SBI Corporate Bond Fund This product is suitable for investors who - - PowerPoint PPT Presentation
SBI Corporate Bond Fund This product is suitable for investors who are seeking: Investment in debt and money- market securities Regular income for medium term Moderate risk SBI Corporate Bond Fund Disclaimer: Investors should consult
Disclaimer: Investors should consult their financial advisors if in doubt whether this product is suitable for them. SBI Corporate Bond Fund
* Corporate Debt securities will include Debenture and Bonds issued by Corporate (private institutions across sectors including NBFC’s, banks and other financial institutions), PSU's, Securitized Debt#, and International Bonds. # Investment in securitized debt will be to the extent of 40% of the net assets of the scheme Exposure to derivatives instruments in the scheme will be to the extent of 50% of the net assets of the scheme. The cumulative gross exposure through Debt & Money market instruments and derivative positions will not exceed 100% of the net assets of the scheme. However, trading in derivatives by the scheme shall be restricted to hedging and portfolio balancing purposes as permitted by the regulations.
as well as Money Market Instruments so as to provide reasonable returns to the Unit holders
investment horizon of minimum 2 years.
Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option of regular plan and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for long-term debt schemes is used for comparison purposes.
31-Mar-2016 to 31-Mar-2017 31-Mar-2015 to 31-Mar-2016 31-Mar-2014 to 31-Mar-2015 Since Inception Absolute Returns (%) CAGR Returns (%) PTP Returns (INR) SBI Corporate Bond Fund 9.97 9.28 N.A. 10.25 13,024 Crisil Composite Bond Fund Index 11.09 8.24 N.A. 10.94 13,245 Crisil 10 Yr Gilt Index 11.87 7.97 N.A. 11.54 13,440 Data as on March 31, 2017 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 31-Mar-2016 to 31-Mar-2017 31-Mar-2015 to 31-Mar-2016 31-Mar-2014 to 31-Mar-2015 Since Inception SBI Corporate Bond Fund - Reg - Growth Scheme Benchmark: - Crisil Composite Bond Fund Index Additional Benchmark: - Crisil 10 Yr Gilt Index
The fund manager will not engage in active duration management but will try to generate alpha by capturing spread over AAA securities. This portion of the funds is primarily invested with maturities ranging from 1 to 5 years The segment currently looks attractive on account
comfortable interest rate position and liquidity outlook. This portion of the portfolio seeks to generate higher returns by way of credit selection. The allocation to the long bonds to maintain duration within a constant range Attractive absolute yield levels provide an opportunity from a long term perspective. This portion of the portfolio seeks to provide stable returns. Current Exposure : 57.85%* Current Exposure : 42.15%*
*As on April 30, 2017
CP, 1.37 NCD, 84.45 ZCB, 10.17 CBLO/Rev erse Repo, 0.98 NCA, 3.03 Below AA+, 57.85 AA+, 7.71 SOV,AAA and Equivalent, 30.43 NCA(Incl. Cash,Depo sits and Equity), 4.01
Data as on: April 30, 2017
Interest Rate Sensitivity Credit Quality
High Medium Low High Medium Low
Issuer Name % of AUM
POWER FINANCE CORPORATION LTD 7.66 ADITYA BIRLA RETAIL LTD. 7.29 RURAL ELECTRIFICATION CORP LTD 6.11 STERLITE POWER GRID VENTURES LTD. 5.66 NATIONAL HIGHWAYS AUTHORITY OF INDIA 4.94 AU SMALL FINANCE BANK LIMITED 4.44 TATA REALTY INFRASTRUCTURE LTD. 3.66 VADODARA BHARUCH TOLLWAY LTD 3.65 RELIANCE HOME FINANCE LTD 3.56 LIC HOUSING FINANCE LTD 3.55
Total 50.52%
Top 10 Holdings
Duration Bucket %
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
1 week 30 days 45 days 90 days
Source: Bloomberg as on April 30, 2017
Spreads between AA & AAA 3 year corporate bonds are above the 3 year period average
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90
Spread 3 Yr Average
its monetary policy stance from accommodative to neutral and has continued to stay elevated there since.
from 6.41% in March. Massive foreign inflow during March and April (due to attractive valuations) also led to the increased demand for Indian G-sec and consequent fall in yields.
inflation is expected to inch up, this attractiveness will likely reduce.
policy stance, the yield curve would remain steeper in the coming months.
government bonds, liquidity situation of the banks once the pace
global outlook will take prominence in guiding the bond markets trajectory.
as average CPI settle lower and government’s measures to widen the tax base leads to structural improvement in the fiscal balance. Accordingly, we keep taking tactical calls in duration at the
Debt Market Outlook
Source: Bloomberg, SBIFM Research 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 10 year GSec yield (mth end, %) Repo Rate (mth end, %)
The fund aims to provide investors with yield spreads on corporate debt securities by cautiously managing the excess risk on its corporate investments. The fund will follow an active credit quality management strategy. The scheme being open ended, some portion of the portfolio will be invested in money market instruments so as to meet the normal repurchase requirements. The remaining investments will be made in corporate debt securities which are either expected to be reasonably liquid or of varying maturities. However, the NAV of the Scheme may be impacted if the securities invested in are rendered illiquid after investment. In line with the scheme objective we have deployed funds in 2 – 3 year corporate bonds with the primary focus on accrual. The portfolio average maturity is 2.79 years and the current weighted average portfolio yield is 8.47%. Tactical exposure towards long AAA rated corporate bonds has been initiated with a positive bias on interest rates.
Independent
Independent in-house research
Fundamental Approach
Judgemental Approach combined with analysis of financial ratios
Intensive Due Diligence
Channel Checks, Interaction with Company Management & Rating Agencies, Competitor Analysis
Monitoring
Close monitoring of credits under coverage through periodic updates and analysis.
Bottom Up Approach
Credit Selection, Security Allocation, Spread Dynamics, Sector Allocation
Industry Analysis Structure, Demand &
Supply, Industry Cycles, Entry Barriers, and Outlook
Company’s Business Fundamentals
Competition, Business Model, Inherent Strengths & Weaknesses
Financial Analysis
Financial Statements, Ratios, Capital Structure, Leverage, Working Capital Management, Bank Credit Lines , Liabilities, Asset Quality & Maturity and Risk Management
Management
Promoter Background & Track Record, Performance of Group Companies, Internal Controls, and Succession Plans
Risk Management
Internal reviews and performance matrices to manage Exposure Limits , Risks such as Credit, Liquidity, Interest Rate etc.
Macro Fundamentals
Monetary & Fiscal Policies, Regulations ,
Background: Jointly promoted by a renowned Indian corporate and a prominent Indian business family. Investment Thesis:
multiple states in India.
as well as average room rates in key markets Investment Rationale:
added in previous three years and only maintenance expenditure planned in near term.
large hotel brand for the Company.
Background:
encompassing 5,000 lane km and spread across various states in India. Investment Thesis:
was carved out with eight projects in its portfolio to enable a strategic stake sale to a fund sponsored by a PSU Bank.
Investment Rationale:
projects
700 crore by the PSU Bank Sponsored Fund brings the holding company into the league of big BOT players being the exclusive platform for the Bank to bid for newer projects.
Attractiveness of AA & below securities in the improving credit situation. Sentiments in the bond markets have improved since the formation of a stable and pro reform government at the centre. Declining interest from foreign investors have been compensated by increasing interest from domestic institutions in the bond market. This inflow of funds will have an impact on the bond prices and may compress yields. Declining inflation trajectory and the consistent rate cut by RBI. Its better to capitalise on the high corporate bond yields now.
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63% 37%
200 years experience (Estd: 1806)
~ 50,000 ATM’s as at end of June 2014
among the top 100 banks in the world
30 countries
*Source: SBI Analyst Presentation as on end December 2014 # Source : Amundi website as on end December 2014
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Group Advantage Process Expertise Risk Management
management with a strong parentage
stakeholders to achieve qualitatively superior business
and Strong Relationships with domestic and international investors
processes to ensure effective execution of strategies
in place for each strategy
advisory assignments
managing strategies across asset classes
businesses and strong linkages with company managements and sell side analysts
provides depth and breadth
superior security selection
independent team
to international standards
risk monitoring
Mr. Navneet Munot - CIO
Navneet Munot joined SBI Funds Management as Chief Investment Officer in December 2008. He brings with him over 15 years of rich experience in Financial Markets. In his previous assignment, he was the Executive Director & Head - multi - strategy boutique with Morgan Stanley Investment Management. Prior to joining Morgan Stanley Investment Management, he worked as the CIO - Fixed Income and Hybrid Funds at Birla Sun Life Asset Management Company Ltd. Navneet had been associated with the financial services business of the group for over 13 years and worked in various areas such as fixed income, equities and foreign exchange. Navneet is a postgraduate in Accountancy and Business Statistics and a qualified Chartered Accountant. He is also a Charter holder of the CFA Institute USA and CAIA Institute USA. He is also an FRM Charter holder of Global Association of Risk Professionals (GARP).
Mr Rajeev Radhakrishnan – Head, Fixed Income
Rajeev joined SBIFM as a fixed income portfolio manager in 2008. He currently heads the Fixed Income desk at the AMC. Prior to joining SBIFM, Rajeev was Co-Fund Manager for Fixed Income with UTI Asset Management for seven years. Rajeev is an Engineering graduate and holds a Masters degree in finance from Mumbai University. He is also a charter holder of the CFA Institute, USA.
Mr. Dinesh Ahuja – Portfolio Manager
Dinesh Ahuja joined SBIFM in 2010. Prior to joining SBIFM, Dinesh was a portfolio manager at L&T Asset Management and Reliance Group for four years. Dinesh started his career in 1998 as a fixed income dealer on the sell side. Thereafter he worked in leading broking outfits for eight years before moving on the buy side in 2006. Dinesh is a Commerce graduate and holds his Masters degree in Finance from Mumbai University.
Mr. Dinesh Balachandran - Head of Research
Dinesh joined SBI FM in 2012 as a Senior Credit Analyst. He is now the Head of Research. Dinesh started his career with Fidelity in Boston USA in 2001 where as an analyst he covered Structured Finance, and local US fixed income market over 10 years. Dinesh holds a B.Tech degree from IIT, Mumbai and M.S degree from Massachusetts Institute of Technology (MIT). He is also a Charter holder
Mr Lokesh Mallya - Credit Analyst
Lokesh Mallya joined SBIFM in 2014. He brings along 9 years of experience in research in the Indian fixed income market and fund management. Prior to joining SBIFM, Lokesh was working with Birla Sunlife Asset Management, Investment Team as fund manager for short term and ultra-short term
Association of Risk Professionals (GARP).
Ms Mansi Sajeja - Credit Analyst
Mansi Sajeja joined SBIFM in 2009. Prior to joining SBIFM Mansi was a senior analyst at ICRA Ltd. for
and has completed post graduation diploma in Business Management from MDI, Gurgaon. She is also a Charter holder of the CFA Institute, USA.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This presentation is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund units/securities. These views alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All
Neither SBI Funds Management Private Limited, nor any person connected with it, accepts any liability arising from the use of this information. The recipient of this material should rely on their investigations and take their own professional advice SBI Funds Management Private Limited (A joint venture between SBI and AMUNDI) Registered Office: 9th Floor, Crescenzo, C-38 & 39, ‘G’ Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Board line: +91 22 61793000 Fax: +91 22 67425687
Call: 1800 425 5425 SMS: “SBIMF” to 56161 Email: customer.delight@sbimf.com Visit us @ www.facebook.com/SBIMF www.sbimf.com Website Visit us @ www.youtube.com/user/sbimutualfund