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Canara Robeco is a meeting of two renowned financial service institutions to bring together their core competencies
The Partnership • Asset Management expertise from Robeco, a global pure-play asset
manager and distribution expertise and local understanding from Canara Bank
• Canara Bank holds 51% in the JV while Robeco Group NV holds 49%
2
Canara HSBC Oriental Life
Insurance
Canbank Factors Limited
Gilt Securities Trading CanFin Homes
Canara Robeco Asset
Management
Canbank Venture Capital
Fund
Cancan Computer Services
Canbank Financial Services
Canara Bank : 106 years of banking expertise
Global CSR Excellence and Leadership Awards 2014 from CSR World Congress
55 Million+ customers & over 4750 branches to service them
Rated AAA* by ICRA, An associate of Moody’s
Investors service
Aggregate business balance sheet of INR 4.62 Lac Crs
*Rating reaffirmed by ICRA on Dec 18 2013
3
> Founded in Rotterdam in 1929
> Assets under Management of EUR 211 billion (31 March 2014)
> A pure-play asset manager: investing is all that we do
> Active investment style
> Core investment capabilities complemented by specialized subsidiaries
– Traditional asset classes (equity, fixed income)
– Alternatives (private equity, managed futures)
> Global leader in sustainability investing
> 1,500+ employees in 15 countries across Europe, the US, the Middle East, Asia and Australia
4
1929 Robeco Founded.
1980 Opening of offices in Switzerland, France, Belgium & Luxembourg
1975 Dutch market share of 80%
1990 Starts of the cooperation with Rabobank
2002 Office in Spain
2007 Offices in Shanghai & Hong Kong
2007 Launch of Canara in India & Corestone Switzerland
2010 Integration ESG factors. Introduction of exclusion policy
2011 Robeco sets up a Premium Pension Institution (PPI)
2012 Offices in Australia and US Miami
2003 Office in Germany
2001 Robeco becomes a full subsidiary of Rabobank
2001 Purchase of Harbor Capital Advisors
2000 Office in Middle East Currently Dubai
2005 Office in Japan.
1974 Start Institutional Asset Management
1998 Acquisition of the first sustainable institutional mandate
1998 Acquisition of Weiss Peck & Greer
2006 Start Fiduciary manage- ment
2006 Acquisition of SAM
2004 Acquisition of Boston Partners
2002 Acquisition of Transtrend
2009 Offices in Korea and Taiwan
2013 Orix acquires majority stake in Robeco
Robeco has focused on delivering superior results at agreed upon risk levels for 85 years
Disciplines to maintain Portfolio Management Focus
Back Office
Trading
Risk Management
Client Servicing
Compliance
Canara Robeco
Local expertise, International strength
5
Investment Management Mid Office
Product Management
6
Asset under Management
2123.19
151.86
3952.53
144.32
Month end AUM as on 30th June, 2014 (Rs. in crores)
Equity ETF Fixed Income Fund of Fund
CANARA ROBECO – Equity Team Ravi Gopalkrishnan, Head - Equities Fund Manager - CR Equity Diversified, Large Cap+, Infrastructure, Emerging Equities, MIP Responsible for overall performance Indian equities. Focus on fundamentals, integrates macro view –MS in Finance from Drexel University, Philadelphia, MBA in Finance from Bradley University, Peoria, IL –24 years of experience, in research and asset management with Pramerica AM, Principal PNB AM, SUN F&C & UTI –With Canara Robeco since September 2012
Krishna Sanghvi, Senior Fund Manager - Equities Fund Manager - CR Equity Tax Saver, Balance, FORCE, Capital Protection Oriented Fund Series 2 Co - Fund Manager - Emerging Equities Responsible for fund management –MMS (Finance) from NMIMS, ICWA, CFA from ICFAI University –17 years of experience in the Financial Services Industry including Kotak Mahindra Finance and Kotak AM –With Canara Robeco since September 2012
Nimesh Chandan, Head - Offshore Investments and Business Development
Responsible for advising portfolios of international clients
– MBA from University of Mumbai – 12 years of research & asset management
experience with Birla Sunlife, SBI Socgen and ICICI Prudential amongst others
– With Canara Robeco since July 2008
Yogesh Patil, Co-Fund Manager Co - Fund Manager - CR Infrastructure
– MBA from University of Pune – 11 years of experience with Sahara Mutual Fund, Religare, Man
Financial and UTI securities – With Canara Robeco since October 2009
Hemang Kapasi, Indian Equity Analyst Co Fund Manager : CR FORCE Focus on fundamental research − 9 Years of experience − joined October 2008
7
India’s Present: An opportunity
Stable Government at centre - Mr. Modi provides justification for the optimism
Reform push expected from new Government
FII positive on Indian market
Strong economic recovery expected
8
• January ’14
• Global liquidity driving most asset
classes
• Risk of accelerated FED Tapering
• Markets expecting a change in
Government at the centre
• Improving current a/c and trade
balances
• Declining inflation trajectory and
expectation of stable to declining
interest rates
9
What has changed post election and Budget…?
• June ’14 • India witnesses a majority government after
three decades with BJP garnering highest
ever 282 seats
• Expectation of Good days ahead, with focus
on growth and employment creation
• Continuation of measures to curtail fiscal
deficit by the new government
• Foreign flows continues to remain strong in
Indian markets
• Expectation of Interest rates decline in 6 to 9
months period
What has changed….
Improving Current account and Trade balance on the back of improving exports and lower non-gold imports
Declining inflation trajectory & Stable to declining interest rates - Inflation has come off sharply in last quarter, especially the consumer price inflation
Index of Industrial production has recorded some improvement in the last two months after moving in a narrow range for an year
10
12
Budget Highlights
Infrastructure development to get a boost
− $ 6.3 billion outlay for road development
− Taxation incentives for REITs and Infrastructure Investment Trusts (InvITs)
Encouraging manufacturing and start-ups
− $ 1.6 billion fund to be allocated for providing risk capital to start-up enterprises
Attracting Foreign Investment
− FDI (Foreign Direct Investment) limits in Defense and Insurance sector hiked to
49% from 26%
− FDI norms relaxed for some Real Estate projects
13
Going forward...
Revival in Investment Growth
Liberalisation of FDI
Subsidy Reduction
Control on Inflation
Tax Reforms – Implementation of GST (Goods and Services Tax) and DTC (Direct
Tax Code). Should add 1.5% to the GDP when fully implemented
Empirical evidence suggest periods of high growth have always been accompanied by above average valuations
15
81 129 181 250 266 291 278 280 216 236 272 348 450 523 718
833 820 834 1,024
1,123 1,184 1,339
1,525 1,811
FY93-96: 45% CAGR
FY96-03: 1% CAGR
FY03-08: 25% CAGR
FY08-14: 8% CAGR
FY14-16E: 16% CAGR
FY93-FY13: 14% CAGR
24.28 24.60
8.30
24.65
16.03
6
12
18
24
30
Mar
/93
Mar
/94
Mar
/95
Mar
/96
Mar
/97
Mar
/98
Mar
/99
Mar
/00
Mar
/01
Mar
/02
Mar
/03
Mar
/04
Mar
/05
Mar
/06
Mar
/07
Mar
/08
Mar
/09
Mar
/10
Mar
/11
Mar
/12
Mar
/13
Mar
/14
Sensex P/E (x) Sensex CAGR 14%
Sensex CAGR -1%
Sensex CAGR 39% Sensex CAGR -1%
Average of 14.9x
Sensex CAGR 14%
Sensex CAGR -1%
Sensex CAGR 39% Sensex CAGR -1%
Average of 14.9x
Sensex EPS
How the sectors performed in the last bull cycle (2003 -08) ?
16
20,873 19,283
10,684
67,113
11,089
37,811
31,379
9,905
32,108
13,484
53,937
25,034
0
15,000
30,000
45,000
60,000
75,000 Apr
-03
Jun-
03
Sep
-03
Dec
-03
Mar
-04
Jun-
04
Sep
-04
Nov
-04
Feb-
05
May
-05
Aug
-05
Nov
-05
Feb-
06
May
-06
Aug
-06
Oct
-06
Jan-
07
Apr
-07
Jul-
07
Oct
-07
Jan-
08
Consumer 30%
Auto 47%
Healthcare 31%
Technology 28%
Sensex 50%
Real Estate 42%
Pvt Banks 83%
CAGR (%)
Level of 3,081
What has changed since January to June ’14…?
17
11.6
13.3
6.2
-5.2
38.3
-1.7
63.2
1.4
4.5
-8.4
10.7
-20.0 0.0 20.0 40.0 60.0 80.0
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
Sensex
Total Return 2013
25.2
7.7
39.4
34.0
0.5
61.7
-7.8
42.9
7.9
26.7
21.9
-20.0 0.0 20.0 40.0 60.0 80.0
Total Return YTD (2014)
As on June 2014
Our Portfolio stance and preferred bets
• Given a strong mandate for the government focus would be more on domestic sectors i.e
(Industrials, Financials, Consumer discretionary, Energy) that will benefit from economic
growth
• With economy bottoming out and expectation of a stable government, we had already
started increasing our allocation towards high beta sectors such as Financials and
Industrials in Jan/Feb 14
• We prefer domestic companies with operating leverage, strong balance sheet and cash
levels
• We also prefer domestic sectors which are geared towards domestic consumption.
• We have turned cautious on domestic staples on account of slowing growth and very high
valuations
18
Current Portfolio stance
Sector Overweight / Underweight
Consumer Discretionary Overweight
Consumer Staples Underweight
Energy Neutral
Financials Overweight
Healthcare Underweight
Industrials Overweight
Information technology Underweight
Materials Underweight
Telecom Overweight
Utilities Underweight
19
Likely scenario near term
• With the favourable outcome of elections & positive cues in the Budget, markets have
rallied , going forward the corporate earnings announcements for the Q1FY15 will
impact market sentiment
• News flow from US Fed on Tapering plans is likely to drive global risk appetite and
liquidity
• Domestic Interest rates likely to remain stable with bias towards decline in later part of
the year
• Mid-caps likely to remain in lime-light given the low relative valuations
• Our portfolio focus is shifting towards:
– Increasing weights in high quality midcaps
– Adding companies which are trading at a steep discount to their intrinsic value,
turnaround opportunities, SOTP ideas
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FII flows
21
9.5 9.2 10.9 5.8
13.1
-10.4
23.4 25.0
8.5
25.8
13.7 0.3 0.1
3.2 6.4
17.7
13.1
5.1
-4.1 -0.9 -12.7
-8.9
9.8 9.3 14.1 12.1 30.8 2.7 28.4 20.9 7.6 13.1 4.8
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
FII (USDb) DII (USDb) Total USDb
Total Flows: USD107b FII: USD61b DII: USD46b
Total Flows: USD46b FII: USD73b DII: USD-27b
Disclaimer
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.
The information used towards formulating the outlook have been obtained from sources published by third parties. While such publications are believed to be reliable, however, neither the AMC, its officers, the trustees, the Fund nor any of their affiliates or representatives assume any responsibility for the accuracy of such information and assume no financial liability whatsoever to the user of this document. This document is strictly confidential and meant for private circulation only and should not at any point of time be construed to be an invitation to the public for subscribing to the units of Canara Robeco Mutual Fund. Please note that this is not an advertisement. The document is solely for the information and understanding of intended recipients only. Internal views, estimates, opinions expressed herein may or may not materialize. These views, estimates, opinions alone are not sufficient and should not be used for the development or implementation of an investment strategy. Forward looking statements are based on internal views and assumptions and subject to known and unknown risks and uncertainties which could materially impact or differ the actual results or performance from those expressed or implied under those statements.
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Corporate Office Canara Robeco Asset Management Company Ltd. 4th Floor, Construction House, 5, Walchand Hirachand Road, Ballard Estate, Mumbai - 400 001 http://www.canararobeco.com
Phone: +91 22 66585000 Fax: +91 22 66585012
THANK YOU