FY19-20

Apr. to Sept. 2019: Samedh Dynamic Mutual Fund Portfolio

Samedh Dynamic Mutual Fund Portfolio for the period from Apr. to Sept. 2019 (FY 2019-20 H1), 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 the period from Apr. to Sept. 2019 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: 55%

55% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Growth Asset Allocation Group during the period from Apr. to Sept. 2019. 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: 30%

30% of Samedh Dynamic Mutual Fund value is allocated to Equity Asset Class during the period from Apr. to Sept. 2019 . 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 the period from Apr. to Sept. 2019 , are mentioned in the table below. Current index levels can be viewed at NSE Live Indices Watch page for comparison.

Asset Class CategoryBenchmark IndexSub Limit Avg. P/E RatioP/E Ratio (Mar)Future Prospect PremiumMajor Factors 1-Yr EPS GrowthInvestment Option(s)
PSU Bank EquityCNX PSU Bank5%36192+430%Nearing bottom of NPAs-21%Goldman Sachs / Kotak PSU Bank ETF
Infrastructure EquityCNX Infrastructure10%2638+45%Govt. Infra. Push61%UTI Infra. Fund / ICICI Pru. Infra. Fund
Midcap EquityCNX Midcap25%2134+60%Domestic Inflows9%ICICI Value Disc. Fund
Banking Sector EquityCNX Bank Nifty40%1765+280%Bank NPAs Bottoming-43%GS Bank. ETF / Reliance Bank. Fund
Realty Sector EquityCNX Realty2%3648+30%Real estate sales starting to pickup14%No Suitable MF
Finance Sector EquityCNX Finance60%2145+110%Bank NPAs, Interest Rate-19%Birla SL Bank. & Fin. Svc. Fund / ICICI Pru. Bank. & Fin. Svc. Fund
Auto Sector EquityCNX Auto25%23230%Auto Sales Pickup26%UTI Transp. & Log. Fund
Smallcap EquityCNX Smallcap10%4730-35%Domestic Inflows95%Reliance Smallcap Fund
Largecap EquityCNX NIFTY40%2029+50%Domestic Inflow, FII Inflow0%HDFC Index Fund Nifty / Sensex
FMCG Sector EquityCNX FMCG10%3747+30%Rural Consumption7%SBI FMCG Fund / ICICI Pru. FMCG Fund
Metal Sector EquityCNX Metal5%1511-30%Price Improvement17%SBI Mag. Comma Fund
Pharma Sector EquityCNX Pharma20%4053+30%US FDA Action-6%SBI Pharma Fund
Energy Sector EquityCNX Energy10%14140%Crude oil price stable17%Tata Res. & Energy Fund
Media Sector EquityCNX Media2%3928-25%Economic Growth, Election year8%Reliance Media & Ent. Fund
IT Sector EquityCNX IT10%2423-2%Visa Restrictions, Digital Disruption3%SBI IT Fund , ICICI Pru. Tech. Fund

Equity portfolio to be allocated as per below:

  • IT Sector Equity: 10% (ICICI Prudential Technology Fund)
  • Media Sector Equity: 5% (Reliance Media & Entertainment Fund)
  • Metal Sector Equity: 5% (SBI Magnum Comma Fund)
  • Energy Sector Equity: 5% (Tata Resource & Energy Fund)
  • Auto Sector Equity: 5% (UTI Transp. & Log. Fund)

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

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

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 the period from Apr. to Sept. 2019 , are mentioned in the table below.

International Equity

Asset Class CategoryBenchmark IndexSub LimitBenchmark Index Level (Mar)Position in Market Pricing CycleMajor FactorsPortfolio AllocationInvestment Option(s)
Europe Equity (INR)Euro Stoxx 508%3,40040%0%DWS Top Euroland Fund
US Equity (INR)DJIA 3015%25,90080%0%Franklin US Opportunities Fund
Hong Kong Equity (INR)Hang Seng6%29,50045%0%Goldman Hang Seng BeES Fund
China Equity (INR)Shanghai Composite4%3,10050%0%JP Morgan Greater China Fund

Precious Metals & Commodities

Asset Class CategoryBenchmark IndexSub LimitBenchmark Index Level (Mar)Position in Market Pricing CycleMajor FactorsPortfolio AllocationInvestment Option(s)
Agriculture CommoditiesS&P Global Agribusiness2%1,60045% –0%DSP BlackRock World Agriculture Fund
Crude Oil / EnergyWest Texas Intermediate Crude5%$ 6015%Shale Gas, Renewable Energy0%DSP BlackRock World Energy Fund
Gold (INR) / 10gmGold (USD) * INR/USD * 10gm/Ounce20%29,00015%Stable Demand in India & China25%SBI Gold Fund

Gold is in BUY phase during the period from Apr. to Sept. 2019 . Investment advice for it is as below:

  • SBI Gold Fund: 25%

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 the period from Apr. to Sept. 2019 . 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: 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
the period from Apr. to Sept. 2019 . This is due to the fact that 10 year Government Security is currently at 65% level in market pricing cycle and interest rates are stable.

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 the period from Apr. to Sept. 2019 , are mentioned in the table below. Current benchmark index levels can be viewed at Investing.com for comparison.

Asset Class CategoryCurrent Interest RateBenchmark IndexBenchmark Index Level (Mar)Position in Market Pricing CycleInvestment PhaseInvestment Option(s)
Senior Citizens’ Saving Scheme – 5 Yr (AAA)8.40%G-Sec (5 Yr) + 1.00 %6.90%65%Bank Bazaar SCSS
Sukanya Samriddhi Scheme – 15 Yr (AAA)8.85%G-Sec (15 Yr) + 0.75%6.90%65%Bank Bazaar SSY
Post Office Time Deposit – 5 Yr (AAA)8.15%G-Sec (5 Yr) + 0.25%6.90%65%India Post – Time Deposit
National Savings Certificate – 5 Yr (AAA)8.15%G-Sec (5 Yr) + 0.25%6.90%65%India Post – NSC
Government Bonds – 10 Yr (AAA)7.90%G-Sec (10 Yr)7.35%65%ICICI Pru. GILT Fund – PF Option
Inflation Indexed National Saving Securities -10 Yr (AAA)6.15%Consumer Price Inflation + 1.5%4.65% (Mar CPI)FloatingRBI INSS Bond
Public Provident Fund (PPF) – 15 Yr (AAA)8.35%G-Sec (15 Year) + 0.25%7.60%FloatingAny Bank – PPF Account
PSU Tax Free Bonds – 15 Yr (AAA)8.10%G-Sec (15 Year)7.60%65%NHAI, PFC Tax Free Bonds
Corporate Tax Free Bonds – 15 Yr (AAA)8.10%G-Sec (15 Year)7.60%65%L&T Inf. Fin. / IDFC Tax Free Bonds

No part of Samedh Dynamic Mutual Fund Portfolio would be invested in this asses class in current period .

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

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

Medium-Term Income represents fixed-income investments with maturity between 1 and 5 years. 30% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Medium-Term Income Asset Class during the period from Apr. to Sept. 2019. 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 the period from Apr. to Sept. 2019 , are mentioned in the table below. Current benchmark index levels can be viewed at Investing.com for comparison.

Asset Class CategoryCurrent Interest RateBenchmark IndexBenchmark Index Level (Jun)Position in Market Pricing CycleInvestment PhaseInvestment Option(s)
Private Bank Fixed Deposit – 3 Yr (AAA)7.25%G-Sec (3 Yr)6.66%45%ICICI Fixed Deposit
Corporate Bonds / Debentures – 3 Yr (A)8.50%G-Sec (3 Yr) + 0.75%6.66%45%HDFC Short Term Fund
Corporate Fixed Deposit – 3 Yr (AAA)8.50%G-Sec (3 Yr) + 0.75%6.66%45%Choose from List
PSU Bank Fixed Deposit – 3 Yr (AAA)6.70%G-Sec (3 Yr)6.66%45%SBI Fixed Deposit
PSU Taxable Bonds – 3 Yr (AAA)7.52%G-Sec (3 Year)6.66%45%Birla SL Short Term Fund

SDMFP Index allocation of 30% would be made in PSU Taxable Bonds – 3 Yr (15%) and Corporate Bonds / Debentures – 3 Yr (15%).

Asset Allocation Group 3: Liquid Assets (LIQUID)

Weightage for quarter in Samedh Dynamic Mutual Fund Portfolio: 15%

15% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Allocation Group during the period from Apr. to Sept. 2019 . 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 14% allocation has been transferred from Growth-Other Asset Class due to insufficient investment options in the current period considering the political uncertainty in India and recession risk in US / Europe.

Liquid Assets – Asset Class 1: INCOME (LIQUID-INCOME)

Allocation for quarter in Samedh Dynamic Mutual Fund Portfolio: 15%

Liquid Income represents fixed-income investments with highest liquidity for Indian investors. 15% of Samedh Dynamic Mutual Fund Portfolio value is allocated to Liquid Asset Class during the period from Apr. to Sept. 2019 . 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 the period from Apr. to Sept. 2019 , are mentioned in the table below:

Asset Class CategoryCurrent Interest RateBenchmark IndexBenchmark Index Level (Mar)Position in Market Pricing CycleInvestment PhaseInvestment Option(s)
Saving Bank Account4.00%Govt. Regulation4.00%N.A.N.A.Any Saving Bank Balance
Liquid Mutual Funds6.45%G-Sec (90 Day)6.12%N.A.N.A.HDFC Liquid Fund
Arbitrage Funds6.30%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 (15%) can be made in Liquid Income Asset Class during the period from Apr. to Sept. 2019 . Of this Saving Bank balance should be limited to 1% and 14% should be allocated to Liquid Mutual Funds.