MUTUAL FUNDS 30 Dec 2016

RETAIL RESEARCH
Equity MF SIP baskets for 2017

Prologue: Systematic investment plan (SIP) is a disciplined way of investing in mutual funds enabling the investors making regular and equal payments at regular intervals for periods to
accumulate wealth over long run. An SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.
Investors have to choose right mutual fund schemes to achieve their investment goals based on their objectives, risk profile and time horizon. We recommend creating an SIP in more
than one fund to avoid concentration risk. We have shortlisted three schemes each for two categories of investors - Aggressive (one for whom capital appreciation is a primary
investment objective, rather than income or safety of principal) and Moderate (one who has a low to moderate risk tolerance and wants reasonable, but relatively stable income and
capital growth).
Schemes for equity investors with varying risk profiles:
Type of Investor (as per Market Capitalisation Break- Lump-sum Returns SIP Returns
Allocation into Standard
the Risk profile) up in Equity PF (%) (%) (Point to Point) (%) (XIRR)
Category Scheme Name Top Holdings Equity (%) in deviation
Large- 3 Year 5 Year 5
Scheme's Portfolio (Annualised)
Aggressive Moderate cap Mid & Small-cap CAGR CAGR 3 Year Year
HDFC Bank, ICICI Bank, Bharti
Equity-Large Cap Funds Franklin India Prima Plus
Airtel,INFY & Indusind Bank 33% 93 79 14 19.31 18.64 8.93 15.56 13.64
HDFC Bank, ICICI Bank, SBI,
Equity-Large Cap Funds HDFC Cap Builder fund
Tata Mot & INFY 34% 95 69 26 17.82 18.33 8.74 15.07 16.37
L&T, Wipro,HDFC Bank, Sun
Equity-Multi Cap Funds ICICI Pru Value Discovery Fund
Pharma & ICICI Bank 33% 91 81 10 23.93 24.69 10.45 19.49 14.42
Sharda Crop, , KPR Mill, SRF,
Equity-Mid & Small cap Funds DSP BR Micro-Cap Fund
Atul & Mannapuram Fin 33% 91 - 91 40.13 31.75 25.29 31.66 16.51
HDFC Bk, Indus Bank , SBI, ICICI
Sector/Theme Funds ICICI Pru Banking & Fin Serv Fund
Bk,& Yes Bank 33% 91 76 15 23.54 25.73 15.44 19.75 19.00
Maruti,Tata Mot,Hero Moto,
Sector/Theme Funds UTI-Transportation & Logistics Fund
M&M & Adani Ports 34% 91 64 27 31.19 31.06 14.21 27.37 16.95
Note: NAV value as on 29 Dec 2016. Portfolio data as on Nov 2016. Source: ACEMF & NAVIndia.

Rationale and importance of Systematic investing:

Lump sum investing or investing in one go is suitable only when you have sufficient resources and there is a high degree of certainty that the market is in a rising trend. In practice,
equity markets are volatile in nature and prediction is very difficult. If the investor panics in bad times and withdraw the lumpsum invested amount it could lead to a sizeable loss.
In the case of systematic investment (SIP), the investor can accumulate small amounts and invest regularly. An SIP also enables investors to start investing in equity early.
The strategy behind starting a SIP with an equity scheme is to go on investing regardless of the market conditions. Investors have to keep SIP running for a longer period and not
stop it in downturns. Else, he will lose out a chance to make money in the long term if he stops SIP midway when the market corrects temporarily.
Features of SIP:
Simple and disciplined approach towards investment. Investment possible with small sum of money invested regularly to accumulate wealth.
Based on concept of Rupee Cost Averaging. The longer the time frame, the larger are the benefits of averaging.
Flexibility in terms of amount or quantity based SIP. Flexible intervals like Daily/ Weekly/ Fortnightly/ Monthly/ Yearly basis.
Periodical review is highly recommended. Profit booking at particular levels will help the investors to retain the benefit of the SIP to that extent.
Benefits of investing through SIP:
Reduces risk because of Rupee Cost Averaging. Timing the market is not necessary. Longer period ensures investing across cycles. Get compounding benefits.
SIP can be started with very small amount of money.
Long term financial goal can be aligned with SIP. Disciplined approach towards Investment helps in controlling the emotions.

RETAIL RESEARCH Page |1

 RETAIL RESEARCH

Other key pointers:

Investors should not compare the performance of the lump sum investments with SIP investments. Both are entirely two different concepts and this comparison will derive false
conclusion depending on the entry time in case of lumpsum investments. One can say that most of the time, under most circumstances, over a sufficiently long period of time, SIPs
will do better than the lumpsum. However, lumpsum scores over SIP mode during the rising equity market as the cost averaging does not work in SIP investment to the investors.
Investors have to keep in mind that the investments made through SIP may sometimes end up with negative returns. It is more likely in the situations like exiting during market
downturns, investing in non performing / under performing schemes or exiting in a short period of time. Over all speaking, SIP may give desired results only if it is run for longer
period.
SIPs are about fixed regular investments. But if you have a lump sum to invest, you can put that too in the same scheme, though your returns on this will depend on the
movement in NAV from the date of investment. You may not get the benefit of Rupee cost averaging but if the market trends upward from here you could benefit.
A modified version of SIP i.e. adding on a certain percent of fall from a recent top instead of same amount every month can also be employed by discerning investors who can
devote time for this effort.

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email:
hdfcsecretailresearch@hdfcsec.com.

Disclaimer: Mutual Funds investments are subject to risk. Past performance is no guarantee for future performance.This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or
copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as
such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional
Clients.

This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams
(Institutional, PCG) of HDFC Securities Ltd. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475.

RETAIL RESEARCH Page |2