UNDERTAKING
SUMMER INTERNSHIP REPORT
ON
MUTUAL FUNDS AND INVESTORS AWARENESS ABOUT MUTUAL FUND
COMPANIES
SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE
DEGREE IN BUSINESS ADMINISTRATION
BY:
ANKIT OMARRoll No. : A0101907051UNDER THE GUIDANCE OF:
DR.R.S.RAI
AMITY BUSINESS SCHOOL
AMITY UNIVERSITY UTTAR PRADESH
24th July2008
DECLARATION
I, student of M.B.A. from AMITY BUSINESS SCHOOL, AMITY
UNIVERSITY UTTAR PRADESH, declare that I have completed this
project Mutual Funds And Investors Awareness About Mutual Fund
Companies at ING VYASA BANK within two months under the guidance of
my Faculty Guide DR. R.S. RAI at Amity Business School, Amity
University Uttar Pradesh.
I further declare that the work inside the report is authentic
to the best of my knowledge.
Date: 25.07.2008 Ankit Omar
Place: Noida A0101907051
CERTIFICATEThis is to certify that Ankit Omar, a student of
M.B.A, AMITY BUSINESS SCHOOL, AMITY UNIVERSITY UTTAR PRADESH, has
worked under the guidance of his Faculty Guide Dr. R.S. Rai for two
months, on a project Mutual Funds And Investors Awareness About
Mutual Fund Companies at ING VYASA BANK. He worked hard displaying
enthusiasm and determination for the completion of his project.I
hereby declare that the work done by him is true as per my
knowledge.
Date: 25.07.2008 R.S. RAIPlace: Noida
ACKNOWLEDGEMENTAt the very outset I would like to express my
sincere gratitude to my respected Faculty Guide Dr. R.S Rai of
AMITY BUSINESS SCHOOL, AMITY UNIVERSITY UTTAR PRADESH for giving me
his wholehearted support, guidance and encouragement at every step
of this project. His valuable suggestions and advices have been a
constant source of inspiration to me in completing this
project.
I would like to express my sincere thanks to ING ASSEST
MANAGEMENT COMPANY for providing me an opportunity to work with
them and to undertake this project on MUTUAL FUNDS AND INVESTORS
AWARENESS ABOUT ASEST MANAGEMENT COMPANIES. I feel proud to be
associated with an esteemed organization like ING.I feel especially
indebted to Mr. Vikash Mishra (Sr. wealth Manager of ING VYSYA
Bank); without whose consent this project couldnt have been carried
out. I express my sincere gratitude to MR. Naveen Goyal (Sr.
Manager ING Investment Management). I am highly indebted and
thankful to all of them for sparing valuable time from their busy
schedule to provide me constant guidance and cooperation for
completing this project.I am very keen to express my gratefulness
to my friends, family members and classmates for their tremendous
support, contribution and assistance at many step of this project
which made this difficult job a nice experience. Ankit Omar
CONTENTS
Declaration
Certificate
AcknowledgmentPrefaceExecutive Summary
Chapter No.: Subject: Page No:
1. Introduction 8-102. Review of Literature 11-133. Industry
Profile 14-584. Company Profile 59-63
5. Comparison between funds 64-76 5. Project Profile 77-78 6.
Research Methodology 79-81 7. Data Analysis and Interpretation
82-928. Observation 939. Limitations 94 10. Conclusion 95 Reference
Annexure- questionnairePreface
This project report has been made on Rising Demand of Mutual
Funds in the present market. The basic idea of this report is to
conduct an analysis of rising need of Mutual Funds in order to
highlight the change in services with the passage of time. The
basic motive is to cover the Upper Middle and Lower segment of the
people investing in mutual funds..
Mutual Fund Industry has grown in a trillion dollar industry by
this year and this is due to the performance given by mutual funds
and because of investors faith in making their money to grow at
higher pace than FDs (Fixed deposit)The data is collected by means
of FACTSHEETS provided by Asset Management Companies and it is
analyzed with the help of graphs & tables. I hope this report
will satisfy the readers & present them with detailed
information.EXECUTIVE SUMMARYI did my S.I.P with ING VYASA BANK,
from 2nd May till 30th June 2008. The basic objective of this
project was to develop an understanding of mutual funds and
determine the level of awareness of the investors about the various
mutual fund companies.With such a large population and the untapped
market of population, Mutual funds happen to be a very big
opportunity in India. In spite of all the growth, the statistics of
the penetration of the mutual funds in the country is not good.
This is an indicator that growth potential for the mutual funds is
immense in India . Seeing the past performance of various funds it
can be stated that these funds can provide better options for
investors to invest in. As it is less risky compared to direct
investments in stock market.INTRODUCTION
A mutual 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 appreciation 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. Mutual funds belong to a group of financial intermediaries
known as investment companies, which are in the business of
collecting funds from investors and pooling them for the purpose of
building a portfolio of securities according to stated objectives.
They are also known as open-end investment companies. Other members
of the group are closed-end investment companies (also known as
closed-end funds) and unit investment trust.Mutual funds are
generally organized as corporations or trusts, and, as such, they
have a board of directors or trustees elected by the shareholders.
Almost all aspects of their operations are externally managed. They
engage a management company to manage the
investment for a fee, generally based on a percentage of the
fund's average net assets during the year. The management company
may be an affiliated organization or an independent contractor.
They sell their shares to investors either directly or through
other firms such as broker-dealers, financial planners, employees
of insurance
companies, and banks. Even the day-to-day administration of a
fund is carried out by an outsider, which may be the management
company or an unaffiliated third party.
Benefits from investing in a mutual fund:
The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
USAGE
Mutual funds can invest in many different kinds of securities.
The most common are
cash, stock, and bonds, but there are hundreds of
Sub-categories. Stock funds, for
instance, can invest primarily in the shares of a particular
industry, such as technology
or utilities. These are known as sector funds. Bond funds can
vary according to risk
(e.g., high-yield junk bonds or investment-grade corporate
bonds), type of issuers (e.g.,
government agencies, corporations) or maturity of the bonds
(short- or long-term).
Most mutual funds' investment portfolios are continually
adjusted under the supervision
of a professional manager, who forecasts the future performance
of investments
appropriate for the fund and chooses those which he or she
believes will most closely
match the fund's stated investment objective.
Mutual funds are liable to a special set of regulatory,
accounting, and tax rules. Unlike
most other types of business entities, they are not taxed on
their income as long as they
distribute substantially all of it to their shareholders. Also,
the type of income they earn
is often unchanged as it passes through to the shareholders.
REVIEW OF LITERATURE
This chapter contains the review of the existing research
literature on MUTUAL FUNDS
A prominent study (Switzer, N., Lorne, 2007) examined whether
small and mid-cap fund performance related to fund manager human
capital characteristics including tenure, investment experience,
education (MBA designation), professional training (CFA), and
gender. The study identified sample of 1,004 small and mid-cap
equity funds on the Morningstar database as of 31 December 2005 and
applied several statistical tests which considered fund
performance, risk, expenses, and turnover simultaneously.
A prominent article ( Jonson, T, Don, 2006) examined whether
real estate investments
will provide better return to investors as it is probably the
largest category of asset for
the investors , it can provide investors better margins as it is
a sector specific fund .
According to the findings these funds can provide higher
management fess to asset
management companies as they are associated with higher
returns.
The article ( Shank ,T, Hill Ron 2005) examined a statement
Doing well is doing
good within the financial management literature, using
comparisons using socially
responsible mutual funds in NYSE ( New York Stock Exchange). It
describes the short
term performance and long term performance of mutual funds and
stated the
comparison between them. The performance indicated that the
performance for long
term fund were much better than the short term funds.
The prominent study (Glenn, J, Patrick, Thomas 2004) examines
the performance of
both open-ended and closed-ended mutual funds-as a fixed income
securities and
vehicles of capital gains. A determination is made of which one
category outperforms
the other and it tells us about the performance better or worse.
This will help to
determine the fund and help the investors in choosing it.
The article (Baris, G, Jay, Warshall, A 2004) examines the
mutual funds scandals
involving market timings and late day trading, The Securities
and commission issued
Investment Company Governance. The new rule ensure that the
investment companies
directors and the company board of chairman should be
independent. The new rule also require most funds to adopt other
governance practices, including annual self-evaluations and
meetings in executive session without the presence of fund
management. In the adopting release, the SEC also provided guidance
on how fund directors should fulfill their fiduciary duties to fund
shareholders.
The study (Ramasamy, Bala, Yeung, C, H, Mathew 2003) examines
both, in terms of size and choice, in the mutual fund industry
among emerging markets has been impressive. However, mutual fund
research in emerging markets hardly exists. This paper intends to
fill this gap. In particular, the paper surveys the relative
importance of factors considered important in the selection of
mutual funds by financial advisors in
emerging markets.This survey focuses on Malaysia where the
mutual industry started in the 1950s but only gained importance in
the 1980s with the establishment of a government initiated
programme. The results of the survey point to three important
factors which dominate the choice of mutual funds. These are
consistent past performance, size of funds and costs of
transaction. Factors which relate to fund managers and investment
style are not considered to be relatively important. With the
impending liberalization of the financial markets in the developing
world, the findings would assist those international funds that are
considering expanding their operations into these emerging markets.
The article ( NealO, Edward, Page,E,Daniel 2002) examine the
sources of performance for a sample of mutual funds that invest
primarily in utility companies. Given
deregulation developments in the utility industry and the
sub-market performance of
utility stocks in the 1990s, the hypothesize that utility funds
may be considering alternatives to traditional high-yielding
electric utility stocks. Although there is anecdotal evidence that
utility funds may be tilting their focus away from electric
utility
stocks, the findings are that utility mutual funds as a group
are no more or less heavily invested in utility stocks today than
they have been over the past 10 years.HISTORY
Massachusetts Investors Trust (now MFS Investment Management)
was founded on March 21, 1924, and, after one year, it had 200
shareholders and $392,000 in assets. The entire industry, which
included a few closed-end funds represented less than $10 million
in 1924.
The stock market crash of 1929 hindered the growth of mutual
funds. In response to the stock market crash, Congress passed the
Securities Act of 1933 and the Securities
Exchange Act 1934 .These laws require that a fund be registered
with the Securities and Exchange Commission (SEC) and provide
prospective investors with a prospectus that contains required
disclosures about the fund, the securities themselves, and fund
manager. The SEC helped draft the Investment Company Act of 1940,
which sets forth the guidelines with which all SEC-registered funds
today must comply.
With renewed confidence in the stock market, mutual funds began
to blossom. By the end of the 1960s, there were approximately 270
funds with $48 billion in assets. The first retail index fund,
First Index Investment Trust, was formed in 1976 and headed by John
Bogle,who conceptualized many of the key tenets of the industry in
his 1951 senior thesis at Princeton University. It is now called
the Vanguard 500 Index Fund and is one of the world's largest
mutual Funds, with more than $100 billion in assets.IN INDIA:
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 the. The history of mutual
funds in India can be broadly divided into four distinct phases
.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. It was set up by the Reserve Bank of India and
functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and
the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first
scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI
had Rs.6,700 crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
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 June 1987
followed by Canara bank Mutual Fund (Dec 87), Punjab National Bank
Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its
mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under
management of Rs.47,004 crores. Third Phase 1993-2003 (Entry of
Private Sector Funds) With the entry of private sector funds in
1993, a new era started in the Indian mutual fund industry, giving
the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the
first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a
more comprehensive and revised Mutual Fund Regulations in 1996. The
industry now functions under the SEBI (Mutual Fund) Regulations
1996.
The number of mutual fund houses went on increasing, with many
foreign mutual funds setting up funds in India and also the
industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust 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 bifurcated into 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 Specified Undertaking of Unit Trust
of India, functioning under an administrator and under the rules
framed by Government of India and does not come under the purview
of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the
Mutual Fund Regulations. With the bifurcation of the erstwhile UTI
which had in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming
to the SEBI Mutual Fund Regulations, and with recent
mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation
and growth. The graph indicates the growth of assets over the
years.
GROWTH IN ASSETS UNDER MANAGEMENT
FREQUENTLY USED TERMS IN MUTUAL FUND
NET ASSEST VALUEThe net asset value, or NAV, is the current
market value of a fund's holdings, usually expressed as a per-share
amount. For most funds, the NAV is determined daily, after the
close of trading on some specified financial exchange, but some
funds update their NAV multiple times during the trading day. The
public offering price, or POP, is the NAV plus a sales charge.
Open-end funds sell shares at the POP and redeem shares at the NAV,
and so process orders only after the NAV is determined. Closed-end
funds (the shares of which are traded by investors) may trade at a
higher or lower price than
their NAV; this is known as a premium or discount, respectively.
If a fund is divided into multiple classes of shares, each class
will typically have its own NAV, reflecting differences in fees and
expenses paid by the different classes.
Some mutual funds own securities which are not regularly traded
on any formal exchange. These may be shares in very small or
bankrupt companies; they may be derivatives; or they may be private
investments in unregistered financial instruments (such as stock in
a non-public company). NAV Calculations
Net Assets = Assets - Liabilities
Assets
= Market value of Investments
+ Receivables + Accrued
income + Other Assets
Liabilities
= Accrued expenses
Payables Liabilities
NAV of a Unit = Net Assets of the Scheme
Number of units outstanding
DISCLOSING NET ASSEST VALUE OF A UNIT Date on which NAV is
calculated is called Valuation Date.
Open ended Funds are required to compute and disclose NAV
Daily.
Close ended Funds can compute NAVs every week but disclose
Daily.
NAV Calculation has to consider up to date transactions.
All income, expenditure to be accounted upto date of
valuation.
Non accrual of small amounts not affecting NAV by more than 1%
permitted.
Non-recorded transactions should not affect NAV calculation by
More than 2% .
FACTORS AFFECTING NET ASSEST VALUE OF A UNIT NAV is affected by
4 set of factors:
Purchase & sale of investment securities
Valuation of all investment securities held
Other assets and liabilities
Units sold or redeemedSale Price
Is the price you pay when you invest in a scheme. Also called
Offer Price. It may include a sales load.
Repurchase PriceIs the price at which a close-ended scheme
repurchases its units and it may include a back-end load. This is
also called Bid Price.
Redemption PriceIs the price at which open-ended schemes
repurchase their units and close-ended schemes redeem their units
on maturity. Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also
called, Front-end load. Schemes that do not charge a load are
called No Load schemes.
Repurchase or Back-end LoadIs a charge collected by a scheme
when it buys back the units from the unit holders.
Wide variety of Mutual Fund Schemes exists to cater to the needs
such as financial position, risk tolerance and return expectations
etc. The table below gives an overview into the existing types of
schemes in the Industry.Organization of a mutual fund:
There are many entities involved and the diagram below
illustrates the organizational set up of a mutual fund:
Source- AMFITYPES OF MUTUAL FUND SCHEMES1. Open-Ended Funds.
2. Close-Ended Funds.
3. Load Funds.
4. No Load Funds.
5. Tax Exempt.
6. Non Tax Exempt Funds.Open Ended Funds: The term mutual fund
is the common name for an open-end investment company. Being
open-ended means that, at the end of every day, the fund issues new
shares to investors and buys back shares from investors wishing to
leave the fund. Unit Variable Capital . Fresh subscription may be
discounted i.e. if a new NFO (New Fund Offer) is offered Assest
Management Companies may leave exit load.
Any time investors can redeemed there values, except when there
is a lockin period.
2. Closed Ended Schemes: These schemes have a stipulated
maturity period. Typically, you can invest in them for between 3 to
10 year. These schemes are open for subscription only during a
specified period at the time of their lunch. In case of listed
schemes, you can invest in the scheme at the time of the initial
issue and thereafter units of the scheme can be bought or sold on
the stock exchange where the scheme is listed. Traded on stock
exchange at a discount / premium to NAV.
Redemption of units on expiry date.
Unit Capital constant.
These funds can allow buy back of units option.3. Load Funds:
Load is one time fee payable by the investor when they enter / exit
an open-ended scheme. Loads are charged to recover initial issue
expenses including
marketing and selling expenses , brokerage .advertising
cost.
There can be Entry load, exit load or Both.
Entry load is also called Front end load.
Exit load is also called Back end load or deferred load.
4. No load Funds: In no load funds marketing and selling
expenses
Are absorbed by the AMC and the investor buys and sell units at
NAV price.
Return on investment to the investor is reduced because of the
loads. Mutual Funds classified as per Class of Investments
1. Equity Funds.
2. Money Market Funds.
3. Bond Fund.4. Hybrid Funds.
5. Gilt funds.6. Balanced Funds.
7. Growth and Income Funds.
8. Real Estate funds.
9. Funds of Funds.
10. Commodity funds. 11. Exchange Traded funds.
Equity Funds: Equity funds consists mainly of stock investments,
are the most common type of mutual funds. Equity funds hold more
than 50 percent of all amount invested in mutual funds in India.
High risk and aim at Capital appreciation
Types of Equity Funds
Aggressive Growth Funds
Growth Funds
Value Funds
Specialty Funds:
Sector Funds
Foreign Securities Funds
Mid-Cap or Small-Cap Equity Funds
Option Income Fund. Diversified Equity Funds
ELSS Funds
Equity Index Funds
Equity Income or Dividend Yield FundMoney Market Funds: Invest
in securities that mature in one year or less, such as Treasury
bills, commercial paper, and certificates of deposits. They are
often referred to as short term funds. High liquidity and safety of
principle amount.
Low risk of loosing principle amount.
Low returns.Hybrid Funds: They invest in long term securities,
as such; it is known as long-term funds. . Hybrid funds invest in a
combination of stocks, bonds, and other securities.
Gilt Funds: Invest in only government securities of over 1 year
maturity.
Risk and return are low but higher than MMF Fund. No default
risk but carry interest rate risk.
Fund value drops when interest rates goes up and rise when
Interest rates go down.
Balanced funds: Balanced Funds seek to provide Income and
Capital Appreciation. Debt Funds: Invest in Corporate Bonds and
Government securities.
Risk higher than that of Gilt Funds
Aims at regular income distribution and not at capital
Appreciation.
Types of Debt Funds:
Diversified Debt Funds
Focused Debt Funds
High yield Debt Funds
Assured return Debt Funds
Fixed Term Plan Series
Growth and Income funds: Seek to provide High Dividend and
Capital Appreciation. Asset Allocation Funds: Flexible Assest
location between debt Equity and MM. Commodity Funds: Invest in
Commodity Stocks. Real State Funds: Invest in stocks of Real Estate
companies in India or across the world.
Exchange traded Fund: A relatively recent innovation, the
exchange traded fund (ETF), is often formulated as an open-Ended.
Investment company. ETFs combine characteristics of both mutual
funds and closed-end funds. Funds of Fund: Funds of funds (FOF) are
mutual funds which Invests in other
underlying mutual funds i.e. they are funds comprised of other
funds.
Mutual Funds classified as per Investment Objectives
1. Growth Schemes.
2. Income Schemes.
3. Balanced Schemes.
4. Liquid Schemes.1. Growth schemes: Growth schemes are designed
to provide optimum returns though capital appreciation over medium
to long term. A major part of their funds are invested in equities.
So, though there could be a decline
in their value in the short-term these schemes deliver in the
long run. It is an ideal option for those in their prime earning
years.2. Income Schemes: If you are looking for regular and steady
returns go for income schemes. These schemes generally invest in
fixed income securities such as bonds and corporate debentures.
Their returns may not be as
attractive as growth schemes but they are steady and less risky
as compared to equity schemes. If you have retired or need capital
stability and income to supplement your current earnings opt for an
income scheme.3. Balanced Schemes: Balanced funds give you the best
of both and income schemes. A balanced fund invests both in
equities and fixed income security. Their returns are less volatile
as compared to pure equity funds.
4. Liquid Schemes: Liquid schemes are also known as money market
schemes. These schemes generally invest in safer short-term
instruments
such as treasury bills, certificates of deposits, commercial
papers and government securities. It is a good idea to invest your
surplus funds for short periods in liquid schemes.
TAXATION ON MUTUAL FUNDS AND INVESTORS Finance Act 1999
radically changed taxation of Dividends received by investors in
Mutual Funds
Mutual Fund as an entity is not taxed since it is a Pass through
Entity.
Finance Act 1999 made income (dividends) from UNITS totally
EXEMPT from Tax u/s 10(33) in the hands of all investors. Income
(dividends) distributed by a Debt Fund was made liable to Dividend
Distribution Tax at applicable rate. Open Ended Funds with more
than 50% invested in equity do not pay any DDT
Security Transaction Tax (STT) is charged as applicable
80 C benefit under ELSS upto Rs. 1 Lac
Restriction on dividend stripping
Within 3 months prior to record date of dividend distribution
and within
9 months after record date for dividend distribution
Impact of Dividend Distribution Tax
Investor pays the tax indirectly, since NAV comes down to the
extent of tax paid by the Fund.
DD Tax bears no relationship to the investors tax bracket.
Dividend reinvested is also subject to Dividend Distribution
Tax.
In Growth Plans, Dividend Distribution Tax not applied, since no
dividend is distributed.
Short / Long Term Capital Gains Tax
Short Term Capital Gain
If units held for less than 12 months
Long Term Capital Gain
If units held for more than 12 months
Short Term Capital Gains at normal tax rates as applicable to
investor
Long Term Capital Gains taxed at 20% with indexation or at 10%
without indexation of cost + Applicable Surcharge & Educational
Cess.Capital Gains Tax
Option to pay 20% or 10% lies with investor for each and every
security
2% surcharge also payable
Indexation Benefit on Unlisted Bonds not available
No Capital Gain tax payable if entire Capital gain invested
in
Capital Gain Bonds of NABARD, NHAI, REC
Calculating Capital Gain Tax - An Example
Mr. H Invests Rs.2 lacs in MF units during FY 97-98
After 2 years, he sells units and gets Rs.2.4 lacs
His tax liability will be:
CII 99-00 : 389, CII 97-98 : 331 , Ratio : 389/331=1.18
Indexed Cost (2,00,000 x 1.18) = Rs.2,36,000
Capital Gains Rs.4,000
Long Term Capital Gain tax of Mr. H:
Rs.4,000* 20%=Rs.800 or 10% of Rs. 40,000/- i.e. Rs. 4,000/-
Obviously he will select the option of paying Rs. 800/-
LEGAL AND REGULATORY FRAMEWORKS SEBI is Capital Market Regulator
with legal powers
SEBI regulates Mutual Funds.
All Mutual Funds to be registered with SEBI
RBI is Money Market Regulator
SEBI is regulator for Liquid Funds Investing in MM
instruments
MOF supervisory body for RBI & SEBI
Security Appellate Tribunal setup in 2003 to hear appeal against
SEBI decisions
Registrar of Companies(ROC) ensures compliance by AMC & by
Trusteeship Company with Indian company act 1956. No promises in
the future without resources backed guarantee
Standard measures to compare such as Annual Yield, CAGR.
Annualised yields for at least one, three, five years & since
Launch. For less than 1 year performance, Absolute Return without
Annualisation. Appropriate benchmark to be chosen
Risk factors prominently stated.
Appropriate benchmark to be chosen.
Any ranking of fund to be explained.
OFFER DOCUMENTOffer Document of a MF scheme is like a Prospectus
issued by inviting public to subscribe to units of MF scheme. It
discloses adequate information for investors to take informed
investment decisions. Offer Document
A Legal document.
Issued by AMC on behalf of Trustees.
Offer Document describes the Product/Scheme.
Very important document for prospective investor.
First time investors must read OD before deciding to
Invest.
For Close Ended Fund issued at the time of launching a
Scheme.
For Open Ended Fund revised every 2 year.
Contents of Offer Document
Summary information on Cover page:
Risk factors: Standard & Scheme Specific
Legal & Regulatory Compliance Certificate
Financial information on Schemes & Expenses for last 3
years.
Constitution of MF its Sponsors, Trustees, AMC & their
functions.
Investment objectives & policies
Management of Funds: Names of Fund Manager
Offer related information: Minimum Subscription amount
Names of Trustees, AMC, Schemes, Period of Opening/closing, face
value of unit, Disclaimer.
Financial Information in Offer Document
Expenses
Sales load, Redemption load
Contingent Deferred Sales Charge
Initial Issue Expenses for the scheme and for schemes
Launched during last one year.
Estimated annual recurring expenses
FUND DISTRIBUTION Residents
Resident Individuals / HUF
Indian companies
Partnership Firms
Indian Trusts / Charitable Institutions
Insurance Companies
Banks
Financial Institutions
NBFCs
Provident Funds
Mutual Funds
Non Residents
NRIs & Persons of Indian Origin
Overseas Corporate Bodies (OCBs)
Foreign Entities
FIIs registered with SEBI
Foreign nationals cannot invest in MF
AMFI CODE OF ETHICS Funds to be managed in the interest of unit
holders
Unit holders to be treated equally & fairly
Ensure meaningful disclosures
Avoid conflict of interest
Ensure segregate accounting
Stick to ethical standards and fairness in dealings
High standards of care, diligence, services and disclosure
announcements.CHARGES IN MUTUAL FUNDS Mutual Funds can recover two
types of Expenses
a. Initial issue expenses
b. Recurring Expenses
Initial Issue Expenses
effective April 04 2006 allowed up to 6% for Close Ended
funds only
Close Ended Funds cannot charge Entry Loads
Open Ended Funds can recover initial expenses through entry
LoadMAXIMUM RECURRING EXPENSEXRecurring Expenses cannot exceed the
following
regulatory limits:
Average Weekly AssetsFor Equity FundsFor Bond Funds
For first Rs.100 crores2.50%2.25%
For next Rs.300 crores2.25%2.00%
For next Rs.300 crores2.0%1.75%
On the Balance Average Weekly Assets 1.75%1.50%
Sources-AMFI
ASSEST MANAGEMENT FEES AMC charges Asset Management Fees Limits
on AMC Fees as per SEBI Regulations:
1.25% of the 1st Rs. 100 crores of weekly Average Net assets
1.00% of the weekly Average Net Assets in excess of Rs. 100 Crores.
AMC may charge additional 1% of weekly Average Net Assets for No
Load Funds
Asset Management Fees are not in addition to but a part of
recurring Expenses
Asset Management fees are usually lower for Debt Funds as
compared to Equity Funds and are disclosed in OD (Offer
Document).Types of Equity Instruments
Equity Shares
Preference Shares
Equity Warrants
Convertible Debentures
Management of Equity Portfolios
Asset Allocation
Stock Selection
Market timing
Monitoring of performance
Portfolio re-balancing
Evaluation of performance
Risk assessment and Risk management
Equity Markets: Positive Features
Largest number of listed stocks (9400 companies listed on all
stock exchanges as at 31/3/04 out of which 7200 listed at BSE with
a market cap of over 13 Lac
Crores)
Industrial diversity (50 Industries / Sectors represents.
Electronic Trading and Settlement System
Growing number of Institutional Players
Lower Transactions Cost
Lower Settlement Risks
Debt Securities: Types
Debt Securities
Central Government Securities
State Government Securities
Government Guaranteed Bonds
PSU Bonds ( Public saving units ) FI Bonds ( financial
Institution ) Bank Bonds
Corporate DebenturesDebt Securities: Positive Features
Other Features
Fixed rate / Floating rate Debt Securities
Coupon Bonds / Cumulative Bonds
Listed / Un-listed Debt Securities
Rated / Un-rated Debt Securities Secured / Unsecured Bonds
Money Market Securities
All Debt Securities maturing within one year are called Money
Market Securities
Money Market Securities (Instruments) are:
T-Bills ( Treasury Bills ) CDs ( Corporate Debentures) Call
Money
ReposMarket Capitalization based Classification of Shares
Large cap companies
High Liquidity
Low Transaction costs
Mid cap companies
Moderate Liquidity
More transaction cost
Small cap companies
High Profit potential
High Transactions costs
High Volatility
Different Indices and Benchmarks for Large / Mid / Small Cap
Price/Earnings Ratios
Higher the P/E, greater the growth potential
Dividend yield
Lower the dividend yield, Higher the growth potential
Equity Portfolio Management Organization Structure
Fund Manager
Focuses on a certain location
Selects stocks
Fixes price range for purchase & sale
Analyst
researches companies
recommends buy & sell
Dealer
Collects market intelligence
Places buy and sell orders with brokers METHODS OF
MEASSURING/EVALUATING MF PERFORMANCE Major sources of return to
investors are Dividends and Capital
Gains. Investor should track the value of his investments in
terms of
Return on such investments
Decide whether he needs to switch to another fund. Absolute
Return Method
Simple Annual Return Method
Total Return Method
Total Return Method when Dividend is Reinvested
Compounded Annual Average Rate Method (CAGR)
Expense Ratio Method
Income Ratio Method
Portfolio Turn over Ratio Method
Transaction Cost Method
Fund Size
Cash Holding Percentage
Fund Evaluation against Benchmarks
Funds Performance can be evaluated against some
Performance Indicators called Benchmarks
Mutual Funds are required by regulations to state the
benchmark in the OD against which scheme
performance will be compared
Investors expect Fund Performance better than the
Benchmark
3 Types of Benchmarks :
Relative to Market as a whole.
Relative to other Mutual Funds
Relative to other comparable financial products.
Benchmarks for Equity Funds
Type of Equity FundName of Benchmark
Index FundsBSE Sensex Index or S&P CNX Nifty Index
Diversified Equity FundsBSE 200 Index
Sector FundsSector Specific Index
Benchmarks for Debt Funds & Money Market Funds
Type of Debt FundName of Benchmark
Gilt FundGovernment Security Index
Debt FundCorporate Bond Index
Money Market FundMibor reflecting inter bank call money market
interest rates.
There are various Indices for benchmarking of Debt Funds
I-Bex Index of I-SEC is used for tracking Govt. Security
performance
CRISIL has 8 Debt Indices for tracking performance of mutual
funds. Corporate Bond Market & Money Market
NSE has Govt. Security Index & Treasury Bill Index
Source- AMFISOURCES OF TRACKING MF PERFORMANCEFollowing sources
of information can be used to track performance of Mutual Fund
Schemes
Mutual Funds Annual periodic Reports.
Mutual Funds website.
AMFI website
Daily Financial News Papers.
Fund Tracking Agencies Credence, Value Research & Lipper
India
Newsletters from brokers.
Offer Document of the Fund
Analytical Articles
MUTUAL FUND COMPANIES PRESENT IN INDIA1. ABN AMRO MUTAL FUND2.
AIG GLOBAL INVESTMENT3. BOB (BANK OF BARODA)4. BENCHMARK
5. CANARA ROBOECCO6. DBS CHOLAMANDALAM7. DSP MERILL LYNCH8.
DEUTSCHE INVESTMENT9. ESCORTS MUTUAL FUND10. FIDELITY
INVESTMENTS11. FRANKLIN TEMPLETON INVESTMENTS12. HDFC MUTUAL
FUNDS13. HSBC MUTUAL FUNDS14. PRUDENTIAL ICICI MUTUAL FUNDS15. ING
MUTUAL FUNDS16. JM MUTUAL FUNDS
17. JP MORGAN INVESTMENTS18. LIC MUTUAL FUNDS
19. LOTUS INDIA MUTUAL FUND20. MIRAE ASSEST INVESTMENTS21.
MORGAN STANLEY INVESTMENTS22. OPTIMIX INVESTMENTS23. PRINCIPAL
MUTUAL FUNDS24. QUANTUM INVESTMENTS
25. RELIANCE MUTUAL FUNDS26. SBI MAGNUM MUTUAL FUNDS27. SAHARA
MUTUAL FUNDS28. SUNDARAM BNP PARIBAS MUTUAL FUND29. TATA MUTUAL
FUND30. TAURAS INVESTMENTSTOP MUTUAL FUND COMPANIESHSBC Mutual
FundsIncorporated7/2/2002
OwnershipPrivate
SponsorHSBC Securities and Capital management private ltd.
Total Assest17,625.70 as on 6/30/2008
Equity Funds (open ended)6
Debt funds (Open ended)12
Short term Debt(Open Ended)15
Hybrid Funds(Open End)1
Chief ExecutiveSanjay Prakash
Chief Executive OfferGordon Rodriguez, Mihir Vora
Investors Relation officerK. Sriram
Address314, D.N Road, FortMumbai 400001
Telephone022) 66145000
URLwww.hsbcinvestments.co.in
Source- Value research online.comHDFC Mutual Fund
Incorporated30/6/2000
OwnershipPrivate
SponsorHousing Development Finance Corporation Ltd, Standard
Life Investments Ltd
Total Assest52,581.40as on 6/30/2008
Equity Funds (open ended)11
Debt funds (Open ended)13
Short term Debt(Open Ended)13
Hybrid Funds(Open End)6
Closed Ended Funds73
Chief ExecutiveMilind Barve
Chief Executive OfferPrashant Jain
Investors Relation officerYezdi Khariwala
AddressRamon House, 3rd Floor, H.T.Parekh Marg, 169, Backbay
Reclamation, ChurchgateMumbai 400020
Telephone022) 22029111/ 66316333
URLwww.hdfcfund.com
Prudential ICICI Mutual Funds
Incorporated30/6/2000
OwnershipPrivate
SponsorPrudential plc, ICICI Bank
Total Assest58,583.51as on 6/30/2008
Equity Funds (open ended)23
Debt funds (Open ended)32
Short term Debt(Open Ended)17
Hybrid Funds(Open End)7
Closed Ended Funds78
Chief ExecutiveNimesh Shah
Chief Executive OfferNilesh Shah
Investors Relation officerRanganath Athreya
AddressPeninsula Tower,8th Floor,503 Peninsula Corporate
Park,Ganpatrao Kadam Marg, Off.Senapati Bapat Marg,Lower
ParelMumbai 400013
Telephone(022) 24997000
URLwww.icicipruamc.com
LIC Mutual FundIncorporated19/6/1989
OwnershipPublic
SponsorLife Insurance Corporation Of India.
Total Assest14,845.99as on 6/30/2008
Equity Funds (open ended)7
Debt funds (Open ended)9
Short term Debt(Open Ended)4
Hybrid Funds(Open End)13
Closed Ended Funds15
Chief ExecutiveSushobhan Sarker
Chief Executive OfferS.K Das
Investors Relation officerNeeraj Verma
AddressIndustrial Assurance Building 4th Floor, Opp. Churchgate
Station Mumbai 400020
Telephone(022) 22885971/ 55719750/9324543832
URLwww.licmutual.com
Reliance Mutual FundIncorporated30/6/95
OwnershipPrivate
SponsorReliance Capital Ltd
Total Assest70,811.86as on 6/30/2008
Equity Funds (open ended)22
Debt funds (Open ended)19
Short term Debt(Open Ended)9
Hybrid Funds(Open End)1
Closed Ended Funds64
Chief ExecutiveVikrant Gugnani
Chief Executive OfferMadhusudan Kela, Amitabh Mohanty
Investors Relation officerMadhusudan Kela, Amitabh Mohanty
AddressExpress Building, 4th & 6th Floor, 14 - 'E' - Road,
Above Satkar Hotel, Opposite Churchgate Station ChurchgateMumbai
400020
Telephone(022) 30414900
URLwww.reliancemutual.com
SBI Mutual Fund
Incorporated29/6/1987
OwnershipPublic
SponsorState Bank of India, Societe Generale Asset
Management
Total Assest26,977.36as on 6/30/2008
Equity Funds (open ended)14
Debt funds (Open ended)12
Short term Debt(Open Ended)12
Hybrid Funds(Open End)3
Closed Ended Funds21
Chief ExecutiveSyed Shahabuddin
Chief Executive OfferSanjay Sinha
Investors Relation officerG Kandasubramanian
Address191, Maker Tower 'E' 19th Floor,Cuffe Parade Mumbai
400005
Telephone(022) 22180221/ 27
URLwww.sbimf.com
SUNDARAM BNP PARIBAS Mutual Fund
Incorporated24/8/1996
OwnershipForeign JV
SponsorSundaram Finance Ltd., BNP Paribas Asset Management
Total Assest13,483.48as on 6/30/2008
Equity Funds (open ended)15
Debt funds (Open ended)11
Short term Debt(Open Ended)12
Hybrid Funds(Open End)2
Closed Ended Funds31
Chief ExecutiveT. P Raman
Chief Executive Offer
Investors Relation officerP Sundararajan
Address2nd Floor, 46, Whites Road, Chennai 600014
Telephone(044) 28583362/ 28583367/ 28569900
URLwww.sundarambnpparibas.in
TATA Mutual Fund
Incorporated30/6/1995
OwnershipForeign JV
SponsorTata Investment Corporation Ltd, Tata Sons LTD.
Total Assest18,605.60as on 6/30/2008
Equity Funds (open ended)16
Debt funds (Open ended)18
Short term Debt(Open Ended)13
Hybrid Funds(Open End)2
Closed Ended Funds39
Chief ExecutiveVed Prakash Chaturvedi
Chief Executive Offer
Investors Relation officerLatha Rajaraman
AddressMulla House, Ground Floor 51, M.G.Road Near Flora
FountainMumbai 400001
Telephone(022) 66315191/92/93
URLwww.tatamutualfund.com
BIRLA SUN LIFE Mutual Fund
Incorporated23/12/1994
OwnershipForeign JV
Sponsor37,316.31as on 6/30/2008
Total AssestSun Life (India) AMC Investments Inc., Birla Global
Finance Ltd
Equity Funds (open ended)20
Debt funds (Open ended)29
Short term Debt(Open Ended)17
Hybrid Funds(Open End)4
Closed Ended Funds61
Chief ExecutiveAnil Kumar
Chief Executive OfferA Balasubramanian
Investors Relation officerRajiv Joshi
AddressAhura Centre, 2nd Floor, Tower A, 96A-D, Mahakali Caves
Road, Andheri (East)Mumbai 400093
Telephone(022) 66928000
URLwww.birlasunlife.com
ING Mutual Fund
Incorporated11/2/1999
OwnershipPrivate
SponsorNational Nederlanden Interfinance B.V (ING Group)
Total Assest9,795.73as on 6/30/2008
Equity Funds (open ended)13
Debt funds (Open ended)13
Short term Debt(Open Ended)10
Hybrid Funds(Open End)4
Closed Ended Funds41
Chief ExecutiveVineet K. Vohra
Chief Executive OfferParas Adenwala, Ramanathan K
Investors Relation officerJyothi Krishnan
Address601-602, 6th Floor, "Windsor" Off. C.S.T.Road,
Vidyanagari Marg, Kalina, Santacruz-(East)Mumbai 400098
Telephone(022) 39827999
URLwww.ingim.co.in
Classification of Funds Based on Risk Levels
Low Risk Funds :
Money Market Fund
Government Securities Fund
Moderate Risk Funds :
Income Fund
Balanced Fund
Growth & Income Fund
Growth Fund
Short Term Bond Fund
Intermediate Bond Fund
Index Fund
High Risk Funds : Aggressive Growth Fund
International Fund
Sector Fund
Specialized Fund
Risks in Mutual Fund Investing
Risk in a generic sense means the possibility of financial
loss
In the investment world possibility of financial loss arises
from variability of earnings from time to time.
A fund with stable, positive earnings is less risky than a fund
with fluctuating total return.
Risk is thus equated with volatility of earnings - a
statistically measurable concept.
COMPANY PROFILE
INTRODUCTION
ING Group is a global financial institution of Dutch origin with
120,000 employees. ING offers banking, insurance and asset
management to more than 60 million clients in over 50 countries.
The clients are individuals, families, small businesses, large
corporations, institutions and governments. ING comprises a
broad spectrum of prominent businesses that increasingly serve
their clients under the ING brand.
Key to ING's retail business is its distribution philosophy of
'click-call-face'. This is a flexible mix of internet, call
centers, intermediaries and branches that enables ING to deliver
what today's clients expect: unlimited access, maximum convenience,
immediate and accurate execution, personal advice, tailor-made
solutions and competitive rates. ING's wholesale product offering
focuses strongly on its strengths in employee benefits/pensions,
financial markets, corporate banking and asset management.
IN INDIA
In India, ING is present in all three fields of banking,
insurance and asset management in the form of ING Vysya Bank, ING
Vysya Life Insurance and ING Investment Management respectively.
The presence in all three fields signifies the importance that the
group attaches to the Indian markets and the group's operations
here, as well as its bullish future outlook on the country.ING
Vysya Bank and ING Vysya Life Insurance are headquartered at
Bangalore, while the corporate office of ING Investment Management
is situated at Mumbai. The synergies arising out of the three
distinct
but complimentary businesses are bound to be an asset to the
group in the changing market dynamics of the future. The first such
signs are already visible on the horizon with combined products
being successfully launched by the different entities of the group
in conjunction with each other.
I
ING INVESTMENT MANAGEMANT
PROFILE
In India ING Investment Management (I) Pvt Ltd has an investor
base of over 1,92,677 with Rs.9795.73 crores as of June 30th, 08
(Source: www.amfiindia.com). With a presence in 40 locations,
currently manage 21 schemes.
ING Investment Management (I) Pvt Ltd has been associated with
innovation and responsive adaptability with sharp minds at work.
ING Investment Management has sealed a position of strength and is
considered as one of the top contenders to challenge the market
leaders. ING Investment Management has enjoyed many firsts and has
always maintained a pioneering outlook.
A few achievements are highlighted below:
1. First Investment Manager to launch a packaged concept in
Asset Management 2. Industry.3. ING Dynamic Asset Allocation Fund
was awarded Most Innovative Product by Asia Asset Monitor.
4. First company to launch Daily Transfer Plan called as Zoom
Investment Plan.
BUSINESS PRINCIPLE
As a global provider of financial products and services, ING
plays an important role in society. In order to fulfill this role
it needs to maintain the confidence of its customers, shareholders,
employees, and other stakeholders by acting with professionalism
and integrity.
ING Group attaches paramount importance to upholding its
reputation, and the ING Business Principles play an important role
in this respect. ING expects the highest levels of integrity from
its employees, regardless of their position in the
organization.
THE ING BUSINESS PRINCIPLES ARE:
1. Commitment to their integrity.2. Aim for above average
return.
3. Respect each other.
4. To promote sustainable development and respect human
rights.
5. Involved in the communities they operate.MISSION
Setting the standard in helping their customers manage their
financial future.
STRATEGYTo remain focus on creating values for shareholders and
rewarding them with better total returns on investment than the
average of our peers in the financial sector over a long time.
INTEGRATED RISK MANAGEMENT
IN recent years ING has systematically invested in improving
their risk management capabilities, building a strong rirk
management function fully integrated to the daily
management of business and daily planning. It also works with
businesses to identify and execute business opportunities, lower
funding costs and strategic planning.
THE AMC is managing 20 open ended funds and 2 closed ended
funds
Open Ended
1. ING Select Debt Fund
2. ING ATM Fund
3. ING Balanced Fund
4. ING Dividend Yield Fund
5. ING Domestic Opportunity Fund
6. ING Equity Fund
7. ING Floating rate fund
8. ING Gilt Fund
9. ING GILT Provident Fund
10. ING Income Fund
11. ING Income Fund-Short Term Plan
12. ING L.I.O.N Plan
13. ING Liquid Fund
14. ING Midcap Fund
15. ING MIP Fund Plan A
16. ING MIP Fund Plan B
17. ING Nifty Plus Fiund
18. ING Select Stock Fund
19. ING Tax Saving Fund
20. ING Latin America FundClosed Ended
1. ING C.U.B Fund
2. ING Dynamic Assest Allocation Fund
COMPARING ING FUNDS WITH OTHER MUTUAL FUNDS
EQUITY
ICICI PRUDENTIAL INFRASTRUTURE FUND
DATEPERIODNAV
INFRASTRUTURE FUNDBENCHMARK RETURN
30-apr 0829.13
30-apr-08Last 1 year19.1951.6226.29
31-aug-05Since inception10.0049.3433.64
Source- ICICI FACTSHEETBIRLA MIDCAP FUNDRETURNS1 year3 year5
yearSince inception
Madcap fund32.5134.8352.1545.88
Cnx midcal28.5026.6847.4142.25
Source- BIRLA FACTSHEETSBI MAGNUM COMMA FUNDCompound Annualized
returnsComma fund returnBse 200 Index return
Return for the last 1 year52.3748.50
Return since Inception38.7440.46
Source SBI FACTSHEETHSBC EQUITY FUND
Compound Annualised returnHSBC Equity fundBSE 200
1 year30.2424.13
3 year34.6430.56
5 year54.2739.96
Since inception50.7435.52
Source - HSBC FACTSHEETHDFC GROWTH FUND
DatePeriodNAVReturnsBSE 200
Dec,28 2007185 days167.888-31.25-37.53
June.30 2005Last 3 years57.34326.2321.20
June,30 2003Last 5 years23.35837.6029.43
Since inceptionOct,11 961025.3015.18
SOURCE- HDFC FACTSHEETING CORE EQUITY FUNDAnnualised return%
change in NAVBSE 100
1 year26.6430.71
3 year38.7140.46
5 year42.8944.24
Since inception14.8121.46
Sources-ING FACTSHEET
COMPARISION BETWEEN EQUITY FUNDSEQUITY FUNDSINCE INCEPTION
ING21.46
HDFC15.18
HSBC35.52
SBI40.46
BIRLA42.25
ICICI49.34
BEBT FUNDSING LIQUID FUND
Returns for the period% change in NAV% change in Benchmark
1 year7.607.17
3 year6.706.37
5 year5.965.49
Since inception6.73N/A
HDFC LIQUID FUND
DateNAVReturnsBenchmark
June,23 200816.394.17.09
Dec,28 200715.7524.253.60
June,30 200513.3317.196.46
Since inception10.006.65N/A
RELIANCE LIQUID FUNDPeriodReturns Benchmark Return
Last 1 year6.636.39
Last 3 year5.435.13
Last 5 year5.685.51
Since inception6.75N/A
ICICI PRUDENTIAL LIQUID PLANDate Liquid planBenchmark
Apr,30 20078.878.86
Apr,29 20057.316.26
Apr,30 20036.625.43
Since inception7.08N/A
BIRLA SUNLIFE LIQUID PLAUS FUNDReturnsLiquid PlusBenchmark
1 year8.598.78
3 year6.916.09
5 year6.275.41
Since inception6.06N/A
COMPARISION BETWEEN DEBT FUNDS
DEBT FUNDSSince Inception
ING6.73
HDFC6.65
RELIANCE6.75
ICICI7.08
BIRLA6.06
PROJECT PROFILEDuring our 8-10 weeks training program, we were
assigned a specific Project Work as summer project which involved
project design, designing of questionnaires, sampling techniques,
administering the survey, data tabulation, and analysis and drawing
inferences.
The details of the projects are given below:
PROJECT TITLE
INVESTORS AWARENESS ABOUT ASSEST MANAGEMENT COMPANIES
OBJECTIVES
1. To understand the mutual fund companies.
2. To understand the competition among competitors.
3. To know investors knowledge about mutual fund.4. To do
customer survey for noticing the trend of investment of their
income.
5. Customer perspective in terms of affordability, awareness,
acceptance, etc.
6. Comparison of the products and services of ING AMC with its
competitors.
LEARNINGS
1. Learnt about the functioning of stock market and the basis of
share trading.
2. Investors perception about mutual funds companies.3.
Comparison of all the mutual funds.
4. Comparison between funds offered by different asset
management companies.
STRATEGY
To go for project work, first I understood the company, its
products and services and the industry. Then I studied the products
and services of its competitors so that I can understand the
competition in the market. After collecting information of
competitors, I fabricated a questionnaire and conducted investors
survey to find investments trend of people in various financial
products and to understand the interests of people towards
companies.RESEARCH METHODOLOGYA systematic Research reduces the
uncertainty in the decision-making process management. Properly
conducted marketing research is an indispensable tool for top
management in marketing decision. Marketing Research is defined as
systematic design, collection analysis and reporting of data and
findings relevant to a specific marketing situation facing the
company.
DATA COLLECTION
Data has been collected through primary as well as from
secondary sources:-
Primary Data:-In the present study primary data has been
collected on the basis of face to face interaction and
questionnaires.
Secondary Data:-The secondary data is being structured from
various websites, books, magazines and journals.
OBJECTIVE OF THE STUDYThe objective of the project is to find
the following points:
1. Products and services provided by the competitors to their
customers.
2. Investment trend of people.
3. Returns derived in last 3 to 5 years.
4. Risk appetite of people and their consideration behind
investments.
5. Awareness of people about Assets management companies.6.
Interest of interest in mutual funds.
SCOPE OF THE STUDY1. ING and other players in the market..
2. Investors of NCR region interest in Asset Management
company.RESEARCH DESIGNMethodology for Customer Survey
Target Population: All customers of ING VYSYA Bank
Survey Frame: All Atm Machines of ING and data of investors of
ING VYSYA bank for my survey.
Sampling Element: Individuals.
Sample Size: 2oo customers.
Sample Area: Customers of bank in the NCR regionType of data
used: Primary data.
Tools Used: Questionnaire
Gender: Males and Females
Age: 25 years to 70 years.
DATA ANALYSIS AND INTERPRETATION1. What is your age?
Out of total sample of 200 investors, 34 are in the category of
20-30, 54 falls in the
category of 30-40, 62 investors are in the age group of 40-50
years, 50 falls in the
category of above 50 years of age.
2. What is your annual income?
48% respondents are having an annual income between Rs. 2.5 Lacs
and Rs. 5 Lacs,
35% respondents are having an annual income between Rs. 1 Lac
and Rs. 2.5 Lacs,
10% respondents are earning above Rs. 5 Lacs and only 7% are in
the category of
below 1 Lac.
3. What kind of investment do you make?This question was asked
to know investors pattern of investment in mutual funds..
In the above diagram maximum investors i.e 150 out of 200 are
investing in equity. The reason behind it is that they want maximum
profit from their investments. the other reason is the past
performance of equity funds. In liquid funds 40 out of 200
investors are investing . This is due to the fear of loosing money
in Equity market and they want to play the safe game and 10 out of
200 are investing in Debt market as their capital will be safe.4.
From last how many years you are doing investments?
This question was asked to find out investors knowledge about
mutual funds.
The above diagram shows that 40 % or 80 investors out of 200 are
investing from less than 2 years another 40 % are investing in
mutual funds from last 5 years.Investors who are investing in
mutual funds from 10 years are only 15 % and who are investing in
mutual funds from above 10 years are only 5 % i.e only 10 out of
200.5. Which mutual fund company have you invested in?
This question was asked to find out in which company investors
have invested their money.
From the questionnaire the findings is that 28 % have invested
in Reliance mutual fund, 18 % of investors have invested in ICICI
mutual funds, 8 % or 16 out of 200 investors have invested in ING
mutual funds and other mutual fund company 46 % of investors have
invested i.e. 96 out of 200. =6. In which ING plan you have done
investments?
This question was asked to find out in which ING scheme
investors have invested.
The above diagram shows that in DOF (Domestic Opportunity Fund)
27 % of investors have invested. In RLF (Real Estate Fund) 38 % of
investors have invested. In Liquid Plus fund 20 % of investors have
invested and in other fund only 15 % of investors have invested.7.
What is your main investment objective? This question was asked to
find investors criteria of investment.
From the figure it can be see that out of sample size of 200
investors, 53% of the respondents have returns as their main
investment consideration because everybody wants good income on
their investments, 22% respondents save their money for the purpose
of tax saving so that they can pay less tax to the government ,22 %
look safety perspective as their main objective is to save some
amount of money and only 4 % of investors are their who dont know
.8. For what time period you do investments? This question was
asked to find out their investment policy.
The above figures shows that majority of people i.e. 41 % invest
between 1-3 years so that they can earn maximum appreciation in
their capital , 33 % of investors invest for more than 3 years for
security reasons and only 26 % of investors do investments for 1
years as they dont want to take risk .9. In which plan you have
invested?This question was asked to know investment detail .
From the above figure we get to know that 53 % of investors
invest in SIP ( Systematic Investment Plan) , the reason behind is
the fluctuation of share market as they want to get better returns
and they are basically service class people as they cant afford to
pay money at a single time.. 47 % of investors invest in lumpsum
amount as they believe that they can get maximum appreciation in
their capital if they invest at a single time.10. Why have you
chosen SIP for doing investments?
In the above diagram, we find that majority of the investors
(42% i.e. 84 out of 200 investors) go for the option of monthly
saving, 41% people i.e. 82 of them want to reduce the risk of
fluctuating market and rest 17% of investors do it for other
purpose.
11. Why have you opted lump sum for doing investments?
In the above diagram it is shown the preference of the investors
regarding investment in lump sum plan and it is found that majority
of the investors (60% i.e. 120 out of 200 investors) invest for the
purpose of getting higher returns, they give first preference of
investing in lump sum plan to getting higher returns and they give
preference to the fluctuating market or arbitrage i.e. buying in
lower market and selling in higher market (30% i.e. 60 out of 200)
and lastly they want to invest for short period (only 20 out of 200
investors). As they earn \
profit or get returns maximum returns they sell the
fund.OBSERVATIONS
1. Some investors see it as a Gambling and some see it as the
best way to increase their capital.
2. Investors still dont have proper knowledge about mutual
funds.3. Investors usually watch past performance of funds before
investing.
4. Investors still belief that if they invest in SBI and
Reliance their capital will be safe.5. Business class people doesnt
want to invest as they believe that they can earn more if they
invest same amount in their business.
LIMITATIONSWherever study is conducted involving human behavior,
it suffers from certain drawbacks because there is possibility of
deviation between what is recorded and what truth is. So there are
few drawbacks in this study that are under mentioned.
1. Sample size is very small and the obtained frequencies may do
not have good fit expected frequencies, so there might be some
discrepancies in options.
2. The sample, which was selected, may not represent the true
characteristics of all the questions. So there may be variations in
the results found from the reality.
3. Respondents were hesitant to give information to some
questions.
4. Some investors didnt entertain me.
5. They didnt give us information easily.
6. It was difficult to collect the correct information.
CONCLUSIONUnder this project, I had the opportunity to get
in-depth understanding about mutual funds and different terms
related with the financial market. This project enabled me to know
the awareness level of the investors about the various mutual fund
companies.This project also helped me gain an insight into various
aspects like the different products and services offered by the
competitors and the investment trend of the people.With the help of
this project, I have been able to broaden my knowledge about the
financial markets especially in terms of mutual funds.
REFERENCES ING ORANGE BOOK
JAGDEESH, N. and S. TITMAN ( Returns of buying Winners and
Selling Loosers: Implications of stock market efficiency) page no.
65-91. M. USEEM: Investors Capitalism. page no. 104-107
Mutual Funds Insight Magazine.
Value Research Magazine
Factsheet Of Various Mutual Fund Companies.
WWW..
www.investmarketbusiness.com www.ingim.com
www.valueresearchonline.com www.investopedia.com1. Switzer, N,
Lorne, Huang, Yanfen, INTELLECTUAL CAPITAL How does human capital
affect the performance of small and mid-cap mutual funds . Year
2007 issue 4, page no. 666-881, Emerald group publisher2. Johnson,
T, Don MANAGERIAL FINANCE Real estate investing.
Year 2006 issue 6, page no. 953-954, Emerald group publisher3.
Shank, Todd, Hill Ron, MANAGERIAL FINANCE A Study of Socially
Responsible Firms' Short-Term versus Long-term Performance. Year
2005 issue 8, page no. 33-46, Emerald group publisher.4. Baris,
G,Jay, Warshall ,A INVESTMENT COMPLIANCE Investment Company
Governance. Year 2004, issue 2, page no. 16-22.Emerald Publisher.5.
Ramasamy, Bala, Yeung, H, C INTERNATIONAL JOURNAL OF BANKING
MARKETING Evaluating mutual funds in an emerging market: factors
that matter to financial advisors. Year 2003, issue 3, page no.
122- 136.Emerald publisher.
QUESTIONNAIRE
Investors Awareness about Asset Management Company .NAME:
OCCUPATION:
CONTACT NO:
1. What is your age?
(a) 20-25 (b) 25-30 (c) 30-35 (d) 35-40
(e) Above 40
2. What is your annual income?
(a) Less than Rs.100000
(b) Between Rs.100000- Rs.250000
(c) Between Rs.250000- Rs.500000
(d) Above Rs.500000
3. From last how many years are you doing investment?
(a) Less than 2 years
(b) 3-5 years
(c) 5-10 years
(d) More than 10 years
4. What kind of investment do you make? (You can tick more than
one)
(a) EQUITY
(b) DEBT
(c) LIQUID
5. Which mutual fund company you have invested in.
(a) ING
(b) RELIANCE
(c) ICICI PRUDENTIAL
(d) OTHERS
SPECIFY:
6. In which plan of ING you have done investment?
(i) DOMESTIC OPPORTUNITY FUND
(ii) REAL ESTATE FUND (iii) Any other (b) Debt
(c) Liquid Fund
7. What is your main investment objective?
(You can tick more than one)
(a) Savings
(b) Tax saving
(c) Capital appreciation
8. For what time period you do investment?
(a) Short term (Up to 1 year)
(b) Middle term (1-3 years)
(c) Long term (Above 3 years)
9. In which plan have you opted?
(a) SIP (Systematic Investment Plan)
(b) Lump sum
10. Why have you chosen SIP for doing investment?
(a) Monthly saving
(b) To reduce risk of fluctuating market
(c) Any other
11. Why have you opted lump sum for doing investment?
(a) Short period investment
(b) Greater returns
(c) To take the advantage of arbitrage (buying in
lower market and selling in higher market)
High return
Low return
Sector Funds
Diversified Equity Funds
Index Funds
Balanced Funds
Debt Funds
Gilt Funds
MMMF
Risk Low
Risk High
Amity Business SchoolPage 5
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0.6Greater returnsGreater returns
To take the advantage of arbitrage0.3To take the advantage of
arbitrage
Short period investmentShort period investment0.1
Greater returns
To take the advantage of arbitrage
Short period investment
Sheet1
Greater returnsTo take the advantage of arbitrageShort period
investment
Greater returns60%
To take the advantage of arbitrage30%
Short period investment10%
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0.07Less than Rs.100000Less than Rs.100000
0.35Rs.100000- Rs.250000Rs.100000- Rs.250000
0.48Rs.250000- Rs.500000Rs.250000- Rs.500000
0.1Above Rs.500000Above Rs.500000
Sheet1
Less than Rs.100000Rs.100000- Rs.250000Rs.250000- Rs.500000Above
Rs.500000
7%35%48%10%
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