Jan’16 – Mar’16

January’ 2016 to March’ 2016: Samedh Dynamic Mutual Fund Portfolio

Samedh Dynamic Mutual Fund Portfolio for January to March quarter of 2016 (FY 2015-16 Q4), is shown 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 Dynamic Mutual Fund Portfolio FY 2015 16 Q4

The table below shows comparative performance of Advisory’s Dynamic Mutual Fund Portfolio and other Financial Investment Assets, during the 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
Quarter’s Start 1st Jan’ 16 7,946 22,566 8.75% 132.71 N.A. N.A. N.A. N.A.
FY 15-16 Q4 Jan-16 7,564 24,271 8.75% 130.70 -4.8% 7.6% 0.7% -1.5%
Feb-16 6,987 27,087 8.75% 127.20 -7.6% 11.6% 0.7% -2.7%
Mar-16 7,738 26,010 8.75% 134.21 10.7% -4.0% 0.7% 5.5%
Overall Return during the Quarter (Jan’16 – Mar’16) -2.6% 15.3% 2.2% 1.1%

Portfolio Explanation

Asset Allocation suggested for Samedh Dynamic Mutual Fund Portfolio for January to March quarter of 2016 (FY 2015-16 Q4) is shown 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 India FY 2015 16 Q4

Asset Allocation Group 1: Growth Assets (GROWTH)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 45%

45% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Growth Asset Allocation Group during January to March quarter of 2016. 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 45%.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 40%

40% of Samedh Dynamic Mutual Fund value is allocated to Equity Asset Class during January to March quarter of 2016. 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 2016, 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 Level (31st Dec) Future Prospect Premium Major Factors Portfolio Allocation Investment Option(s)
Smallcap Equity CNX Smallcap 5% 2,900 5,653 +95% Domestic Inflows, Expected Earning Improvement 0% Reliance Smallcap Fund
Midcap Equity CNX Midcap 20% 7,400 13,397 +81% Domestic Inflows, Expected Earning Improvement 0% ICICI Value Disc. Fund
Banking Sector Equity CNX Bank Nifty 40% 12,100 16,922 +40% PSU Bank NPAs, Soft Interest Rates, Economic Growth 7.5% 0% GS Bank. ETF / Reliance Bank. Fund
Media Sector Equity CNX Media 2% 2,000 2,633 +32% 0% Reliance Media & Ent. Fund
Largecap Equity CNX NIFTY 35% 6,200 7,946 +28%  India Economic Growth 7.5%,
Low Input Cost
0% HDFC Index Fund Nifty / Sensex
FMCG Sector Equity CNX FMCG 10% 15,800 20,193 +28% Low Input Cost, Sluggish Rural Consumption 0% SBI FMCG Fund
PSU Bank Equity CNX PSU Bank 5% 2,300 2,864 +25% PSU Bank NPAs, Soft Interest Rates, Not hit bottom of NPAs 0% Goldman Sachs / Kotak PSU Bank ETF
Pharma Sector Equity CNX Pharma 15% 9,800 11,963 +22% Rupee Depreciation, US FDA Notices 0% SBI Pharma Fund
Auto Sector Equity CNX Auto 30% 7,000 8,255 +18% Comm. Vehicle Growth, 4W Urban Cons. Pickup, 2W Rural Cons. Sluggish 0% UTI Transp. & Log. Fund
Metal Sector Equity CNX Metal 5% 1,700 1,827 7% Global Commodity Downturn, China Crisis, Not reached bottom 0% SBI Mag. Comma Fund
Finance Sector Equity CNX Finance 60% 6,600 7,059 +7% Bank NPAs, Interest Rate, Economic Growth, Fin. Pickup 10% Birla SL Bank. & Fin. Svc. Fund
Energy Sector Equity CNX Energy 10% 8,700 8,584 -1% Crude Global Oversupply. Not reached bottom. 0% UTI Energy Fund
Public Sector Equity CNX PSE 10% 3,200 3,132 -2% 5% Baroda Pio. PSU Equity Fund
Infrastructure Equity CNX Infrastructure 10% 2,900 2,769 -5% Govt. Infra. Push, Declining Interest Rates 5% GS Infra. ETF / UTI Infra. Fund
IT Sector Equity CNX IT 20% 14,100 11,213 -20% Improving US Growth, Sluggish Global Growth, Emerging Tech. 20% SBI IT Fund
Realty Sector Equity CNX Realty 2% 230 173 -25% Real Estate Sector Bottoming Out, Regulation Change 2% DLF

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 100% of sub-limits should be allocated to Realty Sector Equity and IT Sector Equity. This comes to a maximum of 2%  (100%*2%) for Realty Sector Equity and 20%  (100%*20%) for IT Sector Equity. However since there is no Real Estate Mutual Fund available for investment, the 2% would instead be parked in Liquid Funds.
  2. A maximum of 50% of sub-limit should then be allocated to Public Sector Equity and Infrastructure Equity. This comes to a maximum of 5% (10%*50%) for Public Sector Equity and 5% (10%*50%) for Infrastructure Equity.
  3. A maximum of 20% of sub-limit should then be allocated to Finance Sector Equity. This comes to a maximum of 12% (60%*20%). Investment would be limited to 10%

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 5%

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 2016, are mentioned in the table below.

International Equity

Asset Class Category Benchmark Index Sub Limit Benchmark Index Level (31st Dec) Position in Market Pricing Cycle Investment Phase Portfolio Allocation Investment Option(s)
Europe Equity (INR) Euro Stoxx 50 8% 3,267 35% Wait 0% DWS Top Euroland Fund
US Equity (INR) DJIA 30 15% 17,425 65% Wait 0% Franklin US Opportunities Fund
Hong Kong Equity (INR) Hang Seng 6% 21,914 25% Wait 0% Goldman Hang Seng BeES Fund
China Equity (INR) Shanghai Composite 4% 3,539 80% Sell 0% JP Morgan Greater China Fund

Precious Metals & Commodities

Asset Class Category Benchmark Index Sub Limit Benchmark Index Level (31st Dec) Position in Market Pricing Cycle Major Factors Portfolio Allocation Investment Option(s)
Agriculture Commodities S&P Global Agribusiness 2% 1,620 50% 0% DSP BlackRock World Agriculture Fund
Crude Oil / Energy West Texas Intermediate Crude 5% $ 37 5% Global Oversupply, Less China Demand 0% DSP BlackRock World Energy Fund
Gold (INR) / 10gm Gold (USD) * INR/USD * 10gm/Ounce 20% 22,566 10% US Fed Rate Hike, Low Global Inflation 5% SBI Gold Fund

Gold and Crude Oil are in Buy phase during January to March quarter of 2016. 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 25% of sub-limit should be allocated to Gold. This comes to a maximum of 5% (100%*25%)
  2. There is no suitable Mutual Fund to take exposure to Crude Oil. Hence the allocation for the same would be 0%.

Asset Allocation Group 2: Income Assets (INCOME)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 49%

49% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Income Asset Allocation Group during January to March quarter of 2016. 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 49%.

The fixed income investments may be backed by Government of India or by Corporates. 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. 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.

Income Assets – Asset Class 1: Long Term – More than 5 Yr (INCOME-LONG)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 24%

Long Term Income represents fixed-income investments with maturity equal to or longer than five years. 24% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Long-Term Income Asset Class during January to March quarter of 2016. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Long-Term Income Asset Class.

Eight Asset Class Categories have been identified under Long-Term Income Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2016, 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 (31st Dec) Position in Market Pricing Cycle Investment Phase Investment Option(s)
Senior Citizens’ Saving Scheme – 5 Yr (AAA) 9.00% G-Sec (5 Yr) 7.74% 50% Buy SBI SCSS
Post Office Time Deposit – 5 Yr (AAA) 8.50% G-Sec (5 Yr) 7.74% 50% Buy India Post – Time Deposit
National Savings Certificate – 5 Yr (AAA) 8.50% G-Sec (5 Yr) 7.74% 50% Buy India Post – NSC
Government Bonds – 10 Yr (AAA) 7.76% G-Sec (10 Yr) 7.76% 50% Hold ICICI Pru. GILT Fund – PF Option
Inflation Indexed National Saving Securities -10 Yr (AAA) 6.90% Consumer Price Inflation + 1.5% 5.4% (Nov CPI) Floating Wait RBI INSS Bond
Public Provident Fund (PPF) – 15 Yr (AAA) 8.70% G-Sec (15 Year) 8.13% Floating Buy Any Bank – PPF Account
PSU Tax Free Bonds – 15 Yr (AAA) 7.33% G-Sec (15 Year) 8.13% 50% Hold NHAI, PFC Tax Free Bonds
Corporate Tax Free Bonds – 15 Yr (AAA) 8.00% G-Sec (15 Year) 8.13% 50% Hold L&T Inf. Fin. / IDFC Tax Free Bonds

Some fixed interest saving investment asset class categories are in Buy phase during January to March quarter of 2016. Accordingly new investment up to portfolio allocation for the asset class (24%) can be made in Long-Term 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 24% would be invested in 10-Yr Government Bond.

Income Assets – Asset Class 2: Medium Term – 1 to 5 Yr (INCOME-MID)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 25%

Medium-Term Income represents fixed-income investments with maturity between 1 and 5 years. 25% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Medium-Term Income Asset Class during January to March quarter of 2016. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Medium-Term Income Asset Class.

Five Asset Class Categories have been identified under Medium-Term Income Asset Class for SDMFP. The various investment parameters corresponding to these Asset Class Categories, for January to March quarter of 2016, 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 (31st Dec) Position in Market Pricing Cycle Investment Phase Investment Option(s)
Private Bank Fixed Deposit – 3 Yr (AAA) 8.50% G-Sec (3 Yr) 7.62% 40% Buy Choose from list
Corporate Bonds / Debentures – 3 Yr (A) 10.50% G-Sec (3 Yr) 7.62% 40% Buy HDFC Short Term Fund
Corporate Fixed Deposit – 3 Yr (AAA) 9.25% G-Sec (3 Yr) 7.62% 40% Buy Choose from List
PSU Bank Fixed Deposit – 3 Yr (AAA) 7.25% G-Sec (3 Yr) 7.62% 40% Hold SBI Fixed Deposit
PSU Taxable Bonds – 3 Yr (AAA) 7.82% G-Sec (3 Year) 7.62% 40% Hold Birla SL Short Term Fund

Most Asset Class Categories are in Buy phase during January to March quarter of 2016. Accordingly new investment up to portfolio allocation for the asset class (25%) 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 25% would be made in PSU Taxable Bonds – 3 Yr (15%) and Corporate Bonds / Debentures – 3 Yr (10%).

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 2016. 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 2016. 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 2016, are mentioned in the table below:

Asset Class Category Current Interest Rate Benchmark Index Benchmark Index Level (31st Dec) Position in Market Pricing Cycle Investment Phase Investment Option(s)
Saving Bank Account 4.00% Govt. Regulation 4.00% N.A. N.A. Any Saving Bank Balance
Liquid Mutual Funds 7.17% G-Sec (90 Day) 7.17% N.A. N.A. HDFC Liquid Fund
Arbitrage Funds 8.20% 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 2016. 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 132.71 on 1st January 2016, based on closing value of Mutual Funds on 31st December 2015.

Find below the SDMFP Index details table for FY 2015-16 Q4:

Asset Class Group / Asset Class / Asset Class Category / Investment Product Benchmark Last Quarter End Quarter Start (1st Jan. 16) Quarter End (31st Mar. 16)
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 6.76 5.1% 3,132 7.55 5.0% 6.64 -0.1% 2,847 -9.1% 6.64 5.84 4.3% -12.1%
SBI Magnum Comma Fund CNX Metal 6.82 5.1% 1,827 22.97 0.0% 0.00 -5.1% 1,913 4.7% 23.00 0.00 0.0% 0.1%
UTI Energy Fund CNX Energy 13.91 10.5% 8,584 11.87 0.0% 0.00 -10.5% 8,425 -1.9% 11.74 0.00 0.0% -1.1%
Birla SL Bank. & Fin. Serv. Fund CNX Finance 0.00 0.0% 7,059 16.42 10.0% 13.27 10.0% 6,579 -6.8% 16.25 13.13 9.8% -1.0%
UTI Infra Fund CNX Infra 6.49 4.9% 2,769 40.35 5.0% 6.64 0.1% 2,548 -8.0% 37.34 6.16 4.6% -7.2%
SBI IT Fund CNX IT 26.15 19.7% 11,213 46.60 20.0% 26.54 0.3% 11,309 0.9% 46.43 26.45 19.7% -0.4%
Growth-Equity CNX Nifty 60.14 45.3% 7,946 N.A. 40.0% 53.09 -5.3% 7,738 -2.6% N.A. 51.57 38.4% -2.8%
SBI Gold Fund Gold (USD) * USD/INR 6.26 4.7% 22,566 8.23 5.0% 6.64 0.3% 26,010 15.3% 9.33 7.52 5.6% 13.4%
Growth-Other Gold (USD) * USD/INR 6.26 4.7% 22,566 N.A. 5.0% 6.64 0.3% 26,010 15.3% N.A. 7.52 5.6% 13.4%
Growth N.A. 66.40 50.0% N.A. N.A. 45.0% 59.72 -5.0% N.A. N.A. N.A. 59.10 44.0% -1.0%
ICICI Prudential GILT Fund – PF Option G-Sec – 10 Yr 31.36 23.6% 7.76% 28.19 24.0% 31.85 0.4% 7.46% 3.6% 29.24 33.04 24.6% 3.7%
Income-Long Term G-Sec – 10 Yr 31.36 23.6% 7.76% N.A. 24.0% 31.85 0.4% 7.46% 3.6% N.A. 33.04 24.6% 3.7%
Birla SL Short Term Fund G-Sec -3 Yr 0.0 0.0% 7.62% 55.61 10.0% 13.27 10.0% 7.37% 1.4% 56.88 13.57 10.1% 2.3%
HDFC Short Term Fund G-Sec -3 Yr 26.90 20.3% 7.62% 28.88 15.0% 19.91 -5.3% 7.37% 1.4% 29.59 20.40 15.2% 2.5%
Income-Mid. Term G-Sec -3 Yr 26.90 20.3% 7.62% N.A. 25.0% 33.18 4.7% 7.37% 1.4% N.A. 33.97 25.3% 2.4%
Income G-Sec – 10 Yr 58.26 43.9% 7.76% N.A. 49.0% 65.03 5.1% 7.46% 3.6% N.A. 67.01 49.9% 3.0%
Saving Bank Account Regulation 1.33 1.0% 4.00% 4.00% 1.0% 1.33 0.0% 4.00% 1.0% 4.00% 1.34 1.0% 1.0%
HDFC Liquid Fund G-Sec -90 day 6.72 5.1% 7.17% 29.26 5.0% 6.64 -0.1% 7.08% 0.6% 29.84 6.77 5.0% 2.0%
Liquid G-Sec -90 day 8.05 6.1% 7.17% N.A. 6.0% 7.96 -0.1% 7.08% 0.6% N.A. 8.11 6.0% 1.8%
SDMFP Index N.A. 132.71 100.0% N.A. N.A. 100.0% 131.71 0.0% N.A. N.A. N.A. 134.21 100.0% 1.1%