HDFC Growth Opportunities Fund (An open ended equity scheme - - PowerPoint PPT Presentation

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December 2019

HDFC Growth Opportunities Fund

(An open ended equity scheme investing in both large-cap and mid-cap stocks)

This product is suitable for investors who are seeking*:

• To generate long-term capital appreciation / income
• Investment predominantly in Large- Cap and Mid-Cap companies

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

“A diversified fund with controlled exposure to Large Cap & Mid Cap Stocks

Note : The scheme has undergone change in fundamental attribute w.e.f May 23, 2018 and has become an open ended equity scheme investing in both large-cap and mid –cap stocks, prior to the change the fund was positioned as a large cap fund investing predominantly in large cap stocks. Please refer to scheme Information document & addendum available on www.hdfcfund.com / ISCs for further details.

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India suits well for Growth Investing !

India : A Secular Long Term Growth Story

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Nominal GDP*@ Corporate Sales

#

CY :2003 CY : 2018 Growth : No.

• f Times
• Rs. 2,788,991
• Rs. 19,053,967

6.83 times

• Rs. 927,290
• Rs. 8,481,546

9.15 times Corporate Profit

#

• Rs. 88,036
• Rs. 476,252

5.41 times Aggregate M Cap

#

• Rs. 1,275,608
• Rs. 14,468,646

11.34 times

Source: *CMIE; The data before 2004-05 is based on splicing GDP. # Capitaline, Morgan Stanley Research, Bloomberg @ - March 04-March 19 Refer disclaimers at the end of the presentation

Amount in Rs. crores

Factors supporting the Growth in India

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• Excellent demographics
• Rich in natural resources
• Large availability of skilled, young, English speaking and competitive manpower
• Low penetration of consumer goods and improving affordability
• Large unmet needs of infrastructure
• Strong reforms momentum

HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions. Refer disclaimers at the end of the presentation

“The investor of today does not profit from yesterday’s growth.” - Warren Buffett

Indian Economy – Growth moderates, other parameters stable

Improving macros FY15 FY17 FY19 FY20E FY21E Real GDP at market price (% YoY) 7.4 8.2 6.8 4.7 5.5 Centre's fiscal deficit (% GDP) 4.1 3.5 3.4 3.8 3.7 Current Account Deficit (CAD) (% GDP) 1.3 0.7 2.1 1.5 1.6 Balance of Payment (% of GDP) 3.0 0.9

• 0.1

1.2 0.9 Consumer Price Inflation (CPI) (Average) 6 4.5 3.4 4.2 4.5 Foreign Exchange Reserves (USD bn) 341 370 412 454^ NA Source: Kotak Institutional Equities, E-Estimates, ^ as of 13th Dec 19. na – not available

• Auto sector, especially Passenger vehicles (PV), despite low penetration,

slowed down sharply in 2019. Sharp de-growth of production in auto sector (~3-4% of GDP) was a key contributor to slowdown (slide 6-7)

• Slowdown was also observed across other segments like cement, air

travel, consumer durables, etc. (charts 2 to 4)

• Slides 6-7 explain the key reasons for slowdown, what was sustaining

consumption till now and growth outlook for FY21

• Over the past few years, most macro economic parameters are improving
• r are stable; however growth has slowed down in FY20 (Table 1)
• Both consumption (58% of GDP) and investments (29% of GDP) slowed

down significantly in H1 FY20 (Chart 1)

Table 1

Chart 2 Chart 3 Chart 4

Sources: CMIE, Kotak Institutional Equities 5

Chart 1

Slowdown demystified

• Core issue is degrowth in white collar private sector wages in real terms

‒ White collar wages, in real terms, have de-grown by 27% in 15 years (as measured by entry level IT salary) ‒ Average wage bill (salary per person) of a leading IT company has grown at CAGR of 2.9% only over FY04-FY19 ‒ While real wages were weak for 10-15 years, consumption sustained in this period, probably due to falling savings and debt led consumption

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A leading IT Company (INR lakhs per annum) FY04 FY19 CAGR (%) Real growth Typical Entry level (approx.) 2.0 4.0 4.7

• 2.1

Average salary 11.5 17.7 2.9

• 3.9

Average inflation 6.8

• Sharp increase in bankruptcy cases over last few years impacted wages / jobs for many#

‒ Over 2,500 companies were admitted under IBC till Sep’19, ~600 were closed by liquidation and ~1,500 are still under process ‒ Just the 22 companies / groups in IBC had ~60,000 employees

• Weak private investment. Large number of companies in capital intensive sectors like steel, power and Infrastructure are in IBC. This has resulted in

supply of ready assets below replacement cost; hence new asset creation was discouraged

• Slowdown, in our opinion, was also exaggerated due to sharper decline in wholesale volumes in auto sector due to high inventory with dealers in

FY19 and transition to BS VI norms from April 2020, that necessitated an inventory correction of old stock

• Challenges faced by NBFCs and erosion of wealth due to sharp correction in midcap/small caps also had an adverse impact

Sources: # IBBI.gov.in, Capitaline, Kotak Institutional Equities, Morgan Stanley

Why do we think Economic growth has bottomed ?

• Link between Auto sector and GDP slowdown – 2 sides of the same coin

‒ Auto sector accounts for ~3-4% of GDP; thus volume de-growth of ~15%-20% shaves

• ff 0.5% - 0.8% of GDP growth

‒ With inventory correction over, even if auto volumes are flat next year, GDP growth should be higher by 0.5-0.8% in FY21, on this count alone

• Lower corporate tax cuts for new manufacturing units

‒ In a path breaking decision, government reduced the corporate tax rate to 15% for all new manufacturing units that commence production before Mar-23 ‒ In our view, given the general time to set up new unit is 2 - 4 years and deadline of Mar-23 to avail tax benefit, private capex should improve in FY21, especially by MNCs

• Measures taken by Government & RBI

‒ Reduction in corporate tax rates & policy rates (135 bps in 2019); ‒ Multiple steps taken to resolve liquidity issues in NBFCs and Real estate; ‒ Focus on improving ease of doing business; India’s rank improved to 63 from 77 in 2018 & 100 in 2017

• Post verdict on Essar steel case, most large assets in Power, steel, infrastructure etc. are

likely to be resolved under IBC in FY20. This should improve capex in FY21 as ‒ New owners of IBC assets are likely to incur incremental capex to optimise efficiency

• etc. E.g.- Arcelor Mittal indicated capex of INR 80 bn in Essar

‒ For growth, now new units will have to be planned as no existing units are available

• With decline in interest rates (Table 1) and real estate prices (Chart 2), EMIs of home loans

have reduced, thus improving affordability

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^assuming 5% decline in real estate prices 2 years ago Currently Saving Home Loan 40,00,000 38,00,000^ Tenor (In years) 20 20 Interest rate 9.2% 8.3% EMI for home loan (36,376) (32,498) 10.7% Sources: CMIE, ICICI Securities, PIB Chart 1 Chart 2 Table 1

Road to USD 5 trillion (tn) economy gets a Rs 100 trillion (USD 1.4tn) Infra spending boost !

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• On 31st Dec, 2019, Government announced a massive thrust on Infra with doubling
• f planned project pipeline (National Infrastructure Pipeline - NIP) to Rs 102 trillion

(tn) over next 6 years vs Rs 56 tn spent in last 6 years !

• The list of projects is part of a report prepared by a task force under the

chairmanship of the Economic Affairs Secretary

• Planned spending will be frontloaded between FY20-22E with focus on roads,

railways and urban infra while renewables will gain traction in later phases.

• Spending to be funded by Center 39%, States 39%, & Private sector 22%
• Out of Rs 102tn , projects worth Rs 43tn are already under implementation, Rs 20tn

are under development & another Rs 32tn are at conceptual stage

• Focus on Roads (19%), Urban & Rural infrastructure / housing (20%), railways (13%)

& renewable energy (9%)

• Revival in real estate & manufacturing to drive GFCF CAGR of 15% between FY19-

24E compared to 10% between FY11-19 (Antique estimate)

• Infra spending boost along with Corporate tax rate cut (slide 9) announced earlier

will aid competitive edge to Indian manufacturing

5.3 6.3 7.0 8.5 9.2 10.2 10.0 13.6 19.5 19.0 13.8 12.8 11.1 3 8 13 18 23 13 14 15 16 17 18E 19E 20E 21E 22E 23E 24E 25E

Total Infra spend (Rs tn)

Source: Antique Stock Broking Source: National Infrastructure pipeline, GOI Source: Antique Stock Broking

Corporate Tax Rate Cut – Addressing the weak link

• India lagged China & other Asian countries in manufacturing (Chart 1)

‒ In 2018, China’s manufactured exports were ~8 times of India’s; Even Vietnam’s manufactured exports, which is 1/10th the size of India, are comparable with India’s manufactured exports (Chart 2) Manufacturing – Opportunity knocks again for India

• Global companies are now looking to shift and diversify their supply chain

from China. This is driven by ‒ China’s edge of low costs has diminished with rising labor costs ‒ Cost of real estate has risen significantly in China ‒ Stringent environmental standards ‒ Increasing trade tensions with the US

• India was not a preferred destination compared to Asian countries despite

a large domestic market, improving ease of doing business, similar labour costs, availability of skilled resources etc. mainly due to higher tax rates

• With the recent corporate tax rate cut (from 30% to 15%) for new

manufacturing units, India’s tax rate is now amongst the lowest in the

• region. With this, manufacturing in India should get a boost (Chart 5)

9 Sources: Kotak Institutional Equities, JM Financials, Bloomberg, JETRO

Chart 1 Chart 2 Chart 3 Chart 4 Chart 5

India – Entering into righteous circle of Growth

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• Government focus on economy to double

in size to $5 trillion

• Lowering in tax rate is likely to boost

profit growth, improve sentiments, kick- start private capex and make India a favourable investment destination.

• With lower tax rates, India can become an

attractive destination for relocating manufacturing operations, which can spur private capex cycle, boost wage growth and thus, consumption

Righteous circle of Growth

Corporate Tax Rates as as per Finance Act, 2019 and Finance Act (No. 2) Act, 2019 read with The Taxation Law (Amendment) Ordinance, 2019 (Ordinance 2019) published in the Gazette of India on 20 September, 2019

Job Creation Consumption Private Capex

Refer disclaimers at the end of the presentation

Strategic sale route for PSU divestment – A big step forward

• Divestment experience through ETF’s has probably impacted PSU valuations

‒ Regular supply of PSU shares through various ETFs distorts market demand and supply ‒ Share of PSU’s in Market cap has come down ‒ Discount offered on ETF’s creates interest amongst arbitragers & short term investors as against long term investors. Of the Rs 91,600 crs ETF subscribed till Dec 2019 only Rs 18,200 crs is outstanding

• An announcement of a strategic sale in a large OMC suggests a significant

shift in strategy

• Strategic sale is a positive development. This should drive FDI in the country,

give additional resources to the government, reduce supply of paper by government in equity & debt markets and increase competition in marketplace benefiting consumers.

• If the ETF route is less preferred going forward, it should be positive for PSUs

31 31 25 22 26 30 27 28 25 22 19 16 14 15 13 13 11 5 10 15 20 25 30 35 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Latest PSU as a % of total India market cap

• 0.1

0.2 0.3 0.4 0.5 0.6 0.7 0.8 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-19 CPSE Index valuation relative to Nifty 50 Index Source: Kotak Institutional Equities, Data updated till Dec 27, 2019 Source: Kotak Institutional Equities, Data updated till Dec 27, 2019

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Corporate Profit to GDP Near Cyclical low

12 Source : CMIE, CEIC, Morgan Stanley Research Refer disclaimers at the end of the presentation

India’s Corporate Profit to GDP ratio has declined from 7.1% to 2.6% - a 15 year low

NIFTY 50 profits growth – Recovery firmly in sight

HDFC Mutual Fund/AMC is not guaranteeing any returns

• For several years now, strong growth in profits has been elusive
• For all the noise, slowdown in NIFTY 50 profit growth was led

almost entirely by falling profits in Corporate Banks (Table 1). Share of Corporate Banks in NIFTY 50 profits fell from 12% to 3% between FY13 & FY19 (Table 2)

• With profitability of Corporate Banks normalizing, the overall

NIFTY 50 profit growth is expected to bounce back

• Normalization in profitability and RoE of Corporate Banks is

expected by FY22E as slippages and provision costs are falling and recoveries are increasing.

NIFTY profit growth of 18% CAGR is expected between FY19 and FY22E led by recovery in profitability of Corporate Banks

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Source: Kotak Institutional Equities, E- Kotak Institutional Equities Estimates as on 20th December, 2019 Profit after Tax (Rs crs) CAGR % FY13 FY19 FY22E FY13-19 FY19-22E NIFTY 50 ex Corporate Banks 213,301 361,710 511,054 9% 12% Corporate Banks 28,911 10,622 93,683

• 15%

107% NIFTY 50 242,212 372,332 604,737 7% 18%

• 4%

1% 6% 11% 16%

RoE of Corporate Banks

0% 5% 10% 15% GNPL of Corporate Banks Slippagesof Corporate Banks Sector contribution to NIFTY 50 profits (%) FY13 FY19 FY22E Consumer Discretionary 10 7 6 Consumer Staples 5 6 6 Corporate Banks & Financials 12 3 15 Energy 29 30 22 Information Technology 15 19 15 Materials 8 11 9 Retail Banks & Financials 7 13 15 Others 15 13 12 Total 100 100 100 Table 1 Table 2

Indian equities – Attractive Valuations

• Over the long term, stock market indices in India are growing around the

same rate as the nominal GDP ‒ This implies that when in any extended period of, say 10 years, indices grow significantly less than nominal GDP, they tend to make up in the future by delivering higher returns & vice versa. Interestingly, we are in a similar situation presently (Table 1)

• Marketcap to GDP at 61% and CY21(E) P/E of ~15x is attractive, specially

at time when NIFTY50 profit growth is estimated at 18% CAGR over FY19- 22E and interest rates are low

• Gap between 10Y Gsec yield and 1Y-Forward NIFTY 50 Earning yield [i.e. 1

/ (one year forward P/E)] has reduced significantly and is now below 10 year average (1.7%) indicating that equities are attractively valued relative to current bond yields

India market cap to GDP ratio, calendar year-ends 2005-21E (%)

Low Marketcap to GDP, Bond yields equal to Earnings yield and recovery in profit growth make us optimistic on markets over medium to long term 14

• 6.0
• 2.0

2.0 6.0 10.0 14.0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 10Y Gsec and NIFTY Earning Yield near equal

Yield gap (%) Earnings yields (%) India 10-y G-Sec yields (%) 69 88 149 56 99 98 61 72 65 81 75 71 92 78 75 67 61 13 15 23 11 17 16 13 14 16 20 18 17 19 17 22 18 15

5 9 13 17 21 25 30 50 70 90 110 130 150 170 05 06 07 08 09 10 11 12 13 14 15 16 17 1819E 20E 21E Mcap/GDP (%) NIFTY 12M forward P/E (X) (RHS) Year Trailing 10 year NIFTY Return (CAGR) Trailing Nominal GDP Growth (10 year CAGR) Next 10 year NIFTY Return (CAGR) 2001 7% 13% 16% 2002 4% 13% 18% 2003 6% 12% 13% 2004 6% 12% 15% 2006 16% 12% 8% 2007 19% 12% 6% 2016 8% 14% ? 2017 6% 13% ? 2018 14% 13% ? 2019 9% 13% ? Table 1 – Periods when10 year NIFTY Return trailed / exceeded Nominal GDP Growth materially

Source: Kotak Institutional Equities, updated till 30th Nov, 2019, From 2005-18, NIFTY50 PE is based on 12 month forward estimated EPS. For 2019E, by Kotak Institutional Equities has calculated PE based on EPS numbers as of Mar-20 end, 2020E based on EPS of Mar-21 end and for 2021E based on EPS of Mar-22 end

Why invest in Large & Mid Cap Strategy

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• 10

10 13 14 15 16 17 18 Earnings growth (TTM) Broad Market Nifty

• Data suggests that over long periods, category average returns

for large caps and mid / small cap are comparable globally as well as in India. However, there are periods when mid / small cap outperform largecaps and vice versa (Table 1).

• Outperformance during CY14-17 in Midcap / Smallcap indices

vs Largecap indices was driven mainly by P/E rerating and less by higher profit growth. This probably led to an over valuation

• f mid / small caps. (Chart 1 & 2)
• Subsequently, with the correction in mid / small cap stocks in

2018 & 2019, 10 year returns and valuations for Large caps and mid / small caps have converged. Hence, in our judgment, the returns of large cap and mid / small cap should not diverge materially over the medium to long term.

• Also, the rally in NIFTY50 was a narrow rally. Top 5 stocks

contributed to 152% & 81% of NIFTY 50 returns in CY18 & CY19

• respectively. In our judgment, such conditions will be short

lived and we expect markets to be more broad based.

Historical indicators are no guarantee of future results, Source: Morgan Stanley, MSCI data, Bloomberg, Broad Market as defined by Morgan Stanley stands for listed Indian companies with quarterly data for 8 or more quarters which comes to about 1200 companies.

Table 1 Chart 1 Chart 2 60% 80% 100% 120% 140% 160% 180% 050607080910111213141516171819 NIFTY Midcap premium to NIFTY 50 Average in % CY14 CY15 CY16 CY17 CY18 CY19 YTD upto 27th Dec 5 Years CAGR 10 Years CAGR 15 Years CAGR Nifty 50 31.4

• 4.1

3.0 28.6 3.2 12.7 8.1 8.9 12.5 NIFTY 500 37.8

• 0.7

3.8 35.9

• 3.4

5.7 7.4 8.4 11.9 NIFTY MidCap 55.9 6.5 7.1 47.3

• 15.4
• 4.9

6.2 8.6 8.6 NIFTY SmallCap 55.0 7.2 2.3 57.3

• 29.1
• 10.7

1.2 4.8 9.9 Midcap O/p 24.5 10.5 4.1 18.6

• 18.6
• 17.6
• 1.9
• 0.3
• 3.9

MSCI World Small Cap 0.4

• 1.8

10.9 20.9

• 15.2

20.1 6.8 8.9 6.3 MSCI World 2.9

• 2.7

5.3 20.1

• 10.4

21.7 6.7 7.3 4.8 MSCI US Small Cap 11.1

• 0.8

9.2 19.5

• 6.3

25.6 9.4 11.3 6.9 MSCI US 6.0

• 5.1

17.8 15.6

• 11.4

22.3 7.5 11.3 7.3 MSCI EM Small Cap

• 1.1
• 8.8

0.3 31.2

• 20.3

3.0 0.7 0.7 5.1 MSCI EM

• 4.6
• 17.0

8.6 34.3

• 16.6

7.7 3.2 1.2 4.9

Refer disclaimers at the end of the presentation

Hence, to achieve better portfolio diversification across cycles, a blended portfolio with minimum 1/3rd allocation each to Largecap & Mid Cap stocks can offer better risk adjusted returns

• Large Cap composition will offer stability to the portfolio
• Mid Caps will target for superior return through stock selection

HDFC Growth Opportunities Fund - Investment Strategy

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 The Fund targets to invest in a diversified portfolio of Large and mid sized companies with better growth potential  Controlled exposure to different market cap segments helps mitigate market cap bias risk.

• Minimum 35% Large Cap - More established companies with good track records
• Minimum 35% Mid Caps - Potential for faster growth
• The Fund will follow a bottom up strategy with no market cap bias for the balance portfolio (Refer Slide 18 for

current portfolio composition)

HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions. Refer disclaimers at the end of the presentation

Stock Selection Process of HDFC Growth Opportunities Fund?

17 HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment strategy is subject to change depending on the market conditions.

HDFC Growth Opportunities Fund focuses on businesses :

 With potential to deliver above average earnings growth  That enjoy distinct competitive advantages and superior financial strength  That are trading at relatively attractive valuations  That have value unlocking potential

Refer disclaimers at the end of the presentation

A good growing business run by a competent management team can be a potent combination for wealth creation

Top Stocks – Large Cap & Midcap - HDFC Growth Opportunities Fund

18 Stocks/sectors referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these

• sectors. For complete portfolio details refer www.hdfcfund.com. The portfolio composition as on November 30, 2019.

Top 5 Large Cap Stocks (%) Top 5 Mid Cap Stocks (%)

 The weighted average market capitalisation of the fund is approx. 210,687 crore Vs approx. 180,100 crore in benchmark index (NIFTY Large Midcap 250 Total Returns Index)  The weighted average market capitalisation of the Large Cap exposure of fund is approx. 330,803 crore  The weighted average market capitalisation of the Mid Cap exposure of fund is approx. 16,361 crore

N ame Of the Instrument Industry % to N AV Indian Hotels Company Ltd. Hotels, Resorts And Other Recreational Activities 2.98 Trent Ltd. Retailing 2.76 Tata Global Beverages Ltd. Consumer Non Durables 2.35 PRESTIGE ESTATES PROJECTS LIMITED Construction 2.23 Max FInancial Services Ltd. Finance 2.05 12.37 Total N ame Of the Instrument Industry % to N AV ICICI Bank Ltd. Banks 8.88 State Bank of India Banks 8.70 Reliance Industries Ltd. Petroleum Products 6.77 NTPC Limited Power 6.59 Infosys Limited Software 5.41 36.35 Total Refer disclaimers at the end of the presentation

Fund Facts ( As on November 30, 2019)

19 For complete portfolio details refer www.hdfcfund.com

Total Equity & Equity Related Holdings

• Large Cap
• Mid Cap
• Small Cap

98.8%

61.1% 36.7% 1.0%

Cash, Cash Equivalents and net Current Assets 1.25% Average AUM (Rs in crores) 1354.87 Total Number of stocks in the Portfolio 46 Top 10 Holdings (As a % Of Total Holdings) 55.9% Top 15 Holdings (As a % Of Total Holdings) 66.9% Portfolio Turnover Ratio (%) 17.05% Current Portfolio Beta 0.875

Refer disclaimers at the end of the presentation

Differentiated Portfolio Positioning

20 Stocks/sectors referred above are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any present or future positions in these sectors. For complete portfolio details refer www.hdfcfund.com. The portfolio composition as on November 30, 2019. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are subject to change without notice. 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. Source: NAV India, Portfolio details as on November 30, 2019 # Based on other 23 schemes in large and mid cap category across industry.

Key overweight sectors

Utilities

• Capacity led growth

Corporate Banks & Financials

• Recognition phase of NPAs is largely over
• With falling slippages and increasing

resolution of NPAs provisioning costs are expected to fall sharply

Energy

• Attractive valuation

Refer disclaimers at the end of the presentation

Sector HDFC Growth Opportunities Fund (% Exposure) Average of Other Large and Mid cap schemes (% Exposure) Benchmark (% Exposure)* Utilities 17.5 3.9 5.1 Energy 13.6 4.7 6.6 Corporate Bank & Financials 19.1 12.7 9.2 Consumer Staples 8.1 5.6 7.6 Real Estate 2.2 1.1 1.3 Information Technology 6.3 5.8 7.3 Consumer Discretionary 9.9 11.9 12.5 Communication Services 0.0 2.5 2.4 Materials 6.6 10.0 9.3 Health Care 2.1 6.1 7.1 Other Financial Services 0.0 4.3 2.6 Industrials 3.6 9.5 8.5 Retail Bank & Financials 9.8 17.6 20.5 Cash, Foreign Equity, Debt Instruments, NCA and Others 1.3 4.2 0.0 100.0 100.0 100.0

*Benchmark : NIFTY Large Midcap 250 Total Returns Index

HDFC Growth Opportunities Fund portfolio is positioned differently from other Large & Mid cap schemes

Product Features

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Type of Scheme An open ended equity scheme investing in both large cap and mid cap stocks Inception Date February 18, 1994 Investment Objective To generate long term capital appreciation/income from a portfolio, predominantly invested in equity and equity related instruments. There is no assurance that the investment objective of the Scheme will be realized. Fund Manager $

• Mr. Vinay Kulkarni (Since June 28, 2014)

Investment Plans Regular Plan & Direct Plan Investment Options Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility Minimum Application Amount (Under Each Plan/Option) Purchase: Rs. 5,000 and any amount thereafter Additional Purchase: Rs. 1,000 and any amount thereafter Exit Load

• In respect of each purchase / switch-in of units, an exit load of 1.00% is payable if units are redeemed /

switched – out within 1 year from the date of allotment

• No exit load is payable if units are redeemed / switched – out after 1 year from the date of allotment
• In respect of systematic transactions such as SIP , STP etc exit load prevailing on the date of

registration/enrolment shall be levied. No Entry/ Exit Load shall be levied on bonus units and units allotted on dividend reinvestment. For further details on load structure, please refer to the Scheme Information Document. Benchmark NIFTY Large Midcap 250 Total Returns Index

$ Dedicated Fund Manager for Overseas Investments: Mr. Chirag Dagli since July 22, 2019 For further details refer Scheme Information Document/Key Information Memorandum Refer disclaimers at the end of the presentation

Asset Allocation Pattern

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Under normal circumstances, the asset allocation of the scheme’s portfolio will be as follows:

Type of Instruments Minimum Allocation (% of Total Assets) Maximum Allocation (% of Total Assets) Risk Profile of the Instrument

Equity and Equity Related Instruments

• f Large and Mid Cap companies** of which:
• Large Cap Companies
• Mid Cap Companies
• Small Cap Companies

70 35 35 100 65 65 30 High Debt Securities (including securitised debt) and money market instruments. 30 Low to Medium Units issued by REITs and InvITs 10 Medium to High Non-convertible preference shares 10 Low to Medium

** The investment universe of “ Large Cap, Mid Cap & Small Cap” shall comprise companies as defined by SEBI from time to time. In terms of SEBI circular (SEBI / HO/ IMD/ DF3/ CIR/ P/ 2017/ 114) dated October 6, 2017, the universe shall consist of company classification in terms of full market capitalization and that the Scheme will be required to adhere the following:

• The list of stocks of companies prepared by AMFI in this regard will be adopted.
• The said list would be uploaded on the AMFI website and would be updated every six months based on the data as on the end of June and December of each year
• r periodically as specified by SEBI.
• Subsequent to any updation in the said list as uploaded by AMFI, the portfolio of the Scheme will be rebalanced within a period of one month.

The Scheme may invest in the schemes of Mutual Funds in accordance with the applicable extant SEBI (Mutual Funds) Regulations as amended from time to time. The Scheme may invest upto a maximum 35% of the total assets in Foreign Securities and upto 100% of its total assets in Derivatives.

Disclaimer

The presentation dated 31st December, 2019 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 given is for general purposes only. Past performance may or may not be sustained in future. The current investment strategies are subject to change depending on market conditions. The statements are given in summary form and do not purport to be complete. The views / information provided do not have regard to specific investment

• bjectives, financial situation and the particular needs of any specific person who may receive this information. 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. Stocks/Sectors referred in the presentation are illustrative and should not be construed as an investment

advice or a research report or a recommended by HDFC Mutual Fund / AMC. The Fund may or may not have any present or future positions in these sectors. HDFC Mutual Fund/AMC is not guaranteeing any returns on investments made in the Scheme(s). The data/statistics are given to explain general market trends in the securities market, it should not be construed as any research report/research recommendation. 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

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY

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Thank You

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