February 2017



Dear Friends,

The Year 2017 started on an encouraging note for Indian equities. Benchmarks Nifty 50 and S&P BSE Sensex rose 4.59% and 3.87%, respectively. On the domestic front, the biggest booster was the release of better-than-expected quarterly domestic earnings despite the surprise move of demonetisation by the government. At the same time, Finance Minister Arun Jaitley struck some right notes - he did not tighten the long term capital gains tax requirements against expectations; made it easier for FDI (Foreign Direct Investments) to enter the country; and gave relief to Foreign Portfolio Investors (FPIs) from taxation on indirect transfers.

Asset Management companies purchased stocks worth nearly Rs. 5,000 crores and debt of over Rs. 30,000 crores, on the back of continued inflows from investors into different categories of funds, both equity and debt. There is an optimism that markets will continue to do well this year, once the ‘remonetisation’ is complete.

We continue to guide our investors that to create wealth and to continue the habit over the years, asset allocation remains crucial. The inflow into equity-based funds through SIPs and lumpsum continue which is encouraging but many investors continue to neglect the opportunities which lie in the debt category. Equity markets tend to dominate mind space in the media and thus this category tends to get overlooked. Over the past couple of years, debt funds have shown a robust performance and the outlook for 2017 continues to be positive given the expectations that interest rates this year will be lower and inflation stagnant. The returns from the debt category viz, Crisil Composite Bond Fund Index in 2015 and 2016 have been 9% and 13% respectively; which are higher than what traditional investment options would have offered during the same time frame.

For those of you who have still not planned your taxes, it is still not too late. Equity Linked Savings Schemes (ELSS) from mutual funds are an ideal tax-saving option offering a combination of tax benefit (with a 3-year lock-in) and potential of equity market linked returns in one mutual fund scheme. For those of you looking for an ELSS fund with a track record, SBI Magnum Taxgain Scheme with a 23-year history, remains a good option. If you are comfortable with a longer time-period of investment (10 years) while seeking tax-saving options then our new ELSS offering, SBI Long Term Advantage Fund – Series IV is available for subscription which helps you to save tax while staying invested for the long-term to build wealth for your goals. Planning taxes should be about more than just saving taxes and ELSS helps you do that.

As always, we value your investments and look forward to your continued patronage.

Warm Regards,

Anuradha Rao

Managing Director & CEO


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