Project Report on “COMPARATIVE ANALYSIS OF MUTUAL FUNDS” AT BIRLA SUNLIFE AMC, A.
Project submitted in partial fulfillment for the award of the degree of MASTERS OF BUSINESS ADMINISTRATION BY ST.PAUL’S P.G COLLEGE (Affiliated to Osmania University) TURKYAMJAL HYDERABAD-500007.
I hereby declare that this project report titled “COMPARATIVE ANALYSIS OF MUTUAL FUNDS”, AT BIRLA SUNLIFE AMC submitted by me to the department of ST. PAUL’S POST GRADUATE COLLEGE is a bonofied student work undertaken by me and it is not submitted to any other university or institution for the award of any degree diploma/certificate or published any time before.
NAME & ADDRESS OF THE STUDENT
SIGNATURE OF THE STUDENT
At the very outset, I would like to place my sincere thanks to Mr. MUKUL GUPTA (Managing Director) to permit me to undertake this project entitled “COMPARATIVE ANALYSIS OF MUTUAL FUNDS”, AT BIRLA SUNLIFE AMC ”. I would like to express my deep gratitude to SREEDHAR.K (BIRLA SUNLIFE AMC, H.R), who helped me to get all the information needed to fulfill this project.
I also would like to take this opportunity to profusely thanks our Mrs. UMARANI, H.O.D of the M.B.A stream and Mr. VISWNATH SHARMA (ASSISTANT PROFESSOR), and I am very grateful for the guidance through out the project.
Above all I would like to express my deep felt gratitude to my parents, my brother and friends for their blessings without which this task would have been impossible.
48 49 – 63 67 68 69 70
. 7 SUGGESTIONS AND RECOMMENDATIONS. REVIEW OF LITERARURE 5. INTRODUCTION.TABLE OF CONTENTS. 2. BIBILIOGRAPHY PAGE NUMBERS 2 – 10 11 – 41 42 – 45 46 . INDUSTRYPROFILE 3. CONTENTS 1. DATA ANALYSIS AND INTERPRETATION. THE COMPANY PROFILE 4. 6 SUMMARY AND FINDINGS. CONCLUSION 9. 8.
The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). These could range from shares to debentures to money market instruments.
A mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario. A typical individual is unlikely to have the knowledge. Each Mutual Fund scheme has a defined investment objective and strategy. real estate. Markets for equity shares. understand their implications and act speedily. professionally managed portfolio at a relatively low cost. An individual also finds it difficult to keep track of ownership of his assets. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. skills. derivatives and other assets have become mature and information driven.INTRODUCTION
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. bonds and other fixed income instruments. brokerage dues and bank transactions etc. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme.
. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. investments. Price changes in these assets are driven by global events occurring in faraway places. inclination and time to keep track of events.
mutual funds gained popularity only after the Second World War. there are thousands of firms offering tens of thousands of mutual funds with different investment objectives. the age of the prime investor usually determines what style of investing is right for them. Many banks and other financial institutions have set up asset management services that specialize to some degree in various styles of asset management. most asset management services try to find a happy medium between aggressive investing (which can be risky) and conservative investing (which emphasizes safety). If the client is an individual or a family. and "green" waste management initiatives. environmental issues. options and commodities trading. Some examples of socially relevant investments are low-cost housing developments. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. In effect. While the concept of individuals coming together to invest money collectively is not new. but to also make a positive social impact. alternative fuel projects like windmill farms. Although risky investing sometimes pays off handsomely. the mutual fund vehicle exploits economies of scale in all three areas – research. In fact. There are a number of niche asset management firms that appeal to certain constituencies and personal preferences of their investors. and junk bonds. or specific themes such as not investing in tobacco companies.A mutual fund is the answer to all these situations. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. They may advertise their services as being focused on political issues.
. The term Asset Management can be defined as a planned program of investing and protecting an individual's or a company's financial assets with the goal of at least increasing them. A good financial adviser will make you aware of each investment styles' benefits and pitfalls. investments and transaction processing. There are some asset management firms that strictly focus on high growth. Other companies seek to invest for growth. In general. high risk investments such as emerging market stocks. Younger investors aim for high asset growth. just as often it can result in financial disaster. while older investors shift towards security and a lower rate of asset growth. the mutual fund in its present form is a 20 th century phenomenon. Globally.
Typical asset management companies utilize a basic set of resources to achieve success for their investors:
Investment Services .These are the planned programs that seek to balance growth with risk.Asset management companies employ an array of researchers and consultants who concentrate on individual market sectors and try to forecast how each sector will perform in the short. Research . and precious metals. and long terms. These programs usually combine various types of investments such as stocks.
. bonds. mid.
STRUCTURE OF MUTUAL FUNDS
There are many entities involved in the mutual funds organization. The structure is explained below. It mainly comprises the following
This means that the sponsor should have been doing business in financial services worth of the immediately preceding year should be more than the capital contribution of the sponsor in AMC and the sponsor should show profits after providing depreciation. as in most countries these sponsors need approval from the regulator viz. registrars transfer agents and custodians. Trust and Asset Management Company are involved in setting up a mutual fund. • The sponsor and any of the directors or principal officers to be employed by the mutual fund. should not have been found guilty of fraud or convicted of an offence involving moral turpitude or guilty of economic offences. a mutual fund scheme is initiated by a Sponsor. SEBI (Securities Exchange Board of India). • The sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions. interest and tax for three out of the immediately preceding five years. It pre specifies the investment objectives of the fund. which organizes and markets the fund. SEBI looks at track record of the sponsor and its financial strength. SEBI will register the mutual fund if the sponsor fulfills the following criteria. Typically.
Sponsor means any person who acting alone or with another body corporate establishes a mutual fund. the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation.Three key players namely Sponsor. In India. They are assisted by other independent administrative entities like banks. The sponsor of a fund is similar to the promoter of a company as he gets the fund registered with SEBI. the risks associated.
Most of the funds in India are managed by the Board of Trustees. The sponsor is required to contribute at least 40 per cent of the minimum net worth of the asset management company. by subscribing to ‘units’ issued by various schemes established by the Trust as evidence of their beneficial interest in the fund. 10 Crore at all times and this net worth should be
. The AMC is a corny formed and registered under the Companies Act. in the name of he Trust. 50 per cent of the trustees shall be independent trustees (who are not associated with an associate. The trustees shall be accountable for and be the custodian of funds/property of respective scheme. The sponsor forms the Trust and registers it with SEBI. 1882. The AMC should be registered with SEBI. The fund sponsor acts as the settler of the Trust. Asset Management Company The trustees appoint the Asset Management Company with the prior approval of SEBI.
A mutual fund in India is constituted in the form of a public Trust created under the Indian Trust Act. floats and then manages the different investment schemes as per SEBI regulations and the Trust Deed. The AMC. which is an independent body and acts as protector of the unit holders’ interests. Thus. a mutual fund is just a ‘pass through’ vehicle. either directly or acting through the Trustees also appoints a custodian to hold the fund assets. It charges a fee for the services it renders to the mutual fund trust. 1956. He also appoints an Asset Management Company as fund managers. It acts as the investment manager to the Trust under the supervision and direction of the trustees. At least. who are the beneficiaries of the trust. The fund then invites investors to contribute their money in the common pool. The AMC of a mutual fund must have a net worth of at least Rs.The sponsor forms a trust and appoints a Board of Trustees. subsidiary or sponsor in any manner). The sponsor. contributing to its initial capital and appoints as trustee to hold the assets of the Trust for the benefit of the unit holders. to manage the affairs of the mutual fund and operate the schemes of such mutual funds.
which is responsible for the custody of the assets of the fund. The custodian is also responsible for the receipt of all kinds of cash and non-cash benefits such as bonus. rights. issues certificates/account statements to investors. The trustees are empowered to terminate the appointment of the AMC and may appoint a new AMC with the prior approval of the SEBI and unit-holders. It can undertake specific activities such as advisory services and financial consultancy. Transfer Agent AMC’s also hire a registry and transfer agent which takes care of purchase and sale of the units of the fund. etc. It cannot act as a trustee of any other mutual fund. The AMC shall be responsible for the acts of commission or commissions by its employees or the persons whose services have been procured. maintains the register of members.
. replacement of lost unit certificates etc. dividends.in the form of cash. • The AMC shall exercise due diligence and care in all its investment decisions. The custodian is usually a bank or any other financially sound institutions. Custodian The AMC has to hire an outside custodian. makes dividend payments and handles investor related services like change of address. At least 50 per cent of the directors of the board of directors of AMC should not be associated with the sponsor or its subsidiaries or the trustees. It is required to disclose the scheme particulars and base of calculation of NAV. Obligations of an AMC: • The AMC shall take all the reasonable steps and exercise due diligence to ensure that any scheme is not contrary to the Trust deed and provisions of investment of funds pertaining to any scheme is not contrary to the provisions of the regulations and Trust deed. issues redemption checks. It must submit quarterly reports to the mutual fund.
The registrars and share transfer agents to be appointed by AMC are to be registered with SEBI.
• • •
No person. The trustees at the request of an AMC can terminate the assignments of the AMC.
No AMC shall utilize services of the sponsor or any of its associates. who has been found guilty of any economic offence or involved in violation of securities law. or their relatives for the purpose of any securities transaction and distribution and sale of securities.• • •
An AMC shall submit to the trustee’s quarterly reports. The AMC shall abide by his code of conduct specified in the fifth schedule. employees. An AMC shall not deal in securities through any broker associated with a sponsor or a firm which is an associate of sponsor beyond 5 per cent of the daily gross business of the mutual fund. should be appointed as key personnel. unless disclosure is made to the unit-holders and brokerage/commission paid is disclosed in half-yearly accounts of the mutual fund.
including Non-resident Indians Other Corporate Bodies (OCBs) Foreign Entities. Foreign citizens/entities are however not allowed to invest in mutual funds in India.
Mutual funds in India are open to investment by Residents including Resident Indians Individuals. Foreign Institutional Investors (FIIs) registered with SEBI.
. including high net worth individuals and the retail or small investors Indian Trusts/Charitable Institutions Banks Non-Banking Finance Companies Insurance Companies Provident Fund Non-residents.MUTUAL FUND INVESTORS. namely.
SBI Mutual Fund was the first non.47. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.6. Bank of Baroda Mutual Fund (Oct 92). at the initiative of the Government of India and Reserve Bank the.UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87). It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. At the end of 1988 UTI had Rs. Indian Bank Mutual Fund (Nov 89). public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).INDUSTRY PROFILE
HISTORY OF MUTUAL FUNDS IN INDIA
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.UTI.
Second Phase – 1987 – 1993 (Entry of Public Sector Funds)
1987 marked the entry of non. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1993. Bank of India (Jun 90).
. the mutual fund industry had assets under management of Rs. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The history of mutual funds in India can be broadly divided into four distinct phases
First Phase – 1964 – 87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.700 crores of assets under management. Punjab National Bank Mutual Fund (Aug 89).004 crores.
functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The Unit Trust of India with Rs. under which all mutual funds. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. representing broadly. giving the Indian investors a wider choice of fund families. assured return and certain other schemes. 1993 was the year in which the first Mutual Fund Regulations came into being. 541 crores of assets under management was way ahead of other mutual funds. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities.44. The Specified Undertaking of Unit Trust of India. the assets of US 64 scheme. 835 crores as at the end of January 2003. Also. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions.
Fourth Phase – since February 2003
In February 2003. As at the end of January 2003. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The number of mutual fund houses went on increasing.
. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.805 crores. a new era started in the Indian mutual fund industry.29. there were 33 mutual funds with total assets of Rs. except UTI were to be registered and governed. 1.Third Phase – 1993 – 2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993. 21.
With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. and with recent mergers taking place among different private sector funds. BOB and LIC. 000 crores of assets under management and with the setting up of a UTI Mutual Fund. sponsored by SBI. It is registered with SEBI and functions under the Mutual Fund Regulations.2.76. 17. PNB. conforming to the SEBI Mutual Fund Regulations. which manage assets of Rs.The second is the UTI Mutual Fund Ltd. 2006 there were 30 funds.
.82 crores under 428 schemes. As at the end of June. the mutual fund industry has entered its current phase of consolidation and growth.471.
90 6515. Few hired 17
.52 26218.90 25695.76 113446.49 13011.ASSETS UNDER MANAGEMENT
Mutual Fund Name ABN AMRO Mutual Fund Benchmark Mutual Fund Birla Sunlife Mutual Fund BOB Mutual Fund Can bank Mutual Fund Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Fidelity Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund JM Financial Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Principal Mutual Fund Prudential ICICI Mutual Fund Reliance Mutual Fund SBI Mutual Fund Standard Chartered Mutual Fund TATA Mutual Fund UTI Mutual Fund AUM (As on 30.52 31431.92 30958.43 4760.37 2411.00 11212.97 11841.83 15883.05
RECENT TRENDS IN MUTUAL FUND INDUSTRY The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players.01 1341. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity.88 22870.84 3818.10 12341.79 14078.16 3036.42 4756.55 9142.06. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then.2006) 3850.65 230.43 9786.
The performance of most of the schemes floated by these funds was not good. which makes money in the long term and requires deep-pocketed support in the intermediate years. sharp improvement in service standards and disclosure. different types of mutual fund schemes have evolved. The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. float new schemes etc. The experience of some of the AMCs floated by private sector Indian companies was also very similar. They can be credited with introducing many new practices such as new product innovation.
Types of Mutual Fund Schemes:
The objectives of mutual funds are to provide continuous liquidity and higher yields with high degree of safety to investors. They quickly realized that the AMC business is a business. and it is doubtful whether. broker education and support etc. Some have sold out to foreign owned companies.
. barring a few exceptions. usage of technology. Mutual fund schemes may be classified on the basis of its structure and its investment objective. In fact. some have merged with others and there is general restructuring going on. they have serious plans of continuing the activity in a major way. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these. Most of these AMCs have not been able to retain staff.specialized staff and generally chose to transfer staff from the parent organizations. The service levels were also very bad. Based on these objectives.
The key feature of these is liquidity. depending on the purchase or redemption of units by investors. Investors can enter and exit the scheme any time during the life of the fund. The investors can develop their income or saving plan due to free entry and exit frame of funds. the mutual fund
continuously offers to sell and repurchase its units at Net Asset Value (NAV) or NAVrelated prices.
. Besides.Close-ended Scheme Interval Scheme
Growth Funds Balanced Funds Money Market Mutual Funds
Tax Saving ELSS Special Gilt Funds Load funds Index Funds ETFs P/E Ratio Funds
Functional Classification of Mutual Funds
1. They increase liquidity of the investors as the units can be continuously bought and sold. There is no fixed redemption period in open-ended schemes.
Open-ended schemes do not have a fixed corpus. Unlike close-ended schemes. Open-Ended Scheme: In case of open-ended schemes. Such funds announce sale and repurchase prices from timeto-time. which can be terminated whenever the need arises. The corpus of fund increase or decreases. an investor can enter the fund again by buying units from the fund at its offer price. The fund offers a redemption price at which the holder can sell units to the fund and exit. Open-ended schemes usually come as a family of schemes which enable the investors to switch over from one scheme to another of same family. open-ended ones do not have to be listed on the stock exchange and can also offer repurchase soon after allotment.
government securities. The close-ended scheme can be converted into an open-ended one. and commercial paper.2. Investors in close-ended schemes can buy units only from the market. In order to provide an alternate exit route to the investors. 1. Such schemes invest predominantly in income-bearing instruments like bonds. as units bought back by the fund cannot be reissued. Growth Funds: The main objective of growth funds is capital appreciation over the medium to long term. Interval Scheme: Interval scheme combines the features of open-ended and
close-ended schemes. some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. Investors can invest in the scheme when it is launched. Income Funds: The aim of income funds is to provide safety of investments and regular income to investors. If an investor sells units directly to the fund. 2. The fund has no interaction with investors till redemption except for paying dividend/bonus. debentures. They invest most of the corpus in equity shares with significant
. The units can be rolled over by the passing of a resolution by a majority of the unit-holders.
Here. The returns as well as the risk are lower in income funds as compared to growth funds. The scheme remains open for a period not exceeding 45 days. he cannot enter the fund again. 3. once initial subscription are over and thereafter the units are listed on the stock exchanges where they can be bought and sold. classification is on the basis of nature and types of securities and objective of investment. They are open for sale or redemption during predetermined intervals at NAV-related prices.
Close-ended schemes: Close-ended schemes have a fixed corpus and a
stipulated maturity period ranging between 2 to 5 years.
Their exposure to risk is moderate and they offer a reasonable rate of return. They facilitate cross-border fund flow which leads to an increase in foreign currency and foreign exchange reserves. The market is limited and confined to the boundaries of a nation in which the fund operates. Offshore Funds: Offshore funds attract foreign capital for investment in the country of the issuing company.
1.growth potential and they offer higher return to investors in the long-term. Such mutual funds can invest in securities
. Domestic Funds: Funds which mobilize resources from a particular geographical locality like a country or region are domestic funds. The objective of such funds is high liquidity with low rate of return. These schemes are usually close-ended and listed on stock exchanges. They assume the risks associated with equity investments. There is not guarantee or assurance of returns. 3. and certificate of deposits. 4. Money Market Mutual Funds: They specialize in investing in short-term money market instruments like treasury bills. They divide their investment between equity shares and fixed nicebearing instruments in such a proportion that the portfolio is balanced. They can invest only in the securities which are issued and traded in the domestic financial market. Balanced Funds: The aim of balanced scheme is to provide both capital appreciation and regular income. The portfolio of such funds usually comprises of companies with good profit and dividend track record. 2.
was launched by the Unit Trust of India in July 1986 in
1. Mutual funds have introduced a number of tax-saving schemes.
Tax Saving Schemes: Tax-saving schemes are designed on the basis of tax
policy with special tax incentives to investors.
2. Merrill Lynch. either independently or jointly with foreign investment management companies. Sectoral: The funds invest in specific core sectors like energy. Many mutual funds in India have launched a number of offshore funds. The first offshore fund. and financial services.in securities of foreign companies. They open domestic capital market to international investors. transportation. These are close-ended schemes and investments are made for ten years. the India Fund. although investors can avail of encashment facilities after 3 years. Construction. collaboration with the US fund manager. These schemes
. IT. Some of these newly opened-up sectors offer good investment potential.
5. the government has given tax-concessions through special schemes. The latest scheme offered is the Systematic Withdrawal Plan (SWP) which enables investors to reduce their tax incidence on dividends from as high as 30 per cent to as low as 3 to 4 per cent. These funds are provided liquidity support by the Reserve Bank. Housing Unit Scheme 1992. but these schemes carry a lock-in period before the end of which funds cannot be withdrawn. marketing
expenses. UTI has launched such as Children’s Gift Growth Fund. Equity Linked Saving Scheme (ELSS): In order to encourage investors to
invest in equity market. and Venture Capital Funds. In other words. It invests only in those shares which
With a view to creating a wider investor base for government securities. These expenses are known as ‘load’ and are recovered by the fund when it sells the units to investors or repurchases the units from withholders. the Reserve Bank of India encouraged setting up of gilt funds.contain various options like income. 6. and communication expenses. load is a sales charge. growth or capital appreciation. 4.
Gift Funds: Mutual funds which deal exclusively in gilts are called gilt funds. Load Funds: Mutual funds incur certain expenses such as brokerage. 7. Investment in these schemes entitles the investor to claim an income tax rebate. 3. Index Funds: An index fund is a mutual fund which invests in securities in the
index on which it is based BSE Sensex or S&P Nifty. or commission. assessed by certain mutual funds to cover their selling costs. Special Schemes: Mutual funds have launched special schemes to cater to the
special needs of investors.
The fund manager has to merely track the index on which it is based. exchanges does not affect their portfolio. ETFs are basically passively managed funds that track a particular index such as S&P CNX Nifty. trading at the stock
ended mutual funds and listed individual stocks. Since they are listed on stock exchanges.comprise the market index and in exactly the same proportion as the companies/weight age in the index so that the value of such index funds varies with the market index. An index fund follows a passive investment strategy as no effort is made by the fund manager to identify stocks for investment/disinvestment.
P/E Ratio Fund: P/E Ratio fund is another mutual fund variant that is offered by Pioneed ITI Mutual Fund. they trade in a small range around the value of the assets (NAV) held by them. the fund manager has to buy stocks which are added to the index and sell stocks which are deleted from the index. In other words. His portfolio will need an adjustment in case there is a revision in the underlying index. 8. it is possible to by and sells them throughout the day and their price is determined by the demand-supply forces in the market. Exchange traded Funds: Exchange Traded Funds (ETFs) are a hybrid of openHowever.
. They are listed on stock exchanges and trade like individual stocks on the stock exchange. ETFs do not sell their shares directly to investors for cash. The shares are offered to investors over the stock exchange. The P/E ratio of the index is the weighted average price-earnings ratio of all its constituent stocks. The P/E (Price-Earning) ratio is the ratio of the price of the stock of a company to its earnings per share (EPS). In practice.
NET ASSET VALUE (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. most people refer loosely to the NAV per unit as NAV. if the fund is dissolved or liquidated. the NAV is simply the net value of assets divided by the number of units outstanding. We also abide by the same convention. This gives rise to the concept of net asset value per unit. this is the amount that the shareholders would collectively own. by selling off all the assets in the fund. which is the value.
Calculation of NAV
The most important part of the calculation is the valuation of the assets owned by the fund.
. However. represented by the ownership of one unit in the fund. ignoring the “per unit”. It is calculated simply by dividing the net asset value of the fund by the number of units. Once it is calculated. In other words. The detailed methodology for the calculation of the asset value is given below.
of Units outstanding under Scheme / Plan(s)
For liquid shares/debentures. custody charges etc. value is estimated on the basis of yields of comparable liquid securities after adjusting for illiquidity. But. This gives considerable leeway to the AMCs on valuation and some of the AMCs are believed to take advantage of this and adopt flexible valuation policies depending on the situation. Thus. at the daily interest rate. this could be the book value per share or an estimated market price if suitable benchmarks are available. Usually.
. dividends are proposed at the time of the Annual General meeting and become due on the record date. with every passing day. which is calculated by dividing the periodic interest payment with the number of days in each period. NAV = (-) current Liabilities and Provisions -------------------------------------------------------------------------------No. interest is said to be accrued. are calculated on a daily basis. the value has to be estimated. it is deemed to be “accrued”. There is a gap between the dates on which it becomes due and the actual payment date. For debentures and bonds.Market or Fair Value of Sachem’s / Plan(s) investments (+) Current Assets. In the intermediate period. valuation is done on the basis of the last or closing market price on the principal exchange where the security is traded For illiquid and unlisted and/or thinly traded shares/debentures. Interest is payable on debentures/bonds on a periodic basis say every 6 months. Expenses including management fees. The value of fixed interest bearing securities moves in a direction opposite to interest rate changes Valuation of debentures and bonds is a big problem since most of them are unlisted and thinly traded. For shares. accrued interest on a particular day is equal to the daily interest rate multiplied by the number of days since the last interest payment date.
Then the expenses ratio is 2%. Operating expenses – which are paid out of the funds earnings and Sales charges – that are directly deducted from your investment. Advisory fees paid to investment managers. if funds Rs.
. The break up of these expenses is required to be reported in the schemes offer document or prospectus. Operating expenses also known as expenses ratio. trustee fee. Operating expenses Expenses Ratio = -----------------------Average Net Assets For instant. 100 crores and expenses 20 Lakhs. No doubt they influence returns on investment in a fund.
These referred to cost incurred to operate a Mutual fund. custodial fees. expressed as a percentage of the funds average daily net assets mutual funds. Audit fees to chartered accountant.COSTS INVOLVED IN MUTUAL FUNDS
An investor must know that there are certain costs involved while investing in mutual funds. It is not compulsory that every Mutual funds levy sales charges but they certainly have operating expenses. Un-audited for the half year ending September 30 and audited for the physically year end I march 30. register and transfer agent fees. which are published by annually. Mutual funds costs can be classified into 2 broad categories. which is annual expenses. agent commission. expenses ratio is available in the offer document and from historical per unit statistics included in the financial results of the fund.
10 ------------------------Public Offer Price
. An investor invests Rs. It determines public offer price which intern decides how much of your initial investment actually get invested the standard practice of arriving a public offer price is as follows. 10 using the formula public offer price = 10/(1-0. Any excess over specified limits as to be born by Asset Management Company.02) is Rs.20.20 = 980 units at a NAV of Rs.
It is a one time fixed fee paid by an investor when buying a Mutual funds scheme. these are charged directly to investor. Net Asset Value Public offer price = -----------------------(1 – Front-end load) Let us assume.
There are known commonly sales loads.000/10. operating expense are determined by limits mandated by SEBI Mutual funds regulation Act. So only 980 units are allotted to the investor Amount invested Number of units allotted = 10. These charges have no effect on the performance of the scheme.Depending upon scheme and net asset. 10. the trustees or sponsors. Sales loads are used by mutual fund for the payment of agent’s commission. 10. distribution and marketing expenses. Sales loads are usually expression percentage and or of two types front-end and back-end.000 in a scheme that charges a 2% front end load at a NAV per unit Rs.
It is for a pre-determined period only and reduced over the time you invested for a fund. Front-end loads tend to decrease as initial investment amount increase. It is paid when the units are redeemed during the initial years of ownership. The redemption price is arrive are using following formula.02) = Rs. 10 using the formula redemption price 10/(1 + 0.000 in a scheme that charges a 2% back end load at a NAV per units of Rs.
May be a fixed fee redemption or a contingent deferred sales charges – A redemption load continues so long as the redeeming or selling of the units of the units of a fund does not take place in the event of a back end load is applied.
. 10.This means units worth 980 are allotted to him an initial investment of Rs. 10. Net Asset Value Redemption price = -------------------------(1 + back end load) Let us assume an investor redeems units valued at Rs. 9. The SEBI mutual funds regulation 1996 do not allow either the front end load or back end load to any combination is higher than 7%. The longer the investor remains in a fund the lower the CDSC.80. So. what the investor gets in hand is 9800 (9.
Contingent Deferred Sales Charges (CDSC):
Contingent deferred sales charges are a structured back end load. The SEBI (Mutual fund regulation 1996) stipulate that a CDSC may be charge only for first 4 years after purchase of units and also stipulate the maximum CDSC that can we charge every year.
Some funds may also impose a switch over fee which is a charge on transfer of investment from one scheme to another with in a same mutual funds family and also to switch from one plan (short term) to another (long term) within same scheme.8 x 1000).000.
Sharpe Ratio 3.
Sharpe ratio is sued in ranking the funds based on the comparison of the excess return per unit of risk. which quantifies the extent to which a mutual fund portfolio’s returns at variance with the underlying benchmark in the case of index funds this measure is very important. Index funds are supposed to replicate the index and hence have a minimal tracking error.
Trey nor Ratio:
The neither Trey nor ratio is similar to the Sharpe ratio. Beta 2. risk being measured by the standard deviation.
. The return on the 90-day Treasury bill is taken as the risk free rate. Trey nor Ratio 4. Excess return is defined as the actual return of the fund less the risk free rate. Instead of comp arising the fund’s risk-adjusted performance to the risk-free return.MEASURES OF RETURNS IN MUTUAL FUNDS
Returns on the mutual funds are measured using the following parameters. Tracking Error
This is a popular measure of the extent to which the fund returns are impacted by the market factors.
Tracking error is a performance measurement term. 1. Index funds are compared and ranked based on their tracking error. A fund with a higher Beta is more risky then one with lower beta. it compares the fund’s risk-adjusted performance to the relative index. Returns from the fund and expected to be linearly related to the returns from the underlying market.
which invest in different sectors or categories. for example. This minimizes the risk attributed to a concentrated position. It is possible to lose all or part of our investment.
. invest in many stocks – hundreds or even thousands. Further diversification can be achieved by investing in multiple funds. Spreading your investment across a range of securities can help to reduce risk. the loss may be offset by other securities that appreciate in value.BENEFITS OF MUTUAL FUNDS
Using mutual funds can help investor diversity their portfolio with a minimum investment. investors are actually investing in numerous securities. A stock mutual fund. When investing in a single fund. Diversification may help to reduce risk but will never completely eliminate it. If a few securities in mutual fund lose value or become worthless. This helps to reduce the risk associated with a specific industry or category.
This eliminates the investor of the difficult task of trying to time the market. along with prevailing market conditions and other factors. As per the stated objectives set forth in the prospectus.
. mutual funds can eliminate the cost an investor would incur when proper due diligence is given to researching securities. This cost of managing numerous securities is dispersed among all the investors according to the amount of shares they own with a fraction of each dollar invested used to cover the expenses of the fund. the mutual fund manager will decide to buy or sell securities.Professional Management:
Mutual funds are managed and supervised by investment professionals. What does this mean? Fund managers have more money to research more securities more in depth than the average investor. Furthermore.
changing distribution options. Fees or commissions may or may not be applicable. Although a fund’s shareholder is relieved of the day-to-day tasks involved in researching.
Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage.
With most mutual funds. and obtaining information can be accomplished conveniently by telephone. by mail. However. buying and selling securities. buying and selling shares. an investor will still need to evaluate a mutual fund based on investment goals and risk tolerance before making a purchase decision. or online. Fees and commissions are determined by the specific fund and the institution that executes the order. the proportion invested in each class of assets and the fund manager’s investment strategy and outlook.
One gets regular information on the value of their investment in addition to the disclosure on the specific investments made by ones scheme. orders are not executed until the close of business when the NAV of the fund can be determined. Investors should always read the prospectus carefully before investing in any mutual fund. custodial and other fees translate into lower costs for investors.
Mutual fund shares are liquid and orders to buy or sell are placed during market hours.
Mutual Funds can afford information and data required for investments as they have large amount of funds and equity research teams available with them.Flexibility:
Through features such as regular investment plans. Dividends received from mutual fund debt schemes are tax exempt to the over all limit of Rs9.
. regular withdrawal plans and dividend reinvestment plans.
Mutual funds investors now enjoy income -tax benefits.000 allowed under section 80L of the Income tax Act.
All the mutual funds are registered with SEBI and they function under within the provisions of strict regulation designed to protect the interests of the investor. one can systematically invest or withdraw funds according to ones needs and convenience.
For example. Management is by no means infallible. which affects how profitable the individual is from the sale. and. when a fund manager sells a security. fund managers don't consider your
personal tax situation. We'll talk about this in detail in a later section. • Dilution . It might have been more advantageous for the individual to defer the capital gains liability.DISADVANTAGES OF MUTUAL FUNDS
• Professional Management . • Taxes . The mutual fund industry is masterful at burying costs under layers of jargon.It's possible to have too much diversification (this is explained in our article
entitled "Are You Over-Diversified?"). the manager often has trouble finding a good investment for all the new money.When making decisions about your money. even if the fund loses money. Dilution is also the result of a successful fund getting too big.Did you notice how we qualified the advantage of
professional management with the word "theoretically"? Many investors debate over whether or not the so-called professionals are any better than you or I at picking stocks. When money pours into funds that have had strong success.Mutual funds don't exist solely to make your life easier--all funds are in it for a
profit. high returns from a few investments often don't make much difference on the overall return.
. Because funds have small holdings in so many different companies. the manager still takes his/her cut. a capital-gain tax is triggered. These costs are so complicated that in this tutorial we have devoted an entire section to the subject. • Costs .
Rules Regarding Advertisement:
The offer document and advertisement materials shall not be misleading or contain any
statement or opinion. (ii) If the moneys received from the applicants for units are in excess of subscription as referred to in clause (b) of sub-regulation (1).
investors to make informed investment decision including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor
The mutual fund and asset management company shall be liable to refund the (i) If the mutual fund fails to receive the minimum subscription amount referred to in clause (a) of sub-regulation (1).Regulatory Aspects of Mutual Funds
Schemes of a Mutual Fund
T such scheme and a copy of the offer document has been filed with the Boa he asset Every mutual fund shall along with the offer document of each scheme pay filing fees.-
The asset management company shall issue to the applicant whose application has been
accepted. The offer document shall contain disclosures which are adequate in order to enable the
management company shall launch no scheme unless the trustees approve rd. unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than six weeks from the date of closure of the initial subscription list and or from the date of receipt of the request from the unit holders in any open ended scheme. which are incorrect or false.
application money to the applicants.
and shall be subject to the directions of the Board with regard to any records. as the case
may be. records and documents are maintained.
The financial year for all the schemes shall end as of March 31 of each year. or securities that may be in its custody or control.
Every asset management company for each scheme shall keep and maintain proper
books of accounts. trustee or asset management company. trustees or asset management company. during the period of suspension. Every mutual fund shall have the annual statement of accounts audited by an auditor
who is not in any way associated with the auditor of the asset management company. documents.Investment Objectives and Valuation Policies:
The price at which the units may be subscribed or sold and the price at which such units
may at any time be repurchased by the mutual fund shall be made available to the investors.
. relating to its activities as mutual fund. records and documents. shall cease to carry on any activity as a mutual fund. for each scheme so as to explain its transactions and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the fund and intimate to the Board the place where such books of accounts. the mutual fund.
Procedure for Action In Case Of Default:
On and from the date of the suspension of the certificate or the approval. trustees or asset management company.
take delivery of relative securities and in all cases of sale.
The initial issue expenses in respect of any scheme may not exceed six per cent of the Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all and shall in no case put itself in a position whereby it
funds raised under that scheme.
cases of purchases.Restrictions on Investments:
A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments
issued by a single issuer. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of asset Management Company. which are rated not below investment grade by a credit rating agency authorized to carry out such activity under the Act.
A scheme may invest in another scheme under the same asset management company or
any other mutual fund without charging any fees. The securities so transferred shall be in conformity with the investment objective of the scheme to which such transfer has been made. deliver the securities has to make short sale or carry forward transaction or engage in badla finance. provided that aggregate inter scheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund. All such investments shall be made with the prior approval of the Board of Trustees and the Board of asset Management Company.
No mutual fund under all its schemes should own more than ten per cent of any Such transfers are done at the prevailing market price for quoted instruments on spot
company's paid up capital carrying voting rights.
A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt
instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the scheme.
came together realizing the need for a common forum for addressing the issues that affect the mutual fund industry as a whole. wherever investments are intended to be of long-term nature. The AMFI is dedicated to developing the Indian mutual fund industry on professional.
Every mutual fund shall. or i. health and ethical lines and to enhance and maintain standards in all areas with a view to protecting and promoting the interests of mutual funds and their unit – holders. the sponsor.
Pending deployment of funds of a scheme in securities in terms of investment
objectives of the scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled commercial banks. Provided that. Any security issued by way of private placement by an associate or group company of
Any unlisted security of an associate or group company of the sponsor.
No mutual fund scheme shall make any investment in. the limit of 10 per cent shall not be applicable for investments in index fund or sector or industry specific scheme.
ASSOCIATION OF MUTUALFUNDS IN INDIA (AMFI) : The Association of Mutual Funds in India was established in 1993 when all the mutual funds.
A mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or
equity related investments in case of open-ended scheme and 10% of its NAV in case of close-ended scheme. or The listed securities of group companies of the sponsor which is in excess of 30% of the net assets [of all the schemes of a mutual fund]
No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity
shares or equity related instruments of any company. except the UTI. get the securities purchased or transferred in the name of the
mutual fund on account of the concerned scheme.
. Reserve Bank of India and other bodies on all matters relating to the Mutual Fund Industry.
To undertake nation wide investor awareness programmes so as to promote proper understanding of the concept and working of mutual funds.
To disseminate information on Mutual Fund Industry and to undertake studies and research directly and/or in association with other bodies.Objectives of AMFI:
To define and maintain high professional and ethical standards in all areas of operation of mutual fund industry
To recommend and promote best business practices and code of conduct to be followed by members and others engaged in the activities of mutual fund and asset management including agencies connected or involved in the field of capital markets and financial services.
To develop a cadre of well trained Agent distributors and to implement programmes of training and certification for all intermediaries and other engaged in the industry.
To represent to the Government.
To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI on all matters concerning the mutual fund industry.
• • • Birla Sun Life Asset Management Company Limited Birla Sun Life Insurance Company Limited Birla Sun Life Distribution Company Limited
Birla Sun Life Asset Management Company Limited
A joint venture between Sun Life Assurance Company. the Canada-based financial service organization and the Indian industrial house of Aditya Birla. Finance (Birla Global Finance Ltd. powerful and reputed business houses. Both the partners are well known in all areas that they operate in. Sun Life is a leading financial service organization in North America.) and Rayon (India Rayon). this AMC was launched in the mid-90 s. etc. money management and wealth management across globe. debt securities. The Mutual Fund and Insurance companies provide wealth management and protection products to customers while the Distribution and Securities companies provide brokerage and trading services for investment in equities. Textiles (Grasim).COMPANY PROFILE
ABOUT BIRLA SUNLIFE
Birla Sun Life Financial Services Birla Sun Life Financial Services offers a range of financial services for resident Indians and Non Resident Indians. Brought together by two large. Sun Life provides services related to risk management. the Aditya Birla Group and Sun Life Financial. it is our aim to offer diverse and top quality financial services to customers. fixed deposits.
. Fertilizers (Indo-Gulf). While Aditya Birla is a household name in India and has renowned brands in businesses spread across industries as wide ranging as Aluminium (Hindalco).
U.S. Drawing on the expertise of a worldwide staff of over 10. 2006
69 155 35 80 17 4 13
. but solutions for clients financial and risk management needs.15018. This is done through extensive analysis that includes factory visits and field research. of schemes No. The company is one of India's leading.Having established itself at Toronto in 1871. It also has a significant presence through MFS Investment Management in U. which is based on identifying companies that have good credit-worthiness and are fundamentally strong. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes Equity & Debt Gilt Fund Corpus under management Rs. a big agent network and an ability to cater to the need of people.A. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. and Spectrum United Mutual Funds in Canada. Sun Life is committed to providing not just products and services.000 agents and distributors. It has one of the largest team of research analysts in the industry. as on Mar 31.000 people and a network of more than 65.6181 Crs. It places a lot of emphasis on quality of management and risk control. The major strengths of the group are its expertise drawn from managing assets over the globe.
No. private mutual funds with a large customer base.K. it has now spread its wings across Asia Pacific. It has been recognized nationally with coveted awards. and U.S.
It is said that: "To acquire wealth is difficult. Surely. we put knowledge. We at Birla Sun Life stand committed to helping you realize those happy moments which make a life. the most difficult of all. Be it living the same lifestyle in your post retirement days or providing a secure future for your loved ones. It's often about things going right. For your today and your tomorrow. we believe it has its equally pleasant share of buts as well. expertise and experience to good use to preserve. One of the wonders of human nature is that we never believe anything can actually go wrong. in case something happens to you. coupled with technology driven processes has enabled us to excel at this challenging task and in a span of four years emerge as one of the leading distribution houses of the country." Our commitment to excellence along with a roots up approach to research and analysis. The synergy of these two accomplished conglomerates brings you global financial know-how and local market insight.
.Birla Sun Life Insurance Company Limited Insurance is not about something going wrong. life has its share of ifs. but to nourish it wisely.
Birla Sun Life Distribution Company Limited
At Birla Sun Life Distribution. We are a part of the Joint Venture between The Aditya Birla Group and Sun Life Financial of Canada. to preserve it more difficult. At Birla Sun Life however. nurture and nourish your wealth.
I have chosen the comparative performance of selected mutual fund schemes with special reference to Birla Sunlife Mutual Fund schemes.
. To know which fund is best for his needs. So he needs a portfolio manager to manage his invest able funds. But he cannot select his own portfolio and manage on his own. so we can select the mutual funds for investments. we have to consider the investor needs like available funds and risk willing to take and expected return from the securities. The mutual funds provide the services of portfolio manager.REVIEW OF LITERATURE Need of the study
While selecting the investment avenues.
• • •
To offer the suggestions for investors how to choose best schemes. To offer the suggestions for investors as well as mutual fund companies.OBJECTIVES OF THE STUDY
To study the performance of the selected mutual funds and comparing with the Birla Sunlife Mutual Funds.
SCOPE OF THE STUDY The scope of the study is to give clear picture about the comparing and selecting best mutual fund schemes and to suggest measures to over come the problems. To study about the returns pay by the different selected mutual funds.
The Federal Deposit Insurance Corporation (FDIC) only insures against certain losses at banks. most mutual funds receive money when markets are in boom phase and investors are willing to try out mutual funds. there is some money waiting to be invested. Absence of investment focus for an individual investor. The main limitation of mutual fund is that it takes to invest money. after they have calculated the current value of their holdings. where the funds are highly liquid in general. investment opportunities are identified. most mutual funds (called open-ended funds) cannot be bought or sold in the middle of the trading day. gain from a single security is very less comparatively direct investment by the investor Absence of investment focus for an individual investor. Mutual funds. The other limitation of mutual is the trading limitation. gain from a single security is very less comparatively direct investment by the investor Further. savings and loans but not mutual funds. Unfortunately. credit unions. there may be a time lag before
. Investor can also buy and sell them at the end of the day. although regulated by the Government. Since it is difficult to invest all funds in one day. are not insured against losses.
Tools of Analysis:-
Expected return or mean return and standard deviation are used to analyze the data.
Secondary Data:It has been collected from the websites. Company records & Economic Times news papers.Primary Data:It has been collected from industrial guides and other executive form different Functional areas.
Period of the study:The study covers a period of the five years from 2001 to 2005.
87 % 5.15 %
Avg 5.3 3944.1Table of Income Funds
Scheme Name ABN AMRO Cash Fund Birla Cash Plus –Growth Chola Liquid Plus HDFC Liquid Fund HSBC Cash Fund Kotak Liquid Fund LIC Liquid Fund Pru ICICI Liquid Plan TATA Liquid Fund UTI liquid – Cash Plan
AUM (Cr) 1120.25 % 6.8 3484.22 % 4.42 %
3 Year -5.29 5.11%
6 Mont hs 5.60 % 6.75 % 5.51 % 5.38 5.90 %
1 Year 5.03 % 5.31 % 5.78 % 5.2 1817.32 % 5.14 % 5.68 % 5.99 % 5.04 5.78 % 6.39 % 6.64 % 5.20 % 6.74% 5.03 % 5.6 5994.79 %
2 Year -5.97 % 5.9 3796.14 5.8 14254.57 5.1 4470.60 % 4.45
.99 % 5.35 5.97 % 5.1
1 Month 5.41 % 6.69 % 6.95 % 5.00 % 5.24% 5.88 5.28 5.32 % 5.10 % 6.06 % 4.13 % 6.29 5.20 % 5.99 % 5.DATA ANALYSIS & INTERPRETATION
COMPARITIVE ANALYSIS STATEMENT
3.23 % 6.23 % 4.81 % 5.40 % 6.61 % 5.60 % 5.97 % 5.15% 6.8 2217.7 7159.25% 5.
and fourth place is Birla Cash Plus Growth.04 0.05 0.ANALYSIS:
In income funds LIC Liquid Fund performed well as its annualized average return is 5.88 %.03 0. Chola Liquid plus Fund was performing well.02 0. third place is UTI liquid cash plan.07 0.1(a) Chart of Income Funds
0.01 0 A B N B irla C hola H D F C H S B C K otak LIC P ru TA TA U TI A M R O C as h L iquid Liqu id C as h Liquid Liquid IC IC I Liquid liquid – C as h P lus – P lus F u nd F und F und F und Liqu id F und C as h F und G row th P lan P lan 1 M onth 6 M onths 1 Y ear 2 Y ear 3 Y ear
3.06 0. It is Second place after LIC liquid fund.
2 Year 49.15 52.14% 8. fourth position is SBIn Magnum equity fund.3 -2887.30%
1 Year 41.
.34 36.3% 49.4 1063.0% 3.77 % 32. next second place is HDFC equity fund.58 % 57.88 % 57.69 %
3 Year 46.4% 2.7% 3.0 163.5% -0.0
1 Month 0.99 % 50.9% -0.15% 4.22 % 38.36% 5. it occupies first position.54% 14.3%
6 Months 2.90 % 53.42% 9.3% 49.16 % 38.32 47.51 37.81 % 43.36 % 40.32 % 59.31 44.94 %
Avg 43.3 74.96 % 41.71 % 48.33 % 28.9 55.60 % 52.9
In growth funds.56 50.57 % 36.92 56.73 %
5 Year 34.56 % 58.24% 12.4% 2.7 257.80
Reliance Vision 1719.56 % 58.1% 3.61 % 48. third position is TATA pure equity fund.3.02 % 51.92 % 36.68 % 37. Fifth position is Franklin India Growth fund and Sixth position is Birla Advantage Fund.03 % 56.76 % 48.2 Table of Growth Funds – Equity Diversified
Scheme Name Birla Advantage Fund Franklin India Growth Fund HDFC Equity Fund HSBC Equity Fund Principal Growth Fund SBI Magnum Equity Fund Tata Pure Equity Fund UTI Growth
AUM (Cr) 466.63 % 47.42 % 60. Reliance vision fund is performing well.89 % 55.88 % 46.71 % 56.28% 7.4 197.0% 3.23 % -30.85% -5.
-0.2(a) Chart of Growth Funds – Equity Diversified
Bi rla Ad
e N am e
Fr an kli n In di a G ro w th Fu nd ty Fu nd e DF C SB C Eq pa R SB IM Ta ag n ta ui ty lG ro w el ia nc um Pu re th e Eq ui Eq u U Eq ui Fu nd Fu nd Fu n Vi s ty ity TI G d io n Fu n Fu d nd ro wt h H H Pr in ci nt ag va
3.Sc he m
05% 1.3.52 % 31.30 %
3 Year 36.17 % 28.77 % 34.59% 0.74 % 41.63 % 24.23% 3.1 9 34.68 38.54 % 26.00 % 40.17 % 33.47 29.84 % 40.67 % 38.97% 3.65%
1 Year 29.45% 1.98 35.33 % 26.23 % 26.34% 0.9 2
1 Month 4.84 % 30.70 % 28.79 % 36.49% 8.46 %
5 Year 28.64%
6 Months 3.56
In Balanced funds SBI Magnum balanced funds is performed well and occupies first position and second place is Prudential ICICI Balanced funds and third place is DSPML balanced and fourth place is TATA balanced and fifth place is Birla Sunlife 95 fund.58% 8.82 % 23.01 % 29.97% 6.13% 0.27 % 35.24 % 50.80 % 27.96% 4.51 33.43 28.77 % 36.82 34.34% 3.82 % 24.87% 1.22 % 30.33 % 37.23 524.23 % 36.1 4 21.7 8 107.66 14.20 30.83 408.7 2 206.
.54 % 34.94 %
2 Year 36.60 % 34.68 % 29.81 % --
Avg 32.95 % 37.1 8 327.95% 0.74 % 27.11% 0.59% 5.09 % 29.3 Table of Balanced funds
Scheme Name Birla Sunlife’95 Fund DSP ML Balanced Fund Franklin India Balanced fund HDFC Balanced fund Principal Balanced Fund Pru ICICI Balanced Fund SBI Magnum Balanced Fund Tata Balanced Fund UTI Balanced Fund
AUM (Cr) 120.86 28.
-0.3(a) Chart of Balanced funds
1 Month 6 Months 1 Year 2 Year 3 Year 5 Year
Bi rla D SP M L Ba la n ce d Fu nd nd d d fu ce ed fu n d Fu nd Fu nd Fu nd Fu d nd Ba la n nc ce ce d ed Fu 5 In di a DF C pa lB al an al an nc Ba la ’9 n nl ife Fr an kli H Pr in ci Pr u SB IM ag n um Ba la Ba la nc ed ce nd Fu nd al an ta TI B Ta U IC IC IB Su
. Third place occupies fund is BSL new millennium fund.16% 0.37% 44.2%
1 Year 36.0% 3.83% 51.79 % 36.66% 52.73 39.30 %
Avg 41.65 %
3 Year 52.11% 36.48 38.6 Franklin InfoTech 1 Kotak Tech.08% 35.4.4% -2.80 45.73% 27.45% 36.05 41.23% 0.26% 21.68% 25.79 Technology.58 %
5 Year 29.58% 34.25% 8. 46.65% 43.37 36.89 Sector Umbrella BSE IT BSE Teck
3.78% 50.75% 42.53 % 43.69% 52.1 Table of IT Sector Funds
In IT sector funds SBI magnum sector umbrella is performed well against the BSEIT and also BSE Teck funds.50
BSL New Millennium 90.99 % 24.29 Fund PruICICI 120.50 %
2 Year 45.87% 27.64% 44.6% -4.57% 2.9% 0.20% 25.com 144.12% 34.80% 26.3.1 Technology 5 Fund SBI Magnum 60.93% 7.40% 43.4% 1.06% 50.35% 22.65%
6 Months 0.41% 55.85 39.13 Fund DSP ML 27.99% 1.36 32.8% 2.8% -2.4 Tables of Sectoral Specific Funds
1 Month 1.55% 8.08% 50.62 % 53.
4 (a) Charts of Sectoral Specific Funds
0.6 0.2 0.5 0.4.c om kli n Ko Pr In ta uI fo k SB CIC Te tech IT IM ch ec .1(a) Chart of IT Sector Funds
iu Te m Fu ch no nd lo Fr gy an .1 0 -0.4 0.F ag hn un nu ol d m og Se y Fu ct or nd U m br el la BS E IT BS E Te ck
1 Month 6 Months 1 Year 2 Year 3 Year 5 Year
Ne w BS L
M ille D SP
9 20.80% 22.48
1 Month -5.20% 26.7% -9.59 127.4%
1 Year 11.17% 20.76%
Avg 21.71 9.9% -12.76% 18.45% -4.4% -12.76
-5.Scheme Name Franklin Pharma Fund JM Health Sector Fund Reliance Pharma Fund UTI GSF – Pharma & Healthcare BSE Health Care
AUM (Cr) 70.68% -1.50%
2 Year 23.12% 9.04% 25.05% 21.33 85.03%
6 Months -10.4.
.2 Table of Pharma Sector Funds
In Pharma Sector Funds Franklin Pharma Fund perform well against BSE Health Care and occupies first position.03%
3 Year 29.29% --
5 Year 23.48% 6.64 18.21 16.29% 10.41% -4.81 14.76% 15.95% -4.
0.15 Scheme Name Franklin Pharma Fund JM Health Sector Fund Reliance Pharma Fund UTI GSF – Pharma & Healthcare BSE Health Care -0.0.2
0.2(a) Chart of Pharma Sector Funds
3.4.3 Table of FMCG Sector Funds
Scheme Name Franklin FMCG Fund Pru ICICI FMCG Fund BSE FMCG
AUM (Cr) 37.74 113.7 2
1 Month 3.03% 4.25% 8.69%
6 Months 8.89% 3.15% 20.03%
47.33% 54.66% 55.28 %
56.00% 74.81% 55.04 %
41.46 % 54.74 % -
26.60% 31.78% 17.34 %
42.84 53.99 42.55
In FMCG Sector Funds Pru ICICI FMCG Fund perform well against Franklin FMCG Fund and occupies first position.
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 -0.1 1 Month 6 Months 1 Year 2 Year 3 Year 5 Year Franklin FMCG Fund Pru ICICI FMCG Fund BSE FMCG
3.5(a) Chart of FMCG Sector
3.5 Table of ELSS Schemes
AUM (Cr) 16.03 265.3 4 424.5 3 421.7 5 1114. 8 111.2 2 204.8 1 1 Month 6.81% 0.16% 1.41% 5.90% 4.57% 1.98% 0.63% 5.98% 6.91% 4.88% 3.53% 2.13% 10.25% 44.62 % 13.54% 51.24 % 8.60% 44.06 % 6.80% 40.22 % 5.61% 39.66 % 44.70 % 50.15 % 46.29 % 43.59 % 45.64 % 41.04 % 44.64 % 44.13 % 43.14 % 24.46 % 26.89 % 28.70 % 30.41 % 32.29 % 38.70 43.23 40.79 38.07 40.18 6 Months 28.39% 3.51% -2.01% -2.88% -3.64 -3.81% -5.29% 1 Year 60.41% 39.88% 38.19% 35.55% 26.03% 28.09% 2 Year 34.28% 48.78% 55.87% 70.44% 45.29% 39.77% 3 Year 57.29% 51.73% 59.29% 62.0% 50.44% 45.50% 5 Year 31.99% 38.22% 52.14% 48.85% 37.78% Avg 45.99 44.65 51.37 54.21 39.88 37.78
Scheme Name BSL Tax Relief 96 Plan Franklin India Tax shield HDFC Long Term Adv. Fund Pru ICICI Tax Plan Reliance Tax Saver Tata Tax Saving Fund UTI Equity Tax Saving Plan S & P Nifty BSE Sensex BSE 100 BSE 200 BSE 500
In EISS Prudential ICICI tax plan fund is performing by against the SNP, NIFFTY, BSE Sensex , and BSE 100. and second place is HDFC long term advantage fund, Third place is Birla Sunlife Tax Relief 96 plan
-1. u IC Fu IC R nd IT el ia ax T a n ce Pl an ta Ta U Ta TI x Sa x Eq Sa ve ui vi ty r ng Ta Fu x Sa n vin d g Pl S an & P N BS ift E y Se ns ex BS E 10 BS 0 E 20 BS 0 E 50 0
3.5(a) Chart of ELSS Schemes
1 Month 6 Months 1 Year 2 Year 3 Year 5 Year
0.5 -3 -2 -1
Ta x Fr Re an lie H kli DF f9 n C 6 In Pl Lo di a an ng Ta Te xs rm hi Ad eld Pr v.
3% -7.6 Table of Midcap Funds
Scheme Name Birla Mid Cap Fund Chola Mid Cap Fund HSBC Midcap Equity Fund ING Mid Cap fund Kotak Midcap Fund Pru ICICI Emer.4
6 1 Month Months -4. SBI Magnum Midcap fund performed well against the BSE madcap index.82% -7.6% -2.3% -3.8% 52.13
In Midcap funds.24 52.8 441.38% 4.47 33.1 955.47 26.56% 0.4% -6.3. Star Fund SBI Magnum Midcap fund Tata Midcap Fund BSE Midcap
AUM (Cr) 153.07% -3.93% -3.2 59.7% -8.0% 49.35 32.65% 35.4% -9.47% 25.5% -2.3 54.
.4% 29.1 343.34% -5.35 34.81% 38.60%
1 Year 40.38 53.3% -5.7 344.99% -
5 Year -
Avg 45.32% -
3 Year 52.85% 36.6 249.73 %
2 Year 51. Second place is ICICI emerstar fund and third place is Birla Midcap fund.44 18.4% -5.9% -5.0% -7.
6(a) Chart of Midcap Funds
fu nd M id IC ca IC p IE Fu SB m nd er IM .2 0.S ag ta rF nu m un M d id ca Ta p ta fu nd M id ca p Fu nd BS E M id ca p
1 Month 6 Months 1 Year 2 Year 3 Year 5 Year
M id Ca p Fu nd nd Fu Fu nd C ap ty ap id Eq ui C M
Bi rla C H SB C M id ca p G M id IN Ko ho l a
3.2 0.3 0.4 0.1 0.-0.5 0.
HOW TO CHOOSE THE BEST SCHEME?
The first step to investing in Mutual Fund is to define the objective of investing. income schemes. !marriage. you can select a fund type that best meets your need i. There are several schemes tailor made to meet certain personal financial goals (children's education. Thereafter. You can choose the fund on various criteria but primarily these can be the following:
The track record of performance of schemes over the last few years managed by the fund Quality of management and administration Parentage of the Mutual Fund Quality and adequacy of disclosures Service levels
• • • •
. You should clearly lay down the purpose for which you desire to invest. Given the plethora of fund options available to you. You should define the tenure of investment and the risk appetite you have. you can then choose the particular fund that you are comfortable with. retirement etc. equity schemes etc.e.) which can be availed of. liquid schemes. tax saving schemes.
the sale also is affected through the stock exchange mechanism and resembles the sale of equity share. Selling units in an open-ended scheme is similar to the way they are purchased. The actual price is the NAV less the exit load. It is the mutual fund that buys back the units and at a price based on the NAV. is driven by the price the units quote. The pricing for the transaction. This purchase would resemble the purchase of an equity share wherein the investor would pay the quoted price of the unit as well as a brokerage for the purchase transaction.•
The price at which you can enter/exit (i. then the following choices exist: 1.e. the offer document would detail the schemes being offered and the manner of investing. A close ended scheme. if available
You could be investing in a mutual fund either at the initial stage when the mutual fund approaches the market through an offer document route or at a subsequent stage. however. In the case of a close ended scheme. If you choose to invest at the initial stage. If the desired units are of a close-ended scheme. If you are planning to purchase the units subsequently. The mutual fund in an open-ended scheme sells these units to the investor at the NAV (plus a sale / entry load). The manner is usually similar to that of investing any public issue of any security (equity/debt). 2. entry load / exit load) the scheme and its impact on overall return The market price of the units of the scheme (where available) to see the discount/premium that the market assigns to the stated NAV of the scheme Independent rating of the schemes.
. Purchasing a unit in a open-ended scheme is different as there is no exchange where these units are traded. as was mentioned earlier. then the investor would be able to purchase them at the stock exchange where the MF has listed them. The price. Their price reflects the NAV of the scheme. may be either at a discount or premium to the NAV. The exit load is similar in concept to the entry load. This is driven by the NAV ( Net Asset Value) of the scheme.
and fourth place is Birla Cash Plus Growth. NIFFTY. and second place is HDFC long term advantage fund. Reliance vision fund is performing well.
. and BSE 100. • In growth funds. next second place is HDFC equity fund. • In Balanced funds SBI Magnum balanced funds is performed well and occupies first position and second place is Prudential ICICI Balanced funds and third place is DSPML balanced and fourth place is TATA balanced and fifth place is Birla Sunlife 95 fund. SBI Magnum Midcap fund performed well against the BSE madcap index. Third place is Birla Sunlife Tax Relief 96 plan. fourth position is SBIn Magnum equity fund.Findings
• In income funds LIC Liquid Fund performed well as its annualized average return is 5. • In EISS Prudential ICICI tax plan fund is performing by against the SNP. Second place is ICICI emerstar fund and third place is Birla Midcap fund.88 %. • In IT sector funds SBI magnum sector umbrella is performed well against the BSEIT and also BSE Teck funds. • zIn Midcap funds.It is Second place after LIC liquid fund. it occupies first position. BSE Sensex . Chola Liquid plus Fund was performing well . Fifth position is Franklin India Growth fund and Sixth position is Birla Advantage Fund. third place is UTI liquid cash plan. third position is TATA pure equity fund. Third place occupies fund is BSL new millennium fund.
to increase the returns. The Asset Management Company must make sure to pay regular dividends to the investor The Asset Management Company must dedicate itself to a more professional management of the Fund because it motivates the investors and potential investors to invest in Mutual Funds. The Asset Management Company must make sure that the Net Asset Value (NAV) of the fund remains considerably high because it is the most important factor that would be checked by the investors before investing in Mutual Funds.SUGGESTIONS
The Asset Management Company must design the portfolio in such a way.
. The Asset Management Company must make the most advantageous use of print and electronic media in order to motivate the investors and potential investors to invest in Mutual Funds. The Asset Management Company must design the portfolio in such a way. to lessen the risk that is prevalent in the market. The Asset Management Company must organize itself professionally and manage the Fund efficiently and with dedication to earn the goodwill of the public.
So that to minimize the risk (systematic risk and unsystematic risk) and maximizing the return.CONCLUSION
In today’s world of investments a common investor cannot create his own portfolio and manage its risk. So the mutual funds are best investment avenue for the common investors. So he needs a portfolio manager who invest the fund in selected securities among the different industries. These portfolio management services are provided by the mutual fund companies and also we can invest small funds in the funds.
com www.mutualfund.com www.BIBILIOGRAPHY
www.birlasunlife.com www.com Websites of other Mutual fund companies Books on Mutual funds..mutualfundsindia.com www. etc.