33951281-birla-project-2
TRANSCRIPT
STUDENT’S DECLARATION
I, the under signed Hussain.A.Namakwala, hereby declare and
confirm that work done by me is original and true to the best of my knowledge
and belief. It is the result of my efforts and dedication. Moreover it has been
approved by the management of BIRLA SUN LIFE MUTUAL FUND
BHARUCH BRANCH and does not contain any material objectionable to
them. This project is just a part of my college curriculum and will not be used
elsewhere.
Date: Signature
( )
GUIDE’S CERTIFICATE
This is to certify that Hussain.A.Namakwala the student of MBA has
carried out the project work as per the syllabus of Punjab Technical
University. He prepared this Grand Project Report on “Performance
Measurement” at Birla Sun Life Mutual Fund Bharuch Branch under my
guidance and his contribution in making this report during the academic year
2010 -2011 is highly appreciated.
To the best of my knowledge the details presented by him are original in
nature and have not been copied from any other source. Also this report has
not been submitted earlier for the award of any degree or Diploma in Punjab
University or any other University.
Date: Signature
Place: Bharuch ( )
]
Acknowledgement
“Meeting together is the beginning, Keeping together is progress,
Thinking together is unity, & Working together is fulfillment.”
At the outset, I would like to mention that my project is the result of valuable
support & Co-operation I have received from college & company right from
beginning to its completion.
My heartiest thanks to our director general Dr.George Judah , our Coordinator
Ms. Sunetra Gaitonde my project guide Prof.Maneesha Dhavraay & all
faculties of MBA for guiding & giving me such opportunity.
It has been an honour and great opportunity for me to associate myself with Birla
Sun Life Mutual Fund at Bharuch Branch for my Grand Project.
I am very much thankful to Mr. Maulik Patel (Branch Manager of Birla SunLife
Mutual Fund Bharuch Branch) my project guide who guided me a lot and from
whom I learnt about the field of Mutual Fund.
And at last I would like to thankful to each & every person who directly &
indirectly helped me in my training & project.
Hussain
PERFORMANCE MEASUREMENT & ANALYSIS OF MUTUAL FUND COMPANIES (EQUITY SCHEMES)
Mutual Funds: An overview
Emergence of Mutual Funds
Mutual Funds now represent perhaps the most appropriate investment
opportunity for most small investors. As financial markets become more
sophisticated and complex, investors need a financial intermediary who provides
the required knowledge and professional expertise on successful investing. It is
no wonder then that in the birthplace of mutual funds- the U.S.A – the fund
industry has already overtaken the banking industry, with more money under
mutual fund management than deposited with banks.
The Indian mutual fund industry has already opened up many exciting investment
opportunities to Indian investors. We have started witnessing the phenomenon of
more savings now being entrusted to the funds. Despite the expected continuing
growth in the industry, mutual fund is still a new financial intermediary in India.
Introduction
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the
scheme. These could range from shares to debentures to money market
instruments. The income earned through these investments and the capital
appreciations realized by the scheme are shared by its unit holders in proportion
to the number of units owned by them (pro rata). Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed portfolio at a relatively low cost. Anybody
with an investible surplus of as little as a few thousand rupees can invest in
Mutual Funds. Each Mutual Fund scheme has a defined investment objective
and strategy.
A mutual fund is the ideal investment vehicle for today’s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the
knowledge, skills, inclination and time to keep track of events, understand their
implications and act speedily. An individual also finds it difficult to keep track of
ownership of his assets, investments, brokerage dues and bank transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a full
time basis. The large pool of money collected in the fund allows it to hire such
staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits
economies of scale in all three areas - research, investments and transaction
processing. While the concept of individuals coming together to invest money
collectively is not new, the mutual fund in its present form is a 20th century
phenomenon. In fact, mutual funds gained popularity only after the Second World
War. Globally, there are thousands of firms offering tens of thousands of mutual
funds with different investment objectives. Today, mutual funds collectively
manage almost as much as or more money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund.
Typically, it pre specifies the investment objectives of the fund, the risk
associated, the costs involved in the process and the broad rules for entry into
and exit from the fund and other areas of operation.
There are different entities involved in the Mutual Fund, like Sponsor, Asset
Management Company, Trustee, Custodian, Registrar, Bankers, Transfer Agent
Unit Holder & SEBI.
Mutual Fund simply pool the saving from investors, invest them in different
securities, Generate good return and finally pass it in the hands of investors. So
there is one chain, which we can see below.
Structure of Mutual Funds in India.
Like other countries, India has a legal framework within which Mutual Funds must
be constituted. India has unique structure – as Unit Trusts, all the funds open end
or closed end, are governed by the same regulation and the regulatory body, the
SEBI. The structure that is required to be followed by mutual funds in India is laid
down under SEBI (Mutual Fund) Regulations, 1996.
Organisation of Mutual Fund
Unit-Holder
Unit holder are the beneficiaries, who invest their money in the different schemes
of Mutual Fund, as per their own investment objectives. Mutual Fund in India are
open for investment by;
a) Residents including
Resident Indian individuals, including high net worth individuals
and the retail or small investors
Indian Companies
Indian Trust/ Charitable Institutions
Banks
Non-Banking Finance Companies.
Insurance Companies
Provident Funds
b) Non-Residents, including
Non-Resident Indians
Other Corporate Bodies
c) Foreign Entities Namely Foreign institutional Investors (FIIs) registered
with SEBI.
Sponsor
Sponsor is defined under SEBI regulations, as any person who, acting alone or in
combination with another body corporate, establishes a mutual fund. The
sponsor of a fund is akin a promoter of a company as he gets the fund registered
with SEBI. The sponsor will form a Trust and appoint a Board of Trustees. The
sponsor genrally appoint Asset Management Company as fund manages. The
sponsor, either directly or acting through the Trustees, will also appoint a
Custodian to hold the fund assets. All these appointments are made in
accordance with SEBI Regulations.
As per the existing SEBI regulations, for a person to qualify as a sponsor, he
must contribute at least 40% of the net worth of the AMC and possess a sound
financial track record over five years prior to registration.
Mutual Funds as Trusts
A mutual fund in India is constituted in the form of a Public Trust created under
the Indian Trusts Act, 1882.the fund sponsor acts as the settler of the Trust,
contributing to its initial capital, and appoints a Trustee to hold the assets of the
trust for the benefit of the unit-holders, who are the beneficiaries of the Trust. The
fund then invites investors to contribute their money in the common pool, by
subscribing to “units” issued by various schemes established by the trust, units
being the evidence of their beneficial interest in the fund.
The Trust – the mutual fund – may be managed by a Board of Trustees- a body
of individuals or a Trust Company- a corporate body. Most of the funds in India
are managed by Board of Trustees. While the Board of Trustees are governed by
the provision of Indian Trust Act, where the trustee is the corporate body, it would
also required to comply with the provisions of companies Act 1956. The Board or
the Trustee company, as an independent body act as protector of the unit-
holders’ interest. The Trustees do not directly manage the portfolio of securities.
For this specialist function, they appoint an Asset management Company. They
ensure that the fund is managed by the AMC as per the defined objectives and in
accordance with the Trust Deed and SEBI Regulations.
The trust is created through the document called Trust Deed that is executed by
the fund sponsor in the favour of the Trustees. The Trust deed is required to be
stamped as registered under the provisions of the Indian Registration Act and
registered with SEBI.
The Trustees being the primary guardians of unit-holders’ funds & assets, a
Trustee has to be a person of high repute & integrity. Trustees must ensure that
thee investors’ interests are safeguarded and that the AMC’s operations are
along professional lines. SEBI mandates a minimum of 2/3 independent directors
on the Board of the Trustee company.
The Asset Management Company
The role of an AMC is to act as the Investment Manager of the Trust. The
sponsors, or the trustees, if so authorized by the Trust Deed, appoint the AMC.
The AMC so appointed is required to be approved by SEBI. Once approved, the
AMC functions under the supervision of its own Board of Directors and also
undes the direction of the Trustees & SEBI.
The AMC would, in the name of the Trust, float & then manage the different
investment “schemes” as per SEBI Regulations and as per the Investment
Management Agreement it signs with the Trustees. The AMC of a mutual fund
must have a net worth of at least Rs. 10 Crores at all times. Directors of the
AMC, both independent & non-independent, should have adequate professional
experience in financial service and should be individuals of high moral standing,
a condition also applicable to other key personnel of the AMC. The AMC con not
act as a trustee of any other Mutual Fund. Besides its role as the fund manager,
it may undertake specified activities such as advisory services and financial
consulting, provided these activities are run independently of one another and
the AMC’s resources (such as personnel, systems, etc.)are properly segregated
by activity. The AMC must always act in the interest of the unit-holders and report
to the trustees with respect to its activities. To ensure the independence of the
asset management company, SEBI mandates that a minimum of 50% of the
directors of the board of the asset management company should be independent
directors.
Custodian and Depositories
Mutual funds are in the business of buying and selling of securities in large
volumes. Handling these securities in terms of physical delivery and eventual
safekeeping is therefore a specialized activity. The custodian is appointed by the
Board of Trustees for safekeeping of physical securities or participating in any
clearing system through approved depository companies on behalf of the mutual
fund in case of dematerialized securities. A custodian must fulfill its
responsibilities in accordance with its agreement with the mutual fund. The
custodian should be an entity independent of the sponsors and is required to be
registered with SEBI. (Please refer to Chapter IV of SEBI (MF) Regulations,
1996).
Note that the Indian capital markets have moved away from having physical
certificates for securities, to ownership of these securities in “dematerialized”
from with a depository. Thus, a mutual fund’s dematerialized securities holdings
are held by a custodian. Thus, deliveries of a fund’s securities are given or
received by a custodian or a depository participant, at the instruction of the AMC,
although under the overall direction and responsibility of the Trustees.
Bankers
A fund’s activities involve dealing with money on a continuous basis primarily
with respect to buying and selling units, paying for investments made, receiving
the proceeds on sale of investments and discharging its obligations towards
operating expenses. A fund’s bankers, therefore, play a crucial role with respect
to its financial dealings by holding its bank accounts and providing it with
remittance services.
Registrars and Transfer Agents
Registrars and Transfer Agents are responsible for issuing and redeeming units
of the mutual fund and providing other related services such as preparation of
transfer documents and updating investor records. A fund may choose to carry
out this activity in –house and charge the scheme for the service at a competitive
market rate. Where an outside Transfer Agent is used, the fund investor will find
the transfer agent to be an important interface to deal with, since all of the
investor services that a fund provides (besides the investment management) are
going to be dependent on the transfer agent. Such services include
buying/repurchase of units, switching from one scheme to another, systematic
investment/withdrawals, recording of nomination & bank details.
Distributors
Mutual funds operate as collective investment vehicles, on the principle of
accumulating funds from a large number of investors and then investing on a big
scale. For a fund to sell units across a wide retail base of individual investors, an
established network of distribution is essential.
SEBI
The Government of India constituted Security Exchange Board of India (SEBI),
by Act of Parliament in 1992, as the apex regulator of all entities that either raise
funds in the capital markets or invest in capital market securities such as shares
& debentures listed on Stock Exchanges. Mutual Funds have emerged as an
important Institutional Investor in capital market securities. Hence they come
under the purview of SEBI.
SEBI requires all mutual funds to be registered with them. It issues guidelines for
all mutual fund operations including where they can invest, what investment limits
& restrictions must be complied with, how they should account for income &
expenses, how they should make disclosures of information to the investors and
generally act in the interest of investor protection.
Merits of Mutual Fund investment
Professional Management
Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme.
Diversification
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do
all stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on
your own.
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers
and companies. Mutual Funds save your time and make investing easy and
convenient.
Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage,
custodial and other fees translate into lower costs for investors.
Liquidity
In open-end schemes, the investor gets the money back promptly at net asset
value related prices from the Mutual Fund. In closed-end schemes, the units can
be sold on a stock exchange at the prevailing market price or the investor can
avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.
Transparency
One can get regular information on the value of his investment in addition to
disclosure on the specific investments made by his scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and
outlook.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds
according to your needs and convenience.
Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A
mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy. Mutual Funds offer a family of schemes to suit
your varying needs over a lifetime.
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. The operations
of Mutual Funds are regularly monitored by SEBI.
Demerits of Mutual Fund investment:
Professional Management
Many investors debate over whether or not the so-called professionals are any
better than you or I at picking stocks. Management is by no means infallible, and,
even if the fund loses money, the manager still takes his/her cut.
Dilution
It's possible to have too much diversification. Because funds have small holdings
in so many different companies, high returns from a few investments often don't
make much difference on the overall return. Dilution is also the result of a
successful fund getting too big. When money pours into funds that have had
strong success, the manager often has trouble finding a good investment for all
the new money.
Entry and exit costs
Mutual funds are a victim of their own success. When a large body like a fund
invests in shares, the concentrated buying or selling often results in adverse
price movements ie at the time of buying, the fund ends up paying a higher price
and while selling it realizes a lower price. This problem is especially severe in
emerging markets like India, where, excluding a few stocks, even the stocks in
the Sensex are not liquid, let alone stocks in the NSE 50 or the CRISIL 500. So,
there is simply no way that a fund can beat the Sensex or any other index, if it
blindly invests in the same stocks as those in the Sensex and in the same
proportion. For obvious reasons, this problem is even more severe for funds
investing in small capitalization stocks. However, given the large size of the debt
market, excluding UTI, most debt funds do not face this problem.
Wait time before investment
It takes time for a mutual fund to invest money. Unfortunately, most mutual funds
receive money when markets are in a boom phase and investors are willing to try
out mutual funds. Since it is difficult to invest all funds in one day, there is some
money waiting to be invested. Further, there may be a time lag before investment
opportunities are identified. This ensures that the fund underperforms the index.
For open-ended funds, there is the added problem of perpetually keeping some
money in liquid assets to meet redemptions. The problem of impracticability of
quick investments is likely to be reduced to some extent with the introduction of
index futures.
Fund management costs
The costs of the fund management process are deducted from the fund. This
includes marketing and initial costs deducted at the time of entry itself, called
"load". Then there is the annual asset management fee and expenses, together
called the expense ratio. Usually, the former is not counted while measuring
performance, while the latter is. A standard 2% expense ratio means that,
everything else being equal, the fund manager underperforms the benchmark
index by an equal amount.
Cost of churn
The portfolio of a fund does not remain constant. The extent to which the
portfolio changes is a function of the style of the individual fund manager i.e.
whether he is a buy and hold type of manager or one who aggressively churns
the fund. It is also dependent on the volatility of the fund size i.e. whether the
fund constantly receives fresh subscriptions and redemptions. Such portfolio
changes have associated costs of brokerage, custody fees, registration fees etc.
which lowers the portfolio return commensurately.
Change of index composition
World over, the indices keep changing to reflect changing market conditions.
There is an inherent survivorship bias in this process, with the bad stocks
weeded out and replaced by emerging blue chips. This is a severe problem in
India with the Sensex having been changed twice in the last 5 years, with each
change being quite substantial. Another reason for change index composition is
Mergers & Acquisitions. The weightages of the shares of a particular company in
the index changes if it acquires a large company not a part of the index.
MUTUAL FUND – INDIA VS GLOBAL PERSPECTIVE.
World mutual fund industry was pegged at $26.2 trillion at the end of 2007 with
USA having largest share at $13.5 trillion at the end of December 2008. With
India’s mutual fund size of $108 billion as of end of 2007, we remain a drop in the
ocean in terms of size of global mutual fund industry.
Worldwide Mutual Fund Assets ( In Trillion US Dollar)
16.1516.3717.2817.7719.1119.4120.22
21.82 22.9124.5225.79 26.2
0
5
10
15
20
25
30
2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4
Mutual Fund Assets ( In Trillion US Dollar)
On a global scale, equity funds account for major chunk of total assets under
management unlike India where debt segment dominate the share. At the end of
4th quarter of 2007, 48% of worldwide mutual fund assets were in equity funds.
Total share of bond funds was only 16% and money market products accounted
for only 19% of total pie.
Worldwide MF Assets By Type of Funds-2007 Q4
48%
19%
16%
10%
7%
Equity
Money Market
Bond
Balanced/Mixed
Others
The size of mutual fund industry in Asia stands at $3678 bn at the end of 2007
out of which India accounted for only $108bn translating into miniscule share of
2.93%. so not only in terms of world but also in Asia Pacific region Indian mutual
fund industry is at teenage stage. The second most populous country in the world
after china & third largest economy in Asia accounts for only 2.9% share in
region’s mutual fund industry.
India is a nation of saver. As a nation we save $450 bn (Rs. 22.7 lacs Cr) per
annum & mutual fund industry account for only 7 to 8% of household savings.
Reasons for the low penetration of mutual fund industry.
Concentration of mutual fund business in metro and Tier I cities.
Low level of awareness among investors about mutual fund as an
investment product.
Lower number of distributors. According to AMFI, in India there are less
than 60000 mutual fund distributors compared to over 2 million life
insurance agents. Lower distribution network restricts the reach of mutual
fund industry.
Conceptual misunderstanding about mutual fund investing among
investors. Mutual fund is widely viewed as an investing option to invest in
equity. Investors are not aware about the wide variety of options available
under the mutual fund umbrella.
Higher concentration on corporate/institutional money in race to increase
AUM.
Indian mutual fund industry has grown at rapid pace of 43% year on year for a
period from 2003-2007. this growth has outpaced other nations. The US
witnessed industry growth of 13%, UK 29% and Brazil 44% during the same
period. However Russia and China Outpaced India with AUM growth of 97% and
67% respectively.
Indian mutual fund industry is dominated by institutional investors specially banks
and corporate. Put together they account for more than 55% share of total
industry.
Compared to mutual fund industry worldwide the size of Indian mutual fund
industry is just 0.41%. the size of Indian mutual fund industry is smaller than
countries like Belgium and Italy where population base is much smaller than
India.
Country 2004 2005 2006 2007
USA 8106 8904 10412 12021
Brazil 220 302 418 615
Europe 5640 6002 7803 8983
Belgium 118 115 137 149
France 1370 1362 1769 1989
Germany 295 296 340 372
UK 492 547 755 944
Asia 1677 1939 2456 3678
Australia 635 700 864 1192
Italy 511 450 452 419
Hong Kong 343 460 631 818
India 32 40 58 108
Japan 399 470 578 713
South Africa 54 65 78 95
World 16164 17771 21823 26199
This offer great opportunity for mutual fund distributors in India. Retail segment in
India is expected to witness phenomenal growth in coming years. This segment
is expected to grow at 35% to 40% in next five years. In next five years, mutual
fund industry in India will witness addition of 90 lacs first time retail investors.
Even after growth rate of over 35% in coming five years, we will witness
additional 90 lacs investor only. This still leaves huge untapped investing
community.
The US mutual fund industry has witnessed huge outflow especially from stock
funds (outflow of $20.3 billion), balanced funds (outflow of $2 billion) and bond
funds (outflow of 6.77 bn) during month of December 2008 alone. Despite this
redemptions US fund industry stands at over $9 trillion compared to India’s
industry size of $86 bn.
In India, currently wee have total AUM of Rs. 4.21 lacs Cr. (Around $86 bn as of
Dec 31st 2008 ) against this in USA, total AUM increased by $256.4 bn in month
of December 2008 alone taking total industry AUM to 9.60 trillion in December.
So whatever parameter you take Indian mutual fund industry is at nascent stage.
We have just taken baby steps as far as mutual fund industry is concerned. Thia
offers great opportunity to explore huge untapped investing community.
Mutual Funds Industry in India
Investment in India
India among the European investors is considered to be a good investment
despite the political uncertainty, bureaucracy troubles, shortage of power and
infrastructural inefficiencies. India is a potential market for overseas investment
and is actively welcoming the foreign investors in the market. It will emerge as
one of the top three emerging economies. While calculating the potential and
correct estimation and possibilities, one needs to consider such factors as the
inherent hurdles and uncertainties of functioning in the Indian system. Once you
enter India's marketplace, you will have a well-designed plan that should be
supported by a serious thought and careful research. Those who look at India as
a long-term growth will reap more profits rather than those who will see only
short-term profit making opportunities.
India is the fifth largest economy in the world and it ranks above France, Italy, the
United Kingdom, and Russia. It has the third largest GDP in Asia. It is the second
largest of the emerging nations. India is also one of the few markets in the world
which offer high prospects of growth and earning potential in all sectors of
business. However, despite the numerous advantages on its side, India has
failed to generate the same kind of curiosity and attention that China has
gathered for itself.
Indian Mutual Funds
The origin of the mutual funds industry goes back to the time when mutual fund
was introduced by UTI in the year 1963. though the growth has been relatively
slow, it accelerated since 1987 when there were players outside the UTI, who
entered the industry. In the past decade, Indian mutual find industry had seen a
remarkable improvement both quality wise and quantity wise. Before the end of
the monopoly in market, the Assets Under Management (AUM) was Rs.67 bn.
History of Mutual Fund in India
The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India, at the initiative of the Reserve Bank & Government of India. The
objective then was to attract the small investors and introduce them to market
investments. Since then, the history of mutual fund in India can be broadly
divided in to six distinct phases.
Phase 1 – 1964- 1987: Growth of Unit Trust of India
In 1963, UTI was established by an Act of Parliament. As it was the only entity
offering mutual funds in India, it was monopoly. Operationally, UTI was set up by
the Reserve Bank of India, but was later de-linked from the RBI. The first scheme
and for long one of the largest number of investors in any single investment
scheme. It was also at least partially the first open end scheme in the country.
Later in 1970s and 80s,UTI started innovating and different schemes to suit the
needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was
launched in1971. Six new schemes were introduced between 1981 & 1984.
during 1981-84, new scheme such as Children’s Gift Growth Fund (1986) &
Mastershare (1987) were launched. Mastershare could be termed as the first
diversified equity investment scheme in India. The first Indian offshore fund, India
fund, was launched in August 1986. During 1990s, UTI catered to the demand for
income oriented schemes by launching monthly income Schemes, a somewhat
unusual mutual fund product offering “ assured returns”.
In absolute terms, the investible funds corpus of UTI was about Rs. 600 Crores in
1984. By 1987-88 assets under management of UTI had grown ten times to Rs
6700 cr.
Phase-2 – 1987- 1993: Entry of Public Sector Funds
1987 marked the entry of public sector mutual funds. With the opening of the
economy, many public sector banks financial institutions were allowed to
establish mutual fund. State Bank of India established the first non-UTI mutual.
Fund- SBI mutual fund –in Nov 1987. this was followed by canbank Mutaul fund ,
LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC
Mutual Fund & PNB Mutual Fund. These funds helped in enlarging the investor
community & investible funds. From 1987-88 to 1992-93, the assets under
management increased from Rs. 6700 cr. To Rs. 47004 Cr. nearly seven times.
During this period, investor showed a marked interest in mutual funds, allocating
a larger part of their savings to investment in the funds. UTI was still the largest
segment of the industry, with about 80% market share.
Phase 3 -1993-96: Emergence of Private Funds
A new era in the mutual fund industry began in 1993 with the permission granted
for the entry of private sector funds. This gave the Indian investors a broader
choice of ‘fund families’ and increasing competition to the existing public sector
funds. Quite significantly, foreign fund management companies were also
allowed to operate mutual funds, most of them coming into India through their
joint ventures with Indian promoters. These private funds have brought in with
them the latest product innovations, investment management techniques and
investor-servicing technology that make the Indian mutual fund industry today a
vibrant and growing financial intermediary.
During the year 1993-94, five private sector mutual funds launched their
schemes followed by six others in 1994-95. initially, mobilization of funds by the
private mutual funds was slow. But, this segment of the fund industry began to
witness much greater investor confidence in due course. One influencing factor
was the development of SEBI’s regulatory framework for the Indian mutual fund
industry. Yet another important factor has been the steadily improving
performance of several fund houses. Investors in India now clearly saw the
benefits of investing through mutual funds and became discerning and selective.
Phase-4 1996-99: Growth and SEBI Regulation
Since 1996, the mutual fund industry in India saw tighter regulation and higher
growth. It scaled new heights in terms of mobilization of funds & no. of players.
Deregulation & liberalization of Indian economy had introduce competition
provide impetus to the growth of the industry. Finally most investors small or
large started showing interest in mutual funds.
Measures were taken both by SEBI to protect the investor, & by the government
to enhance investors’ returhs through tax benefits. A comprehensive set of
regulation for all mutual funds operating in India was introduced with SEBI
(Mutual Fund) Regulations 1996. these regulations set uniform standard for all
the funds. The erstwhile UTI voluntary adopted SEBI guidelines for its new
schemes. Similarly the budget of union Government in 1999 took a big step in
exempting all mutual fund dividends from income tax in the hands of investors.
Both the 1996 Regulation & the 1999 Budget must be considered of historic
importance, given their far reaching impact on the fund industry.
Phase 5 -1999-2004: Emergence of Large & Uniform Industry
The major development in the fund industry has been the creation of a level
playing field for all mutual fund operating in India. This happened in February
2003, when the UTI Act was repealed. UTI has no longer legal status as a trust
established by Act of Parliament. Instead, it has also adopted the same structure
as any other fund in India- a Trust and an Asset Management Company. UTI
Mutual Fund is present name of the erstwhile Unit trust of India. While UTI
functioned under separate law of Indian Parliament earlier, UTI Mutual Fund is
now under the SEBI’s Regulation, 1996 like all other Mutual Funds in India. UTI
Mutual Fund is still the largest player in the Indian fund industry. All SEBI
compliant schemes of the erstwhile UTI are under its charge. All new schemes
offered by UTI Mutual Fund are SEBI approved. Other schemes of erstwhile UTI
have been paced with a special undertaking administered by the Government of
India. These schemes are being gradually wound up.
The emergence of a uniform industry with the same structure, operations &
regulation makes it easier for distributors & investors to deal with any fund house
in India.1999 marked the beginning of a new phase in history of mutual fund
Industry in India, phase of significant growth in terms of both amounts mobilized
from investors and assets under management.
Between 1999 to 2005, the size of the industry has doubled in terms of AUM
which have gone from about Rs. 68000 cr to over Rs. 150000 cr. Within the
growing industry the relative market share of different players in terms of amount
mobilized and AUM have also undergone changes.
Phase 6 -From 2004 Onwards: Consolidation & Growth
The industry has lately witnessed a spate of mergers & acquisitions, most recent
ones being the acquisition of schemes of Alliance Mutual Fund by Birla Sun Life,
Sun F&C Mutual Fund by Principal & PNB Mutual Fund by Principal. At the same
time, more international players continue to enter India, Including Filedity, one of
the largest fund in world. The stage is set now for growth through consolidation
and entry of new international and private sector players. At the end of March
2006, there were 29 Funds.
Performance of Mutual Fund Industry From 1965 To 2008
Mutual Fund Companies in India
The number of Indians putting their money on mutual fund investments is steadily
increasing. More and more people are being lured by the prospect of handsome profits
that investments in mutual funds carry for the investors. In recent years, many mutual
fund companies have sprung up in India. Now the investors have lots of mutual fund
companies in India to choose from. Currently there are 30 mutual fund companies
operating in India. They are as follow;
NO. Mutual Fund Company1 AIG Global Investment Group Mutual Fund2 Baroda Pioneer Mutual Fund3 Benchmark Mutual Fund4 Bharti AXA Mutual Fund5 Birla Sun Life Mutual Fund6 Canara Robeco Mutual Fund7 DBS Chola Mutual Fund8 Deutsche Mutual Fund 9 DSP BlackRock Mutual Fund
10 Edelweiss Mutual Fund11 Escorts Mutual Fund12 Fidelity Mutual Fund13 Fortis Mutual Fund14 Franklin Templaton Mutual Fund15 HDFC Mutual Fund16 HSBC Mutual Fund17 ICICI Prudential Mutual Fund18 IDFC Mutual Fund19 ING Mutual Fund20 JM Financial Mutual Fund21 JPMorgan Mutual Fund22 Kotak Mahindra Mutual Fund23 LIC Mutual Fund24 Lotus India Mutual Fund25 Mirae Asset Mutual Fund26 Morgan Stanley Mutual Fund27 Principal Mutual Fund28 Quantum Mutual Fund 29 Reliance Mutual Fund30 Sahara Mutual Fund31 SBI Mutual Fund32 Sundaram BNP Paribas Mutual Fund33 Tata Mutual Fund34 Taurus Mutual Fund35 UTI Mutual Fund
Aditya Birla Nuvo Ltd
Introduction
We are the flagship Company of the Aditya Birla Group, which is currently one of
the largest business groups in India in terms of market capitalisation. Aditya Birla
Nuvo Limited (formerly known as Indian Rayon and Industries Limited) is the
Aditya Birla Group's most diversified conglomerate, with a consolidated net
turnover of Rs. 4830.34 crores for fiscal 2006. We were incorporated in 1956 and
are listed on the Bombay Stock Exchange Limited and National Stock Exchange
of India Limited.
We believe we are one of India’s leading players in our key business segments,
such as viscose filament yarn (“VFY”), carbon black, branded garments,
fertilizers, textiles and domestic marketing of insulators. Through our subsidiaries
and joint ventures we are also engaged in other business segment, such as life
insurance, telecommunication, information technology services, business
process outsourcing (BPO), asset management, manufacture of insulator and
other financial services.
It enjoys a leadership position in all the sectors in which it operates. With over 75
business units, spanning the South East Asian belt, Africa, Canada and the UK
among others, it is reckoned as India's first multinational corporation. The group
is anchored by 72,000 employees and has seven lakh shareholders, with an
asset base of over Rs.23,000 crore. .
The following chart illustrates our value business and high growth business.
Financial Service Group of Aditya Birla Nuvo Ltd
ADITYA BIRLA NUVO LTD
VALUE BUSINESS HIGH GROWTH BUSINESS
Rayon
Carbon Black
Textiles
Fertilizer
Insulator Garments
Financial Service JV
Telecom JV
Subsidiaries
Mutual Fund
Life Insurance
Distribution
IT
ITes
Financial Service Group of Aditya Birla Nuvo Ltd offer following
Financial services:
Asset Management Company
Life Insurance
Distribution & Wealth Management.
Insurance Advisory & Broking Services
Capital Market & Corporate Finance.
General Information About Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund – Asset Management Company
Birla Sun Life Mutual Fund was setup on December 24, 1994. The sponsorers of
Birla Mutual Fund are Birla Global Finance Limited and Sun Life (India) AMC
Investments Inc. Sun Life Financial Group of Companies is a financial services
organization headquartered in Toronto, Canada. .
The AMC of Birla Sun Life Mutual Fund is Birla Sun Life Asset Management
Company Limited which was incorporated on September 5, 1994. Recently Birla
Mutual Fund crossed AUM of Rs. 10,000 crores. .
Since its inception in 1994, Birla Sun Life Mutual fund has emerged as one of
India's leading mutual funds managing assets of a large investor base. The fund
offers a range of investment options, which include diversified and sector specific
equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide
range of debt and treasury products and offshore funds. .
BSLAMC follows a long-term, fundamental research based approach to
investment. The approach is to identify companies, which have excellent growth
prospects and strong fundamentals. The fundamentals include the quality of the
company’s management, sustainability of its business model and its competitive
position, amongst other factors. Birla Sun Life Asset Management Company has
one of the largest team of research analysts in the industry, dedicated to tracking
down the best companies to invest in.
BSLAMC strives to provide transparent, ethical and research-based investments
and wealth management services.
The Joint Venture of Birla & Sun Life.
About Sun Life Financial Inc .
Sun Life Financial Inc. is a leading international financial services organization
providing a diverse range of wealth accumulation and protection products and
services to individuals and corporate customers. Tracing its roots back to 1865,
Sun Life Financial and its partners today have operations in key markets
worldwide, including Canada, the United States, the United Kingdom, Hong
Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31
December 2004, the Sun Life Financial group of companies had total assets
under management of USD 299 billion. .
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and
Philippine (PSE) stock exchanges under ticker symbol "SLF".
On the other side it is Birla group of companies which is known for its diversified
business and India ‘s largest business group.
Birla Sun Life Mutual fund is joint venture of Birla & Sun Life Financial Inc.
VISION
To be the most trusted name in investment and wealth management, to be the
preferred employer in the industry and to be a catalyst for growth and excellence
of the asset management business in India.
MISSION:
To consistently pursue investor's wealth optimisation by:
Achieving superior and consistent investment results.
Creating a conducive environment to hone and retain talent.
Providing customer delight.
Institutionalising system-approach in all aspects of functioning.
Upholding highest standards of ethical values at all times.
VALUE
Integrity
Commitment
Passion
Seamlessness
Speed
The diversified schemes are as follows:
Debt Schemes
Balanced Schemes
Offshore Schemes
Investment Plans
Readicheque
Gift Certificates
Organization Structure of Birla Sun Life Mutual Fund
Directors of Birla Sun Life Trustee Company private limited
Mr. Suresh Talwar
Anil KumarCEO
A Balasubramanian CIO
Ashok SuvamaCOO
Abhay PalnitkarCFO
Navin TiwariCo-Head Retail Sales
North & East
Kalpen ParekhCo-Head Retail Sales
West & South Sarb Preet Singh
VP SalesInstitutional
Chandrasekhar ChavanHead-HR & Admin
Rajiv JoshiHead-Legal & compliance
RaghvendranathHead-Strategy
Marketing
Laxmikant GuptaHead Risk
Management
Molly KapoorHead Customer Service
Krishna KumarHead-PAS
Mr. B. N. Puranmalka
Mr. Gurcharan Das
Dr. V. Arunachalam
Mr. Prafull Anubhai
*Director(s) is/are associated with the sponsor or its associates
Directors of Birla Sun Life Asset Management Company Limited
Mr. Kumar Mangalam Birla
Mr. Donald Stewart
Mr. Ajay Srinivasan
Mr. Stephan Rajotte
Mr. Ashok Goenka
Mr. S. S. Raman
Mr. N. N. Jambusaria
Mr. N. C. Singhal
Mr. Venkatesh Mysore (Alternate Director)
*Director(s) is/are associated with the sponsor or its associates.
Investment Team
Awards Of Birla Sun Life Mutual Fund
Anil KumarCEO
A BalasubramanianCIO
Ajay ArgalVP-Investment
Mahesh PatilVP-Investment
Satyabrata MohantyAVP-Investment
Maneesh DangiAVP-Investment
Doraell RodriguesAssistant Manager-Investment
1998 India Advantage Fund
The award for standing first place in the Standard & Poor's Micropal one year
offshore Territories Equity India sector out of 36 funds.
1999
Business Standard
Presented to MR.BHARAT SHAH Fund Manager of Year 1999
Motilal Oswal institute of wealth Creation Pioneers in Investor's
Education.
Presented to BIRLA ADVANTAGE FUND
The Award for The Best Equity Mutual Fund Scheme 1999.
R J Bhatt Awards 1999
Presented to
BIRLA SUN LIFE MUTUAL FUND
The Best Mutual Fund the IRIS Mutual Fund Award in memory of R J Bhatt.
BIRLA ADVANTAGE FUND
The Best Performing Scheme In the category of Growth Funds the IRIS
Mutual Fund Award in memory of R J Bhatt.
BIRLA INCOME PLUS
The Best Performing Scheme In the category of Income Funds the IRIS
Mutual Fund Award in memory of R J Bhatt.
2000
BANCO Emerging Markets Awards 2000
Presented to Birla Sun life Asset Management Company Limited
For having secured the first place for its risk-adjusted performance over three
years with the India Advantage Fund in the Standard & Poor's fund
Services, Asia excl. Japan Equity Sector.
Mr R J BHATT Mutual Funds Awards 2000
Presented to Birla Sun life Asset Management Company Limited In
recognition of
BIRLA ADVANTAGE FUND
The BEST GROWTH SCHEME
Based on three years performance between August 1 ,1997-July 31,2000.
BIRLA INCOME PLUS
The Best Scheme Income Scheme
Based on three years performance between August 1 ,1997-July 31,2000
2002
Business Barons, Best Brand Award 2002,
Presented to BIRLA SUN LIFE MUTUAL FUND
Birla Income Plus - Open- end Debt/Income Fund-.
Birla MIP - Open- end Monthly Income Plan.
Standard & Poor's Fund Awards, 2002 Offshore, India Advantage Fund
Presented to BIRLA SUN LIFE MUTUAL FUND
1st place in the standard & Poor's Five Years (Dec 1996-Dec 2001).
2003
CRISIL Best Fund Awards 2003
Presented toBirla Bond Plus: Best performing Open-end Income-Short
Term Fund
Wealth Creator Award 2003
Presented to BIRLA SUN LIFE MUTUAL FUND for the Best Mutual Fund.
2004
CNBC - TV 18 - BNP PARIBAS Mutual Fund of the Year Award 2004
Presented to
Birla Equity Plan:
Best Performing Open-Ended Equity Tax Saving (ELSS) (one year)
Birla MIP (Gr): Best Performing Open-Ended Monthly Income Plan Fund
(three years)
Birla Gilt Plus (Regular Plan) (Gr): Best Performing Open-Ended Gift Fund
(three years)
Standard & Poor's Fund Awards, 2004 Offshore,
India Advantage Fund
Presented to Awarded 1st Place in the Standard & Poor's Five Years
Offshore Funds Equity India Sector.
ICRA Online Mutual Fund Awards 2004
Presented to
Birla Gilt Plus - Liquid Plan:
Ranked MFR 1 in open-ended gilt schemes - short term category (three
years)
Birla India Opportunities Fund: Ranked MFR 1 in open-ended sectoral
schemes - technology category (three years)
Birla Gilt Plus - Liquid Plan:
Ranked MFR 1 in open-ended gilt schemes - short term category (one year)
Birla India Opportunities Fund: Ranked MFR 1 in open-ended sectoral
schemes - technology category (one year)
Birla Gilt Plus - Regular Plan:
Ranked MFR 1 in open-ended gilt schemes - long term category (one year)
Birla Income Plus:
Ranked MFR 1 in open-ended debt schemes - long term category (one year)
Birla Equity Plan:
Ranked MFR 1 in open-ended equity linked savings schemes category (one
year)
2005
ICRA Awards
Birla India Opportunities Fund
ICRA-MFR 1 Open Ended Sectoral Schemes - Technology (3 Year)
Birla Income Plus
ICRA-MFR 1 Open Ended Debt Scheme - Long Term (3 Year)
Birla Gilt Plus - Liquid Plan
ICRA-MFR 1 Open Ended Gilt Scheme - Short Term - 1 Year
Birla Gilt Plus - Liquid Plan
ICRA-MFR 1 Open Ended Gilt Scheme - Short Term - 3 Year
2007
LIPPER Awards
Birla Sun Life '95 Fund Best Fund - Mixed Asset INR Aggressive
10 - Year Performance ended December 31, 2006 Total Schemes in
Category = 5
Birla Gilt Plus - Regular Plan Best Fund - Bond Indian Rupee -
Government
5 - Year Performance ended December 31, 2006 Total Schemes in
Category = 28
ICRA Awards
GOLD AWARD Birla Sun Life Equity Fund: ICRA MFR~1
Open Ended Diversified Equity – Defensive 3 year period ended 31st
December 2006
GOLD AWARD Birla Gilt Plus – Liquid Plan: ICRA MFR~1
Open Ended Gilt - Short Term 3 year period ended 31st December 2006
GOLD AWARD Birla Cash Plus - Institutional Plan: ICRA MFR~1
Open Ended Liquid - Institutional Plan 3 year period ended 31st December
2006
2008
ICRA STAR GOLD Awards
Birla Income Plus 7-Star Gold Award – Debt: Long Term
1 yr ended 31 Dec, ‘07 Total Schemes in Category = 18
Birla Sun Life Short Term Fund 7-Star Gold Award – Liquid Plus
1 yr ended 31 Dec, ‘07 Total Schemes in Category = 26
Birla Sun Life Income Fund-Growth Best Fund - Bond INR General
3 yrs & 10 yrs performance ended 31 Dec, ‘07 Total Schemes in Category =
100 and 10 respectively
Birla Sun Life Income Fund Category: Income Funds
1 yr performance ended 31 Dec, ‘07 Total Schemes in Category = 17
Birla Sun Life Monthly Income
Category: Monthly Income Plans – Conservative
1 yr performance ended 31 Dec, ’07 total Schemes in category = 9
Birla Sun Life Short Term Fund Category: Income – Short Term Funds
1 yr performance ended 31 Dec, ‘07 Total Schemes in Category = 12
Emerging Equity Fund of the Year Birla Infrastructure Fund – Growth
1 yr performance ended 31 Dec, ’07 Total Schemes in Category = 14
Birla Sun Life Frontline Equity Fund Category: Large Cap oriented
Equity Fund
1 yr performance ended 31 Dec, ‘07 Total Schemes in Category = 22
Mutual Fund of the Year Birla Sun Life Mutual Fund
Total Fund Houses = 26 1 yr performance ended 31, Dec 2007
STAR RATING
5 STAR RATING
Birla Sun Life Liquid Plus - Institutional Plan
Total Open Ended Liquid Plus – Institutional Plan schemes considered – 34
Based on 1 yr performance ended 31 Dec, ’08
5 STAR RATING
Birla Sun Life Income Plus
Total Open Ended Debt Long-Term schemes considered – 21
Based on 3 yr performance ended 31 Dec, ’08
5 STAR RATING
Birla Sun Life Dividend Yield Plus Fund
Total Open Ended Diversified Equity Aggressive schemes considered – 51
Based on 1 yr performance ended 31 Dec, ’08
5 STAR RATING
Birla Sun Life MNC Fund
Total Open Ended Diversified Equity Aggressive schemes considered – 51
Based on 1 yr performance ended 31 Dec, ’08
5 STAR RATING
Birla Sun Life Gilt Plus Regular Plan
Total Open Ended Gilt schemes considered - 22 Schemes
Based on 3 yr performance ended 31 Dec, ‘08
5 STAR RATING
Birla Sun Life Frontline Equity Fund
Total Open Ended Diversified Equity Defensive schemes considered -62 & 55
Based on 1 and 3 yr performance ended 31 Dec, ’08 respectively.
Star Fund House of the year – Debt
Total Fund Houses eligible – 24
Based on 1 yr performance ended 31 Dec, ‘08
7 STAR RATING
Birla Sun Life Dynamic Bond Fund
Total Open Ended Debt - Short Term considered - 17 Schemes
Based on 1 yr performance ended 31 Dec, ‘08
Type of Communication Channel:
Downward Communication
The head communicates at the bottom level with the modes of rules and
regulation files, circulars, orders, politics.
Up ward Communication
The communication moves from bottom to top with the modes of fies and
application, suggestion or complaints.
Horizontal Communication
The communication moves from one department to other at the same level
with the modes of files.
Diagonal Communication
The subordinate of one department communicates directly to the superior of
other department with the modes of files or suggestion.
COMMUNICATION CHANNEL
DOWN WARD HORIZONTALUPWARD DIAGONAL
MARKET SHARE OF BIRLA SUN LIFE MUTUAL FUND & OTHER PLAYERS IN THE INDUSTRY FOR THE YEAR 2009.
Market Share of Mutual Fund companies in India
0%
0%
0%
0%
9%
1%
0%
2%
3%
0%
0%
1%
1%
4%
11%
2%
10%
2%
1%
1%
0%
3%
4%
1%
0%
0%
2%
0%
16%
0%
6%
2%
4%
0% 10%
AIG Global Investment Group Mutual Fund Baroda Pioneer Mutual Fund
Benchmark Mutual Fund Bharti AXA Mutual Fund
Birla Sun Life Mutual Fund Canara Robeco Mutual Fund
DBS Chola Mutual Fund Deutsche Mutual Fund
DSP BlackRock Mutual Fund Edelweiss Mutual Fund
Escorts Mutual Fund Fidelity Mutual Fund
Fortis Mutual Fund Franklin Templaton Mutual Fund
HDFC Mutual Fund HSBC Mutual Fund
ICICI Prudential Mutual Fund IDFC Mutual Fund
ING Mutual Fund JM Financial Mutual Fund
JPMorgan Mutual Fund Kotak Mahindra Mutual Fund
LIC Mutual Fund Lotus India Mutual Fund
Mirae Asset Mutual Fund Morgan Stanley Mutual Fund
Principal Mutual Fund Quantum Mutual Fund
Reliance Mutual Fund Sahara Mutual Fund
SBI Mutual Fund Sundaram BNP Paribas Mutual Fund
Tata Mutual Fund Taurus Mutual Fund
UTI Mutual Fund
Key Highlights of Market Share of Birla Sun Life Mutual fund.
Scaling up infrastructure to support growth
Distribution network more than doubled in last one year to reach 78 branches and 18K financial advisors
Investor folios grew by 65% during the year to 1.9 million Multi Channel non-polarized distribution network
Superior fund performance – 69% of AUM is in top quartile of performance, based on one year returns
Recognized and awarded “Mutual Fund House of the Year” by CNBC TV18-Crisil
Branches (Nos.) Financial Advisors (‘000) Investor Folios (Mn)
5th largest in India with 6.8% share in average domestic AUM in Mar’08 up from 5.8% share in end of period (EOP) AUM in Mar’07
Achieved 89% growth in last one year 2nd highest AUM growth amongst top 7 players Only AMC to show positive month on month growth in average AUM in
Mar’08
Total AUM (EOP) grew 4 times in 3 years to Rs. 45,247 Cr. in Apr’08
Includes offshore equity AUM of Rs. 2,543 Cr. in Apr’08 Equity AUM grew 5 times in 3 years to Rs. 10,838 Cr. in Apr’08
Offering 92 Mutual Fund schemes including 2 offshore funds Product portfolio strengthened through launch of new funds 4 equity NFOs launched collecting Rs. 2,700 Cr. Focus on high margin fixed income funds
Track Record
With a proven track record of over 14 years, Birla Sun Life Mutual Fund has been
a catalyst towards the growth of the private sector asset management business
Innovation
Birla Sun Life Mutual Fund was the first to launch:
Birla Sun Life Cash Plus, a liquid fund.
Birla Sun Life Dividend Yield Plus which is a dividend yield fund.
Birla Bond Index Fund (a debt index fund) which replicates the Crisil
Composite Bond Fund Index, has been assigned AAAF rating by Crisil.
Investment Philosophy
Birla Sun Life Mutual Fund follows a long-term, fundamental research based
approach to investment. The approach is to identify companies, which have
excellent credit-worthiness and strong fundamentals. The fundamentals include
the quality of the company's management, sustainability of its business model
and its competitive position, amongst other factors. Birla Sun Life Asset
Management Company (BSLAMC) has one of the largest team of research
analysts in the industry, dedicated to tracking down the best companies to invest
in.
BSLAMC will always strive to provide transparent, ethical and research-based
investments and wealth management services.
Geographical Reach
Today, BSLAMC is present in 111 locations, including 74 branches
Employees Serving In Birla Sun Life Mutual Fund.
There are around 800 employees serving in company.
Constituents/Entities of The Birla Sun Life Mutual Fund
a) Promoters
The Aditya Birla Group : The Aditya Birla Group is a multinational group of
companies, comprising some of the best-known companies in India. The
manufacturing operations of the group extend across India, Thailand, Indonesia,
Malaysia, the Philippines and Egypt. In India, the group companies have attained
a leading position in a range of key core sector areas and rank among the
country’s largest, most profitable and fastest growing companies with an
excellent track record of returns to investors. Some of the major companies in the
Group are:
Grasim Industries Ltd.: The flagship company of the Aditya Birla Group, it is
India’s leading producer of viscose staple fiber. The diversified business lines of
the company include cement, sponge iron, textiles, software and the export of
agro products.
Hindalco Industries Ltd.: The company is the largest integrated private sector
aluminum producer in India, accounting for about 40 percent of the country’s total
aluminum production (Source CMIE). The company is also self-sufficient in terms
ofits power needs.
Indian Rayon and Industries Ltd: The company manufactures viscose filament
yarn, textiles, gray and white cement, carbon black, insulators and caustic soda.
It has a strong market position in all of its product lines.
Indo-Gulf Fertilisers and Chemicals Corporation Ltd: The company
established the first gas-based fertiliser plant in the private sector. It is the largest
urea producer in the private sector in India (Source CMIE). The company has
recently implemented a 1,00,000 tonnes per annum copper smelting project.
Mangalore Refinery and Petrochemicals Ltd: The company is a joint venture
promoted by the group and the public sector Hindustan Petroleum Corporation
Ltd.
The company has set up a petroleum refinery with a capacity to process three
million tonnes of crude oil per annum to produce liquefied petroleum gas,
naphtha, motor spirit, kerosene, diesel and asphalt. Plans are under way to
expand its capacity to 9 million tonnes per annum.
Sun Life Financial Servics of Canada Inc.
Sun Life Financial Servics of Canada Inc. is the new holding company for Sun
Life Assurance Company of Canada. Sun Life Financial is the new brand of a
select group of companies providing individuals and corporations with a
diversified range of producs and services, meeting their needs for wealth
management as well as protection. As a global enterprise, the Sun Life Financial
group of companies operates in key markets around the world. Major operating
activities are handled by noational offices in Canada, the United States, the
United Kingdom, the Philipines and Hong Kong. It is poised to enter into a joint
venture in the Peoples Republic of China.
b) The Fund
Birla Mutual Fund has been constituted as a trust under the provisions of the
Indian Trusts Act, 1882 (2 of 1882) and registered with SEBI bearing registration
no. MF/ ** Returns of Plan B of scheme may be taken as indicative return for
Plan A ^ Simple Annualised*** Adjusted for dividends and compounded ann
020/94/8 dated December 23, 1994. The objective of the Mutual Fund is to offer
to the public and other eligible investors units in one or more schemes in the
Mutual Fund for making group or collective investments primarily in Indian
Securities in accordance with and as permitted under the directions and
guidelines issued from time to time by SEBI. The Corporate Office of the Mutual
Fund is at
Ahura Centre, Tower A, 2nd Floor, 96 A/D Mahakali Caves Road,Andheri (East), Mumbai - 400 093.
c) The Sponsors
The sponsor of Birla Mutual Fund is Birla Global Finance Ltd.
The Birla Global Finance Ltd. was responsible for setting up and establishing the
Mutual Fund to be called Birla Mutual Fund. In order to do so, the Sponsor acted
as Settlor to the Deed of Trust between themselves and the Board of Trustees.
The Settlor entrusted a sum of Rs.1 lakh to the Trustees as the initial contribution
towards the corpus of the Mutual Fund. The Trustee at the request of the settlor
agreed to act as the Trustees of the Mutual Fund in accordance with the terms
and conditions represented in the Deed of Trust.
Sun Life (India) AMC Investments Inc. is the deemed sponsor as per the SEBI
regulations.
d) The Trustee Company
Birla Sun Life Trustee Company Ltd. (BSLTC) is a company incorporated with
limited liability under the Companies Act, 1956. Under the Trust Deed dated
December 16, 1994 BSLTC has been appointed as the trustee for BMF with Birla
Global Finance Ltd. as the Settlor.
Trustee Meetings
The Trustees have met five times in the year 1999-2000. The performance of all
the schemes are placed before the Trustees at such meetings. The reports on
statutory compliance and investor servicing are also regularly placed at such
meetings by AMC. The quarterly compliance test report in respect of the Fund
adopted by the Trustees is filed with SEBI. Audit committee of the Trustees has
been constituted to review the internal audit systems and the recommendations
of the internal and statutory audit reports and to ensure that the rectification as
suggested by internal and external auditors are acted upon. An independent
Trustee chairs the Committee.
Trusteeship Fees
The Trustee Company, BSLTC shall be entitled to a fee of Rs. 5 lakhs per annum
apportioned over all the schemes of BMF.
e) The Investment Manager
Birla Sun Life Asset Management Company Ltd. (BSLAMC), the Investment
Manager of Birla Mutual Fund, is a joint venture between the Aditya Birla Group
and the Sun Life Assurance Company of Canada. Both the joint venture partners
hold 50% of the equity capital of BSLAMC. BSLAMC is acting as the Investment
Managers for the schemes of BMF vide the Investment Management Agreement
dated December 16, 1994, as supplemented by the Investment Management
Agreement dated October 22, 1999.
f) The Custodian
IIT Corporate Services Ltd., located at IIT House, Off M. Vasanji Road, Opp.
Vazir Glass, Near J.B. Nagar, Andheri (East), Mumbai 400 059, has been
appointed as the custodian of the securities that are bought and sold under the
Schemes. The custodian is registered with SEBI under registration number
IN/CUS/007. The salient features of the custodial agreement and the
responsibilities of the custodian include:
– Keeping in safe custody all the securities and such other instruments belonging
to the Scheme.
– Ensuring the smooth inflow / outflow of securities and such other instruments
as and when necessary in the best interests of the investors.
– Ensuring that the benefits due to the holdings are recovered.
– Responsibility for loss or damage to the securities due to negligence on its part
or on the part of its approved agents.
g) The Registrar
BSLAMC has appointed Karvy Consultants Ltd. to act as Registrar and Transfer
Agents (“The Registrar”) to the Schemes. The Registrar is registered with SEBI
under registration number INR000000221. BSLAMC and the Trustee have
satisfied themselves, after undertaking appropriate due diligence measures, that
the Registrar is able to provide the services required and has adequate facilities,
including systems facilities and back up, to process applications and despatch
Account Statements/Unit certificates to Unit holders within the time limits
prescribed in the Regulations and also sufficient capacity to handle investor
complaints.
h) Auditors
Lodha & Company
Karim Chambers,
48 Ambalal Doshi Marg,
Fort, Mumbai - 400 023.
Product
Diversified Fund
1) Birla Sun Life Pure Value Fund
As savvy consumers, all of us look at great value deals in our everyday life. In
the world of equity investments, investing in stocks with great value has been a
timeless principle. Value investing, is a classical approach that looks at investing
in quality stocks that may be available at bargain prices. The underlying rationale
being that once the factors influencing the stock prices change, these stocks may
get closer to their true or intrinsic value. Birla Sun Life Pure Value Fund is a fund
that seeks to generate consistent long-term capital appreciation by investing
predominantly in equity and equity related securities by following value investing
strategy.
2) Birla Sun Life Equity Fund
Birla Sun Life Equity Fund is a diversified equity fund enabling investors to
capitalize on the immense growth opportunities provided by the stock market
while at the same time minimizing the risk.
Launched in August 1998 (as Alliance Equity Fund and subsequently taken over
by Birla Mutual Fund on Sep 24, 2005), the fund is an open-ended growth
scheme with a Multicap theme. It dynamically shifts weightages between large-
cap and mid-cap stocks depending on the market outlook.
Significant portion of the scheme is invested in sectors with high growth
prospects. Additional focus is kept in identifying sunrise industries / concept
stocks. The large in-house research team is especially helpful in identifying such
stocks. The fund also takes medium-term bets on certain sectoral trends to ride
on the growth momentum. The Fund invests in a wide cross-section of sectors
thereby offering adequate diversification to investors.
3) BSL Frontier Equity
Birla Sun Life Frontline Equity Fund is an open-ended diversified equity fund,
which invests in handpicked frontline stocks (i.e. stocks which have the potential
of providing superior growth opportunities) such that it is representative of all
leading sectors of its chosen benchmark. The scheme targets the same sectoral
weights (+/- 5%) within its portfolio as the benchmark, the BSE 200. However, the
choice of stocks is not limited to the benchmark, thus providing a wider universe
of investible stocks. .
Investing across sectors ensures diversification and at the same time investing in
frontline stocks provides for a possibility of higher returns. Birla Sun Life Frontline
Equity Fund is ideal for investors looking at investing in quality stocks across the
leading sectors of the economy.
4) BSL Mid cap Fund
Birla Sun Life Midcap Fund is an open ended growth fund which focuses on
investing in the Midcap segment of the market with a disciplined investment
approach. More than 65% of the portfolio at any point of time comprises of
Midcap stocks. Diversification and superior risk control form an integral part of
the fund management strategy to keep portfolio volatility at lower levels vis-a-
versa the benchmark CNX Mid-cap Index. The key portfolio strategy is
summarized as follows:
Strong process driven investment philosophy matched with a disciplined
risk management strategy.
Identifying stocks that can demonstrate strong growth over 3-5 years horizon.
Avoid market timing and cash calls.
Avoid concentrated & aggressive calls.
Focus on identifying scaleable businesses with objective of identifying tomorrows large-cap.
Sharpe-eye on valuations.
The fund seeks to achieve long-term growth of capital at controlled level of risk
by primarily investing in Mid Cap Stocks. The Midcap segment comprises mostly
of companies that have been able to sustain themselves in the initial phases of
growth. Since many companies out of this segment would show higher growth in
future and move towards the large cap segment, this segment offers very high
potential. With over 250 stocks in the Midcap segment, there exists a large
variety of business to choose from. Further, this segment is relatively under
researched and hence offers an excellent opportunity for bottom-up focus thus
enabling the spotting of winners ahead of the market.
5) BSL Special Situation Fund
Birla Sun Life Special Situations Fund endeavors to generate long-term growth
by identifying stocks that may have the potential for special situation. Stocks that
are undergoing or have undergone such a situation are also potential picks.
Most special situations often result in incremental value addition to a
stock/business. This may get reflected in the price within a short period or
gradually depending on the special situation that the company is in.
The objective of the scheme is to generate long-term growth of capital by
investing in a portfolio of equity and equity related securities. The scheme would
follow an investment strategy that would take advantage of special situations and
contrarian investment style.
6) BSL Top 100 Fund
Birla Sun Life Top 100 Fund is an open ended growth scheme which will focus on
investing predominantly in a diversified portfolio of Large Cap stocks. It is
specifically designed for those investors who seek exposure to a broader large
market capitalization stocks and growth cum value style of investing. The Fund
shall invest at least 65% of its corpus in equity and equity related securities of the
top 100 Indian companies as measured by market capitalization and listed on
stock exchanges. The remaining portion of the portfolio can be invested in equity
and equity related securities of companies other than the top 100 companies
which in the opinion of the Fund Manager have attractive growth prospects and
potential to outperform the broad market indices.
7) BSL Life Advantage Fund
Birla Sun Life Advantage Fund (BSLAF) is an open-ended, diversified equity
fund, which aims to deliver an above average long-term performance on a
sustained basis. The fund has a superior track record of more than 10 years.
8) BSL Long Term Advantage Fund
Birla Sun Life Long Term Advantage Fund Series I, is a 3-year closed ended
equity fund. The objective of the fund is to generate consistent long-term capital
appreciation by investing predominantly in equity and equity related securities of
companies considered to be small and mid cap. The fund would invest in a
portfolio of attractively priced small & mid cap stocks that are expected to post
attractive growth in the next few years. Birla Sun Life Long Term Advantage Fund
Series I, through active management seeks to construct a portfolio of high growth
stocks with an endeavor to out perform its benchmark index i.e BSE 500
9) BSL Dividend Yield Fund
Birla Sun Life Dividend Yield Plus has a portfolio that seeks to provide a
combination of:
High dividend yield
Substantial capital protection
Strong possibility of capital gains
Historically, stocks of high dividend yielding companies provide a high degree of
protection even in a scenario when equity markets are volatile.
Add to this protection, a good possibility of stock prices appreciating, as and
when the equity markets revive. When a high dividend yield investment is made
in conjunction with other parameters like:
a. Low price to book value ratio (price-to-book) and
b. Low market capitalization to sales ratio (market cap-to-sales)
The possibility of upward re-rating of the stock increases.
10) Birla Sun Life Tax Plan (BSLTP)
Birla Sun Life Tax Plan (BSLTP) aims at achieving long term growth of capital
along with Income Tax benefits for investors. It follows a bottom-up approach to
investing, where the emphasis is on identifying companies in quality businesses
with a strong competitive position and run by quality management. Essentially
the focus is on long term fundamentally driven values. The fund offers superior
growth opportunities. Since investments are planned for a 3 year period it helps
the Fund Manager to take a long term view while selecting stocks and not remain
constrained by short term liquidity pressures. .
Tax Benefit su/s 80c
Investments in this fund would enable you to avail benefits under Section 80C of
the Income Tax Act, 1961. Investments upto Rs. 1 lakh by eligible investors in the
scheme may qualify for deductions. Investors are requested to consult their tax
advisor in this regard. .
Opportunity for wealth creation:
Equities inherently offer a potential for better returns as compared to Debt
instruments, which are fixed or restrictive in nature. Most of the other options
under Section 80C like PPF, NSC, Bonds, etc. represent fixed returns with higher
lock-in periods. However, BEP offers a lock-in of only 3 years and the potential of
higher returns.
11) BSL Index Fund
Birla Sun Life Index Fund is an open ended Index Linked Growth Scheme with
an objective to generate returns that are commensurate with the performance of
the Nifty. This is the fund that benchmarks the S & P CNX Nifty and aims at
delivering competitive returns through a broadly diversified portfolio. Investments
in Birla Index Fund gives you access to an entire basket of Blue Chip stocks.
Theme Based Fund
12) BSL Commodity Equities Fund
The new Birla Sun Life Commodity Equities Fund (BSL CEF) is your chance to
reduce risk and strengthen your portfolio by diversifying across countries,
industries and commodity based companies. Diversification is, basically, reducing
risk by not putting all your eggs into one basket. The more you diversify, the more
you reduce the chance of any single loss (in a component of your portfolio)
seriously damaging the portfolio as a whole.
13) BSL India GenNext Fund
The basic theme of the Birla Sun Life India GenNext Fund is to target growth of
capital by investing in companies that are expected to benefit from the changing
consumption patterns in India. The consumption boom in the country is fuelled by
high disposable incomes of the young generation (Generation Next). Typical
GenNext companies are:
Companies that seek growth in revenues arising out of products
demanded by the consumers, particularly Gen Next.
Companies providing products or rendering of services that go directly to
the consumer.
The products and services having distinct brand identity, thereby enabling
choice.
The Birla Sun Life India GenNext portfolio is positioned to capture the long-term
potential of the Indian Consumption Boom story. The portfolio takes strategic
exposure to key brands that create strong value proposition for customers. The
underlining rationale is that in the long run it is the Brands and value added
products that create value and wealth for customers and investors as well.
14) Birla Sun Life India Opportunities Fund (BSLIOF)
Birla Sun Life India Opportunities Fund (BSLIOF) is an open-ended scheme that
invests in foreign exchange earning companies. BSLIOF aims to identify
companies that seek to utilize India's low cost and high quality resources to
service the needs of global customers. The scheme, thus, allows investors to
participate in India's emerging global outsourcing theme and seeks innovative
ways of investing in only certain types of companies and sectors that have years
of consistent growth ahead of them.
15) Birla Sun Life MNC Fund
Birla Sun Life MNC Fund seeks to provide investors a well-diversified portfolio of
MNCs in growth driven sectors like FMCG, Pharmaceuticals, Auto and
Ancillaries, etc. The fund invests exclusively in securities of multinational
companies in order to achieve long-term growth of capital with relatively
moderate levels of risk. Multinational companies (MNCs) generally have strong
parentage and global experience & technology, backed by professional
management. Such synergies translate strengths into superior products and
services, making these companies an ideal choice for long-term investment.
16) BSL Basic Industry Fund
With the Indian economy expected to grow at attractive rates, investments in
funds focusing on the economically sensitive sectors (core sectors) are an
attractive investment avenue. Birla Sun Life Basic Industries Fund is an open-
ended equity fund investing in basic and core sector industries like Banks,
Capital goods and Automobiles. Since the fund invests in the core sectors, the
performance of the fund is directly linked to the economy's growth. Launched in
January 2000 (as Alliance Basic Industries Fund and subsequently taken over by
Birla Sun Life Mutual Fund on Sep 24, 2005), the fund is a multi-sector equity
scheme investing primarily in economy related cyclical stocks. This fund invests
in a wide range of industries which includes automobiles, cement, construction,
metals, capital goods, petrochemicals, steel, paper etc.
17) BSL Infrastructure Fund
Infrastructure is the backbone of any nation. Economists say that a country can
grow at an additional rate of 2-3% if it has proper infrastructure in place.
Infrastructure also needs to keep pace with country's development. This is
something that Indian infrastructure has lacked. The country has seen large
scale development in the past on various fronts like - roads, bridges, ports,
metro, urban housing etc. However, the extent of development has not been able
to fulfill the requirements.
18) BSL Buy India Fund
The objective of Birla Sun Life Buy India Fund is to attain long term growth of
capital through a portfolio with a target allocation of 100% in equity, focusing on
investing in businesses that are driven by India's large population and inherent
consumption patterns. Birla Sun Life Buy India Fund is an equity fund aiming to
capitalize on the growth opportunities provided by companies that are driven by
India's large population and consumption patterns. The prime focus of the
scheme is in consumer and healthcare sectors. .
The Indian economy has witnessed attractive rates of growth in the past. The
large population of the country and their inherent consumption patterns resulting
in a surge in demand is one of the major drivers for the attractive growth in the
Indian Economy. .
Launched in January 2000 (as Alliance Buy India Fund and subsequently taken
over by Birla Sun Life Mutual Fund on Sep 24, 2005), the fund is an open-ended
multi-sector equity fund with majority of the investments in the FMCG and
healthcare sectors .
19) Birla Sun Life New Millenium Fund
Birla Sun Life New Millenium Fund is a multi-sector open-ended growth scheme
with the focus of investing in Technology, Software, Hardware, Media, Telecom,
Internet and ecommerce and other technology enabled companies. India has
successfully emerged as the hub for providing IT and ITES services to global
customers, leveraging on its vast pool of skilled talent. The offshore model is
gaining momentum and is on the radar of every CIO of global companies looking
to outsource. Besides IT and ITES, Media and Telecom Services segments are
also expected to do well driven by the domestic consumption story. The idea is to
identify and invest in companies, which are at early growth stage and available at
attractive valuations using bottom-up approach.
Debt Schemes
Long Term Fund
1) Birla Sun Life Income Plus
Birla Sun Life Income Plus is an open-ended debt scheme with the objective to
generate consistent income through superior yields on its investments at
moderate levels of risk through a diversified investment approach.
2) Birla Sun Life Income Fund
Birla Sun Life Income Fund (Formerly: Alliance Income Fund) is an open-ended
income scheme with the objective of generating income and capital appreciation
by investing 100% of the corpus in a diversified portfolio of debt and money
market securities.
3) Birla Sun Life Dynamic Bond Fund
Birla Sun Life Dynamic Bond Fund is a scheme with an investment objective to
generate optimal returns with high liquidity through active management of the
portfolio by investing in high quality Debt and Money Market Instruments.
In the world of Fixed Income Investing, one needs a fund that can accurately
track the interest rate movements. A fund that can make flexible asset allocation
across various maturity profiles and debt asset classes. Thereby, taking your
investments high up the ladder, ensuring optimum returns. Birla Sun Life
Dynamic Bond Fund seeks to do just that by taking the sting out of Fixed Income
Investing.
Gilt Fund
1) Birla Sun Life Gilt Fund
Birla Sun Life Gilt Plus is an investment option that is safer than AAA rated
instruments, provides good liquidity at competitive returns and offers tax benefits.
Birla Sun Life Gilt Plus invests exclusively in Central Government Securities with
an objective of generating income and capital appreciation for the investors.
Government Securities (also called "Gilts" or "G-Secs") constitute a large portion
of the debt market and are highly liquid too. Moreover, Gilts are backed by a
sovereign guarantee, which means that there can be no default on the
repayment of the principal and the interest. For retail investors, one of the easier
ways to invest in Government Securities is through Mutual Funds.
BGP enables you to invest with low minimum investment amount (Rs. 5000
only), while taking away the procedural difficulties of direct investment in G-Secs.
To accommodate varying investment horizons, there are three plan options
Liduid Plan (upto 1 year), PF Plan (1 to 3 years) and regular plan (above 3
years).
2) BSL Govt Security Fund
Short Term Fund
1) BSL Savings Fund
Birla Sun Life Savings Fund is a 100% debt fund. It is positioned between the
money-market fund category and the income fund category, and generally has
average maturity between 6-18 months. It is ideal for investors with an
investment horizon of anywhere between one month to twelve months.
2) BSL Short Term Fund
Birla Sun Life Short Term Fund aims to generate income and capital appreciation
by investing 100% of the corpus in a diversified portfolio of debt and money
market securities with relatively low levels of interest rate risk.
Floating Rate Fund
1) BSL Floating Rate Fund
Birla Sun Life Floating Rate Fund is an open-ended income fund that primarily
invests in floating rate debt instruments (65%-100%). The schemes aims to
provide a regular stream of income while minimizing risks arising from interest
rate fluctuations / movement. Birla Floating Rate Fund is a product created to
help investors reduce interest rate related risks of the debt market.
The primary objective of the Scheme is to generate regular income through
investment in a portfolio comprising substantially of floating rate debt/money
market instruments. The scheme may invest a portion of its net assets in fixed
rate debt securities and money market instruments. The scheme will endeavour
to minimize interest rate risk and act as a hedge against increase in interest
rates.
The fund is expected to generate superior returns in an increasing interest rate
environment.
Birla Sun Life Floating Rate Fund offers two unique Plans - Short Term Plan and
Long Term Plan.
Cash Fund
1) BSL Cash Plus
Birla Sun Life Cash Plus (BSLCP) is a highly liquid income scheme with a focus
on prevention of capital erosion. Money is invested in safe instruments like Repo,
Treasury Bills, Commercial Paper, Certificates of Deposit and Non-Convertible
Debentures, giving you a broad based "parking" alternative, which can yield
better returns on money that would otherwise lie idle in a bank account. It makes
Money Management easy. .
Each instrument - whether it is high quality debt or a Money Market instrument -
is picked only after painstaking research with view to minimise risk. The first
scheme of its kind (launched in June 1997), the fund has since proven to be
immensely popular with money managers and individuals alike. .
Birla Sun Life Cash Plus is designed for higher short-term earnings, and gives
the convenience of a bank account. You get an Account Statement, similar to a
passbook, which records subscriptions and redemptions. You can, at any time,
add to your investment or withdraw all or part of it. You can even maintain a 'zero
balance' for a certain period of time.
2) BSL Cash Manager
Launched in 1998, Birla Sun Life Cash Manager aims to provide current income,
which is consistent with a portfolio that offers superior liquidity by investing 100%
in a diversified portfolio of debt (fixed income) & money market securities
Fixed Maturity Plan
1) BSL Fixed Maturity Fund – Annual Yearly Series 3
The market often witnesses high volatility. This increases the price risk,
especially for short-term investors. Birla Sun Life Fixed Maturity Plan is
specifically designed to control price risk. It is a close-ended 100% debt fund. It is
ideal for risk averse investors seeking stable returns over a fixed period similar to
bank fixed deposits. However, investors have the advantage of getting returns
which are tax efficient as compared to bank deposits.
Fixed Term Fund
Interval Income Fund
Hybrid Schemes
Balanced Fund
1) BSL Balanced
Birla Sun Life Balance strikes a balance between the growth that equity offers
and the safety that debt provides, thus seeking to maximize returns on your
investments at moderate levels of risk. .
Equity investments are best for the long-term growth of capital. However, it is still
volatile in the short term. Debt investments on the other hand are generally more
stable.
2) BSL 95 Fund
Birla Sun Life '95 Fund strikes a balance between the growth that equity offers
and the safety that debt provides, and thereby helps you achieve the best of both
worlds. Thus fund seeks to maximize returns on your investment at moderate
levels of risk. .
Launched in January 1995 (as Alliance '95 and subsequently taken over by Birla
Mutual Fund on Sep 24, 2005), the fund is an open-ended balanced scheme
investing across equity and debt classes with a target allocation of 60% in equity
and the remaining in debt and money market securities. Being a balanced fund, it
is geared towards providing a mixture of capital appreciation, safety and income.
The fund is ideal for investors seeking growth from equity investments but with a
cushion of debt.
3) Birla Sun Life MIP- I
Birla Sun Life MIP is an open-ended income scheme which seeks to generate
regular income through investments in fixed income securities so as to make
monthly payment or distribution to Unit-holders with the secondary objective
being growth of capital through investments in equity. Birla Sun Life MIP is
primarily a debt oriented fund that seeks to ensure an uninterrupted flow to unit
holders with an additional objective of capital growth.
4) BSL MIP- II
The concept of Monthly Income Plan (MIP) originates from the requirement of
providing higher returns to conservative investors. In a scenario where debt
returns have come down because of historic low interest rates, the MIP product
relies on small dosages of equities in a predominantly debt portfolio to provide
the return kicker. The concept of a debt portfolio with equity boosters has been
very successful in the past. With little alterations to this formula, it can be made
suitable to a much broader investor mass with varying risk profiles.
The Savings 5 variant of Birla Sun Life MIP II addresses the needs of investors
with a conservative risk profile.
The Wealth 25 variant of Birla Sun Life MIP II addresses the needs of investors
with a moderate risk profile.
5) BSL Monthly Income
Birla Sun Life Monthly Income is an open-end regular income scheme with the
primary objective to generate regular income so as to make monthly and
quarterly distributions to Unit-holders and the secondary objective being growth
of capital.
Fund Of Funds
1) Birla Sun Life Asset Allocation Fund
Birla Sun Life Asset Allocation Fund is an open ended Fund of Fund Scheme.
The Conservative Plan is ideally suited for an investor having a Conservative risk
profile. It provides a convenient and inexpensive way of creating a basket of
funds for the investor, which is rebalanced monthly. The scheme has the option
of investing upto 30% of its assets in schemes managed by other Mutual Funds.
The concept of asset allocation :Asset allocation strategy is based on the
concept of risk diversification. Investments in financial instruments are
recommended based on the risk appetite of the investor. Through asset
allocation, investors can decide on the best mix of debt and equity, which is
commensurate with their risk profile.
Birla Sun Life Asset Allocation Fund is an open ended Fund of Fund Scheme.
The Moderate Plan is ideally suited for an investor having a Moderate risk profile.
It provides a convenient and inexpensive way of creating a basket of funds for
the investor, which is rebalanced monthly. The scheme has the option of
investing upto 30% of its assets in schemes managed by other Mutual Funds.
Birla Sun Life Asset Allocation Fund is an open ended Fund of Fund Scheme.
The Aggressive Plan is ideally suited for an Aggressive Investor. It provides a
convenient and inexpensive way of creating a basket of funds for the investor,
which is rebalanced monthly. The scheme has the option of investing upto 30%
of its assets in schemes managed by other Mutual Funds.
Capital Protected Fund
India Advantage Fund
A Fund designed to seek long-term capital appreciation through investment
primarily in equity related securities of companies in India that are run by efficient
management, have a sustainable and robust business model and are available at
reasonable valuations. .
India Advantage Fund Ltd. is an open-ended Investment Company incorporated
in Mauritius which has been investing in India since 1996.
BSL Excel India Fund
Excel India Fund is an open-ended unit trust created under the laws of Ontario,
Canada pursuant to a declaration of trust dated November 17, 1997. Excel
Funds Management Inc. is the manager, trustee and promoter of the Fund. The
principal office of Excel and the Fund is located at 2000 Argentia Road, Plaza
Four, Suite # 290, Mississauga, Ontario, L5V 1W1. The Fund is open for
subscription to the Residents of Canada.
Excel India Fund invests most of its assets in India Excel (Mauritius) Fund (the
"Mauritius Sub-fund") which is an open-ended investment trust organized under
the laws of Mauritius. The Mauritius Sub-fund in turn invests most of its assets in
India Excel (Offshore) Fund (the "India Sub-fund') established as a dedicated
Sub-fund of Birla Mutual Fund. India Excel (Offshore) Fund is managed by Birla
Sun Life Asset Management Company Limited. India Excel (Offshore) Fund
invests in a diversified portfolio of well researched, globally competitive Indian
companies with sound growth potential. .
For complete details on Excel India Fund visit the official website of Excel Funds
Management Inc. www.excelfunds.com .
Bharuch Branch
Organization Structure of Bharuch Branch
Branch Manager/Head
(Maulik Patel)
Client Relationship & Operation Management (Roshni Dave)
Function of Branch Manager:
Branch Administration:
Attendance of office boy & house keeper.
Cash payment for required purchases & account billing.
Branch maintenance
Filling & Audit Reporting
Maintaining & updating database.
Handling Main Three Channels Distribution
National Distributors – like NJ, Karvi, Prudent.
Bank both Public & Private.
IFA- Individual Financial Advisor.
Other Important Functions.
Updated about the market scenario.
To increase sales volume & market
share of company.
To make strategic planning.
To build a healthy & long term
relationship with distributors & customers.
To solve queries on regular basis.
To be updated with competitors
strategy location as well as distributor wise.
To appoint, provide the training &
develop Individual Financial Advisors.
Basic Function of Client Relationship & Operation Management:
Solve the query of customer.
Checking the the filled application form & processing them &
forwarding them to CAMS.
Reporting for operation.
Preparing ex pence report of the branch.
RESEARCH METHODOLOGY
Research Problem Definition:
1. The measurement & analysis of performance of different Equity schemes that is Equity, Mid Cap, Equity Linked Saving Scheme, Index Fund & Close End Equity, of four selected companies i.e. Birla Sun Life Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual Fund & Reliance Mutual Fund through comparative study by using statistical tools & techniques.
About The Study This study is all about measurement & analysis of performance of different
Mutual Funds, and this has been done by comparative study between them.
There are around 35 mutual funds in India, among them only 4 companies taken for study purpose. And again they are among top 5 mutual funds in terms of market share in India. They are Birla Sun Life M.F., Reliance Mutual Fund, ICICI Prudential Mutual Fund & HDFC Mutual Fund.
This study is done for the month of February 2009. There are no. of schemes offered by different mutual funds like Equity,
Debt, Balanced, International schemes & fund of funds etc. but among them, only Equity Schemes chosen for research Study.
Again among equity schemes only those schemes have been chosen which are common for all mutual fund selected for study. Those Equity Schemes are Large Cap Schemes, Mid Cap Schemes, Blend Equity Schemes, Equity Linked Saving Schemes & Index Fund.
The performance measurement of schemes done by using 9 parameters. They are;
1. Return2. Asset Under Management 3. Portfolio Turnover Rate4. Standard Deviation5. beta6. Cash Holding7. Expense Ratio8. R-Squared9. Sharpe Ratio
As Return is main measure among 9 parameters, the hypothesis is set & Test is applied on it. And whatever result come out from the calculation will decide whether the performance of Birla Sun Life Mutual Fund is Effective or Ineffective.
Apart from the Return all other parameters are very crucial one is suppose to make investment decision about which Mutual Fund to select for investment as specially in Equity Schemes. So all this parameters are taken as
Standard Deviation & Beta- Shows the Risk Profile E
Objectives of Study
Primary Objectives:
To know how to measure & analyse the performance of Equity Schemes of different Mutual Fund Company.To get understand the Statistical tools & other important parameters use to make comparison of performance of different Mutual Fund Companies.To study what is the performance of Birla Sun Life Mutual Fund. To find which company perform well among selected four companies.
Secondary Objectives
To increase my knowledge regarding what are the parameters which seems very important before making investment decision particularly in mutual fund & in that for equity schemes. To share my knowledge/experience of study with others.
UTILITY OF RESEARCH STUDY
Useful to Investor:
The investor naturally would be interested in tracking the value of his investment, whether he invests directly in the markets or indirectly through mutual funds. He would have to make intelligent decisions on whether he gets an acceptable return on his investments in the funds selected by him, or if he needs to switch to another fund.
He therefore needs to understand the basis of appropriate performance measurement for the fund, & acquire the basic knowledge of the different measures of evaluating the performance of a fund. Only then would he be in position to judge correctly whether his fund is performing well or not and make the right decisions.
Useful to advisor:
If person is an intermediary recommending a mutual fund to a potential investor, he would expect advisor to give him proper advice on which fund have a good performance track record. If advisor want to be an effective investment advisor, then he too have to know how to measure and evaluate the performance of the different funds that are available to the investor. The need to compare different funds’ performance requires the advisor to have the knowledge of the correct and appropriate measures of evaluating the fund performance.
Useful to company
The performance of any company become meaningful when it is compared with other companies for same period so this comparative study is definitely useful as this study provide very important data to company & can adopt competitive strategy for improvement or increase the performance & thereby its sales & market share in industry.
Scope of the study
There are only four Mutual Fund companies included in the study they are Birla Sun Life Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual
Fund & Reliance Mutual Fund. Among all schemes of all companies only Equity Schemes- Equity Fund,
Mid Cap Schemes, ELSS, Close End Equity Fund & Index Fund have been taken for the study.
There are 8 parameters taken for measurement purpose. They are Return, Asset Under Management, Portfolio Turnover Rate, Standard Deviation, Beta, Cash Holding, Expense Ratio & R-Squared.
DATA COLLECTION
data used in the comparative study is secondary data. In other word comparative study is based on secondary data. Data is collected from “Factsheet” other required information through internet.
Factsheet:
It is the monthly report of all schemes of Mutual Fund Company. It involves data like Investment Performance, Portfolio & Asset Allocation, Investment Objectives, Entry & Exit Load, AUM and many important information.
LITERATURE REVIEW
Return :
This is the main & popularly used tool for performance measurement of any scheme.
Formula:
[(Distributions + Change in NAV)/ NAV at the beginning of the period] *100.
Return can be a cumulative aggregate return or it can be a average annualized return. For comparison average annualized return is more effective.
The fund/ scheme which gives high return is perform well but performance must be interpreted in the light of market conditions & investment objective of the fund.
Asset Under Management
Meaning : It stands for Asset Under Management. It states the total amount invested in different avenues like Share, Debenture, Bonds, Money Market instrument, real Estate, Insurance etc.
Fund size can affect performance. Small funds are easier to maneuver and can achieve their objectives in a focused manner with limited holdings. Large funds benefit from economies of scale with lower expense ratios and superior fund management skills. They also gain through greater risk bearing and management capacity.
But still if AUM is higher then it means scheme/fund is successful & people are interested to invest in it.
Portfolio Turnover Rate.
Meaning : it means how frequently the fund’s portfolio is turned over by selling & buying the securities of fund.
Formula : portfolio Turnover Rate measures the amount of buying & selling of securities done by a fund. It is defined as the lesser of assets purchased or sold divided by the fund’s net assets.
Purpose : the ratio measures how many times the fund manager turns over his portfolio by buying or selling of securities in the market. A 100% turnover implies that the manager replaced his entire portfolio during the period in question.
Interpretation : This percentage is a good indicator of the extent to which the fund is active in terms of its dealing on the market. However, high turnover ratio also indicates high transaction costs charged to the fund. The net return to the investor can be lower with high transaction costs.
Standard Deviation
Risk is defined as volatility, is measurable by the statistical concept of Standard Deviation. Standard Deviation measures the fluctuations of the fund’s returns around a mean level. Use monthly results of an equity fund. Tabulate the returns. Calculate mean (average) returns. Calculate the variance of each month’s return from the mean. Square these numbers. Sum up. Divide by the number of periods of observations. Compute the overall variance or the Standard Deviation. Standard Deviation basically gives you an idea of how volatile the earning are. Standard Deviation can be computed for both equity and debt funds. Standard Deviations of different funds can be compared with each other, or with Standard Deviation of a market index or even that of another category.
S.D = √∑(R – R) 2/n
Beta
Another measures of risk is its beta coefficient. Beta relates a fund’s return with market index and measures the sensitivity of the fund’s returns to changes in the market index. A Beta of 1 means the funds moves with market. A Beta of less than 1 means the fund will be less volatile than the market, typically in case of conservative portfolios. Higher beta portfolios gives greater returns in rising markets & are riskier in falling markets. A good measure of fund risk level.
Cash Holding
Meaning: mutual funds allocate their assets among equity share, debt securities and cash /bank deposits. The percentage of a fund’s portfolio held in cash equivalent can be an important element in its successful performance.
Interpretation: a large cash holding allows the fund to strengthen its position in preferred securities without liquidating its other portfolios. Cash also allows the fund a cushion against decline in the market prices of shares or bonds. The fund must also guard against large, consistent net redemptions, because these not only indicate dissatisfaction on the part of investors, but also force the fund to maintain large cash reserves lowering the return on the portfolio. It becomes difficult for the fund to attain its objectives in such a situation.
Expense Ratio
Meaning : Its shows the total expense in relation to average net asset of the fund.
Formula : it is defined as the ratio of total expenses to average net assets of the fund. Total Expense/ Net Assets
Purpose: The expense ratio is an indicator of the fund’s efficiency and cost effectiveness.
This expense ratio must be evaluated in light of fund size, average account size and portfolio composition – equity or fixed income. For example fund with small corpus size will have a higher expense ratio affecting investor returns than a large corpus fund.
R-Squared
R-Squared measures how much of a fund’s fluctuations is attributable to movements in the overall market, from 0 to 100 percent. To be meaningful, the fund being evaluated should have some correlation with the market.
This term coined by Bogle, it explains the fund’s performance in relation to a benchmark like a market index. Simply put, a high proportion of an equity fund’s Total Return is generally explained by the return on the index or the performance of the overall market. Only 10 to 20% of a fund’s return may come from the fund’s strategy. If ExMark is lower than 80%, the fund’s performance relative to the market is less predicable.
LIMITATION OF THE STUDY.
First and foremost limitation is that the study is based on the secondary data. So secondary data may or may not reliable.
There are only four Mutual Fund companies included in the study they are Birla Sun Life Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual
Fund & Reliance Mutual Fund. The number of companies taken for study is less so
LARGE CAP SCHEME
Large Cap Schemes Return180 Days 1year 3 year 5 year
Birla Sun Life Equity Fund -33.94 -49.38 -2.74 16.5HDFC Top 200 -29.49 -38.75 1.8 16.61ICICI Prudential Growth Fund -27.21 -37.2 -0.25 12.34Reliance Vision Fund -29.71 -44.66 -0.95 14.89
Performance of Large Cap Schemes of Mutual Funds in Terms of Return
-60
-40
-20
0
20
180 Days 1year 3 year 5 year
Period (Year)
Ret
urn
(%
)
Birla Sun Life Equity Fund HDFC Top 200
ICICI Prudential Growth Fund Reliance Vision Fund
Mid Cap Schemes
Mid Cap Schemes Return180 Days 1 Year 3 Year
Birla Sun Life Mid Cap -37.09 -51.43 -4.47HDFC Capital Builder -33.89 -46.81 -5.19ICICI Prudential Emerging Star -48.11 -61.82 -15.24Reliance Equity Opportunity. -35.13 -46.81 -5.62
Performance of Mid Cap Schemes of Mutual Funds in Terms of Return
-80
-60
-40
-20
0
180 Days 1 Year 3 Year
Period (Year)
Ret
urn
(%
)
Birla Sun Life Mid Cap HDFC Capital Builder
ICICI Prudential Emerging Star Reliance Equity Opportunity.
Blend Equity Schemes
Blend Equity Schemes Return180 Days 1 Year 3 Year 5 Year
Birla Sun Life Basic India Fund -35.77 -51.44 -5.66 9.3HDFC Growth Fund -33.2 -42.4 2.81 15.64ICICI Dynamic Fund -30.69 -36.34 2.53 17.95Reliance Growth -36.13 -44.79 -0.11 21.7
Performance of Blend Equity Schemes of Mutual Funds in Terms of Return
-60
-40
-20
0
20
40
180 Days 1 Year 3 Year 5 Year
Period (Year)
Ret
urn
(%
)
Birla Sun Life Basic India Fund HDFC Growth Fund
ICICI Dynamic Fund Reliance Growth
Equity Linked Saving Schemes
Return180
Days 1 Year 3 Year 5 YearBirla Sun Life Tax Relief 96 -37.73 -54.81 -5.51 7.08HDFC Tax Saver -31.72 -43.82 -5.93 18.69ICICI Tax Plan -39.16 -46.08 -11.02 14.56Reliance Tax Saver -27.08 -40.71 -6.67 19.4
Performance of Equity Linked Saving Schemes Of Mutual Funds in Terms of Return
-60
-40
-20
0
20
40
180 Days 1 Year 3 Year 5 Year
Return For Periods
Ret
urn
%
Birla Sun Life Tax Relief 96 HDFC Tax Saver
ICICI Tax Plan Reliance Tax Saver
Index Funds Return
180 Days 1 Year 2 Year 3 Year
Birla Sun Life Index Fund -33.41 -44.24 -15.6 -1.52HDFC Index Fund -32.58 -43.08 -17.75 -3.82ICICI Index Fund -32.67 -41.87 -12.87 0.96Reliance Quant Plus Fund -30.91 -42.75 -16.42 2.42
Performance of Index Funds of Mutual Funds in Terms of Return
-60
-40
-20
0
20
180 Days 1 Year 2 Year 3 Year
Period (Year)
Ret
urr
n (
%)
Birla Sun Life Index Fund HDFC Index Fund
ICICI Index Fund Reliance Quant Plus Fund
Large Cap Schemes
Measures/ Parameters
Large Cap Schemes of Mutual Funds
Birla Sun Life Equity Fund HDFC Top 200
ICICI Prudential Growth Plan
Reliance Vision Fund
AUM 699.07 1931.84 234.97 2280.86
Rank 3 2 4 1Portfolio Turnover Rate 4.33 6.26 0.88 2.02
Rank 2 1 4 3S.D 32.23 8.4 27.69 4.29
Rank 4 2 3 1Beta 0.93 0.89 0.91 0.88
Rank 4 2 3 1Cash Holding 29.67 8.14 9.05 6.05
Rank 1 3 2 4Expense Ratio 2.02 2 2.36 1.86
Rank 3 2 4 1R-Squared 0.95 0.89 0.97 0.90
Rank 2 4 1 3Sharpe Ratio -0.32 -0.02 -0.1 -0.0015
Rank 4 1 3 2
Performance of Birla Sun Life Mutual Fund in terms of AUM is Good but not effective as like Reliance & HDFC. Their AUM is higher by 3.26 and 2.76 times respectively & BSLMF got 3rd rank. So there is scope of improvement in AUM.
Performance in case of Portfolio Turnover Rate of BSLMF is Effective and got 2nd rank. High portfolio Turnover Rate shows that company manages the portfolio actively.
Standard Deviation shows the variability in Return. So performance of BSLMF in terms of Standard Deviation is Poor as it got 4th Rank, and S.D of BSLMF is as high as 7.51 & 3.84 times than Reliance & HDFC respectively. S.D should low.
Performance of BSLMF in terms of Beta also, Poorer as compare to all the three Mutual Funds as it got 4th rank. It indicates that funds performance is more sensitive to the market movements.
In cash Holding BSLMF got 1st rank so Fund’s performance is Excellent. Cash Holding in portfolio shows required Liquidity. And in today’s falling market its really a good sing to have proper & enough liquidity.
Expense Ratio shows the total expense to total Asset. So performance of BSLMF is Good but not Effective just like Reliance & HDFC. And it got 3rd rank.
R-Squared refers to fund’s Performance (in terms of return) prediction as per the performance of market. So higher the R-Squared, more the performance of fund is predictable from market performance. So with 2nd rank it can be said that BSLMF performance is more like market performance.
Sharpe Ratio:
Measures/Parameters Mid Cap Schemes Of Mutual Fund
Birla Sun Life Mid Cap Fund
HDFC Capital Builder Fund
ICICI Prudential Emerging Star Fund
Reliance Equity Opportunity Fund
AUM 317.47 350.47 223.91 966.29Rank 3 2 4 1
Portfolio Turnover Rate 1.09 4.42 0.33 0.98Rank 2 1 4 3
S.D 34 9.1 37.46 4.44Rank 3 2 4 1
Beta 0.87 0.93 0.91 0.89Rank 1 4 3 2
Cash Holding 17.47 6.88 7.25 3.94Rank 1 3 2 4
Expense Ratio 2.22 2.21 2.36 1.95Rank 3 2 4 1
R-Squared 0.87 0.83 0.88 0.86Rank 2 4 1 3
Sharpe Ratio -0.33 -0.06 -0.41 -0.0165Rank 3 2 4 1
Mid Cap Schemes
Measures/Parameters Blend Equity Schemes Of Mutual Funds
Birla Sun Life Basic India Fund
HDFC Growth Fund
ICICI Prudential Dynamic Fund
Reliance Equity Fund
AUM 69.8 744.44 990.02 1570.11Rank 4 3 2 1
Portfolio Turnover Rate 2.3 6.54 1.6 2.01Rank 2 1 4 3
S.D 33.7 8.7 29.61 3.6Rank 4 2 3 1
Beta 0.97 1 0.93 0.74Rank 3 4 2 1
Cash Holding 35.26 19.87 8.56 19.85Rank 1 2 4 3
Expense Ratio 2.46 2.06 2.05 1.84Rank 4 3 2 1
R-Squared 0.88 0.83 0.89 0.92Rank 3 4 2 1
Sharpe Ratio -0.39 -0.01 0 -0.028Rank 4 2 1 3
Equity Linked Saving Schemes (ELSS)
Measures/Parameters Equity Linked Saving Schemes Of Mutual Fund
Birla Sun Life Tax Relief 96
HDFC Tax Saver
ICICI Tax Plan Reliance Tax Saver
AUM 438.15 936.06 463.63 1216.94Rank 4 2 3 1
Portfolio Turnover Rate 0.85 4.43 2.19 2.13Rank 4 1 2 3
S.D 36.13 9 34.95 4.41Rank 4 2 3 1
Beta 1.03 0.92 1.03 0.84Rank 3 2 3 1
Cash Holding 16.06 4.84 2.4 5.17Rank 1 3 4 2
Expense Ratio 2.21 1.98 2.27 1.93Rank 3 2 4 1
R-Squared 0.84 0.81 0.78 0.79Rank 1 2 4 3
Sharpe Ratio -0.36 -0.07 0.35 -0.0321Rank 4 2 3 1
Index Funds
Measures / Parameters
Index Fund of Mutual Funds
Birla Sun Life Index Fund
HDFC Index Fund
ICICI Index Fund
Reliance Quant Plus
AUM 28.22 25.22 36.32 34.34Rank 3 4 1 2
Portfolio Turnover Rate 3.25 15.43 1.83 2.38
Rank 2 1 4 3S.D 31.67 9.51 29.82 4.99
Rank 4 2 3 1Beta 0.99 0.92 0.99 0.86
Rank 3 2 3 1Cash Holding 20.25 8.68 0.35 4.1
Rank 1 2 4 3Expense Ratio 1.5 1.24 1.25 2.5
Rank 3 1 2 4R-Squared 0.94 0.92 1 0.97
Rank 3 4 1 2Sharpe Ratio -0.28 0.08 0.07 -0.19
Rank 4 2 1 3