Professional Documents
Culture Documents
PROJECT REPORT
ON
A STUDY ON INVESTOR
PERCEPTION OF THE
FINANCIAL ADVISORY
SERVICES OF PRUDENT CAS
LTD. FOR MUTUAL FUNDS
PRUDENT CORPORATE
ADVISORY SERVICES LTD.
BY
Anamika Tiwari
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PREFACE
For the students of Masters of Business Administration, only coaching classrooms
and theoretical studies are not enough to understand different aspects and various
report of any company is an important part of practical study. For this I have done
the summer internship of 6 weeks in PRUDENT C.A.S. LTD. and gained a lot of
knowledge about different financial products and also experienced how market of
I have found out the perception about the mutual fund in the investors mind
I had prepared the questionnaires for the (survey on investor perception with respect to
different investment avenues). This tool of data collection has provided me the different
view for investing in the mutual fund that the people have no more time to spend in
the stock market. If people want to invest their money without spending much
time, then the mutual fund is the best option for them.
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TABLE OF CONTENTS
NO. NO.
1. Preface
Chapter- Bibliography
10
Chapter- Annexure
11
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Chapter-1
INTRODUCTION
INTRODUCTION
A Mutual Fund is a trust that pools together the savings of a number of investors
who share a common financial goal. The money collected is then invested in
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capital market instruments such as shares, debentures and other securities based
on their objective. The income earned through these investments and the capital
appreciation realized are shared by its unit holders in proportion to the number
According to the above definition, a mutual fund in India can raise resources
through sale of units to the public. It can be setup in the form of a Trust under
the Indian Trust Act. The definition has been further extended by allowing
Mutual Funds pool money from many small investors with similar (one could
investment of these funds. This can result in higher returns at lower risk.
Each mutual fund schemes has a defined investment objective and strategy.
the project, all the points are explained like - what is mutual fund, types
of mutual fund and which fund is better. Mutual Fund industry has grown in
i n t h e M u t u a l F u n d i n d u s t r y i n 9 0 s. D u r i n g t h i s p e r i o d a
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mutual funds not only to the common man but also to the
Mutual Fund present an ideal solution to the investment needs of the corporate,
which are looking for returns from their surplus funds. The Mutual
Fund gives them a chance to gain more profits over a short period. The
advices to its
clientsregardingF i n a n c i a l P l a n n i n g . T h e s t r o n g a n d e f f i c i e
n t r e s e a r c h t e a m w h i c h s u p p o r t s t h e investments advisors.
regarding the different mutual fund schemes and other investments options like
Insurance etc.
The company sells its financial products through both direct and direct f o r c e .
t h e corporate channel also now wants to have a greater reach to its clients
which it has already developed through its 150 certified brokers just
the beginning of the force that will grow in leaps and bounds.
T h e company also has a strong and efficient research team that is currently
working from Gujarat which publishes the data that helps the clients in assessing
these three schemes it has been studied which of the scheme is best in terms
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performance, in comparison to the schemes of other mutual funds in the
capital market operations and does not have large resources to reap the benefits
of investment. Hence, he requires the help of an expert. It, is not only expensive
to
hire the services of an expert but it is more difficult to identify a real expert.
Mutual funds are managed by professional managers who have the requisite
various industries and sectors. This diversification reduces the riskiness of the
investments.
market, investing through the funds is relatively less expensive as the benefit of
4. Liquidity: Often, investors cannot sell the securities held easily, while in case
of mutual funds, they can easily cash their investment by selling their units to
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the fund if it is an open-ended scheme or selling them on a stock exchange if it
is a close-ended scheme.
6. Flexibility: Mutual funds offer a family of schemes, and investors have the
Dividends received from mutual funds debt schemes are tax exempt to the
overall limit of Rs 9,000 allowed under section 80L of the Income Tax Act.
month. Thus an investor knows where his/her money is being deployed and in
case they are not happy with the portfolio they can withdraw at a short notice.
9. Stability to the stock market: Mutual funds have a large amount of funds
which provide them economies of scale by which they can absorb any losses in
the stock market and continue investing in the stock market. In addition, mutual
10. Equity research: Mutual funds can afford information and data required for
investments as they have large amount of funds and equity research teams
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All mutual funds comprise of four constituents- Sponsors, Trustees, Asset
a) Sponsors:
A sponsor is any person who, acting alone or in combination with another
promoter of a company.
In accordance with SEBI Regulations, the sponsor forms a trust and
manager. In addition, the sponsor also appoints a custodian to hold the fund
assets. The sponsor must contribute at least 40% of the net worth of the
AMC and possess a sound financial track record over five years prior to
registration.
b) Trust/Board of Trustees:
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The MF or trust can either be managed by the Board of Trustees, which is a
The trustees being the primary guardians of the unit holders funds and
assets, a trustee has to be a person of high repute and integrity. The trustees,
The AMC, which is appointed by the sponsor or the trustees and approved
by SEBI, acts like the investment manager of the trust. The AMC functions
under the supervision of its own Board of Directors, and also under the
AMC, in the name of the trust, floats and manages the different investment
d) Custodians:
The mutual fund should appoint a custodian to carry out the custodial
services for the schemes of the fund and sent intimation of the same to the
in which the sponsor or its associates hold 50% or more of the voting rights
of the share capital of the custodian or where 50% or more of the directors
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of the custodian represent the interest of the sponsor or its associates should
act as custodian for a mutual fund constituted by the same sponsor or any of
The Indian mutual fund industry has evolved over distinct stages. The growth of
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the mutual fund industry in India can be divided into four phases: Phase I (1964-
87), Phase II (1987-92), Phase III (1992-97), and Phase IV (beyond 1997).
Phase I: The mutual fund concept was introduced in India with the setting up of
UTI in 1963. The Unit Trust of India(UTI) was the first mutual fund set up
under the UTI Act, 1963, a special act of the Parliament. It became operational
in
1964 with a major objective of mobilizing savings through the sale of units and
appreciation. This phase commenced with the launch of Unit Scheme 1964 (US-
64) the first open-ended and the most popular scheme. UTIs investible funds, at
market value (and including the book value of fixed assets) grew from Rs 49
further to Rs 5,068 crore by June 1987. Its investor base had also grown to about
2 million investors. It launched innovative schemes during this phase. Its fund
largely through its agent network built up over the years. Master share, the
Master share was the first real close-ended scheme floated by UTI. It launched
India Fund in 1986-the first Indian offshore fund for overseas investors, which
was listed on the London Stock Exchange (LSE). UTI maintained its monopoly
Phase II: The second phase witnessed the entry of mutual fund companies
Fund and Can bank Mutual Fund were set up as trusts under the Indian Trust
Act, 1882. In1988, UTI floated another offshore fund, namely, The India
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Growth Fund which was listed on the New York Stock Exchange (NYSB). By
1990, the two nationalized insurance giants, LIC and GIC, and nationalized
banks, namely, Indian Bank, Bank of India, and Punjab National Bank had
started operations of wholly owned mutual fund subsidiaries. The assured return
type of schemes floated by the mutual funds during this phase were perceived to
1989, the first regulatory guidelines were issued by the Reserve Bank of India,
but they were applicable only to the mutual funds sponsored by FIIs.
the sponsor and asset management company (AMC). With the entry of public
sector funds, there was a tremendous growth in the size of the mutual fund
and the number of investors increasing to over 23 million. The buoyant equity
Phase III: The year 1993 marked a turning point in the history of mutual funds
in India. Tile Securities and Exchange Board of India (SEBI) issued the Mutual
domestic and foreign players were allowed entry in the mutual fund industry.
set up the first private mutual fund the Kothari Pioneer Mutual Fund, in 1993.
Kothari Pioneer introduced the first open-ended fund Prima in 1993. Several
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other private sector mutual funds were set up during this phase. UTI launched a
new scheme, Master-gain, in May 1992, which was a phenomenal success with
investible funds at market value increased to Rs 78,655 crore and the number of
However, the year 1995 was the beginning of the sluggish phase of the mutual
fund industry. During 1995 and 1996, unit holders saw an erosion in the value of
the service quality of mutual funds declined due to a rapid growth in the number
performance of the public sector funds and miserable failure of foreign funds
funds found it increasingly difficult to raise money. The average annual sales
Phase IV: During this phase, the flow of funds into the kitty of mutual funds
sentiment in the capital market, significant tax benefits, and improvement in the
quality of investor service. Investible funds, at market value, of the industry rose
by June 2000 to over Rs 1,10,000 crore with UTI having 68% of the market
crore as against Rs 31,420 crore in the preceding year. This trend was, however,
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28,2000, just at Rs 5.81 as against the face value of Rs 10 and the last sale price
of Rs 14.50. The disclosure of NAV of the countrys largest mutual fund scheme
was the biggest shock of the year to investors. Crumbling global equity markets,
a sluggish economy coupled with bad investment decisions made life tough for
big funds across the world in 2001-02. The effect of these problems was felt
Bank of India MF liquidated all its schemes in 2002. The Indian mutual fund
industry has stagnated at around Rs 1,00,000 crore assets since 2000-01. This
Mutual funds assets under management (AUM) form just around 10% of
deposits of SCBs.
The Unit Trust of India is losing out to other private sector players. While there
has been an increase in AUM by around 11% during the year 2002, UTI on the
contrary has lost more than 11% in AUM. The private sector mutual funds have
benefited the most from the debacle ofUS-64 of UTI. The AUM of this sector
Mutual funds are currently the most popular investment vehicle and provide
You pay a management fee as part of your expense ratio, which is used to hire a
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professional portfolio manager who buys and sells stocks, bonds, etc. This is a
portfolio.
2. Dividend Reinvestment
As dividends and other interest income is declared for the fund, it can be used to
purchase additional shares in the mutual fund, thus helping your investment
grow.
depending on their focus. Several index stock mutual funds own 1,000 or more
Mutual funds are common and easy to buy. They typically have low minimum
investments (some around $2,500) and they are traded only once per day at the
closing net asset value (NAV). This eliminates price fluctuation throughout the
However, there are also disadvantages of mutual funds, such as the following:
If you're not paying attention to mutual fund expense ratios and sales charges,
they can get out of hand. Be very cautious when investing in funds with expense
ratios higher than 1.20%, as they will be considered on the higher cost end. Be
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wary of 12b-1 advertising fees and sales charges in general. There are several
good fund companies out there that have no sales charges. Fees reduce overall
investment returns.
2. Management Abuses
replacement and selling the losers prior to quarter-end to fix the books.
3. Tax Inefficiency
Like it or not, investors do not have a choice when it comes to capital gain
payouts in mutual funds. Due to the turnover, redemptions, gains and losses in
If you place your mutual fund trade anytime before the cut-off time for same-
day NAV, you'll receive the same closing price NAV for your buy or sell on the
mutual fund. For investors looking for faster execution times, maybe because of
short investment horizons, day trading, or timing the market, mutual funds
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TYPES OF MUTUAL FUNDS
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Open-end fund (or open-ended fund)-
Open-end fund is a collective investment scheme which can issue and redeem
shares at any time. An investor will generally purchase shares in the fund
directly from the fund itself rather than from the existing shareholders. It
contrasts with a closed-end fund, which typically issues all the shares it will
issue at the outset, with such shares usually being tradable between investors
thereafter.
trusts and OEICs, European SICAVs, and hedge funds are all examples of open-
ended funds.
The price at which shares in an open-ended fund are issued or can be redeemed
will vary in proportion to the net asset value of the fund, and therefore directly
Features:
Fees
Active management
Hedge funds
Fees
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There may be a percentage charge levied on the purchase of shares or units.
Some of these fees are called an initial charge (UK) or 'front-end load' (US).
Some fees are charged by a fund on the sale of these units, called a 'close-end
load,' that may be waived after several years of owning the fund. Some of the
fees cover the cost of distributing the fund by paying commission to the adviser
or broker that arranged the purchase. These fees are commonly referred to
Not all fund have initial charges; if there are no such charges levied, the fund is
"no-load" (US).
These charges may represent profit for the fund manager or go back into the
fund.
Active management
Most open-end funds are actively managed, meaning that a portfolio manager
picks the securities to buy, although index funds are now growing in popularity.
Index funds are open-end funds that attempt to replicate an index, such as the
S&P 500, and therefore do not allow the manager to actively choose securities
to buy.
The price per share, or NAV (net asset value), is calculated by dividing the
Hedge funds
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Hedge funds are typically open-ended and actively managed. However,
investors can typically redeem shares only monthly or less frequently (e.g.,
quarterly or semi-annually)
number of shares which are not redeemable from the fund. Unlike open-end
funds, new shares in a closed-end fund are not created by managers to meet
demand from investors. Instead, the shares can be purchased and sold only in
the market. This is the original design of the mutual fund which predates open-
end mutual funds but offers the same actively managed pooled investments. In
the United States, closed-end funds sold publicly must be registered under both
the Securities Act of 1933 and the Investment Company Act of 1940.
Closed-end funds are usually listed on a recognized stock exchange and can be
bought and sold on that exchange. The price per share is determined by the
market and is usually different from the underlying value or net asset
value (NAV) per share of the investments held by the fund. The price is said to
respectively.
might reflect the charges to be deducted from the fund in future by the
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managers, uncertainty due to high amounts of leverage, concerns related to
Features:
Availability
Distinguishing features
Initial offering
Exchange-traded
Availability
Closed end funds are typically traded on the major global stock exchanges. In
the United States the New York Stock Exchange is dominant although
although AIM supports many small funds especially the venture capital trusts; in
sponsored by a fund management company which will control how the fund is
which may be public or limited. The investors are given shares corresponding to
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their initial investment. The fund managers pool the money and purchase
securities or other assets. What exactly the fund manager can invest in depends
Some funds invest in stocks, others in bonds, and some in very specific things
(for instance, tax-exempt bonds issued by the state of Florida in the USA).
Distinguishing features
Its shares (typically) trade on stock exchanges rather than being redeemed
Its shares can therefore be traded at any time during market opening hours.
the managers, and the dealing price will usually not be known in advance.
end fund trades at its net asset value (to which sales charges may be added;
and adjustments may be made for e.g. the frictional costs of purchasing or
of leverage (gearing). In doing so, the fund manager hopes to earn a higher
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return with this additional invested capital. This additional capital can be raised
repurchase agreements.
A fund raises its initial equity through the sale of common stock. The amount of
equity that belongs to a share of common stock is known as its net asset value
(NAV). As the fund operates, NAV increases with investment gains and
decreases with losses. These gains or losses are amplified when the fund
employs leverage.
The amount of leverage a fund uses is expressed as a percent of total fund assets
(e.g. if it has a 25% leverage ratio, that means that for each $100 of total assets
Leverage affects both fund income, and capital gains and losses. The additional
the leverage used, but net income is reduced by the interest rate paid to lenders
NAV of the common stock. This increases the volatility of the NAV of a
leveraged fund, compared with its un-leveraged peer. For example, if an un-
leveraged fund had a 10% gain or loss, its 25% leveraged peer would have an
about 13.3% gain or loss. If instead, the fund had a 40% leverage ratio, the gain
In some cases, fund managers charge management fees based on the total
managed assets of the fund, which includes leverage. This further reduces the
additional volatility.
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Leveraged funds can seem to have higher expense ratiosa common way that
adjusted ratios.
additional ways to raise additional capital for the fund. Funds may use a
Since stock in closed-end funds is traded like other stock, an investor trading
them will pay a brokerage commission similar to that paid when trading other
commission will vary based on the share class chosen and the method of
purchasing the fund). In other words, closed-end funds typically do not have
sales-based share classes with different commission rates and annual fees. The
Initial offering
Like a company going public, a closed-end fund will have an initial public
offering of its shares at which it will sell, say, 10 million shares for $10 each.
That will raise $100 million for the fund manager to invest. At that point, the
the NYSE or the AMEX for American closed-end funds. Any investor who
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shares. Nor, typically, do they sell more shares after the IPO (although they may
issue preferred stock, in essence taking out a loan secured by the portfolio). In
general, closed-end funds cannot issue securities for services or property other
Exchange-traded
Closed-end fund shares are traded throughout market opening hours at whatever
price the market will support. It may be possible to deal using advanced types of
orders such as limit orders and stop orders. This is in contrast to some open-end
funds which are only available for buying and selling at the close of business
each day, at the calculated NAV, and for which orders must be placed in
advance, before the NAV is known, and by simple buy or sell orders. Some
funds require that orders be placed hours or days in advance, in order to simplify
their administration, make it easier to match buyers with sellers, and eliminate
the possibility of arbitrage (for example if the fund holds investments which are
Closed-end funds are traded on exchanges and in that respect they are
like exchange-traded funds (ETFs), but there are important differences between
determined by the valuation of the market, and this price often diverges
In contrast, the market price of an ETF trades in a narrow range very close to its
net asset value, because the structure of ETFs allows major market participants
to redeem shares of an ETF for a "basket" of the fund's underlying assets.[5] This
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feature could in theory lead to potential arbitrage profits if the market price of
The market prices of closed-end funds are often 10% to 20% higher or lower
than their NAV, while the market price of an ETF is typically within 1% of its
NAV. Since the market downturn of late 2008 a number of fixed income ETFs
As they are exchange-traded, the price of CEFs will be different from the NAV -
an effect known as the closed-end fund puzzle. In particular, fund shares often
trade at what look to be irrational prices because secondary market prices are
often very much out of line with underlying portfolio values. A CEF can trade at
With open-end funds, the value is precisely equal to the NAV. So investing
$1000 into the fund means buying shares that lay claim to $1000 worth of
underlying assets (apart from sales charges and the fund's investment costs). But
buying a closed-end fund trading at a premium might mean buying $900 worth
financial. CEFs do not have to deal with the expense of creating and redeeming
shares, they tend to keep less cash in their portfolio, and they need not worry
drops irrationally, the closed-end fund may snap up a bargain, while open-ended
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Also, if there is a market panic, investors may sell a particular stock or segment
of stocks en masse. Faced with a wave of sell orders and needing to raise money
stocks he would rather keep, and keep stocks he would rather sell, because of
liquidity concerns (selling too much of any one stock causes the price to drop
demand. But an investor pulling out of a closed-end fund must sell it on the
market to another buyer, so the manager need not sell any of the underlying
stock. The CEF's price will likely drop more than the market does (severely
punishing those who sell during the panic), but it is more likely to make a
Because a closed-end fund is listed on the market, it must obey certain rules,
such as filing reports with the listing authority and holding annual stockholder
meetings
A scheme can also be classified as growth fund, income fund, or balanced fund
Equity Funds
Funds that invest in stocks represent the largest category of mutual funds.
growth with some income. There are, however, many different types of equity
funds because there are many different types of equities. A great way to
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understand the universe of equity funds is to use a style box, an example of
which is below.
The idea is to classify funds based on both the size of the companies invested in
and the investment style of the manager. The term value refers to a style of
investing that looks for high quality companies that are out of favor with the
ratios and high dividend yields. The opposite of value is growth, which refers to
companies that have had (and are expected to continue to have) strong growth in
earnings, sales and cash flow. A compromise between value and growth is blend,
which simply refers to companies that are neither value nor growth stocks and
For example, a mutual fund that invests in large-cap companies that are in
strong financial shape but have recently seen their share prices fall would be
placed in the upper left quadrant of the style box (large and value). The opposite
excellent growth prospects. Such a mutual fund would reside in the bottom right
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Bond/Income Funds
income on a steady basis. When referring to mutual funds, the terms "fixed-
income," "bond," and "income" are synonymous. These terms denote funds that
invest primarily in government and corporate debt. While fund holdings may
Bond funds are likely to pay higher returns than certificates of deposit and
money market investments, but bond funds aren't without risk. Because there are
many different types of bonds, bond funds can vary dramatically depending on
where they invest. For example, a fund specializing in high-yield junk bonds is
much more risky than a fund that invests in government securities. Furthermore,
nearly all bond funds are subject to interest rate risk, which means that if rates
Balanced Funds
combination of fixed income and equities. A typical balanced fund might have a
weighting of 60% equity and 40% fixed income. The weighting might also be
similar to those of a balanced fund, but these kinds of funds typically do not
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have to hold a specified percentage of any asset class. The portfolio manager is
therefore given freedom to switch the ratio of asset classes as the economy
Money Market
These funds are also income funds and their aim is to provide easy liquidity,
government securities, etc. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short periods
Gilt fund
Index Funds
The last but certainly not the least important are index funds. This type of
mutual fund replicates the performance of a broad market index such as the S&P
figures that most managers can't beat the market. An index fund merely
replicates the market return and benefits investors in the form of low fees.
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1. Performance Ranking
Performance Ranking More than the recent or long term performance of any
scheme its ranking among peers should be looked at. To find out the ranking
you need to check out the quartile ranking which will show how the fund has
performed quarter on quarter among its peer group. In quartile ranking each
the scheme which has remained in top quartile most of the time. If at all you
quarters it hints that time has come to exit the scheme. You can find these
rankings from the factsheets of various AMCs and also on some mutual
2. Ratio analysis
Risk and return ratios like standard deviation, Sharpe ratio etc. I have discussed
in my earlier article on Measuring Mutual funds risk. Along with those ratios,
one also should check out the ALPHA of the fund. Alpha tells us what extra or
less the fund manager has generated out of a given portfolio in comparison to
manager. You may check how often the fund manager has generated positive
alpha in last few quarters and also keep a watch on its consistency going
forward.
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3. Total expense ratio
any mutual fund scheme. All fund management and distribution related
expenses are borne by the scheme. This means high expense ratio will affect
the funds returns. Though mutual funds total expense ratio has been capped
by SEBI, still lower the better unless we get some extraordinary return by
ultimate decision maker and his experience and view point counts a lot. You
should know who is the fund manager of the scheme and what is his past
track record. You should also look at the performance of other funds which
alpha and quarter to quarter performance. If you find that due to change in
which does not suit your risk appetite then you may make a decision to exit.
This parameter is different for debt and equity schemes. In equity the
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fund industry are invested in debt funds, so your selected scheme assets
should also have a considerable AUM. Less AUM in any scheme is very
risky as you dont know who the investors are and what quantum of
investments they have in this particular scheme. Exit of any big investor out
of any mutual fund may impact its overall performance very badly and the
Like most investments, mutual funds have risk you could lose money on
your investment. The value of most mutual funds will change as the value of
The level of risk in a mutual fund depends on what it invests in. Usually, the
higher the potential returns, the higher the risk will be. For example, stocks are
generally riskier than bonds, so an equity fund tends to be riskier than a fixed
income fund.
emerging markets, to try to earn a higher return. These kinds of funds also tend
Type of risk Type of investment How the fund could lose money
affected
1. Market All types The value of its investments decline
risk because of unavoidable risks that
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affect the entire market
2. Liquidity All types The fund cant sell an investment
risk thats declining in value because there
are no buyers.
3. Credit Fixed income securities If a bond issuer cant repay a bond, it
risk may end up being a worthless
investment.
4. Interest Fixed income securities The value of fixed income securities
rate risk generally falls when interest rates rise.
5. Country Foreign investments The value of a foreign investment
risk declines because of political changes
or instability in the country where the
investment was issued.
6. Currency Investments If the other currency declines against
risk denominated in a the Canadian dollar, the investment
currency other than the will lose value.
Canadian dollar
the world as a means to accumulate wealth. It works the same way as a recurring
A SIP is a flexible and easy investment plan. Your money is auto-debited from
your bank account and invested into a specific mutual fund scheme. You are
allocated certain number of units based on the ongoing market rate (called NAV
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or net asset value) for the day.
Every time you invest money, additional units of the scheme are purchased at
the market rate and added to your account. Hence, units are bought at different
rates and investors benefit from Rupee-Cost Averaging and the Power of
Compounding.
Rupee-Cost averaging
With volatile markets, most investors remain skeptical about the best time to
invest and try to 'time' their entry into the market. Rupee-cost averaging allows
you to opt out of the guessing game. Since you are a regular investor, your
money fetches more units when the price is low and lesser when the price is
high. During volatile period, it may allow you to achieve a lower average cost
per unit.
Power of Compounding
Albert Einstein once said, "Compound interest is the eighth wonder of the
world. He, who understands it, earns it... he who doesn't... pays it." The rule for
compounding is simple - the sooner you start investing, the more time your
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An investor can customize the cash flows as desired; he can
Under STP, you invest a lump sum amount in one scheme and regularly transfer
a pre-defined amount into another scheme, on a specified date. The mutual fund
will reduce the number of units equal to the amount you have specified from the
scheme you intend to transfer money. At the same time, the amount that is
transferred will be utilized to buy the units of the scheme you intend to transfer
money into, at the applicable net asset value (NAV). You can get into a weekly,
CHAPTER-2
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COMPANY PROFILE
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success. It would like to know the clients goals and aspirations. So that it can
determine an investing strategy that helps you achieve your full potential.
Prudent CAS (Corporate Advisory Services) ltd. gives advices to its clients
regarding Financial Planning. The research team provides the desk to the
necessary information regarding the different mutual fund schemes and other
The company sells its financial products through both direct and indirect force.
Prudent Channel since its inception has a strong hold in the market through its
Direct Force. It also has strong hold on the corporate channel also now wants to
have a greater reach to its clients which it has already developed through its 150
certified brokers just the beginning of the force that will grow in leaps and
bounds. The company also has a strong and efficient research team that is
currently working from Gujarat which publishes the data that helps the clients in
Prudent believes in understanding the customer needs and offering the product
that can match his requirement (marketing) as against just selling what product
assess the investors' need and their risk profile. Once the entire comparative
analysis is done then the best possible option is advised to the investors. The
best possible option provides the proper asset allocation to various asset classes
and also the estimated risk involved. This helps us to provide our clients an
optional basket of funds rather than selling the typical available funds. This
approach lets us set our focus on the quality work rather than the just the
quantity.
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Prudent is a service based distribution company mainly operates in functional
areas of finance, marketing & sales for financial products. Company is in the
Prudent CAS Ltd plans the financial needs in customized way. It analyses
market trend and investment buckets in turn to have maximum returns. Prudent
Mutual funds
investment objective. The mutual fund will have a fund manager who is
responsible for investing the gathered money into specific securities (stocks or
bonds). When you invest in a mutual fund, you are buying units or portions of
the mutual fund and thus on investing becomes a shareholder or unit holder of
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the fund.
Investment consultancy
Managing your money and planning your financial security are no easy tasks.
Time constraints, tax laws that are constantly changing and a confusing
assortment of investment options - all present road blocks for most people
that help you take right financial decisions. Our experts analyze your basic
financial goals - elements such as needs and desires, your status in life and your
parties who wish to buy or sell stocks, bonds, real or Personal Property,
most transactions involving brokers. The client is considered the principal and
the broker acts as the client's agent. An agent's powers generally extend beyond
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those of a broker. A distinguishing feature between an agent and a broker is that
Infrastructure bonds
Bonds issued to help fund infrastructure projects such as those for land or air
The bonds carry tax advantages which enable funding at lower interest rates.
Bonds can be issued in secured or unsecured form. Normally bonds issued in the
attractive returns. Interest under the scheme is paid monthly, quarterly, half
yearly, annually and on maturity. Most of the bonds provide flexibility, liquidity
and
Safety. The flexibility can be seen from the range of options provided (i.e.)
whichever is earlier.
In case of life insurance, the payment for life insurance policy is certain. The
event insured against is sure to happen only the time of its happening is not
known.
is life of human being. Life insurance provides risk coverage to the life of a
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person. On death of the person insurance offers protection against loss of
financial event. General insurance typically comprises any insurance that is not
Fixed Deposits
Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit
Account, a certain sum of money is deposited in the bank for a specified time
period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits
There is great flexibility in maturity period and it ranges from 15days to 5 years.
from bank to bank. Minimum deposit amount is Rs 1000/- and there is no upper
Fixed deposits with the banks are nearly 100% safe as all the banks operating in
the country, irrespective of whether they are nationalized, private, or foreign, are
governed by the RBI's rules and regulations, and give due weight age to the
interest of the investor. Till recently, all bank deposits were insured under the
Deposit Insurance & Credit Guarantee Scheme of India, which has now been
made optional. Nonetheless, bank deposits are among the safest modes of
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investment. One can get loans up to 75- 90% of the deposit amount from banks
against fixed deposit receipts. Though the interest charged will be slightly more
Real estate
Real estate has emerged as an important asset class in recent years in India.
finance have worked together to make real estate an avenue retail investors can
Also if chosen carefully, the price risk associated with real estate tends to be
lower than that for equity. The downside to a real estate investment is larger
investment size, greater transaction cost, lower liquidity and greater information
asymmetry.
The Indian real estate sector plays a significant role in the country's economy.
generation and contributes heavily towards the gross domestic product (GDP).
Almost five per cent of the country's GDP is contributed to by the housing
sector. In the next five years, this contribution to the GDP is expected to rise to 6
per cent.
Almost 80 per cent of real estate developed in India is residential space, the rest
over the next 10 to 15 years, 80 to 90 million housing dwelling units will have
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to be constructed with a majority of them catering to middle- and lower-income
groups.
Size in terms of manpower & turnover of organization
profit turnover is around 50 crores and the company is having over Rs 3,000
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Market share:- The total market share of the industry is 5 lac crores and Prudent
CAS ltd. is now capturing 3000 crores as its AUM (asset under management).
Market position:- It captures 6% of the market share just after Bajaj capital
Companys Achievements
business.
Funds advisors.
3. Won the best broker award twice in the year 2004 and 2005 for outstanding
performance in the schemes of Birla Sun Life and State Bank Of Indias Mutual
Fund.
5. It has acquired about 25 to 29% share of the total Mutual Fund business of
Gujarat.
7. Prudent C.A.S. Ltd. has tie up almost 30 AMC out of 36 operating in Mutual
Fund industry.
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FINANCIAL PLANNING OF PRUDENT CAS LTD.
Financial planning
financial well being. The inputs to the financial planning process are:
The output of the financial planning process is a personal financial plan that tells
how to use the money to achieve goals, keeping in mind inflation, real returns, and
towards achieving your short-term and long-term life goals. Life Goals most
people nurture dreams of owning a bigger house or car, exploring the world, giving
their children the best possible education, a blissful retirement, etc. Basically, these
dreams are life goals. Consider this example: Mr and Mrs Khanna, 35 and 32
respectively, have a three year old son. Both work in private sector companies. Mr
Khanna plans to retire when hes 50. From their current one bedroom rented
suburban Mumbai apartment, the Khannas hope to move to their own two bedroom
apartment costing around Rs 25 lakh within the next five years. They own a small
car, for which they have availed of a loan. Mr Khanna reckons that he will need Rs
15 lakh for his sons higher education 15 years later. He also wants to build a
corpus of Rs 75 lakh for his retirement. While distinguishing short term goals from
long term goals, you must keep in mind that, as a general rule, any life goal that
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needs to be met within five years can be considered as short term. Beyond that, any
other goal can be classified as long term. By this classification, the Khannas goals
Using a similar yardstick, you may classify your own life goals. Each of them
needs financing. How you plan your finances, to have the right amount at your
financial planning. Can you manage without financial planning? Many people do,
but they may findoften when its too latethat they dont have the means to
achieve their life goals. For example, people today realize the importance of living
life to the fullest. Consequently, many opt for early retirement from full time jobs,
as compared to a few decades ago, when most people worked until the maximum
retirement age of 58-60 years. The average person can, today, expect to live a
healthy life well into his or her seventies or eighties, which means that retirement
life is almost as long as working life. Financially, it implies that savings (after
taking into account inflation) should be enough, not just to maintain the same
lifestyle for almost 25-30 years, with no new income, but also to take care of
medical expenses, which are usually high the older a person gets. Planning for all
this is a tall order for anyone. Thats why its critical for everyone to plan their
finances from an early age. So, what do you need to know about yourself when
thinking about a Financial Plan? Financial plan entirely depends upon how much
effort one is willing to put in. This means not just having a good handle on the
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details of your income and expenses, assets and liabilities, but more importantly on
2. Risk Tolerance
3. Liquidity Needs
4. Inflation
No doubt there are other factors that are important as well, but we believe that the
Time Horizon and Goals: It is important to understand what the goals are, and
over what time period you want to achieve the goals. Some goals are short term
goals those that you want to achieve within the year. For such goals its important to
be conservative in ones approach and not take on too much risk. For long term
goals, however, one can afford to take on more risk and use time to ones
advantage.
Risk Tolerance: Every individual should know what their capacity to take risk is.
Some investments can be more risky than others. These will not be suitable for
someone of a low risk profile, or for goals that require you to be conservative.
Crucially, ones risk profile will change across lifes stages. As a young person with
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However, if this young person gets married and has a child, he/she will have
dependants and higher fiscal responsibilities. His/her approach to risk and finances
Liquidity Needs: When the money is needed to meet the goal and how quickly can
you access this money. If investment is in an asset to and expect to sell the asset to
supply you funds to meet a goal, then please understand how easily you can sell the
asset. Usually, money market and stock market related assets are easy to liquidate.
On the other hand, something like real estate might take you a long time to sell.
Inflation: Inflation is a fact of our economic life in India. The bottle of cold drink
that you buy today is almost double the price of what you paid for ten years ago. At
inflation or slightly above 4% per annum, a packet of biscuits that costs you Rs 20
today will cost you Rs. 30 in ten years time. Just imagine what the cost of buying a
car or buying a home might be in ten years time! The purchasing power of your
money is going down every year. Therefore, the cost of achieving your goals need
Need for Growth or Income: As you make investments, think about whether you
are looking for capital appreciation or income. Not all investments satisfy both
requirements. Many people are buying apartments, but are not renting them out
even after they take possession. So, this asset is generating no income for them and
they are probably expecting only capital appreciation from this. A young person
should usually consider investing for capital appreciation to take advantage of their
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income for themselves. Benefits of financial planning Heres a list of the benefits
expenses.
Helps boost savings and create wealth.
Helps reduce tax liability.
Maximizes returns from investments.
Creates wealth and ensures better wealth management to achieve life
goals.
Financially secures retirement life.
Reviews insurance needs and therefore also ensures that dependents
about your sources of income, debts, assets, liabilities, etc. This gives you a picture of
each goal by establishing consensus and put a time period against each, i.e., when will
you need the finances to achieve that goal. If possible, quantify each goal. This
exercise enables recognition of short term and long term goals, and how much money
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much you have or can expect regular sources of income to generate, and how much
A simple calculation gives you an idea of the shortfall. This is important, because,
identifying the right investments to cover the shortfall depends on you quantifying the
instruments such as PPF, bonds, fixed deposits, gilt funds, etc. and identify which
instrument(s) or a combination thereof best suits your needs. The time frame for your
investment must correspond with the time period for your goals.
bank, demat, trading accounts, liaise with brokers and get started.
commitment and periodical review (once in six months, or at a major event such as
birth, death, inheritance). You should be prepared to make minor or major revisions to
your current financial situation, goals and investment time frame based on a review of
Financially challenged individuals who feel this is just beyond them, can of course
always consult professional financial planners, who takes one through the whole
process. Being a long term commitment, financial planning goes on until one meets
his last goal. It is also a personal decision, which implies that a person must select
someone who he is comfortable with, and can build a long term relationship that is
mutually beneficial.
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Tips for making the most of the financial planning process
1. Start now. Even if you are in your mid thirties or forties, its better to start now
4. Review your plan and financial situation periodically and adjust as needed.
5. Always review the performance of your investments; pull out if needed and
6. Be hands-on. Its your money and no one else will do your work for you.
If professional help is sought, your financial planner will ensure that your financial
you
Details of one time and recurring fees charged by him.
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The building blocks of financial planning-
Let us have a look at these blocks, what they are and how to go about their planning:
1.Retirement planning
2. Investment planning
3. Insurance planning
4. Contingency planning
Let us start with the foundation and the first of the two levels in risk management.
Retirement Planning :
The longest of journeys start with a single step. We are not sure who said that, but
being in the financial planning space, we think it most aptly describes what retirement
planning is all about. Planning for retirement is one long journey but a resolute and
1. Start early
its never too early to start saving for retirement, they are right. Make no
mistake that an early start helps and you will be surprised at just how much it
helps. Your friend or colleague who started saving for retirement even five
years earlier than you with the same quantum of investments is likely to save
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twice as much as you at retirement. Even if you dont have the requisite
amount of money required to start, the key lies in starting with what you have
and making up for the deficit at a later stage. However the opportunity to
Planning for retirement can be fairly uncomplicated. You need to have a good
idea of where you want to be 30 years from now in financial terms and what
kind of a lifestyle you would like to maintain. However, putting the financial
plan in place (which has a lot to do with math, an unpopular subject with a lot
steps in. He can give a concrete shape to your retirement plan by coming up
with the all-important figure, based on your inputs and chart out a plausible
Having an investment plan in place sets the ball rolling for you and your
stocks, mutual funds, bonds, small savings schemes and fixed deposits among
other investment avenues. Your risk profile is the most important reference
point for the investment plan. The objective is to invest in avenues that lower
risk and maximize returns and do so in line with your risk profile. Asset
allocation i.e. investing across assets in varying degrees will play a vital role
over the long run. This is where the investment advisors expert advice will
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across pension plans, mutual funds, equities, EPF/PPF and fixed deposits.
Your investment plan must be monitored regularly to make sure that you are
role to guide you in this regard. For instance, with the robust performance of
equity markets over the last couple of years, you are probably over-invested in
equities and have therefore taken on more risk than usual. You will have to
liquidate some of your equity investments to bring it in line with your risk
profile. With passage of time as your risk profile changes, the same will be
linked products like equities and mutual funds is likely to reduce; instead
deposits.
Since retirement money is sacred it is important that you treat it as such. Your
carefully drafted investment plan need not go for a toss every time you
witness a cash crunch. Avoid dipping into your retirement monies, unless its
investing can do for you, so money needs to go into your retirement savings
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Investment planning
Why do we invest?
Of course to save money and earn returns! For what?
Your obvious answer would be: for my and my family's future. If asked to elaborate, I
am sure you will find it difficult to list down five things for which you are saving
money. But if the investments or the money you are saving is not invested in right
investment avenues then in the hour of crisis you either have invested in a locked-in
financial product or their value has become half or in a product which rates very low
in liquidity (like real estate). So the right type of investment product is very important
So this is where investment planning comes in place. Investments of your hard earned
money should always be done considering your goals and the time frame in which
you want to achieve your goals. The next question is how to go about it. First you
need to start with charting, that is, writing down your goals and the time frame in
which you would like to achieve them. This forms the base of your investments. To
make the task simpler, you can break down your goals into three different sections:
children's education and marriage; funding for marriage of your siblings, etc
Needs: Buying a house, saving for retirement, buying office space and any
Dreams: Finally, your dreams or your aspirations which can range anywhere
from buying a solitaire for your wife to going on a world tour to buying a
sports car
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We live only once and so no dream is too big or far-fetched. The next step is the time
frame in which you would like to achieve it. Let me explain the importance of this via
an example.
Let us say you want to save for a down payment for the dream car, which you are
planning to buy after a year and a half. You start saving by investing regularly in
equity mutual funds. After a year, just nearing the time frame you have set for
yourself, you decide to redeem the investment and the market crashes. Forget the
Equities are good investments but only when you have the time frame of more than
eight years. Then you can be rest assured that your investments will earn on an
Insurance planning
It is the planning for an adequate amount of insurance. And it definitely does not end
with life insurance alone. One needs to also plan for health insurance, disability
insurance, and property insurance. These insurances are very important and everyone
should try to incorporate them in their insurance planning. First and foremost, it is
very important to know one very important fact. Insurance is not investment and vice
versa. Never try to mix the two. Insurance is for risk management and investments are
for goal achievements. This golden rule should form the crux of your decision-
making when buying insurance polices. Never buy insurance just because someone
advises you to buy. Try and understand the product, correlate it with your needs and
requirements and only then go for it. So how much is adequate? A number of
These are:
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Inflation adjusted returns
One time cost (which includes any existing loans that you may have taken,
(exclude the home loan which is already insured against declining term
Your current cost of living (only include the fixed and variable mandatory
The amount needed to pay off responsibilities like your child's education and
marriage
Exiting investments
All these factors help in finding the adequate amount of life insurance. Hence if you
have any existing insurance then you only need to buy the additional amount. NOTE:
If you are no more an earning member of the family, that is, if you have retired, then
Health insurance
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A must again with the increasing amount of stress that the younger generation is
facing, we would not be surprised if you have already started running huge amounts
affordable increase the amount. Also, if possible try to take individual policies as
This is because if you have a floater health policy worth Rs 3 lakh, and you fall sick
and use up an amount of say, Rs one lakh worth of health insurance, only Rs 2 lakhs
will be available for the rest of the year for you and your entire family.
In fact now individuals have an option to go for a top-up, that is, if you have an
existing policy with your employer or you have bought it one yourself then you can
top it up to Rs 10 lakh. The premium amount works much cheaper. For example, say
you have Rs 5 lakh of health insurance (this is the maximum offered by most health
insurers today) and you would like to be insured for more than that then you could
So if you have a medical bill of Rs 7 lakh then the first Rs 5 lakh are covered by your
existing policy and the balance Rs 2 lakh by the top-up policy. NOTE: It is very
important to pay your insurance premium on time and see that it does not lapse
especially for individuals who are nearing 60 as after this age very few insurance
companies offer health insurance and to get a new one is very difficult. Also, for
people who are working and have not taken any other mediclaim policy besides the
one their company offers them, remember that once you leave the job and find a new
Disability insurance
Again an important insurance policy, especially, for individuals who travel frequently.
Accidents can happen anytime and if it leads to any disability then well let's not even
think about it. This policy is not an expensive one though. There is also an option for
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individuals to take this insurance as a rider along with their life insurance.
Compare the premium amounts of a standalone policy and the premium if it is taken
Property insurance
Your hard earned money has gone in setting up your house. If something were to
always advisable to have your property insured. The premium amount is low and
The only hitch is that in India, property insurance is for the market value and not for
the replacement value of the property. But this should not be an excuse for not taking
property insurance.
I know it sounds like too many insurances at one time will leave you with no money
for other investment planning but the ones mentioned here are amongst the most
commonly needed ones. The most important are the life insurance and health
insurance and for individuals who are nearing their retirement age or are retired for
them health insurance a must. Once these two are in place you can buy the others
eventually. Once we are assured that your risk is managed, we do not have to worry
about it anymore. Now we can safely move towards investing and planning to achieve
your goals.
Contingency planning
Also known as emergency planning. It has been emphasised time and again that a
contingency plan or an emergency plan has to be in place before starting to plan for
other goals. Why? Emergencies can come anytime or anyplace especially when we
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least expect it. We cannot predict it or even prevent it but what we can do is buffer
ourselves against it so that our life does not go for a toss due to the emergency. It is
basically saving for a rainy day. So once that you have planned for any untoward or
unpredicted eventualities, you can safely move ahead to the next level of the financial
plan.
How to calculate?
All your mandatory monthly expenses which you have to meet by hook or by crook
have to be taken into account. A list of all mandatory expenses have been given
below:
Mortgage installment
And variable mandatory expenses (which are mandatory but vary every month)
include:
Food
Utilities
Grocery
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Transportation
The above expenses have to be calculated on a yearly basis and then divided by 12
form of emergency funds since it is generally observed that three months worth of
funds are enough to meet most emergencies and come back on track. People nearing
retirement should try and keep aside at least five to six months of mandatory monthly
(rounded off). You need to keep aside Rs 87,500 (29,167*3) that is your three months'
It is not necessary to keep the entire amount in cash. You can keep aside Rs 20,000 in
cash and the balance you can split between savings account, fixed deposit, or liquid
funds. Why? Because all of the above mentioned products have liquidity, their biggest
remember that in case of usage of these funds always remember to replenish it.
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Portfolio Valuation Report Detailed
Transaction Report
AUM Report
SIP Calculator
Administration
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Shift Sub Group
Change Password
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Working Theory Of Prudent C.A.S. Ltd.
Finally to provide complete solution & peace of mind on the investment plan
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SWOT ANALYSIS OF THE COMPANY
The research team and the website are backed by a team of veteran IT
team that research and analyze the various financial products available in
the marketplace.
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Company is having 6% share in the market with having Rs. 3000 crore
plus assets.
Fulltime Dedicated of Team RM & CRO for client support & Assistance.
Regular Meeting with Partners on business and market Updates.
Company provides an Online 24X7 query module to its clients and
associate.
Company deals in various kinds of financial products which helps the
Company can grow and expand their services & support through sales and
consultation.
Products, Life/General Insurance and Real Estate which can help the
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Company is in the process of creating its national presence by opening offices
It also has strong hold on the corporate channel - it now wants to have a greater
reach to its clients which it has already developed through its 2000+ certified
brokers just the beginning of the force that will grow in leaps and bounds.
is web based and it provides an online 24 X 7 portfolio and query module that
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Prudent CAS ltd. has only one strategy i.e. Distribution; it can be direct or
advertisements etc., they focus is on getting the Consumer to use the products
and services of the Company and then asking them to recommend the
Prudent CAS ltd. believes in sales through investing in different AMCs, not in
advertising their services. Advertising concept is not the part of Prudent CAS
The diversity among the work force is not as creative as required as the
departments.
different
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CHAPTER-3
OBJECTIVES OF
STUDY
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Objectives
4. To find out the importance of factors like liquidity, higher return, company
reputation and other factors that influence investment decision of mutual fund
holder.
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CHAPTER-4
RESEARCH
METHODOLOGY
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RESEARCH METHODOLOGY
The study aims to delineate the methodology, employed to undertake this study.
Research is a common parlance, which refers to a search for knowledge. One can
Research is of great importance to find out the nature, extent and cause of the
The various steps provide useful guidelines regarding the research process
are:
2. Source of data.
3. Technique of research.
4. Sampling design.
The research design used for this project is Exploratory Research and Analytical
Research.
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Sources of Data:
Sound marketing research depends upon the existence of facts or directly related to
In my study I used secondary as well as primary data. For this research purpose all
Research Technique:
(A) Questionnaire-
Sample Design:
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Sample Design refers to the technique as the procedure that a researcher would
The sample size taken for the study is 100 respondents. The respondents were the
investors of Prudent CAS Ltd. They hold the mutual funds of Prudent CAS Ltd.
The agents and investors had been selected on the basis of Random Sampling. The
study is sample survey consisting of small sized sample of agents who had not
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CHAPTER-5
INTERPRETATION
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Ques.1. What is your investment priority?
Fixed Deposits 28
Real Estate 18
Insurance 21
Mutual Fund 10
Gold 15
Other 8
No.of respondents
FD
Real estate
15% 8% 28% Insurance
10% MF
18%
21% Gold
Other
Interpretation-
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28% investors prefer FD, 21% investors prefer Insurance, 10% investors prefer
MF, 15% investor prefers Gold, 18% investor prefers Real Estate and 8% prefer
Liquidity 20
Low risk 30
High return 32
Trust 18
No. of respondent
Interpretation-
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32% investors prefer because of High return, 30% prefer because of Low risk,
20% prefer because of Liquidity and 18% investors prefer because of Trust.
Ques.3. From where did you get information about Prudent CAS Ltd.?
Advertisement 18
Financial Advisor 46
Bank 22
Peer Group 14
No. of respondent
Advertisement
18%
Peer Group
46% 14% Bank
Financial Advisor
22%
Interpretation-
18%of the customers said that they get the information about MF from
Advertisement, 14% from Peer Group, 22% from Bank and 46% get information
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Ques.4- Which reason prompts you to make an investment in mutual funds?
Returns
Wealth Creation
Tax Saving
Brand Name Equity
Liquidity
Interpretation-
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23% invest to create their wealth. 21% invest to get returns 35% invest to save tax
this is generally for the people whose most of the part goes in tax. 14% invest
Financial advisors 60
Banks 15
AMCs 25
No. of respondent
Interpretation-
60% of investors prefer financial advisors, 15% of investors prefer bank and 25%
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Ques- 6- What are your objectives for making investments?
Particulars Response
Tax Saving 35
Regular Income 25
Child`s future 15
Retirement plan 10
Other 15
Total 100
Interpretation:-
25% invest to generate regular income, 35% investors seek tax saving as their main
motive behind investments, 15% investors invest with the objective of planning of
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their childs future,10% prefer as retirement planning and 15% prefer other options
Particulars Response
Balanced 20
Debt fund 15
Equity fund 50
Gold fund 10
Other 5
Total 100
Interpretation:-
Among the 10% investors of mutual funds, 20%prefer Balanced Fund, 15% prefer
Debt fund, 50% prefer equity, 10% prefer Gold and 5% prefer other available funds
for investing.
Close ended 19
Open ended 81
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Total 100
Interpretation:-
Also, 81% of the investors believed in open-ended schemes and 19% of the
6 12 months 25
12 2 year 40
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Horizon of investment
Less than 6
4% months
31%
6 - 12 months
40%
12 - 2 year
more than 2year
25%
Interpretation-
25% investors prefer more than 6-12 months investment period, 31% prefer more
than 2year period, 40% prefer 12 months-2 year and 4% prefer less than 6 months
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MODE OF INVESTMENT
One time
35% investment
65% SIP
Interpretation-
65% investors replied that they prefer one time investment mode and 35% prefer
Ques.11- Which is the most preferable option for earning high returns?
Dividend Pay-out 21
Dividend Reinvestment 8
Growth in NAV 71
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No.of respondents
Dividend
Payout
21% Dividend
8% reinvestment
71%
Growth in
NAV
Interpretation-
71% investors prefer growth in NAV opinion, 21% prefer dividend reinvestment
NAV of a fund?
By current NAV 41
By past returns 34
By both 25
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Influencing factors of returns
By NAV
25% By return
41%
34% By both
Interpretation-
41% says that they get influenced by NAV, 34% because of returns and 25% says
Last
Last 3 1 3
Category 1
Week Mth Yr Yrs
Mth
Equity - Banks & Fin
-2.26 -8.37 -4.82 14.37 21.60
Srvs
Equity - Contra -1.36 -9.26 -5.75 5.71 21.88
Equity - Diversified -0.71 -8.60 -4.72 6.92 20.93
Equity - Dividend Yield -0.79 -8.09 -4.40 5.63 17.31
Equity - ELSS -0.89 -9.12 -5.21 5.77 19.63
Equity - Energy / Power 0.35 -6.04 -0.14 20.80 25.52
Equity - FMCG -1.93 -10.34 -11.62 0.00 13.29
Equity - Global 1.57 1.09 -0.46 3.86 6.55
Equity - Infrastructure -0.82 -8.42 -4.32 5.06 22.37
Equity - Large-cap -0.90 -8.53 -5.60 4.50 15.63
Equity Media -1.39 -9.65 -5.05 4.21 17.43
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Equity - Mid-cap -0.83 -10.66 -5.09 6.63 29.38
Equity - Multi-cap -0.55 -8.58 -4.45 6.10 20.50
Equity - Nifty Linked
-0.73 -7.79 -6.70 3.81 12.00
Index
Equity - Savings /
-0.20 -2.80 -0.81 7.43 10.56
Income
Equity - Sensex Linked
-0.99 -7.17 -6.47 2.21 9.96
Index
Equity - Small-cap -0.67 -11.21 -5.46 5.92 36.12
Equity ETFs -0.98 -6.67 -5.02 5.11 12.51
FOF Equity -0.09 -3.42 -0.89 9.28 16.26
FOF Overseas 1.53 -1.12 -3.45 9.44 -0.48
Last
Last 3 1 3
Category 1
Week Mth Yr Yrs
Mth
Debt -Interval Funds - Half
1.59 2.06 3.25 9.24 8.65
Yearly
Debt -Interval Funds
0.12 0.57 1.61 7.10 8.14
Monthly
Debt -Interval Funds
0.19 0.64 1.68 6.99 8.00
Quarterly
Debt -Interval Funds
0.32 0.93 2.16 8.35 8.84
Yearly
Fixed Maturity Plans 0.23 0.97 2.42 8.78 9.13
Floating Rate - Long Term 0.45 1.68 3.59 11.41 10.59
Floating Rate - Short Term 0.21 0.88 2.25 8.70 8.92
FOF Debt 0.45 0.40 2.64 10.87 12.20
Gilt - Long Term 1.94 4.64 7.47 18.24 14.23
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Gilt - Medium Term 1.09 2.99 5.51 14.58 11.98
Gilt - Short Term 0.67 1.98 4.01 12.58 9.98
Liquid Funds 0.13 0.56 1.68 7.48 8.18
Long Term Income 1.09 2.96 5.28 13.72 11.61
Medium Term Income 0.68 2.21 4.37 12.44 11.20
Short Term Income Plans 0.45 1.64 3.51 10.83 10.03
Ultra Short Term Plans 0.24 0.99 2.42 9.01 8.91
Fig:4(b) Returns of Debentures
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Birla SL Global Commodities Fund(G) 2.9571 12/2355
DSPBR World Agriculture Fund-Reg(G) 2.7404 13/2355
R*Shares Hang Seng BeES 2.7013 14/2355
Kotak US Equity Fund(G) 2.6038 15/2355
DSPBR World Energy Fund-Reg(G) 2.6033 16/2355
Reliance US Equity Opp Fund(G) 2.4985 17/2355
DSPBR World Mining Fund-Reg(G) 2.3691 18/2355
HSBC Emerging Mkts Fund(G) 2.3463 19/2355
JPMorgan US Value Equity Offshore Fund(G) 2.3018 20/2355
Fig:4(c) Fund ranking
From the above chart it is seen that some of the schemes which gives better returns
and gained highest ranking are ICICI Pru Half Yrly Inv II-Ret(G), Tata India
CHAPTER-6
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FINDINGS
Findings
The trend for investment is changing rapidly besides the traditional pattern of
investment and people today they are ready to undertake risk and also bear the
This shows that people with Middle Income Group are more attractive this market
It is observed that 81% investors have invested open ended schemes that they
want higher returns on their investment rather than investing in closed ended
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It is observed that 35% investors have invested money for tax assumption.21%
investors have invested money for higher returns in their investment.23% investors
have invested money for value creation in fund. And remaining9% investors have
It is observed that 50% investors have not interested to invest money in mutual
mutual fund.9% investors find govt. securities bond is better thats way they not
invested money in mutual fund. And remaining 8% investors have other reason so
account. The ladies were inclined to invest their money in Gold and jewellery
Service class people and retired class people prefer more saving and fixed deposits
It is observed that 70% investors have invested to getting returns in the range of
5-15% which shows in short span of time they are getting good returns and more
than expectations.
It is observed that 80% investors have invested in short term duration which
indicates the investors have not ready to invest in long term period due to various
On asking how they get knowledge of mutual fund a large number of them
attributed to print media. Even banks today follow the role of the investment
advisors. Very few get any information from the e-media or Hence, AMCs must
increase the awareness about their product through Electronic media (TVs, Cables,
Radios etc.) as well as and should not just constrained itself to the print
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Many of the investors are aware of mutual funds but most of their perception
Investors are mainly concerned with the risk factors of mutual funds and are not
The investors who have invested in mutual funds mainly go for it because of the
Most of the people dont know the advantages of mutual funds and the various
There are nearly 1173 schemes of mutual funds offered by various mutual fund
A common investor basically looks for the Tax exemption and Safety &security
while investing.
Investors often feel that those people, who have surplus amount with them and
CHAPTER-7
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SUGGESTIONS AND
RECOMMENDATIONS
Disclosure of Risk: The funds should disclose the level of risk associated with
investment in the fund return in offer documents and in comparative levels of returns
and risk in the annual reports for the sake of prospective and existing investors.
Educating the agents: While investing the agents/salesmen should clearly explain
the investors all the features both positive as well as negatives associated with a fund.
Primarily, the agent/salesmen should first understand the purpose/ need for the
Simple Terminology: The details both facts and figures should be in plan English
and the figures must be explained, for example when Sharpe ratio is mentioned, they
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should clearly tell its significance and how it is related with risk and how to
Regional Languages: The fact books may be printed also in regional languages so
. Customer Care Divisions: Along with internet access the customers queries about
any schemes should be answerable and attract through well suitable counseling.
Educating the public and the investors: Workshops or seminars explaining the
importance and risk factor associated with different classes of assets may be
conducted from time to time for the existing investors. At the same time awareness
programmes more in all areas and more in number should be conducted for the public.
Understanding the Psychology of the Investors: AMCs should put extra effort in
Understand the purpose of investment: The first point to analyze before investing
in a fund is to find out whether the objective matches with the scheme. It is necessary,
as any mismatch of the same would directly affect the prospective probable returns.
Low risk tolerance: Those investors with less risk tolerance should go for debt
schemes, as they are relatively safer, when compared to empowered schemes like
equity. Aggressive investors can go for equity investments. Investors that are even
more aggressive can opt for schemes that invest in specific industry or sector.
Track Record: Investors should go through the schemes track record, performance
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Period of Investment: One should look at covering the volatility exposure which
can be done by holding onto the investment for longer periods which also enables the
scheme to gain.
Cost Factor: Though the AMC fee is regulated, one should look at the expense
ratio of the fund before investing. This is because the money is deducted from the
returns. A higher entry load or exit load also will eat into the actual returns. A higher
expense ratio can be justified only by superlative returns. It is very crucial in a debt
Points to be considered while investing in NFOs: At the time of NFO, one can buy
units at par. However, it is not always advantageous to buy a mutual fund during
NFO. One should always wait and see the performance before investing in it. One can
buy units of an open-end scheme anytime at NAV-related price. The units can be
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CHAPTER-8
CONCLUSION
CONCLUSION
and investors. Prudent CAS has limited awareness among investors but has been
Plan and open ended funds. Investors after the bubble of 2008 have preferred
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The Firm helps investors to maintain an effective portfolio of wide range of
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CHAPTER-9
LIMITATIONS OF THE
STUDY
LIMITATIONS
Every research has its own limitations and present research work is no exception to
this general rule the inherent limitation of the study are as under:
1. The study is limited to the city limits of Lucknow only so generalizations cannot
be done.
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4. Many customers even though they had invested in mutual funds were hesitant to
5. Some people though they invested in mutual funds did not possess any
knowledge of mutual funds; they were totally dependent on their bank investment
6. Since the sample size was 100 it cannot give the exact perception of whole
population.
8. Questionnaire method can be used only when respondents are literate and co-
operative.
itself.
10. In the present work, the sample size is very small. Research is mainly based
on the survey of investors and insurance and post agents which may not be true
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CHAPTER-10
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BIBLIOGRAPHY
Books:
1. Bodie, Kane, Marcus Security Analysis and Portfolio Management, 5th
Websites:
1. www.mutualfundindia.com
2. www.mututalfunds.com
3. www.sebi.com
4. www.moneycontrol.com
5. www.rbi.org.in
6. www.capitalmarket.com
7. www.amfi.com
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Magazine & Newspaper:
Business World
CHAPTER-11
ANNEXURE
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PART A
55-60 ABOVE
60
Q3.Qualification
graduate al holder te
Intermediat 10th class Illiterate
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MALE FEMALE
Q5. Occupation
Student
Business/sel
f employed
Married Unmarried
30000
30001-35000 35001-40000 40001-45000 Above 45000
PART B
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Q2. Which factor influence you to invest?
reputation
Q3. From where did you get information about Prudent MF schemes?
s Advisors specify
t important important
Returns
Wealth Creation
Tax Savings
Brand Name
Equity
Liquidity
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Balanced funds
Debt funds
Equity fund
Gold
Others please specify
months
Q11. Which is the most preferable option for earning high returns?
Q12. Do you get influenced by past returns provided or by the current NAV of
a fund?
By current NAV
By past returns
By both
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