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Jan-March 2012

GLOBAL ECONOMY INVESTMENT & PORTFOLIO STRATEGY

Disclaimer:
The Hongkong and Shanghai Banking Corporation Limited, India 2005 52/60 Mahatma Gandhi Road, Mumbai 400 001 For private circulation only. This publication has been issued by The Hongkong and Shanghai Banking Corporation Limited in India (HSBC), incorporated in Hong Kong SAR with limited liability, for the information of its Premier / Advance / (none) customers who are resident in India. This publication should not be distributed to any other persons and in particular should not be distributed to the United States of America, Canada or Australia. It cannot be reproduced or further disseminated. This publication does not constitute investment advice or an offer to sell, or a solicitation of an offer to purchase or subscribe for any investment. The information herein is derived from publicly available sources that HSBC considers reliable but which has not been independently veried. Whilst every care has been taken in compiling the information, HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Some of the information in this document is derived from third party sources as specied at the relevant places where such information is set out. The Bank believes such information to be reliable but it has not independently veried the same. Expressions of opinion are those of HSBC only and are subject to change without notice. Opinions expressed herein do not have regard to specic investment objectives, nancial situation and the particular needs of any specic person who may receive this publication. Investors should seek nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed in this publication and should understand that the views regarding future prospects may or may not be realised. This document is for circulation in India. The Bank makes no representations that the products or services mentioned in this document are available to persons of any other country or are necessarily suitable for any particular person or appropriate in accordance with their local law. Among other things, this means that the disclosures set forth in this document may not conform to rules of the regulatory bodies of any other country and investment in the products discussed will not afford the protection offered by the local regulatory regime in any other country. The information contained herein is condential to the recipients thereof and may not be reproduced or otherwise disseminated. The Bank or its afliates or their ofcers, directors and employees may have investments in any of the products mentioned in this publication (or in any related products) and may from time to time, add to or dispose of any such investment. Investment involves risk, value of investment may increase or decrease, and may become valueless. Past performance gures shown are not indicative of future performance. The relevant product offering documents should be read for further details.

Wealth Strategies - Jan- March 2012

2011 THE YEAR THAT WAS GLOBAL ECONOMY INDIA OUTLOOK DEBT UPDATE

05 06 10 15

INVESTMENT & PORTFOLIO STRATEGY Investment Outlook Participating in the domestic growth Tiding through the volatility Structural imbalances and environment concerns continue to affect the food supply chain globally Diversication

18 19 19 20 21 21

Tactical opportunities offering better returns on a risk adjusted basis 22 FUNDS IN FOCUS 23

Wealth Strategies - Jan- March 2012

Wealth Strategies - Jan- March 2012

2011 The year that was


Equity markets across major emerging economies in 2011 witnessed a downturn due to slowing performance of the US and sovereign scal and debt crises in Europe. Indian markets broadly followed the trend, though the extent of fall in the Indian markets has been more as compared to its global peers. Endogenous factors including secondary impact of adverse global developments of the currency and scal decit along with sluggishness in industrial activity led to a valuation de-rating and sharp deceleration in earnings growth. The key events that encompass the global equities during the 2011 started with social unrest in Middle Eastern & North African region (MENA) i.e. Tunisia, Egypt, Yemen, Libya, Bahrain etc. and had serious impact on commodity prices and global markets. Crude moved in an upward trajectory on supply disruption and speculation of a widespread and prolonged unrest in the region. Following the MENA crises, global sentiments were further impacted by a massive tsunami that hit Japan in March 2011 impacting the economic growth in the country. Asset prices deteriorated and Japanese economy contracted post the tsunami. The impact of the tsunami was visible on supply chains; and also adversely impacted other Asian economies like Thailand, Indonesia etc. As the global economy was about to regroup post the natural disaster, sentiments were affected by slowing growth in the US coupled with political indecisiveness on raising the US debt ceiling. The US debt ceiling, which had reached its cap of USD 14.3 T was raised to USD 16.4 T. Further to this, the agreement also included cutting the federal budget decit by USD 2.5 T over the next decade. During that period, the markets continued to be volatile on speculation that US might default on debt payments. S&P downgraded U.S.s AAA credit rating for the rst time since inception, slamming the nations political process, indecisiveness and criticising lawmakers for failing to cut spending or raising revenues enough to reduce the record budget decits. Parallely, the Euro region debt crises emerged as the major concern for the global economies. The crisis which was triggered off in Greece spilled over to major European countries like Italy, Spain and France. Most countries saw a revision in their sovereign debt ratings by the three major rating agencies; Moodys, S&P and Fitch. The credit rating agencies also downgraded other sovereign nations across Europe e.g. Greece, Spain, Portugal etc. Closer home, growth remained sluggish as high inflation and rising interest rates resulted in broad-based slowdown of the economy. On the political front, 2G scam & Lokpal bill kept government busy. Policy reforms like FDI in retail had to be shelved on account of stiff opposition. INR touched a record low of 54.2/USD, as greenback gained against major currencies globally. INR was the worst performing currency in the region. A depreciating INR had impacted government financials and fund flow into the country. All these factors coupled with deteriorating global cues kept markets volatile during the year. Going into 2012 for India, a number of unknowns dominate the investment landscape for investors. Amongst them, the dominant factor is weak predictability of outcome of key economic and political developments in the EZ/US; Indias high government deficit runs the risk of crowding-out private sector investments; External sector payment and high crude prices are key negative triggers for the currency markets; In the 2nd quarter GDP, the investment activity in the country contracted due to host of factors. A meaningful recovery in sentiment would critically hinge upon improvement in operating environment that includes fall in inflation (widely expected to touch 7% in Mar12 from current 9%), drop in interest rates and a stable INR. In view of unclear trends in the horizon, it is expected that fixed income assets, stock/sector selection in equities and gold could be important component for portfolio out-performance.

Wealth Strategies - Jan- March 2012

Global economic contraction likely to continue mainly due to the sovereign debt crisis and cyclical downturn in economies.

Global Economy

Marked contraction in industrial productivity and rising unemployment rates in developed nations.

Rising cost of borrowing and increasing pressure on debt servicing and debt re-nancing.

There has been a steady contraction in world economies due to multiple headwinds facing the world in general and Europe in particular. The possibilities of a recession in the Euro-zone economies due to tight fiscal and credit conditions, along with the concerns in the region's banking sector, continue to take a toll on activity and confidence. The recent positive news inflows from the US most likely came from a strong consumer led demand over the recent holiday season, though the core problem of growth still remains as c35% of US exports are to the European Union. Source: Bank of International Settlements.

Developed Nations GDP Slow down


GDP - Developed Nations
US EU UK Japan Germany

5 4 3 2 1 0
Ja n11 Fe b11 Ju n11 ar -1 1 De c10 Ju l-1 1 Au g11

-1 -2

Source: Bloomberg

Wealth Strategies - Jan- March 2012

Se p11

Ap r- 1 1

ay -1 1

Emerging Nations GDP


GDP - Emerging Nations
China India Brazil Indonesia Russia

World PMI
World PMI
US UK Euro-Zone China Japan

10 9 8 7 6 5 4 3 2
Ja n11 De c10 Fe b11 Ju n11 ar -1 1 Au g11 Se p11 Ap r- 1 1 ay -1 1 Ju l-1 1 M M

63 61 59 57 55 53 51 49 47 45 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11

Source: Bloomberg

Source: Bloomberg

The fast paced growth of the emerging market economies has been negatively impacted by the decrease in global trade volumes and a slowdown in the advanced economies. Global industrial growth eased further during the quarter, with the contagion now spreading to the emerging markets. The Purchasing Managers Index (PMI) for China and the Euro-zone has declined by over 5% over the previous quarter. The US has however resisted the trend indicating that the implementation of QE II and Operation Twist are taking effect.

World Unemployment Rates


Global Unemployment Rate
US Euro-Zone UK Italy Spain - RHS

Emerging Market Ination


Emerging Markets Inflation
China Brazil Indonesia India - RHS

10.5 10 9.5 9 8.5 8 7.5 7 6.5

22 21 20 19 18 17

7.5 7 6.5 6 5.5 5 4.5 4 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11

10.2 10 9.8 9.6 9.4 9.2 9 8.8 8.6

Source: Bloomberg

ar -0 9 ay -0 9 Ju l-0 9 Se p09 No v09 Ja n10 M ar -1 M 0 ay -1 0 Ju l-1 0 Se p10 No v10 Ja n11 M ar -1 M 1 ay -1 1 Ju l-1 1 Se p11 M

Source: Bloomberg

Global unemployment rates have remained stubbornly high and in certain economies have started to inch up. Economies where fiscal austerity measures are being adopted and implemented, like Spain, Italy, Greece and Ireland, have seen a sharp upward trend in unemployment rates. Global inflation has shown signs of cooling down from its peak in October due to slow growth. A major contributor to this has been the emerging markets, especially Asia where hard and soft commodity prices are cooling off.

Wealth Strategies - Jan- March 2012

Cost of Borrowing
10-yr Bond Yield
US
7.5 6.5 5.5 4.5 3.5 2.5 1.5
03/01/2011 17/01/2011 31/01/2011 14/02/2011 28/02/2011 14/03/2011 28/03/2011 11/04/2011 25/04/2011 09/05/2011 23/05/2011 06/06/2011 20/06/2011 04/07/2011 18/07/2011 01/08/2011 15/08/2011 29/08/2011 12/09/2011 26/09/2011 10/10/2011 24/10/2011 07/11/2011 21/11/2011 05/12/2011 19/12/2011

World Commodity Movement


World Commodity Prices
Spain Italy
140 130 120 110 100 90 80 70 60
Copper Aluminium Lead Zinc Steel Crude CRY Index Gold

UK

Germany

France

Source: Bloomberg

Source: Bloomberg

There is a growing disparity in the average cost of borrowing in developed nations. Yields of the generic 10-year bonds in distressed nations have soared by over 200 bps in the past quarter to an average 5.5% p.a. Money has moved into safe havens like US Treasuries and German Bunds on moderating economic news and risk-off from equities. There has been a spate of rate cuts across the globe with nations trying to bolster their economies and to increase credit lines to stressed banks. The cuts have ranged from 25 bps to 50 bps in the bank rates as well as reductions in reserve ratios with Central Banks. World commodity prices have displayed heightened volatility in the past few months due to slowing global growth. There has also been a sharp decrease in value of gold which is perceived as a safe haven. A stronger USD and a higher risk aversion to commodities is also a key factor in the reduction of prices. A reversal of this trend could be triggered by 1) the ability of the United States Federal Reserve to stimulate growth; 2) a pick-up in the Chinese economy and 3) a rm scal and credit resolution to the European debt crisis.

World Currency Movement


World Currency Movement
Dollar Index GBP EUR CHF JPY

Europe Banking Exposure


Banking Exposure to Europe
Dec-10 Mar-11 Jun-11

110 105 100 95 90 85 80 75


01 /0 6/ 20 15 11 /0 6/ 20 29 11 /0 6/ 20 13 11 /0 7/ 20 27 11 /0 7/ 20 10 11 /0 8/ 20 24 11 /0 8/ 20 07 11 /0 9/ 20 21 11 /0 9/ 20 05 11 /1 0/ 20 19 11 /1 0/ 20 02 11 /1 1/ 20 16 11 /1 1/ 20 30 11 /1 1/ 20 14 11 /1 2/ 20 11
12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% France Germany Italy Spain United Kingdom

Source: Bloomberg

Source: Bank of International Settlements

The USD has steadily strengthened against most currencies across the globe as there is heightened risk aversion. Most developed nations saw their Central Banks intervene in their currency markets to ensure the stability of their currency and hence stability of trade. The total exposure of European banks to European region has steadily increased since June 2010. Slow growth and high cost of debt servicing and refinancing has resulted in a further contraction in the Euro-zone economies.

Wealth Strategies - Jan- March 2012

01 /0 6/ 20 15 11 /0 6/ 20 29 11 /0 6/ 20 13 11 /0 7/ 20 27 11 /0 7/ 20 10 11 /0 8/ 20 24 11 /0 8/ 20 07 11 /0 9/ 20 21 11 /0 9/ 20 05 11 /1 0/ 20 19 11 /1 0/ 20 02 11 /1 1/ 20 16 11 /1 1/ 20 30 11 /1 1/ 20 14 11 /1 2/ 20 11

Sovereign Rating
Rating

Downgraded Nations

Current AAAa3 BB+

Prior AA Aaa BBB-

Upgraded Nations

Rating Current BBBPrior BB+

Spain Belgium Portugal

Indonesia

Source: Bloomberg

The contagion from the sovereign debt crisis is now affecting the larger European economies. Due to this, the ratings have been revised downwards. Credit rating agencies have also kept the core economies of the Euro-zone under watch due to worsening scal condition and creation of a political impasse over the resolution of the debt crisis. The strength of the emerging economies is evident by their strong domestic demand. This has been commended by credit rating agencies who have revised their sovereign ratings as well as corporate bank ratings upwards with a positive outlook.

Wealth Strategies - Jan- March 2012

Domestic growth rate likely to experience broad-based slowdown amid global and domestic uncertainty.

India Outlook

Ination pressure coming off from the previous high amid earlier monetary action by the Central Bank. Indian equities continued its underperformance vis--vis global peers during the quarter.

Indian Economic Overview

Growth outlook is expected to be lower than estimated, as macro headwinds such as eurozone sovereign debt crisis, growth downgrade and slowdown of economic growth continues. Investment growth in the economy has come off substantially as high interest rate, inflation and reforms vacuum has resulted in postponement of major investment activity. Inflationary pressure have shown signs of cool down over the last couple of months, but still remains above the comfort level of the Central Bank. Moreover, normal monsoon and good kharif crop sowing season has resulted in food inflation dropping significantly over the last couple of weeks; food inflation fell to 6-yr low of 0.42% in mid December. Fiscal consolidation has emerged as a major concern for the economy, as the government is likely to miss its fiscal deficit target of 4.6% by a further 1% on account of increase in oil subsidy. INR at the current levels of INR c52 / USD is expected to adversely impact government financials and corporate balance sheet. Equity markets have underperformed its global peers on yearly basis on account of global & domestic concerns. At current Sensex level of 15500, markets are trading in line with historic valuation.

10 Wealth Strategies - Jan- March 2012

Growth concerns take centrestage


2011-12 Q1 2011-12 Q2

Capital formation dips to single digits from the earlier highs


Real GDP Capital Formation (%) yoy

25% 20% 15% 10% 5%

10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -2.00%


Private Final Consumption Expenditure Government Final Gross Fixed Consumption Capital Formation Expenditure GDP
0% Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 -5%

Source: Bloomberg

Source: Bloomberg

Indian growth rate moderated to 6.9% in Q2 FY12 from 7 .7% in Q1 FY12. The sub 7% level growth was in line with market expectation. The economy faced continuous challenges both on domestic and global front, such as slowing global economy (US/Euro region), lower demand from the developed nations, rising interest rate and detraction in industrial activity in the country. Overall, during H1FY12 of 2011-12, GDP growth slowed to 7 .3% from 8.6% yoy. Investments (Gross Capital Formation) contracted during the quarter (c0.6% yoy), its lowest levels since June-09 on account of uncertain global economic conditions, rising interest rate and high inationary pressures, capital ows and no major policy reforms announcement by the government. Anecdotal evidence suggests that capex activity is likely to be affected in the near term.

Industrial activity slows as economy experiences slowdown


Bas ic goods Capital goods Interm ediate goods Cons um er goods IIP

Consumption spending and credit growth drops

Car Sales (%) yoy


40 30
20.00 25.00

Credit Growth
25 20 15 10 5 0

20 % growth (y-o-y)
15.00

10 0 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11


10.00 5.00 0.00 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11

-10 -20 -30

Source: Bloomberg

Source: Bloomberg

Industrial growth experienced a sharp moderation falling in negative territory (-5.1% yoy v/s 2% in September). The fall was due to volatility in the capital goods segment, which saw the biggest decline of c25% yoy v/s c6% in September. Industrial growth is bearing the impact of previous rate hikes and unstable macro economic environment. Slowing growth has hindered consumption spending in the country. Economic indicators like car sales and credit growth are indicating a slowdown in demand. Credit growth has come off from highs of 20% levels in September to c17% levels currently.

Wealth Strategies - Jan- March 2012 11

Likely slippages in the governments FY12 scal decit target on cards


Fiscal Deficit (% of GDP)
7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00%

Lower Tax revenues to further impact scal targets


Tax Revenues (yoy %)
60.00% 40.00% 20.00% 0.00% -20.00% -40.00% -60.00%

Fiscal slippage likely on oil subsidy

Jan11

Feb- Mar11 11

Apr- May- Jun- Jul11 11 11 11

Aug- Sep- Oct11 11 11

0.00% FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12
-80.00%

Source: Bloomberg

Source: Bloomberg

On the scal front, it is expected that the government may overshoot the decit target of 4.6%. This slippage is likely to arise on account of lower tax revenue, non realisation of disinvestment proceeds, increase in expenditure due to higher oil under recoveries. Government tax revenues have witnessed a declining trend over the recent months as industrial activity is experiencing a slowdown.

Volatile equity market scenario has made the disinvestment difcult for now
Year 2010-11 2011-12 Budgeted Receipt (INR B) 400.00 400.00 Total Receipts (INR B) 22.76 1.14 Shortfall* 43.10% 97 .14%

Source: Department of Disinvestment (Data as on 30th June 2011) (chart 7)

Off late, the government has announced alternate measures to raise money to meet disinvestment target for the scal such as directing cash rich PSUs like Oil India, ONGC and BHEL to buy back government stake in the company as the government had to postpone key public issues by the PSU due to unfavourable and volatile capital markets.

Exports growth slows amid global uncertainty

Widening of trade balance due to slowing global demand


Trade Balance (USD M)
1 J an-1
0 -5000 -10000 -15000 -20000

Imports (yoy %)
90 80 70 60 50 40 30 20 10 0 Jun-11 Jul-11

Exports (yoy %)

Mar-

11

May

-11

1 J ul-1

Sep-

11

Aug-11

Sep-11

Oct-11

-25000

Source: Bloomberg

Source: Bloomberg

Indian export growth has decelerated since September 2011, on account of slowing demand in the global economy. Exports registered a growth of c10% yoy in October 2011, however during the same period imports have gone up by c21%. Indias oil imports too have registered upswing of c20% during the same time. Rising trade decit has emerged as a key concern for the Indian economy; trade decit peaked to its highest level of USD c19 B during the month of October 2011 on account of slowing exports and rising imports. With the slowdown in domestic and global growth, trade activity is likely to slow in the near future.

12 Wealth Strategies - Jan- March 2012

Depreciating INR to dampen the drop in global commodity prices


INR m-o-m (%) Crude m-o-m (%) Commodities m-o-m (%)

.. FII Flows remains volatile


FII Trend (USD M)
3000 2000 1000 0

15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00%


Jan11 Feb11 Mar11 Apr11 May11 Jun- Jul11 11 Aug11 Sep11 Oct11 Nov11

-1000 -2000 -3000

Jan- Feb- Mar- Apr- May- Jun11 11 11 11 11 11

Jul- Aug- Sep- Oct- Nov- Dec11 11 11 11 11 11

Source: Bloomberg (chart 10) Commodities represents CRY Index

Source: Bloomberg

INR has been the worst performing currency in the region; it has fallen over c16% since October 2011 against USD on the back of macro headwinds like eurozone crisis, US rating downgrade and global growth slowdown. The USD has appreciated against most currencies across the globe as risk aversion sentiments take account. A weak INR is likely to have an adverse impact on Indias oil import bill, elevates import cost which will further add to inationary woes and adversely impact the fund ows in to the country. Corporate balance sheets are likely to take a hit on account of mark-to-market forex losses and the bottomline can be squeezed further over the coming quarters. To curb the downfall of INR, government has announced various number of measures such as special window to sell USD to state-run oil importers, removed USD 100 M limit on net supply through INR swaps. Global commodities have corrected from earlier highs on sluggish growth in developed and developing economies of the world. For India, depreciating INR most likely has net off the impact of falling commodity prices on the economy.

Key Positives Ination coming off from the earlier highs


WPI
15 13 11 9 7 5 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11

Pause in monetary action by Central Bank

Food Inflation
10.2 10 9.8 9.6 9.4 9.2 9 8.8 8.6

Repo Rate (%)


9 8 7 6 5 4
No rate hike in RBI mid quarter policy review Dec 2011

Ju n10 Au g10

Fe b10

Fe b11

De c10

Ap r- 1 1

Ju n11

Ap r- 1 0

Au g11

O ct -1 0

Source: Bloomberg

Source: Bloomberg

Inationary pressure have shown signs of cooling over the last couple of months on account of lag impact of previous rate hikes by the Central Bank. WPI ination has however remained above 9% since December 2010 on account of both demand and supply side pressures. Food ination has come off from c11% levels in October 2011 to c3% in December 2011. Current ination levels still continue to remain above RBIs comfort zone but in the coming months the pace of ination is likely to slow. Unstable commodity prices coupled with a depreciating INR could however disrupt the inations downward trajectory.

Wealth Strategies - Jan- March 2012 13

O ct -1 1

Indian Equities Overview


Indian equities continued its underperformance vis--vis global peers
3 Months
10.00% 5.00%

Global cyclical remained worst hit; defensives offered cushion in volatile times
3 Month YTD

YTD - 2011
20.00% 10.00%

He al th

O il&

-5.00% -10.00% -15.00% -20.00% -25.00% -30.00%

FM

China

Brazil

World

Russia

EM

India

-10.00% -20.00% -30.00% -40.00% -50.00% -60.00%

Source: Bloomberg

Source: Bloomberg

Indian equities continued their underperformance vis--vis global peers. On a quarterly basis, Indian equities were the worst performing, falling c7% led by domestic factors like high interest rate, rising ination, lack of reforms, INR depreciation and scal mismatch concerns. Global uncertainty led by growth slowdown in developed countries coupled with Eurozone credit crises added to the volatility during the year. Defensive sectors (FMCG, Healthcare) were better off compared to industrial and global cyclical sectors (IT, Metal) on YTD basis. Strong domestic demand helped companies to register better than expected top-line growth but input pressure has played negatively on the bottom-line. On quarterly basis, IT and Pharma have delivered positive returns on account of revival of demand from developed countries and strengthening of USD against INR.

Sensex valuation in line with historical average


Historic P/E 30 25 20 15 Dec01 10 5 0 Dec02 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11

Sensex remained in volatile trajectory throughout


Sensex 21000 20000 19000 18000 17000 16000 15000 14000
Feb-11 Mar-11 May-11 Aug-11 Sep-11 Nov-11 Jan-11 Jun-11 Jul-11 Oct-11 Apr-11 Dec-11

Volatility 40 35 30 25 20 15

Source: Bloomberg

Source: Bloomberg Volatility refers to Nifty VIX Index

Markets were driven by volatility during the year led by various factors like MENA crises, Japanese earthquake, US Debt crises, Eurozone credit crises, US ratings downgrade and slowing global economic growth. Volatility reached its highest level between AugustOctober on account of heightened global uncertainty. Sensex at 15500 levels is trading at 12x one year forward earnings but below their long term average making it a fairly priced market. Going ahead, key factors like slowing growth, global uncertainty and earnings downgrade are likely to cast a shadow on the equity market performance with the likely scenario being of markets trading in line with historic levels.

14 Wealth Strategies - Jan- March 2012

Ca pi ta

lG oo ds

ar e

Po we r

G as

CG

Re al ty

et al

IT

0.00%

Ba Co nk ns um er Du ra bl e

0.00%

G-secs outperform corporate bonds. RBI signals a shift in its hawkish monetary policy stance.

Debt Update

Fiscal concerns weigh heavy on long term yields. Tight liquidity conditions impacting short term yields.

G-sec yield curve attens during the quarter

Bond yields atten in December; G-secs outperform corporate bonds




Change in bps (RHS) 8.9% 8.8% 8.7% 8.6%

30-Dec-11

29-Sep-11 15 10 5 (5)

Shorter end of the G-sec yield curve moved higher in response to a liquidity crunch due to advance tax payments by corporates and foreign outows amidst volatile equity markets. Meanwhile the longer end of the yield curve eased marginally following a shift in RBIs monetary policy stance, signalling a pause in further monetary tightening. The yields also eased on account of buying support from FIIs following RBIs move to increase their investment limits. Corporate bond yield curve attened on easing supply pressure. On the other hand, yields on money market instruments have risen sharply since September despite a halt in monetary tightening by the RBI on tight liquidity conditions. The attening of the yield curve is being witnessed as a segment of investors are choosing to remain invested at the shorter end of the curve on concerns plaguing the longer end of the curve including 1) scal decit overshooting the budgeted estimates, 2) additional borrowing by the government, 3) higher than estimated slowdown in growth.

8.5% 8.4% 8.3% 8.2% 8.1% 8.0% 7.9% 7.8%

(10) (15) (20) (25)

yr

yr

yr

yr

yr

yr

yr

da

da

yr

yr

11

Source: Bloomberg

Corporate bond curve attens during the quarter


9.90% Change in bps (RHS) 30-Dec-11 29-Sep-11 5

9.80% 0

9.70% -5

9.60%

9.50%

18 2

91

10

15

yr

yr

-10

9.40% -15 9.30%

9.20% 3MO 6MO 1YR 2YR 3YR 4YR 5YR 6YR 7YR 8YR 9YR 10YR 15YR

-20

Source: Bloomberg 

Money market instrument yields harden on liquidity tightness


Money market instrument CP 1M CP 3M CP 6M CP 12M CD 1M CD 3M CD 6M CD 12M 29-Sep-11 9.35 9.55 9.80 10.08 8.85 9.05 9.27 9.50 30-Dec-11 10.05 9.83 9.95 10.10 9.60 9.43 9.69 9.75 Change in bps 70.00 27 .50 15.00 2.50 75.00 38.00 42.00 25.00

Source: Bloomberg

Wealth Strategies - Jan- March 2012 15

Slowing growth and inationary trend leading to a pause in further monetary tightening by RBI


Pace of growth slowing


HSBC Market PMI (Mfg) 60 IIP growth (yoy) RHS 12.0% 10.0% 58 8.0% 56

Pace of growth has slowed considerably in response to the 375 bps interest rate increase since Jan-10. GDP during Q2FY12 rose by 6.9% (yoy) as against as increase of 8.4% increase in the corresponding period last year largely pulled down by slowdown in investments that fell by 0.6% (yoy) in Q2FY12 as against an increase of 10.27% in Q2FY11. The Index of Industrial Production (IIP) also fell sharply by 5.1% (yoy) in October for the rst time in last 2 years largely led by fall in capital goods that declined by a whopping 25.5% during the month. The slowdown is also reecting in the lead indicators of manufacturing growth i.e. the HSBC Market Purchasing Managers Index that has been uctuating in the past few months. The index fell to levels of 51 in November after rising to 52 in October on account of slower growth in output and domestic orders but recovered to 54 in December. The sentiment is being largely impacted by heightened global uncertainties and domestic concerns of ination, policy paralysis, depreciating currency, etc. With the growth momentum losing steam, WPI ination is expected to ease in the coming months aided by favourable base-effect and easing food ination. WPI Ination for November, however stood above the 9% mark at 9.11%. In light of the above developments, the RBI has paused further monetary tightening in its mid-quarter review of monetary policy citing increase in downside risks to growth and retained its ination target for Mar-12 end at 7% due to expected pace of trajectory.

6.0% 54 4.0% 2.0% 0.0% 50 -2.0% 48 -4.0% 46 -6.0%

52

11

11

O ct -1 1

ov -1 1 N

11

g11

ec -1 0

ay -1 1

Ap

Ju

Au

Fe

Se

Ja

Ju

Source: Bloomberg

Ination rate losing momentum


Mfg 25 Primary Ar cle Fuel WPI Ina on

20

15

Mfg & Primary Ar cle ina on stabilising

10

Ju l-1 0 Se p10 N ov -1 0 Ja n11 M ar -1 1 M ay -1 1

Ju l-0 9

Ja n10 M ar -1 0 M ay -1 0

-1 1 Ju l

M ar -0 9 M ay -0 9

-5

-10

-15

Source: Bloomberg

Pause in interest rate tightening by RBI


20

Repo Rate %

WPI Ina on (yoy %)

Index of Industrial Produc on (yoy %)

15 Ina on slowing 10 pause in monetary ghtening Sharp fall in growth 0

Ja

0 -1

1 10 r-10 r-10 y-10 10 t-10 v-10 c-10 11 r-11 r-11 y-11 10 l-10 g-10 11 l-11 -1 bpbnna a a a Ju Ju Jan Ju Ju Oc Ap Ap Fe Se Fe De Au Au No M M M M

-5

-10

Source: Bloomberg

Fiscal concerns weighing heavy on the long term yields




Governments borrowing calendar in H2FY12


Average borrowing announced
1200

While the pause in further interest rate tightening by RBI has aided long-term bonds, the fall in yields has been limited on concerns of additional G-sec supply pressure. Concerns of scal decit remain as the market awaits any meaningful announcement from the government on plans to consolidate the burgeoning scal decit. Moreover, there is an upside risk to the increase in the scal decit on account of various factors including 1) resilience shown by the global commodity prices to uncertainties increasing cost of importing fuel and subsidies,
INR B

Auc ons conducted so far

1000

800

600

400

200

0 5-9 years 10-14 years 15-19 years above 20 yrs

Source: RBI website

16 Wealth Strategies - Jan- March 2012

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11

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2) the weakening of the INR against the USD, 3) the divestment target of INR 400 B is yet to take off in the backdrop of volatile equity markets and 4) a slowing growth which is expected to impact the revenue collections.


Liquidity tightness worsen in Dec


1000 +1% of NDTL -1% of NDTL Avg LAF

500

+1% of NDTL
RBI's comfort zone 0

Moreover, the RBI has further increased the borrowings plan of dated government securities by INR 400 B, taking the total to INR 2600 B in H2FY12. The Central Bank has conducted auction of c55% of its borrowings so far. In this backdrop, concerns of funding the governments borrowing plan are impacting the long term bond yields.

ay 20 -M ay

ov

ct

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INR B

22 -A

21 -O

15 -J

29 -J

-500

-1% of NDTL
liquidity ghtness beyond RBI's comfort zone

-1000

-1500

Source: Bloomberg, RBI Website WSS Statements

Tight liquidity conditions pushing short term yields higher




Slowing credit and deposit growth


Credit growth 24% Deposit growth

Meanwhile, the shorter end of the curve has moved higher on tight liquidity conditions ahead of the advance tax payments that were cINR 690 B. Liquidity decit increased to cINR 1.4 T in Dec higher than RBIs comfort levels of 1% of NDTL that stood at INR 635 B (Dec 2). Separately, RBI has also been conducting open market operations (OMO), buying back G-secs from the market to aid the liquidity tightness. Since Nov, it has infused liquidity to the extent of INR 412 B till date. Credit growth has eased in response to the monetary tightness by the RBI in the recent months slowing to c18% in Dec from levels of c21% in Sep. The slowdown in credit growth has however been accompanied by a slowdown in deposit growth that eased from c19% in Sep to c18% in Dec. This has therefore limited gains in the corporate bonds.

22%

20%

18%

16%

14%

12%

Source: Bloomberg

Outlook


In the coming months, the bond yield curve will likely be impacted by following developments: i. Sharp slowdown in growth in the coming quarters and deviation in the pace of inations downward trajectory could likely impact the pace of interest rate cuts by RBI ii. Take-off in the INR 400 B divestment plan during FY12 will ease the governments scal consolidation burden iii. Stability of the INR against the USD could provide further relief in ination iv. Liquidity conditions easing from these levels will aid the short term yields v. Governments efforts towards scal consolidation will be key during H2FY12 vi. Global developments impacting risk aversion

8Ap 22 r -A p 29 r -A p 6- r M 20 ay -M 27 ay -M ay 3Ju 17 n -J u 24 n -J un 1Ju 15 l -J u 29 l -J 12 ul -A u 26 g -A ug 9Se 23 p -S e 30 p -S ep 7O c 21 t -O c 28 t -O c 4- t N o 18 v -N o 25 v -N ov

Wealth Strategies - Jan- March 2012 17

18 -N

12 -A

26 -A

16 -D

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17 -J

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ct

Investment & Portfolio Strategy


Investment Outlook Participating in the domestic growth Tiding through the volatility Structural imbalances and environment concerns continue to affect the food supply chain globally Diversication Tactical opportunities offering better returns on a risk adjusted basis 21 21 22 19 19 20

The above should be read in conjunction with all the disclaimers appearing in the publication.

18 Wealth Strategies - Jan- March 2012

Investment Outlook
Stepping into the year 2012, global equity markets face multiple headwinds of 1) anaemic growth in the developed markets including concerns of recession in the Euro-region, 2) continuation of the debt crisis in the Euro-region, 3) liquidity tightness due to increase in risk aversion and 4) possibility of credit downgrades for sovereign and nancial institutions. Albeit, nascent signs of growth emerging in the US and concerted efforts from the member-nations of the Euro-region to resolve the debt crisis can provide some support to the markets. In the coming months, Indian markets are likely to take cues from various factors including 1) global risk appetite, 2) global commodity prices especially crude, 3) currency movement, 4) pace of slowdown in ination and investment activity, 4) governments efforts to consolidate scal decit, 5) interest rate environment and 6) political factors such as the upcoming State elections. Given the market scenario, investors may consider adopting an asset allocation in line with their risk prole and use a systematic investment and transfer approach to investing. The recent sell-off in the equity markets and lower market valuations vis--vis long-term averages continue to offer select opportunities for the discerning investor. The investor may consider aligning their portfolios towards actively managed products that vary their asset allocation on pre-dened valuation levels, large cap oriented equity funds, funds that are nimble in their approach to capitalise on opportunities and funds investing into high dividend yielding companies. On the xed income side, the RBI has signalled a pause in further monetary tightening on the back of slowing ination and increase in downside risks to growth, triggering expectations of a fall in interest rates going forward. However, concerns of scal decit slippages continue to weigh heavy on the investor sentiment and the recent addition in the borrowing plans of the government has increased concerns of supply pressure on the long term bonds. Therefore, despite expectations of a steepening in the yield curve going forward, return opportunities on a risk-return basis remain favourable at the shorter end of the curve.

Participating in the domestic growth


Despite the recent slowdown, Indias economy is growing at an average of c7-8% when the developed market economies are growing at sub 2% and most emerging market economies are posting an average growth rate of 6%. While the recent sell-off in the market has been broad-based, select stocks spread across sectors have displayed strong resilience in the midst of volatility and offer growth opportunities for investors.  Large Cap oriented funds Large cap stocks are typically better positioned to tide through market volatility when compared to mid and small cap stocks on account of deeper and greater participation, comprehensive coverage and higher liquidity.


Funds adopting a nimble approach This style of investing focusses on capitalising on opportunities from steep market movements while being nimble in their approach to investing. Dividend yield funds These funds invest a considerable part of their portfolio into high dividend yield companies offering stability in returns in the form of dividends.

Product Category
 

Products predominantly maintaining a sizeable exposure to large caps vis--vis mid and small cap stocks. Products that adopt a bottom-up style of portfolio management focussing on individual stock valuations and not driven by near term market momentum. Products that are diversied in nature, avoiding sizeable exposure to a particular sector. Products adopting a bottom-up nimble approach to investing capitalising on opportunities presented by sharp market movements. Products predominantly investing into dividend yield stocks.

 

Wealth Strategies - Jan- March 2012 19

Risks


Global developments especially development on the sovereign debt crisis in the Euro region and efforts by the US to revive growth, resulting in change in risk appetite and capital ows in the markets. Domestic factors / developments on corporate result season, policy uncertainties, ination etc may impact investor sentiment. Products adopting a nimble approach to investing could add to the portfolio turnover adding to the volatility in returns. Products investing into dividend yielding stocks are usually defensive in nature and this approach could result in relative underperformance in bullish markets.

Tiding through the volatility


Markets are expected to remain volatile on global uncertainties and domestic news ows on ination, corporate earnings results, pace of economic growth, etc.  Asset Allocation funds Funds that do not get carried away by market movement and instead focus on disciplined asset allocation aiding in times of market volatility. Asset allocation also enables prot booking during times of optimism while ensuring capital infusion during times of pessimism.

Product Category


Products that adopt a pre-determined approach towards asset allocation regardless of market movement, removing the element of emotion while investing (e.g. PE-based products).

Risks


Global developments especially development on the sovereign debt crisis in the Euro region and efforts by the US to revive growth, resulting in change in risk appetite and capital ows in the markets. Domestic factors / developments on corporate result season, policy uncertainties, ination etc may impact investor sentiment. Products adopting a pre-determined asset allocation approach towards investing typically tend to underperform during a surge in an asset class as these products will have limited exposure to it. During periods of prolonged volatility, periodic rebalancing would lead to higher expenses.

20 Wealth Strategies - Jan- March 2012

Structural imbalances and environment concerns continue to affect the food supply chain globally


Rising food prices Rising population globally is putting enormous pressures on the global food supply which is further adversely impacted by environmental pressures and increasing urbanisation leading to inationary pressures.

Product Category


Products that offer investment opportunity to capture value at various points along the food chain investing across the spectrum from agricultural commodities to consumer products.

Risks
   

Climatic / environmental changes could lead to volatility in prices. Such theme-based funds have higher concentration risks as compared to funds that are well diversied. Such products are exposed to region specic risks. Products that invest into companies across the world are exposed to currency risks.

Diversication


Regions Indian equity markets have remained largely range-bound over the past 2 years facing signicant resistance primarily on account of valuation concerns, underlying ination and very recently, high commodity prices. The current investment proposition of investing into companies participating into other growth regions can complement the customers portfolio and provide diversication benets while retaining the high growth orientation. Gold Historically, gold has been considered a hedge against global uncertainties and during times of economic instability, gold acts as an effective hedge against other investments acting as a store of value.

Product Category
 

Products investing into companies listed in other growth regions offering opportunities of diversication. Products that maintain exposure to gold through ETFs.

Risks


Many emerging market countries are still in the early stages of modern development and are subject to abrupt and unexpected changes. Product is exposed to region specic risks. Such products that invest into companies across the world are exposed to currency risks. Financial / speculative interest in gold / related instruments may add to volatility in gold prices.

  

Wealth Strategies - Jan- March 2012 21

Tactical opportunities offering better returns on a risk adjusted basis




Short term opportunities Yields at shorter end of the yield curve are expected to ease in response to RBIs move to indicate a pause in further interest rates tightening offering opportunities of capital appreciation.

Product Category


Products are positioned to capitalise on opportunities available at the shorter end of the yield curve.

Risks
  

Tightness in systemic liquidity. Slippages in the ongoing scal consolidation process. Slowdown in the pace of inations downward trajectory.

22 Wealth Strategies - Jan- March 2012

Funds in Focus
Fidelity Equity Fund Franklin India Bluechip Fund ICICI Prudential Focused Bluechip Equity Fund DSP BlackRock Equity Fund HSBC India Opportunities Fund Birla Sun Life Dividend Yield Plus UTI Dividend Yield Fund FT India Dynamic PE Ratio Fund of Funds DWS Global Agribusiness Offshore Fund HSBC Brazil Fund Reliance Gold Savings Fund DSP BlackRock Short Term Fund HSBC Income Fund - Short Term Plan IDFC Super Saver Income Fund - Short Term Plan FT India Monthly Income Plan HDFC MF Monthly Income Plan - Long Term Plan HSBC MIP - Savings Plan Reliance Monthly Income Plan 24 25 26 27 28 29 30 31 32 33 34 36 37 38 39 40 41 42

Disclaimer: The funds mentioned in the following pages have been included after considering various quantitative and qualitative factors, including past performance and observed investment style and is based on data which HSBC believes to be accurate but have not been independently veried. Inclusion in the Funds in Focus neither suggests that funds is suitable for you, nor that it will continue to perform as it has in the past. Funds in Focus should not be considered as buy or sell recommendations. Investors should carefully consider whether any/all of these funds are appropriate for them in view of their investment experience, objectives, nancial resources and relevant circumstances. For further risk disclosures, please refer to the disclaimer on the rst page of this publication. Mutual funds and the underlying investments are subject to market risks and there is no guarantee, implied or otherwise, that the general objectives of the fund or any other specic performance targets will be achieved. In particular, investment returns, repayment of capital and the distribution of dividends or income are not guaranteed and the Sponsor of the fund is not responsible or liable for any loss or shortfall resulting from the operations of the fund. Please read the scheme information document carefully before investing.

Wealth Strategies - Jan- March 2012 23

Funds in Focus

Fidelity Equity Fund

As on 31 December 11

Investment Objective: To generate long-term capital growth from a diversied portfolio of predominantly equity and equity related securities. Inception Date: Fund Manager: 18-May-05 Sandeep Kothari, Subramanian Balakrishnan & Anirudh Gopalakrishnan Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: The long-term outlook for India remains strong, however in the near-term both global and domestic events will keep the markets volatile. Consensus GDP growth expectations for India have declined in tandem with the fall in industrial production, high funding costs and slowing global economic growth. Nonetheless, a slower growth rate in India will still be considerably in excess of growth achieved in the developed world. To some extent the policy challenges, high ination and global risk are already priced into the market. In general, corporate balance sheets are healthy and quite a few top quality companies are currently trading at attractive valuations. Many companies are entering 2012 in much better shape than they did the nancial crisis of 2008. As always, when economic conditions get tough, strong companies get stronger and our investment team remains focussed, despite the macro uncertainty, on picking individually attractive companies that have a long-term competitive edge, whilst prudently managing portfolio risk.

Disclaimer: The use of names of some companies is only for the purpose of illustration and the securities of these companies may or may not form a part of portfolio of the schemes of Fidelity Mutual Fund. Fidelity Equity Fund (FEF) is an open-ended equity growth scheme with an objective to generate long-term capital growth from a diversied portfolio of predominantly equity and equity-related securities. Exit Load: For redemption within 1 year from the date of allotment or purchase applying First in First Out basis: 1.00%. Risk Factors: yMutual funds like securities investments, are subject to market risks and there is no guarantee against loss in the schemes or that the schemes objectives will be achieved. yAs with any investment in securities, the NAV of the Units issued under the schemes can go up or down depending on various factors and forces affecting capital markets. yPast performance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the schemes. yInvestments in the Scheme(s) will be affected by trading volumes, settlement periods, volatility, price uctuations, inability to sell securities, disinvestment of holdings of any unlisted stocks prior to target date of disinvestment, credit risk and interest rate risk. yFEF is the name of the scheme, and it does not in any manner indicate the quality of the schemes, its future prospects or returns. yPlease read the Scheme Information Documents of the scheme and the Statement of Additional Information carefully before investing. Statutory: Fidelity Mutual Fund (the Fund) has been established as a trust under the Indian Trusts Act, 1882, by FIL Investment Advisors (liability restricted to `1 lakh). FIL Trustee Company Private Limited, a company incorporated under the Companies Act, 1956, with a limited liability is the Trustee to the Fund. FIL Fund Management Private Limited, a company incorporated under the Companies Act, 1956, with a limited liability is the Investment Manager to the Fund. Fidelity, Fidelity Investment Managers, and Fidelity Investment Managers and Global Logo are trademarks of FIL Limited. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

24 Wealth Strategies - Jan- March 2012

Funds in Focus

Franklin India Bluechip Fund (FIBCF)

As on 31 December 11

Investment Objective: An open-end growth scheme with an objective primarily to provide medium to long-term capital appreciation. Inception Date: Fund Manager: 01-Dec-93 Anand Radhakrishnan & Anand Vasudevan Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: FIBCF is an open-end diversied equity fund that seeks to achieve capital appreciation through investments in large-cap companies. Launched in 1993, it is one of the oldest equity funds in the country and has consistently out-performed its benchmark BSE SENSEX across time horizons. The fund follows a bottom-up approach to stock selection with a medium to long term perspective and ignores momentum stocks. The companies that the fund seeks to invest in (a) are well managed; (b) generate high ROCE and (c) demonstrate the ability to deliver sustainable growth in earnings. Our strategy remains focussed on the medium to long term opportunities based on investment and consumption themes.

Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the scheme may go up or down depending upon the factors and forces affecting the securities market including the uctuations in the interest rates. There can be no assurance that the scheme's investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its afliates is not necessarily indicative of future performance of the scheme. The above is only the name of the scheme and does not in any manner indicate the quality of the scheme, its future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under the scheme and the same is subject to the availability and adequacy of distribution surplus. Please read the Statement of Additional Information (SAI) and Scheme Information Document (SID) carefully before investing. Statutory Details: Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of `1 lakh) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trusts Act, 1882) and Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 25

Funds in Focus

ICICI Prudential Focused Bluechip Equity Fund (IPFBEF)


(an open-ended equity fund)

As on 31 December 11

Investment Objective: ICICI Prudential Focused Bluechip Equity Fund (An open-ended equity Scheme that seeks to generate long-term capital appreciation and income distribution to unitholders from a portfolio that is invested in equity and equity related securities of about 20 companies belonging to the large cap domain and the balance in debt securities and money market instruments. The Fund Manager will always select stocks for investment from among Top 200 stocks in terms of market capitalisation on the National Stock Exchange of India Ltd. If the total assets under management under this Scheme goes above `1000 crores, the Fund Manager reserves the right to increase the number of companies to more than 20. Investments in the Scheme may have concentration risk, as the Scheme invests in about 20 stocks. Inception Date: Fund Manager: 23-May-08 Prashant Kothari Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: The exposure to banking sector has been reduced on account of concerns on scal side, a slowing economy and rising NPAs. The portfolio is positioned defensively on account of global uncertainties and prevailing local environment and hence exposure to Pharma has been increased. Exposure to IT has been increased to play on the rupee depreciation theme. Concerns remain on the scal side. On the positive side, ination is seen moderating which will allow RBI to loosen strings through rate cuts. We believe that RBI is better positioned towards a more pro growth stance than witnessed throughout 2011 which will be very good for the economy and the long term investments in equity markets.

Statutory Details: Settlor of ICICI Prudential Mutual Fund (IPMF): ICICI Bank Ltd. and Prudential plc; IPMF was set up as a Trust sponsored by the settlor in accordance with the provisions of Indian Trust Act, 1882. Trustee: ICICI Prudential Trust Ltd. (IPTL); Investment Manager: ICICI Prudential Asset Management Co. Ltd. (IPAMCL); IPTL & IPAMCL are incorporated under the Companies Act, 1956. Liability: Liability of IPMF/Sponsors/ IPTL/IPAMCL is limited to `22.2 lakh collectively. Past performance of the Sponsors, the AMC, Fund, and Trustee has no bearing on the expected performance of the mutual fund or any of its schemes. Risk Factors: All investments in Mutual Fund and securities are subject to market risks and the NAV of the Schemes may go up or down, depending upon the factors and forces affecting the securities markets and there can be no assurance that the funds objectives will be achieved. Investment objective: IPFBEF seeks to generate long-term capital appreciation by investing in about 20 companies in the large cap domain. However, there can be no assurance that the investment objective of the Scheme will be realised. Entry Load: Not applicable; Exit Load for Redemption/Switch out made up to one year from the date of allotment: -1% of applicable NAV; Else Nil. Investments in the Scheme may be affected by concentration risk, trading volumes, settlement periods, volatility, price uctuations, liquidity risks, derivative risk, market risk, currency risk for investments in foreign securities, lending & borrowing risks, risks associated with investing in securitised debt, credit & interest rate risks relating to debt investment. IPFBEF is only the name of the scheme and does not in any manner indicate either the quality of the Scheme or its future prospects and returns. Mutual Fund investments are subject to market risks. Please read the Scheme Information Document and Statement of Additional Information of the Scheme carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

26 Wealth Strategies - Jan- March 2012

Funds in Focus

DSP BlackRock Equity Fund (DSPBR Equity)

As on 31 December 11

Investment Objective: DSPBR Equity is an open-ended growth Scheme, seeking to generate long term capital appreciation, from a portfolio that is substantially constituted of equity securities and equity related securities of issuers domiciled in India. Allotment Date: Fund Manager: 29-Apr-97 Apoorva Shah Load Structure
Entry Load Exit Load Nil <12 months: 1% >=12 months: Nil

(Exit loads applicable from the date of allotment of units to unitholder)

Fund Managers Views: Our view is that the pain is expected to continue into 2012 and a cyclical recovery might take some time to materialise. We therefore are underweight on banking sector at this point of time as we are expecting banks to face issues relating to NPAs and also suffer from a slowdown in credit offtake in 2012. We think that the RBIs monetary stance would undergo a change over the course of the next year and hence interest rates can be expected to soften; we are therefore maintaining our weights on the automobile sector, which we think will benet from improved demand on the back of lower interest rates. Meanwhile, we continue to have a barbell approach between defensives (consumer staples and pharma) and cyclicals. We continue to be bullish on the agriculture theme as we believe that the food productivity gain would be a critical focus area for India. We will also continue with our allocation to the mid/small cap category as we think these stocks are currently trading at quite cheap levels and have the potential to perform well once the risk appetite improves.

Disclaimer and Risk Factors: Statutory Details: DSP BlackRock Mutual Fund was set up as a Trust and the settlors/sponsors are DSP ADIKO Holdings Pvt. Ltd. & DSP HMK Holdings Pvt. Ltd. (collectively) and BlackRock Inc. (Combined liability restricted to `1 lakh). Trustee: DSP BlackRock Trustee Company Pvt. Ltd. Investment Manager: DSP BlackRock Investment Managers Pvt. Ltd. Risk Factors: Mutual funds, like securities investments, are subject to market and other risks and there can be no assurance that the Schemes objectives will be achieved. As with any investment in securities, the NAV of Units issued under the Schemes can go up or down depending on the factors and forces affecting capital markets. Past performance of the sponsor/AMC/mutual fund does not indicate the future performance of the Schemes. Investors in the Schemes are not being offered a guaranteed or assured rate of return. Each Scheme/Plan is required to have (i) minimum 20 investors and (ii) no single investor holding >25% of corpus. If the aforesaid point (i) is not fullled within the prescribed time, the Scheme/Plan concerned will be wound up and in case of breach of the aforesaid point, (ii) at the end of the prescribed period, the investors holding in excess of 25% of the corpus will be redeemed as per SEBI guidelines. The names of the Schemes do not in any manner indicate the quality of the Schemes, their future prospects or returns. For scheme specic risk factors, please refer the SID. For more details, please refer the Key Information Memorandum cum Application Forms, which are available on the website, www.dspblackrock.com, and at the ISCs/Distributors. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document and Statement of Additional Information carefully before investing.

Wealth Strategies - Jan- March 2012 27

Funds in Focus

HSBC India Opportunities Fund (HIOF)

As on 31 December 11

Investment Objective: Seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity & equity related securities. However, it could move a signicant portion of its assets towards xed income securities if the fund manager becomes negative on equity markets. Inception Date: Fund Manager: 24 Feb 2004 Tushar Pradhan Load Structure
Entry Load Exit Load Nil 1%, if redeemed/switched out within 1 year from the date of investments. Otherwise Nil.

Fund Managers Views: While the overall global outlook remains challenging, we remain focussed on visible cash ow generators in the portfolio. We remain cautious on the Indian economy as signs of slowing industrial production indicate softening of manufacturing demand. However, there are some areas of the economy that are expected to chug along such as certain consumption plays, select manufacturing and some mainstream large caps that have been really beaten down. The portfolio of HIOF will highlight that the top order will share commonality with large cap portfolios with the bottom order aiming for alpha creation through a rich sprinkling of mid-caps. This is expected to bring in a healthy combination of stability (large caps tend to have lower volatility) and better growth prospects (mid-caps tend to have higher growth as they are typically in unsaturated markets) to the portfolio. The fund has a strong bias for growth stocks (GARP investment - Growth at Reasonable Price) which is tested for tie-ins with HSBC's proprietary PB-ROE (Price to Book - Return on Equity) model to focus on an optimal mix of quality and relative attractiveness.

Disclaimer: Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specic investment objectives, nancial situation and the particular needs of any specic person who may receive this document. Investors should seek nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised. Investors may obtain Statement of Additional Information, Scheme Information Document and Key Information Memorandums along with application forms from the Investor Service Centre of HSBC Mutual Fund. Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED. Statutory Details: HSBC Mutual Fund has been set up as a trust by HSBC Securities and Capital Markets (India) Private Limited (liability restricted to the corpus of `1 lakh). The Sponsor/associates of the Sponsor/Asset Management Company (AMC) are not responsible or liable for any loss or shortfall resulting from the operation of the schemes. The Trustees of HSBC Mutual Fund, a Board of Individual Trustees, have appointed HSBC Asset Management (India) Private Limited as the Investment Manager. Risk Factors: All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme. HSBC India Opportunities Fund is only the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document and Statement of Additional Information carefully before investing.

28 Wealth Strategies - Jan- March 2012

Funds in Focus

Birla Sun Life Dividend Yield Plus (BDYP)

As on 31 December 11

Investment Objective: The objective of the scheme is to provide capital growth and income by investing primarily in a well-diversied portfolio of dividend paying companies that have a relatively high dividend yield.

Inception Date: Fund Manager:

26-Feb-03 Nishit Dholakia

Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: Birla Sunlife Dividend Yield Plus invests in stocks having dividend yield twice that of Sensex at the time of making the investment. These high dividend paying companies generally have stable cash ows, steady growth in earnings, a healthy balance sheet and superior return on capital / equity. This Fund is conventionally considered to provide decent capital appreciation in rising markets and a cushion for investors in falling markets. Naturally this Fund is more suited to conservative investors who are looking for capital appreciation, but at the same time want to limit their downside risk when markets fall. This strategy yields good returns with less risk over longer time period. The Fund maintains a well diversied equity portfolio. The portfolio dividend yield as of end of January 02, 2012 was 2.98% against 1.62% dividend yield of sensex stocks. The key sectoral exposure in the Fund are Banking and Financial Services, Consumer Non Durables and Oil, Gas & Petroleum products and Auto. Fund has around 35% of the portfolio of the Fund invested in large cap stocks while balance portfolio is invested in midcap and smallcap stocks. The cash level in the Fund is around 11%.

Statutory Details: Constitution: Birla Sun Life Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: Aditya Birla Financial Services Private Limited & Sun Life (India) AMC Investments Inc [liability restricted to seed corpus of `1 lakh]. Trustee: Birla Sun Life Trustee Company Pvt. Ltd. Risk Factors: Mutual Funds & securities investments are subject to market risks & there can be no assurance or guarantee that the objective of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme may go up or down depending on the various factors & forces affecting capital markets & money markets. Past performance of the Sponsor / Investment Manager / Mutual Fund does not indicate the future performance of the Scheme & may not necessarily provide a basis of comparison with other investments. The name of the Scheme does not, in any manner, indicate either the quality of the Scheme or its future prospects or returns. Unitholders in the Scheme are not being offered any guaranteed/assured returns. Investors should read the Scheme Information Document/Statement of Additional Information/Key Information Memorandum available at Investor Service Centres and with Distributors carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 29

Funds in Focus

UTI Dividend Yield Fund (UTI DYF)

As on 31 December 11

Investment Objective: UTI Dividend Yield Fund is an open-ended equity oriented scheme. The investment objective of the Scheme is to provide medium to long term capital gains and/or dividend distribution by investing predominantly in equity & equity related instruments, which offer high dividend yield. There can be no assurance that the investment objectives of the Scheme will be realised. Inception Date: Fund Manager: 03-May-05 Swati Kulkarni Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Performance Analysis: On the backdrop of stated investment policy, the Fund is primarily invested in sectors comprising high dividend yield stocks. The Fund follows a bottom-up investment style. Currently, Fund is overweight on sectors like Cement, Fertilisers, Shipping, Power Utilities and PSU oil stocks and underweight on Financials and Metals. Post asset quality concerns, many PSU banks have corrected and now available at attractive valuation. From a perspective of 2 years, increasing exposure to banks makes sense. With the INR depreciation, IT stocks have rallied even though the uncertainty on the core business growth due to global issues persists. We will maintain an underweight to neutral position. We will continue the cement overweight position. With respect to the Capital goods sector, though the valuations are below the last 7 years average, we will wait for the signs of pick-up in investment cycle. Energy exposure in PSU oil companies will be maintained due to valuation support and the likelihood of correction in crude prices on slower global growth.

Statutory Details: UTI-Dividend Yield Fund: An open-ended equity oriented scheme. Investment Objective: To provide medium to long term capital gains and/or dividend distribution by investing predominantly in equity & equity related instruments, which offer high dividend yield. There can be no assurance that the investment objectives of the Scheme will be realised. Load Structure: Entry Load - Nil / Exit Load - 1% for < 1 year & nil for >= 1 year. Asset Allocation: High dividend yield equity and equity related instrument 65% - 100%. Risk prole: High, Other equity or equity related instruments 0-35%. Risk prole: High, Debt and money market instruments 0-10%, Risk prole: Low to medium. Dividend Yield is considered as high if it is greater than the Dividend Yield of the Nifty last released / published by NSE. While no xed allocation will normally be made for investment in money market instruments like Call Deposits, Commercial Papers, Treasury Bills etc. the same may be kept to the minimum generally to meet the liquidity needs of the Scheme. UTI-Dividend Yield Fund retains the option to alter the asset allocation for short-term periods on defensive considerations. General Services: Daily NAV, Sale Price/ Redemption Price available for Sale/ Redemption on all business days. Registered Ofce: UTI Tower, 'Gn' Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051. Phone: 022 66786666. Statutory Details: UTI Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. SPONSORS: State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India (liability of sponsors limited to `10,000). Investment Manager: UTI Asset Management Co. Ltd. (incorporated under the Companies Act 1956). Trustee: UTI Trustee Co. (P) Ltd. (incorporated under the Companies Act 1956). Risk Factors: All investments in Mutual funds and securities are subject to market risks and the NAV of the units issued under the Scheme may go up or down depending upon the factors and forces affecting the securities market. Past performance of the Sponsor / Mutual Fund / Scheme(s) / AMC is not necessarily an indication of future results and may not necessarily provide a basis for comparison with other investments. All Mutual Funds and Securities investments are subject to market risks and there can be no assurance or guarantee that the objectives of the Scheme will be achieved. Statements/Observations made are subject to the laws of the land as they exist at any relevant point of time. Growth, appreciation and income, if any, referred are subject to the laws of the land as they exist from time to time. UTI Dividend Yield Fund is only the name of the scheme and does not in any manner indicate either the quality of the Scheme, its future prospects or returns. The Scheme is subject to risks relating to Credit, Interest Rates, Liquidity, Securities Lending, reinvestment risk, default risk and Investment in Overseas Markets, Trading in debt and equity derivatives (the specic risk could be Credit, Market, Illiquidity, Judgmental error, Interest rate swaps and Forward rate agreements), investment in securitised papers and scheme specic risk. Please contact the nearest UTI Financial Centre, Business Development Associate (BDA) or AMFI/ NISM certied UTI Mutual Fund Independent Financial Advisor (IFA) for a copy of the Key Information Memorandum cum Application Form and Scheme Information Document. Please read the Scheme Information Document carefully before investing. Web site: www.utimf.com Registrar: M/s. Karvy Computershare Pvt. Ltd. Narayani Mansion, H. No. 1-90-2/10/E, Vittalrao Nagar, Madhapur, Hyderabad-500 081. Tel.: 040 23421944 to 47 Fax: 040 - 23115503, Email: uti@karvy.com Registrar: , M/s Karvy Computershare Pvt. Ltd. Narayani Mansion, H. No. 1-90-2/10/E, Vittalrao Nagar, Madhapur, Hyderabad-500 081. Tel.: 040 23421944 to 47 , Fax: 040 - 23115503, Email:uti@karvy.com *Value Research Fund Rating (Risk-adjusted Rating) is a convenient composite measure of both returns and risk. It is purely quantitative and there is no subjective component to the Fund Rating. The assessment does not reect Value Researchs opinion of the future potential of any fund. It only gives a quick summary of how a fund has performed historically relative to its peers. For equity and hybrid funds, the Fund Ratings for the two time periods (3 and 5 years) are combined to give a single assessment of each funds risk rating vis--vis other funds in each fund category. For debt funds, the Fund Ratings are based on 18-month weekly risk adjusted performance, relative to the other funds in category. Value Research does not rate an equity or hybrid fund with less than 3-year performance and a debt fund with less than 18- month performance track record. Each category must have a minimum of 10 funds for it to be rated. Effective, July 2008, we have put additional qualifying criteria, whereby a fund with less than `5 crore of average AUM in the past six months will not be eligible for rating. (www.valueresearchonline.com) CRISIL CPR Ranking Scale & Denition based on percentile of number of schemes considered in the category: CRISIL CPR~1 - Very Good performance in the category (Top 10 percentile of universe)*. CRISIL CPR~2 Good performance in the category. CRISIL CPR~3 - Average performance in the category. CRISIL CPR~4 - Below average performance in the category. CRISIL CPR~5 - Relatively weak performance in the category. * - If the top 10 percentile gure is not an integer, the same is rounded off to the next integer. The same approach is adopted for CPR 2 (11th to 30th percentile), CPR 5 (last 91st to 100th percentile) and CPR 4 (71st to 90th percentile) clusters. The residual schemes in the universe are placed in the CPR 3 cluster. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document carefully before investing.

30 Wealth Strategies - Jan- March 2012

Funds in Focus

FT India Dynamic PE Ratio Fund of Funds (FTDPEF)

As on 31 December 11

Investment Objective: An open-end Fund of Funds Scheme with an objective to provide long-term capital appreciation with relatively lower volatility through a dynamically balanced portfolio of equity and income funds. Inception Date: Fund Manager: 31-Oct-03 Anand Radhakrishnan Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: FTDPEF Indias rst fund of fund, is designed to have a smoother ride through volatile markets. The fund helps , investors take advantage of Indias long term growth story through a tactical approach to equities and achieve stability from the increased allocation to debt at times of overvaluation. It has a unique in-built buy-sell system, which determines tactical allocation between equity and debt based on PE multiples of Nifty which helps in minimising volatility. This discipline takes sentiment away from decision-making and is an ideal product for all long term investors, irrespective of risk prole. The fund currently has an allocation of 60% to Bluechip Fund and 40% to Templeton India Income Fund considering the Nifty PE level of 17 (As of November 30, 2011). .50

Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the scheme may go up or down depending upon the factors and forces affecting the securities market including the uctuations in the interest rates. There can be no assurance that the schemes investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its afliates is not necessarily indicative of future performance of the scheme. The above is only the name of the scheme and does not in any manner indicate the quality of the scheme, its future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under the scheme and the same is subject to the availability and adequacy of distribution surplus. The expenses of the Fund of Funds scheme will be over and above the expenses charged by the underlying schemes. The investments made by the scheme are subject to external risks. Please read the Statement of Additional Information (SAI) and Scheme Information Document (SID) carefully before investing. Statutory Details: Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of `1 lakh) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trusts Act, 1882) and Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 31

Funds in Focus

DWS Global Agribusiness Offshore Fund (DWS GABF)

As on 31 December 11

Investment Objective: To generate long-term capital growth by investing predominantly in units of overseas mutual funds, focussing on agriculture and/or would be direct and indirect beneciaries of the anticipated growth in the agriculture and/or afliated/allied sectors.

Inception Date: Fund Manager:

14-May-10 Aniket Inamdar & Kumaresh Ramakrishnan

Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: A key conclusion of the State of the Worlds Land and Water Resources from (FAO) is that levels of public and private investment in basic agricultural infrastructure have declined over the past two decades. We see public equity markets as one of the avenues to provide a capital solution to these investment needs. As a consequence, the team at GTP continues its research on the capital required for the agribusiness food chain and the far-reaching effects on the bottom-billion framework. An example of the indirect benets of developed infrastructure is the increased efciencies made in the ow of fast moving consumer goods (FMCG) and the subsequent lowering of prices to end-consumers. We continue to look to identify those businesses that can provide solutions to potential bottom-billion customers along with meaningful returns to shareholders.

Risk Factors: Statutory Details: Deutsche Mutual Fund had been set up as a trust settled by Deutsche Asset Management (Asia) Ltd. (DeAM Asia) (liability restricted to `1 lakh). The Sponsors of Deutsche Mutual Fund are DeAM Asia and Deutsche India Holdings Pvt. Ltd. The Trustee of the Mutual Fund is Deutsche Trustee Services (India) Private Limited and the Investment Manager is Deutsche Asset Management (India) Private Limited. DWS Investments is the global mutual fund brand of Deutsche Asset Management. Standard Risk Factors: All mutual funds and securities investments are subject to market risks, and there can be no assurance that the funds objectives will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on various factors that may affect the values of the Schemes investments. Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future performance of the schemes. The sponsor is not responsible or liable for any loss resulting from the operation of the schemes beyond the initial contribution of `1 lakh made by it towards setting up the Fund. DWS Global Agribusiness Offshore Fund is the name of the Scheme and does not in any manner indicate the quality of the Scheme, its future prospects or returns. The present Scheme of Deutsche Mutual Fund is not a guaranteed or assured returns Scheme. Copy of the Scheme Information Document/Key Information Memorandum can be obtained at any of our Investor Service Centres or on our website www.dws-india.com. Please refer to the Scheme Information Document and Statement of Additional Information for other details including scheme specic risk factors before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document carefully before investing.

32 Wealth Strategies - Jan- March 2012

Funds in Focus

HSBC Brazil Fund (HBF)

As on 31 December 11

Investment Objective: The primary investment objective of the Scheme is to provide long term capital appreciation by investing predominantly in units/shares of HSBC Global Investment Funds (HGIF) Brazil Equity Fund. The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a signicant part of its corpus. The Scheme may also invest a certain proportion of its corpus in money market instruments and/or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time. Inception Date: Fund Manager: 6-May-11 Gaurav Mehrotra (dedicated fund manager for overseas investments) Load Structure
Entry Load Exit Load Nil 1%, if redeemed/switched-out within 1 year from the date of investments; otherwise Nil

Fund Managers Views: Global macro uncertainty with respect to the policy action in Europe and the US is likely to weigh on the performance of global equities (including Brazilian equities) in 2012. Apart from the volatility caused due to the above factor, there are some positive drivers for the Brazilian equities easing monetary policy, under ownership in terms of global asset allocation, cheap valuations as compared to other emerging and developed markets as well as enough policy exibility to drive growth and attract capital.

Disclaimer: Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specic investment objectives, nancial situation and the particular needs of any specic person who may receive this document. Investors should seek nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised. Investors may obtain Statement of Additional Information, Scheme Information Document and Key Information Memorandums along with application forms from the Investor Service Centre of HSBC Mutual Fund. Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED. Statutory Details: HSBC Mutual Fund has been set up as a trust by HSBC Securities and Capital Markets (India) Private Limited (liability restricted to the corpus of `1 lakh). The Sponsor/associates of the Sponsor/Asset Management Company (AMC) are not responsible or liable for any loss or shortfall resulting from the operation of the schemes. The Trustees of HSBC Mutual Fund, a Board of Individual Trustees, have appointed HSBC Asset Management (India) Private Limited as the Investment Manager. Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the Scheme may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme. Country specic information could yield results substantially different than that be set herein. Investors shall bear the risks and recurring expenses of the underlying scheme(s) into which the Scheme invests. HSBC Brazil Fund (HBF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 33

Funds in Focus

Reliance Gold Savings Fund (RGSF)

As on 31 December 11

Investment Objective: The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical gold (and gold related securities as permitted by Regulators from time to time). However, performance of the Scheme may differ from that of the domestic prices of gold due to expenses and or other related factors. Inception Date: Fund Manager: 11-Mar-11 Hiren Chandaria Load Structure
Entry Load Exit Load Not applicable <= 1 year: 2% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: The current global macroeconomic environment is very conducive for higher gold prices. European debt crisis, fragile global growth, geo political unrest etc. makes gold a palatable asset. The rise in volatility across all assets makes investors jittery about their investments. Gold tends to benet during such an environment. Again, factors affecting gold prices may not affect other assets in a similar fashion and gold usually exhibits lower correlation with other asset classes. Hence, gold tends to act as a portfolio diversier and improves risk adjusted returns. Any correction can be looked at opportunity to accumulate and long term prudent investor may continue investing in gold in a systematic manner as it improves risk adjusted returns for the portfolio. Common Source for Gold View: Bloomberg, Reuters, World Gold Council

Risk Factors: The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently veried any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials reect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, afliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any nancial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, afliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost prots arising in any way from the information contained in this material. The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, afliates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specic economic sectors mentioned herein. Reliance Gold Savings Fund (An Open Ended Fund of Fund Scheme): The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by Reliance Gold Exchange Traded Fund (RGETF). Asset Allocation Pattern: Units of RGETF - 95 to 100%, Reverse repo and/or CBLO and/or short-term xed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes* - 0 to 5%. *The Fund Manager may invest in Liquid Schemes of Reliance Mutual Fund. However, the Fund Manager may invest in any other scheme of a mutual fund registered with SEBI, which invest predominantly in the money market securities. Load Structure: Entry Load - Nil. Exit Load - 2% - If redeemed or switched-out on or before completion of 1 year from the date of allotment of units, Nil thereafter. Terms of issue: The NAV of the Scheme will be calculated and declared on every Working Day. The Scheme provides sale / switch-in & repurchase / switch-out facility on all Business Days at NAV based prices. RGETF is an open-ended Gold Exchange Traded Fund that tracks the domestic prices of gold through investments in physical Gold. The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold (and Gold related securities as permitted by Regulators from time to time). However, the performance of the Scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors. Asset Allocation Pattern: Physical Gold or Gold Related Instruments as permitted by regulators from time to time - 90 to 100%, Money Market instruments, Bonds, Debentures, Government Securities including T-Bills, Securitised Debt & other debt securities as permitted by regulators from time to time - 0 to 10%. Load Structure - Entry Load & Exit Load - Nil. Terms of Issue - As the units of the Scheme are listed on the Exchange, subsequent buying or selling (trading) by Unit holders can be made from the secondary market on all trading days. The minimum number of Units that can be bought or sold on the exchange is 1 (one) unit.

34 Wealth Strategies - Jan- March 2012

Funds in Focus

Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882. Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment Manager: Reliance Capital Asset Management Limited (Registered Ofce of Trustee & Investment Manager: 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi Mumbai-400 710, Maharashtra). The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of `1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 35

Funds in Focus

DSP BlackRock Short Term Fund (DSPBR STF)

As on 31 December 11

Investment Objective: DSPBR STF is an open-ended income Scheme, seeking to generate income commensurate with prudent risk, from a portfolio constituted of money market securities, oating rate debt securities and debt securities. Asset Allocation: 50% - 100%.: Money Market Securities, Floating rate debt securities whose coupon(s) are reset at least once a year, xed rate debt securities having an average or residual maturity of less than or equal to 367 days or having put options within a period not exceeding 367 days. 0% - 50%: Fixed rate debt securities having residual or average maturity of more than 367 days and oating rate debt security where the next reset date is more than 367 days from the date of purchase. (Floating rate debt securities will include xed rate debt securities swapped for oating rate returns by using derivatives; Debt securities may include securitised debts up to 60% of the net assets). Allotment Date: Fund Manager: 9-Sep-02 Dhawal Dalal Load Structure
Entry Load Exit Load Nil <=180 days: 0.5% >180 days: Nil

(Exit loads applicable from the date of allotment of units to unitholder)

Fund Managers Views: Short Term fund category continues to attract investors' interest, given preference low volatility and expectations of rate cycle is near the peak. DSPBR Short Term fund has seen increase in the AUM last month on account of performance and changing investor sentiment across the industry. Towards end of November, AUM grew to 767 Cr from 729 Cr in November. Portfolio remained pretty much fully invested throughout the month and the duration was marginally increased. We will cautiously add duration by buying on the dips as and when opportunities emerge. We will be exibe in terms of investing across asset class and maturities.

Disclaimer and Risk Factors: Statutory Details: DSP BlackRock Mutual Fund was set up as a Trust and the settlors/sponsors are DSP ADIKO Holdings Pvt. Ltd. & DSP HMK Holdings Pvt. Ltd. (collectively) and BlackRock Inc. (Combined liability restricted to `1 lakh). Trustee: DSP BlackRock Trustee Company Pvt. Ltd. Investment Manager: DSP BlackRock Investment Managers Pvt. Ltd. Risk Factors: Mutual funds, like securities investments, are subject to market and other risks and there can be no assurance that the Schemes objectives will be achieved. As with any investment in securities, the NAV of Units issued under the Schemes can go up or down depending on the factors and forces affecting capital markets. Past performance of the sponsor/AMC/mutual fund does not indicate the future performance of the Schemes. Investors in the Schemes are not being offered a guaranteed or assured rate of return. Each Scheme/Plan is required to have (i) minimum 20 investors and (ii) no single investor holding >25% of corpus. If the aforesaid point (i) is not fullled within the prescribed time, the Scheme/Plan concerned will be wound up and in case of breach of the aforesaid point, (ii) at the end of the prescribed period, the investors holding in excess of 25% of the corpus will be redeemed as per SEBI guidelines. The names of the Schemes do not in any manner indicate the quality of the Schemes, their future prospects or returns. For scheme specic risk factors, please refer the Scheme Information Document. For more details, please refer the Key Information Memorandum cum Application Forms, which are available on the website, www.dspblackrock.com, and at the ISCs/Distributors. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document and Statement of Additional Information carefully before investing.

36 Wealth Strategies - Jan- March 2012

Funds in Focus

HSBC Income Fund - Short Term Plan (HIF - STP)

As on 31 December 11

Investment Objective: Aims to provide reasonable income through a diversied portfolio of xed income securities. The AMCs view of interest rate trends and the nature of the Plans will be reected in the type and maturities of securities in which the Short Term and Investment Plans are invested. Inception Date: Fund Manager: 10-Dec-02 Ruchir Parekh & Sanjay Shah Load Structure
Entry Load Exit Load Nil Regular, Institutional & Institutional Plus Option 0.50% if redeemed / switched-out within 6 months from the date of investment

Fund Managers Views: We continue to see a relatively at yield curve, with 1-year rates for corporate bonds marginally lower than other tenures. The undertone in the debt markets is less bearish than some time ago. We continue to believe that there is value in the 1-3 year portion of the yield curve and that this segment could provide better risk-adjusted returns over a period of time.

Disclaimer: Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specic investment objectives, nancial situation and the particular needs of any specic person who may receive this document. Investors should seek nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised. Investors may obtain Statement of Additional Information, Scheme Information Document and Key Information Memorandums along with application forms from the Investor Service Centre of HSBC Mutual Fund. Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED. Statutory Details: HSBC Mutual Fund has been set up as a trust by HSBC Securities and Capital Markets (India) Private Limited (liability restricted to the corpus of `1 lakh). The Sponsor/associates of the Sponsor/Asset Management Company (AMC) are not responsible or liable for any loss or shortfall resulting from the operation of the schemes. The Trustees of HSBC Mutual Fund, a Board of Individual Trustees, have appointed HSBC Asset Management (India) Private Limited as the Investment Manager. Risk Factors: All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme. HSBC Income Fund - Short Term Plan is only the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document and Statement of Additional Information carefully before investing.

Wealth Strategies - Jan- March 2012 37

Funds in Focus

IDFC Super Saver Income Fund - Short Term (ISSIF ST)

As on 31 December 11

Investment Objective: Seek to generate stable returns with a low risk strategy by investing in good quality xed income securities and money market securities. However there is no assurance that the investment objective of the Scheme will be realised.

Inception Date: Fund Manager:

14-Dec-00 Anupam Joshi

Load Structure
Entry Load Exit Load Not applicable <= 6 months: 0.5% > 6 months: Nil

(Exit loads mentioned are from the date of allotment)

Fund Manager's Views: In SSIF Short Term Plan, we are running a portfolio of high quality bonds, with a maturity cap of ordinarily 24 months and a single papers maturity capped at 3 years on the outer side and discipline of no gilt exposure. Also, we continue to maintain bias for quality of credit, hence maintain almost 98 pc exposure to AAA/AA + papers (this could be a signicant differentiator vs peer group in the ST space). We think that the RBI will start cutting rates in the half year starting April. Hence, we expect a bullish steepening of the yield curve over the next year or so, with shorter end rates falling faster than long end rates. We reiterate the urgency to participate sooner rather than later given the mounting opportunity costs of delaying participation.

Risk Factors: Mutual Funds and securities investments are subject to market risks, reinvestment risk, changes in political, economic environment and government policy and there is no assurance or guarantee that the objectives of the Scheme/s will be achieved. The NAV of the Scheme/s can go up or down depending on factors and forces affecting the Securities Market including uctuation in interest rates, trading volumes and reinvestment risk. Past performance of the Sponsor/AMC/Mutual Fund is not necessarily indicative of the future performance of the Scheme/s and may not necessarily provide a basis for comparison with other investments. IDFC Super Saver Income Fund - Short Term (IDFC-SSIF-ST), is the name of the Scheme and do not in any manner indicate either the quality of the Schemes, their future prospects or returns. The Sponsor or any of its associates is not responsible or liable for any loss resulting from the operation of the Schemes beyond the corpus of the Trust of `30,000. Terms of Issue & Load Structure: During the continuous offer, the AMC calculates and publishes NAVs and offers for sale and redemption of units of the Scheme on all Business days. Entry Loads Nil for all the schemes. Exit Load - IDFC-SSIF Short Term Plan (ST) Plan A, B, C, D & F: 0.50% of NAV on investors who purchase / switch-in and seek to redeem / switch-out such units within 6 months from the date of effecting such purchase / switch-in. Investors opting for PEP / Dividend reinvestment option / SWP or switch between options will not be levied an exit load (with effect from March 01, 2011). Investment Objective: IDFC-SSIF-ST: Seek to generate stable returns with a low risk strategy by investing in good quality xed income securities and money market securities. However, there is no assurance that the investment objective of the scheme will be realised. Statutory Details: IDFC Mutual Fund has been set up as a trust by Infrastructure Development Finance Company Limited (IDFC) (liability restricted to corpus of Trust of `30,000) with IDFC AMC Trustee Company Ltd as the trustee and IDFC Asset Management Company Ltd as the investment manager. Investors in the scheme(s) are not being offered any guaranteed or assured rate of return. Copy of Scheme Information Document and Key Information Memorandum along with application form for all the schemes may be obtained from the ofce of IDFC Mutual Fund, One India Bulls Centre, 841, Jupiter Mills Compound, Senapati Bapat Marg, Elphinstone Road (West), Mumbai-400 013. Contact 1-800-226622 for details. For details, please read the respective Scheme Information Document (SID) (including those of FMPs)/ Offer Document (OD) / Statement of Additional Information (SAI) carefully before investing. The Disclosures of opinions/in-house views incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modications and alterations to this statement as may be required from time to time. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. Neither the IDFC Mutual Fund / Board of Trustee / IDFC Asset Management Co. Pvt. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost prots that may arise from or in connection with the use of the information. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

38 Wealth Strategies - Jan- March 2012

Funds in Focus

FT India Monthly Income Plan (FTMIP)


(Income is not assured, and is subject to the availability of distributable surplus.)

As on 31 December 11

Investment Objective: An open-end income scheme (with no assured returns) with an objective to provide regular income through a portfolio of predominantly high quality xed income securities with a maximum exposure of 20% to equities.

Inception Date: Fund Manager:

28-Sep-00 Anand Radhakrishnan, Anil Prabhudas, Sachin Padwal-Desai & Umesh Sharma

Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: The investment strategy for the xed income component is to maintain a relatively higher credit quality portfolio with an intermediate maturity level. On the equity side, the portfolio is conservatively managed keeping in mind the investment prole of investors in such schemes - for instance, the exposure to a particular stock rarely exceeds 2%, while the exposure to a single sector is normally maintained below 5%. Moreover, the portfolio manager follows an active prot booking strategy to reduce the downside risk on the equity component. We will continue to maintain portfolio maturity at relatively lower levels and try to take advantage of the high accruals available at the short end of the curve. On the equity side, our focus remains on quality companies with the potential to deliver over the medium to long term. Rising input prices and borrowing costs make stock selection an important factor and the fund's equity exposure is towards companies in sectors like Banks, Software and Telecom. Notwithstanding near term challenges, these companies are well positioned to take advantage of long term growth drivers such as consumption and rising infrastructure spending/capex.

Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the scheme may go up or down depending upon the factors and forces affecting the securities market including the uctuations in the interest rates. There can be no assurance that the scheme's investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its afliates is not necessarily indicative of future performance of the scheme. The above is only the name of the scheme and does not in any manner indicate the quality of the scheme, its future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under the scheme and the same is subject to the availability and adequacy of distribution surplus. The investments made by the scheme are subject to external risks. Please read the Statement of Additional Information (SAI) and Scheme Information Document (SID) carefully before investing. Statutory Details: Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of `1 lakh) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trusts Act, 1882) and Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 39

Funds in Focus

HDFC MF Monthly Income Plan - Long Term Plan (HDFC MIP LT)

As on 31 December 11

Investment Objective: The primary objective of the Scheme is to generate regular returns through investment primarily in Debt and Money Market Instruments. The secondary objective of the Scheme is to generate longterm capital appreciation by investing a portfolio of the Schemes assets in equity and equity related instruments. However, there can be no assurance that the investment objective of the Scheme will be achieved. Inception Date: Fund Manager: 26-Dec-03 Prashant Jain (Equity) & Shobhit Mehrotra (Debt) Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: The debt component of HDFC MIP - LTP which constitutes over 75% of the portfolio is positioned to capture any fall in interest rates across the yield curve. The Fund has also taken reasonable exposure to longer dated Government Securities to benet from prevailing high yields. The equity component of the Fund is overweight Software, Banking and Financial Services, etc. With overall interest rates peaking out in the economy and equity valuations being reasonably attractive, MIP-LTP is favourably positioned in the current environment. It is a good asset allocation product for investors seeking controlled exposure to equities.

Risk Factors: All mutual funds and securities investments are subject to market risks and there can be no assurance that the Schemes objectives will be achieved and the NAV of the Schemes may go up or down depending upon the factors and forces affecting the securities market. Past performance of the Sponsors and their afliates / AMC / Mutual Fund and its Scheme(s) do not indicate the future performance of the Scheme of the Mutual Fund. There is no assurance or guarantee to unit holders as to the rate of dividend distribution nor that dividends will be paid regularly. Investors in the Schemes are not being offered any guaranteed / assured returns. The NAV of the units issued under the Schemes may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities. The NAV will inter-alia be exposed to Price / Interest Rate Risk and Credit Risk. Long Term Plan of HDFC MF Monthly Income Plan, an open-ended income scheme (Monthly income is not assured and is subject to availability of distributable surplus) is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme, its future prospects and returns. Please read the Scheme Information Document and Statement of Additional Information before investing. Investment Objective: To generate regular returns through investment primarily in debt and money market instruments. The secondary objective of the Scheme is to generate long term capital appreciation by investing a portion of the Schemes assets in equity and equity related instruments. Asset Allocation Pattern: Equity and equity related instruments (25%); debt and money market instruments (75%). Load Structure: Entry Load: Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered Distributor) based on the investors assessment of various factors including the service rendered by the ARN Holder. Exit Load: In respect of each purchase / switch-in of units, an exit load of 1.00% is payable if units are redeemed / switched-out within 1 year from the date of allotment. No exit load is payable if units are redeemed / switched-out after 1 year from the date of allotment. In view of the individual nature of tax consequences, each investor is advised to consult his/her professional tax advisor. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication.
Please read the Scheme Information Document and Statement of Additional Information carefully before investing.

40 Wealth Strategies - Jan- March 2012

Funds in Focus

HSBC MIP - Savings Plan


(Monthly income is not assured and is subject to availability of distributable surplus.)

As on 31 December 11

Investment Objective: HSBC MIP seeks to generate reasonable returns through investments in Debt and Money Market Instruments. The secondary objective of the Scheme is to invest in equity and equity related instruments to seek capital appreciation.

Inception Date: Fund Manager:

24-Feb-04 Aditya Khemani (Equity); Sanjay Shah & Ruchir Parekh (Debt)

Load Structure
Entry Load Exit Load Nil 1%, if redeemed/switched out within 1 year from the date of investments

Fund Managers Views: Fixed Income view: HSBC MIP - Savings Plan (HMIP - S) has focussed on selective duration building with focus on accrual, given the conservative nature of investors. HMIP - S will continue to follow similar strategy, albeit with higher duration bias as the xed income market may see volatility combined with easing of yields over next year. Fiscal decit and currency depreciation remain a concern, which will need to be watched closely. Equity view: Over the last few quarters, we have continued the strategy of high exposure to large cap stocks keeping in view the risk tolerance of investors in the Scheme. This has made the portfolio much more focussed on consistent, long term performance. Last few quarters, even though equity has been a negative contributor due to the sharp correction, the equity portion of this Scheme has done relatively well and fell lesser than the benchmark. Going forward, when the economy and the equity market revives, equity should be a positive contributor and make up for the low returns over the last couple of years.

Disclaimer: Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specic investment objectives, nancial situation and the particular needs of any specic person who may receive this document. Investors should seek nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realised. Investors may obtain Statement of Additional Information, Scheme Information Document and Key Information Memorandums along with application forms from the Investor Service Centre of HSBC Mutual Fund. Copyright. HSBC Asset Management (India) Private Limited 2011, ALL RIGHTS RESERVED. Statutory Details: HSBC Mutual Fund has been set up as a trust by HSBC Securities and Capital Markets (India) Private Limited (liability restricted to the corpus of `1 lakh). The Sponsor/associates of the Sponsor/Asset Management Company (AMC) are not responsible or liable for any loss or shortfall resulting from the operation of the schemes. The Trustees of HSBC Mutual Fund, a Board of Individual Trustees, have appointed HSBC Asset Management (India) Private Limited as the Investment Manager. Risk Factors: All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme. HSBC MIP is only the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

Wealth Strategies - Jan- March 2012 41

Funds in Focus

Reliance Monthly Income Plan (RMIP)

As on 31 December 11

Investment Objective: To generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital.

Inception Date: Fund Manager:

13-Jan-04 Amit Tripathi, Ashwani Kumar

Load Structure
Entry Load Exit Load Not applicable <= 1 year: 1% > 1 year: Nil

(Exit loads mentioned are from the date of allotment)

Fund Managers Views: Emphasis is more on accrual based returns than on active trading. MIP portfolio reects an optimum blend of both xed and oating rate instruments comprising of Certicate of deposits to take care of liquidity needs and plain vanilla bonds specially to take care of yield enhancement, government securities enhance the credit quality and shall enable in beneting from the bond market play. In line without expectations of gradual fall in yields as ination consolidates, moderation in expectations of further rate hikes and improvement in liquidity conditions going forward, we have moderately increased the portfolio duration through allocations to longer dated G-secs and liquid corporate bonds.Though investment into equity and equity linked securities forms a minor part (maximum 20%) of the portfolio, right timing and selection of stocks have been able to generate the alpha returns, thus resulting in the growth of capital.

Risk Factors: The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently veried any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials reect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, afliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any nancial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, afliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost prots arising in any way from the information contained in this material. The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, afliates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specic economic sectors mentioned herein. Reliance Monthly Income Plan (An Open-ended Fund-Monthly Income is not assured & is subject to the availability of distributable surplus): The primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital. Asset Allocation: Equities and Equity related Securities - 0 to 20%, Fixed Income Securities (Debt and Money Market) 80 to 100%. Entry Load Nil, Exit Load - 1%, if redeemed or switched-out on or before completion of 1 year from the date of allotment of units, Nil thereafter. Terms of issue: The NAV of the Scheme will be calculated and declared on every Working Day. The Schemes provide sale / switch-in & repurchase /switch-out facility on all Business Days at NAV based prices. Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Reliance Monthly Income Plan is the name of the Scheme and does not in any manner indicate either the quality of the Scheme; its future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The NAV of the Scheme may be affected, inter alia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend distributions are subject to the availability of distributable surplus in the Scheme. Please read the Scheme Information Document (SID) and Statement of Additional Information (SAI) carefully before investing. Copies of SID and SAI is available at all the DISC, Distributors and www.reliancemutual.com Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882. Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment Manager: Reliance Capital Asset Management Limited (Registered Ofce of Trustee & Investment Manager: 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi Mumbai-400 710, Maharashtra). The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of `1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. Disclaimer: The views expressed in the above article are those of the above mentioned fund manager and do not reect the views of HSBC or any of its associates or employees. The above should be read in conjunction with all the disclaimers appearing in this publication. Please read the Scheme Information Document carefully before investing.

42 Wealth Strategies - Jan- March 2012

Issued by The Hongkong and Shanghai Banking Corporation Limited, India (HSBC India). Incorporated in Hong Kong SAR with limited liability.