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Project on mutual funds as an investment avenue Document Transcript
y 1. A SUMMER PROJECT REPORT ON MUTUAL FUND ASAN INVESTMENT AVENUE AT PRESENTED TO ARNI
SCHOOL OF BUSINESS MANAGEMENT KATHGARG,
INDORA (HP) 2009-11 PRESENTED BY RANJEET SINGH
SAINI ID:-AEMB0060A/09Projectsformba.blogspot.com
y 2. (A) MUTUAL FUND1. INTRODUCTION A Mutual Fund isa 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 inventible
surplus of as little as a few thousand rupees can invest in MutualFunds. Each Mutual Fund scheme has a defined investment
objective and strategy A Mutual fund is the ideal investment
vehicle for todays 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 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
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involved in the process and the broad rules for entry into and exit
from the fundProjectsformba.blogspot.com
y 3. 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 theAsset
Management Company (AMC). E.g. Birla Global Finance is the
sponsor of theBirla Sun Life Asset Management Company Ltd.,
which has floated different mutualfunds schemes and also acts as
an asset manager for the funds collected under
theschemes.Characteristics: A mutual fund actually belongs to
the investors who have pooled their funds. A mutual fund is
managed by investment professionals and other service
providers, who earn a fee for their services, from the fund. The
pool of funds is invested in a portfolio of marketableinvestments. The value of the portfolio is updated every day.
The investors share in the fund is denominated by units. The
value of the units changes with change in the portfolios value,
every day. The value of one unit of investment is called the Net
Asset Value or NAV.Projectsformba.blogspot.com
y 4. 2. HISTORY OF THE INDIAN MUTUAL FUNDINDUSTRY:The mutual fund industry in India started in 1963
with the formation of Unit Trust ofIndia, at the initiative of the
Government of India and Reserve Bank the. The history
ofmutual funds in India can be broadly divided into four distinct
phases.First Phase: 1964-1987An Act of Parliament established
Unit Trust of India (UTI) on 1963. It was set up by theReserve
Bank of India and functioned under the Regulatory and
administrative control ofthe RBI. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank ofIndia
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(IDBI) took over the regulatory and administrative control in
place of RBI. The firstscheme launched by UTI was Unit Scheme
1964. At the end of 1988 UTI had Rs.6,700crores of
AUM.Second Phase: 1987-1993 (Entry of Public Sector
Funds)In 1987 marked the entry of non- UTI, public sector
mutual funds set up by public sectorbanks and Life Insurance
Corporation of India (LIC) and General Insurance Corporation
ofIndia (GIC). SBI Mutual Fund was the first non- UTI Mutual
Fund established in June1987.Third Phase: 1993-2003 (Entry of
Private Sector Funds)With the entry of private sector funds in
1993, a new era started in the Indian mutual fundindustry, giving
the Indian investors a wider choice of fund families. Also, 1993
was theyear in which the first Mutual Fund Regulations came
into being, under which all mutualfunds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer
(nowProjectsformba.blogspot.com
y 5. merged with Franklin Templeton) was the first private sectormutual fund registered inJuly 1993. The industry now functions
under the SEBI (Mutual Fund) Regulations1996.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 undermanagement was way ahead of other
mutual funds.Fourth Phase Since February 2003In February2003, following the repeal of the Unit Trust of India Act 1963
UTI wasbifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust ofIndia 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 otherschemes.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.Projectsformba.blogspot.com
y 6. The graph indicates the growth of assets over theyears.GROWTH IN ASSETS UNDER
MANAGEMENTNote:Erstwhile UTI was bifurcated into UTI
Mutual Fund and the Specified Undertaking of the UnitTrust of
India effective from February 2003. The Assets under
management of the Specified Projectsformba.blogspot.com
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y 7. Undertaking of the Unit Trust of India has therefore beenexcluded from the total assets of theindustry as a whole from
February 2003 onwards. 3. MUTUAL FUND STRUCTURE The
Structure Consists The structure of mutual funds in India is
governed by the SEBI Regulations, 1996. These regulations
make it mandatory for mutual funds to have a 3-tier structure of
Sponsors- Trustee-AMC (Asset Management Company). The
Sponsor is the promoter of mutual fund, and appoints the
Trustee. The Trustees are responsible to the investors in the
mutual funds, and appoint the AMC for managing the investment
portfolio. The AMC is the Projectsformba.blogspot.com
y 8. business face of the mutual funds, as it manages all the affairsof mutual funds. Themutual funds and AMC have to be
registered by the SEBI.SponsorSponsor is the person who acting
alone or in combination with another body corporateestablishes a
mutual fund. Sponsor must contribute at least 40% of the net
worth of theInvestment Managed and meet the eligibility criteria
prescribed under the Securities andExchange Board of India
(Mutual Funds) Regulations, 1996.The Sponsor is notresponsible
or liable for any loss or shortfall resulting from the operation of
the Schemesbeyond the initial contribution made by it towards
setting up of the Mutual FundTrustThe Mutual Fund is
constituted as a trust in accordance with the provisions of theIndianTrusts Act, 1882 by the Sponsor. The trust deed is
registered under the Indian RegistrationAct, 1908.TrusteeTrustee
is usually a company (corporate body) or a Board of Trustees
(body ofindividuals). The main responsibility of the Trustee is to
safeguard the interest of the unitholders and inter-alia ensure that
the AMC functions in the interest of investors and inaccordance
with the Securities and Exchange Board of India (Mutual Funds)
Regulations,1996, the provisions of the Trust Deed and the Offer
Documents of the respectiveSchemes. At least 2/3rd directors of
the Trustee are independent directors who are notassociated with
the Sponsor in any manner.Asset Management Company
(AMC)Projectsformba.blogspot.com
y 9. The AMC is appointed by the Trustee as the InvestmentManager of the Mutual Fund. TheAMC is required to be
approved by the Securities and Exchange Board of India (SEBI)
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toact as an asset management company of the Mutual Fund. At
least 50% of the directors ofthe AMC are independent directors
who are not associated with the Sponsor in anymanner. The
AMC must have a net worth of at least 10 crores at all
times.Registrar and Transfer AgentThe AMC if so authorized by
the Trust Deed appoints the Registrar and Transfer Agent tothe
Mutual Fund. The Registrar processes the application form,
redemption requests anddispatches account statements to the unit
holders.CustodianA custodian handles the investment back office
of a mutual fund. Its responsibilitiesinclude receipt and delivery
of securities, collection of income, distribution of dividends,and
segregation of assets between schemes. The sponsor of a mutual
fund cannot act as acustodian to the fund. For example, Deutsche
Bank is a custodian, but it cannot serviceDeutsche Mutual Fund,
its mutual fund arm.DepositoryIndian capital markets are moving
away from having physical certificates for securities,
toownership of these securities in dematerialized form with a
Depository.Projectsformba.blogspot.com
y 10. 4.MUTUAL FUND OPERATIONMutual Fund OperationFlow Chart Fund managers investors Invest inPass toInvestor
stock &securities Generate returnProjectsformba.blogspot.com
y 11. 5.TYPES OF MUTUAL FUNDDiagramA Mutual Fund mayfloat several schemes, which may be classified on the basis of
itsstructure, its investment objectives and other objectives.Open
Ended SchemesProjectsformba.blogspot.com
y 12. As the name implies the size of the scheme (fund) is open i.e. not specified or pre- determined. Entry to the fund is always
open, the investor who can subscribe at anytime. Such fund
stands ready to buy or sell its securities at anytime. The key
feature of Open- ended schemes is Liquidity. It implies that the
capitalization of the fund is constantly changing as investors sell
or buy their shares. Further, the shares or units are normally not
traded on the stock exchange but are repurchased by the funds at
announced rates. Open- ended schemes have comparatively
better liquidity despite the fact that these are not listed. The
reason is that investors can any time approach mutual fund for
sale of such units. No intermediaries are required. Moreover, the
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realizable amount is certain since repurchase is at a price based
on declared net asset value (NAV). The portfolio mix of such
schemes has to be investments, which are actively traded in the
market. Otherwise it will not be possible to calculate NAV. This
is the reason that generally open-ended schemes are equity based.
In Open-ended schemes, the option of dividend reinvestment is
available.Close-Ended Schemes A Close ended schemes have a
definite period after which their shares/units are redeemed. The
scheme is open for subscription only during a specified period at
the time of launch of a scheme. 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 the units 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. In these types of schemes, the size of the fund kept
to be constant. SEBI regulations stipulate that at least one of the
two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual
funds schemes disclose NAV generally on weekly
basis.Projectsformba.blogspot.com
y 13. Interval schemes Interval Schemes combine the features ofboth open-ended and close-ended schemes. They are open forsale or redemption during pre-determined intervals at NAV based
prices.Mutual Fund schemes by Investment Objectives:EQUITY
FUNDSThese funds invest a major part of their corpus in
equities. The composition of the fundmay vary from scheme to
scheme and the fund managers outlook on various scrips.The
Equity Funds are sub-classified depending upon their investment
objective, asfollows: 1. Growth Fund: Aim to provide capital
appreciations over the medium to long term. These schemes
normally invest a majority of their funds in equities and are
willing to bear short term decline in value for possible future
appreciation. These schemes are not for investors seeking regular
income or needing their money back in the short- term 2.
Diversified Equity Fund: Diversified equity funds are the most
popular among investors. They invest in many stocks across
many sectors, and because they have the freedom to chop and
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churn their portfolios as they like, diversified equity
fundsProjectsformba.blogspot.com
y 14. are a good proxy to the stock market. If a general exposure toequities is what you want, they are a good option. They can
invest in all listed stocks, and even in unlisted stocks. They can
invest in which ever sector they like, in what ever ratio they like.
3. Equity Linked Savings Schemes (ELSS): Equity linked
savings schemes (ELSS) are diversified equity funds that
additionally offer income tax benefits to individuals. ELSS is one
of the many section 80c instruments, along with the more popular
debt options like the PPF, NSC and infrastructure bonds. In this
Section 80c grouping. ELSS is unique. Being the only instrument
to offer a total equity exposure. 4. Index Fund: An index fund is a
diversified equity fund; with a difference- a fund manager has
absolutely no say in stock selection. At all times, the portfolio of
an index fund mirrors an index, both in its choice of stocks and
their percentage holding. As of March 2004, equity index funds
tracked either the Sensex or the Nifty. So, an index fund that
mirrors the Sensex will invest only in the 30 Sensex stocks,
which too in the same proportion as their weight age in the index.
5. Sector Fund: Sector funds invest in stocks from only one
sector, or a handful of sectors. The objective is to capitalize on
the story in the sectors, and offer investors a window to profitfrom such opportunities. Its a very narrow focus, because of
which sector funds are considered the riskiest among all equity
funds. 6. Mid Cap Fund: These are diversified funds that target
companies on the fast growth trajectory. In the long run, share
prices are driven by growth in a companys turnover and profits.
Market players refer to them as mid-sized companies and mid-
cap stocks with size in this context being benchmarked to a
companys marketProjectsformba.blogspot.com
y 15. value. So, while a typical large cap stock would have amarket capitalization of over Rs 1,000 crores, a mid-cap stock
would have a market value of Rs 250-2,000 crores.DEBT
FUNDSThese Funds invest a major portion of their corpus in
debt papers. Government authorities,private companies, banks
and financial institutions are some of the major issuers of
debtpapers. By investing in debt instruments, these funds ensure
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low risk and provide stableincome to the investors.Debt funds are
further classified as: 1. Gilt Funds: Invest their corpus in
securities issued by Government, popularly known as GOI debt
papers. These Funds carry zero Default risk but are associated
with Interest Rate risk. These schemes are safer as they invest in
papers backed by Government. 2. Income Funds: Income funds
aim to maximize debt returns for the medium to longer term.
Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities. 3. MIPs:
Invests around 80% of their total corpus in debt instruments
while the rest of the portion is invested in equities. It gets benefit
of both equity and debt market. These scheme ranks slightly high
on the risk-return matrix when compared with other debt
schemes. 4. Short Term Plans (STPs): Meant for investors with
an investment horizon of3-6 months. These funds primarily
invest in short term papers like Certificate
ofProjectsformba.blogspot.com
y 16. Deposits (CDs) and Commercial Papers (CPs). Some portionof the corpus is also invested in corporate debentures. 5. Liquid
Funds: Also known as Money Market Schemes, These funds are
meant to provide easy liquidity and preservation of capital. These
schemes invest in short- term instruments like Treasury Bills,
inter-bank call money market etc. These funds are meant forshort-term cash management of corporate houses and are meant
for an investment horizon of 1day to 3 months. These schemes
rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds. 6. Floating Rate Funds:
These income funds are more insulated from interest rate than
their conventional peers. In other words, interest rate changes,
which cause the NAV of a conventional debt fund to go up or
down, have little, or no, impact on NAVs of floating rate
funds.BALANCED FUNDSThese funds, as the name suggests,
are a mix of both equity and debt funds. They invest inboth
equities and fixed income securities, which are in line with pre-
defined investmentobjective of the scheme. These schemes aim
to provide investors with the best of both theworlds. Equity part
provides growth and the debt part provides stability in
returns.Each category of funds is backed by an investment
philosophy, which is pre-defined in theobjectives of the fund.
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The investor can align his own investment needs with the
fundsobjective and invest accordingly.HYBRID FUNDS:-
Projectsformba.blogspot.com
y 17. 1. Growth and Income Fund: Strike a balance capitalappreciation and income for the investors. In these funds
portfolio is a mix between companies with good dividend paying
record and those with potential capital appreciation. These funds
are less risky than growth funds bit more than income funds. 2.
Asset Allocation Fund: These funds follow variable asset
allocation policy. These move in an out of an asset class (equity,
debt, money market or even non-financial assets). Asset
allocation funds are those, which follow more stable allocation
policies like balanced funds. Those, which flexible allocation
policies, are like aggressive speculative funds.6. COMPARISON
OF MUTUAL FUNDProjectsformba.blogspot.com
y 18. InvestMutual Investment Who Should ment RiskFundObjective Portfolio Invest Horiz on 3Equity Long-term Capital
Aggressive investors High Risk Stocks & Shares years +Funds
Appreciation Long term Inv. Capital Balanced ratio ofBalanced
Growth & Regular Market Risk equity and debt funds Moderate
& 2Funds Income and Interest to ensure higher Aggressive years
+ Risk returns at lower risk To generate returns that are NAV
varies Portfolio indices like 3Index Funds commensurate with
with index Aggressive investors. BSE, NIFTY etc years + returns
of performance respective indices 12 Interest Rate Government
Salaried & conservativeGilt Funds Security & Income months
Risk securities investors + Credit Risk & Debentures, 12 Salaried
& conservativeBond Funds Regular Income Interest Rate Govt
securities, months investors Risk Corporate Bonds + Treasury
Bills, Liquidity + Certificate of Park funds in current 2
daysMoney Moderate Income + Negligible Deposits, A/cs or
short-term - 3Market Reservation of Commercial Papers, Bank
Dep. weeks Capital Call MoneyShort-term Call Money,Funds 3
weeks CommPapers,(Floating - Liquidity + Little Interest Those
with surplus - Treasury Bills, CDs,short-term) Moderate Income
Rate short-term funds 3 Short-term Govt. months
securities.Projectsformba.blogspot.com
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y 19. 7.ADVANTAGES OF MUTUAL FUNDDiagram 6Affordability Diversification Variety Regulations Professional
Tax Benefits MgmtMutual Funds offer several benefits to an
investor that are unmatched by the otherinvestment options. Last
six years have been the most turbulent as well as exiting ones
forthe industry. New players have come in, while others have
decided to close shop by eitherselling off or merging with others.
Product innovation is now pass with the game shiftingto
performance delivery in fund management as well as service.
Those directly associatedwith the fund management industry like
distributors, registrars and transfer agents, andeven the regulators
have become more mature and responsible. 1. Affordability :
Small investors with low investment fund are unable to invest in
high-grade or blue chip stocks. An investor through Mutual
Funds can be benefited from a portfolio including of high priced
stock. 2. Diversification : Investors investment is spread across
different securities (stocks, bonds, money market, real estate,
fixed deposits etc.) and different sectors (auto, textile, IT etc.).
This kind of a diversification add to the stability
ofProjectsformba.blogspot.com
y 20. returns, reduces the risk for example during one period oftime equities might under perform but bonds and money market
instruments might do well do well and may protect principalinvestment as well as help to meet return objectives. 3. Variety :
Mutual funds offer a tremendous variety of schemes. This variety
is beneficial in two ways: first, it offers different types of
schemes to investors 4. Professional Management: Mutual Funds
employ the services of experienced and skilled professionals and
dedicated investment research team. The whole team analyses the
performance and balance sheet of companies and selects them to
achieve the objectives of the scheme. 5. Tax Benefits: Depending
on the scheme of mutual funds, tax shelter is also available. As
per the Union Budget-99, income earned through dividends from
mutual funds is 100% tax free. Under ELSS of open-ended
equity-oriented funds an exemption is provided up to Rs.
100,000/- under section 80C. 6. Regulation: 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
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AAA rating is considered the safest whereas a D rating is
considered poorcredit quality. A well-diversified portfolio might
help mitigate this risk.INFLATION RISK:Things you hear
people talk about: Rs. 100 today is worth more than Rs. 100
tomorrow.Remember the time when a bus ride costed 50
paisa?Mehangai Ka Jamana Hai.The root cause, Inflation.
Inflation is the loss of purchasing power over time. A lot oftimes
people make conservative investment decisions to protect their
capital but end upwith a sum of money that can buy less than
what the principal could at the time of
theProjectsformba.blogspot.com
y 23. investment. This happens when inflation grows faster thanthe return on your investment.A well-diversified portfolio with
some investment in equities might help mitigate this
risk.INTEREST RATE RISK:In a free market economy interest
rates are difficult if not impossible to predict. Changesin interest
rates affect the prices of bonds as well as equities. If interest rates
raise theprices of bonds fall and vice versa. Equity might be
negatively affected as well in a risinginterest rate environment. A
well-diversified portfolio might help mitigate this
risk.POLITICAL/GOVERNMENT POLICY RISK:Changes in
government policy and political decision can change the
investmentenvironment. They can create a favorable environmentfor investment or vice versa.LIQUIDITY RISK:Liquidity risk
arises when it becomes difficult to sell the securities that one has
purchased.Liquidity Risk can be partly mitigated by
diversification, staggering of maturities as wellas internal risk
controls that lean towards purchase of liquid securities.10.NET
ASSET VALUE Net Asset Value
(NAV)Projectsformba.blogspot.com
y 24. The net asset value of the fund is the cumulative market valueof the assets fund net of its liabilities. In other words, if the fund
is dissolved or liquidated, by selling off all the assets in the fund,
this is the amount that the shareholders would collectively own.
This gives rise to the concept of net asset value per unit, which is
the value, represented by the ownership of one unit in the fund. It
is calculated simply by dividing the net asset value of the fund by
the number of units. However, most people refer loosely to the
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NAV per unit as NAV, ignoring the "per unit". We also abide by
the same convention. Definition of NAV Net Asset Value, or
NAV, is the sum total of the market value of all the shares held in
the portfolio including cash, less the liabilities, divided by the
total number of units outstanding. Thus, NAV of a mutual fund
unit is nothing but the book value. Calculation of NAV The most
important part of the calculation is the valuation of the assets
owned by the fund. Once it is calculated, the NAV is simply the
net value of assets divided by the number of units outstanding.
The detailed methodology for the calculation of the asset value is
given below. Asset value is equal to Sum of market value of
shares/debentures + Liquid assets/cash held, if any +
Dividends/interest accrued Amount due on unpaid
assetsProjectsformba.blogspot.com
y 25. Expenses accrued but not paid Other liabilitiesNAV per unit= ------------------------------------------------------------------ No. of
units outstanding of the scheme Details on the above items For
liquid shares/debentures, valuation is done on the basis of the last
or closing market price on the principal exchange where the
security is traded For illiquid and unlisted and/or thinly traded
shares/debentures, the value has to be estimated. For shares, this
could be the book value per share or an estimated market price if
suitable benchmarks are available. For debentures and bonds,value is estimated on the basis of yields of comparable liquid
securities after adjusting for illiquidity. The value of fixed
interest bearing securities moves in a direction opposite to
interest rate changes Valuation of debentures and bonds is a big
problem since most of them are unlisted and thinly traded. This
gives considerable leeway to the AMCs on valuation and some of
the AMCs are believed to take advantage of this and adopt
flexible valuation policies depending on the situation.Interest is
payable on debentures/bonds on a periodic basis say every 6
months. But, withevery passing day, interest is said to be
accrued, at the daily interest rate, which iscalculated by dividing
the periodic interest payment with the number of days in
eachPeriod. Thus, accrued interest on a particular day is equal to
the daily interest ratemultiplied by the number of days since the
last interest payment date.Projectsformba.blogspot.com
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y 26. Usually, dividends are proposed at the time of the AnnualGeneral meeting and becomedue on the record date. There is a
gap between the dates on which it becomes due and theactual
payment date. In the intermediate period, it is deemed to be
"accrued".Expenses including management fees, custody charges
etc. are calculated on a daily basis.NAV and its impact on the
returnsWe feel that a MF with lower NAV will give better
returns. This again is due to the wrongperception about NAV. An
example will make it clear that returns are independent of
theNAV.Say, you have Rs 10,000 to invest. You have two
options, wherein the funds are same asfar as the portfolio is
concerned. But say one Fund X has an NAV of Rs 10 and
anotherFund Y has NAV of Rs 50. You will get 1000 units of
Fund X or 200 units of Fund Y.After one year, both funds would
have grown equally as their portfolio is same, say by25%. Then
NAV after one year would be Rs 12.50 for Fund X and Rs 62.50
for Fund Y.The value of your investment would be 1000*12.50 =
Rs 12,500 for Fund X and 200*62.5= Rs 12,500 for Fund Y.
Thus your returns would be same irrespective of the NAV.It is
quality of fund, which would make a difference to your returns.
In fact for equityshares also broadly this logic would
apply.Misconception about NAVThis situation arises from the
perception that a fund at Rs 10 is cheaper than say Rs 15 orRs
100. However, this perception is totally wrong and investors
would be much better offonce they appreciate this
fact.Projectsformba.blogspot.com
y 27. Two funds with same portfolio are same, no matter what theirNAV is. NAV is immaterial.Why people carry this perception is
because they assume that the NAV of a MF is similarto the
market price of an equity share. This, however, is not true.11.
BASIC CONCEPTS OF LOADS : 1. Entry Load: The load
charged at the time of investment is known as entry load. Its
meant to cover the cost that the AMC spends in the process of
acquiring subscribers commission payable to brokers,
advertisements, register expenses etc. The load is recovered by
way of charging a sale price higher than the prevailing NAV. 2.
Exist Load: Some AMC do not charge an entry load but they
charged an exist load i.e., they deduct a load before paying out
the redemption proceeds. Psychologically, investors are much
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more willing to pay exist loads as compared to entry loads. 3.
Unit: Units mean the investment of the unit holders in a scheme.
Each unit represents one undivided share in the assets of a
scheme. The value of each unit changes, depending on the
performance of the fund.12.FACTORS AFFECTING MUTUAL
FUND1. Governmental InfluencesMutual fund business is a
highly regulated business throughout the world as it seeks
toensure that quality and fairly priced schemes are available.
Governmental intervention thusin mutual fund market usually is
most needed to ensure that insurers are reliable. And inthe
developing countries the additional goal may be promotion of
domestic mutual fundindustry and ensuring the national mutual
fund industry contributes to overall
economicProjectsformba.blogspot.com
y 28. development. In a non technical sense mutual fund ispurchased in a good faith so the dutyof government intervention
in mutual fund industry is to ensure that this principle ofmutual
fund is never defeated.The ideology of government plays an
important role in mutual fund industry also. Forexample in the
past during 1991, the P .V Narsimha Rao government strongly
believed inliberalization also liberalized the mutual fund sector
which helped to allow private playersin the industry from 1993
and enhancing joint ventures with foreign companies.The presentgovernment with more focuses on foreign direct investments has
declared tofavor the rise FDI in mutual fund to 49% which
further enhances competition in theindustry.2. Taxation
PolicySocial equity being one of the motives behind tax
collections, government give certainexemptions from such
levying. One such exemption is deduction incurred by
taxpayerstowards investment in mutual fund coverage. Similarly,
capital invested in infrastructurebonds etc is offered with certain
concession under tax laws. The central idea behind
suchexemptions is that the capitals so allocated by individuals
reduce the ultimate burden onthe public infrastructure or helps in
creating such infrastructural facilities.The income tax rules
related to the mutual fund transactions can be classified
under:[A] Exemptions available to companies or businesses[B]
Exemptions available to insured individuals[A] Exemptions
available to companies Expenses deductible from commission
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earned by distributor, banker, national
distributor.Projectsformba.blogspot.com
y 29. Tax concessions under risk management practices of anenterprise In growth option equity schemes there no long term
capital gain by company. In dividend option equity schemes
there no tax. Return received by charitable trust is total
exempted from tax. Else schemes give to advantage of tax
saving, growth potential and return.[B] Tax rules governing
investment by individualsDeduction in respect of ELSS schemes
(sec 80C):Investment in this fund would enable you to avail the
benefits under clause (xiii) of asection 80C of the Income Tax
Act investment made in the schemes up to 1 lakh by theeligible
investor for deduction under this section of the Act.Since it will
be an income deduction an investment of Rs 1 lakh in this fund
can save offRs. 33600 from your tax payable liability (assuming
you are in the highest tax bracket)Investor will receive tax free
dividend in above case.Investor will also receive tax free
dividend by investing equity schemes in dividend
optionInvestors also receive tax free return by investing equity
schemes in growth option for longterm capital gain. C Tax
planningsAn individual can think of health ELSS schemes
purchase as a tool of tax planningexercise. For example people
who are marginally affected by tax liability can be aswellpurchase a ELSS fund get benefits of Rs. 33600 from tax. In
this way tax burden isbecome less by purchasing ELSS
fund.Thus tax law offer benefit to individuals/companies by way
of exemptions/deductions ofexpenditure incurred towards
purchase of mutual fund various schemes coverage fromtotal
taxable income.Projectsformba.blogspot.com
y 30. 3. Foreign Trade RegulationsWith the vast potential formutual fund in India due its large population in the countrymany
foreign companies are ready to enter into the Indian market. But
companies can bepermitted in India through joint ventures with
an Indian partner as well as come separatelyand the foreign
equity shall be restricted to only 25%. Another statement also
tells thatIndian subsidiaries of foreign companies shall not be
allowed to participate in bankingsector unless they entered in to
joint ventures with the Indian partners.But at present the mutual
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fund regulator is in favor of hike in FDI cap from 25% to
49%,and is finalizing a report that will be submitted to the
government for a comprehensivelegislation for the industry. The
security exchange board of India and association of mutualfund
India have been advocating a hike in FDI limit for mutual fund
companies so that theforeign partners can infuse additional funds
in these companies to sustain their growth.The government will
need to amend the separate mutual fund Act for FDI capital as
wellas domestic company as this is the statutory provision unlike
sectors like civil aviation andtelecom, which have come through
notification.4. National IncomeThe relative importance of the
mutual fund Market within a country will also be dependentupon
economic development. With greater rates of economic growth,
consumption ofinvestment should increase as a result of
increased income, and an increased stock ofassets requiring
mutual fund. Furthermore, the development of mutual fund is
likely tofacilitate greater economic growth, implying that
economic growth may be endogenous.Consistent with these
arguments, studies find that the level of financial development
andProjectsformba.blogspot.com
y 31. economic development are positively related to the level ofmutual fund across emergingmarkets.5. Consumptions and
SavingsThe gross capital formation of any country is importantfor indication of its growth in thefuture years. It is quite
necessary to set up the rate of capital formation so that a large
stockof machines, tools and equipments are accumulated in a
country. Experience ofdevelopment in other countries suggests
that a high rate of capital formation was achievedto trigger rapid
rate of economic growth. With the hike in foreign capital coming
to Indiathe rate of capital formation is becoming boom to
insurers, which has given themopportunities. It is heartening to
them to note that latest savings rate of 28% is highest tillnow and
with the growth rate near to 8% is bringing a pool of buyers
purchasing power.This directly influences the demand for mutual
fund products.6. EmploymentThe effect of employment on
mutual fund industry is as direct as that on economicdevelopment
of any country. With the rising levels of employment the effect
on mutualfund industry is positive because employment adds to
the insured properties and assetsfrom every prospective be it due
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to organized or unorganized.7. InflationThe midterm policy
review the strong macroeconomic indicators and RBI has revised
itsGDP growth estimates to the upper limit of the earlier
projection range 8% inflation (WPI)Projectsformba.blogspot.com
y 32. has been steadily moving up in recent times and RBI hashighlighted that primary articlesprices have been on of the key
contributors. However one needs to keep in mind thatrecent
increase in global oil prices.8. Money supplyThe central banks
has indicated that credit growth and money supply number are
likely tobe above its prosecution for the current fiscal year, the
statement to consider promptly allpossible measures as
appropriate to the evolving global and domestics situation
isindicative of phased increase in FII limits for gilt investment
could help in depending thesecurities market and is part of the
road map towards fuller convertibility.9. InterestInterest is major
factor for investment when a person find less return from
investment toolthan people move towards the higher returns tool
of investment.10. Risk factorAll investments in Mutual Fund and
securities are subject to market risks and the NAV ofthe fund
may go up or down depending on the factors and forces affecting
the securitymarket. There can be no assurance that the funds
objective will be achieved. Pastperformance of the
sponsors/Mutual fund/schemes/AMC is not necessarilyindicative ofthe future results. The name of the schemes does not
in any manner indicate their quality,their future prospects or
returns.The specific risk would be credit, market, illiquidity,
judgmental error, interest rate, swapsand forward
rates.Projectsformba.blogspot.com
y 33. 11. Demographic environmentThe demographic environmentsignificantly affects the demand for the mutual fundindustry.
Factors like the average age of the population, levels of
education, householdstructures income distribution, life style and
the extent of industrialization as well asurbanization terribly
influences the demand of mutual fund schemesIn India the
average age of the population is at an increasing trend following
the improvedmedical technology and better awareness of health
care requirements. As a result, the riskof investment death is
decreasing while connectivity is increasing. Simultaneously
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thedemand for pension funds and income fund is expected to
grow. Forexample at the time of independence the average age of
dying for Indians was 45.Presently it has increased to 65
following better healthcare, improvements in medicalscience and
more health consciousness among the common man. By 2010 it
is expected torise to 75. Hence risk profile is also changing.
Earlier people are thanking about safely butat present people
thinking about capital growth.12. Social FactorsThe social
environment covers the customs, habits, level of education, tastes
and standardof living of people in the society. Todays social
environment is greatly influenced to amajor extent by the
changes in technological aspects. With the rapid progress
intechnology and economic liberalization, the physical
boundaries are gradually vanishing.As a result, the social life of
the people and their views towards risk and uncertainty of lifeand
health are gradually changing.Projectsformba.blogspot.com
y 34. These factors of social life are affecting human motivationsand emotions related to thephysical and mental incapacities, loss
of health and death. In general there are extremesapprehensions
of ones death, though it is certain. The perception of an
individual towardrisk and capital growth depends on the social
culture and religious belief. In the urbanizedarea people does
think about investment and capital growth. These beliefsultimatelyinfluence the buying behavior of a consumer.13.
EducationEducation is major factor of demand for mutual fund
product. if the education levels ishigher than the people know the
benefits of mutual fund the use mutual fund as investmenttool
and also take rise capital growth.MUTUAL FUND
PLAYERSThe Indian mutual fund industry is mainly divided
into three kinds of categories. These categories include public
sector players, nationalized banks and private sector and foreign
players.UTI Mutual Fund was one of the leading Mutual Fund
companies in India till May 2006with a corpus of more than
Rs.31, 000 Crore and it is the public sector mutual fund.Bank of
Baroda, Punjab National Bank, Can Bank and SBI are the major
nationalizedbanks mutual fund.At present mutual fund industry is
mainly dominated by private and foreign sector playerswhich
include major players like Prudential ICICI Mutual Fund, HDFC
Mutual Fund,Reliance Mutual Fund etc. are private sector mutual
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funds players while FranklinTempleton etc. are major foreign
mutual fund players. At present there are more than 33players
operating in Indian. The brief introduction of major players is
given as follows.Projectsformba.blogspot.com
y 35. ABN AMRO Mutual FundABN AMRO Mutual Fund wassetup on April 15, 2004 with ABN AMRO Trustee (India)Pvt.
Ltd. as the Trustee Company. The AMC, ABN AMRO Asset
Management (India)Ltd. was incorporated on November4, 2003.
Deutsche Bank A G is the custodian of ABNAMRO Mutual
Fund.Birla Sun Life Mutual FundBirla Sun Life Mutual Fund is
the joint venture of Aditya Birla Group and Sun LifeFinancial.
Sun Life Financial is a global organization evolved in 1871 and
is beingrepresented in Canada, the US, the Philippines, Japan,
Indonesia and Bermuda apart fromIndia. Birla Sun Life Mutual
Fund follows a conservative long-term approach toinvestment.
Recently it crossed AUM of Rs. 10,000 Crore.Bank of Baroda
Mutual FundBank of Baroda Mutual Fund or BOB Mutual Fund
was setup on October30, 1992 underthe sponsorship of Bank of
Baroda. BOB Asset Management Company Limited is theAMC
of BOB Mutual Fund and was incorporated on November5,
1992. Deutsche BankAG is the custodian.HDFC Mutual
FundHDFC Mutual Fund was setup on June 30, 2000 with two
sponsors namely HousingDevelopment Finance CorporationLimited and Standard Life Investments Limited.HSBC Mutual
FundHSBC Mutual Fund was setup on May 27, 2002 with HSBC
Securities and CapitalMarkets (India) Private Limited as the
sponsor. Board of Trustees, HSBC Mutual Fundacts as the
Trustee Company of HSBC Mutual Fund.ING Vysya Mutual
FundProjectsformba.blogspot.com
y 36. ING Vysya Mutual Fund was setup on February 11, 1999with the same named TrusteeCompany. It is a joint venture of
Vysya and ING. The AMC, ING InvestmentManagement (India)
Pvt. Ltd. was incorporated on April 6, 1998.Prudential ICICI
Mutual FundThe mutual fund of ICICI is a joint venture with
Prudential PLC of America; one of thelargest life insurance
companies in the US of A. Prudential ICICI Mutual Fund was
setupon 13th of October 1993 with two sponsors, Prudential
PLC. and ICICI Ltd. The TrusteeCompany formed is Prudential
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ICICI Trust Ltd. and the AMC is Prudential ICICI
AssetManagement Company Limited incorporated on 22nd of
June 1993.Sahara Mutual FundSahara Mutual Fund was set up
on July 18, 1996 with Sahara India Financial CorporationLtd. as
the sponsor. Sahara Asset Management Company Private
Limited incorporated onAugust 31, 1995 works as the AMC of
Sahara Mutual Fund. The paid-up capital of theAMC stands at
Rs 25.8 crore.State Bank of India Mutual FundState Bank of
India Mutual Fund is the first Bank sponsored Mutual Fund to
launchoffshore fund, the India Magnum Fund with a corpus of
Rs. 225 cr. approximately. Todayit is the largest Bank sponsored
Mutual Fund in India. They have already launched 35Schemes
out of which 15 have already yielded handsome returns to
investors. State Bankof India Mutual Fund has more than Rs.
5,500 Crore as AUM. Now it has an investor baseof over 8 Lakhs
spread over 18 schemes.Projectsformba.blogspot.com
y 37. Tata Mutual FundTata Mutual Fund (TMF) is a Trust underthe Indian Trust Act, 1882. The sponsor for TataMutual Fund is
Tata Sons Ltd., and Tata Investment Corporation Ltd. The
investmentmanager is Tata Asset Management Limited and its
Tata Trustee Company Pvt. Limited.Tata Asset Management
Limiteds is one of the fastest in the country with more than
Rs.7,703 Crore (as on April 30, 2005) of AUM.Kotak MahindraMutual FundKotak Mahindra Asset Management Company
(KMAMC) is a subsidiary of KMBL. It ispresently having more
than 1,99,818 investors in its various schemes. KMAMC started
itsoperations in December 1998. Kotak Mahindra Mutual Fund
offers schemes catering toinvestors with varying risk - return
profiles. It was the first company to launch dedicatedgilt scheme
investing only in government securities.Reliance Mutual
FundReliance Mutual Fund (RMF) was established as trust under
Indian Trusts Act, 1882. Thesponsor of RMF is Reliance Capital
Limited and Reliance Capital Trustee Co. Limited isthe Trustee.
It was registered on June 30, 1995 as Reliance Capital Mutual
Fund, whichwas changed on March 11, 2004. Reliance Mutual
Fund was formed for launching ofvarious schemes under which
units are issued to the Public with a view to contribute to
thecapital market and to provide investors the opportunities to
make investments indiversified securities.Standard Chartered
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Mutual FundStandard Chartered Mutual Fund was set up on
March 13, 2000 sponsored by StandardChartered Bank. The
Trustee is Standard Chartered Trustee Company Pvt. Ltd.
StandardProjectsformba.blogspot.com
y 38. Chartered Asset Management Company Pvt. Ltd. is the AMCwhich was incorporated withSEBI on December
20,1999.Franklin Templeton India Mutual FundThe group,
Franklin Templeton Investments is a California (USA) based
company with aglobal AUM of US$ 409.2 bn. (as of April 30,
2005). It is one of the largest financialservices groups in the
world. Investors can buy or sell the Mutual Fund through
theirfinancial advisor or through mail or through their website.
They have Open endDiversified Equity schemes, Open end
Sector Equity schemes, Open end Hybrid schemes,Open end Tax
Saving schemes, Open end Income and Liquid schemes, Closed
end Incomeschemes and Open end Fund of Funds schemes to
offer.Morgan Stanley Mutual Fund IndiaMorgan Stanley is a
worldwide financial services company and its leading in the
marketin securities, investment management and credit services.
Morgan Stanley InvestmentManagement (MISM) was
established in the year 1975. It provides customized
assetmanagement services and products to governments,
corporations, pension funds and non-profit organizations. Itsservices are also extended to high net worth individuals and
retailinvestors. In India it is known as Morgan Stanley
Investment Management Private Limited(MSIM India) and its
AMC is Morgan Stanley Mutual Fund (MSMF). This is the
firstclose end diversified equity scheme serving the needs of
Indian retail investors focusing ona long-term capital
appreciation.Escorts Mutual FundEscorts Mutual Fund was setup
on April 15, 1996 with Escorts Finance Limited as itssponsor.
The Trustee Company is Escorts Investment Trust Limited. Its
AMC wasincorporated on December 1, 1995 with the name
Escorts Asset Management
Limited.Projectsformba.blogspot.com
y 39. Benchmark Mutual FundBenchmark Mutual Fund was setupon June 12, 2001 with Niche Financial Services Pvt.Ltd. as the
sponsor and Benchmark Trustee Company Pvt. Ltd. as the
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Trustee Company.Incorporated on October 16, 2000 and
headquartered in Mumbai, Benchmark AssetManagement
Company Pvt. Ltd. is the AMC.Can bank Mutual FundCan bank
Mutual Fund was setup on December 19, 1987 with Canara Bank
acting as thesponsor. Can bank Investment Management Services
Ltd. incorporated on March 2, 1993is the AMC. The Corporate
Office of the AMC is in Mumbai.Chola Mutual FundChola
Mutual Fund under the sponsorship of Cholamandalam
Investment & FinanceCompany Ltd. was setup on January 3,
1997. Cholamandalam Trustee Co. Ltd. is theTrustee Company
and AMC is Cholamandalam AMC Limited.LIC Mutual
FundLife Insurance Corporation of India set up LIC Mutual Fund
on 19th June 1989. Itcontributed Rs. 2 Crore towards the corpus
of the Fund. LIC Mutual Fund was constitutedas a Trust in
accordance with the provisions of the Indian Trust Act, 1882. .
The Companystarted its business on 29th April 1994. The
Trustees of LIC Mutual Fund have appointedJeevan Bima
Sahayog Asset Management Company Ltd as the Investment
Managers forLIC Mutual Fund.GIC Mutual FundGIC Mutual
Fund, sponsored by General Insurance Corporation of India
(GIC), aGovernment of India undertaking and the four Public
Sector General InsuranceCompanies, viz. National Insurance Co.
Ltd (NIC), The New India Assurance Co.
Ltd.Projectsformba.blogspot.com
y 40. (NIA), The Oriental Insurance Co. Ltd (OIC) and UnitedIndia Insurance Co. Ltd. (UII)and is constituted as a Trust in
accordance with the provisions of the Indian Trusts
Act,1882.Projectsformba.blogspot.com
y 41. (B) COMPANY INFORMATION1. HISTORYNJIndiaInvest Pvt. Ltd. is one of the leading advisors and
distributors of financialproducts and services in India.
Established in year 1994, NJ has over a decade of richexposure
in financial investments space and portfolio advisory services.
From a humblebeginning, NJ over the years has evolved out to
be a professionally managed, qualityconscious and customer
focused financial / investment advisory & distribution firm. NJ
prides in being a professionally managed, quality focused and
customer centricorganization. The strength of NJ lies in the
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strong domain knowledge in investmentconsultancy and the
delivery of sustainable value to clients with support from cutting-
edgetechnology 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 has over INR30 billion* of mutual
fund assets under advice with a widepresence in over 135
locations* in 21states* in India. The numbers are reflections of
thetrust, commitment and value that NJ shares with its clients. NJ
Wealth Advisors, a division of NJ, focuses on providing financial
planning andportfolio advisory services to premium clients of
high net-worth. At NJ Wealth Advisors,we have developed
processes that focus on providing the best in terms of the advice
andthe ongoing management of your portfolio and financial
plans. At NJ, our experience, knowledge and understanding
enables us to provide you withthe expected value, in an enhanced
way. As a leading player in the industry, we continueto
successfully meet the expectations of our clients, through
meaningful andcomprehensive solutions offered by NJ Wealth
AdvisorsProjectsformba.blogspot.com
y
42. 2.VISION & MISSION OF NJ India invest VisionTo be theleader 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. Toprovide solutions which
meet expectations and maintain high professional &
ethicalstandards along with the adherence to the service
commitments3.PHILOSOPHYAt NJ our Service and Investing
philosophy inspire and shape the thoughts, beliefs,attitude,
actions and decisions of our employees. If NJ would resemble a
body, ourphilosophy 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-termimprovements and value-
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additions to meet the needs in an exceptional way. In our
effortsto consistently deliver the best service possible to our
customers, all employees of NJ willmake 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 customers needsProjectsformba.blogspot.com
y 43. bring energy, passion & excellence in everything we do behonest and ethical, in action & attitude, and keep the customers
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 ourefforts 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 Constantmonitoring 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 ourservice
and investing philosophy with commitment and without
exceptions.4.MANAGEMENTThe management at NJ brings
together a team of people with wide experience andknowledge in
the financial services domain. The management provides
direction andguidance to the whole organisation. The
management has strong visions for NJ as aglobally respected
company providing comprehensive services in financial
sector.The Customer First philosophy in deeply ingrained in the
management at NJ. The aimof the management is to bring the
best to the customers in terms of Range of products and
services offered Quality Customer
ServiceProjectsformba.blogspot.com
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y 44. All the key members of the organisation put in great focus onthe processes & systemsunder the diverse functions of business.
The management also focuses on utilizingtechnology as the key
enabler for all the activities and to leverage the technology
forenhancing overall customer experience.The key members of
the management are:Mr. Neeraj Choksi Jt. Managing
DirectorMr. Jignesh Desai Jt. Managing DirectorSales Team:Mr.
Misbah Baxamusa National HeadMr. Naveen Rathod
V.P.Executive Team:Mr. Shirish Patel Information
TechnologyMr. Vinayak Rajput Finance & OperationsMr.
Abhishek Dubey Marketing & DevelopmentMr. Viral Shah
ResearchMr. Dhaval Desai Human Resources5.SERVICE
STANDARDSService in words, service in actionService is the
key to unlocking customer satisfaction, which again is key for
sustainabilityof any business. At NJ we understand this very
well. NJ has set strict processes in place todeliver quality services
to customers. At NJ strict quality service standards are set and
awell-defined process is established and followed religiously by
our quality customerservice 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
givessignificant focus to the proper training and development of
the people involved in theservice delivery chain.Further
we,Projectsformba.blogspot.com
y 45. Have well-defined "Privacy Policy" to keep clientsinformation confidential & internal audits done on the same at
regular intervals Receive various statistics which are analyzed
on an ongoing basis to improve the service standardsWe are
committed to improve and enhance our services and undertake
new serviceinitiatives. Such and other services differentiate us
with other service providers in theindustry.Our Service
Commitments The service commitments are to guide the
actions of the people at NJ. Clearly stated,customers can freely
communicate any such actions/events wherein they feel that any
ofthe following commitments have been breached /
compromised. At NJ we desire to honourour commitments at all
points of time and to all our customers without any bias. To
provide customer-focussed need-based valued services To
provide reliable, accurate and timely information To maintain
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all records in privacy To optimize services/benefits at least
justifiable cost To develop and grow the customers business
To provide constructive after sales service To honour our
service commitments6.PRODUCTS Life Vista Life is counted
not in years, but in moments. Moments of truth, joy, achievement
and satisfaction. Of peace, tranquility, and freedom. At NJ, we
bring such moments to life.Connecting GoalsLife Vista is for
individuals who are looking for goal oriented planning. The
client wouldtypically have a family, with multiple goals directed
at meeting the obligations/goals inlife. Meeting obligations like
education and marriage of children, meeting basic needs
likepurchase of property, or business assets, would ideally be on
agenda for such clients.Retirement planning would also be an
important goal in life along with securing the futurefor those
dependent.Projectsformba.blogspot.com
y 46. Process of Connecting Goals With Life Vista we take theonus to help you achieve your goals in life. Our teamwould
undertake a detailed financial planning exercise for you. An ideal
personalised,financial plan would then be recommended after
detailed study. The team would thenconstantly monitor the
progress of your plan. Any changes in the environment that
mayhappen during the interim period would be incorporated into
your plan. At Life Vista ourobjective is to connect you with yourgoals and your dreams with reality.How we can help youWe will
do a detailed study of your goals and objectives in life and would
help you bydevising a comprehensive plan to help you achieve
them. We would also regularly monitoryour plans to make sure
that you are always on track to achieve your goals. Asset Vista
Wealth is not an end. Neither is it a beginning. Wealth is a
process, a journey. A journey of power, achievement and
responsibility . At NJ we ensure that this journey continues and
grows.Projectsformba.blogspot.com
y 47. Creating Wealth Asset Vista is ideal for individuals orcorporates looking for portfolio managementservices. Typically,
the client would have sizeable investments made into multiple
assetsand/or products. The need for Asset Vista may arise due to
time constraints, the size of theinvestments, or the need for
professional advice. The objective may be to have
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difficult.As investors we often may feel the lack of time and
energy to undertake monitoring andmanaging of our investments
in multiple avenues. This requires both dedicated efforts
andskills in portfolio management.At NJ Wealth Advisors we
realise the need for quality, unbiased portfolio advisoryservices.
At NJ we would aim to manage your portfolio with a superior,
time tested andmuch effective way of Asset Allocation keeping
in mind your risk profile.At NJ Wealth Advisors we offer you
with quality Portfolio Advisory Services underthe product
Asset Vista. Consolidated ReportingQuality online Wealth
Account: As a premium client you would have access to one of
the best online investmentaccounts that offer comprehensive
reports, many of which are unique in nature and givevaluable
insights on our investmentsProjectsformba.blogspot.com
y 50. Our online Wealth Account covers almost all the investmentavenues that you mayhave: Mutual Funds All AMCs, All
Schemes Direct Equity Life Insurance Physical Assets
Gold and Property Private Equity Business Debt Products o
Bank Deposits and Company Deposits o RBI / Infrastructure
Bonds o Postal Savings KVP, MIS, NSC o Debentures o Small
Savings PPF, NSS You would have access to Consolidated Net
Asset Reports which would give youa single view of all your
investments into different avenues as given above.Further, withineach of the Asset class we have many more reports and utilities.
Some ofthe reports covered are Consolidated:Consolidated
Asset Allocation, Consolidated Net Asset, Interest Income, Profit
& LossMutual Funds:Valuation, Transaction, Profit & Loss,
Performance, Portfolio reports like - AMC /Sector / Equity /
Credit / Debt Exposure, Weighted Average Maturity, Dividend
history,etcDirect Equity:Demat accounts, Transaction, Valuation,
Profit & LossLife Insurance:Policy Report, Premium Reminder,
Cash FlowDebt:Transaction, Interest Income, Maturity reports
for different AsseProjectsformba.blogspot.com
y 51. 8. 360 ADVISORY PLATFORM NJ believes in 360 Advisory Platform philosophy With this philosophy, we try
to offer all possible products, services and support which
anAdvisor would need in his business.The support functions are
generally in the following areas Business Planning and
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Strategy Training and Development Self and of employees
Products and Service Offerings Business Branding Marketing
Sales and Development Technology Advisors Resources -
Tools, Calculators, etc.. Research
CommunicationsProjectsformba.blogspot.com
y 52. With this comprehensive supporting platform, the NJ FundzPartners stays ahead of thecurve in each respect compared to
other Advisors/competitors in the market.Needless to say, the
complete NJ Fundz offering is hard to resis (C) RESEARCH
METHODOLOGY 1. RESEARCH PROBLEM:To know
investors behavior regarding mutual fund as an investment
avenue.2. RESEARCH OBJECTIVES (PRIMARY) : To know
investors behavior regarding mutual fund as an investment
avenue. RESEARCH OBJECTIVES (SECONDARY) To
identify the objectives of the investors for investing in a mutual
fund. To identify the investment patterns of investors. To find
out which scheme is better according to investors. To study
investors perceptions about level of satisfaction while investing
in mutualfunds.3. RESEARCH PLAN : DATA SOURCE We
have used primary data source to collect the data regarding
investors behavior formutual fund as an investment avenue. The
survey was conducted across jammu. RESEARCH APPROACH
Survey approach was under taken to know the behavior ofinvestor regarding mutualfund as an investment avenue.
RESEARCH INSTRUMENTProjectsformba.blogspot.com
y 53. Questionnaire was the instrument of collectingdataSAMPLING PLAN Sample unit: All the investors who are
occasionally or regularly investing in financialassets and non-
financial assetsSample size: Survey population comprises of the
total reputed businessman, Professionals, andindividual investor
was approx 70.Sampling method:In this study as suggested by
the company a sample of reputed Businessman,Professionals, and
individual investors was selected and it was selected through
non-probability, convenience sampling method. Because all the
Businessman, Professionals,and individual investors could not
be interviewed as per our requirement but according totheir
availability and accessibility we meet them.Contact methodThe
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total sample size for survey was 70 investors by personal
interviewProjectsformba.blogspot.com
y 54. 4. SURVEY ANALYSIS AND INTERPRETATION:GenderThere are 15 females and 55 males as respondents male
55 female 15 Gender of respondents(% ) 21% males females
79%Projectsformba.blogspot.com
y 55. Q1 what is your age? AGEPARTICULARS NO.20-30 2030-40 2540-50 1350-60 1060-ABOVE 2TOTAL 70 From the above
table we can say that awareness for investment in youngster has
been increased & thats why out of 70, 20 are youngster who do
investment and they come in the age group of 20-30, then comes
age group of30-40 from which 25people do investment and
other age group are 40-50 where they do investment of 13, 10
belongs to age group of50-60 they do the investment, and 2
belongs to the age group of60-above they do their investment.
We can say that youngsters are more careful for their
investment.Q2 what is your profession?
PROFESSIONPARTICULARS NO.BUSINESS4JOB IN
PRIVATE SECTOR 14JOB IN PUBLIC SECTOR35OTHERS
17TOTAL 100Projectsformba.blogspot.com
y 56. Now 70 people doing investment out of which 35 people arefrom public sector, 14 arefrom private sector, 4 are having their
business and 17 are others which include retiredpeople,
housewives and student. Reason for investment by all people was
to secure thefuture and reason given by people doing the job in
private was their higher salary andunsecured
job.Projectsformba.blogspot.com
y 57. Q3 Do you invest in mutual fund ? PARTICULARS YES 21NO 49 TOTAL 70From 70 people 21 of them are doing
investment in mutual fund and 49 of them are notinvesting in
mutual fund but they do investment in other sectors for which
information isgiven in the next question.Q4 If you are not
investing in mutual fund then where do you invest (in
proportion)? INVESTMENT PROPORTION EXCEPT
MF?PARTICULARS NOINSURANCE 40EQUIYTY
MARKET 10GOVT. SCHEME 30REAL ESTATE
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5COMMODITIES 15TOTAL 100.00People who were not
investing in mutual fund they do invest in sectors like
insurance,equity market, government schemes (includes banks,
bonds &other scheme ), real estate,commodities even people
those who do invest in mutual fund they also invest in
differentsectors. Out of 100%, 10% people do invest in equity
market, 40% invest in insurance,30% in government scheme, 5%
do invest in real estate and 15% do invest incommodities. People
do invest in equity market due to higher returns available in
it.Projectsformba.blogspot.com
y 58. Q5 Rank the company according to your preference from top(1) to bottom (11)?RANK THE MF FROM TOP 1 TO
BOTTOM 11?PARTICULARS NORELIANCE 11BIRLA
3TATA 3LOTUS 0SBI 31HDFC 0ICICI 21FRANKLIN TEMP.
0SUNDARAM 0UTI 1BENCHMARK 0TOTAL 70People who
were investing in mutual fund had given the rank to different
mutual fundcompanies on the basis of what they think about that
particular company and had givenranks to different companies.
Here in this data 31 people had given SBI as 1 st rank and
thesecond highest is ICICI where 21 people has given it as 1st
rank and the reasons behindgiving 1st rank were their return,
good credit in market and tax saving benefit.Q6 Do you compare
the returns or other benefits of mf schemes before investing?ANNUAL REPORT CHECKINGPARTICULARSYES 28NO
42TOTAL 70It is necessary to compare the returns and other
benefits because people do invest in forhigher returns so they
compare with other companies also. Here 28 people compare
theProjectsformba.blogspot.com
y 59. returns and other benefits of mutual fund scheme before aswell as after investing to seehow their investment is spread over
in different segments.Q7 which factors do you consider while
investing in mutual fund? SAFETYPARTICULARS NOEXT.
IMP. 48IMPORTANT 22NEUTRAL 0UNIMPORTANT 0EXT.
UNIMP 0TOTAL 70Investors consider different factors before
investment and for many reasons they invest indifferent scheme
of mutual fund. Here reason for investment is safety of their
money andsafety of their future so 48 people consider it ext
important, while 22 people says itsimportant for their
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investment.Many people consider very important to invest in
mutual fund to save tax or to take taxbenefit. Therefore 37 people
consider it as ext important to invest in tax saving schemewhile
32 people consider it as important for investment,1 person is
neutral about it, andnobody consider it as unimportant and ext
unimportant.Projectsformba.blogspot.com
y 60. RETURN EARNINGSPARTICULARS NOEXT. IMP.26IMPORTANT 44NEUTRAL 0UNIMPORTANT 0EXT.
UNIMP 0TOTAL 70Generally people invest in mutual fund
companies for higher returns with less risk ascompare equity
market and could able to earn good returns.26 people agree that
they doinvest in mutual fund for higher returns and consider it as
ext important, 44 investors areconsidering it as important .
LIQUIDITYPARTICULARS NOEXT. IMP. 6IMPORTANT
34NEUTRAL 25UNIMPORTANT 5EXT. UNIMP 0TOTAL
70Above graph reveals that some of the investors means 6 are
giving liquidity moreemphasis because by the way of open ended
scheme they can any time liquid theirposition, 5 investors had
given negative response about it while 34 of the investors
aregiving them least importance and 25 are neutral to
itProjectsformba.blogspot.com
y 61. Q8 How do you monitor the following. NAVPARTICULARS NOMONTHLY 20QUARTELY 26HALF
YEARLY 12YEARLY 7NEVER5TOTAL 70NAV is the net
asset value of your investment in units that comes of every week
by thisyou can come to know how much of your investment has
been increased so it becomesnecessary to monitor but period of
monitoring depends on investor. Here 20 of investor domonitor
monthly, 26 of investors monitors quarterly, 12 monitor half
yearly, 7 monitoryearly,5 never monitor. RISK FACTOR
PARTICULARS NOMONTHLY 14QUARTELY 26HALF
YEARLY 21YEARLY 5NEVER4TOTAL 70Risk factor is
necessary to be monitor at certain time period though there is not
much riskin investing in mutual fund as compare to equity
investment but monitoring is necessary tocheck the returns and
see that the managed properly. Here 14 of investors monitor
itmonthly, 26 of investors monitor it quarterly, 21 do half early
yearly and 5 do monitorProjectsformba.blogspot.com
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y 62. yearly. Risk factor is monitored before investment also tocheck the scheme and to see
itsperformance.Projectsformba.blogspot.com
y 63. PORTFOLIO OF SECURITIES PARTICULARSNOMONTHLY 9QUARTELY 14HALF YEARLY 25YEARLY
15NEVER 7TOTAL 70Portfolio for securities means where the
co invest in different sectors as it is decided inadvance so after
making decision the AMC invest accordingly and it is been
monitoredproper time period as required, 9 of investor do
monitor monthly, 14 of investor monitorquarterly, 25 do half
yearly, most probably 15 of investors monitor it yearly and 7
nevermonitor. Investor check out portfolio to see where their
money is being invested. PROFILE OF FUND MANAGER
PARTICULARS NOMONTHLY 1QUARTELY4HALF
YEARLY 15YEARLY 28NEVER 22TOTAL 70Fund manager
is the person who manage the fund of investor who had invested
theirmoney in their company it is necessary that the fund
manager should be qualified enoughto manager the fund of the
investor because if he fails to manage the fund the
investorsmoney is not secure. So 1 investor monitor profile
monthly, 4 do quarterly, 28 do yearlyand 22 never monitor the
profile. Generally investors monitors the profile
beforeinvesting.Projectsformba.blogspot.com
y 64. Q9 Do you check out the annual reports of your scheme toevaluate the performance of your scheme? ANNUAL REPORT
CHECKINGPARTICULARSYES 61NO 9TOTAL 70In the
annual report of the scheme all the information of that particular
scheme are giveninformation about the performance of the
scheme, position of the scheme in the market,portfolio of the
scheme that where the investment has been done under this
scheme, profileof the fund manager is also given by this the
investors can come to know the position andqualification of the
fund manager. So most of the investors are monitoring the
annualreport.61 investors do monitor the annual report of the
scheme, 9 do not monitor theannual
report.Projectsformba.blogspot.com
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y 65. Q10 Objectives for investment in mutual fund schemes (rankthem from 1most preferred to 4 leastpreferred).OBJECTIVES
FOR INVESTMENTPARTICULARS RANK 1 RANK 2 RANK
3 RANK4 TOTALRETURN/DIVIDEND 1534 21 0
70APPRECIATION 13 26 30 1 70TAX 42 10 17 1
70LIQUIDITY 0 0 2 68 70TOTAL 70 70 70 70Here in this
question the investors have ranked the factors on the basis of
their objectivesthat for what reason they had invested in that
particular scheme. 15 of investors had givenreturn/dividend 1st
rank because every investor want benefits for the risk they had
taken byinvesting in that scheme, 13 of investors had given
appreciation 1st rank because they wantsomething more
including their invested amount.42 of investor has given tax
saving as 1strank because while investing in some particular
scheme their amount invested isappreciated as well as they get
the tax benefit,0 has given 1st rank to liquidity
..Projectsformba.blogspot.com
y 66. 5. LIMITATION OF THE STUDY: Every research has itsown limitation and present research work is no exception to this
general rule the inherent limitation of the study are as under:
Interview method, which was followed in the present research
work, is relatively more time consuming. In addition to this it is
very expensive method, especially when spread geographicsample is taken. Questionnaire method can be used only when
respondents are literate and co-operative. Sample size was 70
that are not enough to study the awareness of Independent
individuals. As sampling techniques is convenient sampling so it
may result in personal bias. Even respondent give bias answers.
Time is main constraint of the research as we have been given
project as well as study
simultaneously.Projectsformba.blogspot.com
y 67. 6.FINDINGS AND RECOMMENDATIONS :From theabove analysis, I found that even though certainly not the best or
deepest ofmarkets in the world, it has ignited the growth rate in
mutual fund industry to providereasonable options for an
ordinary man to invest his savings.With the help of Give more
importance to safety and return attributes because Independent
Financial Advisors are more concern about safety and of giving
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more benefit of the investments to their clients. Independent
Financial Advisors who are not suggesting their clients to invest
in mutual funds due to their lack of knowledge of mutual funds.
So, NJ India Invest should ar- range mutual fund awareness
Program of their and other independent Financial Advi- sors on
regular basis. By providing better service NJ India Invest should
try to attract the Independent Finan- cial Advisors to join with
them. NJ India Invest should arrange special mutual fund
awareness program for gener- al public. So they can directly
work with NJ India Invest as direct client. Majority of the
Government employees take into consideration tax benefits
before mak- ing any investment. So NJ India Invest should
highlight tax benefits in mutual funds. NJ India Invest should
launch its brand awareness campaign to be successful in Mutual
fund advisory service providero NJ India invest should also
concentrate on youngster who are interested in savings so make
them aware about different schemes for investment and arrange
seminars for col- lege going students, by this company gets more
customers connected for long period.o Put hoardings outside the
colleges making NJ INDIA known to them and try to attract
them.Projectsformba.blogspot.com
y 68. Key Findings: - Around 50% of the investors invest tomaximize their returns and they are ready to take moderate risksin their investment portfolio. Most of the investors give
importance to the fact that their investment should grow in value
over a period of time. Growth scheme is the most preferred for
investment Knowledge about mutual funds and their various
schemes is moderate among in- vestors. It is necessary to make
Mutual Fund more popular in the eyes of investors as well as
distributors and also cater trust which has been lost due to US-
64. Most of the investors give importance to return, tax saving
etc. Objectives of the investor are to get something in return for
their investment and the risk they are taking. Here the objective
of the investor between the age of 20-30 is to earn the higher
return. While the age group above 30years concentrates on
safety and tax saving and they even take care of the
liquidity.Projectsformba.blogspot.com
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y 69. BIBLIOGRAPHYBooks referred Ch 9 and Ch 10 fromDavid J. Luck & Ronald S. Rubin, 2003, Marketing Research,
Prentice Hall of India Pvt. Ltd, New Delhi chap-3 from Mutual
Fund in INDIA by Nalini Prava Tripathy, pg no37-84 publication
house Excel books. NJ India Invest monthly fact file.Web
Siteswww.amfi.comwww.indiainfoline.comwww.njindiainvest.c
omwww.mutualfundsearchonline.comProjectsformba.blogspot.c
om