Apr’16 – Jun’16

April’ 2016 to June’ 2016: Samedh Dynamic Mutual Fund Portfolio

Samedh Dynamic Mutual Fund Portfolio for April to June quarter of 2016 (FY 2016-17 Q1), 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 2016 17 Q1

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 Apr’ 16 7,738 26,010 8.75% 134.21 N.A. N.A. N.A. N.A.
FY 16-17 Q1 Apr-16 7,850 27,460 8.75% 137.38 1.4% 5.6% 0.7% 2.4%
May-16 8,160 26,192 8.75% 140.04 3.9% -4.6% 0.7% 1.9%
Jun-16 8,288 28,554 8.75% 143.06 1.6% 9.0% 0.7% 2.2%
Overall Return during the Quarter (Apr’16 – Jun’16) 7.1% 9.8% 2.2% 6.6%

Portfolio Explanation

Asset Allocation suggested for Samedh Dynamic Mutual Fund Portfolio for April to June quarter of 2016 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.

Apr - Jun 2016 Asset Allocation

Asset Allocation Group 1: Growth Assets (GROWTH)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 65%

71% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Growth Asset Allocation Group during April to June 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 65%.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 53%

53% of Samedh Dynamic Mutual Fund value is allocated to Equity Asset Class during April to June quarter of 2016. This allocated portfolio value is to be invested in Asset Class Categories corresponding to Equity Asset Class.

Fifteen 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 April to June 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

(31st Mar)

Index Level

(31st Mar)

Future Prospect Premium Major Factors Portfolio Allocation Investment Option(s)
Smallcap Equity CNX Smallcap 5% 2,600 4,885 +88% Domestic Inflows, Expected Earning Improvement from H2 0% Reliance Smallcap Fund
Midcap Equity CNX Midcap 20% 7,150 12,753 +78% Domestic Inflows, Expected Earning Improvement from H2 0% ICICI Value Disc. Fund
Banking Sector Equity CNX Bank Nifty 40% 12,100 16,142 +33% PSU Bank NPAs, Soft Interest Rates, Economic Growth 7.5% 0% GS Bank. ETF / Reliance Bank. Fund
PSU Bank Equity CNX PSU Bank 5% 1,907 2,449 +29% PSU Bank NPAs, Soft Interest Rates, Not hit bottom of NPAs 0% Goldman Sachs / Kotak PSU Bank ETF
Metal Sector Equity CNX Metal 5% 1,500 1,913 28% Global Commodity Downturn, China Crisis, Price Improvement 0% SBI Mag. Comma Fund
FMCG Sector Equity CNX FMCG 10% 15,600 19,764 +27% Rural Consumption expected to improve in H2 due to Monsoon & Budget 0% SBI FMCG Fund / ICICI Pru. FMCG Fund
Largecap Equity CNX NIFTY 35% 6,200 7,738 +25% India Economic Growth 7.5%,
Expected earning improvement in H2
0% HDFC Index Fund Nifty / Sensex
Media Sector Equity CNX Media 2% 2,050 2,321 +13% Economic Growth 7.5% 0% Reliance Media & Ent. Fund
Auto Sector Equity CNX Auto 30% 7,250 8,088 +12% Comm. Vehicle Growth, 4W Urban Cons. Pickup, 2W Rural Cons. Pickup from H2 0% UTI Transp. & Log. Fund
Finance Sector Equity CNX Finance 60% 6,600 6,579 +0% Bank NPAs, Interest Rate, Economic Growth, Fin. Pickup 20% Birla SL Bank. & Fin. Svc. Fund / ICICI Pru. Bank. & Fin. Svc. Fund
Energy Sector Equity CNX Energy 10% 8,700 8,425 -3% Energy price stabilizing 5% Tata Res. & Energy Fund
Infrastructure Equity CNX Infrastructure 10% 2,750 2,548 -7% Govt. Infra. Push, Declining Interest Rates 8% UTI Infra. Fund / ICICI Pru. Infra. Fund
Pharma Sector Equity CNX Pharma 15% 11,900 10,989 -8% US FDA Notices, High Index PE 0% SBI Pharma Fund
IT Sector Equity CNX IT 20% 13,100 11,309 -14% Stable US Growth, Sluggish Global Growth, Emerging Tech. 20% SBI IT Fund , ICICI Pru. Tech. Fund
Realty Sector Equity CNX Realty 2% 214 157 -27% Real Estate Sector Bottoming Out, Real Estate Regulator 0% No Suitable MF

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 first to IT Sector Equity. This comes to a maximum of 20%  (100%*20%).
  2. A maximum of 80% of sub-limits should then be allocated to Infrastructure Sector Equity. This comes to a maximum of 8% (80%*10%).
  3. A maximum of 50% of sub-limit should then be allocated to Energy Sector Equity and Finance Sector Equity. This comes to a maximum of 5% (10%*50%) for Energy Sector Equity and 30% (60%*50%) for Finance Sector Equity.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 12%

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 April to June quarter of 2016, are mentioned in the table below.

International Equity

Asset Class Category Benchmark Index Sub Limit Benchmark Index Level (31st Mar) Position in Market Pricing Cycle Investment Phase Portfolio Allocation Investment Option(s)
Europe Equity (INR) Euro Stoxx 50 8% 3,005 30% Wait 0% DWS Top Euroland Fund
US Equity (INR) DJIA 30 15% 17,685 65% Wait 0% Franklin US Opportunities Fund
Hong Kong Equity (INR) Hang Seng 6% 20,777 20% Buy 2% Goldman Hang Seng BeES Fund
China Equity (INR) Shanghai Composite 4% 3,004 65% Wait 0% JP Morgan Greater China Fund

Precious Metals & Commodities

Asset Class Category Benchmark Index Sub Limit Benchmark Index Level (31st Mar) Position in Market Pricing Cycle Major Factors Portfolio Allocation Investment Option(s)
Agriculture Commodities S&P Global Agribusiness 2% 1,628 50%  – 0% DSP BlackRock World Agriculture Fund
Crude Oil / Energy West Texas Intermediate Crude 5% $ 38 5% Price Stabilizing 5% DSP BlackRock World Energy Fund
Gold (INR) / 10gm Gold (USD) * INR/USD * 10gm/Ounce 20% 26,010 20% US Fed Rate Hike, Low Global Inflation 5% SBI Gold Fund

Gold, Crude Oil and Hong Kong equity are in Buy phase during April to June quarter of 2016. Investment advice for them is as below:

  1. Crude Oil prices are stabilizing. An amount upto 100% of sub-limit should be allocated to Crude Oil. This comes to a maximum of 5% (5%*100%)
  2. 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% (20%*25%)
  3. An amount upto 40% of sub-limit should be allocated to Hong Kong Equity. This comes to a maximum of 2% (6%*40%)

Asset Allocation Group 2: Income Assets (INCOME)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 30%

30% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Income Asset Allocation Group during April to June 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 30%.

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: 15%

Long Term Income represents fixed-income investments with maturity equal to or longer than five years. 15% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Long-Term Income Asset Class during April to June 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 April to June 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 Mar) Position in Market Pricing Cycle Investment Phase Investment Option(s)
Senior Citizens’ Saving Scheme – 5 Yr (AAA) 8.60% G-Sec (5 Yr) 7.52% 60% Hold SBI SCSS
Post Office Time Deposit – 5 Yr (AAA) 7.90% G-Sec (5 Yr) 7.52% 60% Hold India Post – Time Deposit
National Savings Certificate – 5 Yr (AAA) 8.10% G-Sec (5 Yr) 7.52% 60% Hold India Post – NSC
Government Bonds – 10 Yr (AAA) 7.46% G-Sec (10 Yr) 7.46% 60% Hold ICICI Pru. GILT Fund – PF Option
Inflation Indexed National Saving Securities -10 Yr (AAA) 6.70% Consumer Price Inflation + 1.5% 5.2% (Feb CPI) Floating Wait RBI INSS Bond
Public Provident Fund (PPF) – 15 Yr (AAA) 8.10% G-Sec (15 Year) 7.97% Floating Buy Any Bank – PPF Account
PSU Tax Free Bonds – 15 Yr (AAA) 7.33% G-Sec (15 Year) 7.97% 60% Hold NHAI, PFC Tax Free Bonds
Corporate Tax Free Bonds – 15 Yr (AAA) 8.00% G-Sec (15 Year) 7.97% 60% Hold L&T Inf. Fin. / IDFC Tax Free Bonds

Some fixed interest saving investment asset class categories are in Buy phase during April to June quarter of 2016. Accordingly new investment up to portfolio allocation for the asset class (15%) 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 15% 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: 15%

Medium-Term Income represents fixed-income investments with maturity between 1 and 5 years. 15% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Medium-Term Income Asset Class during April to June 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 April to June 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 Mar) Position in Market Pricing Cycle Investment Phase Investment Option(s)
Private Bank Fixed Deposit – 3 Yr (AAA) 8.50% G-Sec (3 Yr) 7.37% 60% Hold Choose from list
Corporate Bonds / Debentures – 3 Yr (A) 10.50% G-Sec (3 Yr) 7.37% 60% Hold HDFC Short Term Fund
Corporate Fixed Deposit – 3 Yr (AAA) 9.25% G-Sec (3 Yr) 7.37% 60% Hold Choose from List
PSU Bank Fixed Deposit – 3 Yr (AAA) 7.25% G-Sec (3 Yr) 7.37% 60% Hold SBI Fixed Deposit
PSU Taxable Bonds – 3 Yr (AAA) 7.82% G-Sec (3 Year) 7.37% 60% Hold Birla SL Short Term Fund

Most Asset Class Categories are in Hold phase during April to June quarter of 2016. Accordingly new investment up to portfolio allocation for the asset class (15%) can be made in Medium Term Income Asset Class during the quarter.

SDMFP Index allocation of 15% would be made in PSU Taxable Bonds – 3 Yr (10%) and Corporate Bonds / Debentures – 3 Yr (5%).

Asset Allocation Group 3: Liquid Assets (LIQUID)

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

5% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Allocation Group during April to June 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 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: 5%

Liquid Income represents fixed-income investments with highest liquidity for Indian investors. 5% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Class during April to June 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 April to June quarter of 2016, are mentioned in the table below:

Asset Class Category Current Interest Rate Benchmark Index Benchmark Index Level (31st Mar) 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 7.08% G-Sec (90 Day) 7.08% 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 (5%) can be made in Liquid Income Asset Class during April to June quarter of 2016. Of this Saving Bank balance should be limited to 1% and 4% 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 134.21 on 1st April 2016, based on closing value of Mutual Funds on 31st March 2016.

Find below the SDMFP Index details table for FY 2016-17 Q1:

Asset Class Group / Asset Class / Asset Class Category / Investment Product Benchmark Last Quarter End Quarter Start (1st Apr. 16) Quarter End (30th Jun. 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 5.84 4.3% 2,847 6.44 0.0% 0.00 -4.3% 3,169 11.3% 6.98 0.00 0.0% 5.1%
Tata Res. & Energy Fund CNX Energy 0.0 0.0% 8,425 10.38 5.0% 6.71 5.0% 8,705 3.3% 11.43 7.39 5.2% 10.1%
Birla SL Bank. & Fin. Serv. Fund CNX Finance 13.13 9.8% 6,579 16.25 20.0% 26.84 10.2% 7,321 11.3% 19.19 31.70 22.2% 18.8%
ICICI Pru. Infra. Fund CNX Infra 6.16 4.6% 2,548 35.47 8.0% 10.74 3.4% 2,846 11.7% 40.03 12.12 8.5% 12.9%
SBI IT Fund CNX IT 26.45 19.7% 11,309 46.43 20.0% 26.84 0.3% 11,120 -1.7% 45.73 26.44 18.5% -1.5%
Growth-Equity CNX Nifty 51.57 38.4% 7,738 N.A. 53.0% 71.13 14.6% 8,288 7.1% N.A. 77.64 54.3% 9.2%
SBI Gold Fund 7.52 5.6% 26,010 9.33 5.0% 6.71 -0.6% 28,554 9.8% 10.04 7.22 5.0% 7.6%
DSPBR World Energy Fund WTI Crude 0.00 0.0% 38 11.38 5.0% 6.71 5.0% 46 20.5% 12.21 7.20 5.0% 7.3%
Goldman Hang Seng BeES Fund Hang Seng 0.00 0.0% 20,777 2047 2.0% 2.68 2.0% 20,777 0.1% 2124 2.79 1.9% 3.8%
Growth-Other Gold (USD) * USD/INR 7.52 5.6% 26,010 N.A. 12.0% 16.11 6.4% 28,554 9.8% N.A. 17.21 12.0% 6.8%
Growth N.A. 59.10 44.0% N.A. N.A. 65.0% 87.24 21.0% N.A. N.A. N.A. 94.85 66.3% 8.7%
ICICI Prudential GILT Fund – PF Option G-Sec – 10 Yr 33.04 24.6% 7.46% 29.24 15.0% 20.13 -9.6% 7.45% 0.8% 30.21 20.80 14.5% 3.3%
Income-Long Term G-Sec – 10 Yr 33.04 24.6% 7.46% N.A. 15.0% 20.13 -9.6% 7.45% 0.8% N.A. 20.80 14.5% 3.3%
Birla SL Short Term Fund G-Sec -3 Yr 13.57 10.1% 7.37% 56.88 10.0% 13.42 -0.1% 7.13% 1.3% 58.16 13.72 9.6% 2.3%
HDFC Short Term Fund G-Sec -3 Yr 20.40 15.2% 7.37% 29.59 5.0% 6.71 -10.2% 7.13% 1.3% 30.24 6.86 4.8% 2.2%
Income-Mid. Term G-Sec -3 Yr 33.97 25.3% 7.37% N.A. 15.0% 20.13 -10.3% 7.13% 1.3% N.A. 20.58 14.4% 2.2%
Income G-Sec – 10 Yr 67.01 49.9% 7.46% N.A. 49.0% 40.26 -19.9% 7.45% 0.8% N.A. 41.38 28.9% 2.8%
Saving Bank Account Regulation 1.34 1.0% 4.00% 4.00% 1.0% 1.34 0.0% 4.00% 1.0% 4.00% 1.36 0.9% 1.0%
HDFC Liquid Fund G-Sec -90 day 6.77 5.1% 7.08% 29.84 4.0% 5.37 -1.0% 6.59% 0.5% 30.43 5.47 3.8% 2.0%
Liquid G-Sec -90 day 8.11 6.0% 7.08% N.A. 6.0% 6.71 -1.0% 6.59% 0.5% N.A. 6.83 4.8% 1.8%
SDMFP Index N.A. 134.21 100.0% N.A. N.A. 100.0% 134.21 0.0% N.A. N.A. N.A. 143.06 100.0% 6.6%