analysis of mutual funds in india
TRANSCRIPT
-
8/2/2019 Analysis of Mutual Funds in India
1/78
A PROJECT REPORT
ON
ANALYSIS OF MUTUAL FUNDS IN INDIA
SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT
OFPOST GRADUATE DIPLOMA IN MANAGEMENT ( P.G.D.M)
(A.I.C.T.E) APPROVED
SESSION 2006 - 2008
SUBMITTED BY: UNDER THE GUIDANCE OF:
JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL
1
-
8/2/2019 Analysis of Mutual Funds in India
2/78
INDEX CONTENTS PAGE NO.
CHAPTER-1 INTRODUCTION TO THE TOPIC 1-MEANING OF MUTUAL FUND 2
-HISTORY OF INDIAN MUTUAL FUND 7
-OBJECTIVE OF THE STUDY 9-RESEARCH METHODOLOGY 10
CHAPTER-2 LITERATURE REVIEW
11
-HOW DOES MUTUAL FUND WORK 12
-TYPES OF MUTUAL FUND 15-ADVATAGES AND DISADVANTAGES OF MUTUAL FUND 19
-RISKS IN MUTUAL FUND 23
CHAPTER-3 MARKET TRENDS 25
CHAPTER-4 MAJOR PLAYERS IN THE MUTUAL FUND INDUSTRY 29
-BANK V/S MUTUAL FUND 42
CHAPTER-5 REGULATORY ASPECT OF A MUTUAL FUND 43-
- REGULATORY ASPECTS 44-THE INTERNET AND THE MUTUAL FUND 49
CHAPTER-6 ANALYSIS OF QUESTIONNAIRE
46 -ANALYSIS OF QUESTIONNAIRE 47
CHAPTER-7 ANALYSIS OF QUESTIONNAIRE
51 -ANALYSIS OF QUESTIONNAIRE 52
CHAPTER-8 FINDINGS OF THE STUDY
64
-CONCLUSION 65-RECCOMENDATIONS 67
CHAPTER-9 LIMITATIONS
68- LIMITATIONS 69
CHAPTER-10 ANNEXURE 70
BIBLIOGRAPHY 73
2
-
8/2/2019 Analysis of Mutual Funds in India
3/78
ACKNOWLEDGEMENT
I express my heartiest gratitude to MS. ANANDITA DASfor giving me the opportunity of under going this project.
I am grateful to the Library and Computer Center staff
for all the help and cooperation extended to us.
Last but not the least I would like to thank almighty forhis blessings without which virtually this work would nothave been possible.
3
-
8/2/2019 Analysis of Mutual Funds in India
4/78
CHAPTER - 1
INTRODUCTION
INTRODUCTION
4
-
8/2/2019 Analysis of Mutual Funds in India
5/78
INTRODUCTION
What is a Mutual Fund.
A Mutual Fund is a trust that collects the savings of a number of
investors who share a common financial goal and pools it together
to create a larger resource of money. 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
appreciation realized by the scheme are shared by its unit holders
proportionately i.e. on the basis of the number of units owned by
them.
Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified,
professionally managed portfolio at a relatively low cost. Anybody
with any surplus money that can be invested, even as little as a
few thousand rupees can invest in Mutual Funds. Each Mutual
Fund scheme has a defined investment objective and strategy.
The team undertakes this in the most professional manner. A
mutual fund is thus the ideal investment vehicle for todays
complex and modern financial scenario.
5
-
8/2/2019 Analysis of Mutual Funds in India
6/78
Price changes in the assets are driven by global events occurring
every day, in-fact every minute in faraway places. It will be very
difficult, in-fact next to impossible for an ordinary individual 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 costs of hiring these
professionals per investor are very low, as the pool of money
invested is large. In effect, the mutual fund vehicle exploits
economies of scale in all three areas - research, investments and
transaction processing.
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.
SEBI defines mutual funds as Mutual funds means a fund
established in the form of a trust by a sponsor to raise
money by the Trustee through the sale of units to the public
under one or more schemes for investing in securities in
accordance with these regulations.
There are 3 entities operating in a mutual fund . They are :
1) An agency which mobilizes savings and gets a
commission
2) An investment agency which gets a prescribed rate of
commission
6
-
8/2/2019 Analysis of Mutual Funds in India
7/78
3) A trustee institution, which is normally a Bank which
holds the stock of securities of the Mutual fund.
In India the Investment trusts are established under the
Companies Act.
There are difference between Mutual funds and investment
companies which can be as follows:
In terms of objective : In case of mutual funds the
mobilization of savings is from the investors, mostly
household whereas in case of investment companies it is
savings of household , corporate sector. Highest
investments belongs to the promoters of the company.
In terms of organisation : In case of Mutual funds it is as
per SEBI regulations 1993 and in case of UTI as per UTI Act
1963 whereas in case of investment companies it is as per
Companies Act 1956
In terms of Capital structure : For Mutual funds initial
capital would be provided by the sponsor. Scheme wise
capital is decided based on the nature of scheme . Units are
offered out of the scheme capital . No debt capital.
Whereas, investment companies, on par with industrial
companies . No scheme wise capital out of the equity
capital. Capital may be debt capital also and has the
advantage of gearing.
In terms of Liquidity : In Mutual funds it is close ended
scheme units are traded on the organized stock exchange .
Open ended schemes offer repurchase of facility and some
7
-
8/2/2019 Analysis of Mutual Funds in India
8/78
ended schemes may also offer repurchase or premature
encashment. Whereas, in case of investment companies.
The company share is traded on stock exchange. No
repurchase of shares.
In terms of Name of the schemes Mutual funds
Either open ended or close ended with a wide variety of
investment objectives whereas in case investment
companies it is neither open ended or close ended.
Thus we have seen the difference between the mutual funds
and the investment companies. Let us now understand the
superiority of mutual funds over the other investment
options.
Mutual funds with the expertise and experienced
management cadre can be able to secure large varieties of
high yielding Blue chip securities and show better results
to the investing public. Thus Mutual funds are gaining
popularity due to the following reasons:
The basic purpose of reforms in financial sector was to
enhance the generation of domestic resources by reducing
dependence on outside funds. This calls for a market basedinstitution. . Mutual funds are best suited for this purpose.
Ordinarily investor in the market is not sure of getting share
in the normal procedure. Investing in MF by MF companies
get firm allotment. And later selling at a higher price. So
investing in MF yields higher returns to the investors.
8
-
8/2/2019 Analysis of Mutual Funds in India
9/78
Better knowledge of market behavior maximise gains by
proper selection and timing of investments.
Dividends and capital gains are reinvested automatically in
MF and are not frittered away.
MF operation provide reasonable protection to investors
They create awareness about benefits of investment in
capital market and thus able to mop up large amounts
Foreign capital inflows are attracted and secures profitable
investment avenues abroad for domestic savings through
the opening up of off shore funds in various foreign
countries.
Disbursing funds in various industrial sectors in view of
booming trend has led the popularity of MF
Risk of loss due to ill informed and misinformed purchase /
sale is reduced. Risks are reduced due to diversification of
portfolios in terms of companies and industries.
They are controlled and regulated by SEBI and considered
safe.
Thus MF have many advantages even for an individual who
wants to put his savings in various places and not only earn
high yields but also safe landing later when he wants to
acquire the money back.
9
-
8/2/2019 Analysis of Mutual Funds in India
10/78
HISTORY OF THE INDIAN MUTUAL FUND
INDUSTRY
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. 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.
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
10
-
8/2/2019 Analysis of Mutual Funds in India
11/78
(LIC) and General Insurance Corporation of India (GIC). SBI Mutual
Fund was the first non- UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank
Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (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.
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.
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
11
-
8/2/2019 Analysis of Mutual Funds in India
12/78
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.
OBJECTIVE OF THE STUDYThis project Analysis of Mutual Funds In Indiahas been undertaken by me in order to:-
To study what kind of mutual funds are there.
To find whether the fund gives return or not.
To study market trends of the mutual funds.
To know whether people are interested ininvesting in mutual funds.
To know the regulatory framework of the funds.
To find what are the major players in theindustry.
12
-
8/2/2019 Analysis of Mutual Funds in India
13/78
RESEARCH METHODOLOGY
This project started meetings different people in order
to get information about the mutual funds. Then I
thoroughly examined the various activities of mutual
funds.
Then I visited various websites of the mutual fund to
know the recent and upcoming trends of mutual funds.
I went forward collecting the data through primary
source such as a questionnaire.
I prepared the questionnaire. After the collection of the
responses, I drew conclusions with respect to the
effectiveness of the training program and the value of
particular training program in the eyes of trainers and
trainees.
13
-
8/2/2019 Analysis of Mutual Funds in India
14/78
CHAPTER - 2
LITERATURE REVIEW
14
-
8/2/2019 Analysis of Mutual Funds in India
15/78
HOW DOES MUTUAL FUND WORK
The working of Mutual Funds can be briefly stated in the form of
the points below: -
A draft offer document is 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. In India,
as in most countries, these sponsors need approval from a
regulator, SEBI (Securities exchange Board of India) in our
case. SEBI looks at track records of the sponsor and its
financial strength in granting approval to the fund for
commencing operations.
A sponsor then hires an asset management company
to invest the funds according to the investment objective.
15
-
8/2/2019 Analysis of Mutual Funds in India
16/78
It also hires another entity to be the custodian of the
assets of the fund and perhaps a third one to handle registry
work for the unit holders (subscribers) of the fund.
In the Indian context, the sponsors promote the Asset
Management Company also, in which it holds a majority stake. In
many cases a sponsor can hold a 100% stake in the Asset
Management Company (AMC). E.g. Birla Global Finance is the
sponsor of the Birla Sun Life Asset Management Company Ltd.,which has floated different mutual funds schemes and also acts
as an asset manager for the funds collected under the schemes.
16
-
8/2/2019 Analysis of Mutual Funds in India
17/78
ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below
illustrates the organizational set up of a mutual fund:
Organization of a Mutual Fund
17
-
8/2/2019 Analysis of Mutual Funds in India
18/78
Types Of Mutual Funds
Open-ended Funds
An open-end fund is one that is available for subscription all
through the year. These do not have a fixed maturity. Investors
can conveniently buy and sell units at Net Asset Value ("NAV")
related prices. The key feature of open-end schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period which
generally ranging from 3 to 15 years. The fund is open for
subscription only during a specified period. Investors can invest in
the scheme at the time of the initial public issue and thereafter
they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route
to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at
NAV related prices. SEBI Regulations stipulate that at least one of
the two exit routes is provided to the investor.
Interval Funds
Interval funds combine the features of open-ended and close-
ended schemes. They are open for sale or redemption during pre-
determined intervals at NAV related prices.
18
-
8/2/2019 Analysis of Mutual Funds in India
19/78
Growth Funds
The aim of growth funds is to provide capital appreciation over the
medium to long- term. Such schemes normally invest a majority of
their corpus in equities. It has been proven that returns from
stocks, have outperformed most other kind of investments held
over the long term. Growth schemes are ideal for investors having
a long-term outlook seeking growth over a period of time.
Income Funds
The aim of income funds is to provide regular and steady income
to investors. Such schemes generally invest in fixed income
securities such as bonds, corporate debentures and Government
securities. Income Funds are ideal for capital stability and regular
income.
Balanced Funds
The aim of balanced funds is to provide both growth and regular
income. Such schemes periodically distribute a part of their
earning and invest both in equities and fixed income securities in
the proportion indicated in their offer documents. In a rising stock
market, the NAV of these schemes may not normally keep pace,
or fall equally when the market falls. These are ideal for investors
looking for a combination of income and moderate growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity,
preservation of capital and moderate income. These schemes
generally invest in safer short-term instruments such as treasury
bills, certificates of deposit, commercial paper and inter-bank call
money. Returns on these schemes may fluctuate depending upon
19
-
8/2/2019 Analysis of Mutual Funds in India
20/78
the interest rates prevailing in the market. These are ideal for
Corporate and individual investors as a means to park their
surplus funds for short periods.
Load Funds
A Load Fund is one that charges a commission for entry or exit.
That is, each time you buy or sell units in the fund, a commission
will be payable. Typically entry and exit loads range from 1% to
2%. It could be worth paying the load, if the fund has a good
performance history.
No-Load Funds
A No-Load Fund is one that does not charge a commission for
entry or exit. That is, no commission is payable on purchase or
sale of units in the fund. The advantage of a no load fund is that
the entire corpus is put to work.
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific
provisions of the Indian Income Tax laws as the Government
offers tax incentives for investment in specified avenues.
Investments made in Equity Linked Savings Schemes (ELSS) and
Pension Schemes are allowed as deduction u/s 88 of the Income
Tax Act, 1961. The Act also provides opportunities to investors to
save capital gains u/s 54EA and 54EB by investing in Mutual
Funds, provided the capital asset has been sold prior to April 1,
2005-06 and the amount is invested before September 30, 2005-
06.
20
-
8/2/2019 Analysis of Mutual Funds in India
21/78
Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in
the offer document. The investment of these funds is limited to
specific industries like InfoTech, FMCG, and Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a particular
index such as the BSE Sensex or the NSE 50
Sectoral Schemes
Sectoral Funds are those, which invest exclusively in a specified
industry or a group of industries or various segments such as 'A'
Group shares or initial public offerings.
Systematic Investment Plan (SIP)
Here the investor is given the option of preparing a pre-
determined number of post-dated cheques in favour of the fund.
He will get units on the date of the cheque at the existing NAV. For
instance, if on 10th May, he has given a post-dated cheque for
August 10th, he will get units on 10th August at existing NAV.
21
-
8/2/2019 Analysis of Mutual Funds in India
22/78
ADVANTAGES OF MUTUAL FUND
Professional Management - The primary advantage of funds (at
least theoretically) is the professional management of your
money. Investors purchase funds because they do not have the
time or the expertise to manage their own portfolio. A mutual fund
is a relatively inexpensive way for a small investor to get a full-
time manager to make and monitor investments. Investors are
exposed to reduced investment risk due to portfolio
diversification, economies of scale in transaction cost and
professional management
Diversification - By owning shares in a mutual fund instead of
owning individual stocks or bonds, your risk is spread out. Theidea behind diversification is to invest in a large number of assets
so that a loss in any particular investment is minimized by gains in
others. In other words, the more stocks and bonds you own, the
less any one of them can hurt you (think about Enron). Large
mutual funds typically own hundreds of different stocks in many
different industries. It wouldn't be possible for an investor to build
this kind of a portfolio with a small amount of money. Small
investors can participate in larger basket of securities and share
the benefits of efficiently managed portfolio by experts, and are
freed from maintaining records of company share certificates, and
tracking tax rules. Mutual fund investments are less risky due to
portfolio diversification, which is possible mainly due to large
22
http://www.investopedia.com/terms/d/diversification.asphttp://www.investopedia.com/university/mutualfunds/http://www.investopedia.com/terms/d/diversification.asphttp://www.investopedia.com/university/mutualfunds/ -
8/2/2019 Analysis of Mutual Funds in India
23/78
funds available at their disposal. Small investors can never spread
their risks across such a wide portfolio, as can mutual funds.
Freedom from tracking investments Investors do not have to
track their investments regularly, as experts who buy and sell
securities for them do the tracking. Investors are only required to
track the performance of the mutual fund.
Economies of Scale
Because a mutual fund buys and sells large amounts of securities
at a time, its transaction costs are lower than you as an individual
would pay.
Liquidity
Just like an individual stock, a mutual fund allows you to request
that your shares be converted into cash at any time.
Simplicity
Buying a mutual fund is easy! Pretty well any bank has its own line
of mutual funds, and the minimum investment is small. Most
companies also have automatic purchase plans whereby as little
as $100 can be invested on a monthly basis.
Freedom from tracking investmentsInvestors do not have to track their investments regularly, as
experts who buy and sell securities for them do the tracking.
Investors are only required to track the performance of the mutual
fund.
23
http://www.investopedia.com/terms/e/economiesofscale.asphttp://www.investopedia.com/terms/l/liquidity.asphttp://www.investopedia.com/university/mutualfunds/http://www.investopedia.com/terms/e/economiesofscale.asphttp://www.investopedia.com/terms/l/liquidity.asphttp://www.investopedia.com/university/mutualfunds/ -
8/2/2019 Analysis of Mutual Funds in India
24/78
Professional management
Professionals run mutual funds, with experience in portfolio
management. Analysts employed by mutual funds analyze data
and information available in a manner that cannot be matched by
the lay investor.
Tax benefits
Income tax benefits are granted to investors in mutual funds,
making it more tax efficient as compared to other comparable
investment avenues.
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-
calledprofessionals 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.
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. Because
funds have smallholdings in so many different companies, high
returns from a few investments often don't make much difference
24
-
8/2/2019 Analysis of Mutual Funds in India
25/78
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.
No tailor-made Portfolio: Investors who invest on their own can
build teir own portfolios shares, bonds and other securities.
Investing through funds means he delegates this decision to the
fund mangers. High-net-worth individuals or large corporate
investors may find this to be a constraint in achieving their
objectives. However, most mutual funds help investors overcome
this constraint by offering families of schemes-a large number of
different schemes within the same fund. In each scheme there are
various plans and options. An investor can choose from different
investment schemes/plan/options and construct an investment
portfolio that meets his investment objectives.
Managing a portfolio of funds: Availability of a large number
of options from mutual funds can actually mean too much choice
for the investor. He may again need advice on how to select a
fund to achieve his objectives, quite similar to the situation when
he has to select individual shares or bonds to invest in.
fortunately, India now has a large number of AMFI registered and
25
-
8/2/2019 Analysis of Mutual Funds in India
26/78
tested fund distributors and financial planners who are capable of
guiding the investors.
TYPES OF RISKS
Consider these common types of risk and evaluate them against
potential rewards when you select an investment.
Managing Risk
At times the prices or yields of all the securities in a particular
market rise or fall due to broad outside influences. When this
happens, the stock prices of both an outstanding, highly profitable
company and a fledgling corporation may be affected. This change
in price is due to "market risk".
Inflation Risk
Sometimes referred to as "loss of purchasing power." Whenever
inflation sprints forward faster than the earnings on your
investment, you run the risk that you'll actually be able to buy
less, not more. Inflation risk also occurs when prices rise faster
than your returns. Changing interest rates affect both equities and
bonds in many ways. Investors are reminded that "predicting"
which way rates will go is rarely successful. A diversified portfolio
can help in offsetting these changes.
Credit Risk
In short, how stable is the company or entity to which you lend
your money when you invest? How certain are you that it will be
able to pay the interest you are promised, or repay your principal
when the investment matures?
26
-
8/2/2019 Analysis of Mutual Funds in India
27/78
Effect of Loss of Key Professional
An industries' key asset is often the personnel who run the
business i.e. intellectual properties of the key employees of the
respective companies. Given the ever-changing complexion of few
industries and the high obsolescence levels, availability of
qualified, trained and motivated personnel is very critical for the
success of industries in few sectors. It is, therefore, necessary to
attract key personnel and also to retain them to meet the
changing environment and challenges the sector offers.
Failure or inability to attract/retain such qualified key personnel
may impact the prospects of the companies in the particular
sector in which the fund invests.
Exchange Risk
A number of companies generate revenues in foreign currencies
and may have investments or expenses also denominated in
foreign currencies. Changes in exchange rates may, therefore,
have a positive or negative impact on companies which in turn
would have an effect on the investment of the fund.
Inbvestment Risk
The sectoral fund schemes, investments will be predominantly in
equities of select companies in the particular sectors. Accordingly,
the NAV of the schemes are linked to the equity performance of
such companies and may be more volatile than a more diversified
portfolio of equities.
Changes In The Government policy
27
-
8/2/2019 Analysis of Mutual Funds in India
28/78
Changes in Government policy especially in regard to the tax
benefits may impact the business prospects of the companies
leading to an impact on the investments made by the
CHAPTER - 3MARKET TREND
28
-
8/2/2019 Analysis of Mutual Funds in India
29/78
MARKET TREND
MARKET TREN
A lone UTI with just one scheme in 1964 now competes
with as many as 400 odd products and 34 players in the
market. In spite of the stiff competition and losing market
share, UTI still remains a formidable force to reckon with.
Last six years have been the most turbulent as well as
exiting ones for the industry. New players have come in,
while others have decided to close shop by either selling
off or merging with others. Product innovation is now
passed with the game shifting to performance delivery in
fund management as well as service. Those directly
associated with the fund management industry like
distributors, registrars and transfer agents, and even the
regulators have become more mature and responsible.
The industry is also having a profound impact on financial
markets. While UTI has always been a dominant player
on the bourses as well as the debt markets, the new
generations of private funds which have gained
29
-
8/2/2019 Analysis of Mutual Funds in India
30/78
substantial mass are now seen flexing their muscles.
Fund managers, by their selection criteria for stocks have
forced corporate governance on the industry. By
rewarding honest and transparent management with
higher valuations, a system of risk-reward has been
created where the corporate sector is more transparent
then before.
Funds have shifted their focus to the recession free
sectors like pharmaceuticals, FMCG and technology
sector. Funds performances are improving.
What is particularly noteworthy is that bulk of the
mobilization has been by the private sector mutual funds
rather than public sector mutual funds.
Mutual funds are now also competing with commercial
banks in the race for retail investors savings and
corporate float money. The power shift towards mutual
funds has become obvious. The coming few years will
show that the traditional saving avenues are losing out in
the current scenario. Many investors are realizing that
investments in savings accounts are as good as locking
up their deposits in a closet. The fund mobilization trend
by mutual funds in the current year indicates that money
is going to mutual funds in a big way.
India is at the first stage of a revolution that has already
peaked in the U.S. The U.S. boasts of an Asset base that
is much higher than its bank deposits. In India, mutual
30
-
8/2/2019 Analysis of Mutual Funds in India
31/78
fund assets are not even 10% of the bank deposits, but
this trend is beginning to change. Recent figures indicate
that in the first quarter of the current fiscal year mutual
fund assets went up by 115% whereas bank deposits
rose by only 17%. (Source: Think tank, The Financial
Express September 99) This is forcing a large number of
banks to adopt the concept of narrow banking wherein
the deposits are kept in Gilts and some other assets,
which improves liquidity and reduces risk. The basic fact
lies that banks cannot be ignored and they will not close
down completely. Their role as intermediaries cannot be
ignored. It is just that Mutual Funds are going to change
the way banks do business in the future.
Many private players are also coming in the industry with
their own mutual fund such as Birla Sun Life, Reliance,
HDFC Mutual Fund etc.
Reliance now days is competing the market having a
better market share as compared to other players in the
industry.
SBI Mutual fund too also plays an important role in this
industry. Even today many people still like to invest in the
public sector undertaking in order to avoid risk.
HDFC Mutual Fund is also doing well with their ELSS
schemes, such as Long Term Advantage Fund, Tax Saver
Fund, etc.
When markets are down HDFC Funds normally gives better
returns as their return has always given average return at
the time when the market where at its peak.
Now HDFC are the first who are coming up with the Real
Estate Fund.
31
-
8/2/2019 Analysis of Mutual Funds in India
32/78
Their NFO would come in the month of June or July 2008.
CHAPTER 4
MAJOR PLAYERS IN THE INDIAN MUTUAL FUND INDUSTRY
32
-
8/2/2019 Analysis of Mutual Funds in India
33/78
MAJOR PLAYERS IN THE INDIAN MUTUAL FUND INDUSTRY
Morgan Stanley Asset Management (I) Pvt. Ltd.
Morgan Stanley Dean Witter & Co. is a preeminent global financial
services firm that provides a wide range of services to major
corporations, governments, financial institutions and high-net-
worth individuals worldwide. With approximately 50,000
employees in 24 countries, the Firm has a significant presence in
every financial market. Morgan Stanley Dean Witter (MSDW)
Investment Management is the institutional asset management
division of MSDW & Co. MSDW Investment Management was
established in 1975 to help governments, corporations, pension
funds and non-profit organizations meet their long-term
investment objectives. MSDW Investment Management manages
US$ 385 billion for institutional and individual investors.
MSDW Investment Management manages three major offshore
India funds, the India Magnum Fund (traded on the Dublin Stock
33
-
8/2/2019 Analysis of Mutual Funds in India
34/78
Exchange), the India Investment AG (listed on the Zurich Stock
Exchange) and the India Investment Fund (traded on the New York
Stock Exchange).
The Morgan Stanley Growth Fund was launched in January 1994
and garnered an initial corpus of Rs. 981 crores. MSGF is listed on
the Mumbai, Delhi, Calcutta, Chennai and Ahmedabad Stock
Exchanges and is also traded on the National Stock Exchange. In
1997, MSGF units were placed as eligible securities with the
National Securities Depository Limited, which made it possible for
unit holders to hold units in electronic/dematerialized form.
DSP Merill Lynch Investment Managers
DSP Merrill Lynch Asset Management (India) Ltd., (a company
registered under the Companies Act, 1956) has been set up byDSPML and MLAM, to act as the Asset Management Company
(AMC) to the Fund. The AMC has been appointed as the
Investment Manager to the fund, MLAM holds 40% of the paid up
share capital of the AMC, while the balance 60% (approximately),
is held by DSPML. The Investment Manager was approved by SEBI
to act as the AMC for the Mutual Fund.
Merrill Lynch Investment Managers investment philosophy is
designed to seek consistent, long-term strategic performance
results. Its disciplined value oriented approach to managing its
clients portfolios has been with the primary objective of seeking
consistent returns over a long period.
34
-
8/2/2019 Analysis of Mutual Funds in India
35/78
DSP Merrill Lynch Asset Management (India) Ltd. has been
changed its name to DSP Merrill Lynch Investment Managers Ltd.
w.e.f 20th July 2005-06.
No. of schemes 8
No. of schemes including options 13
Equity Schemes 3
Debt Schemes 2
Short term debt Schemes 2
Equity & Debt 2
Gilt Fund 4
Birla Sunlife Asset Management Company Ltd
Birla Sun Life AMC Ltd. is a joint venture between Sun Life
Assurance Company of Canada and the Aditya Birla Group, one of
Indian leading Industrial houses.
Sun Life Assurance Company of Canada is a leading financial
services organization, providing a diversified range of risk
management, wealth management and money management
products for individuals and corporations worldwide. Sun Life
commenced business in Canada in 1871, and is headquartered inToronto with major operations in Canada, United States, United
Kingdom and Asia Pacific. Sun Life has consistently earned ratings
that rank among the best in the North American financial services
sector. It has a major presence in the growing mutual fund
markets through MFS Investment Management in the U.S., and
35
-
8/2/2019 Analysis of Mutual Funds in India
36/78
through Spectrum United Mutual Funds in Canada. It is also active
in the unit trust business in the U.K., and its near term plans
include consideration of mutual fund offerings in the Philippines.
The Aditya Birla group is a multinational group consisting of the
best known companies in India in a range of key sectors like
Textiles (GRASIM), Rayon (Indian Rayon), Aluminum (HINDALCO),
Petroleum (MRPL), Finance (BGFL), Fertilizers (Indo-Gulf). Birla
Mutual Fund offers investment Schemes which aim to cater to
every need of the investor. Drawing on the expertise of a
worldwide staff of over 10,000 people and a network of more than
65,000 agents and distributors, Sun Life is committed to providing
not just products and services, but solutions for clients financial
and risk management needs.
No. of schemes 10
No. of schemes including options 20
Equity Schemes 8
Debt Schemes 2
Short term debt Schemes 2
Equity & Debt 2
36
-
8/2/2019 Analysis of Mutual Funds in India
37/78
Kothari Pioneer Asset Management Company Ltd.
Kothari Pioneer Mutual Fund is sponsored by the Investment Trust
of India Ltd. of the H C Kothari Group and Pioneer Investment
Management Inc.(PIM) of The Pioneer Group Inc.,USA. KothariPioneer is one of India s first mutual fund in the private sector.
Today, it manages Rs.2700 crores in assets for over 650,000
investors across a range of growth, balanced, income, liquid and
tax saving funds.
The sponsors of the fund are Pioneer Investment Management
(PIM), USA and the Investment Trust of India, who together bring
more than 120 years of experience in financial services. PIM
currently manages over $24 billion in assets worldwide on behalf
of individual and institutional investors. Based in Boston, Pioneer
has financial services operations in Germany, Ireland, Poland,
Czech Republic, India and Russia. Its flagship fund, Pioneer Fund,
37
-
8/2/2019 Analysis of Mutual Funds in India
38/78
was founded in 1928 and is the fourth oldest mutual fund in the
United States.
No. of schemes 21
No. of schemes including options 34
Equity Schemes 18
Debt Schemes 12
Short-term debt Schemes 2
Equity & Debt 1
Money Market 1
Sun F & C Asset Management (India) Pvt. Ltd.
SUN F&C Asset Management (India) Pvt. Ltd. is an equal joint
venture between Foreign & Colonial Emerging Markets Ltd. U.K.
and SUN Securities (India) Pvt. Ltd. Foreign & Colonial, established
in 1868, is one of Europe s leading asset management groups.
F&C is a part of Hypo Bank, one of Germany s oldest and largest
banks and has been investing in the Indian stock markets since
1993. SSIL is an Indian subsidiary company of Sun Group. Its
activities consist of principal investment and investmentmanagement operations in emerging markets and technologies as
well as international commercial activities.
SUN F&C currently manages and advises India Performance Fund
(an offshore fund), SUN F&C Value Fund (a domestic fund) and
F&C sponsored Indian Investment Company SICAV (INDICO).
38
-
8/2/2019 Analysis of Mutual Funds in India
39/78
SUN F&C launched its Indian operations by becoming the domestic
advisor to FCEMs INDICO fund. It has since then launched India
Performance Fund, an offshore fund, in 1996 and five domestic
schemes - Value Fund (1997), Money Value Fund (1998), Balanced
Fund (1999), Emerging Technologies Fund (2005-06), Monthly
Income Plan (2005-06) and Resurgent India Equity Fund (2005-
06). Over the last 5 years, the Company has built a strong track
record of managing asset classes, equity and debt. Today, Sun
F&C manages/advises a corpus of over Rs.1000 crore (US$230
mn), of which over 50% is equity. This corpus is spread over 8
schemes, 6 domestic and 2 offshore. A team of 56 people spread
over 8 location service almost 80,000 customers.
UNIT TRUST OF INDIA
Every year, millions of Indians entrust their savings to Unit Trust of
India to build up a financially secure future. This faith andconfidence of investors stem from UTI's commitment, as reflected
in its long track record to ensure its investors, safety, liquidity and
attractive yield on their investments.
39
-
8/2/2019 Analysis of Mutual Funds in India
40/78
Set up in 1964, by an Act of Parliament, UTI Act 1963, UTI has
grown into one of the biggest players and carved out a special
position in the Indian capital market.
Today, UTI manages an aggregate portfolio of Rs. 72,698 Crore as
on 31/12/1999 and services 45 million investor accounts under 90
saving schemes catering to varying needs of different classes of
investors.
UTI has a servicing and distribution network of 53 branch offices,
320 District Representatives and about 87,000 agents. It provides
a complete range of services to its investors, at a low gross cost of
less than 1.01 percent of invisible funds and does not charge any
asset management fee.
UTIis a symbol of trust and confidence among Indian investors. In
the last seven years, the number of schemes managed by UTI
increased from 35 to 92, while the number of unit holding
accounts recorded a sevenfold increase from 65 lakhs to over 450
lakhs.
UTI's expanding product range cover a broad spectrum of
investment goals and includes open end and closed-end income
and capital accumulation funds. Among the most popular are Unit
Scheme 1964 and Master series equity schemes such as
Mastershare, Masterplus, Master Equity Plans, etc.
UTI also manages schemes aimed at meeting specific needs like
Low cost insurance cover (ULIP)
Monthly income needs of retired persons and women.
40
http://var/www/apps/conversion/current/tmp/scratch17696/overview3.htm#mfihttp://var/www/apps/conversion/current/tmp/scratch17696/overview3.htm#mfi -
8/2/2019 Analysis of Mutual Funds in India
41/78
Income and liquidity needs of religious and charitable
institutions and trusts.
Building up funds to meet cost of higher education
and career plans for children.
Future wealth and income needs of girl child and
women.
Building savings to cover medical insurance at old
age.
Wealth accumulation to meet income needs after
retirement.
Individual household investors account for 99% of UTI's investor
accounts and about 65% of unit capital of UTI schemes. Products
are distributed through a marketing force of about 87,000
commission-based canvassing agents trained to explain the
products and provide related services support to investors.
Today, these agents are supervised by 320 Chief Representatives
who guide the investors, organize, train and motivate the agents
in their respective areas of operation (specified districts)
Investors under various schemes of UTI are now serviced through
53 UTI branches, 213 collection centers and offices of 6 Registrar
and Transfer Agencies appointed by UTI. Besides there are 52
franchises offices, which
accept applications and distribute certificates to unit holders. UTI
has set up its own associate company, UTI-Investor Services
Limited (UTIISL), to meet the growing needs of unit holder
servicing.
41
-
8/2/2019 Analysis of Mutual Funds in India
42/78
UTI is also currently implementing a technology upgradation
program, involving networking of on-line computer systems at
UTI's offices, and offices of Registrars and Transfer Agencies. This
would enable UTI to improve service quality significantly.
UTI publishes weekly/daily NAVs for all its listed schemes and
offers a prospectus for every scheme. It also publishes half-yearly
results for all schemes and releases information on portfolio as
also largest shareholding for growth schemes and Unit Scheme
1964. UTI adheres to disclosure requirements specified by SEBI.
Equity Investing:
More than fifty percent of total funds of UTI Schemes are invested
in equity. UTI is the largest operator in the Indian equity market
with total investments worth Rs 35,007.83 crores at book value.
Its various funds collectively hold stocks in more than 1500 Indian
companies and account for over 8 percent of the market
capitalization of all listed scripts on the Bombay Stock Exchange.
Corporate debt:
UTI is one of the main providers of debt finance to the corporate sector.
Investment in corporate debt instruments account for 38 percent of the
total investible funds. Credit market operations cover a range of
instruments including publicly issued and privately placed debentures,
bonds and medium term notes. UTI's debt portfolio quality is represented
by 98 percent performing assets.
HDFC AMC (ASSET MANAGEMENT COMPANY)
HDFC Asset Management Company Ltd (AMC) was incorporated
42
-
8/2/2019 Analysis of Mutual Funds in India
43/78
under the Companies Act, 1956, on December 10, 1999, and was
approved to act as an Asset Management Company for the HDFC
Mutual Fund by SEBI wide with its letter dated 30th june 2000.
The registered office of the AMC is situated at Ramon House, 3rd
Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate,
Mumbai 400 020
In terms of the Investment Management Agreement, the Trustee
has appointed the AMC to manage the mutual fund.
As per the terms of the Investment Management Agreement, the
AMC will conduct the operations of the Mutual Fund and manage
assets of the schemes, including the schemes launched from time
to time
The single most important factor that drives HDFC Mutual Fund is
its belief to give the investor the chance to profitably invest in the
financial market, without constantly worrying about the market
swings. To realize this belief, HDFC Mutual Fund has set up the
infrastructure required to conduct all the fundamental research
and back it up with effective analysis. Our strong emphasis on
managing and controlling portfolio risk avoids chasing the latest
fads and trends.
HDFC Asset Management Company (AMC) is the first AMC in India
to have been assigned the CRISIL Fund House Level 1 rating.
This is its highest Fund Governance and Process Quality Rating
which reflects the highest governance levels and fund
management practices at HDFC AMC It is the only fund house to
have been assigned this rating for two years in succession. Over
the past, we have won a number of awards and accolades for our
43
-
8/2/2019 Analysis of Mutual Funds in India
44/78
performance.
The AMC is managing 24 open-ended schemes of the Mutual
Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF),
HDFC Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Long
Term Advantage Fund (HLTAF), HDFC Children's Gift Fund (HDFC
CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP),
HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF),
HDFC Equity Fund (HEF), HDFC Top 200 Fund (HT200), HDFC
Capital Builder Fund (HCBF), HDFC TaxSaver (HTS), HDFC
Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC
Cash Management Fund (HCMF), HDFC MF Monthly Income Plan
(HMIP), HDFC Core & Satellite Fund (HCSF), HDFC Multiple Yield
Fund (HMYF), HDFC Premier Multi-Cap Fund (HPMCF), HDFC
Multiple Yield Fund . Plan 2005 (HMYF-Plan 2005), HDFC
Quarterly Interval Fund (HQIF) and HDFC Arbitrage Fund.
The AMC is also managing 8 closed ended Schemes of the HDFC
Mutual Fund viz. HDFC Long Term Equity Fund, HDFC Mid-Cap
Opportunities Fund, HDFC Fixed Maturity Plans, HDFC Fixed
Maturity Plans - Series II, HDFC Fixed Maturity Plans - Series III,
HDFC Fixed Maturity Plans - Series IV, HDFC Fixed Maturity Plans
- Series V and HDFC Fixed Maturity Plans - Series VI.
44
-
8/2/2019 Analysis of Mutual Funds in India
45/78
Banks v/s Mutual Funds
CHARACTERISTI
CS
BANKS MUTUAL
FUNDSReturns
LowBetter
Administrative
exp.
High Low
Risk Low ModerateInvestment
options
Less More
Network High penetration Low but
improvingLiquidity At a cost BetterQuality of assets Not transparent TransparentInterest
calculation
Minimum balance between
10th. & 30th. Of every
month
Everyday
Guarantee Maximum Rs.1 lakhs on
deposits
None
45
-
8/2/2019 Analysis of Mutual Funds in India
46/78
CHAPTER- 5
REGULATORY ASPECT OF A MUTUAL FUND
46
-
8/2/2019 Analysis of Mutual Funds in India
47/78
REGULATORY ASPECT OF A MUTUAL FUND
Schemes of a Mutual Fund
The asset management company shall launch no scheme
unless the trustees approve such scheme and a copy of the
offer document has been filed with the Board.
Every mutual fund shall along with the offer document of
each scheme pay filing fees.
The offer document shall contain disclosures which are
adequate in order to enable the investors to make informed
investment decision including the disclosure on maximum
investments proposed to be made by the scheme in the
listed securities of the group companies of the sponsor
The mutual fund and asset Management Company shall be
liable to refund the application money to the applicants
If the mutual fund fails to receive the minimum subscription
amount referred to in clause (a) of sub-regulation (1)
If the moneys received from the applicants for units are in
excess of subscription as referred to in clause (b) of sub-
regulation (1).
47
-
8/2/2019 Analysis of Mutual Funds in India
48/78
The asset management company shall issue to the applicant
whose application has been accepted, unit certificates or a
statement of accounts specifying the number of units
allotted to the applicant as soon as possible but not later
than six weeks from the date of closure of the initial
subscription list and or from the date of receipt of the
request from the unit holders in any open ended scheme.
Rules Regarding Advertisement
The offer document and advertisement materials shall not
be misleading or contain any statement or opinion, which
are incorrect or false.
Investment Objectives and Valuation Policies:
The price at which the units may be subscribed or sold and
the price at which such units may at any time be
repurchased by the mutual fund shall be made available to
the investors.
General Obligations
Every asset management company for each scheme shall
keep and maintain proper books of accounts, records and
documents, for each scheme so as to explain its
transactions and to disclose at any point of time the
financial position of each scheme and in particular give a
true and fair view of the state of affairs of the fund and
intimate to the Board the place where such books of
accounts, records and documents are maintained.
48
-
8/2/2019 Analysis of Mutual Funds in India
49/78
The financial year for all the schemes shall end as of March
31 of each year.
Every mutual fund shall have the annual statement of
accounts audited by an auditor who is not in any way
associated with the auditor of the asset management
company.
Procedure for Action In Case Of Default
On and from the date of the suspension of the certificate or the
approval, as the case may be, the mutual fund, trustees or
asset management company, shall cease to carry on any
activity as a mutual fund, trustee or asset management
company, during the period of suspension, and shall be subject
to the directions of the Board with regard to any records,
documents, or securities that may be in its custody or control,
relating to its activities as mutual fund, trustees or asset
management company.
Restrictions on Investments
A mutual fund scheme shall not invest more than 15% of its
NAV in debt instruments issued by a single issuer, which are
rated not below investment grade by a credit rating agency
authorized to carry out such activity under the Act. Such
investment limit may be extended to 20% of the NAV of the
scheme with the prior approval of the Board of Trustees and
the Board of asset Management Company.
49
-
8/2/2019 Analysis of Mutual Funds in India
50/78
A mutual fund scheme shall not invest more than 10% of its
NAV in an rated debt instruments issued by a single issuer
and the total investment in such instruments shall not
exceed 25% of the NAV of the scheme. All such investments
shall be made with the prior approval of the Board of
Trustees and the Board of asset Management Company.
No mutual fund under all its schemes should own more than
ten per cent of any company's paid up capital carrying
voting rights.
Such transfers are done at the prevailing market price for
quoted instruments on spot basis.
The securities so transferred shall be in conformity with the
investment objective of the scheme to which such transfer
has been made.
A scheme may invest in another scheme under the same
asset management company or any other mutual fund
without charging any fees, provided that aggregate inter
scheme investment made by all schemes under the same
management or in schemes under the management of any
other asset management company shall not exceed 5% of
the net asset value of the mutual fund.
The initial issue expenses in respect of any scheme may not
exceed six per cent of the funds raised under that scheme.
Every mutual fund shall buy and sell securities on the basis
of deliveries and shall in all cases of purchases, take
delivery of relative securities and in all cases of sale, deliver
the securities and shall in no case put itself in a position
whereby
it has to make short sale or carry forward transaction or
engage in badla finance.
50
-
8/2/2019 Analysis of Mutual Funds in India
51/78
Every mutual fund shall, get the securities purchased or
transferred in the name of the mutual fund on account of
the concerned scheme, wherever investments are intended
to be of long-term nature.
Pending deployment of funds of a scheme in securities in
terms of investment objectives of the scheme a mutual fund
can invest the funds of the scheme in short term deposits of
scheduled commercial banks.
No mutual fund scheme shall make any investment in;
Any unlisted security of an associate or group company of
the sponsor; or
Any security issued by way of private placement by an
associate or group company of the sponsor; or
The listed securities of group companies of the sponsor
which is in excess of 30% of the net assets [of all the
schemes of a mutual fund.
No mutual fund scheme shall invest more than 10 per cent
of its NAV in the equity shares or equity related instruments
of any company. Provided that, the limit of 10 per cent shall
not be applicable for investments in index fund or sector or
industry specific scheme.
A mutual fund scheme shall not invest more than 5% of its
NAV in the equity shares or equity related investments in
case of open-ended scheme and 10% of its NAV in case of
close-ended scheme.
51
-
8/2/2019 Analysis of Mutual Funds in India
52/78
INTERNET AND THE MUTUAL FUND INDUSTRY
Here are some of the basic changes that have taken place since
the advent of the Net.
Lower Costs
Distribution of funds will fall in the online trading regime by
2005. Mutual funds could bring down their administrative costs
to 0.75% if trading is done on- line. As per SEBI regulations,
bond funds can charge a maximum of 2.25% and equity funds
can charge 2.5% as administrative fees. Therefore if the
administrative costs are low, the benefits are passed down and
hence Mutual Funds are able to attract mire investors and
increase their asset base.
Better advice
Mutual funds could provide better advice to their investors
through the Net rather than through the traditional investment
routes where there is an additional channel to deal with the
Brokers. Direct dealing with the fund could help the investor
with their financial planning. In India, brokers could get more
Net savvy than investors and could help the investors with the
knowledge through get from the Net.
52
-
8/2/2019 Analysis of Mutual Funds in India
53/78
New investors would prefer online
Mutual funds can target investors who are young individuals
and who are Net savvy, since servicing them would be easier
on the Net. India has around 1.6 million net users who are
prime target for these funds and this could just be the
beginning. The Internet users are going to increase
dramatically and mutual funds are going to be the best
beneficiary. With smaller administrative costs more funds
would be mobilized .A fund manager must be ready to tackle
the volatility and will have to maintain sufficient amount of
investments which are high liquidity and low yielding
investments to honor redemption.
Net based advertisements
There will be more sites involved in ads and promotion of
mutual funds. In the U.S. sites like AOL offer detailed research
and financial details about the functioning of different funds
and their performance statistics. a is witnessing a genesis in
this area . There are many sites such as indiainfoline.com and
indiafn.com that are doing something similar and providing
advice to investors regarding their investments. In the U.S.
most mutual funds concentrate only on financial funds like
equity and debt. Some like real estate funds and commodity
funds also take an exposure to physical assets.
53
-
8/2/2019 Analysis of Mutual Funds in India
54/78
CHAPTER 6
ANALYSIS OF QUESTIONNAIRE
54
-
8/2/2019 Analysis of Mutual Funds in India
55/78
ANALYSIS OF QUESTIONNAIRE
Q1)Are you familiar with mutual funds?
1) Yes
2) No
No
35%
Yes
65%
Yes
No
Conclusion: Out of the total respondentsmost of the
people are aware of mutual funds and only few of
them are not aware of the funds.
55
-
8/2/2019 Analysis of Mutual Funds in India
56/78
Q2) If yes, then which type of mutual fund do you invest.
1) Equity Fund
2) Debt Fund
3) Balanced Fund
Equity Fund
18%
Debt Fund
50%
Balanced
Fund
32%
Equity Fund
Debt Fund
Balanced Fund
Conclusion: Out of total respondents 50% people
invest in the debt fund as compared to 32% people
invest in the balanced fund and very few people are
ready to take the risk of equity fund.
56
-
8/2/2019 Analysis of Mutual Funds in India
57/78
Q3) How much do you invest in mutual fund.
1) 50002) 5000 - 10000
3) 10000-20000
4) Above 20000
10000 To
20000
20%
5000 To 10000
35%
5000
30%Above 20000
15%5000
5000 To 10000
10000 To 20000
Above 20000
Conclusion: Out of the total respondents most of the
people normally invest around 5000 to 10000 and the
rest of them invest according to their own needs and
desire.
57
-
8/2/2019 Analysis of Mutual Funds in India
58/78
Q4) For what purpose do you invest in mutual fund.
1) Security of money
2) Rate of Return
3) Profitability
4) Liquidity
Profitability
40%
Security
20%Liquidity
25%
Rate of
Return
15%
Security
Profitability
Rate of
Return
Liquidity
Conclusion: Most of the people invest in mutual fund to
earn profit as compared to have more security and
liquidity.
58
-
8/2/2019 Analysis of Mutual Funds in India
59/78
Q5) Do you think it is expensive investing in mutual fund
1) Yes
2) No
No
35%
Yes
65%
Yes
No
Conclusion: Most of the people feel that investing in
mutual fund is bit expensive as compared to the other
investment schemes in bank deposits.
59
-
8/2/2019 Analysis of Mutual Funds in India
60/78
Q6) Does your fund gives regular return
1) Yes
2) No
No
30%
Yes
70%
Yes No
Conclusion: Most of the people feel that their fund gives
them regular return whereas rest of them feels that their
fund sometimes gives negative return.
60
-
8/2/2019 Analysis of Mutual Funds in India
61/78
Q7) How much do you invest in Bank Deposits.
1)
-
8/2/2019 Analysis of Mutual Funds in India
62/78
Q8) What type of investment do you prefer.
1) Mutual Fund
2) Bank Saving Accounts
3) Fixed Deposits Schemes
Mutual Fund
21%
Fixed
Deposits
63%
Bank
Accounts
16%
Mutual Fund
Bank Accounts
Fixed Deposits
62
-
8/2/2019 Analysis of Mutual Funds in India
63/78
Conclusion: Out of the total respondent most of them
prefer to invest in the fixed deposits scheme as
compared to the mutual funds and very few people
invests in the savings accounts.
Q9) How do you invest in mutual fund.
1) Agents2) Distribution Companies
3) AMCs
Agents
25%
AMC's
35%
Distribution
companies
40%
Agents
Distributioncompanies
AMC's
63
-
8/2/2019 Analysis of Mutual Funds in India
64/78
Conclusion: Most of the people invest in mutual fund
through distribution companies as compared to direct
investments in asset management companies and very
few people invest through agents.
Q10) Of the following companies where do you prefer toinvest.
1) SBI mutual fund
2) Reliance mutual fund
3) HDFC mutual fund
4) Birla Sun Life
64
-
8/2/2019 Analysis of Mutual Funds in India
65/78
Birla SunLife
20%
Reliance
mutualfund
30%
SBI mutual
fund
25%
HDFC
mutual
fund25%
SBI mutual fund
Reliance mutual
fund
HDFC mutual fund
Birla Sun Life
Conclusion: Out of the total respondent most of them
invest in reliance mutual fund as compared to the other
mutual fund companies.
Q11) If market falls, what do you do.
1) Redeem the amount.
2) Hold the investment.
3) Further invest.
4) Invest in some other kind of investment.
65
-
8/2/2019 Analysis of Mutual Funds in India
66/78
-
8/2/2019 Analysis of Mutual Funds in India
67/78
Yes
65%
No
35%
Yes
No
Conclusion: Most of the people now days invest
systematically as very few people prefer to invest in
lump sum amount.
67
-
8/2/2019 Analysis of Mutual Funds in India
68/78
CHAPTER 7
FINDINGS OF THE STUDY
CONCLUSION
At the end of the project the conclusion which can be
drawn is that the mutual fund industry is going to be one
68
-
8/2/2019 Analysis of Mutual Funds in India
69/78
of the emerging avenues for the investors in the time to
come.
Most of the people show less interest in the mutual
funds.
Most of the respondents who were aware of the funds too
were not interested in investing their savings in the
Mutual Funds. They were not confident of the safety and
security of the investments in Mutual Funds.
People normally give preference to the bank deposits
schemes as compared to the mutual fund because of the
risk factor associated with it.
Most of the respondents are mainly look for the
profitability in the mutual funds which becomes difficult
for them because they normally invest their larger
proportion of their amount in debt instruments as
compared to equity which gives less return.
Many people also do not invest in mutual fund because of
the fact that the cost is high in mutual funds, as they
have to pay entry and exit load attached to the fund.
69
-
8/2/2019 Analysis of Mutual Funds in India
70/78
People normally go through distribution companies while
investing in the mutual funds and hence can avoid any
fraud and flaws associated with the investments.
According to the survey many people prefer invest in the
Reliance mutual fund as compared to the other funds
available in the market.
The concept of SIP(systematic Investment plan) is some
thing which caters to both the return expectation and
security. And normally people are now likely to invest
through SIPs.
RECCOMENDATIONS
70
-
8/2/2019 Analysis of Mutual Funds in India
71/78
After the complete study of the mutual funds and based upon
my experience and observations. The following suggestions are
made which may be beneficial for increasing the effectiveness of
the mutual funds.
People should be given more awareness about the
mutual fund in order to enhance the business
Regular and detailed information should be provided
to the investor and must be given all the details of the
new fund which ever comes in the market.
More emphasis should be given to the equity linkedschemes in mutual fund as compared to debt
schemes in order to gain more profit from equities.
The expenses of the fund should be reduced so that
the
investor can invest easily.
People should invest directly through AMC in order to
avoid expenses associated with the fund.
They should not stick to one fund only as it may notgive better return all the time, rather they shouldinvest in different securities.
Lastly people should invest through systematic
investment plans instead investing in lump sum.
71
-
8/2/2019 Analysis of Mutual Funds in India
72/78
CHAPTER - 8
LIMITATIONS
72
-
8/2/2019 Analysis of Mutual Funds in India
73/78
LIMITATION
1. Time Constraints
The time duration of conducting theresearch was less so a lot of factors were ignored.
A large sample could not be taken due to
same reason.
2. The survey was conducted during free hours. The
customers did not respond when they were
contacted in peak hours.
3. Most of the customers were ignorant and were not
willing to respond that leads to inaccuracy in data
collected.
4. As the data was based on customers perception,
it might be biased to certain extent.
73
-
8/2/2019 Analysis of Mutual Funds in India
74/78
ANNEXURE
Q1)Are you familiar with mutual funds?
1)Yes2) No
Q2) If yes, then which type of mutual fund do you invest.
1) Equity Fund
2) Debt Fund
3) Balanced Fund
Q3) How much do you invest in mutual fund.
1) 5000
2) 5000 - 10000
3) 10000-20000
4) Above 20000
Q4) For what purpose do you invest in mutual fund.
1) Security of money
2) Rate of Return
3) Profitability
4) Liquidity
Q5) Do you think it is expensive investing in mutual fund
1) Yes
2) No
Q6) Does your fund gives regular return
74
-
8/2/2019 Analysis of Mutual Funds in India
75/78
1) Yes
2) No
Q7) How much do you invest in Bank Deposits.
1)
-
8/2/2019 Analysis of Mutual Funds in India
76/78
-
8/2/2019 Analysis of Mutual Funds in India
77/78
BIBLIOGRAPHY
77
-
8/2/2019 Analysis of Mutual Funds in India
78/78
BIBLIOGRAPHY
The websites referred by me are:-
1) www.amfiindia.com2) www.hdfcfund.com3) www.mutualfundindia.com4) www.google.com5) www.valueresearch.com
http://www.amfiindia.com/http://www.hdfcfund.com/http://www.mutualfundindia.com/http://www.google.com/http://www.valueresearch.com/http://www.amfiindia.com/http://www.hdfcfund.com/http://www.mutualfundindia.com/http://www.google.com/http://www.valueresearch.com/