You are on page 1of 69

Analysis of Indian Mutual

Funds Industry
With Specific Reference To

Submitted to

Mr. Sanjay Pachauri

BLS Institute of Management


(Approved by AICTE Ministry of HRD Government of India)

Mohan Nagar, Ghaziabad (U.P.)

Submitted in Partial Fulfillment of the Requirement of the Post Graduate


Diploma in Management as Dissertation (PGDM 2008-10)

Submitted by:

Vinay Kumar Aggarwal

PGDM 4th Semester (Finance & Marketing)

Roll No.-5220342128

1
CONTENTS

With Specific Reference To 1


1
Submitted to 1
Mr. Sanjay Pachauri 1
BLS Institute of Management 1
(Approved by AICTE Ministry of HRD Government of India) 1
Mohan Nagar, Ghaziabad (U.P.) 1
1
Submitted in Partial Fulfillment of the Requirement of the Post
Graduate Diploma in Management as Dissertation (PGDM 2008-10) 1
Submitted by: 1
Vinay Kumar Aggarwal 1
PGDM 4th Semester (Finance & Marketing) 1
Roll No.-5220342128 1
CONTENTS 2
9
Executive Summary 9
BY MARKET CAPITALISATION 52
SHARPE RATIO 62
CONCEPT OF FINANCIAL PLANNING 66

2
ACKNOWLEDGEMENT

I would like to thank my guide Mr. Amit Chadha (for his kind guidance and
support through the project. He has always been there whenever I need
any expert advice and have been more than willing to go out of the way to
help.

I am grateful to the Library and Computer Center staff for all the help and
cooperation extended to us.

Finally, I would also like to take this opportunity to thank all my friends who
took out time to go through our documents and provide me positive
criticism. The project would not have been a value addition without the
help of the above stated people.

3
Statement about the problem:
A Mutual Fund is a trust that collects the savings of a number of investors
who share a common financial goal and pools it together to create a larger
resource of money. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of
the scheme. These could range from shares to debentures to money
market instruments. The securities could be further subdivided into
technology securities, pharmaceutical securities, FMCG securities etc. The
income earned through these investments and the capital appreciation
realized by the scheme are shared by its unit holders proportionately i.e.
on the basis of the number of units owned by them (pro rata).

Thus a Mutual Fund is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with surplus money can invest,
even as little as a few thousand rupees can be invested in Mutual Funds.
Each Mutual Fund scheme has a defined investment objective and
strategy. The team undertakes this in the most professional manner.

Markets for equity shares, debentures, bonds and other fixed income
instruments; real estate, derivatives and other assets have reached their
maturity and are driven by latest up-to-date information. A mutual fund is
thus the ideal investment vehicle for today’s complex and modern financial
scenario.

Price changes in these assets are driven by global events occurring every
day, in-fact every minute in faraway places. It will be very difficult, in-fact
next to impossible for an ordinary individual to have the knowledge, skills,
inclination and time to keep track of events, understand their implications
and act speedily. An individual also finds it difficult to keep track of
ownership of his assets, investments, brokerage dues and bank
transactions etc. A mutual fund is the answer to all these situations. It
appoints professionally qualified and experienced staff that manages each
of these functions on a full time basis. The costs of hiring these
4
professionals per investor are very low, as the pool of money invested is
large. In effect, the mutual fund vehicle exploits economies of scale in all
three areas - research, investments and transaction processing.

While the concept of individuals coming together to invest money


collectively is not new, the mutual fund in its present form is a 20th century
phenomenon. In fact, mutual funds gained popularity only after the Second
World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different investment objectives. Today,
mutual funds collectively manage almost as much as or more money as
compared to banks.

Why is the particular topic chosen?


Being the student of finance and from the family where dealing in money
market is the main business. My keen area of interest is to work on a
project where I can highlight on a topic which can help the common people
also to know about something which is very difficult to digest for them on
the front end.

While talking to many peoples in day to day life I come to know that
Mutual Funds are something about which the most of the peoples have
perceptions that it is just like the same as dealing in Shares in which they
can either earn or can lose their all amount.

So, I decided to take up my project in the area where I can remove this
perception of peoples that Mutual Funds and Shares are same.

I had interviewed some people in and around Delhi city to know more
about the Mutual Funds from the consumer’s point of view. Special care
was taken to include people from all income brackets. Many people had no
idea of Mutual Funds, which showed the low awareness level among the
people of Delhi about the Mutual Funds. This stresses the need for better
marketing

What contribution would the project make?


Mutual funds are financial intermediaries, which collect the savings of
investors and invest them in a large and well-diversified portfolio of
securities such as money market instruments, corporate and government
bonds and equity shares of joint stock companies. MF’s can survive and

5
thrive only if they can live upto the hopes and trusts of their individual
members. This project deals with the structure of the Indian MF industry
and it’s constituents. It also classifies the Mutual fund schemes and
describes the major players in the industry, with specific reference to Unit
Trust Of India (UTI)

A Mutual Fund is a trust that collects the savings of a number of investors


who share a common financial goal and pools it together to create a larger
resource of money. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of
the scheme. These could range from shares to debentures to money
market instruments. The securities could be further subdivided into
technology securities, pharmaceutical securities, FMCG securities etc. The
income earned through these investments and the capital appreciation
realized by the scheme are shared by its unit holders proportionately i.e.
on the basis of the number of units owned by them (pro rata).

In the end it is concluded and recommended that there is a need for Better
marketing to increase awareness level, focus on building a relationship of
trust and commitment with the investors, provide better rate of returns to
the investors than offered by other investment options and providing better
service to the investors

While the concept of individuals coming together to invest money


collectively is not new, the mutual fund in its present form is a 20th century
phenomenon. In fact, mutual funds gained popularity only after the Second
World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different investment objectives. Today,
mutual funds collectively manage almost as much as or more money as
compared to banks.

Thus a Mutual Fund is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost.

6
Objective and scope of the study:
The Mutual Fund Industry is fast gaining popularity in today’s
unpredictable financial scenario. It is emerging as one of the most lucrative
investment options. The primary objective of the project is to gain
detailed insight into this Industry.

I have tried to systematically and objectively look into all-important


aspects. A combination of primary and secondary data has been used.
The former, though limited, has helped us give first hand information on
company and investor sentiments. The latter has been used to understand
the theoretical aspects.

Strategic importance has been given to both current and past trends
and we have tried to correlate both in a manner to gain maximum insight.

This document has been designed to serve a two-fold purpose. The


first, which is also the main objective of the project, is to reflect our
understanding of this industry. The second is to provide the reader similar
detailed knowledge

The prime objective of the research was to determine the perception


of the Indian investor towards Mutual funds and this is demonstrated in the
later part of this report.

Limitations of the study:


7
The major constraint faced by me in making the project was time. The time
was not enough to know in detail about the factors, to major the
performance of all mutual funds companies in the industry and to what
extent each factor is responsible for the same.

Also in some cases the companies contacted, were not willing to provide
adequate information about the Mutual funds schemes, this constraint led
to inability to cover the whole data. Which could give us clearer picture of
the subject.

Most of the data about the companies are collected from the concerned
Companies Website or directly through the Concerned Companies, which
can be manipulated or exaggerated by the company (Window dressing).

However, inspite of all these limitations and constraint, a humble attempt


to present useful information and format with an analytical picture of the
study with suggestions has been made.

Methodology:
Research in this project will be conducted with the help of the

following:

This research is exploratory in nature .I shall be collected data from


various primary and secondary sources. The choice of sample scheme will
be guided by the fact that a reasonable amount of information will available
and representing true picture of Indian mutual fund industry.
The methodology adopted for the completion of this project will be divided
into four stages.

8
The first stage included understanding the Concept, Structure and policy
(related to Mutual funds) in the Indian mutual fund industry and Secondary
data for this purpose will be collected through various books on mutual
funds, business newspapers, business magazines, trade journals, annual
& quarterly performance reports of the concerned mutual funds companies
and the World wide web (www Information- concerned websites mentioned
in the Bibliography).

The second stage included the input stage in which various types of
information data would be collected related to various mutual funds. The
data was collected through discussions & interviews with the
representatives of the companies. The financial and other relevant data
will be extracted from the performance and annual reports of the Asset
management companies (AMC) concerned

In the third stage all the gathered data will be arranged and tabulated to
arrive at the necessary conclusion. All the information was correlated into
tabulation charts and in figures to make the information easy to
understand. Primary collection of data included preparation of tools like
Questionnaires to evaluate various schemes mutual funds and to
determine the perception of the Indian investor towards the mutual funds.
The results and findings of primary data will be collected (Sample
Questionnaire) is given in the Annexure*.

The last stage, i.e. the output stage included analyzing of the processed
information in to final findings and comparing the information with the data
of mutual fund companies and then arriving of final conclusions and policy
recommendations to UTI.

Executive Summary

9
Mutual funds are financial intermediaries, which collect the savings of
investors and invest them in a large and well-diversified portfolio of
securities such as money market instruments, corporate and government
bonds and equity shares of joint stock companies. MF’s can survive and
thrive only if they can live up to the hopes and trusts of their individual
members. This project deals with the structure of the Indian MF industry
and its constituents. It also classifies the Mutual fund schemes and
describes the major players in the industry, with specific reference to Unit
Trust of India (UTI)

This research is exploratory in nature. I collected data from various


secondary sources. The choice of sample scheme was guided by the fact
that a reasonable amount of information was available and representing
true picture of Indian mutual fund industry.

I met 25 people in and around Delhi city to know more about the Mutual
Funds from the consumer’s point of view. Special care was taken to
include people from all income brackets. About 10 people had no idea of
Mutual Funds, which showed the low awareness level among the people
of Delhi about the Mutual Funds. This stresses the need for better
marketing

In India, the trend is that investors invest when there is a boom in the stock
market and withdraw their holdings in times of slump. This is absolutely
contrary to how the system works abroad as their investments take place
in the slump period when greater units can be purchased with same
amount of money. Withdrawals are correspondingly done in boom times as

10
maximum return is achieved. This is the right strategy and Mutual Fund
companies are trying to create this awareness among consumers.
.

In the end it is concluded and recommended that there is a need for Better
marketing to increase awareness level, focus on building a relationship of
trust and commitment with the investors, provide better rate of returns.

11
OVERVIEW

A Mutual Fund is a trust that collects the savings of a number of investors


who share a common financial goal and pools it together to create a larger
resource of money. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of
the scheme. These could range from shares to debentures to money
market instruments. The securities could be further subdivided into
technology securities, pharmaceutical securities, FMCG securities etc. The
income earned through these investments and the capital appreciation
realized by the scheme are shared by its unit holders proportionately i.e.
on the basis of the number of units owned by them (pro rata).

Thus a Mutual Fund is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with any surplus money that can
be invested, even as little as a few thousand rupees can invest in Mutual
Funds. Each Mutual Fund scheme has a defined investment objective and
strategy. The team undertakes this in the most professional manner.

Markets for equity shares, debentures, bonds and other fixed income
instruments; real estate, derivatives and other assets have reached their
maturity and are driven by latest up-to-date information. A mutual fund is
thus the ideal investment vehicle for today’s complex and modern financial
scenario.

Price changes in these assets are driven by global events occurring every
day, in-fact every minute in faraway places. It will be very difficult, in-fact
next to impossible for an ordinary individual to have the knowledge, skills,
inclination and time to keep track of events, understand their implications
and act speedily. An individual also finds it difficult to keep track of
ownership of his assets, investments, brokerage dues and bank

12
transactions etc. A mutual fund is the answer to all these situations. It
appoints professionally qualified and experienced staff that manages each
of these functions on a full time basis. The costs of hiring these
professionals per investor are very low, as the pool of money invested is
large. In effect, the mutual fund vehicle exploits economies of scale in all
three areas - research, investments and transaction processing.

While the concept of individuals coming together to invest money


collectively is not new, the mutual fund in its present form is a 20th century
phenomenon. In fact, mutual funds gained popularity only after the Second
World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different investment objectives. Today,
mutual funds collectively manage almost as much as or more money as
compared to banks.

13
How Mutual Fund Industry Works

The working of Mutual Funds can be briefly stated in the form of the points
below: -

• A draft offer document is prepared at the time of launching the


fund. Typically, it pre specifies the investment objectives of the fund,
the risk associated, the costs involved in the process and the broad
rules for entry into and exit from the fund and other areas of
operation. In India, as in most countries, these sponsors need
approval from a regulator, SEBI (Securities exchange Board of
India) in our case. SEBI looks at track records of the sponsor and its
financial strength in granting approval to the fund for commencing
operations.

• A sponsor then hires an asset management company to


invest the funds according to the investment objective.

• It also hires another entity to be the custodian of the assets of


the fund and perhaps a third one to handle registry work for the unit
holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management


Company also, in which it holds a majority stake. In many cases a sponsor
can hold a 100% stake in the Asset Management Company (AMC).

14
INDUSTRY PROFILE

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.

Worldwide, good mutual fund companies over are known by their


AMCs and this fame is directly linked to their superior stock selection skills.
For mutual funds to grow, AMCs must be held accountable for their
selection of stocks. In other words, there must be some performance
indicator that will reveal the quality of stock selection of various AMCs.
One industry that has undergone the most dramatic transformation in the
post- liberalization era of the nineties is the financial services industry and
in particular, the mutual funds industry. There has been a paradigm
change in the quality and quantity of product and service offerings.

UTI remained the monopoly player in the mutual fund sector until 1987,
when public sector banks and insurance companies were permitted to
enter the fray. Finally, in 1993, the Securities and Exchange Board of India
(SEBI) came up with comprehensive mutual regulations, that permitted the
private sector to start with mutual funds operations. These were later
replaced by the SEBI Mutual Fund Regulations, 1996.

15
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve
Bank the. The history of mutual funds in India can be broadly divided into
four distinct phases

First Phase – 1964-87

 Unit Trust of India (UTI) was established on 1963 by an Act of


Parliament. It was set up by the Reserve Bank of India and
functioned under the Regulatory and administrative control of the
Reserve Bank of India.
 In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI.
 The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6, 700 crores of assets under management.

16
Second Phase – 1987-1993 (Entry of Public Sector Funds)

 1987 marked the entry of non- UTI, public sector mutual funds set
up by public sector banks and Life Insurance Corporation of India
(LIC) and General Insurance Corporation of India (GIC).
 SBI Mutual Fund was the first non- UTI Mutual Fund established in
June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).
 LIC established its mutual fund in June 1989 while GIC had set up
its mutual fund in December 1990.
 At the end of 1993, the mutual fund industry had assets under
management of Rs.47, 004 crores.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

 With the entry of private sector funds in 1993, a new era started in
the Indian mutual fund industry, giving the Indian investors a wider
choice of fund families.
 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.
 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,

17
541 crores of assets under management was way ahead of other
mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities.

 One is the Specified Undertaking of the Unit Trust of India with


assets under management of Rs.29, 835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India
and does not come under the purview of the Mutual Fund
Regulations.
 The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the
Mutual Fund Regulations. With the bifurcation of the erstwhile UTI
which had in March 2000 more than Rs.76,000 crores of assets
under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations
 With recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of
consolidation and growth.
 As at the end of September 2004, there were 29 funds, which
manage assets of Rs.153108 crores under 421 schemes.

18
ASSETS UNDER MANAGEMENT (AUM) have grown as follows:

AS ON 31st MARCH AUM (Rs. Crores)

1965 24.67
1970 88.30
1975 169.95
1980 455.30
1985 2,209.61
1990 19,130.92
1995 72,967.17
1996 74,315.31
1997 70,197.41
1998 58,918.22
1999 70,623.50
2000 103,452.98
2001 90,587.00
2002 100,594.00
2003 79,464.00
31-mar-06 231862.00

The graph indicates the growth of assets over the years.

19
Mutual fund schemes may be classified on the basis of its structure and its
investment objective. This classification is shown below.

20
Types Of Mutual Funds

B a s e d o n S t r u c t u r e B a s e d o n I n v e s t m e n t O b j e c

C lo s e E n d e O d p F e un n Ed ns d e d L Fo ua dn dF s u n d Ns o L o a d F u n d s

I n t e r v a l F u n d s G r o w t h F u n I nd c s o m e F u n d s

B a l a n c e d FM u o n n d e s y M a r k e t F u n d s

O t h e r S c h e m e s

T a x S a v i n g S S p c e h c e i a m l eS s c h e m e s

I n d u s t r y s p e Ic n i f d i c e xS cS h c e h mSe me e c s e t os r a l S c h e m e s

Open-ended Funds

An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy
and sell units at Net Asset Value ("NAV") related prices. The key feature of
open-end schemes is liquidity.

Closed-ended Funds

A closed-end fund has a stipulated maturity period which generally ranging


from 3 to 15 years. The fund is open for subscription only during a
specified period. Investors can invest in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed. In order to provide
an exit route to the investors, some close-ended funds give an option of
selling back the units to the Mutual Fund through periodic repurchase at
NAV related prices. SEBI Regulations stipulate that at least one of the two
exit routes is provided to the investor.

21
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.

Growth Funds

The aim of growth funds is to provide capital appreciation over the medium
to long- term. Such schemes normally invest a majority of their corpus in
equities. It has been proven that returns from stocks, have outperformed
most other kind of investments held over the long term. Growth schemes
are ideal for investors having a long-term outlook seeking growth over a
period of time.

Income Funds

The aim of income funds is to provide regular and steady income to


investors. Such schemes generally invest in fixed income securities such
as bonds, corporate debentures and Government securities. Income
Funds are ideal for capital stability and regular income.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest both
in equities and fixed income securities in the proportion indicated in their
offer documents. In a rising stock market, the NAV of these schemes may
not normally keep pace, or fall equally when the market falls. These are
ideal for investors looking for a combination of income and moderate
growth.

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of


capital and moderate income. These schemes generally invest in safer
short-term instruments such as treasury bills, certificates of deposit,
commercial paper and inter-bank call money. Returns on these schemes
may fluctuate depending upon the interest rates prevailing in the market.
These are ideal for Corporate and individual investors as a means to park
their surplus funds for short periods.

Load Funds

22
A Load Fund is one that charges a commission for entry or exit. That is,
each time you buy or sell units in the fund, a commission will be payable.
Typically entry and exit loads range from 1% to 2%. It could be worth
paying the load, if the fund has a good performance history.

No-Load Funds

A No-Load Fund is one that does not charge a commission for entry or
exit. That is, no commission is payable on purchase or sale of units in the
fund. The advantage of a no load fund is that the entire corpus is put to
work.

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions
of the Indian Income Tax laws as the Government offers tax incentives for
investment in specified avenues. Investments made in Equity Linked
Savings Schemes (ELSS) and Pension Schemes are allowed as deduction
u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to
investors to save capital gains u/s 54EA and 54EB by investing in Mutual
Funds, provided the capital asset has been sold prior to April 1, 2000 and
the amount is invested before September 30, 2000.

Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the


offer document. The investment of these funds is limited to specific
industries like InfoTech, FMCG, and Pharmaceuticals etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index


such as the BSE Sensex or the NSE 50

Sectoral Schemes

Sectoral Funds are those, which invest exclusively in a specified industry


or a group of industries or various segments such as 'A' Group shares or
initial public offerings.

23
Alone 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 sh-are, 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.

The industry is also having a profound impact on financial markets.


While UTI has always been a dominant player on the bourses as well
as the debt markets, the new generations of private funds which have
gained substantial mass are now seen flexing their muscles. Fund
managers, by their selection criteria for stocks have forced corporate
governance on the industry. By rewarding honest and transparent
management with higher valuations, a system of risk-reward has been
created where the corporate sector is more transparent then before.

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 Rs100bn
per annum over five-year period spanning 1993-98 doubled to Rs210bn
in 1998-99. In the current year mobilization till now have exceeded
Rs300bn. Total collection for the current financial year ending March
2000 is expected to reach Rs450bn.

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.

Mutual funds are now also competing with commercial banks in the
race for retail investor’s savings and corporate float money. The power
shift towards mutual funds has become obvious. The coming few years
will show that the traditional saving avenues are losing out in the
current scenario. Many investors are realizing that investments in
savings accounts are as good as locking up their deposits in a closet.
The fund mobilization trend by mutual funds in the current year
24
indicates that money is going to mutual funds in a big way. The
collection in the first half of the financial year 1999-2000 matches the
whole of 1998-99.

India is at the first stage of a revolution that has already peaked in


the U.S. The U.S. boasts of an Asset base that is much higher than its
bank deposits. In India, mutual fund assets are not even 10% of the
bank deposits, but this trend is beginning to change. Recent figures
indicate that in the first quarter of the current fiscal year mutual fund
assets went up by 115% whereas bank deposits rose by only 17%.
(Source: Think tank, The Financial Express September 99) This is
forcing a large number of banks to adopt the concept of narrow banking
wherein the deposits are kept in Gilts and some other assets, which
improves liquidity and reduces risk. The basic fact lies that banks
cannot be ignored and they will not close down completely. Their role
as intermediaries cannot be ignored. It is just that Mutual Funds are
going to change the way banks do business in the future.

Banks v/s Mutual Funds


CHARACTERISTICS BANKS MUTUAL FUNDS
Returns Better
Low
Administrative exp. High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but
improving
Liquidity At a cost Better
Quality of assets Not transparent Transparent
Interest calculation Minimum balance between 10th.Everyday
& 30th. Of every month
Guarantee Maximum Rs.1 Lac on deposits None
Table 1.1

25
 Morgan Stanley Asset Management (I) Pvt. Ltd.
Morgan Stanley Dean Witter & Co. is a preeminent global financial
services firm that provides a wide range of services to major corporations,
governments, financial institutions and high-net-worth individuals
worldwide. With approximately 50,000 employees in 24 countries, the Firm
has a significant presence in every financial market. Morgan Stanley Dean
Witter (MSDW) Investment Management is the institutional asset
management division of MSDW & Co. MSDW Investment Management
was established in 1975 to help governments, corporations, pension funds
and non-profit organizations meet their long-term investment objectives.
MSDW Investment Management manages US$ 385 billion for institutional
and individual investors.

MSDW Investment Management manages three major offshore India


funds, the India Magnum Fund (traded on the Dublin Stock Exchange), the
India Investment AG (listed on the Zurich Stock Exchange) and the India
Investment Fund (traded on the New York Stock Exchange). The Morgan
Stanley Growth Fund was launched in January 1994 and garnered an
initial corpus of Rs. 981 crores. MSGF is listed on the Mumbai, Delhi,
Calcutta, Chennai and Ahmedabad Stock Exchanges and is also traded on
the National Stock Exchange. In 1997, MSGF units were placed as eligible
securities with the National Securities Depository Limited, which made it
possible for unit holders to hold units in electronic/dematerialized form.

No. of schemes 1
No. of schemes including options 1
Equity Schemes 1

Corpus under management 981 Crore as on Jun 30, 1999

 DSP Merrill Lynch Investment Managers

DSP Merrill Lynch Asset Management (India) Ltd., (a company registered


under the Companies Act, 1956) has been set up by DSPML and MLAM,

26
to act as the Asset Management Company (AMC) to the Fund. The AMC
has been appointed as the Investment Manager to the fund, MLAM holds
40% of the paid up share capital of the AMC, while the balance 60%
(approximately), is held by DSPML. The Investment Manager was
approved by SEBI to act as the AMC for the Mutual Fund.

Merrill Lynch Investment Managers investment philosophy is designed to


seek consistent, long-term strategic performance results. Its disciplined
value oriented approach to managing its client’s portfolios has been with
the primary objective of seeking consistent returns over a long period.

DSP Merrill Lynch Asset Management (India) Ltd. has been changed its
name to DSP Merrill Lynch Investment Manager’s Ltd. w.e.f. 20th July
2003.

No. of schemes 8
No. of schemes including options 13
Equity Schemes 3
Debt Schemes 2
Short term debt Schemes 2
Equity & Debt 2
Gilt Fund 4

Corpus under management 1342.02 Crore as on Jun 30, 2003

 Birla Sun Life Asset Management Company Ltd

Birla Sun Life AMC Ltd. is a joint venture between Sun Life Assurance
Company of Canada and the Aditya Birla Group, one of Indian leading
Industrial houses.
Sun Life Assurance Company of Canada is a leading financial services
organization, providing a diversified range of risk management, wealth
management and money management products for individuals and
corporations worldwide. Sun Life commenced business in Canada in 1871,
and is headquartered in Toronto with major operations in Canada, United
States, United Kingdom and Asia Pacific. Sun Life has consistently earned
ratings that rank among the best in the North American financial services
sector. It has a major presence in the growing mutual fund markets
through MFS Investment Management in the U.S., and through Spectrum

27
United Mutual Funds in Canada. It is also active in the unit trust business
in the U.K., and its near term plans include consideration of mutual fund
offerings in the Philippines.
The Aditya Birla group is a multinational group consisting of the best
known companies in India in a range of key sectors like Textiles
(GRASIM), Rayon (Indian Rayon), Aluminum (HINDALCO), Petroleum
(MRPL), Finance (BGFL), Fertilizers (Indo-Gulf). Birla Mutual Fund offers
investment Schemes which aim to cater to every need of the investor.
Drawing on the expertise of a worldwide staff of over 10,000 people and a
network of more than 65,000 agents and distributors, Sun Life is
committed to providing not just products and services, but solutions for
clients financial and risk management needs.

No. of schemes 10
No. of schemes including options 20
Equity Schemes 8
Debt Schemes 2
Short term debt Schemes 2
Equity & Debt 2
Gilt Fund 6
Corpus under management 3742 Crore as on Jun 30, 2003

 Kothari Pioneer Asset Management Company Ltd.

Kothari Pioneer Mutual Fund is sponsored by the Investment Trust of India


Ltd. of the H C Kothari Group and Pioneer Investment Management Inc.
(PIM) of The Pioneer Group Inc., USA. Kothari Pioneer is one of India s
first mutual fund in the private sector. Today, it manages Rs.2700 crores in
assets for over 650,000 investors across a range of growth, balanced,
income, liquid and tax saving funds.
The sponsors of the fund are Pioneer Investment Management (PIM), USA
and the Investment Trust of India, who together bring more than 120 years
of experience in financial services. PIM currently manages over $24 billion
in assets worldwide on behalf of individual and institutional investors.
Based in Boston, Pioneer has financial services operations in Germany,
Ireland, Poland, Czech Republic, India and Russia. Its flagship fund,
Pioneer Fund, was founded in 1928 and is the fourth oldest mutual fund in
the United States.
No. of schemes 21
No. of schemes including options 34
Equity Schemes 18
Debt Schemes 12

28
Short-term debt Schemes 2
Equity & Debt 1
Money Market 1

Corpus under management 2600 Crs. as on Jun 30, 2003

 Sun F & C Asset Management (India) Pvt. Ltd.

SUN F&C Asset Management (India) Pvt. Ltd. is an equal joint venture
between Foreign & Colonial Emerging Markets Ltd. U.K. and SUN
Securities (India) Pvt. Ltd. Foreign & Colonial, established in 1868, is one
of Europe s leading asset management groups. F&C is a part of Hypo
Bank, one of Germany s oldest and largest banks and has been investing
in the Indian stock markets since 1993. SSIL is an Indian subsidiary
company of Sun Group. Its activities consist of principal investment and
investment management operations in emerging markets and technologies
as well as international commercial activities.
SUN F&C currently manages and advises India Performance Fund (an
offshore fund), SUN F&C Value Fund (a domestic fund) and F&C
sponsored Indian Investment Company SICAV (INDICO).

SUN F&C launched its Indian operations by becoming the domestic


advisor to FCEMs INDICO fund. It has since then launched India
Performance Fund, an offshore fund, in 1996 and five domestic schemes -
Value Fund (1997), Money Value Fund (1998), Balanced Fund (1999),
Emerging Technologies Fund (2003), Monthly Income Plan (2003) and
Resurgent India Equity Fund (2003). Over the last 5 years, the Company
has built a strong track record of managing asset classes, equity and debt.
Today, Sun F&C manages/advises a corpus of over Rs.1000 crore
(US$230 mn), of which over 50% is equity. This corpus is spread over 8
schemes, 6 domestic and 2 offshore. A team of 56 people spread over 8
location service almost 80,000 customers.

No. of schemes 7
No. of schemes including options 12
Equity Schemes 4
Debt Schemes 5
Short term debt Schemes 2
Equity & Debt 1

29
Corpus under management 720 Crore as on May 31, 2003

30
Every year, millions of Indians entrust their savings to Unit Trust of India to
build up a financially secure future. This faith and confidence of investors
stem from UTI's commitment, as reflected in its long track record to ensure
its investors, safety, liquidity and attractive yield on their investments.

Set up in 1964, by an Act of Parliament, UTI Act 1963, UTI has grown into
one of the biggest players and carved out a special position in the Indian
capital market.
Today, UTI manages an aggregate portfolio of Rs. 72,698 Crore as on
31/12/1999 and services 45 million investor accounts under 90 saving
schemes catering to varying needs of different classes of investors.

UTI has a servicing and distribution network of 53 branch offices, 320


District Representatives and about 87,000 agents. It provides a complete
range of services to its investors, at a low gross cost of less than 1.01
percent of invisible funds and does not charge any asset management fee.

Management:

Chairman Shri M Damodaran


Executive Directors Shri K G Vassal
Shri A K Thakur
Shri M M Kapur
Shri A N Palwankar
Shri S K Basu
Dr Basudeb Sen
Shri B G Daga

31
Savings Plans and Funds:

UTI is a symbol of trust and confidence among Indian investors. In the last
seven years, the number of schemes managed by UTI increased from 35
to 92, while the number of unit holding accounts recorded a sevenfold
increase from 65 lakhs to over 450 lakhs.

UTI's expanding product range cover a broad spectrum of investment


goals and includes open end and closed-end income and capital
accumulation funds. Among the most popular are Unit Scheme 1964 and
Master series equity schemes such as Mastershare, Masterplus, Master
Equity Plans, etc.

UTI also manages schemes aimed at meeting specific needs like

♦ Low cost insurance cover (ULIP)


♦ Monthly income needs of retired persons and women.
♦ Income and liquidity needs of religious and charitable
institutions and trusts.
♦ Building up funds to meet cost of higher education and career
plans for children.
♦ Future wealth and income needs of girl child and women.
♦ Building savings to cover medical insurance at old age.
♦ Wealth accumulation to meet income needs after retirement.

The Market – Trust and Reach:

Individual household investors account for 99% of UTI's investor accounts


and about 65% of unit capital of UTI schemes. Products are distributed
through a marketing force of about 87,000 commission-based canvassing
agents trained to explain the products and provide related service support
to investors.

Today, these agents are supervised by 320 Chief Representatives who


guide the investors, organize, train and motivate the agents in their
respective areas of operation (specified districts).

32
Investors under various schemes of UTI are now serviced through 53 UTI
branches, 213 collection centers and offices of 6 Registrar and Transfer
Agencies appointed by UTI. Besides there are 52 franchises offices, which
accept applications and distribute certificates to unit holders. UTI has set
up its own associate company, UTI-Investor Services Limited (UTIISL), to
meet the growing needs of unit holder servicing.

UTI is also currently implementing a technology upgradation program,


involving networking of on-line computer systems at UTI's offices, and
offices of Registrars and Transfer Agencies. This would enable UTI to
improve service quality significantly.

UTI publishes weekly/daily NAVs for all its listed schemes and offers a
prospectus for every scheme. It also publishes half-yearly results for all
schemes and releases information on portfolio as also largest
shareholding for growth schemes and Unit Scheme 1964. UTI adheres to
disclosure requirements specified by SEBI.

Fund deployment:

Equity Investing:

More than fifty percent of total funds of UTI Schemes are invested in
equity. UTI is the largest operator in the Indian equity market with total
investments worth Rs 35,007.83 crores at book value. Its various funds
collectively hold stocks in more than 1500 Indian companies and account
for over 8 percent of the market capitalization of all listed scripts on the
Bombay Stock Exchange.

Corporate debt:

UTI is one of the main providers of debt finance to the corporate sector.
Investment in corporate debt instruments account for 38 percent of the
total investible funds. Credit market operations cover a range of
instruments including publicly issued and privately placed debentures,
bonds and medium term notes. UTI's debt portfolio quality is represented
by 98 percent performing assets.

33
UTI is also one of the largest investors, among non-banking institutions in
the money market. About 11 percent of the total investible funds are
accounted for by government paper and call deposits.

Investment guidelines:

Consistent with the UTI Act, UTI's investment decisions are guided by
investors' interests. UTI's operations are guided by UTI Act, 1963 and
UTI's investments are subject to prudential exposure norms and limits laid
down by UTI regulations. It cannot invest more than 10 percent of a
particular scheme corpus in the equity of any one company. UTI's
investment decisions are backed by inputs from independent group’s set-
up for equity research, investment appraisal and credit rating.

A Conglomerate with a vision:

As a distinctive financial institution, UTI manages funds raised through


common investible vehicles and at the same time provides companies
financial services, including underwriting. To create a diversified financial
conglomerate and to meet investor's varying needs under a common
umbrella, UTI has set up a number of associate companies in the field of
banking, securities trading, investor servicing, investment advice and
training.

♦ UTI Bank Ltd (1994)--the first private sector bank to be set up


under RBI guidelines.
♦ UTI Securities Exchange Ltd (1994)--the first institutionally
sponsored corporate stock-broking firm.
♦ UTI Investor Services Ltd (1993)--the first institutionally
sponsored Registrar and Transfer agency.
♦ UTI Institute of Capital Markets (1989)--the first such institute
in Asia, excluding Japan.
o UTI Investment Advisory Services Ltd (1988)--the first
Indian Investment Advisor registered with SEC, US.

Consistent with financial sector deregulation, UTI has plans to enter


insurance, pension fund and credit rating businesses.

34
Global links:

UTI pioneered the offshore fund investment in Indian securities. The India
Fund launched in 1986 as a closed-end fund, became a multi-class open-
ended fund in 1994. Thereafter, in 1988 UTI floated the India Growth
Fund, which is listed, on the New York Stock Exchange. Both India Fund
and India Growth Fund have increased their corpus through rights issues.
Besides the Columbus India Fund, launched in 1994, UTI launched the
India Access Fund, an Indian Index Fund (tracking the NSE 50 index) in
1996.

UTI International Limited is a 100% subsidiary of Unit Trust of India,


registered in the island of Guernsey. This company was set up with the
primary objective of administration and marketing of various offshore funds
managed by UTI as also to act as the management company for these
funds as required by the Guernsey Law. UTI International Ltd has an office
in London to market UTI's offshore funds to institutional clients in UK,
Europe and USA. It is also responsible for developing new products as
well as new business opportunities of UTI. This office also looks after
ongoing investor relations with foreign investors and has succeeded in
greatly improving communication between UTI and its clients and
distributors abroad. UTI International Ltd has played an important role in
launching three new offshore funds of UTI - the India IT Fund Ltd, the India
Debt Fund Ltd and the India Public sector Fund Ltd.

To cater to various needs of NRI investors based in the Gulf region, UTI
has a Representative office at Dubai. The representative office covers all
the six GCC countries viz. UAE, Oman, Kuwait, Saudi Arabia, Qatar and
Bahrain. The Dubai office of UTI acts as a liaison office between our NRI
investors in the Gulf and UTI offices all over India. Besides providing
information on current and new schemes of

UTI, it also co-ordinates with UTI offices in India for all after-sale requests
of unit holders/agents.

In the recent past, UTI has extended its support to the development of Unit
Trusts in other developing countries, like Sri Lanka and Egypt. Besides
providing technical advice, UTI also participated in the equity capital of the
Unit Trust Management Company of Sri Lanka.

35
Research strength:

UTI has its own research set-up to deal with different areas. The areas of
research analysis cover macro economy, capital markets, financial sector
and mutual funds. Equity Research and Credit Rating groups also cover
industry and corporate performance.

UTI Institute of Capital Markets conducts training programmes for the


financial community and helps develop modern and scientific approach
towards investment management. It also serves as a forum to discuss
ideas and issues relevant to the capital market besides publishing
research papers relating to capital market.

Schemes offered:

No. of schemes 72
No. of schemes including options 115
Equity Schemes 31
Debt Schemes 69
Equity & Debt 3
Money Market 1
Gilt Fund 2

Corpus under management 72500 Crore as on Jun 30, 2003

36
Schemes of a Mutual Fund:

 The asset management company shall launch no scheme unless


the trustees approve such scheme and a copy of the offer document
has been filed with the Board.
 Every mutual fund shall along with the offer document of each
scheme pay filing fees.
 The offer document shall contain disclosures which are adequate in
order to enable the investors to make informed investment decision
including the disclosure on maximum investments proposed to be
made by the scheme in the listed securities of the group companies
of the sponsor
 The mutual fund and asset Management Company shall be liable to
refund the application money to the applicants
 If the mutual fund fails to receive the minimum subscription amount
referred to in clause (a) of sub-regulation (1)
 If the moneys received from the applicants for units are in excess of
subscription as referred to in clause (b) of sub-regulation (1).
 The asset management company shall issue to the applicant whose
application has been accepted, unit certificates or a statement of
accounts specifying the number of units allotted to the applicant as
soon as possible but not later than six weeks from the date of
closure of the initial subscription list and or from the date of receipt
of the request from the unit holders in any open ended scheme.

Rules Regarding Advertisement:

 The offer document and advertisement materials shall not be


misleading or contain any statement or opinion, which are incorrect
or false.
 Investment Objectives and Valuation Policies:
 The price at which the units may be subscribed or sold and the price
at which such units may at any time be repurchased by the mutual
fund shall be made available to the investors.

General Obligations:

 Every asset management company for each scheme shall keep and
maintain proper books of accounts, records and documents, for
each scheme so as to explain its transactions and to disclose at any
point of time the financial position of each scheme and in particular
give a true and fair view of the state of affairs of the fund and
37
intimate to the Board the place where such books of accounts,
records and documents are maintained.
 The financial year for all the schemes shall end as of March 31 of
each year.
 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.

Procedure for Action In Case Of Default:

On and from the date of the suspension of the certificate or the


approval, as the case may be, the mutual fund, trustees or asset
management company, shall cease to carry on any activity as a
mutual fund, trustee or asset management company, during the
period of suspension, and shall be subject to the directions of the
Board with regard to any records, documents, or securities that may
be in its custody or control, relating to its activities as mutual fund,
trustees or 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
un rated 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.
 Such transfers are done at the prevailing market price for quoted
instruments on spot basis.
 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

38
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
badla 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;
 Any unlisted security of an associate or group company of the
sponsor; or
 Any security issued by way of private placement by an associate or
group company of the sponsor; or
 The listed securities of group companies of the sponsor which is in
excess of 30% of the net assets [of all the schemes of a mutual
fund]
 No mutual fund scheme shall invest more than 10 per cent of its
NAV in the equity shares or equity related instruments of any
company. Provided that, the limit of 10 per cent shall not be
applicable for investments in index fund or sector or industry specific
scheme.
 A mutual fund scheme shall not invest more than 5% of its NAV in
the equity shares or equity related investments in case of open-
ended scheme and 10% of its NAV in case of close-ended scheme.

39
Key Elements

Fund sponsor:

The Sponsor Company establishes the mutual fund in the form of a trust
and registers it with SEBI. The board of trustees holds the fund in trust for
unit holders and ensures compliance with SEBI regulations, trust deed
guidelines and the terms of the asset management agreement by the
AMC.
As an investor one should check the sponsors track record. Scrutiny of the
fund sponsor's track record may forewarn you against jolts like the CRB
scandal. Apart from a consistent track record, sponsors should have
requisite experience and background in managing mutual funds.

Fund manager:

The fund manager is an employee of the asset management company


who formulates the investment strategy and invests the funds. As an
investor in the fund one should - Understand the investment philosophy of
the fund manager. - Check the returns he has generated on funds
previously managed by him, and - Find out whether the fund manager has
delivered on the investment objectives of the funds he has managed in the
past.

40
Type of fund

1. Open ended funds:


Investors under this scheme are free to join the fund or withdraw
from the fund at any time after an initial lock-in period. Such funds
announce sale and repurchase prices from time to time. In an open-
ended scheme, investors can resell units in the fund to the issuing
mutual fund at the net asset value (NAV) of the units. This is
because open-ended schemes are permitted to buy/sell their own
units.

2. Close ended funds:


Unlike the open-ended schemes, close-ended schemes do not issue
units for repurchase redemption on a periodic basis. Its units can be
redeemed only on termination of the scheme, or through dealings in
the secondary market. In such schemes, the period of the scheme is
specified at the outset. They have a definite target amount for the
funds and cannot sell more after initial offering. If the scheme is
limited, investors can trade units on the bourses, just like equities
and debentures.

Type of scheme

Mutual funds can offer different investment schemes. These schemes can
be classified as:
1. Growth Funds Investment objective:
Capital appreciation of equity shares Investment avenue: Equity shares
of companies with high growth potential

2. Income Funds Investment objective:


Providing safety of investments and regular income Investment avenue:
Bonds, debentures and other debt related instruments as well as equity
shares of companies with high dividend payouts. There are 2 aspects
of income funds viz. low investment risk with constant income and high
investment risk generating high income.

3. Balanced Funds Investment objective:


Modest risk of investment and reasonable rate of return Investment
avenue: Judicious mix of equity shares, preference shares as well as
bonds, debentures and other debt related instruments

4. Money Market Mutual Funds (MMMFs) Investment objective:


To take advantage of the volatility in interest rates in the money market
Investment Avenue: Certificate of deposits (CDs), call money market,
41
commercial papers. Investors who had earlier stayed away from the
money market can participate indirectly through MMMFs.

5. Specialized Funds Investment Objective:


To take advantage of conditions in a particular sector or a specific
income producing security Investment Avenue: Specialized investments
in securities of companies in certain sectors or specific income
producing securities

6. Leveraged Funds Investment objective:


To increase the value of the portfolio and benefit the shareholders by
gains exceeding the cost of borrowed funds Investment avenue:
Speculative and risky investments like short sales to take advantage of
declining market.

7. Index Funds Investment Objective:


To increase the value of the portfolio in line with the benchmark index
(ie. BSE Sensex, S&P CNX 50) Investment Avenue: Investments only
in those shares that form a part of the benchmark index, in exactly the
same proportion, so that the value of the index fund varies in proportion
with the benchmark index.

42
8. Hedge Funds Investment Objective:
To hedge risks in order to increase the value of the portfolio
Investment Avenue: Employ speculative trading principles - buy rising
shares and sell shares whose prices are likely to fall. As an investor
you should invest in schemes, which meet your criteria in terms of you
need for regular income, capital appreciation, and safety of principal.

Fees and charges

AMCs charge a fee for managing the funds. As an investor in the fund we
must be aware of the fees and charges of the AMC. Two schemes with
more or less similar performances would generate different returns if one
of the two schemes charges high fees.

The public offering price

A sales load represents the money received by the AMC as compensation


for distributing units. It helps the fund to meet its expenses relating to sales
literature, promotion, distribution, advertising and agent/broker
commissions. The Public offering Price (POP) is the price at which an
investor buys into the fund and is a function of both the NAV and sales
load.
For instance, if the Funds NAV is Rs 12/- and the applicable sales load is
6% the POP is NAV/ (1-Sales load) =12/(1-. 06) = 12.77 If the investor
applied for Rs 10,000 worth of units he would receive 783.085 units
(10,000/12.77). You might be required to pay such load charges either at
the time of buying the units or at the time of selling the units. As an
investor you should be aware of such entry. /exit loads as they could have
a material impact on returns.

Tax implications

Investors need to understand the tax implications before investing in the


schemes, as one scheme may offer more attractive post-tax returns
compared to its peers. As Union budgets regularly offer tax benefits to
mutual funds and mutual fund investors, you as an investor must review
the tax implications of mutual fund investments.

43
Service levels

Service levels vary across funds. Level of communication also varies


across funds. While some disclose the fund portfolio annually, others
disclose it quarterly, and some others disclose it monthly.

Performance and NAV

Every fund is benchmarked against an index like the BSE Sensex, CNX
SNP 50, BSE 200, etc. As an investor you must track the funds
performance against the benchmark index. Also it could be useful for the
investor to compare its performance with other funds. /exit loads as they
could have a material impact on returns.

2000000 GDP per Capita

1500000
Gross Domestic
1000000 savings

500000 Savings with


Commercial
0
Banks
Mobilization by
20 02

20 03

6
20 01

20 04

20 05
-0
-

-
-

Mutual Funds
00

01

02

03

04

05
20

44
Graph Showing Company Net Flows

Company 2001-02 2002-03 2003-04 2004-05 2005-06


Names
Kothari Pioneer 309.46 -10 -81.4 -5.59 161.1
ICICI Prudential 90.28 528.53
Birla Mutual 162.2 25.03 111.58 260.41 474.49
Fund
Templeton 119.79 53.14 242.76

600
500
400
300
200
100
0
-100 2001-02 2002-03 2003-04 2004-05 2005-06
-200

Kothari Pioneer ICICI Prudential Birla Mutual Fund Templeton

45
Graph Showing Relation Between Market Indices And Mutual
Funds Sales

Month BSE Sensex NSE Index MF Sales


May'02 3964 1132 2920.666667
Aug'03 4898 1412 3537.333333
Nov'04 4622 1376 4752
Feb'05 5447 1655 8703.666667
April'06 4658 1407 6662

10000
8000
6000 BSE Sensex
NSE Index
4000
MF Sales
2000
0
02

03

6
05
v' 0

il'0
'

g'
ay

b'

r
No
Au

Fe

Ap
M

46
SWOT ANALYSIS OF MUTUAL FUNDS

Strengths of Mutual Funds are:


1.The fund industry has introduced the best products and
services, and delivered superlative performances.
2.It allows small investors to invest in market cheaply and
efficiently.
3.You get to own several companies no matter how much you
decide to invest. In other words you get instant ‘diversification’.
4.You can easily make monthly contributions.
5.A professional manager is the one managing the money.
Theoretically because of his/her experience and knowledge you
should receive above average returns.
6.Very high transparency, risk of fraud is very less.
7.For every kind of profile (ie conservative, moderately
aggressive, aggressive) there are investment options available.

Weaknesses of Mutual Funds are:


1.Load being charged for entry into and exit from a particular
fund is the biggest weakness of funds.
2.Lack of flexibility.
3.Load is charged irrespective of the performance of the fund.
4.Expense ratio is charged separately ie you pay management
fee no matter if the fund makes you money or not.
5.A large majority of mutual fund companies don’t come close to
beating market averages like the S&P 500.

47
Opportunities for Mutual Funds:
1.Only .5% of Indian savings is invested in mutual funds.
Therefore there is a large potential for the fund industry to
mobilize the savings of people into investments in MF’s.
2.Mutual funds are currently not allowed to invest in real estate.
MF making investments in property should be allowed.
Government is making necessary efforts.

Threats to the Mutual Funds:


1.One of the biggest ills plaguing the fund industry today is
called late trading. The deal is to offer preferential treatment to
large investors by offering them backdated net asset values
(NAVs).
2. ULIP (Unit Linked Investment Plan)- if the time horizon of the
investor is more than 15 years, ULIP becomes a threat to fund
industry. Also the brokers say (banks) get higher brokerage if an
investor invests in ULIP rather than MF’S.
3.PPF (Public Provident Fund) is also a threat since it gives
guaranteed return since no investment is risk free. Anyone who
invests in mutual funds runs the risk of losing money.
4.Real estate also poses a big threat for the industry since
investor prefers investing in property rather than funds.
5.Portfolio management has now been started by various
institutions such a (Kotak securities), whereby a separate
portfolio can be designed for an individual investor. Here an
individual is saved if the fund manger does not make right
decision regarding fund’s portfolio.

48
Financial Aspects of Mutual Funds:

Net Asset Value:


Before venturing into the market related functional aspects of Mutual
funds, it is important to understand the evaluation criteria of these funds.
Just as a business is evaluated by the level of its profits, a mutual fund is
assessed on the basis of its “net asset value”, as explained below.

The net asset value of the fund is the cumulative market value of the
assets fund net of its liabilities. In other words, if the fund is dissolved or
liquidated, by selling off all the assets in the fund, this is the amount that
the shareholders would collectively own. This gives rise to the concept of
net asset value per unit, which is the value, represented by the ownership
of one unit in the fund. It is calculated simply by dividing the net asset
value of the fund by the number of units. However, most people refer
loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide
by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets
owned by the fund. Once it is calculated, the NAV is simply the net value
of assets divided by the number of units outstanding. The detailed
methodology for the calculation of the asset value is given below.

Asset value is equal to

Sum of market value of shares/debentures

49
+ Liquid assets/cash held, if any
+ Dividends/interest accrued
Amount due on unpaid assets
Expenses accrued but not paid

Asset Management Company (AMC):


An Asset Management Company or AMC is the investment manager of the
respective trust, which is entitled to invest in different securities on behalf
of unit holders, in line with the objectives of respective schemes.
Load:
The charge collected by a Mutual Fund from an investor for selling the
units or investing in it.
Entry load:
When a charge is collected at the time of entering into the scheme it is
called an Entry load or Front-end load or Sales load. The entry load
percentage is added to the NAV at the time of allotment. .
Exit load:

An Exit load or Back-end load or Repurchase load is a charge that is


collected at the time of redeeming or for transfer between schemes
(switch). The exit load percentage is deducted from the NAV at the time of
redemption or transfer between schemes.

Systematic Investment Plan:

50
Systematic Investment Plan is normally offered by many open-ended
mutual funds in order to encourage regular investments. This plan allows
an investor to purchase additional units of the Scheme by investing fixed
amount of rupees every month/quarter. The beauty of the plan is that as
the market falls the number of units purchased by the investor increases
as the purchases are linked to the NAV. This concept is called Rupee Cost
Averaging. Rupee Cost Averaging does not guarantee a profit or protect
against a loss. Rupee Cost Averaging can smooth out the market's ups
and downs and reduce the risk of investing in volatile markets.

Systematic Withdrawal Plan:

The unit holder may set up a Systematic Withdrawal Plan on a monthly,


quarterly or semi-annual or annual basis to redeem a fixed number of units

Price/Earnings Ratio:
Abbreviated as P/E Ratio or P/E. Sometimes referred to as the "multiple."
Calculated by dividing the stock's
current price by the company's current annual earnings per share, usually
from the last four quarters (known as the Trailing P/E Ratio), but
sometimes from the estimates of the earnings expected in the next four
quarters (the Projected P/E ratio), or from the sum of the last two actual
quarters and the estimates of the next two quarters. In and of itself, the
P/E Ratio tells very little, but can be usefully compared to the P/E Ratios of
other companies in the same industry, or to the market in general, or to the
company's own historical P/E Ratios, in order to determine how much the
market is currently willing to pay for a share of the company's earnings.

51
BY MARKET CAPITALISATION

Market capitalization: Stock Funds are often grouped by the size of the
companies they invest in big, small or tiny. By size we mean a company's
value on the stock market: the number of shares it has outstanding
multiplied by the share price. This is known as market capitalization.

 Big companies tend to be less risky than small companies. But


smaller companies can often offer more growth potential. The best
idea is probably to have a mix of funds that gives an exposure to
large-cap, midsize and small companies.
 A fund's market capitalization will indicate whether the fund
emphasizes the stocks of blue-chip companies with large market
capitalizations, emerging companies with small capitalizations, or
something in between.

a) Large Cap Funds:


Large cap funds invest their assets primarily in companies, which have a
sizable market capitalization. Different fund houses define `Sizable'
differently. This is usually mentioned in the fact sheets for the investor's
benefit. For instance, in its IPO (Franklin Flexi Cap), Templeton defined
large caps as companies with a market capitalization in excess of Rs 15
bn (Rs 1,500 crores). Companies below this threshold were categorized as
mid/small caps.

 Investing in large caps is a lower risk-lower return proposition


(vis-à-vis mid cap stocks), because such companies are usually
widely researched and information is widely available.
 Large-cap funds are less volatile than funds that invest in smaller
companies. Usually, that means we can expect smaller returns
but stable returns.
52
E.g.: Kotak 30, HDFC Top 200 Fund, Franklin India Bluechip Fund, HSBC
Equity Fund for instance, invest predominantly in large caps.

b) Mid Cap Funds:


These funds invest in companies that have a lower market capitalization
than the large caps. For instance, Sundaram Mutual Fund defines mid
caps as stocks with a market capitalization of less than Rs 18 bn.
However, this level varies from fund house to fund house. As with large
caps, BSE (BSE Mid Cap 200) and S&P CNX (S&P CNX Mid Cap 200)
have designed their own indices for mid cap stocks.

 Investments in mid caps are a riskier proposition as compared to


investments in large cap funds. In fact, a mid cap stock could
well graduate to a large cap over the years giving the investor a
significant return on his investment.

E.g.: Franklin India Prima Fund, Kotak Mid-Cap, Magnum Global Fund,
Sundaram Select Mid Cap fund are some examples of mid cap funds.
c) Small Cap Funds:
Small cap funds invest in companies with a smaller market capitalization.
(Sundaram SMILE) - Sundaram Mutual Fund defined small caps as stocks
with a market capitalization of less than Rs 2 bn. investing in small cap
funds is fraught with considerable risk.

 Small cap companies in most cases are just evolving. Again,


as with mid caps, information on small caps is not easily
available so these companies are under-researched or maybe
not researched at all. So we are contending with a relatively
unknown entity here.
 However, the risk-return trade-off is much higher vis-à-vis
large caps and mid caps.

53
 The volatility of the fund often depends on the aggressiveness
of the manager. Aggressive small-cap managers will buy hot
growth and technology companies, taking high risks in hopes
of high rewards. More conservative "value" managers will look
for companies that have been beaten down temporarily by the
stock market.

Currently this is a niche segment as there is no fund investing purely in


small cap stocks. Sundaram SMILE is probably the first small cap fund of
its kind.

d) Multi/Flexi-Cap Funds:
Just about every second mutual fund IPO these days is a multi/flexi cap
fund.

 The fund manager has the mandate to shift across market


capitalizations depending on the growth opportunity.
 This is generally dictated by the market happenings i.e. which
sector is driving growth at a given time or which market segment
(market capitalization) is witnessing the latest rally.
 But generally, there's a ceiling on how far the fund manager can
go in a particular market segment or sector. This helps in keeping
the portfolio relatively diversified and mitigate risks. In terms of
risk-return trade-off, these funds are positioned between large
caps and mid caps.

Some multi cap funds include - DSP ML Opportunities, Tata Equity


Opportunities and Principal Resurgent India Fund.

54
HOW TO INVEST IN MUTUAL FUND

Step One - Identify the Investment needs: Our financial goals will vary,
based on the age, lifestyle, financial independence, family commitments,
and level of income and expenses among many other factors. Therefore,
the first step is to assess the needs. We can begin by defining the
investment objectives and needs, which could be regular income, buying a
home or finance a wedding or educate children etc.
Step Two - Choose the right Mutual Fund: The important thing is to
choose the right mutual fund scheme, which suits our requirements. The
offer document of the scheme tells us its objectives and provides
supplementary details like the track record of other schemes managed by
the same Fund Manager. Some factors to evaluate before choosing a
particular Mutual Fund are the track record of the performance of the fund
over the last few years. Other factors could be the portfolio allocation, the
dividend yield and the degree of transparency etc.
Step Three - Select the ideal mix of Schemes: Investing in just one
Mutual Fund scheme may not meet all the investment needs. We may
consider investing in a combination of schemes to achieve our specific
goals.
Step Four - Invest regularly: The best approach is to invest a fixed
amount at specific intervals, say every month. By investing a fixed sum
each month, we buy fewer units when the price is higher and more units
when the price is low, thus bringing down the average cost per unit. This is
called rupee cost averaging and is a disciplined investment strategy
followed by investors all over the world. We can also avail the systematic
investment plan facility offered by many open-end funds.

55
Step Five- Start early: It is desirable to start investing early and stick to a
regular investment plan. If we start now, we will make more than if we wait
and invest later. The power of compounding lets us earn income on
income and our money multiplies at a compounded rate of return.
Step Six - The final step: Finally we need to fill in the application forms of
various mutual fund schemes and start investing. We may reap the
rewards in the years to come. Mutual Funds are suitable for every kind of
investor - whether starting a career or retiring, conservative or risk taking,
growth oriented or income seeking.

56
COMPARATIVE ANALYSIS OF MUTUAL FUNDS

BETA
A Beta is a measure of risk that, when applied to investment portfolios,
provides useful statistical information. It compares a mutual fund's volatility
with that of a benchmark. If the beta of the stock is 1, it means that the
returns in the stock are highly correlated to the benchmark index.
A fund with a beta greater than 1 is considered more volatile than the
market; and a fund with a beta less than 1 means less volatile.

COMPARATIVE ANALYSIS

HDFC TOP PRU ICICI RELIANCE


UTI 200 GROWTH VISION
BETA 0.91 0.91 0.98 0.89

Comparison Chart

0.9

0.85
BETA

0.8 BETA

0.75

0.7
UTI HDFC CAPITAL RELIANCE
BUILDER GROWTH
Funds

57
 Most mainstream equity funds have Betas in the range of .85 to 1.05
(fairly close to the 1.00 Beta represented by the market in the
aggregate). Especially conservative stock funds may register Betas
as low as .75, meaning that in a -10% market decline, their values
might be expected to fall -7.5%. Aggressive funds with Betas of 1.25
might see their values fall by -12.5%.
 We can see that the betas of nearly all the funds are similar apart
from the beta of Pru-ICICI Growth, which has a very high beta,
which implies that the fund is very volatile.
 An important point to be considered is that with different objectives,
the mid-cap and large cap betas also different. Large cap betas are
more towards market beta which implies that these funds have been
more stable unlike mid cap betas which are more volatile

ALPHA
Alpha is a financial term describing that part of an investor's return that is
due to the skills of the investment manager, as distinct from the return of
the market as a whole.
Alpha can provide a deeper perspective on the performance of
equity schemes to a mutual fund investor. While analyzing performance,
we would like to know how much of the return was attributable to the
market as a whole, and how much due to the manager's ability to select
stocks. Value Added by Fund Manager (or alpha) indicates the return that
is not attributable to the market, or in other words the added value the
manager achieved over and above the result of the market.

COMPARATIVE ANALYSIS:

58
A fund manager who reduces risks by booking profits has also to be
careful in reinvesting. If the reinvesting is badly managed, the returns may
not be superior. Then, despite a lower beta, the performance may be flat.
The measure `Alpha' indicates the value added by a fund manager.

HDFC TOP PRU ICICI RELIANCE


UTI 200 GROWTH VISION
ALPHA 1.28 1.73 0.65 2.27

Comparison Chart

3
2.5
2
ALPHA

1.5 ALPHA
1
0.5
0
UTI HDFC CAPITAL RELIANCE
BUILDER GROWTH
Funds

 Alpha can be seen as a measure of a fund manager's performance.


This is what the fund has earned over and above (or under) what it
was expected to earn. Thus, this is the value added (or subtracted)
by the fund manager's investment decisions.
 In the large cap funds, it can be see that the alpha of the Reliance
Vision is highest i.e 2.27. This can be attributed to the high churning
of funds done by the fund manager.
 The lowest alpha is of Pru-ICICI Growth being 0.65; meanwhile the
beta of this fund is the maximum.

59
 Again, in the mid cap funds also the alpha of reliance growth is the
maximum which can be attributed to the above reasons.
 Another trend is that overall the alpha of mid-cap funds is higher as
compared to large cap funds. One reason could also be that in this
time period when the study was done, the mid cap funds were
performing quite well as compared to large cap funds.

SECTOR ALLOCATION
The division of an investment portfolio among major sectors usually to
diversify the risk.

 In this context, two approaches can be followed:


- Top-down approach- Herein firstly the sectors are chosen,
and thereafter-strong companies are chosen in these sectors.
E.g. HSBC Equity
- Bottom-up approach- Herein the investments are done in
fundamentally sound companies. E.g. Franklin India Bluechip.
 PORTFOLIO CONCENTRATION: This refers to the concentration
of the allocation in top few sectors. Depending on the objective of
the mutual fund, the fund could be concentrated or diversified.
HDFC Equity Fund is a very concentrated fund. Meanwhile Reliance
Growth is a very diversified fund
 Funds exposure to different kinds of sectors is another parameter on
which the different mutual funds can be compared. Most funds have
adequate exposure to technology stocks. Lately most funds have
increased their exposure to banking sector stocks. However reliance
has a very different stock allocation investing in automobile and
heavy engineering sectors.

STANDARD DEVIATION

60
The total risk of a given fund is measured in terms of standard deviation of
returns of the fund. Standard Deviation is a measure of scattering of the
values about the average (mean) value. It tells us how much the values
have deviated from the mean of the values. It is calculated by using
returns of the scheme i.e. the Net Asset Value (NAV), and is a measure of
the dispersion of the scheme's return around its average return.

Comparison Chart

8
7.8
7.6
7.4
7.2
S>D.

7 STANDARD DEVIATION
6.8
6.6
6.4
6.2
6
UTI HDFC RELIANCE
CAPITAL GROWTH
BUILDER
Funds

COMPARATIVE ANALYSIS
When used in relation to mutual funds, it tells about the volatility of the
scheme. The higher is the value, the more volatile are the returns and vice
versa.

HDFC TOP PRU ICICI RELIANCE


UTI 200 GROWTH VISION
STANDARD
DEVIATION 6.91 7.27 7.35 7.44

Mid Cap Funds


 The standard deviation is more in mid cap funds. This shows that

mid cap funds are more volatile as compared to large cap funds.

61
 In the large cap funds the highest standard deviation is of reliance
vision, reliance vision falls in the category of high risk and high
return.

 Meanwhile the standard deviation of the Franklin India Blue chip is


the lowest, this fund is considered as one of the most stable returns
giving fund.
 However in the mid cap fund the highest standard deviation is of
Franklin India Prima. This is because Franklin India prima has lately
changed its sectoral composition, trying to make it as an aggressive
fund.

SHARPE RATIO

Sharpe ratio, worked by Nobel Laureate Bill Sharpe, tries to quantify how a
fund performs relative to the risk it takes. It is a ratio of returns generated
by the fund over and above risk free rate of return and the total risk
associated with it (standard deviation). Symbolically it is written as:

SI =
( Ri − Rf )
σ
Where, SI= Sharpe Index
Ri = Return on the fund
Rf = risk free rate of return (e.g. a 90 day T-Bill)
σ = Standard Deviation

62
Comparison Chart

0.6
0.58
0.56
0.54

S.R.
SHARPE RATIO
0.52
0.5
0.48
0.46
UTI HDFC CAPITAL RELIANCE
BUILDER GROWTH
Funds

63
• Retail Investors prefer to invest in debt-based funds when they invest
for short periods and are looking for steady returns. On the contrary,
when they invest for long periods, they prefer to go for equity based
funds as it is seen that in the long period, equity funds out-perform debt
funds. This money is either from their capital gains or for some specific
purpose in the future like their child’s education, marriage, purchase of
house etc.

• Business Investors invest a lot in the end of June when Mutual Funds
are close to declaring dividends. This is because this gets them the
benefit of writing off their capital gains as follows –
1. Say the NAV per unit of the Mutual Fund is Rs. 20.00 at time
of purchase.
2. The business buys the Mutual Fund units at this price and
dividends are declared say Rs. 4.00 per unit.
3. Then after the cool off period when the Mutual Fund opens,
the NAV per unit is Rs. 16.00 per unit (Rs. 20.00 – Rs. 4.00
dividend declared).
4. The business then sells off the units at Rs. 16.00 per unit and
claims capital looses to the tune of Rs. 4.00 per unit, which can
be used by them to write off their capital profits.
5. This actually is not a capital loss as that amount has already
been reimbursed to the unit holder in terms of dividends.

• In India, the trend is that investors invest when there is a boom in


the stock market and withdraw their holdings in times of slump. This
is absolutely contrary to how the system works abroad as there
investments take place in the slump period when greater units can
be purchased with same amount of money. Withdrawals are
correspondingly done in boom times as maximum return is
achieved. This is the right strategy and Mutual Fund companies are
trying to create this awareness among consumers.

64
• The outlook for the Mutual Fund Industry as predicted by the
representatives of the companies that I visited is very bright. They all
expect the market to go up by Diwali (Indian festival) and New Years
and also expect consumer awareness and interest to improve.
Efforts are being made by them to increase awareness and services
offered by them. All this would result in major increase in their
collections and of the industry as a whole. Also a large number of
new companies and schemes are soon going to be launched which
will increase the variety for consumers and also improve the quality
of services offered due to the increase in competition.

65
CONCEPT OF FINANCIAL PLANNING

Financial planning is an exercise aimed to ensure availability of right


amount of money at the right time to meet the individual’s
financial goals.

 An investor, depending on the age, risk taking ability and time horizon,
should accordingly put his/her money in different asset classes in the
proportion that suits their unique needs and requirements the best.

 With the complexity and dynamism of the financial markets increasing


with the passage of time, there is a massive information overload for
all investors. Big investors like FIIs have the time and expertise to
manage such risks. But for a retail investor, this can be highly
intimidating. It is best to ascertain one's own unique requirements
based on the parameters discussed above, depending on which one
can draw out an investment plan.

66
Risk Profiling:

In this section we analyzed the customer’s investment objectives and


preferred investment style. This includes:

1. To understand the basic objectives of investment, the time horizon (the


time period for which the customer wants to invest)
2. To explore the tolerance to volatility associated with various financial
assets
3. To understand the attitude of the customer to different risk levels in
various market conditions. (Risk appetite)- Aggressive, Moderately
aggressive, Conservative.

Finally after analyzing the above parameters with the help of the personal
financial review we quantified the ability of the customer to take the
investment risk associated with the various financial assets. After this we
made 2-3 dummy portfolios suggesting suitable portfolio mix.

67
Recommendations:

1) A few respondents due to confidentiality constraints did not disclose the


average investment made.
2) The future investment in mutual funds depends heavily on the
availability of funds.
3) It is seen from the analysis that most of the people in India specifically
Delhi have no idea of Mutual Funds. This showed the low awareness
level among the people of Delhi about the Mutual Funds therefore I
recommend that there is need for better marketing of Mutual Funds and
specifically target investors who invest in stock markets and small
investors who prefer banks for their investments and create awareness
amongst them about investing in Mutual Funds.
4) It is recommended that the Asset Management Companies (AMC)
more specifically UTI should come up with new Mutual Fund schemes
which focus on security of money, better rate of return, liquidity,
profitability. They should concentrate more on building up investor’s
confidence, as it is seen from the analysis that most of the investors are
not confident of the safety and security of their investments in Mutual
Funds especially after the UTI Scam in India.
5) It is strongly recommended that Asset Management Companies (MF
Companies) specifically UTI provide reliable and more true and
transparent information to the investors as the investor is ready to
invest in Mutual Funds only if they are given more reliable information.
It is also recommended that Asset Management Companies (MF
Companies) focus on building a relationship of trust and commitment
with the investors.
6) All the people interviewed expected a rate of return of 17-18% on their
investments in Mutual Funds therefore if the Asset Management
Companies (AMC) more specifically UTI are able to provide that return
they can attract more investors.
7) In the near future, a large number of new companies and schemes are
soon going to be launched which will increase the variety for investor
and will lead to increase in competition. in the industry and This
stresses the need to improve the quality of services offered and
improve individual fund performance.
8) The capital market has been growing by leaps and bounds. Thus the
stock market in India is on the right track and there will be major
improvements in the near future This expansion will act as an
impediment to the small investors who either has the option to play the
market or to have the knowledge to keep pace with the corporate
information of thousands of companies. Their mutual funds will form a
68
favorable alternative provided there is transparency, reliability and
authenticity in their functioning.

References
1) Mr. Amit Chadha Finance Head (DXN Trading (I) Pvt. Ltd).

2) Mr. Ankit Gupta Student of International College of


Financial Planning (Security Analysis).

3) Mr. Deepak Sharma Student of International College of


Financial Planning (Security Analysis).

4) Mr. Sunil Kumar Student of International College of


Financial Planning (Security Analysis).

5) Mr. Devendera Arbitrageur (CPR Capital Services Ltd.)

69

You might also like