NFO PERIOD – DECEMBER 31, 2015 – MARCH 30, 2016
This product is suitable for investors who are seeking:
Capital appreciation over a period of 10
years.
Investment in equity and equity related
instruments of companies along with
income tax benefit under section 80C of the
Income Tax Act 1961.
TAX PLANNING
INVESTMENT IN EQUITIES
SBI LONG TERM ADVANTAGE FUND – SERIES III
SYNOPSIS
SBI FUNDS MANAGEMENT PVT. LTD.
DISCLAIMER
WHY DO I NEED TO PLAN?
Its very important to have an active control of your finances: Don’t let inflation & taxes eat into your wealth
Idle money looses its value over time due to inflation, hence investing it in an appropriate instrument is important
A well made tax plan can help you save a substantial part of your wealth
An efficient tax-plan not only helps in saving wealth from eroding but may also generates optimal returns on the investments.
Analyzing the available investment options is crucial to maximize the benefits
TAX SAVING INVESTMENTS
Tax Planning
Market Linked
Fixed Income
ELSS – Lock-in 3 years ULIP – Lock-in 5 years
PPF – Lock-in 15 years NSC – Lock-in 5/10
years Tax Saving Fixed Deposits – Lock-in 5 year
*Source : State Bank of India Date: Dec 08, 2014 ^ Source: http://finmin.nic.in, RBI, Rates incorporates compounding wherever applicable
Disclaimer: The comparison of ELSS Vs other tax savings instrument has been given for the purpose of the general information only. Any investment decision needs to be taken only after consulting the Tax Consultant or Financial Advisor. SBI MF will not accept any liability/ responsibility/loss incurred on any investment decision taken on the basis of this presentation.
TAX SAVING INSTRUMENTS: SNAPSHOT
Particulars PPF NSC ELSS Bank Deposits ULIP
Tenure (years) 15 5/10 3 5 5
Min. investment
(Rs) 500 100 500 10,000 10,000
Max. investment
under 80 C (Rs) 1,50,000 1,50,000 150,000 1,50,000 1,50,000
Risk Low Low High Low Medium to High
Return % (CAGR) 8.70^ 8.50/8.80^ Market Linked 7.00* Market Linked
Interest frequency Compounded annually Compounded half yearly No assured dividends/ returns
Compounded
Quarterly NA
Taxation of
ELSS (Equity Linked Savings Scheme) are diversified equity funds with a lock-in period of 3 years. These funds offer tax benefits (Individual / HUF) under Section 80C of IT Act,1961 according to which, investment up to Rs. 1.50 lakh in ELSS is deductible from taxable income
Illustration:
Helps in saving considerable amount of taxes if planned efficiently.
BENEFIT OF INVESTMENT IN ELSS
The above table has been given for general information only. Investors are advised to consult their Tax/ Financial Advisor before taking decision of Investment. The tax calculations shown above are as per the IT slab applicable to Individual/ HUF assessee for FY 2014-15 exclusive of cess & surcharge.
Annual Taxable Income (Rs.) Tax before investment in ELSS (Rs.) Maximum investment eligible for deduction in
ELSS (Rs.) Taxable income post ELSS Investment (Rs.) Tax after investment (Rs.) Savings (Rs.) 4,00,000 15,000 1,50,000 2,50,000 0 15,000 6,00,000 45,000 1,50,000 4,50,000 20,000 25,000 8,00,000 85,000 1,50,000 6,50,000 55,000 30,000 10,00,000 1,25,000 1,50,000 8,50,000 95,000 30,000 12,00,000 1,85,000 1,50,000 10,50,000 1,40,000 45,000
Equities as an Asset class are considered to be high risk but at the same time also have the potential to deliver relatively higher returns
Equity investments are always best suited for long term investors
Equity as an asset class can provide inflation adjusted real returns
Equity asset class comes with high volatility but can build wealth for investors over a long term
WHY INVEST IN EQUITIES?
ALSO GAINS ARE TAX FREE
It is important to take into consideration the taxes applicable for your investment
The long term capital appreciation in equity mutual funds are tax free for the investors (as per current tax laws)
Dividends (if any) declared in equity mutual funds are tax-free. (as per current tax laws)
IS THIS THE RIGHT TIME TO INVEST?
Volatile Markets Global uncertainty High Fiscal DefiictValuations?? Which way is
the market going??
Investors are often confused about the right time to invest, but investment timing is almost irrelevant for a long term investor. Market volatility is a part of equity investing. A long term investor should not fear about the short term market movements.
EARNINGS GROWTH – SET TO REVIVE
Sensex earnings have grown at CAGR of 14% over the last 22 years
In the recent past, earnings growth have been muted and concentrated in few sectors.
A new cycle of corporate earnings growth has begun. Also, growth is likely to be far more broad-based.
Data source: Motilal Oswal
Domestic Institutions’ holding in equity market on the rise
Source: NSDL, MOSL, SBIMF Research
FII inflow has been muted YTD- particularly in equities Domestic MFs, on other hand, were buyers for sixth consecutive quarter
DIIs (ex MFs) have also been net buyers for most part of the year
-20 -10 0 10 20 30 40 50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (as of Nov) India: Net FII Debt Investment (USD bn)
India: Net FII Equity Investment (USD bn)
-0.6 -0.5 -0.4 -0.5 -1.0 -0.2 -0.3 -0.3 -0.6 0.0 -0.4 0.3 -0.4 -0.7 -0.1 -0.1 -0.4 -0.2 -0.6 -0.4 0.0 0.6 0.8 1.1 0.7 1.0 0.3 1.1 0.1 0.7 0.6 1.5 0.7 1.6 0.9 1.6 1.4 0.1 0.6 Se p -12 De c-1 2 Ma r-13 Ju n -13 Se p -13 De c-1 3 Ma r-14 Ju n -14 Se p -14 De c-1 4 Ma r-15 Ju n -15 Se p -15 -1.1 -0.4 -0.5 -1.1 -2.3 -1.5 -1.2 -0.2 -1.6 1.5 0.1 0.7 -1.0 -1.4 -1.4 -1.2 0.2 0.5 -1.5 -0.7 -0.8 -1.3 -1.4 -0.8 -0.9 -0.3 -1.5 -0.3 -1.4 -0.4 -0.6 0.4 0.7 0.3 -0.7 0.9 0.1 0.0 0.7 Se p -12 De c-1 2 Ma r-13 Ju n -13 Se p -13 De c-1 3 Ma r-14 Ju n -14 Se p -14 De c-1 4 Ma r-15 Ju n -15 Se p -15 USD bn
Muted FII inflows have been duly compensated by domestic
investors who have increased their appetite for equity.
This increase in equity investments is driven by concurrent
sluggishness in physical assets like gold and real estate
It is also driven by the need for financialization of assets
among the domestic investors.
As a result we are witnessing a surge in IPO activity which we
As the investment time horizon increases chances of losing money decreases
In case investor would had invested in S & P Sensex for 3 years , ~83% times he would had got positive returns and ~51% times he would had got more than 10% CAGR returns.
In case investor would had invested in S & P Sensex for 10 years , ~99% times he would had got positive returns and ~82% times he would had got more than 10% CAGR returns.
AND IMPORTANTLY TIME NOT TIMING IS IMPORTANT
Daily Rolling Returns of S & P Sensex Index for Various Periods During Jan 01, 1990 to Dec 31, 2015 2015*
This product is suitable for investors who are seeking:
Capital appreciation over a period of 10
years.
Investment in equity and equity related
instruments of companies along with
income tax benefit under section 80C of the
Income Tax Act 1961.
New Fund Offer (NFO)Period* 31st December, 2014 - 30th March, 2015
Fund Type 10 Years Close Ended Equity Linked Savings Scheme
Minimum Investment Rs. 500 and in multiples of Rs. 500/- thereafter
Options The scheme would have two plans viz Direct Plan & Regular Plan. Both plans will have two options Growth and Dividend options. Dividend option will have the facility of Payout & Transfer.
Liquidity After 3 Year of Lock-in period
Benchmark S & P BSE 500
SCHEME FEATURES
Scheme Objective: The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equity and equity-related instruments of companies along with income tax benefit. However, there can be no assurance that the investment objective of the Scheme will be realized.
The scheme shall not invest in Derivatives. The Scheme shall not invest in Securitized Debt. The Scheme shall not invest in repo in corporate debt. The Scheme shall not invest in ADR/GDR/Foreign securities. The Scheme shall not engage in stock lending. The Scheme shall not engage in short selling.
Asset Allocation
*As per SEBI regulations, investment out of the NFO proceeds shall be made only on or after the closure of the NFO period. The mutual fund shall allot units/refund of money and dispatch statements of accounts within five business days from the closure of the NFO.
Instruments Indicative allocations
(% of total assets)
Risk Profile
Min Max High/ Medium/ Low
Equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies
80 100 High
ADVANTAGE OF SBI LONG TERM ADVANTAGE FUND – SERIES III
SBI Long Term Advantage Fund - Series III offer tax benefits (Individual / HUF) under Section 80C of IT Act,1961 according to which, investment up to Rs 1.50 lakh in ELSS is deductible from taxable income
SBI Long Term Advantage Fund - Series III has a lock-in of 3 years which ensures a compulsory discipline for the investors to invest for long term
Although lock-in period is of three years, investors can stay invested upto ten years. This gives them flexibility to redeem their investments at any time after three year but before ten year
This also allows the fund manager to manage the fund more efficiently, as it gives the fund managers the flexibility to make investment decisions with a long term view
SBI Long Term Advantage Fund - Series III will be an actively managed fund providing the advantage of managing the portfolio dynamically to adapt with the changing market scenarios
The scheme will also invest across sectors & market caps offering the much needed diversification benefit to the investors
INVESTMENT PHILOSOPHY
Three parts of investment strategy – Asset allocation, Top down & Bottom-up approach
Fundamental proprietary research underpinning portfolio construction
Portfolio bias towards companies with strong business fundamentals
Detecting unique businesses
Sound management quality, Business fundamental, geared into key factors driving business expansion
Companies set to develop sector leadership by leveraging upon existing franchises
Relative valuation; visibility and sustainability in earnings growth
Disciplined investment process
Rigorous and systematic analysis of targeted companies
PORTFOLIO CONSTRUCTION PROCESS
STEP 1: Qualitative Factors
1. Analysis of business 2. Analysis of business model 3. Impact of Macro-economic variables on the business model 4. External variables and its impact on the company 5. Sell-side research interaction
STEP 2: External Analysis
1. Geo-Politics and its impact on business 2.Competition analysis 3. Channel checks 4.Management Meetings 5. Corporate Governance 6.Plant visits
STEP 3: Quantitative Factors
1. Historical Financial analysis 2.Earnings projection 3. Capital Efficiency projections 4. Application of risk metrics and discount
STEP 4: Investment Thesis
1. Building investment thesis 2. Valuation model 3.Target price 4. Attractiveness vis-a-vis other stocks in the investment universe
STEP 5: Investment Decision
SYNOPSIS
A ten year close ended ELSS with 3 year lock in.
Triple Benefits of Investing in SBI Long Term Advantage Fund - Series III
Tax Savings
Potential Capital Appreciation
Tax Free Returns
To identify stocks across market cap utilizing both Top Down and Bottom Up approach
No Investment Bias: The scheme may invest in Large, Mid & Small Capitalization
stocks in any proportion
Targeted towards investors wishing to save tax and having a long term investment
63%
37%
India’s premier and largest bank with
over 200 years experience (Estd: 1806)
Asset base of USD 399 bn*
Pan-India network of ~22,635 branches
and ~ 50,000 ATM’s as at end of June
2014
Servicing over 256 million customers
Only Indian bank in Fortune 500 list;
ranked among the top 100 banks in the
world
Global leader in asset management
Backed by Credit Agricole and Société
Générale
More than 2,000 institutional clients and
distributors in 30 countries
Over 100 million retail clients via its partner
networks
€ 821.4 bn AuM as at end of June 2014
Ranking N° 1 in Europe, Top 10 worldwide #
*Source: SBI Analyst Presentation as on end June 2014 # Source : Amundi website as on end June 2014
