Jan’15 – Mar’15

January’ 2015 to March’ 2015: Samedh Dynamic Mutual Fund Portfolio

Samedh Dynamic Mutual Fund Portfolio for January to March quarter of 2015 (FY 2014-15 Q4), is shown in the pie-chart below. New investment based on advice should be made for the part of investor’s portfolio that is intended to be invested for longer than 3-years. First time investors are recommended to visit Why Samedh? , Asset Allocation Approach , and Value Investing Philosophy pages before making investment based on the advice.

Samedh Financial Investment Portfolio India January to March 2015

The table below shows comparative performance of Advisory’s Model Portfolio and other Financial Investment Assets, since the start of quarter:

Samedh Dynamic Mutual Fund Portfolio Period Nifty Gold (USD) * USDINR 3-Year FD @ SBI SDMFP Period’s Return
Nifty Gold 3-Year FD SDMFP
Previous Quarter End Dec’ 2014 8,283 24,444 8.75% 127.10 N.A. N.A. N.A. N.A.
FY 2014-15 Q4 Jan’ 2015 8,809 25,132 8.75% 129.73 6.4% 2.8% 0.7% 2.1%
Feb’ 2015 8,902 24,069 8.75% 130.42 1.1% -4.2% 0.7% 0.5%
Mar’ 2015 8,491 23,794 8.75% 131.99 -4.6% -1.1% 0.7% 1.2%
Overall Return during the Quarter (Jan’ 2015 – Mar’ 2015) 2.5% -2.7% 2.2% 3.8%

Portfolio Explanation

Ideal Asset Allocation suggested for Samedh Dynamic Mutual Fund Portfolio for January to March quarter of 2015 (FY 2014-15 Q4)is as below. It has been derived using long-term pricing trends of the various asset classes and consequent return expected from them in future.

Samedh Asset Allocation January to March 2015

Asset Allocation Group 1: Growth Assets (GROWTH)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 43%

43% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Growth Asset Allocation Group during January to March quarter of 2015. This is further sub-allocated into two Asset Classes that are grouped under Growth Assets so that the sum of their sub-allocations adds up to 43%.

Growth Assets – Asset Class 1: Equity (GROWTH-EQUITY)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 35%

35% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Equity Asset Class during January to March quarter of 2015. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Equity Asset Class.

Sixteen market-capitalization and sector based equity indices in India have sufficiently long data series available for them to analyze market cycles. These have been identified as the Asset Class Categories falling under Equity Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2015, are mentioned in the table below. Current index levels can be viewed at NSE Live Indices Watch page for comparison.

Asset Class Category Benchmark Index Sub Limit Index Fair Value (1st Jan) Index Start Level (1st Jan) Future Prospect Premium Investment Phase Portfolio Allocation Buy Threshold for Index (Qtr) Sell Threshold for Index(Qtr) Investment Option(s)
PSU Bank Equity CNX PSU Bank 5% 1,950 4,269 +119% Sell 0% 1,400 2,550 Goldman Sachs / Kotak PSU Bank ETF
Media Sector Equity CNX Media 2% 1,200 2,387 +99% Sell 0% 850 1,550 Reliance Media & Ent. Fund
Auto Sector Equity CNX Auto 30% 4,250 8,281 +95% Sell 0% 2,550 5,950 UTI Transp. & Log. Fund
Smallcap Equity CNX Smallcap 5% 3,100 5,273 +70% Sell 0% 2,150 4,000 Reliance Smallcap Fund
Banking Sector Equity CNX Bank Nifty 40% 11,250 18,737 +67% Sell 0% 6,750 15,750 GS Bank. ETF / Reliance Bank. Fund
Finance Sector Equity CNX Finance 60% 5,900 7,463 +26% Sell 0% 4,700 7,100 Birla SL Bank. & Fin. Svc. Fund
Largecap Equity CNX NIFTY 35% 6,600 8,283 +26% Wait 0% 4,600 8,600 HDFC Index Fund Nifty / Sensex
FMCG Sector Equity CNX FMCG 10% 17,100 20,126 +18% Hold 0% 12,100 22,100 SBI FMCG Fund
Midcap Equity CNX Midcap 25% 10,900 12,584 +15% Hold 0% 8,700 13,000 ICICI Value Disc. Fund
Infrastructure Equity CNX Infrastructure 10% 2,650 3,040 +15% Wait 0% 1,850 3,450 GS Infra. ETF / UTI Infra. Fund
Realty Sector Equity CNX Realty 2% 200 203 +2% Wait 0% 140 320 DLF, Unitech
Energy Sector Equity CNX Energy 10% 8,750 8,641 -1% Hold 4% 6,150 11,350 UTI Energy Fund
Public Sector Equity CNX PSE 10% 3,700 3,556 -4% Hold 4% 2,600 4,800 Baroda Pio. PSU Equity Fund
IT Sector Equity CNX IT 20% 13,000 11,216 -14% Hold 12% 9,100 16,900 SBI IT Fund
Metal Sector Equity CNX Metal 5% 3,250 2,661 -18% Hold 3% 2,000 4,550 SBI Mag. Comma Fund
Pharma Sector Equity CNX Pharma 20% 13,800 10,950 -21% Buy 12% 11,000 16,600 SBI Pharma Fund

Only Pharma Sector Equity is in Buy phase during January to March quarter of 2015. Six Equity Asset Class Categories are in Sell investment phase as their market pricing is substantially higher than their value. Prior investments in these should be liquidated during the current quarter.

Equity portfolio should be allocated as per the Portfolio Allocation percentage mentioned in the table above. The allocation percentages have been derived based on following factors:

  1. A maximum of 60% of sub-limits should be allocated to Pharma Sector Equity, Metal Sector Equity and IT Sector Equity. This comes to a maximum of 12% (60%*20%) for Pharma Sector Equity, 3% (60%*5%) for Metal Sector Equity and 12% (60%*20%) for IT Sector Equity.
  2. A maximum of 40% of sub-limit should then be allocated to Public Sector Equity and Energy Sector Equity. This comes to a maximum of 4% (10%*40%) for Public Sector Equity and 4% (10%*40%) for Energy Sector Equity.

 

Growth Assets – Asset Class 2: Other (GROWTH-OTHER)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 8%

Growth Asset Class Categories other than Equity are broadly grouped as below:

  1. Precious Metals: Metals like Gold, Silver, Platinum etc that are used for investments. Gold has been identified as lead Asset Class Category for the Asset Class. Gold ETFs are available in India which are categorized as financial assets unlike physical Gold. However ETFs are not yet available for other precious metals and hence they cannot be treated as a financial asset.
  2. International Equity: Equity indices outside India that can be taken exposure of through International Equity Mutual Funds available in India, which are categorized as financial assets.
  3. Commodities: Commodities are primarily used for consumption. Investment exposure can be taken to these by investing in International Equity Funds linked to Commodities which are categorized as financial assets

Currently seven Asset Class Categories have been identified under Other Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2015, are mentioned in the table below.

International Equity

Asset Class Category Benchmark Index Sub Limit Benchmark Index Level (1st Jan) Position in Market Pricing Cycle Investment Phase Portfolio Allocation Buy Threshold for Index (Qtr) Sell Threshold for Index (Qtr) Investment Option(s)
Europe Equity (INR) Euro Stoxx 50 8% 3,146 40% Wait 0% 2,350 4,000 DWS Top Euroland Fund
US Equity (INR) DJIA 30 15% 17,823 80% Wait 0% 9,800 18,100 Franklin US Opportunities Fund
Hong Kong Equity (INR) Hang Seng 6% 23,605 65% Wait 0% 19,500 24,500 Goldman Hang Seng BeES Fund
China Equity (INR) Shanghai Composite 4% 3,234 85% Sell 0% 1,750 3,000 JP Morgan Greater China Fund

Precious Metals & Commodities

Asset Class Category Benchmark Index Sub Limit Benchmark Index Level (1st Jan) Position in Market Pricing Cycle Investment Phase Portfolio Allocation Buy Threshold for Index (Qtr) Sell Threshold for Index (Qtr) Investment Option(s)
Agriculture Commodities S&P Global Agribusiness 2% 1,907 70% Wait 0% 1,350 2,050 DSP BlackRock World Agriculture Fund
Crude Oil / Energy West Texas Intermediate Crude 5% $ 53 5% Buy 4% $ 85 $ 140 DSP BlackRock World Energy Fund
Gold (INR) / 10gm Gold (USD) * INR/USD * 10gm/Ounce 20% 24,444 (1,206 * 63.04 * 0.32) 20% Buy 4% 24,700 34,800 SBI Gold Fund

Gold and Crude Oil are in Buy phase during January to March quarter of 2015. Investment advice for them is as below:

  1. Gold (INR) has artificially inflated value because of 10% duty imposed on Gold imports to India. An investment in Gold (INR) has regulatory environment change risk this continues to be the case. However for need of diversification an amount upto 20% of sub-limit should be allocated to Gold. This comes to a maximum of 4% (100%*20%)
  2. Investment of 80% of sub-limit should be allocated to Crude Oil. This comes to a maximum of 4% (80%*5%).

 

Asset Allocation Group 2: Income Assets (INCOME)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 51%

51% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Income Asset Allocation Group during January to March quarter of 2015. This is to be further sub-allocated into two Asset Classes that are grouped under Income Assets so that the sum of their sub-allocations adds up to 51%.

Income Assets – Asset Class 1: Government Income (INCOME-GOVT)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 36%

Government Income represents fixed-income investments backed by Government of India and carry lowest credit risk for Indian investors. These investment options have highest credit rating of AAA for Indian investors. 36% of Moderate Target Return Samedh Model Investment Portfolio value is allocated to Government Income Asset Class during January to March quarter of 2015. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Government Income Asset Class.

Nine Asset Class Categories have been identified under Government Income Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2015, are mentioned in the table below. Current benchmark index levels can be viewed at Investing.com for comparison.

Asset Class Category Current Interest Rate Benchmark Index Benchmark Index Level (1st Jan) Position in Market Pricing Cycle Investment Phase Buy Threshold for Index (Qtr) Sell Threshold for Index (Qtr) Investment Option(s)
Senior Citizens’ Saving Scheme – 5 Yr (AAA) 9.20% G-Sec (5 Yr) 7.99% 35% Buy 8.35% 6.95% SBI SCSS
Post Office Time Deposit – 5 Yr (AAA) 8.50% G-Sec (5 Yr) 7.99% 35% Buy 8.35% 6.95% India Post – Time Deposit
National Savings Certificate – 5 Yr (AAA) 8.50% G-Sec (5 Yr) 7.99% 35% Buy 8.35% 6.95% India Post – NSC
Government Bonds – 10 Yr (AAA) 8.64% G-Sec (10 Yr) 8.00% 35% Hold 8.40% 7.00% ICICI Pru. GILT Fund – PF Option
Inflation Indexed National Saving Securities -10 Yr (AAA) 6.20% Consumer Price Inflation + 1.5% 4.7% (CPI) Floating Wait N.A. N.A. RBI INSS Bond
Public Provident Fund (PPF) – 15 Yr (AAA) 8.70% G-Sec (15 Year) 8.01% Floating Buy N.A. N.A. Any Bank – PPF Account
PSU Bank Fixed Deposit – 3 Yr (AAA) 8.75% G-Sec (3 Yr) 7.96% 35% Buy 8.30% 6.10% SBI Fixed Deposit
PSU Taxable Bonds – 3 Yr (AAA) 8.39% G-Sec (3 Year) 7.96% 35% Buy 8.30% 6.10% Birla SL Short Term Fund
PSU Tax Free Bonds – 15 Yr (AAA) 7.35% G-Sec (15 Year) 8.01% 35% Buy 8.60% 7.40% NHAI, PFC Tax Free Bonds

Fixed interest saving investment asset class categories are in Buy phase during January to March quarter of 2015. Accordingly new investment up to portfolio allocation for the asset class (36%) can be made in Government Fixed Income Asset Class during the quarter. This investment should be made only at Interest Rates above the Buy Threshold for benchmark index.

Samedh Dynamic Mutual Fund Portfolio allocation of 36% would be divided between 10-Yr Government Bond (25%) and PSU Taxable Bond (11%) investment options.

Income Assets – Asset Class 2: Corporate Income (INCOME-CORP)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 15%

Corporate Income represents fixed-income investments floated by private Indian companies. They carry higher credit risk than Government Income for Indian investors. These investment options may have various credit ratings but in SDMFP, investment is only considered in instruments with higher than “A” Credit Rating for Indian investors. 15% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Corporate Income Asset Class during January to March quarter of 2015. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Corporate Income Asset Class.

Four Asset Class Categories have been identified under Corporate Income Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2015, are mentioned in the table below. Current benchmark index levels can be viewed at Investing.com for comparison.

Asset Class Category Current Interest Rate Benchmark Index Benchmark Index Level (1st Jan) Position in Market Pricing Cycle Investment Phase Buy Threshold for Index (Qtr) Sell Threshold for Index (Qtr) Investment Option(s)
Private Bank Fixed Deposit – 3 Yr (AAA) 8.75% G-Sec (3 Yr) 7.96% 35% Buy 8.30% 6.10% Choose from list
Corporate Bonds / Debentures – 3 Yr (A) 10.60% G-Sec (3 Yr) 7.96% 35% Buy 8.30% 6.10% HDFC Short Term Fund
Corporate Fixed Deposit – 3 Yr (AAA) 10.00% G-Sec (3 Yr) 7.96% 35% Buy 8.30% 6.10% Choose from List
Corporate Tax Free Bonds – 15 Yr (AAA) 8.52% G-Sec (15 Year) 8.01% 35% Buy 8.60% 7.40% L&T Inf. Fin. / IDFC Tax Free Bonds

All the Asset Class Categories are in Buy phase during January to March quarter of 2015. Accordingly new investment up to portfolio allocation for the asset class (15%) can be made in Corporate Income Asset Class during the quarter. This investment should be made only at Interest Rates above the Buy Threshold for benchmark index.

SDMFP Index allocation of 15% would be made in Corporate Bonds / Debentures – 3 Yr.

Asset Allocation Group 3: Liquid Assets (LIQUID)

Weightage for quarter in Samedh Dynamic Mutual Fund Portfolio: 6%

6% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Allocation Group during January to March quarter of 2015. This portion is invested in the single Asset Class that is available under Liquid Assets. Even though the overall portfolio has 3-year investment horizon, 1% allocation is made to Liquid Asset Class to represent the capital in-between two investment transactions. Further 5% allocation has been transferred from Growth-Other Asset Class due to insufficient investment options in the current quarter.

Liquid Assets – Asset Class 1: INCOME (LIQUID-INCOME)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 6%

Liquid Income represents fixed-income investments with highest liquidity for Indian investors. 6% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Class during January to March quarter of 2015. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Liquid Income Asset Class.

Two Asset Class Categories have been identified under Liquid Income Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2015, are mentioned in the table below:

Asset Class Category Current Interest Rate Benchmark Index Benchmark Index Level (1st Jan) Position in Market Pricing Cycle Investment Phase Buy Threshold for Index (Qtr) Sell Threshold for Index (Qtr) Investment Option(s)
Saving Bank Account 4.00% Govt. Regulation 4.00% N.A. N.A. N.A. N.A. Any Saving Bank Balance
Liquid Mutual Funds 8.33% G-Sec (90 Day) 8.33% N.A. N.A. N.A. N.A. HDFC Liquid Fund
Arbitrage Funds 8.20% N.A. N.A. N.A. N.A. N.A. N.A. Kotak Eq. Arbitrage Fund

Investment Phase is not applicable to Liquid Income Asset Class and transactions can be made in corresponding Asset Class Categories as pre requirement. Accordingly new investment up to portfolio allocation for the asset class (6%) can be made in Liquid Income Asset Class during January to March quarter of 2015. Of this Saving Bank balance should be limited to 1% and 5% should be allocated to Liquid Mutual Funds.

 

SDMFP Index

SDMFP Index tracks the performance of Samedh Dynamic Mutual Fund Portfolio. The starting level of index was 127.10 on 1st January 2015, based on closing value of Investment Products on 31st December 2014.

Find below the SDMFP Index details table for FY 2014-15 Q4:

Asset Class Group / Asset Class / Asset Class Category / Investment Product Benchmark Last Quarter End Quarter Start (1st Jan. 15) Quarter End (31st Mar. 15)
Updated Allocated Amount Updated Allocation %age Benchmark Level NAV / Interest Rate Alloc. %age Allocated Amount Trans’n During Quarter Benchmark Investment
Level Return NAV / Int. Rate Updated Amount Updated %age Return
Baroda Pio. PSU Equity Fund CNX PSE 7.58 6.0% 3,556 8.95 4.0% 5.08 -2.0% 3,460 -2.7% 8.33 4.73 3.6% -6.9%
SBI Magnum Comma Fund CNX Metal 0.00 0.0% 2,661 24.34 3.0% 3.81 3.0% 2,324 -12.7% 24.27 3.80 2.9% -0.3%
UTI Energy Fund CNX Energy 0.00 0.0% 8,614 12.08 4.0% 5.08 4.0% 8,264 -4.4% 12.17 5.12 3.9% 0.7%
ICICI Value Disc. Fund CNX Midcap 3.89 3.1% 12 ,584 107.99 0.0% 0.00 -3.1% 13,001 3.3% 114.24 0.00 0.0% 5.8%
Reliance Smallcap Fund CNX Smallcap 2.61 2.1% 5,273 24.09 0.0% 0.00 -2.1% 5,623 6.6% 24.12 0.00 0.0% 0.1%
SBI IT Fund CNX IT 14.79 11.6% 11,216 45.59 12.0% 15.25 0.4% 12,083 7.7% 48.49 16.22 12.3% 6.4%
SBI Pharma Fund CNX Pharma 15.18 11.9% 10,950 118.72 12.0% 15.25 0.1% 12,845 17.3% 139.29 17.90 13.6% 17.3%
Birla SL Bank. & Fin. Svc. Fund CNX Finance 7.29 5.7% 7,463 16.51 0.0% 0.00 -5.7% 7,549 1.2% 17.03 0.00 0.0% 3.1%
Growth-Equity CNX Nifty 51.33 40.4% 8,283 N.A. 35.0% 44.49 -5.4% 8,491 2.5% N.A. 47.78 36.2% 7.4%
SBI Gold Fund Gold (USD) * USD/INR 0.00 0.0% 24,444 8.96 4.0% 5.08 4.0% 23,794 -2.7% 8.81 5.00 3.8% -1.7%
DSPBR World Energy Fund WTI Crude 0.00 0.0% 53 13.74 4.0% 5.08 4.0% 49 -9.0% 13.08 4.84 3.7% -4.8%
Growth-Other Gold (USD) * USD/INR 0.00 0.0% 24,444 N.A. 5.5% 10.17 8.0% 23,794 -2.7% N.A. 9.84 7.5% -3.3%
Growth N.A. 51.33 40.4% N.A. N.A. 40.0% 54.66 2.6% N.A. N.A. N.A. 57.61 43.6% 5.4%
ICICI Prudential GILT Fund – PF Option G-Sec – 10 Yr 41.50 32.6% 8.00% 26.73 25.0% 31.78 -7.6% 7.83% 3.0% 27.53 32.73 24.8% 3.0%
Birla SL Short Term Fund G-Sec -3 Yr 9.83 7.7% 7.96% 51.07 11.0% 13.98 3.3% 7.79% 1.8% 52.33 14.33 10.9% 2.5%
Income-Govt G-Sec – 10 Yr 51.33 40.4% 0 N.A. 36.0% 45.76 -4.4% 7.83% 3.0% N.A. 47.05 35.6% 2.8%
HDFC Short Term Fund G-Sec -3 Yr 13.50 10.6% 7.96% 26.38 15.0% 19.07 4.4% 7.79% 1.8% 27.05 19.55 14.8% 2.5%
Income-Corp G-Sec -3 Yr 13.50 10.6% 7.96% N.A. 15.0% 19.07 4.4% 7.79% 1.8% N.A. 19.55 14.8% 2.5%
Income G-Sec – 10 Yr 64.83 51.0% 8.00% N.A. 51.0% 64.82 0.0% 7.83% 3.0% N.A. 66.60 50.5% 2.7%
Saving Bank Account Regulation 1.20 0.9% 4.00% 4.00% 1.0% 1.27 0.1% 4.00% 1.0% 4.00% 1.28 1.0% 1.0%
HDFC Liquid Fund G-Sec -90 day 9.74 7.7% 8.33% 27.01 5.0% 6.36 -2.7% 7.88% 1.3% 27.58 6.49 4.9% 2.1%
Liquid G-Sec -90 day 10.94 8.6% 8.33% N.A. 6.0% 7.63 -2.6% 7.88% 1.3% N.A. 7.77 5.9% 1.9%
SDMFP Index N.A. 127.11 100.0% N.A. N.A. 100.0% 127.11 0.0% N.A. N.A. N.A. 131.99 100.0% 3.8%