Escolar Documentos
Profissional Documentos
Cultura Documentos
INVESTMENT
Submitted to:
Submitted by:
Director Academics Tiwari Deepak kumar
IIMT,
Enr. No.-1031
Greater Noida.
PGDMM ,1ST Batch
Enr no:1031
CERTIFICATE
DATE:
Name of
the Guide:
Seal/Stamp of the Organization Mr.
Sumeet chattwal
PREFACE
Mutual funds have been around for a long time, dating back to the
early 19th century. The first modern American mutual fund opened
in 1924, yet it was only in the 1990's that mutual funds became
mainstream investments, as the number of households owning
them nearly tripled during that decade. With recent surveys
showing that over 88% of all investors participate in mutual funds,
you're probably already familiar with these investments, or perhaps
even own some. In any case, it's important that you know exactly
how these investments work and how you can use them to your
advantage.
A lone UTI with just one scheme in 1964 now competes with as
many as 400 odd products and 34 players in the market. In spite of
the stiff competition and losing market share, UTI still remains a
formidable force to reckon with.
Last six years have been the most turbulent as well as exiting ones
for the industry. New players have come in, while others have
decided to close shop by either selling off or merging with others.
Product innovation is now passé with the game shifting to
performance delivery in fund management as well as service.
Funds have shifted their focus to the recession free sectors like
pharmaceuticals, FMCG and technology sector. Funds
performances are improving. Funds collection, which averaged at
less than Rs.100bn per annum over five-year period spanning
1993-98 doubled to Rs.210bn in 1998-99. In the current year
mobilization till now have exceeded Rs.300bn. Total collection for
the current financial year ending March 2000 is expected to reach
Rs.450bn.
Last but not the least I am very obliged to the management and
member Reliance Money Ltd, Delhi who cooperated with me,
devoting their valuable time for working and preparing this project
report.
Page No.
1. Executive Summary
2. Introduction
3. Objective
4. Company Profile 25
Vision 38
Marketing Policies
6. Project Details
Project Topic
Capital Market
Offshore investment
Mutual Fund (Introduction)
Fund structure and constituents
Regulatory aspect of Mutual Fund
Accounting and Valuation
Tax aspect
Performance measure
Types of mutual fund
Process of investing
Asset allocation
Benefits of mutual fund
Myths about mutual fund
Global Scenario and Market Trend
7. Feedback
Competitors
Limitation
8. Bibliography
9. Annexure
What I learnt
. We are one of the leading DP and enjoy the trust of more than
75,000 investors. We offer a quick, secure and hassle free
alternative to holding the securities and commodities in physical
form. We are one of the few Depository Participants offering
depository facilities for commodities. We are empanelled with
both NCDEX, MCEX. &NMC.
Mutual fund and asset allocation is very vast topic and as well as
interesting also. Mutual Fund is one of the best investment
alternatives with minimum risk and fair returns among different
investment alternative available in the financial risk and asset
allocation is one of the financial technique for designing the
portfolio of the customer according to their profile and risk
appetite. Following are the main objective of the project.
About Group
Headquartered in Mumbai
Mission
Wired to Perfection
To realize its vision, the Reliance money has taken one step ahead.
Today, Reliance money provides various financial services which
include broking (stocks & commodities), depository participant
services, portfolio management services, advisory on mutual fund
investments and many more.
Vision
BOARD OF DIRECTORS
Marketing Division:-
Bosco D'mello 79203 9322193348
Zahid Gawandi 79238 9323609245
Dinesh (Vishram
Dhuri) 79231 9323609340
Nazish Ahmed 79236 9323135220
Mukesh Waje 79233 9322321006
EQUITY DIVISION:-
Ravi Doshi 79204 9322933952
Anand
Krishnamoorthy 79242 9322655088
Ravi Jain 79243 9324714684
OFFSHORE DIVISION:-
Ravi Doshi 79204 9322933952
Anand 79242 9322655088
Krishnamoorthy
Ravi Jain 79243 9324714684
MANAGERIAL HIERARCHY
Director Director
Vice President
Manager
Franchise
Manager
Sub Broker
Manager
Co- ordinator
Senior Manager
Direct Channel
Senior Executive
Senior Executive
Senior Executive
Manager
Accounts
Company’s Approach
Specialized Services
• Equity Trading.
• Derivative Trading.
• Commodities Trading.
• Commodities Trading in International Markets through
DGCX.
• Mutual Fund & IPO Distribution.
• Depository Services for Shares & Commodities.
• Real time Internet Trading.
• Research support to the clients through SMS
• Clearing Services for Trading Members in NSE F&O and
NMCE
Clearing Services
Our massive R&D facility caters to the need of Investors, who are
continuously in need of opportunities for striking rich rewards on
their investment. We have one of the most advanced, hitech in-
house R&D wing with some of the best people, process and
technology resources providing complete research solutions on
Equity, Commodities, IPO’s and Mutual Funds. We offer proactive
and timely world class research based advice and guidance to our
clients so that they can take informed decisions. Click on Research
to unveil the treasure.
a] Basis of preparation
[c] Intangibles
Computer software
[d] Depreciation
[e] Leases
[f] Investments
[g] Inventories
Finished goods
Work-in-process
Sale of Goods:
Interest:
Dividends:
(ii) Conversion
Representative offices
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the
period. The weighted average numbers of equity shares
outstanding during the period are adjusted for events of bonus
issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the
period are adjusted for the effects of all dilutive potential equity
shares.
HR POLICY
Mission
Expectations
Primary Market
Secondary Market
Market
Functions Of Stock Exchange
CAPITAL MARKET
Introduction
The market for long-term securities like bonds, equity stocks and
preferred stocks is divided into primary market and secondary
market. The primary market deals with the new issues of securities.
Outstanding securities are traded in the secondary market, which is
commonly known as stock market or stock exchange. In the
secondary market, the investors can sell and buy securities. Stock
markets predominantly deal in the equity shares. Debt instruments
like bonds and debentures are also traded in the stock market.
Well-regulated and active stock market promotes capital
formation. Growth of the primary market depends on the
secondary market. The health of the economy is reflected by the
growth of the stock market.
Companies raise funds to finance their projects through various
methods. The promoters can bring their own money or borrow
from the financial institutions or mobilize capital by issuing
securities. The funds may be raised through issue of fresh shares at
par or premium, preference shares, debentures or global depository
receipts. The main objectives of a capital issue are given below:
To promote a new company
To expand an existing company
To diversify the production
To meet the regular working capital requirements
To capitalize the reverses
Market Segments
There are two major types of issuers who issue securities. The
corporate entities issue mainly debt and equity instruments (shares,
debentures, etc.), while the governments (central and state
governments) issue debt securities (dated securities, treasury
bills). The secondary market enables participants who hold
securities to adjust their holdings in response to changes in their
assessment of risk and return. They also sell securities for cash to
meet their liquidity needs. The exchanges do not provide facility
for spot trades in a strict sense. Closest to spot market is the cash
market in exchanges where settlement takes place after some time.
Trades taking place over a trading cycle (one day under rolling
settlement) are settled together after a certain time. All the 23 stock
exchanges in the country provide facilities for trading of corporate
securities. Trades executed on NSE only are cleared and settled by
a clearing corporation which provides notation and settlement
guarantee. Nearly 100% of the trades in capital market segment are
settled through demat delivery. NSE also provides a formal trading
platform for trading of a wide range of debt securities including
government securities in both retail and wholesale mode. NSE also
provides trading in derivatives of equities, interest rate as well
indices.
• Equities
• Bonds issued by both Government and Companies
• Futures on benchmark indices as well as stocks
• Options on benchmark indices as well as stocks
• Futures on interest rate products like Notional 91-day T-Bills, 10
year notional zero coupon bond and 6% notional 10 year bond.
The past decade in many ways has been remarkable for securities
market in Indian It has grown exponentially as measured in terms
of amount raised from the market,number of stock exchanges and
other intermediaries, the number of listed stocks,market
capitalisation, trading volumes and turnover on stock exchanges,
and investor population. Along with this growth, the profiles of the
investors, issuers and intermediaries have changed significantly.
The market has witnessed several institutional changes resulting in
drastic reduction in transaction costs and significant improvements
in efficiency, transparency, liquidity and safety. In a short span of
time, Indian derivatives market has got a place in list of top global
exchanges. In single stock futures category, the Futures Industry
Association (FIA) placed NSE in second position in the year 2000.
Particulars Number of
participants
Securities Appellate Tribunal
1
Regulator 4
Depositories 2
Stock Exchanges with equity trading 23
Listed Securities 9,413
Brokers 9,519
Sub-brokers 13,291
FIIs 502
Portfolio Managers 54
Custodians 11
Share Transfer Agents 143
Merchant Bankers 124
Bankers to an Issue 67
Debenture Trustees 35
Underwriters 43
Venture Capital Funds 43
Mutual Funds 38
Collective Investment Schemes 0
It is not that the users and suppliers of funds meet each other and
exchange funds for securities. It is difficult to accomplish such
double coincidence of wants. The amount of funds supplied by the
supplier may not be the amount needed by the user. Similarly, the
risk, liquidity and maturity characteristics of the securities issued
by the issuer may not match preference of the supplier. In such
cases, they incur substantial search costs to find each other. Search
costs are minimised by the intermediaries who match and bring the
suppliers and users of funds together. These intermediaries may act
as agents to match the needs of users and suppliers of funds for a
commission, help suppliers and users in creation and sale of
securities for a fee or buy the securities issued by users and in turn,
sell their own securities to suppliers to book profit. It is, thus, a
misnomer that securities market disintermdiates by establishing a
direct relationship between the savers and the users of funds. The
market does not work in a vacuum; it requires services of a large
variety of intermediaries. The disintermediation in the securities
market is in fact an intermediation with a difference, it is a risk-
less intermediation, where the ultimate risks are borne by the
savers and not the intermediaries. A large variety and number of
intermediaries provide intermediation services in the Indian
securities market. The securities market has essentially three
categories of participants, namely the issuers of securities,
investors in securities and the intermediaries and products include
equities, bonds and derivatives. The issuers and investors are the
consumers of services rendered by the intermediaries while the
investors are consumers (they subscribe for and trade in securities)
of securities issued by issuers.
The past decade in many ways has been remarkable for securities
market in India. It has grown exponentially as measured in terms
of amount raised from the market, number of stock exchanges and
other intermediaries, the number of listed stocks, market
capitalisation, trading volumes and turnover on stock exchanges,
and investor population. Along with this growth, the profiles of the
investors, issuers and intermediaries have changed significantly.
The market has witnessed fundamental institutional changes
resulting in drastic reduction in transaction costs and significant
improvements in efficiency, transparency and safety.
DEPENDENCE ON SECURITIES MARKET
Corporate Sector
Governments
Along with increase in fiscal deficits of the governments, the
dependence on market borrowings to finance fiscal deficits has
increased over the years. During the year 1990-91, the state
governments and the central government financed nearly 14% and
18% respectively of their fiscal deficit by market borrowing. In
percentage terms, dependence of the state governments on market
borrowing did not increase much during the decade 1991-2001. In
case of central government, it increased to 77.6% by 2002-03.
Households
Investor Population
The Society for Capital Market Research and Development carries
out periodical surveys of household investors to estimate the
number of investors. Their first survey carried out in 1990 placed
the total number of share owners at 90-100 lakh. Their second
survey estimated the number of share owners at around 140-150
lakh as of mid-1993. Their latest survey estimates the number of
shareowners at around 2 crore at 1997 end, after which it remained
stagnant up to the end of 1990s. The bulk of increase in number of
investors took place during 1991-94 and tapered off thereafter.
49% of the share owners at the end of 2000 had, for the first time,
entered the market before the end of 1990, 44% entered during
1991-94, 6.3% during 1995-96 and 0.8% since 1997. The survey
attributes such tapering off to persistent depression in the share
market and investors’ bad experience with many unscrupulous
company promoters and managements.
Distribution of Investors
The Society for Capital Market Research & Development
estimates that 15% of urban households and only 0.5-1.0% of
semi-urban and rural households own shares. It is estimated that
4% of all households own shares.
Distribution of Beneficial Accounts with NSDL
S. No. States/Union Beneficial Accounts
Territories Number % to total
1 Andhra Pradesh194,405 6.08
2 Bihar 27,340 0.85
3 Chandigarh 7,891 0.25
4 Delhi 323,693 10.12
5 Goa 11,374 0.36
6 Gujarat 536,720 16.78
7 Himachal Pradesh3,706 0.12
8 Jammu & Kashmir7,320 0.23
9 Karnataka 195,159 6.10
10 Kerala 76,793 2.40
11 Madhya Pradesh 71,158 2.23
12 Maharashtra 911,997 28.52
13 Orissa 14,701 0.46
14 Pondicherry 2,481 0.08
15 Punjab 52,434 1.64
16 Rajasthan 72,316 2.26
17 Tamil Nadu 230,407 7.20
18 Uttar Pradesh 188,835 5.90
19 West Bengal 214,432 6.71
20 Others 54,802 1.71
Total 3,197,964 100.00
An indirect, but very authentic source of information about
distribution of investors is the data base of beneficial accounts with
the depositories. By February 2003, there were 3 million beneficial
accounts with the National Securities Depository Limited (NSDL).
The state-wise distribution of beneficial accounts with NSDL
expected Maharashtra and Gujarat account for nearly 45% of total
beneficial accounts.
PRIMARY MARKET
Stocks available for the first time are offered through new issue
market. The issuer may be a new company. These issues may be of
new type or the security used in the past. In the new issue market
the issuer can be considered as a manufacturer. The issuing houses,
investment bankers and brokers act as the channel of distribution
for the new issues. They take the responsibility of selling the
stocks to the public.
A total of Rs. 2,520,179 million were raised by the government
and corporate sector during 2002-03 as against Rs. 2,269,110
million during the preceding year. Government raised about two
third of the total resources, with central government alone raising
nearly Rs. 1,511,260 million.
Corporate Securities
Government Securities
The primary issues of the Central Government have increased
many-fold during the decade of 1990s from Rs. 89,890 million in
1990-91 to Rs. 1,511,260 million in 2002-03. The issues by state
governments increased by about twelve times from Rs. 25,690
million to Rs. 308,530 million during the same period. The Central
Government mobilised Rs. 1,250,000 million through issue of
dated securities and Rs. 261,260 million through issue of T-bills.
After meeting repayment liabilities of Rs. 274,200 million for
dated securities, and redemption of T-bills of Rs. 195,880 million,
net market borrowing of Central Government amounted to Rs.
1,041,180 million for the year 2002-03. The state governments
collectively raised Rs. 305,830 million during 2002-03 as against
Rs. 187,070 million in the preceding year. The net borrowings of
State Governments in 2002-03 amounted to Rs. 290,640 million.
Along with growth of the market, the investor base has become
very wide. In addition to banks and insurance companies,
corporates and individual investors are investing in government
securities. With dismantling of control regime, and gradual
lowering of the SLR and CRR, Government is borrowing at near–
market rates. The coupons across maturities went down recently
signifying lower interest rates. The weighted average cost of its
borrowing at one stage increased to 13.75% in 1995- 96, which
declined to 7.34% in 2002-03. The maturity structure of
government debt is also changing. In view of bunching of
redemption liabilities in the medium term, securities with higher
maturities were issued during 2002-03. About 64% of primary
issues were raised through securities with maturities above 5 years
and up to 10 years. As a result the weighted average maturity of
dated securities increased to 13.83 years from 6.6 years in 1997-
98.
Relationship between the Primary and Secondary Market
1. The new issues market cannot function without the
secondary market. The secondary market or the stock
market provides liquidity for the issued securities. The
issued securities are traded in the secondary market
offering liquidity to the stocks at a fair price.
2. The stock exchanges through their listing requirements,
exercise control over the primary market. The company
seeking for listing on the respective stock exchange has to
comply with all the rules and regulations given by the
stock exchange.
3. The primary market provides a direct link between the
prospective investors and the company. By providing
liquidity and safety, the stock markets encourage the
public to subscribe to the new issues. The marketability
and the capital appreciation provided in the stock market
are the major factors that attract the investing public
towards the stock market. Thus, it provides an indirect link
between the savers and the company.
4. Even though they are complementary to each other, their
functions and the organizational set up are different from
each other. The health of the primary market depends on
the secondary market and vice versa.
Functions of Primary Market
The main service functions of the primary market are organization,
underwriting and distribution. Origination deals with the origin of
the new issue. The proposal is analyzed in terms of the nature of
the security, the size of the issue, and timing of the issue and
floatation method of the issue. Underwriting contract makes the
share predictable and removes the element of uncertainty in the
subscription. Distribution refers to the lead managers and brokers
to the issue.
In the new issue market stocks are offered for the first time. The
functions and the organization of the new issue market are
different from the secondary market. In the new issue the lead
mangers manage the issue, the underwriters assure to take up the
unsubscribed portion according to his commitment for a
commission and the bankers take up the responsibility of the
collecting the application form and the money. Advertising
agencies promote the new issue through advertising. Financial
institutions and underwriter lend term loans to the company.
Government agencies regulate the issue. The new issues are
offered through prospectus. The prospectus is drafted according to
SEBI guidelines disclosing the needed information to the investing
public. In the bought out deal banks or a company buys the
promoters shares and they offer them to the public at a later date.
This reduces the cost of raising the fund. Private placement means
placing of the issue with financial institutions. They sell shares to
the investors at a suitable price. Right issue means the allotment of
shares to the previous shareholders at a pro-ratio basis. Book
building involves firm allotment of the instrument to a syndicate
created by the lead managers. The book runner manages the issue.
Norms are given by the SEBI to price the issue. Proportionate
allotment method is adopted in the allocation of shares. Project
appraisal, disclosure in the prospectus and clearance of the
prospectus by the stock exchanges protect the investors in the
primary market along with the active role played by the SEBI
SECONDARY MARKET
The market for long-term securities like bonds, equity stocks and
preferred stocks is divided into primary market and secondary
market. The primary market deals with the new issues of securities.
Outstanding securities are traded in the secondary market, which is
commonly known as stock market or stock exchange. In the
secondary market, the investors can sell and buy securities. Stock
markets predominantly deal in the equity shares. Debt instruments
like bonds and debentures are also traded in the stock market.
Well-regulated and active stock market promotes capital
formation. Growth of the primary market depends on the
secondary market. The health of the economy is reflected by the
growth of the stock market.
Corporate Securities
The number of stock exchanges increased from 11 in 1990 to 23
now. All the exchanges are fully computerised and offer 100% on-
line trading. 9,413 companies were available for trading on stock
exchanges at the end of March 2003. The trading platform of the
stock exchanges was accessible to 9,519 members from over 358
cities on the same date.
The market capitalisation grew ten fold between 1990-91 and
1999-00. It increased by 221% during 1991-92 and by 107%
during 1999-00. All India market capitalisation is estimated at Rs.
6,319,212 million at the end of March 2003. The market
capitalisation ratio, which indicates the size of the market,
increased sharply to 57.4% in 1991-92 following spurt in share
prices. The ratio further increased to 85% by March 2000. It,
however, declined to 55% at the end of March 2001 and to 29% by
end March 2003.
The legal system governs both the rights of management and the
rights of investors. The legal system also specifies the recourse
available to investors. Recent research indicates that countries vary
in the level of protection afforded to minority shareholders
(LaPorta et al, 1996). Generally, countries with common-law
traditions afford the highest protection, while civil-law countries,
particularly the French civil-law systems, provide the least amount
of protection.
For purposes of this paper, the main focus and emphasis are on
market-based governance services.
B. Information Production.
Markets serve to aggregate the diverse opinions held by investors
regarding the financial prospects of a company, thereby providing
management with an important guide when it
comes to its investment decisions. This price discovery role of
secondary equity markets is well recognized. Prices aggregate the
diverse opinions and convey that collective wisdom to
management. This flow of information from the market to the firm
might be especially relevant in today's economy, since consensus
on the optimal management actions is so difficult to achieve due to
rapid technological change and constantly changing market
conditions.
Functions of Stock Exchange
Maintains active trading: shares are traded on the stock
exchanges, enabling the investors to buy and sell securities.
The prices may vary from transactions to transaction. A
continuous trading increases the liquidity or marketability of
the shares traded on the stock exchanges.
Fixation of prices: Price is determined by the transactions that
flow from investors’ demand and suppliers’ preferences.
Usually the traded prices are made known to the public. This
helps the investors to make better decisions.
Ensures safe and fair dealing: The rules, regulations and by-
laws of the stock exchanges’ provide a measure of safety to
the investors. Transactions are conducted under competitive
conditions enabling the investors to get a fair deal.
Aids in financing the industry: A continuous market for shares
provides a favourable climate for raising capital. The
negotiability and transferability of the securities helps the
companies to raise long-term funds. When it is easy to trade
the securities, investors are willing to subscribe to the initial
public offerings. This stimulates the capital formation.
Dissemination of information: Stock exchanges provide
information through their various publications. They publish
the share prices traded on daily basis along with the volume
traded. Directory of Corporate Information is useful for the
investors’ assessment regarding the corporate. Handouts,
handbooks and pamphlets provide information regarding the
functioning of the stock exchanges.
Performance inducer: The prices of stocks reflect the
performance of the traded companies. This makes the
corporate more concerned with its public image and tries to
maintain good performance.
Self-regulating organization: The stock exchanges monitor the
integrity of the members, brokers, listed companies and
clients. Continuous internal audit safeguards the investors
against unfair trade practices. It settles the dispute between
member brokers, investors and brokers.
The intermediaries, of all shapes and sizes, who package and sell
securities, compete with one another for the chance to handle
investors/issuers’ money. The quality of their services determines
the shape and health of the securities market. In developed markets
and in some of the developing markets, this is ensured through a
system of testing and certification of persons joining market
intermediaries in the securities market. A testing and certification
mechanism that has become extremely popular and is sought after
by the candidates as well as employers is a unique on-line testing
and certification programme called National Stock Exchange’s
Certification in Financial Markets (NCFM). It is an on-line fully
automated nation-wide testing and certification system where the
entire process from generation of question paper, invigilation,
testing, assessing, scores reporting and certifying is fully
automated - there is absolutely no scope for human intervention. It
allows tremendous flexibility in terms of testing centres, dates and
timing and provides easy accessibility and convenience to
candidates as he can be tested at any time and from any location. It
tests practical knowledge and skills, that are required to operate in
financial markets, in a very secure and unbiased manner, and
certifies personnel who have a proper understanding of the market
and business and skills to service different constituents of the
market. It offers 9 financial market related modules.
Market Design
Primary Market
The movement of the S&P CNX NIFTY, the most widely used
indicator of the market, is presented in Chart 5.1. In the very first
year of liberalization, i.e. 1991-92, it recorded a growth of 267%,
followed by sharp decline of 47% in the next year as certain
irregularities in securities transactions were noticed. The market
picked up next year thanks to increased inflow of foreign funds,
and increased investor interest. Thereafter the market remained
subdued. The index recorded a decline of 3.47% during 1998-99
under the pressure of economic sanctions following detonation of
nuclear device, continuing woes of East Asian financial markets,
volatility of Indian currency and worries about financial health of
UTI’s US-64 scheme. The Union Budget of 1999 brought cheers to
the market. The market moved on a roller coaster ride, but a
distinct rising trend emerged due to all-round positive perception
about strength of the Government and also its commitment towards
second generation reforms, improved macro-economic parameters
and better corporate results. The S&P CNX Nifty firmed up during
1999-2000 by 42% which was nearly four times the average return
offered on bank deposits. The trend got reversed during 2000-01,
which witnessed large sell-offs in new economy stocks in global
markets and deceleration in the growth of the domestic economy.
This brought down Nifty from a high of 1636.95 in April 2000 to a
low of 1108.20 in October 2000. The market looked up in
November-January in anticipation of a good budget. However it
did not last long as the market received shocking news about
imminent payment crisis on certain exchanges, large scale
manipulations in stock prices and revelation of large scale
corruption in the procurement of defense equipments. The Nifty
closed at 1148.20 at the end of March 2001 recording a fall of
about 25% during 2000-01. The trend precipitated further with
introduction of rolling settlement and withdrawal of deferral
products in July 2002, suspension of repurchase facility under
UTI’s US-64 scheme, terrorist attack on world Trade Centre in
September 2002, etc. which caused a further decline in S&P CNX
Nifty by 1.6% during 2001-02. The Nifty closed at 978.2 at the
end of March 2003.
Government Securities
The trading volumes in government securities exceeded the
combined trading volumes in equity segments of all the exchanges
in the country during 2002-03. The aggregate turnover in central
and state government dated securities, including treasury bills,
through SGL transactions increased by manifold between 1994-95
and 2002-03. During 2002-03 it reached a level of Rs. 19,557,313
million, recording about 24.3% growth over Rs.15,738,930 million
in the previous year. Such growing turnover reflects further
deepening of the market. The bulk of transactions during 2000-02
were on outright basis. The share of outright transactions in
government securities increased from 23.2% in 1995-96 to 71.2%
in 2002-03. The share of repot transactions declined
correspondingly from 76.8% in 1995-96 to 29% in 2002-03. The
share of WDM segment of NSE in total turnover for government
securities decreased marginally from 58.9% in 2000-01 to 52% in
2002-03. As compared to the increase in overall turnover of
government securities by 24%, the same on WDM grew by 11%
during 2002-03. Share of WDM in transactions of dated securities
decreased from 61.1% in 2001-02 to 55.6% in 2002-03. Its share in
transactions of T-bills decreased from 27.4% in 2001-02 to 21.5%
in 2002-03. Government debt, which constitutes about three-fourth
of the total outstanding debt, has the highest level of liquidity
amongst the fixed income instruments in the secondary market.
The share of dated securities in total turnover of government
securities has been increasing over the years. Two-way quotes are
available for the active gilt securities from the primary dealers.
Though many trades in the gilts take place through telephone, a
larger chunk of trades get routed through NSE brokers.
Derivatives Market
Trading in derivatives of securities commenced in June 2000 with
the enactment of enabling legislation in early 2000. Derivatives are
formally defined to include: (a) a security derived from a debt
instrument, share, loan whether secured or unsecured, risk
instrument or contract for differences or any other form of security,
and (b) a contract which derives its value from the prices, or index
of prices, or underlying securities. Derivatives are legal and valid
only if such contracts are traded on a recognized stock exchange,
thus precluding OTC derivatives. Derivatives trading commenced
in India in June 2000 after SEBI granted the approval to this effect
in May 2000. SEBI permitted the derivative segment of two stock
exchanges, i.e. NSE and BSE, and their clearing house/corporation
to commence trading and settlement in approved derivative
contracts. To begin with, SEBI approved trading in index futures
contracts based on S&P CNX Nifty Index and BSE-30 (Sensex)
Index. This was followed by approval for trading in options based
on these two indices and options on individual securities. The
trading in index options commenced in June 2001 and trading in
options on individual securities would commence in July 2001
while trading in futures of individual stocks started from
November 2001. In June 2003, SEBI/RBI approved the trading on
interest rate derivative instruments.
The total exchange traded derivatives witnessed a volume of
Rs.4,423,333 million during 2002-03 as against Rs. 1,038,480
million during the preceding year. While NSE accounted for about
99.5% of total turnover, BSE accounted for less than 1% in 2002-
03. The market witnessed higher volumes from June 2001 with
introduction of index options, and still higher volumes with the
introduction of stock options in July 2001. There was a spurt in
volumes in November 2001 when stock futures were introduced. It
is believed that India is the largest market in the world for stock
futures.
The foreign exchange (currency or forex or FX) market exists wherever one
currency is traded for another. It is by far the largest financial market in the world, and
includes trading between large banks, central
banks, currency speculators,
multinational corporations, governments, and other financial markets
and institutions. The average daily trade in the global forex markets currently exceeds
US$1.9 trillion. Retail traders (individuals) are a small fraction of this market and may
only participate indirectly through brokers or banks.
The ten most active traders account for almost 73% of trading
volume, according to The Wall Street Journal Europe, (2/9/06 p.
20). These large international banks continually provide the market
with both bid (buy) and ask (sell) prices. The bid/ask spread is the
difference between the price at which a bank or market maker will
sell ("ask", or "offer") and the price at which a market-maker will
buy ("bid") from a wholesale customer. This spread is minimal for
actively traded pairs of currencies, usually only 0-3 pips. For
example, the bid/ask quote of EUR/USD might be 1.2200/1.2203.
Minimum trading size for most deals is usually $100,000.
Trading characteristics
On the spot market, according to the BIS study, the most heavily
traded products were:
• EUR/USD - 28 %
• USD/JPY - 18 %
• GBP/USD (also called sterling or cable) - 14 %
Supply and demand for any given currency, and thus its value, are
not influenced by any single element, but rather by several. These
elements generally fall into three categories: economic factors,
political conditions and market psychology.
INTRODUCTION TO MUTUAL FUND
Introduction
Mutual funds have been around for a long time, dating back to the
early 19th century. The first modern American mutual fund opened
in 1924, yet it was only in the 1990's that mutual funds became
mainstream investments, as the number of households owning
them nearly tripled during that decade. With recent surveys
showing that over 88% of all investors participate in mutual funds,
you're probably already familiar with these investments, or perhaps
even own some. In any case, it's important that you know exactly
how these investments work and how you can use them to your
advantage.
At the end of 1993, the mutual fund industry had assets under
management of Rs.47, 004 crores.
With the entry of private sector funds in 1993, a new era started in
the Indian mutual fund industry, giving the Indian investors a
wider choice of fund families. Also, 1993 was the year in which
the first Mutual Fund Regulations came into being, under which all
mutual funds, 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 setting up funds in India and also the industry
has witnessed several mergers and acquisitions. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs.
1,21,805 crores. The Unit Trust of India with Rs.44, 541 crores of
assets under management was way ahead of other mutual funds.
IV. Fourth Phase – since February 2003
There are many entities involved and the diagram below illustrates
the organizational set up of a mutual fund:
Trustees
Other Obligations
Trustees must ensure that the transaction of the mutual fund are
in accordance with the trust deed
Trustees must ensure that AMC has systems and procedures in
place, and that all the fund constituents are appointed
Trustees must ensure due diligence in the part of the AMC in
the appointment of the constituents and business associates
Trustees must furnish to SEBI, on half yearly basis a report on
the activities of the AMC.
Trustees must ensure that net worth of the AMC is according to
the stipulated norms, every quarter.
Trustees must ensure that the activities of the mutual fund are
in compliance with the SEBI regulations.
Sponsors
The sponsor of mutual fund is like the promoter of a company. The
sponsor may be bank, a financial institution, or financial service
company. It may be Indian or foreign. Sponsor appoints the
trustees, custodians and the AMC with the prior approval of the
SEBI and in accordance with SEBI regulations. Sponsor must be
carrying on business in financial services for a minimum period of
5years.
Net worth of sponsor is positive in all preceding 5 years
Net worth in immediately proceeding year is more than capital
contribution to AMC.
Sponsor must have been profit making in at least 3 of the
immediately preceding 5 years including the 5th year.
Sponsor must contribute 40% of the net worth of the AMC.
Custodian
The custodian handles the investment back office operations of a
mutual fund. Inter alias, it looks after the receipt and delivery of
securities, collection of income, distribution of dividends, and
segregation of assets between schemes. The sponsor of mutual
fund cannot act as its custodian. This condition is meant to ensure
that the asset of mutual fund is not in the hand of the sponsor. They
keep the investment account of the mutual fund, and also collect
the dividend and interest payment due on mutual fund investments.
On the advice of the fund managers they act on the corporate
actions.
Function of Custodian
Custodians are responsible for the securities held in the mutual
fund’s portfolio. They discharge an important back office function,
by ensuring that securities that are bought are delivered and
transferred to the books of the mutual funds, and that funds are
paid out when a mutual fund buys securities. They keep the
investment account of the mutual fund, and also collect the
dividends and interest payment due on mutual fund investments.
On the advice of the fund managers they act on the corporate
actions.
Brokers
Brokers support the investment management function of the
mutual fund, by enabling the investment managers to buy and sell
securities. Brokers are registered members of stock exchanges.
They charge a commission for their services. In many cases,
brokers also provide investment managers with research report on
the performances of various companies and industrial sectors, and
investment recommendations. Brokers also are an important source
of market information to fund managers.
If the broker is associated with the sponsor or its associates then
the AMC shall not purchase or sell securities through that broker in
excess of 5% of the aggregate of purchase and sale of securities
made by the mutual fund in its entire scheme.
For transactions through any other broker the AMC can exceed the
limit of 5% provided it has recorded justification in writing and
report of such exceeding has been sent to trustee on a quarterly
basis.
Depository Participant
Depository participants hold the securities of mutual funds in
dematerialized form. They work with the custodian and handle the
operational aspects of actually making/receiving delivery of
securities into the account of the mutual funds. On instructions
from the custodian, they deliver/receive securities from the
company/stock exchange, in dematerialized form. They also
communicate the custodian’s instructions on corporate actions to
the company.
REGULATORY ASPECTS OF MUTUAL FUND
(ii) If the moneys received from the applicants for units are in
excess of subscription as referred to in clause (b) of sub-regulation
(1).
General Obligations:
• The financial year for all the schemes shall end as of March
31 of each year.
• Every mutual fund or the asset management company shall
prepare in respect of each financial year an annual report and
annual statement of accounts of the schemes and the fund as
specified in Eleventh Schedule.
• Every mutual fund shall have the annual statement of
accounts audited by an auditor who is not in any way
associated with the auditor of the asset management
company.
Restrictions on Investments:
• A mutual fund scheme shall not invest more than 15% of its
NAV in debt instruments issued by a single issuer, which are
rated not below investment grade by a credit rating agency
authorized to carry out such activity under the Act. Such
investment limit may be extended to 20% of the NAV of the
scheme with the prior approval of the Board of Trustees and
the Board of asset management company
• A mutual fund scheme shall not invest more than 10% of its
NAV in unrated debt instruments issued by a single issuer
and the total investment in such instruments shall not exceed
25% of the NAV of the scheme. All such investments shall
be made with the prior approval of the Board of Trustees and
the Board of asset Management Company.
• No mutual fund under all its schemes should own more than
ten per cent of any company's paid up capital carrying voting
rights.
• Transfers of investments from one scheme to another scheme
in the same mutual fund shall be allowed only if, -
1. Such transfers are done at the prevailing market price for
quoted instruments on spot basis.
2. The securities so transferred shall be in conformity with the
investment objective of the scheme to which such transfer
has been made.
A scheme may invest in another scheme under the
same asset management company or any other mutual fund
without charging any fees, provided that aggregate inter
scheme investment made by all schemes under the same
management or in schemes under the management of any
other asset management company shall not exceed 5% of the
net asset value of the mutual fund.
The initial issue expenses in respect of any
scheme may not exceed six per cent of the funds raised under
that scheme.
Every mutual fund shall buy and sell securities on
the basis of deliveries and shall in all cases of purchases, take
delivery of relative securities and in all cases of sale, deliver
the securities and shall in no case put itself in a position
whereby it has to make short sale or carry forward
transaction or engage in badly finance.
Every mutual fund shall, get the securities
purchased or transferred in the name of the mutual fund on
account of the concerned scheme, wherever investments are
intended to be of long-term nature.
Pending deployment of funds of a scheme in
securities in terms of investment objectives of the scheme a
mutual fund can invest the funds of the scheme in short term
deposits of scheduled commercial banks.
No mutual fund scheme shall make any
investment in;
Self-Regulatory Organizations
Calculation of NAV
NAV of a mutual fund is the value of one unit of investment in the
fund, in net assets terms. It is computed by dividing the net assets
of a fund by the number of units that are outstanding in the books
of the fund.
Example
Considered a mutual fund that collects Rs.10cr by issuing units of
Rs.10 each. Therefore when the mutual fund begins operations, it
would have 100, 00,000 units of Rs.10 each.
Assets mix of the fund
● Equity shares Rs.4, 50, 00,000
● Government bonds Rs.3, 00, 00,000
● Money market instruments Rs.1, 00, 00,000
● Corporate bonds Rs.1, 50, 00,000
Total Assets Rs.10, 00, 00,000
After 30 days, the fund is scheduled to open for fresh sales as well
as repurchases. For this the investment portfolio will have to be
valued again, to ascertain what its current value is? In the interim
the mutual fund would have incurred expenses, earned income,
which has to be reflected in the price per unit. We call these
charges as accrued income and accrued expenses. Mutual funds
have internal accounting policies, which enables the computation
of these accruals. Let us assume the status of the investment at the
end of 30 days is as follows:
● Equity shares Rs.6, 50, 00,000
● Government bonds Rs.4, 00, 00,000
● Money market instruments Rs.1, 00, 00,000
● Corporate bonds Rs.1, 20, 00,000
Total Assets Rs.11, 50, 00,000
The value of the investment has changed with the changes in the
market prices. The process of valuing assets by using market
prices, as “marking to market.” Let us assume the accrued income
and expenses are Rs 1, 00,000 and Rs. 1, 35,000 respectively. The
level of current assets and liabilities are Rs 4, 00,000 and Rs. 3,
00,000 respectively (assumed).
Since the number of units are 1,00,00,000. The NAV on this date
will be 11.5065. Price at which new investors can buy the units, an
existing investor can redeem their units will be based on this price
Expenses usually incurred by mutual fund
Investment management fees to the AMC
Custodians fees
Trustees fees
Registrar and transfer agent fees
Recurring expenses including
Marketing and selling expense
Brokerage and transaction cost
Audit fees
Costs of fund transfer
Cost related to investor communication
Cost of providing account statements
Cost of redemption cheques and warrants
Legal expenses
Cost of advertising
All these expenses are charged against the income earned by the
fund.
Expenses that cannot be charged that cannot be charged against the
income earned by the fund
Penalties and fine for infraction of laws
Interest on delayed payments to unit holders
Legal marketing and publication expenses not attributable to any
scheme
Expenses on investment and general management
Expenses on general administration, corporate advertising
Infrastructure cost
Expenses on fixed assets and software development
Cost as may be prohibited by SEBI
All these expenses are borne by either by the sponsor or AMC
For example, if a fund’s NAV on 6th March 2002 was Rs. 25.56,
and an investor buying units on 7th March 2002 were to be offered
unit at this value, we call it as historical pricing. In case of many
liquid funds, a cut off time is indicated, say 10 a.m. and application
received before this time get the historical pricing.
If the sale on 7th March 2002 depends on the NAV computed at the
end of the business day of 7th March2002, which is unknown at the
time of the transaction, we call such pricing as prospective pricing.
Mutual funds usually announces a cut off time before which
applications have to be handed into be eligible for the end of the
day NAV.
Every offered document defines both “applicable NAV” and
“business day” depending on which the NAV applicable to the
investor for each of the schemes is decided.
Load
Load is the factor that is applied to the NAV of the scheme to
arrive at the price. If a commission is paid to agents to bring in
new business, this represents a cost incurred by the mutual fund,
for the additional sales. Therefore it may decide to impose this cost
on the investors by increasing the price at which they can buy the
units. This is called the entry load.
Similarly, if an investor stays in a fund for a short while, and
decides to repurchase his units, the fund may incur some costs in
liquidating the portfolio and paying off these investors. The fund
imposes the cost of this operation on the exiting investor, in form
of load. This is called exit load.
Mutual funds have a choice. Mutual funds may decide to impose
no load, or only the sales load, or the exit load. If there are no
loads, then the cost associated with sales and repurchases are being
borne by the AMC not by the mutual fund’s scheme. Load may not
always be constant. It may depend on the period of stay of the
investor in the schemes, are called contingent deferred sales
charge.
SEBI regulates the load that a mutual fund can charge. There are
two regulatory requirements.
1. The sale price cannot be more than 7% of the NAV and the
repurchases price cannot be less than 7% of the NAV.
2. The repurchase price cannot be less than 7% of the sale price.
Read together, this means that the 7% limit applies to the sale and
repurchases price, though the fund is free to impose the load on
either of them or both. For example, if the NAV is Rs.10 the
mutual fund can charge a sale price not higher than Rs. 10.7, or a
repurchase price that is not lower than Rs 9.3. However, the mutual
fund cannot charge both these prices. If the sale price is Rs.10.7,
the repurchase price cannot be lower than Rs. 9.95(10.7*0.93). If
repurchase price is Rs. 9.3, the sale price cannot be higher than Rs.
10(9.3/1.07).
In case of close-ended schemes the repurchase price of the units
should not be more than 95% of the NAV.
The AMC may decide that it would not charge the fund with any
of the initial issue expenses. Such schemes are called no load
schemes. In this case AMC can charge an investment management
fees higher than the statutory limit.
Treatment of initial issue expenses in accounts of mutual fund
Since the initial issue expenses is a large amount it is usually
amortized, or spread over a period of time, and charged in
installments to the income of the fund.
For a close-ended scheme floated on a load basis, initial issue
expenses are charged over the life of the scheme, on weekly basis.
For a open ended scheme the initial issue expenses written off over
a period not exceeding 5 years initial issue expenses are charged in
installments to the income of the fund not exceeding 5 years.
The unamortized portion of the initial issue expenses is shown on
the assets side of the balance sheet as deferred revenue expenditure
and included in the net asset calculation as other assets. However
for the purpose of computing the investment manager’s fees and
limits on expenses both of which are based on average net asset,
the deferred revenue expenditure is not included as it is not an
income-earning asset.
Distributable surplus
Number of units outstanding.
When a unit is repurchased at a price above the par value, the
distributable surplus is actually paid put to the investor. The
income equalization account is debited by the amount of the
distributable surplus per unit. If a unit is repurchased below par,
the investor is paid an amount lower than the unit capital
contributed by him, thus foregoing the distributable surplus. The
income equalization amount is debited. Thus, for every sale and
repurchase, a part of the consideration attributable to distributable
surplus of the fund, is charged to the income equalization account.
The balance in the account is transferred to the P&L account at the
end of the year.
Valuation of Securities
Norms for valuing traded securities in a mutual fund.
If the securities held by the mutual fund are traded on stock
exchange regularly, the process of marking to market is simple.
The market price of the security is used to value the security. The
following are the regulations for valuing such traded securities:
The last quoted closing price on the stock exchange where the
securities is principally traded is used for valuation. It would be
left to the AMC to select the appropriate stock exchange but
the reasons for selection should be recorded in writing.
If a security is not traded on the particular day, its traded price
on the earliest previous trading day can be used. Such a date
should not be more than 30 days prior to the valuation date.
The units of mutual funds are treated as capital assets and the
investor has to pay capital gains tax on the sale proceeds of mutual
fund units sold by him. For investments held for less than one year
the tax is equal to 30% of the capital gain. For investments held for
more than one year, the tax is equal to 10% of the capital gains.
The investor is entitled to indexation benefit while computing
capital gains tax. Thus if a typical growth scheme of an income
fund shows a rise of 12% in the NAV after one year and the
investor sells it, he will pay a 10% tax on the selling price less cost
price and indexation component. This reduces the incidence of tax
considerably. This concession is available under section 48 of the
I.T. Act. The following calculations show this in more detail:
Indexation component = 8%
= 11.2 – 10.8
= 0.4
= 11.2 – 11.7
= -0.5
There are three main points in regard to this year's Budget. The
first point is in regard to the new share transaction tax (STT).
Originally, it was proposed to be levied at 0.15 per cent on all
transactions of purchases of securities on stock exchanges. But it
was reduced on persistent demand from the share broker and
investors. This new tax will increase the cost of purchase every
time you buy and sell listed securities and mutual fund units.
After you have purchased share or units, there can be two types of
incomes -- dividend income (regular income during the period of
holding your investment) and capital gain (profit on sale of your
investment). When you receive any dividend, the same can be
included in your income, and you have to pay taxes on that
income. But instead of payment of taxes by the investor, the onus
has, in the recent past, shifted to the company to pay tax when it
pays dividend. This tax is called Dividend Distribution Tax (DTT).
Third is tax on capital gain when the shares or units are sold. Even
in this respect, major changes have been made in this Budget.
any way to the Income Tax Act? The nature of this tax has to
be clarified.
Dividends:
Equity Debt
(10%+10%
surcharge +2% cess)
LTCG
(corporate)-22.44%
(20%+10% surcharge +2% cess)
Short-term capital gain-10% STCG
(individual)-33.66%
STCG (corporate)-39.13%
(35%+10% surcharge
+2% cess)
In case of NRI
Equity Debt
Mutual Fund industry today, with about 34 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.
Ø Jenson Model
Ø Fame Model
Sharpe and Treynor measures are similar in a way, since they both
divide the risk premium by a numerical risk measure. The total risk
is appropriate when we are evaluating the risk return relationship
for well-diversified portfolios. On the other hand, the systematic
risk is the relevant measure of risk when we are evaluating less
than fully diversified portfolios or individual stocks. For a well-
diversified portfolio the total risk is equal to systematic risk.
Rankings based on total risk (Sharpe measure) and systematic risk
(Treynor measure) should be identical for a well-diversified
portfolio, as the total risk is reduced to systematic risk. Therefore,
a poorly diversified fund that ranks higher on Treynor measure,
compared with another fund that is highly diversified, will rank
lower on Sharpe Measure.
Jenson Model
Fama Model
Ri = Rf + Si/Sm*(Rm - Rf)
Where, Sm is standard deviation of market returns. The net
selectivity is then calculated by subtracting this required return
from the actual return of the fund.
Worrisome news it is, for the investor who still believes MFs are a
route to manage one’s money in a better and safe manner. The
recent wild movements in the NAVs of several equity funds have
belied all expectation of a diversified portfolio from the fund
managers when the basic tenet behind portfolio management is risk
management. Mr. Shyam Bhatt, Fund Manager-Tata asset
Management Ltd. said ‘Indian Mutual fund industry is not using
statistical techniques of risk management but is using
diversification effectively within the market limitations. As far as
use of derivatives is concerned, they are not presently used because
of the low volumes, low liquidity and absence of sufficient
hedging products in the market ’.
Aggression has been the key word followed by the AMCs when it
comes to taking positions in stocks. With investment in volatile
ICE sectors being the driver of growth last season, almost
everybody had taken big exposures to them. Birla MF maintained
its exposures in Infosys to almost 25 percent in all of its equity
schemes throughout last year. The same is true of ING Savings
Trust that has Rs. 60 crores invested in Wipro and Infosys out of
the total fund size of 135 crores in its growth fund. The result of
these exposures is that the fund witnessed a movement of almost 9
percent in a single day on budget when the market saw an
appreciation of around 4.36 percent. In their quest for growth,
many funds have seen very volatile movements in NAVs. The
investor confidence may not be lost but such volatility sure dents
it. The point is not whether AMCs should be chastised or not but
just to question the practices as the fate of many investors is linked
to it. An ordinary investor considers mutual funds as the experts in
investment decisions and so naturally expects the decision of
investing in mutual funds to bear fruit. However, AMCs often
leave a lot to be desired as they falter on important fronts like
NAV and portfolio disclosure besides posting high fluctuations and
poor returns.
The Beta of some of the favorite stocks is shown below. The Table
contains the Beta of some of the ICE scrips that constitute the top
10 holdings across various equity funds.
As can be seen, some of the stocks are too volatile and can cause
wild movements in the NAVs of funds that have taken exposures
in them. The standard deviation of the returns in some of these
funds points to it. While Alliance Equity Fund has a Standard
Deviation of 2.53, Birla Advantage has its Standard Deviation at
2.57. ING Growth has a standard deviation of 3.3, which is
relatively high due to its exposure to two volatile ICE scrips. Birla
Advantage has reduced its exposures to Infosys drastically in the
last two months and taken steps to contain volatility. Similar steps
are being planned by SBI Mutual Fund that is recasting its equity
portfolio to reduce risks as they can scare investors.
It is unfortunate that the fund managers are not taking due care for
minimizing the risk and are in a race to post higher and higher
returns during the phase of bull-run. They should understand that
the investors forget the high returns posted in any specific period
very soon but they take hell lot of time to forget the burns they get
during periods of losses. Hence for maintaining the confidence of
the retail investors it is very important to control wild fluctuations
in the NAVs. The basic technique of portfolio management thrusts
on diversification, which preaches inclusion of negative beta,
stocks in the portfolio so as to minimize the impact of fluctuation
in the market. Diversification always has a cost and investors are
willing to pay for it if it is properly done. The fund manager should
disclose what they are doing at the hedging front. They should
come up and tell their investors as to what they do at times of high
fluctuations. Normally it has been seen that they outperform the
broad market indices during the bull-runs and under-perform the
indices during the bear-phases. The industry needs to revise their
attitude and try to streamline their actions with their objectives.
Some mutual fund houses are quite disciplined but every body
should embrace the same spirit. There are some infrastructural
problems but fund managers need to be more vigilant on the
market movements. Mr. Bhupinder Sethi, Fund Manager - Dundee
Mutual Fund said ‘We are actively monitoring the market
movements and taking calls accordingly. Though we are presently
not using derivatives for hedging of risk because of lack of depth
in the market for the product, but we go into cash when we see the
expectations of huge corrections coming in.’
MEASURING RETURNS
Since the mutual fund does not commit any specific rate at which
dividends will be paid, the rate of return is known in advance. The
mutual fund also does not specify any particular tenor for its return
is known in advance. The mutual fund also does not specify any
particular tenor for its products. The investor is free to enter and
exit the fund at any time. However, he would do so at a price
depends on the NAV at the time of entry and exit. Since the NAV
itself changes continuously, the investor would no know in
advance whether there would be a capital gain or a loss from
investment. Therefore there is nothing like pre-specified rate of
return on investment in mutual fund.
The mutual fund invests the fund mobilized from the investor, in a
portfolio of marketable securities. Since the value of these
securities can change over time, the mutual fund cannot assure a
rate of return. There is no technique by which the fund manager
can accurately predict how the market prices will behave in the
future. Therefore the mutual fund cannot provide assured returns to
the investor. In case the market value of the securities falls, if
assured returns have to be provided, the short fall has to be made
good by another entity. SEBI regulations do not permit the sale of
assured return products by mutual funds, unless the sponsor or the
AMC provide an explicit guarantee that they would make good the
shortfall, if the value of the portfolio falls below that of guarantee
that they would make good the shortfall, if the value of the
portfolio falls below that of the assure levels.
Methods for computing returns on investment in mutual fund.
Formula
Difference in NAV
Beginning NAV
{[(15.475-12.45)+0.70]/12.45}*100
= (3.725/12.45)/100
= 29.92%
The amount (15.475-12.45) represents the capital gain earned by
the investor. 0.70 is the dividend amount received which is 7% of
Rs.10, the face value of the unit. The rate of return in the
percentage return the investor makes, on his investment Rs.12.45,
from these two sources.
Beta coefficient
This is a popular measure of the extent to which the fund returns
are impacted by market factors. Returns of the fund are assumed to
be linearly related to the returns from the underlying market. The
extent to which fund returns are impacted by the market returns is
measured by the market returns is measured by the beta co-
efficient (the value of “b” in the equation y=a+bx, where x is the
market return and y is the return on the fund, for the same period).
A fund with higher beta is more risky than one with a lower beta.
BENCHMARKS
Benchmarks are independent portfolios that are not managed by
any fund manager, but are representative of the behavior of returns
from the markets. For example, the S&P CNX Nifty is a portfolio
of 50 securities traded on the National Stock Exchange. The BSE
Sensitive Index is a portfolio of thirty securities traded on the BSE.
The movement of these indices represents the movement in prices,
and therefore returns, of large, actively traded stocks in the equity
markets. If an investor has invested in an index fund, the return
from the index fund will have to compare with the risk and return
of the equity index, which the fund manager is replicated. If the
fund manager is managing an equity portfolio, that invests only in
equity, but is not an index fund, investors may want to know how
his performance compares with an independent portfolio like the
Nifty or the Sensex. These independent portfolios, used to
understand fund manager performance, are called benchmarks.
By computing the Sharpe ratio for funds in the same group, say
equity funds, comparing them with the S&P CNX 500 index, the
Sharpe ratios that we get can be used to rank the funds. The fund
with the highest Sharpe ratio will be the top performer, since it has
delivered the highest return for unit of risk. Mutual und ranking
involves the comparison of mutual fund performance over a period
of time, using several criteria to judge for consistency in
performance.
Open-ended Funds
Closed-ended Funds
Interval Funds
Interval funds combine the features of open-ended and close-ended
schemes. They are open for sale or redemption during pre-
determined intervals at NAV related prices.
By Investment Objective:
Balanced Funds
BY SPECIALIZATION
Index Schemes
Index Funds attempt to replicate the performance of a particular
index such as the BSE Sensex or the NSE 50. in order to track the
return performance of markets, market indices of a subset of
trading stocks is created. An index provides an ideal exposure to
equity markets without the investor having to bear the risk and cost
arising from the market views that a fund manager may take. The
CNX Nifty in one of such index of 50 large and liquid stocks. If a
fund manager creates an equity fund, which will invest in the Nifty
stocks, in the same proportion as in the index, he is creating an
index fund.
Dividend option
Growth option
Re- investment option
Dividend Option
Growth option
Re-Investment Option
Investors buy the units of mutual fund. The number of units bought
by an investor represents his holdings in a mutual fund. The price
at which each unit is being sold is announced by the mutual fund.
This is usually called the sales price. In an existing mutual fund
scheme, the price is announced by the mutual fund everyday based
on the NAV of the fund. The investor can either but a fixed
number of units, or can invest fixed sum of money. All mutual
fund schemes specify the minimum amount that has to be invested
and the multiple thereof. These restrictions are not usually
applicable to inter-scheme and inter-options switches and
reinvestments.
If a scheme is open ended, the investor can invest on any given
day, at the price quoted by the mutual fund. Usually mutual funds
have a distribution network, made up of distributing agents,
investor service centers and branch networks. Investor can buy
units of the fund from any of these agencies. If the fund is close
end, the mutual fund has initial offer period. During this period,
investors can buy units at a price that is fixed, for the whole period.
After the closure of this initial offer, the mutual fund closes further
direct sales to the investors. Investor who wants to invest in close
end fund, after the initial offer period, has to buy units from stock
markets. Close end funds have to list their units on a stock
exchange to enable this.
Distribution Channels through which Mutual Fund Products are
distributed
Individual agents
Distribution companies
Bank and NBFCs
Direct marketing channels
Categories of Investors Eligible to Invest in Mutual Fund
Resident individuals
Indian companies
Indian trust and charitable institutions
Banks
Non banking finance companies
Insurance companies
Provident funds
NRIs
Overseas corporate bodies
SEBI registered FIIs
Every fund manager has his own individual style and investment
philosophy. While some managers are aggressive, others are
passive. The investor must choose the fund that best reflects and
matches his own investment philosophy.
Close-ended funds:
A close-end fund begins with a fixed corpus and operates for a
fixed duration. The fund is open for subscription only during a
specified period. When the period terminates, investors can redeem
their units. Close-ended funds may be listed on the stock
exchanges to impart liquidity to the investment.
Debt funds
Equity Funds
They aim to grow money over time (i.e. capital appreciation). Here
the investment focus is mainly on stocks/shares. Historically,
stocks have outperformed other asset classes like bonds, fixed
deposits, gold, and real estate over the long term -- 10 years.
Balanced funds
The investor must invest in mutual fund categories, which meet his
criteria in terms of need for regular income, capital appreciation,
and safety of principal.
Fees and charges
The load
Fund performance
There are no two opinions on the fact that mutual funds are
increasingly gaining widespread acceptability among masses.
Investors who have traditionally embraced fixed deposits, post-
office schemes and even stocks have bought the idea of investing
through a professional money manager.
There are too many mutual funds in the country and investors
aren't able to decide which fund to own and which to abandon. A
steady stream of mutual fund initial public offering compounds the
issue even further.
Mid-cap funds (with the exception of Franklin Prima Fund) did not
exist until even 3 years ago. So it is a fairly nascent fund category.
You can give the 'steady 5-year track record' criterion a miss for
mid-cap funds.
If the mood in the markets turns and mid-cap stocks are pitch
forked into the limelight, the fund's strategy will reflect the change
in the market mood.
A balanced fund
Floating rate debt funds invest in floating rate paper. Floating rate
instruments have their coupon rates adjusted at periodical intervals,
which reduces price fluctuations arising out of interest rate
volatility.
Floating rate funds have a relatively short history and investors can
look at the 1-year performance before selecting a floating rate
fund.
Introduction
Different Versions of Asset Allocation
Allocation Models
Allocation and Return
Portfolio Asset Selection
Return & Return Volatility
Portfolio Risk Analysis
Value at Risk
Market Risk Exposure
ASSET ALLOCATION
INTRODUCTION
Formal approach
σ
p
Drifting
The policy advocates that the initial portfolio be left undistributed.
It is essentially a buy and hold policy irrespective of what happens
to relative value, no rebalancing is done. . The distinctive features
of drifting asset allocation are as follows.
The value of the portfolio is linearly related to the stock market.
The portfolio value cannot fall below the value of the
initial investment in bonds, it upside potential is
unlimited.
Stocks outperform bonds, the higher the initial
percentage in the stocks, the better the performance of
the “buy and hold” policy and vice versa.
Stocks, bonds, and cash equivalents are all considered asset classes
— as are real estate, collectibles, precious metals, futures and
options, and other alternative investments. Each asset class carries
different types and levels of risk and serves a different purpose in
your portfolio, such as providing capital preservation or potential
growth.
Stocks
If you want your investment portfolio to grow in value over time,
you’ll probably need to allocate at least some of your assets to
stocks. Most financial experts say that the younger you are, the
more you should stress stocks. That’s because historically, stocks
have turned in the strongest performance over the long term. And
if you begin investing early, you have time to ride out the
inevitable ups and downs in the stock market. Although your stock
investments can go up and down significantly in value over the
short term, the longer you stay in the stock market, the more likely
you are to come out ahead. In fact, over periods of 15 years or
more, stocks have always provided positive returns.
Capital preservation
Allocation models
More than any other investment strategy, how you allocate your
portfolio can have a major impact on your investment return.
The account value assumes all earnings were reinvested, and are
figured using the average annual returns for each investment
category for 1926 through 2003: large-company stocks at 10.4%,
corporate bonds at 5.9%, and cash investments at 3.8%*.
Guaranteed income
Your statement will also alert you to imbalances that may develop
in your asset allocation if one asset class turns in a much stronger
performance than the others. For example, if the return on bonds
outpaces the return on stocks, the bond portion of your portfolio
might turn out to be a larger percentage of the total account than
you had allocated. That might mean you’d want to increase the
percentage of money going into stocks to build up that class and
get back where you intended to be. This process is known as
reallocation.
Online resources
You can also track your investments online. There are a number of
computer programs that can help you organize, analyze, and keep
track of your asset allocation. Brokerage firms and mutual fund
companies offer many of these programs, as do independent Web-
based companies.
How it works
Essentially, return volatility (or standard deviation) tells us how
much an asset’s actual return is likely to deviate above or below its
expected return. Consider the graph above, where each segment
represents one standard deviation:
Risk-adjusted Return
Definition
How it works
The historical average return of an asset or portfolio can be
extremely misleading, and should not be considered alone when
selecting assets or comparing the performance of portfolios. The
Sharpe Ratio is such an important tool because it allows you to
factor in the potential impact of Return Volatility on Expected
Return, and to objectively compare assets or portfolios that may
vary widely in terms of returns.
Avg. AnnualReturn
Sharpe Ratio
Return Volatility
Asset A 54.52% 177.20% 0.279
Asset B 36.91% 68.20% 0.468
Asset C 25.64% 22.69% 0.910
Conclusion
Definition
How it works
A Practical Example
In the chart below, we have a user portfolio and the S&P 500
portfolio. While both portfolios have equal market values, the user
portfolio's higher VaR numbers indicate that it carries significantly
more risk than the S&P 500 portfolio.
For example, we can say with 95% confidence that on any given
day in the future, the currently held user portfolio could lose up to
$1,159, and the S&P 500, up to $776. Since the user portfolio's
daily VaR is presented "with 95% confidence", our user must
understand that on any given day in the future there is a 5%
probability of maximum financial loss exceeding $1,159.
S&P 500
User Portfolio
Portfolio
Market Value of Portfolio
$95,910 $95,910
(as of latest market closing)
Daily Value at Risk $1,159 $776
Monthly Value at Risk $5,311 $3,557
Annual Value at Risk $18,399 $12,322
To explain the concepts of alpha, beta and R2, and to show how
they can be used to analyze and assess your portfolio's risk level.
• Alpha – The difference in the expected return of your
portfolio, given the portfolio's beta, and the actual return the
portfolio achieved. The higher your Alpha, the better your
portfolio has done in achieving "excess" returns. It is
generally considered the higher the alpha, the higher the
"value added" to the portfolio by the portfolio manager.
(Note: The market portfolio alpha is always 0.0)
• Beta – Measures the portfolio's sensitivity to movements in
the market portfolio, or benchmark index (e.g., S&P 500
always has a Beta of 1.0). A beta > 1.0 means that the asset
or portfolio is more volatile (risky) than the benchmark
index, and a beta < 1.0 means the asset or portfolio is less
volatile.
• R2 – Indicates the percentage of a portfolio's movement that
is explained by the movement in the market portfolio or
benchmark index. R2 ranges from 0 to 100%, with a score of
100 indicating that all movements of the portfolio are
completely explained by the market portfolio or benchmark
index. In general, the higher the R2, the more reliable a
portfolio's alpha and beta measurements will be.
• A portfolio's Beta is calculated by comparing a portfolio's
volatility to the market's volatility over time. The more
sensitive a portfolio's returns are to movements in the market,
the higher the portfolio's beta will be. Higher Betas therefore
imply higher risk.
• Professional Management
• Diversification
• Convenient Administration
• Return Potential
• Low Costs
• Liquidity
• Transparency
• Flexibility
• Choice of schemes
• Tax benefits
• Well regulated
• Risk and Return
Professional Management
Diversification
Convenient Administration
Return potentials
Liquidity
Transparency
Flexibility
Investment in mutual funds also offers a lot of flexibility with
features such as regular investment plans, regular withdrawal plans
and dividend reinvestment plans enabling systematic investment or
withdrawal of funds. Even the investors, who could otherwise not
enter stock markets with low investible funds, can benefit from a
portfolio comprising of high-priced stocks because they are
purchased from pooled funds. Through features such as regular
investment plans, regular withdrawal plans and dividend
reinvestment plans, we can systematically invest or withdraw
funds according to your needs and convenience.
Choice of Schemes
TAX BENEFITS
Well Regulated
All Mutual Funds are registered with SEBI and they function
within the provisions of strict regulations designed to protect the
interests of investors. The operations of Mutual Funds are regularly
monitored by SEBI. Unlike the company fixed deposits, where
there is little control with the investment being considered as
unsecured debt from the legal point of view, the Mutual Fund
industry is very well regulated. All investments have to be
accounted for, decisions judiciously taken. SEBI acts as a true
watchdog in this case and can impose penalties on the AMCs at
fault. The regulations, designed to protect the investors’ interests
are also implemented effectively.
Risk
Suitable Benefits offered by
Tolerance/Return Focus
Products MFs
Expected
Bank/ Company
Liquidity, Better
Low Debt FD, Debt based
Post-Tax returns
Funds
Medium Partially Balanced Funds,Liquidity, Better
Debt, Some DiversifiedPost-Tax returns,
Partially Equity Funds andBetter Management,
some debt Funds,
Equity Mix of shares andDiversification
Fixed Deposits
Capital Market,Diversification,
Equity FundsExpertise in stock
High Equity
(Diversified aspicking, Liquidity,
well as Sector) Tax free dividends
Other Benefits
Voluntary Benefit
Group Benefit
Voluntary benefit
Group benefit
The numbers of schemes are offered keeping in mind the
requirements of the group such as group insurance along with the
investment. Many schemes offer services and tools to help
effectively manage employee lost time and improve workplace
productivity it also provide benefit like Round out employee
benefit packages by providing them access to property and liability
coverage through various mutual fund schemes along with income
and growth option for meeting the group requirement.
Are Mutual Funds Safe
Now Is Not The Right Time
I Want My Principal To Be Safe At All Times
I Want To Know What Returns I Will Get It
Shouldn’t I Buy A Scheme With A Low NAV
The Diversification Myth
The Momentum Myth
The Market Timing Myth
Stocks Make More Money
Smarter Investors Use Stocks Only
Mutual Funds Are Too Expensive
Mutual Funds Lack Excitement
MYTHS ABOUT MUTUAL FUND
Myth I: ‘Are Mutual Funds Safe?’
Mutual Funds can never run away with investors’
money.
Pick a good fund house that has a track record and
accountability.
Build a portfolio with the right mix of equity and
income funds.
Watch your portfolio progress towards your goal
In fact in advanced countries like the U.S.A, mutual funds buy- sell
transactions have already begun on the Net, while in India the Net
is used as a source of Information.
Such changes could facilitate easy access, lower intermediation
costs and better services for all. A research agency that specializes
in internet technology estimates that over the next four years
Mutual Fund Assets traded on- line will grow ten folds from $ 128
billion to $ 1,227 billion; whereas equity assets traded on-line will
increase during the period from $ 246 billion to $ 1,561 billion.
This will increase the share of mutual funds from 34% to 40%
during the period.
Here are some of the basic changes that have taken place since the
advent of the Net.
Market Trends
Future Scenario
Global Scenario
Future Scenario
Out of ten public sector players five will sell out, close down or
merge with stronger players in three to four years. In the private
sector this trend has already started with two mergers and one
takeover. Here too some of them will down their shutters in the
near future to come.
But this does not mean there is no room for other players. The
market will witness a flurry of new players entering the arena.
There will be a large number of offers from various asset
management companies in the time to come. Some big names like
Fidelity, Principal, and Old Mutual etc. are looking at Indian
market seriously. One important reason for it is that most major
players already have presence here and hence these big names
would hardly like to get left behind.
In U.S.A. apart from bullion funds there are copper funds, precious
metal funds and real estate funds (investing in real estate and other
related assets as well.).In India, the Canada based Dundee mutual
fund is planning to launch a gold and a real estate fund before the
year-end.
In developed countries like the U.S.A there are funds to satisfy
everybody’s requirement, but in India only the tip of the iceberg
has been explored. In the near future India too will concentrate on
financial as well as physical funds.
SEBI is working out the norms for enabling the existing mutual
fund schemes to trade in Derivatives. Importantly, many market
players have called on the Regulator to initiate the process
immediately, so that the mutual funds can implement the changes
that are required to trade in Derivatives.
Market Trends
A lone UTI with just one scheme in 1964 now competes with as
many as 400 odd products and 34 players in the market. In spite of
the stiff competition and losing market share, UTI still remains a
formidable force to reckon with.
Last six years have been the most turbulent as well as exiting ones
for the industry. New players have come in, while others have
decided to close shop by either selling off or merging with others.
Product innovation is now passé with the game shifting to
performance delivery in fund management as well as service.
Those directly associated with the fund management industry like
distributors, registrars and transfer agents, and even the regulators
have become more mature and responsible.
Funds have shifted their focus to the recession free sectors like
pharmaceuticals, FMCG and technology sector. Funds
performances are improving. Funds collection, which averaged at
less than Rs.100bn per annum over five-year period spanning
1993-98 doubled to Rs.210bn in 1998-99. In the current year
mobilization till now have exceeded Rs.300bn. Total collection for
the current financial year ending March 2000 is expected to reach
Rs.450bn.
What is particularly noteworthy is that bulk of the mobilization has
been by the private sector mutual funds rather than public sector
mutual funds. Indeed private MFs saw a net inflow of Rs.7819.34
crore during the first nine months of the year as against a net
inflow of Rs.604.40 crore in the case of public sector funds.
Banks
Considered as the safest of all options, banks have been the roots
of the financial systems in India. Promoted as the means to social
development, banks in India have indeed played an important role
in the rural upliftment. For an ordinary person though, they have
acted as the safest investment avenue wherein a person deposits
money and earns interest on it. The two main modes of investment
in banks, savings accounts and Fixed deposits have been
effectively used by one and all. However, today the interest rate
structure in the country is headed southwards, keeping in line with
global trends. With the banks offering little above 9 percent in their
fixed deposits for one year, the yields have come down
substantially in recent times. Add to this, the inflationary pressures
in economy and you have a position where the savings are not
earning. The inflation is creeping up, to almost 8 percent at times,
and this means that the value of money saved goes down instead of
going up. This effectively mars any chance of gaining from the
investments in banks.
For those who are not adept at understanding the stock market, the
task of generating superior returns at similar levels of risk is
arduous to say the least. This is where Mutual Funds come into
picture.
AnandRathi
Management Team
Milestones
• 1999: The company led and managed the first IPO and
executed first M & A deal
Breadth of Services
IPOs
Mutual fund
Commodities
Equities
Insurance
Real state
Promote By Sivan Securities And Global Technology
Ventures Ltd.
Established In Year-2000
75000 Individual Clients
300 Corporate and Institutional Clients
40 Outlets spread across 20 Major Towns and Cities
Mr V. G Sidhartha (Chairman)
WAY 2 WEALTH
Management
PRODUCTS
Mission
Way2Wealth is a premier Investment Consultancy Firm, launched
with the mission “to be the pre-eminent destination for
personalized financial solutions helping individuals creates
wealth”.
Philosophy
We believe that “our knowledge combined with our investors trust
and involvement will lead to the growth of wealth and make it an
exciting experience”.
Network
Strength
History
Board of directors
Management
Milestones
1986
Geojit becomes a member of the Cochin Stock Exchange.
1994
The Kerala State Industrial Development Corporation
(KSIDC), an arm of the Government of Kerala, becomes a co-
promoter of the company by acquiring 24% equity stake in
Geojit Financial Services Ltd., based on the evaluation report
of Ernst & Young. This is the only venture in India where a
state owned development institution is participating in the
equity of a stock broking company. Geojit became a corporate
broking house.
1995
Geojit came out with a small Initial Public Offer (IPO) of
Rs.9.5 million, which was oversubscribed by 15 times. Geojit's
issued and subscribed equity capital increased to Rs.30 million
and KSIDC's equity stake comes down to 17%.
Geojit becomes a member of the National Stock Exchange
(NSE) and installs its first trading terminal in Cochin, Kerala.
1996
The company launched Portfolio Management Services after
obtaining required registration (Portfolio Management) from
Securities Exchange Board of India (SEBI).
1997
Geojit became a Depository Participant under National
Securities Depository Limited (NSDL) and begins providing
Depository Services through its branches.
1999
Geojit became a member of The Stock Exchange, Mumbai
(BSE) and activated the Bombay Online Terminals (BOLT) in
different branches.
The customer base of Geojit crossed the 50,000 mark.
2000
Geojit became the first broking firm in the country to offer
online trading facility. The then SEBI Chairman, Mr.
D.R.Mehta inaugurated the facility on 1st February, 2000.
Commenced Derivative Trading after obtaining registration as
a Clearing and Trading Member in NSE.
Established the first Bank Gateway in the country for Internet
Trading.
2001
Geojit's customer base crossed 100,000.
Became India's first DP to launch depository transactions
through Internet.
Established Joint Ventures in the UAE for serving NRI clients.
The company issued bonus shares in the ratio of 1:1.
2002
Geojit tied up with MetLife for the marketing and distribution
of insurance products across the country.
The company became the first online brokerage house to
launch integrated internet trading system for both cash and
derivatives segments.
Sheikh Sultan Bin Saud Al Oassemi, a member of the ruling
family of Sharjah, UAE, joined the Board of Directors of
Geojit.
2003
Geojit Commodities Limited, a wholly owned subsidiary of
Geojit, became member of National Multi-Commodity
Exchange of India Ltd., National Commodity & Derivatives
Exchange Ltd., Multi Commodity Exchange and launches
Commodity Futures Trading in rubber, pepper, gold, wheat and
rice.
Geojit Commodities Limited launched Online Futures Trading
in multiple commodities namely, agri-commodities, precious
metals like gold and silver, other metals like steel, aluminum,
etc. and energy futures namely, crude oil and furnace oil.
Geojit raised more than Rs.100 million through issue of
preferential shares.
2005
Barjeel Geojit Securities LLC becomes a member of Dubai
Gold Commodity Exchange.
Customer base of Geojit crossed 250,000.
Geojit's reach spread through a network of more than 300
branches.
The company issued bonus shares in the ratio of 1:1.
Geojit Credits, a subsidiary of Geojit Financial Services Ltd.
registers with Reserve Bank of India as a Non-Banking
Financial Company (NBFC).
The company got listed on National Stock Exchange of India
Limited.
The company implemented Employees Stock Option Scheme.
The company opened a first of its kind - all women's branch in
Cochin.
2006
Strengths
De-materialization
Re-materialization
Repurchase
Pledge
Transfer
IPOs
Speed-e
Internet Services
Other services
Geojit has a tie up with all the Mutual Funds across the country.
Geojit offers life insurance products of the following life insurance
companies:
For over four decades, we have been helping people realize their
aspirations by helping them make their wealth grow, and plan their
financial lives.
Mutual Funds
IPOs
Insurance
Distribution
Saving Schemes
1966: Bajaj Capital expands its product range to include all UTI
schemes and Government saving schemes in addition to Company
Fixed Deposits.
1969: Bajaj Capital manages its first Equity issue (through an
associate company) of Grauer & Wells India Ltd.; right from
drafting the prospectus to marketing the issue.
1987: SBI leads the launch of Public Sector Mutual Funds in India.
Bajaj Capital plays a significant role in fund mobilisation for all
these players.
1991: SBI issues India Development Bonds for NRIs. Bajaj
Capital becomes the top mobilize with collections of over US $20
million.
1995: IDBI and ICICI begin issuing their series of Bonds for retail
investors. Bajaj Capital is the co-manager in all these offerings and
consistently ranks among the top five mobilizes on an all-India
basis.
Management
Mr. K.K. Bajaj
Chairman
Our Aims
Strengths
The group has a net worth of over Rs. 2,500 crore, employs around
6,700 people in its various businesses and has a distribution
network of branches, franchisees, representative offices and
satellite offices across 250 cities and towns in India and offices in
New York, London, Dubai and Mauritius. The Group services over
1.6 million customer accounts.
Kotak Securities
• Institutional Business
• Depository Services
The accolades that Kotak Securities has been graced with include:
Prime Ranking Award (2003-04)- Largest Distributor of IPO's
Finance Asia Award (2004)- India's best Equity House
Finance Asia Award (2005)-Best Broker In India
Euro money Award (2005)-Best Equities House In India
The story of Most goes back many years, when Mr. Motilal Oswal
and Mr. Raamdeo Agrawal met each other as students in a Mumbai
suburban hostel in the early eighties. Both the young chartered
accountants hailing from a rural & an unpretentious background
had a common dream viz 'to build a professional organization with
strong value systems, to provide reliable & honest investment
advice to investors'. Thus was born their first enterprise called
"Prudential Portfolio Services" in 1987
2000: Both Mr. Motilal Oswal and Mr. Raamdeo Agrawal receive
Rashtriya Samman Patra from Central Board of Direct Taxes for
being amongst the top 50 tax payers in India from FY94-FY98
Acquires its 100th Franchisee / Channel Partner and emerges as a
leading player in the Indian Broking Sector
Becomes a Depository Participant of Central Depository Services
Limited (CDSIL)
1998: Mr. Motilal Oswal joins the Governing Board of The Stock
Exchange, Mumbai.
1987: Mr. Motilal Oswal and Mr. Raamdeo Agrawal lay the
foundation of a great partnership by starting a sub-broking firm.
The venture stands out from the rest due to their approach of
Research-based broking even when sub-brokers.
Depository Services
Derivatives Services
Equity Research and Services
Mutual Fund
IPOs
Stock Broking
Distribution
Management Team
MOSt Vision
MOSt Guiding Principles & Core Values
Management
Cholamandalam DBS, in its efforts to pursue principles of
corporate governance, is governed by a statutory board of the
company which has entrusted the responsibility of managing the
operations of this company to a professional Managing Director.
He in turn, has a team of independent professional managers to
take the company to great heights. This harmonious and
professional outlook has emerged as a big factor in support of
Cholamandalam DBS becoming a dominant player in the industry
today.
The various business divisions (Strategic Business Units) of the
company are managed by Business Heads who report to the
Managing Director. These Business Heads form part of the
Business Group Managing Committee (BGMC), which meets once
every month to discuss strategic issues and monitor progress.
Strengths
Depository Services
Portfolio management services
Stock broking services
Wealth management services for NRIs
Saving Schemes
Mutual Fund
India Infoline Was Founded By a Group Of Professionals In
1995
Mr. Nirmal Jain- Chairman
Mr. R Venkataraman - Co-Promoter and Executive Director
170000 Clients
155 Branches
India Infoline Ltd.
For the nine months ended December 31, 2005, India Infoline Ltd
had a total income of Rs 1323.40 Mn up 179% for the same period
for the previous year with a PAT of Rs 324.00 Mn, which is a
growth of 146% for the same period for the previous year.
Across its 155 branches spread across India, around 3,500 people
work with India Infoline Ltd. The company has been driven by the
philosophy of 'Owner mindset' and each of our employee carries
out his/ her duties as if the owner. This philosophy is not just an
esoteric value and has been given an actual form by way of an
active ESOPs scheme
The Management
Strengths
Approach to Research
Data collection
Analysis
Communication
Feedback
Company’s vision
'Networthians', as each one of our 500 plus and ever growing team
members are addressed, is a dedicated team motivated to
continuously progress by imbibing the best of global practices,
indianising such practices, and to constantly evolve a
comprehensive suite of products & services trying to meet every
financial / investment need of the clients. 'TAKE CHARGE'
symbolises and reflects upon our spirit and the committment to
allow two of our most valuable assets - clients and our team
members, to be participative in the relationship that they have with
us besides being encouraged to "own" the growth that our
association results in.
Management
Creating an appropriate mix of assets is the key. How can you feel
confident that you have the right array of investments to meet your
needs? With the Networth as your investment partner, you can
choose your level of support, from powerful research services to
personalized advice.
Indiabulls
Management
Philosophy
Websites: -
www.google.india.com
www.smcindiaonline.com
www.smcebroker.com
www.moneychimp.com
www.amfiindia.com
www.msn.com
www.yahoo.com
www.investopedia.com
WHAT I LEARNT DURING SUMMER TRAINING
Reliance Money is driven by an overarching vision of ‘powering
imagination’ that propels the company forward in its aim to build a
leadership position as the most preferred and significant
Investment Solution services provider.
Outside the office, you'll have time for the people you care about
most. In many locations, we offer flexible work arrangements and
other work/life harmony programs, as well as a variety of benefits
tailored to meet your individual needs.
Think... For us at Reliance Money Ltd, this is more than a
mere statement - it is a theme around which, our business
models are built.
At Reliance Money, our aim is not only getting the job done, but
ensuring that the teams evolve into smarter knowledge pool. We
believe in stimulating intelligence that is built around creative
thinking. Consistent training on latest technologies and industries
is an integral part of working @ adag Group.
At the end we thank to all those persons who have directly or indirectly helped us to
complete this project successfully without whose cooperation it was not possible to
complete the project due to various constraints.At last we would like to give special
thanks to Dr. D.K.Garg sir for giving us opportunity to do final project.
I thank to all those readers who will study this project in the future.
Thanking you.
TIWARI DEEPAK
ENR-MMR 1031
DEEPENDRA KUMAR
ENR-MMR 1055