HDFC Retirement Savings Fund

Transcription

1 Feb 05, 2016 NFO Note HDFC Savings Fund Prologue: HDFC Mutual Fund has launched a New Fund named HDFC Savings Fund, an open ended tax savings cum pension fund. The NFO has opened for subscription on Feb 05, 2016 and closes on Feb 19, A Notified Pension Scheme by CBDT: The Central Government has specified HDFC Savings Fund as a Notified Pension Fund. The Scheme is approved by Central Board of Direct Taxes, Ministry of Finance 80C(2)(xiv) of the Income-tax Act, vide Notification No. 91/2015/F. No. 178/21/2014-ITA-I dated December 08, The investments made in the Scheme will be eligible for tax benefit 80C of the Income-tax Act, for the assessment year and subsequent assessment years. Lock-in: Hence the units of the fund are subject to a lock-in of 5 years from the date of allotment. The units purchased cannot be redeemed / switched out / assigned / transferred / pledged until completion of 5 years of lock-in period, from the date of allotment. Investment objective: The investment objective of the Investment Plans offered under the Scheme is to generate a corpus to provide for pension to an investor in the form of income to the extent of the redemption value of their holding after the age of 60 years by investing in a mix of securities comprising of equity, equity-related instruments and/or Debt/Money Market Instruments. However these units can be redeemed, if the investor so desires, after the end of lock-in period i.e. five years from date of allotment. Different plans in the fund: The Scheme offers investors three Investment Plans: (i) Equity Plan. (ii) Hybrid-Equity Plan. (iii) Hybrid-Debt Plan. Each of the investment plan(s) will be managed as separate portfolios. Basic and Investment details of HDFC Savings Fund: Name of Fund HDFC Savings Fund Nature of Fund Type of the Scheme Tax Benefit Fund Manager Investment Option Open ended funds with the lock-in of 5 years A notified Tax Savings Cum Pension Scheme with no assured returns U/s 80C of the Income-tax, upto Rs. 1.5 lakh Chirag Setalvad (Equities), Shobhit Mehrotra (Debt) and Rakesh Vyas (Overseas Investment) Growth option only Minimum investment (Lump sum) Rs. 5,000 and multiple of Rs. 1,000 SIP options Minimum investment (SIP) Systematic transaction facilities (STP) available Exit Load Yes. Monthly and Quarterly SIP Rs.500 and in multiples of Rs.100 in Monthly. Rs.1,500 and in multiples of Rs.100 thereafter under Quarterly. completion of lock-in period Upon completion of the lock-in period of 5 years, the units can be redeemed with an exit load of 1% till the age of 60 for an investor. After completion of 60 years of age, the investor can redeem the units without any exit load. Exit load will not be applicable for switches between investment plans and plans/option within the scheme post lock-in period.

2 Is exit load applicable for switches within the scheme Options for withdrawal of corpus Scheme be held in dematerialized form Listing Minimum Amount / Units for Redemption (including Switch-out): Minimum Entry Age Maximum Age Eligibility of the Investor Under the Scheme No. Exit Load is not applicable for switching between Investment Plans, subject to completion of the lock-in period. Lump sum Option, Switch-Option, Systematic Withdrawal Advantage Plan (SWAP) Option & Systematic Transfer Plan (STP). Yes Being an open ended Scheme under which Sale and Redemption of Units completion of Lock-in Period) will be made on continuous basis by the Mutual Fund, the Units of the Scheme are not proposed to be listed on any stock exchange. However, the Mutual Fund may at its sole discretion list the Units under the Scheme on one or more stock exchanges at a later date. Rs. 500 or a minimum of 50 Units. 18 Years No Limit. Adult Resident Indian Individuals, either single or jointly (not exceeding three). Non -resident Indians (NRIs) and Persons of Indian Origin (PIO)/ Overseas Citizen of India (OCI) on repatriation basis or on non-repatriation basis. The investor having completed 18 years of age is eligible to invest in the Scheme. Age shall be computed with reference to years completed on the date of allotment. The Trustee reserves the right to alter the age for investment under the Scheme. Plans Equity Plan Hybrid Equity Plan Hybrid Debt Plan Estimated Asset Allocation: Equity & equity-related instruments 80% - 100% 60%-80% 70%-95% Debt and Money Market Instruments 0-20% 20%-40% 5%-30% Benchmark Nifty 500 CRISIL Balanced Fund Index CRISIL MIP Blended Index Total expense ratio (TER) Upto 3% Upto 2.75% Minimum Target amount Rs. 10 crore Rs. 10 crore Rs. 20 crore Tax Benefits: Tax benefits U/s 80C: The investment made by Individuals in the fund is eligible for tax benefits U/s 80C of the Income-tax Act, for a deduction up to Rs.1.5 Lakh (along with other prescribed investments u/s 80C) from Gross Total Income. Please note this 80C tax benefit is available in all the three plans. Long Term Capital Gains Tax on Equity plan & Hybrid Equity Plan: The investments made in the Equity plan & Hybrid Equity Plan will be treated as investments in equity oriented funds and income earned at the time of redemption on these investments will be treated as long term capital gains which are exempt from income taxes. Long Term Capital Gains Tax on Hybrid Debt Plan: Any capital gains arising out of the Hybrid Debt Plan at the time of redemption would be taxable as per the applicable tax rates and indexation benefits thereof. As per the current tax structure, the Long Term Capital Gains Tax on such non-equity oriented funds is levied at 20% with indexation. In case of investments through SIP route, all the installments are subject to lock-in of 5 years. Please note only the first unit holder can avail tax benefit under the scheme. Any Joint holder/s can not avail the tax benefit. Further, the switches between plans of the HDFC Savings Fund are not eligible for tax benefit under section 80 C.

3 Exit Load: Upon completion of the lock-in period of 5 years, the units can be redeemed with an exit load of 1% till the age of 60 for an investor. After completion of 60 years of age, the investor can redeem the units without any exit load. In case an investor invests at the age of 58, the minimum lock-in period of 5 years is applicable and the units cannot be redeemed immediately post turning 60. Exit Load is not applicable for switching between Investment Plans and Plans / Options within the Investment Plans, subject to completion of the lock-in period. Options for withdrawal of corpus: Presently, the Options for withdrawal of corpus available to the Unit holders are as follows: Lump sum Option: In case, the Unit holder wishes to redeem the entire / part of the units accumulated (units outstanding to the credit of Unit holder's folio/beneficiary account), he can exercise the option by submitting a redemption request. The units would get redeemed at the applicable NAV without any exit load. Switch-Option: The Unit holder can switch entire / part of units accumulated to any other Investment Plan within the scheme or else switch to any other open-ended schemes of HDFC Mutual Fund. He can exercise the option by submitting a switch request. Please note that on exercise of switch-option the amount which is switched-out shall be treated as redemption and shall be subject to Income tax provisions as applicable on such redemption. For Income tax purposes, holding period shall be calculated from the date of investment in respective investment Plans and not the date of original investment in the Scheme. Systematic Withdrawal Advantage Plan (SWAP) Option: Unit holders who wish to receive a fixed amount monthly or at pre-specified intervals from the accumulated corpus can opt for this option. Systematic Withdrawal Plan (SWAP) would enable regular income at periodic intervals of time. Here the Unit holder can avail of the fixed amount at the applicable NAV. Systematic Transfer Plan (STP): A Unit holder holding units in non-demat form may enroll for the STP and choose to Switch on a daily, weekly, monthly or quarterly basis from this Scheme to another Scheme of HDFC Mutual Fund, which is available for investment at that time. The provision of "Minimum Redemption Amount" of this Scheme and "Minimum Application Amount" of the designated Transferee Scheme(s) shall not be applicable to STP. Fund Managers: The equity portion will be managed by Mr. Chirag Setalvad. He is B.Sc. in Business Administration - University of North Carolina, Chapel Hill. He has collectively over 19 years of experience, of which 16 years in Fund Management and Equity Research and 3 years in investment banking. He manages other fund such as HDFC Capital Builder Fund, HDFC Mid - Cap Opportunities Fund, HDFC Small & Mid Cap Fund, HDFC Balanced Fund, HDFC Children's Gift Fund, HDFC Long Term Advantage Fund and HDFC Multiple Yield Fund Plan The debt portion will be managed by Mr. Shobhit Mehrotra. He is a B. Text, M.S. MBA Clemson University, SC,USA. He has collectively over 21 years of experience in Fixed Income markets, credit rating etc. He manages other fund such as HDFC MF Monthly Income Plan (Debt Portfolio), HDFC Income Fund, HDFC High Interest Fund - Short Term Plan, HDFC Floating Rate Income Fund, HDFC Corporate Debt Opportunities and FMPs. Similar fund provided by the other AMCs: There are other 4 mutual fund companies which provide similar retirement plans such as Reliance, Franklin Templeton, UTI and mutual funds. Though all schemes by these AMCs are similar on most of the aspects, they differ in term of offering sub plans, lock-in period and flexibility of breaking the investment during lock-in period.

4 The comparison of their basic features are as follows; AMC HDFC Reliance Franklin Templeton UTI Name of the Scheme Nature of the Scheme Nature of the Portfolio HDFC Savings Fund - Equity Plan Tax Saving Fund Pure Equity HDFC Savings Fund - Hybrid Equity Plan Tax Saving Fund Hybrid - Equity HDFC Savings Fund - Hybrid Debt Plan Reliance Fund - Wealth Creation Pure Equity Reliance Fund - Income Generation Lock-in Period 5 years 5 years 5 years 5 years 5 years Tax Benefit 80 C Exit Load Yes. subject to a maximum of Rs. 1,50,000/- 80 C of Income Tax Act, Upon completion of the lock-in period of 5 years, the units can be redeemed with an exit load of 1% till the age of 60 for an investor. After completion of 60 years of age, the investor can redeem the units without any exit load 1% if redeemed/switched out from Reliance Fund before attainment of 60 years of age. Nil in case of Auto SWP/Redemption/Switch out from Reliance Fund on or after attainment of 60 years of age or after completion of 5 year lock in period, whichever is later Franklin India Pension Plan 3 full financial years. a maximum of Rs. 1,50,000/- under Section 80 C of Income completion of the lock-in period and minimum target investment) 3% if redeemed before the age of 58 years; Nil if redeemed after the age of 58 years. UTI- Benefit Pension Fund open ended notified tax savings Yes. 3 years. However, investors may withdraw anytime even during the lock in period the exit load) Yes. Subject to a maximum of under Section Tax Act,. In case if the investors redeems his units before three years from the date of allotment, the tax benefit under sec 80c will be reversed. 5% if redeemed less than one year from the date of allotment, 3% if redeemed between 1 to 3 years, 1% if redeemed after 3 years. Nil if redeemed at maturity (i.e. 58 years of age) or after 5 years from the date of investment whichever is later. No exit load, in the case of the death of an unitholder. Savings - Progressive Open ended fund Pure Equity Savings - Moderate Open ended fund Hybrid - Equity Savings - Conservative Open ended fund No No No No tax benefit under 80c No tax benefit under 80c No tax benefit under 80c Nil - If redeemed after attainment of retirement age i.e. 60 years of age. In case of Auto switch-out of units on occurrence of Auto-switch trigger event Nil. For Redemption of units before the attainment of retirement age i.e 60 years: 3% - If redeemed / Switched out on or before expiry of 3 Years from the date of allotment. 1% - If redeemed / Switched out after 3 Years from the date of allotment.

5 Liquidity Benchmark Asset Allocation into Equity (As per the SID) Asset Allocation into Equity (As per latest portfolio) Largecap & Midcap allocation Ratio in equity portion ( as per latest portfolio) Nifty 500 Index completion of 5 years lock in period CRISIL Balanced Fund Index CRISIL MIP Blended Index completion of 5 years lock in period S&P BSE 100 completion of 5 years lock in period Crisil MIP Blended Subject to completion of the lock-in period and minimum target investment 40% of CNX % of Crisil Composite Bond Fund Index Yes. Any business day the exit load) CRISIL Debt Hybrid (60:40) Yes. Any business day the exit load) S& P BSE SENSEX Yes. Any business day the exit load) CRISIL Balanced Fund Index Yes. Any business day the exit load) CRSIL MIP Blended Index 80% - 100% 60% - 80% 5% - 30% 65% to 100% 5% to 30% Up to 40% Up to 40% 85% to 100% 65% to 85% 0 to 30% % 18% 40% 40% 94% 71% 29% :20 79:21 88:12 68:32 73:27 69:31 74:26 Eligible Entry Age 18 years NA NA up to 60 years Minimum investing Amount Rs. 5,000 / SIP monthly Rs. 500 Rs. 5,000 / SIP monthly Rs. 500 Redemption after completion of 5 year lock in period after completion of 5 year lock in period Rs.10,000 / SIP Rs. 500 On attaining 58 years of age completion of lock-in period of 3 FY) and The total investment made is at least Rs.10000/-, the investor (i.e. you) can avail any of the following options: Pension Option, Lump sum Option, Combination in the age group of 18 to 65 years Rs.10,000 / (Rs. 500 Subject to attaining a minimum investment of Rs. 10,000/- by the age of 52 years) Unitholders who have made investments upto the age of 52 years may get the regular periodical payments after they complete 58 years. Unitholders who make investments between the age of 53 and 65 years can redeem it after 5 years from the date of each such investment. Any time Rs. 5,000/- and in multiples of Re. 1/- thereafter NA NA NA

6 Option, Flexible Option, Minimum amount for redemption Rs. 500 or a minimum of 50 Units. Any amount or any number of units Rs.1,000/- and any amount in multiple of Re.1/- thereafter Rs. 1,000/- and multiples of Rs.100/- minimum of Rs. 500/- / 50 units or in multiples of Re.1/- thereafter or for all the Units Option & Periodicity to receive the redemption proceeds Lump sum Option, Switch-Option, Systematic Withdrawal Advantage Plan (SWAP) Option & Systematic Transfer Plan (STP). Auto SWP Facility (monthly or a quarterly or annual frequency), SWP Redemption benefits can be availed any of the following options: Pension Option, Lump sum Option, Combination Option, Flexible Option, Upon reaching the eligibility age, the unitholders will get at any intervals such as monthly, quarterly, half-yearly or yearly Options Only Growth Growth Option & Bonus Option and Dividend Plan : Dividend Payout Option Growth, Dividend, Div - Reinvestment and Div - Payout Option. Only Growth Only Growth Only Growth Only Growth Relative performance of the retirement funds in the Indian mutual fund industry: Scheme Name Equity Diversified Benchmark Latest Corpus (Rs Crs) Expense Ratio Equity Portfolio Asset Allocation Market cap break up (Equity) Trailing Returns Reliance Fund-Wealth Creation (G) S&P BSE Savings Fund - Progressive (G) S&P BSE Sensex Balanced - Equity Savings Fund - Moderate (G) Crisil Balanced Fund Index Balanced - Debt Franklin India Pension Plan - (G) Crisil Compo Bond, Nif Reliance Fund-Income Generation (G) Crisil MIP Blended Index Savings Fund - Conservative (G) Crisil MIP Blended Index UTI- Benefit Pension Plan Crisil Debt Hybrid (60:40) Benchmark: Debt Cash Large Cap Mid Cap Small Cap 6 Months Absolute 1 Year 3 Years 5 Years 7 Years Standard Deviation (Daily)

7 Nifty S&P BSE S&P BSE Sensex Crisil Balanced Fund Index Crisil Composite Bond Fund Index Crisil Debt Hybrid (60:40) Crisil MIP Blended Index Note: NAV value as on Feb 03, Portfolio data as on Dec What is the need for retirement planning? The need for retirement planning is detailed below: Longer life-spans mean longer retirement. Joint families giving way to nuclear families. Lack of social security benefits in India. To maintain the standard of living post retirement with a plan to tackle the unforeseen expenses. Income streams may dry up. Safeguard against inflation. Why should one invest in HDFC Savings Fund? HDFC Savings Fund addresses the need of retirement planning. The benefits of investing in the fund are detailed below: Long-term investment vehicle targeting retirement corpus for the investors. Asset allocation is important as each asset class has a different return-risk-liquidity profile. HDFC Savings Fund offers three different plans to suit investors of different age groups and risk profiles. Investments in the Scheme qualify for tax benefits U/s 80C of the Income-tax,. Expertise of HDFC AMC with over 15 years of fund management experience. Analyst: Dhuraivel ( Dhuraivel.gunasekaran@hdfcsec.com) Tel: (022) Fax: (022) Corporate Office HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai Phone: (022) Fax: (022) Website: hdfcsecretailresearch@hdfcsec.com Disclaimer: Mutual Funds and Debt 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. INH "