A STUDY ON

“A STUDY AND ANALYSIS OF TOP 3 LARGE CAP EQUITY MUTUAL

FUND SCHEMES ACROSS
INDIAN MUTUAL FUND INDUSTRY”
IN
NJ WEALTH- FINANCIAL PRODUCTS DISTRIBUTORS NETWORK,

VIJAYAWADA

A Project report submitted to

KRISHNA UNIVERSITY

In partial fulfillment of the requirements for the award of degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

S NITISH NAIR

(Registration No: Y16MBA110044)

UNDER THE GUIDANCE OF

Dr POORNA PRABHAT SUNKARA

POST GRADUATE DEPARTMENT OF BUSINESS ADMINISTRATION

ANDHRA LOYOLA COLLEGE

(Affiliated to Krishna University, Approved by AICTE)

Vijayawada, Krishna District

(2016-2018)

1
 CERTIFICATE

This is to certify that the project report entitled “A STUDY AND ANALYSIS OF TOP 3 LARGE
CAP EQUITY MUTUAL FUND SCHEMES ACROSS INDIAN MUTUAL FUND INDUSTRY” in
NJ WEALTH- Financial Products Distributors Network is a bonafide work done by S NITISH
NAIR of Master of Business Administration under my guidance and submitted to the Post
Graduation Department of Business Administration, Andhra Loyola College, Vijayawada in partial
fulfillment of the requirement for the award of Master of Business Administration during the period
2016-2018.

Place: VIJAYAWADA

Date:

Dr. POORNA PRABHAT SUNKARA

Project Guide

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3
 DECLARATION

This project report “A STUDY AND ANALYSIS OF TOP 3 LARGE CAP EQUITY MUTUAL FUND
SCHEMES ACROSS INDIAN MUTUAL FUND INDUSTRY” in NJ WEALTH-Financial
Products Distributors Network written and submitted to the university is an original work carried
out by me and is not submitted to any other university or institution for the award of any
degree/diploma/certificate or published any time before. The findings of this report are based on the
information collected by me during the study period.

Place: VIJAYAWADA S NITISH NAIR

Date: (Y16MBA110044)

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 ACKNOWLEDGEMENT

It is a pleasure to convey my heartiest regards to Rev. Fr. Dr. G.A.PETER KISHORE,

S.J, Principal, Andhra Loyola College and Rev.Fr.Dr.A. REX ANGELO, S.J, Vice Principal,
Post-Graduation Section, Andhra Loyola College for their support in completing my project work.

My sincere and grateful thanks to Dr POORNA PRABHAT SUNKARA PG Department of

Business Administration Andhra Loyola College and my guide for his valuable time and support in
preparation of my project work.

I would also like to thank “NJ WEALTH-Financial Products Distributors Network” for
giving me this opportunity to undergo a project study program in their esteemed organization. I am
also thankful to Mr. NARENDRA KUMAR, Branch Manager at NJ WEALTH, for his patient
and valuable guidance in accomplishing the study.

S NITISH NAIR

(Y16MBA110044)

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 TABLE OF CONTENTS

SL.NO. CHAPTERS PAGE NO.

1. INTRODUCTION 7

2. RESEARCH METHODOLOGY 17

 NEED OF THE STUDY

 SCOPE OF THE STUDY

 OBJECTIVES OF THE STUDY

 DATA COLLECTION

 LIMITATIONS OF THE STUDY

3. INDUSTRY PROFILE 20

4. COMPANY PROFILE 36

5. DATA ANALYSIS AND INTERPRETATION 46

6. FINDING 55

7. SUGGESTIONS 57

8. CONCLUSION 60

BIBLIOGRAPHY

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 CHAPTER I

INTRODUCTION

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MUTUAL FUNDS

A mutual fund is a professionally managed investment fund that pools money from many investors
to purchase securities. Mutual funds are investment vehicles that pool money from many different
investors to increase their buying power and diversify their holdings. This allows investors to add a
substantial number of securities to their portfolio for a much lower price than purchasing each
security individually.

Features of Mutual Funds

Investors purchase standard units of fixed value at the inception of a fund.

 Most funds also offer investors opportunity to enter after inception at prevailing value of the
units.
 Each fund has its own investment objective.
 Depending on the objective, the investment avenues targeted by each fund will be different.
 Investors chose between various funds based on their own personal investment objectives.
 Funds are managed by professional fund managers for a fee.
 The value of a unit at any given point would depend upon the value of the various
investments made by the fund at that point in time.
 Subject to conditions stated at the time of inception of the fund. The investors can redeem
their investments as and when they want.

Mutual fund industry AUM recorded a CAGR of 15.25 per cent over FY07–17. India is considered
one of the preferred investment destinations globally.

The Association of Mutual Funds in India (AMFI) is targeting nearly fivefold growth in assets
under management (AUM) to INR 95 lakh crore (US$ 1.47 trillion) and a more than three times
growth in investor accounts to 130 million by 2025.

ASSETS UNDER MANAGEMENT HAVE MORE THAN DOUBLED SINCE FY07

The asset management industry in India is among the fastest growing in the world.

 As of FY17, 42 asset management companies were operating in the country

 At the end of September 2017, the assets under management of the mutual fund industry
stood at US$ 325.71 billion.
 Inflows in India's mutual fund schemes via the systematic investment plan (SIP) route rose
44 per cent year-on-year to reach a record high of Rs 4,584 crore (US$ 711.17 million) in
May 2017.

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  India registered a record inflow of amount of US$ 51.02 billion in mutual funds in FY 2016-
17. According to the Association of Mutual Funds in India (AMFI) data, this was the
highest investment in mutual fund schemes since the fiscal 1999-2000.
 Equity mutual funds have registered a record net inflow of Rs 20,362 crore (US$ 3.18
billion), thereby increasing their asset base to Rs 6.44 lakh crore (US$ 100.8 billion) in
August 2017.

Advantages of Mutual Funds

1. Diversification. Mutual funds spread their holdings across a number of different investment
vehicles, which reduces the effect any single security or class of securities will have on the
overall portfolio. Because mutual funds can contain hundreds or thousands of securities,
investors aren’t likely to be fazed if one of the securities doesn’t do well.
2. Expert Management. Many investors lack the financial know-how to manage their own
portfolio. However, non-index mutual funds are managed by professionals who dedicate their
careers to helping investors receive the best risk-return trade-off according to their objectives.
3. Liquidity. Mutual funds, unlike some of the individual investments they may hold, can be
traded daily. Though not as liquid as stocks, which can be traded intraday, buy and sell orders
are filled after market close.
4. Convenience. If you were investing on your own, you would ideally spend time researching
securities. You’d also have to purchase a huge range of securities to acquire holdings
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 comparable to most mutual funds. Then, you’d have to monitor all those securities. Choosing
a mutual fund is ideal for people who don’t have the time to micromanage their portfolios.
5. Reinvestment of Income. Another benefit of mutual funds is that they allow you to reinvest
your dividends and interest in additional fund shares. In effect, this allows you to take
advantage of the opportunity to grow your portfolio without paying regular transaction fees
for purchasing additional mutual fund shares.
6. Range of Investment Options and Objectives. There are funds for the highly aggressive
investor, the risk averse, and the middle-of-the-road investor – for example, emerging
markets funds, investment-grade bond funds, and balanced funds, respectively. There are also
life cycle funds to ramp down risk as you near retirement. There are funds with a buy-and-
hold philosophy and others that are in and out of holdings almost daily. No matter your
investing style, there’s bound to be a perfect fund to match it.

Disadvantages of mutual funds

1. No guarantees. Unlike bank deposits, mutual funds are not insured or guaranteed by the
Federal Deposit Insurance Corporation (FDIC) or any other agency of the U.S. government.
The market value of a mutual fund may fluctuate, even if the fund invests in government
securities.

2. The diversification “penalty.” Although diversification eliminates the risk of catastrophic

loss that is possible when you hold a single security whose value plummets, it limits the
potential for a “big score” from holding a single stock or bond whose value shoots up.
3. Potentially high costs. Mutual funds can be a lower-cost way to buy securities when
compared with buying individual securities through a broker. However, a combination of
sales commissions and high operating expenses at some fund companies may offset the
efficiencies that can be gained through mutual fund.

Constituents of mutual fund’s

All mutual funds comprise of four constituents

1. Sponsors
2. Trust /Board of trustees
3. Asset management company or fund managers
4. Custodian

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History of Mutual Funds in India
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India (UTI),
under the initiative of Government of India (GOI) and Reserve Bank of India (RBI). The history of
mutual funds in India can be broadly divided into four distinct phases
Phase I – 1964-87
UTI was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India
and functioned under the regulatory and administrative control of the Reserve Bank of India. In
1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control from RBI. The first scheme launched by UTI was
Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

Phase II – 1987-1993 (Entry of Public Sector Funds)

Since 1987 non- UTI, public sector mutual funds set up by public sector banks and Life Insurance
Corporation of India (LIC) and General Insurance Corporation of India (GIC) came into existence.
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its
mutual fund in June 1989 while GIC set up its mutual fund in December 1990. By the end of 1993,
the mutual fund industry had assets under management of Rs.47004 crores.

Phase III – 1993-2003 (Entry of Private Sector Funds)

In 1993 the Indian mutual fund industry went through a major change with the entry of private
sector mutual funds. This gave the Indian investors a wider choice of funds. ies. The first Mutual
Fund Regulations were introduced in 1993. All mutual funds except UTI were to be registered and
governed. Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised
Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)
Regulations 1996.

Phase IV – since February 2003

In February 2003, the Unit Trust of India Act, 1963 was repealed. UTI was bifurcated into two
separate entities. One is the Specified Undertaking of the Unit Trust of India
with assets under management of Rs.29,835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed
by Government of India does not come under the purview of the Mutual Fund Regulations

Net Asset Value (NAV) The concept

The NAV is nothing but the market price of a particular scheme in relation to all the assets of
a scheme. It can otherwise be called the intrinsic value of each unit. The value is the true
indicator of the performance of the fund. If NAV > Face value of the unit, it indicates that the
money invested on that unit has appreciated.

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Factors to Consider
Before Investing in Mutual Funds :
1. Determine your financial goals and risk tolerance.
When it comes to investing in mutual funds and ETFs, investors have thousands of choices.
Before you invest in any mutual fund or ETF, you must decide whether the investment
strategy and risks are a good fit for you. You should also consider more generally whether
the unique style of investing of the mutual fund’s.

2. Beware of risk.
All investments carry some level of risk. An investor can lose some or all of the money he
or she invests—the principal—because securities held by a fund go up and down in value.
Dividend payments may also fluctuate as market conditions change.

3. Consider the sponsor’s investing style.

Before you invest, you may want to research the sponsor of the mutual fund or ETF you are
considering.

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Types of Funds to Include in Your Portfolio

Stock funds
Actively managed growth or value funds, or index funds that track the total stock market or
segments of it.

Bond funds
Actively managed short-, intermediate-, or longterm corporate, government, or tax-exempt funds, or
index funds that track the total bond market or segments of it.

Money market funds

Actively managed taxable or tax-exempt funds that invest in cash investments issued by
governments, corporations, banks, or other financial institutions.

Balanced funds
Actively managed or index funds that hold a mix of stocks, bonds, and (sometimes) cash
investments. This type of”all- in-one“fund can automatically maintain your target asset allocation
through a single investment.

HNWI POPULATION TO DOUBLE BY 2020

 HNWI population in India is expected to expand rapidly over the next seven years

 Total wealth holdings by HNWI in India is estimated to be US$ 1.5 trillion and is expected
to reach US$ 3 trillion by 2020.
 In Asia-Pacific, India is among the top 5 countries in terms of HNWIs

What is an SIP?

A systematic investment plan (SIP) is a way of investing in mutual funds (MFs) in which one
invests a fixed amount every month on a pre-specified date. Almost all mutual fund schemes
provide the facility of SIP. This is a good investing option for a first-time investor who is trying to
bring discipline into his or her investing process.

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How it works?

Mutual funds provide an option of choosing an SIP either on a monthly or a quarterly mode on a
specific date. Where one opts for a monthly SIP, one can do it by signing 12 post-dated cheques of
equal amounts. Another option is to authorize your bank to debit the amount by filling the
electronic clearing service (ECS) form. If one gives an ECS mandate, the bank will automatically
debit the specific amount every month on a specific date available with the scheme, from your bank
account.

Benefits of starting early

The early birds always have an advantage over those who are off the blocks late. They manage to
save a decent pile for their requirements with much less fuss. Usually, people at young age
undermine the importance of saving small sums of money and keep procrastinating, pushing the
start to a later date. Besides, they often perceive investing as a cumbersome process. This is where
SIP comes in handy; A good way to save through MFs is to set aside a certain amount of one’s
income for them. This, besides helping one make ‘forced savings’, also gives one a financial head
start.

Power of compounding

The rule of the thumb is to invest regularly and keep reinvesting the returns. Compounding is a
simple concept that offers astounding returns in the long run. With simple interest, you earn interest
only on the principal whereas with compounding, you earn interest on the principal and additionally
on the interest. In other words, it’s a way of making your money work harder for you. Let’s
consider what the power of compounding does to an SIP of `500 a month in a scheme
That offers a conservative 12 per cent return, over 30 years. The total investment of `1.80 lakh
(principal) grows to `15.26 lakh over that period.

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How SIP helps in riding market volatility

An SIP is a regular investment plan available on all kinds of mutual fund schemes, though it works
best with equity schemes. SIPs help the investor make profit from stockmarket volatility by
automatically buying more units when prices are falling and fewer units when prices are rising, thus
lowering the average purchase price.

How SIP helps in rupee cost averaging

When one invests through SIPs, he or she buys into the fund at different net asset values (NAVs).
For instance, when the market is rising, the same investment fetches the investor less units at a
higher NAV and when the market is down, the investment buys more units at a lower NAV.

Over long periods of time, investors average out their investments as they
accumulate more in a bear market and less in a bull market. Let’s suppose you were to start an SIP
in a fund in January at the prevailing NAV of `20 for six months. Now, the market goes down for
six months and the NAV comes.

What is an Exchange Traded Fund (ETF)?

An ETF is an open-ended mutual fund scheme with an objective to track and reflect the
performance of its underlying index. It achieves this through a passive investment strategy of
investing in the same stocks and in the same proportion as they constitute the underlying index.

What are the advantages of an ETF?

Investments in ETFs are highly liquid as they are held through a Demat account and can be traded
on a stock exchange like direct equity shares. Also, being passively managed, they have lower
expense ratios in comparison to actively managed mutual funds.

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What is Bharat 22 ETF?

The government of India, in the Budget speech of 2017, announced its plan to achieve a divestment
target of Rs 72,500 crore in the FY 2017-18. Bharat 22 ETF has been set up as one of its vehicle to
achieve the target. It is an open-ended Exchange Traded Fund which will invest in similar
composition and weightages as they appear in Bharat 22 Index.

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 CHAPTER II

RESEARCH METHODOLOGY

17
NEED FOR THE STUDY:

The main purpose of doing this project is to know about the performance of top 3 large cap mutual
fund schemes in two quarter and the return given by schemes and its consistency in both quarterly
basis. The reference period for the data is taken from JAN-MAR 2017 And APR-JUN 2017.

SCOPE OF THE STUDY:

The scope of the study is to analysis of CAGR return and Ranking of the schemes and the
information is taken from the NJ monthly magazine FUNDZ WATCH. The study is carried out to
 Understand the basics of mutual fund industry.
 Know about the sector allocation of the fund.
 Understand the best way to select the fund for investing.
 Details about top 3 large cap mutual fund schemes.

OBJECTIVES OF THE STUDY:

The study that is taken covers the following objectives-

Primary Objective
To know how the schemes are performing in the two quarters and the Return and Ranking of the
schemes changing in short span of time and which is schemes more consistent.
Secondary Objectives
 To understand the reasons for ranking in number one for particular schemes,
 To examine in terms of return, rank and quartile.
 To find out which should consider for investing whether to return or ranking and
consistency.
 To analysis the best performing schemes across Indian mutual fund industry.

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DATA COLLECTION:

Secondary data
The study has been carried out entirely on the basis secondary source. The major sources of
secondary data are as given below:
Procedure of data analysis:
Different statistical tools and financial models are used to evaluate the performance of mutual
funds. Specially mean return, rank, Quartile.

LIMITATIONS:

 Secondary data can be general and vague and may not really help companies with
decision making.
 Accuracy of secondary data is not known.
 Data may be outdated.
 Official data – may change over a period, making difficult for comparison.

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 CHAPTER III
INDUSTRY PROFILE

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INDIAN MUTUAL FUND INDUSTRY

INTRODUCTION

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
appreciations realized by the scheme are shared by its unit holders in proportion to the number of
units owned by them (pro - rata). 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. Anybody with an investible surplus of as little as a few thousand rupees can
invest in Mutual Funds.

The Securities and Exchange Board of India (SEBI) regulations 1993, defines a “mutual fund as a
fund in the form of a trust by a sponsor, to raise money by the trustees through the sale of units to
the public, under one or more schemes, for investing in securities in accordance with these
regulations”

MF industry assets grow 35 per cent to record ` 18.3 lakh cr in FY17

The asset base of mutual fund industry in India surged 35 per cent to all-time high of ` 18.3 lakh
crore in 2016-17, driven by growing participation from retail investors. The assets under
management (AUM) were at ` 13.53 lakh crore at the end of 2015-16, according to the Association
of Mutual Funds in India (AMFI). Industry experts attributed growing
participation from retail investors, especially from small towns, huge inflows into equity schemes
and several measures taken by markets regulator SEBI as well as campaigns by asset management
companies (AMCs). The MF industry added more than 67 lakh investor accounts till February of
last financial year which ended on March 31, taking the total number of folios to 5.4 crore. MFs.

60 per cent mutual fund investors use SIPs to invest: SEBI survey
Around 60 per cent of regular mutual fund investors use Systematic Investment Plans (SIPs) to
invest in mutual funds, a recent SEBI survey revealed. The survey, called SEBI Investors Survey
(SIS), 2015, highlights many important findings in the mutual funds space. According to the survey,
due to the ease of investing in mutual funds through SIPs along with the diversification benefits,
most investors prefer MFs to equities or bonds. Additionally, the publicity of SIPs and the MF
industry over the past ten years has seen an enormous increase. Mutual fund SIP accounts stood at
1.31 crore as per the latest data by Association of Mutual Funds in India (AMFI), The total amount
collected through SIP during February 2017was 4,050 crore.

According to AMFI (Association of Mutual Fund in India)

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 then invested in capital market instruments such as

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shares debentures and other securities. The income earned through these investments and the capital
appreciation realized is 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 basket of securities at a relatively low
cost. The flow chart below describes broadly the working of a mutual fund.

Objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 43 registered AMCs of the country. The
objectives are as follows: -

This mutual fund association of India maintains a high professional and ethical standard in all areas
of operation of the industry.
 It also recommends and promotes the top class business practices and code of conduct
which is followed by members and related people engaged in the activities of mutual fund
and asset management. The agencies who are by any means connected or involved in the
field of capital markets and financial services also involved in this code of the association.
 AMFI interacts with SEBI and works according to SEBI’s guidelines in the Mutual fund
industry.
 Associations of Mutual Fund of India do represent the Government of India, the Reserve
Bank of India and other related bodies on matters relating to the Mutual Fund Industry.
 It develops a team of well qualified and trained Agent distributors. It implements a
programmer of training and certification for all intermediaries and other engaged in the
mutual fund industry.

Definitions

 Large cap stock: Stock with market capitalization equal to or above the cut-off market
capitalization where cumulated market capitalization (calculated in descending order) is
70% of total market capitalization of BSE.

 Large cap fund: Fund having percentage holding of large cap stock more than or equal to
70% of the portfolio

 Blend fund: Fund having percentage holding of large cap stock less than 70% and higher
than or equal to 40% of the portfolio.

 Midcap fund: Fund having percentage holding of large cap stock less than 40% of the
portfolio

 Diversification risk management technique that mixes a wide variety of investments

within a portfolio. The rationale behind this technique contends that a portfolio of different
kinds of investments will, on average, yield higher returns and pose a lower risk than any
individual investment found within the portfolio. Diversification strives to smooth out

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 unsystematic risk events in a portfolio so that the positive performance of some investments
will neutralize the negative performance of others.

Different types of Schemes

Investment Objective
 Income Schemes
 Growth Schemes
 Balanced Schemes
 Tax Saving Schemes
 Sector Funds

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  Index Funds
 Gilt Funds
 Money Market Funds

Operational
 Open Ended Schemes
 Closed Ended Schemes
 Interval Schemes

 Open-end schemes are open for investors to enter or exit at any time, even after the NFO.

 When existing investors buy additional units or new investors buy units of the open-end
scheme, it is called a sale transaction (or subscription). It happens at a sale price, which is
equal to the NAV.

 When investors choose to return any of their units to the scheme and get back their
equivalent value, it is called a re-purchase transaction (or redemption). This happens at a re-
purchase price (or redemption price) that is linked to the NAV.

 Closed-end funds have a fixed maturity. Investors can buy units of a closed-end scheme,
from the fund, only during its NFO. Thereafter, they can be transacted in the stock exchange

 Actively managed funds are funds where the fund manager has the flexibility to choose the
investment portfolio, within the broad parameters of the investment objective of the scheme.

 Passive fund invests on the basis of a specified index, whose performance it seeks to track.
Such funds are also called index funds. These have low running costs.

 The index on which a passively managed scheme is constructed, is called its benchmark.
Similarly, even active schemes have a benchmark – a standard against which scheme
performance can be compared.

 A scheme might have an investment objective to invest largely in equity shares and equity-
related investments like convertible debentures. Such schemes are called equity schemes.

 Schemes with an investment objective that limits them to investments in debt securities like
Treasury Bills, Government Securities, Bonds and Debentures are called debt funds or
income funds.

 Hybrid funds have an investment charter that provides for a reasonable level of investment
in both debt and equity.

 Fixed maturity plans (FMPs) are a kind of debt fund, where the investment portfolio is
closely aligned to the maturity of the scheme. Their portfolio construction gives more clarity
to investors on the likely returns if they stay invested in the scheme until its maturity. This
helps them compare the returns with alternative investments like bank deposits. However,
the returns in a FMP are subject to market risk until they mature, and credit risk too.

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CLASSIFICATION AND TYPES OF MUTUAL FUND

 Equity Funds: Equity funds are considered to be the more risky funds as compared to other
fund types, but they also provide higher returns than other funds. It is advisable that an
investor looking to invest in an equity fund should invest for long term i.e. for 3 years or
more.

 Money Market / Liquid Funds: Money market / liquid funds invest in short-term
(maturing within one year) interest bearing debt instruments. These securities are highly
liquid and provide safety of investment, thus making money market / liquid funds the safest
investment option when compared with other mutual fund types.

 Hybrid Funds: As the name suggests, hybrid funds are those funds whose portfolio
includes a blend of equities, debts and money market securities. Hybrid funds have an equal
proportion of debt and equity in their portfolio.

 Debt / Income Funds: Funds that invest in medium to long-term debt instruments issued by
private companies, banks, financial institutions, governments and other entities belonging to
various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt
funds are low risk profile funds that seek to generate fixed current income (and not capital
appreciation) to investors. In order to ensure regular income to investors, debt (or income)
funds distribute large fraction of their surplus to investors.

 Gilt Funds: Gilt Funds invest in government papers (named dated securities) having
medium to long term maturity period. Issued by the Government of India, these investments
have little credit risk (risk of default) and provide safety of principal to the investors.

 Commodity Funds: Those funds that focus on investing in different commodities (like
metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts
are termed as Commodity Funds. A commodity fund that invests in a single commodity or a
group of commodities is a specialized commodity fund and a commodity fund that invests in
all available commodities is a diversified commodity fund and bears less risk than a
specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in gold,
gold futures or shares of gold mines) are common examples of commodity funds.

 Real Estate Funds: Funds that invest directly in real estate or lend to real estate developers
or invest in shares/securitized assets of housing finance companies, are known as
Specialized Real Estate Funds. The objective of these funds may be to generate regular
income for investors or capital appreciation.

 Exchange Traded Funds (ETF): Exchange Traded Funds provide investors with
combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds
follow stock market indices and are traded on stock exchanges like a single stock at index

25
 linked prices. The biggest advantage offered by these funds is that they offer diversification,
flexibility of holding a single share (tradable at index linked prices) at the same time.
Recently introduced in India, these funds are quite popular abroad.
 Fund of Funds: Mutual funds that do not invest in financial or physical assets, but do
invest in other mutual fund schemes offered by different AMCs, are known as Fund of
Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund
schemes, just like conventional mutual funds maintain a portfolio comprising of
equity/debt/money market instruments or non financial assets.

New Fund Offers Vs. Existing Funds – Choosing Mutual Funds

1. Track Record
When deciding to opt for new fund offers, one has to look at the track record of the fund in terms of
returns and performance in various market conditions. A consistent track record is more important
than a few record breaking instances.

2. Mutual Fund Charges

New mutual funds generally have high entry loads because the fund intends to cover its initial costs
involved in marketing, publicity, commissions given to distributors, etc. According to SEBI rules
Asset Management Companies are permitted to collect up to 6% from the collections of an NFO
issue.

3. Fund’s Expense Ratio

Expense ratio indicates the ratio of the funds operating expenses in relation to the total assets under
management. Generally this is indicated in % terms. The expense ratio for index funds such as
HDFC Nifty Fund is around 1%, and this is generally in the range of 1-2% for most index funds
barring few exceptions.

4. Fund Manager’s Experience

In case of an existing fund the Fund Manager’s or the team itself possess a good amount of
experience and track record, which proves their potential. It is also possible to track the funds
performance and take corrective action if the investment style or the processes followed are not in
line with your financial goals and risk appetite.

Taxation of Mutual Fund Schemes

Mutual fund schemes do not pay a tax on their capital gains or losses. Similarly, they do not pay tax
on their net income i.e. income minus expenses. However, schemes incur Securities Transaction
Tax (STT) on their equity market related transactions. When a debt scheme distributes dividend to
its unit-holders, it has to pay an Additional Tax of Income Distribution (in the market it is

26
commonly referred to as “Dividend Distribution Tax” or DDT). Since the tax payment reduces the
NAV, scheme returns are affected. This is an indirect cost for the unit holder.
The dividend that the unit-holder receives is however exempt from tax in the case of both equity
and debt schemes.

 Mutual fund schemes do not pay a tax on their capital gains or losses.

 Mutual fund schemes do not pay tax on their net income i.e. income minus expenses.

 When a debt scheme distributes dividend to its unit-holders, it has to pay an Additional Tax
of Income Distribution (DDT).

 The dividend that the unit-holder receives is exempt from tax for both equity and debt
schemes.

Mutual Fund Offer Documents have two parts:

 Scheme Information Document (SID)

 Statement of Additional Information (SAI)
Which has statutory information about the mutual fund that is offering the scheme
Since investors are not sophisticated experts of finance or law, the documents are
prepared in simple language, and in clear, concise and easy to understand style. In
practice, SID and SAI are two separate documents, though the legal technicality is
that SAI is part of the SID.

Both documents are prepared in the format prescribed by SEBI, and submitted to SEBI.

Contents of SID

The cover page has information on the name of the scheme and its type.
 Open-ended / Close-ended / Interval (the scheme structure)
 Equity / Balanced / Income / Debt / Liquid / ETF (the expected nature of scheme portfolio)
 Pictorial representation of risk in schemes via Riskometer. It represents five risk levels:
 Low – principal at low risk
 Moderately Low – principal at moderately low risk
 Moderate – principal at moderate risk
 Moderately High – principal at moderately high risk
 High – principal at high risk

Key Information Memorandum

KIM is essentially a summary of the SID and SAI. It is more easily and widely distributed in the
market. As per SEBI regulations, every application form is to be accompanied by the KIM. Some of
the points covered in KIM are as follows:
27
  Name of the AMC, mutual fund, Trustee, Fund Manager and scheme
 Dates of Issue Opening, Issue Closing & Re-opening for Sale and Re-purchase
 Plans and Options under the scheme
 Risk Profile of Scheme
 Price at which Units are being issued and minimum amount / units for initial purchase,
additional purchase and re-purchase
 Benchmark
 Dividend Policy

Demat Account
Dematerialisation is a process whereby an investor’s holding of investments in physical form
(paper), is converted into a digital record. Benefit of holding investments in demat form is that
investors’ purchase and sale of investments get automatically added or subtracted from their
investment demat account, without having to execute cumbersome paperwork. Settlement of most
transactions in the stock exchange needs to be compulsorily done in demat form.

The benefits of demat facility for mutual fund investors have increased, with National Stock
Exchange and Bombay Stock Exchange making available screen-based platforms for purchase and
sale of mutual fund schemes.

Demat account is compulsory for investors to transact in ETF units

Paperwork in buying or selling the units, and correspondingly, accepting or giving delivery of the
units is minimized.

 Bonus and rights units that the investor is entitled to, are directly credited into the investor’s
demat account.
 For all demat units (or shares), change of address or other details need to be given only to
the DP, instead of separately to every mutual fund (or company) where the investor has
invested.
 The investor also has the option to convert the demat units into physical form. This process
is called ‘re-materialization’.

28
INVESTMENT SERVICES
 Systematic Investment Plan (SIP)
It is considered to be a good practice to invest regularly. SIP is an approach where the investor
invests constant amounts at regular intervals. A benefit of such an approach, particularly in equity
schemes, is that it averages the unit-holder’s cost of acquisition.

Suppose an investor were to invest Rs 1,000 per month for 6 months. If, in the first month, the
NAV is Rs 10, the investor will be allotted Rs 1,000 ÷ Rs 10 i.e. 100 units. In the second month, if
the NAV has gone up to Rs 12, the allotment of units will go down to Rs 1,000 ÷ Rs 12 i.e. 83.333
units. If the NAV goes down to Rs 9 in the following month, the unit-holder will be allotted a
higher number of Rs 1,000 ÷ Rs 9 i.e. 111.111 units.

Thus, the investor acquires his Units closer to the average of the NAV on the 6 transaction dates
during the 6 month period. This is why this approach is also called Rupee Cost Averaging.

 Systematic Withdrawal Plan (SWP)

Just as investors do not want to buy all their units at a market peak, they do not want all their units
redeemed in a market trough. Investors can therefore opt for the safer route of offering for re-
purchase, a constant value of units.

Suppose an investor were to offer for re-purchase Rs 1,000 per month for 6 months. If, in the first
month, the NAV is Rs 10, the investor’s unit-holding will be reduced by Rs 1,000 ÷ Rs 10 i.e. 100
units. In the second month, if the NAV has gone up to Rs 12, the unit-holding will go down by
fewer units viz. Rs 1,000 ÷ Rs 12 i.e. 83.333 units. If the NAV goes down to Rs 9 in the following
month, the unit-holder will be offering for re-purchase a higher number of units viz. Rs 1,000 ÷ Rs
9 i.e. 111.111 units.

Systematic Transfer Plan (STP)

This is a variation of SWP. While in a SWP the constant amount is paid to the investor at the pre-
specified frequency, in a STP, the amount which is withdrawn from a scheme is re-invested in some
other scheme of the same mutual fund.
Thus, it operates as a SWP from the first scheme, and a SIP into the second scheme. Since the
investor is effectively switching between schemes, it is also called “switch”. If the unit-holder were
to do this SWP and SIP as separate transactions-
 The unit-holder ends up waiting for funds during the time period that it takes to receive the
re-purchase proceeds.
 He has idle funds, during the time it takes to re-invest in the second scheme. During this
period, the market movements can be adverse for the unit-holder.
 The unit-holder has to do two sets of paper work (re-purchase and subscription) for every
period.

The STP offered by mutual funds is a cost-effective and convenient facility

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Triggers
It is not uncommon for investors to regret missed opportunities of buying or selling because they
could not give the requisite instructions in time. This is addressed through the trigger option that is
available for some schemes.
For instance, an investor can specify that the units would be re-purchased if the market reaches a
particular level. In that case, once the market reaches that level, his units would be re-purchased,
without the need for going through a separate re-purchase documentation. It stands to reason that if
the market continues to go up after the trigger is actioned, the investor loses on the further gain.
Similarly, an investor can set a trigger to transfer moneys from a liquid scheme into an equity
scheme when the market goes down, say, 20%. This would help the investor conveniently increase
his position in equities, when the market goes down 20%.

Investors should study the conditions attached to trigger options (and any other value added

service), because these vary from scheme to scheme.

Why Invest in a Mutual Fund?

 Professional Management: Even under the best of market conditions, it takes an

astute, experienced investor to choose investments correctly, and a further commitment
of time continually Monitor those investments.

30
  Diversification: Successful investors know that diversifying their investments can
help reduce the adverse impact of a single investment. Mutual funds introduce diversify
action to your investment portfolio automatically by holding a wide variety of securities.
 Variety: Within the broad categories of stock, bond, and money market funds, you can
choose among a variety of investment approaches. Today, there are about 8,200 mutual
funds available in the U.S., with goals and styles to fi t most objectives and
circumstances.
 Low Costs: Mutual funds usually hold dozens or even hundreds of securities like
stocks and bonds. The primary way you pay for this service is through a fee that is based
on the total value of your account.
 Liquidity: Liquidity is the ability to readily access your money in an investment.
Mutual fund shares are liquid investments that can be sold on any business day. Mutual
funds are required by law to buy, or redeem, shares each business day.
 Convenience : You can purchase or sell fund shares directly from a fund or through a
broker, financial planner, bank or insurance agent, by mail, over the telephone, and
increasingly by personal computer.

Stock Funds

Stock funds invest primarily in stocks. A share of stock represents a unit of ownership in a
company. If a Company is successful, shareholders can profi t in two ways: the stock may increase
in value, or the company can pass its profit is to shareholders in the form of dividends. If a
company fails, a shareholder can lose the Entire value of his or her shares; however, a shareholder
is not liable for the debts of the company.

Stock Market Returns

The upswings and downturns of the stock market affect stock fund returns. Despite a history of
outperforming other types of securities, stocks sometimes lose money (see chart below).Sometimes
these losses can be substantial and last for long periods. The average annual return on stocks from
1926 to 2005 is about 10.4 percent

Bond Funds

Bond funds invest primarily in securities known as bonds. A bond is a type of security that
resembles a loan. When a bond is purchased; money is lent to the company, municipality, or
government agency that issued the bond. In exchange for the use of this money, the issuer promises
to repay the amount loaned (the principal; also known as the face value of the bond) on a specific
c maturity date. In addition, the issuer typically promises to make periodic interest payments over
the life of the loan.

Dividend or Growth: Which MF option is better for you?

31
While dividend option on debt fund works for those looking for regular income, all other investors
should invest in growth option.

Factor 1 – Which option is better for long term wealth creation?

The reason Shweta decided to start off with equity mutual funds was to build wealth over the long
run. In a dividend plan, each time the dividend is declared, your dividend is paid out of your wealth
created in mutual funds. To that extent it reduces your long term wealth. Consider the example of
XYZ equity fund which had an NAV of Rs.10 when it was launched in 2010. At the end of five
years, the NAV of the growth option stood at Rs.45, while the NAV of the dividend option stood at
Rs.19. The remaining Rs.26 had been paid back by the fund as dividends.

Factor 2 – How important is the tax saving argument for dividends?

Theoretically, there is an argument that a dividend option is better as the dividends are tax free in
the hands of the unit holder. But then you are in the mutual fund for the long haul as you can earn
attractive returns on equity mutual funds only if you hold for a period of over five years. In case of
capital gains, long term is defined as one year. Thus any sale of mutual funds after one year results
in long term capital gains and do not attract any tax. Thus for a long term investor the tax-free
dividend argument does not hold much water.

Factor 3 – Are you using the mutual fund to meet specific life goals?

The best way to handle your mutual fund portfolio is to earmark specific portfolios for specific
needs. For example you need to plan for paying the margin money on your car, the margin money
on your house or for taking a foreign vacation in the short term. In the distant future you need to
plan for your child’s education, their marriage, your retirement etc. When you have earmarked
specific funds for specific needs it is always advisable to opt for a growth option. This growth
option will give you the best benefits of compounding over a long term as the reinvestment of
returns will happen automatically.

Factor 4 – Do you have regular liquidity requirements?

This is an important factor determining whether you must opt for a growth option or a dividend
plan. While dividends on equity funds can be erratic based on performance, dividends on debt funds
are more regular and predictable. In case you are looking at getting regular incomes through
investment in debt funds, you can go for a dividend option. Unlike in case of equity funds, debt
funds are not used for long term wealth creation but more for safety or principal and assured
income streams. Since the holding period for capital gains treatment is 3 years in case of debt funds,
one can opt for a dividend scheme, especially if one is looking at regular income from the mutual
fund investment.

32
Factor 5 – Do you intend to take loan against mutual fund units.

Today, most banks and finance companies offer you loans against mutual fund units. Normally, in
case of equity funds you can get loan against mutual fund units with a 50% haircut of the NAV
value of your mutual fund holdings. In case of a growth plan, you will automatically get a higher
Loan to Value (LTV) and that will be beneficial for you in getting higher leverage eligibility. This
can also be a consideration to opt for growth plans of mutual funds

INSURANCE

Insurance may be described as a social device to reduce or eliminate risk of loss to life and
property. Insurance is a collective bearing of risk. Insurance spreads the risks and losses of few
people among a large number of people as people prefer small fixed liability instead of big
uncertain and changing liability. Insurance is a scheme of economic cooperation by which members
of the community share the unavoidable risks. Insurance is the claimed to be the best option for
investment. It is a form of investment that is stable as long as the premiums are paid. In case of life
insurance, for example, your beneficiary will obtain a death benefit upon an event of your untimely
demise. This benefit is called "face value" and the premiums that need to be paid should surpass its
value. The additional funds go into an account and are invested by the insurance corporation on
your behalf, which means that if the insurance investment is profitable, the cash account will
augment over the years.

Advantages of Insurance as an Investment Option

1. Income guaranteed through annuities: Life indemnity is one of the ideal tools for
retirement preparation. Funds that are earned and hoarded during the lifetime are utilized to
supply a firm source of returns during the retirement period.

2. Dividends enable growth: Customary policies enable prospect to share in the monetary
increase without taking the risk of investment. The investment revenue is shared out among
the policyholders through yearly announcement of bonus and/or dividends.

33
 3. Risk guard: Because life is filled with uncertainties, life insurance guarantees that your
dear ones continue to have monetary back up in case of any unexpected incident that may
lead to your detriment or demise.

4. Tax benefits: Insurance plans offer tax-benefits that are appealing for both at the entry and
exit period under the majority of the plan.

5. Mortgage recovery: In case of demise of the policyholder who has unpaid loans and
mortgages, the insurance acts as an efficient instrument to cover up these charges, removing
the burden of repayment of the family.

Five points to be consider while selecting best mutual fund

1. Performance Ranking

More than the recent or performance of any scheme its ranking among peers should be looked at.
To find out the ranking you need to check out the quartile ranking which will show how the fund
has performed quarter on quarter among its peer group. In quartile ranking each quartile comprises
of 25 percent of peer group schemes.

2. Ratio analysis

Risk and return ratios like standard deviation, Sharpe ratio etc. I have discussed in my earlier article
on Measuring Mutual funds risk. Along with those ratios, one also should check out the ALPHA of
the fund. Alpha tells us what extra or less the fund manager has generated out of a given portfolio
in comparison to benchmark.

3. Total expense ratio

Expense ratio is very important parameter to be looked at while selecting any mutual fund
scheme. All fund management and distribution related expenses are borne by the scheme.
This means high expense ratio will affect the fund’s returns. Though mutual fund’s total
expense ratio has been capped by SEBI, still lower the better unless we get some
extraordinary return by paying higher expenses for fund management.

34
4. Fund manager tenure and experience

Fund manager plays a very important role in the fund’s performance. Though it is a process
oriented approach but still fund manager is the ultimate decision maker and his experience and view
point counts a lot. You should know who is the fund manager of the scheme and what is his past
track record.

5. Scheme asset size

This parameter is different for debt and equity schemes. In equity the comfortable asset size in
hundreds of crores, in debt it should be in thousands of crores as the investment value per investor
is higher in debt funds. 90 percent of total assets under management (AUM) of the mutual fund
industry are invested in debt funds, so your selected scheme assets should also have a considerable
AUM.

Less AUM in any scheme is very risky as you don’t know who the investors are and what quantum
of investments they have in this particular scheme.

35
 CHAPTER IV
COMPANY PROFILE

36
INTRODUCTION

Built On Trust

A evolving, emerging & enterprising group with its' roots in the financial services sector and today
expanding into newer horizons with great passion.

The vision of the group is to be leaders in businesses driven by customer satisfaction, commitment
to excellence and passion for continued value creation for all stakeholders. This vision has helped
us grow and build the trust of our customers and associates which is at the cornerstone of
everything we do. Trust is also at the heart of our success and the driver for passion for our success.

NJ Group is a leading player in the Indian financial services industry known for its' strong
distribution capabilities. The journey of NJ began in 1994 with the establishment of NJ India Invest
Pvt. Ltd., the flagship company, to cater to investor needs in the financial services industry. Today,
the NJ Wealth Distributor Network, earlier known as the NJ Fundz Network, started in 2003 is
among the largest networks of financial products distributor in India.

Over the years, NJ Group has diversified into other businesses and today has the presence in
businesses ranging from financial products distributor network, asset management, real estate,
insurance broking, training & development and technology. Our rich experience in financial
services, combined with executional capabilities and strong process & system orientation, has
enabled us to shape a rising growth trajectory in our businesses.

NJ Group is based out of Surat in Gujarat (India) and has presence in 94* locations in India and has
over 1,100+* employees.

WORK PHILOSOPHY:

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 value creation for customers, it is something that we strongly strive for in all our
endeavors. We are committed to provide our customers with continuous, long-term improvements
and value-additions to meet their expectations.

37
Driven by passion, we continue to evolve and make the right product accessions and service
innovations in our offerings. 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 the most
is winning the trust of our customers

MANAGEMENT TEAM

Mr. Neeraj Choksi & Mr. Jignesh Desai (R) are two first generation entrepreneurs who began the
journey of 'NJ' in 1994. The promoters of the NJ Group were friends since their college years and
the bond between Mr. Neeraj & Mr. Jignesh has been instrumental in the success of NJ. Discussing
upon important things before taking any decision, is a habit that they have followed ever since they
shared their hostel room in Vidhyanagar, where Mr. Neeraj was studying his management courses
and Mr. Jignesh was into engineering. They both have a complementary style of functioning that
augurs perfectly well for the business.

Driven by their passion for financial well-being of customers & the mission for transforming lives,
the promoters have successfully put NJ on the forefront of innovation & growth. With a humble
beginning from home, the promoters have successfully shaped the group's forays into many
diversified businesses. Both believe that 'Trust' has played a very important role in NJ's journey,
and in every step that they have taken. The words of the promoters aptly describes this journey of
NJ – 'Built on Trust'.

Sales and Product team

Mr. Misbah Baxamusa – National sales head for NJ Wealth Distributor Network

Mr. Husaini Kanchwala – Product Head for Investments

Mr. Jigesh Desai – Product Head for Real Estate

Functional Team

Mr.Abhishek Dubey – Head of Strategic Business Development Unit

38
Col. C M Dixit - Head of Administration Function

Mr. Dhaval Desai – Head of Human Resources Function

Mr. Janak Patel – Head of Audit Function

Mr. Janesh Bhatt – Head of IT Projects and Services

Mr. Mohammadali Saiyed – Head of Finance Function

Mr. Rakesh Tokarkar – Head of Compliance Function

Mr. Samanvay Maniar – Head of Marketing Function

Mr. Shirish Patel – Head of Technology

Mr. Vinayak Rajput – Head of Operations Function

CORPORATE GOVERNANCE

NJ realizes the importance of corporate governance and seeks to implement the best practices for
the same. We strongly believe that we have an obligation or duty as corporate entities to all our
stakeholders; from employees, customers and vendors to business partners, authorities, and society
at large. We aim to strike the right balance between minimizing business risks while attempting to
maximize business growth.

Corporate Governance at NJ is based on the following main principles:

 Timely and strict compliance to all established rules, regulations and guidelines
 Building sound system of risk management and internal control.
 Timely and balanced disclosure and communication of all material information to all
stakeholders.
 Transparency and accountability in all practices
 Fair and equitable treatment of all its stakeholders including employees, associates,
customers & community

BUSINESSES

39
  NJ Wealth – Financial Products Distributors Network

NJ Wealth - Financial Products Distributors Network is one of India's leading and most successful
network of distributors in the financial services industry.

Started in 2003, the NJ Wealth seeks to reach out to the common man and extend the opportunity to
create wealth through an empowered network of financial product distributors – the NJ Wealth
Partners. To its Partners, NJ Wealth provides a full service, comprehensive business platform with
end-to-end solutions critical for success in financial products distribution practice. With it's
compelling set of offerings covering every area of distribution practice, NJ Wealth has managed to
successfully transform the lives of many small and big distributors.

To the common man, NJ Wealth offers a comprehensive wealth management platform with a wide
choice of financial and non-financial products. Backed by high levels of excellence in operational
and service standards, NJ Wealth offers customers of its' Partners with solutions that truly makes a
difference.

Driven by the strong vision of 'Creating Wealth and Transforming Lives', NJ Wealth's constant
endeavour is to build on the ideas that are meaningful & effective in scaling business challenges,
seizing available opportunities and serving the interests of the customer.

The NJ Wealth family has grown steadily and today it has over 24,800+ NJ Wealth Partners, spread
across 97 branches in 23 states in India with over 12,00,000+ investors and over
INR 32,500+ crores + of mutual fund assets under advice. Irrespective of the numbers though, it is
trust in us which fuels the passion for creating solutions with excellence that touch many lives, day
after day.

The key offerings of the NJ Wealth Distributor platform are briefly mentioned here.

Product basket

 Domestic mutual funds (all AMCs)

 Capital Markets - direct equity and ETFs
 Fixed Deposits of companies
 PMS products (Third party & NJ)

40
  Government/ RBI/ Infrastructure bonds
 Residential & commercial properties

Partner Services

 Dedicated Relationship Manager

 Marketing & Sales support
 Research support
 Training & Education support
 Dedicated Customer Care / Query management support
 Technological support, including online business / 'Partners Desk' with CRM & Employee
Management modules

Customer Services:

Online family "Client Desk" enabling single portfolio view of 'entire' wealth portfolio Trading &
Demat Account with online transacting & call-&-trade service in mutual funds, direct equity & ETF

 NJ Portfolio Management Services

NJ has ventured in asset management business with NJ Advisory Services Pvt. Ltd., a group
company, launching its discretionary PMS products.

At the heart of NJ Advisory Services is the idea to provide customers with solutions that give them
the freedom from active management of investments while having an assurance that we would be
doing so in the best possible manner. Our conviction, matched by our passion and expertise, is all
about ensuring the peace of mind of the investor. The PMS products currently offered are aimed at
meeting investor's need for successful long-term wealth creation by following strategies that control
risk and optimise returns in a mutual fund portfolio.

NJ Advisory Services leverages upon with its rich experience in portfolio management with in-
depth knowledge & expertise in mutual funds. The decisions on the mutual fund portfolio also
combine results of time tested proprietary research models, extensive due-diligence of fund houses,
interactions with fund managers & internal risk controls. The defined processes and smart use of

41
technology further ensures that the investors are offered with quality portfolio management and
administrative services, ensuring a complete peace of mind.

Products:

 Freedom Portfolio
Objective: To stay invested in equity mutual fund schemes at all times, deliver superior
portfolio returns by selecting better performing schemes and encashing on opportunities
offered by markets.
 Dyanamic Asset Allocation Portfolio
Objective: To give better risk adjusted returns by deciding right proportion of Equity and
Debt asset classes from time to time, and selecting consistently better performing mutual
fund schemes.

 NJ India Realty

The NJ Realty venture offers an integrated service model offering end-to-end services to various
stake-holders in realty program management & execution. The idea is to associate with
stakeholders and engage actively in various stages of program management, viz. market survey,
legal due diligence, land acquisition, planning & execution of projects and managing sales &
distribution through NJ Wealth – Financial Products Distributors Network.

Managing realty programs is a lengthy process replete with many challenges right from program
identification to marketing. As a developer, investor or land owner, one may be keen to execute
realty projects, but may not be equipped with the right skill-sets, contacts, experience and/or know-
how for the undertaking. Our conviction, matched by our passion and expertise, is all about
ensuring the peace of mind of the investor. The PMS products currently offered are aimed at
meeting investor's need for successful long-term wealth creation by following strategies that control
risk and optimise returns in a mutual fund portfolio.

This is where NJ Realty can associate and help in shaping up the realty programs. NJ Realty has
acquired considerable experience in program management and is also currently engaged in
multiple programs playing diverse roles.

42
 At the heart of NJ Realty is the philosophy of sustainability and preservation of environment.
Going beyond words, NJ Realty seeks to keep environment as one of the focal points in it's real
estate business.

 NJ Insurance Brokers

NJ Insurance Brokers Pvt. Ltd., a licensed insurance broker by IRDA, seeks to provide customers
with comprehensive solutions catering to their insurance needs.

At the heart of NJ Insurance is the strong vision for continued financial well-being for customers -
individuals and families, regardless of any circumstances. The key is to offer 'right' advice which is
unbiased and customer centric and encompasses the right risk to insure, the right coverage, the right
product and at the right time. The idea to offer clients with comprehensive solutions extends further
to cover quality claim settlement and other services.

NJ Insurance leverages from the rich experience of NJ group in financial planning and investment
management for customers. NJ Insurance Brokers has appointed Certified Insurance Advisors
(CIAs) who work with customers in identifying, fulfilling & managing their insurance needs. NJ
offers a comprehensive basket of products both in life & non-life insurance space and makes
exhaustive use of technology to deliver great value to customers.

Product basket:

 Life insurance products from leading life insurers

 General insurance products, especially Health, Motor & Personal Accident, from leading
general insurers

 NJ Global Wealth Advisory

NJ Global Invest (Ltd.) is a new venture wherein NJ seeks to offer a Global Wealth Advisory
platform to advisors for offshore funds across the globe.

The vision at Global Wealth Advisory platform is to offer a single window for investment
opportunities across the globe to customers. The idea is to bring to customers a wide range of

43
offshore fund schemes (domiciled in Mauritius, Luxembourg, Dublin and other jurisdictions),
through advisors on the Global Wealth Advisory platform. NJ Global Invest seeks to provide a
offshore fund distribution platform & offshore Portfolio Advisory services under a B2B distribution
model. NJ Global Invest also desires to offer comprehensive order routing and trade settlement
facility with support services of client reporting & fees settlement.

NJ Global Invest, is a venture that leverages from rich experience & success of financial products
distribution business in India. Incorporated in Mauritius, NJ Global Invest is set up an offshore fund
distribution company and is a licensed 'Investment Dealer (Full Service Dealer, excluding
underwriting)" by FSC, Mauritius.

 NJ Technologies

NJ Technologies is a latest venture by NJ wherein we aim to provide quality technology solutions

to businesses in a wide range of domains.

NJ started its journey in technology with the start of Finlogic Technologies (India) Pvt. Ltd., a
group company, in year 2000. The idea then was to develop software applications to support the
growing (financial services) distribution business and manage the IT infrastructure. Over the years,
the captive IT team, gained strong domain expertise and skills in diverse areas and technology
domains. Today, Finlogic team boasts of over 270+ employees with skills & rich experience in
product development, software testing, infrastructure management, R&D, project management &
information security. The entire NJ Group's internal systems and infrastructure is managed by
Finlogic which also has developed many state-of-the arts, proprietary applications that power NJ's
businesses.

NJ Technologies now seeks to leverage these in-house skills & expertise to help other businesses
find solutions for their business challenges. At NJ Technologies, we are keen to adopt the latest and
the best practices from the industry in delivering solutions that really work for businesses.

Solutions for businesses:

 Infrastructure Set-up and Management

 Database Management
 Customized Application Development

44
  Software Quality Assurance
 Information Security

 NJ Gurukul

The NJ Gurukul is a venture aimed at providing valuable training & education support to the young,
emerging talent pool in India. Started in year 2008, NJ Gurukul today offers a very wide range of
training programs across India in all major cities.

NJ Gurukul is about a vision that aspires to nurture the young talent in India and to transform them
into individuals with knowledge & skills for employment and enterprise. With special focus on the
financial advisors community, NJ Gurukul today, is a leading provider of training programs in the
financial services industry. NJ Gurukul offers a wide range of training programs by way of part /
full time classroom sessions being conducted at multiple locations across India. NJ Gurukul has an
institutionalized, process driven approach to training with focus on delivering uniformity in quality
& content.

The NJ Gurukul has a Board of Trainers with over 35 well qualified, professional trainers
empanelled across India for delivering training programs. Within a short time, NJ Gurukul has
trained over 35,000 participants in over 80 locations across India. NJ Wealth provides a full service,
comprehensive business platform with end-to-end solutions critical for success in financial products
distribution practice.

With it's compelling set of offerings covering every area of distribution practice NJ Gurukul is an
authorised Education Provider (EP) with FPSB India to deliver training for the prestigious Certified
Financial Planner - CFPCM Certification. NJ Gurukul is also amongst the largest trainers of Mutual
Fund Distributors in India.

Key Training Programs:

 Mutual Fund Distributors Certification by NISM for prospective NJ Wealth Distributors

 Certified Financial Planner (CFP CM) Certification by FPSB India

45
 CHAPTER V
DATA ANALYSIS AND INTERPRETATION

46
ANALYSIS OF TOP 3 LARGE CAP EQUITY MUTUAL FUNDS IN
DETAILS:

ICICI Prudential Mutual Fund

Mutual Fund: ICICI Prudential Mutual fund

Scheme Name: ICICI Prudential Value Discovery Fund

Gr

Fund manager: Mrinal Singh

Scheme Type: Open Ended

Scheme Category: Large Cap

Launch Date: Mar 07, 2004

Minimum Subscription Amount: Rs. 500

Kotak Mahindra mutual fund

Mutual Fund: Kotak Mahindra mutual fund

Scheme Name: Kotak Select Focus Fund - Gr

Fund manager: Harsha Upadhaya

Scheme Type: Open Ended

Scheme Category: Large Cap

Launch Date: Aug 20, 2009

Minimum Subscription Amount: Rs. 5000

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 Mirae Asset mutual fund
Mutual Fund: Mirae Mutual fund

Scheme Name: Mirae Asset India Opportunities Fund - Gr

Fund manager: Neelesh Surana

Scheme Type: Open Ended

Scheme Category: Large Cap

Launch Date: Mar 11, 2008

Minimum Subscription Amount: Rs. 5000

Escorts Mutual fund

Mutual Fund: Escorts Mutual Fund

Scheme Name: Escorts Growth Plan G

Fund manager: Sanjeev Sharma

Scheme Type: Open Ended

Scheme Category: Large Cap

Launch Date: Mar 21, 2001

Minimum Subscription Amount: Rs. 1000

48
 Data Analysis:
Table no. 1
Data is taken from NJ FUNDZ WATCH AS ON JAN-MAR 2017.

Performance Scorecard
As on 30-12-2016

Large Cap - Equity Funds - Diversified

CAGR Returns% Rank Quartile

Scheme Name 1 Years 2 Years 5 Years 1 Years 2 Years 5 Years 1 Years 2 Years 5 Years

Kotak Select Focus Fund - Gr 9.44 21.17 20.30 10 2 1 3 1 1

-1.52 22.89 20.24 72 1 2 1 1 1

Escorts Growth Plan G

Mirae Asset India Opportunities 8.09 19.87 20.12 13 4 3 1 1 1

Fund – Gr

1 YEAR 2 YEAR 5YEAR

Average of large cap 4.16 14.19 15.19

funds:
NIFTY 50: 3.01 9.10 12.10
S&P BSE SENSEX 1.95 7.94 11.49
UNIVERSE 76 72 69

*CAGR =COMPOUND ANNUAL GROWTH RATE

49
Interpretation:

Table 1 depicts the performance of top 3 large cap mutual fund schemes as on 31-12-
2016 in JAN –MAR 2017 period of time. And it also shows the quartile performance
for the last 5 year.

The table clearly shows the schemes-wise return for FIVE years in which highest
return of 20.30 in the year 3years by (1 )Kotak Select Focus Fund - Gr and also
from the inception. It is followed by (2) Escorts Growth Plan G, (3) Mirae Asset
India Opportunities Fund – Gr with 20.24, 20.12 return respectively.
In all 5 years duration Escorts Growth Plan and Mirae Asset India Opportunities
Fund – Gr is performed well compared to others schemes. Because this two schemes
are more consistent in giving positive return.

COMPARISION BETWEEN SCHEMES

 Kotak Select Focus Fund – Gr is at top of chart while it gives positive return
for 5 years. But in the first year its quartile comes to 3 and its ranking was
third.
 Escorts Growth Plan G this fund was performed very well in the 1 year its
CAGR return was in negative and its ranking was 72.but this fund was more
consistent
 Mirae Asset India Opportunities Fund – Gr its return was positive and this
fund are more consistent in comparison with other funds.

 In the total of 76 funds in 1 year is average of large cap fund is 4.16

 In the total of 72 funds in 2 year is average of large cap fund is 14.19
 In the total of 69 funds in 5 year is average of large cap fund is 15.19.

50
 Data Analysis:
Table no 2
Data is taken from NJ FUNDZ WATCH AS ON APR-JUN 2017.

Performance Scorecard
As on 31-03-2017

Large Cap - Equity Funds - Diversified

CAGR Returns% Rank Quartile

Scheme Name 1 Years 2 Years 5 Years 1 Years 2 Years 5 Years 1 Years 2 Years 5 Years

ICICI Prudential Value Discovery 20.67 24.29 22.20 43 2 1 3 1 1

Fund Gr

Kotak Select Focus Fund - Gr 29.69 24.12 20.73 12 3 2 1 1 1

Mirae Asset India Opportunities 28.32 21.79 19.78 14 8 3 1 1 1

Fund - Gr

1 YEAR 2 YEAR 5YEAR

Average of large cap 22.99 16.70 14.98

funds:
NIFTY 50: 18.55 11.02 11.62

S&P BSE SENSEX 16.88 9.78 11.22

UNIVERSE 77 73 70

*CAGR =COMPOUND ANNUAL GROWTH RATE

51
Interpretation:

Table 2 depicts the performance of top 3 large cap mutual fund schemes as on 31-03-
2017 in APR –JUN 2017 period of time. And it also shows the quartile performance
for the last 5 year.

The table clearly shows the schemes-wise return for FIVE years in which highest
return of 22.20 in the year 5years by (1) ICICI Prudential Value Discovery Fund Gr and also
from the inception. It is followed by (2) Kotak Select Focus Fund - Gr, (3) Mirae Asset
India Opportunities Fund – Gr with 20.73, 19.78 return respectively.
In all 5 years duration Kotak Select Focus Fund - Gr and Mirae Asset India
Opportunities Fund – Gr is performed well compared to others schemes.Because
this two schemes are more consistent in giving positive return.

COMPARISION BETWEEN SCHEMES

 ICICI Prudential Value Discovery Fund Gr is at top of chart while it gives

positive return for 5 years. But in the first year its quartile comes to 3 and its
ranking was third.
 Kotak Select Focus Fund - Gr this fund was performed very well in the 1
year its CAGR return was in Positive and its ranking was 12.but this fund was
more consistent
 Mirae Asset India Opportunities Fund – Gr its return was positive and this
fund is more consistent in comparison with other funds.

 In the total of 77 funds in 1 year is average of large cap fund is 22.99

 In the total of 73 funds in 2 year is average of large cap fund is 16.70
 In the total of 70 funds in 5 year is average of large cap fund is 14.98

52
Interpretation:

Different types of mutual funds have different levels of volatility and those with the
greater chance of losing value are also the funds that can produce the greater returns
for you over a period of time.
So risk has two sides: it causes the value of your investments to fluctuate, but it is
precisely the reason you can expect to earn higher returns.

 There is a huge market volatility effect the fund’s performance. In short span
of three months. Kotak Select Focus Fund – Gr it gives 20.30 in the last 5 year of
JAN-MAR 2017 quarter. But in the next Quarter it gives 20.73 returns.

 In the JAN-MAR 2017 quarter ICICI Prudential Value Discovery Fund Gr was
given 15.91 returns and it ranked in number 26th but in the next Quarter it gives 22.20
Returns and ranked at top 1.

Study (1). Out of the selected Top 3 Large Cap Equity mutual fund of two quarter periods.

 JAN-MAR 2017 (last 5year) performance .

Kotak Select Focus Fund – Gr CAGR% 20.30 Ranks1

 APR-JUN 2017 (last 5year) performance.

ICICI Prudential Value Discovery Fund Gr CAGR% 22.20 Ranks 1

But the performance of Kotak Select Focus Fund – Gr comes down to second Rank. And the
Kotak Select Focus Fund – Gr the it’s consistency level in both the quarter.

53
Study (2). Out of the selected Top 3 Large Cap Equity mutual fund of two quarter periods.

The fund which is not in top 3 large cap funds in the next quarter APR-JUN 2017.

In the JAN-MAR 2017 quarter Escorts Growth Plan G was at the second
rank of top 3 large cap equity funds which gives 20.24 returns. But in the next quarter it
comes to 10th rank and gives 18.03 returns.

Study (3). Out of the selected Top 3 Large Cap Equity mutual fund of two quarter periods.

From the two Quarters only one fund is more consistent in giving positive return.

Mirae Asset India Opportunities Fund – Gr is ranked at third and it gives the positive
returns in the both quarter 20.12, 19.78 respectively.

54
 CHAPTER VI
FINDING

55
 MOST CONSISTENT FUND

Quarter JAN-MAR 2017

Scheme Name CAGR Return % Rank Quartile

1yr 3yr 5yr 1yr 3yr 5yr 1yr 3yr 5yr
Mirae Asset India Opportunities 8.09 19.87 20.12 13 4 3 1 1 1
Fund – Gr

Quarter APR-JUN 2017

Scheme Name CAGR Return% Rank Quartile

1yr 3yr 5yr 1yr 3yr 5yr 1yr 3yr 5yr
Mirae Asset India 28.32 21.79 19.78 14 8 3 1 1 1
Opportunities Fund – Gr

 First quartile represents best performing schemes (top 25% schemes)

 If a scheme remains in first or second quartile for all the given periods, then the
performance of the scheme is considered as consistent & above average.

56
 CHAPTER VII
SUGGESTIONS

57
Recommendations:
 Equity returns have the potential of being much higher but can be volatile.
However, the volatility of equity is a relatively short-term phenomenon.

 For periods exceeding three to five years, equity investments are extremely
likely to give strong positive returns.

This is especially true if stick to a broad selection of the relatively large-cap

Companies and if you invest gradually, as in through an SIP. Speaking in terms of
risk, this means that instead of saying that equity has higher risk, we should actually
be saying that equity's risk drops over time and at a long enough timescale.

 I come to conclusion result that investor should not only focus on Return and
Rank, it must be focus on consistency of the fund. For better result in long
term.

 Likewise on this data analysis Mirae Asset India Opportunities Fund – Gr is more
consistent fund in two quarter.

How to Read NJ FUNDZ WATCH Performance

Scorecard.

58
*Large Cap: Fund having percentage holding of large cap stock more than or equal to 70% of
the portfolio.

*Rank:

 Higher the return, Higher the rank

 Scheme with the highest return will have the first rank.
 If a scheme has higher ranks (Rank 1 or 2)
In all the given periods, then that scheme is considered to be a good
performing as well as consistent scheme.

*Quartile:

 Performance for the period is differentiated in four quartiles.

 First quartile represents best performing schemes (top 25% schemes), While
last or fourth quartile represents relatively worst performing schemes for the
period.

 If a scheme remains in first or second quartile for all the given periods, then
the performance of the scheme is considered as consistent & above average.

59
 CHAPTER VIII

CONCLUSION

60
Among large cap equity mutual fund Mirae Asset India Opportunities Fund – Gr is
perform well in a two quarter. Whereas ICICI Prudential Value Discovery Fund Gr and
Kotak Select Focus Fund – Gr has less consistency level.

 So my suggestion is that while investing we should see the consistency level of

the fund not the return given by it. Because in future there maybe ups and
downs in the returns of the fund.

 Mutual funds have emerged as the best in terms of variety, flexibility,

diversification, liquidity as well as tax benefits, so it is a best investment
vehicle.
 Mutual funds have the capability to provide solutions to most investors’
financial needs.

 My study is expected to see the performance evaluation framework for mutual

funds in India.
 The financial advisors at NJ WEALTH provide financial products as per their
clients’ needs and future goals by conducting market research. All these make NJ
to have an edge over its competitors.

There is a lot of opportunity in the mutual fund industry, the NJ has to create more
awareness among the public and give more advertisements in the print and digital
media.

61
BIBLIOGRAPHY

TEXT BOOKS:

 Prasath.R.H (2014) “A study on Analysis of the performance of mutual fund with reference
to HDFC” Anna University, Chennai.

 Gupta, Amitabh, (2012), “Mutual funds in India” – ‘A study of Investment Management’,

Anmol Publications Pvt. Ltd

MAGAZINES:

 NJ Wealth Watch
 NJ Fundz Watch
 NJ Performance Watch

WEBSITES:

 www.ibef.org.in
 www.amfiindia.com
 www.njwealth.in
 www.njgroup.in
 www.fundzindia.com
 www.mutualfundsindia.com

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.

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