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Reliance Banking Exchange Traded Fund

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Reliance Banking Exchange Traded Fund Powered By Docstoc
					                                  
Reliance Capital Asset Management Ltd. India’s largest fund house has been adjudged

           Winner for the Best Mutual Fund House by Outlook Money Awards 2010

     Fund House of the Year by ICRA Mutual Fund Awards 2011 in the Debt Category

        Runner Up for the Best Equity Fund House by Outlook Money Awards 2010




                                Reliance Banking Exchange Traded Fund
                                      An Open ended, exchange listed, index linked Scheme

                                                NSE/BSE Code: RELBANK




                                                                       Index

 Positioning of the Fund………………………………………………………………………...

 Investment Philosophy…………………………………………………………………………

 Benefits of Investing in Reliance Banking ETF.…………………………………………...

 Performance History……………………………………………………………………………

 Sector View & Outlook…………………………………………………………………………

 How to invest……………………………………………………………………………………

 Portfolio & Scheme Features…………………………………………………………………


                                     PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS

 Reliance Capital Asset Management Limited has been adjudged as “Best Mutual Fund House" and Runner up as
 “Best Equity Fund House” by Outlook Money Awards 2010 under the category “Best Wealth Creator Award. The
 award has been granted for a three year period ended June 30, 2010. 12 AMCs were considered for both the awards.
 India's largest Fund House in terms of AAUM as on 31st December,2010. Source: www.amfiindia.com. Reliance
 Mutual Fund has been judged Fund House of the Year by ICRA Mutual Fund Awards 2011 in the Debt Category. This
 award will be in vogue till the announcement of the next award in the same category or for a period of one year,
 whichever is earlier. Total 7 fund houses were considered as the award universe.



 .


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Positioning of the Fund

Reliance Banking Exchange Traded Fund is a passively managed exchange traded fund which
endeavors to track and provide similar returns to its benchmark-CNX Bank Index

Investment Philosophy

A passively managed open ended exchange traded fund which intends to provide an exposure
to the Indian Banking sector by investing in 12 banking stocks of CNX Bank Index, thereby
endeavoring provide similar returns as CNX Bank Index. However, the performance of Scheme may
differ from that of the underlying index due to tracking error.

          Open-ended exchange traded fund – easy entry & exit through the stock exchange (NSE/BSE)

          Each unit is priced at 1/10th of CNX Bank Index

          Portfolio focused on providing returns that closely correspond to the returns provided by CNX

          Bank Index.

          The units of Reliance Banking ETF are available in dematerialized form.

          A blend of a share and a mutual fund unit.


Benefits of Investing in Reliance Banking ETF


          Economical: The investor can buy the entire basket of CNX Bank Index comprising of 12 stocks

          with a minimum investment of one unit of Reliance Banking ETF on National Stock Exchange of

          India Ltd (NSE)/ Bombay Stock Exchange Ltd ( BSE), thereby providing instant diversification

          Instant Diversification: Reliance Banking ETF one unit is equivalent to key banking stocks

          included in the CNX Bank Index thereby providing the investor with an instant diversification

          Transparency and Flexibility: The units of Reliance Banking ETF can be easily bought and sold

          on NSE/BSE at the real time prices as against the end of the day price. It enables to limit orders

          as well as permits intraday transactions.

          Low cost: Reliance Banking ETF charges an expense of just 0.35% p.a. ( As on 31.01.2011)

    Note: For current expense ratio kindly refer our website i.e. reliancemutual.com.




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Performance History
Performance of Scheme
                                                     NAV Performance as on 28/02/2011
                                                          Absolute
                                                          Returns
                                                             (%)          Compounded Annualized Returns (%)
                                                               6 months            1 Year           3 Years          5 Years          Since Inception
    Reliance Banking Exchange Traded Fund                        -2.95             20.00              N.A              N.A                 28.17
    CNX Bank Index                                                -2.72            19.52               N.A              N.A                   27.06

Past Performance may or may not be sustained in future. Returns less than one year are Absolute Returns and one
year and more is Compounded Annualized. Calculations assume that all payouts during the period have been reinvested
                                                                          th
in the units of the scheme at the then prevailing NAV. (Inception Date: 24 June, 2008)


Sector View & Outlook

Overview:
Over the last 3 years the strength of the Indian banking system has come to the fore. Globally, banking
system is trending more towards simple banking, government governance and reasonable leverage; all
these traits have been present and strengthened in the Indian Banking system over the last decade. As a
result, the Indian banking system remained unscathed out of the global turmoil.

However, we were not entirely insulated from the global turmoil. There was a liquidity crunch witnessed
in India as well, which made availability of capital, both debt and equity, scarce for Corporate India. Like
in other geographies, this was responded effectively by slew of monetary easing and fiscal easing
measures, which has effectively contained the crisis and helped in restoring business and consumer
confidence, albeit at the risk of rising fiscal deficit and inflation. Post the aforesaid measures, given India
being a consumption driven story, the economy rebounded far more and far faster than the developed
economies. The growth in automobile and commercial vehicle sales numbers, consumer durable sale
numbers, recovery in real estate market, etc are some of the indicators that bear testimony to the above
fact.

Given our strong foundation of the economic recovery, India was one of the first few countries that started
reversing the easy monetary stance to curb rising inflation. This has set the tone for gradual rise in
interest rates. Further, given the stable and able government, there is a stark focus on reducing fiscal
deficit going forward. Also, the government is now focusing on Infrastructure investments laying the
foundation for the next growth phase in India. All this means the following for the economy and the
banking system:

      Reducing fiscal deficit – this augurs well for the banking system and for the economy as the bond
      yields would ease benefiting the banks.
      Monetary tightening – this curbs rising inflation and benefits banks as they are able to generate
      higher margins in a rising interest rate environment due to lag in deposit pricing.
      Infrastructure development – this would ensure that credit growth in the system will remain robust
      over the next decade.
      Consumption story – this would continue to grow parallel to the other growth engines of the economy,
      providing impetus to the credit growth.



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A peculiar feature of the Indian banking system is that it is by far the largest funding source for
Infrastructure & other capital expenditure by Corporate India and government deficit financing, which
makes banking sector very crucial enabler of economy growth. Thus, financial services remain one of the
fore front sectors to benefit out of the next big growth phase of India.

Outlook
Going forward we expect the following to happen over a longer term:

     GDP to grow at a healthy pace of over 7.5%, which would make India as one of the fastest growing
     economies in the world.
     Credit growth to remain robust at ~18-20% over the next few years, at the back of infrastructure
     spending and consumption demand.
     Implementation of base rate would ensure less volatility in Net Interest Margins and consequently
     profitability of banks.
     Given the economic recovery, pressure on asset quality would ease and asset recovery cycle would
     support banks profitability.

All of the above augurs well for the Indian banking system which would make the sector a preferred play
on markets over the longer term.

In the near term there are few headwinds facing the sector which has increased the volatility in stock
performance, viz:

           Flattening of the yield curve (to some extent due to tight liquidity),
           Pressure on deposit growth pushing up deposit rate faster than envisaged, consequently putting
           downward pressure on margins, and
           Negative publicity on the entire sector due to the recent frauds un-surfaced.

However, these headwinds appear to be temporary and thus offer progressive investment opportunity in
the sector from a long term investment horizon.

Common Source: RBI, CMIE, Bloomberg


How to invest
The units of the fund are currently available on NSE and BSE. An investor can directly buy and sell the
units of scheme through the broker associated with NSE/BSE and he would receive the units in his
Demat account on a T+2 rolling settlement or large investors and authorized participants can create and
redeem units from the AMC in creation unit size of 10,000 units or cash component if any.

    NSE Code/BSE Scrip Id                 RELBANK

    BSE Scrip                             590105

    Pricing (per unit)                    One unit= Approx 1/10 of CNX Bank Index

    Minimum Investment                          • On the Exchange: One unit

                                                •     Through the AMC( for Large Investors and Authorised Participants
                                                      in creation unit size of 10,000 units and cash component , if any.


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Portfolio & Scheme Features As on 28th February, 2011

    Asset Allocation as on 28th February, 2011
     Equities                                                                       99.25%
     Cash and Other Receivables                                                     0.75%


                                     Portfolio of RELIANCE BANKING EXCHANGE TRADED FUND
                                                          As on 28/02/2011
     Holding                                                                                                                    Weightage(%)
     Equities
     ICICI Bank Ltd.                                                                                                                         30.96
     HDFC Bank Ltd.                                                                                                                          19.87
     State Bank Of India                                                                                                                     18.68
     Axis Bank Limited                                                                                                                        8.77
     Bank Of Baroda                                                                                                                           4.10
     Kotak Mahindra Bank Ltd.                                                                                                                 4.08
     Punjab National Bank                                                                                                                     3.96
     Bank Of India                                                                                                                            2.23
     Union Bank of India                                                                                                                      1.96
     Canara Bank                                                                                                                              1.85
     IDBI Bank Ltd                                                                                                                            1.70
     Oriental Bank of Commerce                                                                                                                1.09
     Sub Total of Equities                                                                                                                   99.25
     Cash & Other Receivables                                                                                                                 0.75
     Grand Total                                                                                                                            100.00
     Indicates Top Ten Holdings


    Scheme Features
                                            The investment objective of Reliance Banking Exchange Traded Fund
                                            (RBETF) is to provide returns that, before expenses, closely correspond
                                            to the total returns of the securities as represented by the CNX Bank
    Investment Objective                    Index. However, the performance of Scheme may differ from that of the
                                            underlying index due to tracking error.
                                            There can be no assurance or guarantee that the investment objective of
                                            the scheme will be achieved.
    Inception Date                          June 24, 2008
                                            On the Exchange: Any investor eligible to trade on the exchange can
                                            buy minimum one unit of Reliance Banking ETF which is approximately
                                            equal to 1/10 of CNX Bank Index on NSE/BSE
    Minimum Investment
                                            Through the AMC: Purchases directly from the Mutual Fund can be
                                            made by Authorized Participants and Large Investors in creation unit size
                                            of 10,000 units and cash component if any.

                                            Entry Load* :Nil
                                            *In terms of SEBI circular no. SEBI/IMD/CIR No.4/ 168230/09 dated June 30, 2009, no
    Load Structure                          entry load will be charged by the Scheme to the investor effective August 1, 2009. Upfront
                                            commission shall be paid directly by the investor to the AMFI registered Distributors based
                                            on the investors' assessment of various factors including the service rendered by the
                                            distributor

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                                           Exit Load: Nil

    Benchmark
                                           CNX Bank Index

    Fund Manager                           Krishan Daga




Disclaimers

The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on
any course of action to be followed by the reader. This information is meant for general reading purposes only and is
not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and
projected) industry and market data and other information was obtained by RCAM from independent, third-party
sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently
verified any of such data or other information, or the reasonableness of the assumptions upon which such data and
other information was based, and there can be no assurance as to the accuracy of such data and other information.
Further, many of the statements and assertions contained in these materials reflect the belief of RCAM, which belief
may be based in whole or in part on such data and other information.

The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affiliates or
representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability
of such information. Whilst no action has been solicited based upon the information provided herein, due care has
been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not
intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this
information should rely on information/data arising out of their own investigations. Readers are advised to seek
independent professional advice, verify the contents and arrive at an informed investment decision before making any
investments.

None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or
representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary
damages, including lost profits arising in any way from the information contained in this material.

The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund
managers, affiliates, representatives including persons involved in the preparation or issuance of this material may
from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specific
economic sectors mentioned herein.

Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act,
1882. Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Company Limited. Investment Manager: Reliance
Capital Asset Management Limited (Registered Office of Trustee & Investment Manager: “Reliance House” Nr. Mardia Plaza, Off.
C.G. Road, Ahmedabad 380 006). The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies
Act 1956. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial
contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus.

Reliance Banking Exchange Traded Fund (Open-ended, exchange listed, index linked Scheme ):The investment objective of
Reliance Banking Exchange Traded Fund (RBETF) is to provide returns that, before expenses, closely correspond to the total
returns of the securities as represented by the CNX Bank Index. However, the performance of Scheme may differ from that of the
underlying index due to tracking error.

Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee
that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units
issued under the Scheme can go up or down depending on the factors and forces affecting the capital
markets.. Reliance Banking Exchange Traded Fund is only the name of the Scheme and does not in any manner indicate
either the quality of the Scheme, its future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not
indicative of the future performance of the Scheme. The Mutual Fund is not guaranteeing or assuring any dividend. The Mutual
Fund is also not assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend

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distributions are subject to the availability of the distributable surplus in the Scheme. For details of scheme features apart from those
mentioned above and scheme specific risk factors, please refer to the provisions of the Scheme Information Document. Scheme
Information Document and KIM cum application form is available at all the DISCs/ Distributors of RMF/www.reliancemutual.com.
Please read the Scheme Information Document & Statement of Additional Information carefully before investing. It is to be
distinctively understood that the permission given by the NSE should not in any way be deemed or construed that the Scheme
Information Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the
contents of Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the
full text of Disclaimer Clause of NSE.

    ICRA Mutual Fund Awards

    Reliance Mutual Fund has been judged Fund House of the Year by ICRA Mutual Fund Awards 2011 in the Debt
    Category. The rank indicates top overall performance within the eligible fund houses. To qualify for the award a fund
    house needs to have at least one ranked scheme in each of the four Debt categories defined by ICRA. In total 7
    fund houses were considered as the award universe. The scoring aims at assessing the number of superior
    performing schemes managed by the fund house over the current one-year period. The assets under management
    are also considered while arriving at the fund house of the year. The ranking methodology did not take into account
    loads imposed by the Fund. The rank is neither a certificate of statutory compliance nor any guarantee on the future
    performance of Reliance Mutual Fund. This award will be in vogue till the announcement of the next award in the
    same category or for a period of one year, whichever is earlier Past performance is no guarantee of future
    results. Ranking Source & Publisher: ICRA Online Limited

Outlook Money Awards 2010:

    Reliance Capital Asset Management Limited has been adjudged as Best Mutual Fund House- Winner & Best Equity
    Fund House - Runner up in the Category: Best Wealth Creator Awards for a three year period ended June 30, 2010.
    12 AMCs were considered for both the awards. This list was arrived at after applying the filters as approved by the
    jury for the Outlook Money Awards. (1) Criterions for Short-Listing of Fund Houses/AMCs are (i) AUM of Rs
    15,000 crore as on 30 June 2010 (ii) At least 40 per cent of the equity funds (or debt funds if the funds chose to
    focus only on debt funds) must have conformed to the tenure and minimum investment eligibility criteria of Outlook
    Money risk-return rankings. Alternately, the fund house must have been ranked the previous year (iii) The Mutual
    Fund House was to have at least one scheme each in the large- and mid- cap categories for it to be considered in
    the Best Mutual Fund and Best Equity Fund House categories (iv) Minimum track record of three years for all
    schemes (v) Returns were adjusted for risk (vi) Sector schemes were not considered (vii) Outlook Money mutual
    fund rankings were used for this analysis. (2) Evaluation Criterions: The questionnaires sent to the fund
    houses/AMCs were based on an evaluation process that considered the parameters (i) Quantitative: The fund
    house/AMC performed vis-à-vis the category average and the number of schemes in the top quartile are considered
    (ii) Qualitative: The facilities that the fund house/AMC offers and the satisfaction level of investors. Only fund
    houses/AMCs that reverted with filled questionnaires competed in these awards. If any question remained
    unanswered, the fund house/AMC was given the lowest mark against that evaluation parameter. Source:
    www.outlookmoney.com. Past performance is no guarantee of future results.




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