fyp-study on mutual fund schemes-nj india invest

A PROJECT REPORT

On

STUDY OF MUTUAL FUND SCHEMES

AT

NJ INDIA INVEST PVT. LTD. (PUNE)

Submitted

In partial fulfillment of

MASTER DEGREE IN BUSINESS

ADMINISTRATION

University of Pune

(2007-2009)

By

SANGEETA ROHRA

MASTER OF BUSINESS ADMINISTRATION

Allana Institute of Management Science, Pune.

CERTIFICATE

This to certify that SANGEETA ROHRA an M.B.A student of Allana

Institute of Management Sciences has undergone a summer internship

in NJ INDIA INVEST PVT.LTD. Under the title “Study of mutual

fund Schemes”. She has successfully completed her project work in partial

fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION.

www.final-yearproject.com | www.finalyearthesis.com

This report is the record of the student‟s own effort your able supervision

and guidance.

Prof. RASHMI

SUNDRIYAL DR.K.K. SINGH

(Internal Guide) [Director]

Date :--------- Date--------

Place:--------- Place:------

--

DECLARATION

This is to declare that the project “STUDY OF MUTUAL FUND

SCHEMES” is entirely genuine work done by me without copying any

material from any available source. It is authentic effort put in by me.

SANGEETA ROHRA


(ALLANA INSTITUTE OF MANAGEMENT SCIENCES)


ACKNOWLEDGEMENT

The last two months with NJ INDIA INVEST PVT.LTD. has been full of

learning and sense of contribution toward the organization. I would like to

thank NJ INDIA INVEST for giving me an opportunity of learning and

contributing through this project. I would like to thanks all the people who

knowingly and unknowingly supported me in my endeavor.

As a student of ALLANA INSITUTE OF MANAGEMENT SCIENCES, I

would first of all like to express my gratitude o Mr. K. K. SINGH for

assigning me such a topic STUDY OF MUTUAL FUND SCHEMES to

work upon in NJ INDIA INVEST PVT.LTD.

During the actual project work, Prof. RASHMI SUNDRIYAL {Project

Guide} has been a source of inspiration through her constant guidance;

personal interest; encouragement and help. I convey my sincere thanks to

her in project. I am also grateful to her for responding Confidence in my

abilities end giving me the freedom to work on my project.

The project couldn‟t have been completed without timely and vital help of

other office staff. Special thanks to Mr. SWAPNIL ADMANE for their

invaluable guidance, keen interest, co-operation, inspiration and of course

moral support through my project session.

[SANGEETA ROHRA]


About NJ

NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm.

NJ prides in being a professionally managed, quality focused and customer centric organisation. The strength of NJ lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cutting-edge technology platform, developed in-house by NJ.

At NJ we believe in …

having single window, multiple solutions that are integrated for

simplicity and sapience

making innovations, accessions, value-additions, a constant

process

providing customers with solutions for tomorrow which will keep them above the curve, today

NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360° Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 8,600* NJ Fundz Network Partners and over 4,500*


normal advisors associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients.

Vision & Mission

To be the leader in our field of business through,

Total Customer Satisfaction

Commitment to Excellence

Determination to Succeed with strict adherence to compliance

Successful Wealth Creation of our Customers

Mission :

Ensure creation of the desired value for our customers, employees

and associates, through constant improvement, innovation and

commitment to service & quality. To provide solutions which meet

expectations and maintain high professional & ethical standards

along with the adherence to the service commitments.


Philosophy

At NJ our service and investing philosophy inspire and shape the

thoughts, attitude, actions and decisions of our employees. If NJ

would beliefs, At NJ our Service and Investing philosophy inspire

and shape the resemble a body, our philosophy would be our spirit

which drives our body.

Service Philosophy:

Our primary measure of success is customer satisfaction …

We are committed to provide our customers with continuous, long-

term improvements and value-additions to meet the needs in an

exceptional way. In our efforts to consistently deliver the best

service possible to our customers, all employees of NJ will make

every effort to:

think of the customer first, take responsibility, and make prompt

service to the customer a priority

deliver upon the commitments & promises made on time

anticipate, visualize, understand, meet, exceed our customer‟s

needs

bring energy, passion & excellence in everything we do

be honest and ethical, in action & attitude, and keep the customer‟s

interest supreme


strengthen customer relationships by providing service in a

thoughtful & proactive manner and meet the expectations,

effectively

Investing Philosophy:

We aim to provide Need-based solutions for long-term wealth

creation

We aim to provide all customers of NJ, directly or indirectly, with

true, unbiased, need-based solutions and advice that best meets

their stated & un-stated needs. In our efforts to provide quality

financial & investment advice, we believe that …

Clients want need-based solutions, which fits them

Long-term wealth creation is simple and straight

Asset-Allocation is the ideal & the best way for long-term wealth

creation

Educating and disclosing all the important facets which the

customer needs to be aware of, is important

The solutions must be unbiased, feasible, practical, executable,

measurable and flexible

Constant monitoring and proper after-sales service is critical to

complete the on-going process

At NJ our aim is to earn the trust and respect of the

employees, customers, partners, regulators, industry

members and the community at large by following our

service and investing philosophy with commitment and

without exceptions


Management

The management at NJ brings together a team of people with wide experience and knowledge in the financial services domain. The management provides direction and guidance to the whole organisation. The management has strong visions for NJ as a globally respected company providing comprehensive services in financial sector.

The ‘Customer First’ philosophy in deeply ingrained in the management at NJ. The aim of the management is to bring the best to the customers in terms of

Range of products and services offered

Quality Customer Service

All the key members of the organisation put in great focus on the processes & systems under the diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage the technology for enhancing overall customer experience.


The key members of the management are:

Mr. Neeraj Choksi Jt. Managing Director Mr. Jignesh Desai Jt. Managing Director

Sales Team: Mr. Misbah Baxamusa National Head Mr. Kulbhushan Nandwani A.V.P. Mr. Prashant Kakkad A.V.P. Executive Team: Mr. Shirish Patel Information Technology Mr. Vinayak Rajput Finance & Operations Mr. Abhishek Dubey Marketing & Development Mr. Viral Shah Research Mr. Dhaval Desai Human Resources

People & Culture

People

Enthusiasm, Enterprise, Education and Ethics form the four pillars

at NJ. At NJ one can witness the vibrant energy, enthusiasm and

the enterprising drive to excel flowing freely throughout the

organisation. At NJ can also experience the creativity, one-to-one

responsiveness, collaborative approach and passion for delivering

value.


At NJ people evolve to be more effective, efficient, and result

oriented. Knowledge is inherent due to the education-centric

approach and the experience in handling different clients groups

across diverse product profiles.

NJ understands that the people are the most important assets of

the company and it is not the company that grows but the people.

NJ hence undertakes rigorous training and educational activities

for enhancing the entire team at NJ. NJ also believes in the

‘Learning through Responsibility’ concept for its employees.

For people at NJ success is not a new word, but is a regular

stepping-stone to realising the one vision that everyone shares.

Culture:

At NJ we believe in transforming the lives of our customers. We

exist to create a difference – a change towards a better life. The

culture at NJ reflects this responsibility, this dream of transforming

lives. And we at NJ are always excited and enthused in doing so.

We believe in keeping „You First‟, providing you with products

and services that meet your stated and unstated needs. Client

satisfaction and client service is the Mantra we constantly recite.

This service oriented philosophy runs throughout the organization,

from top to bottom.

Employees are given ample freedom in their work. The objective is

to keep an open, healthy environment with ample scope for

enterprise, improvement, innovations and out-of-the box solutions


Our efforts are constantly engaged in improving our existing

services, offering new and innovative solutions that go beyond

your expectations. This focus has made us one of the most

respected and preferred service providers, especially in the mutual

fund industry.

Service Standards

Service in words, service in action


Service is the key to unlocking customer satisfaction, which again

is key for sustainability of any business. At NJ we understand this

very well. NJ has set strict processes in place to deliver quality

services to customers. At NJ strict quality service standards are set

and a well-defined process is established and followed religiously

by our quality customer service teams. Performance is evaluated

on a frequent basis and glitches are ironed out.

But quality service also involves quality people in addition to

processes. NJ gives significant focus to the proper training and

development of the people involved in the service delivery chain.

Further we,

Have well-defined "Privacy Policy" to keep clients‟ information

confidential & internal audits done on the same at regular intervals

Receive various statistics which are analysed on an ongoing basis

to improve the service standards

We are committed to improve and enhance our services and

undertake new service initiatives. Such and other services

differentiate us with other service providers in the industry.

Our Service Commitments …

The service commitments are to guide the actions of the people at

NJ. Clearly stated, advisors can freely communicate any such

actions/events wherein they feel that any of the following

commitments have been breached / compromised. At NJ we desire

to honour our commitments at all points of time and to all our

advisors without any bias.


To provide advisor-focussed need-based valued services

To provide reliable, accurate and timely information

To maintain all records in privacy

To optimise services/benefits at least justifiable cost

To develop and grow the advisors‟ business

To provide constructive after sales service

To honour our service commitments

Past Recognitions

Some of the awards & recognitions that we have received in

past …

Year 2000:

For Outstanding Performance presented by Chairman, Prudential

Plc. at London


Year 2002:

For Outstanding Performance presented by Group Chief Executive,

Prudential Plc. at London

Year 2003:



Year 2004:

Among Most Valued Business Associates presented by HDFC

Standard Life at Edinburgh, Scotland

Year 2004:

For Outstanding Performance by Deputy CEO, Prudential

Singapore at Malaysia

Year 2006:

Award for mobilising the Highest Number of SIPs at National Level

by Fidelity Mutual Fund Plc at Mumbai

Year 2006:

Award – Vietnam

Comments from Industry Stalwarts:

The essence of investment consultancy lies in optimal asset

allocation as against security selection or timing the markets for

clients. NJ understands this very well and has added significant


value to the clients through this approach. I am sure with this new

initiative; a much larger number of clients will be able to benefit

from this approach. I wish them all the best in this initiative

CHAPTER: 1

INTRODUCTION

INTRODUCTION OF THE STUDY

Mutual funds now represent perhaps the most appropriate investment

opportunity for most small investors. As financial markets become more

sophisticated and complex, investors need a financial intermediary who

provides the required knowledge and professional expertise on successful

investing. It is no wonder then that in the birthplace of mutual fund-the

U.S.A.-the fund industry has already overtaken the banking industry, with

more money under mutual fund management than deposited with banks.


The Indian mutual fund industry has already opened up many exciting

investment opportunity to Indian investors. We have started witnessing

the phenomenon of more savings now being entrusted to the funds.

Despite the expected continuing growth in the industry, mutual fund is

still a new financial intermediary in India. Hence, it is important that the

investors, the mutual fund agents / distributors, financial planners,

investment advisors and even the fund employees acquire better

knowledge of what mutual funds are, what they can do for investors and

what they cannot, and how they function differently from other financial

intermediaries such as the banks. The Association of Mutual Funds in

India has commissioned this Workbook will also serve as a guide to the

AMFI Mutual Fund Testing Programmed for distributors and employees

of mutual funds.

Mutual Funds normally invest in a well-diversified portfolio of securities.

Each investor in a fund is a part owner of all of the fund‟s assets. This

enables him to hold a diversified investment portfolio even with a small

amount of investment, which would otherwise require big capital.

Even if an investor has a big amount of capital available to him, he

benefits from the professional management skills brought in by the fund

in the management of the investor‟s portfolio. The investment

management skills, along with the needed research into available

investment options, ensure a much better return than what an investor can

manage on his own. Few investors have the skills and resources of their

own to succeed in today‟s fast-moving, global and sophisticated markets.


EXECUTIVE SUMMARY

The project titled “Comparison of Mutual Fund Scheme” being

carried out for NJ INDIA INVESTS PVT. LTD. Today an investor is

interested in tracking the value of his investments, whether he invests

directly in the market or indirectly through Mutual Funds. This dynamic

change has taken place because of a number of reasons. With

globalization and the growing competition in the investments opportunity

available he would have to make guided and rational decisions on

whether he gets an acceptable return on his investments in the funds

selected by him, or if he needs to switch to another fund.

In order to achieve such an end the investor has to understand the

basis of appropriate preference measurement for the fund, and acquire the

basic knowledge of the different measures of evaluating the performance


of the fund. Only then would he be in a position to judge correctly

whether his fund is performing well or not, and make the right decision.

This project is undertaken to help the investors in tracking the

performance of their investments in Mutual Funds and has been carried

out with the objective of giving performance analysis of Mutual Fund.

The methodology for carrying out the project was very simple that

is through secondary data obtained through various mediums like fact

sheet of the funds, the Internet, Business magazines, Newspaper, etc. the

analysis of Mutual Funds has been done with respect to its various

parameters. I hope NJ INDIA INVEST PVT. LTD., Pune will recognize

this as well as take more references from this project report.

INTRODUCTION OF THE PROJECT

In a Mutual Fund, many investors contribute to form a common pool of

money. This pool of money is invested in accordance with an objective.

The ownership of the fund is thus joint of “mutual”; the fund belongs to

all investors. A single investor‟s ownership of the fund is in the same

proportion as the amount of the contribution made by him bears to the

total amount of the fund.

A mutual fund uses the money collected from investors to buy those

assets which are specifically permitted by its stated investment objective.

Thus, a growth fund would buy mainly equity assets – ordinary shares,

preference, warrants, etc. An income fund would mainly buy debt

instruments such as debentures and bonds. The fund‟s assets are owned


by the investors in the same proportion as their contribution bears to the

total contributions of all investors put together.

An investor can buy the shares from a company only when the company

makes a share issue. At other times, a share can be purchased from

another investor through the stock exchange if the share is listed. A

shareholder can sell the share to the company only when the company

announces „share buy back‟. At other times, he can sell share to another

investor through a stock exchange. The price observed in a stock

exchange is a reasonable estimate of the fair value of the share.

An open-end mutual fund is quite different in this respect. In an open-end

mutual fund, investors can buy units from the fund and sell units to the

fund continuously. The stock exchange is not in the picture. To ensure

that there is fairness, sale and purchase has to take place at fair value of

the unit. In other words, each share or unit that an investor holds needs to

be assigned a value. Since the units held by an investor evidence the

ownership of the fund‟s assets, the value of the total assets of the fund

when divided by the total number of units issued by the mutual fund

gives us the value of one unit. This is generally called the Net Asset

Value (NAV) of one unit or one share. The total value of an investor‟s

part ownership is thus determined by multiplying the NAV with the

number of units held.


OBJECTIVES OF THE STUDY:

The project was conducted for the following objective:-

1) To gain an understanding and knowledge of Mutual Funds as an

Investment Tool.

2) To study the product profile of the company.

3) To evaluate the performance of selected schemes of Mutual Fund

of different companies.

4) To compare the Mutual fund schemes on different parameters.

5) To analyze the performance factor of the Fund based on different

drivers associated with the specific fund.

6) To study the diversification of mutual fund.

7) To know the different Asset management companies involve in

MUTUAL FUND.

Scope of the study:


The Indian securities market is the scope of this project and funds floated

therein. The whole project was based with the agenda to analyze existing

mutual funds and determine their performance factors .In depth analysis

of individual fund is not scope but on the other hand performance of

funds and finding their reasons as in general is the primary motive behind

this project.

The area of the project work is pune city and its location where the

survey has been undertaken those are Hinjewadi IT Park, Magarpatta IT

Park, WNS, Baner symphony Soft Ware, Zensar IT Park, and Senapati

Bapat Road.

LIMITATIONS OF THE STUDY:

Every work has its own limitation. Limitations are extent to which the

process should not exceed. Limitations of this project are:-

1. Duration of project was not enough to make a conclusion on such a

vast subject time. Constraint has become a big limitation.

2. The analysis is based on historical data and thus indicates the past

performance, which may not always be indicative of the future

performance.

3. Different schemes consider different market indices as their

benchmarks, but for purpose of uniformity in the study all schemes have

to be compared against same benchmark index.

4.Weekly NAV‟S have been considered for the study. Daily NAV‟s

would have given more precise result for the study.


5. It is difficult to get full insight of how fund managers have deployed

their funds.

6. There are more than 30 companies and offering various ranges of

products and analyzing all of them is again a difficult task.

7. Mutual Fund industry performance is dependent on daily churning of

portfolio and Net Asset Value of each fund changes every day, thus the

fund which in comparison is doing better today may not perform well

tomorrow and thus it affects the analysis process.

All the above mentioned statements are the limitations of the project.

Time, Sample Size & Mentality of investor are the main limitations of the

project.

The study is being done by taking and keeping all limitation in mind. The

project is completed in prescribed time.

To find the Awareness of Mutual Fund the Sample Size is not at all

enough because the population size is much bigger than the sample size

and the last limitation was to change the mentality of the investor to

invest in a particular type of the Investment Product. As the Indian

Market have a large number of potential customer to draw a conclusion in

such a small size may not be reliable.


CHAPTER:2

COMPANY PROFILE


About NJ

NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm.






process

providing customers with solutions for tomorrow which will keep them above the curve, today

NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the


services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360° Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 8,600* NJ Fundz Network Partners and over 4,500* normal advisors associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients.

Vision & Mission






Mission:







Philosophy






Service Philosophy:






every effort to:






needs



interest supreme



effectively



creation








creation












without exceptions

Management








Mr. Neeraj Choksi Jt. Managing Director

Mr. Jignesh Desai Jt. Managing Director

Sales Team:

Mr. Misbah Baxamusa National Head

Mr. Kulbhushan Nandwani A.V.P.

Mr. Prashant Kakkad A.V.P.

People & Culture

People






value.













Culture:









from top to bottom.









fund industry.

Service Standards













Further we,























Past Recognitions


past …

Year 2000:


Plc. at London


Year 2002:



Year 2003:



Year 2004:



Year 2004:



Year 2006:



Year 2006:

Award – Vietnam









CHAPTER NO 3:


THEORETICAL FRAMEWORK

Mutual Funds: An overview

Introduction

A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The money thus collected is invested

by the fund manager in different types of securities depending upon the

objective of the scheme. These could range from shares to debentures to

money market instruments. The income earned through these investments

and the capital appreciations realized by the scheme are shared by its unit

holders in proportion to the number of units owned by them (pro rata).

Thus a Mutual Fund is the most suitable investment for the common

strategy.


A mutual fund is the ideal investment vehicle for today‟s complex and

modern financial scenario. Markets for equity shares, bonds and complex

and modern financial scenario. Markets for equity shares, bonds and other

fixed income instruments, real estate, derivatives and other assets have

become mature and information driven. Price changes in these assets are

driven by global events occurring in faraway places. A typical individual

is unlikely to have the knowledge, skills, inclination and time to keep

track of events, understand their implications and act speedily. An

individual also finds it difficult to keep track of ownership of his assets,

investments, brokerage dues and bank transactions etc.

A mutual fund is the answer to all there situations. It appoints

professionally qualified and experienced staff that manages each of these

functions on a full time basis. The large pool of money collected in the

fund allows it to hire such staff at a very low cost to each investor. In

effect, the mutual fund vehicle exploits economies of scale in all three

areas – research, investments and transaction processing. While the

concept of individuals coming together to invest money collectively is not

new, the mutual fund in its present form is a 20th

century phenomenon. In

fact, mutual funds gained popularity only after the Second World War.

Globally, there are thousands of firms offering tens of thousands of

mutual funds with different investment objectives. Today, mutual funds

collectively manage almost as much as or more money as compared to

banks.

A draft offer document is to be prepared at the time of launching the fund.

Typically, it pre specifies the investment objectives of the fund, the risk

associated, the costs involved in the process and the broad rules for entry

into and exit from the fund and other areas of operation. 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. 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.


HISTORY OF MUTUAL FUND IN INDIA:

The mutual fund industry in India started in 1963 with the formation of

Unit Trust of India, at the initiative of the 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. 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


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.

At the end of 1993, the mutual fund industry has assets under

management of Rs. 47,004 crores.

THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR

FUNDS)

With the entry 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, expect 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.


FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about 30 to

35% over the next few years as investor‟s shift their assets from banks

and other traditional avenues. Some of the older public and private

sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge

with stronger players in three to four years. In the private sector this

trend has already started with two mergers and one takeover. Here too

some of them will down their shutters in the near future to come.

But this does not mean there is no room for other players. The market

will witness a flurry of new players entering the arena. There will be a

large number of offers from various asset management companies in

the time to come. Some big names like Fidelity, Principal, Old Mutual

etc. are looking at Indian market seriously. One important reason for it

is that most major players already have presence here and hence these

big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in

India as this would enable it to hedge its risk and this in turn would be

reflected in it‟s Net Asset Value (NAV).

SEBI is working out the norms for enabling the existing mutual fund

schemes to trade in derivatives. Importantly, many market players have


called on the Regulator to initiate the process immediately, so that the

mutual funds can implement the changes that are required to trade in

Derivatives.

RECENT TRENDS IN MUTUAL FUND INDUSTRY

The most important trend in mutual fund industry is the aggressive

expansion of the foreign owned mutual fund companies and the decline

of the companies floated by nationalized banks and smaller private sector

players.

Many nationalized banks got into the mutual fund business in the early

nineties and got off to a good start due to the stock market boom

prevailing then. These banks did not really understand the mutual fund

business and they just viewed it as another kind of banking activity. Few

hired specialized staff and generally chose to transfer staff from the

parent organizations. The performance of most of the schemes floated by

these funds was not good. Some schemes had offered guaranteed returns

and their parent organizations had to bail out these AMCs by paying

large amounts of money as the diffrence between the guaranteed and

actual returns. The service levels were also very bad.

Most of these AMCs have not been able to retain staff, float new schemes

etc. And it is doubtful whether, barring a few exceptions, they have

serious plans of continuing the activity in a major way. The experience of

some of the AMCs floated by private sector Indian companies was also

very similar. They quickly realized that the AMC business, which makes

money in the long term and requires deep-pocketed support in the


intermediate years. Some have sold out to foreign owned companies,

some have merged with others and there is general restructuring going on.

The foreign owned companies have deep pockets and have come in here

with the expectation of a long haul. They can be credited with introducing

many new practices such as new product innovation, sharp improvement

in service standards and disclosure, usage of technology, broker

education and support etc. In fact, they have forced the industry to

upgrade itself and service levels of organizations like UTI have improved

dramatically in the last few years in response to the competition provided

by these.

LIST OF MEMBERS:


A) Bank Sponsored

1) Joint Ventures – Predominantly Indian

a. SBI Funds Management Private Ltd.

2) Others

a. BOB Asset Management Co. Ltd.

b. Canbank Investment Management Services Ltd.

c. UTI Asset Management Co. Pvt. Ltd.

B) Institutions

a. Jeevan Bima Sahayog Asset Management Co. Ltd.

C) Private Sector

1. Indian

a. Benchmark Asset Management Co. Private Ltd.

b. Cholamandalam Asset Management Co. Ltd.

c. Credit Capital Asset Management Co. Ltd.

d. Escorts Asset Management Ltd.

e. J.M. Financial Asset Management Private Ltd.

f. Kotak Mahindra Asset Management Co. Ltd.

g. Quantum Asset Management Co. Private Ltd.

h. Relience Capital Asset Management Ltd.

i. Sahara Asset Management Co. Private Ltd.

j. Sundaram Asset Management Co. Ltd.

k. Tata Asset Management Ltd.

2. JOINT VENTURES – PREDOMINANTLY INDIAN

a. Birla Sun Life Asset Management Co. Ltd.


b. DSP Merrill Lynch Fund Managers Ltd.

c. HDFC Asset Management Co. Ltd.

d. Prudential ICICI Asset Management Co. Ltd.

3. JOINT VENTURES – PREDOMINANTLY FOREIGN

a. ABN AMRO Asset Management (India) Ltd.

b. Deutsche Asset Management (India) Private Ltd.

c. Fidelity Fund Management Private Ltd.

d. Franklin Templeton Asset Management (India) Private Ltd.

e. HSBC Asset Management (India) Private Ltd.

f. ING Investment Management (India) Private Ltd.

g. Morgan Stanley Investment Management Private Ltd.

h. Principal PNB Asset Management Co. Private Ltd.

i. Standard Charted Asset Management Co. Private.

TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and

its investment objective.

By Structure:


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.


By Investment Objective:

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 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.

Loads 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.

OTHER SCHEMES:

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 54EB by investing in Mutual Funds,

provided the capital asset has been sold prior to April 1, 2000 and the

amount is invested before September 30,20.

SPECIAL SCHEMES

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 Pharmaceutical 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.

BENEFITS OF MUTUAL FUND INVESTMENT:

Professional Management: Mutual Funds provide the services of

experienced and skilled professionals, backed by a dedicated investment

research team that analyses the performance and prospects of companies

and selects suitable investments to achieve the objectives of the scheme.

Diversification: Mutual Funds invest in a number of companies across a

broad cross-section of industries and sectors. This diversification reduces

the risk because seldom do all stocks decline at the same time and in the

same proportion. You achieve this diversification through a Mutual Fund

with far less money than you can do on your own.


Convenient Administration: Investing in a Mutual Fund reduces

paperwork and helps you avoid many problems such as bad deliveries,

delayed payments and follow up with brokers and companies. Mutual

Funds save your time and make investing easy and convenient.

Return Potential: Over a medium to long-term, Mutual Funds have the

potential to provide a higher return as they invest in a diversified basket

of selected securities.

Low Costs: Mutual Funds are a relatively less expensive way to invest

compared to directly investing in the capital markets because the benefits

of scale in brokerage, custodial and other fees translate into lower costs

for investors.

Liquidity: In open-end schemes, the investor gets the money back

promptly at net asset value related prices from the Mutual Fund. In

closed-end schemes, the units can be sold on a stock exchange at the

prevailing market price or the investor can avail of the facility of direct

repurchase at NAV related prices by the Mutual Fund.

Transparency: You get regular information on the value of your

investment in addition to disclosure on the specific investments made by

your scheme, the proportion invested in each class of assets and the fund

manager‟s investment strategy and outlook.

Flexibility: Through features such as regular investment plans, regular

withdrawal plans and dividend reinvestment plans, you can

systematically invest or withdraw funds according to your needs and

convenience.


Affordability: Investors individually may lack sufficient funds to invest

in high-grade stocks. A mutual fund because of its large of its large

corpus allows even a small investor to take the benefit of its investment

strategy.

Choice of Scheme: Mutual Fund offers a family of schemes to suit your

varying needs over a lifetime.

Well Regulated: All Mutual Funds are registered with SEBI and they

function within the provisions of strict regulations designed to protect the

interests of investors. The operations of Mutual Funds are regularly

monitored by SEBI.

DRAWBACKS OF MUTUAL FUND:

No Guarantees: No investment is risk free. If the entire stock market

declines in value, the value of mutual fund shares will go down as well,

no matter how balanced the portfolio. Investors encounter fewer risks

when they invest in mutual funds than when they buy and sell stocks on

their own. However, anyone who invests through a mutual fund runs the

risk of losing money.

Fees and Commissions: All funds charge administrative fees to cover

their day-to-day expenses. Some funds also charge sales commissions or

“loads” to compensate brokers, financial consultants, or financial


planners. Even if you don‟t use a broker or other financial advisor, you

will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell

anywhere from 20 to 70 percent of the securities in their portfolios. If

your fund makes a profit on its sales, you will pay taxes on the income

you receive, even if you reinvest the money you made.

Management Risk: When you invest in a mutual fund, you depend on the

fund‟s manager to make the right decisions regarding the fund‟s portfolio.

If the manager does not perform as well as you had hoped, you might not

make as much money on your investment as you expected. Of course, if

you invest in Index Funds, you forego management risk, because these

funds do not employ managers.

CHAPTER NO 4:


RESEARCH METHODOLOGY

MEANING OF RESEARCH

“A research is a careful investigation or enquiry, especially through

search for new facts in any branch of knowledge. It is a systemized effort

to gain more knowledge.”

“Research Methodology is a way to systematically solve the research

problem. It includes not only the research methods, but also the logic

behind using the methods.”

The methods of research used in this project were as follows:-

Analytical Research

Applied Research


ANALYTICAL RESEARCH

In analytical research the researcher has to use the facts already available,

and analyze these to make the critical evaluation of the material.

In this project I have used many raw data from the various sources and

analyzed it for underlying trends.

APPLIED RESEARCH

Applied Research aims at finding a solution for an immediate problem.

Research aimed at certain conclusions (say a solution) facing a concrete

social or business problem is an example of applied research. Thus the

central aim of applied research is to find a solution for some pressing

practical problem.

In this project, in the last section, by means of assumptions I have found

the feasibility of a project that the organization means to undertake.

The analysis of the trends followed by the mutual funds was Analytical

Research.


OBJECTIVE OF RESEARCH METHODOLOGY

It intends, verifies or correct knowledge.

It enables us to have a better understanding of our world.

It aids in purposive planning.

Research initiates, formulates, deflects and clarifies theories.

METHODS OF DATA COLLECTION

Data is primarily of two kinds.

1. Primary data.

INTERVIEWING

It is the most commonly used method of data collection. It is two ways

purposive communication between interviewer and the respondent aimed


at obtaining and recording information pertinent to the subject matter of

the study.

2. Secondary data.

Secondary data may be defined as a data that has been collected earlier

for some purpose other than the purpose of the present study. Any data

that is available to the prior commencement of the research project is

secondary data and it is called historic data.

USES OF SECONDARY DATA

It acts as a reference for the present study.

The secondary data can be the useful benchmark on which the

finding of the study can be tested.

At times it may be the only source of data.

SOURCES OF SECONDARY DATA

1. Published sources

2. Unpublished sources

DATA COLLECTION METHODS CAN BE CLASSIFIED AS

FOLLOWS

Observations

Interviewing

Experimentation

Simulations

Projective techniques


IN THIS PROJECTS THE TWO METHODS OF COLLECTION

WERE USED

1. Interviewing

2. Published source of data in the form of fact sheets

RESEARCH DESIGN

Type of Research – Descriptive

Nature of Research – Quantitative

Type of Question – Close Ended

Types of Questionnaire – Structured

Types of Analysis – Statistical Analysis


CHAPTER NO 5:

DATA ANALYSIS & INTERPRETATION


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EXCELLENT PAST PERFORMANCE

Scheme Name 3 Years 5 Years 7 Years10

Years

Average of Diversified Mutual fund

Schemes20.98 35.10 31.92 27.79

BSE 30 (Sensex) 23.7 29.19 23.4 12.69

NSE 50 23.08 27.78 22.11 12.9

No. of Diversified Schemes considered 46 30 20 6


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Investor Base Across Various Financial Products

240

1640 17

110

15 1.50

50

100

150

200

250

Bankin

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Credit

Cards

Debit

Cards

Mutu

al

Funds

Life

Insura

nce

General

Insura

nce

Online

Trad

ing

Penetration of Mutual Funds is very low …

Going forward, the opportunity is big …Source: www.rbi.org.in

www.irdaindia.org

www.sebi.gov.in

Customers in millions

PENETRATION OF FINANCIAL PRODUCTS


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Investors Looking for Products with following Features :-

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• Looking for products which help in Wealth Creation in long term


Fundz Network

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Few people have been exposed to the idea & advantages of mutual

funds and even fewer actually invest in mutual funds, because of lack

of adequate no. of advisors

*Figures are approx.*for House Holds savings

Measure US India

Rupees invested in Mutual Funds out of 100 > 30 < 2

MF Industry size as % size of economy (GDP) 83% 6%

Total size / value of MF industry (Rs. Lac Crores) > 469 > 5

Opportunity to offer such products to clients …

Every person can be a customer !!

LOW PENETRATION OF MUTUAL FUNDS IN INDIA


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>35 Insurance Advisors V/s 1 Mutual Fund Advisor

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Very Few Financial Advisors

LOW COMPETITION OF MUTUAL FUND ADVISORS


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– Weekly reports

– Daily market update

– Daily MF track and much more...

Research reports : Recommendations, market insight, analyses etc

NJ KNOWLEDGE EDGE

•Ongoing interaction through product training, Fund Manager Meets

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•Launch Presentations of all prominent products of various Mutual

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Effective integration of different products and services for simplicity

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CHAPTER: 6

FINDINGS,SUGGESTIONS AND CONCLUSION

FINDINGS

From the above data analysis and interpretations, following observations

can be made:


The DSP ML Equity (Growth) scheme was started way back in

April 1997 and since then it has been a consistent performer. The

scheme is benchmarked against Nifty.

The average equity exposure of the portfolio in last one year has

been around 94.26% and 5.74% in cash and equivalents. In the

current month however it had 89.58% of assets in equity and

10.42% in cash and equivalent segments. The scheme has a corpus

of Rs. 469.8094 crores (Aug 2007), which is not among the best in

the industry but its growth from Rs. 68.63 crores as on November

2004 definitely points towards the rising investor confidence in this

scheme. In last six months the corpus has grown over.

The HSBC Equity (growth) scheme is mandated to invest upto 95-

100% in the equity related instruments and 0-5% in debt and

money market instruments. As of Aug 2007, it has allocated

89.44% of its assets in equity and rest in cash and equivalent. Over

a period of one year the asset allocation in equities has not

fluctuated much with average allocation at 88.6%. The scheme had

a corpus of Rs. 973.5673 crores as on Aug 2007 and has gone

down by 25% over a period of last one year.

The UTI Equity (Growth) scheme is managing assets worth Rs.

1635.4454 crores as on Aug 2007 but has witnessed significant

reduction from Rs. 4472 crores when it was launched. However

over a period of one year assets under management of the scheme

has increased by 45%. As per stated guidelines it could invest at

least 80% of its net assets in equity and equity related instruments

and upto 20% in Debt and Money market instruments. As on Aug

2007, the scheme has allocated 97.94% of its assets in equities and

rest in cash and equivalent with average equity allocation of its

assets in last one year.


The LIC equity (Growth) scheme has a corpus of Rs. 91.1291

crores as on Aug 2007 and has gone up by 41% in last one year. As

per stated guidelines it could invest 80%-100% of its net assets in

equity and equity related instruments and upto 20% in Debt and

Money market instruments. As on Aug 2007, the scheme has

allocated 101.92% of its assets in equities. Average equity

allocation in last one year has been at 95.9% of assets under

management of the scheme.

SUGGESTIONS

Following suggestions and recommendations can be made the above

analysis and findings.


1. The AMC (Asset Management Company) should create awareness

among the individuals about the benefits of Mutual Funds & the

returns from the Mutual Fund market.

2. This can be done by arranging at the household level or by

conducing external program at a public place to educate people

about the nature, benefits & importance of Mutual Funds.

3. As on many people are not aware about mutual fund & other

financial products, industry should conduct surveys to gauge the

preferences of the investors as many people do not invest there

savings due to lack of knowledge & because of high risk.

4. They should have customer care department.

5. Make your future secure by investing in Mutual Funds, as

investments in mutual funds may assure based on various available

schemes and funds, higher rate of return that conventional

investments like Banks and Post Office may not provide.

6. The prospective investors should diversify their monthly income

by preparing the Monthly Budget and they cab generate savings

out of their regular income to invest in the monthly plan of Mutual

Funds.

7. It is found that minimum investment in case of HSBC Equity Fund

is Rs. 10,000 which is double than HDFC‟s, hence it is suggested

to reduce it so that more number of invertors can invest.

8. Investors who want to gain consistent profit but in a long time

duration can invest in these companies. The net asset value of the

funds under consideration had proved to be bullish and bearish in a

very short period. But if we see the trend these schemes shows

bullish nature on an average.


9. Dividend acts as a good promotion tool to investors. In all AMC

taken above only UTI equity fund has given dividend, so other

AMC can go for dividend.

10. In case of LIC Equity Fund, since the AMC has made short term

borrowings from money market and hence it might have affect its

performance. Hence it is recommended that AMC should attract

more investors rather than borrowings from market.

CONCLUSION

1. In case of UTI Equity Fund, though the scheme‟s performance has

taken a beating in the recent past but frontline stocks in the

portfolio and better performance in bearish phase do provide some

comfort. At the same time its sector calls are likely to show the

good performance once rerated. Going forward investors should


closely watch its performance before trimming down the

exposures.

2. Seeing the past market rally the LIC Equity (Growth) scheme

shows a lackluster performance and has been ranked at the bottom

of the charts most of the time since its inception. Its one year and

three returns are far below the returns posted by benchmark and

peers despite the average equity exposure of 95% past one year.

The scheme had trailed its peers and benchmark all the time during

the selected time frame shows high risk profile compared to its

peers.

3. Birla Equity Fund, has been very consistent in the performance.

The scheme has given 41.02% annualized return since inception. In

almost all the time periods considered it has consistently beaten the

benchmark and the peer group average. In last one year the scheme

has delivered 48.77% return while the peer group and the

benchmark deliver 39.91% & 37.45% respectively. The scheme

has over the last three years remained in the top quartile.

4. Over the years since the Mutual Fund industry started witnessing

positive contribution in the capital market both, Public sector and

Private sector Mutual Fund institutions has made enough efforts to

meet the investors demands and likely will continue in future too.


CHAPTER: 7

BIBLIOGRAPHY

BOOKS REFERRED WEBSITES

Product And Services Taxman www.njindiainvest.com

Amfi Course Book www.amfiindia.com


www.moneycontrol.com

www.karvy.com

www.Valueresearchonline.com

CHAPTER: 1

INTRODUCTION





















AMFI M usual Fund Testing Programmed for distributors and employees

of mutual funds.













EXECUTIVE SUMMARY








OBJECTIVE OF THE STUDY:


8) To gain an understanding and knowledge of Mutual Funds as an

Investment Tool.


10) To evaluate the performance of selected schemes of Mutual

Fund of different companies.

11) To compare the Mutual fund schemes on different

parameters.


12) To analyze the performance factor of the Fund based on

different drivers associated with the specific fund.


14) To know the different Asset management companies involve

in MUTUAL FUND.

Scope of the study:






this project.




Bapat Road.

LIMITATION OF THE STUDY:








performance.







their funds.









project.








CHAPTER NO 3:

THOERITCAL FRAMEWORK


Introduction


A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is invested by the fund manager in

different types of securities depending upon the objective of the scheme. These could

range from shares to debentures to money market instruments. The income earned

through these investments and the capital appreciations realized by the scheme are

shared by its unit holders in proportion to the number of units owned by them (pro

rata). Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed portfolio at a

relatively low cost. Anybody with an investible surplus of as little as a few thousand

rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined

investment objective and strategy.

A mutual fund is the ideal investment vehicle for today‟s complex and modern

financial scenario. Markets for equity shares, bonds and complex and modern

financial scenario. Markets for equity shares, bonds and other fixed income

instruments, real estate, derivatives and other assets have become mature and

information driven. Price changes in these assets are driven by global events

occurring in faraway places. A typical individual is unlikely to have the knowledge,

skills, inclination and time to keep track of events, understand their implications and

act speedily. An individual also finds it difficult to keep track of ownership of his

assets, investments, brokerage dues and bank transactions etc.















banks.









A sponsor then hires an asset management company to invest the funds according to

the investment objective. 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.







under the schemes.















management.


FUNDS)













FUNDS)

With the entry 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, expect 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.












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.

FUTURE SCENARIO

















The mutual fund industry is awaiting the introduction of derivatives in India as this

would enable it to hedge its risk and this in turn would be reflected in it‟s Net

Asset Value (NAV).





Derivatives.






players.

Many nationalized banks got into the mutual fund business in the early nineties and

got off to a good start due to the stock market boom prevailing then. These banks did

not really understand the mutual fund business and they just viewed it as another kind

of banking activity. Few hired specialized staff and generally chose to transfer staff

from the parent organizations. The performance of most of the schemes floated by

these funds was not good. Some schemes had offered guaranteed returns and their

parent organizations had to bail out these AMCs by paying large amounts of money

as the diffrence between the guaranteed and actual returns. The service levels were

also very bad.









The foreign owned companies have deep pockets and have come in here with the

expectation of a long haul. They can be credited with introducing many new practices

such as new product innovation, sharp improvement in service standards and

disclosure, usage of technology, broker education and support etc. In fact, they have

forced the industry to upgrade itself and service levels of organizations like UTI have

improved dramatically in the last few years in response to the competition provided

by these.


LIST OF MEMBERS:

D) Bank Sponsored


b. SBI Funds Management Private Ltd.

4) Others

d. BOB Asset Management Co. Ltd.


e. Canbank Investment Management Services Ltd.

f. UTI Asset Management Co. Pvt. Ltd.

E) Institutions

b. Jeevan Bima Sahayog Asset Management Co. Ltd.

F) Private Sector

4. Indian

l. Benchmark Asset Management Co. Private Ltd.

m. Cholamandalam Asset Management Co. Ltd.

n. Credit Capital Asset Management Co. Ltd.

o. Escorts Asset Management Ltd.

p. J.M. Financial Asset Management Private Ltd.

q. Kotak Mahindra Asset Management Co. Ltd.

r. Quantum Asset Management Co. Private Ltd.

s. Relience Capital Asset Management Ltd.

t. Sahara Asset Management Co. Private Ltd.

u. Sundaram Asset Management Co. Ltd.

v. Tata Asset Management Ltd.


e. Birla Sun Life Asset Management Co. Ltd.

f. DSP Merrill Lynch Fund Managers Ltd.

g. HDFC Asset Management Co. Ltd.

h. Prudential ICICI Asset Management Co. Ltd.


j. ABN AMRO Asset Management (India) Ltd.


k. Deutsche Asset Management (India) Private Ltd.

l. Fidelity Fund Management Private Ltd.

m. Franklin Templeton Asset Management (India) Private Ltd.

n. HSBC Asset Management (India) Private Ltd.

o. ING Investment Management (India) Private Ltd.

p. Morgan Stanley Investment Management Private Ltd.

q. Principal PNB Asset Management Co. Private Ltd.

r. Standard Charted Asset Management Co. Private.




By Structure:







CLOSED-ENDED FUNDS










INTERVAL FUNDS






GROWTH FUNDS







INCOME FUNDS






BALANCED FUNDS








MONEY MARKET FUNDS












history.

NO-LOAD FUNDS





work.

OTHER SCHEMES:

TAX SAVING SCHEMES









SPECIAL SCHEMES





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.






















for investors.













convenience.




strategy.







monitored by SEBI.
























CHAPTER NO 4:



MEANING OF RESEARCH


search foe new facts in any branch of knowledge. It is a systemized effort






Analytical Research

Applied Research

ANALYTICAL RESEARCH






APPLIED RESEARCH

Applied Research aims at finding a solution for an immediate problem. Research

aimed at certain conclusions (say a solution) facing a concrete social or business

problem is an example of applied research. Thus the central aim of applied research is

to find a solution for some pressing practical problem.




Research.









3. Primary data.

INTERVIEWING




the study.

4. Secondary data.

Secondary data may be defined as a data that has been collected earlier for some

purpose other than the purpose of the present study. Any data that is available to the

prior commencement of the research project is secondary data and it is called historic

data.










DATA COLLECTION METHODS CAN BE CLASSIFIED AS FOLLOWS

Observations

Interviewing

Experimentation

Simulations


IN THIS PROJECTS THE TWO METHODS OF COLLECTION WERE USED

3. Interviewing


RESEARCH DESIGN






CHAPTER NO 5:



CHAPTER: 6

FINDING, SUGGESSIONS AND

CONCLUSION

FINDINGS



can be made:







































SUGGESSIONS






















Funds.

















CONCLUSION

5. In case of HSBC Equity (Growth) fund, though it has yet to

witness bear phase but its performance so far has been

encouraging. And if it manages this kind of performance and sticks

to its investment objective it won‟t be a limiting factor for long.








exposures.








peers.













CHAPTER: 7

ANNEXURE


QUESTIONARE AND BIBLIOGRAPHY

QUESTIONNAIRE

NAME:

AGE: SEX:

ADDRESS:

E-MAIL:


1) Are you aware of NJ INDIA INVEST PVT. LTD.

Consultancy?

o YES

o NO

If NO, are you aware of any of following consultancy?

India Bulls ENAM Sherekhan HDFC

2) Which are the Financial Services you are aware of?

INSURANCE

MUTUAL FUND

TAX PLANNING

BONDS/FD

PERSONAL PORTFOLIO MANAGEMENT

STOCK

3) From which media you come to know about Financial Services

Magazine

Newspaper

TV

Radio

Interest

Agents

Franchisee

Hoardings

Friends

Others

4) Would you like to invest in Financial Sector?

Yes Go to (5)


No Go to (6)

5) Which Financial Service you will prefer to invest and why?

INSURANCE

MUTUAL FUNDS

TAX PLANNIG

BOND/FD

PERSONAL PORTFOLIO MANAGEMENT

STOCK:

6) Reason Being:

High Risk

Lack of Knowledge

Previous Loss

Lack of Financial Planning

7) How much percentage you will like to invest from your annual

income?

INSURANCE

5 to 10%, 10 to 15%, 15 to 20% 20% and above

MUTUAL FUNDS

5 to 10%, 10 to 15%, 15 to 20% 20% and above

PPM

5 to 10%, 10 to 15%, 15 to 20% 20% and above

TAX


5 to 10%, 10 to 15%, 15 to 20% 20% and above

STOCK

5 to 10%, 10 to 15%, 15 to 20% 20% and above

BONDS/FD

5 to 10%, 10 to 15%, 15 to 20% 20% and above

8) What is your Preferable Period for investment?

January – March

April – June

July – September

October – December

9) To invest through consultancy?

Yes

No

If No, then why?


10) If yes, what all services you expect from consultancy?






www.karvy.com

www.Valueresearchonline.com

A PROJECT REPORT

On

STUDY OF MUTUAL FUND SCHEMES

AT

NJ INDIA INVEST PVT. LTD. (PUNE)

Submitted

In partial fulfillment of

MASTER DEGREE IN BUSINESS ADMINISTRATION

University of Pune

(2007-2009)

By


SANGEETA ROHRA

MASTER OF BUSINESS ADMINITRATION

Allana Institute of Management Science, Pune.

CERTIFICATE

This to certify that SANGEETA ROHRA an M.B.A student of Allana

Institute of Management Sciences has undergone a summer

internship in NJ INDIA INVEST PVT.LTD. Under the title “Study

of mutual fund Schemes”. She has successfully completed his

project work in partial fulfillment for the award of MASTER OF

BUSINESS ADMINISTRATION.

This report is the record of the student’s own effort your able

supervision and guidance.

Prof. RASHMI SUNDRIYAL Dr. K.K. SINGH


(Internal Guide) [Director]

Date :--------- Date--------

Place:--------- Place:--------

DECLARATION

This is to declare that the project “STUDY OF MUTUAL FUND

SCHEMES” is entirely genuine work done by me without copying

any material from any available source. It is authentic effort put in

by me.

SANGEETA ROHRA



(ALLANA INSTITUTE OF MANAGEMENT SCIENCES)

ACKNOWLEDGEMENT

The last two months with NJ INDIA INVEST PVT.LTD. has been full of

learning and sense of contribution toward the organization. I would like

to thank NJ INDIA INVEST for giving me an opportunity of learning and

contributing through this project. I would like to thanks all the people

who knowingly and unknowingly supported me in my endeavor.

As a student of ALLANA INSITUTE OF MANAGEMENT SCIENCES,

I would first of all like to express my gratitude o Mr. K. K. SINGH for

assigning me such a topic STUDY OF MUTUAL FUND SCHEMES to

work upon in NJ INDIA INVEST PVT.LTD.

During the actual project work, Prof. RASHMI SUNDRIYAL {Project

Guide} has been a source of inspiration through her constant guidance;

personal interest; encouragement and help. I convey my sincere thanks to


her in project. I am also grateful to her for responding Confidence in my

abilities end giving me the freedom to work on my project.

The project couldn‟t have been completed without timely and vital help

of other office staff. Special thanks to Mr. SWAPNIL ADMANE for

their invaluable guidance, keen interest, co-operation, inspiration and of

course moral support through my project session.

[SANGEETA ROHRA]

CHAPTER: 1

INTRODUCTION


AMFI Mutual Fund Testing Programmed for distributors and employees

of mutual funds.













EXECUTIVE SUMMARY

























OBJECTIVES OF THE STUDY:


15) To gain an understanding and knowledge of Mutual Funds

as an Investment Tool.


17) To evaluate the performance of selected schemes of Mutual

Fund of different companies.

18) To compare the Mutual fund schemes on different

parameters.

19) To analyze the performance factor of the Fund based on

different drivers associated with the specific fund.


21) To know the different Asset management companies involve

in MUTUAL FUND.

Scope of the study:






this project.





Bapat Road.

LIMITATIONSOF THE STUDY:







performance.







their funds.










project.










CHAPTER:2

COMPANY PROFILE

About NJ

NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established


in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm.






process

providing customers with solutions for tomorrow which will keep

them above the curve, today

NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360° Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 8,600* NJ Fundz Network Partners and over 4,500* normal advisors associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients.


Vision & Mission






Mission:







Philosophy






Service Philosophy:






every effort to:





needs



interest supreme



effectively




creation








creation











without exceptions


Management







Mr. Neeraj Choksi Jt. Managing Director

Mr. Jignesh Desai Jt. Managing Director

Sales Team:

Mr. Misbah Baxamusa National Head


Mr. Kulbhushan Nandwani A.V.P.

Mr. Prashant Kakkad A.V.P.

People & Culture

People






value.













Culture:









from top to bottom.








fund industry.


Service Standards












Further we,




Past Recognitions


past …

Year 2000:


Plc. at London

Year 2002:



Year 2003:



Year 2004:




Year 2004:



Year 2006:



Year 2006:

Award – Vietnam









CHAPTER NO 3:


THEORETICAL FRAMEWORK


Introduction

A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The money thus collected is invested

by the fund manager in different types of securities depending upon the

objective of the scheme. These could range from shares to debentures to

money market instruments. The income earned through these investments

and the capital appreciations realized by the scheme are shared by its unit

holders in proportion to the number of units owned by them (pro rata).

Thus a Mutual Fund is the most suitable investment for the common

strategy.


A mutual fund is the ideal investment vehicle for today‟s complex and

modern financial scenario. Markets for equity shares, bonds and complex

and modern financial scenario. Markets for equity shares, bonds and other

fixed income instruments, real estate, derivatives and other assets have

become mature and information driven. Price changes in these assets are

driven by global events occurring in faraway places. A typical individual

is unlikely to have the knowledge, skills, inclination and time to keep

track of events, understand their implications and act speedily. An

individual also finds it difficult to keep track of ownership of his assets,

investments, brokerage dues and bank transactions etc.














banks.










A sponsor then hires an asset management company to invest the funds

according to the investment objective. 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.







under the schemes.















management.


FUNDS)













FUNDS)

With the entry 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, expect 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.












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.


FUTURE SCENARIO
















The mutual fund industry is awaiting the introduction of derivatives in

India as this would enable it to hedge its risk and this in turn would be

reflected in it‟s Net Asset Value (NAV).






Derivatives.





players.

Many nationalized banks got into the mutual fund business in the early

nineties and got off to a good start due to the stock market boom

prevailing then. These banks did not really understand the mutual fund

business and they just viewed it as another kind of banking activity. Few

hired specialized staff and generally chose to transfer staff from the

parent organizations. The performance of most of the schemes floated by

these funds was not good. Some schemes had offered guaranteed returns

and their parent organizations had to bail out these AMCs by paying

large amounts of money as the diffrence between the guaranteed and

actual returns. The service levels were also very bad.










The foreign owned companies have deep pockets and have come in here

with the expectation of a long haul. They can be credited with introducing

many new practices such as new product innovation, sharp improvement

in service standards and disclosure, usage of technology, broker

education and support etc. In fact, they have forced the industry to

upgrade itself and service levels of organizations like UTI have improved

dramatically in the last few years in response to the competition provided

by these.


LIST OF MEMBERS:

G) Bank Sponsored


c. SBI Funds Management Private Ltd.

6) Others

g. BOB Asset Management Co. Ltd.

h. Canbank Investment Management Services Ltd.

i. UTI Asset Management Co. Pvt. Ltd.

H) Institutions

c. Jeevan Bima Sahayog Asset Management Co. Ltd.

I) Private Sector

7. Indian

w. Benchmark Asset Management Co. Private Ltd.

x. Cholamandalam Asset Management Co. Ltd.

y. Credit Capital Asset Management Co. Ltd.

z. Escorts Asset Management Ltd.

aa. J.M. Financial Asset Management Private Ltd.

bb. Kotak Mahindra Asset Management Co. Ltd.

cc. Quantum Asset Management Co. Private Ltd.

dd. Relience Capital Asset Management Ltd.


ee. Sahara Asset Management Co. Private Ltd.

ff. Sundaram Asset Management Co. Ltd.

gg. Tata Asset Management Ltd.


i. Birla Sun Life Asset Management Co. Ltd.

j. DSP Merrill Lynch Fund Managers Ltd.

k. HDFC Asset Management Co. Ltd.

l. Prudential ICICI Asset Management Co. Ltd.


s. ABN AMRO Asset Management (India) Ltd.

t. Deutsche Asset Management (India) Private Ltd.

u. Fidelity Fund Management Private Ltd.

v. Franklin Templeton Asset Management (India) Private Ltd.

w. HSBC Asset Management (India) Private Ltd.

x. ING Investment Management (India) Private Ltd.

y. Morgan Stanley Investment Management Private Ltd.

z. Principal PNB Asset Management Co. Private Ltd.

aa. Standard Charted Asset Management Co. Private.





By Structure:






CLOSED-ENDED FUNDS










INTERVAL FUNDS






GROWTH FUNDS








INCOME FUNDS





BALANCED FUNDS








MONEY MARKET FUNDS













history.

NO-LOAD FUNDS




work.

OTHER SCHEMES:

TAX SAVING SCHEMES










SPECIAL SCHEMES





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.






















for investors.














convenience.




strategy.






monitored by SEBI.



CHAPTER NO 4:


MEANING OF RESEARCH


search for new facts in any branch of knowledge. It is a systemized effort







Analytical Research

Applied Research

ANALYTICAL RESEARCH





APPLIED RESEARCH

Applied Research aims at finding a solution for an immediate problem.

Research aimed at certain conclusions (say a solution) facing a concrete

social or business problem is an example of applied research. Thus the

central aim of applied research is to find a solution for some pressing

practical problem.




Research.



5. Primary data.

INTERVIEWING




the study.

6. Secondary data.

Secondary data may be defined as a data that has been collected earlier

for some purpose other than the purpose of the present study. Any data

that is available to the prior commencement of the research project is

secondary data and it is called historic data.










DATA COLLECTION METHODS CAN BE CLASSIFIED AS

FOLLOWS

Observations

Interviewing

Experimentation

Simulations


IN THIS PROJECTS THE TWO METHODS OF COLLECTION

WERE USED

5. Interviewing


RESEARCH DESIGN





