FUND UPDATE

[Pages:61]SEPTEMBER 2019

FUND UPDATE MarketOutlook FundPerformance

Contents Individual Funds

Group Funds

YOUR INVESTMENT PERFORMANCE

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

CONTENTS

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

INDIVIDUAL FUNDS

MARKET OUTLOOK

FUND PERFORMANCE OF ULIP FUNDS

PRODUCT - FUND MATRIX

CLASSIC OPPORTUNITIES FUND (ULIF-033-16/12/09-CLAOPPFND-107)

FRONTLINE EQUITY FUND (ULIF-034-17/12/09-FRLEQUFND-107)

DYNAMIC FLOOR FUND II (ULIF-035-17/12/09-DYFLRFND2-107)

BALANCED FUND (ULIF-037-21/12/09-BALKFND-107)

KOTAK OPPORTUNITIES FUND (ULIF-029-02/10/08-OPPFND-107)

KOTAK AGGRESSIVE GROWTH FUND (ULIF-018-13/09/04-AGRGWTFND-107)

GUARANTEE FUND (ULIF-048-05/02/10-GRTFND-107)

MONEY MARKET FUND (ULIF-041-05/01/10-MNMKKFND-107)

KOTAK DYNAMIC GROWTH FUND (ULIF-012-27/06/03-DYGWTFND-107)

DYNAMIC FLOOR FUND (ULIF-028-14/11/06-DYFLRFND-107)

KOTAK DYNAMIC BALANCED FUND (ULIF-009-27/06/03-DYBALFND-107)

KOTAK DYNAMIC BOND FUND (ULIF-015-15/04/04-DYBNDFND-107)

KOTAK DYNAMIC GILT FUND (ULIF-006-27/06/03-DYGLTFND-107)

KOTAK DYNAMIC FLOATING RATE FUND (ULIF-020-07/12/04-DYFLTRFND-107)

PEAK GUARANTEE FUND I (ULIF-049-14/02/10-PKGRTFND1-107)

Click on the Fund Name for details

2

KOTAK GUARANTEED GROWTH FUND (ULIF-013-27/06/03-GRTGWTFND-107)

7

KOTAK GUARANTEED BALANCED FUND (ULIF-010-27/06/03-GRTBALFND-107)

10

PENSION CLASSIC OPPORTUNITIES FUND (ULIF-042-07/01/10-PNCLAOPFND-107)

12

KOTAK PENSION OPPORTUNITIES FUND (ULIF-032-17/07/09-PNOPPFND-107)

13

PENSION FRONTLINE EQUITY FUND (ULIF-044-11/01/10-PNFRLEQFND-107)

14

PENSION GUARANTEE FUND (ULIF-038-21/12/09-PNGRTFND-107)

15

KOTAK PENSION GROWTH FUND (ULIF-030-07/01/09-PNGWTFND-107)

16

KOTAK PENSION FLOOR FUND (ULIF-031-13/07/09-PNFLRFND-107)

17

PENSION FLOOR FUND II (ULIF-043-08/01/10-PNFLRKFND2-107)

18

KOTAK PENSION BALANCED FUND (ULIF-011-27/06/03-PNBALFND-107 )

19

PENSION BALANCED FUND II (ULIF-046-24/01/10-PNBALFND2-107)

20

KOTAK PENSION BOND FUND (ULIF-017-15/04/04-PNBNDFND-107)

21

KOTAK PENSION GILT FUND (ULIF-008-27/06/03-PNGLTFND-107)

22

KOTAK PENSION FLOATING RATE FUND (ULIF-022-07/12/04-PNFLTRFND-107)

23

PENSION MONEY MARKET FUND II (ULIF-039-28/12/09-PNMNMKFND-107)

24

KOTAK ADVANTAGE MULTIPLIER FUND II (ULIF-026-21/04/06-ADVMULFND2-107)

25

DISCONTINUED POLICY FUND (ULIF-050-23/03/11-DISPOLFND-107)

26

GROUP FUNDS

Click on the Fund Name for details

KOTAK GROUP DYNAMIC FLOOR FUND (ULGF-015-07/01/10-DYFLRFND-107)

KOTAK GROUP BALANCED FUND (ULGF-003-27/06/03-BALFND-107)

KOTAK GROUP BOND FUND (ULGF-004-15/04/04-BNDFND-107)

KOTAK GROUP GILT FUND (ULGF-002-27/06/03-GLTFND-107)

KOTAK GROUP FLOATING RATE FUND (ULGF-005-07/12/04-FLTRFND-107)

KOTAK GROUP MONEY MARKET FUND (ULGF-001-27/06/03-MNMKFND-107)

45

KOTAK GROUP SECURE CAPITAL FUND (ULGF-016-12/04/11-SECCAPFND-107)

46

KOTAK GROUP SHORT TERM BOND FUND (ULGF-018-18/12/13-SHTRMBND-107)

47

KOTAK GROUP PRUDENT FUND (ULGF-019-04/07/17-KGPFFND-107)

48

ANNEXURE

49

DISCLAIMER

50

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

51 52 53 549 60

01

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Month Gone By ? Markets Month Gone By ? Markets (period ended August 30,2019)

30.0% 20.0% 10.0%

0.0% -10.0% -20.0% -30.0% -40.0%

Market Indicators (Aug 19)

6.8%

6.4%

9.4% 3.4%

-0.9%

-10.1%

1mth 1yr 5yr (CAGR)

Indian Markets (Nifty -0.9%) corrected further in August'19; the decline was more pronounced in Small/Mid-Caps. The NSE Midcap and Small Cap index underperformed Nifty 50 by 1.3% and 0.4% respectively. Global equities witnessed a very volatile month on the back of significant negative headlines on US-China trade conflict. On the domestic front, pessimism prevailed with most sectors declining over last month. Withdrawal of tax surcharge on FPIs and RBI's surplus transfer of INR 1.7tn barely helped reverse the trend.

10 year benchmark treasury yields have increased 19bps (-81bps ytd) as slowing growth concerns have raised expectations of a fiscal stimulus. Yields are still close to 2 year lows as inflation remains below RBI's target of 4% and subsequenlty RBI's dovish policy stance is holding up hopes of more policy rate cuts. In its last MPC meeting on 6th August; RBI cut policy rates by an unconventional 35bps cut. This was the 4th consecutive rate cut by RBI. In this rate cut cycle, policy rates have been reduced by 110bps. The global yields have also declined meaningfully with US 10Y yields at 1.50% (-52bps m/m; -119bps ytd). INR was down -3.7%m/m in August and ended the month at 71.41/$. YTD, INR has depreciated by -2.3%. Crude prices declined 7.3%m/m in August and ended the month at USD60.4/bbl.

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

02

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Flows Foreign Institutional Investors (FIIs) were sellers in August as well to the tune of USD2.5bn reducing the YTD inflows to USD 7.0 bn. However, they recorded net inflows in debt markets at USD 1.6bn in August (3rd consecutive month of USD 1bn inflow). YTD, FIIs were net buyers at USD 4.3bn in debt markets.

On the other hand, DIIs remained buyers to the tune of USD 2.7bn during August taking their YTD inflows to USD 4.6bn. Mutual funds bought USD 2.4bn of equities

in August. Other DIIs bought USD 314mn in August. YTD, mutual funds are net equity buyers at USD 5.7bn while other DIIs are net equity sellers at USD 1.1bn.

30.0

29.3

25.0

20.0

15.0

10.0

5.0

-

-5.0

-10.0

-15.0

26.2 -13.0

15.9 7.0 4.6 4.3

-4.4 -6.9

CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY 18 YTD CY19

Economy

Jul-19

CPI

3.2%

Jun-19 3.2%

May-19 3.1%

Jun-19

May-19

Apr-19

IIP

2.0%

3.1%

3.4%

Net FII Flows (USD b) Net DII Flows (USD b) Net FII Debt (USD b)

1QFY20 real GDP growth fell to 6-year low of 5% yoy led by a sharp decline in private consumption. Nominal GDP growth at 8% YoY touched new post-GFC lows. Index for Industrial Production for June came in at 2.0% as against growth of 4% in May led by sequential slowdown despite favorable base effect. From the use-based classification

side, sequential contraction was visible across all sectors. On a yoy basis capital goods, consumer durables, and infrastructure and construction sector production growth led the slowdown, contracting by 6.5%,5.5%, and 1.8%, respectively. However, primary goods, Intemediate goods and consumer non durables grew 0.5%, 12.4% and 7.8% respectively.

Consumer Price Index (CPI) for July fell slightly to 3.15% with core inflation accelerating to 4.3% and food inflation declining to 2.3%. Headline inflation remains well below the RBI's 4% target. WPI inflation for July at 1.1%oya (vs 2.0% in June) came below expectations of 1.8% and was the lowest print in the last two years.

Trade deficit for July declined to USD 13.4bn (vs USD15.3bn in June). Exports were up 2.2% while Imports were down -10.4%. Gold imports for July declined -42% oya (vs +13% y/y gain last month). Imports ex Oil and Gold declined -2% y/y (vs -9% decline last month), the 9th consecutive month of YoY decline.

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

03

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Equity Market Outlook

Deal activity gained momentum in August with 10 deals worth USD 1.5bn with key deals being Standard Life's stake sale in HDFC Life (USD450mn), Sterling & Wilson Solar's listing (USD402mn) and HDFC's stake sale in Gruh Finance (USD232mn).

Events impacting markets ? Policy Measures: In response to the economic slowdown, FM Smt. Nirmala Sitharaman announced a host of measures to address interest rate transmission, improve liquidity and credit flow and the auto slowdown that included o The reversal of the surcharge on capital gains for both domestic and foreign investors which was initially announced in the Union Budget on 5 July o Upfront release of Rs700bn of PSU bank recap o NHB refinancing to HFCs increased by Rs200bn o Quicker GST refunds to MSMEs o New registration charges on autos deferred to Jun'20 o Additional depreciation of 15% on vehicles acquired till Mar'20 ? PSU Bank Mergers: To aid the ailing Public Sector Banks, Government announced its plan to merge 10 PSU Banks into 4 entities. Merged entities to have better lending capacity. o PNB, OBC and United Bank will be merged to form India's second-largest lender o Canara Bank & Syndicate Bank will be merged o Union Bank of India will be merged with Andhra Bank and Corporation Bank o Indian Bank will merge with Allahabad Bank

? FDI Policy: Government relaxed FDI policy in several sectors: single brand retail (certain relaxations in the 30% local sourcing requirement), coal mining (100% FDI allowed in commercial coal mining), contract manufacturing (100% FDI allowed) and digital media (up to 26% FDI allowed in digital news and current affairs media). The government also approved Rs62.7bn subsidy for sugar exports.

? Monsoon: Cumulative rainfall is now at its LPA on an aggregate basis as of end August. Out of 36 meteorological subdivisions, rainfall so far has been normal in 22 (~ 69% of the country), excessive in 7 (~ 17%) and deficient in 7 (~ 14%). Rainfall has significantly improved in the past 2 months as cumulative deficit was running at ~9% as of end-July and ~33% as of end-June. ? Trade War: At the start of the month, US imposed a 10% tariff on the remaining $300 billion of imports from China. Trade tensions intensified again on August 23, with China announcing additional tariffs on USD75bn of imported products from the US, and re-imposing tariffs on auto and auto parts imported from the US from December 15. Meanwhile, US announced an increase in tariffs from 25% to 30% for USD250bn of Chinese imports, and from 10% to 15% for certain products.

Nifty P/B

Peak

Min

Average

6.4

6

3.7

4

2.3

3.4

2

Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

Source: NSE

04

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Equities can react in the coming months based on following events

? There is increasing talk of the globe slowing down in the coming year. In that backdrop, there has been downward pressure on the US and global bond yields, which has essentially meant that money has started to look for more opportunities in the emerging markets. If the slowdown actually hits the world, country like India whose growth could also slow, will still offer better growth and could see meaningful inflows from emerging market funds, something that was witnessed in 2019 till now.

? Over the last couple of months, several macro variables have undergone a reset in India. These include lower crude oil prices and hence the currency trend, lower than expected inflation trajectory and G-Sec yields dropping from the peak. Corporate asset quality stress also appears to have peaked out and there are visible signs of large ticket asset resolutions under the Bankruptcy Code. All of this bodes well for India.

? Ongoing Trade War tussle between the United States and China can have repurcussions for the global trade and markets. Both the sides seem to be unrelenting in their stance as of now, However since the US has a massive trade deficit with China, it has found more absolute value of goods on which they have applied tariffs. If the issue escalates more, global GDP growth will also be impacted negatively

? Geopolitical tensions and lingering risks of large supply disruptions led by US sanctions on Iran adds upward risk bias to oil. However, the US also wants lower Oil prices and it remains to be seen if countries like Saudi Arabia can pump more oil to keep oil prices in check

? For earnings recovery, a recovery in overall capital formation cycle would be a key factor apart from growth in consumption. While the key driver for capex in the economy would continue to be public spend, the private capex cycle should also benefit from three years of low average lending rates, better corporate profitability, easier availability of credit from the banking system, higher equity raising from a buoyant market, more FDI into manufacturing and infrastructure and a renewed focus on housing. Public capex growth is likely to remain healthy with a focus on roads, rural development and affordable housing.

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

05

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Debt Market Outlook

9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0%

8.3%

7.5%

7.9%

6.5%

6.6%

Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19

Source: Bloomberg

10-Year India G-Sec Yield (%)

Bond market remained in the consolidation mode around 6.40% in the month after MPC cut rates aggressively by 35bps to 5.40%. MPC believed supporting growth at the current juncture should be given priority as inflation is expected to stay below 4%. Bond market reacted positively however the weakening INR kept the yields in consolidation mode.

The panel led by Bimal Jalan to identify the surplus capital submmited its report to RBI board, RBI board accepted the recommendation and declared dividend of Rs.1.24trn (of which 28k crore was interim dividend accounted in last fiscal year) and special one time dividend of Rs.52.6lac crore.

INR depreciated inline with weakness in chinese yuan, the currency traded at Rs.72/dollar from Rs.70. Weaker currency may arrest sharp drop in yields in line with policy easing.

GDP growth for Q1 fell sharply to 5% against market expectations of 5.8%. Weaker private consumption and investment demand were major drag on growth. FY 2020 growth are now expected to be closer to 6.25%. Weaker growth and inflation will support further easing of rates by MPC.

Bond yields will trade in the range of 6.10-6.60% in the near term pulled between easing policy rates and weaker revenue generation of central government.

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

06

FUND PERFORMANCE OF ULIP FUNDS

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Funds available with insurance plans launched on & post Sept. 1, 2010.

Returns As On 30th August 2019

Classic Opportunities Fund (AUM: ` 4,41,315.92

Lakhs)

Frontline Equity Fund

(AUM: ` 72,545.60

Lakhs)

Dynamic Floor Fund II (AUM:

` 62,162.34 Lakhs)

Balanced Fund (AUM: ` 15,571.76

Lakhs)

Guarantee Fund (AUM: ` 3,043.18

Lakhs)

Kotak Dynamic Bond

Fund (AUM: ` 1,05,851.19

Lakhs)

Kotak Dynamic Gilt Fund (AUM:

` 7,013.24 Lakhs)

1 month

0.7

0.0

0.3

0.2

n.a

0.4

0.1

3 months

-5.6

-6.9

-0.5

-2.7

-2.5

3.9

4.2

6 months

3.7

2.2

6.3

4.6

3.2

9.3

9.1

1 year

-5.8

-6.6

5.8

1.7

1.3

15.5

16.7

2 years

2.0

2.9

5.3

4.5

4.8

7.3

7.8

3 years

6.4

6.3

6.8

6.5

6.2

7.6

7.9

4 years

8.3

8.3

8.1

8.2

7.3

8.8

9.2

5 years

9.6

9.2

7.2

9.0

6.5

9.5

10.1

6 years

15.7

14.8

9.4

12.5

8.8

9.9

10.3

7 years

13.8

13.4

8.4

11.3

7.9

8.9

9.2

10 years

n.a

n.a

n.a

n.a

n.a

8.9

8.7

Inception

11.0

10.0

7.1

9.4

7.4

8.7

7.7

Kotak Dynamic Floating Rate Fund (AUM: ` 2,246.88

Lakhs)

0.6 2.1 4.3 8.8 5.9 6.3 6.7 7.2 7.8 8.1 7.6 7.4

Money Market Fund

(AUM: ` 44,930.48

Lakhs)

0.6 1.6 3.3 6.9 6.6 6.7 6.9 7.2 7.5 7.7 n.a 7.5

Discontinued Policy Fund

(AUM: ` 33,807.26

Lakhs)

0.5 1.5 3.1 6.3 6.1 6.2 6.4 6.7 7.0 7.3 n.a 7.5

Funds available with insurance plans launched Prior to Sept. 1, 2010.

Returns As On 30th August 2019

Kotak Opportunities Fund (AUM: ` 75,326.20 Lakhs)

Kotak Aggressive Growth Fund (AUM: ` 24,101.62

Lakhs)

Kotak Dynamic Growth Fund (AUM: ` 5,611.99 Lakhs)

Dynamic Floor Fund (AUM: ` 81,794.46 Lakhs)

Kotak Dynamic Balanced Fund (AUM: ` 1,824.58 Lakhs)

1 month

0.6

0.1

-0.1

0.2

0.2

3 months

-5.9

-7.0

-4.6

-0.7

-2.9

6 months

3.3

1.1

3.9

6.2

4.9

1 year

-6.8

-7.9

-1.7

5.7

1.8

2 years

1.1

2.5

3.8

5.0

4.6

3 years

5.6

5.7

6.4

6.5

6.5

4 years

7.5

7.7

8.2

8.0

8.2

5 years

8.8

8.5

9.0

7.1

9.1

6 years

15.0

14.3

13.5

9.1

12.6

7 years

13.1

13.0

12.3

8.0

11.4

10 years

11.5

10.5

10.1

7.1

9.8

Inception

15.4

14.7

13.6

9.0

12.6

Returns As On 30th August 2019

Peak Guarantee Fund I (AUM: ` 1,521.50 Lakhs)

Kotak Guaranteed Growth Fund (AUM:

` 59,814.34 Lakhs)

Kotak Guaranteed Balanced Fund

(AUM: ` 6,733.71 Lakhs)

Pension Classic Opportunities Fund

(AUM: ` 9,577.74 Lakhs)

Kotak Pension Opportunities Fund

(AUM: ` 1,374.85 Lakhs)

Pension Frontline Equity Fund (AUM:

` 2,001.08 Lakhs)

Pension Guarantee Fund (AUM: ` 9,150.49 Lakhs)

1 month

0.3

0.2

0.3

0.7

0.8

-0.2

n.a

3 months

1.3

-2.3

-1.3

-5.7

-5.7

-7.4

-2.5

6 months

2.5

5.2

5.8

3.7

3.6

2.0

3.1

1 year

4.0

1.9

4.6

-6.0

-6.5

-6.4

1.3

2 years

5.6

4.5

5.2

1.9

1.3

3.0

4.8

3 years

6.5

6.6

6.9

6.5

5.7

6.1

6.3

4 years

7.4

8.2

8.5

8.3

7.6

8.3

7.3

5 years

6.6

9.1

9.3

9.6

8.9

9.2

6.6

6 years

8.7

11.6

11.3

15.9

14.9

14.8

8.8

7 years

7.8

10.5

10.2

13.9

13.0

13.5

8.0

10 years

n.a

9.1

9.1

n.a

10.4

n.a

n.a

Inception

7.0

12.6

11.6

11.4

10.4

10.7

6.8

AS ON 30th AUGUST 2019 MONTHLY UPDATE SEPTEMBER 2019 | (based on last business day)

07

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