This document discusses investment opportunities in the Indian equity markets. It notes that corporate earnings are poised to pick up pace over the next few years, which could provide many opportunities. There is typically performance divergence across different sectors and stocks within sectors. A diversified portfolio selecting the best ideas across sectors and market caps could generate outsized returns. It then introduces the DSP Equity Opportunities Fund, an actively managed large and mid cap fund that aims to take advantage of opportunities by having a high conviction portfolio of 40-60 stocks across sectors.
1. [Title to come]
[Sub-Title to come]
Strictly for Intended Recipients OnlyDate
* DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class
September 2019
| People | Processes | Performance |
DSP Equity Opportunities Fund
Large & Mid Cap Fund - An open ended equity scheme investing
in both large cap and mid cap stocks
2. 2
Performance variance across sectors provide investment opportunities
NSE indices | Source: Bloomberg, IIFL | Returns shown above are absolute returns for the period from January-1 to September-28, 2019. For relevant disclaimers please refer slide no 12 The sector(s)/stock(s)/issuer(s)
mentioned in this presentation do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
Financial Services, Realty, Energy, Information Technology, Bank, FMCG & Infrastructure have been the best performing
sectors as on YTD2019
Media, Metals, Auto & Pharma were detractors to the performance as on YTD2019.
Visible performance divergence across sectors
Media, -29.9%
Metal, -22.7%
Auto, -18.9%
Pharma, -14.9%
Infrastructure, 1.0%
FMCG, 2.0%
Bank, 7.2%
IT, 7.6%
Energy, 8.1%
Realty, 11.4%
Financial Services, 12.4%
-35.0% -30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
Sectoral Perf (%) - CYTD19
3. 3
Historical dispersion of performance between sectors of Nifty 500
Divergence in sectoral contribution has always been there in equity markets
Source: Bloomberg, IIFL | Based on contribution of each sector to the total returns of Nifty 500 based on the weight of the sector in the Nifty 500 and the corresponding absolute returns during the calendar year
period from January-1 to December-31 & For YTD2019 it is from January-1 to September-30. For relevant disclaimers please refer slide no 12.
Highest
Contribution
Lowest
Contribution
2011 2012 2013 2014 2015 2016 2017 2018 YTD2019
Consumer Staples Consumer Staples
Information
Technology
Industrials Health Care Materials Real Estate
Information
Technology
Real Estate
Telecommunicati
on Services
Real Estate Health Care
Consumer
Discretionary
Consumer
Discretionary
Energy Consumer Staples Consumer Staples Financials
Health Care Financials
Telecommunicatio
n Services
Financials
Consumer
Staples
Utilities Materials Financials Energy
Information
Technology
Consumer
Discretionary
Consumer Staples Health Care Industrials Financials
Consumer
Discretionary
Energy
Information
Technology
Consumer
Discretionary
Health Care
Consumer
Discretionary
Materials
Information
Technology
Consumer
Discretionary
Industrials Health Care
Telecommunicati
on Services
Energy Materials Industrials
Consumer
Staples
Telecommunic
ation Services
Consumer Staples
Telecommunicati
on Services
Industrials Industrials
Utilities Industrials Energy Utilities Energy Industrials Financials Materials Consumer Staples
Materials Energy Materials Energy Financials Real Estate Utilities Utilities Utilities
Financials Utilities Financials
Telecommunicati
on Services
Utilities
Information
Technology
Energy
Consumer
Discretionary
Materials
Industrials
Information
Technology
Utilities
Information
Technology
Materials Health Care
Information
Technology
Real Estate
Consumer
Discretionary
Real Estate
Telecommunicatio
n Services
Real Estate Real Estate Real Estate
Telecommunicati
on Services
Health Care
Telecommunicati
on Services
Health Care
4. 4
Performance divergence within sectors in YTD 2019
High divergence across large cap companies within sectors could provide greater opportunity to
generate alpha
Sector Best performing company Worst performing company
Communication Services Info Edge India Ltd 41% Vodafone Idea Ltd -73%
Consumer Discretionary Bata India Ltd 53% Cox & Kings Ltd -98%
Consumer Staples Balrampur Chini Mills Ltd 55% Future Consumer Ltd -41%
Energy Bharat Petroleum Corp Ltd 37% Chennai Petroleum Corp Ltd -41%
Financials HDFC Asset Management Co Ltd 89% Reliance Capital Ltd -89%
Health Care Procter & Gamble Health Ltd 69% Glenmark Pharmaceuticals Ltd -53%
Industrials InterGlobe Aviation Ltd 63% HEG Ltd -73%
Information Technology Redington India Ltd 37% eClerx Services Ltd -59%
Materials PI Industries Ltd 52% Phillips Carbon Black Ltd -41%
Real Estate Godrej Properties Ltd 59% Indiabulls Real Estate Ltd -48%
Utilities Adani Green Energy Ltd 39% Reliance Power Ltd -92%
S&P BSE 200 Index | Source: Bloomberg, IIFL | Returns shown above are absolute returns during the period from January 01 to September 30, 2019. For relevant disclaimers please refer slide no 12.
6. 6
SENSEX FY93-19 earnings CAGR: 12%
Earnings growth could average around 20% for FY19-FY21E
Source: MOSL. Data as of September 30, 2019. CAGR – Compounded annualized growth rate. FY Note: There is no guarantee of returns/income generation in the Scheme. Further, there is no assurance of
any capital protection/capital guarantee to the investors in the Scheme. Forecasts may not come to pass. Indices are unmanaged and used for illustrative purposes only and are not intended to be indicative
of any fund’s performance. It is not possible to invest directly in an index.
81
129
181
250
266
291
278
280
216
236
272
361
446
540
720
833
820
834
1024
1109
1179
1,334
1,348
1,330
1,345
1,361
1,482
1,786
2,147
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20E
FY21E
FY93-96: 45% CAGR FY96-03: 1%
CAGR
FY03-08: 25%
CAGR
FY08-18:
5% CAGR
FY19-21E:
20% CAGR
FY93-FY19: 12%
CAGR
1471
38,673
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
0
200
400
600
800
1000
1200
1400
1600
Mar-92
Mar-93
Mar-94
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Sensex EPS (INR) Sensex Index (RHS)
BSESensexIndexv/sEPS
Sensex CAGR (%) EPS CAGR (%)
27 Yrs FY92 - FY19 8.5 10.9
7. 7
Corporate profits to GDP (%) – At an inflection point?
Source: MOSL. Data as of September 30, 2019. CAGR – Compounded annualized growth rate. FY Note: There is no guarantee of returns/income generation in the Scheme. Further, there is no assurance of any capital
protection/capital guarantee to the investors in the Scheme. Forecasts may not come to pass.
3.0
4.7
5.4
6.2
7.3
7.8
5.5
6.5
6.2
4.9
4.6
4.3
3.8
3.1
3.4
2.9
0
1
2
3
4
5
6
7
8
9 FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Average of 5.1%
Source: Motilal Oswal Research, September 2019. The above chart is created using data from 9000 Plus Listed and unlisted Indian companies, as available on the Capitaline database.
8. 8
To summarize...
Indian equity markets offer many investment opportunities
Corporate earnings is poised to pick up pace which could offer many more opportunities
Some sectors tend to outdo others, depending on market conditions
Also, within each sector, some stocks perform much better than others
A diversified portfolio with the best ideas across sectors, could generate out-sized returns
10. 10
Taking advantage of investment opportunities across the spectrum
Portfolio of around 40-60 stocks with exposure in large and mid cap stocks
Actively managed portfolio with some tactical calls to capitalize on market trends using a
combination of “top-down” and “bottom-up” approach
Higher concentration in top ten stocks at ~40%
Large & Mid
Cap Portfolio
Actively
Managed
High conviction
bets
Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 , small-caps as 251 rank onwards
11. 11
Portfolio Positioning
A large and mid cap equity fund with active portfolio management approach
TOP10HOLDINGS
TOP10SECTORS
Fund Manager (s) Rohit Singhania & Jay Kothari^^ AUM Rs. 5,489 crore
Nature of the fund Large & Mid Cap Benchmark Nifty LargeMidcap 250 TRI*
Inception date 16 May 2000 Exit Load <12 months: 1%; >=12 months: NIL
Why should you consider
this fund?
Portfolio with a mix across large and mid cap securities; typically maintained a large cap bias in past
Active portfolio management with some tactical calls taken to capitalize on market trends
Sector-agnostic portfolio geared towards identifying best opportunities across industries
Source: Internal; Data as on September 2019. * change in benchmark w.e.f September 24, 2019The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may
not have any future position in these sector(s)/stock(s)/issuer. ^^Dedicated Fund manager for managing overseas funds.
9.42%
9.37%
5.03%
3.99%
2.89%
2.81%
2.72%
2.31%
2.21% 2.18%
HDFC Bank Limited
ICICI Bank Limited
Axis Bank Limited
Reliance Industries
Limited
Larsen & Toubro Limited
Kansai Nerolac Paints
Limited
Kotak Mahindra Bank
Limited
Coromandel International
Limited
Alkem Laboratories
Limited
City Union Bank Limited
30.47%
8.25%
7.92%
6.91%
6.23%
6.01%
4.32%
3.54%
3.14% 2.89%
Banks
Consumer Non Durables
Petroleum Products
Pharmaceuticals
Software
Finance
Industrial Products
Construction
Consumer Durables
Construction Project
12. 12
Product labelling details & Disclaimers
*Investors should consult their financial/tax advisors if in doubt about whether the product is suitable for them.
In this material DSP Investment Managers Pvt.. (the AMC) has used information that is publicly available, including information developed in-house. Information gathered and used in this material is believed to be from reliable sources.
The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. The data/statistics are given to explain general market trends in the securities market, it should not be construed as any
research report/research recommendation. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or
variations of such expressions that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with
respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of
India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc.
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s). The
portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors which is available at www.dsp.com. Past
performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.
Indices are unmanaged and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an index.
Asset Allocation: 1 (a) Equity & equity related instruments of large cap companies# 35% - 65%, 1(b) Equity & equity related instruments of mid cap companies$ 35% - 65%, 1(c) Investment in other equity and equity related instruments
0% - 30%, 2. Debt* and Money Market Securities 0% - 30% 3. Units of REITs and InvITs 0% - 10%
*Debt securities/instruments are deemed to include securitized debts
#1st -100th company in terms of full market capitalization would be considered as large cap companies.
$101st - 250th company in terms of full market capitalization would be considered as midcap companies.
Neither the DSP Mutual Fund nor any of its schemes are registered in any jurisdiction except in India, under SEBI (Mutual Fund) Regulations, 1996; except for DSP Equity Opportunities Fund and DSP Dynamic Asset Allocation Fund,
which are also registered with the Securities and Commodities Authority, UAE. The distribution of this material in certain jurisdictions may be restricted or subject to registration requirements and, accordingly, persons who come into
possession of this material in such jurisdictions are required to inform themselves about, and to observe, any such restrictions.
All figures and other data given in this document are as on September 30, 2019 (unless otherwise specified) and the same may or may not be relevant in future and the same should not be considered as solicitation/
recommendation/guarantee of future investments by DSP Investment Managers Pvt.. or its affiliates. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial
implication or consequence of subscribing to the units of DSP Mutual Fund.
The strategy mentioned in the presentation has been currently followed by the Scheme and the same may change in future depending on market conditions and other factors.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This open ended equity scheme is suitable for investors who are seeking* :
Long-term capital growth
Investment in equity and equity-related securities predominantly of large and midcap companies