IIFL Nifty ETF Presentation

8/4/2019 IIFL Nifty ETF Presentation

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WhattheExpertssay

After twenty years of watching investment practitioners dance around the fire shaking their feathered sticks, I observe

that far too many of their patients die and that the turnover of medicine men is rather high. There must be a better way.

And there is Index funds.

John C Bogle, Founder and retired CEO of the Vanguard Group.

The only way to beat an index is to invest in something other than the index. Why would you, when the only source of ,

Mark Hebner, Founder, Index Funds Advisor, Inc

Most investors, both institutional and individual, will find the best way to own common stocks is through an index fund

which charges nominal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered

by the great majority of investment professionals

Warren Buffet, Berkshire Hathaway Chairman


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ItsdifficulttooutperformaBenchmark

Key observations from the Forth Edition of the S&P CRISIL SPIVA for the period ended June 2011.

Amongequityorientedfunds,majorityoflargecapanddiversifiedequityfundsunderperformedtheirbenchmark

indices,viz,theS&PCNXNiftyandtheS&PCNX500,respectively,inallthreetimeperiodsofanalysis(1,3and5years).

In

case

of

equity

linked

saving

schemes

(ELSS),

majority

of

funds

have

underperformed

the

benchmark

S&P

CNX

500

overthe3and5yeartimeframes

Percentageoffundsthatoutperformedbythebenchmark

Category BenchmarkIndex 1year 3Year 5Year

Largecap S&P CNX

Nifty 60.61 60.00 65.00

Diversified S&PCNX50053.62 51.28 55.71

ELSS S&PCNX50037.84 56.67 65.38

Source:S&PCRISILSPIVA,IndicesVersusActiveFundsScorecard,India,June2011


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IntroductiontoExchangeTradedFunds(ETFs)

ExchangeTradedFunds(ETFs)

ETFs areIndexFunds,listedandtradedonexchanges like stocks

ass ve ymanage un strac a enc mar n exc ose y,an re ectt eper ormanceo t at n ex

At the end of June 2011, the global ETF industry comprised 2,825 ETFs from 146 providers on 49 exchanges around the

world, with total assets of 1.49 Trillion USD Source

http://www.ifaonline.co.uk

ApplicationofETFs

EfficientTrading: ETFsprovideinvestorswithaconvenientwaytogainmarketexposureviz.anindexthattradeslikea

stock.Unlikeasinglestock,aninvestmentinanETFIndexproductprovidesdiversifiedexposuretothemarket.

Equitising Cash: Investorswithidlecashintheirportfoliosmaywishtoinvestinaproducttiedtoamarketbenchmark,

likeanIndex,asatemporaryinvestmentbeforedecidingwhichstockstobuyorwhilewaitingfortherightprice

ManagingCashFlows: InvestmentmanagerswhoseeregularinflowsandoutflowsmayoftenchooseETFsbecauseof

theirliquidity,andtheirabilitytorepresentthemarket

DiversifyingExposure: Ifaninvestorisnotsureaboutwhichparticularstocktobuy,butlikestheoverallsector,investing

insharestiedtoanIndexorabasketofstocksprovidesdiversifiedexposure,andreducesstockspecificrisk


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AdvantagesofETF

AdvantagesoverActivelyManagedMutualFunds

investing

Managersdiscretion

Lowcost . . .

expenseratiosaretypicallyinthe0.25% 0.75%p.a range

No

minimum

investments

MutualFundsmayoftenhaveminimuminvestmentsofRs5,000ormore,ETFs

canbeboughtorsoldinaslittleasoneshareincrements

Tradingflexibility

Mutualfundsareonlypricedonceaday,atthecloseofthemarket.ETFs

howeverarepricedthroughoutthedayandcanbeboughtandsoldonthe

exchange

Nostyledrift TheSchemeinvestsexactlyaspertheindexconstitution,andstickstothemandate


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AdvantagesofETF

AdvantagesoverIndexFutures

LotsizeETFscanbeboughtandsoldevenassingleunits,whereasIndexFuturesarein

specificlotsizes

Longtermhorizons

UnlikeETFs,IndexFuturesneedtoberolledovereverymonthorquarter which

carriesitsownrisksandcosts

Taxation ETFswouldbetaxedlikestocksandinvestorscantakeadvantageofspecialrates

Premium &

discounts PremiumsanddiscountstendtobehigherinFuturesthaninETFs


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HowETFswork

PrimaryMarket SecondaryMarket

AllEligible

including

retail

Subscriptionduring

NFO

Investors

nits

Creation

InCreation

UnitsSize

(i.e.5000Units)

Redemptions

y/SellET

F

AuthorizedParticipants/Large

National

Stock

Exchange

(NSE)

B

Investors CapitalMarketSegmentMarketMaking/Arbitrage


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IIFLNiftyETF Keyhighlights

Name:IIFLNiftyETF

Type:AnOpenendedIndexExchangeTradedFund

Investments:TheSchemewillinvestinthesecuritieswhichareconstituentsoftheS&PCNXNiftyIndex,inthesame

proportion

as

the

Index

O ect ve:T e nvestmento ect veo t esc eme stoprov ereturns e ore eesan expenses t atc ose y

correspondtothetotalreturnoftheS&PCNXNiftyIndex,subjecttotrackingerrors.However,therecanbenoassurance

orguaranteethattheinvestmentobjectiveoftheSchemewillbeachieved

Benchmark:

S&P

CNX

Nifty

Index

AssetAllocation:StockscomprisingS&PCNXNiftyIndex:95%100%,DebtandMoneyMarketInstruments:0%5%

Sustainability:Thiswillestablishthatthemarketasawholeismoreefficientthantheindividualswhoareapartofit.

Thatiswhy,itisdifficulttooutperformthemarket.Consequentlytheevergrowingbeliefininvestinginmutualfund

schemesthat

follow

apassive

investment

strategy

Expenses:0.25%p.a.

FundManager:Mr.ManishBandi,aged33years,isaSciencegraduateandaCharteredAccountantwith11yearsof

exper ence nt e nanc a serv ces n ustry


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AbouttheS&PCNXNifty

Index Service Provider

S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL)

s a o n ven ure e ween e an . as a cens ng an mar e ng agreemen w an ar an oor s

(S&P), the world's leading provider of investible equity indices, for cobranding equity indices.

S&P CNX Nifty is a welldiversified 50 stock index accounting for 24 sectors of the economy and represents 63.94% of the

total free float market capitalization of the universe of stocks traded on the NSE as on June 30, 2011

Selection of the index set is based on three criteria:

Liquidity: the security should have traded at an average impact cost of 0.50% or less during the last six months for

90% of the observations, for the basket size of Rs. 20 Million.

10%

Others: A company which comes out with an IPO will be eligible for inclusion in the index, if it fulfills the normal

eligibility criteria for the index like impact cost, market capitalization and free float, for a 3 month period

S&P CNX Nifty is computed using the free float market capitalization method

SourceNSEwe s tean IISL Facts eetason30 une2011


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Annualperformance

S&PCNXNifty

67.42%71.90%

75.76%80.00%

100.00

20.05%

36.34%39.83%

54.77%

40.00%

60.00%

1.04%

3.25% 10.68%

.

0.00%

20.00%

.

18.08%14.65%

16.18%18.48%

40.00%

20.00%

th

51.79%60.00%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

,


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S&PCNXNiftystatistics

PeriodReturns* Volatility

Particular No.

PerformanceasonAugust30,2011

3 Months 10.06 1.21

6 months6.23 1.18

NoofCompanies 50

PricetoEarnin P/E 18.05

1year 7.43 1.17

3years 4.68 1.91

PricetoBook(P/B) 2.95

DividendYield(%) 1.525years 7.93 1.87

10years 16.85 1.66

Since Ince tion 10.82 1.70

FreeFloatMarketcap(Rs.cr) 1,500,226

Top 10continentweights 57.54%

*Returnsabove1yearsareCAGR1yearandbelowreturns areabsolutereturns Source:NSEwebsite/IISL


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Thetop10constituentsoftheIndex

Constituent

FreeFloat

MarketCa Weight

AsonAugust30,2011

(Rs.cr)

RelianceIndustriesLtd. 132,000 8.80

. , .

ITCLtd. 106,650 7.11

ICICIBankLtd. 100,595 6.71

HDFC 87,799 5.85

Larsen&ToubroLtd. 86,253 5.75

HDFCBankLtd. 84,509 5.63

TCS 52,892 3.53

, .

Bharti Airtel Ltd. 48,725 3.25

Source:IISL


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Sectorcomposition

19.50

25.00

S&P CNX Nifty

12.8615.00

.

.

7.115.85 5.75

4.97 4.23 3.92 3.85 3.60 3.04 2.71 2.36 2.191.29 1.29 1.23 1.21 0.94 0.92 0.90 0.61 0.29

5.00

10.00

0.00

Banks

Software

Refineries

Cigarettes

Housing

gineering

Wheelers

Power

aceuticals

lProducts

Services

roduction

Wheelers

quipment

Diversified

luminium

tProducts G

as

Metals

nstruction

Synthetic

Institution

Mining

Finance

C

omputers

Financ E

to

mobiles

Phar

SteelAndSte

mmunication

Ex

ploration/

bile

s

2And3

Electrical

tA

ndCemen

Co

Textiles

Financial

A

Telec O

il

Automo

Ceme

Source:IISL,AsonAugust30,2011


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NFOdetails

NewFund

Offer

Period:

NFO

Opens

on:

September

28,

2011;

NFO

Closes

on:

October

12,

2011

NewFundOfferPrice:TheunitsbeingofferedwillhaveafacevalueofRs.10/ eachandwillbeissuedatapremium

MinimumAmountforApplicationintheNFO:Rs.5,000andmultiplesofRe.1/ thereafter

Plans/Options

offered:

Only

Growth

option

Allotment:Within5(Five)daysaftertheclosureoftheNewFundOffer

AllotmentPrice: Approximately1/10th ofthevalueofS&PCNXNiftyIndexonallotmentdate

Wherecanyousubmitthefilledupapplications:R&TOffice(CAMS)andInvestorServiceCentres(ISCs)ofAMCoffice

Applicationthrough

ASBA

process:

Available

and

Self

Certified

Syndicate

Banks

(SCSBs)

provide

ASBA

facility

Liquidity :SchemeisproposedtobelistedonNSEandIIFLAMChasproposedtoengageAuthorizedParticipants(AP)for

creatin li uidit for ETFs in the stock exchan e

Ongoingsubscription/redemptions:OntheExchange:Investorcanbuy/sellunitsinroundlotof1unitonNSE.Directlywith

theMutualFund:TheAP/largeinvestorcansubscribe/redeemtheunitsoftheSchemedirectlywiththeMutualFundonlyin

. .,

Dematerialization:TheunitsoftheSchemeareavailableonlyintheDematerialized(electronic)mode

LoadStructure:EntryLoad:Nil;ExitLoad:Nil.


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AbouttheCompany

AssetManagementCompany

IndiaInfoline AssetManagementCompanyLtd.(IIFLAMC)isapubliclimitedcompanyincorporatedonMarch22,2010

IIFLAMChasbeenappointedastheInvestmentManagertoIIFLMutualFundbyIndiaInfoline TrusteeCompanyLtd.(IIFL

Trustee)

TheBoardofDirectorsofIIFLAMCcompriseofeminentpersonalitieswithvariedexperience

TheTrustee

IIFLTrusteewasincorporatedonJune05,2009undertheCompaniesAct,1956andistheTrusteetoIIFLMutualFund

IIFLTrusteew ensuret att etransact onsentere nto yIIFLAMCare naccor ancew t t eSEBIRegu at onsan w

alsoreview

the

activities

carried

on

by

the

AMC

MutualFund

IIFLMutualFundhasbeenconstitutedasatrustonApril29,2010.IndiaInfolineLimitedistheSponsorsandIndiaInfoline

TrusteeCompanyLimitedistheTrustee

TheMutual

Fund

was

registered

with

SEBI

on

March

23,

2011


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BoardofDirectorsIndiaInfoline TrusteeCompanyLimited(IIFLTC)

Mr A.K.Shukla

(IndependentDirector)

M.SC.

Former Chairman of Life Insurance Corporation of India

Has an experience of more than 41 years in the insurance business

Chairman Recipient of various prestigious awards including Distinguish Fellow, Institute of Directors, Delhi; Indira Gandhi

Priyadarshni Award by National Unity Congress, Delhi, Marketing King Award by IMM Delhi, etc.

B.Sc;LLB

Mr R.S.Loona


CorporateLawyerbyprofessionwithanexperienceofmorethan30yearsinthelegalfield.

HeldseniorpositionssuchasChiefGeneralManager(Legal)inIDBIandExecutiveDirector(Law)inSEBI

AssociatedwithseveralExpertGroups/CommitteesconstitutedbyGovt.ofIndia,SEBIandalsowritesarticlesin

financialnewspapersonsecuritieslawsandcorporatematters

Mr J.H.Mehta


B.Com;MBAfromIIM(Ahmadabad);GraduateofAdvancedManagementProgrammefromWhartonSchool,USA

ManagementConsultantbyprofession

Hasanexperienceofmorethan30yearsandwasassociatedwithrenownedorganisationslikeHLLasVice

President,HindustanLeverasExecutiveDirector,RPGGroupas President

B.Com;

CA.;

ICWA;

MBA

(IIM)

(AssociateDirector) ChairmanandManagingDirectorofIIFLGroup,oneoftheleadingFinancialServicesCompanyinIndia

Richandvariedexperienceofmorethan21yearsinfinancialservicesindustry

RankedsecondinIndiasMostValuableCEOsbyBusinessWorldfor2009


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BoardofDirectorsIndiaInfoline AssetManagementCompanyLimited

MsHomaiDaruwalla

Chartered Accountant and CAIIB

Former Chairperson and Managing Director of Central Bank of India

Varied and rich experience of more than 34 years in Banking Sector

(Independent Director) Handled varied assignments in 3 large Public Sector Banks viz. Union Bank of India, Oriental Bank of Commerce and

Central Bank of India

Handled prestigious assignment as Region of India Director on BoDs of The Institute of Internal Auditors (IIA), Florida,

U.S.A.

Mr PranabPattanayak

M.A. in Economics from Utkal University and CAIIB PtI

Former Managing Director of State Bank of Mysore

c an var e exper ence o years n e an ng nanc a erv ces e

Held senior positions in State Bank of India and State Bank of Travencore

Mr R.Venkataraman

(AssociateDirector)

B. Tech from IIT (Kharagpur) and MBA from IIM (Bangalore)

CoPromoter and Executive Director of India Infoline Ltd.

Varied experience of more than 19 years in the financial services sector including Stock Broking, Private Equity andnvestment an ng


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TheFundssponsor:IIFL

IndiaInfoline Group(IIFL)isoneoftheleadingplayersintheIndianfinancialservicesspace

IIFLoffersadviceandexecutionplatformfortheentirerangeoffinancialservicescoveringproductsrangingfromEquitiesand

derivatives,Commodities,Wealthmanagement,Assetmanagement,Insurance,Fixeddeposits,Loans,InvestmentBanking,

bondsandothersmallsavingsinstruments

IIFLis

listed

on

NSE

and

BSE

with

amarket

cap

of

US$500mn

Majorbusinessunits

IIFLhasawidenetwork,coveringover3,000businesslocationsspreadacross500citiesandtownsacrossIndia

ThegrouphasalsoexpandedgloballyandhassubsidiariesandofficesinColombo,Dubai,NewYorkandSingapore

RetailEquities

Credit&

Finance

Financial

Over1million

customers

serviced

from

3,000

locations;

leadershippositionwith4%marketshareFocus

on

retail

secured

mortgages

and

consumer

loans;

Book

sizeofRs39bn withNPAsatlessthan 0.5%.

Equities

Investment

Bankin

Products

Distribution

Asset

Mana ement

,

capabilities,strongfranchiseinIndiaandAsiaPacific

PrimaryexpertiseisEquityCapitalMarketswithaviewto

levera einstitutionalandretaildistributionca abilities

,

and othersavingsproducts

Receivedlicense

to

set

up

mutual

fund

PrivateWealth

Management

International

OperationsAmongstleadingIndianplayerswithoverRs200bn assets under

advice

Regulatedsubsidiariesinkeymarkets,targetinginstitutional

equitiesandNRIwealthmanagement


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Evolution

1995 CommencedoperationsasanEquityResearchfirm

1997 Launchedresearchproducts ofleadingIndiancompanies,keysectors

andtheeconomy

Income(` mn)

9,28011,239

14,720

1999 Launchedwww.indiainfoline.com

2000

Launchedonlinetradingthroughwww.5paisa.com

Starteddistribution

of

life

insurance

and

mutual

fund

7422,021

3,974

,

2003 LaunchedproprietarytradingplatformTraderTerminalforretail

customers

2004 Acquiredcommoditiesbrokinglicense

LaunchedPortfolioManagementService

NetProfit(` mn)

FY05 FY06 FY07 FY08 FY09 FY10 FY11

2,320

2,047

2005 MaidenIPOandlistedonNSE,BSE

2006 AcquiredmembershipofDGCX

Commencedthecredit&finance 492756

1,5991,448

2007 ommence nst tut ona equ t es us nessun er

FormedSingaporesubsidiary,IIFL(Asia)PteLtd

2008 LaunchedIIFLWealth

Transitionedto insurance

broking

model

Networth(` mn)FY05 FY06 FY07 FY08 FY09 FY10 FY11

2009 AcquiredregistrationforHousingFinance

ObtainedVentureCapitallicense

2010 ReceivedmembershipoftheSingaporeStock ExchangeandColombo

StockExchange

14,892 15,44716,053

,

CommencedoperationsinSingapore&Colombo

2011 Received SEBIfinalapprovalforIIFLMutualFund522

1,9433,251

FY05 FY06 FY07 FY08 FY09 FY10 H1FY11FY11


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IndependentDirectorsofotherGroupCompanies

Mr A.K. Purwar Joined State Bank in 1968 and became chairman in 2002

Became Chairman o Indian Banks Association in the year 200506

Received CEO of the year and Outstanding Achiever of the year award

.


PartoftheManagingCouncilandheadingtheCorporateMembersCommitteeoftheChamberofTaxConsultants

(CTC)

Mr.Kranti Sinha


Director

and

Chief

Executive

of

LIC

Housing

Finance

Limited

1998

to

2002

ConcurrentlywastheMDofLICHFLCareHomes

ServedasDeputyPresidentofGoverningCouncilofInsuranceInstitute

Mr.M.N.Singh


JoinedtheIndianPoliceServicein1967

Worked as the chiefs of the crime branch of Mumbai Police State CID and AntiCorru tion Bureau


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AwardsandAccolades

IIFLawardedBestWealthManagementHouse IndiaandBestBroker India,2011

Hon'bleFinanceMinisterpresentingIndiasBestEquity

BrokerAward

to

INDIASBESTEQUITY

BROKER2011

BLOOOMBERGUTV2011

BESTBROKER INDIA

FINANCEASIA2011

HOUSE INDIA

THEASSETTRIPLEA

INVESTMENTAWARDS,2011

March26,2011

Someotherrecentawards

BESTBROKER

INDIA2008

MOSTIMPROVED

BROKERAGE INDIA

2008

FASTESTGROWING

BROKINGHOUSE

2008

Ranked2nd in

INDIASMOST

VALUABECEOs

2009

BESTMARKET

ANALYST2009

Amongsttop3for

BESTBROKERAGE

2009


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ThankYou

Documents

IIFL Nifty ETF Presentation