Professional Documents
Culture Documents
1
1
Traditionally, most of us have been harsh on the idea of being “average”
as we keep saying “that was an average movie”, “she is just an average
student”, etc.
Our argument is that, “average” is not just good enough, but is ‘the
thing’ one should strive to achieve as far as equity investing by
individual investors is concerned.
Warning: Getting inspired by these quotes can be harmful for individual investors
in the world of Equity Investing
2
Rupee Cost Averaging :
Invest a particular amount in a mutual fund every month (or every day / week / quarter)
through the ups and downs of the market movement of a mutual fund's NAV. With
rupee cost averaging (or Systematic Investment Plan or SIP), an investor benefits by
buying more units when the market is down and less units when the market is up.
900 24
Recover / Rally
Flattish period
800 22
700 20
Units Purchased
Fund NAV
600 18
500 16
400 14
COVID led fall
300 12
200 10
01-Apr-21
01-Jan-21
01-Apr-19
01-Jul-19
01-Mar-21
01-May-21
01-Sep-19
01-Jan-19
01-Jul-18
01-Oct-19
01-Feb-21
01-Sep-18
01-Jun-19
01-Mar-19
01-Nov-19
01-May-19
01-Aug-19
01-Oct-18
01-Jun-18
01-Dec-19
01-Nov-18
01-Feb-19
01-Aug-18
01-Dec-18
01-Apr-20
01-Jul-20
01-Sep-20
01-Jan-20
01-Oct-20
01-Jun-20
01-Mar-20
01-Nov-20
01-May-20
01-Aug-20
01-Dec-20
01-Feb-20
Average
Line
Peak
Price
Bottom
Time
WHAT TO DO?
Buy Low and Sell High? But, this is Capture the average?
impossible to do on a consistent basis This is the smarter thing to do.
4
Average
Line
Peak
Price
Bottom
Time
5
Factors in favour of India's growth over the next few decades :
Favourable demographics
Indian economy is expected to grow at a healthy rate over the next few decades
The above is for illustrative purposes only to explain the Concept of Averaging. HDFC AMC / HDFC Mutual Fund is not guaranteeing any
returns on investments made in the scheme(s).
6
6
HOWEVER...
7
80% 81%
74% 71%
67%
60%
42%
40%
27%
24%
20% 18% 19%
15% 12% 15%
11% 10%
7%
0%
-3% -2%
-9% -9%
-13%
-20%
-25% -26%
-36%
-40%
11
13
12
15
21
17
99
16
19
18
01
10
14
03
20
02
05
07
06
09
08
00
04
20
20
20
20
20
20
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
*Volatility refers to frequent and extreme upward and downward movements in stock prices. 8
Greed and Fear in Market Cycles
Human beings are guided by 2 extreme emotions "Greed" and "Fear", which prevent them from
taking sound investment decisions.
When there are excesses in the stock market, Greed sets in, which in turn results in major correction,
thereby triggering the Fear psychology. Most of the investors are trapped in the greed and fear cycles
by buying in greed and selling in fear, resulting in a bad investment experience.
Just made handsome gains Just made large losses An SIP Investor
I am sure I can repeat my I should never have made I am ready for the long
Approach to investing success these investments journey ahead
9
Events that have impacted the markets :
2013 Taper Tantrum ( Surge in US Yields), High Twindelicit in India (CAD and
Fiscal Deficit)
2014 NDA forms Central Government
2020 COVID-19
10
Long term SIP in HDFC Flexi Cap Fund
A Truly Rewarding Journey
Average Cost per Unit at year end ( ) HDFC Flexi Cap Fund - Regular Plan Growth NAV
875.882
900
800
700
600
500
400
300
200
100
29.02
0
31-May-21
31-Mar-15
31-Mar-21
31-Mar-17
31-Mar-16
30-Mar-11
31-Mar-14
31-Mar-95
31-Mar-97
28-Mar-13
31-Mar-99
29-Mar-19
31-Mar-03
31-Mar-05
30-Mar-12
31-Mar-20
31-Mar-98
31-Mar-06
28-Mar-18
31-Mar-00
30-Mar-01
31-Mar-04
30-Mar-10
29-Mar-96
28-Mar-02
28-Mar-02
30-Mar-07
30-Mar-09
30-Mar-08
Can you guess what is average cost of the units accumulated via SIP?
Answer - ` 29.02
The reason for lower average cost is the disciplined approach to investing where more
units were accumulated at lower NAV during the early stage of the SIP period.
11
We can broadly divide two types of people who need
SIP for investing
12
84% of investors
73% of investors
Source: Internal
Based on tenure at the time of registration of all live SIPs during Mar - 21
13
No doubt laziness and forgetfulness are negative human traits,
but can prove useful in stock markets for individual investor for
“staying invested” for a long time.
Do something today that your future self will thank you for
- Sean Patrick Flanery
Success is not easy and it is certainly not for the lazy - Anonymous
Warning: Getting inspired by these quotes can be harmful for individual investors
in the world of Equity Investing
14
12
15
13
16
SIP helps to stay disciplined in your investment journey
Amount Saved
5,475 10,400 18,000
per year (in `)
Assumed Rate of
12% 12% 12%
Return (%)
Accumulated
amount at the end 26 Lakhs 50 Lakhs 87 Lakhs
of 35 years (in `)
Do not save what is left after spending, but spend what is left
after saving - Warren Buffet
17
To benefit from SIP, one should invest on periodic basis and not allow
emotions to drive their investment decisions.
Below table shows example of two individuals, Mr. A and Mr. B, both started their SIP
journey in HDFC Flexi Cap Fund on 1st April 2018. During the beginning of COVID 19,
Mr A paused his SIP for 6 months (driven by fear of COVID 19 impact on markets) while
Mr. B continued with his disciplined approach of investing regularly. Here are the
results:
A B
Difference 1,00,124
The trick is not to learn to trust your gut feelings, but rather to
discipline yourself to ignore them... - Peter Lynch
18
Channelize your SIP into three different asset classes
SIP
HDFC Flexi Cap Fund HDFC Corporate Bond Fund HDFC Gold Fund
HDFC Mid-Cap
HDFC Medium Term Debt Fund
Opportunities Fund
Children’s education
20
25
35
45
Key Takeaways
Start Early
Invest Regularly
Age 30 Age 40 Age 50 Retired at
Age 60
Stay Invested
21
How much is enough?
With rising education costs across all professional degrees,
saving for education becomes even more imperative
Inflation
The above chart is only an illustrative example to show rising cost of education and not based on actual data.
22
HDFC Flexi Cap Fund (History of SIP)
1000
`9.57 cr
900
800
700
600
INR Lakhs
500
400
`3.42 Cr
300
200
100
`31.70 Lakh
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Market Value in HDFC Flexi cap at year end Cumulative Amount Invested at year end
A SIP of `10,000 per month in HDFC Flexi cap Fund since Inception (January 01, 1995)
would have grown to `9.57 Cr as on 31st May 2021
23
SIP since inception* of `10,000 invested systematically on the first business day of every month
(total investment `31.70 lakh) in HDFC Flexi Cap Fund would have grown to ~`9.57 crore on May 31, 2021 (refer below table).
SIP Performance - HDFC Flexi Cap Fund - Regular plan - Growth Option
Total Amount Invested (` in 000) 3,170.00 1,800.00 1,200.00 600.00 360.00 120.00
Market Value as on May 31, 2021 (` in 000) 95,713.74 5,621.88 2,524.80 884.95 502.73 163.96
Additional Benchmark Returns (%)## 13.98 12.70 14.30 17.14 22.52 53.55
CAGR returns are computed after accounting for the cash flow by using XIRR method (investment internal rate of return). The above investment
simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic
Investment Plan.Since Inception Date = Date of First allotment in the Scheme / Plan.
SIP since inception of `10,000 invested systematically on the first business day of every month (total
investment ~`29.60 lakh) in HDFC Top 100 Fund would have grown to `4.87 crore$$ on May 31, 2021(refer below table).
SIP Performance - HDFC Top 100 Fund - Regular plan - Growth Option
Total Amount Invested (` in 000) 2,960.00 1,800.00 1,200.00 600.00 360.00 120.00
Market Value as on May 31, 2021 (` in 000)$$ 48,659.04 5,165.11 2,369.43 847.62 478.41 155.53
Additional Benchmark Returns (%)## 14.73 12.83 14.49 17.43 21.84 49.02
CAGR returns are computed after accounting for the cash flow by using XIRR method (investment internal rate of return). The above investment
simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic
Investment Plan. Since Inception Date = Date of First allotment in the Scheme / Plan. $$ All Dividends declared prior to the splitting of the Scheme into
IDCW & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevailing NAV (ex-dividend NAV).
(Please turn overleaf)
24
HDFC Top 100 Fund - Performance - Regular plan - Growth Option
Performance of Other Funds Managed By Prashant Jain, Fund Manager of HDFC Flexi Cap
Fund (Erstwhile HDFC Equity Fund) & HDFC Top 100 Fund (who manages total 4 schemes)
Benchmark - NIFTY 50 Hybrid Composite Debt 65:35 Index 41.79 13.83 13.43
Benchmark - NIFTY 50 Hybrid Composite Debt 15:85 Index 14.35 11.21 9.80
On account of difference in type of scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly not
comparable. +The Fund is co-managed by Mr. Prashant Jain (Equities) & Mr. Shobhit Mehrotra ( Debt).
Notes common to all tables:
Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). Load is not taken
into consideration for computation of above performance(s). Different plans viz. Regular Plan and Direct Plan have different expense structures. The
expenses of the Direct Plan under the scheme will be lower to the extent of the distribution expenses/commission charged in the Regular Plan. Returns
as on May 31, 2021. The above returns are of Regular Plan- Growth Option. N.A.: Not Available
Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). The above returns
are computed using the Time Weighted Rate of Return (TWRR) methodology, to make them more comparable with the mutual fund scheme’s returns.
FPI Portfolio: Inception date is 22nd March, 2016. The performance is not comparable with the performance of the aforementioned scheme(s) of HDFC
Mutual Fund due to differing investment objective/s and fundamental differences in asset allocation, investment strategy and the regulatory environment.
The said disclosure is pursuant to SEBI Circular no. Cir/IMD/DF/7/2012 dated 28th February, 2012 pertaining to Regulation 24(b) of SEBI (Mutual Funds)
Regulations, 1996. N.A. Not Applicable. FPI - Foreign Portfolio Investor.
25
PRODUCT LABELING:
THIS PRODUCT IS SUITABLE FOR
NAME OF SCHEME RISKOMETER
INVESTORS WHO ARE SEEKING*
* Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.
For latest Riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com
Release Date: 05 July, 2021
27