HDFC Equity Savings Fund

(An open ended equity scheme)

This product is suitable for investors who are seeking*:

Riskometer

Capital appreciation while generating income over medium to

long term
Provide capital appreciation and income distribution to the
investors by using equity and equity related instruments,
arbitrage opportunities, and investments in debt and money
market instruments

*Investors should consult their financial advisers if in doubt about

whether the product is suitable for them.

December 116, 2015

Table of Contents
An Overview
Scheme Dynamics The Best of Three
Equity Taxation
Fund Positioning Risk Quotient

Equity Market Outlook

Debt Market Outlook
Why HDFC Equity Savings Scheme?
Investment Strategy
Product Features and Asset Allocation
2

Equity Savings Fund An Overview

Asset allocation is key to financial success.
Investors need exposure to both Equity & Debt markets.

Equity

Characteristics of an Equity
Savings Fund
Volatility < Equity Funds
Potential Returns >Debt Funds
Taxation = Equity Funds

A Stable Trio

Arbitrage

Equity
Savings
Fund

Debt

Lower unhedged Equity exposure ensures lower volatility while the combined exposure of
Equity + Arbitrage offers the tax efficiency of equity oriented funds while offering higher
potential returns as compared to debt funds.

HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the Scheme

Scheme Dynamics The Best Of Three

Flexible Asset allocation fund with equity fund like taxation (Refer Next Slide 5 & 6)
Aim for optimum tax free returns through Dividends and long term capital appreciation

Focus on long term

growth.
Invest in companies
which trade below
their intrinsic values
while maintaining a
balanced market
outlook.

Accrual Income.
Capture benefits of
Capital appreciation
in a falling interest
rate environment.

Generate income through

arbitrage opportunities
arising out of implied cost
of carry and mis-pricing
across the spot, futures
and options markets.

Maximizing income
while maintaining an
optimum balance of
yield, safety &
liquidity.

Equity Taxation
For Resident Individuals/HUF$
Taxes Applicable

Equity Funds

Liquid Funds/
Debt Funds

Dividend Distribution Tax

Nil

28.840%

Short Term Capital Gains@

17.304%

34.608%^

Long Term Capital Gains@@

Nil

23.072%

@ Short Term Capital gains will be considered for equity assets held for a period of up to 12 months and up to 36 months in case of debt assets
@@ Assets not falling under short term assets will be treated as long term assets.
$- Surcharge at the rate of 12% is levied in case of individual/HUF unit holders where their income exceeds Rs. 1 Crore
^ - Assuming the investor falls into highest tax bracket.
The information set out is neither a complete disclosure of every material fact of Income-tax Act 1961 nor does it constitute tax or legal advice. In view of the
individual nature of the tax consequences, each investor is advised to consult his/her own professional tax advisor.

Equity Taxation
For Domestic Companies$
Taxes Applicable

Equity Funds

Liquid Funds/
Debt Funds

Dividend Distribution Tax

Nil

34.608%

Short Term Capital Gains@

17.304%/16.5315%

33.063%/34.608%

Long Term Capital Gains@@

Nil

22.042%/23.072%

@ Short Term Capital gains will be considered for equity assets held for a period of upto 12 months and upto 36 months in case of debt assets
@@ Assets not falling under short term assets will be treated as long term assets.
$- Surcharge at the rate of 7% is levied for domestic corporate unit holders where the income exceeds Rs 1 crore but less than Rs 10 crores and at the rate of 12%
where income exceeds Rs 10 crores.
The information set out is neither a complete disclosure of every material fact of Income-tax Act 1961 nor does it constitute tax or legal advice. In view of the
individual nature of the tax consequences, each investor is advised to consult his/her own professional tax advisor.

Fund Positioning Risk Quotient

Suitable for conservative investors.

Product Return

HDFC Equity Savings fund is much less volatile

than diversified equity/balanced funds (equity
65%) since it has only a limited exposure to
unhedged equity (max up to 40%)

Debt Funds

Liquid Funds

Aims to provide returns while managing risks

efficiently.

Equity Taxation# No capital gains taxes after

1 year. No DDT on any dividends paid.

HDFC Equity
Savings Fund

Balanced
Funds

Diversified
Equity Funds

Sectoral
Funds/
Thematic
Funds

Arbitrage
Funds

Product Risk
# Provided the scheme meets the criteria as an equity oriented scheme as per prevalent Income tax laws. HDFC Mutual Fund/AMC is not guaranteeing
return on investments made in the scheme

3 in 1 The Golden Goose

Reduce the risk of timing the markets.
Benefit from investments in the derivative markets.
Advantage You Optimally take part in the Equity & Debt
stories with a single product.
Flexible asset allocation enhances the potential for investing in
the best-performing asset class and reduces the impact of the
worst-performing asset class across market cycles.
Investment horizon of 18-24 months or more.

Portfolio Rebalancing between equities and debt based on

market conditions.

HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the scheme

A Back test Analysis

A mixture of equity, debt & arbitrage to effectively manages risk without hindering growth
prospects.
A 10 year analysis of this model throws up interesting facts.
Rolling Returns of the Benchmark Investment Model
Particulars
Number Of Observations (A)

1 Yr Rolling

2 Yr Rolling

3 Yr Rolling

5 Yr Rolling

2,233

1,996

1,739

1,240

Number of Negative Returns (B)

205

NIL

NIL

Negative Returns as % Of Total (B/A)

9.18%

0.10%

0.00%

0.00%

Lowest Return Observed

-15.94%

-0.48%

4.47%

5.54%

Highest Return Observed

30.94%

20.16%

13.33%

11.65%

Average Return Across test period

9.75%

8.95%

8.57%

8.47%

Standard Deviation

7.92%

4.11%

2.18%

1.37%

Source: Internal Data calculation.

To test the efficacy of the above benchmark model strategy in the past, a hypothetical fund is created with NAV of Rs. 10. The above findings are based
on calculations made on a daily analysis of the actual index values of the respective benchmarks by extrapolating in the ratio viz. 30% Nifty 50 + 40%
CRISIL Liquid Fund Index + 30% CRISIL Short Term Bond Fund Index for the period from November 1st 2005 to October 31st 2015. The above returns
are annualized without considering fund expenses. The above simulation is for illustrative purposes only. Past performance of the Index is not an
indication of future results. Prospective application of the methodology may not result in performance commensurate with the back-test returns
shown. HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the scheme

Equity Market Outlook

India is one of the biggest beneficiaries of lower
commodity prices especially crude oil.
Further, low inflation, improving CAD and fiscal
outlook and rising order backlogs in some key
infrastructure related industries point to a
steadily improving growth prospects of the
economy, especially of the capex cycle.

45

Roll PE (LHS)

40

35,000

average (LHS)

30,000

BSE (RHS)

35

25,000

30
25

20,000

20

15,000

15

The policy direction is right and economy is

making good progress on most fronts.

10,000

10

5,000

Merit in increasing allocation to equities (for

those with a medium to long term view) in a
phased manner and stay invested.

Oct 15

Oct 13

Oct 11

Oct 09

Oct 07

Oct 05

Oct 03

Oct 01

Oct 99

Oct 97

Oct 95

Oct 93

Improving margin outlook of corporates, likely

lower interest rates, soft commodity prices and
reasonable valuations lead to a positive outlook
for equity markets over the medium to long
term.

Oct 91

Source: CLSA

10

Debt Outlook Lower Inflation & Interest Rates

Real Rates - WPI

3% real rates indicates

downside in yields

further

Real Rates - CPI

11.0

9.8

9.0

8.3

7.0

Inflation - CPI in Nov 15 was at 5.41%

5.0
3.0
1.0

Past drivers of inflation High MSP,

weak INR, rising commodity prices,
good demand have all reversed

1.5

4.2
2.4

0.7

(0.3)
(3.0)

(3.2)

(1.4)
(0.7)

(2.8)

(5.0)
(6.0)
Nov-06

Record gap of CPI-WPI, points to low

CPI going forward

2.4

(0.6)

(1.0)
(3.0)

4.8

0.9
(0.1)

(7.0)

1.2

2.8

Nov-07

Oct-08

Nov-09

Nov-10

Nov-11

Nov-12

Nov-13

Nov-14

Nov-15

Q1 FY 15

Q2 FY 15

Q3 FY 15

Q4 FY 15

Nov 15*

CPI (Avg %)

7.9

6.7

4.1

5.2

5.41

WPI (Avg %)

5.8

3.9

0.3

-1.8

-1.99

Difference

2.1

2.8

3.7

7.0

7.4

Source:Bloomberg, BAML
* As on Dec 15th 2015
The real interest rate is the rate of interest an investor expects to receive after allowing for inflation.

11

Why HDFC Equity Savings Scheme?

Optimal Growth Tactical equity allocation to take advantage of the long term potential in Indian
Equities.

Regular Income Debt and arbitrage securities held in the portfolio will provide fixed income
opportunities.
Efficient Taxation Tax Efficient Returns with appropriate mix of Equity, Debt and Derivatives.

Low Fund Volatility Using Equity Arbitrage Instruments without hindering growth prospects.
Diversified Asset Allocation Regular balancing between asset classes based on market conditions
and asset valuations.

HDFC Mutual Fund/AMC is not guaranteeing return on investments made in the scheme

12

Investment Strategy
Equities
Track disparities in valuation between across sectors to generate alpha from sector & stock
deviations.
Multi cap strategy to provide flexibility in equity allocation based on market conditions
Arbitrage
The scheme will generate income through arbitrage opportunities arising out of implied cost of
carry and mis-pricing across the spot, futures and options markets which can lead to profitable
arbitrage opportunities
Debt
The investment strategy involves investing in a range of debt and money market instruments of
various credit ratings with a view to maximizing income while maintaining an optimum balance
of yield, safety and liquidity.
The Scheme shall endeavor to develop a well- diversified, portfolio of debt (including securitized
debt) and other securities that minimizes liquidity and credit risk.

The current investment strategy is subject to change depending on the market conditions. For complete details on investment strategy refer
13
SID/KIM

Asset Allocation Pattern

Under normal circumstances, the asset allocation of the schemes portfolio will be as follows:
Minimum
(% of Net Assets)

Maximum

Risk Profile

Equities & Equity related instruments

65

90

Medium to High

Of which net long equity*

15

40

Medium to High

Of which Derivatives including index

futures, stock futures, index options etc.**

25

75

Low to Medium

Debt instruments & Money Market

instruments #$

10

35

Low to Medium

Types of Instruments

* This net long equity exposure is aimed to gain from potential capital appreciation and thus is a directional equity exposure which will not be hedged. This
equity exposure means exposure to equity shares alone without a corresponding equity derivative exposure. ** The exposure to derivative shown in the above
asset allocation table would normally be the exposure taken against the underlying equity investments and in such case, exposure to derivative will not be
considered for calculating the gross exposure. # Investments in securitised debt, if undertaken, shall not exceed 35% of net assets of the Scheme.
$ Investments in derivatives shall not exceed 50% of the asset allocation stipulated above. Exposure to Derivatives may be taken to hedge the portfolio,
rebalance the same or to undertake any other strategy as permitted under SEBI (MF) Regulations from time to time. The margin money deployed on these
positions (both equity and / or debt derivatives) would be included in Money Market category. ^The Scheme may seek investment opportunity in ADR / GDR
and Foreign Securities, in accordance with guidelines stipulated in this regard by SEBI and RBI from time to time. Under normal circumstances, the Scheme shall
not have an exposure of more than 50% of its assets in foreign ADR / GDR and Foreign Securities. The cumulative gross exposure through debt, equity and
derivative positions shall not exceed 100% of the net assets of the scheme in accordance with SEBI Cir/IMD/DF/11/2010 dated August 18, 2010.
14 14
For further details refer SID/KIM

Asset Allocation Pattern

Under defensive circumstances, the asset allocation of the schemes portfolio will be as follows:
Minimum
(% of Net Assets)

Maximum

Risk Profile

Equities & Equity related instruments

15

65

Medium to High

Of which net long equity*

15

40

Medium to High

Of which Derivatives including index

futures, stock futures, index options etc.**

50

Low to Medium

Debt instruments & Money Market

instruments #$

35

85

Low to Medium

Types of Instruments

* This net long equity exposure is aimed to gain from potential capital appreciation and thus is a directional equity exposure which will not be hedged. This
equity exposure means exposure to equity shares alone without a corresponding equity derivative exposure. ** The exposure to derivative shown in the above
asset allocation table would normally be the exposure taken against the underlying equity investments and in such case, exposure to derivative will not be
considered for calculating the gross exposure. # Investments in securitised debt, if undertaken, shall not exceed 35% of net assets of the Scheme.
$ Investments in derivatives shall not exceed 50% of the asset allocation stipulated above. Exposure to Derivatives may be taken to hedge the portfolio,
rebalance the same or to undertake any other strategy as permitted under SEBI (MF) Regulations from time to time. The margin money deployed on these
positions (both equity and / or debt derivatives) would be included in Money Market category. ^The Scheme may seek investment opportunity in ADR / GDR
and Foreign Securities, in accordance with guidelines stipulated in this regard by SEBI and RBI from time to time. Under normal circumstances, the Scheme shall
not have an exposure of more than 50% of its assets in foreign ADR / GDR and Foreign Securities. The cumulative gross exposure through debt, equity and
derivative positions shall not exceed 100% of the net assets of the scheme in accordance with SEBI Cir/IMD/DF/11/2010 dated August 18, 2010.
15 15
For further details refer SID/KIM

Product Features
Name

HDFC Equity Savings Fund ( Erstwhile HDFC Multiple Yield Fund)#

Type of Scheme

Open-ended equity scheme.

Inception Date
(Date of allotment)

September 17, 2004

Investment Objective

The investment objective of the scheme is to provide capital appreciation and income distribution to the
investors using arbitrage opportunities, investment in equity / equity related instruments and debt / money
market instruments. There is no assurance that the investment objective of the Scheme will be realized

Fund Manager

Vinay Kulkarni (Equities), Anil Bamboli (Debt)

Investment Plans

Direct Plan
Regular Plan

Investment Option

Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility

Minimum Application Amount

(Under Each Plan /Option)

Purchase: Rs. 5,000 and any amount thereafter

Additional Purchase: Rs. 1,000 and any amount thereafter

Load Structure

Entry Load: Not Applicable

Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered
Distributor) based on the investors assessment of various factors including the service rendered by the
ARN Holder.
Exit Load:
In respect of each purchase / switch-in of units, an exit load of 1% is payable if units are redeemed /
switched-out within 1 year from the date of allotment.
No exit load is payable if units are redeemed / switched-out after 1 year from the date of allotment.

Benchmark

30% Nifty 50 + 40% CRISIL Liquid Fund Index + 30% CRISIL Short Term Bond Fund Index

For Complete details refer KIM/SID.

16
# Due to change in fundamental attributes of the scheme and scheme name, w.e.f. Dec 16th 2015 the scheme shall be managed as an open ended equity scheme

DISCLAIMER
This presentation dated 16th December 2015, has been prepared by HDFC Asset Management Company
Limited (HDFC AMC) based on internal data, publicly available information and other sources believed to
be reliable. Any calculations made are approximations, meant as guidelines only, which you must
confirm before relying on them. The information contained in this document is for general purposes
only. The document is given in summary form and does not purport to be complete. The document does
not have regard to specific investment objectives, financial situation and the particular needs of any
specific person who may receive this document. The information/ data herein alone are not sufficient
and should not be used for the development or implementation of an investment strategy. The
statements contained herein are based on our current views 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 future.
Neither HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any liability
arising from the use of this document. The recipient(s) before acting on any information herein should
make his/her/their own investigation and seek appropriate professional advice and shall alone be fully
responsible / liable for any decision taken on the basis of information contained herein.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED
DOCUMENTS CAREFULLY.

17

Thank You