Background to the DFF

Investors are scared of …..

The Downside Risk in Equities

The Risk of Market Volatility

The Risk of Market Timing

The Risk of Wrong Advice

Need for an investment avenue that aims to provide

stable positive returns & capital appreciation
Fund with embedded advice

 Unique fund – Dynamic Floor Fund

 embedded investment advice in a single fund from experts
 aims for stable returns & capital appreciation in real terms
(i.e. inflation +5%-6% over rolling three years)
 assumes equities are the key driver of real returns and so
aims to maximize equity exposure, but more importantly
books profits along the way
 shields the savings for your children / for your retirement
from shorter term market volatility by aiming to protect
90% of NAV 1 year out (rolling basis)
Fund with embedded advice

 Benefits to you :
 Peace of mind that you’ll meet your children’s milestones /
your long term needs like retirement by comfortably
outpacing the cost of living and booking profits along the
way
 Hassle free in that it you don’t need to worry about
switching across asset classes to try time the markets … you
won’t need to depend on the advice of others and worry
that they might get it wrong!
 Flexibility to change course …profit
… booking means that
should you need the funds earlier than expected,
you don’t need to wait 10-20 years for a
maturity guarantee!
Smarter avenues for Growth
Dynamic Floor Fund

 Specialized investing with…

 In-built investment advice from experts
 Inflation protected returns & capital appreciation
 Shields investment from shorter term market volatility
 Books profit along the way
 Protects 90% of NAV 1 year out (rolling basis)
180
Nifty
160 Profit booking
140 DFF NAV
120 Floor
100 Crisil Liquid
80
*One year
M 07

Ju 7

Au 07
Ju 7

Ju 7
Ja 7

Fe 7
N 6

D 6

Ja 6

Fe 7

M 7

Ap 7

O 7

N 7

D 7
7
N 7
O 7
Au 7

Se 7
Ap 7

M 7

l-0
-0
-0

-0

-0

0
-0

-0

-0

-0
0

-0

-0
0

0
annualized returns
0

p-
l-
-

n-
n-

n-

n-
b-
b-

g-

g-
r-

r-
ov

ov

ov

ec
ec

ov
ay

ay
ar

ct

ct
Ju

as on Nov 30th, 2007.

N

Past performance is
not indicative of
Delivered
future returns.
In-built dynamic asset allocation to allow for profit 26% *
booking and capital appreciation returns
Oc

100
200
300
400
500

-
t-
10
Ja
n-
0
Ap 2
r-
0
Ju 2
l -0
Oc 2
t-
0
Ja 2
n-
0
Ap 3
Nifty
I bex

r-
0
Ju 3
Balance

l -0
Call Index
Long term benefits

Oc 3
t-
0
Ja 3
n-
0
Ap 4
r-
04
Ju
l-0
Oc 4
t-
0
Ja 4
n-
0
growth

Ap 5
r-
05
Ju
l-0
Oc 5
t-
0
lower inflation,

Ja 5
n-
0
Ap 6
r-
06
higher real economic
Lower interest rates,

Ju
l-0
6
Risk and return … the efficient frontier

Dynamic Floor Fund

increasing expected return =>

Aggressive
Growth

Bonds Balanced

Gilt

Increasing volatility =>

Decreasing inflation risk =>
The Dynamic Floor Fund Solution

Investment Objective
To generate stable, real returns over the medium to longer
term, with limited downside over the short term - targeting a
gross return of WPI + 6% over rolling three years.

Investment Strategy
Strategic allocation to maximize equity exposure
Active asset management to provide ‘alpha’ (including credit)
Proprietary risk management model to control downside
Dynamic Floor Protection

Principle of the dynamic risk model … A first in India

100
Time
90

Dynamic adjustment …..

DFF Asset Allocation Ranges

Maximum % Minimum %
Equities 75% 0%
Bonds & Gilts 100% 0%
Cash & 100% 0%
Floating Rate
Instruments

Average equity exposure range over past

5 years between 45% and 50%
(modeling ignores alpha from stock picks
and credit/interest rate calls)
Logic behind the risk model

Equity Exposure Debt Exposure

Equity Market Movements
Rising Markets Increase Decrease
Sideways Markets Little change Little change
Falling Markets Decrease Increase
Interest Rate Movements
Rising Interest Rates Increase Increase
Constant Interest Rates Little change Little change
Declining Interest Rates Decrease No change

Trade-off between raising equity exposure

and raising the floor
DFF model over last 10 years

Profit
booking
The comfort of
a floor
DFF Performance Personality

Equity Likely overall Likely Likely

Market Performance Performance Performance
Performance relative to Relative to cash
equities
Rampant bull Strong positive Underperform Outperform
(real)
Gently rising Positive (real) Outperform Outperform
Flat Positive Outperform Outperform
Gradually Mild positive or Outperform Mildly
falling negative underperform
Rapidly Negative Outperform Underperform
tumbling (subject to floor)

Note the above is indicative only. Actual performance could deviate.

Note also that in volatile circumstances, where markets are tumbling and running concurrently, additional
underperformance may arise due to the impact of increased trading costs (brokerage and impact)
Dynamic hedging & maturity guarantees

Maturity Guarantees Dynamic Floor Protection

 Not an explicit guarantee but a
 Apply at a point in time far
in the future rigourous, quantitative means of
(10, 15, 20 yrs) & not on ensuring 90% of principal is
surrender or part withdrawal protected 1yr out
 Profit booking ensures the floor
 Are fixed in notional terms,
often close to return of gross is periodically raised. As the
premiums NAV grows in real terms, so the
floor moves with it
 Don’t track inflation
 Liquidity is dramatically
 Leaves the booking of profits
enhanced … unexpected
and market timing decisions
withdrawals come off a much
to the client or adviser
more stable NAV. Protection is
at most 12 mths away.

DIY  The stresses of unpredictable

subjective market timing calls
are removed.
 Thank You

Mr. Kirang Gandhi

Mob. No. -9271267305,9766319919
Web site: www.kgandhi.anindia.com
kirang.gandhi@gmail.com