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Strictly for Intended Recipients OnlyDate
* DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class
March 2020
| People | Processes | Performance |
DSP Focus Fund](https://image.slidesharecdn.com/dspfocusfund-mar2020-200623183200/75/DSP-Focus-Fund-1-2048.jpg)
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DSP Focus Fund
- 1. [Title to come] [Sub-Titleto come] Strictly for Intended Recipients OnlyDate * DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class March 2020 | People | Processes | Performance | DSP Focus Fund
- 2. 2 What is theDSP Focus Fund? FOCUSED FUND CAPTURES OPPORTUNITIES IN SECTOR LEADERS Seeks high conviction opportunities across sectors and market caps INVESTMENT PHILOSOPHY Use a blend of growth drivers and valuation support to build a portfolio which is durable across cycles INVESTMENT FRAMEWORK Top down + bottom up analysis to identify stocks with return drivers & margin of safety CONCENTRATED PORTFOLIO Limited to ~ 30 stocks. Each holding weight is ~ 3% to 6% of portfolio at the time of buying. Has a concentrated portfolio of stocks with growth drivers and valuation support Source – DSP Internal
- 3. 3 Why invest inthe DSP Focus Fund? Gopal Agrawal is the Fund manager with > 20 years of experience Prior to DSP, was in Head of Equity roles at Tata MF and Mirae Asset MF Blend growth & value styles to potentially smoothen return profile Capture trending momentum while also allocating to mean reverting value discovery Portfolio with ~ 30 high conviction stock ideas. Potential to generate high alpha but may have higher volatility EXPERIENCED FUND MANAGEMENT TEAM* DESIGNED TO PARTICIPATE ACROSS CYCLES CONCENTRATED PORTOLIO CAN LEAD TO HIGH ALPHA Higher alpha potential makes it suitable for the satellite equity allocation SATELLITE EQUITY ALLOCATION CORE EQUITY ALLOCATION Seeking higher alpha Seeking equity beta * Jay Kothari is dedicated Fund Manager for overseas investments.
- 4. 4 Investment process –Research & Stock selection SECTOR LEADERS LANDSCAPE Macro analysis of growth drivers and valuations Bottom – up analysis of company attractiveness on growth and valuation dynamics Assessment of returns expectations Assessment of margin of safety and liquidity Create a whitelist of stocks Blend analysis of growth drivers and valuation support to determine relative attractiveness Source: Internal.
- 5. 5 Investment process –Portfolio construction Build a concentrated portfolio of the highest conviction ideas across the market spectrum Blend growth drivers with valuation support to identify allocation attractiveness Allocate to current performance and to future value discovery Each stock has a portfolio weight between 3% to 6% at the time of entry Assessment of entry and exit ranges in whitelisted stocks Diversified across styles and sectors to create a concentrated portfolio Source: Internal.
- 6. 6 Investment process –Risk management and Sell discipline Continuous assessment of stock performance v/s fundamental changes Stock continues to demonstrate growth dynamics Use a pyramid purchase strategy to add to allocation on the way up Trade around the position with periodic profit booking Stock is faltering on fundamental growth dynamics Exit the company and assess alternative candidates Assessment of fundamental changes driving Deep value / turnaround cases Remain invested if price action is supportive within 3 year time periods Exit if underperformance continues beyond 3 years indicative of a Value trap Constant monitoring of performance and alternative opportunities Source: Internal.
- 7. 7 Investment team Gopal Agrawal–Co-Fund Manager for the DSP Top 100 Equity Fund & DSP Focus Fund (Since October 2018) • 17 year of Investment experience and 6 years in Oil and Gas Industry experience • Joined DSP Mutual Fund in August 2018 as SVP and Head of Macro Strategy – Investments • Previous work experience as Head of Equity Investments at Mirae Asset Management Company, Head of Equity Investments at Tata Asset Management Company, Fund Manager at SBI Mutual Fund • MBA and Bachelor’s Degree in Chemical Engineering FUND MANAGER* * Jay Kothari is dedicated Fund Manager for overseas investments. Years in brackets ( ) is years of experience. Experienced investment team with a wide coverage of Indian equity markets TEAM SUPPORTING THE FUND MANAGER Chinmay Sapre (9) AVP, Aviation, Realty Abhishek Ghosh (12) AVP, Small & Mid Caps, Transportation Kaushal Maroo (11) AVP, Autos, Ancillaries, Cement Charanjit Singh (12) AVP, Capital Goods, Infra, Power Utilities, Consumer Durables Dhaval Gada (10) AVP, Banking and Financial Services Apoorv Jain, CFA (4) Manager, Investment Analyst Abhishek Rathi (13) AVP, Financials & Industrials for Long / Short Aayush Ganeriwala MT, Oil & Gas, Metals Aditya Khemka (13) AVP, Healthcare Suryanarayanan Manian, CFA (10) VP, Tech, Telecom, Media, FMCG Resham Jain, CFA (14) AVP, Small & Mid Caps, Agri inputs, Textiles, Chemicals, Retail
- 8. 8 Performance Scorecard Source: MFIE;Returns are as on March 31, 2020 for DSP Focus Fund, Growth Plan Regular Option. Rolling Frequency is Daily. Standard Deviation of DSP Focus Fund and S&P BSE 200 TRI is calculated on the basis of daily returns. Click here for performance in SEBI prescribed format and of other schemes managed by Fund Managers. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The figure mentioned for performance of the index should not construe as returns/performance of the Scheme. It is not possible to invest directly in an index. ROLLING RETURNS POINT-TO-POINT RETURNS DSP Focus Fund S&P BSE 200 TRI DSP Focus Fund S&P BSE 200 TRI DSP Focus Fund S&P BSE 200 TRI Average Annual Returns 10.9 10.9 12.8 12.8 13.4 12.7 Median Annual Returns 7.2 10.1 12.1 13.0 14.5 14.0 Minimum Annual Returns -29.8 -32.6 -7.4 -5.4 -1.9 -0.7 Maximum Annual Returns 71.8 58.1 28.5 25.3 22.1 20.8 Returns / Risk 0.64 0.66 0.75 0.77 0.79 0.77 1 YEAR ROLLING RETURNS (%) 3 YEARS ROLLING RETURNS(%) 5 YEARS ROLLING RETURNS (%) TIME PERIOD DSP Focus Fund S&P BSE 200 TRI ALPHA 1 year -24.1 -25.4 1.3 3 years -5.0 -2.0 -2.9 5 years -0.3 1.8 -2.0 Since Inception 5.9 6.9 -1.0
- 9. 9 Performance Scorecard AVERAGE ROLLINGRETURNS RETURN PER UNIT OF RISK 10.9 12.8 13.4 10.9 12.8 12.7 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 1 yr RR 3 yr RR 5 yr RR DSP Focus Fund S&P BSE 200 TRI 0.64 0.75 0.79 0.66 0.77 0.77 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1 yr RR 3 yr RR 5 yr RR DSP Focus Fund S&P BSE 200 TRI Source: MFIE; Returns are as on March 31, 2020 for DSP Focus Fund, Growth Plan Regular Option. Rolling Frequency is Daily. Standard Deviation of DSP Focus Fund and S&P BSE 200 TRI is calculated on the basis of daily returns. Click here for performance in SEBI prescribed format and of other schemes managed by Fund Managers. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The figure mentioned for performance of the index should not construe as returns/performance of the Scheme. It is not possible to invest directly in an index.
- 10. 10 Portfolio details –sector exposures Significant exposure in Financials, Consumer Discretionary & Materials sector during Gopal’s tenure Source: Morningstar; Portfolio data as on March 31, 2020. The 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 | More than 10% allocation highlighted in Orange and more than 5% allocation highlighted in grey Sectors Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Energy 8.5% 8.8% 8.5% 9.2% 9.3% 9.2% 9.3% 8.5% 8.2% 7.9% 8.0% 8.2% 7.3% 7.5% 7.2% 6.0% 6.1% 5.8% Materials 13.6% 13.2% 13.8% 13.5% 14.1% 14.2% 14.4% 13.9% 13.8% 14.2% 13.9% 13.6% 13.2% 13.5% 14.0% 15.1% 15.4% 16.7% Industrials 15.1% 15.1% 15.0% 14.0% 14.4% 14.1% 13.2% 12.8% 12.6% 10.9% 9.9% 9.9% 9.4% 8.4% 8.3% 8.5% 8.4% 7.6% Consumer Discretionary 11.9% 12.1% 11.8% 11.3% 11.5% 10.7% 10.3% 10.4% 10.5% 9.6% 10.6% 9.8% 10.5% 10.0% 10.2% 9.8% 9.7% 9.6% Consumer Staples 5.0% 4.8% 4.8% 4.9% 5.0% 4.9% 4.8% 4.3% 4.3% 4.7% 4.3% 4.2% 4.0% 3.7% 3.6% 5.3% 5.4% 5.8% Healthcare 2.0% 2.0% 2.0% 2.1% 2.1% 2.1% 2.4% 2.1% 3.5% 3.7% 3.8% 3.5% 3.5% 3.6% 3.5% 3.6% 3.5% 4.8% Financials 38.2% 38.7% 39.4% 39.4% 41.7% 43.2% 44.7% 44.8% 46.0% 46.1% 46.6% 45.5% 45.9% 46.7% 47.3% 44.2% 45.9% 40.6% Information Technology 0.8% 0.8% 0.8% 0.8% 0.9% 0.8% 0.9% 0.8% 0.8% 0.9% 3.4% 4.2% 4.4% 4.5% 4.6% 5.3% Communication Services 1.0% 1.0% 1.1% 1.7% Utilities 1.0% 1.0% 0.9% 0.9% 0.8% 0.8% Total Equity 94.9% 95.4% 97.1% 96.3% 100.0% 99.2% 100.0% 97.7% 99.7% 98.1% 98.2% 96.4% 98.1% 98.4% 99.2% 97.1% 99.0% 98.0%
- 11. 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 MARKET CAP BREAKUP Large Cap Mid Cap Small Cap 11 Portfolio details – concentration and market cap trends Source: MFIE; Portfolio data as on March 31, 2020. The 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. Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 stocks, small-caps 251 stock onwards Currently has a large cap bias. Manager preference for stocks with high liquidity 84% 1%13% 1% 42% 37% 63% 58%29 30 0 5 10 15 20 25 30 35 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 STOCK CONCENTRATION TRENDS Top 5 stocks (LHS) Top 10 stocks (LHS) Total No of stocks 41% 67% 80% 20% 30% 40% 50% 60% 70% 80% 90% 100% Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 SECTOR CONCENTRATION TRENDS Top Sector Top 3 Sector Top 5 Sector
- 12. 12 Top Holdings ason March 31, 2020 Source: Internal. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may not have any future position in these sector(s)/stock(s)/issuer(s). TOP 5 STOCKS PORTFOLIO WEIGHT (%) COMMENTS GROWTH DRIVERS VALUATION SUPPORT HDFC BANK LIMITED 9.99 Compounding story with high ROA, ROE Strong retail franchise Credit to Deposit ratio strong even during worse growth environment Financialization of savings Retail credit offtake Minimum fresh slippages Low credit cost Premium valuation because of strong Balance Sheet and lower credit cost ICICI BANK LIMITED 8.66 Core business outlook improving Fresh slippages coming down Subsidiary valuation (AMC, Insurance, Broking, etc) rising Financialization of savings Improving ROEs High Tier 1 Capital Currently trading at P/B of 2 (ex of subsidiary) COROMANDEL INTERNATIONAL LIMITED 6.68 Subsidy for urea has been reduced by 11% in the Union Budget 2020 which should be beneficial for Coromandel International Backward integration, reduced subsidy and focus on non- chemical business Earnings can surprise as estimates of FY21 are likely to be met in FY20 only based on 9 months reported earnings RELIANCE INDUSTRIES LIMITED 5.82 New age business like Telecom & Retail expected to be future value driver Core business Petroleum & Oil & Gas significant cash generators as expansion completed and no more capex unless JV formed with Saudi Aramco Telecom penetration (enterprise, broadband, value added services, Fibre to home etc) and Retail business Value discovery based on Facebook deal BAJAJ FINANCE LIMITED 5.49 Proxy to India’s consumption story Strong fintech company Strong loan book growth (25% - 30% CAGR growth) Rise in consumption Low credit cost PEG <1 based on FY21 earnings
- 13. 13 Current investment outlookand portfolio positioning MARKET OUTLOOK ~ 30% allocation to VALUE KEY SECTORS Financials Materials Consumer Discretionary ~ 70% allocation to GROWTH KEY RISKS PORTFOLIO POSITIONING* Positioning the portfolio to capture an economic recovery Source: Internal. The 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.; * as on March 31, 2020. Market Valuations Nifty 50 Index FY20 earnings likely to close at 485 Market is trading at 19x trailing & 15.3x FY22E, with lower interest scenario we expect 17+multiple on future earnings which offers decent upside over 18 months Earnings growth expectations Q4FY20 earnings to be impacted by inventory write down and lock down due to COVID 19 Earnings to recover post H1FY21, FY22E can be decent growth year assuming no major disruptions Valuation expectations Valuations for Value stocks have bottomed Expect significant recovery from here onwards Global Scenario Negative growth impact due to COVID 19 and massive job losses in USA led to big fiscal response Global growth likely to recover post medical solution for COVID 19 due to strong policy support Fiscal Deficits impact of COVID 19 may led to poor tax collection and combined “all” fiscal deficit can go to double digit Some relief expected due to lower energy prices Credit issues Serious credit quality concerns would re-surface for Indian banks & NBFCs, impacting their willingness & ability to lend Policy support will help to improve it
- 14. 14 Product Labeling Details& Disclaimer In this material DSP Investment Managers Pvt. Ltd. (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 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 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. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. For Schemes Performance in SEBI prescribed format refer annexure as attached with this presentation. All figures and other data given in this document are as on March 31st, 2020 (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 the AMC 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. For scheme specific risk factors and more details, please read the Scheme Information Document, Statement of Additional Information and Key Information Memorandum of respective Scheme available on ISC of AMC and also available on www.dspim.com. For Index disclaimer click here 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 The strategy mentioned has been currently followed by the Scheme and the same may change in future depending on market conditions and other factors. Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 , small-caps as 251 and above. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Scheme Product Suitability Riskometer DSP Focus Fund (An open ended equity scheme investing in maximum 30 stocks. The Scheme shall focus on multi cap stocks) The Open ended equity scheme is suitable for investors who are seeking* Long-term capital growth with exposure limited to a maximum of 30 stocks from a multi cap investment universe Investment in equity and equity-related securities to form a concentrated portfolio *Investors should consult their financial advisers if in doubt about whether the Scheme is suitable for them.