SBI Mutual Fund Launches NFO OPENS: August 22, 2011 NFO OPENS: - - PowerPoint PPT Presentation

SBI Mutual Fund Launches

NFO OPENS: August 22, 2011 NFO OPENS: August 22, 2011 NFO CLOSES: September 05, 2011

Flow of the Presentation

Flow of Presentation

• Gold Scenario - India
• Gold as an Asset Class
• Gold as an Asset Class
• Why Gold Fund?
• Introducing SBI Gold Fund
• About SBI Mutual Fund
• Disclaimer & Risk Factors

Gold Scenario - India

Gold in India

• India is the World’s largest Gold consumer
• Societal impulse of saving Gold for many Indians
• Indian investors preferred holding Gold in the physical form
• Gold is culturally ingrained into our lives – Gold for every occasion
• Gold has been a traditional means of storing wealth in India

11% 2% 52% 16%

India is the largest consumer of the gold in world & about 52% of its gold demand is on account of jewellery

19% Jewellery Private Investment Official Holding Other Fabrication Others

India is the largest consumer of the gold in world & about 52% of its gold demand is on account of jewellery.

Source: World Gold Council, Data as on June 30, 2011

Future demand of gold - India

World Gold Council says, “About 50% of India's 1.2 billion population is below 25 years of age. Going by the numbers, it is estimated that over the next decade, every year there would be Going by the numbers, it is estimated that over the next decade, every year there would be about 1.5 crores weddings in the country . And since gold is an integral part of most Indian weddings , this itself, will create an additional demand of about 500 tonnes of gold annually , the report said”. And this is over and above an estimated 500 tonnes of gold that would be transferred between the families involved in each wedding.

India potentially has perennial demand for gold.

Source: World Gold Council

Gold as an asset class

Why gold as an asset?

• A safe haven
• Hedge against currency devaluation & inflation
• An effective portfolio diversifier - low correlation with other asset class
• A wealth creator

Gold – A multi purpose asset class p p

A safe haven

• During the times of financial crisis, economic downturns, national crisis, emergencies and

wars etc; Gold has been a safe refuge wars etc; Gold has been a safe refuge.

• The official gold holdings globally further strengthens the point.

Country Tonnes (As on June 2011) % of reserves Country Tonnes (As on June 2011) % of reserves United States 8133.50 75.30 Germany 3401.00 71.70 France 2435.40 67.60 Italy 2451.80 71.90 Switzerland 1040.10 17.20 India 557.70 8.20

The percentage share held in gold of total foreign reserves, as calculated by the World Gold Council. The value of gold

Gold – An ideal investment vehicle during the periods of financial crisis.

e pe ce tage s a e e d go d o tota

• e g

ese es, as ca cu ated by t e

• d Go d Cou c

e a ue o go d holdings is calculated using the end of month London pm fix gold price published daily by the LBMA. In April , the end of month gold price was $1535.50 Data for the value of other reserves are taken from IFS, table ‘Total Reserves minus Gold’.

Hedge against currency devaluation

Generally, the relationship between the gold prices and the dollar is inverse and this gives the hedge against price movements of the dollar.

Source: Bloomberg as on 31/7/2011

Hedge against inflation

The purchasing power of gold has remained stable over a longer time period.

Source: Bloomberg

An effective portfolio diversifier

Correlation with other asset classes

• Correlation is a statistical measure of how two asset classes move in relation to each other.
• Gold has significantly low correlation with other asset classes e.g. equities, fixed income and

commodities commodities

• This low correlation provides an excellent opportunity for:
• Effective portfolio diversification
• Maintaining stability in the portfolio returns

Maintaining stability in the portfolio returns

Source: Bloomberg, from Aug 01, 2008- July 29, 2011

Gold versus other asset class

10 Year return of gold shows that it has performed relatively better than many asset classes.

Source: Bloomberg; Data in USD; Data as on July 29, 2011; Returns are CAGR

Past performance may or may not be sustained in future.

Gold: A significant upward rally

25000 16660 20650 23211 15000 20000 ces (INR) 7635 9188 10631 13593 5000 10000 MCX Gold Pric 635 5000

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-11 Gold has been on an upward rally from last few years and has delivered a CAGR of 22.04% during the period of 01.01.2006 to 30.07.2011

Source: Bloomberg

Past performance may or may not be sustained in future.

Gold as a consistent performer

39 29% 45% 39.29% 30% 35% 40% 19.77% 20.70% 20.98% 15% 20% 25% 0% 5% 10% 10 Y 5 Y 3 Y 1 Y 10 Years 5 Years 3 Years 1 Year

Gold has performed consistently over different time periods in last 10 years.

Source: Bloomberg; Data in USD; Data as on July 29, 2011; Returns are CAGR

Past performance may or may not be sustained in future.

SIP – The wealth creator

1 Year 3 Years 5 Years 7 Years 10 Years Amount Invested (In Rs.) 60 000 180 000 300 000 420 000 600 000 60,000 180,000 300,000 420,000 600,000 SIP Start Date 01/08/2010 01/08/2008 01/08/2006 01/08/2004 01/08/2001 Gold Value per gram (as on July 29, 2011) (In Rs.) 2,292.98 2,292.98 2,292.98 2,292.98 2,292.98 Units Accumulated (in grams) 30.00 110.98 233.55 411.97 767.04 Investment Value (as on July 29, 2011) (In Rs.) 68,797 254,483 535,535 944,640 1,758,806 Returns 28.63% 23.94% 23.44% 22.80% 20.41% Returns are as on 29/07/2011 with SIP being done on 1st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future. Example given above is for illustration purpose only and for understanding the concept of SIP. Mutual Fund/AMC does not assure any safeguard of capital, promise, guarantee or forecast any minimum returns and the illustration should not be construed as indicative of future results.

Source: Bloomberg

SIP – The wealth creator

35.00% SIP Return (%) 28.63% 23.94% 23.44% 22.80% 20.41% 20 00% 25.00% 30.00% 10.00% 15.00% 20.00% 0.00% 5.00% 1 Year 3 Years 5 Years 7 Years 10 Years Returns are as on 29/07/2011 with SIP being done on 1st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future

Source: Bloomberg

Why Gold Fund?

Various options of investing in gold

• Gold jewellery
• Gold coins and bar
• Gold instruments (futures)
• Gold ETF

And now And now

• Gold Fund

Comparison of Gold Fund with other gold instruments

Benefit Physical Gold Commodity Exchange Gold ETF Gold Fund G d l li f ld N Y Y Y Good control on quality of gold No Yes Yes Yes Lower cost of holding Yes High Brokerage Cost Yes Yes Risk of theft Yes No No No A il bilit i ll Availability in smaller denomination Yes Yes Yes Yes Wealth Tax Yes No No No Long term investment Yes Speculation or Trading Yes Yes g p g Long term capital gain tax After 3 years No After 1 year After 1 year Auto SIP facility No No No Yes F t h ldi Y N N Y Gold Fund is one of the most economic and efficient way of investing in gold. Fragment holdings Yes No No Yes Purchase price Dealer price Stock exchange price Stock exchange price NAV related price

What is a Gold Fund?

• A “Fund of Fund" (FOF) is an investment strategy of holding a portfolio of other
• A

Fund of Fund (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities.

• In this case, SBI Gold Fund will be investing into SBI Gold Exchange Traded

Scheme

Only one word describes this opportunity… Golden!

INTRODUCING

SBI Gold Fund Features

Type of the scheme -: An Open Ended Fund of Fund. Minimum Amount of Investment -: Rs. 5000 and in multiples of Re. 1 thereafter p Load Structure Entry Load – N.A Exit Load

• Exit within 1 year from the date of allotment – 1 %
• Exit after 1 year from the date of allotment – Nil
• SIP Facility:

The minimum amount of investment for SIP transactions is Rs. 6000 (aggregate) either through: (1) Rs.100/- per month and in multiples of Re. 1/- thereafter for minimum 60 months* (2) Rs.500/- per month and in multiples of Re. 1/- thereafter for minimum 12 months (3) Rs.1000/- per month and in multiples of Re. 1/- thereafter for minimum 6 months (4) Rs.500/- per quarter and in multiples of Re. 1/- thereafter for minimum 12 quarters (5) Rs.1500/- per quarter and in multiples of Re. 1/- thereafter for minimum 4 quarters

*Shall be available only through the direct debit mode of SBI & associate banks

SBI Gold Fund Features

• Investment Objective of the Scheme -: The investment objective of the Scheme is to seek to provide

returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS)

• Asset Allocation -:

Instruments As % of Net Assets (Min.-Max.) Risk Profile Units of SBI GETS 95% - 100% Medium to high Reverse repo and /or CBLO and/or short-term fixed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes 0% - 5% Low to medium

• Benchmark -:The Scheme’s performance will be benchmarked against the price of physical gold. As

there are no indices catering to the gold sector or securities linked to the Gold, currently SBI Gold Fund shall be benchmarked against the domestic price of gold. The price here refers to the morning fixing of Gold by London Bullion Market association (LBMA).

• Expenses -: 0.75% on average weekly assets (The investors in the Scheme will be charged a maximum
• f 1.50% of the daily or average weekly net assets of SBI Gold Fund including the expenses charged in

its underlying investments in SBI GETS)

Significance of SBI Gold Fund

• Purity

: The underlying gold is the LBMA standard gold

• Safe Custody

: Gold held by SBI GETS is kept in the vaults of Bank of Nova Scotia

• Low tracking error

: The fund will track the performance of SBI GETS

• Easy liquidity

: The units can be easily redeemed through the AMC at NAV related prices

• SIP facility

: SIP option provides a regular and the easy way of investing in gold

• Cost Effective

: The fund does not charge any management fee and is cost effective

About SBI Mutual Fund

Combining the strength of two leaders

SBI Mutual Fund: One of the leading fund houses in India

Established in 1987: A leading Asset Manager in India Rs.47,874 crores of quarterly average AUM as

• n June 30, 2011.

Portfolio strategies across asset classes and risk spectrum Investment team

• f

31 professionals with strong track record B d t b ith d 6 illi Broad customer base with around 6 million individual, corporate and institutional investors 500 staff including 330 sales (Mumbai corporate office & 80 investors & sales support centers)

Expertise managing the fund

Raviprakash Sharma

M R i P k h i th f d f SBI G ld F d M Sh h 12 f i i I di it l k t i

• Mr. Ravi Prakash is the fund manager of SBI Gold Fund. Mr. Sharma has over 12 years of experience in Indian capital markets in

various capacities including Portfolio Management and Dealing in equity shares on behalf of clients. Prior to join SBI Fund Management Pvt. Ltd. he was working as Sr. Manager - Portfolio Management Services with HDFC Asset Management Co. Ltd. Raviprakash has done his B.Com, C.A. and is a charter holder of the CFA Institute, USA.

• Mr. Navneet Munot
• Mr. Navneet Munot is the Chief Investment Officer of the SBI Funds Management Pvt. Ltd. Mr. Navneet Munot joined SBI Funds

Management Pvt. Ltd. as Chief Investment Officer in Dec. 2008. Most recently he was the Head of Multi Strategies fund at Morgan Stanley Investment Management. Prior to joining Morgan Stanley Investment Management, he worked as the Chief Investment Officer (Fixed Income and Hybrid Funds) of Birla Sun Life Asset Management Company Ltd. Several funds managed by Navneet got recognition for their consistent superior risk-adjusted performance and won several awards from independent agencies such as CRISIL, CNBC TV 18, ICRA, Reuters Lipper and got top ranking in Value Research. Navneet has been associated with the financial services business of the Birla group for over 13 years and worked in various areas such as fixed income, equities and foreign

• exchange. His articles on matters related to financial markets have widely been published. Navneet holds a Masters in Commerce

and is also a rank holder Chartered Accountant. He is a charter holder of Chartered Financial Analyst Institute, US and Chartered Alternative Analyst Institute, US. He has also done Financial Risk Management, FRM from Global Association of Risk Professionals (GARP).

Disclaimer & Risk Factors

The investor will be bearing the recurring expenses of the Scheme, in addition to the expenses of underlying scheme.

Name of Scheme: SBI Gold Fund Type of Scheme: An open ended fund of fund scheme Investment Objective: The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS). Asset Allocation: Units of SBI GETS – 95% to 100%, Reverse repo and /or CBLO and/or short-term fixed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes*- 0 to 5%, The Scheme shall not invest in securitized debt. *The Fund Manager may invest in Liquid Schemes of SBI Mutual Fund. However, the Fund Manager may invest in any other scheme of a mutual fund registered with SEBI, which invest predominantly in the money market securities. Minimum Investment size: Rs. 5000/- and in multiples of Rs. 1/- thereafter Load Structure: Entry Load: Not Applicable Exit Load: Exit within 1 year from the date of allotment – 1 %, Exit after 1 year from the date of allotment – Nil Terms of Issue: Sale of units - Rs. 10/- per unit during NFO and at NAV related prices on all business days on continuous basis, Liquidity: The scheme would provide repurchase facility to investors on an ongoing basis on all business day. Investor benefits and general services offered – The Scheme offers Systematic Investment Plan during the NFO period. NAV of the Scheme would be computed and declared on all business day. AMC shall disclose the NAV on the AMFI website (www.amfiindia.com) and on the website of the Fund by 10.00 h f ll i b i d i k l d d S i i bj k i k d h i a.m. the following business day. Risk Factors: Mutual Funds and Securities Investments are subject to market risks and there is no assurance or guarantee that the objective of scheme will be achieved. As with any other investment in securities, the NAV of the Units issued under the scheme can go up or down depending on the factors and forces affecting the securities market. Past performance of the Sponsor/AMC/Mutual Fund/Scheme(s) and their affiliates do not indicate the future performance of the scheme of the Mutual Fund. SBI Gold Fund is only the name of the scheme and does not, in any manner, indicates either the quality of the scheme or its future prospects and returns. SBI Gold Fund would be investing in the units of SBI GETS. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by the underlying scheme of mutual funds wherein the Scheme has invested. As a result, the time taken by the Mutual Fund for the redemption of units may be significant in the event of a high number of redemption requests or a restructuring of the scheme. The Mutual Fund is not assuring any dividend nor is it i th t it ill k di id d di t ib ti All di id d di t ib ti bj t t th il bilit f di t ib t bl l d ld d d th assuring that it will make any dividend distributions. All dividend distributions are subject to the availability of distributable surplus and would depend on the performance of the scheme. The Scheme’s NAV will react to the prices of gold. The investor could lose money over short periods due to fluctuation in the Scheme’s NAV in response to factors such as economic and political developments, changes in interest rates and perceived trends in gold prices, market movements and over longer periods during market upturns. Additionally, the prices of gold may be affected by several factors such as global gold supply and demand, investors’ expectations with respect to the rate of inflation, currency exchange rates, interest rates, etc. Crises may motivate large-scale sales of gold, which could decrease the domestic price of gold. The Investor will be bearing the recurring expenses of the Scheme, in addition to the expenses of underlying Scheme and also risk of the underlying Scheme. The Scheme (at Portfolio level) to have >/= 20 investors and no investor to account for > 25% of the corpus

• f the Scheme. In case of non fulfillment with either of the above two conditions, the AMC shall comply with the specified SEBI Guidelines in this regard. The

M t l F d i t i t i it i th t it ill k i di di t ib ti b f di id d St t t d t il SBI M t l F d h Mutual Fund is not assuring any returns nor is it assuring that it will make periodic distributions by way of dividends. Statutory details: SBI Mutual Fund has been set up as a trust under the Indian Trusts Act, 1882. State Bank of India (‘SBI’), the sponsor is not responsible or liable for any loss resulting from the

• peration of the schemes beyond the initial contribution made by it of an amount of Rs. 5 lakhs towards setting up of the mutual fund. Asset Management

Company: SBI Funds Management Private Limited (A joint venture between SBI & AMUNDI). Trustee Company: SBI Mutual Fund Trustee Company Private

• Limited. A copy of the Scheme Information Document & Statement of Additional Information and Key Information Memorandum along with the application form

may be obtained from our ISC’s, ISD’s, SBI Mutual Fund Corporate Office, SBI MF agents or can be downloaded from website – www.sbimf.com. Please read the Scheme Information Document & Statement of Additional Information carefully before investing.

Thank you