overview

Investments

Creating a bigger impact!

chief investment officer
AK Sridhar
Chief Investment Officer

Market Matters January 2018

During the month of January, emerging market (EM) equity indices outperformed their major developed market (DM) counterparts reversing last month’s trend. Key macro – economic data emerging from the US in January remained strong. Going ahead, major central banks viz., the US Fed, Bank of England and the ECB all seem to be expecting that inflation would gradually pick up towards their targets of 2% and thus have committed to reducing monetary stimulus gradually

Indian economic growth trajectory seems to be reversing after ~ five quarters of subdued growth, shrugging the twin impact of demonetisation and GST. Government’s policy actions, seconded by the latest budget proposals, have focussed on the rural economy, agriculture and the infrastructure sector. The government is working on improving farm productivity. The latest budget proposal to link the MSP’s to 1.5x the average the cultivation cost would help increase farmer incomes. On the procurement side, the government seems to be working towards improving procurement of crops other than paddy and wheat so that farmers move away from these towards other crops. The government also seeks to aggregate farm holdings, farm produce and put in place an institutional mechanism so that the input and output is managed in a professional manner. This would basically help augment farm income. All this would help broad - base the overall economic growth. With the liquidity situation moving towards deficit coupled with initial signs of an improvement in the credit offtake, the overall interest rates scenario would harden and would have to be watched. The total GST collection figures for December have inched up MoM. One would, however, have to wait for few more months for a trend to emerge. An increased tax revenue base would greatly support the government’s expenditure program without straining the fiscal deficit too much. With a spate of state-level elections and general elections round the corner, the political climate would continue to remain heated and it would be interesting to see what level of populism is involved in the government actions. Thus, the ongoing corporate earnings season, domestic macro – economic data points, movement in key commodities viz., Crude Oil would be closely watched for future cues

On the valuation front, we have been maintaining for some time now that the Indian equity market valuations based on PE multiples are in the expensive zone. This would lead to sub-optimal returns from equities in the short term. Only sustained good, corporate results for the 2 – 3 quarters would justify these valuations. One of the main reasons for the sustained uptrend domestically was the strong domestic liquidity (MFs, PFs, and NPS). With long-term capital gains tax reintroduced in the latest Budget proposals, among other proposals, it appears that this tide of surging liquidity could recede in the coming 3-4 months. The governments thrust on rural, agriculture and infrastructure in the budget, as mentioned earlier, would benefit certain sectors such as FMCG, consumer durables, infrastructure and healthcare so basically rural consumption and infrastructure would be the key theme. Also, investments in the dynamic/balanced category of Funds could be a better strategy for investors to provide insulation from the market turmoil. Having said that, equity as an asset class is favoured for its ability to deliver superior returns in the long term and investors should approach the equity markets with a horizon of at least 5 years



Disclaimer: Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and NAVs of the units may go up or down, based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. IndiaFirst Life Insurance Company Limited is only name of the Insurance Company and does not in any way indicate the quality of the contract, its future prospects, or returns. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Past performance may or may not be sustained in future and is not a guarantee of future performance. Some of the contents of this document may contain statements / estimates / expectations / predictions, which may be 'forward looking'. The actual outcomes could differ materially from those expressed /implied in this document.These statements, do not intend to provide personal recommendation to any specific individual or any investment needs of an individual. The recommendations / statements / estimates / expectations / predictions are of general in nature and may not take into account the specific investment needs or risk appetite or financial situations of individual policyholder / clients. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Tax benefits are subject to changes in the tax laws.

Whether you are a retail or institutional customer, the first thing you want to know is how well we manage your money? Everyone has two basic expectations - Safety and Returns. Both are opposite goals, but we work hard to achieve both in a balanced way. Your money can be safe if –

  • We choose our investments carefully
  • Watch their performance regularly
  • Take corrective action when needed

We have an institutional policy within the regulations of IRDAI, which is mandated by the Board monitored by Investment Committee and delivered by the team. This is the framework in which we operate. This framework is tight as well as practical enough to allow room for judgmental exceptions which are not taken just by one individual but by the whole team involving the CEO, CFO, CIO and the Appointed Actuary.

Rest assured, our professional Fund Managers, who are experts in the equity and fixed income markets, will take utmost care of your returns.

Equity Investment Strategy

For equity investment we follow both - a top down and a bottom up approach. Looking top down and bottom up we define our investment universe which is a broad basket of stocks we can invest in. Actual stock selection is primarily driven by fundamental analysis.

Once we identify a good stock, we look at analytical and technical factors to see what is the right time to buy or to book profits. Based on technical factors we switch stocks and sectors to enter or reenter the market. We also constantly review our strategies and actively engage in script management. We strive for not only outperforming the benchmark indices but also to deliver superior risk-adjusted returns as compared to peer group over a medium to long term horizon.

Fixed Income Investment Strategy

In a fixed income portfolio, our primary concerns are the safety of investments and consistency of returns. This is why we invest in companies with high credit quality and a track record of good corporate governance. This ensures that the long-term investments are safe while their returns are consistent.

Once we achieve this, we try to improve the returns in our debt portfolio by suitably tuning the portfolio duration. This is based on the expected interest rate movements in the market.

Over time, we try to deliver superior returns as compared to a bank deposit or a typical bond fund in the market. We don’t merely aim to be content with good returns but strive to stay superior at a risk-adjusted level.



Disclaimer: Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and NAVs of the units may go up or down, based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. IndiaFirst Life Insurance Company Limited is only name of the Insurance Company and does not in any way indicate the quality of the contract, its future prospects, or returns. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Past performance may or may not be sustained in future and is not a guarantee of future performance. Some of the contents of this document may contain statements / estimates / expectations / predictions, which may be 'forward looking'. The actual outcomes could differ materially from those expressed /implied in this document.These statements, do not intend to provide personal recommendation to any specific individual or any investment needs of an individual. The recommendations / statements / estimates / expectations / predictions are of general in nature and may not take into account the specific investment needs or risk appetite or financial situations of individual policyholder / clients. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Tax benefits are subject to changes in the tax laws.

Meet our Investment team

AK Sridhar

Chief Investment Officer

Sridhar is amongst the most experienced investment management professionals from India. His analytical approach to investing and deep market knowledge allows him to stay ahead of changing business dynamics. 

His 30 years’ of experience in the financial industry has made him intimately familiar with the worlds of Corporate Finance, Investment Management, Mutual Funds, Private Equity, Business Strategy & Corporate Restructuring and Insurance & Pension Fund industry. He actively tracks the macro-economic indicators & asset allocation shifts to deliver insight on financial markets at professional forums and academic circles in India, North America and South East Asia.

Sridhar is currently a member of the NSE – IISL Index Policy Committee and Capital Market Committee of the Indian Merchant Chambers (IMC). Additionally, he was a Director on the Board of Association of Mutual Funds in India (AMFI) for over 3 consecutive years.

Previously, Sridhar was the Executive Director and Chief Investment Officer (CIO) of UTI Asset Management Company Ltd managing AUM of USD 10 Billion. Later, he was elevated as the Chief Executive Officer of UTI International Ltd in Singapore, managing multi class, multi country assets for international institutional investors.

Presently, he is the Head of Investment Management, ALM functions at IndiaFirst Life Insurance.

Sridhar is a chartered accountant and also holds a Bachelor of Science degree in Physics.

Sridhar is married to Padma and they have two daughters Manasvi and Esha. He is a voracious reader, loves music and travelling.

Viraj M Nadkarni

Fund Manager-Equity

Viraj is a Company Secretary, MBA (Finance) from Symbiosis, Pune, and he also holds a Master’s degree in commerce from Pune University. He has more than 10 years of experience in the financial sector, mainly in equities. He particularly excels in analytics and understands equity market dynamics. Prior to this stint, he was with Angel Broking, Fortune Financials as a Senior Research Analyst. There he handled fundamental research on the institutional front and was involved in tracking multiple sectors. Here,

Viraj is the Fund Manager for Equity.

Sandeep Shirsat

Fund Manager - Fixed Income

Sandeep is a BCom graduate and qualified Cost accountant (ICWAI). He has worked in the fields of mutual funds, banking, PMS as well as insurance for over 22 years. In the past, he has worked with Multi-Act Equity Research (PMS), Matrix AMC, HSBC (Institutional Fund Services), and UTI AMC Pvt Ltd (UTI MF) . He has valuable experience in Fund management - debt and balanced Funds, Treasury Management, Fund accounting, Investment Operations, Mutual Fund compliance and IT projects relating to Investment Functions as domain expert.

Today, he is a part of our company as a Fund Manager for Fixed Income.

Poonam Tandon

Head of Fixed Income cum Senior Fund Manager

Poonam holds a PGDBM from XLRI Jamshedpur and PhD (in Financial Management) from NMIMS. She has a work experience of over 22 years in the financial services sector. This also includes an aggregate work experience of 19 years with a special focus on treasury. Prior to becoming the Head of Fixed Income as well as a Senior Fund Manager; she worked at Industrial Development Bank of India (IDBI) as Treasury, Securities Trading Corporation of India (STCI) as Chief Dealer, and Metlife Insurance as a Fund Manager for the Fixed Income portfolio.

This section will tell you more about the kind of funds that we invest your money in. Each fund has a different type of risk and return associated with it.

Read through this, it will help you understand and pick a Fund that suits your risk appetite best. As an existing customer, you may choose to shift from one Fund to another to optimise your returns. Always remember, take into account the market condition and changes in your risk profile before making these decisions.

Our way of valuing equity shares is as prescribed by Insurance and Regulatory Development Authority of India (IRDAI) through its circular number IRDA/F&I/INV/CIR/213/10/2013 dated October 30, 2013. It has mandated insurers to select either NSE or BSE as the primary and secondary exchange for valuation of its equity shares.

We have selected NSE as the primary and BSE as the secondary exchange. Accordingly, the equity shares held by us are valued at the closing price of NSE. In case a security is not listed or traded on NSE, we use the closing price of BSE.

Click on any of the links below to read more on different types of Funds we offer and why:

 

  • Life Unit Linked Funds
    Debt Fund SFIN No: ULIF003161109DEBTFUND00143

    To generate a good level of income and prospects for capital growth through diversified investment in corporate debt instruments, government securities and money market investments.

     

    0-00%

    Equity Composition
    Equity Fund SFIN No: ULIF001161109EQUITYFUND143

    To provide high growth opportunities with an objective of long-term capital appreciation through investments primarily in equity and equity-related instruments.

    80-100%

    Equity Composition
    Balanced Fund SFIN No: ULIF005161109BALANCEDFN143

    To provide higher growth with reasonable security, by investing primarily in equity instruments and moderate allocation in debt securities/bonds.

    50-70%

    Equity Composition
    Debt 1 Fund SFIN No: ULIF010010910DEBTO1FUND143

    To generate a good level of income and prospects for capital growth through diversified investments in corporate debt instruments, government securities and money market investments.

    0-00%

    Equity Composition
    Value Fund SFIN No: ULIF013010910VALUEFUND0143

    To provide high growth opportunities with an objective of long-term capital appreciation through investments primarily in equity and equity-related instruments.

    70-100%

    Equity Composition
    Index Tracker Fund SFIN No: ULIF012010910INDTRAFUND143

    To provide high growth opportunities with an objective of long-term capital appreciation through investments primarily in equity and equity-related instruments.

    90-100%

    Equity Composition
    Equity 1 Fund SFIN No: ULIF009010910EQUTY1FUND143

    To provide high growth opportunities with an objective of long-term capital appreciation through investments primarily in equity and equity-related instruments.

    80-100%

    Equity Composition
    Dynamic Asset Allocation Fund SFIN No: ULIF012010910INDTRAFUND143

    To provide long-term capital appreciation with relatively lower volatility by dynamically adjusting the capital allocation between equity and fixed income instruments.

    20-80%

    Equity Composition
    Balanced 1 Fund SFIN No: ULIF011010910BALAN1FUND143

    To provide higher growth with reasonable security, by investing primarily in equity instruments and moderate allocation in debt securities/bonds.

    50-70%

    Equity Composition
    Equity Elite Opportunities Fund

    To provide growth opportunities with an objective of long term capital appreciation through investments primarily in equity and equity related instruments and an active management of asset allocation between Equity and Money Market instruments.

    60%-100%

    Equity Composition
  • Pension Linked Funds
    Debt Fund - Pension SFIN No: ULIF004161109DEBFUNDPEN143

    To generate a good level of income and prospects for capital growth through diversified investment in corporate debt instruments, government securities and money market investments.

    0-00%

    Equity Composition
    Equity Fund - Pension SFIN No: ULIF002161109EQUFUNDPEN143

    To provide high growth opportunities with an objective of long-term capital appreciation through investments primarily in equity and equity-related instruments.

    80-100%

    Equity Composition
    Balanced Fund - Pension SFIN No: ULIF006161109BALFUNDPEN143

    To provide higher growth with reasonable security, by investing primarily in equity instruments and moderate allocation in debt securities/bonds.

    50-70%

    Equity Composition
    Liquid Fund - Pension SFIN No: ULIF008161109LIQFUNDPEN143

    To provide capital protection with growth at short term interest rates while providing a high level of liquidity.

    0-00%

    Equity Composition

Disclaimer: Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and NAVs of the units may go up or down, based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. IndiaFirst Life Insurance Company Limited is only name of the Insurance Company and does not in any way indicate the quality of the contract, its future prospects, or returns. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Past performance may or may not be sustained in future and is not a guarantee of future performance. Some of the contents of this document may contain statements / estimates / expectations / predictions, which may be 'forward looking'. The actual outcomes could differ materially from those expressed /implied in this document.These statements, do not intend to provide personal recommendation to any specific individual or any investment needs of an individual. The recommendations / statements / estimates / expectations / predictions are of general in nature and may not take into account the specific investment needs or risk appetite or financial situations of individual policyholder / clients. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Tax benefits are subject to changes in the tax laws.