Ceylon Asset Management | Index Fund Management

2013-05-22 Ceylon Index Fund Create: 51.81 / Redeem: 49.71

Ceylon Tourism Fund Create: 7.21 / Redeem: 6.93 down

Ceylon Financial Sector Fund Create: 8.22 / Redeem: 7.89 down

Ceylon Income Fund Create: 12.16 / Redeem: 12.16

Ceylon IPO Fund Create: 10.93 / Redeem: 10.71

Ceylon Gilt-Edged Fund Create: 11.61 / Redeem: 11.61

ASPI 6461.62 19.98 0.31 YTD: 14.51%

Tourism TOP 10 870.19 -4.51 -0.52 YTD: 3.79% down

Finance Top 10 838.18 -3.42 -0.41 YTD: 20.94% down

Top 10 Index 2874.31 11.96 0.92 YTD: 25.62%

S & P SL 20 Index 3663.98 3.04 0.08 YTD: 18.77%

John Keells Holdings 295.10 -1.9 -0.64 down

Commercial Bank of Ceylon 124.90 -0.4 -0.32 down

Dialog Axiata 9.70 -0.2 -2.02 down

Aitken Spence Holdings 138.80 3.3 2.44

Aitken Spence Hotels Holdings 78.00 -2 -2.5 down

Hatton National Bank 173.00 0 0 Distilleries Company of Sri Lanka 196.10 6 3.16

Cargills Ceylon 176.00 1 0.57

The Lion Brewery Ceylon PLC 425.60 39.1 10.12

Chevron Lubricants Lanka 297.00 8.7 3.02

Ceylon Index Fund

"A performance of 93.70% as at 31st December 2009"

"The top performing fund in Sri Lanka during 2006 with a return of 49.2%"

The index fund management style eliminates the risk of bias and speculation.

Right click on the graph to view full screen

Investment Rationale

The Fund is an "enhanced" Index Fund invested in shares of the 10 companies that comprise the Colombo Top 10 Index (TOP 10 Index), under respective market capitalisation proportions. The TOP 10 index is selected by an independent Index Committee, covering approximately 27% of the total CSE market capitalisation of Rs. 2,207,359,792 as at January 11, 2013.
The fund aims to follow the market capitalisation proportions of the Index on any given day, while the TOP 10 Index aims to track the performance of the overall stock market (ASPI).

The "Managed" Index Fund Enhancements:

     a)     Selected on the basis of market capitalisation

     b)     A "liquidity test" to qualify for index selection.

     c)     Two stocks per sector to ensure diversification.

     d)     Maintains 3% in cash as per the SEC liquidity requirement.

     e)     Can invest up to 10% in IPO's at the discretion of Manager.

Tax Free

All Capital Gains on units and distributions of the fund are TAX FREE

Dividend Distribution Policy

Distributable income will be derived principally from dividend income received by the Fund. Net income will be distributed annually after satisfying operating fees and expenses of the Fund. Investors have the option to re-invest their annual distribution in units of the Fund.

Risk Factors

Minimum Risk equity portfolio due to the absence of Trading Risk, Speculative Risk or Fund Manager Risk.

Being invested in shares, this Fund carries the risk of capital appreciation as well as depreciation with fluctuations of the TOP 10 Index.

The ten companies included in the Index have sound reputations of good corporate governance and are well researched by analysts to unearth risks and opportunities.

The fund manager's risk is the tracking error, defined as the performance difference between the index and the funds invested in the companies. The regulatory requirement to hold 5% of funds in cash will naturally lead to a performance deviation (tracking error) between the fund and the TOP 10 index.

You can start your investment with only Rs.10,000/-

Fee Structure

Front End Fee         :     2%
Management Fee    :     1% per annum
Performance Fee    :     20% of any excess % in 'net return'* over the growth of the All Share Price Index (ASPI)
                                   during each quarter.
Exit Fee                 :     Nil

*Net return calculated as increase in Net Asset Value (NAV) + distribution

Stocks at a Glance 2013-05-22
Index	Value	Daily Change	% Daily Change	Monthly
CIF	50.24	0.24	0.48%	11.62%
CTF	7.00	-0.01	-0.14%	2.79%
CFF	7.97	-0.04	-0.5%	5.42%
CINF	12.16	0.01	0.08%	0.25%
IPO Fund	10.71	0.01	0.09%	0.09%
CGEF	11.61	0.01	0.09%	0.35%
ASPI	6461.62	19.98	0.31%	8.54%
Tourism 10	870.19	-4.51	-0.52%	8.03%
Finance 10	838.18	-3.42	-0.41%	6.18%
TOP 10	2874.31	11.96	0.92%	12.75%
S & P SL 20	3663.98	3.04	0.08%	8.86%

The Colombo Top 10 Index (TOP 10)
Company name	Share price	No of shares issued	Market Capitalization	Market Capital %
John Keells Holdings	295.10	851,323,807	251,225,655,446	23.99
Commercial Bank of Ceylon	124.90	779,225,073	97,325,211,618	12.32
Dialog Axiata	9.70	8,143,778,405	78,994,650,529	10.67
Aitken Spence Holdings	138.80	405,996,045	56,352,251,046	13.39
Hatton National Bank	173.00	317,569,919	54,939,595,987	7.41
Distilleries Company of Sri Lanka	196.10	300,000,000	58,830,000,000	7.07
Cargills Ceylon	176.00	224,000,000	39,424,000,000	5.48
The Lion Brewery Ceylon PLC	425.60	80,000,000	34,048,000,000	4.86
Aitken Spence Hotels Holdings	78.00	336,290,010	26,230,620,780	4.01
Chevron Lubricants Lanka	297.00	120,000,000	35,640,000,000	3.96
Total			586,920,209,304	93.16

JKH is a top performing stock on the Colombo Bourse. Through years of careful diversification the company now offers excellent exposure to high growth sectors in the economy including exclusive access to the Colombo port as well as leisure, financial services and prime real estate projects in Colombo.

Company page

The largest bank listed on the Bourse is a financial powerhouse recognized for its sound corporate strategies, operational management and low NPL ratio, giving it a competitive edge in the industry. Its timely investments in technology enable it to enjoy one of the lowest cost to income ratios in the industry with 170 branches and 333 ATMs. Following the recent collapse of a leading Finance Company, established local banks have benefited from the deposit migration.

Company page

A subsidiary of Axiata Group (Telecom Malaysia), Dialog enjoys the majority market share in the mobile telephone market with its tech savvy, drive for innovation in service and coverage. It has launched Dialog TV successfully and engaged in a cost-cutting exercise to sharpen its competitive edge.

Company page

Aitken Spence is the industry leader in the leisure sector owning some of the best hotels across the country. It has other diversified interests in shipping, logistics, printing, plantation, power generation, garment manufacture and insurance, providing exposure to some key growth sectors. The company is geared to penetrate regional markets having entered the Maldives and the high growth Indian market.

Company page

Aitken Spence Hotels Holdings PLC is the core subsidiary for managing operations in the tourism sector for its parent company Aitken Spence Company Limited. AHUN’s operating map covers most parts of the South Asian region including Sri Lanka, Maldives and India. Further with the recent management contracts in Oman, the operations have now stretched to the Middle East Market.

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In existence since 1888, HNB specializes in banking services to businesses and professional intermediaries looking for end-to-end solutions. The bank with its widespread branch distribution network and its own corporate headquarters building is well positioned in a stable and mature industry. HNB has been a forerunner in development banking and international trade activities.

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Controlling over 75% of the legal hard liquor market, Distilleries is the premier distiller in the island. The cash-rich company with an aggressive acquisition drive has diversified itself into several high growth sectors in the Sri Lankan economy.

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Its continuous investment in retail has made the Cargills retail arm Cargills Food City the largest retailer in the island. Its KFC franchise is the largest international restaurant chain in Sri Lanka. Through its marketing and distribution arm spread across the island Cargills distributes its manufactured brands as well as internationally renowned food and non-food brands.

Company page

PLC - Company drive a globally competitive business portfolio spanning 12 defined sectors of enterprise. These sectors fall under the broader ambit of 7 categories - Global Markets and Manufacturing, Agriculture and Plantations, Transportation and Logistics, Leisure and Aviation, Consumer Products, Power and Energy, Investments and Services.

Company page

Chevron is one of the world's leading integrated energy companies and conducts business worldwide. Company is involved in virtually every facet of the energy industry. It explore for, produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and lubricants; manufacture and sell petrochemical products; generate power and produce geothermal energy; provide energy efficiency solutions; and develop the energy resources of the future, including research for advanced bio fuels.

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