Reliance Dual Advantage Fixed Tenure Fund I Plan K (A Close Ended Income Scheme) NFO Opens: 10 th May, 2011 NFO Closes: 24 th May, 2011

Transcription

1 Reliance Dual Advantage Fixed Tenure Fund I Plan K (A Close Ended Income Scheme) NFO Opens: 10 th May, 2011 NFO Closes: 24 th May, 2011

2 MARKETS & ECONOMY

3 Highlights of the RBI s Monetary Policy Statement for (April- March) The RBI raised the Repo rate and Reverse Repo Rate by 50bps each to 7.25% and 6.25% respectively. RBI made Repo Rate the only independent variable. It pegged Reverse Repo rate 100 bps lower than Repo and the new Marginal Standing Facility (MSF) 100 bps above Repo. So fixed the width of LAF corridor to 200 bps centered at Repo rate. The MSF has been made available up to 1% of banks' NDTL, allowing banks to dip into their SLR holdings. The call money rate will be the operating target.

4 Macro Economy Growth Dynamics Growth momentum consolidating; On higher base Inflation at elevated levels Concerted central bank efforts leading to high cost of capital Outlook may turn cautious and growth may disappoint in the short run if interest rates and inflation remain sticky But medium term prospects remain positive due to Robust expansion in private services Strong consumption, both rural and urban Acceleration in export demand Strong investment pipeline with emphasis on infrastructure.

5 Macro Economy Inflation Dynamics Inflation will remain sticky and average to about % in the first half of FY12 as Government is expected to raise domestic retail fuel price after the state elections. March end inflation clocked 9%, 100 bps above RBI s twice upwardly revised expectation. Inflation has spilled into core indicating demand side pressure. Inflation remains a primary worry. Reasons: Tight supply will keep global commodity prices high even though it has corrected recently on weak US data, end of QE2 by June end and interest rate tightening in emerging economies Higher domestic demand Structural issues in Food price inflation Supply side constraints However unlike last year, inflation is now a global worry. E t d ti i fl ti t t t d ti b th d h lf b t it ill till i Expect domestic inflation to start moderating by the second half, but it will still remain above RBI s long term inflation expectation.

6 Fixed Income Markets Yields moved higher across the curve,on a surprise 50 bps hike by RBI against expectation of 25 bps. Liquidity to stay in a tight range for next couple of months before moderating. Inflation to remain around current levels over the next 4-6 months. Current level of yields is mostly pricing the above negatives on interest rate front. Reliance Dual Advantage Fixed Tenure Fund I Plan K offers a great opportunity for 3 years at current highh rates.

7 Equity Markets India enjoys an unique position : 2 nd fastest growing economy in the world A domestic story Relatively low dependence on global economy Lot of opportunities are in place for a sustained long term growth: FII & FDI inflow might showcase a surprise on the upside Valuations are reasonably attractive post ~15% correction in the markets. Earnings growth is expected to range between 15%-20% in the next 3 years & hence provide shareholders return Source:CEIC-CMI Annual Conference

8 Positioning i of RDAFTF I Plan K The fund is mandated to invest 80%-95% in assets in Debt Securities & Money Market Instruments and 5% - 20% in Equity & Equity Related Instruments The fixed income market has been quite volatile for the past few months. Being a close ended, passively managed fund, the benefits of locking in at the current high levels in a high inflationary scenario can be reaped as liquidity & inflationary scenario improves 3 years is an appropriate time frame for equity as an asset class to deliver healthy returns

9 Investor s need at this hour In the current high inflationary market scenario, a product that provides a hedge against inflation maintaining a prudent risk-return balance is of paramount importance. Given that the current rise in short to medium tenor bond yields due to tight liquidity conditions, the product which invests at these high yields will generate healthy accrual based returns with improving bond scenario going forward Given the strong domestic growth environment, the medium term outlook is encouraging. g In the near term, international events do create volatility, which could throw up opportunities to create high quality long term portfolios. Hence, investment in equity would be beneficial in the long term.

10 RELIANCE MUTUAL FUND presents

11 Reliance Dual Advantage Fixed Tenure Fund I Plan K Reliance Dual Advantage Fixed Tenure Fund I Plan K(henceforth RDAFTF I- K) is a closed ended income scheme which intends to invest 80% - 95% of its assets in Debt Securities & Money Market Instruments and 5% - 20% in Equity & Equity Related Instruments For the fixed income oriented long term investor, RDAFTF I - Plan K intends to provide the dual advantage of stability in investments along with the added advantage of earning returns relatively higher than a typical fixed income investment While the debt portion offers potential for higher accruals in the current market situation with a limited interest rate risk, the equity portion of the portfolio would seek to benefit from the higher growth potential given the 3 years holding period.

12 Product Rationale Allocation of the savings appropriately is of high significance as it helps an investor earn the required rate of returnrn to meet his individualid financial goals in long term As per the trend in the market, products with low risk & stable returns normally offer moderate rate of returns but lucrative investments require an appropriate balance of risk and return In the current investment scenario, even a conservative investment decision requires to earn better than secured return products backed by Government & Banks like RBI Bonds, Post Office Schemes to hedge against the growing inflation level Our product attempts to meet both ends of an investor s expectation :- relatively stable rate of returns from debt clubbed with higherh growth potential ti of equity to help the investor earn relatively better returns than a normal debt product.

13 Key Benefits of RDAFTF - I - Plan K

14 Stability of debt + Power of equity Most of the traditional Twin investment avenues like RBI Bonds, Post Advantage Office Schemes etc with 5 to 6 years of lock in period offers moderate rate of return. RDAFTF I Plan K intends to Edge over hedge against traditional growing inflation and debt products will aim to provide higher returns than a typical fixed income investments. USP In house Research & Fund Management Expertise 3 years holding period gives fund managers the liberty to execute their long terms calls/views on various well researched long term credits, structures, stocks & sectors Indexation Benefits + For highest tax bracket investor post tax returns vs bonds&/fd is more tax efficient. Taxation Reduced loss of carry Close ended nature reduces the need to maintain liquidity in the portfolio which enhances the portfolio yield Investments in RBI Bonds, Post Offices and Bank Fixed Deposits are relatively safer investment avenues. Bank Fixed Deposits are covered under Deposit Insurance and Credit Guarantee Corporation of India to the extent of Rs. 1 lakh per account. The information provided may not necessarily provide a basis for comparison with other investment avenues. The tax benefits are as per the current Income Tax laws & rules and any other law for the time being in force. Readers are advised to seek independent professional advice and consult their tax advisors and arrive at an informed investment decision before making any investments.

15 Fund Strategy

16 Investment Strategy The investment process intends to meet fund specific investment objectives and develop a well-diversified, high credit portfolio that minimizes liquidity risk and credit risk. The investment process is intensely research oriented. It comprises of qualitative as well as quantitative measures. The debt portion will be invested in high quality fixed income securities that are generally maturing in line with the duration of the scheme. The equity portion of the scheme will invest in diversified portfolio of stocks across market capitalization. The funds will follow a bottom-up approach to stock-picking and choose companies across sectors. The scheme shall follow a blend of value and growth style of investing & will primarily focus on companies that have demonstrated characteristics such as market leadership, strong financials and quality management, and have the potential to create wealth for their shareholders by delivering steady performance through the ups and downs of the market.

17 Product Features

18 Product Features Investment Objective The Scheme seeks to generate returns and reduce interest rate volatility, through a portfolio of fixed income securities that are maturing on or before the maturity of the Scheme along with capital appreciation through equity exposure. NFO Dates NFO Opens: 10 th May, 2011; NFO Closes: 24 th May, 2011 Nature of Scheme Benchmark Asset Allocation A Close Ended Income Scheme Crisil MIP Blended Index Debt Securities & Money Market Instruments 80% - 95% Equity & Equity related instruments# 5% - 20% # including investments in ADR/GDR/Foreign Securities up to 40% of the equity/ debt portion, exposure in derivatives up to a maximum of 40%.

19 Product Features Choice of Plans/Options Growth Option ; Dividend Payout Option Minimum Application R 5000/ ti d i lti l f R 1 th ft Amount Rs 5000/- per option and in multiples of Re. 1 thereafter Duration Load Structure 3 years from the date of allotment of units Entry Load: Nil* Exit Load: Nil (Since the scheme shall be listed on the exchange) Fund Manager Ms Anju Chhajer & Mr. Shailesh Bhan *In terms of SEBI circular no. SEBI/IMD/CIR No.4/ /09 dated June 30, 2009, no entry load will be charged by the Scheme to the investor effective August 1, Upfront commission shall be paid directly by the investor to the AMFI registered Distributors based on the investors' assessment of various factors including the service rendered by the distributor

20 Disclaimers The views herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. This document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The Sponsor, The Investment Manager, The Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. Neither the Sponsor, nor The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material. The Sponsor, The Investment Manager, The Trustee, any of their respective directors, employees including the fund managers, affiliates, representatives ti including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) belonging to sectors mentioned herein NSE Disclaimer: It is to be distinctively understood that the permission given by the NSE should not in any way be deemed or construed that the Scheme Information Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of Draft Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of Disclaimer Clause of NSE.

21 Disclaimers Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Company Limited. Investment Manager: Reliance Capital Asset Management Limited (Registered Office of Trustee & Investment Manager: Reliance House Nr. Mardia Plaza, Off. C.G. Road, Ahmedabad ). The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. Terms of issue (including Listing and Liquidity provisions): The Scheme being a close ended income scheme; the units can be purchased only during the New Fund Offer period of the scheme. No redemption/repurchase of units shall be allowed prior to the maturity of the Scheme. The Unit holders are given an Option to hold the units by way of an Account Statement (Physical form) or in Dematerialized ( Demat ) form. The units will be listed on the National Stock Exchange of India Ltd. (NSE) / or any other recognized Stock Exchange. The investor can buy/sell units of the Scheme on a continuous basis on the NSE and other recognized stock exchanges. The trading lot is one unit of the Plan. Investors can purchase units at market prices, which may be at a premium /discount to the NAV of the scheme depending upon the demand and supply of units at the exchanges. Investor benefits and general services offered: The scheme offers Auto- switch, online Transaction, ASBA facility and facility of transacting through stock exchange mechanism during the NFO period. The NAV of the Scheme will be calculated and disclosed at the close of every Business day which shall be published in at least in two daily newspapers and also uploaded on AMFI site i.e. and Reliance Mutual Fund website i.e.

22 Disclaimers Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Reliance Dual Advantage Fixed Tenure Fund I Plan K is only the name of the Scheme does not in any manner indicate either the quality of the Scheme; its future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The NAV of the Scheme may be affected, interalia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend distributions are subject to the availability of distributable surplus in the Scheme. There are various risks associated with investing in Equities, Bonds (Interest Rate Risk, Liquidity or Marketability Risk, Credit Risk, Reinvestment Risk), Foreign Securities, Derivatives, Securitised Debt, Short Selling & Securities Lending and with Listing of Units. For more details of the Schemes and detailed risk factors, please refer to the Scheme Information Document and Kim cum Application Form, which is available free of cost with all the DISC, Distributors and Investors may also call our Customer Care Number (Toll free) or or can write us on customer.care@reliancemutual.com. Mutual Funds investments are subject to market risks. Please read the Scheme Information Document and Statement of Additional Information carefully before investing.

23 Thank You