April to June 2018: Samedh Dynamic Mutual Fund Portfolio
Samedh Dynamic Mutual Fund Portfolio for April to June quarter of 2018 (FY 2018-19 Q1), is as 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.
Portfolio Explanation
Asset Allocation suggested for Samedh Dynamic Mutual Fund Portfolio for April to June quarter of 2018 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.
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 April to June quarter of 2018. 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: 45%
45% of Samedh Dynamic Mutual Fund value is allocated to Equity Asset Class during April to June quarter of 2018. 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 2018, 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 | Avg. P/E Ratio | P/E Ratio (Mar) | Future Prospect Premium | Major Factors | 1-Yr EPS Growth | Investment Option(s) |
| PSU Bank Equity | CNX PSU Bank | 5% | 16 | 191 | +1100% | Nearing bottom of NPAs, Interest rates moved higher | -60% | Goldman Sachs / Kotak PSU Bank ETF |
| Smallcap Equity | CNX Smallcap | 10% | 38 | 128 | +240% | Domestic Inflows | -30% | Reliance Smallcap Fund |
| Infrastructure Equity | CNX Infrastructure | 10% | 22 | 64 | +190% | Govt. Infra. Push | -60% | UTI Infra. Fund / ICICI Pru. Infra. Fund |
| Midcap Equity | CNX Midcap | 25% | 19 | 45 | +140% | Domestic Inflows | -20% | ICICI Value Disc. Fund |
| Realty Sector Equity | CNX Realty | 2% | 32 | 76 | +140% | Real Estate Regulator | -10% | No Suitable MF |
| Banking Sector Equity | CNX Bank Nifty | 40% | 15 | 30 | +100% | Bank NPAs Bottoming | 20% | GS Bank. ETF / Reliance Bank. Fund |
| Auto Sector Equity | CNX Auto | 25% | 22 | 36 | +60% | Auto Sales Pickup | 1% | UTI Transp. & Log. Fund |
| Finance Sector Equity | CNX Finance | 60% | 19 | 29 | +50% | Bank NPAs, Interest Rate | 1% | Birla SL Bank. & Fin. Svc. Fund / ICICI Pru. Bank. & Fin. Svc. Fund |
| Largecap Equity | CNX NIFTY | 40% | 19 | 25 | +30% | Domestic Inflow, FII Inflow | 7% | HDFC Index Fund Nifty / Sensex |
| Pharma Sector Equity | CNX Pharma | 20% | 39 | 48 | +25% | US FDA Action | -30% | SBI Pharma Fund |
| FMCG Sector Equity | CNX FMCG | 10% | 35 | 41 | +15% | Rural Consumption | 8% | SBI FMCG Fund / ICICI Pru. FMCG Fund |
| Energy Sector Equity | CNX Energy | 10% | 14 | 15 | +10% | Crude oil price stable | 3% | Tata Res. & Energy Fund |
| Metal Sector Equity | CNX Metal | 5% | 15 | 16 | +5% | Price Improvement, China | 130% | SBI Mag. Comma Fund |
| Media Sector Equity | CNX Media | 2% | 37 | 39 | -5% | Economic Growth | 50% | Reliance Media & Ent. Fund |
| IT Sector Equity | CNX IT | 10% | 19 | 24 | -20% | Visa Restrictions, Digital Disruption | 7% | SBI IT Fund , ICICI Pru. Tech. Fund |
Equity portfolio to be allocated as per below:
- ICICI Prudential Technology Fund: 15%
- Reliance Media & Entertainment Fund: 5%
- SBI Magnum Comma Fund: 5%
- Tata Resource & Energy Fund: 10%
- ICICI Prudential FMCG Fund: 10%
Growth Assets – Asset Class 2: Other (GROWTH-OTHER)
Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 15%
Growth Asset Class Categories other than Equity are broadly grouped as below:
- 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.
- 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.
- 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 2018, are mentioned in the table below.
International Equity
| Asset Class Category | Benchmark Index | Sub Limit | Benchmark Index Level (Mar) | Position in Market Pricing Cycle | Major Factors | Portfolio Allocation | Investment Option(s) |
| Europe Equity (INR) | Euro Stoxx 50 | 8% | 3,501 | 40% | – | 0% | DWS Top Euroland Fund |
| US Equity (INR) | DJIA 30 | 15% | 20,663 | 70% | – | 0% | Franklin US Opportunities Fund |
| Hong Kong Equity (INR) | Hang Seng | 6% | 24,112 | 35% | – | 0% | Goldman Hang Seng BeES Fund |
| China Equity (INR) | Shanghai Composite | 4% | 3,223 | 50% | – | 0% | JP Morgan Greater China Fund |
Precious Metals & Commodities
| Asset Class Category | Benchmark Index | Sub Limit | Benchmark Index Level (Mar) | Position in Market Pricing Cycle | Major Factors | Portfolio Allocation | Investment Option(s) |
| Agriculture Commodities | S&P Global Agribusiness | 2% | 1,650 | 45% | – | 0% | DSP BlackRock World Agriculture Fund |
| Crude Oil / Energy | West Texas Intermediate Crude | 5% | $ 50 | 10% | Shale Gas, Renewable Energy | 0% | DSP BlackRock World Energy Fund |
| Gold (INR) / 10gm | Gold (USD) * INR/USD * 10gm/Ounce | 20% | 27,500 | 20% | Stable Demand in India & China | 15% | SBI Gold Fund |
Gold is in 
phase during April to June quarter of 2018. Investment advice for it is as below:
- SBI Gold Fund: 15%
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 April to June quarter of 2018. 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: 0%
Long Term Income represents fixed-income investments with maturity equal to or longer than five years. No part of Samedh Dynamic Mutual Fund Portfolio value is allocated to Long-Term Income Asset Class during April to June quarter of 2018. This is due to the fact that 10 year Government Security is currently at 80% level in market pricing cycle and there is limited opportunity to benefit from interest rate decline.
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 2018, 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 (Mar) | Position in Market Pricing Cycle | Investment Phase | Investment Option(s) |
| Senior Citizens’ Saving Scheme – 5 Yr (AAA) | 8.40% | G-Sec (5 Yr) + 1.00 % | 6.86% | 80% |  |
Bank Bazaar SCSS |
| Sukanya Samriddhi Scheme – 15 Yr (AAA) | 8.40% | G-Sec (15 Yr) + 0.75% | 7.33% | 80% | |
Bank Bazaar SSY |
| Post Office Time Deposit – 5 Yr (AAA) | 7.70% | G-Sec (5 Yr) + 0.25% | 6.86% | 80% | |
India Post – Time Deposit |
| National Savings Certificate – 5 Yr (AAA) | 7.90% | G-Sec (5 Yr) + 0.25% | 6.86% | 80% | |
India Post – NSC |
| Government Bonds – 10 Yr (AAA) | 6.69% | G-Sec (10 Yr) | 6.69% | 80% | |
ICICI Pru. GILT Fund – PF Option |
| Inflation Indexed National Saving Securities -10 Yr (AAA) | 5.15% | Consumer Price Inflation + 1.5% | 3.65% (Feb CPI) | Floating |  |
RBI INSS Bond |
| Public Provident Fund (PPF) – 15 Yr (AAA) | 8.10% | G-Sec (15 Year) + 0.25% | 7.33% | Floating | |
Any Bank – PPF Account |
| PSU Tax Free Bonds – 15 Yr (AAA) | 7.33% | G-Sec (15 Year) | 7.33% | 80% | |
NHAI, PFC Tax Free Bonds |
| Corporate Tax Free Bonds – 15 Yr (AAA) | 7.53% | G-Sec (15 Year) | 7.33% | 80% | |
L&T Inf. Fin. / IDFC Tax Free Bonds |
Some fixed interest saving investment asset class categories are in phase during April to June quarter of 2018. 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: 35%
Medium-Term Income represents fixed-income investments with maturity between 1 and 5 years. 35% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Medium-Term Income Asset Class during April to June quarter of 2018. 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 2018, 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) | 6.50% | G-Sec (3 Yr) | 6.57% | 80% | |
ICICI Fixed Deposit |
| Corporate Bonds / Debentures – 3 Yr (A) | 7.90% | G-Sec (3 Yr) | 6.57% | 80% | |
HDFC Short Term Fund |
| Corporate Fixed Deposit – 3 Yr (AAA) | 7.90% | G-Sec (3 Yr) | 6.57% | 80% | |
Choose from List |
| PSU Bank Fixed Deposit – 3 Yr (AAA) | 6.50% | G-Sec (3 Yr) | 6.57% | 80% | |
SBI Fixed Deposit |
| PSU Taxable Bonds – 3 Yr (AAA) | 7.52% | G-Sec (3 Year) | 6.57% | 80% | |
Birla SL Short Term Fund |
Most Asset Class Categories are in phase during April to June quarter of 2018. 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 35% would be made in PSU Taxable Bonds – 3 Yr (15%) and Corporate Bonds / Debentures – 3 Yr (20%).
Asset Allocation Group 3: Liquid Assets (LIQUID)
Weightage for quarter in Samedh Dynamic Mutual Fund Portfolio: 10%
10% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Allocation Group during April to June quarter of 2018. 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 9% 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 2018. 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 2018, 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 | 5.80% | G-Sec (90 Day) | 5.80% | N.A. | N.A. | HDFC Liquid Fund |
| Arbitrage Funds | 6.30% | 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 2018. Of this Saving Bank balance should be limited to 1% and 4% should be allocated to Liquid Mutual Funds.