A STUDY ON MUTUAL FUND PERFORMANCE IN SALEM

AT AMBALAL SHARES AND STOCKS PVT LTD.

CHAPTER -1

1.1. INTRODUCTION

Mutual funds offer a way for a group of investors to effectively pool their money so they can invest in a
wider variety of investment vehicles and take advantage of professional money management through
the purchase of one mutual fund share. Mutual fund companies essentially collect the money from their
investors, or shareholders, and invest that pooled money into individual investment vehicles according
to some risk profile, money management philosophy, or financial goal. The mutual fund then passes
along the profits (and losses) of those investments to its shareholders.Mutual As an investor, you put
your money in financial assets like stocks and bonds. You can do so by either buying them directly or
using investment vehicles like mutual funds.

In this segment, we will understand mutual funds and how to trade in them...Mutual funds in India have
come a long way since 1964 when the Unit Trust of India was the only player

1.1.1. DEFINITION

A mutual fund is an investment vehicle, which pools money from investors with common investment
objectives. It then invests their money in multiple assets, in accordance with the stated objective of the
scheme. The investments are made by an ‘asset management company’ or AMC.

For example, an equity fund would invest in stocks and equity-related instruments, while a debt fund
would invest in bonds, debentures, etc.

.TYPES OF MUTUAL FUND

On the basis of structure:

a) Open - Ended Schemes: An open-end fund is one that is available for subscription throughout the
year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset
Value ("NAV") related prices. The key feature of open-end schemes is liquidity, where you can buy
and sell the mutual fund unit at any time.
b) Close - Ended Schemes: These schemes have a pre-specified maturity period. One can invest
directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are
two exit options available to an investor after the initial offer period closes. First, the Investors can
transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. Second,
some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund
through periodic repurchase at the schemes NAV.
SEBI Regulations ensure that at least one of the two exit routes is provided to the investor.
c) Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended
and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.

On the basis of nature:

a) Equity fund: These funds invest a maximum part of their Principal amount into equities holdings.
The structure of the fund may vary different for different schemes and the fund manager’s outlook on
different stocks. Equity investments are meant for a longer term, thus Equity funds rank high on the
risk-return matrix.
b) Debt funds: The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By investing
in debt instruments, these funds ensure low risk and provide stable income to the investors.
c) Balance fund: They are a mix of both equity and debt funds. They invest in both equities and fixed
income securities, which are in line with pre-defined investment objective of the scheme. These
schemes aim to provide investors with the best of both the Funds. Equity part provides growth and the
debt part provides stability in returns.

On the basis of investment objective:

a) Growth Schemes: These Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally invest a major part of
their fund in equities and are willing to bear short-term decline in value for possible future appreciation
b) Income Schemes: These are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income securities such
as bonds and corporate debentures. Capital appreciation in such schemes may be limited
c) Money Market Schemes: These Schemes aim to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer, short-term instruments, such as treasury
bills, certificates of deposit, commercial paper and inter-bank call money.
FACTORS OF MUTUAL FUND
 Investment objective and style
 Fund performance
  Experience of the manager
 Exit load
 Expense ratio
 Asset allocation
IMPACT OF MUTUAL FUND
 CHALLENGES OF MUTUAL FUND
There are many Challenges Facing Mutual Funds which is of prime concern to the people who have an
investment spree.

People find mutual fund investment so much interesting because they think they can gain high rate of
return by diversifying their investment and risk. But, in reality this scope of high rate of returns is just
one side of the coin. On the other side, there is the harsh reality of highly Fluctuating Rate of Returns.
Though there are other disadvantages also, this concern of fluctuating returns is most possibly the
greatest challenge faced by the mutual fund.

The Other Challenges

 Diworsification or Over Diversification- In order to diversify the investment, many times the mutual
fund companies get involved in Over Diversification. The risk of holding a single financial security is
removed by diversification. But, in case of over diversification, investors diversify so much that many
time they end up with investing in funds that are highly related and thus the benefit of risk
diversification is ruled out.

 Taxes-Every year, most of the mutual funds sell substantial amount of their holdings. If they earn
profit by this sell, then the investors receive the Profit Income. For most of the mutual funds,the
investors are bound to pay taxes on these incomes, even if they reinvest the income.

 Costs- Most of the mutual funds charge Shareholder Fees and Fund Operating Fees from the
investors. In the year, in which mutual fund fails to make profit and the investors get no return, these
fees only blow up the losse
1.2.INDUSTRY ANALYSYS

1.2.1.ORIGIN AND HISTORY

By the end of 1988, UTI had total assets worth Rs 6,700 crore. Soon after, eight funds were established
by banks, LIC and GIC between 1987 and 1993. The total number of schemes went up to 167 and total
money invested – measured by Assets under Management (AUM) – shot up to over Rs 61,000 crore.

In 1993, private and foreign players entered the industry, marking the third phase. The first entrant was
Kothari Pioneer Mutual fund, which launched in association with a foreign fund.

The Securities and Exchange Board of India (SEBI) formulated the Mutual Fund Regulation in 1996,
which, for the first time, established a comprehensive regulatory framework for the mutual fund
industry. Since then, several mutual funds have been set up by the private and joint sectors. Currently
there are around 45 mutual fund organizations in India together handling assets worth nearly Rs 10 lakh
crore. Today, the Indian mutual fund industry has opened up many exciting investment opportunities
for investors. As a result, we have started witnessing the phenomenon of savings now being entrusted to
the funds rather than in banks alone. Mutual Funds are now perhaps one of the most sought-after
investment options for most investors.

As financial markets become more sophisticated and complex, investors need a financial intermediary
who can provide the required knowledge and professional expertise on taking informed decisions.
Mutual funds act as this intermediary.

Mutual funds are one of the most highly utilized investment options among average investors and
financial professionals alike. But why is investing in a mutual fund a good idea? While some mutual
funds are objectively better investment than others (and even others that serve very specific investment
needs), what mutual funds grant investorsaccess to is perhaps the most important benefit.

First and foremost, mutual funds grant investors access to a wide variety of investments that they
otherwise may not carry in their portfolio as individual securities. Since mutual funds invest in a
diverse range of securities and investment options, one mutual fund share actually represents
proportionate ownership in each and every investment in the mutual fund's portfolio.

Of most interest to investors is that each share also proportionately represents the profits of those
investments as mutual funds are required to pass along profits to their investors by way of mutual fund
distributions, which come in several forms. In a mutual fund, the value of your shares goes up and
down as the value of the stocks and bonds in the fund rise and fall.

For the average investor to have the same exposure to those investment options and potential profits on
their own would be extremely costly both in terms of the actual investment dollars and in terms of time.

Additionally, investing in a mutual fund is generally a cost-effective way to gain access to professional
money management. Were an individual investor to try to invest in individual securities and actively
manage them the way a mutual fund's manager does, it could very easily become a full-time job (as is
for the professional fund managers of the world!). In order to make wise investment decisions when
you buy individual stocks and bonds yourself, at the very least you'd have to have the knowledge to do
extensive research on various types of businesses in general (automobile, construction, medical) and on
specific companies (GE, IBM, Microsoft). This is work that most of us are not interested in, do not
have the time for, and, most importantly, are probably not as qualified to do. But through purchasing
shares of a mutual fund, you are also purchasing the money management and investment skills of the
fund manager whose job it is to invest and reinvest the mutual fund's capital based on the fund's
established goals.

MUTUAL FUND INDUSTRIES IN INDIA

 Axis Asset Management Company Ltd.

 Baroda Pioneer Asset Management Company Ltd
 Birla Sun Life Asset Management Company Ltd
 BNP Paribas Asset Management India Pvt Ltd
 BOI AXA Investment Managers Pvt Ltd
 Canara Robeco Asset Management Company Ltd
 Daiwa Asset Management (India) Pvt Ltd
 Deutsche Asset Management (India) Pvt. Ltd.
 DSP BlackRock Investment Managers Pvt. Ltd.
 Edelweiss Asset Management Ltd
 Escorts Asset Management Ltd
 FIL Fund Management Private Ltd
 Franklin Templeton Asset Management (India) Pvt Ltd.
 Goldman Sachs Asset Management (India) Pvt Ltd.
 HDFC Asset Management Company Ltd
 HSBC Asset Management (India) Pvt. Ltd.
GROWTH RATE OF MUTUAL FUND
1.2.4. CHALLENGES AND OPPOURTUNITIES OF MUTUAL FUND INDUSTRY

OPPOURTUNITIES
 High cost of business in cities
 Interest rate of scenario of india
 Development of commodity exchange
 The real estate boom
 Oppourtunity to go global

CHALLENGES
 Pressure on margins
 Consolidation in the industry
 Innovation and product differentiation
 Increasing trend on outsourcing
 Growth versus governance
 Administration and distribution
 Investor education-a driver force on financial planning
 The technological backbone
 Diminishing talent pool
1.3.COMPANY PROFILE

1.3.1.ORIGIN
The company was started in the year 2011 and is in its 6th successful year . Currently
the company has around 40 branches across with around 16000 retail clients and few
corporate clients. Ambalal Real Estate (P) Ltd

Ambalal Shares & Stocks Private Limited (ASSL) is one among the Ambalal group of companies
and one of the fastest growing and 1st Corporate Member of NSE & BSE having Registered &
corporate office at Vellore and aims to render services in Equities, Futures & Options, Currency
Derivatives, Mutual Fund and Insurance across PAN India.

Ambalal Multi Commodities Private Limited (AMCL), Member of MCX provides Investment,
Hedging and trading opportunities to the participants of commodities market.

Name of the trading member and stock AMBALAL SHARES AND STOCKS PRIVATE
broker of NSE & BSE LTD

Chairman
K. Jawarilal Jain
Managing Director
Address Tel No of main office of the #163, Durga Bhavan II Floor,
Sriramulu Gopal
New Katpadi Road,
Trading member
Vellore-632004. Tamil Nadu,India.
www.ambalalshares.com
Address Tel No of corportae office of the #2, Kewalchand
Plaza,
Trading member
Ambalal Green
City, Old Bye Pass
Road, Vellore - 632004.

Tel: +91 416 2227751-

SEBI Registration Number of the Trading INB231432932, INF231432932, INE231432932,
55
member INB011432938, INF011432938, INE011432938
Fax: +91 416 2215006
Name and Designation of contact person at S. GOPAL
www.ambalalshares.co
main office Managing Director
m
Address of the office where the Trading #2, Kewalchand
terminal is located Plaza,

Ambalal Green
City, Old Bye Pass
Road, Vellore - 632004.
 Tel: +91 416 2227751-55
Fax: +91 416 2215006
www.ambalalshares.co
m
Name and Designation of the person A.S. Rajasekaran (Compliance officer)
incharge/ Managing the office Senior Vice President

GROUP OF COMPANIES

 Ambalal Housing and Constructions (P) Ltd

 Ambalal Multi Commodities (P) Ltd
 Ambalal Shares & Stocks (P) Ltd
 Ambalal Hotels (P) Ltd
 Ambalal Automotives Tools (P) Ltd
 Ambalal Infrastructure (P) Ltd
 Ambalal Electronics
 Ambalal Import & Export (P) Ltd
 Ambalal Jewelers Vellore (P) Ltd
 Ambalal Infinity Solutions (P) Ltd
 Ambalal Sai Communication (P) Ltd.

1.3.2.VISION AND MISSION

VISSION

 To be a Reliable, Trusted and leading brand in investment and financial sector.

 Planned to have 111 branches in the Financial year (2016-2017).
 Planned to have branches in Rural Sector too.
MISSION

 To upgrade Knowledge, Skills and Attitude by training and retraining at regular

intervals to bring out the best and enabling fulfillment of personal & the
organizational goals.
 Satisfy the customer’s need and provide value to them.
1.3.3.SWOT ANALYSIS
This is a strategic planning method to evaluate the STRENGTH, WEAKNESSES(Limitations),
OPPORTUNITIES & THREATS (SWOT) involved in Ambalal Shares & Stocks Pvt
Ltd(ASSPL). It involves specifying the objectives of the ASSPL and identifying internal and
external factors that are favorable or unfavorable to achieve it.
STRENGTH:

 ASSPL implementing its own online trading platform .

 NSE , BSE & MCX are under single trading platform in ASSPL.
 Diverse Branches & Networks provide a great opportunity to cater tapped and
untapped locations in Tamilnadu.
 Easy accessibility with Head Office people by clients.
 Ambalal provides competitive brokerage & DP charges in Tamilnadu.
 Ambalal provides equity Research analysis Reports for exclusive
Investors/customer based advisory through Whatsapp to support clients.
 Both Online and offline trading facility available in all our Ambalal Branches.
 User friendly backoffice support to our clients in Ambalal.
 Real time online transfer of Funds and exposure facility with HDFC Bank, ICICI
Bank, Axis Bank, Karur Vysya Bank, Sate Bank of India and etc.

WEAKNESSES:

 Ambalal don’t have its own clearing member in NSE & BSE. Having tie-up with
Edlewise and IL&FS.
 Ambalal takes 24 hours for client’s payout where other competitors are doing
hourly basis.
 Ambalal don’t have other third party financial products like MF, Insurance,
Wealth products and etc.,
 It doesn’t provide indices on major world markets, ADR prices of Indian scripts.
OPPORTUNITIES:

 Ambalal have an opportunities for all financial services like mutual fund ,
Insurance and other third party products.
 It is registered with NSE, BSE and MCX Stock Exchange, so can target other
stock exchanges also like NCDEX & etc.
 ATM facility should be provided to investors for easy withdrawals.
 Look into Tie-ups with third party companies for selling all products.
 To register with PMS for getting High Net worth Client base for cross sell of all
our products also.
 Ambalal having huge opportunities to place our foot print in North India also.

THREATS:

 Companies like IIFL, Sharekhan, ICICI Direct, Kotak Securities and private
brokers like Zerodha & Fyers are major threats for Ambalal. Zerodha & Fyers are
very low brokerage provider.
 Banks with demat facilities are major threats for Ambalal.
 Local brokers Like Goodwill & Alice blue are capable of charging lower
brokerage
 Changes in SEBI guidelines and other tax implications affects for new brokers
like Ambalal.
 Government regulations like GST also getting affected for new members like
Ambalal.
1.3.4.SERVICES OFFERED

 Stock Broking
 Currency Broking
 Commodity Broking
 DP Services
 Mutual Fund Distribution
 Insurance Distribution
 IPO/Bonds/Fixed Deposit Distribution
 Wealth Advisory and Portfolio Management Services

1.3.5.COMPETITOR ANALYSIS
 Angel broking
 ICICI direct
 Motilal oswal
 Sharekhan
 HDFC security
 Kodak securities
 Geogit
 Infoline
1.3.6.ORGANISATION STRUCTURE

CHAIRMAN

MANAGING DIRECTOR

SENIOR VICE PRESIDENT HUMAN RESOURCE

MANAGER

VICE PRESIDENT

GENERAL MANAGER

REGIONAL MANAGER

CLUSTER MANAGER

MANAGER

DEPUTY MANAGER

RELATIONSHIP
MANAGER

TRAINEE
1.3.7.DEPARTMENT ANALYSIS

Ambalal Shares & Stocks having various key departments for smooth functioning of the
business.

1. Operation Department
a. RMS department
b. KYC department
c. DP department
d. Funds Department
e. Reports
2. Administration Department
3. Finance Department
4. IT Department
5. HR department
6. Customer Support
7. Legal & Compliance Department
8. Research Department
9. Branding & Advertisement
10. Marketing & Sales Department.