project of anand rathi
TRANSCRIPT
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CERTIFICATE
This is to certify that Mr. Devabrata Patra a student of Reformers Business School, Indore
has completed project work on “Performance of Mutual Funds and its Awareness among
the Patrons in the Present Market” under my guidance and supervision.
I certify that this is an original work and has not been copied from any source.
Signature of Guide
Name of Project Guide Mr. Rehan Hassan
Date-
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ACKNOWLEDGEMENT
With regard to my Project with Mutual Fund I would like to thank each and every one
who offered help, guideline and support whenever required.
First and foremost I would like to express gratitude to AnandRathi
Financial Services Ltd. to give the opportunity for research project on
“Performance of Mutual Funds and its Awareness among the Patrons in the
Present Market”. I am extremely grateful to my guide, Mr. Rehan Hassan (Senior
Manager of AR) for their valuable guidance and timely suggestions.
And lastly, I would like to express my gratefulness to my parent’s for being the torch
in my life.
DEVABRATA PATRA
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Objectives and Research Methodology
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OBJECTIVES OF THE STUDY
The objective of the research is to study and analyze the awareness level of investors of
mutual funds.
To measure the satisfaction level of investors regarding mutual funds.
An attempt has been made to measure various variable’s playing in the minds of investors in
terms of safety, liquidity, service, returns, and tax saving.
To get insight knowledge about mutual funds
Understanding the different ratios & portfolios so as to tell the distributors about these terms,
by this, managing the relationship with the distributors
To know the mutual funds performance levels in the present market
To analyze the comparative study between other leading mutual funds in the present market.
To know the awareness of mutual funds among different groups of investors.
Finding out ways and means to improve on the services by Anand Rathi.
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RESEARCH METHODOLOGY
My research project has a specified framework for collecting the data in an effective manner. Such framework is called “RESEARCH DESIGN”. The research process which was followed by me consisted following steps.
A. PROBLEM:
The problem at hand was to study and measure the awareness level of people regarding mutual funds
in the city.
B. DEVELOPING THE RESEARCH PLAN:
The development of Research Plan has the following Steps:
1. DATA SOURCES: Two types of data were taken into consideration i.e. Secondary data &
primary data. My major emphasis was on gathering the primary data. The secondary data has
been used to make things more clear.
(i) Primary Data: Direct collection of data from the source of information, technology
including personal interviewing, survey etc.
(ii) Secondary Data: Indirect collection of data from sources containing past or recent past
information like Bank’s Brochures, Annual publications, Books, Fact sheets of mutual funds,
Newspaper & Magazines etc.
2. RESEARCH INSTRUMENT
A close friend questionnaire was constructed for my survey. Questionnaire consisting of a set of questions made to be filled by various respondents.
3. SAMPLING PLAN
The sampling plan calls for three decisions.
a) Sampling Unit: I have completed my survey in Banjara Hills, Hyderabad.
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b) Sample Size: The sample consisted of 100 respondents. The sample was drawn from walk in
customers of Anand Rathi Financial Services Ltd. The selection of the respondents was done
on the basis of simple random sampling.
c) Contact Methods
I have contacted the respondents through personal interviews.
C. COLLECTING THE INFORMATION
After this, I have collected the information from the respondents with the help of questionnaire.
D. ANALYZE THE INFORMATION
The next step is to extract the pertinent findings from the collected data. I have tabulated the collected data & developed frequency distributions. Thus the whole data was grouped aspect wise and was presented in tabular form. Thus, frequencies & percentages were prepared to render impact of the study.
E. PRESENTATIONS OF FINDINGS
This was the last step of the survey.
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SUMMARY
In few years Mutual Fund has emerged as a tool for ensuring one’s financial well
being. Mutual Funds have not only contributed to the India growth story but have also
helped families tap into the success of Indian Industry. As information and awareness
is rising more and more people are enjoying the benefits of investing in mutual funds.
The main reason the number of retail mutual fund investors remains small is that nine
in ten people with incomes in India do not know that mutual funds exist. But once
people are aware of mutual fund investment opportunities, the number who decide to
invest in mutual funds increases to as many as one in five people. The trick for
converting a person with no knowledge of mutual funds to a new Mutual Fund
customer is to understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that customers will
accept as important and relevant to their decision.
This Project gave me a great learning experience and at the same time it gave me
enough scope to implement my analytical ability. The analysis and advice presented
in this Project Report is based on market research on the saving and investment
practices of the investors and preferences of the investors for investment in Mutual
Funds. This Report will help to know about the investors’ Preferences in Mutual Fund
means Are they prefer any particular Asset Management Company (AMC), Which
type of Product they prefer, Which Option (Growth or Dividend) they prefer or
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Which Investment Strategy they follow (Systematic Investment Plan or One time
Plan). This Project as a whole can be divided into two parts.
The first part gives an insight about Mutual Fund and its various aspects, the
Company Profile, Objectives of the study, Research Methodology. One can have a
brief knowledge about Mutual Fund and its basics through the Project.
The second part of the Project consists of data and its analysis collected through
survey done on 100 people. For the collection of Primary data I made a questionnaire
and surveyed of 100 people. I also taken interview of many People those who were
coming at the AnandRathi Branch where I done my Project. “Performance of
Mutual Funds and its awareness among the Patrons in the Present Market” The
data collected has been well organized and presented. I hope the research findings and
conclusion will be of use.
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Company Profile
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ANAND RATHI
ORGANIZATION HISTORY
Company Profile Milestones AR Core Strengths Management Team
About Anand Rathi
Anand Rathi (AR) is a leading full service securities firm providing the entire gamut of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance, structured products - all of which are supported by powerful research teams.
The firm's philosophy is entirely client centric, with a clear focus on providing long term value addition to clients, while maintaining the highest standards of excellence, ethics and professionalism. The entire firm activities are divided across distinct client groups: Individuals, Private Clients, Corporate and Institutions and was recently ranked by Asia Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich.
In year 2007 Citigroup Venture Capital International joined the group as a financial partner.
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Equity & Derivatives Brokerage
Anand Rathi provides end-to-end equity solutions to institutional and individual investors. Consistent delivery of high quality advice on individual stocks, sector trends and investment strategy has established us a competent and reliable research unit across the country.
Clients can trade through us online on BSE and NSE for both equities and derivatives. They are supported by dedicated sales & trading teams in our trading desks across the country. Research and investment ideas can be accessed by clients either through their designated dealers, email, web or SMS
Milestones
1994:
Started activities in consulting and Institutional equity sales with staff of 15
1995:
Set up a research desk and empanelled with major institutional investors
1997:
Introduced investment banking businesses
Retail brokerage services launched
1999:
Lead managed first IPO and executed first M & A deal
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2001:
Initiated Wealth Management Services
2002:
Retail business expansion recommences with ownership model
2003:
Wealth Management assets cross Rs1500 crores
Insurance broking launched
Launch of Wealth Management services in Dubai
Retail Branch network exceeds 50
2004:
Commodities brokerage and real estate services introduced
Wealth Management assets cross Rs3000crores
Institutional equities business re-launched and senior research team put in place
Retail Branch network expands across 100 locations within India
2005:
Real Estate Private Equity Fund Launched
Retail Branch network expands across 200 locations within India
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2006:
AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange (DGCX)
Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money 2006 poll
Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the High Net worth Individuals (HNI) Category
Ranked 9th in the Retail Category having more than 5% market share
Completes its presence in all States across the country with offices at 300+ locations within India
2007: Citigroup Venture Capital International picks up 19.9% equity stake
Retail customer base crosses 100 thousand
Establishes presence in over 350 locations
AR Core Strengths
Breadth of Services
In line with its client-centric philosophy, the firm offers to its clients the entire spectrum of financial services ranging from brokerage services in equities and commodities, distribution of mutual funds, IPO’s and insurance products, real estate, investment banking, merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the product specialists from across the firm to create an optimum solution to the client needs.
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Management Team
AR brings together a highly professional core management team that comprises of individuals with extensive business as well as industry experience.
In-Depth Research
Our research expertise is at the core of the value proposition that we offer to our clients. Research teams across the firm continuously track various markets and products. The aim is however common - to go far deeper than others, to deliver incisive insights and ideas and be accountable for results.
Management Team
The senior Management comprises a diverse talent pool that brings together rich experience from across industry as well as financial services.
Mr. Anand Rathi - Group ChairmanChartered AccountantPast President, BSEHeld several Senior Management positions with one of India's largest industrial groups
Mr. Pradeep Gupta - Vice Chairman Plus 17 years of experience in Financial Services
Mr. Amit Rathi - Managing Director Chartered Accountant & MBAPlus 11 years of experience in Financial Services
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ACQUISITION:
ANZ Grind lays : $ 1.34 bn from August 2000.
Hong Kong Consumer Bank: $ 1.32 bn
Thailand Nakornthan Bank : $ 320 million
Indonesians Bank Per-Mata : $ 366 million from Oct. 2004.
Korea First Bank : $ 3.3 bn from Apr. 2005.
Standard Chartered PLC is listed on both the London Stock Exchange and the Stock Exchange of Hong Kong and is in the top 25 FTSE-100 companies, by market capitalization. Top 100 companies list, no other bank present except Bank of America’s position 69th and position of standard chartered bank is 74th.
Offices of ANANDRATHI are in 197 cities across 28 states & it has also branches in Dubai & Bangkok with more than 44000 employees. It has daily turnover in excess of Rs.4bn. It has 1, 00,000+ clients nationwide. It is also leading distributor of IPO’s.
In India where ANAND RATHI is present in 21 STATES:
Andhra PradeshAssamBiharChhattisgarhDelhiGoaGujaratHaryanaJammu & KashmirJharkhandKarnatakaKeralaMadhya PradeshMaharashtraOrissaPunjabRajasthan
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Tamil NaduUttar PradeshUttaranchalWest Bengal
LIST OF PRODUCTS:
Demat Accounts
Mutual Funds
Derivatives
Commodities
Bonds
Trading Account
Insurance
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MISSION
To be India's first Multinational providing complete financial services solution across the globe
VISION
Providing integrated financial care driven by the relationship of trust and confidence.
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Introduction of Study
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INTRODUCTION
What is a Mutual fund?
Mutual fund is an investment company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end Mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end Mutual funds continuously offer new shares to investors. Also known as an open-end investment company, to differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current netAsset value: total fund assets divided by shares outstanding.
In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of Mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The Mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. In India, A Mutual fund is required to be registered with
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Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public. In Short, a Mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
ADVANTAGES OF MUTUAL FUNDS
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Professional Management.
The major advantage of investing in a mutual fund is that you get a professional money
manager to manage your investments for a small fee. You can leave the investment decisions
to him and only have to monitor the performance of the fund at regular intervals.
Diversification.
Considered the essential tool in risk management, mutual funds make it possible for even
small investors to diversify their portfolio. A mutual fund can effectively diversify its
portfolio because of the large corpus. However, a small investor cannot have a well-
diversified portfolio because it calls for large investment. For example, a modest portfolio of
10 bluechip stocks calls for a few a few thousands.
Convenient Administration.
Mutual funds offer tailor-made solutions like systematic investment plans and systematic
withdrawal plans to investors, which is very convenient to investors. Investors also do not
have to worry about investment decisions; they do not have to deal with brokerage or
depository, etc. for buying or selling of securities. Mutual funds also offer specialized
schemes like retirement plans, children’s plans, industry specific schemes, etc. to suit
personal preference of investors. These schemes also help small investors with asset
allocation of their corpus. It also saves a lot of paper work.
Costs Effectiveness
A small investor will find that the mutual fund route is a cost-effective method (the AMC fee
is normally 2.5%) and it also saves a lot of transaction cost as mutual funds get concession
from brokerages. Also, the investor gets the service of a financial professional for a very
small fee. If he were to seek a financial advisor's help directly, he will end up paying
significantly more for investment advice. Also, he will need to have a sizeable corpus to offer
for investment management to be eligible for an investment adviser’s services.
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Liquidity.
You can liquidate your investments within 3 to 5 working days (mutual funds dispatch
redemption cheques speedily and also offer direct credit facility into your bank account i.e.
Electronic Clearing Services).
Transparency.
Mutual funds offer daily NAVs of schemes, which help you to monitor your investments on a
regular basis. They also send quarterly newsletters, which give details of the portfolio,
performance of schemes against various benchmarks, etc. They are also well regulated and
Sebi monitors their actions closely.
Tax benefits.
You do not have to pay any taxes on dividends issued by mutual funds. You also have the
advantage of capital gains taxation. Tax-saving schemes and pension schemes give you the
added advantage of benefits under section 88.(ELSS)
Affordability
Mutual funds allow you to invest small sums. For instance, if you want to buy a portfolio of
blue chips of modest size, you should at least have a few lakhs of rupees. A mutual fund
gives you the same portfolio for meager investment of Rs.1,000-5,000. A mutual fund can do
that because it collects money from many people and it has a large corpus.
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DISADVANTAGES OF MUTUAL FUNDS:
Professional Management- Did you notice how we qualified the advantage of professional management with the word "theoretically"? 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. We'll talk about this in detail in a later section.
Costs - Mutual funds don't exist solely to make your life easier--all funds are in it for a profit. The Mutual fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this tutorial we have devoted an entire section to the subject.
Dilution - It's possible to have too much diversification (this is explained in our article entitled "Are You Over-Diversified?"). 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.
Taxes - When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.
Equity funds, if selected in the right manner and in the right proportion, have the ability to play an important role in achieving most long-term objectives of investors in different segments. While the selection process becomes much easier if you get advice from professionals, it is equally important to know certain aspects of equity investing yourself to do justice to your hard earned money.
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TYPES OF MUTUAL FUND SCHEMES
1. BY STRUCTURE
Open – Ended Schemes.
Close – Ended Schemes.
Interval Schemes.
2. BY INVESTMENT OBJECTIVE
Growth Schemes.
Income Schemes.
Balanced Schemes.
3. OTHER SCHEMES
Tax Saving Schemes.
Special Schemes.
Index Schemes.
Sector Specific Schemes.
1. OPEN – ENDED SCHEMES
The units offered by these schemes are available for sale and repurchase on any business day at
NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such schemes
thus offer very high liquidity to investors and are becoming increasingly popular in India. Please
note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and may
stop issuing further subscription to new investors. On the other hand, an open-ended fund rarely
denies to its investor the facility to redeem existing units.
2. CLOSED – ENDED SCHEMES
The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of
units. These schemes are launched with an initial public offer (IPO) with a stated maturity period
after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or
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sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital
in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may
offer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid as
compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends
towards the NAV closer to the maturity date of the scheme.
3. INTERVAL SCHEMES
These schemes combine the features of open-ended and closed-ended schemes. They may be traded
on the stock exchange or may be open for sale or redemption during pre-determined intervals at
NAV based prices.
4. GROWTH SCHEMES
These schemes, also commonly called Equity Schemes, seek to invest a majority of their funds in
equities and a small portion in money market instruments. Such schemes have the potential to
deliver superior returns over the long term. However, because they invest in equities, these schemes
are exposed to fluctuations in value especially in the short term.
5. INCOME SCHEMES
These schemes, also commonly called Debt Schemes, invest in debt securities such as corporate
bonds, debentures and government securities. The prices of these schemes tend to be more stable
compared with equity schemes and most of the returns to the investors are generated through
dividends or steady capital appreciation. These schemes are ideal for conservative investors or those
not in a position to take higher equity risks, such as retired individuals. However, as compared to the
money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they
have a higher credit risk.
6. BALANCED SCHEMES
These schemes are commonly known as Hybrid schemes. These schemes invest in both equities as
well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of
income and moderate capital appreciation and are ideal for investors with a conservative, long-term
orientation.
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7. TAX SAVING SCHEMES
Investors are being encouraged to invest in equity markets through Equity Linked Savings Scheme
(“ELSS”) by offering them a tax rebate. Units purchased cannot be assigned / transferred/ pledged /
redeemed / switched – out until completion of 3 years from the date of allotment of the respective
Units.
The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations, 1996
and the notifications issued by the Ministry of Finance (Department of Economic Affairs),
Government of India regarding ELSS.
Subject to such conditions and limitations, as prescribed under Section 88 of the Income-tax Act,
1961.
8. INDEX SCHEMES
The primary purpose of an Index is to serve as a measure of the performance of the market as a
whole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluate
the performance of mutual funds. Some investors are interested in investing in the market in general
rather than investing in any specific fund. Such investors are happy to receive the returns posted by
the markets. As it is not practical to invest in each and every stock in the market in proportion to its
size, these investors are comfortable investing in a fund that they believe is a good representative of
the entire market. Index Funds are launched and managed for such investors.
9. SECTOR SPECIFIC SCHEMES.
Sector Specific Schemes generally invests money in some specified sectors for example: “Real
Estate” Specialized real estate funds would invest in real estates directly, or may fund real estate
developers or lend to them directly or buy shares of housing finance companies or may even buys
their securitized assets.
SEBI Registered Mutual Funds
1. FORTIS Mutual fund
2. Alliance Capital Mutual fund,
3. AIG Global Investment Group Mutual fund
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4. Benchmark Mutual fund,
5. Baroda Pioneer Mutual fund
6. Birla Mutual fund
7. Bharti AXA Mutual fund
8. Canara Robeco Mutual fund
9. CRB Mutual fund (Suspended)
10. DBS Chola Mutual fund,
11. Deutsche Mutual fund
12. DSP Blackrock Mutual fund,
13. Edelweiss Mutual fund
14. Escorts Mutual fund,
15. Franklin Templeton Mutual fund
16. Fidelity Mutual fund
17. Goldman Sachs Mutual fund
18. HDFC Mutual fund,
19. HSBC Mutual fund,
20. ICICI Securities Fund,
21. IL & FS Mutual fund,
22. ING Mutual fund,
23. ICICI Prudential Mutual fund
24. IDFC Mutual fund,
25. JM Financial Mutual fund
26. JP Morgan Mutual fund
27. Kotak Mahindra Mutual fund,
29. LIC Mutual fund
31. Morgan Stanley Mutual fund
32. Mirae Asset Mutual fund
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33. Principal Mutual fund
34. Quantum Mutual fund,
35. Reliance Mutual fund
36. Religare AEGON Mutual fund
37. Sahara Mutual fund,
38. SBI Mutual fund
39. Shriram Mutual fund
40. Sundaram BNP Paribas Mutual fund,
41. Taurus Mutual fund
42. Tata Mutual fund,
43. UTI Mutual fund
If the complaints remain unresolved, the investors may approach SEBI for facilitating redressal of
their complaints. On receipt of complaints, SEBI takes up the matter with the concerned Mutual fund
and follows up with it regularly. Investors may send their complaints to:
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)OFFICE OF INVESTOR ASSISTANCE AND EDUCATION (OIAE)EXCHANGE PLAZA, “G” BLOCK, 4TH FLOOR,BANDRA-KURLA COMPLEX,BANDRA (E), MUMBAI – 400 051.PHONE: 26598510-13
Pointers to Measure Mutual Fund Performance
MEASURES DESCRIPTION IDEAL RANGE
STANDARD
DEVIATION
Standard Deviation allows to evaluate the volatility
of the fund. The standard deviation of a fund
measures this risk by measuring the degree to which
the fund fluctuates in relation to its mean return.
Should be near to it’s mean
return.
BETA Beta is a fairly commonly used measure of risk. It
basically indicates the level of volatility associated
with the fund as compared to the benchmark.
Beta > 1 = high risky
Beta = 1 = Avg
Beta <1 = Low Risky
R-SQUARE R- square measures the correlation of a fund’s
movement to that of an index. R-squared describes
the level of association between the fund's volatility
and market risk.
R-squared values range
between 0 and 1, where 0
represents no correlation and
1 represents full correlation.
ALPHA Alpha is the difference between the returns one
would expect from a fund, given its beta, and the
return it actually produces. It also measures the
unsystematic risk.
Alpha is positive = returns of
stock are better then market
returns.
Alpha is negative = returns of
stock are worst then market.
Alpha is zero = returns are
same as market.
SHARPE
RATIO
Sharpe Ratio= Fund return in excess of risk free
return/ Standard deviation of Fund. Sharpe ratios
are ideal for comparing funds that have a mixed
asset classes.
The higher the Sharpe ratio,
the better a funds returns
relative to the amount of risk
taken.
Tax Rules For Mutual Fund Investors*
Equity
schemes
Other schemes Divide
nd
income
Dividend distribution tax
Short
Term
Capit
al
Gains
Long
Term
Capit
al
Gain
Short
Term
Capital
Gains
Long
Term
Capital
Gain
TDS All
Schem
es
Equit
y
Sche
mes
Liquid
Schemes
Other
Schemes
Reside
nt
Individ
ual
/ HUF
10% NIL AS
PER
SLAB
10%
(20%
with
indexati
on)
NIL TAX
FREE
NIL 28.32%
(25%
+10%sur
charge+e
ducation
cess)
14.16%
(12.5%
+10%surch
arge+3%ed
ucation
cess)
Partne
rship
Firms
10% NIL 30% 10%
(20%
with
indexati
on)
NIL TAX
FREE
NIL 28.32%
(25%
+10%sur
charge+e
ducation
cess)
22.66%
(20%+10%
surcharge+
3%
education
cess)
AOP/
BOI
10% NIL AS
PER
SLAB
10%
(20%
with
indexati
on)
NIL TAX
FREE
NIL 28.32%
(25%
+10%sur
charge+e
ducation
22.66%
(20%+10%
surcharge+
3%
education
cess) cess)
Domest
ic
Compa
nies
10% NIL 30% 10%
(20%
with
indexati
on)
NIL TAX
FREE
NIL 28.32%
(25%
+10%sur
charge+e
ducation
cess)
22.66%
(20%+10%
surcharge+
3%
education
cess)
NRIs 10% NIL AS
PER
SLAB
10%
(20%
with
indexati
on)
STCG-
30%LTC
G-20%
TAX
FREE
NIL 28.32%
(25%
+10%sur
charge+e
ducation
cess)
14.16%
(12.5%
+10%surch
arge+3%ed
ucation
cess)
HISTORY OF MUTUAL FUND
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can
be broadly divided into four distinct phases: -
First Phase – 1964-87
An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve
Bank of India and functioned under the Regulatory and administrative control of the Reserve
Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of
India (IDBI) took over the regulatory and administrative control in place of RBI. The first
scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of
assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established
its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
WHAT IS THE PROCEDURE FOR REGISTERING A MUTUAL FUND WITH SEBI?
An applicant proposing to sponsor a Mutual fund in India must submit an application in Form A
along with a fee of Rs.25, 000. The application is examined and once the sponsor satisfies certain
conditions such as being in the financial services business and possessing positive net worth for
the last five years, having net profit in three out of the last five years and possessing the general
reputation of fairness and integrity in all business transactions, it is required to complete the
remaining formalities for setting up a Mutual fund. These include inter alia, executing the trust
deed and investment management agreement, setting up a trustee company/board of trustees
comprising two- thirds independent trustees, incorporating the asset management company
(AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian.
Upon satisfying these conditions, the registration certificate is issued subject to the payment of
registration fees of Rs.25.00 lakhs for details; see the SEBI (Mutual funds) Regulations, 1996.
EVALUATING PORTFOLIO PERFORMANCE
It is important to evaluate the performance of the portfolio on an ongoing basis. The following
factors are important in this process: Consider long-term track record rather than short-term
performance. It is important because long-term track record moderates the effects which
unusually good or bad short-term performance can have on a fund's track record. Besides,
longer-term track record compensates for the effects of a fund manager's particular investment
style. Evaluate the track record against similar funds. Success in managing a small or in a fund
focusing on a particular segment of the market cannot be relied upon as an evidence of
anticipated performance in managing a large or a broad based fund. Discipline in investment
approach is an important factor as the pressure to perform can make a fund manager susceptible
to have an urge to change tracks in terms of stock selection as well as investment strategy.
The objective should be to differentiate investment skill of the fund manager from luck and to
identify those funds with the greatest potential of future success.
INVESTOR'S FINANCIAL PLANNING AND ITS RESULTS.
Planning for long term objectives
Many people get overwhelmed by the thought of retirement and they think how they will ever
save the huge money that is required to lead a peaceful and happy retired life. However, the fact
is that if we save and invest regularly over a period of time, even a small sum of money can be
adequate.
It is a proven fact that the real power of compounding comes with time. Albert Einstein called
compounding "the eighth wonder of the world" because of its amazing abilities. Essentially,
compounding is the idea that one can make money on the money one has already earned. That's
why, the earlier one starts saving, the more time money gets to grow.
Through Mutual funds, one can set up an investment programme to build capital for retirement
years. Besides, it is an ideal vehicle to practice asset allocation and rebalancing thereby
maintaining the right level of risk at all times.
It is important to know that determination and maintaining the right level of risk tolerance can go
a long way in ensuring the success of an investment plan. Besides, it helps in customizing fund
category allocations and suitable fund selections. There are certain broad guidelines to determine
the risk tolerance.
These are:
Be realistic with regard to volatility. One needs to seriously consider the effect of potential
downside loss as well as potential upside gain. Determine a "comfort level" i.e. If one is not
confident with a particular level of risk tolerance, and then select a different level.
Regardless of the level of risk tolerance, one should adhere to the principles of effective
diversification i.e. the allocation of investment assets among different fund categories to achieve
a variety of distinct risk/reward objectives and a reduction in overall portfolio risk.
It helps to reassess risk tolerance every year. The risk tolerance may change due to either major
adjustment in return objectives or to a realization that an existing risk tolerance is inappropriate
for one's current situation.
Market cap of a company signifies its market value, which is equal to the total number of shares
outstanding multiplied by the current stock price.
The market cap has a role to play in the kind of returns the stock might deliver and the risk or
volatility that one may have to encounter while achieving those returns.For example, large
companies are usually more stable during the turbulent periods and the mid cap and small cap
companies are more vulnerable.
As regards the allocation to each segment, there cannot be a standard combination applicable to
all kinds of investors. Each one of us has different risk profile, time horizon and investment
objectives.
Besides, while deciding on the allocation, one has to keep in mind the fact whether the allocation
is being done for an existing investor or for a new investor. While for an existing investor, the
allocation that already exists has to be considered, for a new investor the right way to begin is by
considering funds that invest predominantly in large cap stocks. The exposure to mid and small
caps can be enhanced over a period of time.
It is always advisable to take help of professionals to decide the allocation as well as select the
appropriate funds. However, investors themselves have an important role to play in this process.
All award-winning funds may not be suitable for everyone
Many investors feel that a simple way to invest in Mutual funds is to just keep investing in award
winning funds. First of all, it is important to understand that more than the awards; it is the
methodology to choose winners that is more relevant.
A rating firm generally elaborates on the criteria for deciding the winner’s i.e. consistent
performance, risk adjusted returns, total returns and protection of capital. Each of these factors is
very important and has its significance for different categories of funds.
Besides, each of these factors has varying degree of significance for different kinds of investors.
For example, consistent return really focuses on risk. If someone is afraid of negative returns,
consistency will be a more important measure than total return i.e. Growth in NAV as well as
dividend received.
A fund can have very impressive total returns overtime, but can be very volatile and tough for a
risk adverse investor. Therefore, all the award winning funds in different categories may not be
suitable for everyone. Typically, when one has to select funds, the first step should be to consider
personal goals and objectives. Investors need to decide which element they value the most and
then prioritize the other criteria.
Once one knows what one is looking for, one should go about selecting the funds according to
the asset allocation. Most investors need just a few funds, carefully picked, watched and
managed over period of time.
7 INVESTMENT TIPS TO IMPROVE YOUR RETURNS
1. Know your risk profile
Before you take a decision to invest in equity funds, it is important to assess your risk tolerance. Risk tolerance depends on certain factors like emotional temperament, attitude and investment experience. Remember, while ascertaining the risk tolerance, it is crucial to consider one's desire to assume risk as the capacity to assume the risk. It helps to understand different categories of overall risk tolerance, i.e. Conservative, moderate or aggressive. While a conservative investor will accept lower returns to minimise price volatility, a moderate investor would be all right with greater price volatility than conservative risk tolerances to pursue higher returns. An aggressive investor wouldn't mind large swings in the NAV’s to seek the highest returns. Though identifying the desire for risk is a tough job, it can be made easy by defining one's comfort zone.
2. Don't have too many schemes in your portfolio
While it is true that diversification helps in earning better returns with a lower level of fluctuations, it becomes counterproductive when one has too many funds in the portfolio. For example, if you have 15 funds in your portfolio, it does not necessarily mean that your portfolio is adequately diversified. To determine the right level of diversification, one has to consider factors like size of the portfolio, type of funds and allocation to different asset classes. Therefore, it is possible that a portfolio having 5 schemes may be adequately diversified whereas another one with 10 schemes may have very little diversification. Remember, to have a well-balanced equity portfolio, it is important to have the right level of exposure to different segments of the equity market like large cap, mid-cap and small cap. In addition, for a decent portfolio size, it is all right to have some exposure in the sector and specialty funds.
3. Longer time horizon provides protection from volatility
As an equity fund investor, you need to understand that volatility is an integral part of the stock market. However, if you remain focused on the long-term objectives and follow a disciplined approach to investing, you can not only handle volatility properly but also turn it to your advantage.
4. Understand and analyze 'Good Performance'
'Good performance' is a subjective thing. Ideally, to analyze performance, one should consider returns as well as the risk taken to achieve those returns. Besides, consistency in terms of performance as well as portfolio selection is another factor that should play an important partWhile analyzing the performance. Therefore, if an investment in a Mutual fund scheme takes you past your risk tolerance while providing you decent returns; it cannot always be termed as good performance. In fact, at times to ensure that your investment remains within the parameters defined in the investment plan, you may to be forced to exit from that scheme. In other words, you need to assess as to how much risk did the fund manger subject you to, and did he give you an adequate reward for taking that risk. Besides, you also need to consider whether own risk profile allows you to accept the revised level of risk
5. Sell your fund, if you need to
There is no standard formula to determine the right time to sell an investment in Mutual fund or for that matter any investment. However, you can definitely benefit by following certain guidelines while deciding to sell an investment in a Mutual fund scheme. Here are some of them:You may consider selling a fund when your investment plan calls for a sale rather than doing so for emotional reasons. You need to hold a fund long enough to evaluate its performance overa complete market cycle, i.e. around three years or so. Many of us make the mistake of either holding on to funds for too long or exit in a hurry. It is important to do a thorough analysis before taking a decision to sell. In other words, if you take a wrong decision, there is always a risk of missing out on good rallies in the market or getting out too early thus missing out onPotential gains. You should consider coming out of a fund if its performance has consistently lagged its peers for a period of one year or so. It doesn't make sense to hold a fund when it no longer meets your needs. If you have made a proper selection, you would generally be requiredto make changes only if the fund changes its objective or investment style, or if your needs change.
6. Diversified vs. Concentrated Portfolio
The choice between funds that have a diversified and a concentrated portfolio largely depends upon your risk profile. As discussed earlier, a well - diversified portfolio helps in spreading the investments across different sectors and segments of the market. The idea is that if one or more stocks do badly, the portfolio won't be affected as much. At the same time, if one stock does very well, the portfolio won't reap all the benefits. A diversified fund, therefore, is an ideal choice for someone who is looking for steady returns over the longer term. A concentrated portfolio works exactly in the opposite manner. While a fund with a concentrated portfolio has a better chance of providing higher returns, it also increases your chances of underperforming or losing a large portion of your portfolio in a market downturn. Thus, a concentrated portfolio is ideally suited for those investors who have the capacity to shoulder higher risk in order to improve the chances of getting better returns.
7. Review your portfolio periodically
It is always a good idea to review your portfolio periodically. For example, you may begin reviewing your portfolio on a half-yearly basis. Besides, you may be required to review your portfolio in greater detail when your investments goals or financial circumstances change.
HOW TO REDUCE RISK WHILE INVESTING:
Any kind of investment we make is subject to risk. In fact we get return on our investment purely and solely because at the very beginning we take the risk of parting with our funds, for getting higher value back at a later date. Partition itself is a risk.
Well known economist and Nobel Prize recipient William Sharpe tried to segregate the total risk faced in any kind of investment into two parts - systematic (Systemic) risk and unsystematic (Unsystemic) risk.
Systematic risk is that risk which exists in the system. Some of the biggest examples of systematic risk are inflation, recession, war, political situation etc.
Inflation erodes returns generated from all investments e.g. If return from fixed deposit is 8 per cent and if inflation is 6 per cent then real rate of return from fixed deposit is reduced by 6 per cent.
Similarly if returns generated from equity market is 18 per cent and inflation is still 6 per cent then equity returns will be lesser by the rate of inflation. Since inflation exists in the system there is no way one can stay away from the risk of inflation.
Economic cycles, war and political situations have effects on all forms of investments. Also these exist in the system and there is no way to stay away from them. It is like learning to walk.
Anyone who wants to learn to walk has to first fall; you cannot learn to walk without falling. Similarly anyone who wants to invest has to first face systematic risk; there can never make any kind of investment without systematic risk.
Another form of risk is unsystematic risk. This risk does not exist in the system and hence is not applicable to all forms of investment. Unsystematic risk is associated with particular form of investment.
Suppose we invest in stock market and the market falls, then only our investment in equity gets affected OR if we have placed a fixed deposit in particular bank and bank goes bankrupt, than we only lose money placed in that bank.
While there is no way to keep away from risk, we can always reduce the impact of risk. Diversification helps in reducing the impact of unsystematic risk. If our investment is distributed across various asset classes the impact of unsystematic risk is reduced.
If we have placed fixed deposit in several banks, then even if one of the banks goes bankrupt our entire fixed deposit investment is not lost.
Similarly if our equity investment is in Tata Motors, HUL, Infosys, adverse news about Infosys will only impact investment in Infosys, all other stocks will not have any impact.
To reduce the impact of systematic risk, we should invest regularly. By investing regularly we average out the impact of risk.
Mutual fund, as an investment vehicle gives us benefit of both diversification and averaging.
Portfolio of mutual funds consists of multiple securities and hence adverse news about single security will have nominal impact on overall portfolio.
By systematically investing in mutual fund we get benefit of rupee cost averaging.
Mutual fund as an investment vehicle helps reduce, both, systematic as well as unsystematic risk.
DATA PRESENTATION, ANALYSIS AND
INTERPRETATION
COMPARISION OF 4 MAJOR MUTUAL FUNDS
FRANKLIN TEMPLETON INDIA PRIMA PLUS
Mutual Fund Franklin Templeton Mutual Fund
Scheme Name Franklin India Prima Plus
Scheme Type Open Ended
Scheme Category Growth
Launch Date 29-Sep-1994
SBI MAGNUM GLOBAL
Mutual Fund SBI Mutual Fund
Scheme Name SBI MAGNUM GLOBAL FUND 94 - GROWTH
Objective of The Objective of the Scheme is to provide
Scheme investors with maximum growth opportunity.
Scheme Type Open Ended
Scheme Category Growth
Launch Date 06-Jun-2005
Minimum Subscription Amount 2000
TATA (GROWTH) FUND
Mutual Fund Tata Mutual Fund
Scheme Name Tata Growth Fund - Growth
The investment objective of the schemes will be
Objective to provide income distribution & / or medium to
Of long term capital gains. The scheme will invest in
Scheme equity and equity related instruments of well
Researched growth oriented companies.
Scheme Type Open Ended
Scheme Category Growth
Minimum
Subscription Rs.5000/-
Amount
RELIANCE GROWTH FUND
Mutual Fund Reliance Mutual Fund
Scheme Name Reliance Growth Fund
Objective The primary investment objective is to achieve
Of Scheme long term growth of capital by investing in
Equity and equity related securities through a
Research based investment approach
Scheme Type Open Ended
Scheme Category Growth
Launch Date 25-Sep-1995
Minimum
Subscription 5000
Amount
Investment needs?
From the above graph it is clear that there are many people who have participated in the
survey and the major portion of the survey indicates that the people are interested in
investing in mutual funds for the sake of their family financial security. From the above
graph it also reveals that the minor portion of the graph that is to build a corpus for
retirement does not play a major role in the investment decisions.
These are the findings from the survey which include the number of participants and the type of the participants. This survey includes all types of participants which may give exact results for the evaluationWhich of the following do you think as a tax saving scheme?
Comparison large cap top performing Mutual funds
This graph represents the scheme assets of the four major companies. The values mentioned in the graph are in crores
This graph represents the latest NAV’s values of all the four major companies in which reliance capital is the one with highest NAV and Tata is the one with the lowest NAV.
This graph stands a symbolic representation of the annual returns of the four major
companies to their customers for the last 3 months. This value is of 14may 2009.
This graph stands a symbolic representation of the annual returns of the four major
companies to their customers for the last 5 years. The value is of 14may 2009.
This graph is the result of the daily NAV’s of the Franklin Templeton India prima plus
scheme for the last one and half year.
This also represents the trend of the previous years. This data is collected by collecting the
NAV values of the previous one and half year their average is taken monthly and a graph is
drawn on the basis of the average values.
In the same manner as explained above the remaining three graphs of Tata Growth fund,
SBI Magnum Global fund, reliance global fund is been drawn. This graph is the result of
the daily NAV’s of the Franklin Templeton India prima plus scheme for the last one and
half year. This also represents the trend of the previous years.
This data is collected by collecting the NAV values of the previous one and half year their
average is taken monthly and a graph is drawn on the basis of the average values.
This graphical representation shows the percentage of the net assets the company holds in
terms of the debt, equity and others. The above graph shows the graphical representation
of Franklin India Prima Plus
This graphical representation shows the percentage of the net assets the company holds in
terms of the debt, equity and others. The above graph shows the graphical representation
of Reliance Growth Fund.
This graphical representation shows the percentage of the net assets the company holds in
terms of the debt, equity and others. The above graph shows the graphical representation
of Tata Growth Fund.
This graphical representation shows the percentage of the net assets the company holds in
terms of the debt, equity and others. The above graph shows the graphical representation
of SBI Magnum Global Fund.
The Graph is based on the income of the consumer and their investment in various
schemes.
0%
20%
40%
60%
80%
100%
Below 2Lac
2 lac to4 lac
4 lac to6 lac
6 lac to8 lac
Above 8lac
Income Vs Investment Scheme
Tax Saving
Money market
Balance
Growth
Income
Interpretation
I. Lower income group of below 2 lakh are more attracted towards the income and money
market Schemes as they cannot afford to take too much of risk.
II. Balanced scheme is more popular with the income group of 2 lakh to 6 lakh. This group
is even inclined towards growth Schemes to certain extent.
III. Persons with a salary of 6 lakh and above are fascinated by tax saving and money market
schemes.
The Graph is showing the influential factor among the consumer.
Influential Factor
05
101520253035
Frie
nds/
Fam
ily T.V
New
spa
per/
Mag
azin
e
Ban
ners
Inte
rnet
No
.of
Peo
ple
Series1
Interpretation
I. Major chunk are fascinated by the Newspapers/ Magazine.
II. Second best instrument to fascinate the customer is the internet. Because internet provide
the easy and quickest way to get the information.
Which factor influence you most to invest through Anand Rathi Financial Services ltd?FACTORS PERCENTAGE
Bank Services 20%Safety 42%Word Of Mouth 14%Advertisement 6%Past Experience 18%
INTERPRETATIONWhen asked that what factor affects most while investing in Mutual Funds through Anand Rathi Financial services Ltd than wide preference is given to safety. 42% investors choose safety.20% bank services, 18% past experience, 14% word of mouth and 6% advertisement.
To how much extent are you satisfied with the services offered by Anand Rathi Financial Services ltd.?
Extremely Satisfied80%
Satisfied To Lesser Extent 10%Dissatisfied To Lesser Extent 5%Extremely Dissatisfied 5%
INTERPRETATION
Out of the respondents 80% are extremely satisfied with the services offered by Anand Rathi Financial services ltd. 10% are satisfied to lesser extent, 5%are extremely dissatisfied.
INTERPRETATION
As FII’s have entered Indian markets Sensex have crossed 10000 mark and investors have
earned a lot in last financial year. Indians are becoming aware of various investment options.
People have started taking risk as they want to book profits. Investors prefer more equity
schemes than debt schemes, around 60% of the investors invest in equity schemes and
balanced schemes. Investors want to take risk as they want to yield better returns. Investors
want high returns, liquidity, safety and tax benefit. Among all investors gives want to have
safety for their money. Around 91% of the investors prefer open ended schemes rather than
close ended schemes as there is flexibility in open ended schemes.
Investors prefer both systematic investment plan and lump sum. It depends upon the
availability of funds that the investor wants to invest in SIP or as lump sum. Some of the
investors invest in both ways i.e. through SIP as well as lump sum. Basically it depends upon
the availability of fund. When questions were asked about the performance of mutual funds
in future 50% of investors said strong future, 35% of the investors said very strong future and
15% of the investors said moderate future.
SUGGESTIONS AND CONCLUSION
RECOMMENDATIONS AND SUGGESTIONS:
Customer education of the salaried class individuals is far below standard. Thus
Asset Management Company’s need to create awareness so that the salaried class
people become the prospective customer of the future.
Early and mid earners bring most of the business for the Asset Management
Company’s. Asset Management Company’s thus needed to educate and develop
schemes for the person’s who are at the late earning or retirement stage to gain
the market share.
Return’s record must be focused by the sales executives while explaining the
schemes to the customer. Pointing out the brand name of the company repeatedly
may not too fruitful.
The target market of salaried class individual has a lot of scope to gain business,
as they are more fascinated to Mutual Funds than the self employed.
Schemes with high equity level need to be targeted towards self employed and
professionals as they require high returns and are ready to bear risk.
Salary class individuals are risk averse and thus they must be assured of the
advantage of “risk – diversification” in Mutual Funds.
There should be given more time & concentration on the Tier-3 distributors.
The resolution of the queries should be fast enough to satisfy the distributors.
Time to time presentation/training classes about the products should be there.
There should be more number of Relationship Managers in different Regions because one RM can handle a maximum of 125 distributors efficiently and also to cover untapped market.
Regular activities like canopy should be done so as to get more interaction with the distributors.
Regular session should be organized on the handling of the AnandRathi software so as to resolve the account statement problem.
All the persons who have cleared the AMFI exam should be empanelled with Mutual Fund so as to be largest distributor base.
Should have to provide more advertisements, canopies in the shopping mall, main markets because no. of people visiting these places are mostly of service classes and they have to save tax, hence there is more opportunity of getting more no. of applications.
CONCLUSION
These were my objectives of my project
To get an insight knowledge about mutual funds
Understanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors
To know the mutual funds performance levels in the present market
To analyze the comparative study between other leading mutual funds in the present market.
To know the awareness of mutual funds among different groups of investors.
To evaluate consumer feedback on mutual funds
Finding out ways and means to improve on the services by Anand Rathi financial Services ltd.
I satisfied my objectives of the project in the following manner
1. Complete insight knowledge about the mutual funds were mentioned in the project
2. Different ratios with complete graphical representation were explained in the project
3. To know the performance levels of the project I have done the comparative analysis of the project using the four major leading mutual fund companies using different parameters.
4. To know the consumer awareness I have done the survey using different customers so as to analyse the views about the mutual funds and perception of the customer in the present scenario.
5. To evaluate the ways and means to improve Anand Rathi Financial Services ltd. I have mentioned various suggestions that are listed above.
ANNEXURE
QUESTIONNAIRE
PERSONAL DETAILS:
Name:
Mobile Number:
Address: _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Occupation: _____________________
Age: ____________________________
1. Of the following what at present are your investment needs?
a. To build a corpus for retirementb. To save for children education/ marriagec. To provide for medical emergenciesd. To provide for family financial securitye. To create wealthf. All of the above
2. Which of the following you think as investment for tax- saving?
a. Mutual fundsb. Fixed depositc. Insuranced. PFe. All of the above
3. Have you ever been invested in mutual funds?
a. Yes b. No
4. If you had Rs 1000/- where you prefer to invest
a. Mutual fundb. Fixed depositc. Direct equityd. Life insurancee. Postal office deposit
5. Out of the following in which Mutual Fund you have invested?
a)
b) Tata Mutual Fund.
c) Franklin Templeton.
d) Reliance.
e) ICICI Prudential.
f) SBI.
g) Other If any ,Please Specify
6. To how much extent are you satisfied with the services offered by Anand Rathi Financial
Services ltd. regarding mutual funds?
a) Extremely satisfied.
b) Satisfied to the lesser extent
d) Dissatisfied to lesser extent
e) Extremely dissatisfied.
7. Out of the following which option would you prefer?
a) Close ended.
b) Open ended.
8. Do you prefer SIP (Systematic Investment Plan) or investing lump sum?
a) SIP
b) Lump sum
c) Depends upon the financial condition
GLOSSARY OF SOME CONCEPTS
AMC The AMC is the corporate entity, which markets and manager and manages a mutual fund
scheme and in return receives a management fee from the fund corpus. SEBI specifies that an
AMC must be separate entity the trust that manages it.
NAVIt is the value of unit of a Mutual Fund scheme and represents its true worth. NAV is arrived at
by dividing total value of all investment made under the scheme by number of units of the
scheme. NAV is critical yardstick of the funds performance.
UNITSUnits in a mutual fund scheme are similar to shares of a joint company. These are always in
denominations of Rs. 10 each the sum total of all the units constitutes corpus of mutual fund.
SPONSORSSponsor of a mutual fund are those who establish the mutual fund trust and the AMC they
constitute the shareholders of the AMC and receive dividends on profits made by the AMC.
SEBI rules stipulate that mutual fund trust as well as the AMC must maintain an arms length
relationship with the sponsors to avoid any conflict to interests, which may affect the unit
holders.
INCOME FUNDThese Funds invest largely in fixed income securities like bonds and debentures. Such funds earn
returns more regularly than a growth fund but level of returns over longer periods normally lag
behind those offered by growth funds while returns in such funds may be regular, their scale may
fluctuate depending upon the prevalent interest rates and credit quality of the debt securities.
GROWTH FUNDSGrowth funds predominantly invest in stock market securities and carry risks larger than income
funds. Since stock markets travel through a natural cycle of boom and bursts one should
normally stay invested inequity funds for a longer times to earn higher returns.
Equity funds may earn higher but they also carry larger risks. For risk taking investor equity are
best suited.
BALANCED FUNDSA balanced fund is the mixture of income fund and growth fund invested partly in equity to
achieve a trade-of between risk and return.
CLOSE ENDEDIn a close-ended fund an investor is allowed to subscribe only during the period of the initial
offer. Close-ended funds mature after a specified period.
OPEN ENDED FUNDSThose funds in which investor can invest & withdraw whenever they wish, after the close of
initial offer. Withdrawals are allowed at NAV minus a back end load.
LOCK IN PERIODTime period during which investor can neither redeem nor they transfer their holdings to others.
Lock in period is imposed to allow fund manager to deploy money for an adequate period of
time to earn a reasonable return premature withdrawals may destabilize the fund & are not
beneficial to the interests of investors.
MANAGEMENT FEESAn AMC that mangers & markets a mutual fund scheme is entitled to a management fee@ 1% to
25% of the total funds managed, it could be charged to the scheme irrespective of the
performance of the scheme.
REDEMPTIONDisbursement of unit capital on the maturity of that particular scheme to all its existing unit
holders.
MARKET PRICEThe price at which units of mutual funds are quoted in stock exchange where they are listed.
REGISTRAROrganization appointed by an AMC to the schemes it is registered, monitored, and regulated by
SEBI, it provides required services like system capabilities back up, accepts and processes
investors applications in informs AMC about amounts received/disbursed for subscription/
purchase/ redemption it also handles communications with investors, perform data entry services
and dispatches account statements.
CUSTODAINBanking organization that keeps in safe custody all the securities & other instruments belonging
to the fund to insure smooth inflow & outflow of securities. It is also approved regulated and
registered with SEBI.
EXIT LOADValue of deduction from NAV on the date when one choose to withdraw from a fund, load is
imposed because withdrawals carry transaction cost to AMC it can not be more than 6% of NAV
of corpus as prescribed by SEBI many schemes offer redemption facility without exit load.
ENTRY LOADCharge paid by unit holder when he invests an amount in the scheme. Mutual funds incur many
expenses during an issue, which are charged to the scheme. Such load is called entry load.
LIQUIDITYAbility of investors to change its unit into cash within minimum time as and when he needs
money.
TRANSPARENCYBasic feature of mutual funds is transparency, their functioning is very efficient, well monitored & transparent working of AMC is regulated by SEBI it is audited weekly, it has to work under strict guidelines issued by SEBI, and its NAV is calculated and published daily so that there is no chance of any default in the working of Mutual Funds.
BIBLIOGRAPHY
David F, Swensen. 2005. Unconventional Success. A fundamental Approach to Personal
Investment Free Press 416
D.C. Anjaria. Dhaivat Anjaria. 2001 AMFI’s Mutual Fund Testing Programme.
Mutual Funds by Akhilesh volume 4, 2007.
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