Project Per for Mane Mutual Funds

8/7/2019 Project Per for Mane Mutual Funds

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1

Performance OfIndian Mutual Fund

Industry


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Contents

Chapter Page Number

Introduction 3

Industry overview 5

Review of Literature 13

Study and Analysis 36

Mutual Fund Evaluation Parameters 39

Comparison between two companies 44

Conclusion 48

Bibliography 49

Introduction

2 Performance Of Indian

Mutual Fund Industry


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The most important factor shaping in today's global economy is the process of globalization.Indian companies are moving in search of low-cast markets, technology is driving growth inproduction and competition is becoming more intense. A second factor is the fastest growth inprivate capital flows, mainly short-term flows by banks and financial institutions, portfolio flowsby mutual funds and pension funds and foreign direct investment into India. A third factor is the

increasing share of India and other emerging market economies in world trade.

The outburst in communication technology has led to greater integration of Indian financialmarkets across the world. The impact of these changes could be felt from the extremely buoyantactivity in Indian stock markets. A number of foreign financial service providers have enteredinto the Indian financial market like Morgan Stanley, Templeton, and Goldman Sachs. CurrentlyFII investment is at $ 6.5 Billion compared to $ 2 Billion in 2001. The stock market is boomingwith Sensex hovering around 16000-17000. SEBI has put in place appropriate guidelines andcontrols to regulate the markets in tune with the changing environment and attendant risks. Allthis is happening because of large amounts of investment in the country

People often invest in various asset classes to:

* To beat Inflation* To fund future needs* To meet contingencies* To maintain same standard of living after retirement

All these factors matters a lot to the investors and the mutual fund route is one way throughwhich people can meet these needs.

MUTUAL FUNDS:

A mutual fund is nothing more than a coming together of a group of investors like you whocontribute different sums of money to make up a large lump sum. The money collected isinvested by the fund manager in stocks, bonds and other securities - across companies, industriesand sectors and in some cases, across countries as well. As an investor, you are issued units inproportion to the money invested. Since you own units of the fund, it makes you less reliant onthe success or failure of any individual stock, which would have been the case if you hadinvested directly in the shares of a single company.

The mutual fund will have a fund managerthat trades the pooled money on a regular basis.Currently, the worldwide value of all mutual funds totals more than $26 trillion

NEED FOR THE STUDY


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The main purpose of doing this project was to know about mutual fund and its functioning. This

helps to know in details about mutual fund industry right from its inception stage, growth and

future prospects.

It also helps in understanding different schemes of mutual funds. Because my study depends

upon prominent funds in India and their schemes like equity, income, balance as well as the

returns associated with those schemes.

The project study was done to ascertain the asset allocation, entry load, exit load, associated with

the mutual funds. Ultimately this would help in understanding the benefits of mutual funds to

investors.

SCOPE OF THE STUDY

In my project the scope is limited to some prominent mutual funds in the mutual fund industry. I

analyzed the funds depending on their schemes like equity, income, balance. But there is so

many other schemes in mutual fund industry like specialized (banking, infrastructure, pharmacy)

funds, index funds etc.

My study is mainly concentrated on equity schemes, the returns, in income schemes the rating of

CRISIL, ICRA and other credit rating agencies.

OBJECTIVE

To give a brief idea about the benefits available from Mutual Fund investment

To give an idea of the types of schemes available.

To discuss about the market trends of Mutual Fund investment.

To study some of the mutual fund schemes and analyse them

Observe the fund management process of mutual funds

Explore the recent developments in the mutual funds in India

To give an idea about the regulations of mutual funds

METHODOLOGY

To achieve the objective of studying the stock market data has been collected.

Research methodology carried for this study can be two types

1. Primary

2. Secondary

PRIMARY:

The data, which has being collected for the first time and it will be the original data..




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SECONDARY:

The secondary information is mostly taken from websites, books, journals, etc.

Limitations

The study is limited to selected mutual fund schemes.

The lack of information sources for the analysis part.

The study is limited to the different schemes available under the mutual funds selected.

The time constraint was one of the major problems.

MUTUAL FUNDS INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund

by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987

when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had

seen a dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly

of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn.

The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till

April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than

the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indianbanking industry. The main reason of its poor growth is that the mutual fund industry in India is

new in the country. Large sections of Indian investors are yet to be intellectuated with the

concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product

correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the development of

the sector. Each phase is briefly described as under.

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the

Reserve Bank of India and functioned under the Regulatory and administrative control of the




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Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development

Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The

first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700

crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual

Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov

89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in

1990. The end of 1993 marked Rs.47,004 as assets under management.

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 the year in

which the first Mutual Fund Regulations came into being, under which all mutual funds, except

UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with

Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and

revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual

Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds settingup funds in India and also the industry has witnessed several mergers and acquisitions. As at the

end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The

Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other

mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the

Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January

2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and

under the rules framed by Government of India and does not come under the purview of the

Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered




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with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the

erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the

setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with

recent mergers taking place among different private sector funds, the mutual fund industry has

entered its current phase of consolidation and growth. As at the end of September, 2004, there

were 29 funds, which manage assets of Rs.153108 crores under 421 schemes

Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and

1987 marked the existance of only one mutual fund company in India with Rs. 67bn assets under

management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end

of the 80s decade, few other mutual fund companies in India took their position in mutual fund

market.The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual

Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual

Fund.

The succeeding decade showed a new horizon in indian mutual fund industry. By the end of

1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started

penetrating the fund families. In the same year the first Mutual Fund Regulations came into

existance with re-registering all mutual funds except UTI. The regulations were further given a

revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has nowmerged with Franklin Templeton. Just after ten years with private sector players penetration, the

total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

Major Mutual Fund Companies in India

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup 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 November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual

Fund


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Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial.

Sun Life Financial is a golbal organisation evolved in 1871 and is being represented in Canada,

the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual

Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs.

10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the

sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB

Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing

Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets

(India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee

Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee

Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management

(India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest

life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of8 Performance Of Indian

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October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formed

is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company

Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as

the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31,

1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs

25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund,

the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Banksponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have

already yielded handsome returns to investors. State Bank of India Mutual Fund has more than

Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata

Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager

is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset

Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as onApril 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

presently having more than 1,99,818 investors in its various schemes. KMAMC started its

operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors

with varying risk - return profiles. It was the first company to launch dedicated gilt scheme

investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI


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Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI Asset Management

Company presently manages a corpus of over Rs.20000 Crore. The sponsorers of UTI Mutual

Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and

Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds,

Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The

sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the

Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed

on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under

which units are issued to the Public with a view to contribute to the capital market and to provide

investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard

Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard

Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI

on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based company with a globalAUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in

the world. Investors can buy or sell the Mutual Fund through their financial advisor or through

mail or through their website. They have Open end Diversified Equity schemes, Open end Sector

Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income

and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the market in

securities, investmenty management and credit services. Morgan Stanley Investment

Management (MISM) was established in the year 1975. It provides customized asset

management services and products to governments, corporations, pension funds and non-profit

organisations. Its services are also extended to high net worth individuals and retail investors. In

India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and


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its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity

scheme serving the needs of Indian retail investors focussing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its sponsor.

The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on

December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital

Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt.

Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office

in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as

the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated

on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company

Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor.

Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The

Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company

Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and

AMC is Cholamandalam AMC Limited.

LIC Mutual Fund




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Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed

Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in

accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business

on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog

Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of

India undertaking and the four Public Sector General Insurance Companies, viz. National

Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co.

Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance

with the provisions of the Indian Trusts Act, 1882.

REVIEW OF LITERATURE:


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India's Real Estate Mutual Funds and Other New Developments: The Story So Far

Talat Ansari,Deepak Nambiar,Ila Kapoor. The Real Estate Finance Journal. Boston: Fall

2008. Vol. 24, Iss. 2; pg. 57

Abstract (Summary)

The Indian real estate market has never looked better. India's booming economy, coupled with aliberalized foreign direct investment ("FDI") policy and a growing middle class with easy accessto bank loans, have all accelerated the growth of India's real estate market. Historically, except incertain limited instances, investment in real estate by non-Indians was prohibited by the Indiangovernment. However, starting March 2005, the Indian government has permitted 100% FDI intownships, housing and built-up infrastructure and construction projects. While the slowing

global economy has taken a toll on India and slowed the flow of funds into the Indian real estatemarket, the long term prospects offered by this sector remain promising. In addition to traditionalforeign direct investment schemes, investors can now avail of real estate mutual funds (REMFs)as a new vehicle of investment. REMFs in India can invest directly or indirectly into real estateassets.

Indexing (document details)

Subjects: Economic growth, Real estate, Mutual funds, Foreign investment,

Regulation

Classification

Codes

9179 Asia & the Pacific, 8360 Real estate, 3400 Investment analysis &

personal finance, 1300 International trade & foreign investment,

4310 Regulation

Locations: India

Author(s): Talat Ansari, Deepak Nambiar, Ila Kapoor

Document types: Feature

Document

features:

References

Publication title: The Real Estate Finance Journal. Boston: Fall 2008. Vol. 24, Iss. 2; pg. 57

Source type: Periodical


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ISSN: 08980209

ProQuest

document ID:

1553506541

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Your Money Matters (A Special Report); Heading East: Mutual funds have been rolling

out new products that target India; That has been great for investors -- until recently

Shefali Anand. Wall Street Journal. (Eastern edition). New York, N.Y.: Apr 21, 2008. pg. R.5


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Abstract (Summary)

Despite these challenges, money managers point out that unlike China, India has a lowerdependence on exports to the U.S. as a percentage of its gross domestic product, which may helpto partially insulate it from a U.S. economic slowdown. Closed-end funds issue a set number ofshares and, depending on supply and demand, can trade at a price different from the net assetvalue of the fund.

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Full Text (1100 words)

(c) 2008 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further

reproduction or distribution is prohibited without permission.

Even as foreign markets tumble amid the U.S. financial crisis, mutual-fund companies are rollingout products to invest in what had been, until recently, one of hottest markets overseas: India.

Four new investments providing exposure to India have been launched this year, following threelast year. That gives U.S. individuals who want to bet on India almost triple the number ofoptions they had just two years ago.

The Bombay Stock Exchange Sensitive Index, or Sensex, jumped 47% in 2007 and was up 157%over four years through the end of last year, putting India's stock market among the best-performing in the world until recently. The run-up, and the accompanying story of India'seconomic growth, attracted investor interest: From 2004 to 2007, $5.5 billion flowed into the 108

India-dedicated funds for both individual and institutional investors tracked by EmergingPortfolio Fund Research around the world.

But the Indian market has been hammered recently as investors globally move away from riskierinvestments. The Sensex is down more than 19% this year, compared with a 5.3% drop in theStandard & Poor's 500-stock index, and Emerging Portfolio Fund Research says investors havepulled $830 million out of the funds it tracks year to date, leaving them with total assets of about$23 billion. The sharp reversal underscores the volatility and risks inherent in emerging marketslike India, fund managers say.

The Indian "market always overreacts, both on the upside and down," says Punita Kumar-Sinha,

the Boston-based manager of India Fund, a closed-end fund at Blackstone Group. "If you have along-term view, you've got to be able to digest the volatility."

Some analysts predict that India's economy -- which expanded at a 9.4% rate in the fiscal yearended March 2007 -- will grow at a slower 7% rate in the 2009 fiscal year. Some worry that ifinvestor money stops flowing into India, the nation's growth plans, especially for developingmuch-needed infrastructure, could be affected.15 Performance Of Indian

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Despite these challenges, money managers point out that unlike China, India has a lowerdependence on exports to the U.S. as a percentage of its gross domestic product, which may helpto partially insulate it from a U.S. economic slowdown. Given the longer-term growth potential,managers say the current downturn has made the Indian market attractive.

"I think it's a good opportunity because some of the froth has been taken out of the market," saysStephen Dover, the San Mateo, Calif.- based manager of Franklin India Growth Fund, which waslaunched by Franklin Templeton Investments in January.

Still, financial advisers suggest that those who want to make a bet on developing markets likeIndia limit this exposure to a small part of their portfolio, typically less than 5%.

Among the oldest India-focused funds available to U.S. investors are Eaton Vance Greater IndiaFund, India Fund and Morgan Stanley India Investment Fund. The Eaton Vance product is anopen-ended fund, while the India Fund and Morgan Stanley products are closed-end funds.Closed-end funds issue a set number of shares and, depending on supply and demand, can trade

at a price different from the net asset value of the fund.

Matthews India Fund, meanwhile, was launched in 2005, while JPMorgan India Fund wasintroduced last year.

Some innovative tools also have emerged: In 2006, Barclays PLC introduced an exchange-tradednote, a type of debt security that trades like a stock on an exchange. The iPath MSCI India IndexETN basically promises to pay the return of the MSCI India Total Return Index, minus a fee.

This year saw the launch of the first India exchange-traded funds -- WisdomTree India EarningsFund and PowerShares India Portfolio, which started trading in February and March,

respectively. Last month, Direxion Funds launched its India Bull 2x Fund, which aims to doublethe return of the MSCI India index.

Each of these investments comes with a unique set of pros and cons.

When making comparisons, "the No. 1 thing is management fees," says Vijay Singal, a financeprofessor at Virginia Tech in Blacksburg, Va.

The open-end mutual funds are among the most expensive. For instance, the Eaton Vance fundhas an expense ratio of 2.14% and can have an initial sales charge of as much as 5.75%. TheFranklin fund has a similar sales charge and a 2.3% expense ratio, before a fee- waiver from

management. This compares with an expense ratio of 1.3% or less for the Matthews India Fundand the two closed-end funds.

But because closed-end funds can trade at a premium or discount, "they are always risky,especially for the long term," says Mr. Singal. India Fund traded at about a 7.2% discount onApril 11, the most recent calculation available, while the Morgan Stanley India Investment Fundis selling at a 7% discount.




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Investors hoped that Barclays' iPath India ETN would solve the premium and discount problemby tracking the MSCI India Index and trading close to its net asset value. It has an expense fee ofabout 0.90%.

Late last year, however, a change in Indian regulations forced Barclays to stop issuing these

notes. With demand high and supply limited, the note started selling at a premium.

More recently, the fund industry came out with a better mousetrap: exchange-traded funds.These basically track an index of India- oriented stocks, and trade at a price close to the net assetvalue of the index. They, too, charge expenses of around 0.90%.

The WisdomTree and PowerShares ETFs don't track the MSCI India Index or the Sensex, mainlybecause regulatory restrictions on the size of stakes foreign investors can take in any one Indiancompany could cause the ETFs' returns to veer from those indexes.

Instead, the ETF companies used customized indexes to launch their products. WisdomTree, for

instance, created an index of about 150 companies that can "accommodate large inflows ofcapital," says Luciano Siracusano, director of research at the New York-based investment firm.

The most recent addition to the India investing field is the Direxion India 2x Bull fund, a mutualfund that aims to provide double the returns of the MSCI Index. It invests in tools like the iPathETN and the ETFs from WisdomTree and PowerShares, along with complex derivativeinstruments like swaps and futures, to enhance its returns. It charges a 1.5% expense fee. Still,such leveraged funds carry their peculiar risks, including the possibility of falling short of thedouble return promised. In a down market, they also double the potential for losses.

---

Ms. Anand is a staff reporter in the Wall Street Journal's New York bureau. She can be reachedat [email protected].


Subjects: Closed end funds, Investment policy, Investment advisors, Growth funds,

Series & special reports, Securities analysis, Financial performance, Mutualfunds, International finance

Classification

Codes

9179 Asia & the Pacific, 9190 United States, 8130 Investment services,

3400 Investment analysis & personal finance


mailto:[email protected]://searchsideways%28%22sub%22%2C%22closed%20end%20funds%22%29/http://searchsideways%28%22sub%22%2C%22investment%20policy%22%29/http://searchsideways%28%22sub%22%2C%22investment%20advisors%22%29/http://searchsideways%28%22sub%22%2C%22growth%20funds%22%29/http://searchsideways%28%22sub%22%2C%22series%20%26%20special%20reports%22%29/http://searchsideways%28%22sub%22%2C%22securities%20analysis%22%29/http://searchsideways%28%22sub%22%2C%22financial%20performance%22%29/http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22international%20finance%22%29/mailto:[email protected]://searchsideways%28%22sub%22%2C%22closed%20end%20funds%22%29/http://searchsideways%28%22sub%22%2C%22investment%20policy%22%29/http://searchsideways%28%22sub%22%2C%22investment%20advisors%22%29/http://searchsideways%28%22sub%22%2C%22growth%20funds%22%29/http://searchsideways%28%22sub%22%2C%22series%20%26%20special%20reports%22%29/http://searchsideways%28%22sub%22%2C%22securities%20analysis%22%29/http://searchsideways%28%22sub%22%2C%22financial%20performance%22%29/http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22international%20finance%22%29/


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Locations: India

Author(s): Shefali Anand


Publication title: Wall Street Journal. (Eastern edition). New York, N.Y.: Apr 21, 2008. pg.

R.5

Source type: Newspaper

ISSN: 00999660

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Growth, Performance and Prospects of Mutual Funds in India1

Jaspal Singh. Finance India. Delhi: Dec 2004. Vol. 18, Iss. 4; pg. 1755, 6 pgs

Abstract (Summary)

An abstract of a doctoral dissertation, Growth, Performance and Prospects of Mutual Funds inIndia, is presented. The last decade has seen enormous expansion in the size of mutual fundindustry in India. Especially, the private sector has shown galloping growth. With unmatchedadvances on the information technology front, increased role of institutional investor in the stockmarket and SEBI still in its infancy, the mutual fund industry players gain unparalleled andunchecked power. To ensure the safety of investment of small investors against whims andfancies of professional fund managers have become need of the hour. This study was undertaken18 Performance Of Indian

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to know the perceptions of small investors, who are the most exploited lot in the Indian capitalmarket, about the tall claims of mutual fund managers as regards only they being dependableguardians for small investors on one hand and role of SEBI on the other. The study alsoexamined, whether the claims of mutual funds as the media for providing diversified portfolio ofsecurities so to earn better return is justified or not by measuring the performance of most

preferred mutual funds.



Copyright Finance India, Indian Institute of Finance Business School Dec 2004

THE LAST DECADE has seen enormous expansion in the size of mutual fund industry in India.Especially, the private sector has shown galloping growth. With unmatched advances on theinformation technology front, increased role of institutional investor in the stock market andSEBI still in its infancy, the mutual fund industry players gained unparalleled and uncheckedpower. To ensure the safety of investment of small investors against whims and fancies ofprofessional fund managers have become need of the hour.

The present study was undertaken to know the perceptions of small investors, who are the mostexploited lot in the Indian capital market, about the tall claims of mutual fund managers asregards only they being dependable guardians for small investors on one hand and role of SEBIon the other. The study also examined, whether the claims of mutual funds as the media forproviding diversified portfolio of securities so to earn better return is justified or not bymeasuring the performance of most preferred mutual funds.

I. Objectives of the Study

The major objective of the study was to analyze in detail the growth pattern of mutual fundindustry in India and to evaluate performance of different schemes floated by most preferredmutual funds in public and private sector. Following are the specific objectives:

i. To measure the growth of mutual funds over a period;

ii. To examine investor's perceptions regarding mutual funds;

iii. To evaluate performance of selected schemes of different mutual funds on the basis of risk-return relationship; and

iv. To assess prospects of mutual funds in India and draw suggestions.


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II. Methodology

For studying the growth pattern of mutual fund industry in India, data was collected fromwebsites of SEBI, AMFI, RBI and some mutual funds.

For studying perceptions of investors, a primary survey was undertaken. A questionnaireconsidering various parameters of perceptions of investors towards mutual funds wasconstructed. As no list of investors was available, therefore, convenience and purposive samplingwas used to select the respondents. The general less educated mutual fund investors were foundto be ignorant and were dependent in making fund investment decision. Rather, they are theeasily lured and motivated lot to get their investment made in any recommended mutual fund.Hence, to make this study meaningful, the focus was then shifted towards educated and informedinvestors. This leads the researcher to contact employees working in banks, LIC offices, UTIoffice and other organizations. In addition, professionals (majority of them being charteredaccountants) were found to be easily accessible. The questionnaire was distributed/mailed to 400investors in major cities of Punjab, Delhi and Mumbai. In all, 273 responses were received out of

which 260 responses (65%) were found to be usable, which have been considered for this study.However, due care was taken to select respondents considering their age and occupation.

To analyze the collected data, statistical techniques like, weighted average, mean, median, chi-square, ANOVA, indexation, correlation and technique of factor analysis were applied.

For measuring the performance of mutual funds, the most preferred mutual funds by theinvestors in the primary survey were considered. Parameters like coefficient of determination(R^sup 2^), systematic risk i.e. beta (b), intercept (a), average return for the scheme and themarket, standard deviation (s) and diversifiable risk were calculated and widely accepted timetested models given by Sharpe, Treynor and Jensen were applied for the purpose.

III. Findings of the Study

3.1 Growth of Mutual Fund Industry in India

1. During the period of the study, growth has been registered by mutual funds in terms ofresource mobilization so far.

2. Out of the total resource mobilized by all the mutual funds, UTI still holds the maximum

share. However, trend has moved in favor of private sector, more sharply since 1998-99.

3. Within private sector the funds leading in resource mobilization are Prudential ICICI, PioneerITI, Birla mutual fund, Templeton India, Alliance Capital India etc.




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4. As per scheme wise breakup, out of the total schemes currently operative, Income/debtschemes out numbered the growth and balanced schemes. Further, open-end schemes as againstclose-end ones in all the three categories are more than the double in number.

3.2. Perceptions of Investors towards Mutual Funds

1. Majority of investors belonging to salaried category and those in the age group of 20-35 yearsintend not to invest in mutual funds anymore. The age of the investor does have impact on adecision to invest in mutual funds.

2. Ranking of investment avenues on given five principles by the investors have been in thefollowing order i.e. Bank FDRs and Gold to be most safe, NSC schemes from tax saving point ofview, Real estate good from safety as well as high return point of view and lastly, UTI schemesand other mutual funds investment to be unsafe and low return providers.

3. The investors belonging to salaried and retired categories gave maximum weight-age to past

record of the organization among the factors influencing choice of a mutual fund for investment.This is perhaps because they do not want to compromise as regards safety of their investedmoney.

4. The analysis highlights the basic psyche of the business category investor and age group of35-50 years who prefer near liquidity position and because of their preference for easy switchingbetween different investment avenues so to make enough money for current rising needs and tosave for future by giving the maximum weight age to unit repurchase by the fund optionfollowed by easy transferability option. In addition, the professionals assigned maximumimportance to availability of adequate information.

5. The respondents in the salaried category and in the age group of 35-50 years consider only thereturn provided on investment by the fund to be the best criteria of performance appraisal of afund.

6. The investors belonging to salaried category and in the age group of 20-35 years showedinclination towards close-ended, growth (equity) oriented schemes over other scheme types.Even the objective of investment for availing any tax rebate is not on investor's agenda.Investment in fund units is done for earning good return.

7. The finding shows that quiet a large number of respondents belonging to salaried category andthose in the age group of 35-50 years have varied experiences as regards returns received from

investments made in mutual funds. No investor except one in professional category said to be inreceipt of very high returns than expected on their investment in mutual funds.

8. As regards choice of a mutual fund for investment, people are moving away from UTI andprefer to invest in private sector mutual funds, despite the fact that these are presumed to be morerisky.




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9. Because of technology driven information explosion, the younger generation and theprofessionals feels that they can take objective and timely decisions. The investors belonging tosalaried and professional categories and in the age group of 20-35 years prefers day-to-daydisclosure of net asset value by the funds. In addition, it is salaried and retired group that wishedfor higher tax rebates on investment in mutual funds.

10. Results depicts that as regards reasons for withdrawing investment and/or not investing anymore in mutual funds the investors belonging to professionals category and in the age group of35-50 years strongly supported the reason of ineffectiveness of controlling bodies like SEBI andothers that resulted in investors disillusionment as regards mutual fund investment.

3.3 Performance Appraisal Of Selected Mutual Fund Schemes

1. Out of the mutual funds selected for performance appraisal, Alliance mutual fund andPrudential ICICI Mutual funds have posted better performance for the period of study in thatorder as compared to other funds. Pioneer ITI, however, has shown average performance. With

preponderance of negatives for different parameters, Templeton India Mutual fund has staged apoor show

2. In the survey as regards perception of investors towards mutual funds, one noticeable findingthat emerged from data analysis was the development of repulsion in the minds of investorstowards UTI schemes. One reason could be the scams that surfaced in the recent past in UTI butequally important reason is the poor performance posted by UTI in all aspects, be it return oninvestment, excess return earning per unit of total risk, excess return earning per unit ofsystematic risk, extent of beta risk and diversifiable risk, low diversification of scheme portfoliosand market timing ability of fund managers.

3.4 Prospects of mutual funds

1. As regards continuing with their investment in mutual funds, overall responses of the investorshave been mixed. No doubt, the experience as regards returns on investment from mutual fundsof majority of investors has been shaky, but the role of SEBI and the management of the fundsby professional managers, too, have been equally criticized.

2. Performance evaluation of only five most preferred mutual funds conducted here reveals thatoverall, performance of mutual funds has been mixed.

3. The growth potential of an Indian economy cannot be denied. Cyclic movements, however,

could not be ruled out. Hence, growth pattern of different economic sectors looks positive,therefore, mutual funds industry is also expected to gain.

4. SEBI and other controlling bodies of capital markets have started monitoring the marketmovements more closely. A consistent effort is being made by them to refine the working ofcapital markets and mutual funds. This is expected to go a long way in reviving the lostconfidence of small investors in mutual funds.




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5. Last but not the least, the managers of these mutual funds needs to sharpen their skills furtherso to manage the pooled money in a total professional way. Market timing, during both the bulland the bear run and diversify product range so to make funds tailor made to the

needs of every investor, is the sole factor that would ensure their long-term survival in the trade.

IV. Suggestions

The findings of the this study, as discussed above, may prove to be of great use to thegovernment for streamlining the working of capital markets through its regulatory bodies likeSEBI, etc. so to check the exploitation of small investors who are one of the major reservoir ofcapital needed for economic growth of the country. It may help SEBI to control effectively theworking of mutual funds so to regain lost confidence with the investors and take effective stepsfor confirming investors' right adherence by them. As reported in the study, the mutual funds,too, can earmark and try to improve upon their weak areas regarding the factors that influenceinvestors decision making as regards choice of a mutual fund, the facilities or options they expectfrom a mutual fund, the criteria they generally believe to be the best for performance appraisal of

a fund, their general perceptions towards mutual funds at present and the problems which theyencountered that resulted in development of aversion towards mutual funds in the minds ofinvestors. Mutual funds should extend full support to the investors in terms of:

i. Investment advisory service

ii. Participation in investment decision making of the concerned fund,

iii. Ensuring full disclosure of relevant information to investors by the fund,

iv. Consultancy regarding understandability of terms of issue of different schemes, etc.

So to help common investor to regain confidence in this channel of investment that is mostdependable reservoir of funds required for development of Indian capital market. As seen, theenormous growth of mutual fund industry, if controlled effectively, could be channelised forachieving better economic growth.

V. Scope of Further Research

Mutual funds are such a wide area of research that no single study can cover different relateddimensions. Even primary surveys for studying the perceptions of investors towards mutualfunds time to time are not a regular feature in India, hence there is much potential of research on

a bigger scale covering wider area.

Further, a research can also be conducted for studying perceptions of institutional investorstowards mutual funds, the area which has been left out of the scope of the present study.

Another important area for carrying out research is the need to develop a benchmark for thepurpose of evaluation of debt securities like different share indices are available for performance




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evaluation of investments in equity shares. However, only recently Securities and ExchangeBoard of India (SEBI) and Association for Mutual Funds of India (AMFI) jointly have evolved acommittee to work in this area.

Research is also needed to review the use of a parameter beta ( i.e. systematic risk) for

performance evaluation of a mutual fund in relation to a chosen market index as a benchmark.This is because, beta is calculated on the basis of total return earned by a given equity-diversifiedfund in relation to the market return, whereas no equity-diversified fund even invest solely inequities rather they, too, keep 5% to 10% of total invested funds in liquid securities for meetingany contingent occurrence. Hence, for true performance evaluation, beta should be adjustedaccordingly because of percentage of total investment in equities.

[Footnote]

1 The Thesis was submitted to Guru Nanak Dev University, Punjab, 2002, for the award of Ph.D.

Degree, awarded in 2003, under the supervision of Prof. Subhash Charnier, Department of

Commerce and Business Management, Guru Nanak Dev University, Amritsar, Punjab, INDIA.

[Author

Affiliation]

JASPAL SINGH*

[Author Affiliation]

* Lecturer, Department of Commerce and Business Management, Guru Nanak Dev University,

63, Joshi Colony, The Mall, Amritsar-143005, Punjab, INDIA.

Submitted June 2003 ; Accepted September 2003


Subjects: Mutual funds, Financial performance, Portfolio diversification, Studies

Classification 9179 Asia & the Pacific, 9130 Experimental/theoretical, 3400 Investment


http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22financial%20performance%22%29/http://searchsideways%28%22sub%22%2C%22portfolio%20diversification%22%29/http://searchsideways%28%22sub%22%2C%22studies%22%29/http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22financial%20performance%22%29/http://searchsideways%28%22sub%22%2C%22portfolio%20diversification%22%29/http://searchsideways%28%22sub%22%2C%22studies%22%29/


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Codes analysis & personal finance

Locations: India

Author(s): Jaspal Singh

Author

Affiliation:

JASPAL SINGH*

* Lecturer, Department of Commerce and Business Management, Guru

Nanak Dev University, 63, Joshi Colony, The Mall, Amritsar-143005,

Punjab, INDIA.

Submitted June 2003 ; Accepted September 2003


Section: Abstract of Doctoral Dissertation

Publication title: Finance India. Delhi: Dec 2004. Vol. 18, Iss. 4; pg. 1755, 6 pgs


ISSN: 09703772

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Indian mutual fund industry faces reversal


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Funds International. London: Jan 2005. pg. P. 2

Abstract (Summary)

After six years of impressive growth, India's mutual fund industry has been jolted onto the backfoot by net outflows for five straight months to November 30, totalling INR148.4 billion.Commenting on the situation, chairman of the Association of Mutual Funds of India, Shri APKurian, said in his latest quarterly review that the primary reason for the industry's poorinvestment flows is that households are not allocating their savings to mutual funds, particularlythose in the equity category.



Copyright Lafferty Ltd. Jan 2005

After six years of impressive growth, India's mutual fund industry has been jolted onto the backfoot by net outflows for five straight months to 30 November totalling INR148.4 billion ($3.2billion). This is in sharp contrast to the situation earlier in the year when the industry reportedtotal net inflows of INR216.1 billion during the first quarters.

Commenting on the situation, chairman of the Association of Mutual Funds of India, Shri APKurian, said in his latest quarterly review that the primary reason for the industry's poorinvestment flows is that households are not allocating their savings to mutual funds, particularlythose in the equity category.

He added that all Indian mutual fund firms are now putting strategies into place to attracthousehold savings but "it is a task that will require sustained efforts over a period of time." Theirefforts are clearly reflected in a surge in television advertising by mutual funds in 2004.

Indian research firm Indiantelevision reports that advertising of mutual funds surged 48 percentin the first 11 months of the year, compared with an 8 percent growth rate registered in 2003.The top advertisers by advertising-spend were Prudential ICICI Asset Management (30 percent),Standard Chartered Asset Management (17 percent), Templeton Asset Management (16 percent),Standard Chartered Grindlays (11 percent) and Kotak Mahindra Asset Management (5 percent.)

One of the industry's biggest competitors for household funds is the government, which, notedKurian, is offering interest yields of 8 to 9 percent on retail bonds. However, other observersbelieve the industry's problems extend further and that much of the outflow from funds is relatedto wealthy individuals switching to other investments such as portfolio management schemes andinsurance schemes.

Copyright: Lafferty Limited. All rights reserved.


http://proquest.umi.com/pqdweb?RQT=318&pmid=37061&TS=1236684134&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=37061&pcid=14495851&SrchMode=3http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572#indexinghttp://proquest.umi.com/pqdweb?RQT=318&pmid=37061&TS=1236684134&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=37061&pcid=14495851&SrchMode=3http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572#indexing


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IFIM B- School


Subjects: Mutual funds, Trends, Industrywide conditions

Classification

Codes

9179 Asia & the Pacific, 8130 Investment services, 9000 Short article

Locations: India

Document types: News

Publication title: Funds International. London: Jan 2005. pg. P. 2


ISSN: 13930486

ProQuest

document ID:

780597641

Text Word

Count

289






Does Mutual Fund Management in India Correspond to its Investment Objective

Classification?

Luis Ferruz Agudo, Cristina Ortiz Lazaro. Review of Pacific Basin Financial Markets and

Policies. Singapore: Dec 2005. Vol. 8, Iss. 4; pg. 659

Abstract (Summary)


http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22trends%22%29/http://searchsideways%28%22sub%22%2C%22industrywide%20conditions%22%29/http://proquest.umi.com/pqdweb?RQT=318&pmid=37061&TS=1236684134&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=37061&pcid=14495851&SrchMode=3http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572http://proquest.umi.com/pqdweb?RQT=318&pmid=66599&TS=1236684358&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=318&pmid=66599&TS=1236684358&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=66599&pcid=17094721&SrchMode=3http://searchsideways%28%22sub%22%2C%22mutual%20funds%22%29/http://searchsideways%28%22sub%22%2C%22trends%22%29/http://searchsideways%28%22sub%22%2C%22industrywide%20conditions%22%29/http://proquest.umi.com/pqdweb?RQT=318&pmid=37061&TS=1236684134&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=37061&pcid=14495851&SrchMode=3http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572http://proquest.umi.com/pqdweb?index=38&did=780597641&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684113&clientId=84572http://proquest.umi.com/pqdweb?RQT=318&pmid=66599&TS=1236684358&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=318&pmid=66599&TS=1236684358&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=66599&pcid=17094721&SrchMode=3


28/49

IFIM B- School

The aim of this article is to investigate the mutual fund market in India and verify whether or notthe fund classification obtained from the name given to identify them corresponds to that whichwould be obtained were prior management to be taken into account. This industry has undergonespectacular growth in recent years, making this study extremely interesting, not least becauseinstitutional control could be less in times of expansion. The methodologies employed in the

study are factor analysis and cluster analysis. The former determines that risk would clearlyidentify two groups of funds in the same manner as public classification of the funds. Clusteranalysis, on the other hand, identifies funds that are, in fact, very close to one another, when forthe bulk of investors they are not. [PUBLICATION ABSTRACT]


Subjects: Mutual funds, Industrywide conditions, Classification, Studies, Historical

analysis

Classification

Codes

8130 Investment services, 9179 Asia & the Pacific,

9130 Experimental/theoretical

Locations: India

Author(s): Luis Ferruz Agudo, Cristina Ortiz Lazaro


Document

features:

graphs, tables, references, equations

Publication title: Review of Pacific Basin Financial Markets and Policies. Singapore: Dec

2005. Vol. 8, Iss. 4; pg. 659


ProQuest

document ID:

969893001







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29/49

IFIM B- School

India's largest mutual fund goes under the microscope

Paula L Green.Global Finance. New York: Feb 2002. Vol. 16, Iss. 2; pg. 7, 1 pgs

Abstract (Summary)

The Indian finance ministry has finally stepped in and decided to place the country's oldest andlargest mutual fund manager - Unit Trust of India - under its watch. UTI and its biggest and mosttroubled fund, US-64, will be under the supervision of the Securities Exchange Board of India byyear-end.



Copyright Global Finance Media Inc. Feb 2002

MILESTONES

TAKING NOTE

INDIA

The Indian finance ministry has finally stepped in and decided to place the country's oldest andlargest mutual fund manager-Unit Trust of India-under its watch.

UTI and its biggest and most troubled fund, US-64, will be under the supervision of theSecurities Exchange Board of India by year-end. The decision should soothe the nerves of US-64's investors, who have seen the net asset value of the fund fall 40% below its original issueprice. It should also boost the confidence level of all investors worried about the lack oftransparency in the Indian financial markets.

Named after its 1964 start-- up date, US-64 is UT's biggest fund, with 20 million investors and avolatile past that has included two government bailouts.The absence of regulatory oversightmeant that UTI never even reported the net asset value of US-64, a mix of risky equities andbonds, until last month.

And while private sector funds have been monitored by the government since 1994, UTI hadnever been regulated by the government since its creation by an act of Parliament in 1964.

As part of the new operating environment, the government has appointed an advisory group toinitiate changes in the fund's operations.Any changes will be based on the recommendations ofseveral committees that investigated the operations of UTI.


http://proquest.umi.com/pqdweb?RQT=318&pmid=12401&TS=1236684609&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=318&pmid=12401&TS=1236684609&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=12401&pcid=1608610&SrchMode=3http://proquest.umi.com/pqdweb?index=52&did=107802746&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684498&clientId=84572#indexinghttp://proquest.umi.com/pqdweb?RQT=318&pmid=12401&TS=1236684609&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=12401&pcid=1608610&SrchMode=3http://proquest.umi.com/pqdweb?index=52&did=107802746&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684498&clientId=84572#indexing


30/49

IFIM B- School

The fund's managers have already decided to shift from high-yielding but risky equity exposuresto more conservative corporate and government bonds. That should reduce the volatility of thefund but make it more difficult for large fund investors to recover their losses from any futureuptick in the stock market.


Subjects: Mutual funds, Problems

Classification

Codes

8130 Investment services, 9179 Asia & the Pacific, 9000 Short article

Locations: India

Author(s): Paula L Green


Publication title: Global Finance. New York: Feb 2002. Vol. 16, Iss. 2; pg. 7, 1 pgs


ISSN: 08964181

ProQuest

document ID:

107802746

Text Word

Count

269







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31/49

IFIM B- School

India's largest mutual fund goes under the microscope

Paula L Green.Global Finance. New York: Feb 2002. Vol. 16, Iss. 2; pg. 7, 1 pgs

Abstract (Summary)

The Indian finance ministry has finally stepped in and decided to place the country's oldest andlargest mutual fund manager - Unit Trust of India - under its watch. UTI and its biggest and mosttroubled fund, US-64, will be under the supervision of the Securities Exchange Board of India by

year-end.



Copyright Global Finance Media Inc. Feb 2002

MILESTONES

TAKING NOTE

INDIA

The Indian finance ministry has finally stepped in and decided to place the country's oldest andlargest mutual fund manager-Unit Trust of India-under its watch.

UTI and its biggest and most troubled fund, US-64, will be under the supervision of theSecurities Exchange Board of India by year-end. The decision should soothe the nerves of US-64's investors, who have seen the net asset value of the fund fall 40% below its original issueprice. It should also boost the confidence level of all investors worried about the lack oftransparency in the Indian financial markets.

Named after its 1964 start-- up date, US-64 is UT's biggest fund, with 20 million investors and avolatile past that has included two government bailouts.The absence of regulatory oversightmeant that UTI never even reported the net asset value of US-64, a mix of risky equities andbonds, until last month.

And while private sector funds have been monitored by the government since 1994, UTI hadnever been regulated by the government since its creation by an act of Parliament in 1964.31 Performance Of Indian

http://proquest.umi.com/pqdweb?RQT=318&pmid=12401&TS=1236684609&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=318&pmid=12401&TS=1236684609&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=12401&pcid=1608610&SrchMode=3http://proquest.umi.com/pqdweb?index=52&did=107802746&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684498&clientId=84572#indexinghttp://proquest.umi.com/pqdweb?RQT=318&pmid=12401&TS=1236684609&clientId=84572&VInst=PROD&VName=PQD&VType=PQDhttp://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=12401&pcid=1608610&SrchMode=3http://proquest.umi.com/pqdweb?index=52&did=107802746&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1236684498&clientId=84572#indexing


32/49

IFIM B- School

As part of the new operating environment, the government has appointed an advisory group toinitiate changes in the fund's operations.Any changes will be based on the recommendations ofseveral committees that investigated the operations of UTI.

The fund's managers have already decided to shift from high-yielding but risky equity exposures

to more conservative corporate and government bonds. That should reduce the volatility of thefund but make it more difficult for large fund investors to recover their losses from any futureuptick in the stock market.


Subjects: Mutual funds, Problems

Classification

Codes

8130 Investment services, 9179 Asia & the Pacific, 9000 Short article

Locations: India

Author(s): Paula L Green


Publication title: Global Finance. New York: Feb 2002. Vol. 16, Iss. 2; pg. 7, 1 pgs


ISSN: 08964181

ProQuest

document ID:

107802746

Text Word

Count

269







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Project Per for Mane Mutual Funds

Documents

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