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Gitarattan International Business School Affiliated to Guru Gobind Singh Indraprastha University Guided By: Ms Manish Mohpatra Submitted By: Bharti Rai Roll no- 12319103910 MBA(2010-2012)
This is to certify that the project report titled “Comparison of Different kinds of mutual funds study of investor’s behavior towards mutual funds” has been accomplished by Anurag Rastogi. This project is being submitted in the partial fulfilment of requirements for the award of the Post Graduate Diploma in International Marketing (PGDIM) from Sri Guru Gobind Singh College of Commerce. This work has not been submitted by her anywhere else for the award of any degree or diploma. All sources of information and help have been duly mentioned and acknowledged.
Preparing a project report of this nature is an arduous task and I was fortunate enough to get the support from a large number of people to whom I shall always remain grateful. I would like to give a special thanks to and Ms Manisha Mohpatra (project mentor), for the valuable advice, guidance, and precious time and support that they have offered in making this project a success. Last but not the least I would also like to thank all the respondents for giving their precious time and relevant information required for completing the project.
0 Ch 7.4 Ch 3.#1.1 3.6.#2.1 1.1 2.0 2.2 1. Page 4 .3 1.4 Ch.0 Ch 5.2 Ch 4. Ch.2 1.TABLE OF CONTENTS Chapter No.3 2.0 3.0 Subject Introduction History and AMFI & Its Role Objectives of the project Types of mutual funds and their benefits Major Players SWOT of Industry Company Profile SWOT of the company Mutual Funds schemes comparison SIP Vs Lump Sum plans Methodology and Analysis Research Methodology Analysis and Diagrammatic representation Limitation of the study Recommendations Conclusion Bibliography Annexure 43 44-55 56 57 58 59 60-62 5-9 10 11-16 17 20 25-32 33 33-35 36 Page No.0 1.0 Ch.
The first retail index fund. represented less than $10 million in 1924. this grew fairly successfully and gave investors a good return. Over the period of 35 yrs. when a number of mistakes were made and hence the mutual funds scheme. which invested in lesser known stocks and at very high levels. First Index Investment Trust. for whom the mutual fund is actually intended. which sets forth the guidelines with which all SEC. The mutual fund industry started in India in a small way with UTI act creating what was effectively a small saving decision with the RBI. But to be fair. The SEC helped draft the investment Company Act 1940. It is now called the Vanguard 500 index fund and is one of the world’s largest mutual funds with value more than $100 billion in assets. the securities themselves. Congress passed the Securities Act of 1933 and the securities Exchange Act of 1934. there were approximately 270 funds costing $48 billion in assets. was formed in 1976 and headed by John Bogle. 1924. has not yet returned to the industry in a big way. became loss leaders for retail investor. which included a few closed ended funds.HISTORY OF MUTUAL FUNDS Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21. and fund manager. the industry too has focused on bringing in the large investors. Huge downfall in the stock market in 1929 hindered the growth of mutual funds.000 in assets. By the end of the 1960’s. The entire industry. Even people already enrolled in corporate pension plans could contribute a limited amount depending on individuals. public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area. As the stock market crashed so in this response. which can make the retail investors fell more secure Page 5 . so that it can create a significant corpus. and therefore in 1989. it had 200 shareholders and $392.registered funds today must comply. and after one year. A key factor in mutual fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual open accounts (IRAs). The initial years of the industry also saw the emerging years of the Indian equity market. who conceptualized many of the key tenets of the industry in his 1951 senior thesis at Princeton University. These laws require that a fund be registered with the Securities and Exchange Commission (SEC) and provide prospective investor with a prospectus that contains all required disclosures about the fund.
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SEBI formulates the policies and regulates the mutual funds to protect the interest of investors. AMFI works through a number of committees. As of now. at the initiative of government of India and RBI. AMFI interacts with SEBI. healthy and ethical lines. In 1978 UTI was delinked from the RBI and the industrial Development Bank of India (IDBI) Page 7 . all the 32 asset management companies that have launched mutual funds schemes are its members. SECURITIES AND EXCHANGE BOARD OF INDIA Securities and Exchange Board of India (SEBI) was established in 1988 to regulate and develop the growth of the capital market.1964-87 UNIT TRUST OF INDIA(UTI) was established on 1963 by an Act of Parliament. some of which are standing committees to address areas where there is a need for constant vigil and improvements and other which are adhoc committees continued to address specific issues.ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI) AND ITS ROLE AMFI is the apex body of all the registered asset management companies. SEBI notified regulations for the mutual funds. HISTORY OF INDIAN MUTUAL FUNDS The mutual fund industry started in India started in 1963 with the formation of Unit Trust of India. The objective of AMFI is to develop the Indian mutual funds industry on profession. In 1993. It also provides training and certification to agent distributors and for all intermediaries and others engaged in the industry. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. and to regulate the securities market. 1995 as a non profit organization. It also aims to enhance and maintain standards in all areas in a view to protecting and promoting the interests of the mutual funds and their units holders. mutual funds sponsored by private sector entities were allowed to enter the capital market. It was incorporated on August 22. Securities and Exchange board of India Act was pass to protect the interest of the investors in securities and to promote the development of. As far as mutual funds are concerned. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of regulations released by SEBI. RBI and the government on all matters concerning the mutual fund industry. The history of mutual funds in India can be broadly divided into four distinct phases: FIRST PHASE. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspection by SEBI. After this notification. In the year 1992.
took over the regulatory and administrative control in place of Reserve Bank of India. Unit scheme was the first scheme launched by UTI in 1964.
SECOND PHASE-1987-1993 (Entry Of Public Sector Funds)
1987 marked the entry of non UTI, public sector banks set up public sector funds, and Life Insurance corporation of India(LIC) and General Insurance Corporation of India (GIC). 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 (June 90), Bank of Baroda Mutual Fund (Oct 92). LIC establishes its Mutual Fund in June 1989 while GIC has set up its mutual funds in Dec 1990. At the end of 1993, mutual fund industry had assets under management of Rs. 47,004 crores.
THIRD PHASE -1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund Industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Funds Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. 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. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of asset management was way ahead of other mutual funds.
FOURTH PHASE- SINCE FEBRUARY 2003
In February 2003 following the repeal of Unit Trust of India Act 1963 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 and does not come at the purview of the Mutual Fund Regulations.
1999- YEAR OF THE FUNDS
Mutual funds have been around for a long period of time to be precise for 36 years but the year 1999 saw immense future potential and developments in this sector. 1999 saw as the year of resurgence of the
mutual funds and the regaining of investor confidence in these MF’s. This time around all the participants are involved in the revival of the funds of the AMC’s, the unit holders, the other related parties. However the sole factor that gave lifer to the revival of the funds was the Union Budget on mutual funds taxation benefits are provided later. It provided centre stage to the mutual funds, made them more attractive and provide acceptability among the investors. The union budget exempted mutual fund dividend given out by equity oriented schemes from tax, both at the hands of the investors as well as the mutual fund. No longer were the mutual funds interested in selling the concept of mutual funds they wanted to talk business which would mean to increase asset base, and to get asset base and investor base they had to be fully armed with a whole lot of schemes for every investor. So new schemes for new IPO’s were inevitable. The quest to attract investor extended beyond just new schemes. The funds started to regulate themselves and were all out winning the trust and confidence of the investors under the aegis of the Association of Mutual Funds of India (AMFI).
2003-2004: A retrospect
The year 2003 was extremely eventful for mutual funds. The aggressive competition in the business took its toll and two more mutual funds bit the dust. Alliance decided to remain in the ring after a highly public bidding war did not yield an acceptable price, while Zurich has been sold to HDFC Mutual. The growth of the industry continued to be corporate focused barring a few initiatives by mutual funds to expand the retail base. Large money brought with it the problems of low retention and consequently low profitability, which is one of the problems plaguing the business. But at the same time the industry did see a spectacular growth in assets, particularly among the private sector players, on the back of the continuing debt bull run. Equity did not find favor with investors since the market was lack-luster and performances of funds, barring a few, were quite disappointing for the investors. The other aspect of this issue is that institutional investors do not usually favor equity. It is largely a retail segment product and without retail depth, most mutual funds have been unable to tap this market. Overall FY2003 can be summed up as the year of the maturing of the mutual fund industry. It was the year when fund houses went through turmoil and consolidation and the strong ones emerged stronger. Investors too became savvier, and began investing based on far more scientific criteria than the past, and with clearly defined investment horizons. Distribution gave way increasingly to intermediation and more and more distributors graduated to providing technical advise to their clients. Thus the industry has come of age in FY2003, and we hope that FY2004 and beyond will see us come out of a stormy adolescence to become a trusted avenue for saving.
The history of the Indian Mutual fund industry can be traced to the formation of UTI in 1963. This was a joint initiative of the government of India an RBI. It held monopoly for nearly 30 years. Since 1987, nonUTI mutual funds entered the scenario. These consisted of LIC, GIC and public-sector bank backed Indian mutual funds. SBI Mutual fund was the first of this kind. 1993 saw the entry of private sector players on the Indian Mutual Funds scene. Mutual Fund Regulations were revised in 1996 to accommodate changing market needs. With the Sensex on a scorching bull rally, many investors prefer to trade on stocks themselves. Mutual funds are more balanced since they diversify over a large number of stocks and sectors. In the rally of 2000, it was noticed that mutual funds did better than the stocks mainly due to prudent fund management based on the virtues of diversification. Some of the major players on the Indian mutual fund scene: ABN AMRO Mutual Fund Benchmark Mutual Fund
Birla Sunlife Mutual Fund
IDFC Mutual Fund SBI Mutual Fund
Canara Bank Mutual Fund
UTI Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund
In India, SEBI (the Securities and Exchange Board of India) is the regulating authority that SEBI formulates policies and regulates the mutual funds to protect the interest of the Indian investors. There have been revisions and amendments from time to time. Even mutual funds promoted by foreign entities come under the purview of SEBI when operating in India. SEBI has revised its regulations to allow Indian mutual funds to invest in gold.
To gain knowledge and get acquainted with mutual fund industry and its general operations. Comparative study of mutual funds. Page 11 .OBJECTIVES To gain knowledge of different kinds of mutual funds in the market. To know why customers go for an investment in Mutual Funds Industry To gather knowledge about the various mutual funds players and assessment in the mutual funds sector. To know how in general customers go about in making an investment. To know how the customers manage the risk involved in an investment.
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The mutual fund will have a fund manager Page 13 . The income earned throughthese investments and the capital appreciation realised are shared by its unit holdersin proportion to the number of units owned by them. The money thus collected is then invested in capital marketinstruments such as shares. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds.Most funds also pass on these gains to investors in a distribution. Each investor owns shares. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money.Mutual Fund is a investment company that pools money from shareholders and invests in a variety of securities. short-term moneymarket instruments. Mutual fundscheme has a defined investment objective and strategy . A fund paysout nearly all of the income it receives over the year to fund owners in the form of a 2) If the fund sells securities that have increased in price. debentures and other securities. Most openend mutual funds stand ready to buy back (redeem) its shares at their current net asset value. Investors can make money from a mutual fund in three ways: 1) Income is earned from dividends on stocks and interest on bonds. investors can then sell your mutual fund shares for a profit. which depends on the total market value of the fund's investment portfolio at the time of redemption.MUTUAL FUND A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Funds also usually give investors a choice either to receive a check for distributions or to reinvest the earnings and get more shares. and/or other securities. professionally managed basket of securities at a relatively low cost. bonds. the fund has a capital gain.A mutual fund is nothing more than a collection of stocks and bonds. bonds and money market instruments. which represent a portion of the holdings of the fund. 3) If fund holdings increase in price but are not sold by the fund manager. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. the fund's shares increase in price. and other securities. investors can think of a mutual fund as a company that brings together a group of people and invests their money in stocks. bonds. such as stocks. Most openend mutual funds continuously offer new shares to A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks.
Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds. Also known as an open-end investment company. In Short. Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced.that trades the pooled money on a regular basis. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current net asset value: total fund assets divided by shares outstanding. Investors of mutual funds are known as unitholders. In India. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public. professionally managed basket of securities at a relatively low cost The profits or losses are shared by the investors in proportion to their investments. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. gilts etc. a mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. debentures. to differentiate it from a closed-end investment company. Mutual Fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified. In Simple Words. For example.Mutual funds can give investors access to emerging Page 14 . The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme.
and the investors may choose an option depending on their preferences. Thereafter you can buy or sell the units of scheme on the stock exchange where they are listed. bonds and money market instruments. Investor can invest directly in the scheme at time of initial issue. The market price at stock exchange could vary from scheme NAV on account of demand and supply situation unit holder expectation and other market factors. Open-end funds raise money by selling shares of the fund to the public. to 15 yrs. Such funds have comparatively high risks and these schemes normally invest a major part of their corpus in equities. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. OPEN ENDED FUNDS Open ended schemes do not have fixed maturity. etc. capital appreciation. These schemes are generally traded at a discount to their NAV but close to maturity the discount narrows. 2. Page 15 . they offer anytime liquidity the investor buy sell the units at net asset value (NAV) related prices. CLOSE ENDED FUNDS These funds have stipulated maturity ranging from 2 yrs. These schemes provide different options to the investors like dividend option. These schemes normally invest a majority of their funds in equities. such as stocks. The mutual funds also allow the investors to change the options at a later date. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles.MUTUAL FUNDS TYPES 1. The investors must indicate the options in the application form. GROWTH / EQUITY ORIENTED SCHEMES These schemes aim to provide capital appreciation over medium to long term. 3. much like any other type of company which can sell stock in itself to the public.
If the interest rates fall. NAVs of such funds are likely to be less volatile compared to pure equity funds. preservation of capital and moderate income. NAVs of such funds are likely to increase in the short run and vice versa. Such schemes generally invest in fixed income securities such as bonds. GILT FUND These funds invest exclusively in government securities. These funds are also affected because of fluctuations in the share prices in the stock markets. INCOME / DEBT ORIENTED SCHEME The aim of income funds is to provide regular and steady income to investors. The NAVs of such funds are affected because of change in interest rates in the country. etc. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. MONEY MARKET or LIQUID FUND These funds are also income funds and their aim is to provide easy liquidity. corporate debentures. These are ideal for retired people with a need for capital stability and regular income and investors who need some income to supplement their earnings. These funds are not affected because of fluctuations in equity markets. long term investors may not bother about these fluctuations. However. Returns on these schemes fluctuate much less compared to other funds depending upon interest rates prevailing in market. These are appropriate for investors looking for moderate growth. 5. commercial paper and inter-bank call money. Government securities have no default risks. BALANCED FUND The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. Page 16 . NAVs of these schemes also fluctuate with change in interest rates and other economic factors as in the case with income or debt oriented schemes. However. Government securities and money market instruments. Such funds are less risky compared to equity schemes. certificates of deposit. government securities. They generally invest 40-60% in equity and debt instruments. opportunities of capital appreciation are also limited in such funds.4. These schemes invest exclusively in safer short-term instruments such as treasury bills. However. 7. 6.
TAX SAVING SCHEME These scheme offer tax rebate to the investors under the tax law as prescribed from time to time. Benefits Of Investing In Mutual Funds Professional Management Mutual Funds provide the services of experienced and skilled professionals. Page 17 . These are ideal for investors seeking tax rebates. These schemes invest in the securities in the same weightage comprising of an index. though not exactly by the same percentage due to some factors known as “tracking error” in technical terms. 9. etc. backed by a dedicated investment research team that analyses the performance and prospects of companies and select suitable investments to achieve the objectives of the scheme. INDEX FUNDS Index Funds replicate the portfolio of a particular index such as the BSE Sensitive Index. The government offer tax incentives on investments in specific avenues like equity-linked saving schemes (ELSS). pension scheme. offer many benefits to investor.8. INDUSTRY SPECIFIC or SECTOR SCHEME These funds invest in specific industries or sectors. infrastructure schemes. Index fund while reducing the risk associated with the market. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. 10. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index. Sectoral fund schemes are ideal for investors who have already decided to invest in a particular sector or segment. S&P NSE 50 index (Nifty). They are passively managed funds wherein the fund manager invests in the fund stock comprising the index in similar weights.
Diversification Mutual Funs invest in a number of companies across a broad cross-section of industries and sectors. custodial and other fees translate into lower costs for investors. Transparency You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme. the units can be sold on a stock exchange at the prevailing market price or the investor can avail the facility of direct repurchase at NAV related prices by the MF.. Mutual Funds have a potential to provide higher return as they invest in a diversified basket of selected securities. delayed payments and follow-up with brokers and companies. Convenient Administration Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries. Low Costs Mutual Funds are relatively a less expensive way to invest compared to directly investing in the capital markets because the benefits of benefit of scale in brokerage. the proportion invested in each class of assets and the fund manager’s investment strategy and outlook. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. Page 18 . Liquidity In open-end schemes. Mutual Funds save your time and make investing easy and convenient. the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In close-ended schemes. Return Potential Over a medium to long-term.
the transaction costs are divided among all the mutual fund shareholders. But each class will have different shareholder services and / or distributions arrangements with different fees and expenses. a fund can offer “class A” and “class B” shares. However. and other class may be sold directly to the public with no load but some fee included in the class’s expenses (sometimes referred to as “class C” shares). you can systematically invest or withdraw funds according to your needs and convenience.00. These differences are suppose to reflect different costs involved in servicing investors in various classes: For example: one class may be sold through brokers with a front – end load. Affordability Investors individually may lack sufficient funds to invest in high-grade stocks. For example. If the fund invests primarily in stocks. The operations of mutual funds are monitored by SEBI.Flexibility Through futures such as regular investment plans. mutual funds are not immune to risks. Mutual funds Vs other Investments Mutual funds offer several advantages over investing in individual stocks. They share the same risks associated with the investments made. For example. despite the professional management. regular withdrawal plans and dividend reinvestment plans. Share Classes Mutual funds offer more than one class options. Choice of Schemes Mutual Funds offer a family of schemes suits your varying needs over a life time. Still a third class might have a minimum investment of $1. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy. who also benefit by having a third party (professional fund managers). Well Regulated All mutual funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors.00. it is usually subject to the same ups and downs and risks as the stock market.000 and be Page 19 . apply expertise and dedicate time to manage and research investment options. Each class will invest in the same pool (or investment portfolio) of securities and will have the same investment objectives and policies.
Accrued expenses – other payables – other liabilities No. and Units sold or redeemed Page 20 . by aggregating regular investments made by many individuals. of units outstanding i. Funds NAV is affected by four sets of factors: Purchase and sale of investment securities Valuation of all investment securities held Other assets and liabilities. a retirement plan (such as 401(k) plan) may qualify to purchase “institutional” shares ( and gain the benefit of their typically lower expense ratios) even though no members of the plan would qualify individually. For the purpose of the NAV calculation. On the other hand. it is common practice for mutual funds to compute share of each investor on the basis of the value of net assets per share/unit. each class will likely have different performance results.available only to financial institutions (a so – called “institutional” share class). NAV A mutual fund is a common investment vehicle where the assets of the fund belong directly to the investors.e. As a result. The following are the regulatory requirements and accounting definitions laid down by SEBI… NAV = Net Assets of the schemes / no. market value of investments + receivables + other accrued income + other assets. A multi-class structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the length of time that they expect to remain invested in the fund). Investors’ subscriptions are accounted for by the fund not as liabilities or deposits but as Unit Capital. commonly known as Net Asset Value (NAV). the day on which NAV is calculated by a fund is known as the valuation date. The funds Net Assets are therefore defined as the assets – liabilities. As there are many investors in the funds. the investment made on the behalf of the investors is reflected on the asset side and are the main constituent of the balance sheet. In some cases. of units outstanding as at the NAV date.
he can simply use the Per Unit Net Asset Value at the beginning and the end periods.If an investor wants to compute the return on investment between two dates.MEASURING MUTUAL FUND PERFORMANCE CHANGE IN NAV – THE MOST COMMON MEASURE PURPOSE. FORMULA For NAV change in absolute terms: NAV at the end of the period / NAV at the beginning of the period For NAV change in percentage terms: (Absolute change in NAV/NAV at the beginning)*100 Page 21 . and calculate the change in the value of NAV between the two dates in absolute and percentage terms.
The fund traces its origin to SBI . following a review of its Page 22 . The paid up capital of the AMC is Rs. patronized by over 80% of the top corporate houses of the country. Magnum Multicap Fund. The Sponsor of Zurich India Mutual Fund. and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3. on December 10. Magnum Global Fund. SBI Bluechip Fund) Debt schemes (Example: Magnum Guilt fund -long term. Zurich Insurance Company (ZIC). Products The main products in which customers deals in hope of profit maximization trusting on the company are: Equity schemes (Example: Magnum Equity Fund. The institution has grown vastly since its inception and today it is India's largest bank. 1999. the Trustee has appointed the HDFC Asset Management Company Limited to manage its Mutual Fund. In terms of the Investment Management Agreement. one of the world’s leading fund management companies that manages over US$ 500 Billion all over the world. This Fund is a joint venture between the State Bank of India and Société Générale Asset Management. Magnum Index Fund.162 crore. Magnum Midcap Fund. 1956. Magnum Children saving plan) Balanced schemes (Example: Magnum Balanced Funds) HDFC MUTUAL FUND (AMC): HDFC Asset Management Company Ltd (AMC) came into existence under the Companies Act.India’s largest banking enterprise.MAJOR PLAYERS SBI MUTUAL FUNDS SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an desirable track record in judicious investments and consistent wealth creation. 24. 2000.
the balance paid up capital being held by minority shareholders. 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. HFDC Fixed Maturity Plans . a part of the Reliance . subject to necessary regulatory approvals. HDFC TaxSaver (HTS) these are open ended scheme of the fund.. Reliance Mutual Fund. Reliance Mutual Fund constantly and continuously endeavors to launch innovative products and customer service initiatives to increase value and returns to investors. HDFC Floating Rate Income Fund (HFRIF).Series VIII. HDFC Liquid Fund (HLF).Series IV. HDFC Short Term Plan (HSTP). had decided to divest its Asset Management business in India.Anil Dhirubhai Ambani Group. RMF offers investors a well-rounded portfolio of products to fulfill varying investor requirements and has presence in 118 cities all over the country. And the close ended schemes are HDFC Fixed Maturity Plans . The AMC had entered into an agreement with ZIC to acquire the business.37% of the paid-up capital of Reliance Capital Asset Management Limited. HDFC Balanced Fund (HBF). HDFC Index Fund. The AMC is managing 24 open ended schemes and 13 close ended schemes.30 Lacs. 1.730 Crs (AAUM for 31st May 09 ) and an investor base of over 72. HDFC Children's Gift Fund (HDFC CGF). HDFC Long Term Advantage Fund (HLTAF). is one of the fastest growing mutual funds across country. HDFC Capital Builder Fund (HCBF). HDFC Income Fund (HIF). HDFC Top 200 Fund (HT200). HDFC Fixed Maturity Plans Series III. Page 23 . HDFC Fixed Maturity Plans .Series II. HFDC Fixed Maturity Plans . high performance environment aimed at delighting our customers” Reliance Capital Asset Management Limited (RCAM) is a registered company under the Companies Act. RELIANCE MUTUAL FUND: Reliance Mutual Fund (RMF) is one of India’s top Mutual Funds. HDFC Equity Fund (HEF). HFDC Fixed Maturity Plans .Series VII. HDFC Gilt Fund (HGILT). a subsidiary of Reliance Capital Limited. HDFC Growth Fund (HGF).overall strategy. 2003. the following Schemes of Zurich India Mutual Fund have merged to HDFC Mutual Fund on June 19. with Average Assets Under Management of Rs." Mission statement of RMF is: “To create and nurture a world-class.02. On obtaining the approvals by regulatory. which holds 93.Series IX. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited.Series VI. HDFC Fixed Maturity Plans . HDFC Fixed Maturity Plans .Series V.
Consistency: Company strives to deliver consistent results through its value-based investing method. RCAM is legally authorized to act as Investment Manager of Reliance Mutual Fund.02 crores. whether one is a businessman or salaried professional. 2008 is Rs 709. Page 24 .RCAM was approved as the Asset Management Company for the Mutual Fund by SEBI on June 30. with operational flexibility to suit their different investment needs. Consistent to this IMA. Service: Tata offer a wide range of services to assist investors have a fulfilling and rewarding financial planning experience with. 21. Tata Mutual Fund offers an investment option for everyone. Flexibility: Tata Mutual Fund offers investors a broad range of managed investment products in various asset classes and risk parameters.00 crores as on May 31. 2007 is Rs. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12. Tata Asset Management aims at overall excellence. 1996. Tata Mutual Fund manages around Rs. a pension holder or housewife. The total net worth of the Asset Management Company as on March 31. The Tata Asset Management philosophy is centered on consistency as well as long-term results. 1995. 2009 worth of assets across its varied offerings. Company has designed its services keeping in mind the needs of investors. an aggressive investor or a conservative capital builder.304.151. within the framework of transparent and rigorous risk. TATA MUTUAL FUNDS : EXPERTISE THAT IS TRUSTED Backing provided by one of the most trusted and valued brands in India. Tata Mutual Fund has earned the trust of lacs of investors with its consistent performance and world-class service and better returns. Stability: Company’s commitment is to provide the highest quality of service and integrity is the foundation upon which it builds trust with its clients. The net worth of the Asset Management Company including preference shares as on September 30. 1997 in line with SEBI (Mutual Funds) Regulations. 1995 and was amended on August 12. giving them a smooth and hassle-free financial planning process.39 crores.
Instability in the market.SWOT OF INDUSTRY STRENGTHS: Less risky compared to direct trading of shares Professional management Diversified portfolio Low at operational cost WEAKNESS: Expenses (entry & exit loads) born by investors Portfolios are not made according to the customer’s choice Customer does not have the custody of the investments Documentation is complicated OPPORTUNITY: Simplify the documentation Abolish entry loads Reduce the lock in period for ELSS funds Fixed deposits rates are going down that attracts the investors to invest in Mutual Funds THREATS: With abolishment of entry load no incentive will be there for the distributors to sell the funds. Page 25 .
Bonanza is the fastest growing financial service with 5 mega group companies under it. Bonanza developed into one of the largest financial services and broking house in India within a short span of time. we also have one of the finest and most dedicated research teams with experts who have in-depth. Mutual Fund Investments. unsurpassed knowledge of the market place. All this and more makes Bonanza the perfect place for you to take your first step in the direction of financial success. With diligent effort. Bonanzas offers you the perfect blend of financial services right from Equity Broking. acknowledged industry leadership and experience.an integrated and innovative platform to trade online as well as offline. Bonanza believes in being technologically advanced so that we can offer you – our tech-savvy customers . With a smorgasbord of services across all verticals in finance. Bonanza has spread its trustworthy tentacles all over the country with pan-India presence across more than 1632 outlets spread across 535 cities. and Insurance to exceptional Depository Services. Today. Advisory Services that cover Portfolio Management Services.COMPANY PROFILE Overview of Bonanza as a whole :- A financial powerhouse! That’s what Bonanza is for you! Established in the year 1994. Page 26 . Besides.
We consider them both as our team associates. And their satisfaction is not just our top priority but also the driving force for us. • Transparency Honesty is our forte. • Solidarity We believe in sharing a forthright and respectful relationship with our business partners and employees. every single day. being fair and transparent with our customers. ceaselessly. Values • Customer-centric approach At Bonanza. We believe in dealing on thoroughly ethical grounds.Vision & Values Vision To be one of the most trusted and globally reputed financial distribution companies. Succeed together. Page 27 . reward and distinguish each one of them. • Meritocracy We recognize and appreciate efforts put in by our employees. And we. who work together. customers come first. as a matter of fact.
07-08 . of offices for 2008-2009*. 6th in terms of Trading terminals in for two consecutive years 2007.Milestones • • • • • 4th largest in terms of no. • Nominated among the Top 3 for the "Best Financial Advisor Awards 09" in the category of National Distributors – Retail instituted by CNBC-TV18 and OptiMix • Awarded by BSE Major Volume Driver 04-05. Top Equity Broking House in terms of branch expansion for 2008*.2008*.Retail. Page 28 .06-07. 9th in terms of Sub Brokers for 2007* Nominated among the Top 3 for the "Best Financial Advisor Awards 08" in the category of National Distributors – Retail instituted by CNBC-TV18 and OptiMix. • Ranked 2nd by UTI MF & CNBC TV 18 Financial Awards 2009 in the category Best Financial Advisor.
E) 4.A. NSDL. IPO. 2. BSE. Ltd. NCDEX AND MCX – Commodity Derivatives. Member: NSE. CDSL Distribution:PMS. Bonanza Financial Academy Arbitrage curse NCF Page 29 .Bonanza as a company:- Different areas of the company Which includes: 1. Bonanza Global DMCC Dubai Gold and Commodity Exchange(U.Bonanza Portfolio Ltd. Bonanza Commodity Brokers Pvt. Mutual Funds. 3.
Brokerage and account opening fees at Bonanza Portfolio Ltd.250/. Rate of account opening Client can open general demat and Trading account with company by paying Rs.For delivery the rate of brokerage transaction. is 0.For intraday transaction the rate of brokerage is nominal i.Rate of brokerages Intraday: .500/. 0.and there will be AMC of Rs.02% on each transaction.e. 2 . Delivery: .:CHARGES DEMAT ACCOUNT 1.20% on each Page 30 .per year.
16 2.99 1. Commodity trading: . Fund (G) % Returns 9.94 4.(G) Sundaram Energy Opportunities Fund (G) Religare Mid Cap Fund (G) Birla Sun Life Small & Midcap Fund (G) Reliance Long-Term Equity Fund (G) ICICI Pru R.The rate of brokerage in commodity trading is 0.95 *Returns upto 1 yr are absolute and over 1 yr are CAGR Page 31 .Emerging Businesses Fund (G) ICICI Pru FMCG Fund .T.Global PMP (G) SBI Magnum SFU .03 4. FUND PERFORMANCE Top Performers Scheme DSP BR World Gold Fund (G) AIG World Gold Fund (G) Birla Sun Life CEF .95 4.G.I.09 2.H.04 1.02%.48 2.52 4.
volatility. Just select the fund you are invested / investing and get the opinion of our in-house MF Research team about the fund. We also take into Page 32 . company and sector concentration of the fund along with few qualitative parameters as well. statistical ratios. The ratings are based purely on the basis of past performance.Mutual Fund Rating Radar Check Whether You Are Invested Into The Right Fund Are you rattled with the most buzzing question amongst mutual funds? To Buy or to Sell “Fund A”.
The five divisions account for top 10%. 3-Star. and fund’s adherence to mandate in the last 5 years. next 25%. 4Star. middle 30%. SWOT OF THE COMPANY STRENGTH: • Top performing funds that have 5 star ratings from “ICRA” Funds in all the categories from open ended equity.consideration factors like the costs/expense ratios of funds. 2-Star and 1-star respectively. The funds are ranked on the said parameters and are divided in 5 divisions. Funds which have not completed a year as on 31-December-2009 have not been rated. corpus size. Sectoral funds. The research process does not have any bias towards any fund house / mutual fund. next 25% and bottom 10% of funds which are ranked 5-Star. Debt funds & ELSS funds Choice of choosing any SIP date to the customer • • WEAKNESS: • Products not advertised extensively •Short term returns are not that good OPPORTUNITIES: • Improve the marketing of the products Page 33 .
• MUTUAL FUND SCHEMES COMPARISON Below is a comparison between different mutual fund schemes on the basis of their investment objectives. Equity Funds Types Investment Objectives Aggressive Growth Funds Capital Appreciation Portfolio Investments Invest in less Highly Volatile of Risk Associated researched shares of speculative nature Growth Funds Capital Invest in companies Volatile but less than Page 34 . • Intense Competition and easy availability of substitutes. portfolio of investments and the level of risk associated.• Fixed deposits rates are going down that attracts the investors to invest in Mutual Funds THREAT: • Increasing competition in the industry Global slowdown affected the MF industry badly and the retail investors are not ready to invest in the market though it is growing but not at a expected growth rate.
exposed to a lower risk level as compared to growth funds or specialty funds whose share prices are currently under- Page 35 . equity without on a meet their Well or risk diversified and reduce sector-specific company-specific funds invest mainly in particular sector.Appreciation that are expected to outperform the market in the future Aggressive funds growth Specialty Funds Capital Appreciation They criteria follow stated for Concentrated diversified funds and hence are riskier than investments and their portfolio comprises of only those companies that criteria. Broader indices (like S&P CNX Nifty or BSE Sensex) are less risky than narrow indices (like BSEBANKEX or CNX Bank Index) Value Funds Capital Appreciation Value funds invest in those companies that have fundamentals sound and These funds are comprises the same companies that form the index and is constituted in the same proportion as the index. Equity Funds Index Capital Appreciation Portfolio funds of these of Risk associated is the same as that of the benchmark index. Diversified Equity Funds Capital Appreciation A small portion of investment in liquid money diversified equities concentration market.
Equity or Income Dividend To generate high recurring income and steady capital appreciation Investments made in companies are those which These funds are generally exposed to the lowest risk level as compared equity funds to other Yield Funds issue high dividends (such as Power or Utility companies). risk of Risk Associated Debt funds interest returns considered to be of investment investment opportunity Page 36 . Income / Debt Funds and Money Market Funds Types Investment Objectives Diversified Debt Funds To generate fixed current income Portfolio Investments These funds invest in all securities issued by entities belonging to all sectors of the market High Yield To earn higher Invest issued issuers "below grade" Assured Return Funds To offer assurance of annual returns to investors in period through out the stated lockPredominantly securities debt A low-risk in securities by who those are More volatile and bear diversified funds higher debt default risk than Low default remains volatility.valued.
preference long- term growth held in a relatively equal proportion Growth-andIncome Funds Capital growth and some income current These funds invest in companies appreciation those issuing dividends known having and for high potential for capital Safer compared riskier income funds as to than growth funds and Asset Allocation Funds Capital Growth and income generation These funds invest in financial assets or non-financial (physical) assets Success of these funds depends upon the skills of a fund manager in anticipating market trends GROWTH VS.Fixed Term To generate some expected returns in a short period Usually debt schemes / invest in Low risk fund Plan Series income MoneyMarket Funds Recurring income Invest in short-term (maturing within one year) interest bearing debt instruments Safest fund option. mutual investment interst and capital safety rate risk remains of Risk Associated Types Investment Objectives Portfolio Investments Debt and Balanced Funds To generate regular income. moderate capital appreciation and at the same time minimizing the risk erosion of capital securities. DIVIDEND Page 37 . equity and shares Limited principal moderate risk to and convertible securities.
income generated by the mutual fund scheme on its investments is distributed to the investor. In other words they believe that since the growth NAV is higher than the dividend NAV. The diminution in the dividend option NAV equals the amount of dividend declared. in this case the growth option NAV already reflects the growth in investments (if any) registered by the mutual fund. Under the growth option. the difference in the growth option between the time he bought the mutual fund and redeemed it is effectively his income. mainly because the reality behind the discrepancy between the two options is far from the perception. Broadly. This income/dividend is not assured by the mutual fund and is linked closely to the performance of stock/debt markets. mutual funds have two options . this is certainly not one of them. The Common Perception Investors believe that after the dividend is distributed. The investor can choose to either encash the dividend or re-invest it in the same mutual fund scheme (through the dividend re-investment facility).It’s important to first get an overview of the two options before we venture into explaining why there is a discrepancy between them. Page 38 . The growth option NAV on the other hand remains unchanged (for simplicity’s sake we have ignored the market movement on that particular day). the investor does not receive an income. To know when to select which option. growth NAV and dividend NAV do not appreciate or depreciate in the same proportion. Under the dividend option. read our article on this subject: What happens when dividend is declared? Once a dividend is declared by the mutual fund. If the investor is in need of an income. it has appreciated more than the dividend NAV. they think that they are better off selecting the growth option as opposed to the dividend option. he can redeem (either completely or partially depending on his investment objective) his units. Therefore. the dividend option NAV diminishes to the extent of the dividend declared. While there are several reasons why investors must choose a particular option (growth or dividend).growth and dividend.
"Usually a company growing its dividend has a strong franchise and is capable of growing the cash-flow per share. there is no other factor at play over here." explains Hugh Yarrow. so they give it to investors. Investment funds fall under two broad definitions . this doesn't mean growth funds invest exclusively in high-risk young companies. younger investors may want to go for growth as they have a long investing future in front of them to recoup any losses. co-manager of the Rathbone Income fund. Page 39 . when reinvested. fund managers look for companies that pay out relatively high dividends. A growth fund looks to grow the original sum invested as much as possible. Certainly. forms an important part of a company's total returns over the long term." Whether you chose an income fund or a growth fund as your first investment depends on your circumstances and aims. To provide a stream of income to investors." Burke adds. A growth company. However. "Such companies are slightly more mature and don't need to put cash back into the business. investments in a pension need to be lower risk. on the other hand. will tend to use its cash-flow to invest back into the business." he explains. With their more mature companies. "An income stock generates lots of cash and pays some of it out as dividends.What investors should do As we have impressed no matter what option the investor chooses. dividend and growth NAVs will appreciate/depreciate based on the market movement. An income fund provides investors with earnings from the dividends of the companies into which the fund manager puts money. income funds are often seen as less risky. particularly towards the time the investor is approaching retirement. Those in later life can't afford to take such risks with their money and may be better advised to stick to safer investments. Which option (growth or dividend) to select is dictated entirely by the investor’s investment objective and income/liquidity constraints. Ed Burke runs the Invesco Perpetual UK Growth fund: "I'm looking to have a high quality group of companies that can generate good levels of free cash-flow per share. or sometimes by a set amount. income-producing stocks are included in growth funds because the income.income and growth. Picking a fund Generally speaking. However.
The charges on each type of fund are similar and selecting a good example of each type of fund could spread risk. But. "If you have a bit of money you can chose income and growth options from a whole variety of funds. Fund managers made the most of rising prices in telecoms media and technology companies to achieve some outstanding returns for investors. Today. these are high-return funds." Best of both worlds It is possible to buy an income fund and a growth fund to capitalize on the advantages that come with each type of investing. Page 40 .Peak performance Some growth funds performed way beyond expectations during the dotcom boom at the end of the 1990s. but there is less choice." she says. Equity Funds Equity funds typically invest in stocks of companies. and over the long term income provides about half the total return of the equity market. "Since 2000 there has been a return to the basic principles of investment. Compared to Debt and Hybrid Funds. there are only a handful of these funds: "There's nothing wrong with those funds. growth managers don't expect a repeat of the quick profits made during that time." Debt Funds Debt Funds invest in long-term borrowing of the government or corporate issuers at fixed rates of interest. Some investment houses manage both income and growth funds. He adds: "Income stocks also outperform when the market is weakening because of their defensive qualities. explains Gee. Equity income funds have a steadier track record. points out Yarrow. In other words. But the boom was an anomaly and couldn't defy gravity forever. and dividends are an important part of that. managers who got their fingers burnt in the boom are careful not to invest in companies that promise over the top growth. which provide a little of each style in the same fund. Here's a tip: equities investments give the best results if you enter give your investments 3-5 years to grow. These funds earn their returns from the interest payments that they receive from bonds / gilts and the fluctuations in the market price of their holdings." explains Burke. which is better. giving exposure to a variety of companies. A Debt Fund is suitable for investors with a low risk appetite. because of the risks to investors' money.
There's no limit to the number of shares the fund can issue.Open and closed-end funds are both pools of investor money and they are both managed by professionals to maximize diversification within a set strategy. but by investor demand for the fund. They bet that the spread between the discount and the underlying asset value will close. the more shares there will be. This happens routinely every day and the total assets of the fund grow and shrink as money flows in and out. you're better off sticking to open-end funds Page 41 . A fund like France Growth Fund trades on the New York Stock Exchange just like any other stock. Its share price is determined not by the total value of the assets it holds. not the size of the fund itself. If you don't understand the mechanics of evaluating the discount spread. The difference is in how the fund is structured in terms of ownership. whenever investors put money into the fund or take it out. Like a company. Investing in closed-end funds can be very confusing for the novice investor and we don't recommend it. most sell at a discount to their underlying asset value for a number of reasons. Nor is the value of each individual share affected by the number outstanding. however. for instance. since net asset value (NAV) is determined solely by the change in prices of the stocks or bonds the fund owns. it issues a set number of shares in an initial public offering and they trade on an exchange. Most investors who buy closed-end funds look for those with solid returns that are trading at large discounts. Since these funds are traded on the open market. An open-end fund issues and redeems shares on demand. That means the more investors buy the Vanguard 500 Index fund. A closed-end fund is a different animal.
1 Net Net By MFs as on Jul 2. 2010 Open Ended & Close Ended Funds Open and closed-end funds are both pools of investor money and they are both managed by professionals to maximize diversification within a set strategy. Page 42 .70 1478. for instance. That means the more investors buy the Vanguard 500 Index fund.60 Gross Sale 1900.80 1222.COMPARISON OF DIFFERENT MUTUAL FUNDS By FIIs as on Jul 3. Equity Debt 2302. not the size of the fund itself. 2010 Amount in Rs. Crores Nature Gross Pur.40 401. An open-end fund issues and redeems shares on demand. Equity Debt 755.60 Gross Sale 962. Crores Nature Gross Pur. Nor is the value of each individual share affected by the number outstanding.80 299.1 3881.70 5103. since net asset value (NAV) is determined solely by the change in prices of the stocks or bonds the fund owns.2 Amount in Rs. There's no limit to the number of shares the fund can issue. the more shares there will be.50 -207. This happens routinely every day and the total assets of the fund grow and shrink as money flows in and out. The difference is in how the fund is structured in terms of ownership. whenever investors put money into the fund or take it out.9 1179.
This is not a problem with closed-ended funds as buying and selling Page 43 . it issues a set number of shares in an initial public offering and they trade on an exchange. open-ended fund managers can be forced to sell some asset of their portfolio which they want to hold and this can harm the liquidity and balance of the fund. CEFs are allowed to invest more in illiquid securities than OEFs. but by investor demand for the fund. Most investors who buy closed-end funds look for those with solid returns that are trading at large discounts. and whenever an investor liquidates shares the funds asset decline as money is taken from the pool of assets. Open-Ended funds and closed-ended funds can be regarded as two main collective investment instruments. Whenever an investor buys shares of open-ended funds the funds asset rise as money is added (equal to the price of shares) to the asset pool. 5. for rising money in hand. Since these funds are traded on the open market. Its share price is determined not by the total value of the assets it holds. 3. The expense ratio of open-ended funds is often higher than closed-ended funds. Here are the key differences between open-ended and closed-ended funds. For creating and redeeming shares. 4. If you don't understand the mechanics of evaluating the discount spread. Investing in closed-end funds can be very confusing for the novice investor and we don't recommend it. Like a company. however. But value of closedended funds can deviate from NAV. Because of their low expense ratio. In periods of market panic. They bet that the spread between the discount and the underlying asset value will close. A fund like France Growth Fund trades on the New York Stock Exchange just like any other stock. The value of open-ended funds is equal to their Net Asset Value (NAV). Closed-Ended funds (CEFs) have fixed number of shares and are traded through exchanges just like stocks. As closed ended funds are traded on exchanges. But in closed end funds as buying and selling activities not directly affect funds asset. where as closed-ended funds can invest all (most) of their asset to build a portfolio of stocks or other securities. Open-Ended funds (OEFs) are funds which stay open. Positive deviation is named as premium and negative deviation as discount.A closed-end fund is a different animal. 1. there is no fixed number of shares and are usually not traded on exchanges (eg: mutual funds). 6. open-ended funds are forced to keep some part of their asset as money. 7. especially to its shareholders. most sell at a discount to their underlying asset value for a number of reasons. 2. you're better off sticking to open-end funds. This is because CEFs do not have to deal with regular creation and redemption of shares. they are bound to obey some rules which make them more transparent to investors.
Hence invest wisely. Taking a leaf out of the age-old piggy bank concept. much like depositing a Page 44 . brokers and market makers) and the fund is not directly involved in it. here are the main reasons: SIPs help you in avoiding timing the market It instills discipline towards investments You do not necessarily have to invest a big amount SIP helps you in being a regular investor All said and done remember that the basic purpose of investing is to get money when you need it the most. SIP OR LUMPSUM OR LONG TERM INVESTMENT.activities are between market participants (investors. Drawing from this success. investors have earned an average of 15 per cent annualised per annum if they remained invested for more than 10 years. Some trends never go out of fashion. The product. WHICH ONE IS BETTER Moral of the story is both styles of investments give good returns in equities if held for the long-term. The virtues of rupee cost averaging and compounding has made it a popular plan to invest with. As long as you remain invested in the right fund. a few fund houses have launched daily SIPs in India. fund houses are now re-inventing the systematic investment plans (SIPs). a great success globally so far. SIP or lump sum Investments both do well. The new product plans to collect a small sum from an individual on a daily basis and invest in the market. Probably because they are time tested and proven. Why the sudden importance of SIP and why everybody and her/his aunt is suggesting SIPs? Well. has proved to be a great way to accumulate wealth for retail investors with low risk appetite. Historically.
Page 45 . To help you decode the new product. here’s a pocket guide on daily SIPs and things you must keep in mind before investing in it.penny in a piggy bank.
Research Methodology Title – “Comparative Analysis of Different kinds of mutual funds study of investor’s behavior towards mutual funds” Purpose: The purpose of methodology is to describe the process involved in research work. Surveyed a sample of 100 investors. Page 46 . This includes the overall research design. Limitations of the Study: The sample size is only 100 so the sample may not be truly representative of the Delhi population. data collection method. the field survey and the analysis of data. Research Objective: To gauge the pattern of investment by the investors and their inclination towards the mutual funds investment and also take a deep insight of what all factors are important before doing an investment Research Design: • • Appropriate and structured questionnaire was designed. Sources of Data: • • Primary data Secondary data Method UsedThe method used for the research is Judgmental Non Probability sampling method. Analysis: The important factors and data collected were sequentially analyzed and graphed.
Analysis and Diagramatic Representation Q1 a) b) c) d) What is your age? Age bracket 25-35 35-45 45-55 55 and above Percentage 36 28 24 12 InterpretationMajority of the respondents were in the age group of 25-35 and 35-45. Page 47 . And this is the time period where generally people like to make more investments as they are earning good in this stage.
Q 2 a) b) c) d) What is your income bracket? Percentage Income 15 1. Just 15% of the respondents were in the 1.5-3lakh bracket.5-3 lakh rupees 32 3-5 lakh rupees 29 5-8 lakh rupees 24 8 lakh and above InterpretationOut of the total 65 respondents the income bracket majorly was in the 3-5 lakh rupees bracket. Page 48 .
Page 49 . News programs on TV are also a good source.What is your source of information while investing in mutual funds? a) b) c) d) e) Source Internet Newspaper Financial Advisor Friends Television Percentage 19 12 28 20 21 InterpretationThe study shows that while making the investment in any mutual fund generally the investors prefer taking a professional support ie of a financial advisor or reports and articles on the net.
Page 50 . Are you a regular or a new investor in mutual fund? Type a) REGULAR b) NEW Percentage 46 54 InterpretationThere was a fair mix of the experienced and naïve invetors in the mutual funds industry out of the sample of 100 investors.Q4.
Q5. Which type of fund you prefer the most? Type a) Regular income b) Debt c) Diversified Equity d) Sector funds e) ELSS (tax shield) Percentage 31 19 27 9 14 InterpretationThis simply shows that the people surveyed rely more on constant incomes and in equity instruments rather than debt funds. Page 51 .
Q6. Which Features attract you the most while choosing a specific Mutual Fund? Feature a) Flexibility b) Return c) Managed by professional people d) Risk Diversion e) Less Expenses Preference Percentage 10 26 11 22 31 InterpretationMinimization of the investment cost and getting a good return by diversifying their investment portfolio are the basic factors that an investor keeps in mind before investing any specific mutual fund type. Page 52 .
What type of Mutual Fund Scheme you prefer? Type a) Open Ended Scheme b) Close Ended Scheme Preference Percentage 68 32 Page 53 .Q7.
Q8. What type of return you expect? Return Time Period Monthly Quarterly Semi annual Annual Percentage 16 20 28 38 Page 54 .
Q9. What is your investment horizon? Investment Time Horizon Up to 6 months Up to 1 year Up to 2 years Up to 3 years Up to 5 years 5 years and above Percentage 10 21 26 24 12 7 Page 55 .
What are your near future liabilities? Liability Child marriage Children Education Parent’s medical expenses Debt Others Preference Percentage 16 28 19 26 11 Page 56 .Q10.
Page 57 .Q11) Would you be interested in knowing more about mutual funds than what your current knowledge is? a) yes b) no   InterpretationMajority investors were interested in knowing more about the mutual funds investment techniques and schemes. which is a good sign for the mutual fund industry.
it is not allowed to get the questionnaire filled. Page 58 . Some people were not willing to respond and few of them who responded were in hurry hence the active participation was lacking. • • Another problem which I face was that people were hesitating to give information about their views freely. A larger sample size may increase the time and cost of collecting the primary data with the help of questionnaire.LIMITATIONS OF THE STUDY While surveying I encounter with some problems like- • • • • • A survey should involve a larger sample size otherwise the findings of the survey cannot be generalized. so it means awareness about the industry needs to be generated. Many of the respondents were not willing to fill the questionnaire. so I kept the sample size small. Companies generally don’t entertain students for survey purposes. Many people don’t even know the concept of mutual funds. Due to which I faced difficulties in collecting information’s regarding our questionnaire.
Simplify the forms. make them easy to fill More lucrative incentives for the distributors. Companies should give knowledge to its customer about its computerized operations. They should promote/advertise aggressively. Page 59 . There is lack of awareness among people about mutual funds so there should be more advertising and other promotional campaigns to make them aware. People are more interested in investing in equity funds rather than debt funds because companies are promoting more for equity funds. Companies should equally promote debt funds also as the provide security to customers. Educate the investors that they can invest in the mutual funds directly through fund houses without any entry and exit loads.RECOMMENDATIONS Forms should be readily available with the distributors.
And it has also been observed that in a very short time period Birla Sun Life AMC Ltd has emerged out as a major player in the market. It studies various factors. their performance in during the last three years with the special focus on funds by Birla Sunlife Mutual Funds AMC LTD. different types of the funds offer to the investor. During the study it also appeared that investors give preference to the age factor. Page 60 . The study involved the comparative analysis of the different mutual funds available to the investors. while investing there surplus money and consider analyst recommendation.CONCLUSION This report is a comparison between different kinds of mutual funds traded in India. the history of the mutual fund industry as well as its rise in India. Moreover it discusses the various measures of revival of common investor confidence in the Indian stock market. During the study I came up to a point that majority of the mutual funds investors are investing by the open ended scheme and many are very much willing to gather more information about mutual funds which is a very good indicator for the industry. sectoral fund etc. which affects common investor’s decision for investment in mutual fund and stock market. dividend etc. It also includes the complete profile of the mutual funds industry that consist all the major players in the market. The different funds available to an investor are debt fund. The report includes all the basics about the mutual funds. NAV of funds and performance in past few years. equity fund. The different options to an investor are growth.
com www. S.com www.economywatch.valuesearchonline.mutualfundsindia.BusinessLine and Business Standard newspapers Business Today and Business week. ‘Maheshwari N.com Magazines and Newspapers The Economic Times .wikipedia.com www.godmind.BIBLIOGRAPHY Websites www.com www.in www.’ “Financial Management” ‘Sankaran.com www.C.com www.reliancemf.sbimutualfund.html www.google.html www. Books and Articles ‘Sharma. Sandhir’ “Research Methodology” 3rd edition.co.mutualfundadvisorindia.investopedia.com www. Sankaran’ “Indian Mutual Funds Handbook” Page 61 .’ “Research Methodology” 2nd edition Chapter 7th “Techniques of researching”. Chapter-4th “Data Analysis Methods” ‘Kothari K.bonannzaonline .com/mutual-funds.in www.economywatch.com/mutual-funds/index-fund.
What is your age? a) b) c) d) 25-35 years 35-45 years 45-55 years 55 and above 2.5-3 lakh rupees b) 3-5 lakh rupees c) 5-8 lakh rupees d) 8 lakhs and above 3. What is your income bracket? a) 1. OCCUPATION : ……………………… 1.ANNEXURE QUESTIONNAIRE ON MUTUAL FUNDS NAME : ………………………………………… AGE : ………………………. What is your source of information while investing in mutual funds? a) Internet b) Newspaper c) Financial Advisor d) Friends e) Television Page 62 . ADDRESS : ………………………………………………………………………………………………………………….
Are you a regular or a new investor in mutual fund? a) REGULAR b) NEW 5. What is your investment horizon? Up to 6 Up to 1 Up to 2 Up to 3 Up to 5 5 years months year years years years and above 10.4. Which Features attract you the most while choosing a specific Mutual Fund? a) Flexibility b) Return c) Managed by professional people d) Risk Diversion e) Less Expenses 7. What are your near future liabilities? Child marriage Children Education Page 63 . Which type of fund you prefer the most? a) Regular income [ 31] b) Debt [ 19] c) Diversified Equity [ 27] d) Sector funds [ 9] e) ELSS (tax shield) [14 ] 6 . What type of return you expect? a) Monthly b) Quarterly c) Semi annually d) Annually 9. What type of Mutual Fund Scheme you prefer? a) Open Ended Scheme b) Close Ended Scheme 8.
Parent’s medical expenses Debt Others 11) Would you be interested in knowing more about mutual funds than what your current knowledge is? a) yes b) no Page 64 .