WHY IS Good For You: HE Conomic Imes

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WHY NPS IS
GOOD FOR YOU The pension scheme has everything that an
investor looks for in a retirement plan. P2
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depends on liquidity can be risk-adjusted of personal
what you see an illusion returns finance
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cover story
02 The Economic Times Wealth May 25-31, 2020
Why
NPS
is good
for you
The pension scheme has
everything an investor looks
for in a retirement plan. P2
IMAGES BAZAAR
By Babar Zaidi Bandyopadhyay, the newly-appointed based PSU banker Priti Kawara (see pic- tax bracket, this means additional tax
chairman of the Pension Fund ture). As part of her retirement benefits, savings of `15,450. More tax can be saved
I
ndranil Halder wants to reduce Regulatory and Development Authority `13,500 is invested in her NPS account if one’s employer signs up with NPS and
his tax but won’t invest in an op- (PFRDA). “A lot of people do not realise every month by her employer. She puts puts up to 10% of the basic salary in the
tion that can shave off more than the importance of saving for retirement. another `50,000 in the scheme every year NPS under Section 80CCD(2). “NPS of-
20% from his tax liability. “I’m They postpone the decision to save till to claim the additional tax benefit under fers significant tax benefits. If your com-
not interested in the NPS because they are in their late 40s,” he says (see Section 80CCD(1b). pany offers NPS, don’t miss the opportu-
it has a long lock-in and other complica- interview on page 4). Indeed, the triple tax benefits of NPS nity to cut your tax,” says Archit Gupta,
tions,” the Pune-based IT professional At the same time, awareness about are a big draw for investors. Firstly, NPS CEO of tax filing portal Cleartax.in.
wrote to ET Wealth last year. Indeed, the the need to start early is gradually grow- investments are eligible for deduction
25 year old will have to wait till 2055 being. “We are seeing a growing interest under Section 80C. If one has already Unfair to tax annuity
fore he can access the money poured into in the NPS among younger people. exhausted the `1.5 lakh ceiling under The other ‘complication’ that Halder
the pension scheme. Very few millenni- More than 62% of the investors in NPS Section 80C, one can claim an additional refers to are the NPS rules on annuity.
als like to think in such long terms. are in the age group 26-45 years,” says deduction of up to ` 50,000 under Section Over the years, the NPS has shed its ri-
This is something worrying Supratim Bandyopadhyay. One of them is Pune- 80CCD (1B). For an investor in the 30% gidity and become more tax friendly. The
cover story
The Economic Times Wealth May 25-31, 2020 03
entire 60% of the corpus that can be withdrawn on ma-

turity is tax free. However, the remaining 40% has to
be compulsorily put into an annuity to earn a pension PSU banker
that is fully taxed as income. This effectively means an
investor does not save tax but only defers it.
Experts point out that the tax situation of a retiree is Priti Karawa
very different. The basic exemption is higher and there 27 years, Mumbai
are other benefits such as tax exemption to interest
income up to `50,000 under Section 80TTB. Even so, the Being a PSU employee,
tax on annuity is a tad unfair because the pension re- NPS is mandatory for her,
ceived is a mix of the principal and investment returns.
though she also invests
Being taxed on investment returns is acceptable, but
an additional `50,000
the tax on the principal portion is galling. “Tax on an-
on her own under Sec
nuity makes NPS unattractive and unfair compared to
80CCD(1b). Has been in-
other retirement products such as EPF and PPF,” says
Chirag Mehta, a finance professional based in Kolkata
vesting for the past three
(see picture). He says if not the entire annuity, at least years but never gave
the principal component should be exempt from tax. attention to the asset mix
“There should also be indexation benefit while taxing or changed her allocation.
the profit element,” he says.
For several years now, tax exemption for annu-
ity pension has been on the Budget wishlist that the
PFRDA sends to the Finance Ministry. This year, the
insurance regulator Irdai also joined the chorus, but to Given the
no avail. “If the Finance Ministry agrees and annuity
becomes tax free, it will be a gamechanger for the pen-
downturn in the
sion sector in India,” says Bandyopadhyay. equity market,
Apart from the tax benefits, the NPS is also an ultra
low-cost investment option. The fund management
this is a good
charges are 0.01%. To be sure, this is not the only time to hike
expense for investors. They also have to shell out one-
time charges at the time of on-boarding and pay a flat
equity exposure
fee on every transaction. Despite this, the NPS is still in NPS to the
by far the cheapest market-linked investment product.
maximum 75%.
Automatic rebalancing
Several studies have shown that rebalanced portfolios
deliver better returns in the long run than static port-
folios that don’t make any changes. Financial planners
recommend that investors should rebalance their port-
folios at least once a year or after a major market de-
velopment, where a particular asset class moves up or
down by more than 10-15%. “Rebalancing protects the
Finance
portfolio against volatility,” says Rohit Shah, Founder professional
and CEO of Getting You Rich.
The NPS also offers a terrific advantage to investors
by way of automatic rebalancing. Investors can choose
Chirag Mehta
from three lifecycle funds—aggressive, moderate and 33 years, Kolkata
conservative. The aggressive portfolio allocates 75% to He has opted for NPS con-
equities, moderate puts 50% and conservative invests tribution by his company
only 25%. The portfolios get rebalanced on the inves-
under Sec 80CCD(2) and also
tor’s birthday every year. “The lifecycle funds of NPS
contributes on his own under
are the only products which automatically rebalance
Sec 80CCD(1b). His combined
the corpus every year,” points out Bandyopadhyay.
contribution is `1.62 lakh per
Best performing pension funds year, which saves him over
If you are convinced that NPS is good for you, the next `50,000 in tax.
step is to open an account and start investing. You also
need to choose from the seven pension fund managers.
The returns of individual NPS schemes do not reflect
the actual returns for the investor because the portfo- I regularly
lio is usually a mix of 2-3 different classes of funds. ET
Wealth studied the blended returns of four different make changes
combinations of the equity, corporate debt and gilt
funds (see page 6).
in the asset mix.
Ultra-safe investors are assumed to have put 60% in In December
gilt funds, 40% in corporate bond funds and nothing in
equity funds. A conservative investor would put 20% in
2019, I switched
stocks, 30% in corporate bonds and 50% in gilts. A bal- from aggressive
anced allocation would put 33.3% in each of the three
classes of funds while an aggressive investor would
mix with 75%
invest the maximum 50% in the equity fund, 30% in in equities to
corporate bonds and 20% in gilts. Aggressive investors
can now put up to 75%, but this allocation does not have
conservative mix
a very long track record. We have also not considered with 25% only.
the 5% allowed to be put in alternative investments.
Ultra-safe investors who stayed away from equi-
ties have earned the highest returns. They may have
cover story
missed the stock market rallies in the past few years

but also didn’t suffer when markets crashed with
Businessman a thud in March. The long-term returns of these
investors are also higher than what the Provident
Milind Gawade Fund or small savings schemes churned out in the

past 3-5 years. Unsurprisingly, the LIC Pension
44 years, Pune Fund is the best performing pension fund for the
ultra-safe allocation, generating 16.32% returns in
He has been investing in the past one year and SIP returns of 10.50% in the
past five years.
NPS for the past five years,
Conservative investors, who put a sliver of their
primarily to save tax. He
corpus in equity funds, have also done well. But
invests around `1 lakh in the
these funds have not managed to beat the returns
scheme every year, claiming
of the Provident Fund. Newcomer Aditya Birla Sun
tax benefit under Section Life Pension Scheme is the best performing fund in
80C and Section 80CCD(1b). the short term, but HDFC Pension Fund stays ahead
Gawade invests in mutual in the longer term and in the SIP mode.
funds for equity exposure Balanced investors who divided the corpus
and uses the NPS for the equally across all three fund classes suffered from
debt portion of his portfolio. the exposure to equities. Though gilt funds rallied,
the crash in equity funds pulled down the overall
returns. Here again, Aditya Birla Sun Life Pension
Scheme has delivered the most impressive num-
bers. Aggressive investors, who put the maximum
My entire 50% in equity funds, have lost money in the past one
year. Some even lost money in SIPs in the past three
corpus is in years, underlining the risks of investing in equities.
Incidentally, the Provident Fund has also started
a gilt fund. It investing in stocks. In August 2015, it started by
has generated putting 5% of fresh inflows in Nifty ETFs. This was
raised to 10% of inflows in 2017 and later hiked to
better returns 15% in 2018. However, though it notched up good
than debt gains in the first few years, the stock crash in March
this year has pushed its equity exposure into the
mutual funds. red. Our calculations show that due to the losses in
equity investments, the Provident Fund may not be
able to give out more than 7% in 2019-20.
“If annuity is made tax free, it will be a gamechanger”

PFRDA Chairman Supratim Bandyopadhyay spoke to ET Wealth on a range of issues facing investors in the NPS.
The NPS offers several benefits to think this will change anytime soon? treated as a default. The pension fund man-
investors. Yet, the voluntary segment We have been requesting for the tax exemp- agers will go by the ratings of the credit rat-
accounts for less than 15% of the total tion of annuity income for some years now. ing agencies and the valuation provided by
AUM. Why are investors staying away? Even the insurance regulator Irdai wants the valuation agency.
Yes, the voluntary segment of NPS is still annuity to be exempted from tax. If the
very small. A lot of people still do not real- Finance Ministry agrees and annuity be- The `5,000 maximum pension under
ise the importance of retirement planning. comes tax free, it will be a gamechanger for Atal Pension Yojana may amount to
They want to postpone the decision till they the pension sector in India. very little after 25-30 years. Why not
are in their late 40s. Data shows that the roll out a premium version with a maxi-
mortality rate in India is improving but In 2018, the PFRDA allowed pension mum pension of `50,000?
morbidity is also growing. People are liv- funds to invest in A rated bonds. In the The Atal Pension Yojana offers a guaran-
ing longer but are afflicted by diseases in light of the recent turmoil, do you think teed return of 8% during the accumulation
their old age. They need to save up enough this decision needs to be reviewed? stage and during the annuitisation stage.
so that their golden years are comfortable. Most pension fund managers follow their These rates are higher than the prevailing
Having said that, we are seeing a growing own investment guidelines which are rates. We want to raise the pension amount
interest in the NPS among younger people. stricter than what PFRDA has laid down. to `10,000. But this decision has to be taken
More than 62% of the investors in NPS are No pension fund has made investments in by the government since they are guaran-
in the age group 26-45 years. bonds rated below AA, so there is adequate teeing the payment.
safety. Also, the guidelines say that bonds
But other retirement products, such as have to be rated by at least two rating agen- In the auto choice, the asset allocation is
endowment insurance policies, continue cies and should be listed. automatically changed every year. How
to attract investors of all age groups. does that help?
Endowment insurance policies are popu- PFRDA has offered 3-month moratorium A large number of subscribers do not
lar but in recent years there is a definite to NCD payments. If funds were invest- change their asset mix throughout the
move towards pure protection term insur- ing in NCDs of good companies, what is investing period. NPS is the only product
ance. Also, insurance has tied agents that the need for the moratorium? which automatically rebalances the corpus
helps bring in customers. The NPS does not This is not a moratorium offered by every year if the investor has opted for the
have that kind of distribution support. The PFRDA. RBI has permitted banks to grant auto choice. So if you started off with 50%
move to enlist retirement advisers has not moratorium of three months on payment equity and due to a market rally it has gone
Supratim gained the desired traction. of installments and subsequently Sebi has up to 60%, the NPS will automatically reset
told rating agencies that any delay in inter- it to 50% on your next birthday. This hap-
Bandyopadhyay A major concern of investors is the tax- est or repayment on bonds or debentures pens regularly and ensures that the risk
Chairman, PFRDA ability of pension from annuity. Do you due to Covid related issues should not be profile of the investor is maintained.
cover story
How NPS funds have fared

These are blended returns for four different types of investors with varying allocation to equity funds.
RETURNS (%)
Investors with ULTRA SAFE 6-MONTH 1-YEAR 3-YEAR 5-YEAR 3-YEAR SIP 5-YEAR SIP
no exposure to Aditya Birla SL Pension Scheme 7.07 15.87 10.34 - 11.27 -
equities have
earned the HDFC Pension Fund 7.30 15.99 9.94 10.16 11.39 10.02
highest returns. ICICI Prudential Pension Fund 6.42 15.12 9.70 10.03 10.98 9.75
LIC Pension
Fund remains Kotak Pension Fund 6.64 14.83 9.44 9.99 10.75 9.62
the best option, LIC Pension Fund 7.10 16.32 10.35 10.65 11.90 10.50
having deliv-
ered double- SBI Pension Fund 6.78 15.58 9.84 10.13 11.10 9.92
ASSET MIX
digit returns in UTI Retirement Solutions 7.01 15.26 9.28 9.71 10.81 9.53
past 3-5 years. 60% 40%
AVERAGE 6.90 15.57 9.84 10.11 11.17 9.89 Gilt Corporate
Returns of the best performing schemes have been highlighted. funds bond funds
RETURNS (%)
Conserva-
CONSERVATIVE 6-MONTH 1-YEAR 3-YEAR 5-YEAR 3-YEAR SIP 5-YEAR SIP
tive investors
Aditya Birla SL Pension Scheme 1.07 9.16 8.13 - 7.53 - also did well,
thanks to falling
HDFC Pension Fund 1.10 9.00 7.75 8.69 7.65 8.04 interest rates.
ICICI Prudential Pension Fund 0.02 7.68 1-YEAR 7.21 8.29 6.93 7.53 Newcomer
Kotak Pension Fund 0.40 7.90 6.95 8.38 6.87 7.51
Aditya Birla Sun
Life stood at
LIC Pension Fund 0.37 8.33 7.41 8.59 7.50 7.98 top. Long-term
ASSET MIX SBI Pension Fund 0.58 8.23 7.42 8.49 7.21 7.77 bonds rose
sharply, making
UTI Retirement Solutions 0.51 7.88 6.89 8.15 6.77 7.37 up for the fall in
50% 30% 20%
Gilt Corporate Equity AVERAGE 0.58 8.31 7.40 8.43 7.21 7.70 equities.
funds bond funds funds
RETURNS (%)
Investors with
a balanced mix BALANCED 6-MONTH 1-YEAR 3-YEAR 5-YEAR 3-YEAR SIP 5-YEAR SIP
suffered some Aditya Birla SL Pension Scheme -3.21 4.36 6.66 - 4.70 -
pain due to the
fall in equities. HDFC Pension Fund -3.48 3.87 6.11 7.63 4.70 6.47
The returns ICICI Prudential Pension Fund -4.74 2.18 5.36 7.05 3.70 5.75
earned in past
Kotak Pension Fund -4.19 2.63 5.04 7.17 3.70 5.75
3-5 years are
misleading. SIP LIC Pension Fund -4.52 2.55 5.17 7.01 3.92 5.86
returns during
SBI Pension Fund -3.93 2.91 5.64 7.30 4.15 6.08
the same time ASSET MIX
have not been UTI Retirement Solutions -4.04 2.52 5.14 7.04 3.59 5.68
so great. 33.3% 33.3% 33.3%
AVERAGE -4.01 3.00 5.59 7.20 4.06 5.93 Gilt Corporate Equity
funds bond funds funds
RETURNS (%)
AGGRESSIVE 6-MONTH 1-YEAR 3-YEAR 5-YEAR 3-YEAR SIP 5-YEAR SIP

Aggressive
Aditya Birla SL Pension Scheme -8.35 -1.39 4.82 - 1.07 - investors with
50% in equities
HDFC Pension Fund -8.86 -2.19 4.19 6.37 1.00 4.52 lost money.
ICICI Prudential Pension Fund -10.31 -4.29 3.20 5.56 -0.36 3.54 Now that up
to 75% can be
Kotak Pension Fund -9.60 -3.47 2.85 5.76 -0.22 3.62
invested in
LIC Pension Fund -10.33 -4.34 2.58 5.19 -0.58 3.24 equity, some
would have lost
SBI Pension Fund -9.29 -3.42 3.54 5.89 0.29 3.95
ASSET MIX
more. Aditya
UTI Retirement Solutions -9.57 -3.85 3.07 5.70 -0.43 3.56 Birla SL Pension
20% 30% 50% Fund was the
AVERAGE -9.47 -3.28 3.46 5.74 0.11 3.74
Gilt Corporate Equity top performer.
funds bond funds funds 3-year and 5-year returns are annualised. Data as on 18 May 2020 | Source: Value Research
guest column
Extent of loss depends

on what you see
Investors who feel that the current fall in equity values is extraordinary
should look closely at the past, says Dhirendra Kumar.
N
owadays, I come across a lot
of people—not physically, of
course— who say that the losses
that their equity fund invest-
DHIRENDR A KUMAR
CEO, VALUE RESE ARCH ments have suffered shows that
the idea of equity investments for the long-
term stands invalidated.
money Here’s a typical such view, from an email I
mysteries received: “Even long-term disciplined inves-

tors (investing for the last 5 years or so) have
lost their money. What is long term now, is it
seven to 10 years? What should such inves-
tors do now?” The writer then gives an ex-
Lump sum ample to illustrate his point of view—the five
year change in the Nifty from 23 March 2015
investments and
to 23 March 2020, the latter being the date at
SIP investments
which that index hit a low of 7,610 points. On
are fundamentally 23 March this year, the Nifty was 11% lower
different. In in value than exactly five years ago.
investing, the level As kids nowadays like to say, this is a true
at which you invest fact. However, it is not a new fact. If anyone
is just as important was waiting for the five year returns of the
bellwether indexes to be negative to bid a
as the value when
permanent goodbye to equity investing, then
you exit. This is
they should have found many, many oppor-
mathematically tunities earlier. They could have done so in
obvious. 1996 when the market dropped below its level
in 1991, or in 1998-99 when it was below its
level in 1993-94, or indeed in similar episodes
As far as an actual
investment strategy in
equity funds goes, there
is no reasonable way to
do it except through a
regular SIP.
in 2001, 2003 and 2011-12. Why hang around
till 2020 to finally proclaim shock and awe at
GETTYIMAGES
the fact that point-to-point five-year returns

can occasionally turn negative? Why not
stick to a bank fixed deposit, as is normal for
most Indian savers?
Not just that, it goes without saying that
this is not the last time that such a thing will actual 23 March example given above, it period, insulate you from that.
happen. Over the coming years and decades, is notable that a five year SIP in a Sensex- What’s more, all experienced investors
there will be many, many occasions when this equivalent fund gave returns of 8.6 % on also try to average their exit point. As I wrote
will happen again. It may even happen more 1 March and -3.6% on 1 April. Equivalent just last week, “For planned exits, where
often, or more severely than it has in the past. returns for a seven year SIP were flat on 1 one knows before hand roughly when one
There are no guarantees. However, it also March and 3.2% on 1 April. needs the money, the thing to do is to start
goes without saying that picking up a particu- However, this is not the whole story. Lump withdrawing the money through an SWP
lar five year period and looking at it is good sum investments and SIP investments are (Systematic Withdrawal Plan) some time
for today’s peculiar style of online point-prov- fundamentally different. In investing, the before the target date arrives.” Historically,
ing but not an actual investment strategy. level at which you invest is just as important if one averages one’s exit from an investment
As far as an actual investment strategy as the value when you exit. This is math- over one to two years, the result is always far
in equity funds goes, there is no reasonable ematically obvious. When you invest in a better than a lump sum exit. It’s very likely
way to do it except in a regular Systematic lump sum, you are taking a gamble not just at that this will also turn out to be true over the
Investment Plan (SIP). If one looks at the the future but also, in a sense, at the present. coming time.
track record of SIP style investing over the The point at which you invest could turn out
decades, five year returns fell negative in to be a high point, something that will de-
Please send your feedback to
a sustained way only during the 2001-2002 stroy your returns for all time to come. SIPs,
etwealth@timesgroup.com
period and then recovered quickly. For the by averaging your entry point over a long
mutual funds
Debt fund liquidity an illusion?

There could be a big gap between the actual maturity date and the nomenclature of the fund and category.
The duration of a fund is the weighted

average time until all the cash flows from
underlying bonds are received. A debt
fund at any time may hold instruments
like floating rate notes and perpetual
bonds, apart from regular coupon bearing
fixed tenure bonds. While a floating rate
note may have any maturity, it typically
comes with a reset clause, where the rate
payable is adjusted at fixed intervals.
“The duration measure considers only the
nearest reset date for computation of bond
duration,” points out Kirtan Shah, Chief
Financial Planner, SRE. So a floating rate
bond maturing in five years but with next
reset falling in six months will sport dura-
tion of six months. Similarly, in case of per-
petual bonds—where there is no defined
maturity date—the nearest call date is tak-
en as current maturity date. Bonds with
put options will project the nearest put
date as prevailing maturity. Call options
gives the issuer the right to repay lender
on a predefined date before maturity. Put
option extends the lender right to demand
GETTYIMAGES
repayment from issuer at a predefined date
before maturity. It is not necessary either
call or put will be exercised.
These facets completely distort the li-
quidity profile of debt funds, say analysts.
by Sanket Dhanorkar Funds may hold bonds that will mature Vidya Bala, Head of Research and Product,
Primeinvestor.in, says, “The fund maturity
long after the stated average maturity
A
fter the Franklin Templeton profile may give an impression of liquidity
debacle, debt fund investors are that may not actually transpire owing to
waking up to the reality that Maturity date of complexity in underlying instruments.”
Scheme Average maturity
returns are secondary to liquid- longest maturity bond In the case of Franklin’s debt funds, the
ity and safety. When large-scale liquidity mismatch was also compounded
Axis Ultra Short Term 6 months 6 Jul 2077
redemptions from stressed debt schemes by heavy borrowings to provide for ongo-
left Franklin Templeton short of cash, it Nippon India Ultra Short Duration 10 months 28 Aug 2030 ing redemptions. Since the funds’ borrow-
decided to wind up the schemes. The lesson ings have to be repaid first from any matu-
ICICI Pru Ultra Short Term 5 months 31 Mar 2029
for investors was that actual liquidity may rity or sale proceeds, it will lead to delay in
not be commensurate to the fund category Aditya Birla SL Savings 9 months 24 Dec 2024 cash flow to investors.
profile and their own time horizon. Finally, the liquidity profile of a fund is
Sundaram Ultra Short Term 5 months 20 Apr 2023
A fund’s liquidity indicates its ability directly linked to its credit profile. If the
to quickly convert existing investments HDFC Short Term Debt 3 years, 4 months 21 Aug 2072 quality of underlying bonds is strong, the
into cash. Why is liquidity so important? fund will always be in a position to sell
UTI ST Income 4 yrs, 11 months 6 Mar 2050
Debt fund investors are advised to marry bonds if the need arises. But if the fund
the choice of fund with their own investing Axis Short Term 3 years, 3 months 22 Jun 2045 holds too many low rated instruments, the
time horizon. Funds are now classified un- liquidity will suffer in a crisis. So, if an
SBI Short Term Debt 3 years, 4 months 28 Jan 2036
der various duration buckets—each car- ultra-short duration fund has put 20% of
rying separate limits for bond maturities. Baroda ST Bond 3 years, 2 months 29 Jul 2034 its portfolio in bonds rated lower than AA,
Someone looking to park surplus funds for its liquidity or cash flow will be far poorer
3-6 months is advised to put it in an ultra- Some bonds have call or put option dates closer to category maturity limits, allowing them to fit within rules. than what its duration suggests. On the
short duration fund. Those looking at a Data compiled by ETIG Database. Source: Ace MF other hand, if the fund has substantial al-
time horizon of 1-3 years may be advised location in government securities or AAA
short or low duration funds. The rationale around the same time. But actual cash Despite what the fund category and the rated corporate bonds, its liquidity will be
is that the respective funds invest in bonds flow projection by the fund house sug- average maturity suggests, several under- comfortable even in the worst of times.
with a similar maturity profile. Since gested a waiting period of over two years. It lying instruments held by the fund may For investors, it may be time to look
these are meant to provide for short term turns out that the maturity of a large num- actually be of much longer maturity. This beyond category definitions and fund ma-
needs, they will not take undue liquidity ber of papers was far beyond the portfolio’s is because the category defines the average turity profile. Actual liquidity is often far
risk. But what if the reality is different? average maturity date. “It is definitely maturity—it doesn’t mean every bond in different due to the fund’s choice of bonds.
Consider Franklin India Ultra Short not telling the whole story,” says Kalpesh the portfolio will mature at the same time. Bonds with the longest maturity in the
Bond and Franklin India Low Duration, Ashar, Founder, Full Circle Financial Rules say only the portfolio average should portfolio would give the actual timeframe
two of the six now closed schemes. These Planners and Advisors. The maturity pro- fall within the definition. So there may within which the fund can return your
had an average maturity of 0.44 years file of a fund may not accurately reflect the be a big gap between actual maturity and money when facing stress.
(roughly 5 months) and 1 year and 5 true liquidity of the entire portfolio. what is allowed by the category. “There is
months respectively as of 23 April 2020. Here is why your fund’s liquidity may a lot of ambiguity in the way higher ma-
Investors were under the impression that be an illusion: Both maturity and dura- turity papers are allowed to be be held by
the funds would return money roughly tion are deceptive indicators of cash flow. shorter duration funds,” says Ashar.
financial planning
Parents best
at planning
finances
Nuclear families have the most financial
freedom, while women are acutely aware
about the need for a financial plan, states
a recent HDFC Life’s Life Freedom survey.
Riju Mehta analyses the data.
GETTYIMAGES
Life Freedom Index score Financial Planning

66.6* in 2019, an increase of
8.7 over 2016.
Women are acutely
51.3 Financial Awareness aware of the need for
Index (FAI)
a financial plan
What best describes your financial
Financial Sufficiency & planning to meet your and your
Adequacy Index (FSI) 71.5
family’s goals?
Financial Liberty
73.4 Index (FLI)
Financial Planning
Index (FPI) 71.9
Proud Smart
* LFI is a reflection of the individual’s perception and his Parents Women
family’s current and future financial aspects based on their
financial plans. It is measured on four indices: Financial Comprehensive
Awareness (25%), Financial Sufficiency & Adequacy (50%),
Financial Planning (20%) and Financial Liberty (5%). 72% plan / Somewhat
comprehensive plan
70%
Financial Sufficiency & Adequacy 18% Basic financial plan 22%
Nuclear families feel the Most respondents are highly confident
most free financially of meeting their financial needs 10%
Financial planning
in progress / No 7%
financial goals
71.2 How confident are you of achieving future financial needs?
Nuclear families comprising only couples 74% 16% 10%
Proud Parents
Tier I investors are
69.5
69% 20% 11%
most meticulous about
Nuclear families with parents Young Aspirants reviewing their plans
67.2 68% 22% 10% How often do you monitor/review
Wisdom Investors your plans?
Nuclear families with kids
Very regularly Once in Don’t update my
64.3 Extremely confident Confident Somewhat confident / / somewhat a while financial plan / Don’t
/ Very confident Not at all confident regularly have a financial plan
Joint families
72% 23% 5%
Financial Awareness: Stark contrast Metros have the Tier I cities best
in priorities of parents and youth highest financial at financial 81%
Metros
16% 3%
80% Proud Parents Young Aspirants Key life priorities awareness planning
Financial Awareness Index Financial Sufficiency &
55% 49% 53% Adequacy Index 54% Tier I 29% 17%
44% 43%
35% 40% 38% 57
METROS
30% 28% 29% METROS 43
73 68 Tier II
TIER I
Source: HDFC Life’s ‘Life Freedom Index’. The study was
Providing Financial Improving Being Financial Planning TIER II conducted in 2019-20 by Nielsen among 2,049 respondents
for child’s security my Physically security for for my TIER II 43 TIER I 71 in 14 metro, tier I and tier II cities. They were divided into
future for my standard and my parents / life after four groups: Young Aspirants, Proud Parents, Wisdom
spouse of living mentally fit other family retirement
members Investors and Smart Women.
stocks
Buy stocks with

high risk-adjusted
returns
To limit portfolio value erosion in the current volitile market, it
is important to judge risk-adjusted returns on a relative basis.
GETTYIMAGES
by Sameer Bhardwaj Names that score on risk-adjusted returns conversion business (Novelis and Aleris)
contributes significantly to EBITDA. The
E
conomic growth uncertain- 1-YEAR UPSIDE ANALYSTS’ brokerage house is bullish on the stock due
EV/ CURRENT TARGET POTENTIAL RECOMMENDATIONS
ties due to the coronavirus COMPANY PE EBITDA PRICE (`) PRICE (`) (%) BUY HOLD SELL
to the company’s strong liquidity profile
pandemic have badly affected and attractive valuations of five times its
the equity market. Volatility Ashoka EV/EBITDA and PE of six times based on
70.8 4.6 54 124 131.5 24 1 0
Buildcon
has intensified in the past four its estimated 2021-22 earnings.
months and the majority of listed stocks Hindalco
6.2 4.5 115 191 65.2 24 2 0
have suffered substantial losses. Also, the Industries Minda Industries
India VIX index surged close to the 2008 Minda The company is a manufacturer of automo-
32.3 11.3 267 358 34.0 10 3 1
global financial crisis levels in March. Industries tive components for Original Equipment
Irrespective of the fiscal and monetary Rallis India 21.3 13.5 207 238 14.8 13 4 4 Manufacturers that cater to passenger
measures undertaken by the government, vehicles, commercial vehicles and two-
Current price, PE as on 18 May 2020. Data source: ACE Equity and Bloomberg.
the market movements continue to be er- wheelers. New products, improved technol-
ratic due to growing risk aversion. Constituent stocks of the BSE500 index were selected from the list. To look at the ogy and customer acquisitions are likely
Fear and anxiety is gripping market were considered to identify those that have future potential of such stocks, only those to drive the company’s growth. Analysts
players, making stock selection even more scored well on the relative risk-adjusted covered by at least five Bloomberg analysts believe that the profitability will increase
difficult during this volatility. With the returns. The Sharpe and the Treynor ra- and with one-year forward price potential given the high margin products like two-
rising risks, it is imperative to select stocks tios were calculated for the past 4 months greater than 10% were included. Let us wheeler alloys and reverse parking sen-
based on their risk-adjusted returns along (volatile period), and the standard 1-year look at four of such stocks: sors. Moreover, the acquisition of Delvis
with other fundamental attributes. As time frames. The stocks were ranked in will help the company to increase its mar-
most of the stocks have delivered negative the descending order of these ratios across Ashoka Buildcon ket share in the vehicle lighting segment.
returns since the beginning of the year, it the defined time frames. The infrastructure development company
is appropriate to judge such risk-adjusted This means that the stock with the high- engaged in construction, power transmis- Rallis India
returns on a relative/ranking basis. est Sharpe ratio in the 4-month time frame sion and distribution on EPC basis, has a A subsidiary of Tata Chemicals with pres-
There are two standard measures for cal- was given rank 1, the second highest was strong balance-sheet to support its cash ence in farm essentials like pesticides, ferti-
culating risk adjusted returns: the Sharpe given rank 2, and so on. Similar rankings flows. Healthy order backlog led by hybrid lizers etc, the company’s domestic revenue
ratio and the Treynor ratio. Frequently were given to stocks on the Sharpe ratio annuities and EPC projects provide it increased by 29% in the fourth quarter of
used for evaluating a portfolio or mutual calculated for the past one year. The aver- strong revenue assurance. Analysts are 2019-20 despite the loss of sales due to Covid.
fund returns, these can also be applied to age ranks for all the companies across these bullish on the stock given its proven execu- Though its international business revenue
direct equities. Sharpe ratio calculates the time frames were worked out. For example, tion capabilities, improving gross collec- declined by 25%, the management expects
excess return generated by a stock relative if a stock had a rank of 5 on 4-month Sharpe tions, good performance of roads and pow- recovery in the next few quarters. The
to standard deviation, which is a measure ratio and rank 7 on 1 year Sharpe ratio, the er segments, and compelling valuations. company has improved its operating cash
of total risk (company-specific and market- average rank of the stock worked out to 6. flows and receivable days (working capital)
specific). On the other hand, the Treynor Similar rankings were made for Treynor Hindalco Industries in 2019-20. Emkay maintains a buy rating on
ratio measures the excess return generated ratio for both the defined time frames and Engaged in aluminium and copper produc- the stock due to the strong momentum in the
by a stock relative to the beta, which is a the average rank for each stock obtained. tion, the company has a footprint in 11 coun- domestic business and market share gains.
measure of the market risk. The excess Eventually, the final average rank for tries outside India. In the fourth quarter of The brokerage house has raised its revenue
return is the return generated over the each stock was worked out using the aver- 2019-20, the company’s EBITDA remained estimates for Rallis for 2020-21 and 2021-22
risk-free rate (or 10-year government bond age ranks of Sharpe and Treynor ratios. strong despite a decline in volumes. The by 2% and 4% respectively.
yield). For example, if a stock has generated Such ranks were then arranged in an as- net debt/EBITDA stood at 2.1 times com-
10% in the past one year and the average cending order to determine the companies pared to 2.5 times last year. According to
government bond yield is 8%, the excess that have scored well on the relative risk- a report by Motilal Oswal, Hindalco will
return will be 2%. adjusted returns. The top 15% of the stocks witness lower volatility in earnings as its
investing
‘Credit risk funds will be back in

reckoning sooner than later’
After the recent Franklin Templeton episode, investors are wary of credit risks. However, as mutual funds
are more exposed to structured credit, they are still safe, Amit Tripathi tells Sanket Dhanorkar.
ment, I don’t see any names coming under lio shows a different picture now.
pressure immediately. Ultra Short invested in a mix of AAA,
AA+ and AA- . However, there was a credit
Some of your debt funds have seen size- event in one of its holdings. The portfolio
able redemptions. How are you tackling size after this event came down drastically.
the situation? We were forced to sell many exposures. So
Redemptions were very high in the recent because of a few credit events that were
past. But we are more comfortably placed large in the context of the fund holdings, we
now. Even in some of the lower rated expo- saw significant redemptions which skewed
sures, we have seen refinancing and cash our overall portfolio quality.
flows through buybacks and prepayments.
This allowed us to create liquidity out- Are investors right to flock towards rela-
side the normal secondary market route. tive safety of liquid funds and Banking and
Infrastructure debt funds, FPIs have also PSU funds? Has long duration strategy run
come in to take advantage of the attractive its course for now?
yields. Through a combination of working Both short and long term high-grade seg-
with issuers for prepayments and by selling ments have delivered very good returns.
some exposures we have been able to gener- However, long-term segment has the issue
ate sufficient liquidity even in credit funds. of visibility given the current fiscal uncer-
tainty. While RBI has been cutting rates and
With the spotlight on credit risk funds, providing liquidity, there are uncertainties
how do you plan to maneuver Nippon India on the medium term fiscal consolidation
Credit Risk through the stress? path. Hence, investors want to be in high
There are things we will do grade short-end compris-
differently. In credit funds, ing liquid, ultra short term,
we will focus only on those We will learn from corporate bond funds and
names where cash flow
visibility is very high and
our mistakes, and Banking & PSU debt funds.
Some flows have been seen
structures are self-liqui- ensure negative in high grade long term dura-
dating in nature, particu-
larly in high yield bonds.
surprises in debt tion funds as well. Currently
the absolute levels across the
This way, we won’t be at the funds are reduced. curve for sovereign /AAA as-
mercy of balance sheet va- sets are low, but the curve is
garies nor have to rely on refinancing. very steep. We have moved to a low growth /
We will also focus on avoiding concentra- low inflation environment from medium to
tion risk—something we have suffered from long term perspective. Hence, long duration
both in terms of illiquidity and bigger im- makes more sense with a 3-5 year perspec-
pact from a credit event. The overall compo- tive. From a 3-12 month perspective, interim
sition of the portfolio will have to undergo a volatility can be very high, hence investors
change, maintaining reasonable allocation should stick to the shorter end. Overall, a
Amit Tripathi With credit profile of India Inc set to sag fur-
ther, do you see more pain for debt funds?
to high grade bonds to manage liquidity.
We have also taken a decision not to invest
70:30 allocation where 70% goes into short
term high-grade and the rest in long term
The post-Covid environment will only add below AA rated corporates across schemes high-grade could be a good strategy.
CIO, Fixed Income to the weakness that existed even before other than credit risk funds. The size of the
Investments, the lockdown. There are two aspects to this
weakness—availability of liquidity for
liquidity problem is not very significant
now as a percentage of the total debt AUM—
Do you think the current categorisation of
debt funds is flawed?
Nippon India MF corporate balance sheets and debt servicing less than 5%. This is a viable category in the If you add up all the credit events over the
capability of India Inc amid slow growth. In medium to long term, and will be back in the past 12-18 months, 80% of the papers would
the midst of this, the Franklin Templeton reckoning sooner than later. have started off AAA rated. But at the same
episode has turned the focus on concerns time, it would not hurt to give investors
around credit. Why did Nippon India Strategic Debt & some confidence at this time. Anything
Going forward, the environment will be Nippon India Ultra Short Duration explore with higher AAA, AA exposure gives more
even less sanguine. One will have to be care- low quality credits? confidence. Adding credit range along with
ful for the next six months. Credit quality de- Nippon India Strategic Debt has never in- duration risk might be workable and benefi-
terioration will be more pronounced in the vested in any instrument with lower than cial for investors.
unsecured space. Among non-financials, AA- rating. Even the AA- component was We should not extrapolate the event of the
discretionary consumer facing businesses fairly low. What happened is that 2-3 of our last 12 months. On our part, we will learn
will face issues. These businesses will need large exposures, which became larger as from our mistakes, and ensure the negative
sufficient capital buffers to survive. percentage of the portfolio when the scheme surprises in debt funds are reduced to near
Structured credit will continue to out- sizes reduced, saw significant deterioration zero levels.
perform plain vanilla credit. Mutual funds in credit post-purchase. While they were
are more exposed to the former, and hence AAA or AA rated at the time of purchase,
in better shape. While the incremental risk they saw multiple rating downgrades subse- Please send your feedback to
definitely exists in the current environ- quently. That is why the optics of the portfo-
financial planning
WEALTH
WHINES
Should you discuss salary
Money &
Relationships
cut with your children?
While it’s a good idea to share the bad news with your kids, find out about
the things you should keep in mind before doing so, says Riju Mehta.
I
f you have suddenly lost your job manner. It also makes sense to consider the the situation and and that things will be
or seen your salary slashed due to child’s maturity level because each child back to normal soon. If you are positive
Covid, it would have come as a shock is different and sometimes a 15-year-old and optimistic, the child will not feel anx-
to you and your finances. Even as may not be able to process the development, ious or depressed.
you start learning to live with the while a 13-year-old may do so with ease. So
altered new reality and make changes to assess your child’s ability to process the Convey implications in a
your spending and budgeting, there are information before deciding to divulge the 3 simple manner
other issues to deal with. For instance, how financial details. Even if you feel your child When you tell the children that you’ve
do you explain to your children why they is not ready to handle it and you should not had a salary cut, explain what it means in
can’t order the dress or gadget you were tell him about the salary cut, remember not terms of the day-to-day financial transac-
planning to buy them? Why have you sud- to lie to him about the situation. Lying will tions and short-to-medium term implica-
denly cut down on expensive foods or on- confuse the child as he will not be able to tions. Try to explain how reduced income
line ordering? If you’ve been debating what reconcile the developments with the false will translate to lower spending and,
to do about the uncomfortable questions explanations you have peddled to him. hence, the importance of separating the
and whether or not you should explain the essentials from discretionary items. Also
situation to the kids, here’s what you should Explain without stress lead by example, stressing on how you
consider first: 2 It is important that if, and when, will cut your personal spending for the
you decide to tell the children about the time being. This will make the kids feel
Consider the child’s age & salary cut, you are in a completely relaxed better about letting go of their purchases.
1 maturity level frame of mind. If you are stressed, you will
Seek contribution
While it’s typically a good idea to disclose
such developments to children, it would be
transfer the anxiety to the child and it may
result in an undesirable reaction instead 4 If you present a difficult situation
quite pointless if the kid is just 5-6 years old. of easing the child’s fears. So convey the to the child in which he has no contribu-
However, by the age of 12, most kids have a information in a matter-of-fact manner, tion to make, he will feel helpless and
ANIRBAN BORA
good grasp of what is going on in the house- with the underlying message being that it is develop latent anxiety. Since he has no
hold, financially or otherwise. So it would a temporary phase and that you will find a way of controlling the situation, he will
be prudent to sit with the child and explain way to handle it. It is also important to send not know what to do. So, when you tell
about your salary cut or job loss in a relaxed across the message that you are in charge of the child about the salary cut, ask how he
can help in the situation. Seek his help
and support, explaining how contribu-
IF YOU HAVE A WEALTH WHINE, WRITE TO US... Disclaimer: The advice in this column is not from
a licensed healthcare professional and should tion from every family member will help
All of us have been in a financial dilemma when it comes to relationships. How do you say no to a friend not be construed as psychological counselling, handle the situation better. Encourage
who wants you to invest in his new business venture? Should you take a loan from your married brother? therapy or medical advice. ET Wealth and the him to forgo his monthly pocket money or
Are you concerned about your wife’s impulse buying? If you have any such concerns that are hard to writer will not be responsible for the outcome of
resolve, write in to us at etwealth@timesgroup.com with ‘Wealth Whines’ as the subject. the suggestions made in the column. save it so that he can buy something big-
ger later on.
READERS’ QUERIES
My father is having an extra-marital affair and bears all her expenses. We have
Q bought a house on loan. How can we claim a share in his PF or block it so that,
after retirement, we can clear the loan as my dad is unlikely to do so? — Seema Sharma
Adequate maintenance can be claimed by your mother under Section 125 of the Criminal Procedure Code. The Provident Fund cannot be blocked by the family member
during the life span of the PF account holder. However, after the death of your father, your mother and you, being legal heirs, can claim your right in his property.
I have a 15-year-old daughter cial aid from me, be it in the form of heir after your death if you die with- During the interim period (between
Q and have some self-acquired
property. I’m the only son and
property or money?
— Vinay Ramdas
out a will.
4. She can claim maintenance from you
death and granting of probate), the
executor or administrator, or the nomi-
have two sisters, both of whom are 1. No. As per the succession laws in until she becomes a major with refer- nee, can deal in securities for the benefit
employed and married, with their own India, your daughter cannot claim ence to Section 125 of the Criminal of the estate. If there is no executor, any
houses. My father retired six years ago the shares of her grandfather’s intes- Procedure Code. beneficiary can apply for letter of ad-
and has two self-acquired houses. My tate properties during your lifetime. ministration and the permitted admin-
questions are as follows: 2. After your death, as a legal heir, your If a person dies with more than istrator can take care of the estate of the
1. Can my daughter claim my father’s
self-acquired property?
daughter is legally entitled to claim a
share in your self-acquired properties
Q `50 lakh in demat and mutual
funds, can these be redeemed
deceased, including such securities.
2. Can my daughter claim my self- if you die intestate. She can also claim and sold on intimation of death or does
acquired property or any inherited a share in inherited property if that it continue to be in the market till the
property from my father? has been absolutely vested with you. probated will is presented? Since
Raj Lakhotia
3. Can my daughter claim any portion 3. No, your daughter cannot claim any getting a will probated takes 5-6 Founder, Dilsewill
of my savings? portion of your savings during your months, is the money at market risk
4. Can my daughter claim any finan- lifetime. She can only claim as a legal during this period? — Suhas Singh
learn & keep

Which debt product should you opt for?

With banks slashing fixed deposit (FD) rates, investors are looking for alteratives. However, while chasing higher returns, you should not
ignore safety or tax implications. Narendra Nathan explores various debt products to help you choose the one most suitable.
5-year bank fixed deposits Senior Citizens’ Savings Scheme National Savings Certificate (NSC) RBI bonds
6.14
Sr. Citizens Others Rate 5.39 Net yield @20.8% tax slab 5.33
Net yield @20.8% tax slab 6.80 Net yield
6.50 Effective @31.2% tax
5.70 yield if 80C 7.75
5.15 6.80 availed
slab
4.51 4.47 Interest
3.92 7.40 5.86 7.40 7.40 Rate offered @20.8% rate
5.09
6.80
4.68 Effective
Net yield @20.8% Net yield Net yield Effective yield Effective yield Net yield yield if 80C
Interest rate (SBI) tax slab Net yield @31.2% tax slab Interest @20.8% tax @31.2% tax if 80C availed if 80C availed availed
@31.2% tax slab
rate slab slab @20.8% @31.2% @31.2% NO PROS CONS WHO FOR
80C Safest debt Lock-in of
NO PROS CONS WHO FOR benefits product 7 years. Investors who
80C YES
PROS CONS SUITS WHOM YES
PROS CONS WHO FOR offering Invest are ready
Premature Net yield 80C 80C
benefits Those who want High 5 year lock- Moderate 5-year lock-in NO highest only spare to hold till
withdrawal very low
easy access to benefits interest in; Only for Senior citizens benefits interest; period. Investors who Tax-free
allowed for people interest; no cap money. maturity.
NO their money. rates; No people above in higher tax No risk. want totally interest
Tax-free with in high tax NO NO
on investment.
Highly liquid. Tax-free risk 60; Maximum brackets who can Tax-free risk-free
interest penalty. brackets.
investment
interest lock-in money for interest products. IMPORTANT Rates still hgh. Lock-in before the rates
allowed is
Caution: Smaller banks offer better rates. However, weigh the risks before investing. 5 years. are pared down.
` 15 lakh
Tax saving fixed deposits Sukanya Samriddhi Yojana Voluntary Provident Fund Debt mutual funds
Sr. Citizens Others 5.23 Rate 12.57
6.02 7.60 10.92 Safe categories
Net yield
6.50 6.50 6.50 Net yield
@20.8% tax slab Effective yield if 80C
8.65 8.65 8.65
5.70 5.70 @20.8% PARTICULARS LIQUID FUNDS OVERNIGHT FUNDS
5.15 5.70 availed @20.8%
4.51 4.47 tax slab
3.92 Historical returns * 5.58 4.70
7.60 Net yield @20.8% tax slab 5.25 4.55
7.60 Effective yield
FD rate (SBI) Net yield Net yield Effective yield Effective yield Interest if 80C availed Net yield Net yield Effective yield Effective yield Net yield @31.2% tax slab 5.25 4.55
if 80C availed if 80C availed rate @31.2% Rate @20.8% @31.2% if 80C availed if 80C availed
@20.8% tax slab @31.2% tax slab
@20.8% @31.2% offered* tax slab tax slab @20.8% @31.2% *Historical 1-year returns; it may vary in future
YES
PROS CONS WHO FOR *This is the rate for last year. It Is expected to come down this year. ** Long term capital gain tax of 20.8% with indexation; inflation assumed to be 4%
80C High New a/c can
80C YES PROS NEGATIVES WHO FOR benefits interest be opened Parents who want PROS CONS PROS CONS
The 80C Long 5-year to accumulate 80C YES WHO FOR 80C NO WHO FOR
benefits People who rates; No only by Due to politi- Only for those No lock-in, Due to fall in
benefit. lock-in, low NO risk parents with money for their benefits Great long term HNIs who want
only want to Tax-free cal pressure, in EPF net. benefits reasonable interest rate
net yield. girl child; daughter’s rates offered Withdrawal accumulation liquidity; structure, fu- to park large
Tax-free NO invest in their interest Maximum opportunity
own bank. education or Tax-free YES are higher restrictions Tax-free NO no cap on ture returns amounts of
interest investment wedding. than market till retire- for salaried invest- expected to money and who
allowed is interest rates. ment. individuals. interest ments. be low.
Caution: Smaller banks offer better rates. However, weigh the risks before investing. need liquidity.
`1.5 lakh p.a.
5-year company deposits Public Provident Fund Listed tax-free bonds Pradhan Mantri Vaya Vandana
Sr. Citizens Others
7.10 Current interest rate Yojana
7.55 7.30 5.86
5.98 5.78 7.10 Net yield @20.8% tax slab
5.19 5.02
7.10 Net yield @31.2% tax slab 4.94 4.94 4.94 Net yield @20.8%
tax slab
Net yield Net yield
Current yield 7.40
8.96 Effective yield if 80C availed @20.8% @20.8% @31.2% Rate offered
tax slab tax slab 5.09
10.32 Effective yield if 80C availed @31.2% Net yield @31.2%
Net yield @20.8% tax slab Net yield @31.2% tax slab tax slab
Interest rate
(HDFC) PROS CONS WHO FOR
80C YES PROS CONS
High Long 15 Note: Current yield to maturity of 9.01% NHB Bond, as on May 19 NO WHO FOR
benefits tax free year tenure. Those in high tax 80C Moderate For those
80C NO PROS CONS WHO FOR rates; No Maximum bracket can use PROS CONS benefits interest; above 60; 10 Senior citizens
Higher Higher 80C NO WHO FOR
benefits Those who can YES risk investment this instrument High rated Need to buy No risk. year lock-in; looking for
interest risk; More Tax-free benefits PSU entities; from mar- Suits only NO Maximum risk free
rates than restrictions
afford to take
interest
only `1.5 lakh for long term Tax-free
higher risk and p.a. accumulation. decent post ket; Market people in the pension up to products.
Tax-free NO
bank FDs. on premature interest
forgo liquidity. Tax-free YES tax yield liquidity not highest tax `10,000.
interest withdrawals. that great. bracket.
interest Note: Though a pension plan, this works like an FD; Invested
Caution: Risk increases with smaller banks, but risks multiply with smaller and weaker companies. So, amount returned after 10 years or at the death of insured.
restrict investments only to AAA rated companies.
ILLUSTRATION: ANIRBAN BORA
financial planning
New rules of personal finance

The pillars of household finance—income, spending, saving and investing—have changed, says Uma Shashikant.
no expense on eating out, entertainment,

travel, clothes, furniture and home décor, is
the new norm. Beyond grocery and utility bills,
most households are postponing expenses.
This is needed given risks to income.
The business impact of this lack of spending
is deep too. Without consumption demand,
most businesses that thrived on the spending
habits of the household will bleed. The ability
of these business to employ people, pay salaries
and expand activity will be curtailed, creat-
ing a negative spiral of loss. Households might
be willing to support local businesses and be
valiant about using newer unbranded suppli-
ers of goods and services. But the consumption
basket has shrunk severely. Credit card usage
is down, so is online shopping.
Saving and investing are in the background
as activities that represent a forgotten luxury.
Households that are still managing a surplus
have allowed the money to remain in the bank;
and those that have enough wealth to consider
investing strategies are quite sure they have
not seen the bottom of the falling markets.
Much as we like to stay positive about the
new world that will emerge, signs that there
would be a gradual and prolonged recovery is
GETTY IMAGES
all around us. Until a cure or a vaccine is found,
we may not be able to claim victory over this
pandemic. We may restart with care, but the
economic activity can only be a small percent-
age of what it was; we may step out, but only
A
s we switch from fear to a gradual are at home, with no hope of schools reopen- do so when needed; we may spend, but we may
state of restart, the questions ing. There are no summer camps, day care restrict it to only the essentials; and this is
about family finances after or play date. Either parent or a family elder how the world might work, at a fraction of its
Covid-19 are stark. The going is must be present to take care of them and su- economic capacities, for another 12-15 months
too tough for some families, and pervise their online studies. This reduces before everyone is vaccinated.
easy for the fortunate. But the recast view the hours of work the family can put in out- How prepared is the household finance for
of income, spending, saving and investing side their home, if restart begins. that possibility? Use the experiences of the last
is tough to miss. Those four pillars of house- Those who ran businesses have no in- 60 days to evaluate how your financial life will
hold finance have changed drastically. come as the businesses are closed. Stocks pan out. Make a list of questions and take stock
Risks to income are the most significant. remain unsold; bills remain unpaid; for the next 12 months. Is there money in the
UMA SHASHIK ANT
IS CHAIRPER SON, CENTRE
The migrants struggling to get home have without buyers there is no revenue. From bank to cover basic costs for that period? What
FOR INVES TMENT lost their livelihood. It is unclear if they will big businesses to small ones, there is an happens if one or both wage earners of the
EDUC ATION AND LE ARNING find work in their villages; it is unknown if unbelievable standstill. No one would have household lose their jobs? How much of a pay
there are better times ahead when they will expected to operate, if at all, at single digit cut can be taken? What is the source of liquid-
comfortably travel back to cities for jobs. capacity. When the first quarter numbers ity if the job is lost? How can one raise loans?
Millions of livelihoods have been wiped out for this financial year come in, despite all What assets are available to sell or pledge?
by one pandemic. Our gross insensitivity expectations, the shock will be unbearable. What are the loans already due to be paid? How
to the shame of displacing millions without In the new world thus, across segments, does one renegotiate the EMIs and dues?
work, food and water, and letting them walk income has vanished, reduced or has It is good to know that the air is clean, the
thousands of miles, is a black mark we can- settled at a new low. Keeping the job and rivers are sparkling and that the mornings are
In the new world not erase from our collective conscience. hunkering down to doing it as best as pos- filled with bird song. Will this crisis take us
thus, across The next rung of wage earners who have sible, is the most we are looking at. This back to the very basics, and lead us all to living
segments, income made the cities their home are still around, means demand for credit will have to with content in our communities, focusing on
has vanished, but do not have jobs. Many employers who increase sooner than later. The loan may food, rest and family? We might contemplate
reduced or has funded the first month of pay are now re- be unsecured, or against assets that the that fundamental truth about living, but that
settled at a new luctant to extend the benevolence. Without more wealthy have accumulated, but as the level of frugality might be unrealistic for most.
low. Keeping the economic activity, there is no work and no liquidity reserves dry up, the demand for Between the mindless excesses of unbridled
job and hunkering pay; nor do these households have enough loans will move up. Banks and NBFCs have consumption, growth, and expansion and the
down to doing it savings to keep going without income. They enough liquidity at this time and should be rigid frugality of minimalistic existence, lies
as best as possible, are surviving on hand loans and pledging able to provide short term finance. Without a mean that we may not be able to choose or
is the most we are the few things they have accumulated. economic activity they cannot go too far. pursue. The next 12 months is about that explo-
looking at. Among the more comfortable monthly Which is why the lack of government spend- ration that might define the new character and
income earners, many have lost their jobs; ing, and the lack of bold reforms that place culture of the household.
many have settled for significant pay cuts, money in the hands of people, sting.
and hope to hold their jobs; and many oth- Spending has changed dramatically. The
ers are unsure how the work from home sit- risk to income means families have learned
uations will extend over time. The children to cut back on a lot of spending. Incurring
financial planning
Managing financial PAPER WORK

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1
submit to complete the process.
Rights issue 2 4 A listed

company has
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QA
your queries
For the past three years, I

have been investing `2,000
& I am 33. I started monthly
SIPs of `60,000 in April
per month through SIPs in 2019. My target was to
Aditya Birla SL Front line build a corpus of `25 lakh
Equity, HDFC Hybrid Equity by end of February 2022.
and Franklin India Focused Our suggestion My debt allocation of
Currently we are
Fund. My goal is wealth is you stop SIPs `40,000 comprises two
creation over the next 4-5 short term funds and one witnessing an
in Aditya Birla extraordinary
years. Given the current low duration fund whereas
SL Frontline market situation
market scenario, should I
continue with the SIPs? The Equity and Our panel of experts will the equity allocation of
`20,000 comprises one globally. Your
funds are underperforming. Franklin India answer questions related to multi-cap and two large fund allocation is
Focused Fund cap funds. After 13 months well diversified.
and decide any aspect of personal of investing, the NAV of my However, the goal
whether to hold or exit a year later after you finance. If you have a query, portfolio is -13%. Should I of `25 lakh by
cross the exit load for the SIPs. Continue SIPs increase the SIP amount or
in HDFC Hybrid Equity and take a call after 6
mail it to us right away. invest in different category
February 2022 is
too ambitious.
months. Start SIPs in Axis Nifty 100 Index of mutual funds other than
the above or change the You must
Fund (in place of a large-cap fund) and SBI
Focused Equity. Hope you
QUESTION OF THE WEEK overall allocation? continue SIPs in
the same funds
have sufficient debt for at least 5
exposure through funds I have 350 shares of Vedanta. The years. It will help you reap benefits by
or traditional options. company has announced delisting of its averaging cost. A time horizon of 3 years is too
shares from BSE and NSE. If that short for yielding the best returns out of
happens, I will not be able to sell the equity market investments. Either
Vidya Bala,
start a bank recurring deposit of
Co-Founder, PrimeInvestor.in shares on the bourses. The average cost
`20,000 per month for 2 years
per share is `189.65. If I sell now, the now or opt for a personal
loss will be around `35,000. After loan as a last resort to
delisting, the company has quoted a bridge the gap in 2022.
My wife and I bring home
purchase price of `87.45 per share.
around `1.2 lakh per month. What should I do?
Raj Khosla
My wife’s income doesn’t Founder and Managing Director,
fall in any tax bracket. We The floor price of the delisting proposal by MyMoneyMantra.com
are planning to buy a budget
If the house is co- Vedanta is `87.25, which is slightly lower than
home in her name under the
owned by both of half its 52-week high of `180. It is important to
PMAY scheme. We will be
taking a loan of `15 lakh. you and you will remember that this is not the final price at
Can I show the housing loan repay the loan which the shares will be delisted. The final
jointly with your offer price will be determined via the reverse I invest `70,000 per month in
interest in my tax return?
mutual funds while my wife
wife, the interest book building mechanism, which is basically a
invests `10,000. I invest
on housing loan process used for efficient price discovery of
`10,000 in SBI Small Cap,
can be claimed in the tax return by you and the stock. During the period for which the `20,000 in Mirae Asset
your wife in the ratio in which you both will reverse book building is open, offers are Emerging Bluechip, `15,000 in You and your
repay the loan instalments. However, if the collected from shareholders. These offers can Kotak Standard Multicap Fund, wife should con-
house is owned by your wife only and she be above or equal to the floor price. At the end `10,000 in Axis Mid Cap, tinue with your
will pay the loan instalments, the interest on of the offer, the merchant banker (SBI Capital `10,000 in Nippon India Large existing mutual
housing loan cannot be claimed in your Markets in this case) to the book building Cap and `5,000 in ICICI
fund SIPs, ex-
return. Moreover, if your wife owns the exercise shall announce the final price. The Prudential Balanced
Advantage Fund. My wife
cept for Nippon
house while you have financed the property promotor shareholding in Vedanta is currently India Large Cap
invests `5,000 each in Kotak
including the loan instalments, the income at 50.14% and that needs to go all the way up Fund. This fund
Emerging Equity and Nippon
from house property will be clubbed in to 90% to enable delisting. There is a India Large Cap Fund. Are we has underper-
your hands and the applicable probability that the final price could be higher on the right track? formed its peer
deduction for the interest than what has been currently offered and thus funds for quite
on housing loan will be as an investor, your focus now should be on the some time. Shift
allowed to you against outcome of the price discovery. The process future SIPs to Axis Bluechip Fund instead. You
the clubbed income. can take 2-3 months and thus you will get time should also look to top-up your existing SIPs
to make a decision. Once the final price is with lump sum investments in a staggered
decided, regulations allow an exit window up manner. With around 25% correction in the
Homi Mistry to one year from the date of delisting to equity markets from January peaks, topping
Partner, Deloitte
remaining shareholders to tender shares up your existing equity funds will further av-
Haskins & Sells
to the promoter at the same final erage your investment cost and help restore
price. If you do not exercise any your original asset mix. Choose Axis Bluechip
of the options, you can even Fund instead of
continue to hold shares in the Nippon India Large
delisted company, but that will Cap for your lump
The Finance Minister recently said have its own constraints. sum top-ups too.
that the employee’s contribution to
PF will be reduced from 12% to Prableen Bajpai
10%. Will it not increase our tax Founder, Managing Partner,
FinFix Research & Analytics Naveen Kukreja
burden since PF is non-taxable? CEO and Co-Founder,
Also, is it to be done by choice of Paisabazaar.com
the employee or is it compulsory?
The reduction in contribution will lead to an increase in your take-
home pay which, in turn, will be taxed at your income-tax slab
rate. This reduction has to be undertaken by all companies falling within the ambit of EPF.
As far as I am aware, employees too will have to mandatorily opt-in for this reduction. Ask our experts
Have a question for the experts?
Jayant R. Pai
CFP and Head - Products, PPFAS, Mutual Fund
SMART STATS
The Economic Times Wealth
May 25-31, 2020
In This Section
MUTUAL FUNDS - P18
LOANS AND DEPOSITS - P20
ALTERNATE INVESTMENTS- P21
ET WEALTH TOP 50 STOCKS

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result
of this is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt.
RANK PRICE ` GROWTH%* VA LUAT I O N R AT I O S RISK R AT I N G

Current Previous Stock Net Div Downside Bear No. of Consensus
Rank Rank Price Revenue Profit PE PB Yield PEG Risk Beta Analysts Rating
KEC International 1 1 197.35 23.53 32.46 10.40 2.08 3.03 0.33 2.19 1.15 34 4.74
1 Fast growing stocks
HG Infra Engineering 2 3 159.85 42.40 73.39 8.26 1.59 0.32 0.13 2.39 1.00 16 5.00
Top 5 stocks with the highest
Power Grid Corp of India 3 2 158.90 13.36 22.13 6.62 1.41 5.34 0.30 1.44 0.61 27 4.70 expected revenue % growth
JK Cement 4 4 1,105.25 15.82 72.07 30.04 3.16 1.60 0.47 1.65 0.71 28 4.79 over the previous year
Birla Corp 5 7 412.65 9.59 54.39 12.40 0.71 1.90 0.30 2.11 0.96 11 5.00 HG Infra
42
Engineering
JSW Energy 6 5 40.15 1.02 29.57 9.53 0.56 2.46 0.28 1.79 0.58 16 4.81
Bayer 42
Emami 7 6 209.50 9.66 82.80 31.00 4.53 3.91 0.37 1.83 0.66 33 4.03 CropScience
Alkem Laboratories 8 8 2,474.95 29.62 78.59 38.76 5.42 1.23 0.51 1.33 0.36 21 4.24 Tata Consumer 40
Products
Sun Pharmaceutical 9 10 466.45 24.20 49.05 41.55 2.67 1.26 0.88 1.60 0.61 40 3.92
Ajanta Pharma 40
Engineers India 10 9 62.40 22.41 17.81 10.64 1.68 7.09 0.50 1.93 0.63 15 4.47
Ipca 39
Larsen & Toubro 11 13 820.50 15.38 16.71 12.90 1.84 3.35 0.90 1.84 1.07 43 4.77 Laboratories
CCL Products India 12 17 178.35 21.36 24.48 15.35 2.83 3.74 0.63 1.73 0.82 10 4.80
ITC 13 11 188.95 10.31 26.29 18.16 3.88 3.27 0.69 1.76 0.80 38 4.53
2 Least expensive stocks
Gujarat Gas 14 18 250.00 32.17 142.72 41.27 7.83 0.40 0.27 1.84 0.82 30 3.97 Top 5 stocks with the lowest
Essel Propack 15 24 169.90 14.29 49.11 27.70 3.85 1.50 0.56 2.13 0.71 11 4.55
price-earnings ratio
APL Apollo Tubes 16 20 1,382.60 18.94 57.06 22.25 3.44 1.06 0.46 2.21 1.23 10 4.60 NTPC
5.88
Ipca Laboratories 17 16 1,604.70 39.35 84.98 46.46 6.62 0.31 0.56 1.51 0.14 24 4.13
Dilip Buildcon 6.43
NTPC 18 15 90.25 18.77 9.55 5.88 0.81 0.54 0.70 1.54 0.74 27 4.93
CESC 6.44
CESC 19 27 568.10 11.80 8.27 6.44 0.85 3.46 1.05 1.72 0.71 18 4.94
Jubilant Life Sciences 20 22 471.05 10.30 27.81 12.72 1.55 2.08 0.48 2.38 1.01 13 4.54 Power Grid 6.62
Corp of India
Century Plyboards India 21 32 103.55 5.81 40.73 15.54 2.37 0.95 0.52 1.97 0.73 20 4.45 Redington 6.82
Mahanagar Gas 22 28 906.95 0.86 32.75 16.40 3.74 2.23 0.45 1.87 0.94 30 4.27 India
Pfizer 23 30 4,219.20 17.92 40.63 45.22 6.44 7.92 1.11 1.42 0.36 10 4.60
3 Best PEGs
Aurobindo Pharma 24 26 724.35 28.40 24.51 17.61 3.00 0.42 0.72 2.85 0.89 35 4.60
Top 5 stocks with the least
Ajanta Pharma 25 29 1,487.40 40.11 44.89 33.71 5.81 0.90 0.77 1.69 0.65 13 4.39 price-earnings to growth ratio
Transport Corp of India 26 31 151.40 12.11 20.08 8.01 1.30 1.30 0.50 1.96 0.93 10 4.90 Gujarat Gas Power Grid
Corp of India
Dilip Buildcon 27 33 253.85 21.72 20.41 6.43 1.25 0.39 0.31 2.72 1.26 15 4.53
Cipla/India 28 23 616.60 11.31 26.81 32.03 3.14 0.64 1.20 1.34 0.28 43 4.35
0.13 0.27 0.28 0.30 0.30
Thermax 29 35 706.55 2.07 35.20 24.40 2.79 1.98 0.72 1.36 0.39 32 2.88
VRL Logistics 30 37 152.05 7.98 18.46 15.00 2.13 4.62 0.88 1.78 0.71 15 4.33
HG Infra JSW Energy Birla Corp
Ramco Cements/The 31 49 561.95 14.64 33.39 24.40 2.92 0.98 0.89 1.72 0.89 28 3.71 Engineering
Info Edge India 32 40 2,456.05 32.76 53.38 49.38 11.74 0.33 0.37 2.16 0.74 27 3.30
Apollo Hospitals 33 43 1,280.30 25.03 47.60 75.72 5.36 0.50 1.32 1.96 1.01 23 4.87 4 Income generators
SRF 34 42 3,370.45 14.51 45.69 30.36 4.72 0.41 0.64 2.01 1.11 20 4.35 Top 5 stocks with the highest
HeidelbergCement 35 36 150.50 6.56 22.44 15.64 2.95 0.97 0.52 2.04 1.03 15 4.60
dividend yield (%)
Redington India 8.65
Torrent Pharmaceuticals 36 38 2,618.75 15.32 72.34 100.50 9.28 1.40 1.38 1.49 0.42 34 3.38
Pfizer 7.92
Coromandel International 37 41 615.00 5.73 45.68 24.97 5.36 0.57 0.54 1.49 0.73 15 4.33
Engineers India 7.09
Bayer CropScience/India 38 39 4,498.75 42.14 147.00 65.03 8.20 0.40 0.70 1.52 0.57 10 3.80
Bajaj Auto 7.04
Tata Consumer Products 39 46 360.30 40.28 91.91 71.42 2.38 0.69 2.02 1.91 0.99 12 4.42
Power Grid 5.34
Carborundum Universal 40 47 205.90 12.93 23.20 15.84 2.28 1.95 0.96 1.80 0.90 11 4.27 Corp of India
Dr Reddy's Laboratories 41 34 3,847.50 7.75 30.28 32.62 4.11 0.51 1.02 1.20 0.32 47 3.60
5 Least risky
Lupin 42 45 885.75 3.74 55.16 65.53 2.89 0.57 1.17 1.37 0.30 46 2.98
Top 5 stocks with the lowest
Prestige Estates Project 43 50 141.10 27.60 6.28 12.66 1.24 2.18 2.78 3.01 1.03 18 4.56 downside risk
Redington India 44 48 87.50 19.27 1.14 6.82 0.87 8.65 12.88 2.63 0.93 10 4.80 Alkem
Laboratories Thermax
Adani Ports & SEZ 45 -- 317.15 9.57 13.12 17.06 2.51 1.05 1.11 2.00 1.16 26 4.85
Voltas 46 -- 461.35 17.68 18.28 30.01 3.71 0.88 1.74 1.66 0.90 43 4.16
1.20 1.33 1.34 1.36 1.37
Ahluwalia Contracts 47 -- 165.20 10.51 10.92 9.54 1.52 0.18 0.52 2.38 1.12 18 4.50
Bajaj Auto 48 -- 2,640.35 2.27 10.09 14.70 3.54 7.04 1.47 1.66 0.84 53 3.91
Dr Reddy's Cipla/India Lupin
Oberoi Realty 49 -- 300.90 2.84 13.79 13.30 1.37 0.66 0.94 2.01 0.59 26 4.08 Laboratories
Asian Paints 50 -- 1,574.30 13.15 43.16 69.17 15.69 1.21 1.64 1.51 0.78 40 3.83 SEE DOWNSIDE RISK AND BEAR BETA COLUMNS
IN THE ADJACENT TABLE.
*REVENUE AND NET PROFIT GROWTH IS BASED ON CONSENSUS ANALYSTS' EXPECTATIONS. NR: NOT IN THE RANKING. DATA AS ON 21 MAY 2020. SOURCE: BLOOMBERG
smart stats
LAGGARDS & LEADERS

ETW FUNDS 100
BEST FUNDS TO BUILD YOUR PORTFOLIO
Taking a long-term view of fund returns, here is a list of 10
funds in each category—five leaders (worth investing) and
five laggards (that may be a drag on your portfolio).
LAGGARDS LEADERS
ET Wealth collaborates with Value Research to identify the top-performing Equity: Large-cap 5-year returns
funds across categories. Equity funds and equity-oriented hybrid funds are
-1.09 6.6
ranked on 3-year returns while debt-oriented hybrid and income funds are Taurus Largecap Equity Axis Bluechip
ranked on 1-year returns. -0.82 5.28
Principal Nifty 100 Equal Weight Canara Robeco Bluechip Equity
0.26 4.64
Franklin India Bluechip Mirae Asset Large Cap
RETURNS (%) 0.55 4.37
Value Research Net Assets Expense
Fund Rating (` Cr) 3-Month 6-Month 1-Year 3-Year 5-Year Ratio (%) Nippon India Large Cap Quant Focused
0.72 4.13
EQUITY: LARGE CAP
Axis Bluechip Fund  12,716.81 -20.79 -15.88 -9.90 6.86 6.60 1.98
6.86% Tata Large Cap Nippon India ETF Shariah BeES
Canara Robeco Bluechip Equity Fund  418.00 -20.20 -15.01 -9.45 3.30 5.28 2.56 THE 3-YEAR
Sundaram Select Focus Fund  932.85 -22.82 -20.07 -16.42 1.78 4.00 2.42
RETURN
Tata Index Sensex Fund  23.61 -24.72 -23.89 -20.76 1.13 2.65 1.00
OF AXIS
BLUECHIP IS
Equity: Multi-cap 5-year returns
HDFC Index Fund  1,177.38 -25.24 -24.40 -21.31 1.05 2.96 0.30 THE HIGHEST
Edelweiss Large Cap Fund  165.33 -24.31 -21.89 -18.87 -0.08 2.18 2.44 IN ITS -3.22 7.15
UTI Nifty Index Fund  2,097.08 -25.01 -24.50 -22.72 -0.33 2.41 0.17 CATEGORY. Nippon India Multi Cap Parag Parikh Long Term Equity
Motilal Oswal Focused 25 Fund  1,153.47 -21.27 -17.53 -10.68 -0.38 3.65 2.24
-2.25 6.64
Mirae Asset Large Cap Fund  15,347.16 -25.66 -24.70 -21.37 -0.92 4.64 1.67
Nippon India Retirement SBI Focused Equity
ICICI Prudential Bluechip Fund*  21,820.93 -23.26 -22.42 -20.63 -1.35 2.99 2.05
Indiabulls Bluechip Fund  127.95 -26.36 -25.34 -23.20 -2.92 2.89 2.43 -1.87 6.57
Taurus Starshare (Multi Cap) Axis Focused 25
EQUITY: LARGE & MIDCAP -1.26 5.97
Invesco India Growth Opportunities Fund  2,282.43 -25.07 -22.05 -16.97 0.69 3.89 2.02 0.69% HDFC Focused 30 Tata Retirement Savings
Mirae Asset Emerging Bluechip Fund  8,838.98 -24.55 -20.84 -15.15 0.10 8.88 1.81 THE 3-YEAR
LIC MF Large & Mid Cap Fund  594.43 -26.12 -20.83 -14.51 -1.52 4.90 2.47 RETURN OF -0.76 5.66
INVESCO IN- LIC MF Multicap IIFL Focused Equity
Canara Robeco Emerging Equities Fund  4,845.74 -24.56 -16.73 -15.46 -1.61 6.41 1.97
DIA GROWTH
Kotak Equity Opportunities Fund  2,980.18 -24.84 -19.98 -15.84 -1.74 4.16 2.10 OPPORTUNI-
Sundaram Large and Mid Cap Fund  1,012.99 -29.96 -27.44 -23.02 -2.44 3.49 2.36 TIES FUND IS
Principal Emerging Bluechip Fund  1,822.03 -24.89 -18.85 -16.33 -2.67 4.86 2.18 THE HIGHEST
IN ITS
Equity: Mid-cap 3-year returns
DSP Equity Opportunities Fund  4,439.07 -25.32 -22.71 -17.74 -2.98 4.17 1.96
CATEGORY.
-11.42 7.12
EQUITY: MULTI CAP
Aditya Birla Sun Life Mid Cap Axis Midcap
Parag Parikh Long Term Equity Fund  2,925.43 -15.36 -10.29 -4.32 5.99 7.15 2.09
SBI Focused Equity Fund  7,967.80 -23.68 -18.72 -13.53 4.23 6.64 1.99 -10.47 0.21
Axis Focused 25 Fund  9,493.38 -24.87 -19.93 -13.63 2.80 6.57 1.73 Motilal Oswal Midcap 100ET Quant Mid Cap
IIFL Focused Equity Fund  785.87 -26.33 -19.01 -12.26 2.69 5.66 2.30 -10 -2.18
Canara Robeco Equity Diversified Fund  1,896.90 -21.51 -15.15 -12.31 2.66 4.42 2.31
Sundaram Mid Cap DSP Midcap
Tata Retirement Savings Fund  689.21 -21.12 -18.60 -13.71 0.43 5.97 2.45
Kotak Standard Multicap Fund  26,049.43 -25.92 -23.74 -21.18 -1.97 4.45 1.70
-9.5 -2.98
JM Multicap Fund  118.78 -26.00 -23.51 -15.62 -1.98 3.75 — SBI Magnum Midcap Tata Midcap Growth
Edelweiss Multi Cap Fund  488.67 -25.87 -22.54 -21.39 -2.04 3.34 2.46 -8.79 -3.75
SBI Magnum Multicap Fund  7,912.14 -26.51 -24.52 -21.60 -2.67 3.54 2.01 IDBI Midcap Edelweiss Mid Cap
Motilal Oswal Multicap 35 Fund  10,236.93 -27.14 -24.93 -23.30 -4.75 3.30 1.82
EQUITY: MID CAP

Axis Midcap Fund  5,098.37 -18.71 -11.91 -3.36 7.12 6.49 1.94 7.12% Equity: Small-cap 3-year returns
DSP Midcap Fund  6,487.64 -21.97 -14.54 -9.99 -2.18 6.47 1.92 THE 3-YEAR
RETURN OF -16.89 1.23
Kotak Emerging Equity Fund  5,911.85 -28.53 -21.50 -18.21 -4.66 3.83 1.92 AXIS MID- ABSL Small Cap Axis Small Cap
L&T Midcap Fund  5,366.51 -25.93 -19.48 -18.93 -5.68 4.43 1.98 CAP FUND IS
THE HIGH- -16.62 -0.44
EQUITY: SMALL CAP EST IN ITS Sundaram Small Cap SBI Small Cap
Axis Small Cap Fund  2,169.10 -28.68 -20.33 -9.66 1.23 5.64 2.23
CATEGORY.
-13.63 -7.39
SBI Small Cap Fund  3,280.30 -26.07 -20.52 -16.16 -0.44 7.05 2.24
Franklin India Smaller Companies Union Small Cap
Nippon India Small Cap Fund  6,994.88 -30.40 -23.83 -25.99 -7.49 4.04 2.18
L&T Emerging Businesses Fund  4,267.86 -32.37 -30.26 -33.52 -11.83 2.13 2.08
-13.34 -7.49
HSBC Small Cap Equity Nippon India Small Cap
EQUITY: VALUE ORIENTED
-12.19 -8.84
Invesco India Contra Fund  4,273.93 -23.54 -18.71 -16.97 0.54 5.41 2.12

Quant Small Cap Kotak Small Cap
Kotak India EQ Contra Fund 726.10 -26.40 -23.91 -21.58 0.26 3.18 2.49
Tata Equity PE Fund  4,018.95 -22.59 -22.33 -20.64 -4.44 3.84 1.98
L&T India Value Fund  5,709.96 -27.26 -24.14 -24.68 -7.08 2.63 1.93
Hybrid: Aggressive 5-year returns
EQUITY: ELSS
Axis Long Term Equity Fund  19,632.01 -23.29 -17.76 -11.81 3.77 5.15 1.72 3.77% -2.39 6.03
Canara Robeco Equity Tax Saver Fund  940.59 -21.96 -14.84 -12.21 2.27 4.41 2.27 THE 3-YEAR JM Equity Hybrid Canara Robeco Equity Hybrid
Mirae Asset Tax Saver Fund  3,184.25 -25.28 -23.48 -18.35 0.52 — 1.79 RETURN OF
Invesco India Tax Plan  930.37 -24.50 -19.34 -15.58 0.45 4.14 2.23 AXIS LONG -1.38 5.46
Aditya Birla Sun Life Tax Relief 96  9,371.50 -21.28 -18.51 -16.30 -0.60 3.97 1.94
TERM EQUITY Nippon India Equity Hybrid DSP Equity & Bond
FUND IS THE
Quant Tax Plan  8.83 -17.26 -17.15 -13.03 -0.78 6.32 2.48
HIGHEST IN -0.05 5.18
DSP Tax Saver Fund  5,407.34 -24.61 -22.73 -17.72 -2.18 4.61 1.87 ITS CATEGORY. PGIM India Hybrid Equity Tata Retirement Savings
Tata India Tax Savings Fund  1,769.58 -26.24 -24.44 -21.68 -2.33 4.18 2.12
0.32 5.03
Kotak Tax Saver  1,040.28 -26.32 -21.69 -19.33 -2.35 3.04 2.29
Franklin India Life Stage Principal Hybrid Equity
JM Tax Gain Fund  31.80 -29.40 -25.40 -21.22 -2.41 2.83 —
Motilal Oswal Long Term Equity Fund  1,411.09 -29.96 -26.01 -20.43 -3.99 4.97 2.11 0.53 4.94
LIC MF Equity Hybrid SBI Equity Hybrid
ANNUALISED RETURNS IN % AS ON 20 MAY 2020.
smart stats
ETW FUNDS 100 Top 5 SIPs

Value Research
Fund Rating
Net Assets
(` Cr) 3-Month 6-Month
RETURNS (%)
1-Year 3-Year 5-Year
Expense
Ratio
1 Top 5 equity schemes based
HYBRID: EQUITY SAVINGS on 10-year SIP returns
Edelweiss Equity Savings Fund  83.73 -4.46 -2.74 0.63 5.17 5.76 1.74 SBI Small Cap
Kotak Equity Savings Fund  1,491.74 -8.67 -6.89 -3.15 3.89 5.29 2.15
14.45
Axis Equity Saver Fund  700.38 -11.86 -9.56 -7.06 3.06 — 2.39
Canara Robeco Emerging Equities
ICICI Prudential Equity Savings Fund*  1,241.95 -12.18 -10.12 -5.84 2.13 4.86 1.33
13.47
HYBRID: AGGRESSIVE (EQUITY-ORIENTED)
Axis Long Term Equity
Canara Robeco Equity Hybrid Fund  2,912.43 -15.19 -9.92 -6.04 3.43 6.03 2.03 3.43%
SBI Equity Hybrid Fund  29,105.88 -19.04 -15.73 -10.54 3.04 4.94 1.74 THE 3-YEAR 12.04
Mirae Asset Hybrid Equity Fund  3,314.23 -17.83 -16.68 -13.00 1.63 — 1.90 RETURN OF
CANARA Principal Emerging Bluechip
Tata Retirement Savings Fund  1,047.69 -17.58 -15.06 -12.04 0.77 5.18 2.23
ROBECO EQ- 11.24
DSP Equity & Bond Fund  5,538.45 -19.73 -13.97 -8.34 0.56 5.46 1.90
UITY IS THE
HDFC Retirement Savings Fund  367.19 -19.38 -16.42 -15.49 -0.16 — 2.63 HIGHEST DSP Midcap
Principal Hybrid Equity Fund  1,087.56 -17.99 -15.70 -16.49 -0.30 5.03 2.24 IN ITS
CATEGORY. 10.91
HDFC Children's Gift Fund  2,776.99 -19.88 -17.57 -15.19 -0.35 4.16 2.13
ICICI Prudential Equity & Debt Fund*  17,696.29 -17.73 -17.22 -15.54 -0.91 4.39 1.82 SIP: SYSTEMATIC % ANNUALISED RETURNS
INVESTMENT PLAN AS ON 20 MAY 2020
HYBRID: CONSERVATIVE (DEBT-ORIENTED)
Baroda Conservative Hybrid Fund  22.10 0.77 3.30 9.55 7.31 7.18 2.05
Top 5 MIPs
Kotak Debt Hybrid Fund
Tata Retirement Savings Fund


236.39
133.22
-5.36
-4.20
-2.64
-1.94
3.02
2.44
4.09
4.44
6.58
6.57
2.23
2.20 2 Top 5 MIP schemes based on
ICICI Prudential Regular Savings Fund*  1,581.24 -5.00 -2.60 2.09 5.64 7.40 1.91
Indiabulls Savings Income Fund  24.56 -3.90 -3.32 -0.86 6.32 — 2.00 3-year SWP returns
DEBT: MEDIUM- TO LONG-TERM Indiabulls Savings Income
IDFC Bond Fund Income Plan  670.57 4.13 6.81 14.71 8.15 8.56 1.92
Nippon India Income Fund  305.89 3.52 6.23 14.52 8.51 8.53 1.75 14.71% 6.68
SBI Magnum Income Fund  1,292.48 1.77 6.33 13.57 7.99 8.70 1.47 THE 1-YEAR Baroda Conservative Hybrid
ICICI Prudential Bond Fund*  3,153.22 2.46 5.39 12.49 7.93 8.35 1.08 RETURN OF 6.59
IDFC BOND
DEBT: MEDIUM-TERM FUND INCOME ICICI Prudential Regular Savings
SBI Magnum Medium Duration Fund  3,192.04 2.08 5.49 12.29 8.57 9.20 1.23 PLAN IS THE
HIGHEST IN ITS 4.91
IDFC Bond Fund  2,807.92 2.86 5.09 11.37 7.81 8.08 1.43
CATEGORY. Canara Robeco Conservative Hybrid
Indiabulls Income Fund  30.33 2.57 4.52 9.10 8.24 7.93 0.90
HDFC Medium Term Debt Fund  1,134.93 -0.57 2.58 7.79 6.65 7.57 1.29 4.82
DEBT: SHORT-TERM LIC MF Debt Hybrid
L&T Short Term Bond Fund  4,421.96 3.12 5.08 10.74 8.08 8.05 0.75 4.39
HDFC Short Term Debt Fund  11,000.38 1.95 4.57 10.47 8.18 8.34 0.39
SWP: SYSTEMATIC % ANNUALISED RETURNS
Axis Short Term Fund  5,560.05 2.29 4.54 10.45 7.90 8.13 0.95
WITHDRAWAL PLAN AS ON 20 MAY 2020
IDFC Bond Fund Short Term Plan  11,459.35 2.34 4.44 10.30 7.94 8.01 0.80
DEBT: DYNAMIC BOND

IDFC Dynamic Bond Fund  2,030.79 4.60 7.76 15.93 8.71 9.00 1.80 15.93%
SBI Dynamic Bond Fund
Axis Dynamic Bond Fund


1,352.43
488.53
3.71
2.57
7.04
6.60
15.61
13.77
8.67
8.43
9.24
8.69
1.66
0.65
THE 1-YEAR
RETURN OF
IDFC DYNAMIC
3 Large Cap Cash holdings
Quantum Dynamic Bond Fund  60.58 2.73 6.29 13.14 7.96 9.33 0.68

BOND FUND IS
ICICI Prudential All Seasons Bond Fund* 3,014.13 2.49 6.19 12.23 8.32 9.28 1.34
THE HIGH- 17.25
PGIM India Dynamic Bond Fund  43.61 1.89 4.96 12.11 8.25 8.61 1.75 16.54
EST IN ITS
Kotak Dynamic Bond Fund  1,076.06 2.09 4.94 11.93 8.85 9.35 1.08 CATEGORY. 13.77 12.77
Edelweiss Dynamic Bond Fund  54.18 2.27 4.26 11.69 8.05 7.78 0.99
8.87
DEBT: CORPORATE BOND
HDFC Corporate Bond Fund  14,518.19 2.64 5.15 11.28 8.51 8.76 0.50
Aditya Birla Sun Life Corporate Bond Fund  17,647.81 2.90 5.22 10.85 8.45 8.69 0.45
ICICI Prudential Corporate Bond Fund*  11,860.11 2.28 4.63 10.34 8.02 8.36 0.56 Expense as on 30 April 2020
Kotak Corporate Bond Fund  4,031.53 1.81 3.81 9.34 8.17 8.33 0.60 *Expense as on before 30 Quant LIC MF JM Indiabulls IDFC
April 2020 Focused Large Large Bluechip Large
Franklin India Corporate Debt Fund  1,071.73 -0.74 2.45 8.25 7.64 8.04 0.92
Returns as on 20 May 2020 Cap Cap Cap
Assets as on 30 April 2020
All equity funds ranked on 3-year returns. Debt funds ranked on 1-year returns. Rating as on 30 April 2020
Did not find your fund here? % OF ASSETS AS ON 30 APRIL 2020
Log on to www.wealth.economictimes.com for an exhaustive list.
Methodology
The Top 100 includes only those funds that have a 5- or
4-star rating from Value Research. The rating is determined
EQUITIES (figures over the past one year)
Large-cap: Mostly invested in large-cap companies.
4 Debt: Ultra short duration
Multi-cap: Mostly invested in large- and mid-cap
by subtracting a fund’s risk score from its return score.
The result is assigned stars according to the following companies. FUND 0.45 0.47
distribution:
  Top 10%

Mid-cap: Mostly invested in mid-cap companies.
Small-cap: Mostly invested in small-cap companies.
RAISER 0.41
0.44
  Next 22.5% Tax planning: Offer tax rebate under Section 80C.
(Not covered
31%
  Middle 35% in ETW Funds International: More than 65% of assets invested abroad.
  Next 22.5% 100 listing) Income: Average maturity varies according to objective.
  Bottom 10% Gilt: Medium- and long-term; invest in gilt securities. 0.08
Fixed-income funds less than 18 months old and equity funds Equity-oriented: Average equity exposure more of the total AUM of equity
less than three years old have been excluded. This ensures than 60%.
funds was invested in the Motilal IDFC Baroda Aditya HSBC
that all the funds have existed long enough to be tracked for Debt-oriented aggressive: Average equity exposure
consistency of performance. Given the focus on long-term top three sectors comprising Oswal Ultra Ultra Birla Sun Ultra
between 25-60%. Ultra Short Short Life Short
investing, liquid funds, short-term funds and FMPs are not private sector banks, IT and
part of the list. For the same reason, we have considered only Debt-oriented conservative: Average equity exposure Short Term Dura- Savings Duration
less than 25%. pharmaceuticals in Term tion
the growth option of funds that reinvest returns instead of
offering dividends that increase the NAV of funds. Arbitrage: Seek arbitrage opportunities between equity April 2020.
% AS ON 30 APR 2020
Despite these rigorous filters, the list includes 2/3 funds of and derivatives. % EXPENSE RATIO IS CHARGED ANNUALLY.
each category to maximise choice from the best funds. Asset allocation: Invest fully in equity or debt as per METHODOLOGY OF TOP 100 FUNDS ON
The fund categories are: market conditions. WWW.WEALTH.ECONOMICTIMES.COM
loans and deposits

LOANS & DEPOSITS

ET WEALTH collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income
instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator.
Top five bank FDs

TENURE: 1 YEAR
Interest rate (%)
compounded qtrly
What `10,000
will grow to
HOME LOAN RATES
With effect from 1 October, all banks have made the transition to external
Ujjivan Small Finance Bank 7.50 10,771
benchmarks for pricing new home loans. Most banks have picked the RBI
IDFC First Bank 7.25 10,745
RBL Bank 7.20 10,740
repo rate as the external benchmark.
Indusind Bank
DCB Bank
7.00
6.75
10,719
10,692
REPO RATE: 4.40%
FOR SALARIED FOR SELF EMPLOYED (%)
BANK
TENURE: 2 YEARS RLLR (%) FROM (%) TO (%) FROM (%) TO (%) WEF
Ujjivan Small Finance Bank 7.50 11,602 Union Bank of India 7.20 7.10 7.55 7.35 7.55 1 April 2020
SBI Term Loan 7.05 7.20 7.55 7.35 7.70 1 April 2020
RBL Bank 7.25 11,545
Punjab National Bank 7.05 7.20 7.80 7.20 7.80 1 April 2020
AU Small Finance Bank 7.25 11,545
DCB Bank 7.20 11,534 Bank of India 7.25 7.25 7.55 7.25 8.15 1 April 2020
TENURE: 3 YEARS Central Bank of India 7.25 7.25 7.35 7.25 7.35 1 April 2020
AU Small Finance Bank 7.53 12,508 Canara Bank 7.30 7.30 9.30 7.30 9.30 7 April 2020
RBL Bank 7.50 12,497 UCO Bank 7.30 7.30 7.40 7.30 7.40 28 Mar 2020
DCB Bank 7.35 12,442
Punjab & Sind Bank 7.30 7.30 7.65 7.30 7.65 16 April 2020
IDFC First Bank 7.40 7.40 8.40 7.40 8.40
SBI Max Gain 7.05 7.45 7.80 7.60 7.95 1 April 2020
TENURE: 5 YEARS
DCB Bank 7.35 14,393 Indian Overseas Bank 7.25 7.45 7.70 7.45 7.70 14 April 2020
IDFC First Bank 7.25 14,323 Indian Bank 7.20 7.55 7.85 7.60 7.90 1 April 2020
AU Small Finance Bank 7.25 14,323 J & K Bank 7.60 7.70 8.00 7.70 8.00 28 Mar 2020
RBL Bank 7.15 14,252
ICICI Bank 7.70 7.70 8.70 7.95 8.80 1 April 2020
Indusind Bank 6.75 13,975
IDBI Bank 7.80 7.80 8.40 7.80 8.80 12 April 2020
Axis Bank 8.10 8.10 8.65 8.35 8.85 28 April 2020
South Indian Bank 8.10 8.10 9.35 8.10 9.35 16 April 2020
Top five senior citizen bank FDs
Interest rate (%) What `10,000 Karur Vysya Bank 7.60 8.20 10.05 8.20 10.05 1 April 2020
TENURE: 1 YEAR compounded qtrly will grow to
Bank of Maharashtra 7.45 8.20 9.50 8.45 9.60 7 April 2020
IDFC First Bank 7.75 10,798 Kotak Mahindra Bank 8.20 8.20 9.15 8.30 9.25 16 April 2020
RBL Bank 7.70 10,793 Bank of Baroda 7.25 8.25 8.50 8.25 8.50 28 Mar 2020
DCB Bank 7.25 10,745
TENURE: 2 YEARS Your EMI for a loan of `1 lakh

Ujjivan Small Finance Bank 8.00 11,717 TENURE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS
RBL Bank 7.75 11,659 @ 8% 2,028 1,213 956 836 772
@ 10% 2,125 1,322 1,075 965 909
DCB Bank 7.70 11,648
TENURE: 3 YEARS @ 12% 2,224 1,435 1,200 1,101 1,053

RBL Bank 8.00 12,682
@ 15% 2,379 1,613 1,400 1,317 1,281
DCB Bank 7.85 12,627 FIGURES ARE IN `. USE THIS CALCULATOR TO CHECK YOUR LOAN AFFORDABILITY.
FOR EXAMPLE, A `5 LAKH LOAN AT 12% FOR 10 YEARS WILL TRANSLATE INTO AN EMI OF `1,435 X 5 = `7,175
TENURE: 5 YEARS
Post office deposits Interest (%)
Minimum
investment (`)
Maximum
investment (`)
Features
Tax
benefits
DCB Bank 7.85 14,751

Sukanya Samriddhi Yojana 7.60 250 1.50 lakh One account per girl child 80C
AU Small Finance Bank 7.75 14,678 Senior Citizens' Savings Scheme 7.40 1,000 15 lakh 5-year tenure, minimum age 60 yrs 80C
RBL Bank 7.65 14,607
Public Provident Fund 7.10 500 1.50 lakh p.a. 15-year tenure, tax-free returns 80C
Kisan Vikas Patra 6.90 1,000 No limit Can be encashed after 2.5 years Nil
Top five tax-saving bank FDs 5-year NSC VIII Issue 6.80 100 No limit No TDS 80C
Interest What `10,000
TENURE: 5 YEARS AND ABOVE rate (%) will grow to Time deposit 5.50-6.70 200 No limit Available in 1, 2, 3, 5 year tenures 80C#
DCB Bank 7.35 14,393
Single 4.5 lakh 5-year tenure, monthly returns Nil
IDFC First Bank 7.25 14,323 Post Office Monthly Income
6.60 1,500
Scheme
AU Small Finance Bank 7.25 14,323 Joint 9 lakh 5-year tenure, monthly returns Nil
RBL Bank 7.15 14,252
Recurring deposits 5.80 10 No limit 5-year tenure Nil
Savings account 4.00 20 No limit `10,000 interest tax-free Nil
ALL DATA SOURCED FROM ECONOMIC TIMES INTELLIGENCE GROUP
(ETIGDB@TIMESGROUP.COM) Data as on 21 May 2020 # Benefit available only for 5-year deposit
market watch
HOW YOUR INVESTMENTS

PERFORMED THIS WEEK
This weekly tracker keeps you updated on the benchmark stock index, bond yields, forex movements and CPI-Combined.
It also tracks the changes in the past one year to give investors an idea how their investments performed over a longer period.
Sensex 10-yr bond yield (%) USD-INR CPI-Combined (%)

7.35
38,970 30,933 7.30 6.03 69.73 75.51 7.59
21 MAY 2019 21 MAY 2020 21 MAY 2019 21 MAY 2020 21 MAY 2019 21 MAY 2020 5.54 6.58
3.99 5.84
` PER DOLL AR 3.18 4.62
3.05 3.28
2.99 3.15
Apr '19
May '19
Jun '19
Jul '19
Aug '19
Sep '19
Oct '19
Nov '19
Jan '20
Feb '20
Mar '20
Dec '19
CHANGE
X 1 WEEK -0.61% 1 WEEK -2.60 (bps) 1 WEEK 0.09% LATEST 5.84%
X 1 YEAR -20.62% 1 YEAR -127.10 (bps) 1 YEAR 8.29% 1-YEAR AVG 4.76%
Markets remained volatile due to Covid-19 fears The 10-year bond yield The rupee weakened due to the The CPI-Combined for the month
and heavy selling in banking and NBFC stocks. changed little due to the strengthening US dollar, rising of March 2020 is revised to 5.84%,
Investors were also concerned about the chances adequate liquidity surplus crude oil prices, and extension of which fell below the RBI's upper
of demand revival in the near term as the recent in the system. national lockdown. target limit of 6%.
stimulus measures are considered inadequate.
PENNY STOCKS UPDATE

Penny stocks as a recommended non-traditional investment? Not exactly. ET WEALTH
neither has the expertise nor does it recommend investing in such stocks. But since the
relatively ‘low’ cost of investment attracts some investors to penny stocks, we provide
a weekly snapshot of this most volatile and uncertain type of stock investing.
Top price gainers Top volume gainers

MARKET 1-WEEK (%) 1-MTH (%) 1-MONTH AVG 1-MONTH AVG MKT CAP MARKET 1-WEEK (%) 1-MTH (%) 1-MTH AVG 1-MONTH AVG MKT CAP
STOCK PRICE (`) CHANGE CHANGE VOL (LAKH) VOL CHG (%) (`CR) STOCK PRICE (`) CHANGE CHANGE VOL (LAKH) VOL CHG (%) (`CR)
Educomp Solutions 3.74 26.78 159.72 0.44 433.1 45.80 B2B Software 9.75 -0.51 -10.55 0.01 1,30,431.00 11.30
Siti Networks 2.28 25.97 159.09 0.97 -51.34 198.84 Uttam Value Steels 0.22 -4.35 15.79 42.36 5,625.35 145.38
Vikas Ecotech 3.36 26.79 127.03 3.39 47.81 102.68 KSS 0.19 0 0 12.10 2,891.39 39.51
DB Realty 8.15 26.95 115.61 1.40 69.21 198.26 OCL Iron & Steel 1.89 15.24 -20.92 0.54 2,376.48 26.67
Opto Circuits (India) 5.82 -1.36 106.38 4.76 374.87 174.97 Vikas Proppant 2.99 9.12 -30.47 28.98 2,106.74 151.35
Jyoti 5.60 27.27 103.64 0 -79.84 12.93 ISMT 3.00 -13.04 -0.66 1.55 1,508.55 43.95
Sanwaria Consumer 3.36 -5.35 97.65 9.88 973.05 247.33 Prismx Global Ventures 7.68 -9.22 -44.35 0.04 1,311.85 21.80
Hindustan Fluorocarbon 6.78 5.94 93.71 0.03 96.65 13.29 Birla Cotsyn (I) 0.10 25.00 25.00 4.74 1,256.12 26.87
Vikas Multicorp 2.33 11.48 92.56 1.91 9.84 154.6 Tuticorin Alkali Chemicals 6.18 21.18 43.72 0.07 1,125.86 75.30
SE Power 3.00 -18.03 85.19 0.36 849.35 12.18 Swadeshi Polytex 3.99 3.64 -5.00 0.02 1,099.06 15.56
Top price losers Top volume losers

Vikas Proppant & Granite 2.99 9.12 -30.47 28.98 2,106.74 151.35 JMT Auto 3.02 26.36 41.78 1.18 -75.16 152.15
PMC Fincorp 0.23 4.55 -25.81 1.81 -52.54 11.71 Dish TV 4.62 -3.14 -2.33 4.32 -66.94 850.68
Housing Development 1.57 -8.19 -23.79 1.99 6.36 74.42 Jaiprakash Power 0.90 1.12 23.29 19.29 -62.84 615.64
CG Power and Industrial 5.71 -12.15 -22.52 1.49 -13.32 357.87 SREI Infrastructure 3.78 -6.67 -2.83 1.61 -60.79 190.17
RattanIndia Power 1.14 -7.32 -20.28 7.98 18.39 563.13 Hindustan Construction 4.52 -5.64 -13.41 3.35 -60.39 683.88
GV Films 0.24 -7.69 -17.24 1.06 53.68 21.95 PMC Fincorp 0.23 4.55 -25.81 1.81 -52.54 11.71
South Indian Bank 4.96 -9.49 -15.93 11.89 40.1 897.61 Toyam Industries 3.00 15.38 23.46 1.39 -46.04 63.75
Reliance Naval 1.13 9.71 -15.04 19.02 556.83 83.35 Syncom Formulations 0.92 1.10 -3.16 13.57 -42.64 71.82
Hindustan Construction 4.52 -5.64 -13.41 3.35 -60.39 683.88 JCT 1.46 5.04 62.22 2.77 -37.71 122.41
Shiva Cement 8.26 1.23 -11.75 1.11 -27.59 161.07 Trident 4.58 -3.58 -6.34 5.13 -33.31 2,333.97
THE STOCKS HAVE BEEN SELECTED USING THE FOLLOWING FILTERS: PRICE LESS THAN `10, ONE-MONTH AVERAGE VOLUME GREATER THAN OR EQUAL TO 1 LAKH AND MARKET
CAPITALISATION GREATER THAN OR EQUAL TO `10 CRORE. DATA AS ON 21 MAY 2020. SOURCE: ETIG DATABASE AND BLOOMBERG.
mutual funds
ICICI PRUDENTIAL BLUECHIP
GOOD RECORD OUTSHINES LOW BOUTS

ET Wealth collaborates with Value Research to analyse top mutual funds. We examine the key fundamentals
of the fund, its portfolio and performance to help you make an informed investment decision.
HOW HAS THE FUND PERFORMED? Top 5 sectors in portfolio (%)
Point To Point Return (%)

BASIC Financial 28.94
FUND BENCHMARK CATEGORY AVERAGE FACTS Energy 14.69
2.68 2.52 2.07 Technology 11.20

1-YEAR 3-YEAR DATE OF LAUNCH
5-YEAR 23 MAY 2008 Automobile 8.04
-2.00 -1.37 -1.47
CATEGORY
FMCG 7.31
EQUITY
TYPE
LARGE CAP The portfolio is underweight in financials,
FMCG and tech, overweight in autos.
AUM*
-19.35 -20.50 -18.87 `21,820.93 CR
BENCHMARK Top 5 stocks in portfolio (%)
The fund has shed slightly more than AS ON 19 MAY 2020
NIFTY 100 TOTAL HDFC Bank 9.26
its peers in the recent past.
RETURN INDEX
Infosys 7.25
Rolling Return (%) FUND BENCHMARK WHAT IT ICICI Bank 6.19
13.38 COSTS Reliance Ind 5.89
1-YEAR 5.76
10.96 NAV** Bharti Airtel
GROWTH OPTION
The fund’s significant overweight bets are
`33.28
14.71 Bharti Airtel, SBI Life and NTPC.
DIVIDEND OPTION
3-YEAR
11.25 `15.37
MINIMUM INVESTMENT Recent portfolio changes
`100
14.95 New Entrants
MINIMUM SIP AMOUNT
5-YEAR
11.41 `100 Ambuja Cements, Bajaj Auto, Bank Of Baroda,
EXPENSE RATIO*** (%) Bharat Electronics, Cochin Shipyard, Hindustan
2.05 Zinc, M&M, PVR, Trent, among others (March)
The fund has delivered decent outperformance over AS ON 19 MAY 2020
EXIT LOAD
index across time frames over the past decade. Complete Exits
1% for redemption
FIGURES DENOTE DAILY ROLLING RETURNS OVER LAST 10 YEARS
BENCHMARK DATA USED S&P BSE 100 TRI
within 365 days Bajaj Auto, Bajaj Finserv, NBCC India, Zee
*AS ON 30 APR 2020 Entertainment Enterprises (April)
**AS ON 19 MAY 2020
***AS ON 31 MAR 2020 Additions
WHERE DOES THE FUND INVEST? Asian Paints, BPCL, Britannia Inds, Eicher Motors,
ICICI Bank, M&M, Maruti Suzuki, TCS, Tata Power
Portfolio asset Fund Co., Titan Company, Wipro (April)
allocation style box
Growth Blend Value How risky is it?
Equity 93.60% Fund Category Index
Small Medium Large
CAPITALISATION
Large-cap 88.92%
Standard Deviation 19.54 19.90 20.50
Mid-cap 10.88%
Small-cap 0.20% Sharpe Ratio -0.12 -0.07 -0.05
Debt & Cash 6.40%

FUND Mean Return 3.07 4.09 4.46
BASED ON 3-YEAR PERFORMANCE.
INVESTMENT STYLE
MANAGER The fund’s risk profile is reasonably
ANISH TAWAKLEY (IN PIC) good even though performance has been
The fund keeps some exposure to the larger mid-caps.
AND RAJAT CHANDAK average in recent times.
TENURE: 1 YEAR 7 MONTHS / 2 YEARS
9 MONTHS SOURCE: VALUE RESEARCH
This large-cap fund tries ends of the spectrum - high with businesses with inherent While the fund’s long term track
Should to squeeze alpha through quality businesses at a premium balance sheet strength and record is impressive, the new fund
You individual stock picks rather

than deliberately taking large
or cheap value stocks. It avoids
the ‘growth at reasonable price’
ability to withstand turbulence.
Its performance has dipped in
managers are yet to demonstrate
execution capabilities before it
Buy deviations at sector level. It

prefers to pick ideas from two
basket. In the near term, the
fund managers prefer to stick
the last few years, falling down
the pecking order in its category.
can be considered as a good pick in
its category.
pick of the week

Manappuram Fin: Emerging stronger

The Covid-19 induced financial stress may result in increased demand for gold loans.
W
ith a 30% increase in asset under manage- non-gold loan portfolio is not expected to grow in 2020-21,
ment (AUM), the highest among non-banking which may bring down the overall AUM growth to 10%.
Fundamentals
finance companies (NBFCs), Manappuram There will be short term credit quality issues also on these CONSENSUS
ACTUAL
ESTIMATE
Finance has reported good numbers for the segments due to Covid-19 and moratorium induced stresses.
2017-18 2018-19 2019-20 2020-21
January-March quarter. Higher operating Comfortable funding environment is another reason why
Revenue (` cr) 2,859.40 3,633.09 4,051.55 4,489.92
profit that grew by 55% y-o-y and fall in corporate tax rate analysts are getting bullish on this medium-sized NBFC.
helped it report 43% net profit y-o-y, much ahead of expecta- Despite the stress on NBFC Street, Manappuram contin- Ebitda (` cr) 1,427.29 1,921.43 2,355.62 2,613.30
tions. ues to get funds from banks and other funding sources at Net profit (` cr) 922.41 1,467.75 1,465.22 1,744.22
Si nc e gold lo a n s c on s t i - reasonable cost (incremental EPS (`) 10.93 17.37 17.31 20.59
tute two -thirds of its AU M, cost of funds is placed at 9.4%).
Manappuram Finance is better Analysts’ views However, net interest margin Valuations PBV PE
DIVIDEND
YIELD (%)
placed compared to other NBFCs (NIM) may come under pres- Manappuram Finance 2.23 6.86 1.80
in 2020-21 due to several factors. 13 sure in the short term as the Muthoot Finance 3.34 11.67 1.45
First, Indian gold loan custom- Buy company is keeping high liquid- Sundaram Finance 2.12 11.11 1.46
ers usually don’t default because ity as a precautionary measure, Shriram Transport Finance 0.82 4.29 2.09
of emotional issues, since jewel- which is around 15% of its loan Cholamandalam Invest and Fin 1.71 8.13 0.95
leries are pledged not gold bars. as cash. Despite the drag from
Second, the gold price is at higher non-gold portfolio, Manappuram
level now and therefore, recovery 1 is also expected to maintain its
Latest brokerage calls TARGET
RECO DATE RESEARCH HOUSE ADVICE PRICE (`)
of loan by selling pledged gold is Hold return ratios like return on eq-
15 May ’20 Daiwa Securities Buy 160
easy even if there is a default. uity (ROE) and return on assets
Third, the demand for gold loan (ROA) at more than 20% and 4% 15 May ’20 Phillip Securities Buy 140
is expected to increase in coming respectively in 2020-21. 15 May ’20 IDBI Capital Market Buy 160
months because loans from other Manappuram is better placed compared to other NBFCs since 15 May ’20 Nirmal Bang Inst Buy 142
Indian gold loan customers hardly default and even if they
places will become difficult. Selection Methodology: We 14 May ’20 YES Research Buy 165
do, the recovery will be easier given the high prices of gold
Though the loan growth has currently. Comfortable funding environment is another reason pick up the stock that has shown
been low during April and May, why the company is a favourite of analysts. maximum increase in ‘consen- Relative performance
due to lockdown induced opera- sus analyst rating’ during the 100 MARKET PRICE: `119.20
66.62
tional issues, it is picking up now. Around 90% of its 3,529 gold last one month. Consensus rating is arrived at by averag- SENSEX
loan branches have become operational. Manappuram has ing all analyst recommendations after attributing weights 79.38
fought the lockdown blues by widening its online gold loan to each of them (ie 5 for strong buy, 4 for buy, 3 for hold, 2 for 94.60
scheme. The online gold loan now stands at 61%, compared to sell and 1 for strong sell) and any improvement in consensus
45% before the lockdown and is expected to reach 70% by the analyst rating indicates that the analysts are getting bull-
end of 2020-21. On a conservative basis, analysts believe that ish on the stock. To make sure that we pick only companies
its gold loan portfolio will grow by more than 15% in 2020-21. with decent analyst coverage, this search will be restricted
The numbers for January-March were decent for non-gold to stocks with at least 10 analysts covering it. You can see 21 MAY 2019 MANAPPURAM FIN ET NBFC 21 MAY 2020
loans. For example, the AUM of Asirvad micro finance and similar consensus analyst rating changes during the last one Manappuram Fin compared with ET NBFC and Sensex. Stock price and index
vehicle finance reported 43% and 21% y-o-y growth. However, week in ETW 50 table. —Narendra Nathan values normalised to a base of 100. Source: ETIG and Bloomberg.
WHAT EXPERTS ADVISE

BUY *STOCK PRICES AS ON 21 MAY
RESEARCH STOCK 1-YEAR TARGET POTENTIAL
STOCK ADVICE COMMENT
HOUSE PRICE* (`) PRICE (`) UPSIDE (%)
Expect 2020-21 to be a turnaround year as the likely restructuring of 3 BOT assets will cut loss. Along
JMC Projects HDFC Sec Buy 35 69 97 with the strong new domestic order bookings in April-May, international orders also saw an increase.
Though April has seen significant fall in execution and the ramp up would be very gradual going
Kalpataru Power Yes Securities Buy 193 313 63 forward, valuation became reasonable after the recent sharp correction in stock price.
Buy due to robust earnings growth and attractive valuations. While capacity expansion and sweating
UltraTech Cement Motilal Oswal Buy 3,571 4,305 21 of existing assets will drive volume growth, revamping of Century assets to improve margins.
Though Ranitidine ban by the US FDA is negative, rest of the product pipeline is strong. Its margins is
Strides Pharma Jefferies India Buy 421 500 19 also expected to be strong, led by the US ramp-up and strong growth in other developed markets.
Airtel continues to report revenue market share gains and also enjoys a comfortable leverage vis-à-vis
Bharti Airtel ICICI Direct Buy 594 700 18 peers. With a resilient performance amid challenging times, it is one of the better placed telecom players.
SELL RESEARCH STOCK 1-YEAR TARGET POTENTIAL

STOCK ADVICE COMMENT
HOUSE PRICE* (`) PRICE (`) DOWNSIDE (%)
While Dr Reddy’s earnings performance is expected to improve in future led by growth across all
Dr Reddy’s Lab Nirmal Bang Sell 3,847 3,647 5 geographies, retain sell rating on the stock given the rich valuation it is trading at.
Challenges posed by Covid-19 is likely to impact JK Lakshmi Cement’s operations. Since the revival will
JK Lakshmi Cement Centrum Sell 206 207 0 be gradual, it will impact performance of relatively higher leveraged companies like JK Lakshmi Cement.
your feedback & more...

Readers’ response, online and in print, to ET Wealth stories has been enlightening.
We pick some that add information and perspective to our articles from previous issues.
This refers to the story, ‘Debt fund I have been reading ET Wealth right
investors seem to have learnt their from the time it started and my
lesson’. Investors should say enough
is enough! After the jolt of imposition
Who will explain Mondays are not complete without it. I
find Uma Shashikant’s articles
of LTCG tax, the Franklin Templeton
episode has shattered the confidence
the terms? extremely relevant for the times that
we live in. The article, ‘Treat this
of retail investors. If one has to keep period as a pause’, gives valuable
The cover story, ‘Arogya Sanjeevani: Is it
watching portfolios and other factors, inputs on how to cope with retirement
for you?’ well highlighted the benefits of
then this is not an investment avenue in the current climate. I am on the
this basic health plan. The problem with
for all. We expect more steps from Sebi verge of retirement and have
insurers is that not only are their products
and the government. personally been badly affected by the
complex but so are the terms and conditions..
Raj Krishnamurthy current market crash. However, the
It’s difficult for a layman to understand the
article inspired me to believe that all
jargons, and while selling no efforts are
Mutual funds sahi nahin hai. I invested is not lost. There is hope.
made to explain them. The heartburn comess
in a low duration fund. I didn’t realise Sridhar
at the time of claim settlement.
that it was low duration only in name
Arup Choudhury
and that it carried credit risk. Neither The column must have been very
will I invest in any scheme of Franklin comforting for all those who are
Templeton going forward, nor will I retiring during this crisis period. Even
take the mutual fund industry or directly in the market. It’s better to stay interesting. This way, the companies would for a person like me who retired a few
seriously. Bank interest and peace of away from funds right now. have their main offices in the city and years back and has seen the worth of
mind are better. P.K.N. smaller offices in the suburbs. This would be investments in equity melting down in
Natarajan S. a welcome move for those who live in the a matter of weeks, her advice shows
The article, ‘Where to buy a house now’, suburbs of large metros right now. These the way forward. I wish I could read
Not just debt fund investors, all provided valuable insight about where the office goers have to scramble to reach work this article a few weeks back. She
mutual fund investors have learnt residential real estate segment was headed. on time daily and put up with punishing writes from her heart with the
a lesson from this episode. We are The point about companies thinking of commutes. investors’ concern in mind.
better off investing in fixed deposits adopting the hub and spoke model was Ajay N. Manjunath
REALTY Good Metro connectivity is key

HOT SPOT This Hyderabad locality enjoys excellent connectivity with major job hubs in the city.
LOCALITY SNAPSHOT SUPPLY BY BHK
MIYAPUR, HYDERABAD 1 BHK 10%

Established area with good social infra & proximity to major IT hubs of Gachibowli and Hitec City
Close to the major educational institutions of ISB, IIIT, University of Hyderabad and JNTU 2 BHK 69%
Key amenities nearby are Pranaam Hospital, Citizens Specialty Hospital, Forum Sujana Mall, etc.
Good connectivity through Miyapur Road (NH-65), ORR & Chandanagar MMTS station
3 BHK & above 21%
Enjoys widespread metro connectivity through Miyapur-LB Nagar line of Hyderabad Metro
PRICE RANGE VALUES Consumer preference by

`2,150-5,800 per sq ft budget segment (`)
Nizampet
LOCALITY Price Rent Below 30 lakh
Aminpur Miyapur
Pragathi Nagar (`/sqft) (`/month) 14% 13%
30-40 lakh
14% 25% 40-50 lakh
Aminpur 2,150-3,400 11,400-18,200
34% 50-60 lakh
Above 60 lakh
Airport: 41 km
Railway station: Miyapur 3,300-5,800 11,000-18,400
24 km Consumer preference by
NH-65: 0 km covered area (sq ft)
12% 10%
1 BHK 2 BHK 3 BHK Nizampet 3,100-4,550 11,200-16,900
5% Below 750
600 sq ft 1,100 sq ft 1,550 sq ft
750-1,000
`23
lakh (avg)
`45
lakh (avg)
`60
lakh (avg)
14% 1,000-1,250
Pragathi Nagar 3,200-4,700 11,500-16,900 1,250-1,500
59%
Above 1,500
Schools 12+ Hospitals 10+ Restaurants 10+ Banks 12+ Grocery Stores 15+ Petrol Pumps 10+ In dia’s No. 1 P ropert y Sit e
The Economic Times Wealth is available at an invitation price of `8/issue. To book your copy, contact your newspaper vendor or call 022-39898090; Email: crm.mumbai@timesgroup.com; SMS ETWS to 58888
The Economic Times Wealth, published by Bennett, Coleman & Co. Ltd. exercises due care and caution in collecting the data PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co Ltd by R.Krishnamurthy at The Times of India Building, Dr. D.N. Road, Mumbai 400001. Tel. No.: (022) 6635 3535,
before publication. In spite of this, if any omission, inaccuracy or printing errors occur with regard to the data contained in this 2273 3535. Fax: (022) 2273 2544 and printed by him at (1) The Times of India Suburban Press, Akurli Road, Western Express Highway, Kandivli (E), Mumbai-400101 . Tel. No.:
newspaper, The Economic Times Wealth will not be held responsible or liable. The content hereof does not constitute any (022) 28872324, 28872931, Fax: (022) 28874231. (2) The Times of India Print City, Plot No.4, T.T.C. Industrial Area, Thane Belapur Road, Airoli, Navi Mumbai-400708. Tel No.:
form of advice, recommendation or arrangement by the newspaper. The Economic Times Wealth will not be liable for any (022) 2760 9999, Fax: (022) 2760 5275.
direct or indirect losses caused because of readers’ reliance on the same in making any specific or other decisions. Readers are EDITOR: Babar Zaidi (Responsible for selection of news under PRB Act). © Reproduction in whole or in part without written permission of the publisher is prohibited. All rights
recommended to make appropriate enquiries and seek appropriate advice before making any specific or other decisions. reserved. RNI No.: MAHENG/2014/57046. VOLUME 07 NO. 21

WHY IS Good For You: HE Conomic Imes

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THE ECONOMIC TIMES Which debt

WE HELP YOU CHOOSE THE BEST .7m

entire 60% of the corpus that can be withdrawn on ma-

missed the stock market rallies in the past few years

Milind Gawade Fund or small savings schemes churned out in the

“If annuity is made tax free, it will be a gamechanger”

How NPS funds have fared

AGGRESSIVE 6-MONTH 1-YEAR 3-YEAR 5-YEAR 3-YEAR SIP 5-YEAR SIP

Extent of loss depends

mysteries received: “Even long-term disciplined inves-

the fact that point-to-point five-year returns

Debt fund liquidity an illusion?

The duration of a fund is the weighted

Life Freedom Index score Financial Planning

Buy stocks with

‘Credit risk funds will be back in

learn & keep

Which debt product should you opt for?

New rules of personal finance

no expense on eating out, entertainment,

Managing financial PAPER WORK

Evaluate the suitability of your KYC information

Rights issue 2 4 A listed

For the past three years, I

ET WEALTH TOP 50 STOCKS

RANK PRICE ` GROWTH%* VA LUAT I O N R AT I O S RISK R AT I N G

LAGGARDS & LEADERS

EQUITY: MID CAP

ETW FUNDS 100 Top 5 SIPs

DEBT: DYNAMIC BOND

  Top 10%

loans and deposits

LOANS & DEPOSITS

Top five bank FDs

TENURE: 2 YEARS Your EMI for a loan of `1 lakh

TENURE: 3 YEARS @ 12% 2,224 1,435 1,200 1,101 1,053

DCB Bank 7.85 14,751

HOW YOUR INVESTMENTS

Sensex 10-yr bond yield (%) USD-INR CPI-Combined (%)

PENNY STOCKS UPDATE

Top price gainers Top volume gainers

Top price losers Top volume losers

ICICI PRUDENTIAL BLUECHIP

GOOD RECORD OUTSHINES LOW BOUTS

HOW HAS THE FUND PERFORMED? Top 5 sectors in portfolio (%)

Point To Point Return (%)

FUND BENCHMARK CATEGORY AVERAGE FACTS Energy 14.69

2.68 2.52 2.07 Technology 11.20

Rolling Return (%) FUND BENCHMARK WHAT IT ICICI Bank 6.19

13.38 COSTS Reliance Ind 5.89

Debt & Cash 6.40%

You individual stock picks rather

Buy deviations at sector level. It

pick of the week

Manappuram Fin: Emerging stronger

WHAT EXPERTS ADVISE

SELL RESEARCH STOCK 1-YEAR TARGET POTENTIAL

your feedback & more...

REALTY Good Metro connectivity is key

LOCALITY SNAPSHOT SUPPLY BY BHK

MIYAPUR, HYDERABAD 1 BHK 10%

PRICE RANGE VALUES Consumer preference by