PGPBM 0810

NJ INDIA INVEST PVT. LTD.
ByPRASHANT GUPTA

MUTUAL FUNDS
‘A trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme’

CERTIFICATION
This is to certify that this dissertation “Mutual Funds” is the work done by PRASHANT GUPTA, student of PGPBM 08-10, ISB&M, NOIDA. This dissertation has the requisite standard for the partial fulfillment of the Post Graduate Program in Business Administration and has been done by under my guidance and supervision during the period April 2009 to September 2009. This dissertation report has not been submitted to any other institution or organization for any kind of assessment or consideration, to the best of my knowledge.

FACULTY MENTOR

Prof. HARI SRIVASTAVA ISB&M, NOIDA

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ACKNOWLEDGEMENT
This report is a synergetic product of many minds. I am grateful for the inspiration and wisdom of all those who were with me in this journey. I am sincerely thankful to ISB&M, Noida for providing me with the opportunity to write a research paper in the form of a dissertation on the topic “Mutual Funds”. To begin with my faculty mentor Prof. Hari Srivastava, ISB&M, Noida who encouraged me to do my best. Without his support it would have been very difficult for me to prepare the paper so meaningful. I am also thankful to him for his guidance that helped me improve a lot. Besides this I would like to declare that this study would not have been possible without the guidance of Mr. Lalu Gadhvi, Asst. Manager and my superiors at NJ India Invest, Noida. I thank all the people whose support made it possible for me to fulfill this study. Through this research paper I have learnt a lot about the Mutual Funds as a whole and hope that this research paper will help all those Investors which are already or planning to start the process of Financial planning.

PRASHANT GUPTA

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Abstract

Today's customers are living in an environment of uncertainties like changing interest rates, making the investment decision more complex. The demographic profile of customers is also rapidly changing with more ageing population being added, giving rise to different financial needs. These have led to heightened expectations from service providers and advisors. In this scenario, it is essential for financial advisors and brokers to have a thorough understanding of the different investment avenues and their benefits & risks. Mutual funds are the next big investment opportunity. Any way you look at them they are winners - be it performance, taxation or financial planning for life's milestones. In developed markets investors have already seen the benefits of investing in mutual funds. In India, it is only now that benefits are becoming apparent. After the failure of UTI investors lost their faith in the mutual funds but in the current scenario due to boom in the Indian capital markets there has been an upward trend in the popularity of the mutual funds. So to know as to how much advisors prefer mutual funds as an investment option in comparison to other investment avenues, how much knowledge do they have about mutual funds and advisor’s knowledge regarding various other aspects of mutual funds, a primary research was conducted to know the perception of advisors towards the mutual funds. The research was undertaken to impart information, knowledge and the functioning of mutual funds among financial advisors which ultimately help the investors in taking investments decision. Also it helped to know the awareness about benefits of Mutual funds advisory business. The study includes analysis of the investors on the basis of their investment objectives, age, income etc. It also examined the position of Mutual Funds (MF) among investment avenues available for the investors and the past performances of various schemes from the active Asset Management Company (AMC) in Indian market on the basis of Net Asset Value (NAV) & time. So that it can help the advisors as well as investors to choose the correct portfolio. The study also covers the scenario of MF industry during the Entry Load and No Entry Load applications. Mutual Funds

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CONTENTS
1. Company overview: NJ India Invest Pvt. Ltd. 2. Introduction: Mutual Funds (MF) 3. Brief History 4. MF Structure 5. Advantages and Disadvantages of MF 6. Classification of MF 7. Risks associated with MF 8. Research Methodology 9. Objective of study 10.Data collection 11.Analysis on The Basis of Objective of Investor 12.Analysis on The Basis of Age of Investor 13.Position of MF among Various Investment Avenues 14.Entry Load: Wipe Off 15.Value Pack Procurement Process 16.Systematic Investment Plan (SIP): A companion for all times 17.Case Study: SIP 18.Findings & Suggestions: How to invest in MF 19.Bibliography

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Welcome to NJ India Invest

Doing the 'right' thing is a virtue most desirable. The difference between success and failure is often not dictated by knowledge or expertise but by its actual application and perseverance. When it comes to successful wealth creation for customers, it is something that we believe & practice. For us it is more than a mission; it is what defines our lives and our actions at NJ IndiaInvest. With this passion, we continue to evolve and make the right product accessions and service innovations in our offerings. To the advisors, we offer a 360 comprehensive business platform with unmatched IT solutions, empowering them to set the best practice standards and deliver real value to their customers. Over the years, our passion has seen us grow from strength to strength and expand rapidly, setting new benchmarks in the process. But to us, what really matters most is the number of lives we have managed to transform and we still have a long way to go.. NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focused financial / investment advisory & distribution firm. NJ prides in being a professionally managed, quality focused and customer centric organization. The strength of NJ lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cutting-edge technology platform, developed in-house by NJ.

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At NJ we believe in .. having single window, multiple solutions that are integrated for simplicity and sapience making innovations, accessions, value-additions, a constant process providing customers with solutions for tomorrow which will keep them above the curve, today NJ had over INR 5,500* Crores of mutual fund assets under advice with a wide presence in over 135 locations* in 22 states* in India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients. At NJ, we continue to innovate, enrich our intellect, and ask critical questions. We challenge our own processes and systems on constant basis to emerge more convinced. At NJ, we continue to expand the scope and depth of our offerings, making apt use of technological support.

Vision & Mission
Vision:
To be the leader in our field of business through, Total Customer Satisfaction Commitment to Excellence Determination to Succeed with strict adherence to compliance Successful Wealth Creation of our Customers

Mission:
Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments.

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Divisions
NJ Fundz Network is a unique, first time in India concept that offers such comprehensive business platform to independent financial advisors. NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360° Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 13000* NJ Fundz Network Partners and over 4,500* normal advisors associated with us. NJ presently has over Rs. 5,500* Crores of assets under advice. NJ has over 135* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients. At NJ, our experience, knowledge and understanding enables us to provide you with the expected value, in an enhanced way. As a leading player in the industry, we continue to successfully meet the expectations of our clients, through meaningful and comprehensive solutions offered by NJ Fundz Network.

Products presently on offer …
At the basic product level NJ has a basket of the following• Mutual funds – covering all AMCs & schemes, • Life Insurance (Prudential ICICI) • Fixed deposits of companies, • Government/RBI bonds, • Infrastructure Bonds, • Approved securities for charitable trusts, etc

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Established as a distinct entity, NJ Wealth Advisors Pvt. Ltd. seeks to offer comprehensive financial planning and portfolio advisory services to premium clients. With NJ Wealth Advisors, NJ seeks to leverage the strong financial advisory and portfolio management skills gained in over a decade of experience in the industry. NJ Wealth Advisors offers its clients with quality, unbiased, need-based advisory services & investment solutions.

This sporadic growth in terms of need of performers in financial advisory services has lead to the crunch of available performers. Though lots of youngsters are getting into financial advisory services, but the greatest challenge is of RIGHT SELLING, for which adequate Training is a prerequisite. Advisory function demands updated knowledge, backed up by honed skills to fetch effective business. Building long term relationship with clients depends upon possessing clear edge over others in the field. Hence continuous people development has an important role in building this fraternity.

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At NJ IndiaRealty we understand the challenges in shaping reality from your realty aspirations. With our fully integrated end-to-end service model we offer solutions that would enable you to meet the challenges of development, fortify your own transformation and exploit the opportunities available in the Indian realty sector. At NJ IndiaRealty we have made backward & forward integration of valueadded services to the core-realty services which lie at the heart of the business. The services at NJ IndiaRealty enable continual partnership right from idea to its reality, encompassing all functional & operational undertakings. At NJ IndiaRealty we aim to provide you with substantive value in - Delivering core realty services - Execution of the other value-added services NJ IndiaRealty has a rich experience and a vast repertoire in project planning & execution in the realty domain. The strong processes and systems in place ensure the effective & timely execution of the projects. High-quality assurance forms the under-current in the entire value-chain of service delivery.

NJ IndiaRealty brings with it professional management, total quality consciousness, confidence and keenness to offer customers with high-quality development at attractive value propositions. At NJ IndiaRealty we commit ourselves to the continuous improvements, accessions in the value-chain and the best practices adopted by the industry.

Technology has traditionally been NJ's key strength. Our offering on the technological front is unmatched, vibrant, and comprehensive in nature. Our focus & commitment on technology can be gauged from the fact that we have set-up distinct entity with a very strong, talented work-force for the sole purpose of providing the best to NJ in terms of technology and support. Finlogic Technologies (India) Pvt. Ltd. does all the development & support work inhouse on a continuous basis. It has successfully developed & implemented a powerful support system for the mutual fund distribution business at NJ with a provision for integrating the same with other investment products as well as the financial accounting system.

Products
NJ offers advisory and distribution services on the following products. 1. 2. 3. 4. 5. 6. Mutual funds – covering all AMCs & all schemes, Life insurance – Prudential ICICI Fixed deposits of companies, Government/RBI bonds, Infrastructure Bonds, Approved securities for charitable trusts, etc

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NJ’s main focus is though on mutual funds advisory and distribution. At NJ, we believe that mutual funds, as an asset class, can be looked at for almost all of the financial needs.

People & Culture
People:
Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout the organisation. At NJ can also experience the creativity, one-to-one responsiveness, collaborative approach and passion for delivering value. At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent due to the education-centric approach and the experience in handling different clients groups across diverse product profiles. NJ understands that the people are the most important assets of the company and it is not the company that grows but the people. NJ hence undertakes rigorous training and educational activities for enhancing the entire team at NJ. NJ also believes in the ‘Learning through Responsibility’ concept for its employees. For people at NJ success is not a new word, but is a regular stepping-stone to realising the one vision that everyone shares.

Culture:
At NJ we believe in transforming the lives of our customers. We exist to create a difference – a change towards a better life. The culture at NJ reflects this responsibility, this dream of transforming lives. And we at NJ are always excited and enthused in doing so. We believe in keeping ‘You First’, providing you with products and services that meet your stated and unstated needs. Client satisfaction and client service is the Mantra we constantly recite. This service oriented philosophy runs throughout the organization, from top to bottom. Employees are given ample freedom in their work. The objective is to keep an open, healthy environment with ample scope for enterprise, improvement, innovations and out-of-the box solutions Our efforts are constantly engaged in improving our existing services, offering new and innovative solutions that go beyond your expectations. This focus has made us one of the most respected and preferred service providers, especially in the mutual fund industry.

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Service Standards
Service is the key to unlocking customer satisfaction, which again is key for sustainability of any business. At NJ we understand this very well. NJ has set strict processes in place to deliver quality services to customers. At NJ strict quality service standards are set and a well-defined process is established and followed religiously by our quality customer service teams. Performance is evaluated on a frequent basis and glitches are ironed out. But quality service also involves quality people in addition to processes. NJ gives significant focus to the proper training and development of the people involved in the service delivery chain. Further we, Have well-defined "Privacy Policy" to keep clients’ information confidential & internal audits done on the same at regular intervals Receive various statistics which are analysed on an ongoing basis to improve the service standards We are committed to improve and enhance our services and undertake new service initiatives. Such and other services differentiate us with other service providers in the industry. Our Service Commitments … The service commitments are to guide the actions of the people at NJ. Clearly stated, customers can freely communicate any such actions/events wherein they feel that any of the following commitments have been breached / compromised. At NJ we desire to honour our commitments at all points of time and to all our customers without any bias. To provide customer-focussed need-based valued services To provide reliable, accurate and timely information To maintain all records in privacy To optimise services/benefits at least justifiable cost To develop and grow the customers ’ business To provide constructive after sales service To honour our service commitments

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Recognitions
Some of the awards & recognitions that we have received in past..

Year 2000:
For Outstanding Performance presented by Chairman, Prudential Plc. at London

Year 2002:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London

Year 2003:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London

Year 2004:
Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh, Scotland

Year 2004:
For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia

Year 2006:
Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual Fund Plc at Mumbai

Year 2006:
Award – Vietnam Comments from Industry Stalwarts: The essence of investment consultancy lies in optimal asset allocation as against security selection or timing the markets for clients. NJ understands this very well and has added significant value to the clients through this approach. I am sure with this new initiative; a much larger number of clients will be able to benefit from this approach. I wish them all the best in this initiative - Prashat Jain, CIO, HDFC AMC. The success of any business lies in innovation ahead of times and NJ has proved it time again - Rajan Krishnan, Principal Pnb AMC.

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Mutual Funds
Mutual funds provide investment opportunities depending on investor’s risk and Return expectations. Mutual funds are specialized investment vehicles that allow one to pool savings and consolidate them into fairly large and diversified portfolio of investment. The pooled funds are invested in securities or assets as per the objective of the scheme in which it is collected and the returns/growth is distributed to the investors. Mutual funds are managed by professionals and are well regulated by SEBI now who keep track of industries /companies and monitor their performance which an individual investor finds difficult. In India, the assured return schemes have been quite successful due to their fixed income nature and the obsessed mindset of the small investor with fixed or assured returns. The opportunity to invest at fixed rates over a long period of time is likely to reduce. Market related rate of interest is being experienced in the banking sector. The returns become more market related and vary over time and we can see a lot of variable rate products in the days to come. What Is A Mutual Fund? A mutual fund (MF) is a vehicle to pool money from investors, with a promise that the money would be invested in a particular manner, by professional managers who are expected to honor the promise. The idea behind a MF is that investors lack time, inclination or skills to manage their own investments. Professional managers, acting on behalf of the MF, manage the investments for the benefit of investors in return for a management fee. The organization that manages the investment is the Asset Management Company (AMC). In India, the operations of the AMC are supervised by a Board of Trustees/Trustee company. Mutual Fund investments are Collective Investment Schemes, which collect contribution from the subscribers and invest them in a variety of transferable assets such as ordinary shares and bonds.
Operational flowchart of Mutual Fund

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These Trusts are run by experienced Investment Managers who use their knowledge and expertise to select individual securities, which are classified to form portfolios that meet predetermined objectives and criteria. These portfolios are then sold to the public. Thus a Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

Mutual Fund Framework

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Brief History

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. Phase 1 – ( 1964 – 1987)- Growth of UTI UTI sole player in the industry, created by an Act of Parliament ,1963 The first product launched by UTI was Unit Scheme 1964 UTI creates products such as ULIP (1971), MIP's, Children Plans(1986) ,Offshore Funds etc MASTERSHARE (1987) – 1st Diversified Equity Investment Scheme in India INDIA Fund – 1st Indian offshore fund launched in August 1986 Phase 2 – ( 1987 – 1993)- Entry of Public Sector Funds In 1987 Public Sector Banks and FI's got permission to set up MF. SBI mutual fund was the first non -UTI mutual fund, set up in November 1987 This was followed by Canbank MF, LIC MF, Indian Bank MF, BOI MF, GIC and PNB MF In 1993, Mutual Fund Industry was open to private players SEBI got its regulatory powers in 1992 Phase 3 – ( 1993-1996) – Emergence of Private Funds In 1993, Mutual Fund Industry was open to private players. SEBI's first set of regulations for the industry formulated in 1993 Significant innovations, mostly initiated by private players Phase 4 – ( 1996-1999) – Growth and SEBI Regulation Implementation of new SEBI regulations led to rapid growth Bank mutual funds were recast as per SEBI guidelines UTI came under voluntary SEBI supervision Dividends made tax free in 1999 Mutual funds assets in mid-2002 were app. 1,00,000 crore During this phase, both SEBI and AMFI launched investor awareness programmes

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Phase 5 – (1999-2004) – Emergence of a large and uniform industry UTI Act Repealed in February 2003 AUM by end of 2005 app. INR 1,50,000 crore

Rapid growth, significant increase in corpus of private players Tax break offered created arbitrage opportunities Bond funds and liquid funds registered highest growth Phase 6 – From 2004 onwards: Consolidation and Growth Mergers and Acquisitions witnessed Alliance MF acquired by Birla Sunlife Sun F&C by Principal PNB Mutual fund The graph below illustrates the growth of assets over the years.

Diagram : Growth Graph of Mutual Funds (AMFI Mutual Fund Test Workbook & Website)

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Mutual Fund Industry
Global Mutual Fund Industry
The Emergence It all started when three Boston securities executives pooled their money together in 1924 to create the first mutual fund, they had no idea how popular mutual funds would become. The idea of pooling money together for investing purposes started in Europe in the mid-1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was called the Massachusetts Investors Trust. After one year, the Massachusetts Investors Trust grew from $50,000 in assets in 1924 to $392,000 in assets (with around 200 shareholders). In contrast, there are over 10,000 mutual funds in the U.S. today totaling around $7 trillion (with approximately 83 million individual investors). The Setback The stock market crash of 1929 slowed the growth of mutual funds. In response to the stock market crash, American Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the SEC and provide prospective investors with a prospectus. The SEC (U.S. Securities and Exchange Commission) helped create the Investment Company Act of 1940 which provides the guidelines that all funds must comply with today in United States of America. The Development With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s there were around 270 funds with $48 billion in assets. In 1976, John C. Bogle opened the first retail index fund called the First Index Investment Trust. It is now called the Vanguard 500 Index fund and in November of 2000 it became the largest mutual fund ever with $100 billion in assets.

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Present Scenario Over the years, structural changes in the global economic environment have led to the emergence of a strong market economy and facilitated the growth of the

mutual funds industry. A market economy depends more on growth led by financial market than by bank-finance. Since the mutual funds industry is a strong pillar of the financial market, it got a boost with the emergence of a strong market economy. Mutual funds found increasing acceptance also because they have the capacity to absorb the instability and uncertainties that characterize the financial market system. The rise in inflation, reduction in real interest rates and growing complexities in the market provided tremendous opportunities to mutual funds. For these reasons, the mutual funds industry began to thrive well in not only the developed countries but also the newly industrialized and developing country, particularly during the 1990s. Mutual fund asset growth was boosted by positive stock market returns in almost all reporting countries and the ongoing net flow of new investments.

Mutual Fund Industry In India
The Origin and development of Mutual funds in India happened in a phased manner. The Emergence The origin of the Indian mutual fund industry can be traced back to 1964 when the Indian Government, with a view to augment small savings within the country and to channelize these savings to the capital markets, set up the Unit Trust of India (“UTI”). The UTI was setup under a specific statute, the Unit Trust of India Act, 1963. The Unit Trust of India launched its first open-ended equity scheme called Unit 64 in the year 1964, which turned out to be one of the most popular mutual fund schemes in the country. This is the First phase in the history of mutual funds in India. • • • • • • UTI Act repealed in 2003 UTI now does not have a special status. (now under SEBI) Size of industry was 1,50,000 crore in 2005 Merger and Acquisitions happening Fidelity, Largest MF has entered India At the end of March 2006, there were 29 Funds

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The Development The Second phase started in 1987, when the government permitted other public sector banks and insurance companies to promote mutual fund schemes. Pursuant to this relaxation, six public sector banks and two insurance companies’ viz. Life Insurance Corporation of India and General Insurance Corporation of India launched mutual fund schemes in the country. A New Era…The Entrance of Private Players Subsequently, in 1993, the Securities and Exchange Board of India ("SEBI") introduced The Securities and Exchange Board of India (Mutual Funds) Regulations, 1993, which paved way for the entry of private sector players in the mutual fund industry. This third phase of the mutual fund industry, which commenced in late 1993, witnessed exponential growth of the industry, with the advent of private players therein. Private sector funds having distinct operational advantages, posed serious competition to the existing public sector funds. Kothari Pioneer Mutual fund (now merged with Franklin Templeton) was the first fund to be established by the private sector in association with a foreign fund. It launched the open-ended Prima Fund in November 1993. During the year 1993-94 another four private players launched their schemes: ICICI Mutual Fund, 20th Century Mutual Fund, Morgan Stanley Mutual Fund and Taurus Mutual Fund. In the first year of operation these five funds launched seven schemes, and mobilized an amount of Rs1, 559.6 crores during 1993-94. The Industry though has remained flat for the last couple of years (2001- 2003) due to recession, but has bounced back strongly in 2003- 04 to post a record of assets under management. 1964-92 The UTI Era RBI and IDBI were the regulators in phases. 1993-98 SEBI is the regulator. 1998 – Present

Private players Entry of Private become dominant. players

Milestones in Indian Mutual Fund Industry

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Structure of Mutual Funds In India
Like other countries, India has a legal framework within which mutual funds must be constituted. In India, open and closed-end funds operate under the same regulatory structure, i.e. in India, all mutual funds are constituted along one unique structure-as unit trust. A mutual fund in India is allowed to issue openend and close end schemes under a common legal structure. Therefore, a mutual fund may have different schemes (open and closed-end) under it i.e. under one unit trust, at any point of time. The structure, which is required to be followed by mutual funds in India, lay down under SEBI (Mutual Fund) Regulations, 1996.

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The Fund Sponsor
'Sponsor" is defined under SEBI regulations as any person who, acting Alone or in combination with another body corporate, establishes a, mutual fund. The sponsor of a fund is akin to the promoter of companies he gets the fund registered with SEBI. The sponsor will form a Trust and appoint a board of Trustees. The sponsor will also generally appoint 11 Asset management Company (AMC) as fund managers. The sponsor ill also appoint a Custodian to hold the fund assets. All these appointment are made in accordance with the SEBI regulations. Per the existing SEBI regulations, for a person to qualify as a sponsor, must contribute at least 40% of the net worth of the AMC and issues a sound financial track over five years prior to registration.

Mutual Funds as Trusts
Mutual fund in India is constituted in the form of a Public Trust under the Indian Trusts Act 1882.The fund invites investors. Contribute their money in the common pool by subscribing to units Issued by various schemes established by the trust as evidence of their beneficial interest in the fund. The trust or fund has no legal capacity itself rather it is the Trustee(s) who have legal capacity and therefore the trustees take all acts in relation to the trust on its behalf.

Trustees
A board of trustees - a body of individuals, or a Trust company - a corporate body, may manage the Trust. Board of Trustees manages most of the funds in India.4, The Board or the Trustee Company (body of individuals, corporate body, for managing the portfolio, appoints an Asset Management Company. The Trust is created through a document called the Trust Deed that is executed by the Fund Sponsor in favors of the trustees. They are the primary guardian of the unit holder's funds and assets. They ensure that AMC's operations are along professional lines.

Rights of Trustees
Appoint the AMC with the prior approval of SEBI. • Approve each of the schemes floated by the AMC. • Have the right to request any necessary information from the AMC concerning the operations of various schemes managed by the AMC as Mutual Funds

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• •

• •

often as required, to ensure that the AMC is in compliance with the Trust Deed and regulation. It may take remedial action if they believe that the conduct of the funds business is not in accordance with SEBI regulations. Direction of the trustees. The AMC is required to be approved and registered with SEBI as an AMC; The Trustees are empowered to terminate the appointment of the AMC and may appoint new AMC with the prior approval of the Board and holders. The AMC floats and then manages the different investment schemes. The AMC of a mutual Fund must have a net worth of at least 1O Crores at all the times. The AMC cannot act as a trustee any other mutual fund. The AMC must report to the trustees with respect to its activities.

Obligations of Trustees
• Must enter into an investment management agreement with the AMC in accordance with the Fourth Schedule of SEBI (MF) Regulations, 1996. • Must ensure that the funds transactions are in accordance with the Trust Deed. • Are responsible for ensuring that the AMC has proper systems and procedures in place and has appointed key personnel including Fund Managers and a Compliance Officer besides other constituents such as the auditors and registrar. • Must ensure due diligence on the part of the AMC for empanelment of brokers • Must ensure that the AMC is managing schemes independent of other activities and that the interest of unit holders of one scheme are not compromised with those of other schemes • Must furnish to SEBI on a half-yearly basis, a report on the funds activities and a certificate stating that the AMC has been managing the schemes independently of other activities

Asset Management Company
• Acts as an invest manager of the Trust under the Board Supervision and direction of the Trustees. • Has to be approved and registered with SEBI. • Will float and manage the different investment schemes in the name of Trust and in accordance with SEBI regulations. • Acts in interest of the unit-holders and reports to the trustees. Mutual Funds

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• At least 50% of directors on the board are independent of the sponsor or the trustees.

Obligations of the AMC and its Directors
They must ensure that: • Investment of funds is in accordance with SEBI Regulations and the Trust Deed. • Take responsibility for the act of its employees and others whose services it has procured • They are answerable to the trustees and must submit quarterly reports to them on AMC activities and compliance with SEBI Regulations • If the AMC uses the services of a sponsor, associate or employee, it must take appropriate disclosure to unit holders, including the amount of brokerage or commission paid. • Do not undertake any other activity conflicting with managing the fund. • Will float schemes only after obtaining disclosure to the investors in areas such as calculation of NAV and repurchase price. Certain specific events, the trustees have the right to dismiss the AMC with the approval of SEBI in accordance with the regulations. • Right to ensure that, based on their quarterly review of the AMC's net worth, any shortfall is made up.

Agents
Transfer agents are responsible for issuing and redeeming units of the mutual fund and provide other related services such as preparation of transfer documents updating investors' records. A fund may choose to out this activity in-house or by an outside transfer agent.

Distributors
AMC’s usually appoint Distributors or Brokers, who sell units on behalf bf the fund. Some funds require that all transactions to be routed through such brokers. In India, besides brokers, independent individuals are appointed as agents for the purpose of selling the fund scheme to the investors. While individual constitute the largest segment in the category of mutual fund distributors, other distributors include banks, NBFCs and corporate.

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Bankers
A fund's activities involve dealing with the money on a continuous basis primarily with respect to buying and selling units, paying for investment made, receiving the proceeds on sale of investment and discharging its obligations towards operating expenses. A funds banker therefore play a crucial role with respect to its financial dealings by holding its bank account and providing it with remittance services.

Custodian and Depository
The custodian is appointed by the Board of Trustees for safekeeping of securities in terms of physical delivery and eventual safe keeping or participating in the clearing system through approved depository companies on behalf of the mutual fund and must fulfill its responsibilities in accordance with its agreement with the mutual fund. The Indian markets are moving away from having physical certificates for securities, to ownership of these securities in dematerialized form with a depository. Thus, a Depository Participant will hold a mutual fund’s dematerialized securities holdings. A fund's physical securities will continue to be held by a custodian.

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Advantages Of Mutual Funds
To understand and appreciate the different techniques employed by Mutual Funds to market and sell their units, it is imperative that we first understand the objectives and aims that these funds have towards their customers. It is only in this light that we would be able to completely comprehend their marketing strategies. The following objectives can be said to be the major driving force for investors to take the Mutual Funds route. • Diversification of Risk: Mutual Funds are an extremely sound investment for the purposes of diversification. By investing in many companies the mutual funds can protect themselves from unexpected drop in values of some shares. Small investors can achieve wide diversification of their risks by investing in Mutual Funds, and hence do not have the fear of “putting all their eggs in one basket”. • Expertise Supervision and Control of Investments: When investors buy mutual fund schemes, an essential benefit that they acquire is expert Portfolio Management of their investments. The professional fund managers who supervise fund’s portfolio take desirable decisions viz., what scrips are to be bought, what investments are to be sold and more appropriate decision as to timings of such buy and sell. • Lower Costs: Mutual funds have very large funds at their disposal, and hence are in a position to reap the benefits of economies of scale. The brokerage and transaction fees or trading commission is in most cases reduced substantially. • Safety of Investment: The legislation provides for the safety of investments by regulating the Mutual Funds Industry. • Small investments: Mutual funds help you to reap the benefit of returns by a portfolio spread across a wide spectrum of companies with small investments. Such a spread would not have been possible without their assistance. • Professional Fund Management: Professionals having considerable expertise, experience and resources manage the pool of money collected by a mutual fund. They thoroughly analyze the markets and economy to pick good investment opportunities.

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• Spreading Risk: An investor with a limited amount of fund might be able to invest in only one or two stocks / bonds, thus increasing his or her risk. However, a mutual fund will spread its risk by investing a number of sound stocks or bonds. A fund normally invests in companies across a wide range of industries, so the risk is diversified at the same time taking advantage of the position it holds. Also in cases of liquidity crisis where stocks are sold at a distress, mutual funds have the advantage of the redemption option at the NAVs. • Transparency and interactivity: Mutual Funds regularly provide investors with information on the value of their investments. Mutual Funds also provide complete portfolio disclosure of the investments made by various schemes and also the proportion invested in each asset type. Mutual Funds clearly layout their investment strategy to the investor. • Liquidity: Closed ended funds have their units listed at the stock exchange, thus they can be bought and sold at their market value. Over and above this the units can be directly redeemed to the Mutual Fund as and when they announce the repurchase. • Choice: The large amount of Mutual Funds offer the investor a wide variety to choose from. An investor can pick up a scheme depending upon his risk / return profile. • Regulations: All the mutual funds are registered with SEBI and they function within the provisions of strict regulation designed to protect the interests of the investor. • TAX BENEFITS: Dividend income from mutual fund units will be exempt from income tax with effect from July 1, 1999. Further, investors can get rebate from tax under section 88 of Income Tax Act, 1961 by investing in Equity Linked Saving Schemes of mutual funds. • Further benefits are also available under section 54EA and 54EB with regard to relief from long term capital gains tax in certain specified schemes • Miscellaneous advantages: Investing in securities through mutual funds has many other advantages like the option to reinvest in dividends, strong possibility of capital appreciation, regular returns, etc.( Jim Gard, 2002)

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Disadvantages Of Mutual Funds
• No control over the costs. Regulators limit the expenses of Mutual Funds. Fees are paid as percentage of the value of investment • No tailor made portfolios. • Managing a portfolio of funds. ( Investor has to hold a portfolio for funds for different objectives ) • One fund can have schemes of similar objectives so, selection becomes difficult.

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Classifications of Mutual Funds
(The Categorization of Mutual Funds based on different criteria) Asset Classes:The two main asset classes are debt and equity. Popular perception is that equity is risky, while debt is safe. However, it needs to be remembered that debt securities are susceptible to daily change in values as equity securities. Further, the real returns on debt may or may not be positive. Equity on the other hand, can be an effective hedge against inflation, particularly in situations of normal inflation. Broadly mutual funds can be divided into two categories - equity-oriented and debt-oriented. As the names suggest, equity-oriented mutual funds invest predominantly in equities; diversified equity funds and balanced funds are the popular variants. Equity valuations, on the other hand, vary with corporate performance and prospects, and the overall market sentiment. Conversely, debt-oriented funds hold a significant portion of their portfolios in fixed income instruments like government securities, corporate bonds, and treasury bills among others. However this bifurcation fails to reveal the versatile nature of mutual funds. Let's take this discussion a step further by discussing the various choices available to investors in each of the aforementioned categories Different Mutual Funds are positioned differently depending on the strategy they adopt for making investments. Any mutual fund has the main objective of earning income and high returns for its investors, i.e., getting increased value of their investments. Most Mutual Fund companies offer different schemes of investments depending on the requirements of the target groups. The most efficient method of starting a classification or categorization of all schemes that are offered in the Mutual Fund Investments Market would be to group these into two broad classifications: Portfolio Classification and Operational Classification.

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Load and No Load Funds
Load is the onetime fee payable by the investor to allow the fund to meet initial issue expenses including brokers/agents’/distributors’ commissions, advertising and marketing expenses IF the investors’ objective is to get the benefit of compounding his initial investment by reinvesting and holding his investment for a very long term, then , a no front load fund is preferable

Operational Classification
Operational classification highlights the two main types of schemes, i.e., openended and close-ended which are offered by the mutual funds. (a) Open Ended Schemes: As the name implies the size of the scheme (Fund) is open, and not specified or pre-determined. Entry to the fund is always open to the investor who can subscribe at any time. Such fund stands ready to buy or sell its securities at any time. The units are normally not traded on the stock exchange but are repurchased by the fund at announced rates. Open-ended schemes have comparatively better liquidity despite the fact that these are not listed. No minute-to-minute fluctuations in rates haunt the investors. (b) Close Ended Schemes: Such schemes have a definite period after which their shares/ units are redeemed. Unlike open-ended funds, these funds have fixed capitalization, i.e., their corpus normally does not change throughout its life period. Their price is determined on the basis of demand and supply in the market. A premium may exist only on account of speculative activities.

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Portfolio Classification of Funds:
The portfolio classification of funds can be divided into 4 kinds.

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(a) Return based classification: The investors of the
mutual fund schemes are made to enjoy a good return in form of regular dividends or capital appreciation or a combination of these both. 1. Income Funds: Income funds are floated for the interest of investors who want to maximize current income. These funds distribute periodically the income earned by them, in the form of either a constant income at relatively low risk or in the form of maximum income possible with higher risk by the use of leverage. 2. Growth Funds: These Schemes have the objective to achieve an increase in the value of the underlying investments through capital appreciation, and they invest in growth oriented securities. 3. Conservative Funds: These funds offer a blend of good average returns and reasonable capital appreciation. These funds are very popular and are ideal for the investors who want both growth and income from their investment.

(b) Investment Based Classification: Mutual funds
may also be classified on the basis of the kind of securities that they invest in.

1. Equity Funds: Equities are a high risk-high return asset class; the same
risk profile spills over to equity funds as well. However investors must take note of the fact that a large number of variations exist within the 'high risk' equity funds segment. For example a sector fund would be on the relatively higher scale in the risk-return paradigm when compared to an index fund, which simply tracks the movements in a chosen benchmark index. The graph displays how some of the variants from the equity funds segment rank in terms of the risk-return trade-off. Instead of adopting a "text-book" method and placing all equity funds on a common platform, investors should appreciate the nuances of each category. These are intricacies investors must be aware of in order to make an informed investment decision. These funds invest most of their investible shares in equity shares of companies and undertake the risk associated with the investment in equity shares. In a developed market, Equity funds can be of different categories. For example, ‘blue chip’, FMCG, PSUs, etc.

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The equity funds category can be further differentiated as follows: Market capitalization-based funds Market capitalization is defined as the number of shares issued by a company multiplied by the price of each share. Companies are generally divided into the large cap, mid cap and small cap segments respectively on the basis of their market capitalization. Some diversified equity funds are launched with the mandate to invest in stocks from one or more of the stated segments i.e. the company's market capitalization becomes the governing force. For instance, Franklin India Blue chip Fund represents a large cap diversified equity fund. The sharp run up in stocks from the mid cap segment in the recent past can be credited for the launch in funds of the mid cap and flexi cap (funds that invest in stocks across market segments) varieties. Sundaram S.M.I.L.E. and HDFC Premier Multi-Cap Fund are examples of flexi cap funds. Opportunities funds Fund managers handling opportunities funds have perhaps the most flexible investment mandates. Opportunities funds can invest in stocks across market segments, sectors and some are even permitted to invest a significant portion of their corpus in debt. As the name suggests, the idea is to seek opportunities for clocking gains from any sector/market segment. However the agile management style also tends to enhance the risk profile of these funds vis-à-vis a conventional diversified equity fund. DSP ML Opportunities Fund and HSBC India Opportunities Fund fall under this category. Theme-based funds T h e m e - b a s e d funds are fairly similar to sector funds, however the differentiating factor is the level of diversification they offer. Instead of concentrating on stocks from a single sector/industry, their focus lies on a specific theme like globally competitive Indian companies or multinational corporations operating in India; for example Kotak Global India Fund and Birla India Opportunities Fund. In terms of diversification and risk profiles, these companies tread the path between a sector fund and a conventional diversified equity fund. Some theme-based funds are positioned based on their stockpicking strategy. Dividend yield funds are launched with the intention of investing in stocks offering a dividend yield above a certain pre-determined level. For example, Principal Dividend Yield Fund targets companies with a dividend yield higher than 1.5 times that of the NSE Nifty on the earlier trading day. Similarly value funds propagate the value style of investing i.e. picking

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stocks that are fundamentally strong and inherently good buys but currently out of favour (for example Templeton India Growth Fund). Index funds Index funds are launched with the mandate of tracking benchmark indices like the BSE Sensex or S&P CNX Nifty. These funds invest in stocks from the index in the same proportion as the benchmark, thereby offering investors the opportunity to capture the growth in the chosen index. Index funds are generally more popular in developed markets where actively managed funds find it difficult to outperform the benchmark indices as markets are relatively better researched; also their expenses (fees, charges) tend to be lower vis-à-vis actively managed funds. An offshoot of index funds is the index- plus funds category. Index-plus funds invest a predetermined proportion of their total assets in index stocks and the balance in stocks outside the index. HDFC Top 200 Fund falls in this category of funds. Fund of Funds A regular mutual fund invests in equities, bonds and fixed income securities depending on its objective. Fund of Funds (FoF) extend this concept by investing in units of other mutual fund schemes. By investing in more than one mutual fund they take diversification to a new level For example an FoF could invest in five top performing equity funds and offer a highly diversified portfolio to the investor. Similarly others could invest in equity and debt funds simultaneously, thereby offering a portfolio that is diversified across asset classes. On the flipside, FoF investors must be wary of higher expenses on account of overlapping of costs. FT India Life Stage Fund is the example of an FoF. Conventional diversified equity funds We have used the term "conventional" diversified equity funds at various places during the course of this discussion. This is not a variant; instead these are equity funds in their purest form and might seem rather lackluster in the present scenario. Typically, a diversified equity fund invests in a number of equity/ equity related instruments from various sectors thereby enabling investors to benefit from diversification. HDFC Equity Fund and Sundaram Growth Fund can be classified as conventional diversified equity funds.

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2. Debt Funds: These Funds have their portfolio comprising of bonds and
debentures (Debt Instruments). These funds are considered to be very secure with a steady income. Long-term debt funds Long-term debt funds are conventional debt/bond funds that have been in existence for as long as equity funds. Investors prefer to invest in debt funds for the same reasons they choose to invest in equity funds viz. they get benefits of diversification across debt instruments and the services of a professional fund manager. In fact, for retail investors, debt funds are one of the most important avenues for investing in debt securities like corporate bonds and government securities, chiefly because individual transactions in debt are of a very high value (running in millions of rupees) and beyond most retail investors. This is unlike equities for instance, where retail investors can invest on their own in smaller lots. Debt funds invest across a range of debt/fixed income securities. The corpus of long-term debt funds comprises mainly of corporate bonds and government securities (gilts/gsecs). When these securities have a residual maturity of at least 12 months, they are classified as long-term debt or longer-dated paper. Debt funds also invest in shorter-dated paper like treasury bills, certificate of deposit (CDs) and commercial paper to name a few. In addition to this, they also allocate a small part of assets to cash. Sundaram Bond Saver is an example of a long-term debt fund. Given that a large chunk of the fund's assets are in longer-dated paper, these funds are exposed to what is called as 'interest rate risk'. This means that in the event of volatility in debt markets, long-term debt funds will witness above-average turbulence, as there is greater uncertainty associated with the longer tenure. On the other hand, shorter-dated paper is relatively well insulated from instability in debt markets. An analogy that investors can relate to is the difference in rates on a fixed deposit for 1-Yr and 3-Yr. The 3- Yr fixed deposit offers a higher return as there is more uncertainty associated with it as against a fixed deposit for 1- Yr. So more uncertainty is rewarded with a higher rate to 'incentivise' investment. Likewise, longer-dated paper offer higher coupon rates as compared to shorter-dated paper because investors take on more risk. Investments in long-term debt funds should be made with a time frame of at least 12 months.

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Short-term debt funds If you have understood how longer dated paper is different from shorter dated paper, then you have a fairly good idea about what short-term debt funds have on offer for investors. There is a category of investors who have two critical needs that short-term debt funds help achieve. One – they want to be invested for the short-term - less than 6 months. Two - over this time frame, they are looking at preserving capital with a return that is superior to that of a fixed deposit of a comparable tenure. The reason why short-term debt funds can preserve capital better than long term debt funds is because they are invested in debt instruments of a shorter tenure. This category of debt instruments is not as adversely affected by volatility in debt markets as longer dated paper. As a result, prices of shorter-dated debt instruments are relatively stable and serve the needs of risk-averse investors well. Templeton Income Short Term is an example of a short-term debt fund. Investments in short-term debt funds should be made with a time frame of 1-6 months. Liquid funds Liquid funds invest in very short-term debt instruments maturing in 30-45 days. Typically this includes treasury bills and call money. Liquid funds serve needs quite similar to that of short-term debt funds, only difference is that liquid fund investors have an even shorter investment time frame, at times as short as one day. If investors are looking at being invested for more than a month, they can consider short-term debt funds for a marginally higher return. Grindlays Cash Fund is an example of a liquid fund. Long-term gilt funds A long-term government securities und invests primarily in government paper (gilt/gsec) with a residual maturity of over 12 months. This is unlike conventional debt funds that invest primarily in corporate bonds with gilts accounting for a smaller share of net assets. Given their 'investment bias' for a particular segment of the debt market, gilt funds can be classified as 'sector funds'. Gilt funds have a higher risk profile than conventional debt funds because their investments are limited to a particular segment of the debt market and they cannot diversify across other segments like corporate bonds for instance, In times of turbulence. The risk associated with gilt funds is further compounded by the fact that gilts due to the higher liquidity are more volatile than corporate bonds. Due to the liquidity, gilt prices are more closely linked to developments in the economy. So any pessimism in debt markets linked to 'news' like inflation, rising crude prices, global economic turbulence, is likely to have a greater impact on gilt prices than corporate bond prices. This is mainly Mutual Funds

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why gilt funds are more volatile than conventional debt funds. Templeton Gsec and Kotak Gilt are examples of long-term gilt funds. Investments in long-term gilt funds should be made with a time frame of at least 12 months. Short-term gilt funds A short-term gilt fund invests primarily n gilts of a shorter tenure (less than 12 months). The rationale for investing in short-term gilt funds is similar o that of short-term debt funds. Investors have a shorter investment time frame (less than 6 months) and want to clock a small gain with capital preservation being the more important objective. The reason investors choose short-term gilt funds over short-term debt funds is because gilts can provide a higher capital appreciation vis-à-vis bonds. As explained earlier, this is because gilts, by virtue of liquidity, are more closely linked to 'economy-related news' and the upside and downside of investing in gilts is markedly higher vis-à-vis corporate bonds. Templeton Gsec (Short Term) is an example of a short-term gilt fund. Dynamic debt funds Dynamic debt funds attempt to combine the benefits of debt funds and gilt funds. They can invest across corporate bonds and gilts without any restrictions. They are distinct from conventional debt funds that invest in gilts and corporate bonds because these funds usually maintain a cap on their gilt investments. Dynamic debt funds tend to increase their gilt investments in times of economic stability as gilt prices tend to have a more lucrative spread (i.e. difference between the buy and sell prices). Again spreads on gilt have an edge over spreads on corporate bonds because of higher liquidity in the former. The fund manager will invest in corporate bonds and/or gilts depending on the spread between the yields of the two instruments. He will consider the comparative yields and the credit risks associated with the instrument and invest accordingly. In this way dynamic debt funds try to maximise returns for the investor at all times. Grindlays Dynamic Bond Fund is an example of a dynamic debt fund. Investments in dynamic debt funds should be made with a time frame of at least 12 months. Long-term floating rate funds Floating rate funds invest in debt instruments that have their coupon rates adjusted at periodic intervals. These instruments are called 'floating rate instruments'. The floating rate paper is benchmarked against a reference point like the MIBOR (Mumbai Inter-bank Offered Rate) for instance. Changes in the MIBOR are a cue for the coupon rate on the floating rate paper to be reset accordingly. As opposed to floating rate instruments, you have conventional Mutual Funds

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fixed rate instruments wherein the coupon rate is fixed till maturity. As the coupon rate on floating rate paper is reset periodically, there is lower pressure on its price during interest rate volatility. That is why floating rate paper is less affected by turbulence in debt markets vis-à-vis fixed rate paper. Consequently over the past two years, floating rate funds have held their own in investors' portfolios, while conventional debt funds have been adversely impacted by the instability in interest rates. Templeton Floating Rate Fund (Long Term) is an example of a floating rate fund. Short-term floating rate funds Short-term floating rate funds work on the same lines as long-term floating rate funds except that they invest in floating rate paper of shorter tenure (less than 12 months). If investors are looking to be invested across a shorter time frame of 16 months, short-term floating rate funds should be preferred over their longerterm counterparts. Templeton Floating Rate Fund (Short Term) is an example of a short-term floating rate fund. Fixed maturity plans Fixed maturity plans (FMPs) are another 'invention' that became a 'necessity' to counter interest rate instability, a problem that has become acute over the last two years. Typically, FMPs are close-ended funds. They invest across debt instruments to arrive at a pre-determined yield. Pre-determined because the yield is announced beforehand to investors. So FMPs have defined investment tenure. If the investor's investment time-frame matches that of the FMP, he can consider investing in it. The benefit of investing in FMP is that the investor knows in advance the return that he will generate on his investment. Knowing the return on your debt fund has assumed significance now when conventional debt funds are operating in an uncertain interest rate environment, when even negative returns have become a way of life. To understand how this works – take an FMP, which at the IPO stage (initial public offering) announces that it will invest in paper maturing in May 2006 yielding 5.25% interest. The fund will invest in freshly-launched debt paper. This is because investing in an existing paper will disturb the yield c a l c u l a t i o n s (5.25% in this case) if the bond is not priced favorably. Investors with a definite 1-Year horizon can consider investing in the FMP to yield an interest of 5.25%. From the investor's perspective, he knows what his investment will yield over the next 12 months, so intermittent volatility in bond prices does not disturb him. Some fund houses like Birla Mutual Fund and JM Mutual Fund launch FMPs at regular intervals. Even Franklin Templeton Mutual Fund which has avoided FMPs in the past has launched its maiden FMP offering to tap investor interest in this product. FMPs have investment tenures ranging from less than a year to more than 10 years. Mutual Funds

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Monthly Income Plans (MIPs) As a mutual fund category, monthly income plans (MIPs) are a relatively recent phenomenon. MIPs are hybrid funds that invest predominantly in debt instruments with a small portion of assets invested in equities. The equity component is expected to act as a 'kicker' that will make the MIP outperform a conventional debt fund. The rationale for a hybrid product like an MIP came to the fore because debt funds weren't adding a lot of value to the risk-averse investor's portfolio. As a matter of fact, they were eroding value. This is something that investor's had never seen before. Fund houses introduced MIPs to encourage investors to take on a little bit of risk so as to earn a slightly higher return than conventional debt funds. So we had MIPs being launched that gave the fund manager a mandate to invest 5-30% of assets in equities. Conventional MIPs invest about 5- 15% of assets in equities with their aggressive counterparts investing as high as 20-30% in equities. Several fund houses have two distinct MIPs catering to different investor groups. For instance HDFC Mutual Fund has one MIP with a maximum permissible 15% equity component and another one with a maximum permissible 25% equity component. Likewise DSP ML has three funds in its Savings Plus series with the equity component capped at 10%, 20% and 30%. In our vie