Escolar Documentos
Profissional Documentos
Cultura Documentos
Objectives:
Sub- objectives:
1. To
know the factors that influence investors while taking investment
decisions.
2. To
know the advantages and disadvantages of Mutual funds.
3. To know whether the investors are interested in investing Lump sum [one
time investment] or SIP[Systematic Investment Plan].
DECLARATION
ACKNOWLEDGEMENTS
KANNUR
prestigious organization.
Reddy, HAL, ARDC for their extensive support and encouragement to carry out
CONTENTS
INDUSTRY OVERVIEW
Mutual Fund industry today, with about 43 players and more than five hundred
schemes, is one of the most preferred investment avenues in India. However, with
a plethora of schemes to choose from, the retail investor faces problems in
selecting funds. Factors such as investment strategy and management style are
qualitative, but the funds record is an important indicator too. Though past
performance alone cannot be indicative of future performance, it is, frankly, the
only quantitative way to judge how good a fund is at present. Therefore, there is a
need to correctly assess the past performance of different mutual funds.
Worldwide, good mutual fund companies over are known by their AMCs and
this fame is directly linked to their superior stock selection skills. For mutual
funds to grow, AMCs must be held accountable for their selection of stocks. In
other words, there must be some performance indicator that will reveal the quality
of stock selection of various AMCs.
specific securities present in the portfolio of the fund, called unsystematic risk.
The Total Risk of a given fund is sum of these two and is measured in terms of
standard deviation of returns of the fund.
COMPANY OVERVIEW
This project work is been done in the esteemed organization called GEOJITH
BNP PARIBAS. Let us have the introduction of the esteemed GEOJITH
BNP PARIBAS
GEOJITH BNP PARIBAS is driven by ethical and dynamic process for wealth
creation. Based on this, the company started its endeavor in the financial market.
In the year events 1988 - The company, Geojit Securities Limited (GSL), was
a partnership firm, with two partners - Mr. C.J. George and Mr. Ranjit, under the
name and style of M/s Geojit & Company established on 4th November, to act as
stock and share brokers with membership on the Cochin Stock Exchange.
Barjeel Geojith Securities, the joint venture with the Al Saud Group in the
United Arab Emiratesis headquarted in Dubai with branches in Abu Dhabi, Ras
Al Khaimah, Sharjah and Muscat. Aloula Geojith Brokerage Co., the joint
venture with Al Johar Group in Saudi Arabia is headquartered in Riyadh.
Among the many industry first achieved, prominent are the launch of Internet
Trading in the year 2000, launch of an integrated internet trading system for Cash
& Derivatives segments in 2002. In 2006, the company became the first Indian
stock broking company to commence domestic retail brokerage operations in any
foreign country through its joint venture Aloula Geojith. Company was the first
brokerage to offer full Direct Market Access execution in India for institutional
clients.
Unlike a traditional broking firm, Geojith BNP Paribas works on the philosophy
of partnering for wealth creation. We not only execute trades for our clients but
also provide them critical and timely investment advice.
VISION
MISSION
Geojith BNP paribas team is led by a very eminent Board of Directors who
provide policy guidance and work under the active leadership of its CEO &
Managing Director and support of its Central Guidance Team.
BOARD OF DIRECTORS
JA - HRM
PRODUCT RANGE
Equity
That is, you may trade from our branches or trade on your own over the net and
with that you get our expertise and assistance. Equity financing, or equity
funding, is trading a percentage of a business for a specific amount of money.
This form of financing enables a business to receive the capital needed without
taking on additional debt. Outside investors will want to see an owner also
investing their own money to show they are willing to share the risks. While it is
possible to attract investors.
It has been designed to provide world-class experience and expertise to investors.
R-ALLY as the name suggests is the perfect partner for savvy investors. Clients
opting for this service would be provided services managed by a team of
dedicated relationship managers and experienced trade dealers. They would not
only assist the client in information dissemination but would also take care of all
post trade requirements.
Commodities
Commodities as a word originated from the French word ‘commdite’ meaning
‘benefit, profit’. Rightly so! The kind of continuously growing turnover which
commodities market has seen is incredible, benefiting both producers and buyers.
Depository
Geojith BNP Paribas is among the few major Depository Participants holding
securities. The company provides depository services to investors as a Depository
Participant with NSDL and CDSL.
The Depository system in India links issuers, depository participants, National
Securities Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSL) and clearing house / clearing corporation of stock exchanges.
These facilitate holding of securities in dematerialized form and securities
transactions are processed by means of account transfers.
INTRODUCTION
Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. Each scheme of a mutual fund can have different
character and objectives. Mutual funds issue units to the investors, which
represent an equitable right in the assets of the mutual fund. Investing in a mutual
fund is like investing in a whole bunch of stocks all at the same time. It's like a
collection or a portfolio of stocks.
Let us start the discussion of the performance of mutual funds in India from
the day the concept of mutual fund took birth in India. The year was 1963. Unit
Trust of India invited investors or rather to those who believed in savings, to park
hand, you spread your money out over several different types of investments, the
road to creating wealth won't be as bumpy and you'll sleep better at night. You
may want to consider having part of your money in the banks, part in stocks, and
some in mutual funds. In simply this is called investment diversification.
The no. of fund houses are offering various different products in the public.
The major and largest fund houses in India are Reliance MF. And other fund
houses are ICICI Prudential, Birla Sunlife MF, DSP BLACKROCK, HDFC etc,.
This market was made open to private players in 1993 after the historic
constitutional amendments brought forward by the then Congress led government
under the existing regime of Liberalization, Privatization and Globalization
(LPG). The first private sector fund to operate in India was Kothari Pioneer which
was later merged with Franklin Templeton. we never invest the whole amount
into one security only that is we should diversify our funds in different
investment opportunities.
With the increase in Mutual Fund players in India, a need for Mutual Fund
Association in India was generated to function as a non-profit organization.
MUTUAL FUND
The first mutual fund to be introduced in India was way back in 1963 when the
Government of India launched Unit Trust of India (UTI). UTI enjoyed a
private sector fund to operate in India was Kothari Pioneer which was later
merged with Franklin Templeton.
Each unit of these schemes reflects the share of investor in the respective fund
and its appreciation is judged by the Net Asset Value (NAV) of the scheme. The
NAV is directly linked to the bullish and bearish trends of the markets as the
pooled money is invested either inequity shares or in debentures or treasury bills.
Indian Mutual Funds unveils this multi-dimensional avenue, with its intricacies,
in a fashionable manner as mutual funds up-hold ample scope of generating
decent returns by some thoughtful investment.
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciation realised are
shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost. The flow chart below describes broadly the
working of a mutual fund:
Almost everybody has the ambition to get rich without lifting a finger - that's
because there's plenty of us out there that are driven by laziness and greed. We
like to find ways for having our cash work for us, or apply the Law of Leverage,
which is to multiply our efforts through others. A classic example of that would
be an Egyptian Pharaoh having his slaves build infrastructure or gather the rice
grains which he uses for sale/trade - he doesn't do anything, but gets all the work
done and gets richer and richer. You're not a Pharaoh, so how do you get rich?
Well one way would be putting your money in a median that can help you reach
that particular financial goal.
Fear not old friend, your investment is being managed by the company's team
of investment professionals - these guys know exactly what they're doing and find
the best ways possible to ensure that you make money. It's like having a
symbiotic relationship with them: if they do good, you do good, heck all of you
do good. Usually an investment manager does the buying and selling on your
behalf, making sure all goes in your favor. As the investments diversify, the risk
of loss gets lower and lower, which is clearly what everybody wants. There are
three types of mutual funds, the first being: equity funds - which is basically
investing in common stocks.
This is considered to be very risky, but it can also mean lots of money for you.
The second type are the fixed income funds, which is a lot safer due to the fact
that they're basically government and corporate securities. Here you don't take
that much risk, which in some cases could mean that you don't earn that much (as
compared to investing in equity funds). Lastly, we have balanced mutual funds,
The Evolution
The formation of Unit Trust of India marked the evolution of the Indian mutual
fund industry in the year 1963. The primary objective at that time was to attract
the small investors and it was made possible through the collective efforts of the
Government of India and the Reserve Bank of India. The history of mutual fund
industry in India can be better understood divided into following phases:
Unit Trust of India enjoyed complete monopoly when it was established in the
year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India
and it continued to operate under the regulatory control of the RBI until the two
were de-linked in 1978 and the entire control was tranferred in the hands of
Industrial Development Bank of India (IDBI). UTI launched its first scheme in
1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of
investors in any single investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of
different investors. It launched ULIP in 1971, six more schemes between 1981-
84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in
1986, Mastershare (Inida's first equity diversified scheme) in 1987 and Monthly
Income Schemes (offering assured returns) during 1990s. By the end of 1987,
UTI's assets under management grew ten times to Rs 6700 crores.
The Indian mutual fund industry witnessed a number of public sector players
entering the market in the year 1987. In November 1987, SBI Mutual Fund from
the State Bank of India became the first non-UTI mutual fund in India. SBI
Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund,
Indian Bank Muatual Fund, Bank of India Mutual Fund, GIC Mutual Fund and
PNB Mutual Fund. By 1993, the assets under management of the industry
Mobilisati
Amou Assets
on as %
1992- nt Under
of gross
93 Mobili Managem
Domestic
sed ent
Savings
The mutual fund industry witnessed robust growth and stricter regulation from
the SEBI after the year 1996. The mobilisation of funds and the number of
players operating in the industry reached new heights as investors started showing
more interest in mutual fund.
Investors' interests were safeguarded by SEBI and the Government offered tax
benefits to the investors in order to encourage them. SEBI (Mutual Funds)
Regulations, 1996 was introduced by SEBI that set uniform standards for all
mutual funds in India. The Union Budget in 1999 exempted all dividend incomes
in the hands of investors from income tax. Various Investor Awareness
Programmes were launched during this phase, both by SEBI and AMFI, with an
objective to educate investors and make them informed about the mutual fund
industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its
Special legal status as a trust formed by an Act of Parliament. The primary
objective behind this was to bring all mutal fund players on the same level. UTI
was re-organised into two parts: 1. The Specified Undertaking, 2. The UTI
Mutual Fund Presently Unit Trust of India operates under the name of UTI
Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are
being gradually wound up. However, UTI Mutual Fund is still the largest player
in the industry. In 1999, there was a significant growth in mobilisation of funds
from investors.
The industry has also witnessed several mergers and acquisitions recently,
examples of which are acquisition of schemes of Alliance Mutual Fund by Birla
Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual
Fund. Simultaneously, more international mutal fund players have entered India
like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the
end of March 2006. This is a continuing phase of growth of the industry through
consolidation and entry of new international and private sector players.
Fortis
Birla Sunlife
Bank of Baroda
HDFC
ING Vysya
ICICI Prudential
SBI Mutual Fund
Tata
Kotak Mahindra
Unit Trust of India
Reliance
IDFC
Franklin Templeton
Sundaram Mutual Fund
Religare Mutual Fund
Principal Mutual Fund
Despite being available in the market for over two decades now with assets
under management equaling Rs 7,81,71,152 Lakhs (as of 28 February,2010), less
than 10% of Indian households have invested in mutual funds. A recent report on
Mutual Funds Investments in India published by research and analytics firm,
Boston Analytics, suggests investors are holding back from putting their money
in mutual funds due to their perceived high risk and a lack of information on how
mutual funds work. This report is based on a survey of approximately 10,000
respondents in 15 Indian cities and towns as of March 2010.There are 43 Mutual
Funds at present.
The primary reason for not investing appears to be correlated with city size.
For example, as depicted in the exhibit below, among respondents with a high
savings rate, close to 40% of those who live in metros and Tier I cities cited such
investments were very risky, whereas 33% of those in Tier II cities said they did
not how and where to invest in such assets.
On the other hand, among those who invested, close to nine out of ten
respondents did so because they felt these assets to be more professionally
managed than other asset classes. Exhibit 2 lists some of the influencing factors
for investing in mutual funds. Interestingly, while non-investors cite “risk” as
one of the primary reasons they do not invest in mutual funds, those who do
invest cite the fact that they are “professionally managed” and “more diverse”
most often as the reasons they invest in mutual funds versus other investments.
Mutual Funds
A mutual fund is set up in the form of a trust, which has sponsor, trustees, and
asset management company (AMC) and custodian. The trust is established by a
sponsor or more than one sponsor who is like promoter of a company. The
trustees of the mutual fund hold its property for the benefit of the unitholders.
Asset Management Company (AMC) approved by SEBI manages the funds by
making investments in various types of securities. Custodian, who is registered
with SEBI, holds the securities of various schemes of the fund in its custody. The
trustees are vested with the general power of superintendence and direction over
AMC. They monitor the performance and compliance of SEBI Regulations by the
mutual fund.
SEBI Regulations require that at least two thirds of the directors of trustee
company or board of trustees must be independent i.e. they should not be
associated with the sponsors. Also, 50% of the directors of AMC must be
independent. All mutual funds are required to be registered with SEBI before they
launch any scheme. However, Unit Trust of India (UTI) is not registered with
SEBI (as on January 15, 2002).
In the year 1992, Securities and exchange Board of India (SEBI) Act was
passed. The objectives of SEBI are - to protect the interest of investors in
securities and to promote the development of and to regulate the securities
market.
As far as mutual funds are concerned, SEBI formulates policies and regulates
the mutual funds to protect the interest of the investors. SEBI notified regulations
for the mutual funds in 1993. Thereafter, mutual funds sponsored by private
sector entities were allowed to enter the capital market. The regulations were
fully revised in 1996 and have been amended thereafter from time to time. SEBI
has also issued guidelines to the mutual funds from time to time to protect the
interests of investors.
All mutual funds whether promoted by public sector or private sector entities
including those promoted by foreign entities are governed by the same set of
Regulations. There is no distinction in regulatory requirements for these mutual
funds and all are subject to monitoring and inspections by SEBI. The risks
associated with the schemes launched by the mutual funds sponsored by these
entities are of similar type. It may be mentioned here that Unit Trust of India
(UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).
USAGE
Mutual funds can invest in many different kinds of securities. The most
common are cash, stock, and bonds, but there are hundreds of sub-categories.
Stock funds, for instance, can invest primarily in the shares of a particular
industry, such as technology or utilities. These are known as sector funds. Bond
funds can vary according to risk (e.g., high-yield or junk bonds, investment-grade
corporate bonds), type of issuers (e.g., government agencies, corporations, or
municipalities), or maturity of the bonds (short- or long-term)
Most mutual funds' investment portfolios are continually adjusted under the
supervision of a professional manager, who forecasts the future performance of
investments appropriate for the fund and chooses those which he or she believes
will most closely match the fund's stated investment objective. A mutual fund is
administered through a parent management company, which may hire or fire fund
managers.
Mutual funds are liable to a special set of regulatory, accounting, and tax rules.
Unlike most other types of business entities, they are not taxed on their income as
long as they distribute substantially all of it to their shareholders. Also, the type of
income they earn is often unchanged as it passes through to the shareholders.
Mutual fund distributions of tax-free municipal bond income are also tax-free to
• Professional expertise:
Funds managers are professionals who track the market on an on-going basis with
their mix of professional qualification and market knowledge, they are better
placed than the average investors to understand the markets.
• Diversification:
Since a Mutual Fund scheme invests in number of stocks and/or Debentures, the
associated risks are greatly reduced.
When compared to direct investments in the capital market, Mutual Funds Cost
less. This is due to savings in brokerage costs, demat costs, Depository costs etc.
• Liquidity:
• Transparency:
You will always have access to up-to-date information on the value of your
investment in additional to the complete portfolio of investments, the
Proportion allocated to different assets and the fund manager’s investment
strategy.
Professional management
Investment diversification
Liquidity
Explicit investment goals
It seems strange to compare mutual funds to stocks since mutual funds are
primarily composed of stocks, but it is important to distinguish the two because
there are some notable advantages to using mutual funds.
Get Focused: I will admit that investing in individual stocks can be fun because
each company has a unique story. However, it is important for people to focus on
making money. Investing isn't a game. Your financial future depends on where
you put you hard earned dollars and it shouldn't be taken lightly.
Most people who invest in mutual funds don't know what they are doing.
They take advice from someone at a bank or perhaps a friend and plunk
down money into a fund. Sometimes this strategy works, but most of the
time, it doesn't.
When you invest your money in a mutual fund, you are trusting someone
to invest in the stock market for you. Because of this, you want to be sure
this person knows what he or she is doing. Also, you want to make sure
that this person is not charging you too much to manage your money for
you. Mutual funds fees are "hidden," in the sense that they do not charge
you an upfront fee but rather a percentage of the amount of money in
your account. If this percentage is too high, you would do better just
blindly picking stocks yourself.
Here are four helpful tips for choosing the right mutual funds.
1. Keep the fees low. Generally, expense fees should not be much higher
than 1% if it is just a basic domestic equity fund. You should never invest
money in a fund that also charges a "load," which is an additional fee that
is ridiculous to pay. Never invest in funds that charge loads; those funds
are for suckers.
anyway or else they'll just have money laying around. There's little reason
to invest in a fund with over $5 billion in assets. It's best if it's under $2
billion generally.
3. Consider an index fund. This is a fund that tracks a stock index, such
as the S&P 500. For these funds, the manager just buys whatever stocks
happen to be in the index. Since this is not much work, the fees are much
lower. Even though this method is simple, it has proven to perform better
than most mutual funds. Some high performance index funds include
FSMKX (Fidelity S&P 500) and VIMSX (Vanguard S&P 400 Midcap.
4. Evaluate the fund's strategy. If you have a long term outlook, look for a
more aggressive fund that invests in small-cap stocks, international
stocks, and riskier stocks in general. High risk tends to result in high
performance in the long run. If you are more risk-averse, consider an
S&P 500 index fund.
Mutual funds invest the money collected from the investors in securities
markets. In simple words, Net Asset Value is the market value of the
securities held by the scheme. Since market value of securities changes
every day, NAV of a scheme also varies on day to day basis. The NAV
per unit is the market value of securities of a scheme divided by the total
number of units of the scheme on any particular date. For example, if the
market value of securities of a mutual fund scheme is Rs 200 lakhs and
the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors,
then the NAV per unit of the fund is Rs.20. NAV is required to be
disclosed by the mutual funds on a regular basis - daily or weekly -
depending on the type of scheme.
Human beings from their very inception want to earn and save
something for unwanted situations. In earlier stage he puts his earnings
under the soil to keep it safe from being stolen. Later banking system was
developed and subsequently different kind of instruments for investment
is being used. Nowadays, investments in share market instruments are
much preferred by big as well as small investors. Everyone wants to earn
extraordinary returns from share market booms. And Mutual Funds are
one of such ways through investments in share markets are being carried
out by small and marginal investors. A Mutual fund is an investment
company that issues shares to the public. The money it receives from
shareholders is pooled and invested in a wide range of stocks, bonds, or
other money market instruments to meet specific investment objectives.
The various instruments included in a fund's portfolio are handled by
professional money managers in line with the stated investment policy of
the fund.
With the increase in Mutual Fund players in India, a need for Mutual
Fund Association in India was generated to function as a non-profit
organization. Association of Mutual Funds in India (AMFI) was
incorporated on 22nd August, 1995.
At last but not the least Association of Mutual Fund of India also
disseminate information on Mutual Fund Industry and undertakes
studies and research either directly or in association with other
bodies.
Bank Sponsored
Institutions
Private Sector
Indian:-
The aim of balanced funds is to provide both growth and regular income
as such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for
investors looking for moderate growth. They generally invest 40-60% in
equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes
invest exclusively in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short
periods.
Gilt Fund
Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in
the securities in the same weightage comprising of an index. NAVs of
such schemes would rise or fall in accordance with the rise or fall in the
index, though not exactly by the same percentage due to some factors
There are also exchange traded index funds launched by the mutual funds
which are traded on the stock exchanges.
These are the funds/schemes, which invest in the securities of only those
sectors or industries as specified in the offer documents.
e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these
funds are dependent on the performance of the respective
sectors/industries. While these funds may give higher
returns, they are more risky compared to diversified funds.
Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time.
They may also seek advice of an expert.
A no-load fund is one that does not charge for entry or exit. It means the
investors can enter the fund/scheme at NAV and no additional charges
are payable on purchase or sale of units.
Assured return schemes are those schemes that assure a specific return to
the unitholders irrespective of performance of the scheme.
A scheme cannot promise returns unless such returns are fully guaranteed
by the sponsor or AMC and this is required to be disclosed in the offer
document.
Can a mutual fund change the asset allocation while deploying funds
of investors?
they must consider the track record of the mutual fund and should take
objective decisions.
Statement of account
Transfer of Units
Dividend warrants
There are a number of other web sites which give a lot of information of
various schemes of mutual funds including yields over a period of time.
Many newspapers also publish useful information on mutual funds on
daily and weekly basis. Investors may approach their agents and
distributors to guide them in this regard.
Complaint redressing
Investors would find the name of contact person in the offer document of
the mutual fund scheme that they may approach in case of any query,
complaints or grievances. Trustees of a mutual fund monitor the activities
of the mutual fund. The names of the directors of asset Management
The regulations bar Mutual Funds from options trading, short selling
and carrying forward transactions in securities. The Mutual Funds have
been permitted to invest only in transferable securities in the money and
capital markets or any privately placed debentures or securities debt.
SEBI grants registration to only those mutual funds that can prove an
efficient and orderly conduct of business. The track record of sponsors, a
minimum experience of five years in the relevant field of Investment,
financial services, integrity in business transactions and financial
soundness are taken into account. The regulations also prescribe the
advertisement code for the marketing schemes of Mutual Funds, the
contents of the trust deed, the investment management agreement and the
scheme-wise balance sheet. Mutual Funds are required to be formed as
trusts and managed by separately formed as trusts and managed by
separately formed Asset Management Companies (AMC). The minimum
net worth of such AMC is stipulated at Rs.5 crores of which, the Mutual
Fund should have a custodian who is not associated in any way with the
AMC and registered with the SEBI.
Further, the Mutual Funds are now under the obligation to publish
scheme-wise annual reports, furnish six month un-audited accounts,
quarterly statements of the movements of the net asset value and
quarterly portfolio statements to the SEBI. There is also a stipulation that
the Mutual Funds should ensure adequate disclosures to the investors.
SEBI has agreed to let the Mutual Funds buy back the units of their
schemes. However, the funds cannot advertise this facility in their
The increase in the number of MFs and the types of schemes offered
by them necessitated uniform norms for valuation of investments and
accounting practices in order to enable the investors to judge their
performance on a comparable basis. The Mutual Fund Regulations is
sued in December 1996 provide for a scheme-wise report and justification
of performance, disclosure of large investments which constitute a
significant portion of the portfolio and disclosure of the movements in the
unit capital.
The consent of the investors has to be obtained for bringing about any
change in the fundamental attributes of the scheme on the basis of which
the unit holders had made initial investments. The regulation empowers
At the end of 2005 July, Indian mutual fund industry reached Rs. 1,
75, 918 Crores. It is estimated that by 2010 March-end, the total assets of
all scheduled commercial banks should be Rs. 40, 90, 000 crores.
The annual composite rate of growth is expected 13.4% during the rest
of the decade. In the last 5 years we have seen annual growth rate of 9%.
According to the current growth rate, the year 2010, mutual fund assets is
double.
Going by the above facts and generally, mutual funds have often been
considered a good route to invest and earn returns with reasonable safety.
Small and big investors have both invested in instruments that have suited
their needs. And so equity and debt funds have attracted investments
alike. The performance of the investments, equity in particular, for the
last one-year, has however been disappointing for the investors.
The fall in NAVs of equity funds, and it is really steep in some, even
to the extent of 60-70 percent, has left investors disgusted. Such backlash
was only to be expected when funds, in a hurry to post good returns
invested in volatile tech stocks. The move, though good under conducive
market conditions, is the point of rebuttal now. Owing to volatility in
market and profit warnings by some IT majors, tech stocks have been on
the downhill journey and the result is fall in NAVs of most equity funds.
This hurts the investor but then investments in equity are never safe.
Mutual funds are not just guilty of mismanaging their risks as the recent
survey by Price water house Coopers indicates but also not educating
their investors enough on the risks facing them. It is for the mutual
benefit of the investors as well as mutual funds that investor is educated
enough or else an agitated investor might route his investments to other
avenues that are considered safe.
Debt funds are safe investments and generate returns far in excess of
what other so-called safe avenues such as banks generate. Despite this,
the inflow of funds in debt funds and banks is by no means comparable.
The factor contributing to this the lack of understanding caused by
improper guidance by the intermediaries.
Till now, Investor education has been one of the issues, less cared for,
by the industry. The industry focused upon the amounts and not why a
person wanted to invest or whether a particular product suited him or not.
While educating the customer might not have been on the cards earlier,
the things are beginning to change now.
With SEBI passing on the guidelines, the funds will engage in investor
education. The guidelines state that funds will utilize the income earned
on unclaimed money lying with them for a period exceeding three years
to educate the investors. AMFI has started a certification program for
Although the investors themselves are also guilty of picking funds that
were not suited for them, the blame can’t lie square on their shoulders
alone. The industry has also got to bear some of it. With such programs
becoming mandatory, it can be ensured to some extent that ignorance
ceases to be an aspect associated with the industry.
Till now, investors have been ignorant about the kind of fund to be
picked or how to select a fund. Teaching an investor how to select a fund
is thus an important aspect. Educated investors can, on their part, ask
pertinent questions to find funds that qualify to be in their portfolio as per
their risk bearing capacity.
It would not be improper to say that investor education is still the key
to managing the funds handed over by investors. The investors are
important to the industry and likewise, mutual funds form an important
avenue for an investor. It would thus be of critical importance to educate
people for an informed investor is in the best position to pick up Schemes
New fund offerings are both open ended and closed ended funds. This
fund will primarily have a top down approach to identify and create a
diversified Portfolio of Companies, which present the most attractive
investment opportunity. New fund offerings are close-ended fund with 3
years tenor. Usually NFO’s open for one month and then again reopens
after one month from last date of filling the application. Usually investors
go for open-ended scheme in NFO’s as the investors can enter and exit
from the funds at any time and on the other hand some investors go for
NFO’s with closed ended scheme. They go for different options
depending on the amount invested as if they invested huge amount they
can go for either for dividend or growth option. On the other hand if the
amount invested is less than they go for growth option.
On-Going Funds
RATE OF RETURN
The net asset value of the fund is the cumulative market value of the
assets fund 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 NAV per unit
as NAV, ignoring the “per unit”. We also abide by the same convention.
The Net Asset Value (NAV) of the units will be determined as of every
working day and for such other days as may be required for the purpose
of transaction of units.
The NAV shall be calculated in accordance with the following formula,
or such other formula as may be prescribed by SEBI from time to time.
Main purpose for choosing this topic is that the Mutual Funds have
recorded the tremendous growth in the investment sector. Mutual Funds
have contributed major portion in the growth of the economy. It also
involves lots of growth opportunity. As for finance student it will be a
great learning experience to have the project on Mutual Funds which has
the scope to have clear-cut insight of Mutual funds. The topic requires the
efforts on collecting the historical records of the Mutual Funds and equity
Market and other investment avenues. It was helpful me to have the brief
idea about all those investment avenues also.
Another important thing i have learnt is, as this project was objected
towards the role of AMFI in the mutual fund. Also SEBI Rules &
Regulation in Mutual Fund and advantages & disadvantages of New
Fund Offerings[NFO’s] and On-going Funds. it helped me to study in
which scheme and which fund I have to invest and suggest others to
invest in mutual fund avenue when compared with other investment
avenues available. This made me to select the funds, which have good
track records with greater consistency. Therefore it ignited the push
towards putting hard efforts to make this report a competitive one.
Mutual Fund as the best investment avenue and make the clients agree to
invest hence increase the volume and profits.
To me: -
To the organization
During the project work I also helped the organization in its day- to-
day
Activities, which gave me the experience, and was one among in
working with
the organization.
METHODOLOGY ADOPTED
Methodology
• Primary data
Information was gathered from discussion with the clients of the
company. And the further details will be collected through the
company officials.
• Secondary data:
Secondary data was collected from the various websites like
www.amfiindia.com
www.mutualfundsindia.com
www.finance.yahoo.com
www.bseindia.com
www.nseindia.com
FINDINGS
5. It is found that the organization has the good client base in the equity
section.
RECOMENDATION
BIBLIOGRAPHY
Websites :-
www.amfiinidia.com
www.mutualfundsindia.com
www.bseindia.com
www.nseindia.com
www.finance.yahoo.com
Business world
Business Line
Business Standard
Mutual Fund Insight
TV Channels:-
CNBC TV 18
NDTV Profit
And the fact sheets of the funds considered for the study.