DSP Nifty 50 Equal Weight Index Fund.pdf
- 1. April 2023 | People | Processes | Performance | DSP Nifty 50 Equal Weight Index Fund (erstwhile known as DSP Equal Nifty 50 Fund) (An open ended scheme replicating NIFTY 50 Equal Weight Index) #INVESTFORGOOD
- 2. Mutual fund options investors have in large-cap space Active Large cap Funds Passive Funds Broad based index (e.g. Nifty 50) Smart beta index (e.g. Nifty 50 Equal Weight) OR
- 3. Active large cap funds – Current trends
- 4. Source: SPIVA. Data As of 31 Dec 2022. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of this scheme. It is not possible to invest directly in Index Majority of active large cap funds have been underperforming the index 13% 3% 6% 32% 88% 97% 94% 68% 1 year 3 year 5 year 10 year Performance of Largecap Fund - SPIVA Dec 2022 % of Largecap Fund outperformed S&P BSE 100 % of Largecap Fund underperformed S&P BSE 100
- 5. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of large cap funds outperforming Nifty 50 TRI on 3 year rolling basis Source: Internal, MFIE, Data As of 30 Apr 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of this scheme. It is not possible to invest directly in Index Underperformance has become more evident post SEBI Recategorization circular SEBI scheme recategorisation - Oct 2017 Significant reduction in % of large cap schemes outperforming Nifty 50 TRI post Oct 2017
- 6. Group/Investment Nifty 50 Equal Weight Index Nifty 50 Index Largecap Fund median Industrials 6.1 4.9 7.8 Energy 8.0 12.1 7.1 Materials 13.8 6.8 5.6 Consumer Discretionary 14.5 6.9 9.4 Consumer Staples 10.1 9.7 8.7 Healthcare 9.9 3.8 5.2 Financials 22.4 38.3 34.9 Information Technology 9.2 12.7 10.5 Communication Services 1.9 2.5 2.6 Utilities 3.9 2.0 2.3 Real Estate 0.0 0.0 0.0 24.2 12.5 Nifty 50 Equal Weight Index Active Largecap Funds (Median) Sectoral Active Share% Source: Internal, Morningstar, Data As of 30 Apr 2023. The sector(s)/stock(s)/issuer(s) mentioned in this document 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(s). Active large cap funds don’t deviate much from Nifty 50 in terms of sectoral allocation Nifty 50 TRI, 71% Cash, 4% Active portion, 24% Breakup of portfolio of Top 10 active largecap funds
- 7. Source: MFIE. Data as of 28 Apr 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. For performance in SEBI prescribed format & schemes managed by same fund manager, please refer Annexure in slide 18 & 19. DSP Nifty 50 Equal Weight Index Fund – Best Performing fund in large cap category 6.5% 13.2% 28.2% 6.9% 12.5% 23.8% 5.7% 10.5% 20.6% 1 Year 2 Years 3 Years Lumpsum Returns as on 28 Apr 2023 DSP Nifty 50 Equal Weight Index Fund - Reg - Growth Nifty 50 TRI Active Large cap Funds (Category Median) 8.9% 7.7% 17.1% 8.5% 7.0% 14.4% 6.7% 4.5% 11.4% 1 Year 2 Years 3 Years SIP Returns as on 28 Apr 2023 DSP Nifty 50 Equal Weight Index Fund - Reg - Growth Nifty 50 TRI Active Large cap Funds (Category Median)
- 8. Nifty 50 investing vs Nifty 50 Equal Weight investing
- 9. Source: Internal, NSE, Data As of 30 Apr 2023. The sector(s)/stock(s)/issuer(s) mentioned in this document 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(s) Every player has an equal potential to perform Top 10 companies: Nifty 50 Index= 58.8% weight, Nifty 50 Equal Weight Index= 19.8 % weight Bottom 10 companies as per Nifty 50 Index Company Name Weight in Nifty 50 Index Weight in Nifty 50 Equal Weight Index BAJAJ AUTO LTD. 0.63 2.17 COAL INDIA LTD. 0.62 2.09 CIPLA LTD. 0.60 1.90 APOLLO HOSPITALS ENTERPRISE LTD. 0.57 1.95 TATA CONSUMER PRODUCTS LTD. 0.57 2.04 EICHER MOTORS LTD. 0.57 2.13 DIVI'S LABORATORIES LTD. 0.52 2.15 UPL LTD. 0.48 1.97 BHARAT PETROLEUM CORPORATION LTD. 0.43 1.93 HERO MOTOCORP LTD. 0.42 2.07 Total 5.4% 20.4% Top 10 companies as per Nifty 50 Index Company Name Weight in Nifty 50 Index Weight in Nifty 50 Equal Weight Index RELIANCE INDUSTRIES LTD. 10.32 2.02 HDFC BANK LTD. 9.38 2.01 ICICI BANK LTD. 8.08 2.02 HOUSING DEVELOPMENT FINANCE CORPORATION LTD. 6.34 2.02 INFOSYS LTD. 5.63 1.68 ITC LTD. 4.73 2.09 TATA CONSULTANCY SERVICES LTD. 4.16 1.92 LARSEN & TOUBRO LTD. 3.60 2.05 KOTAK MAHINDRA BANK LTD. 3.59 2.12 AXIS BANK LTD. 2.97 1.92 Total 58.8% 19.8% Balanced Diversification
- 10. -10 -5 0 5 10 15 20 3 Year alpha of Nifty 50 Equal Weight vs Nifty 50 Current cycle of outperformance may have just begun Source: MFIE. Data as of 30 Apr 2023. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of this scheme. It is not possible to invest directly in Index Alpha over Nifty 50 is cyclical and usually last for longer time
- 11. 1.1 1.15 1.2 1.25 1.3 1.35 1.4 1.45 1.5 1.55 Nifty 50 Equal Weight/ Nifty 50 Ratio Average – 1.34 Source: MFIE. Data as of 30 Apr 2023. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of this scheme. It is not possible to invest directly in Index Nifty 50 Equal Weight / Nifty 50 ratio is still below its historical average
- 12. Since Jun 20, depolarization phase has begun with fall in Top 10 stocks weights from 62.6% to 58.2%. This has led to Nifty 50 Equal Weight index (NEW) outperforming Nifty 50 Index (N50) Current weight of Top 10 stocks @ 58.2% is still at elevated level when compared to its history Source: NSE, Data As of 30 Apr 2023 49.6 58.9 49.6 59.4 59.4 51.7 62.6 58.5 48 50 52 54 56 58 60 62 64 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 Apr-21 Apr-23 Weight of top 10 stocks in Nifty 50 (%) NEW vs N50 (Annualized returns differential in green/red fonts) +26% -4% - 8% +16% -3% +4% Depolarisation phase
- 13. Source: NSE, Data As of 30 Apr 2023 Same 50 stocks at lower valuation using Nifty 50 Equal Weight Index (NEW) ! 20.56 19.68 10 15 20 25 30 35 40 45 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-20 Apr-21 Oct-21 Apr-22 Oct-22 Apr-23 Price to Earning (P/E) Ratio Nifty P/E NEW P/E
- 14. Low tracking error & tracking difference Source: AMFI, Data As of 30 Apr 2023 Nifty 50 Equal Weight strategy – Industry landscape Scheme Tracking Error Regular plan (%) Tracking Error Direct plan (%) Tracking Difference Regular plan Tracking Difference Direct Plan 1-Year (%) 1-Year (%) DSP NIFTY 50 Equal Weight ETF 0.04 -- -0.36 -- DSP Nifty 50 Equal Weight Index Fund 0.05 0.05 -1.0 -0.47 Category average of Index Funds tracking Nifty 50 Equal Weight Index 0.08 0.09 -1.21 -0.63 Median 0.05 0.10 -1.25 -0.60
- 15. How do we recommend investing in this strategy? SIP (preferred) Lumpsum investment with Long term horizon (At least 5 years) Investor can allocate 15-20% of their large cap exposure
- 16. Nifty 50 Equal Weight Index is underweight pure banking/NBFC & overweight Financial Services and Insurance Good performance by Banking stocks can lead to underperformance of Nifty 50 Equal Weight NIFTY 50 NIFTY Equal 50 HDFC BANK LTD. 9.38% 2.01% ICICI BANK LTD. 8.08% 2.02% HDFC 6.34% 2.02% KOTAK MAHINDRA BANK LTD. 3.59% 2.12% STATE BANK OF INDIA 2.8% 2.11% BAJAJ FINANCE LTD. 2.11% 2.09% AXIS BANK LTD. 2.97% 1.92% INDUSIND BANK LTD. 0.95% 2.12% TOTAL BANKING/NBFC EXPOSURE 36.22% 16.41% BAJAJ FINSERV LTD. 0.92% 2.04% SBI LIFE INSURANCE COMPANY LTD. 0.65% 1.93% HDFC LIFE INSURANCE COMPANY LTD. 0.66% 2.00% TOTAL FINANCIAL SERVICE EXPOSURE 2.23% 5.97% Source: NSE, Data As of 30 Apr 2023. The sector(s)/stock(s)/issuer(s) mentioned in this document 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(s) Risk – Significant underweight to Banking/NBFCs
- 17. Source: NSE, Data As of 30 Apr 2023. Numbers in ( ) indicates number of experience. The investment approach / framework/ strategy / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors. Aanchal Almal, CFA (8) Manager Diipesh Shah (19) Vice President Anil Ghelani, CFA (20) Head of Passive Investments & Products Review Opening Portfolios and forecast Cash Flows Review market liquidity to manage impact costs Pre - Trade Evaluation Investment Decision Post - Trade Analysis Track mandatory and elective Corporate Actions Strategy for stock level timing and pace of execution Identify price movements and evaluate stock lending opportunities Evaluate trade execution Analyse Tracking Error Ensure real time portfolio weights align with underlying index Track Scheduled and Adhoc rebalances Monitor real time market movement In line with global best practices - dedicated passive investment desk to increase focus Investment team & Process Portfolio Management / Dealing / Analysis Passive Investments Process
- 18. Annexure – Performance in SEBI prescribed format (Growth option) Fund Managers: 1. Anil Ghelani (Managing this fund since July 2019) 2 Diipesh Shah (Managing this fund since November 2020)
- 19. Annexure – Performance of schemes managed by Anil Ghelani & Diipesh Shah Data as on 30 Apr 2023. Regular-growth option considered
- 20. Disclaimer & Product Labelling Disclaimers: This presentation / note is for information purposes only. It should not be construed as investment advice to any party. In this material DSP Asset 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. While utmost care has been exercised while preparing this document, the AMC nor any person connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice. The statements contained herein may include statements of future expectations and other forward looking statements that are based on prevailing market conditions / various other factors and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in the 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 the schemes of DSP mutual fund may or may not have any future position in these sector(s)/stock(s)/issuer(s). Large-caps are defined as top 100 stocks on market capitalization, mid-caps as 101-250 , small-caps as 251 and above. Data provided is as on Apr 30, 2023 (unless otherwise specified) The figures pertain to performance of the index and do not in any manner indicate the returns/performance of the Scheme. It is not possible to invest directly in an index. All opinions, figures, charts/graphs and data included in this presentation are as on date and are subject to change without notice. For complete details on investment objective, investment strategy, asset allocation, 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. There is no assurance of any returns/capital protection/capital guarantee to the investors in above mentioned Schemes. The presentation indicates the strategy/investment approach currently followed by the above mentioned Schemes and the same may change in future depending on market conditions and other factors. The portfolio of the above schemes is subject to changes within the provisions of the Scheme Information document of the scheme. For index disclaimer click here. An investor, by subscribing or purchasing an interest in the Product(s), will be regarded as having acknowledged, understood and accepted the disclaimer referred to in Clauses above and will be bound by it. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. DSP Nifty 50 Equal Weight Index Fund (An open ended scheme replicating NIFTY 50 Equal Weight Index) This open-ended index linked equity scheme is suitable for investors who are seeking* •Long term capital growth •Returns that are commensurate with the performance of Nifty 50 Equal Weight Index TRI, subject to tracking error. DSP Nifty 50 Equal Weight ETF (An open ended scheme replicating NIFTY 50 Equal Weight Index) This product is suitable for investors who are seeking* •Long-term capital growth •Investment in equity and equity related securities covered by NIFTY50 Equal Weight Index, subject to tracking error. SCHEME RISKOMETER BENCHMARK RISKOMETER - Nifty 50 Equal Weight TRI * Investors should consult their financial advisers if in doubt about whether the Scheme is suitable for them. SCHEME RISKOMETER BENCHMARK RISKOMETER - Nifty 50 Equal Weight TRI
- 21. For Professional Investor use only 13 #INVESTFORGOOD