A Project Report on Nj

8/8/2019 A Project Report on Nj

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E A S T E R N I N S T I T U T E F O R I N T E G R A T E D L E A R N I N G I N M A N A G E M E N T Page 1

A PROJECT REPORT ON

A study on mutual funds and awareness of

mutual fund among insurance advisors

At

.

DALHOUSI, KOLKATA

A Project report submitted in partial fulfillment for the

award ofPost Graduate Diploma in Management.

SUBMITTED TO: SUBMITTED BY:

Mr. T. N. Srivastava SHUBHANKAR BRAHMA

SEC-B, ROLL NO- 65

PGDM 2009-11


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DECLARATION

I, Ranjeet kumar, a student of Graduate School of Business and

Administration, Greater Noida hereby declare that the project entitled A

study on mutual funds and awareness of

mutual fund among insurance advisors is submitted

in partial fulfillment of PGDM is my original work.


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ACKNOWLEDGEMENT

Sometimes words fall short to show gratitude, the same happened with me during

this project.The immense help and support received from NJ India Invest Pvt. Ltd.

overwhelmed me during the project.

My sincere gratitude to Mr. CHAHAT MIYA KHAN (Team Leader), Mr. AMIT GUPTA,

Mr. DURBADAL MUKHERJEE & Mr. SUNIL SINGH (Relation Executive) whose co-operation and guidance proved immensely helpful to me during the course of

summer training.

I also wish to acknowledge my sincere thanks to the entire concern faculty

for their valuable advice and suggestions.

Last but not the least; my heartfelt love for my parents, whose constant

support and blessings helped me throughout this project.


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TABLE OF CONTENTS

Chapter Name

Objective of study .5

Industry profile ..6

Types of mutual fund..15

Advantage of mutual fund..21

Disadvantage of mutual fund.22

Company profile32

Why mutual fund advisors for insurance agents48

Research Methodology....53

Summary of findings...57

Suggestions.65

Bibliography....66


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OBJECTIVE OF STUDY

1) Understanding Mutual Funds

2) Understanding Market Potential of Mutual funds.

3) Understanding which mutual fund is good for whom

4)Analyzing Awareness of Mutual Funds among insurance advisors.


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INDUSTRY OVERVIEW

MUTUAL FUND

INTRODUCTION:-

A Mutual Fund is a trust that pools the savings of a number of investors who share a common

financial goal. The money thus collected is then invested in capital market instruments such as

shares, debentures and other securities. The income earned through these investments and the

capital appreciations realized are shared by its unit holders in proportion to the number of units

owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed basket of securities at a

relatively low cost

The flow chart below describes broadly the working of a Mutual Fund.


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A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India

(SEBI) that pools up the money from individual/corporate investors and invests the same on

behalf of the investors/unit holders, in Equity shares, Government securities, Bonds, Call Money

Markets etc, and distributes the profits. In the other words, a Mutual Fund allows investors to

indirectly take a position in a basket of assets. Mutual Fund is a mechanism for pooling the

resources by issuing units to the investors and investing funds in securities in accordance withobjectives as disclosed in offer document. Investments in securities are spread among a wide

cross-section of industries and sectors thus the risk is reduced. Diversification reduces the risk

because all stocks may not move in the same direction in the same proportion at same time.

Investors of mutual funds are known as unit holders.

The investors in proportion to their investments share the profits or losses. The mutual funds

normally come out with a number of schemes with different investment objectives which are

launched from time to time. A Mutual Fund is required to be registered with Securities

Exchange Board of India (SEBI) which regulates securities markets before it can collect funds

from the public.

Characteristics:

A mutual fund actually belongs to the investors who have pooled their funds.

A mutual fund is managed by investment professionals and other service providers, who

earn a fee for their services, from the fund.

The pool of funds is invested in a portfolio of marketable investments. The value of the

portfolio is updated every day.

The investors share in the fund is denominated by units. The value of the units changes

with change in the portfolios value, every day. The value of one unit of investment is

called the Net Asset Value or NAV.


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HISTORY OF THE INDIAN MUTUAL FUNDINDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at

the initiative of the Government of India and Reserve Bank. 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 improvement, both

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending

phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the

fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the

height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with 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.

The history of mutual funds in India can be broadly divided into four

distinct phases.

First Phase: 1964-1987

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 of1988 UTI had Rs.6,700 cores


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of assets under management.

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

In 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks

and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India

(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June1987followed

by Canara bank Mutual Fund (Dec87), Punjab National Bank Mutual Fund (Aug 89), Indian

Bank Mutual Fund (Nov89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).

LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December

1990. At the end of1993, the mutual fund industry had assets under management of Rs.47, 004

cores.

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

industry now functions under the SEBI (Mutual Fund) Regulations1996.As at the end of

January 2003; there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The UnitTrust of India with Rs.44,541 crores of assets under management was way ahead of other

mutual funds.

Fourth Phase Since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcatedinto two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets

under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the

assets of US 64 scheme, assured return and certain other schemes.The 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. The graph indicates the growth of assets over the years.


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Growth of mutual fund business in India in the four decadesfrom 1964, when UTI was set up is given in the table below:-

Period(Year)

Aggregate

investment in

Crores of

Rupees

Period(Year)

Aggregate

investment in

Crores of

Rupees

1964-69 65 1992-93 46988.02

1969-74 172 1993-94 61301.21

19774-79 402 1994-95 75050.21

1979-84 1261 1995-96 81026.52

1986-87 4563.68 1996-97 80539.00

1987-88 6738.81 1997-98 68984.00

1988-89 13455.65 1998-99 63472.00

1989-90 19110.92 1999-00 107966.10

1990-91 23060.45 2000-01 90587.00

1991-92 37480.20 2001-02 94571.00


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NOTE:- Industry AUM tripled from 1.50 lac crore 2003 to 4.50 lac crore in Nov.08.

GROWTH IN ASSETS UNDER MANAGEMENT


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Note:Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking ofthe Unit Trust of India effective from February 2003. The Assets under management of the

Specified Undertaking of the Unit Trust of India has therefore been excluded from the total

assets industry as a whole from February 2003 onwards.


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MUTUAL FUND STRUCTURE

The Structure Consists

The structure of mutual funds in India is governed by the SEBI Regulations, 1996. These

regulations make it mandatory for mutual funds to have a 3-tier structure of Sponsors- Trustee-

AMC (Asset Management Company). The Sponsor is the promoter of mutual fund, and

appoints the Trustee. The Trustees are responsible to the investors in the mutual funds, and

appoint the AMC for managing the investment portfolio. The AMC is the business face of the

mutual funds, as it manages all the affairs of mutual funds. The mutual funds and AMC have to

be registered by the SEBI.

Sponsor

A sponsor is a body corporate who establishes a mutual fund. It may be one person acting alone

or together with another body corporate. Sponsor must contribute at least 40% of the net worth

of the Investment Managed and meet the eligibility criteria prescribed under the Securities and

Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or

liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial

contribution made by it towards setting up of the Mutual Fund

Board of Trustee:


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Mutual fund requires to have an independent board of Trustee, where two third of the trustees

should be independent person who are not associated with the sponsor in any manner. The

board of trustees of the trustee company holds the property of the mutual fund in trust for the

benefit of the unit holders. The board of trustees is responsible for protecting the unit holders

interest.

Asset Management Company (AMC)

The role of asset Management Company is highly significant in the mutual fund operation. The

AMC is appointed by the Trustee. They are the fund managers i.e. they invest the investors

money in various securities ( equity, debt and money market instruments) after proper research

of market conditions and the financial performance of individual companies and specific

securities in the efforts to meet or beat average market return and analysis. The AMC is

required to be approved by the Securities and Exchange Board of India (SEBI) to act as an assetmanagement company of the Mutual Fund. At least 50% of the directors of the AMC are

independent directors who are not associated with the Sponsor in any manner. The AMC must

have a net worth of at least 10 crores at all times. They also look after the administrative

functions of a mutual fund for which they charge management fee.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the

Mutual Fund. The Registrar processes the application form, redemption requests and dispatches

account statements to the unit holders.

Custodian

Mutual fund is required by law to protect their portfolio securities by splacing them with a

custodian. Nearly all mutual funds use qualified bank custodians. Only a registered custodian

under the SEBI regulation can act as a custodian to a mutual fund.A custodian handles the

investment back office of a mutual fund.

Fee structure:-

Custodian charges range between 0.15% to 0.20% on the net value of the customers holding for

custodian services space is one important factor which has fixed cost element.

RESPONSIBILITY OF CUSTODIANS: -

Receipt and delivery of securities


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Holding of securities.

Collecting income

Holding and processing cost

Corporate actions etc

RATE OF RETURN ON MUTUAL FUNDS:-

An investor in mutual fund earns return from two sources:

Income from dividend paid by the mutual fund.

Capital gains arising out of selling the units at a price higher than the

acquisition price

Formation and regulations:

Mutual funds are to be established in the form of trusts under the Indian trusts act and

are to be operated by separate asset management companies (AMC s)

AMCs shall have a minimum Net worth of Rs. 5 crores;

AMCs and Trustees of Mutual Funds are to be two separate legal entities and that an

AMC or its affiliate cannot act as a manager in any other fund;

Mutual funds dealing exclusively with money market instruments are to be regulated by

the Reserve Bank Of India

Mutual fund dealing primarily in the capital market and also partly money market

instruments are to be regulated by the Securities Exchange Board Of India (SEBI)

All schemes floated by Mutual funds are to be registered with SEBI

TYPES OF MUTUAL FUND

Diagram


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Schemes according to maturity period : -

A mutual fund scheme can be classified into open-ended scheme or close ended scheme

depending on its maturity period.

Open ended fund/scheme:


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An open-ended fund or scheme is one that is available for subscription and repurchase on a

continuous basis. These schemes not have a fixed maturity period. Investors can conveniently

buy and sell units at Net Asset Value (NAV) related prices which are on a daily basis. The key

feature of open-end schemes is liquidity.

Close ended Fund/scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open

for subscription only during a specified period at the time of launch of the scheme. Investors can

invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the

units of the scheme on the stock exchanges where the units are listed. In order to provide an exit

route to the investors some close ended funds give an option of selling back the units to the

mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate

that at least one of the two exit routes is provided to the investors i.e. either repurchase facility

or through listing on stock exchanges. These mutual funds schemes disclose NAV generally a

weekly basis.

Schemes according to investment objective:

A scheme can also be classified as growth scheme, income scheme, or balance scheme

considering its investment objective. Such schemes may be open-ended or close-ended scheme as

described earlier. Such schemes may be classified mainly as follows:

Equity funds:These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However,short term fluctuations in the market, generally smoothens out in the long term, thereby

offering higher returns at relatively lower volatility. At the same time, such funds can

yield great capital appreciation as, historically, equities have outperformed all asset

classes in the long term. Hence, investment in equity funds should be considered for a

period of at least 3-5 years. It can be further classified as:

1. Growth Fund:Aim to provide capital appreciations over the medium to long term.These schemes normally invest a majority of their funds in equities and are willing to

bear short term decline in value for possible future appreciation. These schemes are not

for investors seeking regular income or needing their money back in the short term

2. Diversified Equity Fund: Diversified equity funds are the most popularamong investors. They invest in many stocks across many sectors, and because they have

the freedom to chop and churn their portfolios as they like, diversified equity funds are a

good proxy to the stock market. If a general exposure to equities is what you want, they

are a good option. They can invest in all listed stocks, and even in unlisted stocks. They


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can invest in which ever sector they like, in what ever ratio they like.

3. Equity Linked Savings Schemes (ELSS):Equity linked savingsschemes (ELSS) are diversified equity funds that additionally offer income tax benefits to

individuals. ELSS is one of the many section 80c instruments, along with the more

popular debt options like the PPF, NSC and infrastructure bonds. In this Section 80c

grouping. ELSS is unique. Being the only instrument to offer a total equity exposure.

4. Index Fund: An index fund is a diversified equity fund; with a difference- a fundmanager has absolutely no say in stock selection. At all times, the portfolio of an index

fund mirrors an index, both in its choice of stocks and their percentage holding. As of

March 2004, equity index funds tracked either the Sensex or the Nifty. So, an index fund

that mirrors the Sensex will invest only in the 30 Sensex stocks, which too in the same

proportion as their weight age in the index.

5. Sector Fund:Sector funds invest in stocks from only one sector, or a handful ofsectors. The objective is to capitalize on the story in the sectors, and offer investors a

window to profit from such opportunities. Its a very narrow focus, because of which

sector funds are considered the riskiest among all equity funds.

6. Mid Cap Fund:These are diversified funds that target companies on the fast growth trajectory. In the long run, share prices are driven by growth in a companys

turnover and profits. Market players refer to them as mid-sized companies and mid-cap stocks with size in this context being benchmarked to a companys market value. So,

while a typical large cap stock would have a market capitalization of over Rs 1,000

crores, a mid-cap stock would have a market value of Rs 250-2,000 crores.

Mutual Fund Equity schemes have delivered very attractive returns in last5 years, giving over 51% returns annually


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DEBT FUNDS:-These Funds invest a major portion of their corpus in debt papers.Government authorities, private companies, banks and financial institutions are some of the

major issuers of debt papers. By investing in debt instruments, these funds ensure low risk andprovide stable income to the investors.

Debt funds are further classified as:

1. Gilt Funds: Invest their corpus in securities issued by Government, popularlyknown as GOI debt papers. These Funds carry zero Default risk but are associated with

Interest Rate risk. These schemes are safer as they invest in papers backed by

Government.

2. Income Funds: Income funds aim to maximize debt returns for the medium tolonger term. Invest a major portion into various debt instruments such as bonds,

corporate debentures and Government securities.

3. MIPs:Invests around 80% of their total corpus in debt instruments while the rest of the

portion is invested in equities. It gets benefit of both equity and debt market. These

scheme ranks slightly high on the risk-return matrix when compared with other debt

schemes.

4. Short Term Plans (STPs): Meant for investors with an investment horizonof 3-6 months. These funds primarily invest in short term papers like Certificate of

Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested


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in corporate debentures.

5. Liquid Funds: Also known as Money Market Schemes, These funds are meant toprovide easy liquidity and preservation of capital. These schemes invest in shortterm

instruments like Treasury Bills, inter-bank call money market etc. These funds are meant

for short-term cash management of corporate houses and are meant for an investment

horizon of1day to 3 months. These schemes rank low on risk-return

6. matrix and are considered to be the safest amongst all categories of mutual funds.

7. Floating Rate Funds: These income funds are more insulated from interestrate than their conventional peers. In other words, interest rate changes, which cause the

NAV of a conventional debt fund to go up or down, have little, or no, impact on NAVs of

floating rate funds.

HYBRID FUNDS:-

1. BALANCED FUNDS:-These funds, as the name suggests, are a mix of both equityand debt funds. The aim of balanced funds is to provide both growth and regular income

as such schemes invest both in equities and fixed income securities in the proportion

indicated in their offer documents. These are appropriate for investors looking for

moderate growth. They generally invest 40-60% in equity and debt instruments. These

funds are also affected because of fluctuations in shares prices in the stock markets.

However, NAVs of such funds are likely to be less volatile compared to pure equity funds.Following are balanced funds classes:-

a. Debt-oriented funds -Investment below 65% in equities.b. Equity-oriented funds -Invest at least 65% in equities, remaining

in debt.

2. Growth and Income Fund: Funds that combine features of growthfunds 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 thangrowth funds and higher than income funds.

3. Asset Allocation Fund: Mutual funds may invest in financial assets likeequity, debt, money market or non-financial (physical) assets like real estate,

commodities etc.. Asset allocation funds adopt a variable asset allocation strategy that


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allows fund managers to switch over from one asset class to another at any time

depending upon their

4. outlook for specific markets. In other words, fund managers may switch over to equity ifthey expect equity market to provide good returns and switch over to debt if they expect

debt market to provide better returns.

Comparison of Investment Products

Return Safety Volatility Liquidity Convenience

Equity High Low High High Moderate

Bonds Moderate High Moderate Moderate High

Corporate

Debentures

Moderate Moderate Moderate Low Low

Corporate

FDs

Moderate Low Low Low Moderate

Bank

Deposits

Low High Low High High

PPF Moderate High Low Moderate High

Life

Insurance

Low High Low Low Moderate

Gold Moderate High Moderate Moderate Gold

Real Estate High Moderate High Low Low

Mutual

Funds

High High Moderate High High


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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 aMutual 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 investment 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


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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.SafetyMutual 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.

DISADVANTAGE OF MUTUAL FUND

1.Costs Control Not in the Hands of an Investor

Investor has to pay investment management fees and fund distribution costs as a

percentage of the value of his investments (as long as he holds the units), irrespective of the

performance of the fund.

2.No Customized Portfolios

The portfolio of securities in which a fund invests is a decision taken by the fund manager.

Investors have no right to interfere in the decision making process of a fund manager, whichsome investors find as a constraint in achieving their financial objectives.

3.Difficulty in Selecting a Suitable Fund Scheme

Many investors find it difficult to select one option from the plethora of funds /

schemes / plans available. For this, they may have to take advice from financial planners in

order to invest in the right fund to achieve their objectives.

4. Delay in Redemption:

The redemption of the funds though has liquidity in 24-hours to 3 days takes formal application

as well as needs time for redemption. This becomes cumbersome for the investors.

5. Non-availability of loans:


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Mutual funds are not accepted as security against loan. The investor cannot deposit the mutual

funds against taking any kind of bank loans though they may be his assets.

RISK V/S. RETURN:

RISKINVOLVED

IN MUTUALFUND :

RISK INVOLVED IN MUTUAL FUND :


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THE RISK-RETURN TRADE-OFF

The most important relationship to understand is the risk-return trade-off. Higher the risk

greater the returns/loss and lower the risk lesser the returns/loss. Hence it is up to you, the

investor to decide how much risk you are willing to take. In order to do this you must first be

aware of the different types of risks involved with your investment decision.

MARKET RISK:

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the

market in general lead to this. This is true, may it be big corporations or smaller mid-sized

companies. This is known as Market Risk. A Systematic Investment Plan (SIP) that works on

the concept of Rupee Cost Averaging (RCA) might help mitigate this risk.

CREDIT RISK:

The debt servicing ability (may it be interest payments or repayment of principal) of a company

through its cash flows determines the Credit Risk faced by you. This credit risk is measured byindependent rating agencies like CRISIL who rate companies and their paper. An AAA rating

is considered the safest whereas a D rating is considered poor credit quality. A well-diversified

portfolio might help mitigate this risk.

INFLATION RISK:


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Things you hear people talk about: Rs. 100 today is worth more than Rs. 100 tomorrow.

Remember the time when a bus ride costed 50 paisa?Mehangai Ka Jamana Hai.The root

cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people make

conservative investment decisions to protect their capital but end up with a sum of money that

can buy less than what the principal could at the time of the investment. This happens when

inflation grows faster than the return on your investment. A well diversified portfolio with someinvestment in equities might help mitigate this risk.

INTEREST RATE RISK:

In a free market economy interest rates are difficult if not impossible to predict. Changes in

interest rates affect the prices of bonds as well as equities. If interest rates raise the prices of

bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate

environment. A well-diversified portfolio might help mitigate this risk.

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment environment.

They can create a favorable environment for investment or vice versa.

LIQUIDITY RISK:

Liquidity risk arises when it becomes difficult to sell the securities that one has purchased.

Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well asinternal risk controls that lean towards purchase of liquid securities.

NET ASSET VALUE


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Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its

liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the

fund, this is the amount that the shareholders would collectively own. This gives rise to the

concept of net asset value per unit, which is the value, represented by the ownership of one unit

in the fund. It is calculated simply by dividing the net asset value of the fund by the number of

units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit".

We also abide by the same convention.

Definition of NAV

Net Asset Value, or NAV, is the sum total of the market value of all the shares held in theportfolio including cash, less the liabilities, divided by the total number of units outstanding.

Thus, NAV of a mutual fund unit is nothing but the 'book value.'

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the fund. Once

it is calculated, the NAV is simply the net value of assets divided by the number of units

outstanding. The detailed methodology for the calculation of the asset value is given below.

Asset value is equal to


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Sum of market value of shares/debentures+ Liquid assets/cash held, if any+ Dividends/interest accruedAmount due on unpaid assetsExpenses accrued but not paid

Other liabilitiesNAV per unit = ------------------------------------------------------------------

No. of units outstanding of the scheme

NAV and its impact on the returns

We feel that a MF with lower NAV will give better returns. This again is due to the wrong

perception about NAV. An example will make it clear that returns are independent of the NAV.

Say, you have Rs 10,000 to invest. You have two options, wherein the funds are same as far as

the portfolio is concerned. But say one Fund X has an NAV of Rs 10 and another Fund Y has

NAV of Rs 50. You will get 1000 units of Fund X or 200 units of Fund Y. After one year, bothfunds would have grown equally as their portfolio is same, say by 25%. Then NAV after one

year would be Rs 12.50 for Fund X and Rs 62.50 for Fund Y. The value of your investment

would be 1000*12.50 = Rs 12,500 for Fund X and 200*62.5 = Rs 12,500 for Fund Y. Thus your

returns would be same irrespective of the NAV. It is quality of fund, which would make a

difference to your returns. In fact for equity shares also broadly this logic would apply.

Misconception about NAV

This situation arises from the perception that a fund at Rs 10 is cheaper than say Rs 15 or Rs

100. However, this perception is totally wrong and investors would be much better off once they

appreciate this fact. Two funds with same portfolio are same, no matter what their NAV is. NAV

is immaterial. Why people carry this perception is because they assume that the NAV of a MF is

similar to the market price of an equity share. This, however, is not true.

BASIC CONCEPTS OF LOADS:

Entry Load: The load charged at the time of investment is known as entry load. Itsmeant to cover the cost that the AMC spends in the process of acquiring subscribers

commission payable to brokers, advertisements, register expenses etc. The load is

recovered by way of charging a sale price higher than the prevailing NAV.

Exist Load: Some AMC do not charge an entry load but they charged an exist loadi.e., they deduct a load before paying out the redemption proceeds. Psychologically,

investors are much more willing to pay exist loads as compared to entry loads.

Unit: Units mean the investment of the unit holders in a scheme. Each unit representsone undivided share in the assets of a scheme. The value of each unit changes, depending

on the performance of the fund.


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FACTORS AFFECTING MUTUAL FUND

1. Governmental Influences

Mutual fund business is a highly regulated business throughout the world as it seeks to ensure

that quality and fairly priced schemes are available. Governmental intervention thus in mutual

fund market usually is most needed to ensure that insurers are reliable. And in the developing

countries the additional goal may be promotion of domestic mutual fund industry and ensuring

the national mutual fund industry contributes to overall economic development. In a non

technical sense mutual fund is purchased in a good faith so the duty of government intervention

in mutual fund industry is to ensure that this principle of mutual fund is never defeated. The

ideology of government plays an important role in mutual fund industry also. For example in the

past during 1991, the P .V Narsimha Rao government strongly believed in liberalization also

liberalized the mutual fund sector which helped to allow private players in the industry from

1993 and enhancing joint ventures with foreign companies. The present government with more

focuses on foreign direct investments has declared to favor the rise FDI in mutual fund to 49%

which further enhances competition in the industry.

2. Taxation Policy

Social equity being one of the motives behind tax collections, government give certain

exemptions from such levying. One such exemption is deduction incurred by taxpayers towards

investment in mutual fund coverage. Similarly, capital invested in infrastructure bonds etc is

offered with certain concession under tax laws. The central idea behind such exemptions is that

the capitals so allocated by individuals reduce the ultimate burden on the public infrastructureor helps in creating such infrastructural facilities. The income tax rules related to the mutual

fund transactions can be classified under:

[A] Exemptions available to companies or businesses

[B] Exemptions available to insured individuals

[A] Exemptions available to companiesExpenses deductible from commission earned by distributor, banker, national

distributor.

Tax concessions under risk management practices of an enterprise

In growth option equity schemes there no long term capital gain by company.In dividend option equity schemes there no tax.

Return received by charitable trust is total exempted from tax.

Else schemes give to advantage of tax saving, growth potential and return.

[B] Tax rules governing investment by individuals

Deduction in respect of ELSS schemes (sec 80C):


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Investment in this fund would enable you to avail the benefits under clause (xiii) of a section 80C

of the Income Tax Act investment made in the schemes up to 1 lakh by the eligible investor for

deduction under this section of the Act.

Since it will be an income deduction an investment of Rs 1 lakh in this fund can save off Rs.

33600 from your tax payable liability (assuming you are in the highest tax bracket ) Investor will

receive tax free dividend in above case. Investor will also receive tax free dividend by investing

equity schemes in dividend option Investors also receive tax free return by investing equityschemes in growth option for long term capital gain.

C Tax plannings

An individual can think of health ELSS schemes purchase as a tool of tax planning exercise. For

example people who are marginally affected by tax liability can be as well purchase a ELSS fund

get benefits of Rs. 33600 from tax. In this way tax burden is become less by purchasing ELSS

fund. Thus tax law offer benefit to individuals/companies by way of exemptions/deductions of

expenditure incurred towards purchase of mutual fund various schemes coverage from total

taxable income.

3. Foreign Trade Regulations

With the vast potential for mutual fund in India due its large population in the country many

foreign companies are ready to enter into the Indian market. But companies can be permitted in

India through joint ventures with an Indian partner as well as come separately and the foreign

equity shall be restricted to only 25%. Another statement also tells that Indian subsidiaries of

foreign companies shall not be allowed to participate in banking sector unless they entered in to

joint ventures with the Indian partners. But at present the mutual fund regulator is in favor of

hike in FDI cap from 25% to 49%, and is finalizing a report that will be submitted to the

government for a comprehensive legislation for the industry. The security exchange board ofIndia and association of mutual fund India have been advocating a hike in FDI limit for mutual

fund companies so that the foreign partners can infuse additional funds in these companies to

sustain their growth. The government will need to amend the separate mutual fund Act for FDI

capital as well as domestic company as this is the statutory provision unlike sectors like civil

aviation and telecom, which have come through notification.

4. National Income

The relative importance of the mutual fund Market within a country will also be dependent

upon economic development. With greater rates of economic growth, consumption of investmentshould increase as a result of increased income, and an increased stock of assets requiring

mutual fund. Furthermore, the development of mutual fund is likely to facilitate greater

economic growth, implying that economic growth may be endogenous. Consistent with these

arguments, studies find that the level of financial development and economic development are

positively related to the level of mutual fund across emerging markets.

5. Consumptions and Savings


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The gross capital formation of any country is important for indication of its growth in the future

years. It is quite necessary to set up the rate of capital formation so that a large stock of

machines, tools and equipments are accumulated in a country. Experience of development in

other countries suggests that a high rate of capital formation was achieved to trigger rapid rate

of economic growth. With the hike in foreign capital coming to India the rate of capital

formation is becoming boom to insurers, which has given them opportunities. It is heartening to

them to note that latest savings rate of 28% is highest till now and with the growth rate near to8% is bringing a pool of buyers purchasing power. This directly influences the demand for

mutual fund products.

6. Employment

The effect of employment on mutual fund industry is as direct as that on economic development

of any country. With the rising levels of employment the effect on mutual fund industry is

positive because employment adds to the insured properties and assets from every prospective

be it due to organized or unorganized.

7. Inflation

The midterm policy review the strong macroeconomic indicators and RBI has revised its GDP

growth estimates to the upper limit of the earlier projection range 8% inflation (WPI) has been

steadily moving up in recent times and RBI has highlighted that primary articles prices have

been on of the key contributors. However one needs to keep in mind that

recent increase in global oil prices.

8. Money supply

The central banks has indicated that credit growth and money supply number are likely to be

above its prosecution for the current fiscal year, the statement to consider promptly all possible

measures as appropriate to the evolving global and domestics situation is indicative of phased

increase in FII limits for gilt investment could help in depending the securities market and is

part of the road map towards fuller convertibility.

9. Interest

Interest is major factor for investment when a person find less return from investment tool than

people move towards the higher returns tool of investment.

10. Risk factor

All investments in Mutual Fund and securities are subject to market risks and the NAV of the

fund may go up or down depending on the factors and forces affecting the security market.

There can be noassurance that the funds objective will be achieved. Past performance of the

sponsors/Mutual fund/schemes/AMC is not necessarily indicative of

the future results. The name of the schemes does not in any manner indicate their quality, their

future prospects or returns.

The specific risk would be credit, market, illiquidity, judgmental error, interest rate, swaps and


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forward rates.

11. Demographic environment

The demographic environment significantly affects the demand for the mutual fund industry.

Factors like the average age of the population, levels of education, household structures income

distribution, life style and the extent of industrialization as well as urbanization terribly

influences the demand of mutual fund schemes In India the average age of the population is at

an increasing trend following the improved

medical technology and better awareness of health care requirements. As a result, the risk of

investment death is decreasing while connectivity is increasing. Simultaneously the demand for

pension funds and income fund is expected to grow. For example at the time of independence the

average age of dying for Indians was 45. Presently it has increased to 65 following better

healthcare, improvements in medicalscience and more health consciousness among the common

man. By 2010 it is expected to rise to 75. Hence risk profile is also changing. Earlier people are

thanking about safely but at present people thinking about capital growth.

12. Social Factors

The social environment covers the customs, habits, level of education, tastes and standard of

living of people in the society. Todays social environment is greatly influenced to a major extent

by the changes in technological aspects. With the rapid progress in technology and economic

liberalization, the physical boundaries are gradually vanishing. As a result, the social life of the

people and their views towards risk and uncertainty of life and health are gradually changing.

These factors of social life are affecting human motivations and emotions related to the physical

and mental incapacities, loss of health and death. In general there are extremes apprehensions of

ones death, though it is certain. The perception of an individual toward risk and capital growth

depends on the social culture and religious belief. In the urbanized area people does think aboutinvestment and capital growth. These beliefs ultimately influence the buying behavior of aconsumer.

13. Education

Education is major factor of demand for mutual fund product. if the education levels is higher

than the people know the benefits of mutual fund the use mutual fund as investment tool and

also take rise capital growth.

MUTUAL FUND PLAYERSThe Indian mutual fund industry is mainly divided into three kinds of categories. These

categories include public sector players, nationalized banks and private sector and foreign

players.

UTI Mutual Fund was one of the leading Mutual Fund companies in India till May 2006 with a

corpus of more than Rs.31, 000 Crore and it is the public sector mutual fund. Bank of Baroda,

Punjab National Bank, Can Bank and SBI are the major nationalized banks mutual fund. At


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present mutual fund industry is mainly dominated by private and foreign sector players which

include major players like Prudential ICICI Mutual Fund, HDFC Mutual Fund, Reliance

Mutual Fund etc. are private sector mutual funds players while Franklin Templeton etc. are

major foreign mutual fund players. At present there are more than 39 players operating in

Indian.

COMPANY OVERVIEW

1. INTRODUCTION:-

Success is a journey, not a destination.If we look for examples to prove this quote then we can

find many but there is none like that ofNJ India Invest Pvt. Ltd. Back in the year 1994, two

people created history by establishing NJ India Invest Pvt. Ltd leading advisors and distributors

of financial products and services in India.

NJ has over a decade of rich exposure in financial investments space and portfolio advisory

services. From a humble beginning, NJ over the years has evolved out to be a professionallymanaged, quality conscious and customer focussed financial / investment advisory &

distribution firm.

NJ prides in being a professionally managed, quality focused and customercentric organisation. The strength of NJ lies in the strong domain knowledge in investment

consultancy and the delivery of sustainable value to clients with support from cutting-edge

technology platform, developed in-house by NJ.

At NJ we believe in

having single window, multiple solutions that are integrated for simplicity and sapience


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making innovations, accessions, value-additions, a constant process providing customers with solutions for tomorrow which will keep them above the curve,

today

NJ has over INR60 billion* of mutual fund assets under advice with a wide presence in over 96locations* in 18 states* and 500+ employees in India. The numbers are reflections of the trust,

commitment and value that NJ shares with its clients

NJ Wealth Advisors, a division of NJ, focuses on providing financial planning and portfolioadvisory services to premium clients of high net-worth. At NJ Wealth Advisors, we have

developed processes that focus on providing the best in terms of the advice and the ongoing

management of your portfolio and financial plans.

At NJ, our experience, knowledge and understanding enables us to provide you with theexpected value, in an enhanced way. As a leading player in the industry, we continue to

successfully meet the expectations of our clients, through meaningful and comprehensive

solutions offered by NJ Wealth Advisors

2. VISION & MISSION OF NJ India invest:-

Vision

To be the leader in our field of business through,

Total Customer Satisfaction Commitment to Excellence Determination to Succeed with strict adherence to compliance Successful Wealth Creation of our Customers

Mission

Ensure creation of the desired value for our customers, employees and associates, through

constant improvement, innovation and commitment to service & quality. To provide solutions

which meet expectations and maintain high professional & ethical standards along with theadherence to the service commitments


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3. PHILOSOPHY:-

At NJ our Service and Investing philosophy inspire and shape the thoughts, beliefs, attitude, actions

and decisions of our employees. If NJ would resemble a body, our philosophy would be our spirit

which drives our body.

Service Philosophy:

Our primary measure of success is customer satisfaction

We are committed to provide our customers with continuous, long-term improvements and

value-additions to meet the needs in an exceptional way. In our efforts to consistently deliver the

best service possible to our customers, all employees of NJ will make every effort to:

y think of the customer first, take responsibility, and make prompt service to the customera priority

y deliver upon the commitments & promises made on time

y anticipate, visualize, understand, meet, exceed our customers needs

y bring energy, passion & excellence in everything we do.

y be honest and ethical, in action & attitude, and keep the customers interest supreme

y strengthen customer relationships by providing service in a thoughtful & proactive

manner and meet the expectations, effectively.

Investing Philosophy:

We aim to provide Need-based solutions for long-term wealth creation

We aim to provide all customers of NJ, directly or indirectly, with true, unbiased, need-based

solutions and advice that best meets their stated & un-stated needs. In our efforts to provide

quality financial & investment advice, we believe that

y Clients want need-based solutions, which fits them

y Long-term wealth creation is simple and straight

y Asset-Allocation is the ideal & the best way for long-term wealth creation

y Educating and disclosing all the important facets which the customer needs to be awareof, is important


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y The solutions must be unbiased, feasible, practical, executable, measurable and flexible

y Constant monitoring and proper after-sales service is critical to complete the ongoingprocess.

At NJ our aim is to earn the trust and respect of the employees, customers, partners, regulators,

industry members and the community at large by following our service and investing philosophywith commitment and without exceptions.

4. MANAGEMENT:-

The management at NJ brings together a team of people with wide experience and knowledge in

the financial services domain. The management provides direction and guidance to the whole

organisation. The management has strong visions for NJ as a globally respected company

providing comprehensive services in financial sector.

The 'Customer First' philosophy in deeply ingrained in the management at NJ. The aim of the

management is to bring the best to the customers in terms of -

y Range of products and services offered

y Quality Customer Service

All the key members of the organisation put in great focus on the processes & systems under the

diverse functions of business. The management also focuses on utilizing technology as the key

enabler for all the activities and to leverage the technology for enhancing overall customer

experience.

The key members of the management are:

Mr. Neeraj Choksi Jt. Managing Director

Mr. Jignesh Desai Jt. Managing Director

Key Sales Team:

Mr. Misbah Baxamusa National Head

Mr. Naveen Rathod V.P. (Sales)


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Mr. Kulbhushan Nandwani A.V.P. (Marketing)

Mr. Prashant Kakkad A.V.P. (Sales)

Key Executive Team :

Mr. Shirish Patel Information Technology

Mr. Abhishek Dubey Business Process

Mr. Vinayak Rajput Operations

Mr. Dhaval Desai Human Resources

Mr. Col. Dixit Administration

Mr. Tejas Soni Finance

Mr. Viral Shah Research

Mr. Rakesh Tokarkar Compliance

5. People & culture:-

People:

Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness

the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout theorganization. At NJ can also experience the creativity, one-to-one responsiveness,

collaborative approach and passion for delivering value.

At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent

due to the education-centric approach and the experience in handling different clients


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groups across diverse product profiles.

NJ understands that the people are the most important assets of the company and it is not

the company that grows but the people. NJ hence undertakes rigorous training and

educational activities for enhancing the entire team at NJ . NJ also believes in the Learning

through Responsibility concept for its employees.

For people at NJ success is not a new word, but is a regular stepping - stone to

realising the one vision that everyone shares.

Culture

At NJ we believe in transforming the lives of our customers. We exist to create a difference

a change towards a better life. The culture at NJ reflects this responsibility, this

dream of transforming lives. And we at NJ are always excited and enthused in

doing so.

We believe in keeping You First, providing you with products and services that meet your

stated and unstated needs. Client satisfaction and client service is the Mantra we constantly

recite. This service oriented philosophy runs throughout the organization, from top to bottom.

Employees are given ample freedom in their work. The objective is to keep an open, healthy

environment with ample scope for enterprise, improvement, innovations and out-of-the box

solutions

Our efforts are constantly engaged in improving our existing services, offering new and

innovative solutions that go beyond your expectations. This focus has made us one of the

most respected and preferred service providers, especially in the mutual fund industry.

6. SERVICE STANDARDS:-

Service in words, service in action

Service is the key to unlocking customer satisfaction, which again is key for

sustainability Business. At NJ we understand this very well. NJ has set strict processes


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in place to delivered service to customers. AT NJ strict quality service standards are set

and a well defined established and followed religiously by our quality customer service

team.

Performance evaluated on a frequent basis and glitches are iron out.

But quality service also involves quality people in addition to processes. NJ gives

Significant the proper training and development of the people involved in the service

delivery chain.

Further We:

Have well-defined Privacy Policy to keep clients information confidential & internaldone on the same at regular intervals.

Receive various statistics which are analyzed on an ongoing basis To improve the

standards.

We are committed to improve and enhance our services and undertake new Services

initiative and other services differentiate us with other services providers in the industry.

Our service commitment..

The service commitments are to guide the actions of the people at NJ. Clearly stated

Customers can freely communicate any such action /events wherein they feel that any Of

the commitments have been breached/ compromised . At NJ we desire to honors Our

commitments all points of the time and to all our customers without any bias.

To provide customer-focused need-based valued services.

To provide reliable, accurate and timely information.

To maintain all records in privacy.

To optimize services/benefits at least justifiable cost.


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To develop and grow the customers business.

To provide constructive after sales service.

To honour our service commitments.

As NJWealth Advisors Global Private Client, you get comprehensive set of services that

ensure you stay informed, insightful, in command, of your investments at all times.

7. PRODUCTS:-

Life Vista

Life is counted not in years, but in moments. Moments of truth, joy, achievement and

satisfaction. Of peace, tranquillity, and freedom. At NJ, we bring such moments to life.

How we can help you?

We will do a detailed study of your goals and objectives in life and would help you by devising a

comprehensive plan to help you achieve them. We would also regularly monitor your plans to

make sure that you are always on track to achieve your goals.

Asset Vista

Wealth is not an end. Neither is it a beginning. Wealth is a process, a journey. A journey of

power, achievement and responsibility .

At NJ we ensure that this journey continues and grows.

How we can help you?

We will seek to manage and monitor your portfolio as per your objectives and your risk profile.

We would manage your portfolio the Asset Allocation way which is the most effective & ideal

way to manage investments. You would also have access to consolidated portfolio reports that

enable you to see all your investments into multiple avenues at a single place.

8. SERVICES PROVIDED TO CLIENT:-

As NJ Wealth Advisors Global Private Client, you get comprehensive set of services that ensure

you stay informed, insightful, in command, of your investments at all times.


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Comprehensive Financial Planning:-

We all have many responsibilities and goals in our lives. We have dreams and aspirations for abetter future. But quite often we are not sure as to how we will fulfil these goals and aspirations.

Life changes over time. We may never be sure what today holds for us tomorrow. What if

something goes wrong? How do we make sure that we get what we wish?

A comprehensive Financial Plan is what you need. At NJ Wealth Advisors we offer you with

Comprehensive Financial Planning solutions which would involve

A detailed study of your goals

Preparation of a comprehensive Financial Plan

Monitoring of the Financial Plan on an on-going basis

At NJ Wealth Advisors we offer you with comprehensive Financial Planning Services under the

product Life Vista.


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Quality Portfolio Advisory:-

Making money is easy. Managing money is difficult. And managing money in todays complex

financial markets with multiple products on an ongoing basis becomes even more difficult.

As investors we often may feel the lack of time and energy to undertake monitoring and

managing of our investments in multiple avenues. This requires both dedicated efforts and skills

in portfolio management.

At NJ Wealth Advisors we realise the need for quality, unbiased portfolio advisory services. At

NJ we would aim to manage your portfolio with a superior, time tested and much effective way

of Asset Allocation keeping in mind your risk profile.

At NJ Wealth Advisors we offer you with quality Portfolio Advisory Services under the product

Asset Vista.

Consolidated Reporting:-

Quality online Wealth Account:

As a premium client you would have access to one of the best online investment accounts that

offer comprehensive reports, many of which are unique in nature and give valuable insights on

our investments

Our online Wealth Account covers almost all the investment

avenues that you may have:

Mutual Funds All AMCs, All Schemes

Direct Equity

Life Insurance

Physical Assets Gold and Property

Private Equity Business

Debt Products

Bank Deposits and Company Deposits RBI / Infrastructure Bonds Postal Savings KVP, MIS, NSC Debentures Small Savings PPF, NSS


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You would have access to Consolidated Net Asset Reports which would give you a single view of

all your investments into different avenues as given above.

Further, within each of the Asset class we have many more reports and utilities. Some of the

reports covered are

Consolidated:

Consolidated Asset Allocation, Consolidated Net Asset, Interest Income, Profit & Loss

Mutual Funds:

Valuation, Transaction, Profit & Loss, Performance, Portfolio reports like - AMC / Sector /

Equity / Credit / Debt Exposure, Weighted Average Maturity, Dividend history, etc

Direct Equity:

Demat accounts, Transaction, Valuation, Profit & Loss

Life Insurance:

Policy Report, Premium Reminder, Cash Flow

Debt:

Transaction, Interest Income, Maturity reports for different Asset

Dedicated Team:-

At NJ Wealth Advisors, we work in a team concept to provide quality, effective and

timely service to our clients. The team is designed keeping you at the beginning or the end of

the flow as the originator and the end receiver of any request or service.

The team handling you consists of the Relationship Manager and the Account Manager

who would be in direct touch with you. This would be supported by the Centralised

Research Team, the Chief Portfolio Manager and the Service Team. All the important

investment decisions and/or plans recommended to you are actually prepared and /or

approved by the Chief Portfolio Manager with inputs from the Research Team. The


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structure ensures that all the Plans and recommendations that you receive are unbiased,

based on true research & detailed study, and suited to your needs.

Quality Customer Service

NJ realizes the true importance of quality customer service. The service commitments are to guide

the actions taken at NJ. Clearly stated, customers can freely communicate any such actions/events

wherein they feel that the following commitments have been breached. At NJ we desire to honour

our commitments at all points of time and to all customers without any bias.

Quality Service:

Highlights-

You will receive regular portfolio reports in hard copies to serve as record

All records are maintained for the plans and recommendations and minutes of all the

meetings are kept.

Dedicated Account Manager directly oversees the operational support to you Quality

Advisory.


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True, unbiased recommendations.

Each plan is unique in nature to suit your needs and profile.

Defined Process followed in investment consultancy / portfolio management.

All the plans are prepared and/or approved in line with the set process by Chief

Portfolio Manager with inputs from the Research Team.

Quality Communications support:

Daily market update Email

Daily MF tracker-for sort term debt fund Email

Weekly performance report Email/ Hard copy

Comprehensive monthly fact sheet Hardcopy

Research articles and reports Email / Hardcopy


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9. 360 ADVISORY PLATFORM:-

With this philosophy, we try to offer all possible products, services and support which an

Advisor would need in his business.


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The support functions are generally in the following areas

Business Planning and Strategy

Training and Development Self and of employees

Products and Service Offerings

Business Branding

Marketing

Sales and Development

Technology

Advisors Resources - Tools, Calculators, etc..Research

Communications

With this comprehensive supporting platform, the NJ Fundz Partners stays ahead of the curve

in each respect compared to other Advisors/competitors in the market.

Recognitions

Some of the awards & recognitions that we have received in past

Year 2000:

For Outstanding Performance presented by Chairman, Prudential Plc. at London.

Year 2002:

For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London.

Year 2003:

For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London.

Year 2004:


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Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh,

Scotland.

Year 2004:

For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia.

Year 2006:

Award for mobilizing the Highest Number of SIPs at National Level by Fidelity Mutual

Fund Plc at Mumbai.

Year 2006:

Award Vietnam


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WHY INSURANCE AGENTS SHOULD

SELL MUTUAL FUND?

Reason 1: Easy to make more clients

The Penetration of Mutual Funds is very low

Whereas relatively,

The Penetration of Insurance is very high .

Opportunity for you to acquire more clients

Now no call of yours should get waste

Reason 2: LOW COMPETITION OF MUTUAL FUND ADVISORS

Lack of competition represents a very big opportunity to grow your business anywhere in India.

> 22 Lacs Insurance Advisors

V/s

< 70,000 Mutual Fund Advisors


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(VeryFew FinancialAdvisors)

(>35 Insurance Advisors V/s 1 Mutual FundAdvisor)

A huge DEMAND ofQuality Mutual Fund Agents

There is a genuine need for more than 2 lakh mutual fund advisors in India (our

estimates)

Reason 3:More satisfaction to your clients

If you are not selling mutual funds then you must not be aware of what they truly are and

the possibilities that they offer in providing solutions that meet the diverse needs of

different clients.

With mutual funds in your offering, you are in a much better position to fully meet the

clients financial and investment needs.

Your client would ideally like you to do that and will be happy once to offer himmultiple solutions.

Reason 4: Additional source of income

Mutual fund is one product today that potentially has no limits to the volumes that you

can generate.The important differentiation here with insurance is that you income is not based

on the premium you collect but on the entire AUM (assets under management)

that you have mobilized to counter the low rates.

An agents AUM running into crores in quite common in the industry. The income

from mutual funds can complement your earnings from insurance and may even

substitute them in future


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Reason 5: Leveraging existing clientele base

How to get more out of what you already have?

Well, mutual fund is just the perfect answer to that question.

The truth is that there is a lot of potential to generate further income from your existing clientelebase.

Much of the investment needs of clients are unexplored and unfulfilled that you can

satisfy.

Reason 6: Strong industry growth ahead

There is a very strong growth of mutual funds ahead

The reasons are many good product, low penetration, huge market, growing income,changing mindset, lack of other attractive investment products, etc.

In US, almost every third household invests in mutual funds.

The US MF industry size is about 67% of the US GDP and is 1.5 times of the bank

deposits in US.

The situation is though almost opposite in India with the MF industry size here equal to

6% of GDP and bank deposits are 10.50 times of the total industry size.

The potential is huge and India is expected to follow in on the lines of the more developedcountries.

Reason 7: Retention and loyalty of clients

The underlying logic can be found in the growth of multiplexes, shopping malls, after

all the human nature is basically the same

People today look for easy, fast, and single service point that provides them with

solutions that meets their multiple needs.

your client would probably invest in mutual funds some day or later

Why not you do the same before anyone else gets to your client?

Reason 8: Greater choice of products


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Till now we havent really talked about what choices you can offer to your clients In

fact, you can offer cash-flow management, to long-term goal oriented planning to your

clients.

Your basket would include pure equity funds (Diversified / Sectoral / Index Funds) to

pure debt funds (Gilt / Income / Short Term Plans / Floating / Liquid Funds) to hybrid

funds (MIPs / Balance / Arbitrage Funds) to the tax saving ELSS.

With a vast range of Fund houses and many more schemes the choices are

virtually endless, and one is sure to find what one needs.

Reason 9: Be a Complete Financial Advisor

What next to Insurance?

There is an opportunity for you to transcend to the next level and offer real solutions

that will truly add value to your clients.

You should develop yourself and grow more as a Financial advisor rather than just

Insurance agent.

The learnings can extend beyond products to markets, to equities, debt, economy,

etc to understanding real financial planning, funds management, etc

Reason 10: Helps in selling ULIPs

If your focus is also selling ULIPS then, dealing in mutual funds should also help you in

better understanding and helping communicate the same to your clients.

It is a general observation in western countries that as an economy progresses, term plans

and ULIPs have increasing % of fresh investments from clients as far as insurance is

considered.

Your presence in mutual funds would be an advantage to you going forward.


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Reason 11: Market potential of mutual funds.

Low Penetration of Mutual Funds in INDIA

Few people have been exposed to the idea & advantages of mutual funds and even fewer actually

invest in mutual funds, because of lack of adequate no. of advisors

Opportunity to offer such products to clients

Every person can be a customer!!

Reason12 : EXCELLENT PAST PERFORMANCE

Mutual Fund Equity schemes have delivered very attractive returns in last 5 years, giving over

51% returns annually


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Opportunity for you to offer your clients with such equity-

relatedproducts for long-term wealth creation

RESEARCH METHODLOGY

METHOD OF STUDY-

Data collection:-

1. Primary data

2.Secondary data:- Book , Internet, Magazines

NOTE:-Data for the study was collected by the survey method with the accessoriesquestionnaire Keeping in mind the objectives. The primary data was for attaining the objective

while the Secondary data were used to write the literature & get the information.

Primary data

Primary data can be obtained through direct communication with respondents or through

personal interaction. There are several method of collecting primary data through survey &

descriptive research. I have used questioner from as for collecting primary data. Which have

been very helpful for me to analyze the exact market potential of and awareness of mutual fund

and mutual fund advisors.


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Secondary data:

Secondary data means, the data has already collected and analyzed by someone else. Various

sources of secondary data are as follow

Books

Magazines

Internet

Newspapers

Reports

Projects etc.

Data sources

The study is based on primary data only. For this, A questionnaire was prepared consisting of

both open and closed ended questions. Answers are collected by personal interview with the

insurance advisors of different insurance company by formal and informal talks.

Sample size :

The sample size of my project was limited to 150 people only

Limitation of the study:

Due the constraints, survey was conducted at west Delhi near Janakpuri branch. So result

cannt represent the whole market.


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QuestionnaireAWARENESS OF MUTUAL FUNDS AMONG

INSURENCE ADVISORS

Name: ------------------------- Age: -------------- Address: ----------------------------

Contact no: ---------------------------------- E-mail ID: -------------------------------

Experience in business: ----------------------------

1. What are the products in your existing business?

a. life insurance b. general insurances

cpostal scheme d. others

2. Do you know about Mutual Fund SIP 8th

wonder of the world as a product for

wealth creation ofcustomers?

a. Yes b. No


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c. know slightly

3 Do you know about revenue and commissionin Mutual Fund and SIP business

for advisors?

a. Yes b. No

c. know slightly

4. Do you know the advantages ofadding up Mutual Fund and SIP as a product

along with your existing product?

a. Yes b. No

c. Would like to know

5. Would you you like to attend business opportunity program organized by NJ

India Invest?

a. Yes b. No

c) Yes but not now

6. Can we send representative from NJ IndiaInvest for more information about

Mutual Fund?

a. Yes b. No c)Yes but with an appointment

7.Have you cleared your AMFI exam?

a. Yes b. No

8 Ifno, would you like to give the exam ifadequate reading materials and

training given?

a. Yes b. No


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AnyComments___________________________________________________________

_________________________________________________

SUMMARY OF FINDINGS

1.What are the products in your existing business?

a. life insurance b. general insurancess

c. postal scheme d. others

Ans:-

No ofResponse %

Life Insurance 120 80General Insurance 18 12

Postal schemes 3 2

Others 9 6


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2.Do you know about Mutual Fund SIP 8th wonder of the world as a product

for wealth creation of customers?

a. Yes b. No

c. know slightly

Ans:-

No ofResponse %

Yes 48 32

No 69 46Know Slightly 33 22

life insurance

general insurance

postal schemes

others


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.

3 Do you know about revenue and commission in Mutual Fund and SIP business

for advisors?

a. Yes b. No

c.know slightly

Ans:-

No ofResponse %

Yes 60 40

No 75 50

Would Like to Know 15 10

Yes

No

Know Slightly


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4. Do you know the advantages of adding up Mutual Fund and SIP as a product

along with your existing product?

a. Yes b. No

c. Would like to know

Ans:-No ofResponse %

Yes 18 12

No 48 32

Would Like to Know 84 56

Yes

No

Would like to know


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5. Would you you like to attend business opportunity program organized by NJ

India Invest?

a. Yes b. No

cYes but not now

Ans:-

No ofResponse %

Yes 54 36

No 78 52

Yes but not now 18 12

Yes

No

Would like to know


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6.Can we send representative from NJ India Invest for more information about

Mutual Fund?

a. Yes b. No c)Yes but with an appointment

Ans:-

No ofResponse %

Yes 63 42

No 69 46

Yes but not now 18 12

Yes

No

Yes but not now


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7.Have you cleared your AMFI exam?

a. Yes b. No

Ans:-

No ofResponse %

Yes 12 8

No 138 92

yes

no

yes but not now


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E A S T E R N I N S T I T U T E F O R I N T E G R A T E D L E A R N I N G I N M A N A G E M

A Project Report on Nj

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