TM SHARIAH STRATEGY

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TAMCO Portfolio Management

• TM SHARIAH STRATEGY
• (A Shariah Compliant PMS Strategy)

Presented By R. K. GUPTA MD PO Taurus Asset
Management Company Ltd
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Emergence of Shariah Investment

• Muslims represent nearly a quarter of the worlds
  population.
• Islamic Finance Investment as an industry is
  evolving and developing.
• Investor base for Shariah investment is becoming
  large and product base is also improving.
• Market for Shariah compliant products is growing
  resulting particularly, equity assets of Shariah
  Compliant investors are increasing
• Therefore, demand for securities / products /
  schemes that meet Shariah principles is growing.
• Shariah compliant indices are being launched in
  an effort to attract more investors from India
  and abroad.
• Such indices attract those investors who want to
  buy stocks without violating Islamic investment
  guidelines.
• In India also, such indices have been launched.

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Opportunities of Shariah Investment

• The global Islamic asset management business
  ranges between 30 billion to 50 billion, which
  is a drop in the ocean compared with the
  multi-trillion dollar conventional fund business.
  (Source arabnews.com)
• Changing political situation in America and
  European countries and falling GDPs of Europe and
  North America have forced rich Islamic investors
  from the Gulf countries to look for investment
  opportunities in South East Asian countries,
  including India)
• Islamic finance in India, home to the worlds
  second-largest Muslim population after Indonesia,
  is still in its infancy.
• Efforts should help channel socially-conscious
  investors savings of more than 1 trillion in
  the coming years, including from the cash-rich
  Gulf (Source gulfnews.com)

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Global Islamic Investments

• The Dow Jones and FTSE have already established
  global Islamic indices.
• The Dow Jones Composite Islamic Index with 2440
  compliant companies and over 70 country Islamic
  indices as of today enjoys wide spread marketing
  acceptance.
• The FTSE/SGX Asia Shariah 100 index provides more
  opportunities for Islamic investors to invest in
  Asian market.
• The SP BRIC Shariah Index is designed to capture
  the largest and mostly liquid stocks in Brazil,
  Russia, India and China that meet the criteria of
  Shariah law.
• In India, there are two Shariah Compliant
  Indices
• By NSE SP CNX 500 Shariah
• By BSE TASIS Shariah - 50

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Global Islamic Investments

• Non Islamic investors have began to show more
  interest in Islamic products.
• A new Islamic Asset class showing immense
  potential in private equities.
• There are more than 130 Islamic Equity Funds
  managed by some of the worlds top Fund Managers
  viz. Citibank, Deutsche Bank, HSBC, Merrill
  Lynch, UBS etc.
• These Funds have brought modern Fund Management
  techniques and the world creation of inter price
  system to the door step of Muslim investors.

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CHOICE OF SHARIAH COMPLIANT Investments
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Shariah Compliance India Scenario

• Shariah compliant investment in India is a recent
  concept to attract Muslim investors, in
  particular.
• Equity based Shariah investment is the most
  popular product in India.
• India has the second highest Muslim population in
  the world.
• Awareness has reached Muslims who are now ready
  to join the main-stream.
• Number of Shariah-compliant stocks in India are
  much higher than many Muslim countries, thus
  providing large stock universe for investment by
  Islamic investors.
• Out of 6,000 BSE listed companies,
  approximately4,200 are Shariah compliant. The
  market capitalization of these stocks accounts
  for approximately 61 of the total market
  capitalization of companies listed on BSE
  (Source islamicequity.co.in)

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A Step Forward

• TAMCO has taken another step in this direction by
  offering TM Shariah Strategy under its
  Portfolio Management Services.
• As such Indian Muslims have got another avenue to
  park their investible income in TM Shariah
  Strategy, a Shariah Compliant PMS product.
• Multigain, a leading Advisory Broking Group in
  the area of financial services has entered into
  an arrangement with TAMCO as a sole marketing
  partner to market a specialized PMS product TM
  Shariah Strategy, a Shariah Compliant PMS
  Strategy.

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Why Shariah Investment

• Despite such huge and fledging stock market in
  India, parts of Muslim population have not been
  able to participate
• Different aspects of their lives, including
  investments, are governed by Shariah Laws
• Opening an avenue for the inclusion of Muslims at
  large in the Great Indian Growth story
• Shariah Investment is not essentially only for
  Muslim population but for every person who has
  values and ethics.
• TM Shariah strategy is TAMCOs unique socially
  responsible approach for the benefit of
  interested HNIs.
• TAMCO already has a Shariah compliant mutual fund
  scheme in the market by the name of Taurus
  Ethical Fund for the benefit of retail investors
  at large.

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Why Shariah Investment

• The Shariah 50 has outperformed the SENSEX by
  nearly 25 and the BSE 500 by over 30 over BSEs
  back-test horizon - 1st Jan 08 to 22nd Dec 10.
  (Source BSE)

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SHARIAH PMS vs Conventional PMS
Returns BSE TASIS Shariah 50 Sensex BSE 500
YTD (Jan-Dec 22, 2010) 18.16 14.61 13.77
1 Yr (23-Dec-09 to 22-Dec-10) 21.59 19.91 18.20
2 Yrs (23-Dec-08 to 22-Dec-10) 132.67 101.60 112.13
Since start date (01-Jan-08) 22.77 -1.40 -10.12
Volatility BSE TASIS Shariah 50 Sensex BSE 500
(Annualized since 01-Jan-08) 28.01 34.41 32.97
Over the back testing period, annualized
volatility for the Shariah 50 was also less than
both SENSEX and the BSE 500 by nearly 5
percentage points. (Source BSE)
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Why Shariah Investment

• From the graphs and return figures, it is pretty
  evident that Shariah 50 has been consistently
  able to outperform the Sensex as well as BSE-500.
• Similar study was done on Indonesian stock market
  between Jakarta Islamic Index and Jakarta
  Composite Index concluding that Islamic index is
  more resilient towards crisis compare to
  conventional stock index. (Source Dept. of
  Islamic Economic, Airlangga University,
  Indonesia)
• Various empirical studies have suggested that the
  Shariah screening process automatically reduces
  the risk of investment which is inline with the
  nature of Islamic value of small uncertainty
  (Gharar shaghir)

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SHARIAH PMS vs Conventional PMS
Shariah PMS Conventional PMS
Hedging using derivatives not allowed Hedging is allowed
Cash settled futures is prohibited Cash settled in future is allowed
Investment in banks, insurance and any company conducting non-Shariah business is not allowed Investment in banks, insurance companies, etc. is allowed
Investment cant be made in Interest bearing instruments securities. Free cash to be kept in current account therefore returns could be affected Investment can be made in bonds, CP, CD, and other interest bearing instruments to reduce volatility
Shariah Audit to confirm that Shariah principles are followed in making investments. No special audit
Copy of Shariah Compliant Audit provided to investors. No specific compliance audit provided to investors
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Shariah investment identification

• PMS would apply fundamental, technical logical
  analysis on the list to identify investment
  worthy stocks.
• No investment would be made in T/Z category
  (illiquid) shares.
• TAMCOs Shariah-compliant list will be reviewed
  by TASIS monthly to check for its conformity to
  the Shariah principles.
• In case any stock is removed from Shariah list
  and fund has an investment in that stock, it will
  be given appropriate time to sell that stock from
  the portfolio. So there wont be any distress
  selling.
• Free cash can be invested in gold ETFs only

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Portfolio building process
Market behavior Trend analysis
Bottom-up/ Top-down approach
Information News analysis
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TM Shariah Strategy Highlights

• A Shariah Compliant PMS Strategy
• Minimum Investment Rs.5 lacs
• Individuals, Sole Proprietorship Firms,
  Partnership Firms Company/Body Corporates, Trusts
  Association of Pensions NRIs/FIIs (subject to RBI
  approval) can invest.
• Investment can be made only by cheque / draft or
  through listed stocks.
• Independent SEBI registered Custodian.
• Personalized services both by TAMCO Relationship
  Manager officials of Multigain.
• Regular reporting.
• Facility of Tracking the Portfolio with User I.D
  password.
• Choice of Discretionary and Non-Discretionary
  Portfolio.
• Regular communication from TAMCO PMS.

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Norms for Shariah Compliance

• In terms of the present Shariah law, funds of the
  TM Shariah Strategy will not be invested in the
  following areas
• Fixed interest instruments
• Derivatives including but not limited to options,
  futures and contracts for difference.
• Banking and finance companies.
• Manufacture or distribution of alcohol products.
• Gambling and entertainment.
• The production, packaging or any other activities
  related to Pork or Pork products or other
  non-halal meats.
• Sugar companies due to their heavy focus on
  molasses which are used for production of
  alcohol.
• Equities or other securities issued by companies
  whose activities relate in any way to the
  production or distribution of pornographic
  material.
• Investment trusts, unit trusts and other
  collective investment schemes that do not adhere
  to Islamic Shariah investment principles.

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Shariah compliance by tasis

• The monitoring and reviewing of Shariah
  Compliance of TM Shariah Strategy is done by
  Taqwaa Advisory Shariah Investment Solutions
  (P) Ltd (TASIS).
• The portfolio of this strategy is to be monitored
  every month by TASIS officials to conform its
  Shariah compliance.
• TASIS (Taqwaa Advisory Shariah Investment
  Solutions) is Indias premiere Shariah Advisory
  Firm which provides the services of stock
  screening, product structuring, Shariah
  Monitoring and Shariah Certification in India.
• It is a well known body for Shariah Advisory in
  India following are its feats
• TASIS has become Indias first institution to
  become a member of Accounting and Auditing
  Organization for Islamic Financial Institutions
  (AAOIFI)
• BSE and TASIS Launch Shariah-Compliant Index to
  Promote Financial Inclusion in India.
• GIC (Re), a Government of India owned company,
  appoints TASIS for Shariah advisory.
• For more details, visit www.tasis.in

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The Index BSE TASIS Shariah 50

• Launched by BSE and Taqwaa Advisory and Shariah
  Investment Solutions (TASIS) in December 2010
• This Index consists of 50 largest and most liquid
  Shariah compliant stocks within the BSE-500.
• TASIS employs strict financial screening norms
  which are more conservative than its peers.
• First Shariah compliant equity index which is
  publically disseminated on a real-time basis.
• The index constituent weights are capped at 8.

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About TAMCO

• SEBI approved Asset Management Company since 1993
• At present, Investment Manager for various
  schemes of Taurus Mutual Fund.
• The present AUM of Taurus Mutual Fund is about
  Rs.2800 Crs.
• Taurus Mutual Fund is also managing a Shariah
  compliant scheme called Taurus Ethical Fund,
  Indias first such scheme approved by SEBI.
• In the second Venture, TAMCO has started
  Portfolio Management Services (PMS) after getting
  licence from SEBI.
• This is a Board run Company whose operations are
  also being monitored by Board of Trustees
  comprising of eminent personality.

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Services offered by TAMCO-PMS

• At present, TAMCO PMS is offering following
  Investment strategies under Discretionary
  Portfolio Management Services
• Alpha Generator Strategy
• Focused PSU Strategy
• Wealth Building Strategy
• Arbitrage strategy
• TM Shariah Strategy
• For more details visit
• www.tamcopms.com

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About multigain

• Multigain is an integrated financial services
  group, offering a wide range of services to
  different clients, segments of the economy,
  includes EPF Trusts, Corporate, high net-worth
  individuals and retail investors. Provide all
  financial solutions under one umbrella.
• Multigain is an ISO ISO 90012008 certified
  company working since 1994, having its own
  branches in Moradabad, Mumbai, Noida , Lucknow
  in 15 different states with more than 100
  employees, 100 plus Franchisees more than 300
  Advisors across PAN India.
• Multigain has Membership with BSE, NSE, MCXSX,
  USE, NSEL, MCX, NCDEX, NMCE, ACE, ICEX and CDSL.
• Multigain started working early in the area of
  Shariah finance and launched Multigain Shariah
  Investment Services (MSIS) in 2009

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Multigain Shariah Investment services pvt. Ltd.

• Multigain Shariah Investment Services Pvt. Ltd.
  (MSIS) was launched in 2009 by its parent company
  Multigain group. It is an independent vertical
  whose operations are separate from Multigains
  financial services.
• Multigain is Indias 1st Shariah Compliant
  Commodity Broker in National Spot Exchange Ltd.
• MSIS is Indias Largest Integrated Platform of
  Distributing Broking of Shariah Base Investment
  Products Services.
• The objective of Multigain Shariah Investment
  Services is to give an opportunity to those
  investors who want to invest in accordance to the
  Shariah principles in ethically correct sectors.
  
• Shariah Investment Solutions
• Equity Trading
• Spot Commodity Trading
• Portfolio Management Service
• Mutual Fund ETF

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PMS VS INDIVIDUAL TRADING
PMS Individual Trading
Professional Management of Portfolio involving overall fundamental, technical logical analysis No professional Management of Portfolio
Focus and exclusivity of investment service Lack of focus and exclusive time for investment decisions
Access to large amount of market information and news with enough time margin to capitalize on it Most of the news and information available only from public domain which has lost effectiveness
Benefit of price averaging available Averaging difficult on account of one time buying rather than accumulation
Diversification benefits available owing to pooling of fund Diversification lacking owing to limited funds
Higher reward to risk ratio Lower reward to risk ratio
Proper accounting reporting, easier for deducing tax liability Cumbersome accounting of profit loss.
Regular monitoring of portfolio on account of focused nature of service Regular monitoring of investment difficult due to paucity of time
Advisory service also available No investment advice available. Investment mostly based on news available from various sources
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PMS VS MUTUAL FUND
PMS Mutual Fund
Personalized investment objective depending on ticket size of investment other factors Common investment objective for all investors irrespective of ticket size of investment
Personalized service customized portfolio solutions No personalized customized service
Daily tracking of individual portfolio available for investor Portfolio details available only on monthly basis
No SEBI restrictions in terms of portfolio structure thus providing greater flexibility for profit maximization SEBI structure applicable on funds portfolio
Profit sharing option available No such option available
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WHY TAMCO PMS
Broker backed PMS TAMCO PMS
DP Service provider Mostly their own therefore compromise on quality of service cant be ruled out Outside agency which is a SEBI approved custodian
Propriety trade More interested so returns can be affected Concept doesnt exist
Access to research reps Reps of other research houses mostly not access Reps of all research houses available
Trading style Own terminals used so unnecessary churning high broking rates may increase cost Independent brokers empanelled with competitive brokerage agreements
Staff No separate team for PMS operations thus lacking focus Independent dedicated team for entire gamut of PMS operations
Service quality PMS one of the activity along with secondary market transactions therefore less personalized Separate teams for PMS Mutual Fund therefore more personalized service
Portfolio disclosure Normally not disclosed on regular basis Viewing facility available online on regular basis
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The Joint Venture

• TAMCO and Multigain have entered into an
  arrangement whereby
• TAMCO will be responsible for the Fund
  Management, Back office Accounting as per the
  SEBIs guidelines.
• Multigain will be responsible for marketing of TM
  Shariah Strategy through various channels,
  sub-brokers etc. both in India and abroad.
• TASIS will be responsible for the Shariah
  compliance of TM Shariah Strategy
• Role and responsibility of the identities are
  well defined.

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For any query/information, contact us

• At TAMCO
• Taurus Asset Management Co. Ltd.
• UGF, Kanchenjunga Building,
• 18, Barakhamba Road, New Delhi 110 001
• 45382222, 23717593, 23738664
• Fax [phone], E-mail queries_at_tamcopms.com

Mudita (Relationship Manager) Ph(Direct)
011-45382203 Mobile [phone] email
mudita_at_tamcopms.com
C M Mathur Ph(Direct) 011-45382204 Mobile
9810264642 email mathur_at_tamcopms.com

• At Multigain
• Multigain Commodities Services (P) Ltd.
• H-50, Lajpat Nagar
• Moradabad 244 001
• [phone], 2490500
• Mobile [phone]
• E-mail jasem_at_multigain.in/pms_at_multigain.in

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Risk Disclosure

• Investments in Securities are subject to market
  and other risks and there is no assurance or
  guarantee that the objective of any of the
  portfolio will be achieved.
• Investors in the PMS Product are not being
  offered any guaranteed/assured returns.
• Past performance does not indicate the future
  performance of the portfolios of the Portfolio
  Manager.
• The names of the portfolio strategies do not in
  any manner indicate their prospects or return.
• The material is based upon information that we
  consider reliable, but we do not represent that
  it is accurate or complete, and it should be
  relied upon as such.
• Neither Taurus Asset Management Co. Ltd. nor any
  person connected with it, accepts any liability
  arising from the use of this material. The
  recipient of this material should rely on their
  investigations and take their own professional
  advice.
• Disclosure Document shall be obtained and read
  carefully before executing the PMS agreement and
  any time thereafter.
• For tax consequences, each investor is advised to
  consult his/her own professional tax advisor.
• This presentation is not for public distribution
  and has been furnished solely for information and
  must not be reproduced or redistributed to any
  other person. Person into whose possession this
  document may come are required to observe these
  restrictions. No part of this material may be
  duplicated in any form and/or redistributed with
  Taurus Asset Management Co. Ltd.s prior written
  consent.
• Distribution Restrictions This material should
  not be circulated in countries where restrictions
  exist on soliciting business from potential
  clients residing in same countries.

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