dspbrim-mutual fund basics and sip presentation new

7/31/2019 DSPBRIM-Mutual Fund Basics and SIP Presentation New

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Mutual Funds and Systematic Invest ing :

A Perspect ive

August 2010

FOR PROFESSIONAL INTERMEDIARIES


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When I w as young, I used t o t hinkt hat m oney is everyt h ing in l i f e

Now that I m old, I know i t is.


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25 28 30 35 40 50 60AGE

StartCareer

Marriage

BuyAutomobile

BuyHouse

ChildrensEducation

DaughtersMarriage

Retirement

Why Invest?


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Select ion of appropr iate invest ment s

What i f I need the money bef ore t he targeted dat e?

What paper w ork is needed?

How of t en do I monit or t hese invest ment s?

How do I ensure safe t y?

Who w i l l infor m me on t he progress regular ly?

What are t he t ax impl icat ions Can I keep t he ret urn or w i l l t he t ax-man keep i t ?

What i f I lose t he proof of invest ment s?

Why are investment decisions dif f icult?


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What investment is appropriate?

Debt : PPF, Post Of f ice Schem e, Fixed Deposit s, Debent ur es, Bonds, Income Funds

Equity: Individual Stocks, Growth Funds, Sectoral Funds

Banks: Bank Deposits, Liquid Funds

Or a mix of the above

A good investment is one that helps you maximise your total returns, net of taxes andinf lat ion over the time per iod you invest for!


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Basics of Mut ual Funds


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A pool of money, collected from investors, invested according to cert ain investment objectives

Ow nership i n hands of i nvest ors w ho ve pooled in t heir f unds.

Managed by a t eam of invest ment prof essionals

The pool of funds invest ed in port fo l io of market able invest ment s.

Investors share denominated by Units that have a Net Asset Value (NAV) which changes everyday

The port fo l i o is created according to st ated invest ment obj ect ives

Invest ors make m oney thr ough Capit al appreciat ion and Income dist r i but ion

Mutual Funds


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Port fo l i o diversi f icat ion

Professional Management

Reduction in Risk

Service

Af fordabi l i ty

Reduction in Transaction costs

L iqu id i ty

Convenience and Flexib i l i t y

Tax Ef f ic iency

What are the advantages of Mutual Funds?


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Three Basic Types

Mutual funds come in three basic types

Equit y or st ock funds

Bond or incom e f unds and

Money m arket or cash f unds.


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Other classif icat ions

Growth / Value/ Income

Opt ions- Growt h/ Div idend/ Reinvest ment

Sect oral Funds

Special t y Funds

Of f shore Funds

Open ended/ Close ended

Diversif ied Equit y

ELSS Funds

Index Funds

Hybri d/ Balanced Funds


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How to choose the right scheme

Det erm ine your f i nancial goals and your t im e horizon

Det erm ine your t o lerance for r i sk

St udy the obj ect i ves of t he funds avai lable and mat ch t hem w it h your need


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Evaluat ing a Fund s Performance

Perf orm ance against Benchm ark

Perf ormance against t hat of peer group (simi lar f unds)

Consist ency in perf orm ance over Benchmar k and against

peer group

St abl e Fund Managem ent

Time f rame considered- Ideal ly 3-5 years

Sect oral Diversi f icat i on- Whether port f ol io is evenly

diversi f ied


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Liquid

Income

Balanced

Diversified

Sector

Returns

Risk

Fund Suitabi lit y Risk vs Return


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March is a part icular ly r isky mont h t o invest in t he st ock m arket ,t he ot her s are.

July, February, January, April, September, August , May, June,

December, October & November.


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The intell igent way of invest ing?


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When they say t ime is money, they must mean

Systemat ic Investment Planning


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Life is a roller coaster ride- full of ups

and downs. We all know we have to savefor many responsibilities life brings alongwith it.

But no matter how much you save- ItsNever Enough!


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Did you know ?

If your curr ent m ont hly expenses are Rs. 30, 000/ - perm ont h, t hen af t er 20 years you w i l l requi re Rs. 80, 000/ - am ont h t o j ust m aint ain t he sam e l i f est y le!

An educat ion degree for your chi ld which current ly costsRs. 20 lakh cou ld cost over Rs. 34 lakh af t er 11 years!

At inf lat ion of 5%


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Individual Investor Needs: Investment Goals

All individuals need to save for

Ret i rement

Chi ld s educat i on / marr iage

Medical em ergency

Ot her fami l y obl igat ions

Every individual has one or more of the above goals


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Individual Investor: Life Stages

Earnings (Consumption + Savings)

Consumption

Savings

60Ret irement

27Young Married

22Young Independe nt

40Middle Age

All individuals have a f ini te period to save for t heir investment goals


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Value of Money over t ime

30,000

38,288

62,368

79,599

Today 5 years 15 years 20 years

100,000

78,353

48,102

37,689

Today 5 years 15 years 20 years

All f igures in Rs.; At inf lat ion of 5%; Hypot het ical numbers meant only for i l lust rat ion purpose

Investors need to beat inf lat ion

Value of Rs. 100,000 over timeImpact of inflat ion on monthlyexpenses of Rs. 30,000 today


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Performance of Various Asset Classes

6.62%

8.87%

2.11%

16.97%

9.71%

WPI Inf l at ion Bank FDs* BSE Sensex^

Grow t h Real Grow t h

Source: IIFL, Int ernal; *1-3 year maturi t y; ^excluding dividends; data as at end FY2010

Equit ies outperform other asset classes over the long term

Cumulative annualised returns1982 to 2010


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Individual investors are scared of

The Dow nside Risk in Equi t ies

The Risk of Market Volat i l i t y

The Risk of Market Tim ing


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What else makes a material impact on

investments in equit y ?


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Investing in the BSE Sensex

16.91%

Fixed investment on

1st day of every month

16.19%

17.60%

Fixed invest ment atlow est sensex value

every year

Fixed invest ment athighest sensex val ue

every year

Source: Internal ; Returns have been calculat ed as on Aug 19, 2010

Market t iming does not mat ter over t he long term

Returns are from Jan 1980- Aug 2010


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The Power of Compounding

BSE SensexScenario A

BSE SensexScenario B

Number of years 15 20

Monthly investment Rs 5000 Rs 5000

Total investment Rs 9 lakh Rs 12 l akh

Assumed annualised return 18% 18%

Final corpus Rs. 45. 96 l akh Rs. 1. 17 crore

Time Period of 25 years; Hypot heti cal numbers meant only for il lust rat ion purpose

Saving a small sum of money regularly in equity mutual funds can make your money workwith greater power and can have a signif icant impact on wealt h accumulat ion.

The above i l lustrat ion above is merely indicat ive in nature and does not in any manner indicatet he per f orm ance of any of t he schem es of DSP BlackRock Mut ual Fund. Please r ead t he SID andSAI carefully before investing.

Even a seemingly small 5 year delay can cost you the CROREPATI tag


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Summary

Long Term Systematic MonthlyInvestment In equit y schemes

is ideal for t his !

Investors needs to save regularlyand invest those savings in higher

return assets to create wealt h


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How Do You Achieve Your Financial Goals

Reti rement

Chil d s educat ion

Fam i ly com m it m ent s - m edical em ergency, et c


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Ret i r ement corpus requi red t o meet post ret i rementexpenses (if invest ed at 7%) : Rs 1.4 cr

Retirement Planning

Today At the time

of ret irement

Rs 30,000

Rs 83,579

21 Yrs

Inf l at ion 5%

Monthly HouseholdExpenses

Monthly investment needed to achieve thiscorpus in 21 years

at 12% Rs 12,583

at 15% Rs 8,083

at 18% Rs 5,090

Corpus requiredper month


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Retirement Planning

Present When your Child actually

goes for this degree

Rs 20,00,000

Rs 34,20,000

11 Yrs

Inf l at ion 5%Monthly investment needed to achieve this

corpus in 11 years

at 12% Rs 12,456

at 15% Rs 10,166

at 18% Rs 8,237

Educat ional Degree for Child

Corpus required


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Retirement Planning

Present When your Child actually

gets married

Rs 20,00,000

Rs 43,70,000

16 Yrs

Inf l at ion 5%

Child s Marr iage

Monthly investment needed to achieve thiscorpus in 16 years

at 12% Rs 7,509

at 15% Rs 5,466

at 18% Rs 3,925

Corpus required


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So What Are The Benefits Of Investing Through ASystematic Investment Plan?


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Benefits of Invest ing Systemat ically

The Benefi t of Long Term Equity Investment Equi t ies give super ior ret urn s among all asset classes over t he lon g ter m DSP BlackRock Mutual Fund has a track record of consistent good performance relative to its peers

The Benefits of Systematic Monthly Investment

Takes out t he r isk of market t imi ng Adds t he benef i t s of t he rupee cost averaging and the power of compounding

RUPEE COST AVERAGING

One doesn t have to worry about when to invest , how much to invest etc consider ing dai ly marketmovements, as systematic investing reduces the risks signif icantly

Elim inates t he need to t ime your i nvest ment s in equi t ies

Smoot hens t he impact of m arket f luct uat ions and hence reduces risks of invest ing in volati le markets

The r isk of market volat i l i ty gets negated with more units being purchased when the Price is low andfewer unit s being bought when t he Price is high


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Benefits of Investing Systematically: Rupee Cost Averaging

Time(Months)

Amountinvested

NAV per Unit(Rs)

Unitspurchased

1 1, 000 23 43

2 1, 000 21 48

3 1, 000 22 45

4 1, 000 19 53

5 1, 000 16 63

6 1, 000 17 59

7 1, 000 17 59

8 1, 000 20 50

9 1, 000 21 48

10 1, 000 19 53

11 1, 000 25 40

12 1, 000 24 42

Total 12,000 601

Average NAV per Unit over 12 months =

(23+21+22+!9+16+17+17+20+21+19+25+24)/ 12

or Rs 20.34

Average Cost per Unit over 12 months =

12,000/ 601

or Rs 19.96

Average Cost per Unit will always be lesser than the Average NAV per Unit, regardless of themarket movements

Source: Int ernal ; Hypothet ical numbers meant only for i ll ust rat ion purpose


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Benef its of Invest ing Systemat ically (contd)

Flexibility You can choose f rom a wi de arr ay of schemes You can decide t o keep invest ed amount s in an earl i er scheme & invest f ut ure SIP inst al lm ent s

int o a new scheme

Added Convenience Aut o debit f aci l i t y across over 25 locat i ons in India Regular account st at ement s Redempt ion request direct ly credi t ed int o your bank account


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The First 4 Steps To Potent ial Wealth Creat ion

Select a mutual fund schemeof your choice

Select the amount you canafford to invest every month

Decide on the frequency withwhich you will invest

Decide the length of theinvestment period

Step 1

Step 2

Step 3

Step 4


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Table Illust rat ing the power of compounding (12% CAGR)

Invest Systemat ically to Benefi t f rom the Power of Compounding

MonthlyInvestments for aperiod of

12% return per annum

5 years 10 years 15 years 20 years 25 years

2,000 1. 65 Lacs 4. 65 Lacs 10. 09 Lacs 19. 98 Lacs 37. 95 Lacs


10,000 8. 25 Lacs 23.23 Lacs 50.46 Lacs 99.91 Lacs 1. 90 Cror e

15,000 12.37 Lacs 34.85 Lacs 75.69 Lacs 1. 50 Cro re 2. 85 Cror e

20,000 16. 50 Lacs 46. 47 Lacs 1. 01 Cr or e 2. 00 Cr or e 3. 80 Cr or e

25,000 20. 62 Lacs 58. 08 Lacs 1. 26 Cr or e 2. 50 Cr or e 4. 74 Cr or e

50,000 41.24 Lacs 1.16 Cror e 2.52 Cror e 5.00 Cror e 9.49 Cror e

Source: Int ernal ; Hypothet ical numbers meant only for i l lust rat ion purpose


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5,000 4. 48 Lacs 13.93 Lacs 33.84 Lacs 75.80 Lacs 1. 64 Cro re

10,000 8. 97 Lacs 27.87 Lacs 67.69 Lacs 1. 52 Cro re 3. 28 Cro re

15,000 13.45 Lacs 41.80 Lacs 1. 02 Cro re 2. 27 Cro re 4. 93 Cro re





Th P f C di


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2,000 2. 07 Lacs 7. 65 Lacs 22.69 Lacs 63.23 Lacs 1. 73 Cror e

5,000 5. 17 Lacs 19.12 Lacs 56.71 Lacs 1. 58 Cro re 4. 31 Cror e

10,000 10.35 Lacs 38.24 Lacs 1. 13 Cro re 3. 16 Cro re 8. 63 Cror e

15,000 15.52 Lacs 57.35 Lacs 1. 70 Cro re 4. 74 Cro re 12.94 Cror e





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DSP BlackRock Mutual Fund:

Schemes SIP Per formance

SIP ret rns as on J l 30 2010


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SIP returns as on Jul 30, 2010

Source: Internal ; Data as on Jul 30, 2010

DSP BlackRock Equity Fund (Date of a l lo tm ent: Apr 29, 1997)

Time Period SIP Investment (Rs.)DSPBREF S&P CNX Nifty^

Value (Rs.) SIP CAGR(%) Value (Rs.) SIP CAGR (%)

1 Year 12000 13854 29. 70 12915 14. 37

3 Year 36000 52380 25. 89 44810 14. 72

5 Year 60000 106007 22. 93 84421 13. 61

Incept ion 159000 1194435 27. 44 522294 16. 57

^Benchmark. ' Since incept ion ret urns are calculated on Rs. 10/ - invest ed at i ncept ion, v iz . date of a l lo tm ent. Al lRet urns and schem e NAVs are f or Regular Plan- Grow t h Opt ion. Ret urns and NAV only f or DSPBREF are f or Regular Plan- Dividend Option assuming reinvestment of dividend. As on Jul 30, 2010, NAV of DSPBREF: 50.246, value of S&P CNXNif t y: 5,367.60. As on Jul 30, 2010, NAV of DSPBRTEF: 94. 086, val ue of BSE 100: 9, 556.67.SIP invest ment ret urns t able assumes an invest ment of Rs. 1000/ - per m ont h. 'Since incept ion ret urns calculat ed f romthe 'Start date of SIP' (Considered to be the Date of Allotment). Past performance may or may not be sustained infuture and should not be used as a basis for comparison with other investments.

DSP BlackRock Top 100 Equity Fund (Date of a l lo tm ent: Mar 10, 2003)

Time Period SIP Investment (Rs.)

DSPBRTEF BSE 100^


1 Year 12000 13091 17. 2 12967 15. 21

3 Year 36000 48075 19. 68 45880 16. 37

5 Year 60000 98137 19. 75 86196 14. 45

Incept ion 88000 240312 26. 8 188731 20. 34

SIP returns as on Jul 30 2010


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DSP BlackRock Oppor tunit ies Fund (Date of al lotment: May 16, 2000)

Time Period SIP Investment (Rs.)DSPBROF S&P CNX Nifty^


1 Year 12000 14014 32. 37 12915 14. 37

3 Year 36000 51083 24. 06 44810 14. 72

5 Year 60000 96305 18. 97 84421 13. 61

Incept ion 122000 608190 29. 64 342128 19. 21

* The Infrast ructure Growth and Economic Reforms Fund^Benchmark. ' Since incept ion ret urns are calculated on Rs. 10/ - invest ed at i ncept ion, v iz . date of a l lo tm ent. Al lReturns and scheme NAVs are for Regular Plan- Growth Option. As on Jul 30, 2010, NAV of DSPBROF: 83.931, value ofS&P CNX Nifty: 5,367.60. As on Jul 30, 2010, NAV of DSPBRITF: 47.796, value of BSE 100: 9,556.67.SIP invest ment ret urns t able assumes an invest ment of Rs. 1000/ - per m ont h. 'Since incept ion ret urns calculat ed f romthe 'Start date of SIP' (Considered to be the Date of Allotment). Past performance may or may not be sustained infuture and should not be used as a basis for comparison with other investments.

DSP BlackRock India T.I.G.E.R. * Fund (Date of a l lo tm ent: Jun 11, 2004)


DSPBRITF BSE 100^


1 Year 12000 13446 22. 97 12967 15. 21

3 Year 36000 46820 17. 80 45880 16. 37

5 Year 60000 92090 17. 14 86196 14. 45

Incept ion 73000 142085 21. 74 124593 17. 41

SIP returns as on Jul 30 2010


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DSP BlackRock Small and Mid Cap Fund (Date of a l lo tm ent: Nov 14, 2006)

Time Period SIP Investment (Rs.)DSPBRSMF CNX Mid Cap^


1 Year 12000 14936 48. 05 14187 35. 28

3 Year 36000 59743 35. 77 53765 27. 81

Incept ion 44000 72940 28. 49 66585 23. 11

^Benchmark. ' Since incept ion ret urns are calculated on Rs. 10/ - invest ed at i ncept ion, v iz . date of a l lo tm ent. Al lRet urns and schem e NAVs are f or Regular Plan- Grow t h Opt ion. As on Jul 30, 2010, NAV of DSPBRSMF: 17.293, value ofCNX Mid Cap: 8,415.30. As on Jul 30, 2010, NAV of DSPBRTSF: 17.036, value of S&P CNX 500: 4,475.15.SIP invest ment ret urns t able assumes an invest ment of Rs. 1000/ - per m ont h. 'Since incept ion ret urns calculat ed f romthe 'Start date of SIP' (Considered to be the Date of Allotment). Past performance may or may not be sustained infuture and should not be used as a basis for comparison with other investments.

DSP BlackRock Tax Saver Fund (Date of a l lo tm ent: Jan 18, 2007)


DSPBRTSF S&P CNX 500^


1 Year 12000 14100 33. 81 13013 15. 95

3 Year 36000 51660 24. 88 46393 17. 15

Incept ion 42000 61612 22. 40 54396 14. 88


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44A Rupee Saved Is A Rupee Earned A Long Journey Begins With A Small Step


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