IBS

Report on Mutual Funds Close Ended

Administrator

Table of Contents
Mutual Fund ............................................................................................................................................ 4 Open Ended Fund .................................................................................................................................... 4 Close Ended Fund.................................................................................................................................... 4 Advantages of close ended mutual fund ............................................................................................... 5 Risks of close ended mutual fund ......................................................................................................... 5 Reliance Mutual Fund.............................................................................................................................. 6 Reliance Long term Equity Fund.............................................................................................................. 6 Product Features .................................................................................................................................. 6 USP ..................................................................................................................................................... 8 Limitation ............................................................................................................................................ 8 Portfolio Strategy ................................................................................................................................. 8 Recommendation ................................................................................................................................. 9 Reliance Equity Linked Saving Fund Series I ........................................................................................... 9 Product Features .................................................................................................................................. 9 HSBC MUTUAL FUND ....................................................................................................................... 12 HSBC Unique Opportunities Fund ......................................................................................................... 13 Product Features ................................................................................................................................ 13 USP ................................................................................................................................................... 14 Recommendations.............................................................................................................................. 15 HSBC Small Cap Fund .......................................................................................................................... 15 Product features ................................................................................................................................. 15 USP ................................................................................................................................................... 15 Limitation .......................................................................................................................................... 16 Recommendation ............................................................................................................................... 16 UTI MUTUAL FUND ........................................................................................................................... 17 UTI-India Lifestyle Fund ....................................................................................................................... 18 Features ............................................................................................................................................. 18 USPs ................................................................................................................................................. 18 Recommendations.............................................................................................................................. 18 Limitations ........................................................................................................................................ 18 UTI Long Term Advantage Fund - Series II ........................................................................................... 19 Features ............................................................................................................................................. 19 2

USPs ................................................................................................................................................. 19 Recommendations.............................................................................................................................. 19 Limitations ........................................................................................................................................ 19 Conclusion ............................................................................................................................................ 20

Mutual Fund
An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money mangers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund's current net asset value (NAV) per share, which is sometimes expressed as NAVPS. Dividend income from mutual fund units will be exempt from income tax with effect from July 1, 1999. Further, investors can get rebate from tax under section 88 of Income Tax Act, 1961 by investing in Equity Linked Saving Schemes of mutual funds. Further benefits are also available under section 54EA and 54EB with regard to relief from long term capital gains tax in certain specified schemes. There are two basic types of mutual funds. "Open-ended" or "Open" mutual funds are the most common type of mutual funds. Investors may purchase units from the fund sponsor or redeem units at the valuation promised in the fund documents, usually on a daily basis. "Closed-ended" or "Closed" mutual funds are traded as financial securities, once they are issued, and holders must sell their units on the stock market to receive their funds back.

Open Ended Fund

A type of mutual fund that does not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell. The majority of mutual funds are open-end. By continuously selling and buying back fund shares, these funds provide investors with a very useful and convenient investing vehicle. It should be noted that when a fund's investment manager(s) determine that a fund's total assets have become too large to effectively execute its stated objective, the fund will be closed to new investors and in extreme cases, be closed to new investment by existing fund investors.

Close Ended Fund

A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange. A close-ended mutual fund scheme clearly stipulates the maturity period,
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which could be anywhere between 2 to 15 years of time. The investor can make investments on a close-ended mutual fund scheme as soon as they are issued. Later on, he is free to buy or sell close-ended mutual fund scheme units when they are listed on the stock exchange. Once the units are listed on the stock exchange, the market price of the close-ended mutual fund scheme units could vary depending on factors like: y y The expectations of the unit holders Demand for and supply of scheme units

Generally, the units of the close-ended mutual fund schemes are traded on the stock exchange at a price less than its Net Asset Value or NAV. On nearing maturity, the difference between the scheme unit's trading price and NAV may narrow significantly. Close ended funds also called closed ended mutual funds are referred to as financial sureties. Close ended funds or close ended mutual funds are merchandised in the stock market.

Advantages of close ended mutual fund

There are certain advantages of close ended funds as mentioned below:
y y

One can avail of the facility of buying closed ended funds at a discount rate. Discount on the closed ended funds is calculated by ascertaining the difference between NAV and close ended funds value. The main advantage of close ended funds lies in the fact that an individual intending to own stocks, can avail of the close ended funds at a discounted rate and at the same time possess quality stocks.

Risks of close ended mutual fund

There are certain risks associated with close ended funds.
y y y y

Closed ended funds can change abruptly and drastically. Closed ended funds are basically ever changing in nature. Close ended funds should be invested in preferably by veteran investing individuals. Shares of close ended funds can be discounted to such an extent due to which owner of the shares are unable to know the actual value of the shares. In order to understand better about the close ended mutual fund scheme we have analyzed the schemes of three fund houses. These are Reliance Mutual fund, HSBC Mutual funds and UTI
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Mutual funds. We have taken one company from Indian Private sector, one from Government sector and one a foreign player to understand the different strategies of each company.All the product features, USP of the product , limitation of the product and recommendation have been made for each scheme.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 71,094 Crs (AAUM for 31st Oct 08 ) and an investor base of over 70.68 Lakhs.Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 118 cities across the country.Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders."Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services.

Reliance Long term Equity Fund

(An Close-ended Long Term Equity Scheme.) The primary investment objective of the scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Product Features
Type : A 36-months close ended diversified equity fund with an automatic conversion into an open ended scheme on expiry of 36-months from the date of allotment Investment Objective : The primary investment objective of the scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Asset Allocation/Investment pattern Under normal circumstances, the anticipated asset allocation would be Instruments Equity and Equity related Securities Debt and Money market securities (including investments in securitised debt) Indicative asset Risk Profile allocation 70% to 100% Medium to High 0% to 30% Low to Medium

An overall limit of 100% of the portfolio value has been introduced for the purpose of equity derivatives in the scheme. Options Available:
y y

Growth Option Dividend: Only Dividend payout

Benchmark Index : BSE - 200 Application Amount : Rs 5000 and in multiples of Re. 1 thereafter Liquidity The Scheme will offer for Redemption / Switch-out of Units on an ongoing basis at half yearly intervals at NAV based prices. The Redemption / Switch-out of Units will be available only during the Specified Redemption Period i.e. the first five Business Days immediately after the end of each calendar half year. After the conversion of Scheme into an open-ended scheme, the Scheme will offer for Sale/Switch-in and Redemption/Switch-out of Units at NAV based prices on every Business Day on an ongoing basis. Load Structure : No Entry Load for Direct Investments w.e.f January 4th, 2008 Entry Load : Nil Exit Load For subscription If redeemed/ switched before completion 12 months from the date of allotment 4% If redeemed/ switched between 12 months - 1 day and on or before completion of 24 month from the date of allotment 3% If redeemed/ switched between 24 months - 1 day and on or before completion of 36 month from the date of allotment 2%

Exit Load

Load Structure : On Conversion into open ended scheme Entry Load : For amt below Rs. 2 crs-2.25%, for amt of Rs.2 crs and below 5 crs-1.25%and for amt. Rs. 5 crs and above- Nil Exit Load : Nil Nomination facility : Available

USP
y The fund shall primarily focus on the small and mid cap stocks. However depending on the views of the fund manager and market conditions in the interest of the investors, the fund manager will have the flexibility to select stocks which he feels are best suited to achieve the stated objective. The fund will have the flexibility to invest predominantly in a range of Small and Mid Cap companies/stocks with an objective to maximize the returns, at the same time trying to minimize the risk by reasonable diversification. However there can be no assurance that the investment objective of the scheme will be realized, as actual market movements may be at variance with anticipated trends.

Limitation
y Investors investing in small/mid caps need to be patient enough as it could be a while before these stocks unlock the potential that is expected of them. So flitting in and out of these stocks/funds may not be the right way to go about investing in mid caps. With regards to Reliance Mutual Fund, we have not been able to get complete clarity on the investment proposition of some of their funds. For instance, Reliance Vision Fund until some years ago was predominantly invested in mid caps, while Reliance Growth Fund was the large cap offering. As things stand today, their investment mandates have reversed, which means Reliance Vision is a large cap fund, whereas Reliance Growth is a mid cap fund. The change in their mandates is inexplicable and given that they share the exactly same investment objective, we have no way to ascertain whether this change is only temporary or permanent.

Portfolio Strategy
RLTEF has a relatively straightforward portfolio strategy. The fund is mandated to invest 70%100% of its net assets in equity and equity-related instruments. According to RLTEF's Offer Document, the equity investments will be made strictly in the small/mid cap segment. The market capitalisation ceiling for this segment is Rs 15 bn (Rs 1,500 crores), in other words, the fund is unlikely to invest in stocks beyond this ceiling under normal market conditions. However, as the Offer Document mentions, the fund manager can revise the ceiling depending on the market conditions and invest in stocks outside this universe.

Instruments Allocation Range Equity and equity-related securities 70%-100% 0%-30% Debt and money market securities Moreover, if in the fund manager's view, equity markets are unlikely to perform well and there is a dearth of investment opportunities, the fund can reduce its allocations to equities and instead invest in debt and money market instruments upto 30% of net assets.

Recommendation
It pays to invest in diversified equity funds with a long-term perspective, at least 3 years in our view. Investing for the long-term is particularly relevant for small/mid caps since, unlike wellestablished large caps, they take a lot more time to unlock their potential. In fact, we would recommend that investments in mid caps should be made with a minimum 5-Yr investment time frame. And over this period, investors should be prepared to witness above-average volatility.

Reliance Equity Linked Saving Fund Series I

(An Close Ended Equity Linked Saving Fund)The primary objective of the scheme is to generate long term capital appreciation from portfolio that is invested predominatly in equities along with income tax benefit.

Product Features
Type: 10 year Close Ended Equity Linked Saving Scheme Investment Objective The primary objective of the scheme is to generate long term capital appreciation from portfolio that is invested predominatly in equities along with income tax benefit. Corpus : Rs117.55 crore(September 2008) Minimum Investment : Rs 5oo and in multiples of Rs 500 thereafer Entry Load : NA Exit Load : Nil* *In accordance with the SEBI (MFs) Regulations, 1996, NFO expenses not exceeding 6% of the Amount mobilized, will be charged to the scheme and will be amortized over a period of 10 years. If the investor opts for the redemption before the completion of 10 years, proportionate unamortized portion of the NFO expenses outstanding as on the date of the redemption shall be recovered from such investor. Benchmark: - BSE 100

Asset Allocation Under normal circumstances, the asset allocation under the Scheme will be as follows: Type of Security % of Corpus (indicative) Risk Profile 80 - 100 % High Equities Low to Medium Debt and Money Market Instruments Up to 20 % The scheme may invest in equity shares in foreign companies, ADRs / GDRs and instruments convertible into equity shares of domestic or foreign companies and in derivatives as may be permissible under the guidelines issued by SEBI and RBI. As the scheme is governed by ELSS guidelines, such investment will be made, if the ELSS guidelines permit. Specified Redemption Period/Liquidity The scheme will offer purchase only during the new fund offer period and the redemption/switch-out will be available only during the Specified Redemption Period i.e. first five Business Days on a monthly basis at NAV based prices after an initial lock-in-period of three years from the date of allotment. Options Available: y y USP y The funds collected under a plan shall be invested in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies. Investment may also be made in partly convertible issues of debentures and bonds including those issued on rights basis subject to the condition that, as far as possible, the non-convertible portion of the debentures so acquired or subscribed, shall be disinvested within a period of twelve months. It shall be ensured that funds of a plan shall remain invested to the extent of at least eighty per cent in securities specified in clause (a). The scheme shall strive to invest its funds in the manner stated above within a period of six months from the date of closure of the plan in every year. In exceptional circumstances, this requirement may be dispensed with by the Fund, in order that the interests of the assesse are protected. Pending investment of funds of a plan in the required manner, the Fund may invest the funds in short-term money market instruments or other liquid instruments or both. After three years of the date of allotment of the units, the Fund may hold upto twenty per cent of net assets of the plan in short-term money market instruments and other liquid instruments to enable them to redeem investment of those unit holders who would seek to tender the units for repurchase. Growth Plan Dividend Plan

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Limitations y The amount invested in the scheme shall be subject to a lock-in of 3 years from the date of allotment and thereafter redemption will be available only during the Specified Redemption Period i.e. first Five Business Days on a monthly basis at NAV based prices. y Reliance Equity Linked Saving Fund - Series I is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects or returns Recommendations It pays to invest in diversified equity funds with a long-term perspective, of 10 years in our view. This is a long period for an investor to invest. In fact, we would recommend that investments in mid caps should be made with a minimum 5-Yr investment time frame. And over this period, investors should be prepared to witness above-average volatility.

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HSBC MUTUAL FUND

HSBC Global Asset Management draws upon a long history of serving clients of the HSBC Group, tracing its roots back to the foundation of the Hongkong and Shanghai Banking Corporation in 1865. The HSBC Group has identified asset management as a key constituent of the HSBC Groups wealth management strategy and at HSBC Investments; we have been dedicated to managing assets on behalf of our clients for more than 30 years. In 1994 the HSBC Group recognized the increasingly global nature of financial markets, would create the need for a credible global asset management organization to ensure delivery of the best possible solutions for clients. In response, the separate regional asset management businesses of HSBC were unified to create a single powerful investment manager aimed at delivering global investment capabilities combined with significant local expertise. In 2001, following the integration of CCF and its investment businesses into HSBC, a new global strategy was launched for asset management. The strategy aimed to create a core proprietary global investment management business HSBC Asset Management, operating alongside a series of Specialist investment businesses, namely: Sinopia for quantitative and structured products, HSBC Specialist Investments for property and infrastructure investments, and HSBC Multimanager for best-in-class open architecture investments and HSBC Alternative Investments for single-manager hedge fund strategies. In 2004, following a strong period of growth in HSBCs investment businesses, a new strategy was announced for the investment businesses of HSBC. The strategy is intended to position HSBC for market leadership in the provision of investment solutions that meet client needs and involved a reorganization of HSBCs investment businesses including HSBC Asset Management and HSBC Investment Management, leading to the creation of: HSBC Investments. In 2008, HSBC Investments is re-named to HSBC Global Asset Management. The name change is more closely to align it with Global Banking and Markets (the new name for Corporate, Investment Banking and Markets). HSBC Global Asset Management has a global network of dedicated offices in each of the worlds major financial centers. Expert teams in each location are committed to developing and delivering a broad range of solutions for all types of investor drawing on internal investment capabilities when appropriate and external managers as required, through our Multimanager capability. We are able to create and deliver solutions for clients through a global network of dedicated offices, supported by the HSBC Group network of some 10,000 offices in 83 countries and territories.

HSBC Mutual Fund

The HSBC Mutual Funds are known for three major factors being summarized in their own word:
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Client Focus
 

We are the client experts for all investment matters, using our knowledge to provide wellengineered products We provide client solutions we aim to develop appropriate solutions for clients rather than just sell in-house capabilities

People


We are stable yet vibrant, benefiting from the vibrancy brought about by our employees allowing us to combine the ideas and perspectives of different cultures and of long standing and new employees We work in teams emphasizing teamwork by developing empowered, focused teams backed by high quality support that allows them to achieve their goals. Our people are impartial and intelligent We offer leading thinking by investing in and recruiting the most talented people across our business who deliver creative and thoughtful solutions to the advantage of our clients.

Our Business
 

We promote transparency using technology and the full range of available media to achieve clear, open and appropriate communication with our clients We demonstrate longevity by building lasting relationships with our clients and developing new markets with a strategic perspective. We are supported by the Groups long term vision and our clients trust in our commitment to serving them We are an integral part of the HSBC Group, benefiting from the backing of the HSBC Group with all its strengths and qualities, giving us the confidence to make strategic commitments to client relationships and new markets.

HSBC Unique Opportunities Fund

HSBC Unique Opportunities Fund (HUOF) is a 3-year, close-ended equity fund that intends to invest in stocks of companies facing certain out-of-ordinary conditions but have potential for long term growth. The Fund aims to invest in companies that have strong fundamentals and possess growth potential but are either temporarily undervalued or are likely to benefit from unlocking of value from the culmination of these out-of-ordinary situations that are usually non-recurring and outside the ordinary course of business. It aims to enhance returns over a longer period of time by taking on moderately higher risk.

Product Features
Type: 3-year close-ended equity scheme with automatic conversion into an open-ended equity scheme at the end of 3 years from the date of allotment of units

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Investment Objective: To provide long-term capital growth from a diversified portfolio of equity and equity related instruments. The focus would be to invest in stocks of companies facing "out-of-ordinary" conditions like Mergers & Acquisitions, Turnaround/Recovery situations, Out of Industries/sectors, Employee/Management Buyouts etc.
Asset Allocation/Investment pattern Under normal circumstances, the anticipated asset allocation would be Instruments Equity and Equity related Securities Debt and Money market securities Indicative asset allocation 65% to 100% 0% to 35%

An overall limit of 100% of the portfolio value has been introduced for the purpose of equity derivatives in the scheme. Options Available:
y y

Growth Option Dividend: Only Dividend payout

Benchmark Index: BSE - 200 Application Amount: Rs 5000 Liquidity The Scheme within 10 working days of the receipt of the redemption request at the Official Points of Acceptance of Transactions of the Registrar and the AMC. The Fund would endeavor to effect redemption payouts (net of applicable taxes) within 3 business Days under normal circumstances. Load Structure: Entry Load: Nil. After conversion into open ended for investments below Rs 5 crores, 2.25%, otherwise Nil Exit Load: Nil Nomination facility: Available

USP
As India witnesses strong economic growth and increased corporate activity, there can be visible opportunities to profit from out-of-ordinary situations such as restructurings, M& As, turnarounds, new business ideas, etc. The Fund has the ability to take on aggressive positions with an aim to capitalize on these unique opportunities for long term capital appreciation. Being close-ended in nature, it is also likely to protect the investor from the short-term volatility common to such investments.

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Recommendations
HUOF is likely to prove to be a high risk-high return investment proposition due to two reasons, first is the inherent risk of investing in companies that qualify as unique investment opportunities, second is the aggressive investment style (in terms of concentrated stock allocations) that it will pursue under certain circumstances. However, the fund could find an ally in the 35% debt allocation to stem volatility during turbulence in stock markets.

HSBC Small Cap Fund

Product features
Type of Scheme: A close ended Equity Fund for 3 years. Investment Objective To provide long-term capital appreciation primarily from a diversified portfolio of equity and equity related instruments of small cap companies. Options Available:
y y

Growth Option Dividend: Only Dividend payout

Dividend Declaration of dividend and its frequency will inter alia depend upon the availability of distributable surplus. Dividend may be declared from time to time. Minimum Application Amount : Rs. 10,000/Benchmark Index BSE Small Cap Index Asset Allocation/Investment pattern Under normal circumstances, the anticipated asset allocation would be

Instruments Equity and Equity related Securities Debt and Money market securities

Indicative asset allocation 65% to 100% 0% to 35%

USP

The fundamental investment objective of this Fund is to achieve long-term capital growth by investing primarily in a broad range of smaller Canadian companies. In selecting the investments for this Fund, the Fund's investment advisor focuses primarily on quality companies in three broad industry segments: Resources, Consumer/Industrial Products

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and Technology. The amount the Fund's investment advisor invests in each of the three segments is largely a result of the individual stocks it chooses. The Scheme may also use various derivative products from time to time, as would be available and permitted by SEBI/RBI, in an attempt to protect the value of the portfolio and enhance Unit holders' interest.

Limitation
y y The minimum amount for subscription is really high in comparison to UTI and Reliance. It is focusing only three broad sectors, that has limited the growth of the fund.

Recommendation
It pays to invest in diversified equity funds with a long-term perspective, of 3 years in our view. This is a long period for an investor to invest. The find has not mentioned any motive,i.e, whether it is going to invest in Small cap, Large cap or in equities of some special companies. So the investors should be informed about these information

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UTI MUTUAL FUND

Genesis Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI Asset Management Company Limited, who has been appointed by the UTI Trustee Pvt. Limited Co. for managing the schemes of UTI Mutual Fund and the schemes transferred/migrated from the erstwhile Unit Trust of India. The UTI Asset Management Company provides professionally managed back office support for all business services of UTI Mutual Fund (excluding fund management) in accordance with the provisions of the Investment Management Agreement, the Trust Deed, the SEBI (Mutual Funds) Regulations and the objectives of the schemes. State-of-the-art systems and communications are in place to ensure a seamless flow across the various activities undertaken by UTIMF. UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers) Regulations, 1993 on 3rd February 2004, for undertaking portfolio management services and also acts as the manager and marketer to offshore funds through its 100 % subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. Assets Under Management

UTI Asset Management Company presently manages a corpus of over Rs. 44,623 Crores * as on 30th September 2008 (source: www.amfiindia.com). UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs of every class of citizenry. It has a nationwide network consisting 103 UTI Financial Centres (UFCs) and UTI International offices in London, Dubai and Bahrain. With a view to reach to common investors at district level, 1 satellite offices have also been opened in select towns and districts. We have a well-qualified, professional fund management team, who have been highly empowered to manage funds with greater efficiency and accountability in the sole interest of unit holders. The fund managers are also ably supported with a strong in-house securities research department. To ensure better management of funds, a risk management department is also in operation. Reliability UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and registrar offices are connected on a robust IT network to ensure cost-effective quick and efficient service. All these have evolved UTI Mutual Fund to position as a dynamic, responsive, restructured, efficient and transparent SEBI compliant entity.

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UTI-India Lifestyle Fund

Features
Type: A 3 year close ended scheme with tax benefit. Investment Objective :The investment objective is to earn long term capital gains from the changing needs of the Indian consumers along with the tax benefit attached to it Asset allocation: - 80% in equity and up to 20% in debt No entry load and no exit load* for three years Minimum investment is Rs 5000/- and in multiples of RS 1/Minimum lock in period of 3 years after which the fund may be converted to an open ended scheme

USPs
y y y Investment in companies which will benefit from changing Indian demographics Indian lifestyles and rising consumption pattern Investment in derivatives segment of those companies which will benefit from changing Indian demographics. The investment manager will select the securities on a bottom up approach and not invest right away when he has cash.

Recommendations
y y y Since the company is looking for a long term profit the term of the fund should be increased. The current term is 3 years which could be changed to say 5-6 years. The fund could be traded on the stock exchange in order to giving the benefit of liquidation to the investors when they want it. Once the nature of the fund changes to an open ended fund the fund house can give more options like an STP, SWP and SIP etc

Limitations
y y The duration of 3 years is very less for an economy like India to grow at the maximum point. The fund cannot be changed to cash very easily when compared to the other products by the competitors, the Dates for redeeming the units are as follows: - 21/01/2008, 21/07/2008, 19/01/2009, 20/07/ 2009, 18/01/2010, 19/07/2010 which may act negative for the company. There are very less investment options available for investment within the fund

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UTI Long Term Advantage Fund - Series II

Features
Type : A 10 year close ended scheme with tax benefit. The investment objective is to earn medium to long term capital gains along with the tax benefit attached to it, also focusing on Small cap companies. Asset allocation: - 80% in equity and up to 20% in debt No entry load and no exit load* for ten years Declaration of NAV on a daily basis but after one year of completion Minimum investment is Rs 5000/- and in multiples of RS 500/-

USPs
y y y A fund which aims at saving the amount of tax which are to be paid by the investors at large It invests in those instruments which have low risk but a guaranteed returns Declaration of NAV on a daily basis

Recommendations
y y 10 years is a very long time and many such funds convert themselves into an open ended fund on completion of 5-6 years There are very less option of investments and also withdrawing the company can come up with options like STP, SWP etc

Limitations
y y Low risk definitely means that the returns will be low. This will definitely pull down the NAV value of the fund. Very long lock in period : - investors will not invest for a reason that the company has a very long lock in period of 10 years.

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Conclusion
We have noticed there are really few close ended scheme in the market. There is more of demand for open ended mutual funds due to the ease to enter and exit the fund any time. As a result fund houses are coming up with more of open ended scheme and less of close ended schemes. In case of Reliance and HSBC the number of close ended scheme varied from 2 to 4 as in comparison of UTI which has many close ended scheme. This shows that that the government sector has offered more of the close ended scheme. As we are seeing there is a lot of volatility in the market. Due to this reason lot of redemption are taking place. In this scenario no investor is interested to invest their money for a long period of time. So the close ended funds are not performing well. Mutual funds like the HSBC Unique opportunities fund which plans to invest in areas where opportunities to profit from out-of-ordinary
situations such as restructurings, M& As, turnarounds, new business ideas, etc. are riskier. The investor in this scenario would not want to take risk, owing to the current economic scenario of recession.

We have compared all the small caps scheme of each house in order to maintain a uniform parameter to analyze. We can conclude that in case of UTI the lock in period is 10 year for earning tax benefit. But due to the high investment period investors have not that much subscribed. In case of HSBC the minimum amount subscription is high approximately double also the reputation of HSBC is as such to take more of risk. So at last we will conclude that reliance has got an Competitive advantage in respect of lock in period and minimum amount of subscription. Also the initial fund schemes of Reliance have been performing well.

Submitted By Priya Kanika Puri Rasya Chari Amanjot Naval Taneja Shreyans Bansali

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