Factsheet March 2016
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Crosses `100 Crores* BOI AXA SHORT TERM INCOME FUND . AVERAGE MATURITY AND MODIFIED DURATION The fund is currently maintaining a Modified Duration of 0.56 and an Average Maturity of 0.90 years (as of March 31, ‘16) Hence, the fund is well positioned to take advantage of the middle segment of the yield curve where we see maximum value Why invest ASSET QUALITY in BOI AXA The fund is maintaining a judicious mix between Corporate Bonds, Money Market instruments and Government Securities This enables the fund to earn accrual income from its Corporate Bonds while also benefiting from tactical trading Short Term opportunities through G-Secs Income CREDIT QUALITY The fund is currently is 83.31% invested in G-Secs, AAA and A1+ rated instruments Fund? It is also ~2.33% invested in Unrated instruments in order to enhance the portfolio yield The fund’s portfolio yield is currently at 9.66% (as of March 31, ‘16) Refer Pg. No.3 for Product Labelling *As on 06/04/2016 Facts in Figures Monthly fund analysis and market reviews March 2016 Fund Manager’s Views The last repo rate cut by RBI appears to be one of last few rate cuts in this interest rate easing cycle. A further rate cut from here has to be driven by fall in inflation more than anything else. To explain it better, RBI has forecasted CPI inflation to be around 5% for this financial year. At the same time RBI intends to Alok Singh maintain a real positive interest rate of 1.5%-2%. Now, Head – in this scenario, if repo rate is around 6.5% and the 1 year T-bill rate at ~6.90% is the reference rate for real Investments rate calculation, then with inflation at 5%, the real positive spread is within the range stipulated by RBI. Going forward, less favorable base effect, poor monsoon and any recovery in global oil prices post last year's sharp fall are factors that will boost inflation over the near term. Any relaxation to the finance ministry's fiscal deficit targets going forward due to local/global macro-economic factors could also boost BOI AXA inflation expectations, which have already been rising in recent months. This will make it very difficult for the RBI to trim rates any further. If the liquidity SHORT TERM conditions improve in line with the guidance given by the RBI, one can see the INCOME FUND yield curve getting steeper mainly by short end of the curve coming down. The short end of the curve is also able to capture the accrual yield quite well. AN OPEN ENDED This, along with moderation in short yield, make it a good investment INCOME SCHEME proposition to look at. If one looks at the recent historic performance of CRISIL Composite Bond Index and CRISIL Short Term Bond Fund Index, the latter has outperformed as the short term part of the yield curve offers the sweet spot of the Indian yield curve which allow investments to enjoy both accrual and capital gain. We expect this to continue next year as well. Source: Bloomberg (Unless indicated otherwise) Data/ figures as on: March 31, 2016 Statements relating to outlook and forecast are the opinions of the Author. The views expressed by the author are personal and are not necessarily that of BOI AXA Investment Managers Private Limited (AMC). This report is for information purpose only and is not intended to be any investment advice. Please make independent research/ obtain professional help before taking any decision of investment/ sale. AMC makes no representation as to the quality, liquidity or market perception of any securities/ issuer/ borrower, if described in the note above, nor does it provide any guarantee whatsoever. Information and material used in this note are believed to be from reliable sources. However, AMC does not warrant the accuracy, reasonableness and/or completeness of any information. AMC does not undertake to update any information or material in this report. Decisions taken by you based on the information provided in this report are to your own account and risk. AMC and any of its officers, directors and employees shall not be liable for any loss or damage of any nature, as also any loss of profit in any way arising from the use of this material in any manner. AMC or its directors, officers and employees, including author of this note / persons involved in the preparation or issuance of this note may, from time to time, have long or short positions in, and buy or sell the securities, if any, mentioned herein or have other potential conflict of interest with respect to any recommendation and related information and opinions given in the note. This Note, or any part of it, should not be duplicated, or contents altered / modified, in whole or in part in any form and or re-distributed without AMC’s prior written consent. • For detailed Portfolio - Plz refer page no. 11 • For Performance - Plz refer page no. 21 • For Product Labelling - Plz refer page no. 3 Mutual Fund investments are subject to market risks, read all scheme related documents carefully. PRODUCT LABEL SCHEME THIS PRODUCT IS SUITABLE FOR INVESTORS WHO ARE SEEKING*: RISKOMETER BOI AXA Liquid Fund • Income over short term. Moderate • Investment in Debt and Money Market Instruments. Moder (An Open Ended Liquid Scheme) tely a a High tely ModerLow High Low LOW HIGH Investors understand that their principal will be at low risk BOI AXA Treasury Advantage Fund • Regular income over short term. Moderate Moder (An Open Ended Income Scheme) • Investment in Debt and Money Market Instruments tely a a High tely ModerLow High Low LOW HIGH Investors understand that their principal will be at moderately low risk BOI AXA Short Term Income Fund • Regular income over short to medium term. Moderate • Investment in Debt / Money Market Instruments / Govt. Securities Moder (An Open Ended Income Scheme) tely a a with portfolio average maturity not exceeding 5 years. High tely ModerLow BOI AXA Regular Return Fund • Long term capital appreciation and regular income. (An Open Ended Income Scheme) • Investment in equity and equity related securities (upto 20%) as well as fixed income securities (Debt / Money Market High Instruments Govt.Securities). Low BOI AXA Corporate Credit • Long term capital appreciation Spectrum Fund • Investment primarily in corporate debt securities with medium to LOW HIGH (An Open Ended Debt Scheme) long term maturities across the credit spectrum within the Investors understand that their principal will be at universe of investment grade rating moderate risk BOI AXA Equity Fund • Long-term capital growth. Moderate Moder (An Open Ended Equity Growth • Investment in equity and equity-related securities including equity tely a a Fund) derivatives of companies across market capitalisations. High tely ModerLow BOI AXA Tax Advantage Fund • Long-term capital growth. (An Open-Ended Equity Linked • Investment in equity and equity-related securities of companies Savings Scheme) across market capitalisations. High Low BOI AXA Equity Debt Rebalancer • Long term capital appreciation Fund • Dynamic asset allocation between equity and fixed income based (An Open Ended Dynamic Fund) on equity market valuations LOW HIGH Investors understand that their principal will be at moderately high risk BOI AXA Manufacturing & • Long-term capital growth. Infrastructure Fund Moderate Moder • Investment in equity and equity-related securities of companies tely a a (An Open Ended Sector Scheme) scheme engaged in manufacturing & infrastructure and related High tely sectors. ModerLow High Low LOW HIGH Investors understand that their principal will be at high risk *Investor should consult their financial advisor if they are not clear about the suitability of the product. 3 David Pezarkar EQUITY OUTLOOK HEAD - EQUITY Indian equities gained by 11% in the month of March post the Union Budget as Foreign Institutional Investor (FII) flows turned strongly positive. The rally in the domestic markets after the pro-investment and rural-focused budget appears to be due to a combination of two factors; First, apprehensions that the Long term Capital Gains tax regime for equities would change, did not fructify, causing relief. Secondly, indications from central banks across the globe suggested that monetary policy would remain loose. This was partially responsible for a rally in commodity prices, which have rebounded from multi-year lows as producers have responded by curtailing supplies. This led to a favorable sentiment change towards emerging market assets. Additionally, a reduction in China growth fears, and political developments signaling potential policy change in Brazil acted as further catalysts for the rally. March 2016 was the best month for emerging markets since October 2011, with the MSCI EM Index rising by 13%, an outperformance of 6.5% vs developed markets, the largest since March 2011. FIIs turned buyers in March reversing the trend seen in January and February with net inflows to the tune of US$3.6bn in Indian equities. In contrast, domestic investors reversed their position to net sellers in March and saw net outflows of US$2.4bn. Among market sectors, materials, industrials and consumer discretionary stocks outperformed on the back of policy support. Materials in particular benefitted from strength in commodity prices. Defensives such as Health Care, Staples and Energy underperformed the rising market. Healthcare was impacted adversely by continued concerns pertaining to manufacturing units in India meeting US FDA regulations. The first half of the Budget session of Parliament saw some encouraging policy developments. The Aadhaar and the Real Estate Regulator bills were approved. The Lok Sabha also approved the Mines and Mineral Development Regulation Act. Interest rates on small savings schemes were reduced. The Reserve Bank liberalized norms for calculating capital ratios for banks.