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    PRESENTED BY:

    KUNAL GALA (PG12044)NISHANT SHAH (PG12053)ANKUR RAMBHIA (PG12033)1

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    2

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    TYPES OF INVESTMENTPRODUCT RETURN SAFETY LIQUIDITY TAX

    BENEFI

    T

    CONVINIENC

    E

    BANK DEPOSIT LOW HIGH HIGH NO HIGH

    EQUITY HIGH LOW HIGH ORLOW

    NO MODERATE

    DEBT MODERATE MODERATE

    LOW NO LOW

    PPF MODERATE HIGH LOW YES MODERATE

    LIFE INSURANCE MODERATE HIGH LOW YES MODERATE

    NSC MODERATE HIGH LOW YES MODERATE

    MUTUAL FUNDS

    (OPEN ENDED)

    MODERATE MODERATE

    HIGH NO HIGH

    MUTUAL FUNDS

    (CLOSE ENDED)

    MODERATE MODERAT

    E

    HIGH YES HIGH

    3

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    A

    B

    C

    MUTUALFUND

    STOCKS

    DERIVATIVES

    BONDS/

    DEBT

    FUNDMANAGER

    4

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    DEFINITION

    Definition:-

    According to SEBI (mutual funds) Regulations Act 1993defines mutual fund as, a fund established in the form ofa trust by a sponsor to raise monies by the trusteesthrough the sale of units to the public under one or moreschemes for investing in securities.

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    6

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    HISTORY Unit Trust of India was the first mutual fund set up

    in India in the year 1963.

    First phase (1964-87)

    Second phase - (1987- 1993)

    Third phase (1993-2003)

    Fourth phase since Feb 2003

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    Growth in AUM

    8

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    FEATURES OF MF

    Funds are purchased from the fund itself or through abroker.

    Funds per share (NAV) plus and shareholder feesimposed at the time of purchase

    Mutual fund shares are Redeemable.

    Investors money is managed by a separate entity.

    Since the unit held by investor evidences the ownership,

    the NAV determines the value of the investor9

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    Private sector - Indian Cholamandalam Asset Management Co.Ltd

    JM Financial Mutual fund

    Kotak Mahindra asset management company

    Reliance capital Asset management Ltd

    Sundaram Asset management Co.Ltd

    10

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    Indian Joint Ventures Birla Sun life Asset management company

    DSP Merill Lynch Fund Managers company

    HDFC Asset management company

    11

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    Ventures

    ABN AMRO Asset Management (I) Ltd.

    Deutsche Asset Management (India) Pvt. Ltd.

    Fidelity Fund Management Private Limited.

    Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.

    HSBC Asset Management (India) Private Ltd.

    12

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    PROFESSIONALMANAGEMENT

    MINIMUMINVESTMENT

    DIVERSIFICATION

    CONVINIENTADMINISTRATION

    TRANSPARENCY

    LIQUIDITY

    LOW COSTS

    RETURNPOTENTIAL

    FLEXIBILITY

    CHOICE OFSCHEMES

    TAX BENEFITS

    WELLREGULATED

    ADVANTAGES

    13

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    DISADVANTAGES

    Subject to market fluctuation

    No fixed return

    No control

    No Guarantees

    Management Risk

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    Organisation of a Mutual Fund

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    SPONSOR (TIER 1) Akin to the promoter of the company

    Contributes atleast 40% of the net worth of the AMC.

    Posses sound financial record over five years period

    Establishes the fund

    Gets the fund registered with SEBI

    Forms a trust and appoints a board of trustee

    16

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    TRUSTEES (TIER 2) Holds assets on behalf of unit holders in trust

    Trustees are caretaker of unit holders money.

    Two third of the trustees shall be independentpersons (not associated with the sponsor).

    Trustees ensure that the system, processes &personnel are in place

    Resolves Unitholders Grievances

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    AMC (TIER 3) Floats schemes and manages according to SEBI.

    Chairman of AMC cannot be a trustee of any MF.

    Cannot undertake any other business activityother than PMS

    Atleast 50% of independent directors

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    CUSTODIANS Holds the funds securities in safekeeping

    Settles securities transaction for the fund

    Collects interest & dividends paid on securities

    Records information on corporate actions

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    REGISTRAR AND TRANSFERAGENTS (RTAs)

    Maintains records of unit holders accounts andtransactions

    Disburses & receives funds from unitholdertransactions

    Prepares and distributes a/c settlements

    Tax information, handles unit holdercommunication

    Provides unit holder transaction services20

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    INDIA(AMFI)

    Incorporated on 22 Aug, 1995

    Modeled on the lines of SRO

    Professional and healthy market

    Protects and promotes the interest of investors

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    Objectives of AMFI

    22

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    SEBI GUIDELINES Formation of trust.

    Set up of board of trustees

    Minimum net worth of the AMC should be 5 crs

    AMC and trustees 2 separate entities

    Approval of SEBI

    Registration of MF schemes

    90% minimum distribution of profits

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    PROCEDURE FORREGISTERING

    Submit an application form

    Satisfying the conditions:

    Being in the financial services

    Positive net worth

    Having net profit

    Executing the trust deed

    Setting up a trustee

    Payment of registration fees

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    Investors Rights and Obligations Mutual,beneficial and proportional owners

    Receive dividend within 30 days of declaration

    In case of redemption, 10 working days. If the

    AMC fails, an interest of 15% is paid.

    In case of failure to claim the redemption

    proceeds, then NAV is applicable

    25

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    Investors Rights and Obligations

    Right to receive audited annual reports and otherrelevant information

    Right to wound up a scheme if unitholders representing75% of schemes assets pass a resolution

    Right to be informed about the fundamental attributes

    of a scheme

    Can approach Investor relations officer for grievance

    redressal26

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    Key Terminologies

    AUM

    Portfolio turnover

    Expense ratio

    Sales/redemption price

    Assured return

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    NEW FUND OFFER (NFO)

    NFO mutual fund is a fund which has come out forsubscription for the first time.

    A security offering in which investors may purchaseunits of a closed-end mutual fund.

    A new fund offer occurs when a mutual fund islaunched, allowing the firm to raise capital forpurchasing securities.

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    OFFER DOCUMENT

    Key document that provides essential information about thescheme to help investors make informed decisions aboutwhether to purchase the units being offered.

    Investment Objective

    Asset Allocation

    Risk Factor

    Minimum Investment

    Past PerformanceData

    Initial issue expenses

    Entry or Exit loads

    Sponsors track record

    Performance in the past

    Penalties imposed and pendinglitigations29

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    NET ASSET VALUE (NAV)

    If all the schemes assets are realised and the schemesdues other than to unit holders are paid out, what remainsis the net assets of the scheme.

    The amount divided by the number of units is the NetAsset Value (NAV) per unit.

    Market value of the funds investments +

    Receivables + Accrued Income (Liabilities + Accrued expenses)

    ================================

    ====Number of units outstanding

    30

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    HOW IT IS CALCULATED..??

    LIABILITIES RS

    CRS

    ASSETS RS

    CRS

    UNIT CAPITAL 300 SHARES 345

    RESERVES AND SURPLUS 85.7 DEBENTURES 23

    MONEY MARKET INSTRUMENTS 12

    ACCRUED EXPENDITURE 1.5 ACCRUED INCOME 2.3

    OTHER CURRENT LIABILITIES 0.5 OTHER CURRENT ASSETS 1.2

    DEFERRED REVENUEEXPENDITURE

    4.2

    387.7 387.7

    UNITS ISSUED (Cr.) 30

    FACE VALUE (RS.) 10

    NET ASSETS (RS.) 385.7

    NAV (RS.) 12.8631

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    SCHEMES

    WHICH OPTION IS

    BETTER???

    DIVERSIFIED EQUITY SCHEMES

    X PERSON INVESTMENT(A)

    9000 9000

    CURRENT NAV (B) 15 90

    TOTAL NO. OF UNITS (A/B) 600 100

    MARKETS GO UP BY 10%

    NAV GOES UP BY 10% (C) 16.50 99

    TOTAL NO. OF UNITS (D) 600 100

    INVESTMENT (C/D) 9900 9900

    BOTH ARESAME

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    IMPORTANCE OF NAV

    NAV is the price per unit of a mutual fund.

    Calculated on a daily basis after market hours andweekly basis in case of close ended schemes

    Performance of a fund can be tracked by rise and fall in

    its NAV.

    Cost of a scheme in terms of its NAV has nothing to

    do with returns.

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    Can the scheme be changed? Unless written communication

    Advertisement in a English daily newspaper

    Have the right to exit the scheme

    Similar procedure in case of change in sponsor

    34

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    INVESTMENT FROM A NUMBER OF

    SCHEMES?

    Offer document

    Past track record of the performance of scheme

    Compare the performance with other schemes

    In case of debt, ratings need to be given special attention

    Similarly in case of equity, quality of portfoly should beseen

    35

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    EXPENSES

    TRANSACTIONFEES

    PERIODIC FEES

    LOADSOTHER OPERATING

    EXPENSES

    EXPENSES

    36

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    Various Expenses

    Transaction

    Fees

    Purchase Fees

    Redemption Fees

    Exchange Fees

    Periodic fees

    Management fees

    Account fees

    Other

    operating

    expenses

    Transaction costs

    37

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    LOADS

    LOAD

    NO LOAD

    Load is fee payable by the investor when they

    enter/exit an MF scheme

    38

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    CONTINGENT DEFERRED SALESCHARGE (CDSC)

    EXIT TIME CDSC

    EXIT WITHIN FIRST 3 YEARS 3%

    EXIT WITHIN FIRST 3 TO 5 YEARS 2%

    EXIT AFTER 5 YEARS NILMODIFIED

    FORM OF EXIT

    LOAD

    39

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    WHAT IS PMS AND HOW IT IS

    DIFFERENT

    Offered to HNIS

    Minimum investment limit Rs 5 lakh presently

    Investors share a part of the gains on the PMS portfoliohowever the losses are entirely borne by the investor

    Separate portfolio/separate KYC

    Responsibility to pretect the investment lies with theinvestor unlike mutual funds.

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    COMPARISON

    HEDGE

    FUNDS

    PRIVAT

    E

    EQUITY

    FUNDS

    VENTUR

    E

    CAPITA

    LFUNDS

    MUTUA

    L

    FUNDS

    Investment Tradablesecurities

    Privatecompanies

    Start ups Stocks,bonds,

    derivatives

    etc

    Risk Very high medium High Low

    Availability Only to HNIS Everyone Everyone Everyone

    41

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    Mutual funds are not permitted to borrow to invest.

    Mutual funds therefore not permitted to indulge in short-

    selling transactions.

    42

    INVESTMENT BY MF

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    INVESTMENT BY MFSCHEMES EQUITY

    DEBT

    DERIVATIVES

    GOLD

    REAL ESTATE

    INTERNATIONAL INVESTMENTS

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    EQUITY

    A Scheme cannot invest more than 10% of its assetsin a single companys shares.

    Sector funds can have a higher investment in asingle company

    Index funds as per the index they track.

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    Investment

    Unlisted

    Open endedschemes

    5% of NetAssets

    Closeended

    schemes

    10% of NetAssets

    Listed

    Open andclose ended

    schemes

    10% of NetAssets

    45

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    DEBT

    Can invest in debt securities but cannot give loans.

    Restricted to 15% of its Net Assets and the limit mayextend to 20% if prior approval of the boards of the AMCand the trustees is taken.

    In Unrated paper, a lower limit of 10% and overall cap of25% of net assets of the scheme.

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    DERIVATIVES

    Permitted to invest in financial derivatives.

    Can enter into forward rate agreements andinterest rate swaps

    Can also invest in derivatives traded onexchanges abroad

    However gross exposure through debt, equityand derivatives cannot exceed 100% of thenet assets of the scheme.

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    GOLD

    Primarily invest in gold and gold- relatedinstruments.

    Invest in short term deposits

    If it is not in the form of standard bars, it should beassayed and converted into standard bars

    Maintains liquidity48

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    Real estate

    Permitted to invest in direct real estate assets and realestate securities.

    Population over a million.

    Construction should be completed and the asset shouldbe usable.

    Real estate asset should have valid title deeds.49

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    SEBI LIMITS

    At least 75% of the Net Assets should be invested indirect real estate, mortgage backed securities andequity shares or debentures.

    At least 35% has to be invested in direct real estate.

    No real estate mutual fund scheme can invest morethan 15% of its net assets in equity shares or

    debentures of any unlisted company.

    Not permitted to engage in lending or housing financeactivity.

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    VALUATION OF

    INVESTMENTS BY

    MUTUAL FUNDSCHEMES51

    VALUATION OF INVESTMENTS BY

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    VALUATION OF INVESTMENTS BY

    MF SCHEMES

    EQUITY

    DEBT

    GOLD REALESTATE

    52

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    EQUITY

    Securities are valued at thelast quoted closing price onthe stock exchange.TRADED

    Trades less than Rs. 5 lakh in

    value and 50,000 shares involume.

    Valued as per appropriatevaluation methods

    NONTRADED

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    DEBT

    Valued at weighted average price.

    If not traded on a particular day,then on Amortization basis.

    RESIDUALMATURITY

    OF UPTO 91DAYS

    Valued at weighted average price.

    If not traded on a particular day,then on YTM basis.

    RESIDUALMATURITY

    OF OVER 91DAYS

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    REAL ESTATE

    Cost price on the date of theiracquisition

    Cost includes purchase price and any otherdirectly attributable expenditure.

    Fair price on every 90th from the day of

    their purchase Fair value means the amount for which an asset

    can be exchanged between knowledgeable.

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    Types of Mutual Funds

    Equity funds Money market mutual funds

    Debt funds

    Hybrid funds

    Gilt funds

    Other funds

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    Equity funds

    Diversified Equity Fund: These funds aim todiversify the investments across companies andacross sectors.

    Small and Mid-Cap Funds: These funds areaggressive in their investment nature with an aim togenerate long term appreciation from a portfolio thatis substantially constituted of equity and equity relatedsecurities, which are not part of top 100 stocks.

    Sector Specific Funds: These invest into sectors

    which are mentioned in their objective or offerdocuments, such as banking, FMCG, etc.

    Tax Saving Funds (ELSS): It offers tax rebates toinvestor u/s 80C of I. T. Act.

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    Liquid funds

    Also known as Money Market Schemes

    These funds provide easy liquidity and preservation ofcapital.

    These schemes invest in short-term instruments likeTreasury Bills, inter-bank call money market, CPs andCDs.

    These funds are meant for short-term cashmanagement of corporate houses and are meant foran investment horizon of 1 day to 3 months.

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    60

    Debt Funds

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    Debt Funds

    Gilt Funds: Invest their corpus in securities issued by government.

    These funds carry zero default risk but are associated with InterestRate Risk.

    Income Funds: Invest a major portion into various debt instruments

    such as bonds, corporate debentures and government securities.

    Monthly Income Plan (MIPs): MIPS invests maximum of their totalcorpus in debt instruments while they take minimum exposure in

    equities. It gets benefit of both equity and debt market.

    Short Term Plans (STPs): These investments are meant for ahorizon of three to six months. These funds primarily invest in short

    term papers like Certificate of Deposits (CDs) and Commercial61

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    FIXED MATURITY PLANS (FMPs):

    Fixed Maturity plans commonly known as FMPs havepredetermined fixed maturity date before which investors cannotwithdraw their investments.

    BALANCED/HYBRID FUNDS:

    As the name suggest, they are a mix of both equity and debtfunds. They invest in both equities and fixed income securities,which are in line with pre-defined investment objective of thescheme. These schemes aim to provide investors with the bestof both the worlds. Equity part provides growth and the debt partprovides stability in returns.

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    Systematic Investment Plan

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    Systematic Investment Plan

    (SIP)

    An SIP is a method of investing a fixed sum,on a regular basis, in a mutual fund scheme. Itis similar to regular saving schemes like arecurring deposit. An SIP allows one to buy

    units on a given date each month or quarter,so that one can implement a saving plan forthemselves.

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    65

    Systematic Withdrawal Plan

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    Systematic Withdrawal Plan

    (SWP)

    SWP is a smart way to plan for your futureneeds by withdrawing amounts systematicallyfrom your existing portfolio either to reinvest inanother portfolio or to meet your expenses.

    Your savings no longer remain idle. Yourmoney can earn better returns if reinvested,instead of lying idle in a savings account formeeting your regular payments.

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    Systematic Transfer Plan (STP)

    A plan that allows the investor to give a mandateto the fund to periodically and systematicallytransfer a certain amount from one scheme toanother.

    68

    Example How does a Systematic Transfer Plan work

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    Example How does a Systematic Transfer Plan work

    This is best understood using an example. Say you want totransfer2,000 from an equity MF scheme to a debt MF schemeevery month.

    Month 1

    Equity MF units before transfer: 1,000Debt MF units before transfer: 0

    Equity MF unit NAV:20Debt MF unit NAV:15

    Equity MF units needed (redeemed from your account) =2,000 /20= 100

    Debt MF units allotted =2,000 /15 = 133.33Equity MF units after transfer = 1000100 = 900

    Debt MF units after transfer= 0 + 133.33 = 133.33

    69

    Month 2

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    Month 2

    Equity MF units before transfer: 900Debt MF units before transfer: 133.33

    Equity MF unit NAV:22Debt MF unit NAV:16

    Equity MF units needed ( redeemed from your account)=2,000 /22 = 90.91Debt MF units allotted =2,000 /16 = 125

    Equity MF units after transfer = 90090.91 = 809.09Debt MF units after transfer = 133.33 + 125 = 258.33

    And so on

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    Absolute return and Annualized

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    Absolute return and Annualizedreturn

    Example :1) If you invest Rs. 100 ; after 1 year returns is20% so end of the year it becomes Rs. 100 + 20=Rs. 120.

    2) Now second year also you make a profit of20% so your money is Rs. 120 + 24 = Rs. 144

    3) After 2 years your money of Rs. 100 is now Rs.144 so your

    Absolute returns for 2 years is 44% whereasAnnualized returns is 20% year on year.

    71

    Quantitative Evaluation of Mutual

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    Quantitative Evaluation of Mutual

    Fund Schemes

    Returns XIRR

    Dividend Re-investment (CAGR)

    Compounding ofPeriodic Returns

    Risk Standard Deviation

    Beta

    Weighted AverageMaturity

    Modified Duration

    Risk Adjusted Returns Sharpe Ratio

    Sortino Ratio Treynor Ratio

    Jensens Alpha

    72

    Calculation of Return using XIRR

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    Calculation of Return using XIRR

    Function

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    Axis equity fund offer document

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    Dividend Re investment (CAGR)

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    Dividend Re-investment (CAGR)

    The compounded annual growth rate(CAGR) can be calculated as follows:CAGR = 100 X {(I2 I1) (1r)}-1i.e. 100 X {(19,127 14,000)(365382} - 1i.e. 34.74%

    75

    Compounding of Periodic

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    p gReturns

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    Standard Deviation

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    Standard Deviation Beta compares a fund's returns with a benchmark,

    standard deviation measures how far a fund's recentnumbers stray from its long-term average.

    Fund X has a 10% average rate of return and a standarddeviation of 5%, most of the time, its return will range from

    5% to 15%.

    Large standard deviation supposedly shows a more riskyfund than a smaller one

    Higher the deviation, higher the risk & vice versa.

    It is calculated by taking the square root of variance.78

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    Standard Deviation

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    BETA

    compares a mutual fund's volatility with that of abenchmark

    A statistical measure which shows how sensitive thefund is to the market volatility

    Calculation of Beta: Y = a + X

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    Weighted Average MaturityFixed rate debt instruments have a price risk. When interest rates in the

    market go up, the debt instruments already issued, based on theerstwhile lower interest rates, lose value. Similarly, when interest rates inthe market go down fixed rate debt instruments gain value.

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    Modified Duration

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    Modified Duration

    The implication is that if the yields in the marketwere to change by 1%, this debt security is likely tochange in value by 1.68%.

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    Sharpe Ratio

    It quantifies how a fund performs relative to the risk ittakes

    Sharpe index measures risk premium of a portfolio,relative to the total amount for risk in the portfolio

    Sharpe Index =

    (Rp) (Rt)

    Standard Deviations of the Portfolio Return

    Portfolio Average Return (Rp)

    Risk Free Rate of Interest (Rt)

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    S(market) = (.10-.05)/.18 = .278

    S(manager X) = (.14-.05)/.11 = .818

    S(manager Y) = (.17-.05)/.20 = .600

    S(manager Z) = (.19-.05)/.27 = .519

    84

    Treynor ratio

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    y

    (Portfolio Return Risk-Free Rate) / Beta

    The numerator identifies the risk premium and thedenominator corresponds with the risk of the portfolio.

    The resulting value represents the portfolio's return perunit risk

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    Now, you can compute the Treynor value foreach:

    T(market) = (.10-.05)/1 = .05

    T(manager A) = (.10-.05)/0.90 = .056

    T(manager B) = (.14-.05)/1.03 = .087

    T(manager C) = (.15-.05)/1.20 = .083

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    Jensens Alpha

    Alpha is the risk-adjusted return on an investmentAlpha demonstrates whether your investment

    outperformed or underperformed a risk-relatedbenchmark

    The formula for alpha is expressed as follows:a = Rp [Rf + (Rm Rf) ]

    Where:

    Rp = Realized return of portfolio Rm = Market return

    Rf = risk-free rate

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    First, we calculate the portfolio's expected return:

    ER(D)= .05 + 0.90 (.10-.05) = .0950 or 9.5% return

    ER(E)= .05 + 1.10 (.10-.05) = .1050 or 10.50% return

    ER(F)= .05 + 1.20 (.10-.05) = .1100 or 11% return

    Then, we calculate the portfolio's alpha by subtracting theexpected return of the portfolio from the actual return:

    Alpha D = 11%- 9.5% = 1.5%

    Alpha E = 15%- 10.5% = 4.5%

    Alpha F = 15%- 11% = 4.0%

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    Axis Equity BNP Paribas HDFC Index

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    Fund Equity - GrowthHDFC Index

    Fund

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    CRISIL Mutual Fund Ranking

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    Methodology

    Superior Return Score The superior return score (SRS) is the relative measure

    of the schemes returns and risks (volatility) compared

    to their peer group.

    Mean Return and Volatility

    Downside Risk Probability (DRP)

    DRP measures the probability of the investment earninglower returns compared to short tenor risk freesecurities.

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    Portfolio Concentration Analysis

    Liquidity Analysis

    Asset Quality

    Modified Duration /Average Maturity

    Asset Size

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    Non Resident Investment in Indian MF

    h

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    Schemes

    Non Resident investment comprises ofinvestment by

    1. NRI Investments

    2. Foreign Institutional Investors

    3. Qualified Foreign Investors

    Portfolio investment route for NR investmentsliberalised for KYC norms.

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    Investment by NRIs

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    Investment by NRIs

    Meaning of NRI

    Provisions regarding Investment by NRIs- Repatriable basis

    - Non - repatriable basis

    Guidelines for investing in mutual funds by an NRI

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    Investment by Foreign Institutional

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    Investors

    Meaning of FI investment

    Who all are permitted to register as FIIs ??

    Broad based funds w.r.t. to certain FII

    participants

    Guidelines for FII registration

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    Investment by Qualified Foreign

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    Investors Meaning of QFIs

    is not resident in India;

    is not registered with SEBI as a Foreign Institutional Investor

    or as a Sub-account.

    Resident of the country complaint with

    - FATF standards

    - Signatory to IOSCOs Multilateral Memorandum ofUnderstanding (MMoU)

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    Continue . . . .

    Investment ceiling applicable for QFIs in:1. Equity schemes upto 10 million USD

    2. Debt schemes upto 3 million USD

    Investment Route for QFIs 1. Direct Route (Demat) --- 3 parties involved namely QFI,

    Qualified DP & MF

    2. Indirect Route (UCR Unit Confirmation Receipt) --- 4 parties

    involved namely QFI, Custodian Bank, MF & UCR

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    Investment by Indians in

    l h

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    International MF Schemes

    International fund different from global fund.

    Helps in diversificationof portfolio

    Investment routed throughthe fund of funds (FOF) route

    - a mutual fund that invests in other funds is afund of funds is known as fund of funds

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    Investment by Indians in

    I t ti l MF S h

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    International MF Schemes

    Structure of fund of fund (FOF) route

    1. Feeder Fund - receives money in India inIndian rupees.

    2. Master Fund acts as target abroad for thefeeder fund to invest in.

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    List of some of the InternationalF d

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    Funds

    Franklin Asia Equity Fund (Growth)

    Kotak Global Emerging Market (Growth)

    L & T Indo Asia Fund (Growth)

    ICICI Pru Indo Asia Equity RP (Growth)

    L & T Global Real Assets (Growth)

    Birla SL International Equity A (Growth)

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    Points to consider w.r.tI t ti l I t t

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    International Investments

    Need to understand the international financialmarket

    Need to understand regulations regardingpermissible investment

    Need to understand regulations regardingtaxation

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    Need to understand regulations regardingrepatriation

    Foreign currency risk

    Transaction costs

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    MUTUAL FUND TAXATION

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    MUTUAL FUND TAXATION107

    Securities Transaction Tax(STT)

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    (STT)

    STT introduced w.e.f. 1st Oct., 2004

    Applicable to equity oriented funds only

    Taxable transactions under STT

    Service Tax, Surcharge & Education Cess notapplicable

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    Securities Transaction Tax(STT)

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    (STT)

    On schemes purchase of equity

    shares in the stock exchange

    0.10 %

    On schemes sale of equity shares in

    stock exchange0.10 %

    On schemes sale of futures & options in

    stock exchange0.017%

    STT on equity-oriented schemes of mutualfunds

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    Capital Gains Tax

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    Capital Gains Tax

    1. Equity oriented schemes ---

    a. Long Term capital Gains - NIL

    b. Short Term Capital Gains 15% + Surcharge + EducationCess

    2. Other Schemes ---

    a. Long term capital Gains 10% + Surcharge+ EducationCess

    b. Short term capital gains Nil / 10% / 20% / 30% depending

    on tax slab

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    TDS / Withholding Tax

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    S / o d g a

    No TDS on dividend or re purchase amountfor resident investors

    Withholding tax rates for NRIs or foreigncompanies are

    1. Interest 20%

    2. Dividends 10%

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    Dividend Stripping / DoubleI d ti B fit

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    Indexation Benefit

    Dividend Stripping

    Tax avoidance strategy

    Dividend stripping is the purchase of sharesjust before a dividend is paid, and the sale ofthose shares after that payment

    Double Indexation Benefit

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    MUTUAL FUND TAXATION -FMP

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    FMP

    Benefits of FMP w.r.t. taxation

    1. Often preferred by HNIs

    2. Indexation a key reason as it ensures betterpost tax returns as compared to Bank FD

    3. Double Indexation benefit

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    FMP V/S FIXED DEPOSIT

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    FMP v/s FD taking into consideration

    Dividend option

    Growth option

    - With Indexation- Without indexation

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    Future of Mutual Fund Industry

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    Diverse range of products

    Stringent regulations for MF Distributors

    Eligibility norms of AMC should be revised

    Trading through stock exchange platforms

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    Future of Mutual Fund Industry

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    y

    Growth of Real Estate Mutual Funds

    Expansion of MF network in Tier II cities &rural areas due to increased level ofawareness

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    Projected Growth by 2015

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    j y

    2009 20122015 (P)

    2009 20122015 (P)

    SOURCE - KPMG

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    Indian v/s US Mutual FundIndustry

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    Industry

    PARTICULARS INDIAN MUTUAL FUNDINDUSTRY

    US MUTUAL FUNDINDUSTRY

    ORGANIZATION /STRUCTURE OF MF

    ACTS AS A TRUST4 INDEPENDENTENTITIES

    EXTERNALLY MANAGED

    TOTAL AUM US$110 billion US$11 trillionNO. OF SCHEMES LESS IN COMPARISON HIGHER THAN THE NO.

    OF LISTED COMPANIESIN INDIA

    TAX SECURITIES

    TRANSACTION TAX

    DEFAZIO HARKIN

    TAXTAX INCENTIVES MODERATE HIGH IN COMPARISON

    OPTION OF CHOOSINGFUNDS

    NOT ALLOWED ALLOWED

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    Latest Updates

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    p

    Updated till 31st July, 2013

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    CONCLUSION

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    Mutual Fund Investmentsare Subject to Market

    Risk. Please Read theOffer Document carefully

    before Investing

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