Jul’14 – Sep’14

July’ 2014 to September’ 2014: Samedh Dynamic Mutual Fund Portfolio

Samedh Dynamic Mutual Fund Portfolio for July to September quarter of Financial Year 2014-15, 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 FY 2014 15 Q2

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 Jun’ 2014 7,611 25,633 8.75% 116.95 N.A. N.A. N.A. N.A.
FY 2014-15 Q2 Jul’ 2014 7,721 25,107 8.75% 117.12 1.4% -2.1% 0.7% 0.1%
Aug’ 2014 7,954 25,090 8.75% 118.66 3.0% -0.1% 0.7% 1.3%
Sep’ 2014 7,965 24,228 8.75% 119.16 0.1% -3.4% 0.7% 0.4%
Overall Return during the Quarter (Jul’ 2014 – Sep’ 2014) 4.6% -5.5% 2.2% 1.9%

Portfolio Explanation

Ideal Asset Allocation suggested for Samedh Dynamic Mutual Fund Portfolio for July to September Quarter (Q2) of Financial Year 2014-15 is as below. It has been derived from long-term pricing trends of the various asset classes and consequent return expected from them in future.

Samedh Asset Allocation India FY 2014 15 Q2

Asset Allocation Group 1: Growth Assets (GROWTH)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 55%

55% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Growth Asset Allocation Group during July to September quarter of 2014. 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 55%.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 44%

44% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Equity Asset Class during July to September quarter of 2014. 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 July to September quarter of 2014, 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 Jul) Index Start Level (1st Jul) Future Prospect Premium Investment  Phase Portfolio Allocation Buy  Threshold for Index (Qtr) Sell  Threshold for Index(Qtr) Investment Option(s)
Realty Sector Equity CNX Realty 2% 125 264 +111% Sell 0% 75 175  DLF, Unitech
PSU Bank Equity CNX PSU Bank 5% 1,900 3,879 +104% Sell 0% 1,300 2,500 Goldman Sachs / Kotak PSU Bank ETF
Metal Sector Equity CNX Metal 5% 1,750 3,309 +89% Sell 0% 1,200 2,300 SBI Mag. Comma Fund
Auto Sector Equity CNX Auto 40% 3,600 6,775 +88% Sell 0% 2,150 5,100  UTI Transp. & Log. Fund
Banking Sector Equity CNX Bank Nifty 40% 9,900 15,242 +54% Sell 0% 5,900 13,900 GS Bank. ETF / Reliance Bank. Fund
Largecap Equity CNX NIFTY 35% 5,800 7,611 +31% Sell 0% 4,000 7,600 HDFC Index Fund Sensex / Nifty
Infrastructure Equity CNX Infrastructure 10% 2,600 3,373 +30% Sell 0% 1,800 3,350 GS Infra. ETF / UTI Infra. Fund
Pharma Sector Equity CNX Pharma 20% 7,000 8,836 +22% Sell 0% 5,600 8,400 SBI Pharma Fund
Smallcap Equity CNX Smallcap 5% 4,400 5,389 +22% Wait 0% 3,100 5,700 Reliance Smallcap Fund
Midcap Equity CNX Midcap 25% 9,500 11,097 +17% Wait 5% 7,500 11,500 ICICI  Value Disc. Fund
Finance Sector Equity CNX Finance 60% 5,350 6,247 +17% Hold 10% 4,300 6,400 Birla SL Bank. & Fin. Svc. Fund
Energy Sector Equity CNX Energy 10% 8,900 9,968 +12% Hold 4% 6,200 11,600 UTI Energy Fund
FMCG Sector Equity CNX FMCG 10% 15,900 17,434 +10% Wait 4% 11,000 20,700 SBI FMCG Fund
Media Sector Equity CNX Media 2% 2,140 2,118 -1% Wait 1% 1,250 3,000 Reliance Media & Ent. Fund
IT Sector Equity CNX IT 20% 10,250 9,912 -3% Hold 12% 7,200 13,300 SBI IT Fund
Public Sector Equity CNX PSE 10% 4,300 3,779 -12% Hold 8% 3,000 5,600 Baroda Pio. PSU Equity Fund

None of the sixteen Asset Class Categories is in Buy phase during July to September quarter of 2014 . This demonstrates the general rise in equity prices as a result of the decisive political mandate received by new government at center. Eight 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.

New 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 80% of sub-limit should be first allocated to Public Sector Equity. This comes to a maximum of 8% (80%*10%).
  2. A maximum of 60% of sub-limits should then be allocated to IT Sector Equity and Media Sector Equity. This comes to a maximum of 12% (60%*20%) for IT Sector Equity and 1% (60%*2%) for Media Sector Equity.
  3. A maximum of 40% of sub-limits should then be allocated to FMCG Sector Equity and Energy Sector Equity. This comes to a maximum of 4% (40%*10%) for FMCG Sector Equity and 4% (40%*10%) for Energy Sector Equity.
  4. A maximum of 20% of sub-limits should then be allocated to Finance Sector Equity and Midcap Equity. This comes to a maximum of 12% (20%*60%) for Finance Sector Equity and 5% (20%*25%) for Midcap Equity.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 11%

11% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Other Asset Class during July to September quarter of 2014. This allocated portfolio value is to be invested in Growth Asset Class Categories other than Equity. These 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 July to September quarter of 2014, are mentioned in the table below.

International Equity

Asset Class     Category Benchmark      Index Sub    Limit Benchmark    Index Level (1st Jul) 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% 3,228 75% Wait 0% 2,000 3,400 DWS Top Euroland Fund
US Equity (INR) DJIA 30 15% 16,827 70% Wait 0% 10,000 18,500 Franklin US Opportunities Fund
Hong Kong Equity (INR) Hang Seng 6% 23,191 50% Wait 0% 20,000 25,000 Goldman Hang Seng BeES Fund
China Equity (INR) Shanghai Composite 4% 2,048 35% Wait 2% 1,750 3,000 Mirae China Advantage

Precious Metals & Commodities

Asset Class     Category Benchmark       Index Sub    Limit Benchmark       Index Level (Start) 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% 2,008 80% Wait 0% 1,350 2,050 DSP BlackRock World Agriculture Fund
Crude Oil / Energy West Texas Intermediate Crude 5% $ 106 30% Hold 3% $ 99 $ 150 DSP BlackRock World Energy Fund
Gold (INR) / 10gm Gold (USD) * INR/USD * 10gm/Ounce 20% 25,633     (1,327 * 60.06 * 0.32) 30% Wait 6% 24,500 38,000 GS Gold ETF, DSPBR World Gold Fund

None of the seven Asset Class Categories is in Buy phase during July to September quarter of 2014. Gold (INR), Crude Oil and China Equity are between 30% and 40% market pricing level. So a maximum of 60% of sub-limit can be allocated to these. However Gold (INR) has artificially inflated value because of duty imposed on Gold imports to India. An investment in Gold (INR) is not advisable till this continues to be the case. Hence the exposure to Gold needs to be taken indirectly by investing in Global Gold Mining Equity Fund (DSPBR World Gold Fund) upto a maximum of 50% of the allocation for Gold (INR). Allocation to Gold (INR) comes to 12% (20%*60%) so a maximum of 6% allocation can be made to Global Gold Mining Equity Funds. Allocation to Crude Oil comes to 3% (5%*60%) and that to China Equity comes to 2% (4%*60%).

 

Asset Allocation Group 2: Income Assets (INCOME)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 39%

39% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Income Asset Allocation Group during July to September quarter of 2014. 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 39%.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 29%

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. 29% of Samedh Model Investment Portfolio value is allocated to Government Income Asset Class during July to September quarter of 2014. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Government Income Asset Class.

Eight Asset Class Categories have been identified under Government Income Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for July to September quarter of 2014, 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 (Start) 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) 8.65% 5% Buy 8.30% 6.70% SBI SCSS
Post Office Time Deposit – 5 Yr (AAA) 8.81% G-Sec (5 Yr) 8.65% 5% Buy 8.30% 6.70% India Post
National Savings Certificate – 5 Yr (AAA) 8.50% G-Sec (5 Yr) 8.65% 5% Hold 8.30% 6.70% India Post
Government Securities – 10 Yr (AAA) 8.81% G-Sec (10 Yr) 8.75% 5% Buy 8.70% 7.00% Templeton G-Sec LT Fund
Inflation Indexed National Saving Securities -10 Yr (AAA) 9.80% Consumer Price Inflation + 1.5% 8.3% (CPI) Floating Buy N.A. N.A. RBI INSS Bond
Public Provident Fund (PPF) – 15 Yr (AAA) 8.70% G-Sec (15 Year) 8.78% Floating Buy N.A. N.A. Any Bank
PSU Bank Fixed Deposit – 3 Yr (AAA) 9.25% G-Sec (3 Yr) 8.38% 5% Buy 8.20% 6.20% SBI Fixed Deposit
PSU Tax Free Bonds – 15 Yr (AAA) 8.52% G-Sec (15 Year) 8.78% 5% Buy 8.60% 7.40% NHAI, PFC Tax Free Bonds

Most of the Asset Class Categories are in Buy phase during July to September quarter of 2014. Accordingly new investment up to portfolio allocation for the asset class (29%) can be made in Government Income Asset Class during the quarter. This investment should be made only at Interest Rates above the Buy Threshold for benchmark index.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 10%

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 AAA or AA Credit Rating for Indian investors. 10% of Samedh Model Investment Portfolio value is allocated to Corporate Income Asset Class during July to September quarter of 2014. 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 July to September quarter of 2014, 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 (Start) 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) 9.25% G-Sec (3 Yr) 8.38% 5% Buy 8.20% 6.20% ICICI Bank Fixed Deposit
Corporate Bonds / Debentures – 3 Yr (AA) 11.60% G-Sec (3 Yr) 8.38% 5% Buy 8.20% 6.20% Edelweiss, IIFL, Muthoot NCD
Corporate Fixed Deposit – 3 Yr (AAA) 10.25% G-Sec (3 Yr) 8.38% 5% Buy 8.20% 6.20% Mahindra Finance FD
Corporate Tax Free Bonds – 15 Yr (AAA) 8.52% G-Sec (15 Year) 8.78% 5% Buy 8.60% 7.40% L&T Inf. Fin. / IDFC Tax Free Bonds

All the Asset Class Categories are in Buy phase during July to September quarter of 2014. Accordingly new investment up to portfolio allocation for the asset class (10%) 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.

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 July to September quarter of 2014. 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, 2% allocation is made to Liquid Asset Class to represent the capital in-between two investment transactions. Further 4% 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 July to September quarter of 2014. 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 July to September quarter of 2014, are mentioned in the table below:

Asset Class Category Current Interest Rate Benchmark     Index Benchmark     Index Level (Start) 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. ICICI Saving Bank Balance
Liquid Mutual Funds 8.58% G-Sec (90 Day) 8.58% N.A. N.A. N.A. N.A. HDFC Liquid 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 July to September quarter of 2014. 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 116.95 as on date 1st July 2014 which was based on closing value of Investment Products on 30th June 2014. Quarter end value of the index was 119.16 based on closing values of 30th September 2014. This implies an absolute portfolio return of 1.9% in FY 2014-15 Q2.

Find below the SDMFP Index details table for FY 2014-15 Q2:

Asset Class Group / Asset Class / Asset Class Category / Investment Product Benchmark Last Quarter End Quarter Start (1st Jul. 14) Quarter End (30th Sep. 14)
Updat’d Alloc’d Amount Updat’d Alloc’n %age Benchm’k Level NAV / Interest Rate Alloc’n %age Alloc’d Amount Trans’n During Quarter Benchmark Investment
Level Return NAV / Int. Rate Updat’d Amount Updat’d %age Return
Baroda Pio. PSU Equity Fund CNX PSE 13.71 11.7% 3,779 9.20 8.0% 9.36 -3.7% 3,509 -7.1% 8.44 8.58 7.2% -8.3%
Reliance Media & Ent. Fund CNX Media 2.41 2.1% 2,118 48.72 1.0% 1.17 -1.1% 2,027 -4.3% 47.81 1.15 1.0% -1.9%
UTI Energy Fund CNX Energy 10.59 9.1% 9,968 12.83 4.0% 4.68 -5.1% 9,275 -7.0% 11.95 4.36 3.7% -6.9%
ICICI  Value Disc. Fund CNX Midcap 10.47 8.9% 11,097 90.03 5.0% 5.85 -4.0% 11,418 2.9% 99.30 6.45 5.4% 10.3%
UTI Infra. Fund CNX Infrastructure 3.87 3.3% 3,373 42.26 0.0% 0.00 -3.3% 3,021 -10.4% 38.03 0.00 0.0% -10.0%
SBI IT Fund CNX IT 6.55 5.6% 9,912 37.72 12.0% 14.03 6.4% 11,303 14.0% 44.07 16.40 13.8% 16.8%
SBI FMCG Fund CNX FMCG 0.00 0.0% 17,434 58.98 4.0% 4.68 4.0% 19,876 14.0% 68.45 5.43 4.6% 16.1%
Birla SL Bank. & Fin. Svc. Fund CNX Finance 20.92 17.9% 6,247 13.81 10.0% 11.69 -7.9% 6,324 1.2% 13.49 11.42 9.6% -2.3%
Growth-Equity CNX Nifty 68.52 58.6% 7,611 N.A. 44.0% 51.46 -14.6% 7,965 4.7% N.A. 53.79 45.1% 4.5%
Mirae China Advantage Shanghai Composite 0.00 0.0% 2,048 3.41 2.0% 2.34 2.0% 2,364 15.4% 13.38 2.33 2.0% -0.2%
DSPBR World Gold Fund Gold (USD) * USD/INR 0.00 0.0% 25,663 12.15 6.0% 7.02 6.0% 24,228 -5.6% 10.78 6.23 5.2% -11.3%
DSPBR World Energy Fund WTI Crude 6.63 5.7% 106 15.73 3.0% 3.51 -2.7% 91 -14.0% 14.60 3.26 2.7% -7.2%
Growth-Other Gold (USD) * USD/INR 6.63 5.7% 25,663 N.A. 11.0% 12.86 5.3% 24,228 -5.6% N.A. 11.82 9.9% -8.1%
Growth N.A. 75.15 64.3% N.A. N.A. 55.0% 64.32 -9.3% N.A. N.A. N.A. 65.60 55.1% 2.0%
Templeton G-Sec LT Fund G-Sec – 10 Yr 21.13 18.1% 8.75% 28.80 24.0% 28.07 5.9% 8.65% 3.2% 29.31 28.56 24.0% 1.8%
SBI Fixed Deposit (3 Yr) G-Sec -3 Yr 5.11 4.4% 8.38% 9.00% 5.0% 5.85 0.6% 8.48% 1.8% 8.75% 5.98 5.0% 2.2%
Income-Govt G-Sec 10 Yr 26.24 22.4% 8.75% N.A. 29.0% 33.91 6.6% 8.65% 3.2% N.A. 34.54 29.0% 1.8%
Edelwiess / IIFL NCD: 3 Yr Cumulative G-Sec -3 Yr 6.36 5.4% 11.60% 1060.00 7.0% 8.19 1.6% 8.48% 2.1% 1070.00 8.26 6.9% 0.9%
Mahindra Finance FD – 3 Yr G-Sec -3 Yr 3.08 2.6% 10.25% 10.25% 3.0% 3.51 0.4% 8.48% 2.1% 10.00% 3.60 3.0% 2.5%
Income-Corp G-Sec 3 Yr 9.44 8.1% 8.38% N.A. 10.0% 11.69 1.9% 8.48% 1.8% N.A. 11.86 10.0% 1.4%
Income G-Sec 10 Yr 35.68 30.5% 8.75% N.A. 39.0% 45.61 8.5% 8.65% 3.2% N.A. 46.40 38.9% 1.7%
Saving Bank Account Regulation 1.02 0.9% 4.00% 4.00% 1.0% 1.17 0.1% 4.00% 1.0% 4.00% 1.18 1.0% 1.0%
HDFC Liquid Fund G-Sec -90 day 5.11 4.4% 8.55% 25.87 5.0% 5.85 0.6% 8.56% 2.1% 26.43 5.98 5.0% 2.2%
Liquid G-Sec – 90 day 6.13 5.2% 8.55% N.A. 6.0% 7.02 0.8% 8.56% 2.1% N.A. 7.16 6.0% 2.0%
SDMFP Index N.A. 116.95 100.0% N.A. N.A. 100.0% 116.95 0.0% N.A. N.A. N.A. 119.16 100.0% 1.9%