Hdfc Asset Management Co. Ltd. · NSE:HDFCAMC
Hdfc Asset Management — Investor Presentation (May 2022)
28 slides from Hdfc Asset Management's investor presentation, May 5, 2022
Slide 1: HDFC Asset Allocator Fund of Funds
HDFC Asset Allocator Fund of Funds Contact your Mutual Fund Distributor or Registered Investment Adviser today, or give a missed call on 7397412345. HDFC Asset Allocator Fund of Funds (An open ended Fund of Riskometer # Funds scheme investing in equity oriented, debt oriented and gold ETFs schemes)
Slide 2: Why Asset Allocation?
Why Asset Allocation ? On an average, 90 percent of the variability of returns and 100 percent of the absolute level of return is explained by Asset Allocation - Roger Ibbotson Refer disclaimers on page 27. 2
Slide 3: Equity: Offers Returns with Volatility
Equity : Offers Returns with Volatility Equities have the potential to create Long Term Wealth but the journey is volatile NIFTY 50 - Weath Creation Journey 20000 18000 16000 14000 1 1 .77 % 12000 turn s ~ Re 10000 CAGR 8000 6000 4000 2000 0 Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oc
Slide 4: Asset Class winners change over time
Asset Class winners change over time Equity Debt Gold 70% 60% 57% 50% 40% 37% 30% 20% 19% 20% Returns % 20% 14% 16% 13% 10% 11% 11% 7% 5% 8% 8% 7% 8% 8% 10% 5% 4% 5% 3% 3% 0% 0% 0% -1% -10% -4% -10% -20% -14% -30% -40% -38% -50% FY 98-00 FY 00-03 FY 03-08 FY 08-11 FY 11-17 FY 17-20* (Market COVID-19
Slide 5: Even within Equities – Different Market Caps perform at different times
Even within Equities – Different Market Caps perform at different times Period Large Cap Mid Cap Small Cap Rank 1 Rank 2 Rank 3 2005-2006 65% 75% 79% 2006-2007 14% -1% 12% Large Cap 6 3 8 2007-2008 24% 21% 31% Mid Cap 3 11 3 2008-2009 -37% -49% -55% 2009-2010 85% 136% 141% Small Cap 8 3 6 2010-2011
Slide 6: Different Asset Classes have different risk profile
Different Asset Classes have different risk profile Annualized Standard Deviation (%) 25% Equity returns are relatively more 20.1% volatile vis-à-vis debt and gold. 20% 14.7% 15% 10% 4.9% 5% 0% Equity Gold Debt *Data as on April 30, 2022. Source:- Bloomberg. World Gold Council Data for 24 fiscal yea
Slide 7: Hence….. Asset Allocation
Hence….. Asset Allocation Asset Allocation may lead to better risk- adjusted returns The most important key to successful investing can be summed up in just two words – Asset Allocation - Michael LeBoeuf Refer disclaimers on page 27. 7
Slide 8: Asset Allocation and its Benefits
Asset Allocation and its Benefits Asset Allocation refers to distributing your investible surplus across various asset classes according to risk tolerance, risk appetite and investment time frame. Why Asset allocation is crucial? Each asset class behaves differently across different economic cycles
Slide 9: Correlation and diversification
Correlation and diversification Asset correlation is a measure of how asset classes Since April 1998 move in relation to one another over a period of time. Correlation coefficient can range from -1 to +1. When Equity Debt Gold assets move in the same direction at the same time, Equity 1 -0.26 -0.08
Slide 10: Power of Asset Allocation
Asset Class winners change Power of Asset Allocation over time Lets consider the CAGR growth of an investment FPI Flows Rs crs from 1st April, Outcome of the investment over ~2 decades? 1998 to 30th April, 2022, along with the volatility of returns over Individual Asset Classes that period 25% How t
Slide 11: Asset Allocation by Investors not always determined by valuations
Asset Allocation by Investors not always determined by valuations Financial Net Investments 12 M Next 2 Years Year PB Valuation Cumulative Net Investments Average Next into Equity MFs Trailing PE Returns Range into Equity MFs (in INR Cr) 2 years returns (in INR Cr) FY: 05-06 50,880 20.26 5.15 17.93%
Slide 12: So what is the solution?
So what is the solution ? Equity, Debt or Gold ? Large cap, Mid Cap or Small Cap ? Simple solution Systematic & to all these Process Driven investment Asset questions Frequency of Rebalancing ? Whether Asset Allocation is Tax Efficient ? Refer disclaimers on page 27. 12
Slide 13: Presenting HDFC Asset Allocator Fund of Funds
Presenting HDFC Asset Allocator Fund of Funds A Systematic & Process driven approach to Asset Allocation 13
Slide 14: HDFC Asset Allocator Fund of Funds - Asset Allocation
HDFC Asset Allocator Fund of Funds - Asset Allocation Equity Oriented Schemes* (40-80%) Units of Domestic Mutual Funds Schemes Debt Oriented Schemes** (10-50%) 95%-100% Gold ETF Schemes*** (10-30%) * Equity Oriented schemes of HDFC Mutual Fund or other Domestic Mutual Funds having similar objectives
Slide 15: Equity Allocation: Model driven asset allocation
Equity Allocation: Model driven asset allocation Historical Asset Allocation range indicated by the model Alloca�on to Equity (% of Net Assets) (LHS) NIFTY 50 (RHS) 85% 16,000 Factors considered by the Post GFC trough COVID led correc�on 80% 14,000 model include 1) TTM PE, 2) 1 Year Forward PE, 3) T
Slide 16: Equity Allocation % indicated by model during key market events
Equity Allocation % indicated by model during key market events Based on valuations, the financial model indicated an reasonably optimal equity allocation during key events as under: NIFTY 50 Equity Next 1 Year Events Month end Level Allocation % NIFTY Returns Pre GFC peak Nov’07 5763 47% -52% Post
Slide 17: Debt Allocation Strategy
Debt Allocation Strategy Background: Debt portfolio aims to play the role of reducing volatility while generating reasonable returns Strategy: To invest, predominantly, in schemes with exposure, mostly, to issuers with high credit quality Controlled interest rate risk Generally debt portfolio durati
Slide 18: Gold Allocation to act as hedge
Gold Allocation to act as hedge Returns from Gold in domestic currency terms (INR) are a function of : Gold prices in USD Currency fluctuation of INR vs USD (INR Depreciation increases Returns from Gold and vice versa) Taxes & duties as levied by government Gold acts not only as a safe haven asset,
Slide 19: Allocation within Equities
Allocation within Equities Equity Oriented Schemes* (40%-80%) Base Allocation#$ Tactical Allocation# 75%-100% 0-25% Large Cap, Mid Cap, All other categories Small cap and Flexi of MF Schemes Cap categories of MF Schemes * Equity Oriented schemes of HDFC Mutual Fund. #of the Equity Allocation. $Marke
Slide 20: Base Allocation within Equity: Model driven asset allocation
Base Allocation within Equity : Model driven asset allocation Historical Asset Allocation range indicated by the model Alloca�on to Midcap & Smallcap (% of Net Assets) (LHS) NIFTY Midcap (RHS) Factors considered by the 90.0% 25,000 Post GFC Recovery Post GFC trough model include 1) TTM PE, 80.0% 2)
Slide 21: Base Equity Allocation % indicated by model during key market events
Base Equity Allocation % indicated by model during key market events Based on valuations, the financial model has indicated an optimal equity allocation during key events as under: Midcap & Smallcap Outperformance of average returns of Midcap & Events Month end Smallcap over NIFTY 50 in Next 3 Years
Slide 22: Protection during Market Corrections
Protection during Market Corrections Based on valuations, the financial model indicated a reasonably optimal asset allocation Resultantly during periods of market correction, downside was protected. 3 Month Cumulative Returns Downside Month End Model based Asset Difference Capture Ratio Allocation (
Slide 23: Why HDFC Asset Allocator Fund of Funds?
Why HDFC Asset Allocator Fund of Funds ? Timing the market for various asset classes is difficult Lack of diversification leads to higher volatility of returns Combining negatively correlated/ less correlated asset classes reduces portfolio risk HDFC Asset Allocator Fund of Funds could be considered
Slide 24: Fund Facts
Fund Facts Portfolio (As on March 31, 2022) % to Net Assets Debt Statistics As on April 29, 2022 Equity Oriented Schemes Average Maturity in Years 2.84 HDFC Flexi Cap Fund - Direct Plan- Growth Option 16.12 Modified Duration in Years 1.32 HDFC Top 100 Fund - Direct Plan - Growth Option 15.87 FPI Flo
Slide 25: Fund Facts
Fund Facts Type of Scheme An open ended Fund of Funds scheme investing in equity oriented, debt oriented and gold ETF schemes To seek capital appreciation by managing the asset allocation between equity oriented, debt oriented and gold ETF schemes. Investment Objective There is no assurance that the
Slide 26: Asset Allocation
Asset Allocation Under normal circumstance, the asset allocation of the scheme’s portfolio will be as follows Minimum Allocation Maximum Allocation Risk Profile of Type of Instruments (% of Total Assets) (% of Total Assets) the Instrument Units of domestic Mutual Fund Schemes as under: 95 100 Equity
Slide 27: Disclaimer & Risk Factors
Disclaimer & Risk Factors This presentation dated May 5, 2022 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, wh
Slide 28: Thank you
Thank you
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