UTI Nifty Next 50 - Index Fund and Exchange Traded Fund

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENT CAREFULLY. Growth of Equity ETFs and Index Funds in India

17.41% 151,014 16.72% 137,776

10.67%

8.81% 74,925 % share % 4.50% 45,624 2.52% Crs. Rs. inAUM 17,009 8,534

Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Sep-19 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Sep-19 Period Period

Equity ETFs + Index Funds AUM* Equity ETFs and Index Funds AUM as % of Equity Mutual Fund AUM*

❑ Major Growth Enablers

✓ Retirement Funds are mandated to invest at least 5% of annual accretion in Equities. Many of them have opted Equity ETFs/Index Funds for equity investment.

✓ Categorization and Rationalization of Mutual Fund Schemes by SEBI$

✓ Benchmarking of funds moved from Price Return Index (PRI) to Total Return Index (TRI).

✓ Challenges in generating alpha due to improving efficiency of equity market and reducing information asymmetry.

* Month End Asset Under Management (AUM). Source: MFI Explorer. $ with reference to circular number SEBI/HO/IMD/DF3/CIR/P/2017/114 SEBI - Securities and Exchange Board of India. TRI refers to index values which also account for dividends, where as in case of Price Return Index (PRI), dividends distributed by companies forming part of an index are not considered. What is an Equity Index?

Rule Based Representation Indexing

Investing in a Indices represents portfolio which is An Index is a rule certain aligned to particular based portfolio characteristics of a index. I.e. equity where, market segment, portfolio will hold stocks/companies like market same stocks and in are selected based capitalization, same proportion as on pre-defined rules sectors, themes, represented by an factors etc. Index. Why Indexing?

Market is efficient Zero Sum Game Easy to understand No Biases Low Risk Low Cost

Movement in prices Positive alpha* of It reduces the Elimination of Helps in reducing Available at lower are based on new one market process of individual’s biases un-systematic risk cost as compared information and participant has to selection vis-à-vis & subjective and rewards for to actively indices reflects the come from an individual opinion while taking systematic managed funds collective negative alpha of stock/fund picking risk. interpretation by another market stocks/funds the various market participant participants

* Alpha is difference between returns generated by a scheme and its benchmark. When a scheme generate more returns as compared to its benchmark is called positive alpha. When scheme generate less returns as compared to its benchmark, is called negative alpha. Why Indexing? S&P Indices versus Active Fund (SPIVA) India Scorecard

• SPIVA India scorecard compares the performance of actively managed Indian mutual funds with their respective benchmark indices over 1, 3, 5, and 10 year period.

• The comparison is done in a scientific way considering survivorship bias correction, style consistency, apple-to-apple comparison, asset weighted returns etc.

• This semi-annual report is called as SPIVA scorecard.

• Extract from the Mid Year June 2019 Report: Majority of large-cap funds are underperforming the Index.

Source: https://us.spindices.com/documents/spiva/spiva-india-mid-year-2019.pdf Nifty Next 50 Index A large cap with the return potential of a Mid Cap Indices Attributes

Index Nifty 50 Nifty Next 50 Nifty Mid Cap 150 Top 50 companies Companies ranked from 101 to 250 Broad Selection Next 50 companies by free float market capitalization (M- based on full market capitalization from Criteria* by M-Cap after Nifty 50 Index Cap) Nifty 500 index. Number of 50 50 150 Constituents Launch Date April 22, 1996 December 24, 1996 April 1, 2016 Base Date November 03, 1995 November 04, 1996 April 1, 2005

Re-balance Semi-Annual Semi-Annual Semi-Annual

Market Cap Exposure$ 7% 3%2%

89% 93% 95%

Large Cap Mid Cap Small Cap

Source: www.niftyindices.com *Subject to other selection criteria defined under index construction methodology. $ As per list published by Association of Mutual Funds in India (AMFI) in July 2019 for the period Jan to June 2019 with reference to Securities and Exchange Board of India (SEBI) circular number SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 6, 2017 on Categorization and Rationalization of Mutual Fund Schemes considering weights of index components as on Oct 31, 2019 Nifty Next 50 : Well diversified Index

FINANCIAL OTHER FINANCIAL OTHER SERVICES 13.72% SERVICES 20.63% 23.16% 39.47% FINANCIAL SERVICES 29.13% OTHER AUTOMOBILE 31.79% 6.11%

ENERGY 6.74% CONSUMER Nifty 50 Index GOODS Nifty Next 50 Index Nifty Mid Cap 150 Index 12.38%

CEMENT & CEMENT CONSUMER PRODUCTS GOODS 6.90% PHARMA 17.82% 8.36%

IT 13.01% PHARMA INDUSTRIAL 11.67% CONSUMER MANUFACTURI ENERGY GOODS NG ENERGY 15.31% 24.93% 9.37% 9.50%

• Nifty Next 50 Index is well diversified in terms of sector allocation.

• Top sector contributes ~39% in Nifty 50 Index, whereas in Nifty Next 50 Index top sector contributes ~29%

• Top 5 sectors contributes 86% in Nifty 50 Index, 79% in Nifty Next 50 Index and 68% in Nifty Mid Cap 150 Index.

$ - Data as on Oct 31, 2019. Source: www.niftyindices.com, The Sectors referred in this literature are not an endorsement by the Mutual Fund and AMC of their soundness or a recommendation to buy or sell at any point of time. These are only for reference purpose. Nifty Next 50 : Size of Large Cap with flavor of Mid Cap

Nifty 50 Nifty Next 50 Nifty MidCap 150

8,904,367 2,275,463 2,396,767

Market Exposure Market Exposure Market Exposure

58% 16% 15%

Cap in Rs. Rs. Crores Capin

M M

928,273 126,347 118,182 17,954 40,841 8,836 13,545 31,423 3,832

Total M-Cap of Median M-Cap M-Cap of Top M-Cap of Bottom Total M-Cap of Median M-Cap M-Cap of Top M-Cap of Bottom Total M-Cap of Median M-Cap M-Cap of Top M-Cap of Bottom Index Company Company Index Company Company Index Company Company

• Total Market Capitalization of Nifty Next 50 Index is very similar to Nifty Mid Cap 150 Index.

• The top company in Nifty Next 50 Index is ~4.02 times of top company in Nifty Mid Cap 150 Index.

• The bottom company in Nifty Next 50 Index is ~2.31 time of bottom company in Nifty Mid Cap 150 Index.

• Large size gives stability and little mid cap exposure gives possibility of higher returns in Nifty Next 50 Index.

Data as on Oct 31, 2019. Source: Bloomberg. Data based on Total Market Capitalization of companies. % Market Exposure = Total Market Cap of Index / Market cap of all listed companies in National Stock Exchange Limited (NSE) Nifty Next 50 : Return behavior similar to Nifty Mid Cap 150 Index

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

Value of 1,000 pointstheatstart 1,000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Period : April 1, 2005 to Oct 31, 2019

Nifty 50 TRI Nifty Next 50 TRI Nifty MidCap 150 TRI

• Historically Nifty Next 50 Index has shown returns characteristics of Nifty Mid Cap 150 Index

• Historically Nifty Next 50 TRI* has behaved like Nifty Mid Cap 150 TRI in terms of returns.

Source: www.niftyindices.com, Data points rebase to 1,000. The Indices referred in this literature are not an endorsement by the Mutual Fund and AMC of their soundness or a recommendation to buy or sell at any point of time. These are only for reference purpose. *TRI = Total Return Index. Graph is to represent overall movement of indices and not specific to particular time period. Nifty Next 50 : Lesser Drawdown as compared to Nifty Mid Cap 150

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0%

-10%

-20%

-30%

-40%

% Drawdown % -50%

-60%

-70%

-80% Period : April 1, 2005 to Oct 31, 2019

Nifty MidCap 150 TRI Nifty Next 50 TRI Nifty 50 TRI

• Drawdown refers to correction in values from the historic peaks.

• Lesser drawdowns shows the stability during correction periods.

• Nifty Next 50 Index historically has shown less drawdown as compared to Nifty Mid Cap 150 Index.

Data from April 1, 2005 to oct 31, 2019. Closing Value Source: www.niftyindices.com. To calculate drawdown, respective current date closing value of an index is subtracted from historic peak of an index and such value is divided by from historic peak of an index. These data points are graphically presented above. Graph is to represent overall movement of indices and not specific to particular time period. Nifty Next 50 : Annualized Returns rolled over on monthly basis

Monthly Rolling Returns

29% Above 15% return observations 28%

24% 23% Nifty Mid Cap 150 TRI 22% Nifty Next 50 TRI 17% Nifty 50 TRI 18% 35% 18% 16% 15% 15% 15% 5Y 47% 10Y

12% 11% 50% 52% Return % in

11% 10% 7%

0% 1% Nifty 50 TRI Nifty Next 50 TRI Nifty MidCap-2% 150 Nifty 50 TRI Nifty Next 50 TRI Nifty MidCap 150 TRI TRI 5 Year 10 Year

Average Maximum +ve Return Maximum -ve / Minimum +ve Return

• In 5 and 10 year period, on an average Nifty Next 50 TRI has given • In 5 Year period, 52% of the time Nifty Next 50 has given above 15% 16% and 15% returns respectively. returns, where as in 10 year period, 47% of the times Nifty Next 50 Index has given above 15% returns. • Historically, In 5 year period, Nifty Next 50 TRI has given at least 1% return and in 10 year period at least 11%

Data as on Oct 31, 2019. Returns are calculated considering last working day of the month. First 5 Year Return is calculated from April 29, 2005 to April 30, 2010. Such returns are rolled over up to oct 31, 2019. Closing Value Source: www.niftyindices.com Performance is based on the Base Date of Indices as mentioned in slide on Index Attributes. Returns over one year are of compounded annualized growth rate (CAGR) To sum up…….!

Historically, Nifty Next 50 Index has shown return behavior similar to Nifty Mid Cap 150 Index.

Historically Nifty Next 50 has shown better downside protection over Nifty Mid Cap 150 Index

Nifty Next 50 Index has the potential to give Mid Cap 150 Index like returns with relatively better drawdown protection Product Offerings from UTI Mutual Fund

UTI Nifty Next 50 Exchange Traded Scheme UTI Nifty Next 50 Index Fund Fund (UTI Nifty Next 50 ETF)

Type Index Fund ETF

Underlying Index Nifty Next 50 Nifty Next 50

Date of Inception June 28, 2018 August 4, 2017

Plans: Regular & Direct Plans & Options Available@ NA Options: Growth Direct: 0.27% Annual Expense Ratio* 0.14% Regular: 0.77%

Entry & Exit Load* NIL NIL

#Net asset value (NAV) in relation to index value may differ due to dividend & expense. * As on Oct 31, 2019. @ Under UTI Nifty Next 50 Index Fund in addition to regular, there is a direct plan. Under UTI Nifty Next 50 Index Fund only Growth Option is available. For more details please read Scheme Information Document. Product Label UTI Nifty Next 50 Exchange Traded Fund This product is suitable for investors who are seeking*:

•long term investment

•Investment in securities covered by Nifty Next 50 Index

UTI Nifty Next 50 Index Fund This product is suitable for investors who are seeking*:

•Capital growth in tune with the index returns

•Passive investment in equity instruments comprised in Nifty Next 50 Index

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them. REGISTERED OFFICE: UTI Tower, ‘GN’ Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051.Phone: 022 – 66786666. UTI Asset Management Company Ltd (Investment Manager for UTI Mutual Fund) Email: [email protected] . (CIN-U65991MH2002PLC137867). For more information, please contact the nearest UTI Financial Centre or your AMFI/NISM certified UTI Mutual Fund Independent Financial Advisor (IFA) for a copy of the Statement of Additional Information, Scheme Information Document and Key Information Memorandum cum Application Form.

Disclaimers: The information on this document is provided for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration. Users of this document should seek advice regarding the appropriateness of investing in any securities, financial instruments or investment strategies referred to on this document and should understand that statements regarding future prospects may not be realized. The recipient of this material is solely responsible for any action taken based on this material. Opinions, projections and estimates are subject to change without notice.

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