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A STUDY ON COMPARATIVE ANALYSIS ON VARIOUS MUTUAFUNDS
WITH REFERENCE TO
ICICI PRUDENTIAL MUTUAL FUND
Project report submitted in partial fulfillment for the award of degree in
POST GRADUATE DIPLOMA IN MANAGEMENT
ByT.SUDHEER
Regd no: 010-012-030
PGDM 2010-2012
Under the esteemed guidance of
Mr. SUHEI SHAIK
ASST MANAGER-SALES
Industry Guide&
Dr. B. Ratan Reddy
Professor & Faculty Guide
RATAN GLOBAL BUSINESS SCHOOL, HYDERABADApproved by AICTE, Ministry of HRD, Govt of India, New Delhi
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DECLARATION
I declare that project report entitled A STUDY ON COMPARATIVE ANALYSIS OF
VARIOUS MUTUAL FUNDS IN ICICI PRUDENTIALS, HYDERABAD is original and has
not been submitted in part or in full for the award of any other degree or Diploma.
Place:
Date:
T.SUDHEER
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ACKNOWLEDGEMENT
I am very thankful to Mr. SUHEL SHAIK, Asst Manager, Sales for giving
permission to do project in their organization and extending his valuable guidance throughou
the study.
I am also thankful to Mr. Ravi Shekhar, Regional manager and
Mr.P.V.V SYAM SUNDAR, Relationship manager for providing me the valuable information
and had spent their time in completing my project.
At last express my gratitude to all those who have helped me directly or
indirectly in completing this project successfully.
T.SUDHEER
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ABSTRACT
The present project work A Comparative Analysis of Various Mutual Funds With Reference To Nifty is
categorized in to seven chapters
Chapter: - 1 Deals with the introduction this chapter sets the objective of the study and also gives the need
scope, Research methodology and the limitations of the study
Chapter: - 2 Deals with the introduction to the Industry profile
Chapter: - 3 Deals with the Review of literature and company profile.
Chapter: - 4 Deals with the analysis of the data & Interpretation
Chapter: -5 Deals with findings of the study that are arrived at after making the data analysis
Chapter:-6 Deals with the suggestions of the study.
Chapter:-7 Deals with the conclusions of the study.
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CONTENT
CHAPTER NO TITLE PAGE.NO
1 INTRODUCTION TO TOPIC
OBJECTIVES
NEED AND SCOPE OF STUDY
LIMITATIONS
RESEARCH METHODOLOGY
1
2
3
4
52 INDUSTRY PROFILE 6-18
3 LITERATURE REVIEW
COMPANY PROFILE
19-38
39-44
4 DATA ANALYSIS
&
INTERPRETATION
45-75
5 FINDINGS 76
6 SUGGESTIONS 77
7 CONCLUSSION 78
ANNEXURE:-
BIBLIOGRAPHY
LIST OF TABLES
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ABLENO TABLE NAME PAGE
Icici prudential gilt fund - investment plan - pf option 45-4
Icici prudential gilt fund - investment plan 47-4
Icici prudential income plan institutional 49-5
Reliance liquid fund - treasury plan - institutional plan 51-5
Reliance liquidity fund 53-5
Reliance monthly income plan growth 55-5
Jm nifty plus fund 57-5
Jm g-sec fund - regular plan growth 59-6
Jm g-sec fund - regular plan dividend 61-6
Escorts gilt fund 63-6
Escorts income plan 65-6
Escorts liquid plan 67-6
Nifty average returns 69
Comparative average returns of funds 70
Comparative risk of funds 71
Comparative study on fund returns to nifty returns 72
Comparative study on fund risk to nifty risk 73
Comparative study on fund average returns to fund risk 74
Ranks according to average returns 75
Ranks according to risk 75
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CHAPTER - I
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INTRODUCTION
Investment in a portfolio can take different forms. An investor can either invest securities, or can invest
through an investment company, also referred to as mutual fund. Mutual fund are financial intermediaries
which collect the savings of investors and invest them in a large and well-diversified portfolio of securities such
as money market instruments, corporate and government bonds and equity shares of joint stock companies.
A mutual fund is a pool of commingles funds invested by different investors, who have no contact with
each other. Mutual funds pools money from a cross section of investors by issuing units, construct a diversified
portfolio of stocks, bonds and other investment instruments and invest the same in capital market. Mutual funds
are conceived as instructions for providing small investors with avenues of investments in the capital market
Since small investors generally do not have adequate time, knowledge, experience and resources for directly
accessing the capital market, them have to rely on and intermediaries, which undertakes informed investmen
decisions and provides consequential benefits of professional expertise. Except the union trust of India, all
mutual funds in India are organized and set up under the Indian Trust Act as Trust.
The primary objective of all mutual funds is to provide better returns to investors by minimizing the risk
associated with capital market instruments.
All the mutual funds aim at achieving one or more of the following.
Providing a steady flow of income.
Providing high capital appreciation.
Providing capital appreciaton with income.
Providing income or capital appreciation with tax benefits.
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OBJECTIVES
To study performance of a selected mutual funds
To compare the fund performance with respect to Nifty
To make suggestions to investors based on performance anal
NEED OF THE STUDY
Many small investors are tempted to invest in the markets these days. But they do not have the knowledge and
expertise to take decisions. More over them have limited funds and time. Therefore mutual funds are a good
option for them. This study shows the performance of a few funds and compares it with nifty
.
SCOPE OF THE STUDY
The historical performance of the fund is compared with performance of the market (Nifty). Both the
historical data of the fund and the market is used for analysis. The internal factors contributing for the
performance of this specific fund is not include in the scope of the study. The scope of the study is confined to
the performance of this specific fund in comparison to the prevailing market conditions. The market being a
major factor affecting the mutual funds performance, the market plays a critical role despite the precautions
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taken by the fund managers. The care taken by the fund mangers does not fall in the scope of the study. The
scope of the study is limited to the performance of the fund in the existing market conditions.
LIMITATIONS
The present project work has been studied to analysis to study on A Comparative Study of Selected Mutual
Funds With Reference To Nifty. The following limitation has been founded during the study of project
1. The study is limited only to the analysis of different schemes and its suitability to different investors
according to their risk taking ability.
2. The study is based on secondary data available fact sheets, websites and other books as primary data was
not accessible.
3. Data pertaining to 2008-2009 was considered for analysis
4. The sample size chosen for the project study is not sufficient enough to give suggestions to investors.
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RESEARCH METHODOLOGY
Sources of data:
For the project study the data has been collected from the secondary sources like websites, fact sheets e.t.c,
Research design:
The project has been done by following 12 different funds
Between 01-04-2008 to 31-03-2009
(icici prudential gilt fund - investment plan - pf option , icici prudential gilt fund - investment plan , icic
prudential income plan institutional , reliance liquid fund - treasury plan - institutional plan, reliance liquidity
fund , reliance monthly income plan growth , jm nifty plus fund , jm g-sec fund - regular plan growth, jm g-
sec fund - regular plan dividend , escorts gilt fund , escorts income plan , escorts liquid plan)
The risk and return for the above prescribed funds are
Calculated and compared with risk and returns of nifty index
Data analysis:
The present project work has been analyzed using time series analysis with graphical presentation.
The formulas applied in the calculations are as follows
Closing price opening price
RETURNS =
Opening price
Standard deviation =
11
*100
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CHAPTER II
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INDUTSTRY PROFILEMUTUAL FUNDS INDUSTRY IN INDIA
The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the
year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered
the industry.
In the past decade, Indian mutual fund industry had seen a dramatic imporvements, both qualitywise as well as
quantitywise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management
(AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993
and till April 2004, it reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of
SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.
The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large
sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of
all mutual fund companies, to market the product correctly abreast of selling.
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The mutual fund industry can be broadly put into four phases according to the development of the sector. Each
phase is briefly described as under.
FIRST PHASE - 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of
India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI
was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6,700 crores of assets under management.
SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)
Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87),
Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank
of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets
under management.
THIRD PHASE - 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the
Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund
Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in
India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there
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were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores o
assets under management was way ahead of other mutual fund.
FOURTH PHASE - SINCE FEBRUARY 2003
This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and
functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the
SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
The major players in the Indian Mutual Fund Industry are:
TYPES OF MUTUAL FUNDS
General Classification of Mutual Funds
Open-end Funds / Closed-end Funds
Open-end Funds:
Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size
(corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and
repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the
investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of
an open-end fund is calculated every day.
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Closed-end Funds:
Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-
end Funds. The corpus of aClosed-end Fund remains unchanged at all times. After the closure of the offer,
buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the
interests of the investors, SEBI provides investors with two avenues to liquidate their positions:
1. Closed-end Funds are listed on the stock exchanges where investors can buy/sell units from/to each
other. The trading is generally done at a discount to the NAV of the scheme. The NAV of a closed-end
fund is computed on a weekly basis (updated every Thursday).
2. Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case, the corpus of the
Fund and its outstanding units do get changed.
Load Funds/no-load funds
Load Funds:
Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund
managers salary etc. Many funds recover these expenses from the investors in the form of load. These funds are
known as Load Funds. A load fund may impose following types of loads on the investors:
Entry Load Also known as Front-end load, it refers to the load charged to an investor at the time of
his entry into a scheme. Entry load is deducted from the investors contribution amount to the fund.
Exit Load Also known as Back-end load, these charges are imposed on an investor when he
redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an
outgoing investor.
Deferred Load Deferred load is charged to the scheme over a period of time.
Contingent Deferred Sales Charge (CDSS) In some schemes, the percentage of exit load
reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred
Sales Charge.
No-Load Fund:
All those funds that do not charge any of the above mentioned loads are known as No-load Funds.
Tax-exempt Funds/ Non-Tax-exempt Funds
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Tax-exempt Funds:
Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end equity oriented
funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and
dividend income in the hands of investors are tax-free.
Non-Tax-exempt Funds:
Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end
equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an
investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of
units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the
redemption proceeds to an investor
BROAD MUTUAL FUND TYPES
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1. Equity Funds:
Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide
higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest
for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk
bracket. In the order of decreasing risk level, there are following types of equity funds:
a. Aggressive Growth Funds: In Aggressive Growth Funds, fund managers aspire for maximum
capital appreciation and invest in less researched shares of speculative nature. Because of these
speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher
risk than other equity funds.
b. Growth Funds: Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years)
but they are different from Aggressive Growth Funds in the sense that they invest in companies that are
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expected to outperform the market in the future. Without entirely adopting speculative strategies,
Growth Funds invest in those companies that are expected to post above average earnings in the future.
c. Speciality Funds: Speciality Funds have stated criteria for investments and their portfolio
comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to
invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are
comparatively riskier than diversified funds. There are following types of speciality funds:
1. Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector
Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto,
Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity
funds that invest in multiple sectors.
2. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more
foreign companies. Foreign securities funds achieve international diversification and hence they are less risky
than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.
3. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization
than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap
companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores)
and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a
company can be calculated by multiplying the market price of the company's share by the total number of its
outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-
Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment
gets risky.
4. Diversified Equity Funds: Except for a small portion of investment in liquid money market, diversified
equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well
diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity
funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity
Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in
equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the
time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the
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investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which
he may have received any tax exemption(s) in the past.
d. Equity Index Funds: Equity Index Funds have the objective to match the performance of a specific
stock market index. The portfolio of these funds comprises of the same companies that form the index
and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like
S&P CNX Nifty, Sensex) are
e. Less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank
Index etc). Narrow indices are less diversified and therefore, are more risky.
2.Debt/IncomeFunds:
Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial
institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are
known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income
(and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds
distribute large fraction of their surplus to investors. Although debt securities are generally less risky than
equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment.
To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit
rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more
risky. Based on different investment objectives, there can be following types of debt funds:
a. Diversified Debt Funds: Debt funds that invest in all securities issued by entities belonging to all
sectors of the market are known as diversified debt funds. The best feature of diversified debtfunds is that
investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on
account of default by a debt issuer, is shared by all investors which further reduces risk for an individual
investor.
b. Focused Debt Funds: Unlike diversified debt funds, focused debt funds are narrow focus funds that
are confined to investments in selective debt securities, issued by companies of a specific sector orindustry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds,
funds that invest only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation,
focused debt funds are more risky as compared to diversified debt funds. Although not yet available in
India, these funds are conceivable and may be offered to investors very soon.
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c. Assured Return Funds: Although it is not necessary that a fund will meet its objectives or provide
assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of
annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or
the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors
with a low-risk investment opportunity. However, the security of investments depends upon the net worth
of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of
investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate
net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e.
Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to
fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took
over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to
investors, though possible.
d. Fixed Term Plan Series: Fixed Term Plan Series usually are closed-end schemes having short term
maturity period (of less than one year) that offer a series of plans and issue units to investors at regular
intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series
usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan
schemes is to
e. Gratify investors by generating some expected returns in a short period.
f. 1.Open-end2.Closed-end 3.GiltFunds
Also known as Government Securities in India, Gilt Funds invest in government papers (named datedsecurities) having medium to long term maturity period. Issued by the Government of India, these
investments have little credit risk (risk of default) and provide safety of principal to the investors.
However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of
debt securities are inversely related and any change in the interest rates results in a change in the NAV of
debt/gilt funds in an opposite direction.
4. Money Market/Liquid Funds:
Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments.
These securities are highly liquid and provide safety of investment, thus making money market / liquid funds
the safest investment option when compared with other mutual fund types. However, even money market /
liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include
Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit
(issued by banks).
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5. Hybrid Funds:
As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and
money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are
following types of hybrid funds in India:
a. Balanced Funds The portfolio of balanced funds include assets like debt securities, convertible
securities, and equity and preference shares held in a relatively equal proportion. The objectives of
balanced funds are to reward investors with a regular income, moderate capital appreciation and at the
same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative
investors having a long term investment horizon.
b. Growth-and-Income Funds Funds that combine features of growth funds and income funds are
known as Growth-and-Income Funds. These funds invest in companies having potential for capital
appreciation and those known for issuing high dividends. The level of risks involved in these funds is
lower than growth funds and higher than income funds.
6. Commodity Funds:
Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or
commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that
invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity
fund that invests in all available commodities is a diversified commodity fund and bears less risk than a
specialized commodity fund. Precious Metals Fund and Gold Funds (that invest in gold, gold futures or shares
of gold mines) are common examples of commodity funds.
7. RealEstate Funds:
Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of
housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to
generate regular income for investors or capital appreciation.
8.ExchangeTradedFunds(ETF)
Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual
fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock
at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility
of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these
funds are quite popular abroad.
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The National Stock Exchange of India Limited
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The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on
Establishment of New Stock Exchanges. It recommended promotion of a National Stock Exchange by financial
institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India
and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993
NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market
(Equities) segment commenced operations in November 1994 and
operationsinDerivativessegmentcommencedinJune2000.
The following years witnessed rapid development of Indian capital market with introduction of internet trading,
Exchange traded funds (ETF), stock derivatives and the first volatility index - IndiaVIXinApril2008,byNSE
August 2008 saw introduction of Currency derivatives in India with the launch of Currency Futures in USD INR
by NSE. Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009, exactly
after one year of the launch of Currency Futures
With this, now both the retail and institutional investors can participate in equities, equity derivatives, currency
and interest rate derivatives, giving them wide range of products to take care of their evolving needs.
Group
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NSCCL
NCCL NSETECH
IISL
DotEx Intl. Ltd.
NSE.IT
NSE Milestones
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April 1993 Recognition as a stock exchange
May 1993 Formulation of business plan
June 1994 Wholesale Debt Market segment goes live
November 1994 Capital Market (Equities) segment goes live
March 1995 Establishment of Investor Grievance Cell
April 1995 Establishment of NSCCL, the first Clearing Corporation
June 1995 Introduction of centralized insurance cover for all trading members
July 1995 Establishment of Investor Protection Fund
October 1995 Became largest stock exchange in the country
April 1996 Commencement of clearing and settlement by NSCCL
April 1996 Launch of S&P CNX Nifty
June 1996 Establishment of Settlement Guarantee Fund
November 1996Setting up ofNational Securities Depository Limited, first depository in India, co-promoted
by NSE
November 1996 Best IT Usage award by Computer Society of India
December 1996 Commencement of trading/settlement in dematerialised securities
December 1996 Dataquest award for Top IT User
December 1996 Launch ofCNX Nifty Junior
February 1997 Regional clearing facility goes live
November 1997 Best IT Usage award by Computer Society of India
May 1998 Promotion of joint venture, India Index Services & Products Limited (IISL)
May 1998 Launch of NSE's Web-site: www.nse.co.in
July 1998 Launch of NSE's Certification Programme in Financial Market
August 1998 CYBER CORPORATE OF THE YEAR 1998 award
February 1999 Launch of Automated Lending and Borrowing Mechanism
April 1999 CHIP Web Award by CHIP magazine
October 1999 Setting up of NSE.ITMr. subhash kumar
January 2000 Launch of NSE Research Initiative
February 2000 Commencement of Internet Trading
June 2000 Commencement of Derivatives Trading (Index Futures)
September 2000 Launch of'Zero Coupon Yield Curve'
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November 2000Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd. and i-
flex Solutions Ltd.
December 2000 Commencement ofWAP trading
June 2001 Commencement of trading in Index Options
July 2001 Commencement of trading in Options on Individual Securities
November 2001 Commencement of trading in Futures on Individual Securities
December 2001 Launch ofNSE VaR for Government Securities
January 2002 Launch of Exchange Traded Funds (ETFs)
May 2002NSE wins the Wharton-Infosys Business Transformation Award in the Organization-wide
Transformation category
October 2002 Launch of NSE Government Securities Index
January 2003 Commencement of trading in Retail Debt Market
June 2003 Launch of Interest Rate Futures
August 2003 Launch of Futures & options in CNXIT Index
June 2004 Launch of STP Interoperability
August 2004 Launch of NSEs electronic interface for listed companies
March 2005 India Innovation Award by EMPI Business School, New Delhi
June 2005 Launch of Futures & options in BANK Nifty Index
December 2006 'Derivative Exchange of the Year', by Asia Risk magazine
January 2007 Launch of NSE CNBC TV 18 media centre
March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com
June 2007 NSE launches derivatives on Nifty Junior & CNX 100
October 2007 NSE launches derivatives on Nifty Midcap 50
January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008
March 2008 Introduction of long term option contracts on S&P CNX Nifty Index
April 2008 Launch of India VIX
April 2008 Launch of Securities Lending & Borrowing Scheme
August 2008 Launch of Currency Derivatives
August 2009 Launch of Interest Rate Futures
November 2009 Launch of Mutual Fund Service System
December 2009 Commencement of settlement of corporate bonds
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February 2010 Launch of Currency Futures on additional currency pairs
Technology
Across the globe, developments in information, communication and network technologies have created
paradigm shifts in the securities market operations. Technology has enabled organizations to build new sources
of competitive advantage, bring about innovations in products and services, and to provide for new business
opportunities. Stock exchanges all over the world have realized the potential of IT and have moved over to
electronic trading systems, which are cheaper, have wider reach and provide a better mechanism for trade and
post trade
NSE believes that technology will continue to provide the necessary impetus for the organization to
retain its competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact
that technology will continue to redefine the shape of the securities industry, NSE stresses on innovation and
sustained investment in technology to remain ahead of competition. NSE's IT set-up is the largest by any
company in India. It uses satellite communication technology to energies participation from around 200 cities
spread all over the country. In the recent past, capacity enhancement measures were taken up in regard to the
trading systems so as to effectively meet the requirements of increased users and associated trading loads. With
up gradation of trading hardware, NSE today can handle up to 15 million trades per day in Capital Market
segment. In order to capitalize on in-house expertise in technology, NSE set up a separate company, NSE
Technology Services Ltd. which is expected to provide a platform for taking up all IT related assignments of
NSE.
NEAT is a state-of-the-art client server based application. At the server end, all trading information is
stored in an in-memory database to achieve minimum response time and maximum system availability for users
The trading server software runs on a fault tolerant STRATUS main frame computer while the client software
runs under Windows on PCs
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The telecommunications network which was using X.25 protocol and is the backbone of the automated
trading system is being upgraded to use the more popular and modern IP Protocol. This is a major project
involving use of X.25 and IP in parallel and ensuring smooth transition to IP. Each trading member trades on the
NSE with other members through a PC located in the trading member's office, anywhere in India. The trading
members on the various market segments such as CM / F&O, WDM are linked to the central computer at the
NSE through dedicated leased lines and VSAT terminals. The Exchange uses powerful RISC -based UNIX
servers, procured from HP for the back office processing. The latest software platforms like ORACLE 10g
RDBMS, SQL/ORACLE FORMS Front - Ends, etc. have been used for the Exchange applications. The
Exchange currently manages its data centre operations, system and database administration, design and
development of in-house systems and design and implementationoftelecommunicationsolutions.
NSE is one of the largest interactive VSAT based stock exchanges in the world. Today it supports more
than 2000 VSATs and 3000 leased lines across the country. The NSE- network is the largest private wide area
network in the country and the first extended C- Band VSAT network in the world. Currently more than 9000
users are trading on the real time-online NSE application. There are over 15 large computer systems which
include non-stop fault-tolerant computers and high end UNIX servers, operational under one roof to support the
NSE applications. This coupled with the nation wide VSAT network makes NSE the country's larges
InformationTechnologyuser.
In an ongoing effort to improve NSE's infrastructure, a corporate network has been implemented
connecting all the offices at Mumbai, Delhi, Calcutta and Chennai. This corporate network enables speedy inter-
office communications and data and voice connectivity between offices
In keeping with the current trend, NSE has gone online on the Internet. Apart from having multiple
internet links and our own domain for internal browsing and e-mail purposes, we have also set up our own Web
site. Currently, NSE is displaying its live stock quotes on the web
site(www.nseindia.com)whichareupdatedonline.
NSE today allows members to provide internet trading facility to their clients through the use of NOW
(NSE on web), a shared web infrastructure.
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Indices
NSE also set up as index services firm known as India Index Services & Products Limited (IISL) and has
launched several stock indices, including
S&P CNX Nifty(Standard & Poor's CRISIL NSE Index)
CNX Nifty Junior
CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)
CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)
CHAPTER III
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INTRODUCTION TO MUTUAL FUND
Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest
the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the
stated investment objective of a mutual fund scheme generally forms the basis for an investor's decision to
contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time.
Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary
research works ensures much better return than what an investor can manage on his own. The capita
appreciation and other incomes earned from these investments are passed on to the investors (also known as uni
holders) in proportion of the number of units they own.
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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the
fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund)
Mutual Fund investor is also known as a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such as shares, debentures
etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual
Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.
For example:
A. If the market value of the assets of a fund is Rs. 100,000
B. The total number of units issued to the investors is equal to 10,000.
C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00
D. Now if an investor 'X' owns 5 units of this scheme
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E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by the NAV of the
scheme)
ADVANTAGES OF MUTUAL FUND
1. Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio of securities which
enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).
2. Professional Management: Fund manager undergoes through various research works and has better
investment management skills which ensure higher returns to the investor than what he can manage on his own.
3. Less Risk:Investors acquire a diversified portfolio of securities even with a small investment in a Mutual
Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.
4. Low Transaction Costs: Due to the economies of scale (benefits of larger volumes), mutual funds pay
lesser transaction costs. These benefits are passed on to the investors.
5. Liquidity: An investor may not be able to sell some of the shares held by him very easily and quickly,
whereas units of a mutual fund are far more liquid.
6. Choice of Schemes: Mutual funds provide investors with various schemes with different investmen
objectives. Investors have the option of investing in a scheme having a correlation between its investment
objectives and their own financial goals. These schemes further have different plans/options
7. Transparency: Funds provide investors with updated information pertaining to the markets and the
schemes. All material facts are disclosed to investors as required by the regulator.
8. Flexibility:Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors
can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at
regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.
9. Safety: Mutual Fund industry is part of a well-regulated investment environment where the interests of the
investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.
Disadvantages of Mutual Funds:
Professional Management - Did you notice how we qualified the advantage of professional managemen
with the word "theoretically"? Many investors debate whether or not the so-called professionals are any better
than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the
manager still takes his/her cut. We'll talk about this in detail in a later section.
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Costs - Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. The mutual
fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this
tutorial we have devoted an entire section to the subject.
Dilution - It's possible to have too much diversification. Because funds have small holdings in so many
different companies, high returns from a few investments often don't make much difference on the overall
return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have
had strong success, the manager often has trouble finding a good investment for all the new money.
Taxes - When making decisions about your money, fund managers don't consider your personal tax situation
For example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how profitable
the individual is from the sale. It might have been more advantageous for the individual to defer the capital
gains liability.
MUTUAL FUND STRUCTURE
The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in the form
of a trust by a sponsor to raise monies by the Trustees through the sale of units to the public under one or more
schemes for in vesting in securities in accordance with these regulations.
These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The structure
indicated by the new regulations is indicated as under.
A mutual fund comprises four separate entitles, namely sponsor, mutual fund trust, AMC and custodian. The
sponsor establishes the mutual fund and gets its registered with SEBI.
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The mutual fund needs to be constituted in the form of a trust and the instrument of the trust should be in
the form of a deed registered under the provisions of the Indian Registration Act, 1908.
The sponsor is required to contribute at lease 40% of the minimum net worth (Rs.10 core) of the asset
management company. The board of trustees manages the MF and the sponsor executes the trust deeds in favor
of the trustees. It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed
by the trustees are in accordance with the trust deed and SEBI guidelines
CHOOSING A FUND
Following steps are involved in choosing a fund
IdentifyingGoalsandRiskTolerance
Before acquiring shares in any fund, an investor must first identify his or her goals and desires for the money
being invested. Are long-term capital gains desired, or is a current incomepreferred? Will the money be used to
pay for college expenses, or to supplement a retirement that is decades away? Identifying a goal is important
because it will enable you to dramatically whittle down the list of the more than 8,000 mutual funds in the
public domain.
In addition, investors must also consider the issue ofrisk tolerance. Is the investor able to afford and mentally
accept dramatic swings in portfolio value? Or, is a more conservative investment warranted? Identifying risk
tolerance is as important as identifying a goal. After all, what good is an investment if the investor has trouble
sleeping at night? (For more insight, see Determining Risk and the Risk Pyramid and A Guide To Portfolio
Construction.)
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Finally, the issue of time horizon must be addressed. Investors must think about how long they can afford to tie
up their money, or if they anticipate any liquidity concerns in the near future. This is because mutual funds have
sales charges that can take a big bite out of an investor's return over short periods of time. Ideally, mutual fund
holders should have an investment horizon with at least five years or more. (For related reading, see
Disadvantages Of Mutual Funds.)
StyleandFundType
If the investor intends to use the money in the fund for a longer term need and is willing to assume a fair amount
of risk and volatility, then the style/objective he or she may be suited for is a long-term capital appreciation
fund. These types of funds typically hold a high percentage of their assets in common stocks, and are therefore
considered to be volatile in nature. They also carrythepotentialforalargerewardovertime.
Conversely, if the investor is in need of current income, he or she should acquire shares in an income fund.
Government and corporate debt are the two of the more common holdings in an incomefund.
Of course, there are times when an investor has a longer term need, but is unwilling or unable to assume
substantial risk. In this case, a balanced fund, which invests in both stocks and bonds, maybethebestalternative.
ChargesandFeesMutual funds make their money by charging fees to the investor. It is important to gain an understanding of the
different types of fees that you may face when purchasing an investment.
Some funds charge a sales fee known as a load fee, which will either be charged upon initial investment or upon
sale of the investment. A front-end load/fee is paid out of the initial investment made by the investor while
aback-end load/fee is charged when an investor sells his or her investment, usually prior to a set time period,
such as seven years from purchase.
Both front- and back-end loaded funds typically charge 3-6% of the total amount invested or distributed, but this
number can be as much as 8.5% by law. Its purpose is to discourage turnover and to cover any administrative
charges associated with the investment. Depending on the mutual fund, the fees may go to a broker for selling
the mutual fund or to the fund itself, which mayresultinloweradministrationfeeslateron.
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To avoid these sales fees, look forno-load funds, which don't charge a front- or back-end load/fee. However, be
aware of the other fees in a no-load fund, such as the management expense ratio and other administration fees,
as they may be very high.
Still other funds charge 12b-1 fees, which are baked into the share price and are used by the fund for
promotions, sales and other activities related to the distribution of fund shares. These fees come right off of the
reported share price at a predetermined point in time. As a result, investors may not be aware of the fee at all.
12b-1 fees can, by law, be as much as 0.75% of a fund's averageassetsperyear.
One final tip when perusing mutual fund sales literature: The investor should look for the management expense
ratio. In fact, that one number can help clear up any and all confusion as it relates to sales charges. The ratio is
simply the total percentage of fund assets that are being charged to cover fund expenses. The higher the ratio,
the lower the investor's return will be at the endoftheyear.
EvaluatingManagers/PastResults
As with all investments, investors should research a fund's past results. To that end, the following is a list of
questions that perspective investors should ask themselves when reviewing the historical record:
Did the fund manager deliver results that were consistent with general market returns?
Was the fund more volatile than the big indexes (meaning did its returns vary dramatically throughou
the year)?
Was there an unusually high turnover (which can result in larger tax liabilities for the investor)?
This information is important because it will give the investor insight into how the portfolio managerperform
under certain conditions, as well as what historically has been the trend in termsofturnoverandreturn
With that in mind, past performance is no guarantee of future results. For this reason, prior to buying into a
fund, it makes sense to review the investment company's literature to look for information about anticipatedtrends in the market in the years ahead. In most cases, a candid fund manager will give the investor some sense
of the prospects for the fund and/or its holdings in the year(s) ahead as well as discuss general industry trends
which may be helpful. (For more insight,seeDiggingDeeper:TheMutualFundProspectus.
SizeoftheFund
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Typically, the size of a fund does not hinder its ability to meet its investment objectives. However, there are
times when a fund can get too big. A perfect example is Fidelity's Magellan Fund. Back in 1999 the fund topped
$100 billion in assets, and for the first time, it was forced to change its investment process to accommodate the
large daily (money) inflows. Instead of being nimble and buying small and mid cap stocks, it shifted its focus
primarily toward larger capitalization growth stocks. As a result, its performance has suffered. (To learn more
check out DoesSizeReallyMatter?
So how big is too big? There are no benchmarks that are set in stone, but that $100 billion mark certainly makes
it difficult for a fund manager to acquire a position in a stock and dispose of it without running up the stock
dramatically on the way up, and depressing it on the way down. It also makes the process of buying and selling
stocks with any kind of anonymity almost impossible
BottomLine
Selecting a mutual fund may seem like a daunting task, but knowing your objectives and risk tolerance is hal
the battle. If you follow this bit of due diligence before selecting a fund, you will increase your chances of
success.
The Ground rules of Mutual Fund Investing:
Moses gave to his followers 10 commandments that were to be followed till eternity. The world of investments
too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad
world of investments. These come in handy for there is every possibility of losing what one has if due care is
not taken.
1. Assess yourself: Self-assessment of one's needs; expectations and risk profile is of prime importance
failing which; one will make more mistakes in putting money in right places than otherwise. One should
identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments
Irrational expectations will only bring pain.
2. Try to understand where the money is going: It is important to identify the nature oinvestment and to know if one is compatible with the investment. One can lose substantially if one picks the
wrong kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer
document and fact sheets that mutual fund companies provide on their funds.
3. Don't rush in picking funds, think first: one first has to decide what he wants the money for
and it is this investment goal that should be the guiding light for all investments done. It is thus important to
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know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should
take a look at the portfolio of the funds for the purpose. Excessive exposure to any specific sector should be
avoided, as it will only add to the risk of the entire portfolio. Mutual funds invest with a certain ideology such as
the "Value Principle" or "Growth Philosophy". Both have their share of critics but both philosophies work for
investors of different kinds. Identifying the proposed investment philosophy of the fund will give an insight into
the kind of risks that it shall be taking in future.
4. Invest. Don't speculate: A common investor is limited in the degree of risk that he is willing to
take. It is thus of key importance that there is thought given to the process of investment and to the time horizon
of the intended investment. One should abstain from speculating which in' other words would mean getting out
of one fund and investing in another with the intention of making quick money. One would do well to remember
that nobody can perfectly time the market so staying invested is the best option unless there are compelling
reasons to exit.
5. Don't put all the eggs in one basket: This old age adage is of utmost importance. No matter wha
the risk profile of a person is, it is always advisable to diversify the risks associated. So putting one's money in
different asset classes is generally the best option as it averages the risks in each category. Thus, even investors
of equity should be judicious and invest some portion of the investment in debt. Diversification even in money
in the hands of several fund managers. This might reduce the maximum return possible, but will also reduce the
risks.
6. Be regular: Investing should be a habit and not an exercise undertaken at one's wishes, if one has to
really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the
market. It is important to beat the market by being systematic. The basic philosophy of Rupee cost averaging
would suggest that if one invests regularly through the ups and downs of the market, he would stand a better
chance of generating more returns than the market for the entire duration. The SIPs (Systematic Investment
Plans) offered by all funds helps in being systematic.
Performance Measures of Mutual Funds
Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the
most preferred investment avenues in India. However with a plethora of schemes to choose from the retailinvestor faces problems in selecting funds. Factors such as investment strategy and management style are
qualitative, but the funds record is an important indicator too. Though past performance alone cannot be
indicative of future performance, it is, frankly, the only quantitative way to judge how good a fund is at present
Therefore, there is a need to correctly assess the past performance of different mutual funds.
Worldwide, good Mutual fund companies over are known by their AMCs and this fame is directly linked
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to their superior stock selection skills. For mutual funds to grow, AMCs must be held accountable for their
selection of stocks. In other words, there must be some performance indicator that will reveal the quality of
stock selection of various AMCs.
Return alone should not be considered as the basis of measurement of the performance of a mutual fund
scheme. It should also include the risk taken by the fund manager because different funds will have different
levels of risk attached to them. Risk associated with a fund, in a general, can be defined as variability or
fluctuations in the returns generated by it. The higher the t1uctuations in the returns of a fund during a given
period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are
resultant of two guiding forces. First, general market fluctuations, which affect all the securities present in the
market, called market risk or systematic risk and second, t1uctuations due to specific securities present in the
portfolio of the fund, called unsystematic risk. The Total Riskof a given fund is sum of these t\VO and is
measured in terms ofstandard deviation of returns of the fund. Systematic risk. On the other hand is measured
in terms ofBeta, which represents t1uctuations in the NA V of the fund vis--vis market. The more responsive
the NA V of a mutual fund is to the changes in the market; higher will be its beta. Beta is calculated by relating
the returns on a mutual
fund with the returns in the market. While unsystematic risk can be diversified through investments in a
number of instruments, systematic risk can not.
By using the risk return relationship, we try to assess the competitive strength of the mutual funds vis--vis one
another in a better way:
In order to determine the risk-adjusted returns of investment portfolios, several eminent authors have worked
since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative
portfolios within a particular risk class.
Benefits of investing in stock market
The stock market is a big auction house for pieces of company ownership, called stocks. Despite the
risks and volatility of the stock market, there are considerable advantages in investing money in stocks.
Outperforms Other Investments
Historically, the returns on investments in the market are higher than those on investments held in other
markets and assets. This means that, over time, money will grow more if it is invested in the stock market. The
historical average for stock market investments is approximately eight percent per year.
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Easy Access
Another advantage of stock market investments is the ease of access (and exit) in the stock market
Thanks to new Internet technology, an investor can easily take a position in a company and leave that position
in a matter of seconds.
Asset Diversity
The diversity of options is one more advantage of investing in the stock market. Companies that have
their stocks listed in the market cover a range of industries and services. This offers the investor a chance to
diversify his portfolio and make money in a variety of economic conditions.
Dividends
Investing in stocks that earn dividends is a unique advantage of the stock market. Stocks release a
portion of the profits in the form of dividends to their stock holders. Meanwhile, the stock still has the ability to
increase in price, creating two ways for the stock to earn money for the investor.
Transparency
While critics often point out the examples of companies that release fraudulent earnings statements as a
way to taint the entire market, the vast majority of the companies release accurate information about the money
they spend and earn. This adds a layer of transparency in the investment.
Easy Review and Research
It's not difficult to research a company's financial statement. It's also easy to monitor the stock's share
price. This information is available in newspapers and magazines, as well as online.
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ICICI GROUP COMPANIES
As one of the largest and oldest financial sector conglomerates in India, ICICI Group believes that its
own long-term growth and profitability is linked to the balanced and sustainable growth of the Indian economy.
In line with its commitment to fuelling equitable growth in all segments of society, ICICI Group of Companies
(www.icicigroupcompanies.com) CSR activities aim to more effectively direct human and financial resources
towards the civil sector.
ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI Group in early 2008 to
give focus to its efforts to promote inclusive growth amongst low-income Indian households.
We believe our fundamental challenge is to create a just society one where everyone has equal opportunity
to develop and grow. Towards this end, ICICI Foundation is committed to making Indias economic growth
more inclusive, allowing every individual to participate in and benefit from the growth process.
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We hold a set ofcore beliefs and values that defines our pathway towards inclusive growth and guides our five
strategic partnerships.
Vision
our vision is a world free of poverty in which every individual has the freedom and power to create and sustain a
just society in which to live.
Mission
Our mission is to empower the poor to participate in and benefit from the Indian growth process through active
collaboration with government and independent organisations.
Core beliefs:
ICICI Foundations pathway towards inclusive growth and our five strategic partnerships are guided by severa
core beliefs:
Good health and basic education are fundamental prerequisites to achieving inclusive growth.
While healthy and educated individuals have the capacity to transform their lives, their ability to do so
depends on the quality of their access to transformative tools such as finance.
For the Indian growth process to be truly inclusive, health, education and access to complete financia
markets are necessary but not sufficient.
Our Approach
Rather than build departments within a large, monolithic foundation, we have chosen to collaborate with and
foster independent, responsive organizations, each with deep expertise in one of the five areas that we believe
provide essential elements for inclusive growth:primary health, elementary education,comprehensive access to
financial services, strong civil society and environmental sustainability.
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The Foundation provides active support and mentorship to each of these strategic partners a strategy we
believe will build knowledge and specialization in each field and ensure long-term impact.
Partners
Through ICICI Child Health in Pune, we support children in the poorest communities across India to
develop to their full potential in the critical first three years of life.
Through ICICI Elementary Education in Pune, we support children in government-run preschools and
elementary schools across India to become engaged citizens.
Through IFMR Finance Foundation in Chennai, we seek to ensure that every individual and every
enterprise in India has complete access to financial services. Through CSO Partners in Chennai, we
support civil society organizations (CSOs) across India to be more effective by enabling them to tap into
new resources and networks of support.
Through the Environmentally Sustainable Finance Group at the Centre for Development Finance in
Chennai, we support scalable private and community interventions as well as policies to make India's
economy more environmentally sustainable from the bottom up.
OVERVIEW
ICICI Group offers a wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its specialised group companies, subsidiaries and affiliates inthe areas of personal banking, investment banking, life and general insurance, venture capital and asse
management. With a strong customer focus, the ICICI Group Companies have maintained and enhanced their
leadership position in their respective sectors.
ICICI Bankis India's second-largest bank with total assets of Rs. 3,793.01 billion (US$ 75 billion) at March 31
2009 and profit after tax Rs. 37.58 billion for the year ended March 31, 2009. The Bank has a network of 1,451
branches and about 4,721 ATMs in India and presence in 18countrie
ICICI Prudential Life Insurance Company is a 74:26 joint venture with Prudential plc (UK). It is the larges
private sector life insurance company offering a comprehensive suite of life, health and pensions products. It is
also the pioneer in launching innovative health care products like Diabetes Care Active and health Saver. The
company operates on a multi-channel platform and has a distribution strength of over 2,76,000 financia
advisors operating from more than 2000 branches spread across 1800 locations across the country. In addition to
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the agency force, it also has tie-ups with various banks, corporate agents and brokers. In fiscal 2009, ICICI
Prudential attained a market share of 10.9% based on retail weighted premium and garnered a total premium of
Rs 153.56 billion registering a growth of 13% and held assets of Rs. 327.88 billion as on March 31, 2009.
ICICI Lombard General Insurance Company, a joint venture with the Canada based Fairfax Financial Holdings
is the largest private sector general insurance company. It has a comprehensive product portfolio catering to all
corporate and retail insurance needs and is present in over 300 locations across the country. ICICI Lombard
General Insurance has achieved a market share of 27.2% among private sector general insurance companies and
an overall market share of 11.2% during fiscal 2009. The gross return premium grew by 2.2% from Rs. 33.45
billion in fiscal 2008 to 34.20 billion in fiscal 2009.
ICICI Securities Ltd is the largest equity house in the country providing end-to-end solutions (including web
based services) through the largest non-banking distribution channel so as to fulfill all the diverse needs of retail
and corporate customers. ICICI Securities (I-Sec) has a dominant position in its core segments of its operations -
Corporate Finance including Equity Capital Markets Advisory Services, Institutional Equities, Retail and
Financial Product Distribution
ICICI Securities Primary DealershipLimited is the largest Primary Dealer in Government Securities. It is an
acknowledged leader in the Indian fixed income and money markets, with a strong franchise across the
spectrum of interest rate products and services - institutional sales and trading, resource mobilization, portfolio
management services and research. One of the first entities to be granted Primary Dealership license by RBI, I-
Sec PD has made pioneering contributions since inception to debt market development in India. I-Sec PD is also
credited with pioneering debt market research in India. I-Sec PD has been recognized as the 'Best Domestic
Bond House in India' by Asia money every year from 2002 to 2007 and selected as 'Best Bond House' by
Financeasia.com for the years - 2001, 2004 to 2007 and 2009."
ICICI Prudential Asset Managementis the third largest mutual fund with average asset under management of
Rs. 514.33 billion and a market share of 10.43% as on March 31, 2009. The Company manages a
comprehensive range of mutual fund schemes and portfolio management services to meet the varying
investment needs of its investors through162 branches and 185 CAMS official point of transaction acceptance
spread across the country.
ICICI Venture is one of the largest and most successful private equity firms in India with funds under
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management in excess of USD 2 billion. ICICI Venture, over the years has built an enviable portfolio of
companies across sectors including Life Sciences, Information Technology, Media, Manufacturing, Retail
Financial Services, and Real Estate thereby building sustainable value. It has several firsts to its credit in the
Indian Private Equity industry. Amongst them are Indias first leveraged buyout (Infomedia), the first real estate
investment (Cyber Gateway), the first mezzanine financing for a acquisition (Arch Pharmalabs), the firs
royalty-based structured deal in Pharma Research & Development (Dr Reddys Laboratories - JV) and the firs
fund level secondary transaction (Coller Capital).
ICICI PRUDENTIAL ASSET MANAGEMENT
ICICI Prudential Asset Management Company Ltd. is a joint venture between ICICI Bank, Indias second
largest commercial bank & a well-known and trusted name in the financial services in India, & Prudential Plc,
one of the United Kingdoms largest players in the financial services sectors.
In a span of just over 12 years, the company has forged a position of preeminence as one of the largest Asset
Management Companys in the country, contributing significantly towards the growth of the Indian mutual fund
industry.
Our Average Assets under Management (AAUM) as on September 2010 month-end in Mutual Fund Schemes
stood at Rs. 69,754.78 Crores. This is in addition to our Portfolio Management Services, inclusive of EPFO*
and International Advisory Mandates for clients across international markets in asset classes like Debt, Equity
and Real Estate with primary focus on risk adjusted returns.
As an Asset Management Company, we have over 15 years of experience and are currently managing a
comprehensive range of schemes of more than 46 Mutual funds and a wide range of PMS Products for our
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investors, spread across the country. We service this investor base with our own branch network of over 160
branches and a distribution reach of over 42,000 channel partners.
SPONSERS
ICICI Bank
ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at 31st
March, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended 31st March, 2010. The
Bank has a network of 2016 branches and about 5219 ATMs in India and presence in 18 countries. ICICI Bank
offers a wide range of banking products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investmen
banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiarie
in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri
Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China
South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in
Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New
York Stock Exchange (NYSE).
Prudential Plc (formerly known as Prudential Corporation plc)
Prudential plc of the United Kingdom is not affiliated in any manner with Prudential Financial, Inc., a company
whose principal place of business is in the United States of America.
Prudential plc is an international financial services group with significant operations in Asia, the US and the
UK. They serve appro
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