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Monthly Market Outlook - October 2018

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The document provides an outlook on the Indian equity and fixed income markets for October 2018. It summarizes the performance of various global and Indian indices in September, with Indian equities suffering declines. It recommends staying cautious on equities and preferring large caps over mid and small caps. For fixed income, it suggests maintaining a cautious approach and staying in low duration funds given concerns around tightening liquidity. Specific mutual fund schemes are highlighted for their ability to benefit from market volatility through dynamic asset allocation.

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1 Monthly Market Outlook October 2018 Equity & Fixed Income Outlook
2 Global Indices Performance Most global indices experienced significant gains in the month of September, Indian equities suffered due to concerns on the domestic front Germany - DAX Index; China - SSE Composite Index; France - CAC 40 Index; Japan - Nikkei; Europe - Euronext 100; Hong Kong - HangSeng; US - Dow Jones; Singapore - Strait Times; Russia - RTS Index; Indonesia - Jakarta Composite Index; U.K. - FTSE; South Korea - Kospi; Brazil - Ibovespa Sao Paulo Index; Indonesia – Jakarta Composite Index; Switzerland – Swiss Market Index; Taiwan – Taiwan Stock Exchange Corporation; India – S&P BSE Sensex; Returns in % terms. Data Source: MFI; Returns are absolute returns for the PRI variant of the index calculated between August 31, 2018 – September 28, 2018. 9.1 5.5 3.5 3.5 1.9 1.6 1.4 1.3 1.0 0.9 0.2 -0.4 -0.5 -0.7 -0.9 -6.3-8 -6 -4 -2 0 2 4 6 8 10 IndexReturns(%)
3 Sector and Market-cap based Index • Sentiment in the market turned negative on depreciating rupee and rising crude prices • Worries about worsening CAD • Finance stocks remained under pressure led mainly by the decline in NBFCs • IT index gained on the back of rupee depreciation All indices are of S&P BSE and carry the prefix of S&P BSE; Abbreviated CD - S&P BSE Consumer Durables; CG - S&P BSE Capital Goods; FMCG - S&P BSE Fast Moving Consumer Goods; HC - S&P BSE Health Care; Infra. - S&P BSE India Infrastructure; IT - S&P BSE Information Technology. Source: MFI; Returns are absolute returns for the PRI variant of the index calculated between August 31, 2018 – September 28, 2018. 0.5 -0.4 -1.5 -3.9 -5.8 -7.4 -9.9 -9.9 -9.9 -10.9 -11.8 -11.8 -12.8 -13.1 -13.4 -20.5 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 IndexReturns(%)
4 Indian Equity and Debt Markets in Sept-18 Source: BSE India and CRISIL Research; NBFCs – Non-Banking Financial Companies; Fed – US Federal Reserve S&P BSE Sensex was down 6.3% in Sept- 2018; G-Sec yields touched a high of 8.18% mid-month in Sept 2018 before finally settling at 8.02% Markets would remain watchful of: US rate hikes – the US Fed could raise rates in Dec again Events in the run-up to the elections 2019 Rationalisation of bond-buying programme by central banks Escalating tensions due to on-going trade-wars Depreciating Rupee Widening Fiscal Deficit Higher Crude Oil Prices Decline in NBFCs on concerns about liquidity and credit quality Factors affecting both debt and equity markets
5 Equity Outlook Stay Cautious
6 Our Equity Recommendations • For pure equity exposure, prefer largecap Schemes • Remain positive on exports and services theme • For long-term equity exposure, prefer midcap and smallcaps through SIP • Recommend asset allocation to benefit from volatility
7 Prefer Largecaps over Mid- and Smallcaps Source: BSE India; Data as of September 28, 2018; P/E – Price to Earnings; Past performance may or may not be sustained in future. Index 1 Month (%) S&P BSE Sensex -6.3 S&P BSE MID CAP -12.5 S&P BSE SMALL CAP -16.1 36.6 53.7 43.4 33.2 23.8 22.3 23.9 20 25 30 35 40 45 50 55 60 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 P/Evaluations Largecaps have relatively better valuations Near-term outlook for midcaps and smallcaps continues to be cautious; we maintain our largecap stance S&P BSE Midcap Index S&P BSE Sensex
8 Why ICICI Prudential Bluechip Fund? (An open ended equity scheme predominantly investing in large cap stocks.) Data as of Sept 28, 2018; Past performance may or may not sustain in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information Document of the Scheme. AUM – Assets Under Management Adopts “buy & hold” approach in large-cap companies with proven track record, quality management, good growth potential. Takes aggressive positions in high conviction stocks with an aim to generate alpha. Follows bottom-up approach for stock selection Closing AUM `18,966.3 crore Average Dividend Yield 1.64 No. of stocks 58 Average P/E ratio 24.87 Top 10 Stock Holdings 43.10% Average P/B ratio 5.04 Top 10 Sectors 74.25%
9 Currency and Crude: Supporting the export theme Source: CRISIL Research; Data as of September 30, 2018 64.9 66.9 67.8 70.2 73.0 63 65 67 69 71 73 75 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 INR/USD Rupee Depreciation 62.6 70.5 79.6 71.8 82.7 60 64 68 72 76 80 84 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Rising Crude prices
10 ICICI Prudential Exports and Services Fund The scheme is well diversified across different sectors and gives a broader play on Indian economy. Also, the flexibility to move portfolios from Export oriented sectors to domestic oriented sector makes this scheme suitable for the long-term. EXPORT-ORIENTED SECTORS AUTO ANCILLARIES PHARMACEUTICALS & HEALTHCARE SERVICES SOFTWARE CHEMICALS TEXTILES The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s).
11 Manufacturing outlook Source: BSE India, Citi Research, ibef.org ; Data as of Sept 27, 2018. *Earnings rebased to Rs 100; Past performance may or may not be sustained in future. 231.4 116.7 0 50 100 150 200 250 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 03-Sep-18 05-Sep-18 07-Sep-18 11-Sep-18 14-Sep-18 18-Sep-18 21-Sep-18 25-Sep-18 27-Sep-18 Earnings(inRs)* S&P BSE India Manufacturing Index Earnings S&P BSE Sensex Earnings The Government aims to increase the share of the manufacturing sector in India’s GDP to 25% by 2025, from 18% at present. Therefore, we expect earnings of manufacturing sector companies to increase going forward
12 ICICI Prudential Manufacture in India Fund (An open ended equity scheme following manufacturing theme) • ICICI Prudential Manufacture in India Fund gives an opportunity to participate in the diverse themes of manufacturing • Contribution of Manufacturing to GDP has been improving • The Scheme can go overweight in the following sub-themes of the manufacturing sector based on various economic parameters:  Exports oriented manufacturing  Domestic consumption  Domestic capex manufacturing • Scheme will follow market cap agnostic approach of investing The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s).
13 Equity Valuation Index Equity Valuation index is calculated by assigning equal weights to Price-to-Earnings (PE), Price-to-Book (PB), G-Sec*PE and Market Cap to GDP ratio. G-Sec – Government Securities. GDP – Gross Domestic Product; Asset Allocation – Schemes that invest both in equity and fixed income Valuation Index Equity valuations show that the market valuations are in the zone where investors are recommended to invest in funds with low net equity levels within the dynamic asset allocation fund category. Data as of September 28, 2018; Past Performance may or may not be sustained in future. None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to consult their financial advisors before investing. 115.37 50 70 90 110 130 150 170 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Invest in Equities Aggressively invest in Equities Asset Allocation Incremental Money to Debt Book Partial Profits
14 Our Asset Allocation Hybrid schemes The asset allocation and investment strategy will be as per the Scheme Information Document, *This scheme will attract debt taxation. These schemes aim to benefit from volatility and manage equity exposure based on valuations. Conservative Hybrid Fund Equity Savings Fund Dynamic Asset Allocation or Balanced Advantage Fund Multi Asset Allocation Net Equity–10-25% Net Equity–15-50% Net equity - 30-80% Min of 10% in each of the three asset classes Aggressive Hybrid Net Equity–65-80% ICICI Prudential Regular Savings Fund* ICICI Prudential Equity Savings Fund ICICI Prudential Balanced Advantage Fund ICICI Prudential Multi-Asset Fund ICICI Prudential Equity & Debt Fund
15 Our Equity Scheme Recommendations ICICI Prudential Bluechip Fund ICICI Prudential Multicap Fund ICICI Prudential Value Discovery Fund Invests in large-cap stocks and follows a benchmark hugging approach. Invests in stocks across market capitalisation Follows a value investment strategy. PureEquity The asset allocation and investment strategy will be as per the Scheme Information Document ICICI Prudential Smallcap Fund The scheme predominantly invests in Smallcap stocks ICICI Prudential Large & Mid Cap Fund The scheme invests in largecap as well as midcap stocks ICICI Prudential Midcap Fund The scheme predominantly invests in midcap stocks SIPRecommendations ICICI Prudential Exports and Services Fund For investors looking at tactical allocation. Thematic/Sectoral ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund For investors looking at tactical allocation. ICICI Prudential Manufacture In India Fund For investors looking at tactical allocation.
16 Fixed Income Outlook Tightening Liquidity – Stay in Low Duration
17 Our Outlook on Fixed Income • Maintain cautious approach and remain watchful of: −Higher Crude Prices −Rising Trade Protectionism −Unwinding of QE by central banks −Commitment towards domestic fiscal discipline and consolidation −Upside risks on inflation QE – Quantitative Easing
18 October RBI Monetary Policy Review – Pause in rate hikes Source: RBI; Data as of Oct 5, 2018; bps – basis points: MPC – Monetary Policy Committee Jan-13 Mar-13 May-13 7.75 7.5 7.25 RBI Repo Rate action since 2013 Sep-13 Oct-13 Jan-14 7.5 7.75 8 Jan-15 Mar-15 Jun-15 Sep-15 7.75 7.5 7.25 6.75 Apr-16 Oct-16 Aug-17 6.5 6.25 6 Jun-18 Aug-18 6.25 6.5 CUT HIKE CUT CUT HIKE RBI kept repo rate unchanged at 6.5% in its Oct 5, 2018 MPC meeting due to : • Lower inflationary pressures • Rupee Instability • Higher crude oil prices • Possibility of fiscal slippage at centre or state level
19 Rates and Yields Across the World Source: CRISIL Research; Interest rates as on Sept 30, 2017 and Sept 30, 2018 Interest rates (%) Sep-17 Sep-18 India 6 6.5 US 1.25 2.25 Eurozone 0 0 China 4.35 4.35 Japan -0.063 -0.064 10-yr G-Sec Yield (%) Sep-17 Sep-18 India 6.66 8.02 US 2.33 3.06 Eurozone 0.46 0.47 China 3.62 3.63 Japan 0.06 0.12 The US rate hike and subsequent rise in the US Treasury yields has had a significant impact on global liquidity. Indian markets have had sharp reactions to the US rate-hikes as seen in the currency depreciation, and the subsequent increase in the 10-yr G-sec yield.
20 Tightening Liquidity – Credit Growth vs Deposit Growth Source: RBI; Data as on September 14, 2018 Credit growth has been surpassing deposit growth since November 2017, with December 2017 seeing the widest gap between the two at 7.36% 11.10% 15.90% 8.60%9.00% 4.10% 13.50% 0% 4% 8% 12% 16% 20% Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 %(Y-o-Y) Aggregate Deposit Growth (% Y-o-Y) Bank Credit Growth (% Y-o-Y) 7.36% Sep-18
21 Tightening Liquidity – Increase in currency in circulation Source: Morgan Stanley Research, Data as of September 21, 2018 4.1% 1.4% 1.4% -1.1% -0.5% 0.8% 3.2% 1.3% -0.6% -1.3% 0.6% -0.1% -2% -1% 0% 1% 2% 3% 4% 5% Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 2018 5Y Avg As of September 2018, currency in circulation (MoM%) is higher than the 5-year average
22 FPI – Sellers in the Debt market Source: RBI: Data as of September 30, 2018; FPI – Foreign Portfolio Investor 157.01 -211.51 253.55 256.85 160.63 -196.54 -101.98 -300 -200 -100 0 100 200 300 Amount(inRs.bn) FPI buying / selling of INR bonds FPI selling in the bond markets has further aggravated the pressure on the currency
23 Tightening Liquidity – RBI intervention RBI Continued to intervene in the forex market to reduce the forex volatility -15 -10 -5 0 5 10 15 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 InUSDbn FX Intervention (Spot+ Forward) in US$ Bn Negative shows - RBI sold dollars Source: Morgan Stanley Research, Data as of July 31, 2018; FX – Foreign exchange
24 Inflationary Pressures Source: RBI; Data as on Aug 31, 2018; CPI – Consumer Price Index; 2HFY19 – Second half of FY19; Q1FY20 – First Quarter of FY20 Inflationary pressures in the economy have started to cool off largely on account of decline in food inflation In its October Monetary Policy Committee meeting, the RBI revised its CPI inflation projection downwards to 3.9 – 4.5% for 2HFY19 and 4.8% in Q1FY20. 5.40 4.83 6.07 3.89 1.46 4.92 3.69 0 1 2 3 4 5 6 7 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 CPIInflation(%)
25 1.11 1 2 3 4 5 6 7 8 9 10 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Debt Valuation Index We recommend investors to invest in Ultra Low / Low Duration schemes or accrual schemes such as ICICI Prudential Credit Risk Fund. For those investors who aim to benefit from volatility we recommend investment in ICICI Prudential All Seasons Bond Fund. Debt Valuation Index considers WPI, CPI, Sensex YOY returns, Gold YOY returns and Real estate YOY returns over G-Sec yield, Current Account Balance and Crude Oil Movement for calculation. WPI – Wholesale Price Index; CPI – Consumer Price Index. None of the aforesaid recommendations are based on any assumptions. Data as of September 28, 2018 Ultra Low Duration Low Duration Moderate Duration High Duration Aggressively in High Duration
26 Our Debt Recommendations ICICI Prudential All Seasons Bond Fund ICICI Prudential Floating Interest FundICICI Prudential Medium Term Bond Fund An All-season scheme which invests across duration based on an in-house CAD model The scheme invests predominantly in floating- rate instruments The schemes invests with the aim to maintain a medium duration with focus on accrual income ICICI Prudential Short Term Fund ICICI Prudential Ultra Short Term Fund The scheme invests with the aim to maintain a short duration The scheme invests with the aim to maintain a low duration with focus on accrual income Short Duration The asset allocation and investment strategy will be as per the Scheme Information Document. CAD: Current Account Deficit ICICI Prudential Credit Risk Fund The scheme invests predominantly in AA and below rated credit instruments with a Hold- till-maturity approach Medium Duration UltraShort Duration DynamicDurationFloaterFundCreditRisk ICICI Prudential Savings Fund The scheme invests with the aim to maintain a low duration Low Duration
27 Update on Key Schemes
28 ICICI Prudential Balanced Advantage Fund (An open ended dynamic asset allocation fund):Aim to Benefit From Market Volatility • ICICI Prudential Balanced Advantage Fund (BAF) seeks to remove the psychological barrier (Greed & Fear) for its investors. • The Scheme aims to follow a buy-low and sell-high strategy. Stock Selection Blend of Large and Mid Cap Stocks Asset Allocation Net Equity Level Range 30-80% based on In-House P/BV Model Derivative Strategy Derivative Exposure for Hedging / Portfolio Rebalancing The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme.
29 SIP for the Long Run SIP ICICI Prudential Large & Midcap Fund (An open ended equity scheme investing in both largecap and midcap stocks) ICICI Prudential Midcap Fund (An open ended equity scheme predominantly investing in mid cap stocks) ICICI Prudential Smallcap Fund (An open ended equity scheme predominantly investing in small cap stocks)
30 ICICI Prudential Ultra Short Term Fund (An open ended ultra-short term debt scheme investing in instruments such that the Macaulay Duration* of the portfolio is between 3 months and 6 months) Low Duration Play - Anticipating volatility, the scheme has reduced its modified duration over the last one year to 0.26 yrs (as on September 30, 2018) Margin of Safety - The Yield To Maturity (YTM) is at 8.98% as on September 30, 2018, 248 bps higher than the repo rate. Data as of September 30, 2018; bps - basis points; Past performance may or may not be sustained in future.; *The Macaulay Duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price. 0.96 0.98 0.78 0.33 0.26 0.2 0.4 0.6 0.8 1 1.2 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Modifiedduration(inyrs)
31 • Based on various filters, qualitative and quantitative research Well Researched Credit Universe • Mitigating concentration risk by diversification Broadened Exposure • Clearly defined modified duration range Managing Duration Risk Strict Internal Limits at Issuer Level and rating level The asset allocation and investment strategy will be as per Scheme Information Document. *Direct origination means no involvement of intermediaries. Accrual based schemes investment process The scheme has an Independent credit evaluation, approval and monitoring process which is not solely relying on the Fund Manager judgement to invest in a paper. The scheme focuses on direct origination* which helps in alpha generation and monitoring.
32 ICICI Prudential Credit Risk Fund (An open ended debt scheme predominantly investing in AA and below rated corporate bonds) Aims to invest in well researched corporate bonds Aims to generate alpha from any potential credit upgrades Aims to maintain stable accrual income with Hold-to-Maturity approach Data as of September 28, 2018; The asset allocation and investment strategy will be as per the Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document. The scheme portfolio is well-diversified across a large number of securities which reduces risk pertaining to high exposure in a single security. 89 No. of securities in the scheme portfolio 1.06% Average exposure to a single security in the portfolio 5.03% Highest exposure to single security in the portfolio 31.3% Exposure (as % of NAV) to the top 10 holdings in the portfolio 10.16 % Yield to Maturity
33 ICICI Prudential All Seasons Bond Fund (An open ended dynamic debt scheme investing across duration) ICICI Prudential All Seasons Bond Fund aims to perform in all market conditions All Seasons Investment Avenue Uses an In-House CAD model to manage duration between 1-10 yrs Aims to benefit from Volatility Tactical Allocation between G-sec and Corporate Securities Data as of September 28, 2018; The asset allocation and investment strategy will be as per the Scheme Information Document. Past performance may or may not be sustained in future. ^rounded off. CAD: Current Account Deficit. 5.95 9 5.73 6.59 1.11 8.50% 7.34% 7.44% 6.24% 6.53% 8.02% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 0 1 2 3 4 5 6 7 8 9 10 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 10-yrG-Secyields(%) ModifiedDuration(inyrs) Modified Duration G Sec (RHS)
34 Our Equity Schemes Scheme Name Type of Scheme ICICI Prudential Bluechip Fund An open ended equity scheme predominantly investing in large cap stocks. ICICI Prudential Large & Mid Cap Fund An open ended equity scheme investing in both large cap and mid cap stocks. ICICI Prudential Midcap Fund An open ended equity scheme predominantly investing in mid cap stocks. ICICI Prudential Smallcap Fund An open ended equity scheme predominantly investing in small cap stocks. ICICI Prudential Value Discovery Fund An open ended equity scheme following a value investment strategy. ICICI Prudential Multicap Fund An open ended equity scheme investing across large cap, mid cap, small cap stocks. ICICI Prudential Exports and Services Fund An open ended equity scheme following Exports & Services theme. ICICI Prudential Manufacture in India Fund An open ended equity scheme following manufacturing theme ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund An Open Ended Equity Scheme following Pharma, Healthcare, Diagnostic and allied Theme
35 Our Hybrid Schemes Scheme Name Type of Scheme ICICI Prudential Balanced Advantage Fund An open ended dynamic asset allocation fund ICICI Prudential Regular Savings Fund An open ended hybrid scheme investing predominantly in debt instruments ICICI Prudential Equity Savings Fund An open ended scheme investing in equity, arbitrage and debt. ICICI Prudential Equity & Debt Fund An open ended hybrid scheme investing predominantly in equity and equity related instruments ICICI Prudential Multi-Asset Fund An open ended scheme investing in Equity, Debt, Gold/Gold ETF/units of REITs & InvITs and such other asset classes as may be permitted from time to time.
36 Our Debt Schemes Scheme Name Type of Scheme ICICI Prudential Ultra Short Term Fund An open ended ultra-short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 months and 6 months. ICICI Prudential Short Term Fund An open ended short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1 Year and 3 Years. ICICI Prudential Savings Fund An open ended low duration debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 6 months and 12 months. ICICI Prudential Medium Term Bond Fund An open ended medium term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 Years and 4 Years. The Macaulay duration of the portfolio is 1 Year to 4 years under anticipated adverse situation. ICICI Prudential Credit Risk Fund An open ended debt scheme predominantly investing in AA and below rated corporate bonds. ICICI Prudential Floating Interest Fund An open ended debt scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives). ICICI Prudential All Seasons Bond Fund An open ended dynamic debt scheme investing across duration.
37 ICICI Prudential Multi-Asset Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended scheme investing in at least three asset classes with minimum allocation of 10% to each asset class. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them Riskometers ICICI Prudential Equity & Debt Fund is suitable for investors who are seeking*:  Long term wealth creation solution  A balanced fund aiming for long term capital appreciation and current income by investing in equity as well as fixed income securities. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*:  Long term wealth creation solution  An equity fund that aims for growth by investing in equity and derivatives. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
38 Riskometers ICICI Prudential Bluechip Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme predominantly investing in large cap stocks. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme following a value investment strategy *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Large & Mid Cap Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme investing in both largecap and mid cap stocks *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
39 ICICI Prudential Exports and Services Fund is suitable for investors who are seeking*:  Long term wealth creation  An open-ended equity scheme that aims for growth by predominantly investing in companies belonging to Exports & Services industry. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them Riskometers ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended scheme that seeks to generate regular income through investments in fixed income securities, arbitrage and other derivative strategies and aim for long term capital appreciation by investing in equity and equity related instruments. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Multicap Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme investing across largecap, mid cap and small cap stocks. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
40 Riskometers ICICI Prudential Credit Risk Fund is suitable for investors who are seeking*:  Medium term savings  A debt scheme that aims to generate income through investing predominantly in AA and below rated corporate bonds while maintaining the optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Medium Term Bond Fund is suitable for investors who are seeking*:  Medium term savings  A debt scheme that invests in debt and money market instruments with a view to maximize income while maintaining optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*:  Medium to long term regular income solution  A hybrid fund that aims to generate regular income through investments primarily in debt and money market instruments and long term capital appreciation by investing a portion in equity. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
41 Riskometers ICICI Prudential Short Term Fund is suitable for investors who are seeking*:  Short term income generation and capital appreciation solution  A debt fund that aims to generate income by investing in a range of debt and money market instruments of various maturities. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential All Seasons Bond Fund is suitable for investors who are seeking*:  All duration savings  A debt scheme that invests in debt and money market instruments with a view to maximize income while maintaining optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Smallcap Fund is suitable for investors who are seeking*:  Long Term wealth creation  An open ended equity scheme that seeks to generate capital appreciation by predominantly investing in equity and equity related securities of small cap companies. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
42 Riskometers ICICI Prudential Floating Interest Fund is suitable for investors who are seeking*:  Short term savings  An open ended debt scheme predominantly investing in floating rate instruments *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Ultra Short Term Fund is suitable for investors who are seeking*:  Short term regular income  An open ended ultra-short term debt scheme investing in a range of debt and money market instruments *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Midcap Fund is suitable for investors who are seeking*:  Long Term wealth creation  An open-ended equity scheme that aims for capital appreciation by investing in diversified mid cap companies. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
43 ICICI Prudential Manufacture in India Fund is suitable for investors who are seeking:*  Long term wealth creation  An open ended equity Scheme that aims to provide capital appreciation by investing in equity and equity related securities of companies engaged in manufacturing theme. *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. Riskometers ICICI Prudential Savings Fund is suitable for investors who are seeking*:  Short term savings  An open ended low duration debt scheme that aims to maximize income by investing in debt and money market instruments while maintaining optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) FUND is suitable for investors who are seeking:*  Long term wealth creation  An equity Scheme that predominantly invests in pharma, healthcare, hospitals, diagnostic, wellness and allied companies *Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
44 Disclaimer for Mutual Funds Mutual Fund investments are subject to market risks, read all scheme related documents carefully. All figures and other data given in this document are dated. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material from time to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Prudential Asset Management Company Limited. Prospective 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 ICICI Prudential Mutual Fund. Past Performance may or may not be sustained in future. Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including information developed in-house. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s). Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. 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. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. Further, the information contained herein should not be construed as forecast or promise or investment advice. The recipient alone shall be fully responsible/are liable for any decision taken on this material.

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Monthly Market Outlook - October 2018

  • 1. 1 Monthly Market Outlook October 2018 Equity & Fixed Income Outlook
  • 2. 2 Global Indices Performance Most global indices experienced significant gains in the month of September, Indian equities suffered due to concerns on the domestic front Germany - DAX Index; China - SSE Composite Index; France - CAC 40 Index; Japan - Nikkei; Europe - Euronext 100; Hong Kong - HangSeng; US - Dow Jones; Singapore - Strait Times; Russia - RTS Index; Indonesia - Jakarta Composite Index; U.K. - FTSE; South Korea - Kospi; Brazil - Ibovespa Sao Paulo Index; Indonesia – Jakarta Composite Index; Switzerland – Swiss Market Index; Taiwan – Taiwan Stock Exchange Corporation; India – S&P BSE Sensex; Returns in % terms. Data Source: MFI; Returns are absolute returns for the PRI variant of the index calculated between August 31, 2018 – September 28, 2018. 9.1 5.5 3.5 3.5 1.9 1.6 1.4 1.3 1.0 0.9 0.2 -0.4 -0.5 -0.7 -0.9 -6.3-8 -6 -4 -2 0 2 4 6 8 10 IndexReturns(%)
  • 3. 3 Sector and Market-cap based Index • Sentiment in the market turned negative on depreciating rupee and rising crude prices • Worries about worsening CAD • Finance stocks remained under pressure led mainly by the decline in NBFCs • IT index gained on the back of rupee depreciation All indices are of S&P BSE and carry the prefix of S&P BSE; Abbreviated CD - S&P BSE Consumer Durables; CG - S&P BSE Capital Goods; FMCG - S&P BSE Fast Moving Consumer Goods; HC - S&P BSE Health Care; Infra. - S&P BSE India Infrastructure; IT - S&P BSE Information Technology. Source: MFI; Returns are absolute returns for the PRI variant of the index calculated between August 31, 2018 – September 28, 2018. 0.5 -0.4 -1.5 -3.9 -5.8 -7.4 -9.9 -9.9 -9.9 -10.9 -11.8 -11.8 -12.8 -13.1 -13.4 -20.5 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 IndexReturns(%)
  • 4. 4 Indian Equity and Debt Markets in Sept-18 Source: BSE India and CRISIL Research; NBFCs – Non-Banking Financial Companies; Fed – US Federal Reserve S&P BSE Sensex was down 6.3% in Sept- 2018; G-Sec yields touched a high of 8.18% mid-month in Sept 2018 before finally settling at 8.02% Markets would remain watchful of: US rate hikes – the US Fed could raise rates in Dec again Events in the run-up to the elections 2019 Rationalisation of bond-buying programme by central banks Escalating tensions due to on-going trade-wars Depreciating Rupee Widening Fiscal Deficit Higher Crude Oil Prices Decline in NBFCs on concerns about liquidity and credit quality Factors affecting both debt and equity markets
  • 6. 6 Our Equity Recommendations • For pure equity exposure, prefer largecap Schemes • Remain positive on exports and services theme • For long-term equity exposure, prefer midcap and smallcaps through SIP • Recommend asset allocation to benefit from volatility
  • 7. 7 Prefer Largecaps over Mid- and Smallcaps Source: BSE India; Data as of September 28, 2018; P/E – Price to Earnings; Past performance may or may not be sustained in future. Index 1 Month (%) S&P BSE Sensex -6.3 S&P BSE MID CAP -12.5 S&P BSE SMALL CAP -16.1 36.6 53.7 43.4 33.2 23.8 22.3 23.9 20 25 30 35 40 45 50 55 60 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 P/Evaluations Largecaps have relatively better valuations Near-term outlook for midcaps and smallcaps continues to be cautious; we maintain our largecap stance S&P BSE Midcap Index S&P BSE Sensex
  • 8. 8 Why ICICI Prudential Bluechip Fund? (An open ended equity scheme predominantly investing in large cap stocks.) Data as of Sept 28, 2018; Past performance may or may not sustain in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information Document of the Scheme. AUM – Assets Under Management Adopts “buy & hold” approach in large-cap companies with proven track record, quality management, good growth potential. Takes aggressive positions in high conviction stocks with an aim to generate alpha. Follows bottom-up approach for stock selection Closing AUM `18,966.3 crore Average Dividend Yield 1.64 No. of stocks 58 Average P/E ratio 24.87 Top 10 Stock Holdings 43.10% Average P/B ratio 5.04 Top 10 Sectors 74.25%
  • 9. 9 Currency and Crude: Supporting the export theme Source: CRISIL Research; Data as of September 30, 2018 64.9 66.9 67.8 70.2 73.0 63 65 67 69 71 73 75 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 INR/USD Rupee Depreciation 62.6 70.5 79.6 71.8 82.7 60 64 68 72 76 80 84 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Rising Crude prices
  • 10. 10 ICICI Prudential Exports and Services Fund The scheme is well diversified across different sectors and gives a broader play on Indian economy. Also, the flexibility to move portfolios from Export oriented sectors to domestic oriented sector makes this scheme suitable for the long-term. EXPORT-ORIENTED SECTORS AUTO ANCILLARIES PHARMACEUTICALS & HEALTHCARE SERVICES SOFTWARE CHEMICALS TEXTILES The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s).
  • 11. 11 Manufacturing outlook Source: BSE India, Citi Research, ibef.org ; Data as of Sept 27, 2018. *Earnings rebased to Rs 100; Past performance may or may not be sustained in future. 231.4 116.7 0 50 100 150 200 250 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 03-Sep-18 05-Sep-18 07-Sep-18 11-Sep-18 14-Sep-18 18-Sep-18 21-Sep-18 25-Sep-18 27-Sep-18 Earnings(inRs)* S&P BSE India Manufacturing Index Earnings S&P BSE Sensex Earnings The Government aims to increase the share of the manufacturing sector in India’s GDP to 25% by 2025, from 18% at present. Therefore, we expect earnings of manufacturing sector companies to increase going forward
  • 12. 12 ICICI Prudential Manufacture in India Fund (An open ended equity scheme following manufacturing theme) • ICICI Prudential Manufacture in India Fund gives an opportunity to participate in the diverse themes of manufacturing • Contribution of Manufacturing to GDP has been improving • The Scheme can go overweight in the following sub-themes of the manufacturing sector based on various economic parameters:  Exports oriented manufacturing  Domestic consumption  Domestic capex manufacturing • Scheme will follow market cap agnostic approach of investing The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s).
  • 13. 13 Equity Valuation Index Equity Valuation index is calculated by assigning equal weights to Price-to-Earnings (PE), Price-to-Book (PB), G-Sec*PE and Market Cap to GDP ratio. G-Sec – Government Securities. GDP – Gross Domestic Product; Asset Allocation – Schemes that invest both in equity and fixed income Valuation Index Equity valuations show that the market valuations are in the zone where investors are recommended to invest in funds with low net equity levels within the dynamic asset allocation fund category. Data as of September 28, 2018; Past Performance may or may not be sustained in future. None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to consult their financial advisors before investing. 115.37 50 70 90 110 130 150 170 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Invest in Equities Aggressively invest in Equities Asset Allocation Incremental Money to Debt Book Partial Profits
  • 14. 14 Our Asset Allocation Hybrid schemes The asset allocation and investment strategy will be as per the Scheme Information Document, *This scheme will attract debt taxation. These schemes aim to benefit from volatility and manage equity exposure based on valuations. Conservative Hybrid Fund Equity Savings Fund Dynamic Asset Allocation or Balanced Advantage Fund Multi Asset Allocation Net Equity–10-25% Net Equity–15-50% Net equity - 30-80% Min of 10% in each of the three asset classes Aggressive Hybrid Net Equity–65-80% ICICI Prudential Regular Savings Fund* ICICI Prudential Equity Savings Fund ICICI Prudential Balanced Advantage Fund ICICI Prudential Multi-Asset Fund ICICI Prudential Equity & Debt Fund
  • 15. 15 Our Equity Scheme Recommendations ICICI Prudential Bluechip Fund ICICI Prudential Multicap Fund ICICI Prudential Value Discovery Fund Invests in large-cap stocks and follows a benchmark hugging approach. Invests in stocks across market capitalisation Follows a value investment strategy. PureEquity The asset allocation and investment strategy will be as per the Scheme Information Document ICICI Prudential Smallcap Fund The scheme predominantly invests in Smallcap stocks ICICI Prudential Large & Mid Cap Fund The scheme invests in largecap as well as midcap stocks ICICI Prudential Midcap Fund The scheme predominantly invests in midcap stocks SIPRecommendations ICICI Prudential Exports and Services Fund For investors looking at tactical allocation. Thematic/Sectoral ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund For investors looking at tactical allocation. ICICI Prudential Manufacture In India Fund For investors looking at tactical allocation.
  • 16. 16 Fixed Income Outlook Tightening Liquidity – Stay in Low Duration
  • 17. 17 Our Outlook on Fixed Income • Maintain cautious approach and remain watchful of: −Higher Crude Prices −Rising Trade Protectionism −Unwinding of QE by central banks −Commitment towards domestic fiscal discipline and consolidation −Upside risks on inflation QE – Quantitative Easing
  • 18. 18 October RBI Monetary Policy Review – Pause in rate hikes Source: RBI; Data as of Oct 5, 2018; bps – basis points: MPC – Monetary Policy Committee Jan-13 Mar-13 May-13 7.75 7.5 7.25 RBI Repo Rate action since 2013 Sep-13 Oct-13 Jan-14 7.5 7.75 8 Jan-15 Mar-15 Jun-15 Sep-15 7.75 7.5 7.25 6.75 Apr-16 Oct-16 Aug-17 6.5 6.25 6 Jun-18 Aug-18 6.25 6.5 CUT HIKE CUT CUT HIKE RBI kept repo rate unchanged at 6.5% in its Oct 5, 2018 MPC meeting due to : • Lower inflationary pressures • Rupee Instability • Higher crude oil prices • Possibility of fiscal slippage at centre or state level
  • 19. 19 Rates and Yields Across the World Source: CRISIL Research; Interest rates as on Sept 30, 2017 and Sept 30, 2018 Interest rates (%) Sep-17 Sep-18 India 6 6.5 US 1.25 2.25 Eurozone 0 0 China 4.35 4.35 Japan -0.063 -0.064 10-yr G-Sec Yield (%) Sep-17 Sep-18 India 6.66 8.02 US 2.33 3.06 Eurozone 0.46 0.47 China 3.62 3.63 Japan 0.06 0.12 The US rate hike and subsequent rise in the US Treasury yields has had a significant impact on global liquidity. Indian markets have had sharp reactions to the US rate-hikes as seen in the currency depreciation, and the subsequent increase in the 10-yr G-sec yield.
  • 20. 20 Tightening Liquidity – Credit Growth vs Deposit Growth Source: RBI; Data as on September 14, 2018 Credit growth has been surpassing deposit growth since November 2017, with December 2017 seeing the widest gap between the two at 7.36% 11.10% 15.90% 8.60%9.00% 4.10% 13.50% 0% 4% 8% 12% 16% 20% Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 %(Y-o-Y) Aggregate Deposit Growth (% Y-o-Y) Bank Credit Growth (% Y-o-Y) 7.36% Sep-18
  • 21. 21 Tightening Liquidity – Increase in currency in circulation Source: Morgan Stanley Research, Data as of September 21, 2018 4.1% 1.4% 1.4% -1.1% -0.5% 0.8% 3.2% 1.3% -0.6% -1.3% 0.6% -0.1% -2% -1% 0% 1% 2% 3% 4% 5% Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 2018 5Y Avg As of September 2018, currency in circulation (MoM%) is higher than the 5-year average
  • 22. 22 FPI – Sellers in the Debt market Source: RBI: Data as of September 30, 2018; FPI – Foreign Portfolio Investor 157.01 -211.51 253.55 256.85 160.63 -196.54 -101.98 -300 -200 -100 0 100 200 300 Amount(inRs.bn) FPI buying / selling of INR bonds FPI selling in the bond markets has further aggravated the pressure on the currency
  • 23. 23 Tightening Liquidity – RBI intervention RBI Continued to intervene in the forex market to reduce the forex volatility -15 -10 -5 0 5 10 15 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 InUSDbn FX Intervention (Spot+ Forward) in US$ Bn Negative shows - RBI sold dollars Source: Morgan Stanley Research, Data as of July 31, 2018; FX – Foreign exchange
  • 24. 24 Inflationary Pressures Source: RBI; Data as on Aug 31, 2018; CPI – Consumer Price Index; 2HFY19 – Second half of FY19; Q1FY20 – First Quarter of FY20 Inflationary pressures in the economy have started to cool off largely on account of decline in food inflation In its October Monetary Policy Committee meeting, the RBI revised its CPI inflation projection downwards to 3.9 – 4.5% for 2HFY19 and 4.8% in Q1FY20. 5.40 4.83 6.07 3.89 1.46 4.92 3.69 0 1 2 3 4 5 6 7 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 CPIInflation(%)
  • 25. 25 1.11 1 2 3 4 5 6 7 8 9 10 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Debt Valuation Index We recommend investors to invest in Ultra Low / Low Duration schemes or accrual schemes such as ICICI Prudential Credit Risk Fund. For those investors who aim to benefit from volatility we recommend investment in ICICI Prudential All Seasons Bond Fund. Debt Valuation Index considers WPI, CPI, Sensex YOY returns, Gold YOY returns and Real estate YOY returns over G-Sec yield, Current Account Balance and Crude Oil Movement for calculation. WPI – Wholesale Price Index; CPI – Consumer Price Index. None of the aforesaid recommendations are based on any assumptions. Data as of September 28, 2018 Ultra Low Duration Low Duration Moderate Duration High Duration Aggressively in High Duration
  • 26. 26 Our Debt Recommendations ICICI Prudential All Seasons Bond Fund ICICI Prudential Floating Interest FundICICI Prudential Medium Term Bond Fund An All-season scheme which invests across duration based on an in-house CAD model The scheme invests predominantly in floating- rate instruments The schemes invests with the aim to maintain a medium duration with focus on accrual income ICICI Prudential Short Term Fund ICICI Prudential Ultra Short Term Fund The scheme invests with the aim to maintain a short duration The scheme invests with the aim to maintain a low duration with focus on accrual income Short Duration The asset allocation and investment strategy will be as per the Scheme Information Document. CAD: Current Account Deficit ICICI Prudential Credit Risk Fund The scheme invests predominantly in AA and below rated credit instruments with a Hold- till-maturity approach Medium Duration UltraShort Duration DynamicDurationFloaterFundCreditRisk ICICI Prudential Savings Fund The scheme invests with the aim to maintain a low duration Low Duration
  • 27. 27 Update on Key Schemes
  • 28. 28 ICICI Prudential Balanced Advantage Fund (An open ended dynamic asset allocation fund):Aim to Benefit From Market Volatility • ICICI Prudential Balanced Advantage Fund (BAF) seeks to remove the psychological barrier (Greed & Fear) for its investors. • The Scheme aims to follow a buy-low and sell-high strategy. Stock Selection Blend of Large and Mid Cap Stocks Asset Allocation Net Equity Level Range 30-80% based on In-House P/BV Model Derivative Strategy Derivative Exposure for Hedging / Portfolio Rebalancing The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme.
  • 29. 29 SIP for the Long Run SIP ICICI Prudential Large & Midcap Fund (An open ended equity scheme investing in both largecap and midcap stocks) ICICI Prudential Midcap Fund (An open ended equity scheme predominantly investing in mid cap stocks) ICICI Prudential Smallcap Fund (An open ended equity scheme predominantly investing in small cap stocks)
  • 30. 30 ICICI Prudential Ultra Short Term Fund (An open ended ultra-short term debt scheme investing in instruments such that the Macaulay Duration* of the portfolio is between 3 months and 6 months) Low Duration Play - Anticipating volatility, the scheme has reduced its modified duration over the last one year to 0.26 yrs (as on September 30, 2018) Margin of Safety - The Yield To Maturity (YTM) is at 8.98% as on September 30, 2018, 248 bps higher than the repo rate. Data as of September 30, 2018; bps - basis points; Past performance may or may not be sustained in future.; *The Macaulay Duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price. 0.96 0.98 0.78 0.33 0.26 0.2 0.4 0.6 0.8 1 1.2 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Modifiedduration(inyrs)
  • 31. 31 • Based on various filters, qualitative and quantitative research Well Researched Credit Universe • Mitigating concentration risk by diversification Broadened Exposure • Clearly defined modified duration range Managing Duration Risk Strict Internal Limits at Issuer Level and rating level The asset allocation and investment strategy will be as per Scheme Information Document. *Direct origination means no involvement of intermediaries. Accrual based schemes investment process The scheme has an Independent credit evaluation, approval and monitoring process which is not solely relying on the Fund Manager judgement to invest in a paper. The scheme focuses on direct origination* which helps in alpha generation and monitoring.
  • 32. 32 ICICI Prudential Credit Risk Fund (An open ended debt scheme predominantly investing in AA and below rated corporate bonds) Aims to invest in well researched corporate bonds Aims to generate alpha from any potential credit upgrades Aims to maintain stable accrual income with Hold-to-Maturity approach Data as of September 28, 2018; The asset allocation and investment strategy will be as per the Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document. The scheme portfolio is well-diversified across a large number of securities which reduces risk pertaining to high exposure in a single security. 89 No. of securities in the scheme portfolio 1.06% Average exposure to a single security in the portfolio 5.03% Highest exposure to single security in the portfolio 31.3% Exposure (as % of NAV) to the top 10 holdings in the portfolio 10.16 % Yield to Maturity
  • 33. 33 ICICI Prudential All Seasons Bond Fund (An open ended dynamic debt scheme investing across duration) ICICI Prudential All Seasons Bond Fund aims to perform in all market conditions All Seasons Investment Avenue Uses an In-House CAD model to manage duration between 1-10 yrs Aims to benefit from Volatility Tactical Allocation between G-sec and Corporate Securities Data as of September 28, 2018; The asset allocation and investment strategy will be as per the Scheme Information Document. Past performance may or may not be sustained in future. ^rounded off. CAD: Current Account Deficit. 5.95 9 5.73 6.59 1.11 8.50% 7.34% 7.44% 6.24% 6.53% 8.02% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 0 1 2 3 4 5 6 7 8 9 10 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 10-yrG-Secyields(%) ModifiedDuration(inyrs) Modified Duration G Sec (RHS)
  • 34. 34 Our Equity Schemes Scheme Name Type of Scheme ICICI Prudential Bluechip Fund An open ended equity scheme predominantly investing in large cap stocks. ICICI Prudential Large & Mid Cap Fund An open ended equity scheme investing in both large cap and mid cap stocks. ICICI Prudential Midcap Fund An open ended equity scheme predominantly investing in mid cap stocks. ICICI Prudential Smallcap Fund An open ended equity scheme predominantly investing in small cap stocks. ICICI Prudential Value Discovery Fund An open ended equity scheme following a value investment strategy. ICICI Prudential Multicap Fund An open ended equity scheme investing across large cap, mid cap, small cap stocks. ICICI Prudential Exports and Services Fund An open ended equity scheme following Exports & Services theme. ICICI Prudential Manufacture in India Fund An open ended equity scheme following manufacturing theme ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund An Open Ended Equity Scheme following Pharma, Healthcare, Diagnostic and allied Theme
  • 35. 35 Our Hybrid Schemes Scheme Name Type of Scheme ICICI Prudential Balanced Advantage Fund An open ended dynamic asset allocation fund ICICI Prudential Regular Savings Fund An open ended hybrid scheme investing predominantly in debt instruments ICICI Prudential Equity Savings Fund An open ended scheme investing in equity, arbitrage and debt. ICICI Prudential Equity & Debt Fund An open ended hybrid scheme investing predominantly in equity and equity related instruments ICICI Prudential Multi-Asset Fund An open ended scheme investing in Equity, Debt, Gold/Gold ETF/units of REITs & InvITs and such other asset classes as may be permitted from time to time.
  • 36. 36 Our Debt Schemes Scheme Name Type of Scheme ICICI Prudential Ultra Short Term Fund An open ended ultra-short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 months and 6 months. ICICI Prudential Short Term Fund An open ended short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1 Year and 3 Years. ICICI Prudential Savings Fund An open ended low duration debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 6 months and 12 months. ICICI Prudential Medium Term Bond Fund An open ended medium term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 Years and 4 Years. The Macaulay duration of the portfolio is 1 Year to 4 years under anticipated adverse situation. ICICI Prudential Credit Risk Fund An open ended debt scheme predominantly investing in AA and below rated corporate bonds. ICICI Prudential Floating Interest Fund An open ended debt scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives). ICICI Prudential All Seasons Bond Fund An open ended dynamic debt scheme investing across duration.
  • 37. 37 ICICI Prudential Multi-Asset Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended scheme investing in at least three asset classes with minimum allocation of 10% to each asset class. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them Riskometers ICICI Prudential Equity & Debt Fund is suitable for investors who are seeking*:  Long term wealth creation solution  A balanced fund aiming for long term capital appreciation and current income by investing in equity as well as fixed income securities. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*:  Long term wealth creation solution  An equity fund that aims for growth by investing in equity and derivatives. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 38. 38 Riskometers ICICI Prudential Bluechip Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme predominantly investing in large cap stocks. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme following a value investment strategy *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Large & Mid Cap Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme investing in both largecap and mid cap stocks *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 39. 39 ICICI Prudential Exports and Services Fund is suitable for investors who are seeking*:  Long term wealth creation  An open-ended equity scheme that aims for growth by predominantly investing in companies belonging to Exports & Services industry. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them Riskometers ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended scheme that seeks to generate regular income through investments in fixed income securities, arbitrage and other derivative strategies and aim for long term capital appreciation by investing in equity and equity related instruments. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Multicap Fund is suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme investing across largecap, mid cap and small cap stocks. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 40. 40 Riskometers ICICI Prudential Credit Risk Fund is suitable for investors who are seeking*:  Medium term savings  A debt scheme that aims to generate income through investing predominantly in AA and below rated corporate bonds while maintaining the optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Medium Term Bond Fund is suitable for investors who are seeking*:  Medium term savings  A debt scheme that invests in debt and money market instruments with a view to maximize income while maintaining optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*:  Medium to long term regular income solution  A hybrid fund that aims to generate regular income through investments primarily in debt and money market instruments and long term capital appreciation by investing a portion in equity. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 41. 41 Riskometers ICICI Prudential Short Term Fund is suitable for investors who are seeking*:  Short term income generation and capital appreciation solution  A debt fund that aims to generate income by investing in a range of debt and money market instruments of various maturities. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential All Seasons Bond Fund is suitable for investors who are seeking*:  All duration savings  A debt scheme that invests in debt and money market instruments with a view to maximize income while maintaining optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Smallcap Fund is suitable for investors who are seeking*:  Long Term wealth creation  An open ended equity scheme that seeks to generate capital appreciation by predominantly investing in equity and equity related securities of small cap companies. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 42. 42 Riskometers ICICI Prudential Floating Interest Fund is suitable for investors who are seeking*:  Short term savings  An open ended debt scheme predominantly investing in floating rate instruments *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Ultra Short Term Fund is suitable for investors who are seeking*:  Short term regular income  An open ended ultra-short term debt scheme investing in a range of debt and money market instruments *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Midcap Fund is suitable for investors who are seeking*:  Long Term wealth creation  An open-ended equity scheme that aims for capital appreciation by investing in diversified mid cap companies. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 43. 43 ICICI Prudential Manufacture in India Fund is suitable for investors who are seeking:*  Long term wealth creation  An open ended equity Scheme that aims to provide capital appreciation by investing in equity and equity related securities of companies engaged in manufacturing theme. *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. Riskometers ICICI Prudential Savings Fund is suitable for investors who are seeking*:  Short term savings  An open ended low duration debt scheme that aims to maximize income by investing in debt and money market instruments while maintaining optimum balance of yield, safety and liquidity *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) FUND is suitable for investors who are seeking:*  Long term wealth creation  An equity Scheme that predominantly invests in pharma, healthcare, hospitals, diagnostic, wellness and allied companies *Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
  • 44. 44 Disclaimer for Mutual Funds Mutual Fund investments are subject to market risks, read all scheme related documents carefully. All figures and other data given in this document are dated. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material from time to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Prudential Asset Management Company Limited. Prospective 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 ICICI Prudential Mutual Fund. Past Performance may or may not be sustained in future. Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including information developed in-house. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s). Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. 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. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. Further, the information contained herein should not be construed as forecast or promise or investment advice. The recipient alone shall be fully responsible/are liable for any decision taken on this material.