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AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS
“DSP BlackRock MUTUAL FUNDS – UNDERSTANDING THE NEED AND IMPORTANCE OF SIP”
Submitted ByAnkur Aneja MBA-3C 2011-2012 A1808711012
INDUSTRY GUIDE GUIDE Mr. Amit Bhatia Lamba Vice President - Sales DSP BlackRock
Gopal Das Bhawan Building, Barakhamba Road New Delhi
FACULTY Ms. Supriya Professor AIBS
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
CERTIFICATE OF ORIGIN
This is to certify that Mr. Ankur Aneja, a student of Post Graduate Degree in MBA 3 Continents, Amity International Business School in Noida has worked in the DSP BlackRock Investment Managers Ltd., under the guidance and supervision of Mr. Amit Bhatia, Vice President – Sales in DSP BlackRock Investment Managers Ltd. The period for which he was on training was for 6 weeks, starting from 1 st June 2012 to 15th July, 2012. This Summer Internship report has the requisite standard for the partial fulfillment the Post Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.
Signature (Faculty Guide)
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
I express my sincere gratitude to my industry guide Mr. Amit Bhatia, Vice President – Sales in DSP BlackRock Investment Managers Ltd. for his guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible. I would also like to thank Ms. Neha Kaul and the entire team for the constant support and help in the successful completion of my project. Also, I am thankful to my faculty guide Ms. Supriya Lamba of my institute, for her continued guidance and invaluable encouragement.
In result. Each pool of money is known as Mutual Fund scheme which has a defined investment objective and strategy. With the large pool of money collected in the fund. the initiative of the Government of India and Reserve Bank of India. which is collected. the problem of investing became more serious. The income that is earned through such investments. professionally managed portfolio at a relatively low cost. the key objective was to attract the small investors which were made possible through the joint efforts of the Government of India (GOI) and the Reserve Bank of India (RBI). In 1963. it is the most suitable investment vehicle for the common person. the mutual fund industry started with the formation of Unit Trust of India. The securities range from shares to debentures and to money market instruments. Anyone with an investible amount of a few thousand rupees can also invest in Mutual Funds. allows sponsors to hire experienced managers at a very low cost. As a Mutual Fund offers an opportunity to invest in a diversified. At that time. Then the idea of collective investment scheme captured the public's attention in the 1980s and '90s that pools money from many investors to purchase securities known as Mutual Funds. is mobilized by the fund manager in different securities and markets depending upon the objective of the scheme. its unit holders shares the capital appreciation realized by the scheme in proportion to the number of units owned by them which is on pro rata basis. The sponsors appoint professionally qualified and experienced staff that manages these functions on a regular basis. The money.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH ABSRTACT With the market scenarios in 80s. the mutual fund has an advantage of economies of scale in all three areas • • • Research Investments Transaction processing 4|Page .
(Rs. it is the right time to invest in the stock market and the safest mode of investing is mutual fund which has less market risk than other securities. The insurance companies also hold a portfolio of stocks in the mutual funds industry. Through SIPs. 5|Page . mutual fund has been the monopoly of the country where UTI is the key player with invested funds over US $ 10 bn.). As the stock market is going down. And investors can invest a fixed sum through SIP rather than lump sum amount and reduce their risks with the rupee cost averaging. types and structure of mutual funds.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH As Mutual Funds are the important source of investment in both government securities and corporate securities. I will find out how the SIPs work at the time of the stock market fluctuations and what products & strategies does the DSP BlackRock use to counter the stock market risk. Then we will learn about the products offered by AMCs to the investors directly or with the help of intermediaries. And then with the help of the data of the past trends of SIP. Then we will understand the concept of Systematic Investment Plan (SIP) and the trends & importance of SIPs. In the end a sincere attempt is made in recommending some solutions to DSP BlackRock. Beginning with the project we will try to understand about the history of mutual funds. we will analyse the present scenario of SIP and conclude whether SIP is a better option or Lumpsum amount. 300 bn. For the decades. investors can save regularly and invest those savings in higher return assets to create wealth.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH TABLE OF CONTENTS 6|Page .
Chapter 1 SUBJECT Executive Summary Research Methodology • Objectives • Scope • Rationale • Methodology • Research Design • Limitations Review of Literature Overview of Mutual Fund Industry in India Industry Profile • Concept and Types of Mutual Funds • Structure of Mutual Funds • Majors Players in the Mutual Fund Industry in India Company Profile • Introduction • Milestone • Need and Importance of SIPs • Types and How to Invest in Mutual Funds • SWOT Analysis Questionnaire PAGE NO.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH CHAPTER NO. 2 4 5 6 7 8 9 11-15 17-19 Chapter 2 Chapter 3 Chapter 4 Chapter 5 21-22 23-30 31 33-36 37 38-41 42-53 54-55 57-60 Chapter 6 Chapter 7 Chapter 8 Findings and Analysis of Study 62-75 Chapter 9 Conclusion 77 Chapter 10 Suggestions and Recommendations 79-80 Chapter 11 7|Page Chapter 12 Bibliography 82-83 Synopsis 85-86 .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
EXECUTIVE SUMMARY The project was undertaken for 6 weeks in DSP BlackRock Investment Managers Ltd for the partial fulfillment of M.B.A Degree from Amity International Business School, Amity University, Noida, UP. The objective of this project is to find out the need and importance of Systematic Investment Plan in the mutual funds industry. First of all I surveyed 152 people in Delhi, NCR (Faridabad and Noida) who have their bank accounts in HDFC BANK that whether they are aware about Mutual Funds or not. I used cluster sampling method because I want to know the perception of the people about the mutual funds as compared to other investment options, through which I can measure the popularity of the mutual funds. The survey conducted is a descriptive type which has to be backed by the primary data and secondary data collection. After the survey, it was found that about 20% people do not invest and the out of rest, 75% people invest in other investment options like Bank Deposit, Bonds etc. A very less percentage of people invest in mutual funds in India. At present, DSP BR has a total of twenty-three parent products under its various fundtypes. Equity Funds DSP BR is credited with the Natural Resources and New Energy Fund, the Micro Cap Fund, the Equity Fund, the Top 100 Equity Fund, etc. To increase the market share of the company, DSP BlackRock should introduce new products and should reduce the amount of SIPs and make a good after sale service department which look after all the problem related to the product. And it should afford a lot in R&D to come up with the new product that can be useful for the investors.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
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AMCs. trustees. RTAs.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH OBJECTIVE The Project assigned has various objectives: • • • • • • • • • To find out the preferences of the investors for Asset Management Company To understand and give an idea about the regulations of Mutual funds To know why the investor has invested or not invested in Mutual Funds To find out the most preferred channel to invest To find out what should be done to promote the Mutual Fund Industry To find out the competitors of DSP BlackRock in India To know the products offered by DSP BlackRock to the investors To study the role of sponsors. Fund Managers To study the Consumer Behavior and awareness for Mutual Funds in India 11 | P a g e . custodian.
mode of investment.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SCOPE OF THE STUDY A big boom has been witnessed in Mutual Fund Industry in recent years. The research was carried on in New Delhi .NCR. I surveyed on my Project Topic “Mutual Funds – Understanding the Need and Importance of SIPs” on the visiting customers of the HDFC BANK. New Delhi and NCR where I completed my Project work. The study will help to know the preferences of the customers which company. and option for getting return and so on they prefer. 12 | P a g e . I had been visiting the branches of HDFC BANK. This project report may help the company to make further planning and strategy to promote the mutual fund industry and its benefits. A large number of new players have entered the market and trying to gain market share in this rapidly improving market.
As. And will also help us to know the reason that why most of the investors do not prefer to invest in the mutual funds. only 1% of people invest in mutual funds. The purpose behind assigning this project is to conduct study on overall concept of mutual funds and its benefit. The project aims at bringing the knowledge about the mutual funds and the benefits & importance of SIPs in today’s market scenario for the investors.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH RATIONALE DSP BlackRock is one of the top 10 AMCs in the world and is the most promising company as part of services and returns. In India. The following is the pie chart showing the percentage of each country contributing towards mutual funds industry: Source: Investment Company Institute 13 | P a g e .
I will analyse that which mode of investment do they prefer – SIP or LUMPSUM. And with the same methodology. when share prices rise day by day and Bear Phase i. Then with the help of the secondary data of the past years trends of SIP. it may be possible that some time the market is very volatile and it is not possible to know in which direction it is moving. When any phase is going on. I will analyse that how many of the investors prefer investing through bank or direct investment with DSP BlackRock. • From the Direct Interaction with the accountholders in HDFC BANK. I will analyse how many of them invest in stock market or in mutual funds.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH METHODOLOGY To analyse the LUMPSUM vs. I will analyse that which mode should be preferred in Bull Phase i. SIP issue faced by DSP BlackRock. • With the help of the questionnaire. when share prices fall day by day. it may also be possible that the market is very stable for a few days with only minor fluctuations. 14 | P a g e . the first step is to understand the concept of ‘Bull Phase’ and ‘Bear Phase’. For the same.e. the following methodology will be adopted: • Analyse the products provided by DSP BlackRock to face the stock market (NSE and BSE) fluctuations. After understanding these phases. we look at the products used by DSP BlackRock to counter the stock market fluctuations.e.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH RESEARCH DESIGN A research design is the master plan or model for the conduct of formal investigation and survey. Our approach to research is descriptive. The major objective of the descriptive research is to describe something – usually market features or functions. Why: Why are we obtaining the information from the respondents? To know Investment Pattern of respondent and to check Awareness of Mutual Fund 15 | P a g e . Good research design ensures that the information obtained is relevant to the research question and that it was collected by objectives. the information will be obtained. Since research design is simply the framework of plan for a study. A sampling design is to be selected. why. It is a blueprint that is followed in completing the research study. What: What information should be obtained from the respondent? What is the investment pattern of the respondent? When: When should the information is obtained from the respondent? While the investors visit the branch. it should be used as a guide in collecting and analyzing the data. when. & the way (the 5Ws) of the research. where. It decides the source of information and methods for gathering the data. what. Our 5 Ws are: Who: Who should be considered for the research? All categories of people are considered for research. It is a specification of methods and procedures for acquiring the information that needs for solving the problem. It requires a clear specification of whom. A questionnaire and other forms are tested to use the collection of data.
HDFC BANK Branches Location. New Delhi and NCR. Sample size is limited to 152 visitors of HDFC BANK .General Public Sampling Units.New Delhi .NCR Research Instrument-Questionnaire LIMITATIONS • • • Some of the persons were not so responsive. periodicals and Internet. I have collected secondary data from magazines. Out of these only 34 had invested in Mutual Fund. It is more reliable. • • Some respondents were reluctant to disclose their personal information which can affect the validity of all responses.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Way: In what way we are going to obtain the information from the respondents? Personal Interview Method DATA COLLECTION METHOD In this research. 16 | P a g e . fresh and accurate. newspapers. • • Primary Data are the first hand data collected by us by filling the questionnaire from the respondents.size may not adequately represent the whole market. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire. The sample. The research is confined to a certain part of Delhi – NCR. Secondary Data are the data collected for some purpose other than the problem at hand. SAMPLING • • • • • Sample size-152 Elements. I have used two types of data. It is less reliable and secured data as compared to primary data.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH LITERATURE REVIEW 17 | P a g e .
ensures that the investors are not cheated out of their hard earned money. While somebody wants security. The range of products includes equity funds. it is obvious that the products required will vary as well. its merits and demerits. which has enough teeth to safeguard investors’ interests. There are also funds meant exclusively for young and old. Somebody else might want to plan for his child's education while somebody might be saving for the proverbial rainy day or even life after retirement. gilt and balanced funds. debt. liquid. With objectives defying any range. In view of the growing competition in the Mutual Funds industry. a universal appeal. the setup of a legal structure.e. it was felt necessary to understand the working of mutual funds industry in India. All in all. small and large investo rs. their pattern of risk appetite and preferences in various schemes and plans. Indian Mutual Funds industry offers a plethora of schemes and serves broadly all types of investors. Apart from this the report also includes the details of the work that I have learnt during the project. others might give more weightage to returns alone. benefits provided by them cut across the boundaries of investor category and thus create for them. Investors of all categories could choose to invest on their own in multiple options but opt for Mutual Funds for the sole reason that all benefits come in a package. which according to me is the best part of the project as it provided me a practical exposure to the Mutual fund industry and the working of an AMC. schemes and options with respect to rate of returns. 18 | P a g e . various types of schemes available in the Indian market and the investor’s orientation towards Mutual Funds i.Moreover. dividend frequency and liquidity. The Mutual Fund Industry is having its hands full to cater to various needs of the investors by coming up with new plans.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH LITERATURE REVIEW ABSTRACT (1) Investments goals vary from person to person.
have a greater fraction of independent directors. This approach allows defining mutual fund performance indexes that can take into account several inputs and thus consider different risk measures and. the procedure allows identifying. which includes among the outputs a stochastic dominance indicator that reflects both the investors' preference structure and the time occurrence of the returns. This model applies an operational research methodology.S. Boston and Monitor Company. They use these data to examine the relation between board structure and the fees charged by a fund to its shareholders. Therefore. above all. open-end mutual funds. a composite portfolio which can be considered as a particular benchmark. Moreover. which allows measuring the relative efficiency of decision making units. Inc. the investment costs (subscription costs and redemption fees)..AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH ABSTRACT (2) Antonella Basso and Stefanie Funari discussed in this paper about “A data envelopment analysis approach to measure the mutual fund performance. They find some evidence that funds whose independent directors are paid relatively higher directors' fees approve higher shareholder fees. a generalized version of the DEA mutual fund performance indexes is defined. ABSTRACT (3) Peter Tufano and Mathew Sevick of Harvard Business School.” In this paper they present a model which can be used to evaluate the performance of mutual funds. 19 | P a g e . In addition. This study uses a new database to describe the composition and compensation of boards of directors of U.S. The performance indexes proposed are tested on empirical data. and are composed of directors who sit on a large fraction of the fund sponsor's other boards. too. called data envelopment analysis (DEA). Cambridge respectively discussed in this paper about “Board structure and fee-setting in the U. mutual fund industry”. for each mutual fund. the DEA approach can naturally envisage other output indicators. in addition to the mean return considered by the traditional indexes. They find that shareholder fees are lower when fund boards are smaller.
but individual funds do not earn higher returns from following the momentum strategy in stocks. Carhart discussed in this paper on the topic “On Persistence in Mutual Fund Performance” using a sample free of survivor bias. The only significant persistence not explained is concentrated in strong underperformance by the worst –return mutual funds. Lehmann and David M. ABSTRACT (5) Mark M. 20 | P a g e . Patel and Zeckhauser’s (1993) “hot hands” result is mostly driven by the one-year momentum effect of Jaegadeesh and Titman (1993). The author main goal in this paper is to ascertain whether conventional measures of abnormal mutual fund performance are sensitive to the benchmark chosen to measure normal performance. which suggests the importance of knowing the appropriate model for risk and return in this context. they find statistically significant measured abnormal performance using all the benchmarks. I demonstrate that common factors in stock returns and investment expenses almost completely explain persistence in equity mutual funds mean and risk-adjusted returns. the rankings are not insensitive to the method used to construct the APT benchmark. The results do not support the existence of skilled or informed mutual fund portfolio managers. Hendricks. They find little similarity between the absolute and relative mutual fund rankings obtained from these alternative benchmarks. They employ the standard CAPM benchmarks and a variety of APT benchmarks to investigate this question.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH ABSTRACT (4) Bruce N. Modest discussed in this research paper on the topic “Mutual Fund Performance Evaluation: A comparison of Benchmarks and Benchmark Comparisons”. In addition. The economic explanation for this phenomenon appears to be open question. Finally.
This investigation. Results indicate significant improvements in post merger performance and a reduction in expense ratios for target fund shareholders. Brown. mangers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be “winners”. we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time. Fleckenstein discussed in this paper on the topic “Preferences for Stock Characteristics as revealed by Mutual Fund Portfolio Holding”. An empirical investigation of the performance of 334 growth-oriented mutual funds during 1976 to 1991 demonstrates that mid-year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid-year winners. acquiring fund shareholders experience a significant deterioration in post 21 | P a g e . a potential agency problem in mutual funds. Ajay Khorana. Furthermore. W. Harlow and Laura T. ABSTRACT (8) Narayan Jayaraman. Starks discussed in this paper on the topic “Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry”.V. and Edward Nelling discussed in this paper on the topic “An Analysis of the Determinants and Shareholder Wealth Effects of Mutual Fund Mergers”. of the cross-section of mutual fund equity holdings for the years 1991 and 1992. In contrast. ABSTRACT (7) Eric G.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH ABSTRACT (6) Keith C. test of trendsfollowing and herd behavior by mutual funds. They test the hypothesis that when their compensation is linked to relative performance. This study examines the determinants of mutual fund mergers and their subsequent wealth impact on shareholders of target and acquiring funds. These findings are relevant to theories concerning investor recognition. shows that mutual funds have a significant preference towards stocks with low volatility. and corporate finance.
The likelihood of a fund merger is inversely related to fund size for both within and across-family mutual fund merger. poor past performance is a significant determinant for only within-family mergers. However. 22 | P a g e .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH merger performance. The net asset flows continue to remain negative for the combined fund in the year following the merger.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH OVERVIEW OF MUTUAL FUND INDUSTRY IN INDIA 23 | P a g e .
in 1963. There are broadly four distinct phases in the history of mutual funds in India. the initiative of the Government of India and Reserve Bank of India. • First Phase – UTI Establishment (1964-87) The first initiative was taken in 1963 by an Act of Parliament which established the Unit Trust of India (UTI). Reserve Bank of India played the major role in setting up the UTI which was also functioned and regulated under the administrative control of the RBI. UTI got de-linked from RBI and the responsibility was shifted to the 24 | P a g e . the mutual fund industry started with the formation of Unit Trust of India. Later in 1978.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH OVERVIEW OF MUTUAL FUND INDUSTRY IN INDIA As mentioned earlier.
In 1964. Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). It was followed by Can bank Mutual Fund. The following is the table of asset under management collected by the sectors at the end of 1993 Assets Year 1992 -1993 UTI PUBLIC SECTOR TOTAL • Amount Mobilised 11. In 1993. These funds gave varieties of funds and diversification options to the Indian investors. Punjab National Bank Mutual Fund. LIC came up with its first mutual fund.964 13. The first non. In June 1989. Private sector funds entered the market and started a new era in the Indian Mutual Fund Industry. Bank of Baroda Mutual Fund. The first private sector mutual fund was registered in July 1993.UTI Mutual Fund was SBI Mutual Fund which was established in June 1987. • Second Phase – Entry of Public Sector Funds (1987-1993) In 1987.6.247 8.021 ) 38. Indian Bank Mutual Fund. the first Mutual Fund Regulations came into existence. Bank of India . Since then.20% 0. 700 crores of assets under management (AUM) at the end of 1988. This scheme became so beneficial that UTI collected about Rs. first time the non – UTI entered the market with Public sector mutual funds. under which all mutual funds had to be registered and governed except UTI.757 47.004 Under Mobilisation as of Domestic Savings in % 5.90% 6.057 1. A broader Mutual Fund Regulations in 1996 substituted the SEBI Mutual Fund Regulation 1993 and now functions the whole industry. UTI launched its first scheme naming “Unit Scheme”.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Industrial Development Bank of India (IDBI) which took over the regulatory and administrative control from the RBI. These mutual funds were set up by public sector banks.10% Management( AUM gross Third Phase – Entry of Private Sector Funds (1993-2003) In 1993. many foreign mutual 25 | P a g e .
there were 33 mutual funds with total assets under management of Rs.Specified Undertaking of the Unit Trust of India assured return and some other schemes.amfiindia. At the end of year 2002. Bank of Baroda and LIC.44. The graph shows the growth in asset under management in Phase Four over the years From March 1965 to March . Punjab National Bank. The Specified Undertaking of Unit Trust of India functions under an administrator and the rules framed by Government of India. the mutual fund industry has currently entered into the phase of growth. Fourth Phase – Bifurcation of UTI (since February 2003) In February 2003.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH fund houses started setting up their funds in India and several mergers and acquisitions took place in the Industry. • First . As mergers are taking place among different private sector funds. 541 crores of assets under management.805 crores in which the Unit Trust of India was on the top of other funds with Rs.2011 Source – www. UTI was divided into two separate entities after the abolishment of the Unit Trust of India Act 1963.com 26 | P a g e . 21. • Second .UTI Mutual Fund which was sponsored by State Bank of India. 1. It does not come under the regulations of the Mutual Fund Regulations. It functions under the Mutual Fund Regulations and is registered with SEBI.
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AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INDUSTRY PROFILE 28 | P a g e .
Net Assets Value Net asset value (NAV) represents the value of each unit in the scheme. NAV is calculated at the end of every trading day based on the closing portfolio of securities market prices. and other securities. collected. Net Asset Value (NAV) = Unit-holders’ Funds in the Scheme No. The money. debentures.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTRODUCTION What are Mutual Funds? A Mutual Fund is a trust acting as a vehicle that mobilizes money from investors and invest in different kinds of securities and markets with an investment objective and a common goal. This is calculated on the daily basis and the investors buy the shares from the fund company and sell at this value to the fund company. of Units 29 | P a g e . The securities generate returns and the unit holders share the income earned in proportion to the share of units owned in the scheme by them. is invested in shares. When a scheme is made available first time in the market for investment is known as New Fund Offer (NFO). All the income and realized capital gains generated are distributed to unit holders of the funds.
Since post-NFO. These types of funds don’t have fixed maturity. Therefore.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Types of Mutual Funds Schemes in India 1. The sale price is always equal and linked to the Net Asset Value of the scheme. post-NFO in a stock exchange. When investors sell the units from the open ended scheme at their repurchase price and get back to their equivalent value. The trading is done through a listing of the scheme in a stock exchange which is mandatory for such schemes. 30 | P a g e . after the NFO. It is known as repurchase transaction. When investors acquire new units from the open ended scheme at their sale price or existing investors buy more units. Similarly. By structure: • Open ended funds are those schemes in which the investors can enter or exit at any point of time. The re-purchase price is equal and linked to the NAV of the scheme. even after the NFO or launch of a fund. The mutual fund makes arrangements for the investors to sell the units through trading. investors who want to buy Units will have to find a seller for those units in the stock exchange. The unit capital keeps on changing on a regular basis. it is known as sale transaction. sale and purchase of units happen to or from counterparty in the stock exchange – and not to or from the mutual fund – the unit capital of the scheme remains stable. • Close ended funds are those types of schemes which have a fixed maturity where investors buy units of a close ended scheme only during NFO from the fund. investors who want to sell Units will have to find a buyer for those units in the stock exchange.
By investment objective: • Equity Schemes: A scheme might have an investment objective to invest largely in equity shares and equity-related investments like convertible debentures. • Debt Schemes: Schemes invest in debt securities like Treasury Bills. but become open ended at pre specified intervals.and Small-Cap (investment in smaller companies that are in their growing stages). They move up and down as much as their benchmarks move. For example. 2. a passive fund on Nifty index will buy all 50 stocks in the same proportion as held by the Nifty. 3. For instance. Bonds and Debentures. These schemes have low running costs. an interval scheme might become open ended between January 1 to 15. Such schemes are called equity schemes.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • Interval funds combine features of both open ended and close ended schemes. Types in Equity Funds can be broadly classified under Large-Cap (investment in large and well-established companies). Government Securities. Since this increases the role of the fund manager. Bond(investment in corporate bonds and partly in government securities). and July 1 to 15. Mid. • Passively managed funds only aim to mimic an index. By management: • Actively managed funds are funds where the fund manager has the flexibility to choose the investment portfolio. the expenses for running the fund turn out to be higher. Government Securities (investment only in government securities) and Liquid (investments in scrip that mature in a very short time). within the broad parameters of the investment objective of the scheme. They are largely close ended. and Sector/Thematic (investment in select sectors). Investors expect actively managed funds to perform better than the market. and as such don’t need fund managers. They invest in scrip’s – and in exactly the same proportion – as lie in their benchmark indices. each year. 31 | P a g e .
Structure of Mutual Funds: Mutual funds in India. 32 | P a g e . and also ensure that unit holders get their due returns. For major decisions concerning the fund. AMC and custodian. A detailed discussion follows: • Sponsor: The sponsor initiates the idea to set up a mutual fund. scheduled bank or financial institution. Trustees float and market schemes. default-free dealings and a general reputation of fairness. Once the AMC is formed. whether the fund's assets are protected. A sponsor has to satisfy certain conditions. The sponsor appoints the trustees. • Trust/board of trustees: Trustees hold a fiduciary responsibility towards unit holders by protecting their interests. 1996. It could be a registered company. and secure necessary approvals. Trustees also review any due diligence done by the AMC. they have to take unit holders' consent. They submit reports every six months to SEBI. such as on capital.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • Hybrid Schemes: Hybrid funds have an investment charter that provides for a reasonable level of investment in both debt and equity. are set up as a three tier structure: Sponsor-Trust-Asset Management Company. track record (at least five years' operation in financial services). They check if the AMC's investments are within defined limits. in accordance with the norms of the SEBI (Mutual Fund) Regulations. the sponsor is just a stakeholder.
An AMC takes investment decisions. who is the guardian of the funds and assets of the investors. right offers. maintains proper accounting and information for pricing of units. and submits quarterly reports to the trustees. custodian is appointed by board of trustees. offer for sale. Its net worth should not fall below Rs 10 crores. and provides information on listed schemes and secondary market unit transactions. Source: HSBC 33 | P a g e . • Transfer Agents: They are responsible for issuing and redeeming units of the Mutual Fund and providing other Mutual Fund related services to investors.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • Fund Managers/AMC: They are the ones who manage your money. Track corporate actions like bonus issues. The investor’s fund and the investments are held by the custodian. It also exercises due diligence on investments. buy back and open offers for acquisition. A fund's AMC can neither act for any other fund nor undertake any business other than asset management. calculates the NAV. compensates investors through dividends. • Custodians: For safekeeping of physical securities of Mutual Fund. Register and Transfer (R&T) Agents manage the sale and repurchase of units and keep the unit holders accounts.
• Divisibility: Many investors don't have the exact sums of money to buy round lots of securities. the cheaper that product becomes. Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. Diversification involves the mixing of investments within a portfolio and is used to manage risk. for both large and small investors. you are able to sell your mutual funds in a short period of time without there being much difference between the sale price and the most current market value. This also occurs in the purchase and sale of securities. • Liquidity: Another advantage of mutual funds is the ability to get in and out with relative ease. • Economies of Scale: The easiest way to understand economies of scale is by thinking about volume discounts. don’t put all your eggs in the same basket‟. In general. you are also choosing a professional money manager.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Advantages of Mutual Funds: • Diversification: One rule of investing. is asset diversification: this is in accordance with the phrase. • Professional Management: When you buy a mutual fund. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. 34 | P a g e . the more of one product you buy. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging.
• Fees and commissions: All funds charge administrative fees to cover their dayto-day expenses.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Disadvantages of Mutual Funds: • No Guarantees: The value of your mutual fund investment. too. you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped. 35 | P a g e . unlike a bank deposit. Payment is made through post dated cheques or direct debit facilities. financial consultants. mutual funds are usually not insured or guaranteed by an agency. Some funds also charge sales commissions or "loads" to compensate brokers. The investor gets fewer units when the NAV is high and more units when the NAV is low. or financial planners. • The Diversification Penalty: Diversification can help to reduce your risk of loss from holding a single security. • Management risk: When you invest in a mutual fund. an investor invests in debt oriented fund and gives instructions to transfer a fixed sum at a fixed interval. Remember. you might not make as much money on your investment as you expected. INVESTMENT STRATEGIES • Systematic Investment Plan: Under this a fixed sum is invested each month on a fixed date of a month. that diversification does not protect you from an overall decline in the market. to an equity scheme of the same mutual fund. This is called as the benefit of Rupee Cost Averaging (RCA) • Systematic Transfer Plan: Under this. In addition. but it limits your potential for a "home run" if a single security increases dramatically in value. could fall and be worth less than the principle initially invested.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • Systematic Withdrawal Plan: If someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month. RISK vs. RETURN ACCORDING TO THE TYPES OF MUTUAL FUNDS 36 | P a g e .
of a security or a portfolio in comparison to the market as a whole. The excess return of the investment relative to the return of the benchmark index is its "alpha".0. a beta of more than 1.0 indicates that the investment's price will be more volatile than the market 37 | P a g e . Beta is calculated using regression analysis. Simply stated. the market has a beta of 1. Individual security and portfolio values are measured according to how they deviate from the market. or systematic risk." is a measure of the volatility.0 indicates that the investment will be less volatile than the market.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Measurement of fund risk: There are six main indicators of investment risk that apply to the analysis of stocks. They are alpha. These statistical measures are historical predictors of investment risk/volatility and are all major components of modern portfolio theory (MPT). correspondingly. and the Treynor ratio. • Alpha: Alpha is a measure of an investment's performance on a risk-adjusted basis. By definition. the Sharpe ratio. A beta of less than 1. beta. and. A positive alpha of 1. standard deviation. It takes the volatility (price risk) of a security or fund portfolio and compares its risk-adjusted performance to a benchmark index. r-squared. and you can think of it as the tendency of an investment's return to respond to swings in the market. bonds and mutual fund portfolios. alpha is often considered to represent the value that a portfolio manager adds or subtracts from a fund portfolio's return. All of these risk measurements are intended to help investors determine the risk-reward parameters of their investments. also known as the "beta coefficient.0 means the fund has outperformed its benchmark index by 1 %.) • Beta: Beta.
• Sharpe Ratio: Developed by Nobel laureate economist William Sharpe. the more that data is spread apart. the better its riskadjusted performance. standard deviation is applied to the annual rate of return of an investment to measure its volatility (risk). With mutual funds. In finance. • Standard Deviation: Standard deviation measures the dispersion of data from its mean. In plain English.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • R-Squared: R-Squared is a statistical measure that represents the percentage of a fund portfolio's or security's movements that can be explained by movements in a benchmark index. a mutual fund with an R-squared value between 85 and 100 has a performance record that is closely correlated to the index. the higher the difference is from the norm. According to Morningstar. 38 | P a g e . A fund rated 70 or less would not perform like the index. R-squared values range from 0 to 100. The greater an investment’s Sharpe ratio. The Sharpe ratio tells investors whether an investment's returns are due to smart investment decisions or the result of excess risk. this ratio measures risk-adjusted performance. the standard deviation tells us how much the return on a fund is deviating from the expected returns based on its historical performance. A volatile stock would have a high standard deviation. It is calculated by subtracting the risk-free rate of return from the rate of return for an investment and dividing the result by the investment's standard deviation of its return.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SOME MAJOR PLAYERS IN THE MUTULA FUND INDUSTRY IN INDIA • • • • • • • • • • • • • • • • • • • • • • • ABN AMRO Mutual Fund Birla Mutual Fund Deutsche Mutual Fund DSP BlackRock Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund Franklin Templeton Investments HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Morgan Stanley Mutual Fund ICICI Prudential Mutual Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund Standard Chartered Mutual Fund Sundaram Mutual Fund Tata Mutual Fund Taurus Mutual Fund Unit Trust of India UTI Mutual Fund 39 | P a g e .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH COMPANY PROFILE 40 | P a g e .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
Introduction to DSP BlackRock Formerly known as DSP Merrill Lynch, until BlackRock acquired the share of Merrill Lynch, DSP BlackRock (DSP BR) is a tie-up of the Indian D.S. Prabudas, one of the founding-fathers of the Bombay Stock Exchange, and the American BlackRock, which is currently the biggest money-manager in the world. Blackrock’s Assets under Management total US$3.36 trillion across equity, fixed income, cash management, alternative investment, real estate, and advisory strategies. DSP BR is a 60-40 venture with DSP having the greater share. At present, DSP BR has a total of twenty-three parent products under its various fundtypes. The Equity Funds DSP BR is credited with the Natural Resources and New Energy Fund, the Micro Cap Fund, the Equity Fund, the Top 100 Equity Fund, the Opportunities Fund, the India T.I.G.E.R. Fund, the Technology.com Fund, the Small and Mid Cap Fund, Tax Saver Fund, and the newly-launched Focus 25 Fund. Under Hybrid Schemes DSP BR has the Savings plus Fund (Aggressive, Moderate, and Conservative) and the Balanced Fund to its name. DSP BR also manages eight Fixed Income Schemes, viz., the Liquidity Fund, the Floating Rate Fund, the Liquid plus Fund, the Treasury Bill Fund, the Short Term Fund, the Bond Fund, the Government Securities Fund, and the Strategic Bond Fund. Finally, the World Gold Fund, the World Mining Fund, and the World Energy Fund are its Funds of Funds. Noteworthy it is that DSP BR bagged the Best Equity Fund House (for a 3-year performance ending December 31, 2009) at the Lipper Fund Awards 2010 and the Best Equity Fund House (for a 1-year performance ending December 31, 2009) at the CNBCTV18 – CRISIL Mutual Fund of the Year Awards 2010. Individual accolades were won by several schemes at the aforementioned and the ICRA Mutual Fund Awards 2010, viz., the Technology.com Fund, the Government Securities Fund, the Equity Fund, the Top 100 Equity Fund, and the Small and Mid Cap Fund.
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AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
Sponsors: The Asset management company is sponsored by two non banking financial companies (NBFC), namely DSP HMK Holdings Pvt. Ltd. & DSP ADIKO Holdings Pvt. Ltd., and BlackRock (BlackRock is a premier provider of global investment management services to institutional and retail clients. It serves in over sixty countries), an investment management company headquartered in New York. Trustee: DSP BlackRock Trustee Company Private Ltd., a company incorporated under the Companies Act, 1956, is the trustee for the Fund vides Trust Deed dated December 16, 1996. The shareholding of the Trustee is as follows: BlackRock Advisors Singapore Pvt. Ltd., a wholly owned subsidiary of BlackRock Inc., holds 49% and the balance 51% is held by Mr. Hemendra Kothari. Asset Management Company (AMC): DSP BlackRock Investment Managers Pvt. Ltd. is the investment manager to DSP BlackRock Mutual Fund. The AMC directors include Chairman, Mr. Hemendra Kothari – founder of DSP Financial Consultants Ltd – and Mr. Larry Fink – Chairman and Chief Executive Officer of BlackRock – amongst others.
DSP BR vis-à-vis Industry, in terms of Asset under Management (AUM):
AUM is simply the market value of the assets that an investment company manages on behalf of investors. AUM is looked at as a measure of success against the competition and consists of growth/decline due to both capital appreciation/losses and new money inflow/outflow. This measurement is normally used to calculate the money that an AMC is managing through its various schemes put all together.
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AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH
HDFC Asset Management Co. Ltd. Reliance Capital Asset Management Ltd. ICICI Prudential Asset Management Co. Ltd. Birla Sun Life Asset Management Co. Ltd. UTI Asset Management Company Ltd SBI Funds Management Private Ltd. Franklin Templeton Asset Management Pvt. Ltd. DSP BlackRock Investment Managers Pvt. Ltd. Kotak Mahindra Asset Management Company Ltd Tata Asset Management Ltd.
AUM, 06 July 2012, in Rs. Crs
86102.96 .69552.75 62869.41 .54686.38 50099.75 45845.77 36110.62 29825.87 20736.78 17206.17
FUND MANAGERS • • • • • • Anoop Maheshwari Apoorva Shah Dhawal Dalal Harsha Upadhyaya Kushal M. Choski Laukik Bagwe
PRODUCTS FUND OF FUNDS SCHEME 1. DSP BlackRock World Gold Fund 2. DSP BlackRock World Energy Fund 3. DSP BlackRock World Mining Fund 4. DSP BlackRock World Agriculture Fund EQUITY SCHEMES 1. DSP BlackRock Equity Fund 2. DSP BlackRock Top 100 Equity Fund 43 | P a g e
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH 3.com Fund 6. DSP BlackRock G Sec Fund 8. DSP BlackRock Bond Fund 6. DSP BlackRock Natural Resources & New Energy Fund 10. DSP BlackRock Strategic Bond Fund 7. DSP BlackRock Opportunities fund 4. DSP BlackRock India T. DSP BlackRock Money Manager Fund 4. DSP BlackRock Small and Mid Fund 7. fund 5. DSP BlackRock Micro Cap Fund 9. DSP BlackRock Focus Fund HYBRID SCHEMES 1. DSP BlackRock Technology. DSP BlackRock Short Term Fund 5. DSP BlackRock Tax Saver Fund 8. DSP BlackRock Income Opportunities Fund 3.R. DSP BlackRock Liquidity Fund 2. DSP BlackRock MIP fund 2. DSP BlackRock Treasury Bill Fund MILESTONE 44 | P a g e .E. DSP BlackRock Balanced Fund FIXED INCOME SCHEME 1.I.G.
• BlackRock honored as Global Fund House of the Year by Asian Investor Magazine. while iShares won the ETF Provider of the Year award. • Managing Director Bob Connolly.the world's first and New York City's only food rescue program." • BlackRock receives an award from City Harvest. a non-profit organization founded in 1982 . Larry Fink listed on Smart Money’s Power 30: Finance and Wall Street List in October 2009. Blackrock’s General Counsel. • • Financial News Asset Management Awards names Larry Fink CEO of the Year. • Wall Street & Technology selected BlackRock as the recipient of the "Best Analytics Award" for their Gold Book 2009 issue published in October.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • BlackRock Chief Operating Officer Sue Wagner rises through the ranks on Fortune's 12th annual list of "50 Most Powerful Women in Business. March 2010. honored BlackRock with awards for Liability Driven Investments Manager of the Year and Derivatives Manager of the Year. 45 | P a g e . a magazine for the institutional pension industry. receives Fund Titan Award for "Inside Counsel of the Year" by Ignites in September 2009. • Global Pensions.
where one can do SIP investments. So there are very fewer hassles while investing as well as tracking the investment dates. The amount which is debited from investor’s bank account is invested in the scheme(s) as selected by him for a specified tenure (months. The only difference in case of SIPs is that. and the returns generated by the respective funds are variable and are subject to market risks. years). 46 | P a g e .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH UNDERSTANDING THE NEED AND IMPORTANCE OF SIP Systematic Investment Plan (SIP) Systematic Investment Plan is a mode of investing in mutual funds. The flexibility to make SIPs on a daily. (either through an ECS mandate or through post-dated cheques forwarded). monthly or a quarterly basis is also available. through the IPIN (Internet Personal Identification Number) provided by the AMC and following the procedure as made available on their websites. where a fixed sum of money is deposited into a recurring deposit account with a fixed rate of interest. a fixed amount as desired is debited from your bank account on a specified date. Now all the Asset Management Companies (AMCs) / mutual fund houses also provide the ease and convenience of transacting online. the money is invested in a mutual fund scheme (equity schemes and / or debt schemes). They have set up their own online transaction platforms. Thus this enables the investor to invest regularly and build wealth over the long-term. A SIP mode of investment in mutual funds is similar to the mode which is followed while investing in a recurring deposit of a bank. In case of SIPs.
Makes market timing irrelevant SIPs make market timing irrelevant as most of the investors try to time the stock markets. Mind you. Power of compounding The regular investments through the SIP route will help the investor’s wealth grow by leaps and bounds. 47 | P a g e . apart from requiring a full time attention also requires expertise in understanding economic cycles and market scenarios.g. monthly or quarterly).: one has started a SIP of Rs 1. Timing the markets.000 today.000 has grown into a huge corpus of Rs 80 lakhs in 20 years (assuming a modest return of 15% p. Thus in turn reduces the burden of defraying a lump-sum amount from the investors. if investor cannot invest Rs 5. Small Investment (Light on the Wallet) The SIP mode enables to invest in smaller amounts at regular intervals (daily. a daily SIP is also possible (if you want to manage the volatility of the equity markets on daily basis).000 in lump-sum.). The investor can simply take the SIP route and trigger the mutual fund investment with as low as Rs 500 per month. 3. A long-term investment horizon is the key to wealth creation. 2. So the small savings of Rs 1. So.a. which investors may or may not possess.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH NEED OF SIPs There are some good reasons for investing regularly through SIPs which are as follows: 1. in a mutual fund scheme following prudent investment system and processes. For E. with a SIP tenure of 20 years. which in investors’ opinion are a complete waste of time.
This infuses good discipline since it forces to commit cash at market lows. Under rupeecost averaging investors would typically buy more of a mutual fund unit when prices are low and similarly buy fewer mutual units when prices are high.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Source: www. 48 | P a g e . when other investors around are wary and exiting the market. Rupee cost averaging In order to absorb the shocks of the volatile equity markets well. SIP works better as opposed to one-time investing. It also enables to lower the average cost of the investments.moneycontrol.com 4. This is because of rupee-cost averaging.
18 HDFC BANK NIRMAAN VIHAR HDFC BANK RAJORI GARDEN HDFC BANK VIKASPURI HDFC BANK PITAMPURA HDFC BANK TAGORE GARDEN HDFC BANK TILAK NAGAR 49 | P a g e .com Branches visited while summer internship: • • • • • • • HDFC BANK NOIDA SECTOR .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Source: www.moneycontrol.
Identify your investment needs. What are my investment objectives and needs? 2. Therefore. What are my cash flow requirements? Step Two . based on your age. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed the same Fund Manager. the first step is to assess your needs. you now have to choose which Mutual Fund and scheme you want to invest in. prompt and personalized service. family commitments. 50 | P a g e .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH HOW TO INVEST IN MUTUAL FUNDS Step One. How much risk am I willing to take? 3. Some factors to evaluate before choosing a particular Mutual Fund are: • The track record of performance over the last few years in relation to the appropriate yardstick and similar funds in the same category • How well the Mutual Fund is organised to provide efficient. Your financial goals will vary. level of income and expenses among many other factors. • Degree of transparency as reflected infrequency and quality of their communications. Begin by asking yourself these questions: 1.Choose the right Mutual Fund. financial independence. lifestyle. Once you have a clear strategy in mind.
Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals.Select the ideal mix of Schemes. The following charts could prove useful in selecting a combination of schemes that satisfy your needs. Investors seeking growth over a long term. BALANCED SCHEMES GROWTH SCHEMES MODERATE PLAN 51 | P a g e . AGGRESSIVE PLAN This plan may suit: • • Investors in their prime earning years and willing to take more risk.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Step Three .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH This plan may suit: • • Investors seeking income and moderate growth Investors looking for growth and stability with moderate risk. BALANCED SCHEMES GROWTH SCHEMES CONSERVATIVE PLAN 52 | P a g e .
Step Five . in case of debt schemes 53 | P a g e . However. With many open-ended schemes offering systematic investment plans. the approach that works best is to invest a fixed amount at specific intervals.Keep your taxes in mind As per the current tax laws.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH This plan may suit: • Retired and other investors who need to preserve capital and earn regular income. say every month. By investing a fixed sum each month. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. this regular investing habit is made easy for you. you get fewer units when the price is high and more units when the price is low.Invest regularly For most of us. Dividend/Income Distribution made by mutual funds is exempt from Income Tax in the hands of investor. BALANCED SCHEMES GROWTH SCHEMES Step Four . thus bringing down your average cost per unit.
Further. there are other benefits available for investment in Mutual Funds under the provisions of the prevailing tax laws.69 Equity Fund 54 | P a g e . The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return. You may therefore consult your tax advisor or Chartered Accountant for specific advice to achieve maximum tax efficiency by investing in mutual funds.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Dividend/ Income Distribution is subject to Dividend Distribution Tax. Reap the rewards in the years to come. you will make more than if you wait and invest later. Mutual Funds are suitable for every kind of investor whether starting a career or retiring.66 6 Months 8.33 7.11 -4.60 8.57 Since inception 8. Step Seven-The final step All you need to do now is to get in touch with a Mutual Fund or your advisor and start investing. conservative or risk taking. PORTFOLIO OF DSP BLACKROCK PRODUCTS ANNUALISED RETURN CHART Fund Name DSPBR 3 Months Equity -2. growth oriented or income seeking.10 11.16 1 Yr -8.57 AND COMPOUNDED Fund DSPBR Top 100 -1. Step Six – Start Early It is desirable to start investing early and stick to a regular investment plan. If you start now.92 27.91 5 Yrs 7.38 3 Yrs 14.
1000 Rs. 1%.93% Debt-0.509.07% Equity-96.00% Others-3.April 29.61 as on Jun – 2012 . in crores) Rs. 0 Months to 12 to 12 Months. from a from a portfolio that is substantially substantially constituted of equity and equity largest corporates. 1997 G. listed in India.Basis Scheme type DSPBR Equity Fund DSPBR Top 100 Equity Fund Open equity diversified Open ended equity diversified AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Fund objective The Scheme aims to provide The Fund is seeking to generate long portfolio term capital capital appreciation. 2007 Apoorva shah scheme (Managing this scheme since June 2006 ) Feb 21.685. by market capitalisation. 0 Months If redeemed bet. 5000 thereafter N. 43.00% Others-3. appreciation constituted of equity and related securities of the 100 equity related securities.07% Fund style Minimum investment amount Entry load Exit load 55 | P a g e Market Cap (Rs.000 and Rs.2012 73.A If redeemed bet.A N. 5.12 as on Jun .93% Debt-0. 2003 Launch date Asset allocation Equity-96. Fund manager Apoorva shah (Managing this since June 2006 ) D. Exit load is 1%.June 07. Exit load is Months.
06 Portfolio Ratio P/E 27.72 Standard deviation Sharpe ratio 3.08 0.10 0.11 as on Jun .76 0.20 3.27 0.12 0.30 0.32 0.35 0.2012 56 | P a g e .2012 25.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH MODERN PORTFOLIO STATISTICS: Sortino Treynor Beta VOLATILITY MEASURES Mean 0.14 as on Jun .07 0.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH DSP BLACKROCK EQUITY FUND NAV CHART (From 15 Jun to 13 Jul 2012) TOP 5 HOLDINGS DSP BLACKROCK EQUITY TOP 5 HOLDINGS= 19.37% 57 | P a g e .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH TOP 5 SECTOR HOLDINGS DSP BLACKROCK EQUITY TOP 5 SECTORS ALLOCATION= 51.16% DSP BLACKROCK TOP 100 EQUITY FUND NAV CHART (From 15 Jun to 13 Jul 2012) 58 | P a g e .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH TOP 5 HOLDINGS DSP BLACKROCK TOP 100 EQUITY TOP 5 HOLDINGS= 37.43% 59 | P a g e .24% TOP 5 SECTOR HOLDINGS DSP BLACKROCK EQUITY TOP 5 SECTORS ALLOCATION= 65.
looking at the facts of the regular products of DSP BlackRock on infer from the above stated facts. For any investor looking for long term capital appreciation.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Therefore. 60 | P a g e . DSPBR Equity fund and DSPBR Top 100 Equity Fund are the better investment options.
DSP BLACKROCK Mutual Fund offers clear and non overlapping positioning of different funds.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SWOT ANALYSIS OF DSP BLACKROCK MUTUAL FUND STRENGTHS Being the 8th biggest AMC. • DSP BLACKROCK Mutual Fund is one of the oldest AMC’s in private sector and schemes which are matured enough pull new investors because of high returns.and hence people show more faith in DSP BLACKROCK Mutual Fund.give ample amount of choice to customers.ranging from debt funds to equity and a mixture of both invarious proportions. WEAKNESS • • Lack of promotional material . Blackrock’s General Counsel. Larry Fink listed on Smart Money’s Power 30: Finance and Wall Street List in October 2009.banners. • • • • • Wide variety of funds.dispensers . BlackRock honored as Global Fund House of the Year by Asian Investor Magazine. Managing Director Bob Connolly. receives Fund Titan Award for "Inside Counsel of the Year" by Ignites in September 2009. Proper training not being provided to bank officials 61 | P a g e . DSP BLACKROCK Mutual Fund has a cutting edge over other AMC’s • The name DSP BLACKROCK is also associated with one of the largest public sector bank in India.
Ongoing downfall in the market may impose adverse effects 62 | P a g e . Clear information provided to investors may lead to more investments. Share market slump may see downfall in investments.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH OPPORTUNITIES • • • Untapped rural market offers huge potential. More focus on PSU’s may enhance business.ICICI prudential are catching up fast on the market share. THREATS • • • Competitors like Reliance AMC.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH QUESTIONNAIRE 63 | P a g e .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH QUESTIONNAIRE Awareness and Investment Pattern Of General Public in Mutual Fund PERSONAL DETAILS (These details are required for communication purposes only and will not be disclosed) Name * Gender * Age * Below 31 31-40 41-50 Above 50 CONTACT DETAILS Mobile Number Email Address Question 1. Which are the investment tools you invests in? * Bank Fixed Deposit 64 | P a g e . Do You Invest? * Yes No Question 2.
Do you invest in Mutual Funds? Yes No Question 7.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH RBI Bonds Mutual Funds Equities Others (Please specify) ____________________ Question 3.You primarily invest for (Rank according to your preference) Tax Benefits Returns Liquidity Savings Question 4. Rank the investments options according to your preference of investment Bank Fixed Deposits RBI Bonds Mutual Funds Equities Others (Please specify) ____________________ Question 5. Are you aware of the various schemes offered by Mutual Funds? If the answer to question 9 is "Yes" Yes 65 | P a g e . What is average tenure of investment? Short-term Long-term Question 6.
If Mutual Fund offer you Steady Returns. Liquidity. Would you be interested to know more about Mutual Funds? Yes No 66 | P a g e . Tax Benefits.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH No Somewhat Question 8. Which mode of payment you prefer the most? SIP (Systematic Investment Plan) One Time Investment If the answer to question 9 is “No” Question 11. On whose external advice do you invest? Bank Distributor Agents Direct Investments Question 10. Do you know that you can get Tax Advantages by investing in Mutual Funds? Yes No Not Sure Question 9. Lesser Risk. Would you consider it as an investment option in the future? Yes No May Be Question 12. Diversification of Portfolio.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH 67 | P a g e .
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH FINDINGS AND ANALYSIS OF STUDY 68 | P a g e .
of respondents 120 32 152 Percentage 79% 21% 100% INTERPRETATION It is very important to know that how many people invest among all the respondents. As some people are not in position to do investment because of some personal reason. like they re-invest in their own unit. or they do not have enough surpluses for investment.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH FINDINGS AND ANALYSIS OF STUDY HOW MANY PEOPLE INVEST? Invest Doesn't Invest Total No. working on expansion plans. AGE DISTRIBUTION 69 | P a g e .
e. the most are in the age group of 31-40 yrs. of respondents 6 16 10 32 % of the respondents 19% 50% 31% 100% . the second most investors are in the age group of 41-50yrs i. i.e. 35%. 20% and the least investors are in the age group of below 30 yrs. WHY PEOPLE DO NOT INVEST? Reasons Working on Expansion Plans 70 | P a g e Re-invest their own unit Not enough Surplus Total No.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Age Distribution Number of Investors <=30 18 31-40 48 41-50 44 >50 10 INTERPRETATION According to this chart out of 120 Mutual Fund investors of New Delhi – NCR.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION People are not able to make investments because they are working on their expansion plans. DIFFERENT INVESTMENT TOOLS Reasons Bank Deposits RBI Bonds Mutual Funds Equities 71 | P a g e No. some of them re-invest their surplus in their own unit and some do not have enough surplus to make investment. of Investors 113 45 34 41 .
Other insuranc e.e. Following table shows preference of people for particular investment tool. Here I took one option i. Here we see that in which investment tools people like to invest more.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Others 30 INTERPRETATION We have several investment tools.This figure shows that majority of the respondents invest their money in Bank Deposits and small number of investors invest in Mutual Funds. others which includes LIC.Post saving schemes etc. FACTORS CONSIDERED BY INVESTORS WHILE INVESTING Rank Given Tax Benefit Returns Liquidity Savings 72 | P a g e 44 50 14 12 49 18 27 26 27 35 28 30 0 17 51 52 .
RANKING FOR INVESTMENT OPTIONS Ranking For Investment Options Investment Options Bank Deposits RBI Bonds Mutual Funds 73 | P a g e 1 80 15 4 2 30 30 7 3 7 50 43 4 3 25 66 .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION More of the people consider tax benefit as most important criteria for investment.As we can see that 44 people has ranked it as 1st and another 49 ranked it as 2nd People while making an investment also take return into account. But return has relatively less important as compared to Tax Benefit.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Equities 21 53 20 26 INTERPRETATION Here I asked the respondents to give rank to different investments options as per their preference. AVERAGE TENURE OF INVESTMENT Average Tenure of Investment Short -term Long .term Total Number of Respondent 74 46 120 % of Respondents 62% 38% 100% 74 | P a g e . It is totally based on a person’s point of thinking and ability to take risk andinvesting money in the market.
That is why the number of short-term period investors is more. Here the age of the investors matters a lot where young investors can take risks and invest for short-term. PREFERENCE FOR FUTURE INVESTMENT IN MUTUAL FUNDS Number of Preference for future investment RELIANCE HDFC ICICI PRUDENTIAL DSP BlackRock Others Total 75 | P a g e Investors 30 40 32 4 14 120 % of investors 25% 33% 27% 3% 12% 100% .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION Here I asked the respondents to give their investment tenure as per their preference. It is totally based on a person’s point of thinking and ability to take risk and investing money in the market.
On other side. some of the AMCs don’t have their own banks which lack for such benefits. NUMBER OF INVESTORS INVESTING IN MUTUAL FUND Invest In Mutual Funds? Yes No Total Number of Respondent 34 86 120 % of Respondents 28% 72% 100% 76 | P a g e .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION Most of the investors invest through HDFC.RELIANCE. HDFC and ICICI have their own banks which gives them the benefit of having a large number of customer base. The reason behind it is the investor prefer the Brand Image and out of these three.ICICI PRUDENTIAL.
REASON FOR NOT INVESTING IN MUTUAL FUND Reasons Bitter Past Experience lack of knowledge Lack of Confidence Difficult Scheme Selection In-efficient Advise Total Number of Respondent 2 98 70 45 43 258 % of respondents 1% 38% 27% 17% 17% 100% 77 | P a g e . The table shows us the number of people who invests in Mutual Fund out of 120 people.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION In this research we have 120 people who do investments. Out of that some invests inMutual Funds and some do not invests in Mutual Fund.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION Some investors have difficulty in selection of schemes. Few number of investors has bitter past experience so they decided that they do not invest in Mutual Funds in future. Some of them are not getting proper guidance from their advisers. AWARENESS OF SCHEMES OF MUTUAL FUND Knowledge of Schemes Yes No Few Total Number of Respondent 12 2 20 34 % of respondents 35% 6% 59% 100% 78 | P a g e .
Majority of the respondents were aware of few Mutual Fund Schemes (59%) But there are respondents who know all schemes of Mutual Funds (35%) KNOWLEDGE ABOUT TAX ADVANTAGE IN MUTUAL FUNDS Tax Advantage Yes No Few Total 79 | P a g e Number of Respondent % of respondents 19 56% 7 21% 8 24% 34 100% . Here we see that how many people know all the schemes. But they may or may not know thedifferent schemes available in Mutual Funds.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION People may have basic idea about Mutual Funds. some of the schemes or none of the schemes.
As most of the investors who filled the questionnaire were less than the age of 45. And most of them were salaried person. EXTERNAL ADVICE FOR INVESTING IN MUTUAL FUNDS External Advice Bank Distributors Agents Direct Investments Total Number of Respondent % of respondents 22 65% 2 6% 3 9% 7 34 21% 100% 80 | P a g e . That is why the number of mutual fund investors are aware of the tax advantage.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION Many of the Investors have the knowledge about the tax advantage offered by the mutual funds.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION ` As the inverstors have their accounts in the banks and most of the banks provide the services for mutual funds. PREFERENCE OF PAYMENT MODE Payment Mode SIPs One Time Investment Total Number of Respondent 10 24 34 % of respondents 29% 71% 100% 81 | P a g e . So the investors perfer banks the most while investing in the mutual funds.
As it is easy to pay monthly equally installment rather than the lump-sum amount. 82 | P a g e . But the rest of 5 investors who chose to invest as lump-sum are businessmen who want quick returns.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH INTERPRETATION The number of investors choose the payment mode as SIP( Systematic Investment Plan).
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH CONCLUSION 83 | P a g e .
As the awareness and income is growing the number of mutual fund investors are also growing. DSP BlackRock. Channels etc. They are is well larger known Brand.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH CONCLUSION Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. they are performing well and their Assets Under Management than others whose Brand name are not well known like Principle. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. UTI. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC). Products. Many of investors directly invest their money through AMC because they do not have to pay entry load. They think their money will not be secure in Mutual Fund. They can change investors’ mind from one investment option to others. etc. SBIMF. 84 | P a g e .Financial Advisors are the most preferred channel for the investment inmutual fund. etc. ICICI Prudential. Sunderam.Distribution channels are also important for the investment in mutual fund. There are many AMCs in India but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Only those people invest directly who know well about mutual fund and its operations and those have time. Reliance.“Brand” plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. I observed that many of people have fear of Mutual Fund.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SUGGESTIONS AND RECOMMENDATIONS 85 | P a g e .
• Before making any investment. because they are the main source to influence the investors. 86 | P a g e . By considering these three things they can take the customers into consideration. The advisors must make the investors aware about the benefits of mutual funds. So the advisors should try to change their mindsets. However. their need and time (how long they want to invest). Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Financial Advisors should first enquire about the risk tolerance of the investors/customers.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SUGGESTIONS AND RECOMMENDATIONS • The most critical problem is of unawareness. Investors must be made to understand that ignorance is no longer delight and what they are losing by not investing. so making greater efforts with younger customers who show some interest in investing should pay off. The advisors should target for more and more young investors. most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. • Mutual funds offer a number of benefits which other investment options do not offer. • Younger people aged under 35 will be a key new customer group into the future. • Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective. Noone will invest in the mutual funds until and unless he is completely convinced.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • Customers with graduate level education are easier to sell to and there is a large untapped market there. • Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. To succeed however. 87 | P a g e . Though most of the prospects and potential investors are not aware about the SIP. advisors must provide sound advice and high quality. There is a large scope for the companies to tap the salaried persons.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH BIBLIOGRAPHY 88 | P a g e .
) Top Asset Management Companies in India.com (2008) FundsIndia.com (2011) Investing in Mutual Funds. • Financialexpress. • Moneycontrol. What is a Mutual Fund? • Mutualfundsindia.About US . • Moneycontrol. 89 | P a g e .DSP BlackRock. Investing in Mutual Funds Online. • Oifc.com (2012) Why you should adopt the SIP route for your MF investments? • Business.mapsofindia. How to Invest.com (2012) Mutual funds lose over 7 lakh folios in six months. Investing in Funds. • Fundsindia.d.Invest in Mutual Funds.com (2011) Mutual Funds :. Investing in MF. • Dspblackrock.com (2010) Fund Managers .com (2007) MutualFundsIndia.com (n.in (2012) OIFC : Mutual Fund Trends in India: An Analysis.complete magazine on mutual funds industry in India.com (2012) AUM rises for the second consecutive month in May Moneycontrol.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH BIBLIOGRAPHY • Moneycontrol.com • Moneycontrol.com .
90 | P a g e . DSP BlackRock.com (2008) Top Rated Funds .com (2012) Welcome to AMFI !. • Investopedia. Research. Best Mutual Funds.com (2012) Mutual Fund Ratings. • Valueresearchonline.com (1993) Mutual Funds Articles | Investopedia.Value Research Online • Morningstar. No Load Funds • Amfiindia.com (2010) Types of Mutual Fund Products | Investment Schemes.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH • Dspblackrock. Performance. Growth Fund Ratings. Closed End Funds.
AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SYNOPSIS 91 | P a g e .
and Channels. 92 | P a g e . Supriya Lamba Objective: The objective of the project is: • • • To study the Consumer Behavior and awareness for Mutual Funds in India To find out the most preferred channel to invest To find out the preferences of the investors for Asset Management Company Findings: • People are not able to make investments because they are working on their expansion plans. Amit Bhatia Faculty Guide: Ms.Rupee is currently depreciating. Student’s Name: Ankur Aneja LTD. Majority of the respondents invest their money in Bank Deposits and small number of investors invest in Mutual Funds. 2.AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH “DSP BlackRock Mutual Funds : Understanding the Need and DSP BlackRock Importance of SIPs” INVESTORS MANAGEMENT PVT. Understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC). • • Conclusions & implications: 1. Products. Analyse how to allocate the assets according to the age. Industry Guide: Mr. some of them re-invest their surplus in their own unit and some do not have enough surplus to make investment. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest.
Amit Bhatia and my field Supervisor Ms Neha Kaul are very knowledgeable and experienced professionals. They both have helped me a lot in executing my project and have made me available all the data related to my project and has continuously updated me with the fluctuations in the stock market. 93 | P a g e .AMITY INTRENATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH Student perception about Industry Guide: Mr.
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