INTRODUCTION
PREFACE
I have study and analyze the different aspects of investment
companies (mutual funds) of India and has also done the comparative
analysis related to different companys mutual funds for the
submission of research report in college and university in the
partial fulfillment of Master of Business Administration degree
program.
Today the mutual fund industry has emerged as the most dynamic
segment of the Indian financial system, thanks to the rigorous
policy initiatives of the government. Till 1987,UTI was the only
mutual fund with an investiable fund of Rs.6700 crores. The
industry has witnessed an unprecedented level of growth with the
entry of mutual funds sponsored by nationalized bank and insurance
companies in1987. By the end of 1992-93, the funds under management
rose to nearly Rs.48,000 crores. The mutual fund activity attained
momentum in1993 with the opening up of the industry to private
sector fund operators and, consequently, by 1995, the investiable
funds of the industry have crossed Rs.72,000 crores. By the end of
1994-95, 11 private sector and nine public sector mutual funds,
excluding UTI, came into operation.
As mutual fund industry is one of the important industries in
todays scenario so, I have tried to analyze different mutual funds
related to different industries both public as well as private.
The report contains the analysis and interpretation of various
aspects of mutual fund industry. The starting part of the report
gives the description of the evolution, growth, classification and
current status of mutual funds in India with a focus on the
problems and prospects of the industry.
The later part of the report deals with the research that is
research methodology used and the analysis and interpretations of
different companies mutual funds along with the findings of the
research and recommendation to improve this industry.
Acknowledgement
No project is created entirely by an individual. Many people
helped me to rate this project and each of their contribution has
been valuable
I take this opportunity to express my profound and sincere
gratitude , Symbiosis centre for Distance learning, Pune, for
providing me with the opportunity to explorer the corridors of the
corporate world and gather invaluable information and practical
experience via such summer training project in finance.
First I want to give a lot of thanks and grateful regards to my
teacher for valuable guidance inspiration and supervision
throughout my work.
I also grateful to these companys whose data has been used for
completing number of studies.And atlest but not the least I give my
heartiest gratitude to my respected parents family members and
friends who gave me full support in the completion of this
project.
Ravi Shanker declaration Ravi Shanker student of PGDBA
Programme, Symbiosis centre for Distance learning, Pune of Batch
2007, Reg No. 200759687 hereby declare that the Research Project
Report titled as A COMPARATIVE STUDY OF MUTUAL FUNDS SCHEMES OF
DIFFERENT INVESTMENT COMPANIES is the outcome of my own research
work and the same has not been submitted to any
University/Institution for the award of any degree.Date:
11-11-2011(Ravi Shanker)
PGDBA 2007 TABLE OF CONTENTS
1. Introduction
2. History of mutual funds in India3. Organization of mutual
funds in India4. Objectives of study
5. Research Methodology
i. Types of researchii. Collection of secondary data
6. Classification of mutual funds
7. Role of mutual funds in the financial market
8. Future of mutual funds in India
9. Concept of mutual funds10. Data Analysis
11. Findings
12. Suggestions13. Conclusion
14. Bibliography
INTRODUCTIONIt is said, Necessity is the mother of invention.
Innovation has been always the spirit of human nature. In the
financial sector also, several new instruments had been innovated
in tune with the market needs. The constraints of banks to provide
growth with market yields for the investors section of society has
already given birth to one more new institution the Mutual
Fund.
Therefore, emergence of mutual funds in the Indian scene is a
product of necessity. The constraints on the banking sector to tap
the fruits of the capital market and the reluctance of the
investors to take a direct plunge in complex and erratic capital
market operation required an intermediary. Mutual fund fills this
gap admirably.
The word mutual denotes something to be done collectively by a
group of people with the common objective having mutual faith and
understanding among them. The other part of the word, i.e. fund is
used in monetary terms, to collect some money from the members of
the mutual fund for a common objective of all the members of the
group. Here the common objective of the members of mutual fund can
be well guessed as earning the profits from a huge collective fund
with a joint effort.
Mutual fund has been defined as it is a non-depository or
non-banking financial intermediary which acts as important vehicle
for bringing wealth holders and deficit units together
indirectly.
According to Dr. Vinayakam, N. a Mutual Fund is an indirect
investment made by the public by pooling in sources. The fund per
se comprises equal units/ shares/ certificates and the public
invests its savings in them depending on the quantum of resources
available with the individuals. The fund uses these savings for
investment in equity shares and debentures of various companies.
The resulting earnings are distributed among the fund owners.
Mutual funds perform as per their portfolio, and better the
portfolio management, it will give better returns.
A mutual fund is a single; large professionally managed
investment organization that combines the funds of many individual
investors having similar investment objectives. In rapidly changing
stock markets, it is essential to respond positively and quickly to
events, which tend to move share prices. The search for maximum
returns has to be balanced against the need to control risk. A
mutual fund is able to reduce such risk associated with investments
by investment in a large number of companies across different
industries. An individual investor with limited financial resources
may be unable to do so. The guiding factor behind investment
decisions of a mutual fund is the fundamental strength of a share
determined by the overall economic situation. The research dept. is
the backbone of a mutual fund, which devises investment strategies
based upon market knowledge, experience and the expertise.
A mutual fund is a pool of co-mingled funds invested by
different investors. Most mutual fund investors do not know each
other and never have contact with each other. The investment
management of such a pool of funds is usually performed by a
professional money management firm for a fee of say 1% of the
market value of all the assets managed each year. Such managers
invest the funds in a diversified portfolio of securities they
research and analyze and expect to perform well. The owners of
shares in mutual funds may either invest more money or withdraw
their money at time from the mutual fund scheme.
HISTORY OF MUTUALFUNDS IN INDIA
The end of millennium marks 36 years of existence of mutual
funds in this country. The ride through these 36 years is not been
smooth. Investor opinion is still divided. While some are for
mutual funds others are against it.
UTI commenced its operations from July 1964 .The impetus for
establishing a formal institution came from the desire to increase
the propensity of the middle and lower groups to save and to
invest. UTI came into existence during a period marked by great
political and economic uncertainty in India. With war on the
borders and economic turmoil that depressed the financial market,
entrepreneurs were hesitant to enter capitalmarket.The already
existing companies found it difficult to raise fresh capital, as
investors did not respond adequately to new issues. Earnest efforts
were required to canalize savings of the community into productive
uses in order to speed up the process of industrial growth.
The then Finance Minister, T.T. Krishnamachari set up the idea
of a unit trust that would be "open to any person or institution to
purchase the units offered by the trust. However, this institution
as we see it, is intended to cater to the needs of individual
investors, and even among them as far as possible, to those whose
means are small."
His ideas took the form of the Unit Trust of India, an
intermediary that would help fulfill the twin objectives of
mobilizing retail savings and investing those savings in the
capital market and passing on the benefits so accrued to the small
investors.
UTI commenced its operations from July 1964 " with a view to
encouraging savings and investment and participation in the income,
profits and gains accruing to the Corporation from the acquisition,
holding, management and disposal of securities." Different
provisions of the UTI Act laid down the structure of management,
scope of business, powers and functions of the Trust as well as
accounting, disclosures and regulatory requirements for the
Trust.
One thing is certain the fund industry is here to stay. The
industry was one-entity show till 1986 when the UTI monopoly was
broken when SBI and Can bank mutual fund entered the arena. This
was followed by the entry of others like BOI, LIC, GIC, etc.
sponsored by public sector banks. Starting with an asset base of
Rs. 25 crore in 1964 the industry has grown at a compounded average
growth rate of 27% to its current size of Rs.90000 crore.
The period 1986-1993 can be termed as the period of public
sector mutual funds (PMFs). From one player in 1985 the number
increased to 8 in 1993. The party did not last long. When the
private sector made its debut in 1993-94, the stock market was
booming.
The opening up of the asset management business to private
sector in 1993 saw international players like Morgan Stanley,
Jardine Fleming, JP Morgan, George Soros and Capital International
along with the host of domestic players join the party. But for the
equity funds, the period of 1994-96 was one of the worst in the
history of Indian Mutual Funds.
First Phase 1964-87
An Act of Parliament established Unit Trust of India (UTI) on
1963. 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 Can 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.
Mutual funds have been around for a long period of time to be
precise for 36 yrs but the year 1999 saw immense future potential
and developments in this sector. This year signaled the year of
resurgence of mutual funds and the regaining of investor confidence
in these MFs. This time around all the participants are involved in
the revival of the funds ----- the AMCs, the unit holders, the
other related parties. However the sole factor that gave lifer to
the revival of the funds was the Union Budget. The budget brought
about a large number of changes in one stroke. An insight of the
Union Budget on mutual funds taxation benefits is provided
later.
It provided centre stage to the mutual funds, made them more
attractive and provides acceptability among the investors. The
Union Budget exempted mutual fund dividend given out by
equity-oriented schemes from tax, both at the hands of the investor
as well as the mutual fund. No longer were the mutual funds
interested in selling the concept of mutual funds they wanted to
talk business, which would mean to increase asset base, and to get
asset base, and investor base they had to be fully armed with a
whole lot of schemes for every investor. So new schemes for new
IPOs were inevitable. The quest to attract investors extended
beyond just new schemes. The funds started to regulate themselves
and were all out on winning the trust and confidence of the
investors under the aegis of the Association of Mutual Funds of
India (AMFI). One can say that the industry is moving from infancy
to adolescence, the industry is maturing and the investors and
funds are frankly and openly discussing difficulties opportunities
and compulsions.
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.
As at the end of October 31, 2003, there were 31 funds, which
manage assets of Rs.126726 crores under 386 schemes.
ORGANIZATION OF A MUTUAL FUND
Essentially there are four parties to any mutual fund
organization. These are:
The Sponsor
The Asset Management Company (AMC)
The Trustees
The Custodians
THE SPONSOR
A mutual fund is set up b a company, which is called the
sponsor. Sponsor must be has a sound track record, general
reputation and fairness among the players in its business
transactions {SEBI (Mutual Funds) regulations, 1993}. Now in India
a sponsor can be financial institution like ICICI, a bank either in
the public sector or in the private sector like state bank of India
(SBI), life insurance corporation of India (LIC), General insurance
corporation of India (GIC), Unit trust of India and a body
corporate registered under the Indian companies Act, 1956 like HB
portfolio leasing Ltd.
THE ASSET MANAGEMENT COMPANY
Mutual funds are to be operated by a separate Asset Management
Company (AMC). The asset management Company operates and manages
the fund of the mutual fund schemes and mutual fund regulations
issued from time to time by the Securities and Exchange Board of
India (SEBI). It has to submit a quarterly report on the
functioning of the funds to the trustees. The asset Management
Company employs professionals from various fields for conducting
the research and taking investment decisions for the maximization
of return on investments made by the mutual fund in the capital
market. The general success of mutual fund lies in the quantum of
return on investments to any scheme of the fund.
To ensure efficient management, SEBI desires that existing Asset
Management Company should have a sound track record (good net
worth, dividend paying capacity and profitability, etc.) general
reputation and fairness in transactions. The directors of AMC
should be expert in relevant fields like portfolio management,
investment analysis and financial administration.
TRUSTEES
The third essential of a mutual fund is the Trustee. A trustee
is a person who holds the property of mutual fund in trust for the
benefit of the unit holders. Trustees have the exclusive ownership
of the Trust Fund and are also vested with the general power of
superintendence, direction and management of the affairs of the
Trust. The Trustees ensure that Asset Management Company fulfills
the duties and functions assigned to it. The Trustees are the
persons of very high repute and experts in their fields.
Once a mutual fund trust is formed, virtually the role of the
sponsor comes to an end, as it is mutual trust, which takes charge
of the mutual fund, which takes charge of the mutual fund to
interact with the SEBI. To ensure fair dealings, mutual fund
regulations require that one cannot be a trustee or a director of a
trustees company in more than one mutual fund. Further at least 50%
of the trustees are bound to be independent of the sponsors. These
independent trustees may enjoy multi-trusteeships. Asset Management
Company or its directors or its employee shall not act as trustees
of any mutual fund.
The trustees appoint Asset Management Company (AMC) to float the
mutual fund schemes in consultation with the sponsors. The trustees
are to evolve investment management agreement to be entered into
with Asset Management Company. It is the duty of the trustee to
observe and ensure the Asset Management Company is managing the
schemes in accordance with the trust deed. Trustees are vested with
the power to dismiss Asset Management Company if they are not
satisfied with the working of the AMC. For their services, trustees
are paid their trusteeship fees, which are specified in the trust
deed itself. Trustees are to present annual report to the investors
of the mutual fund.Some of the main obligations of Asset Management
Company are as under:
1. To appoint the custodians of the mutual fund.
2. To appoint registrar and share transfer agents.
3. To file a detail of the transactions in securities with the
trustees.
4. To report the trustees about any investment made in a
company, which has invested more than 5% of net asset value of any
scheme of the mutual fund.
5. To ensure that investments of the mutual fund schemes are as
per the provisions of regulations.
6. To file with the trustees the details of the transactions in
securities made by its officials in their own name or on behalf of
the asset Management Company.
7. To report the trustees any transaction in securities with any
of its associates.
OBJECTIVE OF STUDY
This research project work undertaken for the partial fulfilment
of the MBA degree programme fulfils the following objectives.
To analysis the various types of mutual funds
To study the role of mutual funds in financial market.
To study about the regulatory aspects mutual funds
To study the current trends of the mutual fund industry and the
future thereof.
To understand and compare different mutual funds of different
companies on basis of different criteria.
RESEARCH METHODLOGYAs to compare, analyze and interpretation,
the research has to be done so that the right data is been
collected.
I have tried to analyze different mutual funds of major
companies they are UTI, CANBANK, ICICI, KOTAK MAHINDRA. As to know
the present position of different companys mutual funds it
necessary to go for data and information finding but it cannot be
possible to get it from the questionnaire as analysis and
evaluation of different mutual funds are been done by head office
finance team members. So lot of work has been done to get the
data.
Types of ResearchThe basic types of research are as follows:
-
1. Descriptive Research:
The major purpose of this research is description of the state
of affairs as it exists at present.2. Analytical Research:In this
research, the researcher has to use facts or information already
available, and analyze these to make a critical evaluation of the
material
Fundamental Research:It mainly concerned with generalizations
and with the formulation of a theory.Conceptual Research:It is
related to some abstract ideas or theory.
Collection of Secondary Data:
When the researchers utilize the secondary data, then he has to
look into various sources from where he can obtain them. Secondary
data may either be published data or unpublished data. Usually
published data are available in-
1. Various publications of the central, state and local
governments.
2. Various publications of foreign governments or of
international bodies and their subsidiary organizations.
3. Technical and trade journals.
4. Books, magazines and newspapers.
5. Report and publications of various associations connected
with business and industry, banks, stock exchanges etc.
6. Reports prepared by research scholars, universities,
economists etc. in different fields.
7. Public record and statistics, historical documents, and other
sources of published information.
Second data collected for my research was mainly with the help
of journals, magazines and newspapers and Internet.
CLASSIFICATION OF MUTUAL FUNDS
(FUNCTIONAL CLASSIFICATION)OPEN-ENDED FUND
An open-ended fund or scheme is one that is available for
subscription and repurchase on a continuous basis. These schemes do
not have a fixed maturity period. Investors can conveniently buy
and sell units at Net Asset Value (NAV) related prices, which are
declared on a daily basis. The key feature of open-end schemes is
liquidity.
CLOSE-ENDED FUND
A close-ended fund or scheme has a stipulated maturity period
e.g. 5-7 years. The fund is open for subscription only during a
specified period at the time of launch of the scheme. Investors can
invest in the scheme at the time of the initial public issue and
thereafter they can buy or sell the units of the scheme on the
stock exchanges where the units are listed. In order to provide an
exit route to the investors, some close-ended funds give an option
of selling back the units to the mutual fund through periodic
repurchase at NAV related prices. SEBI Regulations stipulate that
at least one of the two exit routes is provided to the investor
i.e. either repurchase facility or through listing on stock
exchanges. These mutual funds schemes disclose NAV generally on
weekly basis.
INVESTMENT OBJECTIVE CLASSIFICATION
A scheme can also be classified on the basis of the investment
objectives that are they are designed to meet the objectives of
different types of savers. This classification can also be name as
portfolio classification. Such schemes may be open-ended or
close-ended schemes. Such schemes may be classified mainly as
follows:
GROWTH / EQUITY ORIENTED SCHEME
The aim of growth funds is to provide capital appreciation over
the medium to long- term. Such schemes normally invest a major part
of their corpus in equities. Such funds have comparatively high
risks. These schemes provide different options to the investors
like dividend option, capital appreciation, etc. and the investors
may choose an option depending on their preferences. The investors
must indicate the option in the application form. The mutual funds
also allow the investors to change the options at a later date.
Growth schemes are good for investors having a long-term outlook
seeking appreciation over a period of time.
INCOME / DEBT ORIENTED SCHEME
The aim of income funds is to provide regular and steady income
to investors. Such schemes generally invest in fixed income
securities such as bonds, corporate debentures, Government
securities and money market instruments. Such funds are less risky
compared to equity schemes. These funds are not affected because of
fluctuations in equity markets. However, opportunities of capital
appreciation are also limited in such funds. The NAVs of such funds
are affected because of change in interest rates in the country. If
the interest rates fall, NAVs of such funds are likely to increase
in the short run and vice versa. However, long-term investors may
not bother about these fluctuations.
BALANCED FUND
The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents.
These are appropriate for investors looking for moderate growth.
They generally invest 40-60% in equity and debt instruments. These
funds are also affected because of fluctuations in share prices in
the stock markets. However, NAVs of such funds are likely to be
less volatile compared to pure equity funds.MONEY MARKET OR LIQUID
FUND
These funds are also income funds and their aim is to provide
easy liquidity, preservation of capital and moderate income. These
schemes invest exclusively in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and
inter-bank call money, government securities, etc. Returns on these
schemes fluctuate much less compared to other funds. These funds
are appropriate for corporate and individual investors as a means
to park their surplus funds for short periods.
LEVERAGED FUNDS
Leveraged funds or borrowed funds are used in order to increase
the size of the value of the portfolio and benefit the shareholders
by gains exceeding the cost of the borrowed funds. Funds are used
in speculative and risky investments like short sale to take
advantage of declining market to realize gains in the portfolio.
Short sales decrease loss of the portfolio in a declining market
and vice versa in rising market.DUAL PURPOSE FUNDS
Income and growth are two objectives, which are achieved by
offering half of the amount of funds to those investors who wish
regular income and half to those who wish growth. The funds thus
received are pooled together and used for investment. Any income
derived from the portfolio goes to the investors who hold income
shares. The investors who hold capital shares receive no income.
Instead they receive capital gains or losses that result from
investments of total portfolio.
REAL ESTATE FUNDReal estate fund is of closed-end type. The fund
is named so because of the primary investment in real estate
ventures. Such funds are of various types depending upon real
estate transactions.
PERFORMANCE FUNDS
The investment is made in buying equity shares of
small-unseasoned companies with relatively high price earnings
ratio and higher price volatility. Such funds were set up in USA in
1960s to seek large profits in high-flying common stocks.SPECIALITY
FUNDS
The investment is made in good track record companies, which
offer long-term capital growth and provide handsome dividend
income.
INDEX FUNDS
Index Funds replicate the portfolio of a particular index such
as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These
schemes invest in the securities in the same weight age comprising
of an index. NAVs of such schemes would rise or fall in accordance
with the rise or fall in the index, though not exactly by the same
percentage due to some factors known as "tracking error" in
technical terms. Necessary disclosures in this regard are made in
the offer document of the mutual fund scheme. There are also
exchange traded index funds launched by the mutual funds, which are
traded on the stock exchanges.
GILT FUND
These funds invest exclusively in government securities.
Government securities have no default risk. NAVs of these schemes
also fluctuate due to change in interest rates and other economic
factors as are the case with income or debt oriented schemes.
SPECIALIZED FUNDS
These are the funds/schemes, which invest in the securities of
only those sectors or industries as specified in the offer
documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
dependent on the performance of the respective sectors/industries.
While these funds may give higher returns, they are more risky
compared to diversified funds. Investors need to keep a watch on
the performance of those sectors/industries and must exit at an
appropriate time. They may also seek advice of an expert.
TAX SAVING SCHEMES
These schemes offer tax rebates to the investors under specific
provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues. e.g. Equity Linked
Savings Schemes (ELSS). Pension schemes launched by the mutual
funds also offer tax benefits. These schemes are growth oriented
and invest pre-dominantly in equities. Their growth opportunities
and risks associated are like any equity-oriented scheme.
LOAD OR NO-LOAD FUND
A Load Fund is one that charges a percentage of NAV for entry or
exit. That is, each time one buys or sells units in the fund, a
charge will be payable. This charge is used by the mutual fund for
marketing and distribution expenses. Suppose the NAV per unit is
Rs.10. If the entry as well as exit load charged is 1%, then the
investors who buy would be required to pay Rs.10.10 and those who
offer their units for repurchase to the mutual fund will get only
Rs.9.90 per unit. The investors should take the loads into
consideration while making investment as these affect their
yields/returns. However, the investors should also consider the
performance track record and service standards of the mutual fund,
which are more important. Efficient funds may give higher returns
in spite of loads.
A no-load fund is one that does not charge for entry or exit. It
means the investors can enter the fund/scheme at NAV and no
additional charges are payable on purchase or sale of units.
GEOGRAPHICAL CLASSIFICATION
Mutual funds can be classified from the angle of territorial
jurisdiction of operations in two types:
DOMESTIC MUTUAL FUNDS (DMFS)
Domestic mutual funds launch schemes, which are operational
within political territorial limits of a country for the residents
or non-residents.
OFFSHORE MUTUAL FUNDS (OMFS)
Offshore mutual funds are cross border funds meant to attract
foreign savings for investment in India.
ROLE OF MUTUAL FUNDS IN THE
FINANCIAL MARKETMutual funds have opened new vistas to investors
and imparted much needed liquidity to the system. In this process
they have challenged the hitherto dominant role of the commercial
banks in the financial market and national economy.
Mutual Funds And Household Savings
In 1997 the share of mutual funds in household financial assets
was over 5% in the USA, 8% in Germany, 3% in Japan, 3%in Italy and
about 5% in India. The other indicator, which highlights their
importance, is the rate of growth of this share. The economist
magazine in its issue of 9 Oct 1995 reported that in 1980, 58% on
the personal sector wealth in the USA was held in financial assets;
by 1992 this had risen to 63%. Out of these financial assets the
share of mutual funds stood at 5.4% as against 0.7% in 1980.
In India there has been a steady increase in the share of mutual
funds in households savings (financial assets) since 1988-89, i.e.
after the entry of public sector mutual funds. The most significant
growth during 1980-81 to 1992-93 was in respect of UTI. It
increased from 0.3% of the total household savings in 1980-81 to
7.0% in 1992-93. However the percentage share of bank deposits
declined from 45.8% in1980-81 to 40.2% in1994-95.
Mutual Funds And The Capital MarketAccording to centre for
Monitoring Indian Economy (CMIE), mutual funds cornered 12% of the
total market capitalization, the share of the UTI being 9.4% of the
total market capitalization of Indian stock markets in 1994. Out of
the total investment of rs.71, 828.62 crores, 51% was invested
inequities while about 21% was invested in debt instruments like
debentures/ bonds. This indicates that mutual funds have strongly
supported the equity market. While non-UTI mutual funds have tended
more towards equities and debentures. UTI due to its special
structure has rendered better support to government securities
market.
Mutual Funds And Corporate FinanceAccording to the flow of funds
statistics published by the RBI, the share of the banking sector in
filling the resource gap of the corporate sector has declined from
54.42% in 1988-89 to 2.3% in 1991-92, while of the other financial
sector (including mutual funds) has increased from 39.9% to
102.58%. RBI has noted that the rapid growth of mutual funds and
increase in term lending by other financial institutions appear to
have contributed to this trend. FUTURE OF MUTUAL FUNDS IN INDIA
Future of mutual funds industry seems to be bright in view of
improved performance of fund managers and increasing confidence of
investors in working the funds as also benefits of investing in
funds. Further, with economy picking up, mutual funds industry is
expected to grow at a good pace. It is also expected that money
moving into the lap of mutual funds from banks as open-ended funds
offers same convenience, higher rate of returns, variety of
schemes, better performance, transparency, after sales customer
services and genuine retail investor interest will drive the
industry's growth. Technology and new distribution channels would
increase reach even as investors move funds out from traditional
investment channels.
Despite slow down in growth of mutual fund industry during
1999-2000, growth potential of the industry is beyond doubt as the
Chairman of Housing Development Finance Corporation. Deepak Parekh
stated recently we have only scratched surface. Equity funds in the
US account for nearly 65 per cent of the total equity market
capitalization while in India it is barely 5% of BSE's market
capitalization of Rs. 8,50,000 crore in March 31, 2000. Indian
mutual funds are expecting a pick up in equity investments in near
future with blue chip shares looking attractively value after the
recent declines.
Besides, the 40 per cent average growth of the mutual fund
industry during the last two years compares favorably with the much
more sedate growth in bank deposits of 16-18 percent recorded in
the last five years. Mutual funds will continue to grow as they are
getting accepted as a savings vehicle. Large pools of savings are
outside the purview of the industry at present, for example, bank
deposits, pension funds, etc. These will certainly provide a source
for big growth for the industry.
Prospects of mutual find industry are likely to brighten further
in view of some important reforms on the anvil. With the SEBI
proposing a corporate structure on the lines of US funds, the
existing trustee structure will be modified to introduce
professional trustee companies. The underlying objective is to
bring greater democracy in mutual fund administration and give the
unit holders the right to change the trustees if they fail to
perform their job.
More flexibility to asset management companies is also likely so
that it can charge expenses, which are directly attributable to a
particular scheme. Investors will have access to the balance sheets
of AMCs. Although the balance sheets of most AMCs that are
subsidiaries of public listed companies are already available. But
most foreign mutual funds are not bound to disclose their AMC
operations separately and this provision would help investors
understand their operations better.
In the interest of the unit holders, mutual funds are now
required to follow minimum international standards, for trading by
their employees so that there is no conflict of interest between
the transactions of employees and the mutual funds and there is no
front running and insider trading. The code is likely to be
finalized soon in consultation with the Association of Mutual Funds
of India. CONCEPT OF MUTUAL FUNDA Mutual Fund is a trust that pools
the savings of a number of investors who share a common financial
goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The
income earned through these investments and the capital
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. The flow chart below
describes broadly the working of a mutual fund:A Mutual Fund is a
trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the
capital 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. The flow chart below
describes broadly the working of a mutual fund:A Mutual Fund is a
trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the
capital 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. The flow chart below
describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below
illustrates the organizational set up of a mutual fund
Organization of a Mutual Fund
DATA ANALYSIS
COMPANYS DETAIL
KOTAK MAHINDRA
OVERVIEW
The Kotak Mahindra Group was born in 1985 as Kotak Capital
Management Finance Limited. Uday Kotak, S.A.A. Pinto and Kotak
& Company promoted this company. Industrialists Harish Mahindra
and Anand Mahindra took a stake in 1986, and that's when the
company changed its name to Kotak Mahindra Finance Limited (KMFL).
With affect from March 22, 2003, the company KMFL has got converted
into Kotak Mahindra Bank Limited (KMBL).
Kotak Mahindra Asset Management Company Limited (KMAMC), a
wholly owned subsidiary of KMBL, is the asset manager for Kotak
Mahindra Mutual Fund (KMMF). KMAMC started operations in December
1998 and has over 1,15,000 investors in various schemes. KMMF
offers schemes catering to investors with varying risk- return
profiles and was the first fund house in the country to launch a
dedicated gilt scheme investing only in government securities.
Kotak Mahindra Asset Management Company Ltd., a wholly owned
subsidiary of Kotak Mahindra Bank Ltd, manages Kotak Mahindra
Mutual Fund (KMMF). Kotak Mahindra Mutual Fund launched its Schemes
in December 1998 and today manages assets close to Rs.3000 cr.
contributed by over 115000 investors in various schemes. KMMF has
to its credit the launching of innovative schemes and plans like K
Gilt and Free Life Insurance with K Bond Deposit Plan.Risk
Factors:
Mutual Funds and securities investments are subject to market
risks and there is no assurance or guarantee that the objectives of
the Scheme will be achieved.
As with any securities investment, the NAV of the Units issued
under the Scheme can go up or down depending on the factors and
forces affecting the capital market.
Past performance of the Sponsor or that of existing schemes of
the Fund does not indicate the future performance of the
Scheme.
K 30 is only the name of the Scheme and does not in any manner
indicate the quality of the Scheme, future prospects or
returns.
UNIT TRUST OF INDIA
Mission
To offer customer-oriented, innovative products by leveraging
technology to provide superior returns achieve the highest service
standards and attain sustained growth levels through principled
human resources striving in a focused, transparent ethical manner
to exceed investor expectations.
Overview
UTI Mutual Fund has come into existence with effect from 1st
February 2003. UTI Asset Management Company presently manages 42
NAV based domestic SEBI compliant schemes and 4 Offshore funds
having a corpus Rs.15, 243 crore from about 10 million investor
accounts.
UTI Mutual Fund has a track record of managing a variety of
schemes catering to the needs of every class of citizenry over a
period of 39 years. It has a nationwide network consisting 54
branch offices, 3 UTI Financial Centres (UFCs) and representative
offices in Dubai and London. With a view to reach to common
investors at district level, 18 satellite offices have also been
opened in select towns and districts. It has 2400 committed
employees and over 10,000 active agents and 266 chief
representatives to sell and service its schemes. It has a
well-qualified, professional fund management team, who has been
highly empowered to manage funds with greater efficiency and
accountability in the sole interest of unit holders. The fund
managers are also ably supported with a strong in-house equity
research department. To ensure better management of funds, a risk
management department is also in operation.
It has reset and upgraded transparency standards for the mutual
funds industry. All the branches, UFCs and registrar offices are
connected on a robust IT network to ensure cost-effective quick and
efficient service. All these have evolved UTI Mutual Fund to
position as a dynamic, responsive, restructured, efficient, and
transparent and SEBI compliant entity.
UTI Mutual Fund has recently opened out yet another investor
friendly vista for its investors on the Internet i.e. My UTI
whereby an investor can transact through the Internet. With this
the investors need not visit UTI offices, or write letters for non
monetary changes, not involving any document submission for
transactions viz. change of address, bank particulars mandate (mode
of payment), update income tax details and view, and download.
As on January 31, 2003, almost all schemes/funds have
outperformed the respective benchmark indices over various periods.
These schemes have distributed income/bonuses consistently. Over
and above the faith reposed by the investor community on UTI has
also been reflected by fresh sales mobilization over Rs.5,200
crores in the last 7 months, commencing 1st July 2002. US 95 has
been awarded with CNBC Mutual Fund Award for the year for the best
performance in the open-end balance fund category under the
threeyear segment.
UTI Mutual Fund is poised to meet the challenges of the future
with its dedicated human resources, vast reservoir of funds and
38-year track record. Speed, Quality and Transparency is the
edifice on which it desires to stride ahead for the benefit of its
investors.
CANARA BANK
Mission
To build on a deep strong foundation ensuring long - lasting
stability.
To attain heights of growth with an eye always on safety.
To share with every single investor the sweet scent of
success.
To manage our most precious assets your trust and
confidence."
Overview
Canbank Mutual Fund (herein after referred to as the "Fund") was
set up by Canara Bank, pursuant to the approvals received by it
from theGovernment of India, Ministry of Finance, New Delhi vide
letter No. D.O. No F.1/65/SE/87 dated 15th December 1987 for making
investments in equity and other securities. The Securities &
Exchange Board of India has also granted registration vide
Registration No.MF/004/93/4 date. 19/10/1993. Canbank Mutual Fund
has also been recognized under section 10(23D) of Income-Tax Act,
1961 vide Notification No.SO/1064/E dated 18th November 1988
issuedby Central Board of Direct Taxes, Department of Revenue,
Ministry of Finance, and Government of India.The Asset Management
Company:
Canbank Investment Management Services Ltd. - a wholly owned
subsidiary of Canara Bank, (hereinafter referred to as the
"Investment Manager") has been set up as per the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1993.
An Investment Management Agreement has been signed between
Canbank Mutual Fund and the Investment Manager on 16th June 1993,
whereby the Investment Manager is empowered to manage the affairs
of Canbank Mutual Fund and operate its various Schemes.
The Investment Manager is also the sub-Investment Manager in
respect of IC-Himalayan Fund / Canbank (Offshore) Fund. Controls
& Safeguards as suggested by SEBI vide letter No.
IIMARP/3219/94 dt. 27.05.1994 for managing the Offshore Fund are
being adhered to and there is no conflict of interest in managing
the Schemes of Canbank Mutual Fund and IC-Himalayan Fund / Canbank
(Offshore) Fund.
The risk factors generally associated with mutual fund before
subscribing to the units of any Scheme of Canbank are:
All investments in mutual funds and securities are subject to
market risks and the NAV of the schemes may go up or down depending
upon the factors and forces affecting the securities market.
There can be no assurance that the schemes' investment
objectives will be achieved.
The past performance of the sponsors / asset management company
/ mutual fund is not necessarily indicative of the future
performance of the scheme.
The sponsors are not responsible or liable for any loss
resulting from the operation of the scheme.
The name (s) of the Scheme (s) do not in any manner indicate the
quality of the Scheme (s), its future prospects or returns.
PRUDENTIAL ICICI
Overview
Prudential ICICI Asset Management Company, (55%: 45%) a joint
venture between Prudential, UK's leading insurance company and
ICICI Bank Ltd, India's premier financial institution.
The joint venture was formed with the key objective of providing
the Indian investor mutual fund products to suit a variety of
investment needs. The AMC has already launched a range of products
to suit different risk and maturity profiles.
Prudential ICICI Asset Management Company Limited has a net
worth of about Rs. 69.89 crore (1 crore = 10 million) as of March
31, 2002. Both Prudential and ICICI Bank Ltd have a strategic
long-term commitment to the rapidly expanding financial services
sector in India.
GUIDING PRINCIPLES
Prudential CICI will conduct its business with Honesty and
trustworthiness in all interactions. A pioneering spirit and
excellence in action. Collaboration and teamwork. An understanding
of customer needs and the desire to satisfy them. The highest
service standards. A consistently above average performance.
GENERAL RISK AND ICICIS BANK DISCLAIMERInvestors are advice to read
the risk factors carefully before taking an investment decision.
Offer Document/s / Abridge Offer Document/s are available with
Mutual Fund Companies/ ICICI Bank. For taking an investing
decision, investors must rely on their own examination of the
issuer and offer, including risk involved. It is to be distinctly
understood that the mutual fund schemes, being offered for
investment, have not been recommended by ICICI Bank and nor ICICI
Bank has sponsored any scheme. ICICI Bank does not take any
responsibility either for the financial soundness of any scheme or
for the correctness of statement made or opinion expressed in the
Offer Document / Abridge Offer Document of mutual funds. ICICI Bank
does not guarantee any returns on investments made in mutual fund
scheme/s by investors. Investment in mutual funds involves a degree
of risks and investors should not invest any funds unless they can
afford to take risk of losing their investment.
FUNDS OFFERED
Balanced Fund
Balanced funds are more evenly invested in equities and income
securities. Balanced and equity-income funds are suitable for
conservative investors who want high current yield with some
growth. If you seek to generate long-term capital appreciation and
current income, an investment in the balanced fund would be ideal.
It gives you an exposure to the stock market without the entire
risk of the stock market. The funds offered under this category are
the Prudential ICICI Balanced Fund and Prudential ICICI Child Care
Plan.Investment Philosophy
The AMC proposes to invest in a mix of equities and fixed income
securities with the aim of generating capital appreciation, while
at the same time minimizing the volatility inherent in pure equity
schemes. With this aim, the AMC would allocate the assets between
equity and fixed income instruments within the limits laid down for
each scheme.
Debt funds
The goal of fixed income funds is to provide high current income
consistent with the preservation of capital. Growth of capital is
of secondary importance. These funds invest in corporate bonds or
government securities that have a fixed rate of return. The funds
are suitable for investors who want to maximize current income and
who do not wish to assume a high degree of capital risk in order to
do so. Since bond prices fluctuate with changing interest rates,
there is some principal risk involved despite the fund's
conservative nature.
The funds offered under this category are the Prudential ICICI
Income Plan, the Prudential ICICI Gilt-Treasury Fund, The
Prudential ICICI Gilt-Investment Fund, Prudential ICICI Liquid
plan, Prudential ICICI Fixed Maturity Plan, Prudential ICICI Short
Term Plan, Prudential ICICI Long Term Plan and Prudential ICICI
Sweep Plan
Investment Philosophy
The AMC aims to identify securities, which offer superior levels
of yield at lower levels of risks. With the aim of controlling
risks, the investment team of the AMC will carry out rigorous
in-depth credit evaluation of the securities proposed to be
invested in. The credit evaluation includes a study of the
operating environment of the company, the past track record as well
as the future prospects of the issuer, the short as well as
longer-term financial health of the issuer. Rated debt instruments
in which the Scheme invests will be of investment grade as rated by
a credit rating agency. In case a debt instrument is not rated,
specific approval of the Board of the AMC will be obtained for such
an investment.In addition, the investment team of the AMC studies
the macro economic conditions, including the politico-economic
environment and factors affecting liquidity and interest rates. The
AMC would use this analysis to attempt to predict the likely
direction of interest rates and position the portfolio
appropriately to take advantage of the same.
Equity Funds
Equity funds seek to provide maximum growth of capital with
secondary emphasis on dividend or interest income. They invest in
common stocks with a high potential for rapid growth and capital
appreciation. An equity fund gives an exposure to the stock market.
The fund would have long-term growth potential but provide low
current income. They are not suitable for investors who are risk
averse and are focused on maximizing current income or conserving
principal. The funds are the Prudential ICICI Growth Plan,
Prudential ICICI FMCG Fund, Prudential ICICI Technology Fund,
Prudential ICICI Tax Plan, Prudential ICICI Index Fund and
Prudential ICICI Power.Investment Philosophy
The overriding objective of the AMC in managing its investments
is to produce a consistently above average long-term performance.
The AMC believes in a bottom-up approach to stock picking. This
means that the focus is on the fundamental quality of companies as
opposed to a focus on favored sectors and market movements. The AMC
will follow a structured investment process in order to identify
the best stocks for inclusion in the portfolio. This would involve
consistently examining all stocks under an internally developed
research framework. A stock would be considered or inclusion in the
portfolio when the valuation does not adequately capture its
underlying fundamental value in the AMC's opinion based on the
above factors. The AMC's portfolio management style is conducive to
a low portfolio turnover rate. However, the AMC will take advantage
of the opportunities that present themselves from time to time
because of inefficiencies of the securities markets. The AMC will
endeavor to balance the increased cost on account of higher
portfolio turnover with the benefits derived there from.
Appreciation of the value of the Units issued under the Scheme
can be restricted in the event of a high asset allocation to cash
when stocks appreciate.
The NAV of the Units issued under the Scheme may be affected,
inter-alia, by changes in the market interest rates, trading
volumes, settlement periods and transfer procedures.
Tax laws may change, affecting the return on investment in
Units.
In the event of receipt of a very large number of redemption
requests or very large value redemption requests or of a
restructuring of the Schemes portfolio, there may be delays in the
redemption of Units. Please refer to the paragraph on "Right to
limit Redemption" in the Combined Offer Document.
Statutory: Kotak Mahindra Mutual Fund has been established as a
trust under the Indian Trusts Act, 1882, by Kotak Mahindra Finance
Limited (liability Rs. NIL) with Kotak Mahindra Trustee Company
Limited as the Trustee and with Kotak Mahindra Asset Management
Company Limited as the Investment Manager.
INVESTMENT PATTERN OF GILT PLAN
MUTUAL FUND
ICICI
UTI
CANBANK
KOTAK MAHINDRA
INTERPRETATION Gilt fund refers to those funds in which invest
only in Govt. securities including call money, treasury bill and
repos of varying maturities with a view to generating credit risk
free return. . According to the graph study we can see that
companies has different investment pattern. UTI has allotted 100%
investment in Sovereign debt. Where as Kotak Mahindra has 89% in
Govt. Sect., 10% in Repo and 2% in Other Rec. Can Bank has invested
29% in money market funds and 71 % in debt. ICICI has 100% in Gilt
securities (treasury bills).
INVESTMENT PATTERN OF SECTOR PLAN
MUTUAL FUND
ICICI
CANBANK
KOTAK MAHINDRA
UTI
INTERPRETATION
As from the graph we can see that different company has adopted
different pattern of investment. ICICI FMCG PLAN has invested 90%
in debt and 10% in MMF. UTI Growth Sector has invested in100 %
equity of the specific sector. CanBank has also invested in 87% in
equity and 13%in MMF .Kotak invested in 61.40% in equity ,34.23% in
MMF ,4.37% in other .
INVESTMENT PATTERN OF LIQUID PLAN
MUTUAL FUND
ICICI
UTI
CANBANK
KOTAK MAHINDRA
INTERPRETATION
As from the graph we can see that different company has adopted
different pattern of investment. ICICI LIQUID PLAN has invested 20%
in debt and 80% in MMF. UTI MMF has invested 100 % in debt..
CanBank has invested 70% in MMF and 30% in debt. KOTAK has invested
46% in debt, 41% in MMF and 12.88% in other assets.
INVESTMENT PATTERN OF BALANCE PLAN
MUTUAL FUND
UTI
ICICI
CANBANK
KOTAK MAHINDRA
INTERPRETATION Balanced fund refers to those fund in which there
is a good mix of equity and debt. According to the graph study we
can see some company has equal ratio of equity and debt, but some
do follows equal portion pattern. UTI has allotted 60:40 ratios for
asset investment pattern in equity and debt. Where as Kotak
Mahindra has 40% in debt, 52% in equity and 9% in money market
fund. CanBank has invested 63% funds in equity, 17% in money market
funds and 20 % in debt. ICICI has same portion allotment as
UTI.
FINDING
In Gilt fund UTI & ICICI invested 100% in sovereign debt,
KOTAK invested 89%, Canbank invested 29%
According to section plan invested pattern ICICI FMCG plan
invested 90% debt & 10% in MMF, KOTEK invested 90% debt &
10% in MMF & 4.37% in other.
According to liquid plan invested pattern KOTAK invested 46% in
debt, 41% in MMF & 12.88% in other assets, UTI invested 100% in
debt.
In balanced fund UTI invested 60% in equity 40% in debt, KOTAK
invested 40% in debt, 52% in equity &9% in MMF
SUGGESTIONS
In order to render the existing mutual funds more effective and
purposeful the following steps should be taken:
There should be comprehensive legislation to control the
operations of the mutual funds including the kotak mahindra mutual
funds are to guidelines laid down by the RBI, Government of India
and the SEBI and some of the guidelines are contradictory leading
to confusion among the mutual fund managers. Further, the
guidelines governing the kotak mahindra. It is, therefore,
necessary that the Government should come out with single set of
comprehensive legislation, which will uniformly be applicable to
public sector and private sector mutual funds and the kotak
mahindra.
So far mutual funds in India confined themselves to urban areas;
leaving vast saving potentials in rural hinterlands untapped. By
penetrating in rural areas and introducing saving schemes tailored
to the diverse preferences of rural community and by educating them
about the benefits of the schemes, mutual funds can raise
burgeoning resources which can be gainfully employed for the
national development.
Investors' confidence in mutual funds can be restored by
rendering their operations more transparent and providing better
services.
While it is fine to advertise good performance of a particular
scheme by a fund in order to attract more investment, the times are
fast approaching when an honest view based approach would compel a
mutual fund to advise investors on "sell" or "switch" between
schemes, as emphatically as it would advise on the purchase. So as
to attract investors, it is, therefore, advisable to mutual funds
to offer this sort of counseling which will certainly make a mutual
fund different from other institutions. CONCLUSION
Mutual funds are financial intermediaries concerned with
mobilizing savings of those who have surplus and canalization of
these savings in those avenues where there is demand of kotak
mahindra mutual funds. These institutions employ their resources in
such a manner as to afford for their investors the combined
benefits of low risk, steady return, high liquidity and capital
appreciation through diversification and expert management.
The performance of a mutual fund is dependent on the prudence of
the management in selection of scrips, the diversity of investment
in scrips and the extent to which risks are minimized during
investment. The future prospects of an ongoing manufacturing
company could be judged and predicted with a fair degree of
confidence, and investment strategies could be worked out
accordingly. Whereas, investment in a mutual fund is judged purely
from the point of returns given to the investor, management's
expertise and the types of schemes offered to the public,
prediction of any scheme performing better than those of any other
mutual funds is generally not possible specially for a growth
scheme. This is purely because the investor is investing his money
in mutual funds to enable the latter to further re-invest in
scrips, which provide both short-term and long-term gains.
Therefore, this intermediary (MF) is a decision-maker for public
money investment.
Since mutual fund is a pool of public money, maximum care and
caution is taken to invest in the right scrip for capital
appreciation and returns on investment for its distribution to the
investors. Therefore, the business of mutual fund is to re-invest
in any scrip in the market, and prove their performance through
returns to investors. Therefore, each mutual fund is a reinvestment
agency.
For a mutual fund, its environment is the environment of all
industries put together. Its management's function is highly
specialized, as they have to have the knowledge or individual
companies, their economic and commercial environment as well as the
government laws that regulate and promote that industry. In the
absence of this information, the mutual fund will not be in a
position to meaningfully diversify its investment in various scrips
to maximize profit and minimize risks.
BIBLIOGRAPHY
BOOK NAME
AUTHOR NAME
Mutual Funds in India
S. Krishnamurti
Manual of SEBI
Nabhi Publications
Financial Sector Reforms
B.B Tandon and
A.K. Vashisht
Manual of Merchant Banking
Dr J.C. Verma
Mutual fund
K.G Sahadevan
Management of Indian FinancialInstitution
R.M. Srivastava
Research methodology
C.R. KothariWEBSITES
www.kotakmutual.com www.canbankmutual.com
www.unittrustofindia.com www.sebi.com www.pruiciciamc.com
www.google.com www.money control.com
www.valueresearch.comMAGAZINE
OUTLOOK
INVESTMENT MONITOR
ANALYST
THE FINANCIAL EXPRESS
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