
30
1,04,45,444
2,76,67,111 5,29,48,707 10,51,47,309 21,48,79,338
Savings and Bank FD return is assumed at 4% and 9% respec vely. For Equity MF various assumed return scenario.
More Time = More Wealth It’s Not Timing It’s Time Into The Market Which Is More Important.
Historically, those who stayed invested with their invested have made big fortunes.
7
Behavior Gap People who constantly try to time the market end up getting lesser return than the actual asset class performance Major returns in equity market is delivered in few days. By constantly trying to time the market, chances of losing those few days are very high. “World is waiting for market to crash, market is waiting for your passion to crash.�
Risk Of Missing Few Best Days Valua on as on 14th July 2014 of Rs 100000 invested for 10 years
Product
Current Value
Impact of Best Days missed 2 days
5 days
10 days 20 days 30 days 40 days
Sensex
524,199 412,801 337,181 251,906 149,353 95,781
65,713
Birla Sun Life Equity Fund
769,417 611,452 512,141 388,639 251,137 173,938 125,811
DSP BlackRock Opportuni es Fund 646,632 570,762 466,110 357,449 235,689 168,631 125,659 HDFC Equity Fund
8
875,144 768,618 645,569 498,366 324,265 230,057 168,017
What if you missed BEST days? Sensex
850,000 650,000
Value of Rs 1,00,000 invested before 10 years*
524,199 412,801
450,000
337,181 251,906
250,000
149,353 95,781 65,713
50,000 Current 2 days 5 days 10 days 20 days 30 days 40 days Value
Birla Sun Life Equity Fund 850,000
769,417 611,452
650,000
512,141 388,639
450,000
251,137
250,000
173,938 125,811
Value of Rs 1,00,000 invested before 10 years*
50,000 Current 2 days 5 days 10 days 20 days 30 days 40 days Value
HDFC Equity Fund
900,000
Value of Rs 1,00,000 invested before 10 years*
875,144 768,618 645,569
700,000
498,366 500,000 324,265 300,000
230,057
168,017
100,000 Current Value
2 days
5 days
10 days 20 days 30 days 40 days
DSP BlackRock Opportuni es Fund 900,000 700,000
646,632 570,762
Value of Rs 1,00,000 invested before 10 years*
466,110
500,000
357,449 235,689
300,000
168,631
125,659
100,000 Current Value
2 days
5 days
10 days 20 days 30 days 40 days
9
10
Concern 3
Let The More Clarity Come, Then I Will Invest
“WALL OF WORRY” em
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11
Market Doesn’t Wait For Clarity Market always reacts in advance. It goes up or down before the actual event takes place. Waiting for the clarity may result in paying the premium and lesser returns. So when odds are in favor of investment, don’t wait for the exact clarity. People who were waiting for election to get over have missed the rally of 6000 points in Sensex.
Cost Of Clarity Period
Market Indicator
Wall of Worry
Sensex
2013: Sept
Modi appointed as BJP's PM Candidate
But there is infigh ng within BJP
19733
2013: Dec
BJP wins assembly elec on of 4 states
But these are only Hindi heartlands
21326
2014: March
Opinion polls accord majority to NDA
But opinion polls were wrong in 2004 & 2009
21920
2014: April
Heavy Campaigning by Modi
But polariza on of votes will happen
22702
2014: Early may
Exit Polls gives NDA majority
But exit polls always underes mates Congress
23551
2014: May
BJP alone gets majority
But BJP does not have majority in upper house
24122
12
13
Concern 4
I don’t want to invest as the last 3 years returns are not good. Every time I invest in Equity Fund looking at performance, but after my investments scheme performance deteriorates.
em
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14
15
3346 3927 3110 3085 3659 3055 5006 3972 3262 3377 5839 6603 9398 13787 20287 9647 17465 20509 15455 19427 21117 28032
Date
24-Dec-93 23-Dec-94 22-Dec-95 24-Dec-96 31-Dec-97 31-Dec-98 30-Dec-99 29-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 30-Dec-05 29-Dec-06 31-Dec-07 31-Dec-08 31-Dec-09 31-Dec-10 30-Dec-11 31-Dec-12 31-Dec-13 19-Nov -14
PE EPS for (based financial on EPS year for FY) 129 25.94 181 21.70 250 12.44 266 11.60 291 12.57 278 10.99 280 17.88 216 18.39 236 13.82 272 12.42 348 16.78 450 14.67 523 17.97 718 19.20 833 24.35 820 11.77 830 21.04 1060 19.35 1140 13.56 1196 16.24 1326 1593 1542 18.32 Min Max Average -1.80% 4.97% 5.01% 1.12% -1.59% 13.83% 5.69% 18.80% 33.41% 43.13% 10.56% 21.48% 16.89% 2.31% -0.86% 16.96% 6.94% 0.19% 0.80% 1.52% 8.10% 13.70% 11.07% 23.05% 35.61% 19.12% 20.03% 20.79% 8.64% 5.88% 0.67% 2.48% -2.61% 1.18% 9.54% 8.80% 17.41% 15.57% 26.23% 16.75% 26.46% 19.66% 12.92% 10.93% 6.28%
-0.32% -1.87% 8.19% 9.98% 12.51% 20.73% 19.12% 11.73% 23.33% 25.29% 12.94% 14.44% 10.65%
• EPS for FY 14 is assumed. • EPS for FY 15 is the assumed EPS for the year
5.33% 19.12% 13.69%
2.26% -6.08% 12.63% 6.52% -2.83% 2.54% 3.92% 13.55% 30.28% 42.14% 36.53% 9.94% 16.76% 10.44% -6.58% 19.12% 4.86%
8.99% 17.19% 13.20%
8.99% 11.03% 16.91% 9.97% 13.91% 17.19% 9.85% 14.14% 16.84%
7.31% 13.76% 11.34%
7.31% 10.46% 13.40% 11.34% 11.77% 13.76%
4 years 5 years 6 years 7 years 8 years 9 years 10 years 12 years 15 years
-52.45% -31.04% -12.29% -6.58% -1.80% 0.19% -2.61% -1.87% 0.10% 81.03% 45.80% 40.65% 42.14% 43.13% 35.61% 26.46% 25.29% 23.41% 15.23% 9.42% 8.54% 11.53% 11.87% 11.74% 12.26% 12.83% 13.37%
-2.67% -2.33% -0.59% 17.51% 2.77% 2.21% -12.29% 13.70% 26.49% 40.65% 33.16% 29.24% -11.22% -4.87% 0.36% 17.01% 3.61% 0.98%
3 years
5.73% 5.33% 11.69% 16.15% 18.68% 12.18% 13.31% 17.84% 16.83% 19.12% 13.72%
-3.58% -11.36% 8.46% -0.48% 16.97% 14.02% -19.27% -7.79% 33.78% 39.82% 26.87% 44.50% 21.30% -31.04% -7.22% 45.80% -5.93% -2.67% 16.89%
2 year
0.10% 4.51% 8.72% 13.17% 15.88% 23.41% 7.56% 17.89% 22.66% 18.41% 14.29% 13.79%
17.36% -20.79% -0.81% 18.60% -16.50% 63.83% -20.65% -17.87% 3.52% 72.89% 13.08% 42.33% 46.70% 47.15% -52.45% 81.03% 17.43% -24.64% 25.70% 8.70%
1 year
• Sensex is taken as on par cular day (i.e last day of December of each calendar year. • EPS is taken for the respec ve financial year.
BSE Sensex (as on Dec 31)
Historical Returns
3346 3927 3110 3085 3659 3055 5006 3972 3262 3377 5839 6603 9398 13787 20287 9647 17465 20509 15455 19427 21117 28032
Date
24-Dec-93 23-Dec-94 22-Dec-95 24-Dec-96 31-Dec-97 31-Dec-98 30-Dec-99 29-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 30-Dec-05 29-Dec-06 31-Dec-07 31-Dec-08 31-Dec-09 31-Dec-10 30-Dec-11 31-Dec-12 31-Dec-13 19-Nov -14
PE EPS for (based financial on EPS year for FY) 129 25.94 181 21.70 250 12.44 266 11.60 291 12.57 278 10.99 280 17.88 216 18.39 236 13.82 272 12.42 348 16.78 450 14.67 523 17.97 718 19.20 833 24.35 820 11.77 830 21.04 1060 19.35 1140 13.56 1196 16.24 1326 15.93 1542 18.32 Min Max Average -6.58% 42.14% 11.53%
4 Years
-52.45% -31.04% -12.29% 81.03% 45.80% 40.65% 15.23% 9.42% 8.54%
3 years 2.26% -6.08% 12.63% 6.52% -2.83% 2.54% 3.92% 13.55% 30.28% 42.14% 36.53% 9.94% 16.76% 10.44% -6.58% 19.12% 4.86%
2 year
17.36% -3.58% -2.67% -20.79% -11.36% -2.33% -0.81% 8.46% -0.59% 18.60% -0.48% 17.51% -16.50% 16.97% 2.77% 63.83% 14.02% 2.21% -20.65% -19.27% -12.29% -17.87% -7.79% 13.70% 3.52% 33.78% 26.49% 72.89% 39.82% 40.65% 13.08% 26.87% 33.16% 42.33% 44.50% 29.24% 46.70% 21.30% -11.22% 47.15% -31.04% -4.87% -52.45% -7.22% 0.36% 81.03% 45.80% 17.01% 17.43% -5.93% 3.61% -24.64% -2.67% 0.98% 25.70% 16.89% 8.70%
1 year
• Sensex is taken as on par cular day (i.e last day of December of each calendar year. • EPS is taken for the respec ve financial year.
BSE Sensex (as on Dec 31)
Historical Returns
0.19% 35.61% 11.74%
6.94% 0.19% 0.80% 1.52% 8.10% 13.70% 11.07% 23.05% 35.61% 19.12% 20.03% 20.79% 8.64% 5.88% 0.67%
6 years
-2.61% 26.46% 12.26%
2.48% -2.61% 1.18% 9.54% 8.80% 17.41% 15.57% 26.23% 16.75% 26.46% 19.66% 12.92% 10.93% 6.28%
7 years
-1.87% 25.29% 12.83%
-0.32% -1.87% 8.19% 9.98% 12.51% 20.73% 19.12% 11.73% 23.33% 25.29% 12.94% 14.44% 10.65%
8 years
0.10% 23.41% 13.37%
0.10% 4.51% 8.72% 13.17% 15.88% 23.41% 7.56% 17.89% 22.66% 18.41% 14.29% 13.79%
5.33% 19.12% 13.69%
5.73% 5.33% 11.69% 16.15% 18.68% 12.18% 13.31% 17.84% 16.83% 19.12% 13.72%
8.99% 17.19% 13.20%
8.99% 11.03% 16.91% 9.97% 13.91% 17.19% 9.85% 14.14% 16.84%
7.31% 13.76% 11.34%
7.31% 10.46% 13.40% 11.34% 11.77% 13.76%
9 years 10 years 12 years 15 years
• EPS for FY 14 is assumed. • EPS for FY 15 is the assumed EPS for the year
-1.80% 43.13% 11.87%
-1.80% 4.97% 5.01% 1.12% -1.59% 13.83% 5.69% 18.80% 33.41% 43.13% 10.56% 21.48% 16.89% 2.31% -0.86% 16.96%
5 years
17
Concern 5
Sentiments are not good, just look at the NEWS.
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18 12
Don’t Act On Headlines 8 January 2008 Sensex Level: 20,873 P/E Valuation: 28.51 Overall market sentiment Net Equity inflows: `1,00,384 Crs. (Jan 2006 - Sept 2008)
What happens next? Sensex Returns since then: -1.44% CAGR*
20 November 2008 Sensex Level: 8,451 P/E Valuation: 10.72 Overall market sentiment Net Equity inflows: `2,113 Crs. (Oct 2008 - Mar 2009)
What happens next? Sensex Returns since then: 20.21% CAGR*
28 March 2013 Sensex Level: 18,835 P/E Valuation: 15.95 Overall market sentiment Net Equity inflows: `15,778 Crs. (Apr 2011 - Feb 2013)
What do you think will
happen next ?
“I think the worst mistake you can make in stock market is to buy or sell based on current headlines.” - Warrant Buffet 19
20
Concern 6
No One Is Investing In Stock Market Right Now.
em
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em
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21
When To Invest? Choice 1: When Market is cheap, attractive but no one wants to invest.
Choice 2: When Market is costly And everyone wants to invest.
Why we opt for 2nd Choice? Investor's Decision Vs Feeling Alone
Group
Wrong
Very Bad
Not So Bad
Right
Very Good
Not So Good
What is more profitable: buying cheap or buying costly?
Don’t Follow the Hand
22
23
Concern 7
What if FIIs move out of
market?
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24
We think “Achhe din aane WALE hai” FII believe “Achhe din aa GAYE hai.” We are proud of our country and its economic power. FII invest in our economic power and earn from it.
No of FIIs registered with SEBI 2000 1765
1713
1710 1722
1635
1757
1500 1319
1000
997 882 685
500
502 Jan-03
Jan-04
540 Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12 Jan-13
Jan-14
FII is not a single entity There are around more than 1700+ FIIs They are all from the different parts of the world All of them may not require the money at the same time. They come for the longer period of time. Over a period of time FIIs have increased their holding in Indian companies.
25
FII Inflow In Indian Equity Market Financial Year
FII Flow cr in
Financial Year
Financial Year
2000-01
FII Flow cr in 10,207
2008-09
FII Flow cr in -47,706
1992-93 1993-94
13 5,127
2001-02
8,072
2009-10
110,221
1994-95
4,796
2002-03
2,527
2010-11
110,121
1995-96
6,942
2003-04
39,960
2011-12
43,738
1996-97
8,546
2004-05
44,123
2012-13
140,033
1997-98
5,267
2005-06
48,801
2013-14
79,709
1998-99
-717 9,670
2006-07
25,236
2014-15 **
2007-08
53,404
Total
60071 717,688
1999-00
Source: https://www.fpi.nsdl.co.in/web/data/fii_inv_det_financial.htm
Since last 10 years FII is net seller only in 1 financial year. FIIs are continuously buying the Indian Equity markets On daily basis due to the huge volumes of FIIs market may be volatile, but over long term FIIs are interested only in buying.
How have we done over time? Holding in NIFTYMarch 2008
Holding in NIFTYJune 2014
Holding in CNX 500March 2008
Holding in CNX 500June 2014
54.95%
47.62%
58.47%
52.11%
FII
16.05%
22.64%
14.59%
19.91%
DII
10.46%
11.92%
9.31%
10.33%
Public
8.20%
6.63%
8.36%
7.47%
Others
10.34%
11.19%
9.27%
Type of Shareholder Promoter Non Promoters
10.20% Source: www.sebi.gov.in
26
Who Own What ? BSE 500 ownership 30th June 2014 Banks/FIs 1.50%
Non-Promoter Corporate 4.20%
Indian Promoters 28.10%
Public 7.60%
MFs 3.40% Insurance 5.40%
Govts. 16.40%
Foreign Promoters 8.20%
Retail- 12% FII – 22% MF – 3%
Others 3.20% FIIs 22.20%
BSE Sensex ownership 30th June 2014 Banks/FIs Non4.60% Promoter Corp. 3.50% Public MF 3.40% 6.80%
Promoters 23.80%
Insurance 7.70%
Foreign Promoters 5.10%
Govt. 17.80%
Retail - 10% FII – 27% MF – 3%
FIIs 26.70%
Others 3.70% 27
28
Concern 8
Markets are at all time high,
it can’t move up further.
em
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29
Sensex may be at all time high, but valuation are not. One need to keep an eye the valuation measured by P/E ratio to ďŹ nd out weather the markets are cheap or costly P/E of market swings like pendulum from low to high. Current PE of market
New Cycle Of Earnings Growth The chart below indicates the S&P Sensex expected Earnings Per Share (EPS) growth from FY13 –FY15E.
FY13-15E: 14% 1,525 CAGR 1,331
FY08-13: 7% CAGR
1,123 1,183
1,024
FY03-08: 25% CAGR
833 820
834
718
FY96-03: 1% CAGR
FY15E
FY14E
FY13
FY12
FY11
FY10
FY09
FY00
348
FY08
FY99
272
FY07
FY98
236
FY05
FY97
216
FY04
280
FY03
278
FY02
291
FY01
266
FY96
181
FY95
129
FY94
FY93
81
450 250
523
FY06
FY93-96: 45% CAGR
Above forward-looking graphs & statements are based on external current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results. Past performance may or may not be sustained in future. Source: Motilal Oswal Securities Ltd, as on March 31 , 2014
30
Current Valuations Below Decadal Average 27
24.65 10 Year Avg: 15.4x
17
14.68
12 10.67
7
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
SENSEX P/E (x)
22
4.8 4.15
10 Year Avg: 2.7x
3.0
2.40
2.1 1.64
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
1.2
SENSEX P/B (x)
3.9
Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Source: Motilal Oswal Securities Ltd, as on March 31 , 2014
31
Sensex Projection SENSEX projc on @ 15% es mated EPS growth Year 3 5 7 EPS 1467 2231 2951 3902 15 33467 44260 58534 18 40160 53112 70240 PE 20 44622 59013 78045 22 49085 64915 85849
SENSEX projc on @ 18% es mated EPS growth Year 3 5 7 EPS 1467** 2410 3356 4673 15 36155 50342 70096 18 43386 60411 84116 PE 20 48207 67123 93462 22 53027 73835 102808 **As on 18th Nov., 2014
Current EPS = Current Sensex/Current PE Sensex 28168 and PE 19.19 as per www.bseindia.com
Historical PE movement Low PE10.68 Average PE 18.31 High PE28.47
32
33
Concern 9 I don’t need Mutual Funds, they also go down with market. Mutual Funds are even not beating Sensex, why should I invest in MF? I can do it on my own, I am educated and intelligent.
em
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34
It’s Not About Being Intelligent
“I can calculate the movement of stars, but not the madness of men.” -Sir Isaac Newton
It’s Not About High IQ It’s About High EQ Newton lost his life saving of 20000 British pound in year 1720 trying on his own. His loss is equal to approx Rs 18 cr. in today’s context.
Do you think you are more educated and intelligent than Isaac
35
Understanding And Doing It Different Just by looking at the picture, I am sure you can understand what the by pass surgery is .. Now if you have understood what bypass surgery is,
If you or any of your member suffer from blockage of coronary artery?
WILL YOU DO IT YOURSELF,
Can You Do This On Your Own? Par culars
Investment On 14-Feb-00
Value As On Value As On (Panic (Confused Investor) Abs. Investor) Growth 21-Sep-01 23-Nov-04
Smart Investor, Addi onal Investment on 21st Sept 2001 25000
50000
100000
112%
316094
419828
627296
102%
279003
355465
508390
255610
155%
410563
565515
875421
71651
235370
135%
317494
399618
563865
43927
182360
82%
286569
390509
598388
100000
45550
256670
156%
397543
538415
820161
100000
46002
169780
69%
262048
354315
538851
ICICIPru DiversiďŹ ed Power
100000
45433
221220
121%
342949
464677
708135
Reliance Growth Fund
100000
26818
221750
121%
428468
635185
1048620
Sensex
5924.31
2600.12
6009.86
1.44%
HDFC Equity Fund
100000
51179
212360
Franklin Bluechip
100000
66222
202540
Reliance Vision Fund
100000
41240
HDFC Prudence Fund
100000
Tata Pure Equity
100000
Franklin India Prima Fund HDFC Top 200
Understanding something and doing something is all together different ball game.
36
37
ICICI Pruden al Value Discovery Fund - Growth HDFC Mid-Cap Opportuni es Fund - Growth IDFC Premier Equity Fund - Reg - Growth Reliance Equity Opportuni es Fund - Growth HDFC Equity Fund - Growth Birla Sun Life Dividend Yield Plus - Growth Franklin India Smaller Companies Fund- Growth ICICI Pruden al Dynamic Plan - Growth HDFC Top 200 - Growth DSP BlackRock Small and Midcap Fund - Reg - Growth Sundaram Select Midcap - Reg - Growth Birla Sun Life India GenNext Fund - Growth Birla Sun Life Frontline Equity Fund - Plan A - Growth Templeton India Equity Income Fund - Growth Tata Dividend Yield Fund - Plan A - Growth Reliance Long Term Equity Fund - Growth Franklin India Prima Plus - Growth Franklin India Prima Fund - Growth Franklin India High Growth Companies Fund - Growth L&T Equity Fund - Growth Franklin India Flexi Cap Fund - Growth Canara Robeco Equity DiversiďŹ ed - Growth L&T India Large Cap Fund - Growth L&T India Special Situa ons Fund - Growth Tata Equity P/E Fund - Plan A - Growth HDFC Capital Builder Fund - Growth ICICI Pruden al Top 100 Fund - Growth Sundaram SMILE Fund - Reg - Growth Birla Sun Life Top 100 Fund - Growth SBI Magnum Global Fund 94 - Growth L&T Midcap Fund - Growth DSP BlackRock Equity Fund - Reg - Growth Franklin India Bluechip - Growth Templeton India Growth Fund - Growth ICICI Pruden al Exports and Other Services Fund- Growth SBI Emerg Buss Fund - Growth Tata Mid Cap Growth Fund - Plan A - Growth Birla Sun Life India Opportuni es Fund - Growth
Sensex
Scheme Name 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000
08th Jan 2008 20873 38791 39683 40009 36196 40507 49916 29671 46929 45480 35172 32613 43466 44439 41593 41430 38905 44214 30767 32802 43682 39414 38944 43643 36007 38729 37604 46189 33156 43947 26798 30316 45092 45027 41765 28838 22624 32415 32219
Value as on 09th Mar 2009 8160 262715 237033 219332 206216 196079 196014 188427 187597 187566 186982 186195 181431 177988 177722 175912 175427 174803 174003 172005 169799 169792 168899 167860 167773 166920 166442 165869 165123 164959 164479 163973 162517 162406 161629 159545 158912 158777 156105
Value as on 24th Sept 2014 26744
58.91% 58.78% 56.10%
59.55%
69.80% 69.79% 68.90% 67.86% 67.77% 66.92% 66.44% 65.87% 65.12% 64.96% 64.48% 63.97% 62.52% 62.41% 61.63%
72.01%
77.72% 75.91% 75.43% 74.80% 74.00%
77.99%
86.19% 81.43%
86.98%
162.71% 137.03% 119.33% 106.22% 96.08% 96.01% 88.43% 87.60% 87.57%
28.13%
% Change
38
Concern 10
I want to stop my SIP, because the returns are not good for last 5 years
em
Power empowering you to succeed
39
Equity Investment - Game of Patience Curious case of Chinese Bamboo 1. You take a tiny seed, plant it and water it... you get a tiny sampling.... nothing more
YEARS
2. You water it, fertilize it.... the sampling stays as it is.... nothing happens 3. You continue to water it, take care of it...still nothing happens 4. Against your better judgment, you need to continue to water it, fertilise it... and still nothing will happen 5. To everyone's surprise, the tree sprouts and grows NINTY feet in SIX weeks
Chinese Bamboo tree tests your patience
What was going on in first Few Years? The tiny sampling was actually developing its root system underground to sustain its impending over the ground growth fifth year onwards. If you had uprooted the sampling to see why it was not growing, it would die. But if you were patient and had faith, you would witness the miraculous growth later on
Investing – similar game of patience
40
41
SIP Stopped Vs SIP Continued SIP Start Date: 15th Sept Valuation as on: 17th Novemebr 2014
Scheme Name SIP of Rs 5000 per month
3 Years Return as on 17 th Aug. 13 (SIP Stopped) Total Investment
Return of same ll Nov 2014 (SIP con nued )
Value CAGR Total Investment
Present Value(SIP) CAGR
Birla Sun Life Equity Fund - Growth Birla Sun Life Mid Cap Fund - Plan A Growth DSP BlackRock Equity Fund - Reg Dividend DSP BlackRock Small and Midcap Fund Reg - Growth DSP BlackRock Top 100 Equity Fund - Reg - Growth HDFC Equity Fund - Growth HDFC Growth Fund - Growth HDFC Top 200 - Growth Kotak 50 - Growth Reliance Growth - Growth Reliance Vision - Growth Sundaram SMILE Fund - Reg - Growth
180000 180000
171787 -3.17 164416 -6.11
255000 255000
429373 431710
25.90 26.19
180000
166851 -5.13
255000
403877
22.75
180000
159774
255000
458005
29.26
180000
179842 -0.06
255000
373815
18.81
180000 180000 180000 180000 180000 180000 180000
164718 165589 168967 176727 163569 153723 150503
-5.98 -5.63 -4.28 -1.25 -6.45 -10.52 -11.89
255000 255000 255000 255000 255000 255000 255000
423069 375811 404833 386695 413905 412300 510341
25.14 19.08 22.87 20.53 24.01 23.81 34.98
Tata Equity P/E Fund - Plan A - Growth
180000
163176 -6.61
255000
435214
26.60
-8
SIP Start Date: 15th Sept Valuation as on: 17th Novemebr 2014
Scheme Name SIP of Rs 5000 per month Birla Sun Life Equity Fund - Growth Birla Sun Life Mid Cap Fund - Plan A - Growth DSP BlackRock Equity Fund - Reg - Dividend DSP BlackRock Small and Midcap Fund - Reg - Growth DSP BlackRock Top 100 Equity Fund - Reg - Growth HDFC Equity Fund - Growth HDFC Growth Fund - Growth HDFC Top 200 - Growth Kotak 50 - Growth Reliance Growth - Growth Reliance Vision - Growth Sundaram SMILE Fund - Reg - Growth Tata Equity P/E Fund - Plan A - Growth
5 Years Return as on 17 th Aug.13 (SIP Stopped)
Return of same ll Nov 2014 (SIP con nued ) Total Present Total Investment Value CAGR CAGR Investmen Value(SIP) 300000 300000 300000 300000 300000 300000 300000 300000 300000 300000 300000 300000 300000
326814 330158 332700 344293 351504 344709 333513 343043 336806 319006 291942 291401 325948
3.49 3.9 4.22 5.62 6.47 5.67 4.32 5.47 4.72 2.5 -1.11 -1.18 3.38
375000 375000 375000 375000 375000 375000 375000 375000 375000 375000 375000 375000 375000
Normally average Investor stops SIP after 3 or 5 years if returns are not good or negative 42
724518 757908 702896 857952 640076 771726 658214 718737 649006 707261 686439 868338 761619
21.36 22.83 20.37 26.92 17.31 23.43 18.22 21.10 17.76 20.57 19.59 27.32 23.00
43
Concern 11
em
Power empowering you to succeed
I want to save for my Son’s education/My retirement;
why should I invest in equity? wherein there is no surety of returns?
44
PPF Returns
Normally average Investor stops SIP after 3 or 5 years if returns are not good or negative
45
ELSS Vs. PPF ELSS Vs. PPF 140
Rs. 128.99 Lacs (1.29 Crore)
120
(in Rs. Lacs)
100 80 60 40 Rs. 15 Lacs
Rs. 30.30 Lacs
20 0
Time Horizon
46
Invested Amt.
PPF
Invst. Invst. Per Invst. Till Date (Rs. Lacs) Made in Annum(Rs.)
15 Years
PPF
1,00,000
Rs. 15 Lacs
15 Years
ELSS
1,00,000
Rs. 15 Lacs
ELSS
Rate of Return
Current Value (Rs. Lacs)
Refer the PPF interest rate table Rs. 30.30 Lacs 24.34%* Rs. 128.99 Lacs
Comparison Of ELSS Vs. PPF The Table shows value of 1 lac invested every year in PPF, Sensex and Various ELSS schemes on 31st July of every year. Valuation Date: 31 July 2014. 1 Year
2 Years
3 Years
5 Years
7 Years
10 Years
12 Years
Axis Long Term Equity Fund
1,67,843
3,59,968
5,74,686
Birla Sun Life Tax Plan
1,49,791
3,14,530
4,95,254
NA 8,59,910
NA 13,37,830
NA 24,55,300
NA 48,67,797
Birla Sun Life Tax Relief 96 BNP Paribas Long Term Equity Fund
1,51,256
3,18,358
5,00,784
8,35,462
13,15,051
24,40,837
43,95,364
1,50,328
3,22,219
5,13,107
9,18,546
14,07,176
Canara Robeco Equity Taxsaver
1,43,582
3,00,129
4,74,621
8,55,966
15,01,406
NA 31,50,460
NA 55,94,754
DSP BlackRock Tax Saver Fund
1,52,118
3,22,236
5,14,376
8,90,104
14,57,672
Franklin India Taxshield HDFC Long Term Advantage Fund
1,52,607
3,20,471
5,01,061
9,11,924
14,94,884
NA 29,60,255
NA 56,53,976
1,48,587
3,16,690
4,97,025
8,76,224
14,41,794
26,65,502
55,14,983
HDFC Taxsaver HSBC Tax Saver Equity Fund
1,60,013
3,31,075
5,12,064
8,87,317
14,77,897
29,68,633
64,20,773
1,54,517
3,18,843
5,10,056
8,80,483
14,17,586
ICICI Prudential Taxplan
1,59,549
3,34,660
5,27,932
9,44,620
16,27,640
NA 30,87,422
NA 63,90,486
IDFC Tax Advantage (ELSS) Fund
1,42,927
3,07,721
4,85,999
8,59,657
NA
1,50,176
2,98,445
4,61,354
7,83,472
NA 12,18,576
NA
Kotak Taxsaver L&T Tax Advantage Fund
NA
NA
1,43,163
3,00,045
4,65,471
8,26,702
13,82,805
Principal Personal Taxsaver
1,44,401
3,01,251
4,72,463
7,92,725
12,39,661
NA 23,14,297
NA 39,66,763
Principal Tax Savings Fund
1,55,844
3,31,379
5,34,103
8,99,764
13,37,428
23,98,953
43,15,567
Reliance Tax Saver (ELSS) Fund
1,95,481
3,87,782
6,13,274
10,84,115
17,74,660
NA
NA
Religare Invesco Tax Plan
1,55,117
3,26,062
5,11,120
9,14,100
15,63,288
SBI Magnum Tax Gain Scheme 93
1,51,442
3,15,988
5,00,517
8,61,570
13,65,927
NA 28,75,099
NA 68,97,552
Sundaram Taxsaver Tata Tax Saving Fund - Plan A
1,43,888
2,94,376
4,61,945
7,77,509
12,21,409
25,63,615
51,54,556
1,44,549
3,04,000
4,75,139
8,38,694
13,46,717
24,22,991
45,24,251
UTI Equity Tax Savings Plan
1,40,607
2,93,482
4,56,522
7,83,252
12,11,495
21,19,101
35,75,622
Maximum
1,95,481
3,87,782
6,13,274
10,84,115
17,74,660
31,50,460
68,97,552
Minimum
1,40,607
2,93,482
4,56,522
7,77,509
12,11,495
21,19,101
35,75,622
Average
1,52,626
3,19,078
5,02,676
8,70,577
14,07,045
26,47,882
51,74,803
Sensex
1,31,663
2,82,245
4,39,635
7,54,037
11,79,196
22,38,518
37,51,234
PPF Calculated @ Actual Rates
1,08,909
2,27,340
3,56,056
6,45,176
9,82,442
15,96,487
20,93,017
Scheme Name
Summary
past performance may or may not sustain in future.
47
Case Study – Retirement Planning Name: Raj Sharma- Age 35 • Retirement Age
Age 60 Years
• Life Expectancy
80 Years
• Current Monthly Expense
25000
• Inflation
8%
• Risk free return after retirement
9%
• Monthly Expense at retirement
1,71,212
• Corpus Required for the Retirement
4,53,30,143
Years to Save – 25
Retirement Corpus needed 4.53 Cr.
Expected Return
8%
Monthly Investment required
49,550
12%
15%
18%
26,630 16,444 10,069 7,241
Power of compounding is the 8th wonder of world.
48
20%
Case Study – Child Education Fund Parent : Anil Kumar
-
Child Name : Samir
• Child Age
5 Years
• Higher Education Age
18 Years 10,00,000 Rs.
• Current Education expense
8%
• Inflation
27,19,623 Rs.
• Expected Education cost (after 13 years)
Years to Save – 13
Child Education Fund Required 27.19 Lac.
Expected Return
8%
12%
15%
18%
20%
Monthly Investment required (Rs)
10,111
7,600
6,111
4,902
4,228
Power of compounding is the 8th wonder of world.
49
50
Concern 12
What if the fund chosen by me under-perform?
em
Power empowering you to succeed
51
Past performance as on 23td June, 2014
Par culars
15 Years
Total Number of Schemes Highest Return (%) Lowest Return (%) Average Return (%) Schemes with 20% plus CAGR Schemes with 15% plus CAGR Schemes with 12% plus CAGR Schemes with 10% plus CAGR
49 26.24 10.68 18.70 22 42 47 49
All diversified equity funds which has completed 15 years as on 23rd June, 2014.
•Don’t invest in Schemes based on Past Performance only. •Consult your Financial Advisor •Ask for Fund Selection Parameters. 52
Disclaimer and Risk Factors: This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information/data here in alone is not suf icient and shouldn’t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions, igures, charts/graphs, estimates and data included in this presentation are as on particular date mentioned into the presentation and are subject to change without notice. While utmost care has been exercised while preparing this document, Prudent CAS Ltd does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on
em
Power empowering you to succeed
our views and assumptions and involve known and unknown risk and uncertainties that could cause actual results, performance or events to dier materially from those expressed or implied in such statement. Reader shall be fully responsible / liable for any decision taken on the basis of this presentation. Investments in Mutual Funds are subject to market and other risks and there is no assurance or guarantee of returns. The material is based upon information we consider reliable, but we do not represent that it is accurate or complete, and it should not be solely relied upon. Neither Prudent CAS Ltd nor any person connected with it accepts any liability arising from the use of this material. The document is not for the public distribution and has been furnished solely for information and must not be reproduced or redistributed to any other person. Person into whose possession this document may come are required to observe these restrictions.