Titanium Hybrid Long-Short Fund Regular Plan Growth Units Regular Plan Growth · BSE:TSIFRG
Titanium Hybrid Long-Short Fund Regular Plan Growth Units Regular Plan Growth — Tata Mutual Fund — Investor Presentation (June 2021)
24 slides from Titanium Hybrid Long-Short Fund Regular Plan Growth Units Regular Plan Growth's investor presentation, Jun 21, 2021
Slide 1: Tata Floating Rate Fund
TATA FLOATING RATE FUND {An open-ended debt scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/ derivatives) NFO OPENS : 21ST JUNE, 2021 NFO CLOSES : 05TH JULY, 2021 When interest rates are likely to rise, ch
Slide 2: What is floating rate instrument?
WHAT IS FLOATING RATE INSTRUMENT? Floating Rate Coupon Floating Rate instruments are debt securities which pay a floating rate coupon Coupon rates are benchmarked with a spread Coupon rates are based on a benchmark reference rate like MIBOR (Mumbai Inter-Bank Offer Rate). A Spread is added to th
Slide 3: What is floating rate instrument?
WHAT IS FLOATING RATE INSTRUMENT? 3.50% 2.0% 5.50% BENCHMARK REFERENCE RATE FIXED SPREAD COUPON RATE OF FLOATING RATE DEBT 3 In a Floating rate instrument, the spread is a function of several factors including the credit spread of the issuer to the outlook on interest rates and demand and supply con
Slide 4: Example of a floating rate debt security
EXAMPLE OF A FLOATING RATE DEBT SECURITY XYZ company issues a floating rate security which pays MIBOR + 200 bps as coupon with a reset frequency of 6 months and matures in 3 years Timeline MIBOR Rate Spread Coupon Rate applicable Issue Date 3.50% 2.00% 5.50% For 2nd Half Year period 3.75% 2.00% 5.75
Slide 5: Benefits of a floating rate investment
BENEFITS OF A FLOATING RATE INVESTMENT Coupon payments reflecting the prevailing interest rate regime Coupon payments are aligned with the changing interest rate and hence, provides opportunity to gain from a rising interest rate scenario Lower Sensitivity to interest rate risk vs Fixed Rate Bonds W
Slide 6: Interest rate scenarios and floating rate funds
INTEREST RATE SCENARIOS AND FLOATING RATE FUNDS 6
Slide 7: Different interest rate scenario require different duration strategies
DIFFERENT INTEREST RATE SCENARIO REQUIRE DIFFERENT DURATION STRATEGIES 30.00% 20.00% 10.00% 0.00% Feb-10 to Nov- Aug-13 to Feb-14 May-18 to Sep- Sep-08 to Apr-09 Mar-12 to May- Dec-14 to Aug- Jan-19 to Jun-20 11 (Rise) (Rise) 18 (Rise) (Fall) 13 (Fall) 17 (Fall) (Fall) 10 Y Gilt Index It is prudent
Slide 8: Different interest rate scenario require different duration strategies
DIFFERENT INTEREST RATE SCENARIO REQUIRE DIFFERENT DURATION STRATEGIES Accrual Funds Dura on Funds Long Dura on / G-Sec Funds / FMPs Interest Rate Risk Short Dura on Funds Low Dura on Medium Term Funds Funds Floa ng Rate Fund Ultra short Funds Maturity / Investment Horizon Floating Rate Funds have
Slide 9: Floating rate funds and rising interest rate cycle
FLOATING RATE FUNDS AND RISING INTEREST RATE CYCLE Better return proposition than lower duration fund with lower/ Similar interest rate risk Highly Suited during rising Higher Yields with Higher interest interest rate cycle Rate risk Lower Yields with Lower Interest Rate Risk Duration Funds yield lo
Slide 10: About floating rate funds
TATA MUTUAL FUND ABOUT FLOATING RATE FUNDS
Slide 11: About floating rate fund
ABOUT FLOATING RATE FUND Flexibility to Suitable in a invest across Stability of rising interest maturities Returns & Short Term & Credit Investments Spectrum Has the flexibility to invest As the coupon is Floating Rate Funds provide across Credit and maturity predominantly aligned to relatively sta
Slide 12: When floating rate funds work?
WHEN FLOATING RATE FUNDS WORK? Rising/Stable Yields Compression of Spread Liquidity Cycle reversal Rising Yields would lead Compression of Spread to losses in high between Fixed yielding Rising overnight rates duration funds bonds and OIS leads to due to liquidity gains in the Fund concerns provides
Slide 13: How overnight indexed swap is used for making portfolio floating rate
HOW OVERNIGHT INDEXED SWAP IS USED FOR MAKING PORTFOLIO FLOATING RATE Illustration: The Fund has invested Rs. 100 crs in a 3-year 6% fixed coupon bond and enters in to an OIS Swap over the 3-Year period. As per the agreement the Fund will pay fixed rate of 4.25% and receive overnight MIBOR rate comp
Slide 14: How OIS work in a rising and falling interest rate scenario
HOW OIS WORK IN A RISING AND FALLING INTEREST RATE SCENARIO Rise in Interest Rates by 50 bps and MIBOR Rate by 65 bps MTM Loss on Fixed Rate Bond MTM Gain on OIS Trade 6.00% 3.75% 4.25% 0.50% 5.80% (Coupon received from (Floating Coupon (Fixed Coupon (Net Paid on OIS) -2*0.50% = (1%) 2*0.65% = 1.30%
Slide 15: Current market conditions and outlook
CURRENT MARKET CONDITIONS AND OUTLOOK 15
Slide 16: Current market conditions and interest rate outlook
CURRENT MARKET CONDITIONS AND INTEREST RATE OUTLOOK Rural Demand and Normal Monsoon to drive GDP growth in FY22 GDP Growth Rate Resilient Rural demand on record production and normal monsoon expectation 1 Strengthening global economy likely to help external sector growth FY21 – (-7.3%) FY22E – +
Slide 17: Current market conditions and strategy
CURRENT MARKET CONDITIONS AND STRATEGY AAA Corporate Bond vs G-Sec Yields 7 An increase in rates would result in Corporate Bond 6 curve steepening as Spreads turn posi ve in the 3-7year segment 5 4 3 1 Year 2 Years 3 Years 5 Years 7 Years 10 Years AAA Corp Bond Yield G-sec Yield Source: Bloomberg
Slide 18: Current market conditions and strategy
CURRENT MARKET CONDITIONS AND STRATEGY Repo vs MIBOR vs OIS Spreads 5.00 4.50 4.00 Widened spreads between MIBOR and 3.50 Repo rate 3.00 May-20 Aug-20 Nov-20 Feb-21 May-21 Repo Rate MIBOR Rate 1 Year OIS 2 Year OIS Source: Bloomberg Overnight MIBOR rates tend to stay closer to or above repo rates
Slide 19: Tata Floating Rate Fund
TATA FLOATING RATE FUND This product is suitable for investors who are seeking*: • Regular Income by investing predominantly in a portfolio of floating rate instruments (including fixed rate instruments converted for floating rate exposures using swaps / derivatives). 19 *Investors should consult th
Slide 20: Tata Floating Rate Fund
TATA FLOATING RATE FUND Fixed Rate Bonds Floating Rate Floating Rate swapped for government Corporate Overnight securities Bonds Indexed Swaps (OIS) Type of Security Min (%) Max (%) Risk Profile Floating rate securities* (including fixed rate securities converted to floating rate exposures using swa
Slide 21: Current target portfolio strategy
CURRENT TARGET PORTFOLIO STRATEGY Fund intends to focus towards providing investors competitive accrual yields with lower net duration risk. Portfolio Orientation Oriented towards maintaining bias towards Quality of portfolio Duration Aims to keep short term duration in the fixed rate portfolio unde
Slide 22: Who should invest?
WHO SHOULD INVEST? Investors seeking relatively Investors seeking diversification Investors preferring shorter stable portfolio yields in a rising of Fixed Rate investments duration enhanced accruals with interest rate scenario lower interest rate risk 22
Slide 23: Fund details
FUND DETAILS Scheme Name TATA FLOATING RATE FUND NFO Date NFO OPENS: 21st June 2021 • NFO CLOSES: 5th July 2021 Investment Objective The objective of the scheme is to generate income through investment primarily in floating rate debt instruments, fixed rate debt instruments swapped for floating rate
Slide 24: Thank you
Thank you Mutual Fund Investments are subject to market risks, read all scheme related documents carefully Call: (022) 6282 7777 (Mon to Sat 9:00 am to 5:30 pm) | SMS: TMF to 57575 | www.tatamutualfund.com 24