Mutual Fund Schemes of IDFC

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Project Report

On

CHANNELS OF DISTRIBUTION OF

MUTUALS FUNDS

Submitted towards partial fulfilment of requirements for award of

POST GRADUATE DIPLOMA IN MANAGEMENT

(BATCH-2010-12)

SUBMITTED BY: SUPERVISED BY:

M.UMAR ADIL (PGDM) DR.RACHNA SHARMA

ROLL NO - 2010015

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JAIPURIA INSTITUTE OF MANAGEMENT STUDIES

SECTOR 14C, VASUNDHARA, GHAZIABAD, 201012

CERTIFICATE

I hereby certify that the work which is being presented in this training report

entitled CHANNELS OF DISTRIBUTION OF MUTUAL FUNDS in partial

fulfilment of the requirements for the award of Post Graduation Diploma inManagement of Jaipuria Institute of Management Studies, Vasundhara is an authentic

record of my own work carried under the supervision of DR.RACHNA SHARMA

(Faculty PGDM) and Mr. Gyanendra Prakash (Assistance Vice President- Sales),

IDFC Mutual Fund.

M.UMAR ADIL

ROLL NO:2100015

This is to certify that the above statement made by the student is correct to the best of my

knowledge. I recommend submission of the report for the purpose of evaluation.

DR.RACHNA SHARMA

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Faculty, PGDM

ACKNOWLEDGEMENT

My Research project with CHANNELS OF DISTRIBITION OF MUTUAL FUNDS

proved to be highly valuable and informative.. I got some valuable insights from this

exercise, which has definitely enabled me to improve my vision ,skills and widen my

perspective towards banking in its modern prospect.

We would like to take this opportunity to express our deep gratitude to Mr.

Gyanendra Prakash (Assistance Vice President- Sales), IDFC Mutual Fund. IDFC

Mutual Fund, for providing the facilities to get an exposure for management system in

organization.

I express my gratitude towards DR.RACHNA SHARMA, (Faculty PGDM) who gave

me opportunity to complete my Research Project. I am also thankful to her for providing

me her able guidance, valuable suggestions and for sharing her experiences with me

without which this project may not have been successful.

I am also grateful to all my colleagues who continuously helped me in my project and for

their kind co-operation and by sparing their valuable time in providing me theinformation needed.

Date-

Place- Vashundhra, Ghaziabad

Submitted by- M.UMAR ADIL

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Roll. No. 2010015

Jaipuria Institute of Management Studies

Executive Summary

This project was undertaken to understand the distribution of mutual funds through

various channels.During the summer training in IDFC Mutual Fund, I learnt so many

things related to the mutual fund.

The project reflects performance of the IDFC Mutual Fund. This also includes various

products which are offered by the IDFC to the customer.

Also I have studied the mutual funds on different parameters such as broker commission,

Buyer and broker relationship ,various channels in supporting its distribution channels

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TABLE OF CONTENTS Page No.

1. Introduction 1

1.1 Profile of the Organization 3

1.2 Profile of the Study 11

2. Objectives of the Study 31

3. Research Methodology 32

3.1 Research Design 32

3.2Data Collection 33

3.3 Analytical Tools 33

4. Findings 74

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5. Recommendations 75

6. Limitations of the study 76

7. Bibliography 77

8. Annexure 78

1. Introduction

The Indian mutual fund industry in recent years has exponential growth and yet it is still

at a very nascent stage. We believe that the mutual fund industry has grown in terms of

size or choices available, but is a long distance from being regarded as a mature one. To

understand this one has to look at the global scenario. If one look at the global mutual

fund industry, one has see that assets have grown by 185% between 2000 and 2006. In

comparison, Indian assets outgrew at a staggering 446%, where as the US only grew by

158% and Europe by 242%.

As our economy continues to grow at a spectacular rate there is a huge amount of wealth

creating opportunities surfacing everywhere. Financial Planners have an immensely

responsible role to play by identifying these opportunities and channelling them into

wealth creating initiatives that would enable people to address their financial needs. To

give an overview of a recent study conducted by Invest India, there are about 321.8

millions paid workers in India. Of this only 5.3 millions have an exposure to mutual

funds. This is less than 2% of total work force. Even more interesting fact is that 77% of

them reside in super metros and Tier I cities. Again, about 4 millions come in the Rs

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90,000-5 lack income bracket. The penetration among the less than Rs 90,000 and more

than Rs 5 lack income bracket is very low. The need for the hour is to expend the market

boundaries and expand scope in Tier II and Tier III cities.

India is also one of the fastest growing markets for mutual funds, attracting a host of

global players. Hence, investors will have an even wider range of products to choose

from. The combination of the increase in number of fund houses along with new schemes

and the increase in the number of people parking their saving in mutual funds has

resulted in per cent during April-December 2007. This now stands at Rs 30314 billion as

against Rs 13476 billion for the corresponding period last year.

As on January 31, 2008, Indian assets stood at $ 137 billion and are growing. We already

have many experts expressing their concentration at the frequency of NFO launches. Yet

we have less than 1000 schemes in India, compared to 15000 in the US and 36000 in

Europe. The gap is significant and has to be filled up with unique and better priced

products.

There has also been a rapid rise in the HNI segment. India stands only second-best to

Korea in the Asia- Pacific region in terms of percentage growth. The total HNWI (High

Net Worth Individual) assets stood at about Rs 12 trillion and their assets are distributed

over various assets classes. To top them MFs will have to come up with structured

products, real estate funds, commodity based funds, art funds and the like.

Indian households have also increased their exposure to the capital market. Very

interestingly, the MF proportion in this has increased. In fact, there has been more than

2000% growth in the assets coming to MFs in the last 3 years. Statistics reveal that a

higher portion of investors savings is now invested in market-linked avenues like mutual

funds as compared to earlier times.

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1.1 Profile of the IDFC MUTUAL FUND

1.1 (a) History

The fund was established on March 13, 2000. Now the management of the fund has been

taken over by Standard Chartered Bank, the UK based banking conglomerate. The name

of the AMC too has been changed from ANZ AMC. Previously sponsored by ANZ

Banking Group, Australia, this fund has just set up its operations in the year 2000.

Australia and New Zealand Banking Group Limited, the previous sponsor of the fund, is

a leading international bank and is also one of the "Big Four" Australian commercial

banks providing a full range of banking and financial services with total assets of US $

97.35 billion as on 30th Sept, 1999. ANZ Funds Management is a core business unit of

the group and is one of Australia s large fund managers. It has a full range of investment

products and services managing more than AUD $ 13267.7 million in customer funds on

30th Sept., 1999. ANZ Banking Group has significant presence in 35 nations from the

Middle East thorough South Asia and East Asia to the Pacific

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1.1 (b)IDFC ASSET MANAGEMENT COMPANY

1.1 (b) (a) Sponsor

Infrastructure Development Finance Company Limited (IDFC).

1.1 (b) (b) Trustee

IDFC AMC Trustee Company Private Limited.

1.1 (b) (c) Chairman

Dr. Rajiv Lall.

1.1 (b) (d) CEO / MD

Mr. Naval Bir Kumar President

1.1 (b) (e) Compliance Officer

Ms. Jyothi Krishnan

1.1 (b) (f) Investor Service Officer

Mr. Praveen Bhatt

1.1 (b) (g) Assets Managed

Rs. 19,266.05 crore (Jun-25-2010)

1.1 (c) IDFC AMC (ASSET MANAGEMENT COMPANY)

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IDFC is a leading private sector diversified financial institution established by a

consortium of strong global and local institutions with the support and sponsorship of the

Government of India.

A majority of IDFCs shareholding (67% as of March 31, 2008) is held by reputed global

stalwarts that include respectable names like Government of India, International

Finance Corporation (IFC) - a member of the World Bank Group, Government of

Singapore, AIG, Morgan Stanley, Goldman Sachs, Citigroup, JP Morgan among

others. The best Indian financial institutions such as HDFC, LIC, SBI, and IDBI are

owners in IDFC, making it an institution of high repute and standing.

We are determined to construct a comprehensive asset management business that consists

of:

Private equity investments through IDFC Private Equity Company Limited

Project equity through IDFC Project Equity Company Limited, and

Public markets investment advisory services through IDFC Investment Advisors

Limited.

IDFC Private Equity manages a corpus of US$ 630 million and is Indias largest and

most active private equity fund focused on infrastructure. The two funds under

management are India Development Fund (IDF) and IDFC Private Equity Fund II.

.

1.1 (c) (a) IDFC Acquires Standard chartered Mutual Fund

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Infrastructure Finance Development Company Ltd today acquired mutual fund business

of Standard Chartered Bank. The company has received all necessary approvals from the

concerned regulatory authority, IDFC informed the Bombay Stock Exchange in a

communiqu here. The company had earlier signed an agreement with Standard

Chartered Bank in March for a consideration of Rs 820 crore.

Standard Chartered MF has around Rs 14,000 crore in assets of which Rs 4,000 crore is

in equity while rest is in debt. With this IDFC acquires Standard Chartered TrusteeCompany and Standard Chartered Asset Management Company, both of which represent

Standard Chartered mutual fund business in India.

IDFC is one of the leading infrastructure finance institutions, and the acquisition would

give it a foothold in the retail sector and improve its high margin fee based income.

1.1 (d) COMPETITIVE ADVANTAGES

1.1 (d) (a) Research

IDFC have our roots in equity research. Their original business model was to provideresearch and information services on Indian business and capital markets to institutional

customers. IDFC executive directors have equity research and investment experience in

leading banks and brokerage houses

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1.1 (d) (b) Experienced management team

Management team has hands on experience in financial services, especially targeted at

retail sales and relationship management.

1.1 (d) (c) Customer Relationship Management

IDFC MUTUAL FUND, ASSET MANAGEMENT COMPANY has developed a team of

Customer Relationship Managers across India to handle key customer accounts. These

people are experienced in financial services and have undergone in-house training. This

allows them to offer unbiased advice on investment products like mutual funds and other

investment products.

1.1 (d) (d) Robust Risk Management Systems:

IDFC asset Management Company manage the risks associated with their riskmanagement procedures rely primarily on internally developed Risk Management System

and systems provided by their vendors.

1.1 (d) (e) Business Decisions

An employee must not permit a decision about whether IDFC Asset Management

Company Pvt. Ltd. will do business with a current or prospective customer or supplier to

be influenced by unrelated interests. Decisions relating to placing IDFC Asset

Management Company Pvt. Ltd.'s business with current or prospective customers and

suppliers, and the volume of such business, must be based upon business considerations.

1.1 (e) SWOT ANALYSIS

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1.1 (e) (a) STRENGTHS

Research.

Customer Relationship Management.

Risk Management System.

1.1 (e) (b) WEAKNESS

Lack of banking arm to complete the bank broker depositary chain

Insignificance presence in institutional segments.

1.1 (e) (c) OPPORTUNITIES

Changing demographic with higher disposable income and increasing complex

financial instruments will drive the demand for investment advisory services

Rapid penetration of internet and computer needs that technology enabled

services will gain market share.

1.1 (e) (d) THREATS

Economic slowdown

Stock market fall will have a cascading effect on mutual fund mobilization

Increase or decrease in interest rates can effect debt or income mobilizations

Future changes in personal taxation rules can impact mutual funds sales

Increasing competition from large and particularly foreign players

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1.1(f) IDFC Schemes

Table 1.1 IDFC Schemes

No. of schemes 84

No. of schemes including options 269

Equity Schemes 24

Debt Schemes 209

Short term debt Schemes 19

Equity and Debt 3

Money Market 0

Gilt Fund 13

1.1(f) (a) Open Ended Schemes

IDFC All Seasons Bond Fund

IDFC Arbitrage Fund

IDFC Arbitrage Plus Fund

IDFC Asset Allocation Fund Aggressive plan

IDFC Asset Allocation Fund Conservative Plan

IDFC Asset Allocation Fund Moderate plan

IDFC Monthly Income Plan

IDFC All Seasons Bond Fund

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IDFC Cash Fund

IDFC Classic Equity Fund

IDFC Dynamic Bond Fund

IDFC Government Securities Fund Investment Plan

IDFC Government Securities Fund Short Term Plan

IDFC Imperial Equity Fund

IDFC Liquidity Manager

IDFC Enterprise Equity Fund

IDFC Nifty Fund

IDFC India GDP Growth Fund

IDFC Strategic Sector(50-50) Equity Fund

IDFC Small and Midcap Equity (SME) Fund

IDFC Premier Equity Fund

IDFC Super Saver Income Fund Investment Plan

IDFC Super Saver Income Fund Medium Term Plan

IDFC Super Saver Income Fund Short Term Plan

IDFC Tax Advantage (ELSS) Fund

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1.2 Profile of the Study

A mutual fund is a professionally-managed form of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market

instruments, and/or other securities.[1In a mutual fund, the fund manager, who is also

known as the portfolio manager, trades the fund's underlying securities, realizing capital

gains or losses, and collects the dividend or interest income. The investment proceeds are

then passed along to the individual investors. The value of a share of the mutual fund,known as the net asset value per share (NAV) is calculated daily based on the total value

of the fund divided by the number of shares currently issued and outstanding.

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Legally known as an "open-end company" under the Investment Company Act of

1940(the primary regulatory statute governing investment companies), a mutual fund is

one of three basic types of investment companies available in the United States.[2] Outside

of the United States (with the exception of Canada, which follows the U.S. model),

mutual fund may be used as a generic term for various types of collective investment

vehicle. In the United Kingdom and Western Europe (including offshore jurisdictions),

other forms of collective investment vehicle are prevalent, including unit trusts, open-

ended investment companies (OEICs), SICAVs and unitized insurance funds. In

Australia and New Zealand the term "mutual fund" is generally not used; the name

"managed fund" is used instead.

1.2 (a) what is a Mutual Fund?

Mutual funds belong to the class of firms known as investment companies. While

companies may offer a "family" of funds under a single umbrella name and common

administration - for example, the Vanguard Group, Fidelity Investments, or Strong Funds

- each fund offered is a separately incorporated investment company. These are entitiesthat pool investor money to buy the securities that make up the funds portfolio. The idea

behind this pooling of investor money is to give each investor the benefits that come from

the ownership of a diversified portfolio of securities chosen and monitored daily by

experience professional advisers.

The funds create and sell new shares on demand. Investors` shares represent a portion of

the funds portfolio and income proportional to the number of shares they purchase.

Individual shareholders of the mutual funds have voting rights in the operation of the

fund, just as most holders of common stocks in corporations have the right to vote on

certain issues involving the running of the company. The key attribute of a mutual fund,

regardless of how it is structured, is that the investor is entitled to receive on demand, or

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within a specified period after demand, an amount computed by reference to the value of

the investors proportionate interest in the net assets of the mutual fund. This means that

the owner of mutual fund shares can "cash in," or redeem his or her shares at any time.

Mutual funds, therefore, are considered a liquid investment. The investors selling

(redemption) price may be higher or lower than the purchase price. It all depends on the

performance of the funds portfolio. The fund has an adviser who charges a fee for

managing the portfolio. The adviser decides when and what securities to buy and sell, and

is responsible for providing or causing to be provided all services required by the mutual

fund in carrying on its day-to-day activities. All fund investors get this built-in portfolio

management whether they own 50 shares or 10,000.

Figure 1.1 Concept of Mutual Fund

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1.2 (b) History of Mutual Fund in India

1.2 (b) (a) the Evolution

The formation of Unit Trust of India marked the evolution of the Indian mutual fund

industry in the year 1963. The primary objective at that time was to attract the small

investors and it was made possible through the collective efforts of the Government of

India and the Reserve Bank of India. The history of mutual fund industry in India can be

better understood divided into following phases:

1.2(b) (b) Phase 1. Establishment and Growth of Unit Trust of India - 1964-87

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Unit Trust of India enjoyed complete monopoly when it was established in the year 1963

by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to

operate under the regulatory control of the RBI until the two were de-linked in 1978 and

the entire control was transferred in the hands of Industrial Development Bank of India

(IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64),

which attracted the largest number of investors in any single investment scheme over the

years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of differentinvestors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift

Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (Indias

first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured

returns) during 1990s. By the end of 1987, UTI's assets under management grew ten

times to Rs 6700 crores.

1.2 (b) (c) Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the

market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of

India became the first non-UTI mutual fund in India. SBI Mutual Fund was later

followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank

of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets

under management of the industry increased seven times to Rs. 47,004 crores. However,

UTI remained to be the leader with about 80% market share.

1.2 (b) (d) Phase III. Emergence of Private Sector Funds - 1993-96

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The permission given to private sector funds including foreign fund management

companies (most of them entering through joint ventures with Indian promoters) to enter

the mutal fund industry in 1993, provided a wide range of choice to investors and more

competition in the industry. Private funds introduced innovative products, investment

techniques and investor-servicing technology. By 1994-95, about 11 private sector funds

had launched their schemes.

1.2 (b) (e) Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI

after the year 1996. The mobilization of funds and the number of players operating in the

industry reached new heights as investors started showing more interest in mutual funds.

Inventors interests were safeguarded by SEBI and the Government offered tax benefits

to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was

introduced by SEBI that set uniform standards for all mutual funds in India. The Union

Budget in 1999 exempted all dividend incomes in the hands of investors from incometax. Various Investor Awareness Programmes were launched during this phase, both by

SEBI and AMFI, with an objective to educate investors and make them informed about

the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal

status as a trust formed by an Act of Parliament. The primary objective behind this was to

bring all mutual fund players on the same level. UTI was re-organized into two parts: 1.

The Specified Undertaking, 2. The UTI Mutual Fund

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1.2 (b) (f) Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of

which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C

Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more

international mutual fund players have entered India like Fidelity, Franklin Templeton

Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing

phase of growth of the industry through consolidation and entry of new international and

private sector players.

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1.2(c) Types of Mutual Funds

Figure 1.2 Types of Mutual Fund

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1.2 (d) Advantages of Mutual Fund

Table 1.2 Advantages of Mutual Fund

S. No. Advantage Particulars

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 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

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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 theregulator.

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.

1.2 (e) Disadvantage of Investing Through Mutual Funds

Table 1.3 Disadvantage of the Mutual Fund

S. No. Disadvantage Particulars

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, which some investors find as a

constraint in achieving their financial objectives.

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3. Difficulty in

Selecting a

SuitableFund 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 financialplanners in order to invest in the right fund to achieve

their objectives.

1.2 (f) Mutual Fund Investment Strategies

1.2 (f) (a) Systematic Investment Plan (SIPs)

These are best suited for young people who have started their careers and need to build their

wealth. SIPs entail an investor to invest a fixed sum of money at regular intervals in mutual

fund scheme the investor has chosen. For instance an investor opting for SIP in xyz mutual

fund scheme will need to invest a certain sum of money every month / quarter /half year in the

scheme.

1.2 (f) (b) Systematic Withdrawal Plan (SWPs)

These plans are best suited for people nearing retirement. In these plans an investor invests in

a mutual fund scheme and is allowed to withdraw a fixed sum of money at regular intervals to

take care of expenses.

1.2 (f) (c) Systematic Transfer Plan (STPs)

They allow the investors to transfer on a periodic basis a specified amount from one scheme

to another within the same fund family meaning two schemes belonging to the same mutual

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fund. A transfer will be treated as redemption of units from the scheme from which the

transfer is made .Such redemption or investment will be at the applicable NAV. This service

allows the investor to manage his investment actively to achieve his objectives. Many funds

do not even charge even any transaction feed for this service an added advantage for the active

investor.

1.2 (g) Performance Evaluation

Parameters of mutual fund evaluation

Risk

Returns

Liquidity

Expense ratio

Composition of portfolio

1.2(g) (a)Risks Associated With Mutual Funds

Investing in mutual funds as with any security, does not come without risk. One of the most

basic economic principles is that risk and reward are directly correlated. In other words, the

greater the potential risk, the greater the potential return. The types of risk commonly

associated with mutual funds are:

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1.2 (g) (a) (a) Market Risk

Market risk relate to the market value of a security in the future. Market prices fluctuate and

are susceptible to economic and financial trends, supply and demand, and many other factors

that cannot be precisely predicted or controlled.

1.2 (g) (a) (b) Political Risk

Changes in the tax laws, trade regulations, administered prices etc. is some of the many

political factors that create market risk. Although collectively, as citizens, we have indirect

control through the power of our vote, individually as investors, we have virtually no control.

1.2 (g) (a) (c) Inflation Risk

Inflation or purchasing power risk, relates to the uncertainty of the future purchasing power

of the invested rupees. The risk is the increase in cost of the goods and services, as measured

by the Consumer Price Index.

1.2 (g) (a) (d) Interest Rate Risk

Interest Rate risk relates to the future changes in interest rates. For instance, if an investor

invests in a long term debt mutual fund scheme and interest rate increase, the NAV of the

scheme will fall because the scheme will be end up holding debt offering lowest interest rates.

1.2 (g) (a) (e) Business Risk

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Business Risk is the uncertainty concerning the future existence, stability and profitability of

the issuer of the security. Business Risk is inherent in all business ventures. The future

financial stability of a company cannot be predicted or guaranteed, nor can the price of its

securities. Adverse changes in business circumstances will reduce the market price of the

companys equity resulting in proportionate fall in the NAV of mutual fund scheme, which

has invested in the equity of such a company.

1.2 (g) (a) (f) Economic Risk

Economic Risk involves uncertainty in the economy, which, in turn can have an adverse

effect on a companys business. For instance, if monsoons fall in a year, equity stocks of

agriculture bases companies will fall and NAVs of mutual funds, which have invested in such

stocks, will fall proportionately.

1.2 (g) (b) Returns

Returns have to be studied along with the risk. A fund could have earned higher return than

the benchmark. But such higher return may be accompanied by high risk. Therefore, we have

to compare funds with the benchmarks, on a risk adjusted basis. William Sharpe created a

metric for fund performance, which enables the ranking of funds on a risk adjusted basis.

Sharpe Ratio = Risk Premium

Funds Standard Deviation

Trey nor Ratio = Risk Premium

Funds Beta

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Risk Premium = Difference between the Funds Average return and Risk free

return on government security or treasury bill over a given period .

1.2(g) (c) Liquidity

Most of the funds being sold today are open-ended. That is, investors can sell their existing

units, or buy new units, at any point of time, at prices that are related to the NAV of the fund

on the date of the transaction. Since investors continuously enter and exit funds, funds are

actually able to provide liquidity to investors, even if the underlying markets, in which the

portfolio is invested, may not have the liquidity that the investor seeks.

1.2(g) (d) Expense Ratio

Expense ratio is defined as the ratio of total expenses of the fund to the average net assets of

the fund. Expense ratio can actually understate the total expenses, because brokerage paid on

transactions of a fund are not included in the expenses. According to the current SEBI norms,

brokerage commissions are capitalized and included in the cost of the transactions.

Expense ratio = Total Expenses

Average Net Assets

1.2 (g) (e) Composition of the Portfolio

Credit quality of the portfolio is measured by looking at the credit ratings of the investments

in the portfolio. Mutual Fund fact sheets show the composition of the portfolio and the

investments in various asset classes over time.

Portfolio turnover rate is the ratio of lesser of asset purchased or sold by funds in the market

to the net assets of the fund.

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If Portfolio ratio is 100% means portfolio has been changed fully. When Portfolio ratio is high

means expense ratio is high.

Portfolio Ratio = Total Sales & Purchase

Net Assets of fund

In order to meaningfully compare funds some level of similarity in the following factors has

to be ensured:

Size of the funds

Investment objective

Risk profile

Portfolio composition

Expense ratios

1.2 (h) How Is A Mutual Fund Set Up?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset

Management Company (AMC) and custodian. The trust is established by a sponsor or

more than one sponsor who is like promoter of a company. The trustees of the mutual

fund hold its property for the benefit of the unit holders. Asset Management Company

(AMC) approved by SEBI manages the funds by making investments in various types

of securities. Custodian, who is registered with SEBI, holds the securities of various

schemes of the fund in its custody. The trustees are vested with the general power of

superintendence and direction over AMC. They monitor the performance and

compliance of SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or

board of trustees must be independent i.e. they should not be associated with the

sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are

required to be registered with SEBI before they launch any scheme.

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1.2 (i) Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in

India was generated to function as a non-profit organization. Association of Mutual

Funds in India (AMFI) was incorporated on 22nd August, 1995.AMFI is an apex body of

all Asset Management Companies (AMC) which has been registered with SEBI. Till date

all the AMCs are that have launched mutual fund schemes are its members. It functions

under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry toa professional and healthy market with ethical lines enhancing and maintaining standards.

It follows the principle of both protecting and promoting the interests of mutual funds as

well as their unit holders.

The objectives of Association of Mutual Funds in India: ---

The Association of Mutual Funds of India works with 30 registered AMCs of the

country. It has certain defined objectives which juxtaposes the guidelines of its Board of

Directors. The objectives are as follows:-

This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of

conduct which is followed by members and related people engaged in the activities

of mutual fund and asset management. The agencies who are by any means

connected or involved in the field of capital markets and financial services also

involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual

fund industry.

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Association of Mutual Fund of India do represent the Government of India, the

Reserve Bank of India and other related bodies on matters relating to the Mutual

Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements

a programme of training and certification for all intermediaries and other engaged

in the mutual fund industry.

AMFI undertakes all India awareness programme for investors in order to

promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate informationon Mutual Fund Industry and undertakes studies and research either directly or in

association with other bodies.

The sponsorers of Association of Mutual Funds in India: ---

Bank Sponsored

SBI Fund Management Ltd.

BOB Asset Management Co. Ltd.

Canbank Investment Management Services Ltd.

UTI Asset Management Company Pvt. Ltd.

1.2 (j) GLOSSARY

1.2 (j) (a) Back-end Load

Charge imposed by a mutual fund when an investor redeems shares. Redemption fees

and contingent deferred sales charges are examples.

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1.2 (j) (b) Contingents Deferred Sales Charges

Back-end load imposed on an investor who redeems shares. It is usually expressed as a

percentage of the original purchase price or of the value of shares redeemed. In most

cases, the longer the investor holds his shares, the smaller the deferred sales charge.

1.2 (j) (c) Distribution

Payments made to shareholders by the mutual fund. Interest and stock dividends earnedby the funds portfolio are passed to shareholders as dividends, while capital gains are

passed as capital gains distributions.

1.2 (j) (d) Dividend Reinvestment Fee

Fee charged when an investor uses dividends paid by a mutual fund to purchase

additional shares of the mutual fund.

1.2 (j) (e) Exchange Fee

Fee charged when an investor switches from one mutual fund to another in the same

family of funds.

1.2 (j) (f) Front-end Load

Sales charge applied at the time the investor purchases shares. Investment Companies -

The companies that pool investor monies to purchase securities. The Investment

Company Act of 1940 created three types of investment companies: face-amount

certificate companies, unit investment trusts and management companies.

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1.2 (j) (g) Management Companies

There are two types: open-end and closed-end. Open-end funds, which sell and buy

shares back on demand, are called mutual funds. Closed-end funds have a fixed number

of shares. After the initial public offering, shares in closed-end funds trade only on

exchanges. The price is determined by the market and does not necessarily reflect the net

asset value of the shares.

1.2 (j) (h) Management Fee

A fee paid by the mutual fund to its investment adviser and charged against fund assets,

generally 1% or less per year.

1.2 (j) (i) Net Asset Value

In effect, the share price of a fund computed daily by adding the value of the funds

securities and other assets, subtracting liabilities, and dividing by the number of shares

outstanding. For a mutual fund with a front-end load, net asset value is identical to the

"asked price" or "offering price."

1.2 (j) (j) Prospectus

A disclosure document which should provide the investor with full and complete

disclosure of all material information needed by the investor to make a decision whether

or not to invest. The prospectus generally incorporates the SAI by "reference."

1.2 (j) (k) Redemption Fee

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A fee charged to an investor who redeems shares. It is generally expressed as a

percentage of the value of shares redeemed.

1.2 (j) (l) Rule 12b-1 Fee

An asset-based sales load, permitted by SEC Rule 12b-1, representing annual charges of

up to 1-1/4% for specific sales or promotional activities of the mutual fund. Over time,

the amount paid in Rule 12b-1 fees can surpass the amount paid in sales fees charged by

load funds.

1.2 (j) (m) SAI

A disclosure document called a Statement of Additional Information. The SAI is not

required to be furnished by mutual funds to investors unless investors specifically request

it. Investors are responsible for information in the SAI, even if they dont request it.

1.2 (j) (n) Total Return

A computation of mutual fund performance which measures changes in total value over a

specified time period. Included in the computation are distributions paid to investors,

capital gains distributions and unrealized capital gains and losses. Since all fund activity

which has an effect on net asset value is represented, this measure provides a picture of

performance which is more complete than yield.

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1.2 (j) (o) Yield

A measure of mutual fund performance, which is figured by dividing the income

generated (dividends, capital gains distribution, etc.) per share for a specific time period

by the funds current price per share. For example if, during a year, a single share of a

fund had paid income totalling $1 and its share price was $10, the annual yield for that

year would be figured by dividing 1 by 10, which equals one tenth, or a yield of 10%.

2. OBJECTIVE OF THE STUDY

This study is conducted in order to find out:-

To study the performance of channels being used in its distribution of MUTUAL

FUND.

To study the performance of channels MUTUAL FUND.

To study the current marketing trends of mutual funds in the Indian market.

Risk and Return involved in distribution MUTUAL FUNDS.

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3. RESEARCH METHODOLOGY

3.1 RESEARCH

Methodology plays a significant role in any study including social science research. It

provides the essential tools/techniques to carry out the study in a scientific manner. The

concept of truth, usefulness, acceptability could be ascertained through paper

quantification, verification of fact through different method of study/procedures used.

3.2 RESEARCH METHODOLOGY

A system of models, procedures and techniques used to find the results of a research is

called a research methodology.

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3.3 RESEARCH DESIGN

A research design is a framework or blueprint for conducting the marketing research

project. It details the procedures necessary for obtaining the information needed to

structure or solve marketing research problems.

A research can be classified into three parts: -

Explanatory Research

Descriptive Research

Experimental Research

For my study, I have used Descriptive research.

3.4 DATA COLLECTION

Data are the input to any decision- making process in a business. The processing of data

gives statistics of importance of the study. Data can be classified into primary data and

secondary data.

3.4 (a) PRIMARY DATA

The data which are collected from the field under the control and supervision of an

investigator is known as primary data.

3.4 (b) SECONDARY DATA

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If data collected from journals, magazines, government publications, annual reports of

companies, etc; then such data are called as secondary data.

For my study purpose, I have used secondary data.

Table 3.1 Asset Allocation

93.55%

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93.55%

3.60% 2.85%

Eq

De

Ca

3.5 (a) (b) Interpretation

IDFC- IEF is the conservative fund. The investment objective of the scheme is to seek to

generate capital appreciation. In this fund, mostly part of the fund invested into equity

(93%) in large- cap companies, only approx. 4% part invested into debt and remaining

into cash (3%).

Table 3.2 Fund Performance in terms of capital appreciation

SIP Returns

Period Investment (in Rs.) Value (in Rs.) Scheme Returns

Since Inception 51,000 72,356 16.29%

Last 3 Years 36,000 46,696 14.41%

Last 2 Years 24,000 32,052 30.09%

Last 1 Years 12,000 13,032 15.87%

Figure 3.2 Fund Performance in terms of capital appreciation

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0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Amount (in Rs.) 51,000 36,000 24,000 12,000

Value (in Rs.) 72,356 46,696 32,052 13,032

Since Inception Last 3 Year Last 2 Years Last 1 Year

3.5 (a) (c) Interpretation

IDFC- IEF regularly provides the good capital appreciation to the investors. According

to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the

amount is Rs. 13,032. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.) the

amount is Rs. 32,052 and from the inception time at the amount of Rs. 51,000 the current

value of the fund is Rs. 72,356.

Figure3.3 Fund performances in terms of return on capital

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1 6 . 2 91 7 . 6 9

3 0 . 7 3

1 6 . 4 7

0 . 0 0 %

5 . 0 0 %

1 0 . 0 0 %

1 5 . 0 0 %

2 0 . 0 0 %

2 5 . 0 0 %

3 0 . 0 0 %

3 5 . 0 0 %

S i nc e In c e p t io nL a s t 3 Y e a rs L a s t 2 Y e a rs L a s t 1 Y e a r

3.5 (a) (d) Interpretation

IDFC- IEF regularly provides the good capital appreciation to the investors. According to

the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the return

on capital is 16.47%. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.) the

return on capital is 30.73% and from the inception time the fund providing the return on

capital is 16.29%.

Table 3.3 Fund Performance in terms of Dividend

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Last 3 Dividends (Rs. /Unit)

8 June 2009 1.20 NAV 12.452

15 June 2009 1.20 NAV 12.0942

14 May 2008 1.50 NAV 13.9431

3.5 (a) (e) Interpretation

Since inception IDFC- IEF declared the dividend three times. First time it declared on 14May 2008 @ Rs. 1.50 at the NAV 13.9431. Second time it declared on 15June 2009 @

Rs. 1.20 at the NAV 12.0942 and last time it declared on 8 June 2009 @ Rs. 1.50 at the

NAV 12.452.

3.5 (b) IDFC Enterprise Equity Fund

(An open-ended fund)

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(IDFC- EEF)

3.5 (b) (a) Fund Features

Nature

Equity

Average AUM

Rs. 602.54 Crore

Fund manager

Mr. Kenneth Andrade

Inception Date

9 June 2006

Minimum Investment Amount

Rs. 5,000

SIP (Minimum Amount)

Rs. 1,000


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Equity 93.68%

Debt 5.87%

Cash 0.45%

Figure 3.4 Asset Allocation

93.68%

5.87% 0.45%

Eq

De

Ca

3.5 (b) (b) Interpretation

IDFC- IEF is the initial level fund. The investment objective of the scheme is to seek to


(93%) in large- cap companies, only approx. 6% part invested into debt and only 1% part

invested into cash.

Table 3.5 Fund Performance in terms of Capital Appreciation

SIP Returns

Asset Allocation

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Since Inception 48,000 60,743 11.49%

Last 3 Years 36,000 44,002 13.56%

Last 2 Years 24,000 31,523 28.91%

Last 1 Years 12,000 12,983 15.67%

Figure 3.5 Fund Performance in terms of Capital Appreciation

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Amount (in Rs.) 48,000 36,000 24,000 12,000

Value (in Rs.) 60,743 44,002 31,523 12,983


3.5 (b) (c) Interpretation

IDFC- EEF regularly provides the good capital appreciation to the investors. According





Figure 3.6 Fund performances in terms of return on capital

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1 1 . 4 91 3 . 5 6

2 8 . 9 1

1 5 . 6 7

0 . 0 0 %

5 . 0 0 %

1 0 . 0 0 %

1 5 . 0 0 %

2 0 . 0 0 %

2 5 . 0 0 %

3 0 . 0 0 %

S in c e In c e p t io n L a s t 3 Y ea rs L a s t 2 Y e a rs L a s t 1 Y ea r

3.5 (b) (d) Interpretation

IDFC- EEF regularly provides the good capital appreciation to the investors. According


return on capital is 15.67%. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.)

the return on capital is 28.91% and from the inception time the fund providing the return

on capital is 11.49%.


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Last Dividends (Rs. /Unit)

28 July 2009 1.00 NAV 10.7430

14 May 2008 1.50 NAV 13.0106

3.5 (b) (e) Interpretation

Since inception IDFC- EEF declared the dividend two times. First time it declared on 14

May 2008 @ Rs. 1.50 at the NAV 13.0106. Second time it declared on 28 July 2009 @

Rs. 1.00 at the NAV 10.7430.

3.5 (c) IDFC Classic Equity Fund


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(IDFC- CEF)

3.5 (c) (a) Fund Features

Nature

Equity

Average AUM

Rs. 268.84 Crore

Fund manager

Mr. Tridib Pathak

Inception Date

9 August 2005


Rs. 5,000


Rs. 1,000


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Equity 94.75%

Debt 2.90%

Cash 2.36%


94.75%

2.90% 2.36%

Eq

De

Ca

3.5 (c) (b) Interpretation

IDFC- CEF is the moderate risky fund. The investment objective of the scheme is to seek

to generate capital appreciation. In this fund, mostly part of the fund invested into equity

(95%) in large, small and midcap companies, only approx. 3% part invested into debtand only 2% part invested into cash.


SIP Returns

Asset Allocation

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Since Inception 58,000 77,290 11.59%

Last 3 Years 36,000 43,007 11.93%

Last 2 Years 24,000 31,176 27.54%

Last 1 Years 12,000 12,920 14.64%


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Amount (in Rs.) 58,000 36,000 24,000 12,000

Value (in Rs.) 77,290 43,007 31,176 12,920


3.5 (c) (c) Interpretations

IDFC- CEF regularly provides the good capital appreciation to the investors. According






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11.59% 11.93%

27.54%

14.64%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Since Inception Last 3 Years Last 2 Years Last 1 Year

3.5 (c) (d) Interpretation

IDFC- CEF regularly provides the good capital appreciation to the investors. According

to the data amount invested by investors Rs.12, 000 in 2009-10 (Rs.1, 000 p.m.) the





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22 August 2006 1.50 NAV 11.5580

28 May 2007 1.50 NAV 13.2659

22 Oct 2007 1.50 NAV 15.2703

3.5 (c) (e) Interpretation

Since inception IDFC- CEF declared the dividend three times. First time it declared on 22August @ Rs. 1.50 at the NAV 11.5580. Second time it declared on 28 May @ Rs. 1.50

at the NAV 13.2659 and last time it declared on 22 October @ Rs. 1.50 at the NAV

15.2703.

3.5 (d) IDFC Premier Equity Fund


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(IDFC- PEF)

3.5 (d) (a) Fund Features

Nature

Equity

Average AUM

Rs. 1,498.77 Crore

Fund manager

Mr. Kenneth Andrade

Inception Date

28 September2005


Nil


Rs. 2,000


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Asset Allocation

Equity 93.55%

Debt 3.60%

Cash 2.85%


89.62%

7.28% 3.10%

Eq

De

Ca

3.5 (d) (b) Interpretation

IDFC- PEF is the aggressive fund. The investment objective of the scheme is to seek to


(90%) in small and midcap companies, only approx. 7% part invested into debt and only

3% part invested into cash.


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SIP Returns


Since Inception 1,12,000 2,16,678 28.09%

Last 3 Years 72,000 1,11,751 30.83%

Last 2 Years 48,000 77,535 54.23%

Last 1 Years 24,000 28,833 39.72%


0

50,000

100,000

150,000

200,000

250,000

Amount (in Rs.) 112,000 72,000 48,000 24,000

Value (in Rs.) 216,678 111,751 77,535 28,833


3.5 (d) (c) Interpretation

IDFC- PEF regularly provides the good capital appreciation to the investors. According



amount is Rs. 77,535 and from the inception time at the amount of Rs. 1, 12,000 the

current value of the fund is Rs. 2,16,678.


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2 8 . 0 93 0 . 8 3

5 4 . 2 3

3 9 . 7 2

0 . 0 0 %

1 0 . 0 0 %

2 0 . 0 0 %

3 0 . 0 0 %

4 0 . 0 0 %

5 0 . 0 0 %

6 0 . 0 0 %

S in c e In c e p tio n L a s t 3 Y e ars L a s t 2 Y ea rs L a s t 1 Y ea r

3.5 (d) (d) Interpretation

IDFC- PEF regularly provides the good capital appreciation to the investors. According

to the data amount invested by investors Rs. 24, 000 in 2009-10 (Rs.2, 000 p.m.) the





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28 Apr 2009 1.50 NAV 13.1031

29 March 2010 2.40 NAV 22.3426

3.5 (d) (e) Interpretation

Since inception IDFC- PEF declared the dividend two times. First time it declared on 28

April 2009 @ Rs. 1.50 at the NAV 13.1031. Second time it declared on 29 March 2010

@ Rs. 2.40 at the NAV 22.3426.

3.5 (e) IDFC Small & Midcap Equity Fund


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(IDFC- SMEF)

3.5 (e) (a) Fund Features

Nature

Equity

Average AUM

Rs. 705.91 Crore

Fund manager

Mr. Kenneth Andrade

Inception Date

7 march 2008


Rs. 5,000


Rs. 1,000


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Equity 94.75%

Debt 2.90%

Cash 2.36%


83.92%

11.33%4.75%

Eq

De

Ca

3.5 (e) (b) Interpretation

IDFC- SMEF is the aggressive fund. The investment objective of the scheme is to seek to


(84%) in small and midcap companies, only approx. 11% part invested into debt andonly 5% part invested into cash.


SIP Returns

Asset Allocation

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Since Inception 27,000 46,811 53.75%

Last 2 Years 24,000 40,975 61.96%

Last 1Years 12,000 14,729 45.23%


0

10,000

20,000

30,000

40,000

50,000

Amount (in Rs.) 27,000 24,000 12,000 Value (in Rs.) 46,811 40,975 14,729

Since Inception Last 2 Years Last 1 Year

3.5 (e) (c) Interpretation

IDFC- SMEF regularly provides the good capital appreciation to the investors.

According to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000

p.m.) the amount is Rs. 14,729. After 24 months, the time period is 2008-10 (Rs. 1,000

p.m.) the amount is Rs. 40,975 and from the inception time at the amount of Rs. 27,000

the current value of the fund is Rs. 46,811.


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5 3 . 7 5

6 1 . 9 6

4 5 . 2 3

0 . 0 0 %

1 0 . 0 0 %

2 0 . 0 0 %

3 0 . 0 0 %

4 0 . 0 0 %

5 0 . 0 0 %

6 0 . 0 0 %

7 0 . 0 0 %

S in c e In c e p t io n L a s t 2 Y e a rs L a s t 1 Y e a rs

3.5 (e) (d) Interpretation

IDFC- SMEF regularly provides the good capital appreciation to the investors.

According to the data amount invested by investors Rs. 12, 000 in 2009-10 (Rs.1, 000

p.m.) the return on capital is 45.23%. After 24 months, the time period is 2008-10 (Rs.

1,000 p.m.) the return on capital is 61.96% and from the inception time the fund

providing the return on capital is 53.75%.


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29 Sep. 2009 1.50 NAV 12.3972

29 Apr. 2010 1.60 NAV 13.9863

3.5 (e) (e) Interpretation

Since inception IDFC- SMEF declared the dividend two times. First time it declared on

29 September 2009 @ Rs. 1.50 at the NAV 12.3972 and Second time it declared on 29

April 2010 @ Rs. 1.60 at the NAV 13.9863.

3.5 (f) IDFC Strategic Sector (50-50) Equity Fund


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IDFC- SS (50-50) - EF

3.5 (f) (a) Fund Features

Nature

Equity

Average AUM

Rs. 32.71 Crore

Fund manager

Mr. Kenneth Andrade

Inception Date

3 October 2008


Rs. 5,000


Rs. 1,000


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Equity 88.41%

Debt 9.76%

Cash 1.82%


88.41%

9.76% 1.82%

Eq

De

Ca

3.5 (f) (b) Interpretation

IDFC- SS (50-50) - EF is the aggressive fund. The investment objective of the scheme is

to seek to generate capital appreciation. In this fund, mostly part of the fund invested into

equity (88%) invested amount up to 50% of the assets of the scheme in a chosen sector

(sector specific exposure) while the balance amount may be invested in companies across

market capitalization and across sectors (diversified exposure), only approx. 10% partinvested into debt and only 2% part invested into cash.


SIP Returns


Asset Allocation

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Since Inception 20,000 25,634 29.32%

Last 1 Years 12,000 12,929 14.79%


0

5,000

10,000

15,000

20,000

25,000

30,000

Amount (in Rs.) 20,000 12,000

Value (in Rs.) 25,634 12,929

Since Inception Last 1 Year

3.5 (f) (c) Interpretation

IDFC- SS (50-50) - EF regularly provides the good capital appreciation to the investors.

According to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000

p.m.) the amount is Rs. 12,929 and from the inception time at the amount of Rs. 20,000

the current value of the fund is Rs. 25,634.


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2 9 . 3 2

1 4 . 7 9

0 . 0 0 %

5 . 0 0 %

1 0 . 0 0 %

1 5 . 0 0 %

2 0 . 0 0 %

2 5 . 0 0 %

3 0 . 0 0 %

S in c e In c e p t io n L a s t 1 Y e a rs

3.5 (f) (d) Interpretation

IDFC- SS (50-50) - EF regularly provides the good capital appreciation to the investors.

According to the data amount invested by investors Rs. 12, 000 in 2009-10 (Rs.1, 000

p.m.) the return on capital is 14.79% and from the inception time the fund providing the

return on capital is 29.32%.

3.5 (f) (e) Fund Performance in terms of Dividend

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Last Dividends (Rs. /Unit)-

NA

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3.5 (g) IDFC Tax Advantage (ELSS) Equity Fund


IDFC Equity Linked Saving Scheme

3.5 (g) (a) Fund Features

Nature

Equity

Average AUM

Rs. 84.51 Crore

Fund manager

Mr. Kenneth Andrade

Inception Date

26 December 2008


Rs. 5,000


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Rs. 500


Equity 94.01%

Debt 5.99%


94.01%

5.99%

Eq

De

3.5 (g) (b) Interpretation

IDFC- TA (ELSS) Fund is the tax saving fund with the 3 years lock in period. The

investment objective of the scheme is to seek to generate capital appreciation with tax

rebate. In this fund, mostly part of the fund invested into equity (94%) in large, small and

midcap companies, only approx. 6% part invested into debt.

Asset Allocation

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41.88%

26.14%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

3.5 (g) (d) Interpretation

IDFC TA (ELSS) Fund regularly provides the good capital appreciation to the investors.

According to the data amount invested by investors Rs. 6, 000 in 2009-10 (Rs.500 p.m.)

the return on capital is 26.14% and from the inception time the fund provided the capital

appreciation 41.88%.

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20 January 2010 2.50 NAV 14.9373

23 March 2010 1.00 NAV 14.3869

3.5 (g) (e) Interpretation

Since inception IDFC TA (ELSS) Fund declared the dividend two times. First time it

declared on 29 January 2010 @ Rs. 2.50 at the NAV 14.9373 and Second time it declared

on 23 March 2010 @ Rs. 1.00 at the NAV 14.3869.

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3.5 (h) IDFC Monthly Income Plan


(IDFC MIP)

3.5 (h) (a) Fund Features

Nature

Fund of fund

Average AUM

Rs. 264.48 Crore

Fund manager

Mr. Ashwin Patni

Inception Date:

25 February 2010


Rs. 5,000

Dividend frequency

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Monthly and such other frequency as decided from time to time.


Equity 21.67%

Debt 78%

Cash 0.33%


21.67%

78.00%

0.33%

Eq

De

Ca

3.5 (h) (b) Interpretation

IDFC- MIP is the regular income fund. The investment objective of the scheme is to seek

to generate capital appreciation with the security of principal amount. In this fund, mostly

part of the fund invested into debt (78%) in large, only approx. 22% part invested into

equity and only hardly 0.5% part invested into cash.

Asset Allocation

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One Time Returns


Since Inception 5,000 5,179 3.58%


4,900

4,950

5,000

5,050

5,100

5,150

5,200

Since Inception (As on 31/ 07/ 2010)

Since Inception (As on 31/ 07/

2010)

5,000 5,179

Amount (in Rs.) Value (in Rs.)

3.5 (h) (c) Interpretation

IDFC MIP regularly provides regular to the investors. According to the data amount

invested by investors Rs. 5,000 since the inception time the current value of the fund is

Rs. 5,179.

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3.58%

0.00%

1.00%

2.00%

3.00%

4.00%

1

Since Inception (As on 31/07/2010)

Since Inception (A

31/07/2010)

3.5 (h) (d) Interpretation

IDFC MIP regularly provides regular income to the investors. According to the data

amount invested by investors since the inception time the fund provided the capital

appreciation 3.58%

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01 Jun 2010 0.0326 NAV 10.1653

05 July 2010 0.0327 NAV 10.2869

3.5 (h) (e) Interpretation

Since inception MIP declared the dividend two times. First time it declared on 01 Jun

2010 @ Rs. 0.0326 at the NAV 10.1653 and Second time it declared on 23 March 2010

@ Rs. 0.0327 at the NAV 10.2869.

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4. Results & discussions/Findings

I found the MIP is the best investment option for that investors, who is

looking to the regular income with secure his principal.

IDFC- IEF is the better for those customerss who want to invest for long

period. It is the conservative fund, which provides the good rate of return with

better capital appreciation.

IDFC- ELSS is entitled to deductions of the amount invested in Units of the

Scheme, subject to maximum of Rs. 1, 00,000 under and in terms of Section

80 C (2) (XIII) of the Income Tax Act, 1961.

IDFC- SME Fund for those customerss who want the good return with the

short period of time. It is one of the best funds in todays growing period.

IDFC- PEF is the one of the fund which has continues provide the better

return since 2005. It got the best performance award to the ICRA Online MF

Rank, LIPPER Fund Awards 2010 India, and Business world.

Now the IDFC is focusing to the IDFC- PEF and IDFC- SME Fund, for those

customerss who want to invest in equity.

During my training time I found that the customers who are looking the

better return with secure his principal the best portfolio is IDFC- MIP (30%),

IDFC- IEF (30%) and IDFC- SMEF (40%).

During my training time I found that banks are effective enough in increasing

the total assets under management (AUM) of the mutual fund industry as

compared to independent financial advisors (IFAs), brokers & other agents.

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Banks are increasingly turning their focus on mutual fund distribution due to

the scope of earning higher revenues by brokerage fee.

5. Recommendations

Indian market potential is high, investors are willing to pour money in

mutual funds, despite some temporary restraints, and other economic

factors are in favourable mode. Thus IDFC need proper management of

advisory services, more schemes, financial advisors and institutions to

cater untouched markets.

IDFC need to revise its business strategy. Investors perception is not

prioritized yet. Instead of completing targets, advisors working under

institutions should consider the requirement of investors. We need to

change pattern of selling mutual funds schemes.

IDFC should provide better after sales service, so it helps to the investors

become loyal to the company.

As the competitors provide the better incentives to the banks employs, so

they were attract to do more investments. So IDFC should try to give

better incentive to them.

IDFC is not doing advertisement of its products. So IDFC should focus

more on advertisement, so as to increase the sales and create awareness in

the public.

IDFC only focus on metro cities it should be focusing on urban and as

well as rural areas.

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LIMITATIONS OF THE STUDY

Limited resources are available to collect the information about the Mutual

fund.

Time period was limited to get the knowledge of the mutual fund in detail.

During the project knowledge was one of the constraints.

The busy schedule of the employees, so they did not enough time to

discuss the implications in detail.

Market is so much volatile, so it is difficult to forecast anything about it.

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6. BIBLIOGRAPHY

Book References

By Abhijit Dutta, Mutual Funds In India, C- 14, D.S.I.D.C. Work Centre Jhilmil

Colony, Delhi- 110095, 1st

Edition, Wisdom Publications, 2007.

By Nalini Prava Tripathy, Mutual Funds In India, Emerging Issues, A-45, Naraina

Phase-1, Delhi- 110028, 1st Edition, Excel Books Publications, 2007.

Web References

www.idfcmf.com

www.moneycontrolindia.com

http://www.nse-india.com

http://www.amfiindia.com

http://www.mutualfundsindia.com

http://www.sebi.gov.in

www.economictimes.com

www.valueresearchonline.com

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Mutual Fund Schemes of IDFC

Documents