DSP BlackRock US Flexible* Equity Fund

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DSP BlackRock US Flexible Equity Fund - An Open Ended Fund Of Funds Scheme Investing in a US Equity Fund

*The term “Flexible” in the name of the Scheme signifies that the Investment Manager of the Underlying Fund can invest either in growth or value investment characteristic securities placing an emphasis as the market outlook warrants.

This Open-ended Fund of Funds Scheme is suitable for investors who are seeking*:
1. Long-term capital growth

2. Investment in units of overseas funds which invest primarily in equity and equity related securities of companies domiciled in, or exercising the predominant part of their economic activity in the USA

3. High risk (Brown)

*Investors should consult their financial advisors if in doubt about whether the Scheme is suitable for them.

Note : Risk may be represented as :
(Blue) : Investors understand that their principal will be at low risk
(Yellow) : Investors understand that their principal will be at medium risk
(Brown) : Investors understand that their principal will be at high risk

Published in: Economy & Finance, Business
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DSP BlackRock US Flexible* Equity Fund

  1. 1. DSP BlackRock US Flexible* Equity Fund An Open Ended Fund Of Funds Scheme Investing In a US Equity Fund April 2014 FOR PROFESSIONAL INTERMEDIARIES ONLY *The term “Flexible” in the name of the Scheme signifies that the Investment Manager of the Underlying Fund can invest either in growth or value investment characteristic securities placing an emphasis as the market outlook warrants This Open-ended Fund of Funds Scheme is suitable for investors who are seeking*:  Long-term capital growth  Investment in units of overseas funds which invest primarily in equity and equity related securities of companies domiciled in, or exercising the predominant part of their economic activity in the USA  High risk  (Brown) *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. Note: Risk may be represented as:  (Blue): Investors understand that their principal will be at low risk |  (Yellow): Investors understand that their principal will be at medium risk |  (Brown): Investors understand that their principal will be at high risk
  2. 2. DSP BlackRock US Flexible* Equity Fund (USD 948 mn*) Indian Investors Accessing one of the Flagship funds of BlackRock in the category BlackRock Global Funds (BGF) US Flexible Equity Fund Source: Internal; *AUM as at end- March 2014 (*The term “Flexible” in the name of the Scheme signifies that the Investment Manager of the Underlying Fund can invest either in growth or value investment characteristic securities placing an emphasis as the market outlook warrants) FOR PROFESSIONAL INTERMEDIARIES ONLY 2
  3. 3. Outline  Why US equities? • Access to the world’s largest equity market • US Equities are a core component of global equity portfolios/indices • Represents numerous global investment themes • Resilient economy  Why invest now? • Attractive valuations • Global portfolios are overweight on US equities • Strong corporate balance sheets  About the Underlying Fund: BGF US Flexible Equity Fund (*The term “Flexible” in the name of the Scheme signifies that the Investment Manager of the Underlying Fund can invest either in growth or value investment characteristic securities placing an emphasis as the market outlook warrants) FOR PROFESSIONAL INTERMEDIARIES ONLY 3
  4. 4. Why US equities?
  5. 5. Access to the largest equity market in the world Top 10 Equity Markets by Market Capitalization (US$ trillion) US market capitalization is greater than those of the next 6 countries combined Source: Bloomberg; as on 30 April 2013 FOR PROFESSIONAL INTERMEDIARIES ONLY 19.3 4.2 3.5 3.3 3.3 1.9 1.8 1.7 1.3 1.3 0 5 10 15 20 25 USA Japan UK Hong Kong China Canada France Germany Switzerland Australia MarketCap(US$trillion) 5
  6. 6. US Equities are a core component of global equity portfolios/ indices US as a % of Global Equity Indices US as a % of Global Sector Indices (S&P Global Indices) US Equities have the largest allocation in every major global equity and sector index Source: Internal, as of March 31, 2013 FOR PROFESSIONAL INTERMEDIARIES ONLY 53% 52% 50% 47% 47% 0% 20% 40% 60% 80% 100% MSCI World FTSE Developed Index S&P Global 100 FTSE All World Index MSCI ACWI 77% 60% 56% 53% 52% 51% 50% 40% 35% 26% 0% 20% 40% 60% 80% 100% Technology Healthcare ConsumerDiscretionary Utilities Energy ConsumerStaples Industrials Financials Telecom Materials 6
  7. 7. Represents numerous global investment themes Technology New Media Global Trend Investable Themes Company Examples* New Health Services Economic Shift Lifestyle Shifts Demographic Shifts Productivity Enhancement Niche Growth Market Theme Apple Inc. Google Microsoft IBM Pfizer Abbot Labs Johnson & Johnson Proctor & Gamble Expedia NASDAQ McGraw Hill Companies General Electric US companies have exhibited unparalleled innovation to lead many global trends *The company examples are for illustration purposes and there is no guarantee that they will form a part of the portfolio of BGF US Flexible Equity Fund FOR PROFESSIONAL INTERMEDIARIES ONLY 7
  8. 8. 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 1975 1976 1977 1979 1980 1981 1983 1984 1985 1987 1988 1989 1991 1992 1993 1995 1996 1997 1999 2000 2001 2003 2004 2005 2007 2008 2009 2011 2012 Resilient economy US unemployment rate Significant decrease in unemployment numbers after each economic slowdown thereby exhibiting economic resilience Source: Bloomberg. Data through April 2013 FOR PROFESSIONAL INTERMEDIARIES ONLY 8
  9. 9. US economy continues to demonstrate slow but stable economic recovery Falling initial jobless claims Purchasing Managers Index Improving level of industrial production Consumer confidence steadily inching up Source: Bloomberg, as of end-August 2013. Past Performance may or may not be sustained in future FOR PROFESSIONAL INTERMEDIARIES ONLY 9 30 35 40 45 50 55 60 65 Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Apr-06 Jun-07 Sep-08 Dec-09 Mar-11 Jun-12 Aug-13 ISMManufacturingPMI SeasonallyAdjusted -20 -15 -10 -5 0 5 10 Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Apr-06 Jun-07 Sep-08 Dec-09 Mar-11 Jun-12 Aug-13 USIndustrialProductionYoY (Base:2007)Seasonally Adjusted 0 20 40 60 80 100 120 140 160 Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Apr-06 Jun-07 Sep-08 Dec-09 Mar-11 Jun-12 Aug-13 ConferenceBoardConsumer Confidence(Base:1985) SeasonallyAdjusted 200 300 400 500 600 700 Jan-00 Apr-01 Jun-02 Sep-03 Dec-04 Mar-06 Jun-07 Aug-08 Nov-09 Feb-11 May-12 Aug-13 InitialJoblessClaims4Week MovingAverageSeasonally Adjusted
  10. 10. Strong corporate balance sheets Free cash flow yields: 1998 vs. Today 7.2% 5.5% 2.8% 5.9% 0% 1% 2% 3% 4% 5% 6% 7% 8% 1998 Today Emerging Markets US Source: Bloomberg. “Today” data as of 31 Mar 2013. Indices used are MSCI Emerging Markets Index and MSCI US Index. Past Performance may or may not be sustained in future. Free Cash Flow Yield is calculated by dividing Free Cash Flow per Share by Current Market Price of each share. FOR PROFESSIONAL INTERMEDIARIES ONLY 10
  11. 11. Strong Corporate balance sheets: Dividends & buybacks hit a record high 145 132 144 156 170 222 254 298 363 372 353 324 329 350 491 706 858 1050 761 587 652 880 0 200 400 600 800 1,000 1,200 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Calendar Year Buybacks plus dividends ($bn) Excess cash in balance sheets has resulted in record buybacks and dividends USDbn Source: Bloomberg; annual data as of 2012 | Past Performance may or may not be sustained in future. FOR PROFESSIONAL INTERMEDIARIES ONLY 11
  12. 12. About the Underlying Fund: BGF US Flexible Equity Fund
  13. 13. BlackRock: World’s largest Asset Management Company One of the world’s pre-eminent asset management companies  USD 4.324 trillion assets under management with USD 2.4 trillion in equity assets  Broad product range available through mutual funds, ETFs, commingled funds, and separate accounts  Fiduciary model/culture - no proprietary trading  BlackRock Solutions® oversees USD14.7 trillion in assets  Financial Markets Advisory Group advises public and private financial institutions on key assignments  Dedicated transitions team helps clients change investment exposure, minimizing risk and cost Global footprint enables a deep understanding of local markets, industries, and regulatory dynamics  22 primary investment centers worldwide facilitate access to major capital markets  Global trading capabilities enable us to source assets and negotiate favorable terms for investors  Superior insights through access to management and perspective as an investor across the capital structure in thousands of companies worldwide Investment insights gained at a local level & shared globally maximize investment opportunities for clients  Investment platform promotes knowledge sharing across the firm; daily calls connect investment teams, linking the insights from up to seven trading desks and 120 investment teams in 15 countries  The BlackRock Investment Institute (BII), our internal investor forum, facilitates sharing and debates insights  Presence in 68 cities across 30 countries provides local experience and global expertise to a diverse client base  Dedicated Risk & Quantitative Analysis (RQA) professionals partner with portfolio teams to monitor and analyze risk  Proprietary Aladdin® platform integrates portfolio management, risk analytics, trading and operations Source: Internal, Bloomberg; as at end-December 2013 FOR PROFESSIONAL INTERMEDIARIES ONLY 13
  14. 14. Key Investment Professionals Team members average over a decade of investment experience  Portfolio manager defines investment process and strategy and makes buy and sell decisions  Utilize quantitative research to evaluate opportunities in the investment universe  Analysts conduct fundamental research on the opportunities identified by the model and provide input into the buy and sell process Large Cap Series Equity Team draws on BlackRock’s broad resources  Diverse equity investment teams  Scientific Active Equity group  Risk & Quantitative Analysis (RQA) group ( ) years of Investment experience; as of 31 March 2014 Director Fundamental Analyst Fundamental Analyst Tim Doherty, CFA (12) Todd Burnside (15) David Gardner, CFA (9) Managing DirectorFundamental Analyst Gregory Brunk (22)Brett Shaver, CFA (12) BlackRock Large Cap Series Resources Portfolio Management Team Product Strategist Portfolio Manager Peter Stournaras, CFA (19) Lead Quantitative Analyst Joe Wolfe, CFA, CQF, FRM (13) Analysts Fundamental Analyst Scott Winters, CFA (9) 14FOR PROFESSIONAL INTERMEDIARIES ONLY
  15. 15. Bridging Quantitative and Fundamental Investing Quantitative analysis Fundamental research Portfolio construction Actual portfolio Combining the best of BlackRock’s quantitative and fundamental innovation Best of Both Worlds Fundamental Research Quantitative Analysis Integrated Fundamental & Quantitative Subjective Objective Pragmatic Idiosyncratic Scalable Guided focus Judgmental Systematic Disciplined, informed decisions Forward-looking Historically-based Evidential forecasts 15FOR PROFESSIONAL INTERMEDIARIES ONLY
  16. 16. Investment Process: Idea Generation Quantitative Stock Opportunities Thematic Fundamental Opportunities Thematic Quantitative Opportunities Fundamental Stock Opportunities Research Prioritization Meeting • Prioritize opportunity • Set initial conviction • Determine portfolio complement Research List • Set research agenda • Focus research attention • Research coordination tool The investment process described represents the portfolio management team’s current process for selecting investments for portfolios managed in the style of one of the Large Cap Series strategies. The investment process is subject to change based on market conditions, the opinions of the portfolio management team and other factors. FOR PROFESSIONAL INTERMEDIARIES ONLY 16
  17. 17. Idea Generation – Internal Quantitative Model Model ranks the investment universe from most to least attractive  Companies above 25th percentile eligible for investment on a quantitative basis  No more than 20% active weight in stocks scoring below 33rd percentile Enhancements  Model leverages Blackrock's significant investment expertise and quantitative investment platforms worldwide  Synchronize the model with expected holding period - reduce turnover  Weights adjusted based on existing market regime and opportunities Priced Attractively How much we pay for earnings, assets and cash flow Price implied expectations Accounting we can rely on Accruals Pensions Economic vs. GAAP Capital Deployment Fundamental Momentum Growth Stability of Growth Investment Sentiment Price Momentum Analyst Revisions Short Interest Current process for selecting investments in the Fund’s portfolio in accordance with its stated investment objectives and policies. Process subject to change based on market conditions, portfolio manager’s opinion and other factors. FOR PROFESSIONAL INTERMEDIARIES ONLY 17
  18. 18.  Individual company template • Analysis tool and discussion framework  Identify key drivers/pivotal issuers • Top risks and opportunities  Review independent/external bull-bear case  Review company filings and conference call transcripts  Internal BlackRock insights  Develop downside, core and stretch targets  Management incentives Systematic Approach, Enabling Focus on Value-Added Analysis The screenshot presented is shown for illustrative purposes only. FOR PROFESSIONAL INTERMEDIARIES ONLY 18 Research Process
  19. 19. Portfolio Construction Portfolio approximate tracking error range 300bps to 700bps  Internally monitored  Ex-ante tracking error outside of the range mandates additional review Bounds  Individual company active weight +/- 200bps; approximately 60 to 100 securities in the portfolio  Sectors +/- 1000bps relative to respective Russell 1000® Index Risk is monitored at the overall portfolio level  Percentage of risk coming from various positions, industry and style bets actively monitored by BlackRock’s Risk & Quantitative Analysis (RQA) group Deliberate, diversified and properly scaled FOR PROFESSIONAL INTERMEDIARIES ONLY 19
  20. 20. Investment Process: Sell Discipline  Avoid a “criminal court” mindset  Investment thesis fully reflected in the stock price  Quantitative score deteriorates • Automatic review triggered if stock falls below 33rd percentile  Fundamental milestones missed  Thesis creep  Competition for capital (better investment opportunities elsewhere)  Diversification • Sector, industry, and security FOR PROFESSIONAL INTERMEDIARIES ONLY 20
  21. 21. Why choose BGF US Flexible Equity Fund?  Time-tested long-term investment philosophy driven by an experienced portfolio management team  Quantitative model adds discipline and focus to the investment process  Organizes and focuses research efforts  Strong fundamental research supported by BlackRock’s extensive capabilities  Disciplined risk management efficiently measures and manages portfolio risk FOR PROFESSIONAL INTERMEDIARIES ONLY 21
  22. 22. BGF US Flexible Equity Fund: Portfolio Characteristics Source: BlackRock, FactSet. Portfolio characteristics are of the BlackRock BGF US Flexible Equity portfolio and are subject to change. Holdings are for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the industries shown above. 1 The expected annual increase in operating earnings for a company over the next full business cycle as per Consensus IBES estimates. These forecasts refer to a period of between three and five years, and are expressed as a percentage. As of 31 March 2014 22 Portfolio Russell 1000 Index LT IBES Growth Rate1 12.20% 11.90% Number of Holdings 84 1,016 Wtd. Avg. Market Cap. $97.2 bn $106.5 bn Price/Book Value 2.13x 2.60x P/E (FY1) 14.3x 16.2x Top 10 holdings Weight (%) Google Inc. Class A 3.49 JPMorgan Chase & Co. 3.37 Bank of America Corporation 2.99 CVS Caremark Corporation 2.83 3M Company 2.82 Comcast Corporation Class A 2.64 Merck & Co., Inc. 2.61 U.S. Bancorp 2.58 Pfizer Inc. 2.55 American International Group, Inc. 2.47 Characteristics Sector allocation 3.06% 2.36% 3.75% 18.22% 11.25% 12.95% 17.14% 9.58% 8.80% 12.89% 0.00% 0.00% 3.73% 22.00% 10.98% 17.59% 21.57% 10.04% 2.97% 11.11% 0.00% 10.00% 20.00% 30.00% Utilities Telecom Services Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary BGF US Flexible Equity Russell 1000 Index FOR PROFESSIONAL INTERMEDIARIES ONLY
  23. 23. Disclaimers FOR PROFESSIONAL INTERMEDIARIES ONLY This document is meant for professional intermediaries only and may not be reproduced, distributed or published, in whole or in part, by any recipient thereof or any purpose without prior consent. For Scheme specific risk factors including risk associated with underlying scheme, please read the relevant Scheme Information Document and Key Information Memorandum carefully. Past performance may or may not be sustained in the future and should not be used as a basis of comparison with other investments. The views expressed/data provided are as on March 31, 2014 and may change as subsequent conditions vary Information gathered and materials used in this presentation are believed to be from reliable sources. The Fund/AMC, however does not warrant the accuracy, reasonableness and/or completeness of any information. Mutual Fund investments are subject to market risks, read all scheme related documents carefully 23

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