Jan’17 – Mar’17

January to March 2017: Samedh Dynamic Mutual Fund Portfolio

Samedh Dynamic Mutual Fund Portfolio for January to March quarter of 2017 (FY 2016-17 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 2016 17 Q4

Portfolio Explanation

Asset Allocation suggested for Samedh Dynamic Mutual Fund Portfolio for January to March quarter of 2017 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 2016 17 Q4

Asset Allocation Group 1: Growth Assets (GROWTH)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 60%

60% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Growth Asset Allocation Group during January to March quarter of 2017. 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 60%.

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

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 50%

50% of Samedh Dynamic Mutual Fund value is allocated to Equity Asset Class during January to March quarter of 2017. 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 January to March quarter of 2017, 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 Dec)

Index Level

(31st Dec)

Future Prospect Premium Major Factors Portfolio Allocation Investment Option(s)
PSU Bank Equity CNX PSU Bank 5% 300 2,982 +850% Nearing bottom of NPAs, Demonetization Liquidity 0% Goldman Sachs / Kotak PSU Bank ETF
Metal Sector Equity CNX Metal 5% 900 2,653 200% Global Commodity Bottomed, Price Improvement 0% SBI Mag. Comma Fund
Banking Sector Equity CNX Bank Nifty 40% 9,700 18,177 +90% Bank NPAs Bottoming, Demonetization Liquidity 0% GS Bank. ETF / Reliance Bank. Fund
Smallcap Equity CNX Smallcap 10% 3,550 5,781 +60% Domestic Inflows, Demonetization Impact on Earning 0% Reliance Smallcap Fund
Midcap Equity CNX Midcap 25% 9,100 14,351 +60% Domestic Inflows, Demonetization Impact on Earning 0% ICICI Value Disc. Fund
Auto Sector Equity CNX Auto 25% 7,400 9,147 +25% Demonetization impact on Auto Sales 0% UTI Transp. & Log. Fund
Infrastructure Equity CNX Infrastructure 10% 2,400 2,712 15% Govt. Infra. Push, Declining Interest Rates 0% UTI Infra. Fund / ICICI Pru. Infra. Fund
Finance Sector Equity CNX Finance 60% 6,900 7,407 +7% Bank NPAs, Interest Rate, Demonetization Impact 0% Birla SL Bank. & Fin. Svc. Fund / ICICI Pru. Bank. & Fin. Svc. Fund
Largecap Equity CNX NIFTY 40% 8,000 8,186 +2% FII Outflow, Demonetization impact on earnings 0% HDFC Index Fund Nifty / Sensex
Energy Sector Equity CNX Energy 10% 10,150 10,272 +1% Energy price improving 10% Tata Res. & Energy Fund
Media Sector Equity CNX Media 2% 2,600 2,611 +0% Economic Growth 0% Reliance Media & Ent. Fund
Pharma Sector Equity CNX Pharma 20% 10,650 10,267 -4% US FDA Action, Dollar Strengthening 20% SBI Pharma Fund
Realty Sector Equity CNX Realty 2% 180 165 -8% Demonetization Impact, Real Estate Regulator 0% No Suitable MF
FMCG Sector Equity CNX FMCG 10% 24,300 20,754 -15% Consumption Impacted by Demonetization 10% SBI FMCG Fund / ICICI Pru. FMCG Fund
IT Sector Equity CNX IT 10% 13,600 10,399 -25% Stable US Growth, Trump Policy Digital Disruption 10% SBI IT Fund , ICICI Pru. Tech. Fund

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, FMCG Sector Equity, Pharma Sector Equity and Energy Sector Equity. This comes to a maximum of 10%  (10%*100%) for IT Sector Equity, 10% (10%*100%) for FMCG Sector Equity, 20% (20%*100%) for Pharma Sector Equity and 10% (10%*100%) for Energy Sector Equity.

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

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

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 2017, 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 Major Factors Portfolio Allocation Investment Option(s)
Europe Equity (INR) Euro Stoxx 50 8% 3,291 35% 0% DWS Top Euroland Fund
US Equity (INR) DJIA 30 15% 19,763 70% 0% Franklin US Opportunities Fund
Hong Kong Equity (INR) Hang Seng 6% 20,000 25% 0% Goldman Hang Seng BeES Fund
China Equity (INR) Shanghai Composite 4% 3,104 40% 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% 1,648 50%  – 0% DSP BlackRock World Agriculture Fund
Crude Oil / Energy West Texas Intermediate Crude 5% $ 53 20% Price Improving 5% DSP BlackRock World Energy Fund
Gold (INR) / 10gm Gold (USD) * INR/USD * 10gm/Ounce 20% 24,715 20% Dollar Strength, Low Demand in India & China 5% SBI Gold Fund

Gold and Crude Oil are in Buy phase during January to March quarter of 2017. 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 and due to increased Global risk an amount upto 25% of sub-limit should be allocated to Gold. This comes to a maximum of 5% (20%*25%)

Asset Allocation Group 2: Income Assets (INCOME)

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

35% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Income Asset Allocation Group during January to March quarter of 2017. 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 35%.

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: 10%

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 January to March quarter of 2017. 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 2017, 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) 7.88% G-Sec (5 Yr) + 1.00 % 6.65% 80% Hold SBI SCSS
Sukanya Samriddhi Scheme – 15 Yr (AAA) 7.94% G-Sec (15 Yr) + 0.75% 7.20% 80% Hold SBI SCSS
Post Office Time Deposit – 5 Yr (AAA) 7.13% G-Sec (5 Yr) + 0.25% 6.65% 80% Hold India Post – Time Deposit
National Savings Certificate – 5 Yr (AAA) 7.13% G-Sec (5 Yr) + 0.25% 6.65% 80% Hold India Post – NSC
Government Bonds – 10 Yr (AAA) 6.96% G-Sec (10 Yr) 6.52% 80% Hold ICICI Pru. GILT Fund – PF Option
Inflation Indexed National Saving Securities -10 Yr (AAA) 5.13% Consumer Price Inflation + 1.5% 3.63% (Oct CPI) Floating Wait RBI INSS Bond
Public Provident Fund (PPF) – 15 Yr (AAA) 7.45% G-Sec (15 Year) + 0.25% 7.20% Floating Buy Any Bank – PPF Account
PSU Tax Free Bonds – 15 Yr (AAA) 7.00% G-Sec (15 Year) 7.20% 80% Hold NHAI, PFC Tax Free Bonds
Corporate Tax Free Bonds – 15 Yr (AAA) 7.30% G-Sec (15 Year) 7.20% 80% 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 2017. Accordingly new investment up to portfolio allocation for the asset class (10%) can be made in Long-Term Fixed Income Asset Class during the quarter.

Samedh Dynamic Mutual Fund Portfolio allocation of 10% would be invested in 10-Yr Government Bond as a Mutual Fund investment is possible for the same.

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 2017. 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 2017, 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) 7.60% G-Sec (3 Yr) 6.46% 20% Hold Choose from list
Corporate Bonds / Debentures – 3 Yr (A) 8.75% G-Sec (3 Yr) 6.46% 20% Hold HDFC Short Term Fund
Corporate Fixed Deposit – 3 Yr (AAA) 8.50% G-Sec (3 Yr) 6.46% 20% Hold Choose from List
PSU Bank Fixed Deposit – 3 Yr (AAA) 7.00% G-Sec (3 Yr) 6.46% 20% Hold SBI Fixed Deposit
PSU Taxable Bonds – 3 Yr (AAA) 7.52% G-Sec (3 Year) 6.46% 20% Hold Birla SL Short Term Fund

Most Asset Class Categories are in Hold phase during January to March quarter of 2017. Accordingly new investment up to portfolio allocation for the asset class (25%) 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 January to March quarter of 2017. 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-Equity 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 January to March quarter of 2017. 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 2017, 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 6.22% G-Sec (90 Day) 6.22% N.A. N.A. HDFC Liquid Fund
Arbitrage Funds 7.20% 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 January to March quarter of 2017. 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 146.75 on 1st January 2017, based on closing value of Mutual Funds on 31st December 2016.

Asset Class Group / Asset Class /
Asset Class Category / Investment Product
Benchmark Last Quarter End Quarter Start (1st Jan. 17)
Updated Allocated Amount Updated Allocation %age Benchmark Level NAV / Interest Rate Alloc. %age Allocated Amount Trans’n During Quarter
ICICI Pru. FMCG Fund CNX FMCG 14.03 9.6%          20,754 163.11 10.0% 14.67 0.4%
Tata Resource & Energy Fund CNX Energy 14.49 9.9%          10,272 12.18 10.0% 14.67 0.1%
Birla Sunlife Banking & Fin. Service Fund CNX Finance 13.13 8.9%             7,407 19.00 0.0% 0.00 -8.9%
SBI Pharma Fund CNX Pharma 0.00 0.0%          10,267 129.64 20.0% 29.35 20.0%
SBI IT Fund CNX IT 30.14 20.5%          10,399 45.06 10.0% 14.67 -10.5%
Growth-Equity CNX Nifty 71.79 48.9% 8,186 N.A. 50.0% 73.37 1.1%
SBI Gold Fund Gold (USD) * USD/INR 13.25 9.0% 24,715 9.05 5.0% 7.34 -4.0%
DSPBR World Energy Fund WTI Crude 8.02 5.5% 53 13.33 5.0% 7.34 -0.5%
Growth-Other Gold (USD) * USD/INR 21.27 14.5% 24,715 N.A. 10.0% 14.67 -4.5%
Growth N.A. 93.06 63.4% N.A. N.A. 60.0% 88.05 -3.4%
ICICI Prudential GILT Fund – PF Option G-Sec – 10 Yr 23.16 15.8% 6.52% 33.20 10.0% 14.67 -5.8%
Income-Long Term G-Sec 10 Yr 23.16 15.8% 6.52% N.A. 10.0% 14.67 -5.8%
Birla SL Short Term Fund G-Sec -3 Yr 15.30 10.4% 6.46% 61.30 15.0% 22.01 4.6%
HDFC Short Term Plan G-Sec -3 Yr 7.64 5.2% 6.46% 31.80 10.0% 14.67 4.8%
Income-Med. Term G-Sec 3 Yr 22.93 15.6% 6.46% N.A. 25.0% 36.69 9.4%
Income G-Sec 10 Yr 46.09 31.4% 6.52% N.A. 35.0% 51.36 3.6%
Saving Bank Account Regulation 1.51 1.0% 4.00% 4.00% 1.0% 1.47 0.0%
HDFC Liquid Fund G-Sec -90 day 6.09 4.1% 6.22% 31.48 4.0% 5.87 -0.1%
Liquid G-Sec – 90 day 7.60 5.2% 6.22% N.A. 5.0% 7.34 -0.2%
SMFIP Index N.A. 146.75 100.0% N.A. N.A. 100.0% 146.75 0.0%