Giv ive an an edge edge to to sh short t te term su surp - - PowerPoint PPT Presentation

(An open ended ultra-short term debt scheme investing in instruments such that the

Macaulay Duration^ of the portfolio is between 3 months and 6 months) This product is suitable for investors who are seeking*:

• Income over short term
• income/capital appreciation through investments in debt securities and

money market instruments

Riskometer

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Giv ive an an edge edge to to sh short t te term su surp rplu lus!

NFO Opens: 18th Sept,18 NFO Closes: 24th Sept,18#

^Please refer to Slide 7 on which the concept of Macaulay’s Duration has been explained.

# Scheme re-opens on: Within 5 Business Days from the date of allotment of units under NFO

Key interest rate determinants & their outlook

• Growth

– India’s FY19 GDP growth likely to be better than FY18

• Liquidity

– Tightening due to high currency withdrawal, higher credit growth and RBI forex

• intervention. RBI OMO purchases could be high, to support reserve money
• Inflation

– Headline inflation likely to remain range bound

• CAD

– High crude oil prices putting pressure on CAD

• USD / INR

– Strengthening Dollar and high US yields to adversely impact capital flows

• RBI Policy

– Shallow rate hiking cycle, unless growth or inflation surprises on the upside or INR depreciates sharply

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Why Ultra Short Term funds ?

• Absolute yield levels are attractive (refer slide 4)
• Term spreads are high (refer slide 5)
• Steep yield curve – giving faster roll down benefits (refer slide 6)
• Lower interest rate risk (Macaulay Duration between 3- 6 months)
• Yield to Maturity likely to be higher than liquid funds
• No lock-in, no entry / exit load
• Currently, the fund shall focus on maintaining superior credit quality

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Attractive yields upto one year

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CD: Certificate of Deposit Source: Reuters, FBIL

6.0 6.5 7.0 7.5 8.0 8.5 9.0 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18

3m CD 6m CD 1Y CD

(%)

High term spreads -

Spread between CDs and Repo are near 3 year highs

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• 0.50

0.00 0.50 1.00 1.50 2.00 2.50 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18

3m CD - Repo 6m CD - Repo 1Y CD - Repo

CD: Certificate of Deposit Source: Reuters, FBIL

Spread (%)

Steep yield curve

Attractive roll down opportunity

6 (0.25)

• 0.25

0.50 0.75 1.00 1.25 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18

6m CD - 3m CD 12m CD - 3m CD

CD: Certificate of Deposit Source: Reuters, FBIL

Spread (%)

Liquid Funds Ultra Short Term Funds Money Market Funds Low Duration Funds Short Duration Funds Medium Duration Funds Long Duration Funds

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Positioning (Debt Funds)

RISK (Matu

turity ity) RETURN URN

Upto

• 91 days$

3 3 -6 months nths^ Upto

• 1 year$

ar$ 6 6 -12 2 months nths^ 1-3 years ars^ 3-4 years ars^

(1 (1-4 years in adverse situation)

4-7 years ars^

(1 (1-7 years in adverse situation)

$ - Maximum maturity of a security ^ - Portfolio Macaulay Duration

Macaulay Duration (Duration) measures the price volatility of fixed income securities. It is often used in the comparison of interest rate risk between securities with different coupons and different maturities. It is defined as the weighted average time to cash flows of a bond where the weights are nothing but the present value of the cash flows themselves. It is expressed in years. The duration of a fixed income security is always shorter than its term to maturity, except in the case of zero coupon securities where they are the same. 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.

Ultra Short Term Funds are suitable for investors:

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• Desiring a high degree of liquidity with lower interest rate risk
• Having an investment horizon of 2-6 months
• Investors with a need to park short term surpluses
• Using it as a channel to transfer funds systematically to other schemes

Natur ure of

• f Schem

eme An open ended ultra-short term debt scheme investing in such that the Macaulay Duration^ of the portfolio is between 3 months and 6 months Categ egor

• ry of
• f Schem

eme Ultra Short Duration Fund Incep ception

• n Date

(Prop

• pose
• sed Date of
• f allotm
• tment

nt) 25th September, 2018 Invest vestmen ent Objec ective ve To generate income/ capital appreciation through investment in debt securities and money market

• instruments. There is no assurance that the investment objective of the Scheme will be realized.

Fund Fund Mana nage ger $ Anil Bamboli Invest vestmen ent Plan Regular Plan & Direct Plan Invest vestmen ent Opti ption

• ns

Options under each plan: Growth and Dividend. Dividend Option offers Daily (Reinvestment), Weekly (Payout and Reinvestment) and Monthly (Payout and Reinvestment) facility. Minimum App pplicatio cation Amou

• unt

nt. (Und nder er Each ach Plan/O n/Opt ption

• n)

Purchase: Rs. 5,000 and any amount thereafter Additional Purchase: Rs. 1,000 and any amount thereafter Benchm chmark ark CRISIL Ultra Short Term Debt Index

Fund Facts

9 $ Dedicated Fund Manager for Overseas Investments: Mr Rakesh Vyas For further details, please refer to the Scheme Information Document.

Disclaimer & Risk Factors

This presentation dated 14th September, 2018 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 only, which you must confirm before relying on

• them. The information contained in this document is for general purposes only. The document is given in

summary form and does not purport to be complete. The document does not have regard to specific investment

• bjectives, 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 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.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

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Thank You