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Industry – Mutual Fund
Area of focus – Factor analysis and competition analysis
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Study of factors affecting sales of ICICI Prudential mutual fund and promotion and competition analysis of its popular schemes
An internship report submitted in partial fulfillment of the programme.
Prepared by: AVIJIT ARORA PGDM 2009-2011 Roll No. 166 BIMTECH
Corporate Guide: Mr. Junaid Ahmad (NCR Head SBI Mutual Fund)
Academic Guide: Prof. Gagan Katiyar (Senior Faculty – Marketing BIMTECH)
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Summer Project Certificate
This is to certify that Mr. AVIJIT ARORA Roll No. 09DM166 a student of PGDM has worked on a summer project titled “Study of factors affecting sales of ICICI Prudential mutual fund and promotion and competition analysis of its popular schemes” at ICICI Prudential Mutual Fund Bhilwara after
Trimester-III in partial fulfillment of the requirement for the Post Graduate Diploma in Management
programme. This is his/her original work to the best of my knowledge.
Date:___________ Signature ________________ ( Prof. Gagan Katiyar ) Name of Faculty BIMTECH SEAL
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Senior Faculty. BIMTECH. I shall be highly obliged if errors (if any) be brought to my attention.DECLARATION I hereby declare that the project report titled “Study of factors affecting sales of ICICI Prudential mutual fund and promotion and competition analysis of its popular schemes” at ICICI Prudential Mutual Fund Bhilwara is my own work and has been carried out under the able guidance of Mr.email@example.com. and Prof. JUNAID AHMAD (NCR HEAD). All care has been taken to keep this report error free and I sincerely regret for any unintended discrepancies that might have crept into this report. Thanking You. GAGAN KATIYAR. Date:____________ (Avijit Arora) Place: Greater Noida E-mail: avijit.in Page | 4 .
Mr. I also wish to convey my deep regards to my project guide. Gagan Katiyar (Faculty at BIMTECH) who gave me permission to take up the project. I am grateful to Mr. It would have been impossible to gain this experience without the help and guidance that I have received from different quarters. 09DM166 (BIRLA INSTITUTE OF MANAGEMENT TECHNOLOGY) Page | 5 . Suresh Chandra Sharma (Branch Head – ICICI Prudential Mutual Fund Bhilwara) for giving me this opportunity to carry out my Summer Internship Project in their office in Bhilwara.ACKNOWLEDGEMENT My Summer Internship Project with ICICI Prudential Mutual Fund has been an enriching experience for me. Avijit Arora PGDM (2009-11) Roll No.
.......................................................................................................................14 Custodian:...........................................27 BETA...........................................................................33 Intermediaries: ..........................................................15 ADVANTAGES OF MUTUAL FUND ............................................................................................................................................................................................................................................................................... 28 Company profile:........................... 6 Executive Summary..........25 SHARPE RATIO............................................................................ 29 ICICI PRUDENTIAL MUTUAL FUND PRODUCTS:..............................................................................................25 Expense Ratio ..............................26 Standard Deviation...... 10 ORGANISATION OF A MUTUAL FUND.............................................................................................................................................................17 Disadvantage of Investing Through Mutual Funds.....................................................................................13 Asset Management Company(AMC):.................................. 24 Turnover Ratio.........................................31 MAIN DEBT SCHEMES:..................................................................... 13 Trustees:..................................................................................................................12 Sponsor:...................15 SEBI – Securities and Exchange Board of India:.........................................................................................................................................................................................................................................................................18 VARIOUS CRITERIA TO EVALUATE THE MUTUAL FUNDS ...............................................................................................................................................................................................................................................................................................................................................................................................18 TYPES OF MUTUAL FUND SCHEMES: ................................................ 34 National Distributors ................................ 27 NAV..................8 Introduction..........................................................................................................................33 Mutual Fund Office: ...31 MAIN EQUITY SCHEMES:.................................................................................................Contents Contents..........34 Page | 6 .......................25 TREYNOR RATIO....................................................................32 BALANCED SCHEMES:...................... 14 Registrars & Transfer Agent(R & T Agent):.....32 CHANNELS OF SELLING MUTUAL FUNDS ...............................................................................................................24 P/E Ratio....................13 Types of AMCs in Indian Context:.....................................................................................................................................
................................................................................36 Learning’s from the internship –.....................................................................................................................52 Analysis............................... 57 Recommendations...............................................................................45 Questionnaire................................................................................................................................................................37 Competition Analysis of Various schemes................................................................. 63 Page | 7 ............................................................................... 35 Individual Financial Advisors ..Banks ................................................................................................................................................................... 62 BIBLIOGRAPHY.....................................................................................................................................................................................................................59 LIMITATIONS........36 The Internet ...................................................................... 51 Factor Analysis through SPSS................43 SBI Magnum MIP v/s Reliance MIP............................. 61 CONCLUSION........................................................................
1. To study and work in all the distribution channels of ICICI Prudential mutual fund.
2. To identify various factors that influences the decision of investors while investing in mutual fund.
3. To compare the popular schemes of ICICI Prudential mutual Fund with the most
popular schemes in the same segment.
Scope of the project The project can prove to be very useful to the company as it can help to identify the most important factors that influence the decision of investor while investing in mutual fund and working on these factors to improve sales and also communicating these factors to the sales force so that they can focus on them while convincing the customers. This project will also help the company to get information about the performance of schemes of its competitors in the same segment.
1. 2. 3.
Study all about mutual fund and various schemes. Sell mutual fund through various channels. Identify various factors that influence the investors’ decision while investing
in mutual fund.
4. 5. 6.
Listing down of all the factors identified. Develop a questionnaire using these factors on Likert Scale. Take a survey through various distribution channels and also among internal
customers of the company.
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Analyze primary data collected through SPSS (factor analysis) Study the distribution channel thoroughly and take feedback from various
intermediaries about various schemes of ICICI Prudential MF and that of its competitors.
Based on feedback and ranking given by various organizations identify best
schemes of ICICI Prudential and its competitors and do a comparative analysis. 10. Make recommendations based on findings.
Sampling Sample size – 60 Since the questionnaire is long and not easy for anybody to understand so the respondents were mostly who knoe about mutual i.e. investors and internal customers etc.
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Mutual funds: Mutual funds, as the name indicates is the fund where in numerous investors come together to invest in various schemes of mutual fund. Mutual funds are dynamic institution, which plays a crucial role in an economy by mobilizing savings and investing them in the capital market, thus establishing a link between savings and the capital market. A mutual fund is an institution that invests the pooled funds of public to create a diversified portfolio of securities. Pooling is the key to mutual fund investing. Each mutual fund has a specific investment objective and tries to meet that objective through active portfolio management. Mutual fund as an investment company combines or collects money of its shareholders and invests those funds in variety of stocks, bonds, and money market instruments. The latter include securities, commercial papers, certificates of deposits, etc. Mutual funds provide the investor with professional management of funds and diversification of investment. Investors who invest in mutual funds are provided with units to participate in stock markets. These units are investment vehicle that provide a means of participation in the stock market for people who have neither the time, nor the money, nor perhaps the expertise to undertake the direct investment in equities. On the other hand they also provide a route into specialist markets where direct investment often demands both more time and more knowledge than an investor may possess. The price of units in any mutual fund is governed by the value of underlying securities. The value of an investor’s holding in a unit can therefore, like an investment in share, can go down as well as up. Hence it is said that mutual funds are subjected to market risk. Mutual fund cannot guarantee a fixed rate of return. It depends on the market condition. If a particular scheme is performing well then more return can be expected. It also depends on the fund manager expertise knowledge. It is also seen that people invest in particular funds depending on who the fund manager is.
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Thus a mutual fund is the most suitable investment for the common person as it offers an opportunity to invest in a diversified. knowledge. Since small investors generally do not have adequate time. professionally managed basket of securities at a relatively low cost. These could range from shares to debentures to money market instruments. experience & Page | 11 .The following diagram shows the working of mutual fund This diagram signifies the importance of Mutual Fund. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The income earned through these investments and the capital appreciations realized by the schemes are shared by its unit holders in proportion to the number of units owned by them.
ORGANISATION OF A MUTUAL FUND There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund: Mutual funds have a unique structure not shared with other entities such as companies or firms. Page | 12 . sponsors. transparency. 1996. low transaction cost. custodians. This portfolio diversification ensures risk minimization. they have to rely on an intermediary. which acts as a watchdog. The criticality of such a measure comes in when you factor in the fluctuations that characterize stock markets. The advantage of Mutual Funds to the investors is professionally managed. the fund & the Asset Management Company(AMC) the legal structure also drives the inter-relationships between these constituents. It is important for employees & agents to be aware of the special nature of this structure. trustees. well regulated. This principle has been effective worldwide as more & more investors are going the mutual fund way. transfer agents & of course. By pooling their assets through mutual funds. Mutual funds are governed by SEBI (Mutual Funds) regulations. A collected corpus can be used to procure a diversified portfolio indicating greater returns has also create economies of scale through cost reduction. liquidity.. diversified portfolios & tax benefits. because it determines the rights & responsibilities of the fund’s constituents viz. which undertakes informed investment decisions & provides consequential benefits of professional expertise. investors achieve economies of scale. The interest of the investors is protected by the SEBI.resources for directly accessing the capital market.
trustee. executed by the fund sponsor in favor of the trustees. Asset Management Company(AMC): The role of an Asset management companies is to act as the investment manager of the trust. He must contribute at least 40% of the capital of the AMC. who is also registered with SEBI. He must have at least five year track record of business interest in the financial markets. Trustees: The Mutual Fund may be managed by a Board of trustees of individuals. The mutual fund & the AMC have to be registered with SEBI. where the trustee is the corporate body. He appoints the trustees. The trust deed is required to be stamped as registered under the provision of the Indian registration act & registered with SEBI. custodian. AMC.& appoints the trustees. The trust is created through a document called the trust deed i. as an independent body. These regulations make it mandatory for mutual funds to have a structure of sponsor. the board of trustee company. & appoint the AMC for managing the investment portfolio. Sponsor: The sponsor is the promoter of the mutual fund. While the board of trustees is governed by the provisions of the Indian trust act. The sponsor establishes the Mutual fund & registers the same with SEBI. The trustees are responsible to the investors in the mutual fund. The trustees don’t directly manage the portfolio of securities. & in accordance with SEBI regulations. it would also be required to comply with the provisions of the companies act. Custodian. 1996. They ensure that the fund is managed by AMC as per the defined objectives & in accordance with the trust deed & SEBI regulations. Custodians & the AMC with prior approval of SEBI.The structure of the mutual fund India is governed by the SEBI (Mutual Funds) regulations. a trustee has to be a person of high repute & integrity. compensates Page | 13 . act as protector of the unitholders interest. holds the securities of various schemes of the fund in its custody. or a trust company – a corporate body. 1956. Sponsor must have been profit making in at least three of the above five years. Most of the funds in India are managed by board of trustees.e. For this specialist function. The AMC is the business face of the mutual fund. An AMC takes decisions. They are the ones who manage money of investors. The sponsor is the promoter of the mutual fund. The trustees begin the primary guardians of the unit-holders funds & assets. they appoint an AMC.. as it manages all affairs of the mutual fund.
and bad loans which emanate out of a systematic banking crisis. Its responsibilities include receipt & delivery of securities collecting incomedistributing dividends. the idea of AMCs or ARCs is not to bail out banks. All mutual fund schemes floated by AMC have to be approved by trustees. it is also subject Indian Company Act. balance sheets and generally the health of banking. maintains proper accounting & information for pricing of units. So. Trustees appoint AMC in consultation with the sponsors & according to SEBI regulation. AMCs have been set up in various countries internationally as an answer to the global problem of bad loans. AMCs owned by Indian private sector companies. Trustees review & ensure that net worth of the company is according to stipulated norms. Mutual fund is managed either trust company board of trustees. & provides information on listed schemes. Page | 14 . but to bail out the banking system itself. it takes custody all securities & other assets of mutual fund.investors through dividends. Custodian: Often an independent organization. If trustee is a company. AMCs owned by Indian & foreign sponsors. safekeeping of the unit & segregating assets & settlements between schemes. AMCs owned by foreign institutional investors. AMCs owned by financial institutions. It also exercises due diligence on investments & submits quarterly reports to the trustees. every quarter. Types of AMCs in Indian Context: The following are the various types of AMCs we have in India: AMCs owned by banks. Board of trustees & trust are governed by provisions of Indian trust act. calculates the NAV. Bad loans are essentially of two types: bad loans generated out of the usual banking operations or bad lending. It is in the latter case that banking regulators or governments try to bail out the banking system of a systematic accumulation of bad loans which acts as a drag on their liquidity.
The AMC structures the mutual fund products. manages the funds & services to the investors. markets them & mobilizes fund. send out to investors details regarding their investment in the mutual fund. Page | 15 . the cost involved in the process & the broad rules to enter & to exit from the fund & other areas of operation. A draft offer document is to be prepared at the time of launching the fund. it prespecifies investment objectives of the fund. by recording new investors & removing investors who have withdrawn their funds. it is the authority that has to always be on its toes. Registrars & Transfer Agent(R & T Agent): The Registrars & Transfer Agents(R & T Agents) are responsible for the investor servicing function. It also hires another entity to be the custodian of the assets of the fund & perhaps the third one to handle registry work for the unit holder of the fund. SEBI looks at track records of the sponsor & its financial strength granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according to the investment objective. Typically. More so. as they maintain the records of investors in mutual funds. send out periodical information on the performance of the mutual fund. The AMC is the first functionary to be appointed. incorporate changes in information as communicated by investors. Similar to the Securities Exchange Commission in the US. SEBI – Securities and Exchange Board of India: Securities and Exchange Board of India (SEBI) is a board (autonomous body) created by the Government of India in 1988 and given statutory form in 1992 with the SEBI Act 1992 with its head office at Mumbai. record details provide by the investors on application forms. They process investor applications. the risk associated. & is involved in appointment of all other functionaries. The Securities and Exchange Board of India is perhaps the most important regulatory body. In India as in most countries. process dividend payout to investor. SEBI in our case.Though the trust is the mutual fund. & keep the investor record up-to-date. when the markets are doing well and there are a spate of IPOs (initial public offerings) or FPO’s (follow-on public offerings) like now. these sponsors need approval from a regulator. the AMC is its operational face.
FPO's and rights issues • • • Non-receipt of dividend from listed companies Non-receipt of share certificates after transfer from listed companies Non-receipt of debentures after transfer or non-receipt of interest or principal on redemption and non-receipt of interest on delayed repayment • Non-receipt of rights offer letter Page | 16 . When investors have complaints against listed companies or registered intermediaries. SEBI has listed certain categories of grievances for which investors can file complaints with it. These include: • Non-receipt of refund order or allotment advice in case of investment in IPO's. and if they are not solved directly between the parties concerned.Its main mandate is to protect the interest of investors in the securities markets and to promote the development of and to regulate the securities markets so as to establish a dynamic and efficient securities market. or if the investor is not happy with the response then SEBI acts as the nodal agency for addressing these complaints.
Advant age Portfoli Particulars 1. mutual funds pay lesser transaction costs. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. o Diversif ication Professi Mutual Funds invest in a well-diversified portfolio of securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small). 2. Low 4. An investor may not be able to sell some of the shares held by him very easily and quickly. Transpa rency 8. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes. onal Manage ment Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own. Less Risk Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. Page | 17 . All material facts are disclosed to investors as required by the regulator. These benefits are passed on to the investors. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. 3. These schemes further have different plans/options Funds provide investors with updated information pertaining to the markets and the schemes. Investors also benefit from the convenience and flexibility offered 5. whereas units of a mutual fund are far more liquid. No. Transac tion Costs Liquidit y Due to the economies of scale (benefits of larger volumes). Mutual funds provide investors with various schemes with different investment objectives. of Scheme s 7.ADVANTAGES OF MUTUAL FUND S. Flexibili ty by Mutual Funds. Choice 6.
All funds are registered with SEBI and complete transparency is forced. Safety environment where the interests of the investors are protected by the regulator. they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.Mutual Fund industry is part of a well-regulated investment 9. the Hands of an Investo r No Customi The portfolio of securities in which a fund invests is a decision taken by the fund manager. For this. 2. irrespective of the performance of the fund. 1. zed Portfoli os Difficult y in Selectin Many investors find it difficult to select one option from the plethora of funds/schemes/plans available. Investors have no right to interfere in the decision making process of a fund manager. 3. Disadva ntage Costs Control Not in Particulars Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units). Disadvantage of Investing Through Mutual Funds S. No. which some investors find as a constraint in achieving their financial objectives. ga Suitable Fund Scheme TYPES OF MUTUAL FUND SCHEMES: • By Structure o Open-ended schemes o Close-ended schemes o Interval schemes Page | 18 .
g. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor Page | 19 . 5-7 years.• By Investment Objective o Growth schemes o Income schemes o Balance schemes o Money Market schemes • Other types of schemes o Tax Saving schemes o Special schemes o Index schemes o Sector specific schemes Schemes according to maturity period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The fund is open for subscription only during a specified period at the time of launch of the scheme. These schemes do not have a fixed maturity period. Open-ended Fund / Scheme An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. The key feature of open-end schemes is liquidity. Close-ended Fund / Scheme A close-ended fund or scheme has a stipulated maturity period e. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors.
e. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. income scheme. Such funds are less risky compared to equity schemes. However. Page | 20 . The investors must indicate the option in the application form. Such schemes normally invest a major part of their corpus in equities. opportunities of capital appreciation are also limited in such funds. However. Such schemes may be open-ended or close-ended schemes as described earlier. They are open for sale or redemption during pre-determined intervals at NAV related prices. Such funds have comparatively high risks. and the investors may choose an option depending on their preferences. The mutual funds also allow the investors to change the options at a later date. Interval scheme Interval funds combine the features of open-ended & closed ended schemes. or balanced scheme considering its investment objective. These schemes provide different options to the investors like dividend option. Such schemes may be classified mainly as follows: Growth / Equity Oriented Schemes The aim of growth funds is to provide capital appreciation over the medium to long. Schemes according to Investment Objective: A scheme can also be classified as growth scheme. If the interest rates fall. The NAVs of such funds are affected because of change in interest rates in the country. capital appreciation. Such schemes generally invest in fixed income securities such as bonds. These funds are not affected because of fluctuations in equity markets.i. long term investors may not bother about these fluctuations. Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. corporate debentures. etc. These mutual funds schemes disclose NAV generally on weekly basis. either repurchase facility or through listing on stock exchanges. Government securities and money market instruments. NAVs of such funds are likely to increase in the short run and vice versa.term.
NAVs of such funds are likely to be less volatile compared to pure equity funds. preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills. etc. Equity Linked Savings Schemes (ELSS). NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. government securities. Other Schemes Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act. These are appropriate for investors looking for moderate growth. Gilt Fund These funds invest exclusively in government securities.g. Index Funds Page | 21 . Pension schemes launched by the mutual funds also offer tax benefits. e. Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity. However. commercial paper and inter-bank call money. They generally invest 40-60% in equity and debt instruments.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. certificates of deposit. Government securities have no default risk. Returns on these schemes fluctuate much less compared to other funds. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme. 1961 as the Government offers tax incentives for investment in specified avenues. These funds are also affected because of fluctuations in share prices in the stock markets.
Petroleum stocks. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. e. Pharmaceuticals. etc.g. they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. R e t u r n s Risk Floaters Money Market Funds Gilt Funds Income Funds MIPs Diversified Equity Funds Balanced Funds Page | 22 . Sector specific funds / schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. Software. though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index. They may also seek advice of an expert. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Fast Moving Consumer Goods (FMCG).Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index. The returns in these funds are dependent on the performance of the respective sectors/industries. etc these schemes invest in the securities in the same weight age comprising of an index. While these funds may give higher returns. S&P NSE 50 index (Nifty).
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Page | 24 .VARIOUS CRITERIA TO EVALUATE THE MUTUAL FUNDS The most important and widely used measures of performance are:Basic criterions to evaluate the mutual fund schemes P/E ratio Turnover ratio Expense ratio Standard deviation P/E Ratio A valuation ratio of a company's current share price compared to its per-share earnings. This is because the growth in share price is expected to follow earnings growth. (EPS). Higher PE ratio signifies that investor expectation from these shares is higher. the PE ratio will reflect the price that an investor will pay for this one rupee of the company's profits. However. if EPS is one. to the market in general or against the company's own historical P/E. a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. the P/E ratio doesn't tell us the whole story by itself. In general. Calculated as: EPS is the profit that a company makes on a per share basis. So. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry.
SHARPE RATIO St= Rp --Rf S. as compared to a fund` which is fully invested.Turnover Ratio The turnover ratio is the lower of the total sales or total purchases over the period divided by the average of the net assets. As returns from bond funds tend to be similar. So. In comparison a passively managed fund. will obviously have a higher turnover ratio. he has to keep in mind that the cost of buying and selling will eat into the fund's returns. As the scheme is deploying its assets there will be more transactions. Expense Ratio Expense ratio is the percentage of total assets that are spent to run a mutual fund. which can move rapidly between sectors. Turnover ratio is less relevant for income funds as brokerage costs are much lower. will have a lower turnover rate compared to an active fund as it has to just mirror the index. and hence they will have a lower potential to eat into returns. Understanding turnover ratio helps in gaining insights into a fund's performance. the impact of this turnover is much less. Dynamic equity funds. at least buy orders.D WHERE Page | 25 . Also. redemptions and changes in the index. expenses become an important factor while comparing bond funds. The turnover ratio is more important for equity and balanced funds where the trading cost of equities is substantial. each time a fund manager buys and sells. such as an index fund. it is not meaningful to use turnover ratio for new schemes. even though gilt funds may have equally high turnover as compared to equity funds. The only trading here will be due to investments. greater is the volume of trading carried out by the fund. This ratio indicates how much a fund is trading. Higher the turnover ratio. which are not fully invested. Here risk will not be just of the fund manager making a wrong call on a sector but also that of turnover risk. So. In Short. Turnover ratio is a measure of how a fund's portfolio changes in a year.
The fund that has performed well comapred to other will be ranked first then the others.Beta coeffecient Treynor ratio is based on the concept of characteristic line. The ideal fund’s return rises at a faster rate than the market performance when the market is moving upwards and its rate of return declines slowly than the market return. TREYNOR RATIO Ty= Rp—Rf B WHERE Rp. in the decline. Sharpe ratio can be used to rank the desirability of funds or portfolios. Higher the value of sharpe ratio better the fund has performed. The standard deviation of the portfolio indicates the risk. Page | 26 . The fund’s performance is measured in relation to market performance. The risk premium is the difference between the portfolio’s average rate of return and the risk less rate of return. B.Risk less rate of interest.D.Average return to portfolio Rf. Characteristic line gives the relation between a given market return and fund’s return.Standard Deviation Sharpe’s performce index gives a single value to be used for the performance ranking of various funds or portfolios. Treynor’s risk premium of the portfolio is the difference between the aveage return and the risk less rate of return. Sharpe index measures the risk premium of the portfolio relative to the total amount of risk in the portfolio.Rp – Avereage return to portfolio Rf—Risk free rate of interest S. The risk premium depends on the systematic risk assumed in a portfoilo.
0 One percent change in the market index return causes 2 percent change in the stock return.(∑X) (∑Y/ N(X*X) * (∑x) . the deviation will not matter much. The stock return is more volatile.5 One percent changes in the market index return causes 0. 2) Beta= + 0.5 percent change in the stock return. If the first fund is a much higher performer than the second one. It tells us how closely an average represents the underlying numbers. BETA Beta describes the relationship between the stock’s return and index returns. For debt and gilt funds it is based on average weekly return over the past one and a half years. but it does not necessarily mean that such a fund is worse than one with a low Standard Deviation. It gives you a 'quality rating' of an average. The stocks with more than 1 beta value are considered to be very risky. A high Standard Deviation may be a measure of volatility.0 It indicates that one percent change in market index return causes exactly one percent change in the stock return. It indicates that stock moves along with the market. 3) Beta=2. Beta= Where Page | 27 N*∑XY. A measure of the total volatility of a fund is based on the trailing three-year monthly returns. 1) Beta =+1. It indicates that it is less volatile compared to market. There can be direct or indirect relation between stock’s return and index return. Indirect relations are very rare. 4) Negative beta value indicates that the stocks return move in opposite direction to the market return.Standard Deviation Standard Deviation is the most common statistical measure of judging a fund's volatility and risk. The Standard Deviation of an average is the amount by which the numbers that go into an average deviate from that average.
N.Total of return to Nav NAV Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fund. of Units Outstanding as at the NAV date Page | 28 .Total of market index value Y. in net asset terms.No of observation X. NAV = Net Assets of the scheme / Number of Units Outstanding Where Net Assets are calculated as:(Market value of investments + current assets and other assets + Accrued income – current liabilities and other liabilities – less accrued expenses) / No.
810 ATMs in India. and has a presence in 19 countries.34 billion (US$ 91 billion) at March 31. Qatar and Dubai International Finance Center and representative offices in United Arab Emirates. China.538 branches and about 6. & Prudential Plc. The Bank has a network of 2. one of the United Kingdom’s largest players in the financial services sectors. Bangladesh. 2011 and profit after tax Rs. including India. We service this investor base with our own branch network of around 168 branches and a distribution reach of over 42. As an Asset Management Company.Company profile: ICICI Prudential Asset Management Company Ltd. the company has forged a position of preeminence as one of the largest Asset Management Company’s in the country. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking. The company manages significant Mutual Fund Assets under Management (AUM).155 million) for the year ended March 31. Page | 29 . Malaysia and Indonesia. Hong Kong. in addition to our Portfolio Management Services (PMS) and International Advisory Mandates for clients across international markets in asset classes like Debt. Bahrain.000 channel partners. Singapore. India’s second largest commercial bank & a well-known and trusted name in the financial services in India. In a span of over 18 years since inception and just over 13 years of the Joint Venture. is a joint venture between ICICI Bank. life and non-life insurance. 2011. branches in United States. Our UK subsidiary has established branches in Belgium and Germany. 51. contributing significantly towards the growth of the Indian mutual fund industry.51 billion (US$ 1. 4. Sri Lanka. we have over 18 years of experience and are currently managing a comprehensive range of schemes of more than 46 Mutual fund schemes and a wide range of PMS Products for our investors spread across the country. Sponsors ICICI Bank ICICI Bank is India's second-largest bank with total assets of Rs. Russia and Canada. Equity and Real Estate with primary focus on risk adjusted returns. venture capital and asset management. South Africa. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). The Bank currently has subsidiaries in the United Kingdom. Thailand.062.
8 million customers. Singapore. Malaysia. PCA provides a comprehensive range of savings. protection and investment products that are specifically designed to meet the needs of customers in each of its local markets. Indonesia. 2009). It is also one of the top five providers of variable and fixed index annuities in the US. a strong investment track record.M&G has been investing money for individual and institutional clients for nearly 80 years. pensions and investment products where it can maximize the advantage it has in offering with-profits and other multi-asset investment funds. Philippines. PCA’s asset management business in Asia has retail operations in 10 markets and it independently manages assets on behalf of a wide range of retail and institutional investors across the region. They serve approximately. India. Today it is among the largest investors in the UK stock market.It has a number of major competitive advantages including significant longevity experience. providing retirement savings and income solutions to more than 2. 25 million customers and have £290 billion in assets under management. multi-asset investment capabilities.4 billion (as at 31 December 2009). PUE continues to focus on its core strengths including its annuities. a highly respected brand and financial strength. They are among the leading capitalized insurers in the world with an Insurance Groups Directive (IGD) capital surplus estimated at £3.Prudential Plc (formerly known as Prudential Corporation plc) Prudential plc is an international financial services group with significant operations in Asia. M&G M&G is Prudential’s UK and European fund management business with total assets under management of £174 billion (as at December 31. as well as being a powerhouse in fixed-income investments Page | 30 . and Vietnam. Jackson has a long and successful record of providing effective retirement solutions for their clients. the US and the UK. Prudential UK & Europe (PUE) PUE is a leading life and pension’s provider to approximately 7 million customers in the UK. Jackson National Life Insurance Company Jackson is one of the largest life insurance companies in the US. The Group is structured around four main business units: Prudential Corporation Asia (PCA) PCA is a leading life insurer in Asia with presence in 12 markets and a top three position in seven key locations: Hong Kong. Founded nearly 50 years ago.
are riskier than Diversified Equity Funds. Diversified Equity Funds invest in various stocks across different sectors while Sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence. ♦ ICICI Prudential Focused Bluechip Equity Fund ♦ ICICI Prudential Discovery Fund ♦ ICICI Prudential Dynamic Plan ♦ ICICI Prudential Infrastructure Fund ♦ ICICI Prudential MidCap Fund ♦ ICICI Prudential Top 100 Fund ♦ ICICI Prudential Top 200 Fund ♦ ICICI Prudential Target Returns Fund ♦ ICICI Prudential FMCG Fund ♦ ICICI Prudential Technilogy Fund ♦ ICICI Prudential Index Fund ♦ ICICI Prudential Banking & Financial Services Fund Page | 31 . Equity Funds include diversified Equity Funds. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term.ICICI PRUDENTIAL MUTUAL FUND PRODUCTS: MAIN EQUITY SCHEMES: The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index. Sectoral Funds and Index Funds.
They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets. Hence they are safer than equity funds. but is looking for higher returns than those provided by debt funds. but at the same time provide commensurately lower returns. At the same time the expected returns from debt funds would be lower.MAIN DEBT SCHEMES: Debt Funds invest only in debt instruments such as Corporate Bonds. ♦ ICICI Prudential Child care plan ♦ ICICI Prudential Gilt Fund ♦ ICICI Prudential Income Plan ♦ ICICI Prudential Flexible income plan ♦ ICICI Prudential Liquid fund ♦ ICICI Prudential Short term plan ♦ ICICI Prudential Monthly Income Plan ♦ ICICI Prudential MIP-25 BALANCED SCHEMES: ICICI Prudential Balanced Fund invests in a mix of equity and debt investments. Hence they are less risky than equity funds. ♦ ICICI Prudential Balanced Fund Page | 32 . Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors. Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan.
we’ll study that. Mutual Fund Office: Anyone can walk into a mutual fund’s office. It’s a simple process. the relevant document is the redemption form. Every one attracts in their own way. As to start with we will first study about the intermediaries in brief by describing who they are and how they help a direct investor. Their way of dealing with them is totally different from other. How different companies lure the partners. which sometimes forms part of Page | 33 . our relation with them really is going to play a vital role. There are many industries here. As we rely only on channel partners. The investors need to understand the working of a mutual fund and the increasingly diverse and complex investment options brought to them by a large number of mutual funds. and there are employees of the fund house on hand to guide you through. In this industry we have five different channels through which mutual fund are sold: 1 2 3 4 5 • Mutual Fund Company • National Distributors (NDs) & Intermediaries • Banks • Individual Financial Advisors (IFAs) • Internet Each one has its own customer base. Conceptually and operationally they are different. you will have to fill up an application form and hand over a cheque equivalent to your investment. How they attract we will study. The fund house will give you an acknowledgement of your investment in its scheme(s) and subject to your cheque being cleared. send you an account statement within three to seven days. and buy/sell units of its schemes. The urgency to keep increasing in size has led mutual funds to use marketing hooks to draw investors. Since a fund house market only its schemes and not those of its competitors. If you are buying units. The key channel in bringing the mutual funds to a large number of investors all over the country is the network of INTERMEDIARIES/DISTRIBUTORS. buying directly means knowing which fund house we want to invest in.CHANNELS OF SELLING MUTUAL FUNDS Mutual funds are emerging as an important financial intermediary for the investing public in India. If we are selling units.
But as the industry grows and gains greater investor acceptance. They operate from multiple locations-for example. make sure they have the AMFI (Association of Mutual Fund in India) certification-a SEBI precondition. some of whom are willing to come to our doorstop and sell schemes to you. fill up the scheme’s form and give in a cheque. Agents score over mutual funds on convenience. An agent is supposed to be impartial and not show a preference towards a particular fund house. while a mutual fund offer its schemes. Fund houses pay intermediaries a commission linked to the business they bring in. a big agent has the biggest stock among all mutual fund sellers. While dealing with the intermediaries.your account statement and can be torn off it. as it stands to earn more. go to an agent. this means travelling a fair distance. For us. The very nature of the relationship between an intermediary and fund houses opens up the possibility of bias. as well as other investment products. since September 2003. If fund house X pays a higher commission than fund house Y. Most fund houses have just an office or two in the big cities. Further. for most investors. Intermediaries: Distributors such as agents. this means more choice. intended t ensure that only qualified distributors dispense mutual fund advice. a good agent will understand our need and help you pick a scheme. National Distributors The big agents are one-stop sellers of financial products. since such offices are located in the central business district. Even if we don’t know which scheme we want to invest in. The agent should understand our reasons for investing in a mutual fund and based on that offer us appropriate options. selling virtually all schemes of virtually every fund house. moreover. or can be had from the fund house’s office. AMFI issues photo identity cards to registered intermediaries. choice and quality of service. which makes them the preferred option among investors. How do we know that we are Page | 34 . banks and stockbrokers are present in much greater numbers. It’s worse in smaller centres-only a few fund houses have a scattered presence. The fund house mails the cheque within three days. If we know the scheme we want to invest in. The problem with transacting through fund house is that they have a very thin presence. for selling mutual funds. and let us make a choice. which is proof of their having acquired the certification. Mutual funds are bound to expand beyond cities. an intermediary might push scheme X. national distributors like Bajaj Capital has more outlets than most mutual funds-and are supported by an army of registered agents.
listen to what an intermediary to say but also do the homework. Many of them market not only their own schemes. and use your judgement to make an informed decision. are into marketing the mutual fund schemes. unless you are a big money client and subscribe to its wealth management services. Page | 35 . Till mid 2002. an agent recommended. typically a bank will not give you this option or attention. Hence always know the entry load being charged by a scheme. banks are a notch below agents. as an incentive to invest. In terms of scope of service. This often created an unhealthy situation. Although intermediaries can’t lure you with money now (legally speaking that is). perhaps he is more interested in maximizing his commission than our returns. If the agent is pushing the higher load scheme. Obviously the more they got form the fund house. offer you information on various schemes as asked by you. Banks A number of banks. banks are a good option because of their fantastic reach-banks can be founded in every neighborhood. and suggest investment options. the higher the agent’s commission. barely 10 percent of fresh mutual fund sales were made through banks. Which is why. various estimates put the share of banks in mutual fund sales at between 30 percent and 50 percent. unconditionally.being misguided or not? The entry load charged by a scheme can offer us some clues. What banks will do. their commission-based earnings structure means a distributor could still be a partial to a fund house. This wide reach has enabled banks to emerge as a major distributor. SEBI made it illegal for intermediaries to give money and gifts to investors. especially the private and foreign ones. However. during 2003. determined which scheme. Whatever your profile or investment amount might be. The higher the entry load. In June 2002. where cash incentives. The amount of cash paid depended largely on much they got from a fund house. intermediaries passed on a part of their commission to investors. and not investment-worthiness. an agent will offer you personalized service-he will listen to your investment needs. is help you through the investment formalities like filling up a form and offering basic information. and the agent’s commission tends to flow out of it. But things are changing and banks are also giving personalized service to its retail investors also. The entry load represents the upfront costs an investor pays to invest in a scheme. chances are. to stop such abuse. In 1999. but also those of their rivals as a point of purchase. the more they passed on to investors.
where you make your payment. on the other hand. you can open an online account with it. The Internet At present.The other move that will provide a fillip to online transactions to be supplemented by physical documentation. Online trading portals-. However.com) and Sharekhan (sharekhan. welcome retail investors.Individual Financial Advisors Big brokers combine the attributes of agents (one-stop shop. choose your scheme and investment amount. switch between the schemes and purchase additional units-at the click of a mouse. These are independent professionals trained to advice you on all personal finance matters. with better Net connectivity are also expected to tie up with more banks. 2. Own websites-. All you need is a Net banking account with any of the banks the fund houses have tied up with. though.com among others. The process and requirements are similar to that of for buying through the fund’s site. which will bring more investors into the loop. and is reserved for their clients.com. Once you have done an online transaction with a fund house. You log on to the fund’s site. They all sell financial products. Small brokers.com and indiainfoline. CFPs might charge you for their services.com) too offer a fair number of mutual fund schemes on their Page | 36 .Share trading portals like ICICI Direct (icicidirect. personalized service) and banks (a team of analyst who crack the mutual fund industry). timesofmoney. This service.You can also buy units of several mutual funds through financial portals as myiris. Financial Portals-. Unlike agents. though usually comes at a cost.Most of the mutual fund houses let you buy and sell the units of their schemes through their websites. This figure is bound to increase. and send back. This will enable you to sell your holdings. At present. selling on three platforms: 1. most portals enable only purchase. some fund houses enable buying-and in some instances. A link on the website takes you to the website of the designated bank. as agents currently do. but most of them market schemes of select fund houses only. around 3 percent of mutual fund transactions are done online. 3. Money is transferred from your Net banking account to the mutual fund and units are allotted to you instantaneously. The transaction is also documented in the physical form-the fund houses send you the application form to sign.
After spending some weeks in banks I visited other channels of Distribution.. Through interaction with them I found out that ICICI Prudential had a tough competition with Reliance. Registered user can buy or sell their units on offer. Most of the time was spent selling and promoting mutual fund products through ICICI Bank Branches. Birla SL. Page | 37 . I was asked to focus mainly on two schemes of equity segment of ICICI Prudential mutual fund – ICICI Pruedntial focused bluechip equity fund & ICICI Prudential discovery fund. Yes Bank. ICICI Bank. SBI & UTI. just like a stock-at no extra cost. Learning’s from the internship – I was put into the distribution channel of ICICI Prudential mutual Fund. Both of these funds are five star rated by valueresearch. Services offered by Reliance & UTI were better than other players. I was sent to various IFAs. Some brokerage is charged by NDs and IFAs. I gained a good knowledge of Mutual fund and also a nice experience of selling mutual funds through this internship. Kotak Mahindra Bank.platforms. HDFC. ICICI Prudential Mutual Fund Bhilwara has 40 IFAs and NDs and some of the private banks like Axis bank. HDFC Bank etc also sell mutual funds. I Compared top performing equity schemes in large cap & value segment. Most of the investors I came across had already heard about these funds. National Distributors and Private Banks. Indusind Bank. Promotion of new brokerage plan for SIP and MIP was also done while visiting IFA’s and national Distributors.
22 11/11/2011 HDFC Index Sensex Plus 23.31 (11Nov) 15.76 11/11/2011 26.Equity: Large Cap .28 11/11/2011 ICICI Prudential Top 200 Inst I 24.86 11/11/2011 DSPBR Top 100 Equity Reg 22.53 (11Nov) 12.26 11/11/2011 ICICI Prudential Top 100 Inst I 23.05 11/11/2011 JP Morgan India Equity 22.88 (11Nov) 28.08 (11Nov) 12.67 11/11/2011 Page | 38 .83 (11Nov) 204.62 (11Nov) ICICI Prudential Focused Bluechip Equity Inst I ICICI Prudential Focused Bluechip Equity Retail Franklin India Bluechip 31.88 11/11/2011 30.02 (11Nov) 17.Three Year Return Fund NAV Return (Date) Returns(%) as on 16.33 (11Nov) 94.43 (11Nov) 13.94 (11Nov) 215.TTTOP 15 OPEN ENDED -DIVERSIFIED FUNDS .PERIOD (LAST 5 YEARS) Open Ended .14 11/11/2011 DSPBR Top 100 Equity Inst 23.99 11/11/2011 Reliance Quant Plus Retail 22.
Page | 39 .6%.com From the above table it is clear that magnum contra fund and HDFC Top 200 have been ranked in top 10 for the period of last 5 years with an average return of 26.Source – www.mutualfundsindia.
4405 16.52 29.7935 19.7577 18. From the above table it is seen that none of the SBI schemes have been in top 15 if take last 3 years data.4443 19. 2010 May 14 .Growth Tata Dividend Yield Fund .Growth Birla Sun Life Dividend Yield Plus .86 44. 2010 May 14 . 2010 May 14 . 2010 May 14 .9221 18.2826 21.Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.0182 44.1731 17.Growth Sundaram BNP Paribas SMILE Fund Growth ICICI Prudential Discovery Fund . Other schemes from different company have come up like – ICICI prudential discovery fund – Growth and Reliance regular savings fund growth. 2010 May 14 .64 23.4927 17. 2010 May 14 . 2010 May 14 .Growth HDFC Equity Fund .Growth Reliance Regular Savings Fund .3495 444.Equity Growth ING Dividend Yield Fund . 2010 May 14 .IP.1138 16. 2010 May 14 .9938 18.5311 28.5581 21.3609 17.Growth Date May 14 .Growth UTI Opportunities Fund .23 31. 2010 May 14 .076 Last 3 Years % 23.Growth Canara Robeco Equity Diversified .4259 16.3639 20.Growth Reliance Growth .4317 21.2171 240. 2010 May 14 .755 50.Plan A . 2010 May 14 .PERIOD (LAST 3 YEARS) Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Scheme Name IDFC Premier Equity Fund .59 75.TOP 15 OPEN ENDED -DIVERSIFIED FUNDS . though HDFC top 200 is still there on 10th rank.Growth HDFC Top 200 .26 183.) 28.Growth UTI Dividend Yield Fund . 2010 May 14 .Growth ICICI Prudential Discovery Fund .Growth Tata Equity P/E Fund .73 28. 2010 NAV (Rs. Page | 40 .8633 19. 2010 May 14 .4196 *Note:.
2010 May 14 .0613 20. 2010 May 14 . 2010 May 14 .02 16.Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.9237 12.3848 19.5519 18.7526 21.Emerging Businesses Fund .34 16.Growth SBI Magnum Sector Umbrella .87 Last 6 Months % 21. 2010 May 14 . 2010 May 14 .Growth Fortis Future Leaders Fund .) 19.Growth DSP BlackRock Small and Midcap Fund Growth ICICI Prudential Emerging STAR Fund Growth Reliance Equity Opportunities Fund .IP Growth Canara Robeco Emerging Equities .031 17.8373 8. 2010 May 14 .96 31.Growth ICICI Prudential Emerging STAR Fund .2538 17.Growth UTI Master Value Fund . 2010 May 14 .087 32.37 20.637 18. 2010 May 14 .Growth Religare Mid Cap Fund .Growth Date May 14 .Growth Escorts Growth Plan .Growth ING Dividend Yield Fund .53 21.9689 18.23 44.59 21.72 74.26 13.4531 21. Page | 41 .1808 17. 2010 May 14 .4505 20. 2010 May 14 .1356 16. 2010 NAV (Rs.7877 *Note:.66 35. From the above table it is seen that neither HDFC top 200 nor Magnum contra fund and nor Reliance RSF growth are in top 15 but ICICI prudential Discovery fund growth is on 3rd rank and SBI MSFU emerging business fund has come up on 9th rank which was nowhere earlier.Growth Taurus Ethical Fund . 2010 May 14 .IP.785 46.8198 19.Growth IDFC Small & Midcap Equity Fund . 2010 May 14 .Growth ICICI Prudential Discovery Fund .2115 17.PERIOD (LAST 6 MONTHS) Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Scheme Name ICICI Prudential Discovery Fund .TOP 15 OPEN ENDED -DIVERSIFIED FUNDS . 2010 May 14 . 2010 May 14 .
R.E Fund (G) Sundaram Select Small Cap (G) UTI Dividend Yield Fund (G) UTI Master Value Fund (G) UTI Mid Cap (G) Above is the 5 star rating given to various funds by www.A (G) IDFC Small&Midcap Eqty -G Principal LT Equity 3yr Sr2(G) Reliance Equity Oppor . Reliance RSF equity growth and SBI Magnum emerging Business fund Growth have been rated 5 star.com. But at the same time valueresearch has rated Magnum contra fund with 4 stars.A.L.Fund Ratings As on : May 2010 Equity Diversified Birla SL Dividend Yield (G) Birla SL Long Term Adv.RP (G) DSP-BR Small & Mid Cap -RP (G) ICICI Pru Discovery Fund (G) ICICI Pru Emerging S.(G) IDFC Premier Equity .Equity (G) SBI Magnum Emerging Busi (G) Sundaram S.T. ICICI prudential discovery fund growth. Though HDFC top 200 has been rated 4 star and SBI magnum Contra fund has been rated 1 star.M.RP (G) Reliance RSF .I. Page | 42 .moneycontrol.-Sr1(G) Birla SL Pure Value Fund (G) DSP-BR Micro Cap Fund .
1 0 7 .8 -0 9 .9 8 1 1 .5 6 .9 69 8 19 9 6 .7 17 9 8 .8 8 7 -3 8 .6 0 6 9 1 .3 4 6 5 . and contra is Page | 43 .6 6 4 1 .4 7 1 0 2 9 .2 4 .) L rg a e Mid S a m ll No.0 4 5 2 .4 2 1 5 5 .2 6 4 9 .7 4 7 0 5 3 .7 7 1 .9 0 5 13 6 8 .8 11 9 3 .1 4 5 2 4 .4 7 9 2 .0 8 6 .9 6 4 2 .6 2 8 6 . of stoc ks P/e ra tio equity D ebt C sh a equiva a nd lent 2 8 .9 5 .5 8 5 9 .8 5 .6 2 8 .5 5 8 S I MS R nce B FU elia S I MS H FC top B FU D em ing erg C ontra RF S business fund (G equity(G fund (G ) ) ) 2 0(G 0 ) 5 /1 9 9 /2 0 /7 9 9 /6 0 5 1 /9 0 4 1 /9 9 6 7 /2 0 1 /1 9 1 0 3 3 .3 1 .2 5 7 2 .1 4 .2 1 0 22 2 .) E xpense ra tio portfolio turnover ra tio la test 5 -week hig 2 h 5 -week low 2 1m onth 3m onths 6m onths 1yea r 3yea rs 5yea rs S ince inc eption S harpe B eta treynor Ma rket ca (in C p r.6 3 2 3 5 3 .3 9 .4 0 4 5 6 2 .7 7 .8 -0 5 .1 7 7 .5 4 7 2 1 .3 18 9 3 .0 0 8 .9 -1 2 .7 3 2 2 .2 1 3 -4 9 .5 9 2 -0 1 .0 1 1 .8 3 3 .3 3 7 0 6 3 .4 4 4 9 .2 0 9 .8 9 6 3 .9 9 2 3 .4 9 6 1 .2 1 .1 8 0 2 .6 1 .2 8 8 2 .5 29 30 6 6 .1 5 2 -0 .7 8 6 1 9 .9 0 6 0 9 4 .3 3 .5 5 3 3 .1 1 .2 4 6 4 .2 0 9 .9 1 1 9 .9 3 4 .4 8 9 2 .1 0 2 .3 62 4 7 .2 7 8 4 .7 5 .6 FAC S T Inception D te a Fac Va e lue Fund S ize(in C r.5 1 .8 -0 3 .7 3 .9 11 1 5 .0 23 2 4 .) Increa in fund size se sinc 3 st m r 2 1 e 1 a 00 (in C r.6 8 1 1 .4 3 1 -0 3 .0 1 6 4 .5 4 2 .4 0 2 1 .Competition Analysis of Various schemes IC I IC Prudentia l D overy isc fund (G ) 1 /8 0 4 4 /2 0 1 0 91 4 7 .5 7 8 1 0 7 1 .0 1 6 10 6 1 .4 6 6 2 .0 9 4 -0 1 .7 3 3 0 7 .6 7 5 1 0 2 6 .1 5 6 2 .2 1 1 2 .8 2 .4 4 8 2 .9 1 9 2 8 .9 6 .0 1 2 -3 9 .5 3 8 8 4 .3 8 6 2 .8 7 6 2 .0 9 8 .0 3 4 .5 1 6 NA 2 .5 2 7 1 .1 0 8 .4 2 4 1 .8 8 .9 -1 5 .7 5 4 9 .3 7 .5 5 .8 -0 1 .5 NAV returns R isk Portfolio Asset a lloca tion From the above analysis it is observed that ICICI prudential discovery is giving highest returns since inception followed by emerging business fund and HDFC top 200.6 8 .9 4 0 2 .1 8 2 .9 3 6 -0 7 .8 1 .3 3 -0 9 .2 1 .
As it is seen that though SBI schemes are performing very well but still investors go for schemes offered by other companies because of 1) Less brokerage given to IFAs and NDs. 4) Even the returns from Magnum Taxgain scheme which has the highest AUM and is one of the best schemes by SBI was less compared to tax saver schemes of HDFC and Reliance. Eg. 5) Complaints like dividend not received or statement not received were frequent. If we look at Sharpe and Treynor ratio they are highest for HDFC top 200 followed by contra fund giving the proof of better management and better performance.giving lowest returns amongst the following. Page | 44 . – One India Fund. 3) Bad performance of schemes in the past. 2) Other companies provide better services comparatively. Even in portfolio turnover ratio emerging business fund is second highest. Comparing Beta values indicate that emerging business funds moves exactly with the market compared to other funds amongst the following.
1821 2.5229 17.0544 5.244 2. Source – www.Growth Reliance Monthly Income Plan Growth LIC MF Floater .8201 20.Growth Canara Robeco Monthly Income Plan Growth HDFC Multiple Yield Fund .Plan 2005 Growth HDFC Multiple Yield Fund .3351 2.Growth NAV (Rs.Plan 2005 Growth Tata MIP Plus .Long Term Plan .8466 21.) 15.4639 15.) 15.4206 15.3964 19.com From the above ranking it is concluded that SBI magnum MIP has gained good popularity and performed really well in the last three months.3489 18.mutualfundsindia.PERIOD (LAST 3 MONTHS) Rank 1 2 3 4 5 6 7 8 9 10 Scheme Name HDFC Multiple Yield Fund .Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.4546 Last 3 Months % 3.Monthly Income Plan Growth SBI Magnum Monthly Income Plan Growth ICICI Prudential Income Multiplier Fund Cumulative NAV (Rs.8201 Last 6 Months % 6.SBI Magnum MIP v/s Reliance MIP TOP 10 -MIP FUNDS .Growth DWS Twin Advantage Fund .5841 2.4639 16.51 28 16.Growth HDFC Monthly Income Plan .1397 *Note:.8633 3.3007 Page | 45 . TOP 15 MIP FUNDS – Period last 6 months Rank 1 2 Scheme Name HDFC Multiple Yield Fund .9753 2.1437 3.1277 2.7523 2.
3489 4.4578 3.Growth LIC MF Floater .) Last 12 Months % 17.3208 3.8059 *Note:.Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.4546 34.3 4 5 6 7 8 9 10 11 12 13 14 15 Canara Robeco Monthly Income Plan Growth HDFC Monthly Income Plan .51 15.0839 3.3998 19.Long Term 15.5834 12.3964 18. Even in last six months SBI Magnum MIP is in top 15 Source – www.Monthly Income Plan Growth UTI Monthly Income Scheme .Growth Reliance Monthly Income Plan Growth Baroda Pioneer Monthly Income Fund Growth HDFC Monthly Income Plan .5229 12.4407 18.1229 3.Growth SBI Magnum Monthly Income Plan Floater .Growth DWS Twin Advantage Fund .8466 17.com TOP 10 MIP FUNDS LAST – 12 months Rank Scheme Name NAV (Rs.1263 3.5978 16.51 14.Growth SBI Magnum Monthly Income Plan Growth 28 21.Short Term Plan .4024 3.5947 4.9584 2.755 3.Growth Tata MIP Plus .Plan 2005 Growth HDFC Monthly Income Plan .0498 2.Long Term Plan .4639 2 21.8858 20.4206 15.Growth ICICI Prudential Income Multiplier Fund Cumulative Birla Sun Life Monthly Income .1929 4.mutualfundsindia.4699 3.382 1 HDFC Multiple Yield Fund .75 Page | 46 .
Short Term Plan . Source – www.8807 5 6 7 18.5229 18.Growth Birla Sun Life MIP .com Page | 47 .2357 12.Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.7699 12.6535 9.681 Last 3 Years % 14.51 28 16.Growth HDFC Monthly Income Plan .Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.4164 9.7701 8 9 10 16.Growth DSP BlackRock Savings Manager Fund Aggressive .2534 9.0205 *Note:.4544 18.Savings 5 Growth NAV (Rs.5229 14.Growth Canara Robeco Monthly Income Plan .mutualfundsindia.) 20.5834 18.Wealth 25 .8201 20.0375 *Note:.2988 9.8725 10. Top 5 MIP funds in Last 3 years Rank 1 2 3 4 5 Scheme Name Reliance Monthly Income Plan Growth L&T Monthly Income Plan .8877 21.Growth Birla Sun Life Monthly Income .Growth Reliance Monthly Income Plan Growth HSBC MIP .Growth UTI Monthly Income Scheme .4407 10.Growth HDFC Monthly Income Plan .Plan .Growth 16.Savings Plan .Growth 3 4 HDFC Multiple Yield Fund .8858 16.Growth Birla Sun Life MIP .1468 13.Long Term Plan .1536 12.9589 34.0961 12.
15 0.55 17.39 4.65 25 33.73 portfolio turnover ratio Latest 52-week high 52-week low 1 month 3 months 6 months 1 year 3 years 5 years Since inception Sharpe Beta Treynor Market cap (in Cr.73 -0.52 20.) 9/4/2001 10 235.14 13. of stocks P/e ratio Equity Debt Cash and equivalent NA 19.34 3.56 6.35 19.21 1.56 333.01 2.74 NAV returns Risk Portfolio Asset allocation Page | 48 .44 Increase in fund size since 30th april 2010 (in Cr.19 Expense ratio 1.18 2.com.88 75.69 4.57 357 20.23 2.81 8.) 21.140.16 70 22.56 10. SBI Magnum MIP has been rated 3 star and Reliance MIP has been rated 5 star by moneycontrol. Comparison of the above two schemes SBI Magnum MIP (G) FACTS Inception Date Face Value Fund Size(in Cr.98 18.06 Reliance MIP (G) 13/1/20 04 10 4771.28 54.33 0.83 0.78 -0.36 4.69 0.17 2. 31 13.45 34.88 14.82 46.From the above data it is clear that Reliance MIP (G) has been performing consistently well from last three years.32 1.43 -0.77 13.36 11.4 13.72 5.800.39 17.19 14.) Large Mid Small No.9 7.13 0.
Since sales of SBI MIP is low so the fund size is very small comparatively and it is also increasing at a very low rate.Sharpe and Treynor ratio of Reliance MIP is greater than that of SBI MIP giving a proof of better management and better performance. of stocks invested in is also very low. Though last three months returns have been almost similar but if we look at long run returns from Reliance MIP are far greater than SBI MIP. After continuous interaction with investors. Page | 49 . I used these factors in form of a questionnaire on likert scale to identify the major factors. No. IFA’s and ND’s I identified following factors which might affect customer’s decision while investing in mutual funds.
Page | 50 .
.) 12 Investo r investing in mutua l fund fo r the first time 13 P ro mo tio n o f the b rand 14 C o nvincing ab ility o f the sales p erso n 15K no w led ge o f share mark et and sto c k s 16Inve sto r has mad e so me investments in share mark et 17Inve sto r has o ther mo d es o f savings (eg.. S TP . S IP . o f times D ivid end d eclared fo r a p articular sc heme 10 O p tio ns availab le in the scheme (eg.gro w th. p riva te. Lo ck in p erio d ) 11Typ e o f o rganizatio n (P S U . o f d ep end e nts in the family 19 A vailab ility o f the mutual fund 20Inve sto r having a cco unt in a p articular b ank 21Tax saving 22F o r ho w lo ng d o es he /she w ant to invest 23C urre nt mark et situa tio n 24N A V o f the scheme 25Inve sto r's aw a reness o f the financial p ro d ucts 26Typ e o f jo b o f the investo r (p ub lic/go vt. M IP ) 8 D a te o f incep tio n o f the scheme 9 N o .F D s. . D ivid e nd . b usiness) 27 Investo r is living in ho meto w n o r aw ay 28 R eco mmend atio n o f family memb er o r friend 29F o r the time p erio d he/she has b ee n w o rk ing 30F und manager o f the scheme 31Time p erio d fo r w hich the o rganizatio n has b e en in b usiness 32S aving s o f the inve s tor 33P as t perfo rm a n c e of th e s c h e m e Page | 51 . disagree Agree 1 R isk 2 R eturn 3 Inco me o f the investo r 4 A ge o f the investo r 5 B rand N ame 6 P o p ularity o f the scheme 7 P lans availab le fo r the sche me (eg.Questionnaire Factors Affecting Customers’ Decision while investing in mutual Fund S. Life insurance) 18N o . Question Strongly Disagree Neutral Agree Strongly No. P rivate etc.
Factor Analysis through SPSS Page | 52 .
878 2.853 1.471 5.356 6.173E-16 2.008 .430 81.094 7.827 Cumulative % 38.416 73.847 99.923 9.383 3.202 1.950 .063 .882 1.615 5.671 1.135 86.000 100.012E-17 % of Variance 38.428 2.255 50.266 .327 76.136 1.049 .717 99.263 .671 1.169 95.471 5.882 10.286 .353 1.977 12.827 2.000 100.012 .648 .339E-17 -9.304 1.157 .181 97.094 7.220 .329 62.266 1.429 70.430 81.165 .229 Cumulative % 14.331 2.913 .927 99.920 .052 .544 .356 6.028 81.879 10.446 .257 Page | 53 .411 99.848 98.257 84.265E-15 7.392 98.130 .800 68.731E-16 Cumulative % 38.043 .315E-16 -2.373 40.667 .080 .767 2.136 1.000 100.879 48.638E-16 4.416 73.479 77.331 2.751 4.577 .396 12.428 2.951 3.879 48.069 92.275 3.304 .263 Extraction Sums of Squared Loadings % of Variance 38.879 10.500 .192 .615 5.038 .000 100.830 3.026 .748 1.965 99.456 96.257 Total 4.004 4.506 60.830 3.965 1.180 .897 5.800 68.425 .892 99.727 .568 99.064 3.304 1.108 .000 Total 12.853 1.973 56.396 27.104 91.805 .951 3.902 89.024 .702 5.064 3.Total Variance Explained Initial Eigenvalues Comp onent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Total 12.973 56.994E-16 1.149 .011 1.816 94.479 77.328 .220 99.283 4.376 97.725 Rotation Sums of Squared Loadings % of Variance 14.251 9.989 100.329 62.251 3.
therefore I will consider only these three components for my analysis. Page | 54 .In the above table as only first eight components are having their Eigen values more than one so only these components will be taken into consideration. Out of these eight components first three have highest variance and they form 56% of the total variance.
372 .154 .163 .230 .152 .379 -.193 .160 .370 -.058 .FDs.804 .085 .296 .077 -. Private etc.043 .103 .439 4 -.817 .018 .042 .760 . STP.065 -.067 .116 .458 .224 .032 2 . .113 .244 .663 .438 .506 . Lock in period) Type of organization (PSU.557 .173 .012 .087 -.123 .117 .158 .350 -.210 .610 .009 .309 -.454 .161 -.031 .075 .160 .505 -.098 .670 -.122 .) Investor investing in mutual fund for the first time Promotion of the brand Convincing ability of the sales person Knowledge of share market and stocks Investor has made some investments in share market Investor has other modes of savings (eg.814 .288 .038 .125 -.124 .158 .450 -.119 .091 -.775 .138 .759 .172 -.113 .056 -.747 .148 .793 .Rotated Component Matrixa Component 1 Risk Return Income of the investor Age of the investor Brand Name Popularity of the scheme Plans available for the scheme (eg. of times Dividend declared for a particular scheme Options available in the scheme (eg.752 Page | 55 .143 .192 .113 .017 .573 .061 .123 .202 .211 .157 .520 .108 .139 3 .154 -.118 .148 ..585 .116 .166 -.395 .growth.015 .240 .017 .120 .042 -.166 8 -.308 -.057 .022 .357 .230 .250 .451 -.237 .135 . SIP.294 .041 .056 .291 .161 -.179 .039 5 .402 .022 .343 . Life .200 -.304 -.208 -.364 . MIP) Date of inception of the scheme No.077 .045 .614 .085 .078 .013 6 . Dividend.187 .585 .098 -.192 7 .108 .070 -.255 .177 .213 -.
Past performance of the scheme 8. Type of organization (PSU. Private etc. Age of the investor 2. factors which come under first component are – Factors with their values more than . Convincing ability of the salesperson Page | 56 . of dependents in the family 5. Popularity of the scheme 4. Investor having Account in particular Bank 6.5 in first component 1. Tax Savings 6. Brand name 3.Now looking at Rotation component matrix we can see that factors which are most influential i. Investor has other modes of savings 4. No.) 4. Savings of the investor Second most important factors (second component) are – 1. Risk 2. Date of inception of the scheme 5. Return 3. Income of the Investor 3. Recommendation of family member or friend 9. Type of job of the investor 7. Promotion of the Brand 6. Time period for which the organization has been in business Third most important factors (third component) are – 1. Investor investing in mutual fund for the first time 5. Risk 2.e.
Returns – returns from the scheme matters most to the investor so SBI MF should try to increase returns as much as possible.796 201 . many of them keep this on their first priority. 4. Tax saving is also very important for investors. no. Page | 57 .000 Since KMO and Bartlett’s ratio is more than .KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. since SBI itself has a good brand name so it was a plus point for the company. Chi-Square Df Sig.683 431. No. Risk – it matters most to the investor as he/she is investing his/her hard earned money 2. Brand Name – brand name also matters a lot to the investor. of times dividend declared. 3. . Analysis 1. – for investors who want to invest in dividend option.5 so the questionnaire was and well understood by the respondants. Bartlett's Test of Sphericity Approx. 5. of times dividend declared in the past is very important. so SBI MF should try to maximize its dividend declaration.
14. Investor investing for the first time won’t invest a high amount as they are not sure about it. Awareness of the financial product (Mutual Fund) is very important. 13. Savings is a very important factor – higher the savings higher will be the investment as no one wants to keep his/her savings without any growth. Age of the investor is important as young investors are risk takers so they invest more in mutual funds and old age investors are risk averse and they usually invest in FDs 10. Risk is a very important factor as investors always look for schemes with least risk eg. Page | 58 . 16. Type of organization is also very important as investors have a perception that if they are investing in PSU then their money won’t go anywhere. 11.6. Type of job of the investor is also important as businessmen are more risk taking and govt. Date of inception is important as older the scheme more reliable it will be for the investor. 15. 12. employees are risk averse. Investors having account in a particular bank is one of the major factors so SBI MF should try to tap the existing customers of SBI. 8. – Schemes which have been giving consistent returns. Promotion of the brand and popularity of the scheme is important as it also gives a sense of security to the investor. Tax saving is also a major factor as most of the investors invests to save tax. 7. 9. Past performance of the scheme is also very important as it gives a sense of security and confidence while investing if the scheme has performed well.
there is a large customer base of SBI who have no idea about mutual funds. so fund managers should try to increase the returns by changing portfolio. 7. – since IFAs have a great convincing ability so SBI mutual fund should keep s good relationship with them by increasing brokerage and by having regular meetings with them. road shows etc. HNI segment usually ask for latest NAVs while investing so CREs or sales executive should be regularly updated with latest NAVs of all the schemes. and they need to be tapped. Page | 59 . 3. so organization should focus on its operations and provide better service to its customers by sending regular statements and should train its employees to give first preference to customer satisfaction. 6. Returns from scheme offered by SBI are very low compared to its competitors. Young customers having account with SBI should be convinced to invest in MF as they are risk taking. 4. 5.Recommendations 1. Spreading awareness about Mutual fund is required. Convincing ability of the salesperson. This can be done through advertisements. People who come to SBI bank for investment in FDs. Most of the customers of SBI MF are not satisfied with its service. TDS etc should be convinced to invest in mutual funds as they give more returns comparatively. 2.
Page | 60 . Schemes like child benefit plan can be promoted to newly married couples or customers with small children.8. HNI investors usually invest in dividend option so SBI MF should try to increase no. Schemes which have performed well in past should be advertised and promoted as it gives a confidence to investors. 9. 10. of times dividend declared and be at par with the competitors.
This project focuses only on Mutual Funds and not on other financial products.LIMITATIONS 1. internal customers and IFAs. This project has mostly catered to the customers of SBI MF and not of other Mutual Fund companies. 6. Sample size is only sixty. 3. Research is limited to only Gurgaon Region. Project has covered only well educated people with good knowledge of financial products. 4. 2. Since questionnaire can only be understood by investors who invest in mutual find so sample mostly consisted of existing customers. 5. Page | 61 .
so investor doesn’t need to take any tension about his/her money.CONCLUSION Mutual fund is very good for people who have less knowledge of stock market or who don’t have enough time to keep a regular check on the market. SBI MF has a good name in the mutual Fund industry because of the name SBI attached to it. SBI MF also has a strong distribution network with effective employees. – easy process of investment and redemption. Selling MF is a tough task as the product is intangible and the investor doesn’t get anything tangible for the money he pays except an acknowledgement. keeping investors updated with NAVs through email or statements etc. In fact SBI MF Gurgaon has been awarded best investor desk for increasing the market share of SBI MF up to 33% in NCR. Mutual Funds are managed by professionals. Though Mutual Funds are popular but still there is a large number market who have no idea of mutual funds because awareness of mutual fund is less compared to life insurance and FDs. Mutual Fund is a good industry to work with because of its transparency and it also with growing literacy rate in India it has a good future. Eg. since SBI is one of the oldest and biggest banks of India so it has a big hand in spreading awareness of SBI MF. Mutual Fund is a service industry so it is very important for the company to provide good service and make sure it is at par with its competitors. Page | 62 .
mutualfundsindia. www. www.com 7.economictimes.com 9. www.com 4.com 3.amfiindia. www.com 8. www.com 6.htm Page | 63 .sbimf.investopedia. www.com 5. www.moneycontrol. www.wikipedia.allenandunwin. www.valueresearchonline.com/spss.com 2.BIBLIOGRAPHY 1.
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