FUND UPDATE

[Pages:61]March 2019

FUND UPDATE

YOUR INVESTMENT PERFORMANCE

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

AK(UONLTNGAEFKX-0UG1R9RE-O04U/P07P/R1U7D-KEGNPT FFFUNNDD-107)

48

DANISCNELAXUIMRER

49

DISCLAIMER

50

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 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 53 594 60

01

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Month Gone By ? Markets Market Indicators (period ended February 28,2019)

Indices Performance

Equity Sensex Nifty Nifty Midcap 50 Nifty SmallCap 50

1 month

-1.1% -0.4% -1.7% -3.2%

1 yr

5yr (CAGR)

4.9% 2.9% -11.2% -34.8%

11.2% 11.4% 16.3% 9.2%

Bond Market

Crisil Composite Bond Index

0.0%

7.1%

9.0%

Commodities Gold(USD/oz)

-0.6%

-0.4%

-0.2%

Indices Performance

Bond Market 10 yr Gsec

Feb-19 7.4%

Jan-19 7.3%

1 month Change

0.1%

Currency USD/INR

70.7

71.1

0.5%

Commodities

Brent Crude(USD/bbl)

66.0

61.9

6.7%

Net Flows (USD Bn) FII (Equity) FII (Debt) DII (Equity)

Feb-19 2.3 -0.6 0.6

Jan-19 -0.5 -0.3 0.3

CY 19 2.2 -1.0 1.0

Indian equities (-0.4%) were flat for the month as they were impacted by a) reversal in Brent crude oil prices, up 23% in Jan-Feb 2019, post 36% drop in 4Q18, b) mixed earnings season with disproportionate losses in some large companies, c) negative sentiment on companies where promoters have significant pledged shares, d) Premature ending of Trump-Kim summit in Hanoi with the 2 leaders failing to strike a deal, e) heightened geopolitical tensions between India and Pakistan following the Feb 14 militant attack on CRPF in J&K with both India and Pakistan engaging in aerial action. Nifty Mid-cap 50 and Small cap 50 indicies underperformed Nifty by 1.4% and 2.8% respectively.

10 year benchmark yields were up 13bps in February to 7.4%. Bond yield spiked in last week of February post geo political tensions. Crude oil prices were up 6.7% during the month amid OPEC supply cuts and Venezuelan sanctions. INR appreciated 0.5% ended the month at 70.75/USD. This comes after a 1.85% decline in January.

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 2019 | (based on last business day)

02

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Flows 29.3

26.2

-12.2

-13.0

22.9

14.1 15.9 7.8

2.2 1.0 -1.0

-4.4 -6.9

CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY 18 YTD CY19

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

Foreign Institutional Investors (FIIs) recorded net inflows of USD2.3bn in Indian equities in the month of February which was the highest net inflow since Nov-17. YTD, FIIs recorded net inflows of USD 2.2bn DIIs remained net equity buyers at USD 0.6bn, the 23rd consecutive month of inflows in equities. YTD, DII inflows are at USD0.95 bn. Mutual funds recorded the 31st consecutive month of net buying at USD 1.0bn while other DIIs outflows are at USD 0.4bn. YTD, mutual funds are net equity buyers at USD 2.1bn while other DIIs are net equity sellers at USD 1.1bn. FIIs recorded net outflows in debt markets at USD0.6bn in February. YTD, FIIs remain net sellers at USD 1.0bn in debt markets.

Economy

Index for Industrial Production (IIP)

9.0% 8.0% 7.0%

7.5%

7.1%

7.1%

7.0% 6.6%

8.1%

6.0% 5.0%

4.8% 4.4%

4.3% 4.5%

4.0% 3.0%

3.2%

2.4%

2.0%

1.0%

0.5%

0.0%

7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

Inflation

CPI

WPI

Index for Industrial Production for December stayed subdued at 2.4%, despite improving significantly from December lows of 0.5% on account of contraction in mining segment and poor showing by manufacturing sector. Manufacturing sector recorded a low growth of 2.7%. In terms of industries, 13 out of 23 industry groups in manufacturing sector showed positive growth.

Consumer Price Index (CPI) inflation soft patch continued with January print declining further to 19-month low of 2.05% on the back of fall in fuel (2.2% vs 4.5%) and food (-1.3% vs 1.6%). Core inflation also moderated marginally to 5.4% to 5.7% while health inflation continued to

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 2019 | (based on last business day)

03

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

remain sticky and education inflation saw some moderation. WPI inflation softened to 2.8% in January from 3.8% in December. Trade deficit for January widened to USD14.7bn from the 10-month low of USD13.1bn in December due to fall in exports led by fall in petro products. Brent prices jumped up in December leading to an increase in oil imports to USD 11.2bn from USD10.7bn.

Equity Market Outlook

Deal activity picked up in February after weakness over last few months with 8 deals totaling ~USD2bn. Among the key ones were the IPO of Chalet Hotels (USD230mn) and OFS of Axis Bank (USD753mn).

Events impacting markets

? Indo-Pak tensions- Militant outfit JeM initiated terror attack on a convoy of CRPF jawans in Pulwama, Jammu & Kashmir on 14 February, killing 40 security personnel. As a countermeasure, IAF bombed JeM's Balakot camp on 26 February, following which Pakistan Air Force targeted Indian military installations on 27 February and downed an Indian jet in PoK leading to the capture of an IAF pilot. UN and leading nations urged de-escalation of tensions which was followed by Pakistan announcing the release of the captured pilot as a peace-keeping gesture.

? GST Council Meet- GST council cut rates on under-construction properties to 5% (from 12%) and on affordable housing to 1% (from 8%) effective 1 April, 2019. In both cases, the builders will not be eligible to claim input tax credit in the new structure. The probable date for the next meeting is March 15.

? MSCI rebalancing- On 28 February 2019, MSCI announced its decision on China A-shares' further weight increase consultation. MSCI will adopt all three proposals that were included in the consultation - Increase the inclusion factor for China A Large Cap from 5% to 20%, Introduce China A Mid Cap and add ChiNext stocks. The timeline was extended for the Large Cap weight increase from the initially suggested two steps (May 2019 and Aug 2019) to three steps (May 2019, Aug 2019 and Nov 2019). China A's weight in the MSCI China index will increase from the current 2.9% to 11.2%. China's weight in the MSCI EM Index will increase from 32.5% to 33.4%. China A may attract 14.2bn USD passive inflow based on some reports. In order to fund the trade, Korea, India and Taiwan will be the top three countries to suffer passive outflows of USD3.6bn/USD3.2bn/USD2.8bn respectively. As a result, India's weight in MSCI EM could potentially reduce by 75bps (currently at 8.4%)

? PSB recap- Government sought parliamentary approval for PSU bank recapitalization for additional Rs. 410bn in order to pull some lenders out of PCA ambit. Capital solvency is expected to fund shortfall from market and should ensure banks to remain solvent.

Equities can react in the coming months based on following events

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 2019 | (based on last business day)

04

MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

? 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, appointment of the new RBI Governor, 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

? Corporate earnings growth trajectory would be key factor to determine the path of domestic markets. Markets are now looking forward to the Q3 reportcard from the companies. Given the deteriorating macro, earnings delivery will go a long way in sustaining multiples

? 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.

? Investors focus over next 3 months will be increasingly towards the outcome of national election likely to be held in April ? May 2019. Formation of stable government can be critical to attract more foreign money in the country

Nifty P/B

Peak

6.4

Min

Average

6

3.6 4

3.4

2.3

2

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

Source: NSE

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 2019 | (based on last business day)

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MARKET OUTLOOK

Market Outlook Fund Performance

Contents Individual Funds

Group Funds

Debt Market Outlook

RBI in its monetary policy meeting cut repo rate by 25 bps to 6.25% and changed its policy stance to `neutral' from `calibrated tightening'. RBI slashed its inflation forecast for a 2nd consecutive meeting for H1 FY20 to 3.2-3.4% from 3.8-4.2% and 3.9% in Q3 FY20, with risk broadly balanced (earlier risks were tilted on the upside). RBI also mentioned that food inflation was unexpectedly benign and moderation in fuel group was larger than anticipated. GDP growth for FY19-20 is projected at 7.4% with risk evenly balanced.

In the interim budget, government highlighted that fiscal deficit (FD) will climb to 3.4% of GDP for FY19 compared to earlier estimate of 3.3%. For FY20, fiscal deficit is pegged at 3.4% of GDP. The gross government borrowings for FY20 is expected at INR 7.0 tn., which was higher than the market expectations. Current account deficit is pegged at 2.5% of GDP for FY19.

Debt market was in a bearish mode during the month due to fiscal slippage in FY19 revised estimate and higher FD in FY20 too. Higher gross borrowing coupled with huge state government borrowings going forward pushed the yields higher during the month. Tensions in the India border escalated by the end of the month and this also aggrevated the bearish sentiments.

RBI announced OMO purchases of INR250 bn for first fortnight of March 2019, which would be some relief for a relatively supply heavy March.

As expected, RBI changed its stance to neutral citing benign inflation trajectory and moderating global growth. Low CPI prints and benign commodity prices would help RBI to cut rates in the future. The 10yr benchmark G-sec could trade in a range of 7.10-7.50% in the near term.

10.0%

9.0%

8.9%

8.0%

7.0% 6.7%

6.0% 6.0%

5.0%

4.0%

7.9% 7.4%

Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18

Source: Bloomberg

10-Year India G-Sec Yield (%)

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 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 28th February 2019

Classic Opportunities Fund (AUM: ` 3,80,944.41

Lakhs)

Frontline Equity Fund

(AUM: ` 67,098.33

Lakhs)

Dynamic Floor Fund II (AUM:

` 60,138.75 Lakhs)

Balanced Fund (AUM: ` 13,662.29

Lakhs)

Guarantee Fund (AUM: ` 3,085.59

Lakhs)

Kotak Dynamic Bond

Fund (AUM: ` 99,788.15

Lakhs)

Kotak Dynamic Gilt Fund (AUM:

` 5,425.76 Lakhs)

1 month

-0.8

-0.4

-0.3

-0.3

0.0

-0.2

0.0

3 months

-1.1

-0.6

1.1

0.6

0.2

2.1

2.3

6 months

-9.2

-8.6

-0.4

-2.7

-1.8

5.7

6.9

1 year

-3.2

0.0

4.7

3.5

4.7

8.3

9.5

2 years

6.8

8.0

6.2

6.9

7.4

5.6

6.4

3 years

15.5

15.4

10.5

11.8

9.7

7.9

8.5

4 years

6.1

6.6

5.2

6.5

5.1

6.9

7.3

5 years

14.9

14.3

8.9

11.9

8.8

9.0

9.7

6 years

13.9

13.7

7.6

11.1

7.6

7.8

8.0

7 years

13.2

12.8

7.7

10.8

7.7

8.3

8.5

10 years

n.a

n.a

n.a

n.a

n.a

8.4

7.8

Inception

11.2

10.3

6.8

9.4

7.5

8.3

7.4

Kotak Dynamic Floating Rate Fund (AUM: ` 2,549.54

Lakhs)

0.7 2.2 4.3 6.7 5.6 6.4 6.6 7.4 8.0 8.1 7.4 7.4

Money Market Fund

(AUM: ` 39,797.29

Lakhs)

0.6 1.8 3.5 6.8 6.5 6.8 7.1 7.4 7.6 7.9 n.a 7.5

Discontinued Policy Fund

(AUM: ` 24,872.39

Lakhs)

0.5 1.6 3.1 6.3 6.0 6.2 6.6 7.0 7.2 7.6 n.a 7.6

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

Returns As On 28th February 2019

Kotak Opportunities Fund (AUM: ` 79,051.30 Lakhs)

Kotak Aggressive Growth Fund (AUM: ` 25,173.05

Lakhs)

Kotak Dynamic Growth Fund (AUM: ` 5,680.09 Lakhs)

Dynamic Floor Fund (AUM: ` 92,655.27 Lakhs)

Kotak Dynamic Balanced Fund (AUM: ` 1,897.02 Lakhs)

1 month

-0.9

-0.2

-0.3

-0.3

-0.3

3 months

-1.3

-1.3

0.1

1.0

0.6

6 months

-9.8

-8.9

-5.5

-0.5

-2.9

1 year

-4.2

0.0

1.6

4.4

3.3

2 years

5.9

7.8

7.3

5.9

6.9

3 years

14.7

15.4

13.5

10.0

11.9

4 years

5.3

6.1

6.4

5.1

6.5

5 years

14.3

14.0

12.9

8.7

11.9

6 years

13.1

13.4

12.2

7.3

11.2

7 years

12.5

12.5

11.6

7.3

10.9

10 years

17.3

15.9

13.0

8.0

12.0

Inception

15.9

15.2

13.8

8.9

12.6

Returns As On 28th February 2019

1 month 3 months 6 months 1 year 2 years 3 years 4 years 5 years 6 years 7 years 10 years Inception

Peak Guarantee Fund I (AUM: ` 1,520.67 Lakhs)

Kotak Guaranteed Growth Fund (AUM:

` 59,223.45 Lakhs)

Kotak Guaranteed Balanced Fund

(AUM: ` 8,004.41 Lakhs)

Pension Classic Opportunities Fund

(AUM: ` 9,983.87 Lakhs)

Kotak Pension Opportunities Fund

(AUM: ` 2,045.48 Lakhs)

Pension Frontline Equity Fund (AUM:

` 2,249.15 Lakhs)

Pension Guarantee Fund (AUM: ` 9,237.25 Lakhs)

0.5

-0.2

-0.2

-0.8

-0.8

-0.4

0.0

1.2

0.7

1.0

-1.2

-1.4

-0.3

0.2

1.4

-3.1

-1.2

-9.3

-9.7

-8.2

-1.8

5.2

3.1

4.5

-3.4

-4.1

0.2

4.8

8.2

6.6

6.6

6.7

5.9

8.1

7.4

10.1

11.7

11.2

15.6

14.5

15.6

9.8

5.4

6.5

6.8

6.0

5.3

6.6

5.2

9.0

11.2

10.9

15.1

14.1

14.4

8.9

7.6

10.1

9.7

14.0

13.0

13.8

7.6

7.6

9.9

9.6

13.3

12.4

12.9

7.7

n.a

10.6

10.2

n.a

n.a

n.a

n.a

7.1

12.6

11.6

11.6

10.6

11.1

6.8

AS ON 28th FEBRUARY 2019

MONTHLY UPDATE MARCH 2019 | (based on last business day)

07

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