Project report on SIP in Mutual funds

7/29/2019 Project report on SIP in Mutual funds

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SUMMER INTERNSHIP PROJECT REPORT

ON

Systematic Investment Plan

(The Better Way to Invest In Mutual Funds)

At

EDELWEISS BROKING LIMITED

Bangalore

A Project Report Submitted In Partial Fulfillment of the Requirements

For The Award of the

POST GRADUATE DI PLOMA IN MANAGEMENT

TO

M.S.RAMAI AH I NSTITUTE OF MANAGEMENT

BY

ANUBHAV SOOD

Roll no: 121206

PGDM (AUTONOMOUS)

2012-2014

Under the guidance of

Dr. M Kiran Kumar

M.S.RAMAIAH INSTITUTE MANAGEMENT

NEW BEL ROAD, BANGALORE-560054


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CERTIFICATE

This is to certify that the Project Report at

EDELWEISS BROKING LTD

Submitted in partial fulfillment of the requirements for the award of the

POST GRADUATE DIPLOMA IN MANAGEMENT (AUTONOMOUS)

TO

M.S.RAMAI AH I NSTITUTE OF MANAGEMENT

Is a record of bonafide Training carried out under my supervision and

guidance and that no part of this report has been submitted for the award of

any other degree/diploma/fellowship or similar titles or prizes.

GUIDE: Dr. M Kiran Kumar

Signature:

Name: Dr. M Kiran Kumar

Qualifications: Degree of Doctor of Philosophy in commerce.


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DECLARATION

I hereby declare that this work entitled SYSTEMATIC INVESTMENT PLANNING ABETTER WAY TO INVEST IN MUTUAL FUNDS is my work carried out under theguidance of my faculty guide Dr. M Kiran Kumar and my company guide Rajshekhar PGupta. This report neither full nor in past has ever been submitted for award of any other degreeof either this university or any other university.

Name: Anubhav sood

PGDM AUTONOMUS

Roll no: 121206


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ACKNOWLEDGEMENT

I extend my special gratitude to our beloved DEAN Dr. H Muralidharan, Academic HeadProf. Purnima Ramaswamy and Our Coordinator Dr. Savitha Rani for inspiring me totake up this project.

I wish to acknowledge my sincere gratitude and indebtedness to my Project Guide Dr. MKiranKumar ofM.S. RAMAIAH INSTITUTE OF MANAGEMENT Bangalore for hervaluable guidance and constructive suggestions in the preparation of project report.

I extend my gratitude to

EDELWEISS BROKING LIMITED

And the Company guide Mr. Rajshekhar P Gupta and all my colleagues, friends for theirencouragement, support, guidance and assistance for undergoing industrial training and forpreparing the project report.

Anubhav SoodReg. No. 121206


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PREFACE

The report has been conducted on TO STUDY SYSTEMATIC INVESTMENT

PLANNING AS A BETTER WAY TO INVEST IN MUTUAL FUNDS

The purpose of this work is to study about the Mutual Funds and find out about the benefits of

SIP in Mutual Funds.


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EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring ones financial wellbeing. Mutual

Funds have not only contributed to the India growth story but have also helped families tap into

the success of Indian Industry. As information and awareness is rising more and more people are

enjoying the benefits of investing in mutual funds.

The main reason the number of retail mutual fund investors remains small is that nine in ten

people with incomes in India do not know that mutual funds exist. But once people are aware of

mutual fund investment opportunities, the number who decide to invest in mutual funds increases

to as many as one in five people. The trick for converting a person with no knowledge of mutual

funds to a new Mutual Fund customer is to understand which of the potential investors are more

likely to buy mutual funds and to use the right arguments in the sales process that customers will

accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me enough scope

to implement my analytical ability. The analysis and advice presented in this Project Report is

based on market research on the saving and investment practices of the investors and preferences

of the investors for investment in Mutual Funds. This Report will help to know about the

investors Preferences in Mutual Fund means Are they prefer any particular Asset Management

Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they

prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time Plan).

This Project as a whole can be divided into two parts.

The first part gives an insight about Mutual Fund and its various aspects, the Company Profile,

Objectives of the study, Research Methodology. One can have a brief knowledge about Mutual

Fund and its basics through the Project.

The second part of the Project consists of data and its analysis collected through survey done on

100 people. For the collection of Primary data I made a questionnaire and surveyed of 100

people. I also taken interview of many People those who were coming at the Edelweiss Branch

where I done my Project.


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TABLE OF CONTENTS

\ Content PageNo.

1 Industry Analysis.. 8

2 Company Analysis 16

3 SWOT Analysis 33

4 Discussion on Training.. 34

5 Introduction... 37

6 Classification of Mutual Funds.. 40

7 Systematic Investment Plan.. 49

8 Research Methodology 56

Title of the study

Duration of the project

Objective of the study

Simple size &method

Scope of the study

Limitation of the study

9 Analysis and Interpretation . 61

10 Facts and Findings .. 71

11 Conclusion .... 72

12 Suggestion 73

13 Annexure .. 74

14 Bibliography. 76


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CHAPTER 1

Industry Analysis


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INTRODUCTION

The financial system is a set of institutional arrangements through which financial surpluses

available in the economy are mobilized. A financial system, which is inherently strong,

functionally diverse and displays efficiency and flexibility, is critical in creating a market-driven,

productive and competitive economy. A mature financial system has to gear up and undergo

varied and comprehensive changes in order to achieve rapid economic development.

The financial sector reforms in India in the early nineties has resulted in explosive growth of the

economy, opening up of the Indian financial market to foreign and private Indian players, large

inflow of Foreign Ninth AIMS International Conference on Management Institutional Investors,

increased competition and better product offerings to consumers. One of the major developmentsof this decade has been the take-off of mutual funds. Mutual funds have emerged as a strong

financial intermediary and are the fastest growing segment of the financial services sector in

India. It aims at promoting a diversified, efficient and competitive financial sector increasing the

return on investment and promoting and accelerating the growth of the economy. It is a medium

of investment suitable to the small investors, who are not able to invest in stock market directly.

Mutual funds now play a very significant role in channelizing the savings of millions of

individuals. The mutual fund industry in India over the years has seen dramatic improvements in

terms of quantity as well as quality of product and service offerings in recent years. The

tremendous growth of Indian Mutual Funds industry is an indicator of Indias efficient financial

market and the trust which investors have on the regulatory

Environment. Millions of investors rely on mutual funds as their primary investments because

they offer a convenient, cost-effective and easy way to invest in the financial markets. The

Securities Exchange Board of India (SEBI) regulates this fast growing industry and it is the

representative body of all mutual funds in the country.

Every mutual fund has a goal - either growing its assets (capital gains) and/or generating income

(dividends) for its investors. Distribution in the form of capital gains (short-term and long-term)

and dividends may be passed on (paid) to the shareholders as income or reinvested to purchase

more shares. A mutual fund is valued daily and reports a price known as a Net Asset Value

(NAV) per share. In its simplest form, a NAV is the total value of all the securities held in a fund


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divided by the total number of shares owned by its shareholders. As the price of the NAV

increases or decreases, the shareholder's value will increase or decrease.

Current Scenario of Mutual Funds

The global economic environment was conducive and this led to the explosive growth of mutual

funds in most countries particularly since 1980s. This growth can be attributed to the strong

emergence of the market economy which depends more on the growth led by the stock market.

Mutual funds found increasing acceptance in the developed countries when compared to the

developing countries in the early and mid 90s but gradually it found its place even in the

developing countries because of its advantages. Gradually the number of mutual funds increasedsignificantly worldwide and many developed countries started designing country specific funds

to match the trend prevailing in other developed countries.

Evolution of Mutual Fund Industry in India

The mutual fund revolution that was sweeping the other countries bypassed India also. The

formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the

year 1963. The primary objective at that time was to attract the small investors and it was made

possible through the collective efforts of the Government of India and the Reserve Bank of India.

UTI commenced its operations from July 1964 and 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. Even though the growth of the

mutual fund industry was very slow in the beginning, it accelerated when the public sector and

private sector mutual funds entered the market after the year 1987. The mobilization of funds and

the number of players operating in the industry reached new heights as investors started showing

more interest in mutual funds. Investors' interests were safeguarded by SEBI and the

Government offers tax benefits to the investors in order to encourage them. SEBI also introduced

SEBI (Mutual Funds) Regulations, 1996 and set uniform standards for all mutual funds in India.


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History of the Indian Mutual Fund Industry

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

India, at the initiative of the Government of India and Reserve Bank. Though the

Growth was slow, but it accelerated from the year 1987 when non-UTI players entered

the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities

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

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

raised the AUM to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs.

1540 billion.

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

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

First Phase1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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 Phase1987-1993 (Entry of Public Sector Funds)


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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.

Third Phase1993-2003 (Entry of Private Sector Funds)

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. As at the end of January 2003, there were 33

Mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phasesince 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 second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isRegistered with SEBI and functions under the Mutual Fund Regulations. Consolidation

And growth. As at the end of September, 2004, there were 29 funds, which manage

Assets of Rs.153108 crores under 421 schemes.

Major Mutual Fund Companies in India:


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Axis Asset Management Company

Birla Sun Life Mutual Fund

Bank of Baroda Mutual fund

DBS Chola Mutual Fund

Franklin Templeton India Mutual Fund

HDFC Mutual fund

ICICI Prudential Mutual fund

ING Mutual fund

JM Financial Mutual fund

JP Morgan Mutual fund

Kotak Mahindra Mutual fund

LIC Mutual fund

Reliance Mutual fund

Sahara Mutual fund

State Bank of India Mutual fund

Standard Charted Mutual fund

Sundaram BNP Paribas Mutual fund

Tata Mutual fund

Unit Trust of India Mutual fund


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ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

With the increase in mutual fund players in India, a need for mutual fund association in Indiawas generated to function as a non-profit organization. Association of Mutual Funds in India(AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset

Management Companies (AMC) which has been registered with SEBI. Till date all the AMCsare that have launched mutual fund schemes are its members. It functions under the supervisionand guidelines of its Board of Directors.Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to aprofessional and healthy market with ethical lines enhancing and maintaining standards. Itfollows the principle of both protecting and promoting the interests of mutual funds as well astheir unit holders.

The objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It hascertain defined objectives which supports the guidelines of its Board of Directors. The objectivesare as follows:

ins high professional and ethical standards in allareas of operation of the industry.

is followed by members and related people engaged in the activities of mutual fund and assetmanagement. The agencies who are by any means connected or involved in the field of capitalmarkets and financial services also involved in this code of conduct of the association.

guidelines in the mutual fund industry.

India and other related bodies on matters relating to the Mutual Fund Industry.

ied and trained Agent distributors. It implements a programme oftraining and certification for all intermediaries and other engaged in the mutual fund industry.

understanding of the concept and working of mutual funds.

Mutual Fund Industry and undertakes studies and research either directly or in association with otherbodies.


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STRUCTURE OF THE INDIAN MUTUAL FUND INDUSTRY:

Structure wise mutual fund industry can be classified into three categories;

Unit trust of India:The Indian mutual fund industry is dominated by the unit trust of India, which has a total corpus of51000 crore collected from over 20 million investors. The UTI has many fund/ schemes in allcategories in equity, balanced, debt, money market etc. With some being open ended and some beingclosed ended. The unit scheme 1964 commonly referred to as US64,which is a balanced fund, is thebiggest scheme with a corpus of about 10000 crore.

Public sector mutual fund:The second largest categories of mutual funds are the ones floated by nationalized banks .can bankasset management floated by Canara bank and SBI funds. Management floated by State Bank OfIndia is the largest. Online trading is a great idea to reduce management expenses from the current2% of total assets to about 0.75% of the total asset.72% of the crore-customer base of mutual fund in the top 50-broking firms in the US is expected to

trade on line by 2003

Private Sector Mutual fund:The third largest categories of mutual funds are the ones floated by the private sector domesticmutual funds and the private sector foreign mutual funds. The largest of these in private sectordomestic mutual funds are Reliance mutual fund, JM capital management company ltd. Tata mutual,Axis mutual fund, Birla sun life asset management pvt. Ltd. and in private foreign mutual funds theseare alliance capital asset management private ltd, Franklin Templeton Investments, Sun F&C asset


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Chapter 2

Company Analysis


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ABOUT THE COMPANY

EDELWEISS GROUP started its journey in Mumbai in the year 1995, by two IIM

graduates, Mr. Rashesh Shah and Mr. Venkat Ramaswami.

I deas create, values protect

is the slogan and depict the mission statement of Edelweiss group.

Our Reputation and Image is more important than any financial reward. Reputation is hard

to build and even harder to rebuild. Reputation will be impacted by our ability to think for

our clients, maintain confidentiality and by our adherence to our value system.

Mr.Rashesh Shah

Mr. Venkat Ramaswami

The Logo: Edelweiss, a rare flower found in Switzerland. A graphic flower that represents

ideas! Around it, the protective arms of the letter E:

Edelweiss bel ieves ideas create wealth, but values protect it.

It is the practice of this core thought that has led to Edelweiss becoming one of theleading

financial servicescompany in India.

Its current businesses include:

Investment Banking,


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Securities Broking, and

Investment Management.

Edelweiss also provides a wide range of services to:

Corporations,

Institutional Investors and

High Net-Worth Individuals.

Headquarter based in Mumbai, India.

Key People: Chairman & Founder: Mr. Rashesh Shah (IIM Graduate 1995 batch) and

Venkat Ramaswami.

Designated director:Naresh Kothari.

Directors: Rashesh Shah, Venkat Ramaswami and Hiralal Chopra.

Type of industry: investment banking, brokerage and asset management firm.

Total market capitalization: About Rs. 22,877 cr.

Total number of employees: 3,900

Edelweiss was previously into niche marketing only, dealing with the High Net worth

Individuals (HNIs) clients only. Looking at the current market scenario, company is targeting the

Retail Segment with its newOnl ine Trading Portal.


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Product and Services

Investment Banking

Overview

Our Investment Banking business is dedicated to providing corporations, entrepreneurs and

investors, the highest quality independent financial advice and transaction execution. Our

professionals offer a full range of services and transaction expertise, including private

placements of equity, capital raising services in public markets, mezzanine and convertible debt,

mergers and acquisition and restructuring advisory services. We have a track record of

successfully closing more than 100 transactions to date.

Offerings

Private Equity Advisory - We have been a leading Private Equity advisor for over a decade andhave developed a strong expertise across industries which enable us to recognize emergingindustry themes and position transactions within the context.

Structured Finance Advisory - Over the years, we have built up significant expertise inStructuring appropriate financing solutions for client specific situations and identifying andPlacing the transaction with institutional investors. Our portfolio of solutions comprises the followingPromoters Funding and Acquisition Financing.

Mergers and Acquisitions Advisory - Edelweiss M&A team provides insights into howcompanies can grow and enhance their value. The M&A team are engaged in turnkeytransaction management and advise a diverse range of clients in medium to large transactions.

Our key strengths include independent advice, deep sector knowledge backed by professionalswith a range of training and experience that spans across multiple cross-border deals and ourrelationships with large corporate.

Real Estate Advisory - Our advisory solutions are primarily focused on capital rising andcover the optimal financing mix, project valuation, investment structuring and accomplishingcapital raising at either the enterprise level or the asset level. We manage Real Estate IPOs, QIPs,advise enterprise level private equity financings, and enterprise level mezzanine financing andstructured debt. We have completed over $ 700 million in capital rising in the last 18 monthsacross multiple formats.

Equity Capital Markets - We are in the vanguard of equity capital markets having brought tothe market a large number of successful and path breaking transactions. We advise leadingIndian companies, banks, institutions and businesses which are seeking to mobilize capital frominvestors in India and overseas. Within the practice, we provide opportunities for clients toraise funds through the following Initial Public Offering (IPOs) Follow-on PublicOfferings(POs) Qualified Institutional Placements(QIP) Rights Issues Preferential AllotmentsForeign Currency Convertible Bonds(FCCBs) Global Depository Receipts(GDRs)


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Infrastructure Advisory - A critical ingredient for sustainable development in India is thepressing need for Infrastructure creation on a commercially viable basis. This signifies immenseopportunities and challenges for the sector. Recognizing this, Edelweiss new Infrastructurepractice has been formed to provide innovative solutions tailored to the unique financing andadvisory requirements of Indian infrastructure projects and developers. Our team has a

dedicated focus on the infrastructure sector, with considerable experience, a deepunderstanding and a vast network of key relationships. We provide Infrastructure projectcompanies and developers the full range of capital and advisory services.

Debt Restructuring Advisory - At Edelweiss we have a very competent team offeringcomprehensive debt restructuring solutions, both under the formal Corporate DebtRestructuring (CDR) mechanism as well as negotiations with lender/consortium of lenders. Ourteam of senior ex-bankers and restructuring specialists have unparalleled experience ofrestructuring debts worth over Rs. 75,000 crores, and an ability to provide complete solutionsand support to the Corporate.

Institutional Equities

Edelweiss Capitals Institutional Equities Business (IE) has become one of the top five domesticBrokerage houses and top three derivatives desks. It is the only brokerage on the Street with aquant desk that provides a wide product range, servicing all investor categories. The innovativemind set, unparalleled research, agile sales teams, and intensive execution systems have enabledus to relentlessly service our clients in different ways. It caters to a wide clientele comprisingleading domestic and international institutional investors, including Pension Funds, HedgeFunds, and Mutual Funds, insuranceCompanies and banks.

Asset Management

Overview

Edelweiss Asset Management offers a range of investment products and advisory services acrossthe risk return spectrum to individual and institutional investors. Our close focus on clientrequirements is our inspiration in designing products which offer the best opportunity for assetgrowth with a constant focus on risk and preservation of capital.

Offerings

Portfolio Management - Edelweiss offers the discerning investor an opportunity to access itsasset management expertise through its portfolio management service (PMS). The basicobjective of this product is to provide unbiased investment management strategy based on

rigorous fundamental analysis while taking cognizance of market conditions and movements.Mutual Funds - Edelweiss Asset Management Limited follows a research based and process

oriented investment approach. Edelweiss Asset Management Limited is committed to observethe highest ethical standards while deploying investors monies, servicing investors and dealingwith business partners.


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Wealth Management

OverviewIt is a specialized profession where our experts combine their efforts to meet the wealth planning,investment, and financial management needs of individuals, families, family offices, or

corporate. Edelweiss Wealth Management takes one step closer to you, by providing an "all-in-one approach. Advice on asset allocation and thereby creating customized financial solutionsfor HNWIs, NRIs, Trusts and Corporate. We offer advisory services on Structured Products,Portfolio Management, Mutual Funds, Insurance, Derivative Strategies, Direct Equity, IPOs,Real Estate Funds and Art Funds.

Private Client Brokerage

Overview

The Private Client Services Group at Edelweiss is focused on providing products, strategies andservices to High Net worth Individuals and Corporate Clients. We have geographic reachthrough our Branches, Channel Partners & Investment Consultants in over 19 locations in India.

The PCG team has highly trained equity professionals, who act as your Equity Advisor. Our ESLEquity Advisor proactively helps you take informed investment decisions and build a healthyportfolio. We draw on our strong presence and industry leadership to develop a portfolio ofofferings designed to serve the spectrum of financialneeds. Our main objective is to provide clients with all the tools and services they need to reducethe administrative burdens of managing money and focus on what you do best - maximizing yourtrading performance, building your business, and attracting new sources of capital.

OfferingsCash Equity - Providing research based advice on select stocks from across sectors to meet

clients investment requirement ranging from positional trading to long term investment goals.

For our clients I provide ongoing portfolio consultation with a dedicated relationship manager asone point contact for all day-to-day execution of trades and other service requirements such asadvisory on investments.

Derivatives - Edelweiss being a pioneer in Quantitative & Alternative Research, I leveragethisstrength for our derivatives strategies focused towards short-term / medium investments ofclients in PCG. Derivative Strategy group, through its dedicated research team provides seamlessexecution for its clients with trading view. The stock ideas generated are enhanced bycombination of technical view and derivative strategy along with the statistical data. Based onthe Quantitative Research products such as Pair Trades & Alpha Trades are also initiatedwhenever I identify the opportunity.

Financing - I offer various products and services to individuals and corporates with a closefocuson client requirements while designing our products. Over a period of time I have been offeringshort term loans against securities and/or to buy new securities. I also provide finance forinvestment in primary market issues. I help promoters by financing against their share holdingto meet their business requirements, expansion of businesses and diversification of the lines ofbusiness. I possess expertise in financing short and long term loan facility, risk analysis, transferand assessment besides a broad spectrum of services.


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Financing

Overview

Edelweiss Housing Finance Limited (EHFL) is a Housing Finance Company incorporated underthe aegis of the National Housing Bank (NHB). It is part of the Edelweiss Group of Companies.

EHFL has an array of loan solutions which can be tailored to your requirements. If yourelooking for a Home Loan, do apply to EHFL for the highest loan amount in the shortest time.

OfferingsHome LoansLoan against property25 year loan - The Newly launched 25 year Home loans help you purchase a property and

repay in lower / easily manageable installmentsRefinancing - If you have already purchased a property and used your own funds or borrowed

from friends or relatives for the same, I could re-finance the same.Balance transfer & top up - If you already have a Home loan or a Loan against Property

running with any Bank or other financier, you could move the same to EHFL a better rate ofinterest and a longer tenor, giving you the advantage of a lower EMI. You can also avail of anadditional ("Top-Up") loan against same property.1.

Position of the Edelweiss broking ltd

CORPORATE STRUCTURE


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Board of Directors


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Financial Performance at a Glance:

Financial Highlights

I. Consolidated Financial Information:

(Rs in million)

2011-12 2010-11

Total Income 16,706.87 14,290.12

Total Expenditure 14,719.90 10,790.00

Profit Before Tax 1,986.97 3,500.12

Provision for Tax 680.86 1,030.97

Profit After Tax 1,306.11 2,469.15

Less: Share of Minority Interest 28.68 138.99

Profit for the year after 1,277.43 2,330.16Minority interest

Add: Surplus brought forwardfrom previous year 7,716.86 6,407.19

Profit available for appropriation: 8,994.29 8,737.35

Less: Appropriations


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Interim Dividend 226.99 187.98

Proposed Dividend 227.34 263.24

Transfer to Reserves 272.22 493.69

Dividend Distribution Tax 85.24 75.58

Surplus carried to the 8,182.50 7,716.86Balance Sheet

Earnings per equity share(Face Value - Rs 1/-)

(Rs in million)

2011-12 2010-11

Basic (Rs) 1.69 3.10

Diluted (Rs) 1.66 3.00

Total Income 2,072.91 4,395.55

Total Expenditure 1,313.13 3,771.84

Profit Before Tax 759.78 623.71

Provision for Tax 73.44 36.46


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Profit After Tax 686.34 587.25

Add: Surplus broughtforward from previous year 106.23 42.76

Profit available for appropriation: 792.57 630.01

Less: Appropriations

Interim Dividend 226.99 187.98

Proposed Dividend 227.34 263.24

Transfer to Reserves 68.63 58.73

Dividend Distribution Tax (13.83) 13.83

Surplus carried to the Balance Sheet 283.44 106.23

Earnings per equity share(Face Value - Rs 1/-)

Basic (Rs) 0.91 0.78

Diluted (Rs) 0.89 0.76

Dividend

Edelweiss over the past years has delivered strong operating and financial performance since its

inception. It has consistently demonstrated a strong track record of high growth and profitability.

Its Revenues and PAT have grown at an 11-year CAGR of 80% and 75% respectively till FY10.


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As on 30th September 2010 Edelweiss Groups Net worth after minority interest stood at over `

23.35 billion (` 28.09 billion including minority interest), indicating a strong balance sheet.

Equity capital is the primary source of funding for the group besides debt. The leverage as on

30th September 10 is 2.17 times including the Minority Interest indicating a healthy position

whereby the balance sheet can be further levered easily.

Consolidated Financial Performance of Edelweiss Capital Limited:

Edelweiss benefits from a strong and liquid balance sheet with a low leverage. A strong capitalbase and adequate profitability year after year allows Edelweiss to constantly invest in newbusinesses with an eye on future growth while scaling up the existing businesses. A large capitalbase also allows it to transact larger volumes of broking and trading in the markets giving it aleadership position in Institutional Equities business. It also enables the group to add debt capital

as and when required at reasonable rates. Its market capitalization as on 30th September 10 wasover ` 41 billion and places the company among top 5 brokerage houses in the country by marketcap.

Highest ShortTerm Credit RatingsEdelweiss Capital Limited and three other group companies enjoy highest short term rating asunder:(As on 30th September 10)

EntityRating Agency Rating

Edelweiss Capital LimitedLong-Term Debt Programme ICRA LAA-/LAA- pn/ LAA-

pp/StableShort-Term Debt Programme CRISIL P1+Edelweiss Securities LimitedShort-Term Debt Programme CRISIL P1+ECL Finance LimitedShort-Term Debt Programme ICRA A1+Long Term Debt Programme ICRA LAA- pp (SO)/StableLong Term Debt Programme CRISIL AA-/StableShort-Term Debt Programme CRISIL P1+Edelweiss Commodities Ltd. (formerly ECAL Advisors Ltd.)Short Term Debt Programme CRISIL P1+


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Edelweiss Strengths

1. Brand: Edelweiss the brand, today is a strong franchise in the capital markets backed by aconsistent focus on execution and innovation. It constantly emphasizes innovation which isreflected in leadership in new products and asset classes and new client segments.

2. Edelweiss Core Strategic Approach to business is founded on growth with profitabilitybacked by synergistic diversification across the businesses; Control and flexibility of cost, capitaland balance sheet, diversified revenue streams, strong risk management and organization buildup by developing leadership in bench and investing in culture which rewards thinking aboutlong-term in a partnership cohesive approach. It believes in growth through adjacent markets,adjacent asset classes, adjacent product classes and adjacent client segments.

3. Integrated & Diversified Business Model: Edelweiss derives its strength from a distinct butcomplementary set of diversified businesses which also protect the Group from any downwardcyclical pressures. To this end, Edelweiss continues to look to invest in long term business

opportunities in financial services. Its core business diversification approach is based on growththrough adjacent markets and through widening the product mix in existing businesses. Thesynergistic diversification ensures three broad streams of revenue, viz. Agency fee &commission, Treasury operations income and Interest income contribute approximately one-thirdeach of the total revenues.

4. Balance Sheet: Edelweiss benefits from a strong and liquid balance sheet with a low leverage.Its focus while managing the Balance Sheet is on strong risk management and capitalpreservation. A strong capital base of ` 28.09 billion and adequate profitability year after yearallows Edelweiss to constantly invest in new businesses with an eye on future growth whilescaling up the existing businesses. Edelweiss is also shielded from any adverse asset liabilitymismatch as its asset-side duration is less than 9 months whereas its liabilities have duration ofabout 120 months. Low leverage on the balance sheet and highest short term credit ratings allowit ample leeway to lever the balance sheet further. The flexibility in the cost structure enables itto protect the margins, strong risk management focuses on preservation of capital and the groupmaintains adequate liquidity cushion to ensure smooth business operations across cycles.

5. Edelweiss Business Model is to be able to adjust to downturn in markets with inherent costflexibility and be able to quickly convert growth opportunities into business when they reappear.Our business growth perspective is aligned to the medium term of 3 to 5 years.

6. Board level Commitment: A board comprising of three independent and one non-independentnon-executive director out of a total of six directors, all of whom play a governing role andprovide expertise and insight into building Edelweiss into one of the most reputableorganizations with an admirable compliance and corporate governance ethos.

7. Management: Edelweiss has an experienced and stable senior management team. We alsohave a strong middle management team, which comprises of a 50 member Senior LeadershipGroup and an 80 member Leadership Group forming the bench strength. The four tier leadershippool thus covers over 5% of the total employee strength of the group. Edelweiss constantly


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emphasizes training and developing leadership and its 100 seater Training Centre at Alibaug(near Mumbai) is now operational.

8. Employee Ownership: Edelweiss has a widely distributed employee ownership and wasamong the pioneers in the financial services industry in instituting an employee stock option

scheme. It now has one of the largest ESOP pool in the financial services space in India and over600 employees are covered through ESOPs. The employees including key management ownover 50% of the company.

9. ISO Certification: Edelweiss has now been certified as ISO 9001:2000 compliant. This is anorganisation wide certification, which covers all lines of businesses and support functions. Itensures that Quality Management System (QMS) of Edelweiss complies with InternationalStandards.


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COMPETITORS


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Edelweiss VS Competitors


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SWOT ANALYSIS

STRENGTH

A well-known name in

financial companies.

Wide experience in this field.

Dedicated employees.

Ever growing distribution

network.

Good Research team.

Easy access to branch.

WEAKNESS

No access to rural market.

No direct link between investors

and AMC.

Opportunities

Positive outlook of People

toward mutual funds.

Untapped market.

THREATS

Highly volatile and uncertain

market.

Large number of financial giants

present in this market


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CHAPTER 3

Discussion on Training


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Roles and Responsibilities

My scope of work during internship was to generate business for the company by way ofopening demats account and persuading peoples to invest in mutual funds. I was given intensivetraining during the starting of our internship about the product and the details about it like thedifferent brokerage plans, various value added services provided by the company, extensiveresearch done by the company to provide the customers with accurate information and providethe customers with opportunities to earn handsome returns on their investments.

During my internship I was given the task of calling customers and trying to convince, them toopen demat account and investing in the stock market and mutual funds. I also have the task ofconvince the customers that investing in the stock market and mutual funds is a better optionthan investing money in FD, Post office schemes etc. The average return from the stock marketduring the past five years is about 15% p.a. Once I had convinced the client over the phone thenthe next task was to ask for a meeting where I would clear any remaining doubts that the clientmay have and do the necessary paper work that is required to open an demat account.

Apart from tele calling other ways of generating leads for the company was by way of talking topeople in the market and getting them to invest in the stock market. Taking to them about waysby which they could start investment in the stock market.

Our task was to interact with people and provide them with basic knowledge about investmentopportunities in the stock market. Our primary goal was to generate leads for the company and

getting people to invest in the mutual funds and clear there misconception that investment in the

mutual funds is risky and they would suffer losses.


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Challenges Faced:

The challenges that I faced during our SIP was from two different sets of people, first sets of

people where those who have very little or no knowledge of the stock markets and how it works,

the second set of people where those who are already active in the stock markets and are notready to switch to a different company. I had to tackle these two different sets of people very

differently; our approach would have to very different in these two cases.

The main challenge that I faced was to convince new people to invest and get involved in the

stock market. In India only a very small percentage of the population invest in the stock markets.

There is very little awareness about investment opportunities that exists. I had to start from the

scratch in order for them to understand how the stock markets works and that there investment

are absolutely safe and secure. People also have the preconceived opinion that investment in the

stock markets is a risky business, they are happy to invest in various other sources like banks,

property, jewelry etc. They are of the opinion that once you have invested your money in thestock markets it will never come back.

Also they are not ready to trust a private company that would manage their investments. They

prefer to invest in public sector banks and other govt. companies. They are not at all comfortable

with the idea of investment in the stock markets even if it could earn them better returns. They

are comfortable with whatever they are earnings are not ready to explore new areas.

To get people who are already active in the stock markets to switch to a new company was

equally challenging if not more. Here the problem was to convince people to try out our

company and how I would offer products and services to them than they are already getting form

their existing broking company. It would take a lot of persuasion and convincing, many round of

meeting where I would present our products and let them compare with their existing products.

Also there would be lots of negotiation about the different brokerage plans and brokerage rates. I

would have to offer the clients very low brokerage rates and multiple benefits to get them to

switch. They would demand very low brokerage rates and various other facilities some of those

would not be possible for us to give.

My seniors provided me with guidance and motivation that helped me in my interaction with the

clients and clearing their doubts. They explained to me in detail the various benefits of the

product and how the customer would benefit from it.


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INTRODUCTION

Mutual Fund

A mutual fund is an instrument that brings together money from many people and invests it in

stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund

owns are known as itsportfolio. Each investor in the fund owns shares, which represent a part of

these holdings A mutual fund is a professionally managed investment product that sells shares to

investors and pools the capital it raises to purchase investments A fund typically buys a

diversified portfolio of stock, bonds, and money market securities, or a combination of stock and

bonds, depending on the investment objectives of the fund. Mutual funds may also hold other

investments, such as derivatives. A fund that makes a continuous offering of its shares to the

public and will buy any shares an investor wishes to redeem, or sell back, is known as an open-

end fund. An open-end fund trades at net asset value (NAV).

An investment vehicle that is made up of a pool of funds collected from many investors for the

purpose of investing in securities such as stocks, bonds, money market instruments and similar

assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt

to produce capital gains and income for the fund's investors. A mutual fund's portfolio is

structured and maintained to match the investment objectives stated in its prospectus.


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Advantages of Mut1ual Funds

- Diversification

- Professional Management

- Regulatory oversight

- Liquidity

- Convenience

- Low cost

- Transparency

-

Flexibility

- Choice of schemes

- Tax benefits

- Well regulated

Working of Mutual Funds:

The following figure explains the working of Mutual funds


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The important terms of the figure are explained as follows:

Fund Sponsor:

The sponsor is the company which sets up the mutual fund. It means anybody corporate acting

alone or in combination with another body corporate established a mutual fund after initiating

and completing the formalities

Trust:

MF or trust can either be managed by the Board of Trustees, which is a body of

individuals, or by a Trust Company, which is a corporate body. Most of the funds in India are

managed by Board of Trustees. The trustee being the primary guardian of the unit holders

funds and assets has to be a person of high repute and integrity. The trustees, however, do not

directly manage the portfolio securities. The portfolio is managed by the AMC as per the

defined objectives, accordance with Trust Deed and SEBI (Mutual Funds) Regulations.

Asset Management Company

(AMC):

The AMC, which is appointed by the sponsor or the trustees and approved by SEBI, acts like

the investment manager of the trust. The AMC functions under the supervision of its own

Board of Directors, and also under the direction of the trustees and SEBI. AMC, in the name of

the trust, floats and manages the different investment schemesas per the SEBI Regulationsand as per the Investment Management Agreement signed with the Trustees.

Other

Apart from these, the MF has some other fund constituents, such as custodians and

depositories, banks, transfer agents and distributors.

The custodian is appointed for safe keeping of securities and participating in the clearing

system through approved depository. The bankers handle the financial dealings of the fund.

Transfer agents are responsible for issue and redemption of units of MF.


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RiskReturnMatrix:

The risk return trade-off indicates that if investor is willing to take higher risk then

correspondingly he can expect higher returns and vice versa if he pertains to lower risk

instruments, which would be satisfied by lower returns. For example, if an investor opts for

bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in

capital protected funds and the profit-bonds that give out more return which is slightly higher

as compared to the bank deposits but the risk involved also increases.

Thus investors choose mutual funds as their primary means of investing, as Mutual funds

provide professional management, diversification, convenience and liquidity. That doesnt

mean mutual fund investments are risk free. This is because the money that is pooled in are not

invested only in debts funds which are less riskier but are also invested in the stock markets

which involves a higher risk but can expect higher returns.

Mutual funds can be classified as follow:


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Based on their structure:

Open-ended funds: Investors can buy and sell the units from the fund, at any point of

time.

Close-ended funds: These funds raise money from investors only once. Therefore, after

the offer period, fresh investments cannot be made into the fund. If the fund is listed on a

stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund).

Recently, most of the New Fund Offers of close-ended funds provided liquidity window

on a periodic basis such as monthly or weekly. Redemption of units can be made during

specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective:

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

fluctuating share prices, such funds show volatile performance, even losses. However,

short term fluctuations in the market, generally smoothens out in the long term, thereby

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

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

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

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

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms of composition

and individual stock weight ages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading

across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest

in companies offering high dividend yields.


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iv) Thematic funds-Invest 100% of the assets in sectors which are related through

some theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector

fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund:Their investment portfolio includes both debt and equity. As a result,

on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the

ideal mutual funds vehicle for investors who prefer spreading their risk across various

instruments. Following are balanced funds classes.

i.)Debt-oriented funds -Investment below 65% in equities.

ii.)Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors

averse to idea of taking risk associated with equities. Therefore, they invest exclusively in

fixed-income instruments like bonds, debentures, Government of India securities; and

money market instruments such as certificates of deposit (CD), commercial paper (CP)

and call money. Put your money into any of these debt funds depending on your

investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion being

invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and

T-bills.


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iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

IV) Arbitrage fund- They generate income through arbitrage opportunities due to mispricingbetween cash market and derivatives market. Funds are allocated to equities, derivatives and

money markets. Higher proportion (around 75%) is put in money markets, in the absence of

arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government

Securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in

long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an

exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line withthat of the fund.

Investment Strategies:

1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed

date of a month. Payment is made through postdated cheques or direct debit facilities. The

investor gets fewer units when the NAV is high and more units when the NAV is low. This is

called as the benefit of Rupee Cost Averaging (RCA)


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2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give

instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual

fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then

he can withdraw a fixed amount each month.

Options Available To Investors:

Each plan of every mutual fund has three options Growth, Dividend and dividend

reinvestment. Separate NAV are calculated for each scheme.

- Dividend Option

Under the dividend plan dividend are usually declared on quarterly or annual basis. Mutual fund

reserves the right to change the frequency of dividend declared.

- Dividend reinvestment option

Instead of remittances of units through payouts, Units holder may choose to invest the entire

dividend in additional units of the scheme at NAV related prices of the next working day after

the record date. No sales or entry load is levied on dividend reinvest.

- Growth Option

Under this, plan returns accrue to the investor in the form of capital appreciation as reflected in

the NAV. The scheme will not declare the dividend under the Growth plan and investors who opt

for this plan will not receive any income from the scheme. Instead of income earned on their

units will remain invested within the scheme and will be reflected in the NAV.


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Risk Return Hierarchy of Different Funds

BANKS V/S MUTUAL FUNDS:

Mutual Funds are now also competing with commercial banks in the race for retail investors

savings and corporate float money. The power shift towards mutual funds has become obvious.

The coming few years will show that the traditional saving avenues are losing out in the current

scenario. Many investors are realizing that investments in savings accounts are as good as

locking up their deposits in a closet. The fund mobilization trend by mutual funds indicates that

money is going to mutual fund in a big way.


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MUTUAL FUNDS STRUCTURE

The SEBI(Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in

the form of a trust by a sponsor to raise monies by the Trustees through the sale of units to the

public under one or more schemes for investing in securities in accordance with these

regulations. These regulations have since been replaced by the SEBI (Mutual Funds)

Regulations, 1996. The structure indicated by the new regulations is indicated as under. A

mutual fund comprises four separate entities, namely sponsor, mutual fund trust, AMC and

custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.

The mutual fund needs to be constituted in the form of a trust and the instrument of the trust

should be in the form of a deed registered under the provisions of the Indian Registration Act,

1908.

CATEGORY BANKS MUTUAL FUNDS

Returns Low High

Administrative exp. High Low

Risk Low Moderate

Investment options Less More

Network High penetration Low but improving

Liquidity At a cost Better

Quality of assets Not transparent Transparent

Interest calculationMinimum balance between

10th & 30th of every monthEveryday

GuaranteeMaximum Rs.1 lakh on

depositsNone
http://www.sebi.gov.in/HomePage.jsphttp://www.sebi.gov.in/HomePage.jsphttp://www.sebi.gov.in/HomePage.jsphttp://www.sebi.gov.in/HomePage.jsp


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The Custodian maintains the custody of the securities in which the scheme invests. It also keeps

a tab on corporate actions such as rights, bonus and dividends declared by the companies in

which the fund has invested. The Custodian is appointed by the Board of Trustees. The

Custodian also participates in a clearing and settlement system through approved

depository companies on behalf of mutual funds, in case of dematerialized securities.

The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10 crore) of

the asset management company. The board of trustees manages the MF and the sponsor

executes the trust deeds in favor of the trustees. It is the job of the MF trustees to see that

schemes floated and managed by the AMC appointed by the trustees are in accordance with the

trust deed and SEBI guidelines


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Taxation of Mutual Funds and Investor

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. Section 10(23d)

of the IT Act.

Finance Act 1999 made income (dividend) from UNITS totally exempt from tax u/s

10(33) in the hands of 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 (since

changed to 65% in FY 06-07.

Individuals 14.02% , Companies 22.44%.

Security Transaction Tax (STT) is charged as applicable.

80 C benefits under ELSS up to Rs 1 lack.

Types of Investment in Mutual Fund

Lump Sum



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Lump Sum Payment

A lump sum is a single payment of money, as opposed to a series of payments made over time

(such as an annuity) This means investing the entire sum of money at one go. For instance, if you

have Rs 1 lakh which you are willing to fully invest in stocks or MFs, it is a lump-sum

investment.


A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save

regularly. It is just like a recurring deposit with the post office or bank where you put in a small

amount every month, except the amount is invested in a mutual fund. The minimum amount to

be invested can be as small as 100 (100 Indian Rupees) and the frequency of investment is

usually monthly or quarterly.
http://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Money


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What is Systematic Investment Plan?

Systematic Investment Plan (SIP) is a smart financial planning tool that helps you to create

wealth, by investing small sums of money every month, over a period of time. Systematic

Investment Plan (SIP) is a planned approach to investments and an investment technique that

allows you to provide for the future by investing small amounts of money in Mutual Fund

schemes of your choice.

A SIP is a method of investing in mutual funds, by investing a fixed sum at a regular frequency,

to buy units of a mutual fund schemes. It is quite similar to a recurring deposit of a bank or post

office. For the convenience, an investor could start a SIP with as low as Rs 500; however this

amount may differ from one fund house to other. The SIP provides them a way to invest in the

fund of their choice in installments.

How to invest in SIP?

The SIP option is available with all types of funds like equity, income or gift.

An investor can avail the SIP option by giving post-dated cheques of Rs.500 or Rs.1000

according to the funds policy.

If an investor wants to put more than Rs.500 or Rs.1000 in any given month he will have

to fill in a new form for SIP intimating the fund that he is changing his SIP structure. Also

he will be allowed to change the SIP structure only in the multiples of the SIP amount.

If an investor is investing in two different schemes of the same fund he can fill in a

common SIP form for all the schemes. However, if the first holders in those schemes are

different then they will have to fill different SIP forms, as the first holder has to sign on

the form. The investor can get out of the fund i.e. redeem his units any time irrespective of

whether he has completed his minimum investment in that scheme. In that case, his

post-dated cheques will be returned back to him.


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Here is an illustration using hypothetical figures indicating how the SIP

can work for investors :

Suppose an investor would like to invest Rs.4, 000 under the Systematic Investment

Plan on quarterly basis.

Invested Premium

(Rs)

NAV of Maxi miser

Fund (Rs per unit)

Units allocated

7t April10 4000 11.34 352.73

7t May10 4000 11.01 363.31

7t June10 4000 12.05 331.95

7t July10 4000 13.13 304.65

7t

August10

4000 13.67 292.61

7t Sept10 4000 15.81 253.00

7t Oct10 4000 16.78 238.38

7t Nov10 4000 18.28 218.82

7t Dec10 4000 18.71 213.79

7t Jan11 4000 21.48 186.22

7t Feb11 4000 21.49 186.13

7t

March11

4000 21.98 181.98

Total 48000


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Actual average NAV=

(11.34+11.01+12.05+13.13+13.67+15.81+16.78+18.28+18.71+21.48+21.49+21.98) / 12

= 16.29

NAV for Mr. X (4,000 * 12) / (352.73+ 363.31 + 331.95 + 304.65 + 292.61 + 253.00+

238.38 + 218.82 + 213.79 + 186.22 + 186.13+ 183.74) = Rs.15.36

Based on the historical analysis for BSE Sensex for last 10 to 12 years (i.e.1-Jan-1998 to 1-Jan-

have 2010) we find that if an individual had invested Rs. 1000 ever year (SIP) he would by

earned a return of 9% vis--vis 5% earned an individual who had invested Rs. 1000 at the

beginning of 10 year period. Similarly over a five-year period (1-Jan-1994 to 1-Jan-1999) SIP

investment return would have been 16.52% compared to 14.09% for a one-time investment at the

beginning of the period.

Using the SIP strategy the investor can reduce his average cost per unit. The investor gets the

advantage of getting more units when the market is turned down.


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Benefits of SIP

Benefit 1

Become a Disciplined Investor

Being disciplined - Its the key to investing success. With the Systematic Investment Plan you

commit an amount of your choice (minimum of Rs. 500 and in multiples of Rs. 100 thereof*) to

be invested every month in one of our schemes.

Think of each SIP payment as laying a brick. One by one, youll see them transform into a

building. Youll see your investments accrue month after month. Its as simple as giving at least

6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. Its the perfect

solution for irregular investors.

Benefit 2

Reach Your Financial Goal

Imagine you want to buy a car a year from now, but you dont know where the down -payment

will come from. SIP is a perfect tool for people who have a specific, future financial

requirement. By investing an amount of your choice every month, you can plan for and meet


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financial goals, like funds for a childs education, a marriage in the family or a comfortable

postretirement life.

Benefit 3

Take Advantage of Rupee Cost Averaging

Most investors want to buy stocks when the prices are low and sell them when prices are high.

But timing the market is time-consuming and risky. A more successful investment strategy is to

adopt the method called Rupee Cost Averaging. We can reap this benefit by investing the

amounts through a SIP.

Benefit 4

Grow Your Investment with Compounded Benefits

It is far better to invest a small amount of money regularly, rather than save up to make one large

investment.

This is because while you are saving the lump sum, your savings may not earn much interest.

With HDFC MF SIP, each amount you invest grows through compounding benefits as well. That

is, the interest earned on your investment also earns interest. The following example illustrates

this.

Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs.

5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs. Arjun

also starts working when he is 20 years old. But he doesnt invest monthly. He gets a large bonus

of Rs. 3 lakhs at 25 and decides to invest the entire amount.

Both of them decide not to withdraw these investments till they turn 50. At 50, Nehas

Investments have grown to Rs. 46, 68,273* whereas Arjuns investments have grown to Rs. 36,


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17,084*. Nehas small contributions to a SIP and her decision to start investing earlier than

Arjun have made her wealthier by over Rs. 10 lakhs.

*Figures based on 10% p.a. interest compounded monthly.

Benefit 5

Do All This Effortlessly

Investing with SIP is easy. Simply give us post-dated cheques or opt for an Auto Debit from your

bank account for an amount of your choice (minimum of Rs. 500 and in multiples of Rs. 100

thereof*) and well invest the money every month in a fund of your choice. The plans are

completely flexible. You can invest for a minimum of six months, or for as long as you want.

You can also decide to invest quarterly and will need to invest for a minimum of two quarters.

OTHER BENEFITS

1. SIP can be started with a minimum investment of Rs. 500/- per month or Rs. 1000/- per

month.

2. It is good and effective way of creating wealth for long term.

3. ECS facility is available in case of Investment through SIP.

4. A small withdrawal from the account doesnt affect the bank balance of an individual as

compared to a hefty withdrawal.

5. It can be for a year, two years, three years etc. if a person at any point of time couldnt be able

to continue its SIP, he may give instructions at least 25 days before to the fund house. His SIP is

discontinued.

6. All type of funds except Liquid funds, cash funds and other funds who invest in very short

fixed return investments offers the facility of SIP.

7. Capital gains, if applicable, are taxed on a first-in first-out basis.

8. As the investment made through SIP are not at one time. Some units bought at high price and

some at low price, so chances of making gain through SIP is higher than the one timeinvestment.

In short, SIP is a simple and effective way to create wealth but to create such wealth, one should

think about the investment in SIP for a period of at least for time frame of three years because it

pays to invest in a longer run.


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Chapter 4

Research Methodology


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Research Methodology

Title of the study


(The Better Way to Invest In Mutual Funds)

Duration of the Project

The duration of the project is 60 days

Objective of the study

The purpose of choosing the project is to know:

Investors option for entry into mutual fund

LUMPSUM or SIP

Comparative analysis between Lump Sum and SIP

Investors Delight when investment is through SIP

Research Type

Conclusive and explorative approach has been adopted in the study. As here the topic of

research problem has been explored so that hidden facts can come into the light and then the

maximum allocation criteria in SIP are Rs. 1000-3000 i.e. the final conclusion is given 45%

SAMPLE SIZE

A sample size of 50 investors was chosen to meet the earlier mentioned objectives. The selection

of sample was based on the following criteria: -

People belonging to different state of society.

Servicemen working in government organization & private organization.

Professionals who includes doctors, lawyers, teachers etc


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Research Design

This research is Explorative and conclusive in nature because it aims to collect the data about

the behavior of investors in which way they invest in Mutual Funds. The research approach used

is survey based and the analysis is largely based on the primary data.

Research Instrument

Structured questionnaire: open- ended and close- ended.

Contact Method

Personal interview

Research Approach

Any methodology includes the overall research design, the sampling procedure and data

collection method. The methodology adopted by me for purpose of finding the investment

behavior of investors was DIRECT SURVEY METHOD

Population

BANGALORE CITY

Study scope

BANGALORE

This project will help existing/prospective investor to understand what the various mode of

investment in Mutual Fund are and why Systematic Investment Plan gives better returns than

Lump sum. So that investors can do better use of their hard earned money to earn more profit.

Types of data

1. Primary Data

2. Secondary Data


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Primary Datais that data which is collected by the researcher as per his/her needs

Secondary Datais that data which is collected through references as websites, journals, books,

magazines, etc.

LIMITATIONS TO THE SURVEY

Though research based decision-making is now considered but still there is a gap between the

understanding of researcher and users.

Research is there to help in decision-making, not a substitute of decision-making. Some of the

following limitations have restricts the scope of survey to some extent :

Some respondents gave vague information and were not serious while responding.

Some respondents were hesitant to reveal information about their finances because

of income tax queries.

It was difficult to find whether respondents actually participate in their financial

planning.

Research can provide number of facts but it does not provide actionable results.

It cannot provide answer to any problem but can only provide a set of guidelines.

Management rely more on the intuitions and judgments rather than research.

Area of research was restricted to some location of the city and state.


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Analysis and Interpretation

Q 1: In which Financial Instrument do you invest into?

Ans:

Interpretation: From above pie chart, it has been analyzed that 76% of investors invest in the

analysis is done on the basis of the response of respondents, which is collected through the

questions present in questionnaire.

Financial Instruments Investment in %

Mutual 76

Bond 15

Online Trading 07

Derivatives 02


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Q 2: By structure in which type of schemes have you invested?

Ans:

Types of schemes on the basis of structure Investment in %

Open ended funds 66

Close ended funds 22

Intervals funds 12

Interpretation:The above pie chart depicts that 66% investors invest in Open-ended funds,

22% in Close-ended funds and 12% in Interval funds.


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Q. 3: By investment objective In which type of schemes have you invested?

Ans:

Types of Investment on the basis of objective Investment in %

Growth Schemes 55

Income Schemes 13

Balances Schemes 32

Interpretation:From the above pie chart, I conclude that there are 55 % investors who investin Growth Schemes, 13% investor invest in Income Schemes, and 32% investors invest in

Balanced Funds.


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Q.4. In which type of fund you want to invest?

Ans:

Interpretation: The above chart depicts that the maximum numbers of investor.i.e.41%

investors invest in Sectorial Funds, 44% in Index Funds and 15% in Tax Saver Funds.

TYPES OF FUNDS INVESTMENT IN

%

Index Fund 41

Tax Saver Fund 15

Sectorial fund 44


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Q.5 Do you repeat your investment after initial investment?

Ans :

Interpretation: The above pie chart depicts that 68% of investors invest again after the initial

investment

Repetition of

investment

Investors in %

Yes 68

No 32


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Q.6 what percentage of your earnings do you invest in Mutual Funds?

Ans:

Interpretation: The above chart depicts that 43% investor invest that up to 10% of their earning

in Mutual Fund.

% of earnings Investors in %

Upto 10% 43

Upto 25% 32

Upto 50% 15

Above 50% 10


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Q.7 :How many investors invested in SIP , Lump sum or both?

Ans :

Interpretation: From above chart it has been analyzed that 55% investors have invested SIP,

10% in lump sum and 35% in both the category.

Type of investment Investment in %

SIP 55

Lump sum 10

Both 35


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Q.8 what is an allocation criteria of an investor in SIP?

Ans :

Allocation criteria (in Rs) Investment in %

Less than 1000 9

1000-3000 45

3000-5000 36

More than 5000 10

Interpretation: From above chart it has been analyzed that the allocation criteria of investment

is 45% in the range Rs1000 to Rs 3000.

0

5

10

15

20

25

30

35

40

45

50

less than 1000 1000-3000 3000-5000 more than 5000

Allocation criteria (in Rs)

investment in %


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Q.9 what is the time duration of investment?

Ans :

Time duration Investment in %

Less than or equal to 5 years 25




Less than or equal to 1 year 8

Interpretation: The above bar chart depicts that most of the investors (i.e. 33.33%) invest in less

than 3 years.


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Q.10 which has given more profit to investors?

Ans :

Investment in Profit in %

Lump sum 16

SIP 84

Interpretation: The above Pie chart depicts that 84% of investors have got more profit in

Systematic Investment Plan.


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Facts and Findings

The analysis is done based on the structured questions and we got following points:

- People still invest less part of their income in mutual funds i.e. about 10%

- 55% investor invests in SIP mode.

- 84% got more profit in SIP

-

The maximum duration of investment in SIP is 3 years i.e. 34%.





Less than or equal to 1 year 8

- The maximum allocation criteria in SIP are 1000-3000 i.e. 45%

Less than 1000 9

1000-3000 45

3000-5000 36

More than 5000 10


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Conclusion:

Findings:

Our findings during the training with Edelweiss Broking Limited, Bangalore was good on the

following grounds:-

Edelweiss is a high ranked company listed with NSDL and CDSL; provide trading

through both NSE and BSE.

Provides excellent research base to its customers.

Provides fast and easy to use trading platform.

SIP provides a better platform for investments in Mutual Funds as it attracts a large

number of small investors as well.

There are some more points:-

Mutual fund advisors give emphasis on mutual funds than other investment options.

The awareness level of investor is low as advisors are interested in dealing in mutual

funds.

Very less advisors are knowing about services provided by Edelweiss (Mutual Fund)

Mutual funds have given a new direction to the flow of personal saving and enable small

and medium investors in remote rural and semi urban areas to reap the benefits of the

stock market investments. Indian mutual funds are thus playing a very important role in

allocation of scarce resources in the emerging economy.


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RECOMMENDATION AND SUGGESTIONS

Though the Edelweiss have a very good ascribed plan with exclusive band of opportunities but

as nothing is free from the hurdles therefore there are few shortcomings which I felt makes

Edelweiss fail to achieve its target :

There is high potential market for mutual fund advisors in Bangalore city but this

market needs to be explored as investors are still hesitated to invest their money in

mutual fund.

In Bangalore investors have inadequate knowledge about mutual fund, so proper

marketing of various schemes is required. Company should arrange more and more

seminars on mutual funds.

Awareness of mutual fund services among the investors are very low so Asset

Management Company needs proper marketing of their all services by advertising ,

distribution of pamphlet , arranging seminars etc.

Most advisors are not interested in dealing of mutual funds because they get very low

commission.

Company should also provide knowledge about the growth rate and expected growth

rate of mutual fund industry in India.

Most people are aware of Life Insurance , NSC and PPF for tax saving so company

should market various tax saving scheme of mutual fund and their benefits.


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ANNEXURE

QUESTIONNAIRE

(Hello, I am Anubhav Sood.I need your spare time to fill up the questionnaire, as this is the part

of my Summer Internship Training under PGDM curriculum)

NAME: ______________________________________ __________________

AGE

0-18_____ 18-36_____ 36-54_____ 54-72______ 72 ABOVE______

GENDER: Male

Female

OCCUPATION: Businessman [ ] Pvt. Employee [ ]

Govt. Employee [ ] Professional [ ]

Student [ ] other (specify):________

CONTACT NO: __________________________________

Q1. In which of these Financial Instruments do you invest into?

Mutual Funds [ ] Bonds [ ]

Derivatives [ ] Online trading [ ]

Q2 .By structure in which type of schemes did you invested?

Open Ended Fund [ ]

Close Ended Fund [ ]

Interval Schemes [ ]

Q3.By investment objective in which type of schemes have you invested?


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Growth Schemes [ ]

Income Schemes [ ] Balanced Schemes [ ]

Q4.In which type of funds you want to invest?

Tax Saver Funds [ ]

Index Funds [ ]

Sectorial Funds [ ]

Q5. Did you repeat your investment after your initial investments?

Yes [ ] No [ ]

Q6. What percentage of your earnings do you invest in Mutual Funds?

Up to 10% Up to 25% Up to 50% Above 50%

Q7. In which you have invested?

SIP [ ] Lump Sum [ ] Both [ ]

Q8. What is your allocation criterion?

5000b [ ]

Q9. For what time period you have invested?


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Bibliography

1. Internet2. Magazines and journal of the company3. Book of financial Management4. Website:-

www.edelweiss.in

www.wikipedia.com

www.moneycontrol.com

www.valueresearch.com

www.google.com

www.mutaulfundsindia.com

www.investopedia.com
http://www.moneycontrol.com/http://www.valueresearch.com/http://www.google.com/http://www.mutaulfundsindia.com/http://www.investopedia.com/http://www.investopedia.com/http://www.mutaulfundsindia.com/http://www.google.com/http://www.valueresearch.com/http://www.moneycontrol.com/


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Project report on SIP in Mutual funds

Documents