A po portf tfoli lio with ith ru run do down mat aturity^ - - PowerPoint PPT Presentation

HDFC Money Market Fund

(An open ended debt scheme investing in money market instruments)

This product is suitable for investors who are seeking*:

• Income over short term.
• to generate income/ capital appreciation by investing in money market instruments

Riskometer

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them. ^Refer slide 3-5 for run down strategy 1

A po portf tfoli lio with ith ru run do down mat aturity^

July 2020

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• Portfolio aims to maintain a higher credit quality with focus on run down strategy^.
• Maintained high proportion of investments in AAA / A1+ or equivalent rated securities (100

00% of

• f Net

Assets in in AAA/A1+ or

• r equiv

uivale alent nt rat ated ed securit rities ies sinc nce 30 30th

th June

ne, 2018 18)

• Fund invests in money market instruments* with maturity of not more than one year

^Please refer Slide 3-5 for details on run down strategy The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com. The product positioning and intended duration is based on current view and is subject to change. *Commercial papers, Commercial bills, Treasury bills, Government securities (having an unexpired maturity upto one year), Call or notice money, Certificate of deposit, Usance bills and any other like instruments as specified by the RBI / SEBI from time to time.

HDFC Money Market Fund : Portfolio Positioning

Current Investment Strategy

• Currently, the fund intends to follow the investment strategy of

– buying money market instruments with maturity upto 1 year and – adopting a buy and hold (run down) strategy; thus allowing the maturity to reduce over time.

• Strategy is initiated in January-March quarter (rebalancing period); thus the portfolio maturity shall

generally be rebalanced in this period every year.

• Fund may, during the financial year, invest up to 35% of the portfolio in papers maturing beyond the

next rebalancing period (i.e., up to June-July) to take advantage of steepness in the yield curve, if any.

• Hence, fund returns are expected to be closely aligned to the prevailing YTM, irrespective of the

movement in interest rates over the run down tenor of the strategy.*

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The current investment strategy is subject to change as per fund manager’s outlook. Run down strategy is subject to the risks arising on account of portfolio adjustments made due to inflows/outflows. Further, all debt portfolios are subject to markets risks, interest rate risks, reinvestment risks and credit risks. For full details, read Scheme related documents. *Assuming the option of investing up to 35% of the portfolio in papers maturing beyond the next rebalancing period is not exercised The rate of return/yields mentioned should not be construed as actual returns and/or indicative returns. Expenses / charges have not been considered. HDFC Mutual Fund/AMC is not guaranteeing /offering/communicating any returns/indicative yields on investments made in the said Scheme.

Jan-March, Year 1 (Rebalancing period)

Maturity

Jan-March, Year 2 (Rebalancing period)

Maturity is rebalanced when Portfolio Maturity is minimal; reset

• f maturity will be done with the
• bjective
• f
• ptimizing

returns

• ver the target duration

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Run down Portfolio Strategy – Graphical representation

The current investment strategy is subject to change as per the fund manager’s outlook. Run down strategy is subject to the risks arising on account of portfolio adjustments made due to inflows/outflows. HDFC Mutual Fund/AMC is not guaranteeing /offering/communicating any returns/indicative yields on investments made in the said Scheme. Jan-March, Year 3 (Rebalancing period)

Up to 35% of the portfolio may be invested in papers maturing in June/July of year 2, i.e., beyond next rebalancing period. However, these papers may get rebalanced along with the rest of the portfolio at the next rebalancing period.

June-July, Year 2

How does Run down Portfolio work?

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Scenario Investment Date Portfolio Yield at the time of Investment Redemption Date Portfolio Yield at the time of redemption Portfolio Return ^(Annualised) Remarks When investor redeemed during rebalancing period 1 1-Mar-15 7% 1-Mar-16 * ~7% It can be seen that the portfolio return approximately matched the

portfolio yield available at the time

• f investment

2 1-Aug-15 6% 1-Mar-16 * ~6% 3 1-Nov-15 8% 1-Mar-16 * ~8% When investor redeemed before rebalancing period 4 1-Mar-15 7% 1-Aug-15 6% >~7% As the portfolio yield is lower than that of Mar-15, there would be valuation Gains 5 1-Mar-15 7% 1-Nov-15 8% <~7% As the portfolio yield is higher than that of Mar-15, there would be valuation Losses

Scenario Analysis of Run Down Portfolio Strategy assuming the rebalancing is done on 1st March every year$

Disclaimer: Above illustration is purely to explain the concept of run down portfolio strategy. Run down strategy is subject to the risks arising on account of portfolio adjustments made due to inflows/outflows. The rate of return/yields shown are assumed figures and should not be construed as actual returns and/or indicative returns. Expenses / charges have not been considered in the

• calculations. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any returns/indicative yields on investments made in this Fund. The recipient should understand that the

information provided above may not contain all the material aspects relevant for making an investment decision. In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest in the Scheme. The current investment strategy is subject to change as per the fund manager’s outlook.

* Yield at the time of redemption would not be relevant for HTM portfolio. HTM: Held To Maturity $ The illustration assumes the option of investing up to 35% of the portfolio in papers maturing beyond the next rebalancing period is not exercised. If the option is exercised, the returns may not be closely aligned with the YTM at the time of investment, depending on market factors at the time of exercising the option.

Interest rate/reinvestment risk would be lesser when redemption occurs during rebalancing period

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• Interbanking liquidity remains in surplus since past

12 months (see graph 1)

• Upward sloping yield curve – suitable for run down

benefits (see graph 2)

• Term spreads are reasonable
• High quality credit

Other her bene nefit its

• Lower interest rate risk vis-à-vis other debt funds

except Liquid funds

• No lock-in, no entry / exit load

Reaso sonably ly Steep Yield ield Curve rve

CD: Certificate of Deposit, Source: Bloomberg, RBI * HDFC AMC/Mutual Fund is not assuring or guaranteeing any returns in the Scheme Updated till 6th July 2020

• 2,000
• 1,000

1,000 2,000 3,000 4,000 5,000 6,000 7,000 Jun/18 Jul/18 Aug/18 Sep/18 Oct/18 Nov/18 Dec/18 Jan/19 Feb/19 Mar/19 Apr/19 May/19 Jun/19 Jul/19 Aug/19 Sep/19 Oct/19 Nov/19 Dec/19 Jan/20 Feb/20 Mar/20 Apr/20 May/20 Jun/20 Jul/20

Interbank Liquidity (INR bn) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Spreads (%) 12m CD - 6m CD 12m CD - 3m CD

Why Money Market Fund ?

Suit itab able le for investor

• rs -
• Desiring a higher degree of liquidity and lower

interest rate risk compared to certain debt schemes

• Maintained 100% of AUM in AAA/A1+ or

equivalent rated securities since 30-Jun-18

• Having an investment horizon of 3 to 12 months

*Investors should consult their financial advisers, if in doubt about whether the product is suitable for them. For complete portfolio details refer www.hdfcfund.com * Spread between month-end YTMs and cut off yield of 91 days T-bill in last auction of the month

HDFC Money Market Fund : Suitability

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10 20 30 40 50 60 70 80 90 100 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 % Of Net Asset

Allocation to AAA and equivalent securities

• Who wants to minimize interest rate risk and seek returns closer to prevailing YTMs
• With a need to park surplus cash flows

Portfolio Characteristics

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Portfolio Classification by Rating Class (%) *

AAA/AAA(SO)/A1+/A1+(SO) & Equivalent 100.12 Cash, Cash Equivalents and Net Current Assets

• 0.12

AUM (In Rs. Cr.) 8,422

Portfolio Classification by Asset Class (%) *

Commercial Papers 49.00 Certificate of Deposits 51.12 Cash, Cash Equivalents and Net Current Assets

• 0.12

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on June 30, 2020 * Computed on invested amount.

Avera erage ge Mat atur urit ity Modif dified ied Durat ration ion Macaulay ulay dura ratio ion n Yield ld To Matur urit ity 232 Days 215 Days 232 Days 4.53%

Type pe of

• f Schem

heme An open ended debt scheme investing in money market instruments Category egory of

• f Scheme

heme Money Market Fund Incept eption

• n Date

18th November, 1999 Inves estment ent Object ective ve To generate income / capital appreciation by investing in money market instruments. There is no assurance that the investment objective of the Scheme will be realized. Fund nd Manager ager $ Anil Bamboli (since July 25, 2012) and Vikash Agarwal (since July 1, 2020) Inves estment ent Plan an Regular Plan & Direct Plan Inves estment ent Options

• ns

Options under each plan: Growth and Dividend. Dividend Option offers Daily (Reinvestment) and Weekly (Payout and Reinvestment facility) Mini nimum um Appl plicat cation

• n Amount

unt. Purchase: Under Growth Option and Weekly Dividend Option : Rs. 5,000 and any amount thereafter. Under Daily Dividend Option : Rs. 10,000 and any amount thereafter Additional Purchase: Under Growth Option and Weekly Dividend Option : Rs. 1,000 and any amount

• thereafter. Under Daily Dividend Option : Rs. 5,000 and any amount thereafter

Benchmar nchmark Index ex NIFTY Money Market Index

Fund Facts

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$ Dedicated Fund Manager for Overseas Investments: Mr Chirag Dagli For further details, please refer to the Scheme Information Document.

Disclaimer & Risk Factors

This presentation dated July 30, 2020 has been prepared by HDFC Asset Management Company Limited (HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines

• nly, which you must confirm before relying on them. The information contained in this document

is for general purposes only. The current investment strategies are subject to change depending

• n market conditions.

The document is given in summary form and does not purport to be

• complete. The document does not have regard to specific investment objectives, financial

situation and the particular needs of any specific person who may receive this document. The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.Past performance may or may not be sustained in future. Neither HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.For complete portfolio/details refer to our website www.hdfcfund.com

Mu Mutual tual fund fund inv nves estments ments are re subj ubjec ect to to mark market et risks, read read al all schem heme related related documents uments careful efully.

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Thank You

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