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Mutual funds
A Case Study and survey
at
(HDFC Bank branches: Jalandhar City.)
Submitted to: Shaheed Udham Singh College
of
Engineering and Technology Tangori (Mohali)
Submitted by: Munish Kapil
Roll no. 90692234759
Session (2009-11)
Contents
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Acknowledgment 3
Student undertaking 4
Executive summery 5
Introduction 7-38
- What is Mutual Fund; 7- History of Mutual Fund in India; 9- Types of mutual funds schemes; 12- Advantages of Mutual Funds; 17- Disadvantage of Investing Through Mutual Funds; 18- Mutual Fund investment strategies; 19- Performance evaluation; 20- Risk and Return; 25- Tax treatment for unit holder; 29- Mutual fund set up; 33- AMFI; 33- Tips on buying mutual funds; 36
- AUM; 37
Company Profile 39-54
- HDFC AMC Nam Dev Choak Jalandhar - Schemes- Acquisition of standard charted by IDFC
Findings 52- Survey background; 52- Methodology; 52- Findings;53
Conclusion and reconditions 60
Questionnaire 61
Glossary 65
References 67
Acknowledgment
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It took great deal of help, tolerance and understanding on the part of a variety of people and
organizations to prepare this project report. I would particularly thank to Harmeet Sir , Naresh
Sir, Rijju Sir and Manjit sir( HDFC AMC) as they provided me guide line and support during my
training.
My special thanks go to JIMS College and its placement department for providing me such an
opportunity to work with HDFC AMC.
I would also thank to all staff members of different branches of HDFC Bank Ltd. To all the
above and the many colleagues whose ideas and practice I adopted in the project I wish to
express my warmest appreciation for their help and support along the way.
Munish Kapil
Student undertaking
This is to certify that this project “Mutual Funds : study & survey ” is original work
done for the partial fulfillment for the award of post graduate Degree in business
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management from Shaheed Udham Singh College of Engineering and Technology ,
Tangori ( Mohali) . I am grateful to Prof.Shaweta Mam , faculty of MBA Department
S.U.S.C.E.T. Tangori
Project guide Student
(HOD Pankaj Mahindroo) (Munish
Kapil)
Executive summary
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The Indian mutual fund industry in recent years has exponential growth and yet it is
still at a very nascent stage. We believe that the mutual fund industry has grown in
terms of size or choices available, but is a long distance from being regarded as a
mature one. To understand this one has to look at the global scenario. If one look at
the global mutual fund industry, one has see that assets have grown by 185%
between 2000 and 2006. In comparison, Indian assets outgrew at a staggering 446%,
where as the US only grew by 158% and Europe by 242%.
As our economy continues to grow at a spectacular rate there is a huge amount of
wealth creating opportunities surfacing everywhere. Financial Planners have an
immensely responsible role to play by identifying these opportunities and channeling
them into wealth creating initiatives that would enable people to address their
financial needs. To give an overview of a recent study conducted by Invest India, there
are about 321.8 millions paid workers in India. Of this only 5.3 millions have an
exposure to mutual funds. This is less than 2% of total work force. Even more
interesting fact is that 77% of them reside in super metros and Tier I cities. Again,
about 4 millions come in the Rs 90,000-5 lack income bracket. The penetration amongthe less than Rs 90,000 and more than Rs 5 lack income bracket is very low. The need
for the hour is to expend the market boundaries and expand scope in Tier II and Tier III
cities.
India is also one of the fastest growing markets for mutual funds, attracting a host of
global players. Hence, investors will have an even wider range of products to choose
from. The combination of the increase in number of fund houses along with new
schemes and the increase in the number of people parking their saving in mutual
funds has resulted in per cent during April-December 2007. This now stands at Rs
30314 billions as against Rs 13476 billions for the corresponding period last year.
As on January 31,2008, Indian assets stood at $ 137 billions and are growing. We
already have many experts expressing their concentration at the frequency of NFO
launches. Yet we have less than 1000 schemes in India, compared to 15000 in the US
and 36000 in Europe. The gap is significant and has to be filled up with unique and
better priced products.
There has also been a rapid rise in the HNI segment. India stands only second-best to
Korea in the Asia- Pacific region in terms of percentage growth. The total HNWI (High
Net Worth Individual) assets stood at about Rs 12 trillion and their assets aredistributed over various assets classes. To top them MFs will have to come up with
structured products, real estate funds, commodity based funds, art funds and the like.
Indian house holds have also increased their exposure to the capital market. Very
interestingly, the MF proportion in this has increased. In fact, there has been more
than 2000% growth in the assets coming to MFs in the last 3 years. Statistics reveal
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that a higher portion of investors’ savings is now invested in market-linked avenues
like mutual funds as compared to earlier times.
Passing through the growth phase
We have always read that fund industry has seen three phases – the UTI phase, thepublic sector phase and the post – UTI phase. But if we study a bit more closely, there
have been four clear stages.
- UTI Phase (1964 – 1987)
- Public sector phase (1987 – 1993), during which the likes of SBI,BOB and Canara
Bank comes in to existence
- The emergence phase (1993 – 2003), when international players come in to
India. Some have wound up their operations and a few of them are looking for
re-entry.
- Post UTI phase (2003 – 2007), when domestic players along with some global
players have consolidated the MF industry.
And now we are entering Phase V of the industry, when not only are newer players
readying to enter the market but are also looking at penetration and market
expansion. All in all, this is a win-win situation for Indian investors. We have also come
up a long way from plain vanilla equity funds to hybrid funds, from balanced funds to
arbitrage funds, from sect oral funds to quant strategies.
Changing investor profile
Today’s investor is quite young and very unlike the older generation. He follows a
contrarian’s approach. How buys when the market flips and books profit when it
rallies. While the market corrected by almost 22% during the January mayhem, mutual
funds were net buyers to the tune of Rs 4,200 crores. Much of this support came from
domestic investors. The retail participation in equity schemes has also increased
tremendously. The total AUM of 330 schemes in December last year stood at Rs 2,157
billions as compared to 197 schemes and Rs92 billions In march 2000. Also in the last
three years, mobilizations from NFOs stood at Rs 95,000 crores. Although manycomplain that the industry is still brokerage driven, the trends clearly suggest that
investors prefer NFOs to enter equities.
Our economy is booming, we have now a sustained GDP growth of 8%, which is likely
to remain at this level for years to come, our per capita income is about to touch $
1000 by the end of 2008. The number of AMCs is increasing. Their presence across
India is expending. Distributors too are expanding their networks. Besides, the
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benefits that come from the ownership of a diversified portfolio of securities chosen
and monitored daily by experience, professional advisers.
The funds create and sell new shares on demand. Investors` shares represent a
portion of the fund’s portfolio and income proportional to the number of shares they
purchase. Individual shareholders of the mutual funds have voting rights in the
operation of the fund, just as most holders of common stocks in corporations have the
right to vote on certain issues involving the running of the company. The key attributeof a mutual fund, regardless of how it is structured, is that the investor is entitled to
receive on demand, or within a specified period after demand, an amount computed
by reference to the value of the investor’s proportionate interest in the net assets of
the mutual fund. This means that the owner of mutual fund shares can "cash in," or
redeem his or her shares at any time.
Mutual funds, therefore, are considered a liquid investment. The investor’s selling
(redemption) price may be higher or lower than the purchase price. It all depends on
the performance of the fund’s portfolio. The fund has an adviser who charges a fee for
managing the portfolio. The adviser decides when and what securities to buy and sell,
and is responsible for providing or causing to be provided all services required by the
mutual fund in carrying on its day-to-day activities. All fund investors get this built-in
portfolio management whether they own 50 shares or 10,000.The adviser generally
purchases many different securities for the portfolio, since investment theory holds
that diversification reduces risk. It is this diminished risk that is one of the attractions
of mutual funds. The fund also has a custodian, usually a financial institution such as a
bank, which holds all cash and securities for the fund.
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Phase 1. Establishment and Growth of Unit Trust of India- 1964-87
Unit Trust of India enjoyed complete monopoly when it was established in the year1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and itcontinued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of IndustrialDevelopment Bank of India (IDBI). UTI launched its first scheme in 1964, named asUnit Scheme 1964 (US-64), which attracted the largest number of investors in anysingle investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of differentinvestors. It launched ULIP in 1971, six more schemes between 1981-84, Children'sGift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share
(India’s first equity diversified scheme) in 1987 and Monthly Income Schemes (offeringassured returns) during 1990s. By the end of 1987, UTI's assets under managementgrew ten times to Rs 6700 crores.
Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public sector players enteringthe market in the year 1987. In November 1987, SBI Mutual Fund from the State Bankof India became the first non-UTI mutual fund in India. SBI Mutual Fund was laterfollowed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets undermanagement of the industry increased seven times to Rs. 47,004 crores. However, UTIremained to be the leader with about 80% market share.
1992-93
AmountMobilise
d
AssetsUnderManagement
Mobilisationas %
of gross
Domestic
Saving
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s
UTI11,0
5738,247 5.2%
Publ
icSector
1,964 8,757 0.9%
Total
13,021
47,004 6.1%
Phase III. Emergence of Private Sector Funds - 1993-96
The permission given to private sector funds including foreign fund managementcompanies (most of them entering through joint ventures with Indian promoters) toenter the mutual fund industry in 1993, provided a wide range of choice to investorsand more competition in the industry. Private funds introduced innovative products,investment techniques and investor-servicing technology. By 1994-95, about 11private sector funds had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and stricter regulation from theSEBI after the year 1996. The mobilization of funds and the number of playersoperating in the industry reached new heights as investors started showing moreinterest in mutual funds.
Inventors’ interests were safeguarded by SEBI and the Government offered taxbenefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations,1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investorsfrom income tax. Various Investor Awareness Programmes were launched during this
phase, both by SEBI and AMFI, with an objective to educate investors and make theminformed about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special legalstatus as a trust formed by an Act of Parliament. The primary objective behind thiswas to bring all mutual fund players on the same level. UTI was re-organized into twoparts: 1. The Specified Undertaking, 2. The UTI Mutual Fund
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Phase V. Growth and Consolidation - 2004 Onwards
The industry has also witnessed several mergers and acquisitions recently, examples
of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&CMutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more
international mutual fund players have entered India like Fidelity, Franklin Templeton
Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing
phase of growth of the industry through consolidation and entry of new international
and private sector players.
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Types of mutual funds
1. Schemes according to Maturity Period:-
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A mutual fund scheme can be classified into open-ended scheme or close-
ended scheme depending on its maturity period.
Open-ended Fund/ Scheme:-
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/ Scheme:-
A close-ended fund or scheme has a stipulated maturity
period e.g. 5-7 years. The fund is open for subscription
only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the
time of the initial public issue and thereafter they can
buy or sell the units of the scheme on the stock
exchanges where the units are listed. In order to provide
an exit route to the investors, some close-ended funds
give an option of selling back the units to the mutual
fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two
exit routes is provided to the investor i.e. eitherrepurchase facility or through listing on stock exchanges
These mutual funds schemes disclose NAV generally on
weekly basis.
2. Schemes according to Investment Objective:-
A scheme can also be classified as growth scheme, income
scheme, or balanced scheme considering its investment
objective. Such schemes may be open-ended or close-ended
schemes as described earlier. 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
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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 limitedin 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 provideeasy 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
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corporate and individual investors as a means to park their
surplus funds for short periods.
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 economicfactors as is the case with income or debt oriented schemes.
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 weightage comprising of an
index. NAVs of such schemes would rise or fall in accordance withthe 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.
3. Sector specific funds/schemes:-
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.
4. 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 forinvestment 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.
5. Fund of Funds (FoF) scheme:-
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A scheme that invests primarily in other schemes of the same mutual fund
or other mutual funds is known as a FoF scheme. An FoF scheme enables
the investors to achieve greater diversification through one scheme. It
spreads risks across a greater universe.
6. 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 whichare 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.
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ADVANTAGES OF MUTUAL FUND
S.
No.Advantage Particulars
1.
Portfolio
Diversifica
tion
Mutual Funds invest in a well-diversified portfolio of securities which enables
investor to hold a diversified investment portfolio (whether the amount of
investment is big or small).
2.
Profession
al
Manageme
nt
Fund manager undergoes through various research works and has better
investment management skills which ensure higher returns to the investor than
what he can manage on his own.
3. Less Risk
Investors acquire a diversified portfolio of securities even with a small
investment in a Mutual Fund. The risk in a diversified portfolio is lesser than
investing in merely 2 or 3 securities.
4.
Low
Transactio
n Costs
Due to the economies of scale (benefits of larger volumes), mutual funds pay
lesser transaction costs. These benefits are passed on to the investors.
5. LiquidityAn investor may not be able to sell some of the shares held by him very easily
and quickly, whereas units of a mutual fund are far more liquid.
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6.Choice of
Schemes
Mutual funds provide investors with various schemes with different investment
objectives. Investors have the option of investing in a scheme having a
correlation between its investment objectives and their own financial goals.
These schemes further have different plans/options
7.Transpare
ncy
Funds provide investors with updated information pertaining to the markets and
the schemes. All material facts are disclosed to investors as required by the
regulator.
8. Flexibility
Investors also benefit from the convenience and flexibility offered by Mutual
Funds. Investors can switch their holdings from a debt scheme to an equity
scheme and vice-versa. Option of systematic (at regular intervals) investment
and withdrawal is also offered to the investors in most open-end schemes.
9. Safety
Mutual Fund industry is part of a well-regulated investment environment where
the interests of the investors are protected by the regulator. All funds are
registered with SEBI and complete transparency is forced.
Disadvantage of Investing Through Mutual Funds
S.
No.
Disadvanta
geParticulars
1.
Costs
Control Not
in the
Hands of
an
Investor
Investor has to pay investment management fees and fund distribution costs
as a percentage of the value of his investments (as long as he holds the
units), irrespective of the performance of the fund.
2.
No
Customize
d Portfolios
The portfolio of securities in which a fund invests is a decision taken by the
fund manager. Investors have no right to interfere in the decision making
process of a fund manager, which some investors find as a constraint in
achieving their financial objectives.
3.
Difficulty
in
Selecting a
Suitable
Fund
Scheme
Many investors find it difficult to select one option from the plethora of
funds/schemes/plans available. For this, they may have to take advice from
financial planners in order to invest in the right fund to achieve their
objectives.
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Mutual Fund Investment Strategies
Systematic Investment Plan (SIPs):
These are best suited for young people who have started their careers and need to btheir wealth. SIPs entail an investor to invest a fixed sum of money at regular intervamutual fund scheme the investor has chosen. For instance an investor opting for SIP inmutual fund scheme will need to invest a certain sum of money every month / qua/half year in the scheme.
Systematic Withdrawal Plan (SWPs):
These plans are best suited for people nearing retirement. In these plans an inveinvests in a mutual fund scheme and is allowed to withdraw a fixed sum of moneyregular intervals to take care of expenses.
Systematic Transfer Plan (STPs) :
They allow the investors to transfer on a periodic basis a specified amount from scheme to another within the same fund family meaning two schemes belonging tosame mutual fund. A transfer will be treated as redemption of units from the scheme fwhich the transfer is made .Such redemption or investment will be at the applicable N This service allows the investor to manage his investment actively to achieve
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objectives. Many funds do not even charge even any transaction feed for this serviceadded advantage for the active investor.
Performance Evaluation
PARAMETERS OF MUTUAL FUND EVALUATION:
Risk
Returns
Liquidity
Expense Ratio
Composition of Portfolio
Risks Associated With Mutual Funds
Investing in mutual funds as with any security, does not come without risk. One ofmost basic economic principles is that risk and reward are directly correlated. In owords, the greater the potential risk, the greater the potential return. The types of commonly associated with mutual funds are:
Market Risk:
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Market risk relate to the market value of a security in the future. Market prices fluctuand are susceptible to economic and financial trends, supply and demand, and mother factors that cannot be precisely predicted or controlled.
Political Risk:
Changes in the tax laws, trade regulations, administered prices etc. is some of the m
political factors that create market risk. Although collectively, as citizens, we have indcontrol through the power of our vote, individually as investors, we have virtuallycontrol.
Inflation Risk:
Inflation or purchasing power risk, relates to the uncertainty of the future purchaspower of the invested rupees. The risk is the increase in cost of the goods and servicesmeasured by the Consumer Price Index.
Interest Rate Risk:
Interest Rate risk relates to the future changes in interest rates. For instance, iinvestor invests in a long term debt mutual fund scheme and interest rate increase,NAV of the scheme will fall because the scheme will be end up holding debt offelowest interest rates.
Business Risk:
Business Risk is the uncertainty concerning the future existence, stability and profitabof the issuer of the security. Business Risk is inherent in all business ventures. The fufinancial stability of a company can not be predicted or guaranteed, nor can the pricits securities. Adverse changes in business circumstances will reduce the market pricthe company’s equity resulting in proportionate fall in the NAV of mutual fund schewhich has invested in the equity of such a company.
Economic Risk :
Economic Risk involves uncertainty in the economy, which, in turn can haveadverse effect on a company’s business. For instance, if monsoons fall in a year, eqstocks of agriculture bases companies will fall and NAVs of mutual funds, which hinvested in such stocks, will fall proportionately. There are 3 different methods with the help of which we can measure the risk.
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Measurement of risk
I. Beta Coefficient Measure Of Risk :
Beta relates a fund’s return with a market index. It basically measures the sensitivitfunds return to changes in market index.If Beta = 1Fund moves with the market i.e. Passive fundIf Beta < 1Fund is less volatile than the market i. e Defensive FundIf Beta > 1Funds will give higher returns when market rises & higher losses when market fallsAggressive Fund
II. Ex –Marks or R-squared Measure Of Risk :
Ex –Marks represents co relation with markets. Higher the Ex-marks lower the risk offund because a fund with higher Ex-marks is better diversified than a fund with lowermarks.
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III. Standard Deviation Measure Of Risk :
It is a statistical concept, which measures volatility. It measures the fluctuations of fureturns around a mean level. Basically it gives you an idea of how volatile your earnare. It is broader concept than BETA. It also helps in measuring total risk and not justmarket risk of the portfolio.
How to Calculate the Value of a Mutual Fund:
The investors’ funds are deployed in a portfolio of securities by the fund manager. value of these investments keeps changing as the market price of the securities chaSince investors are free to enter and exit the fund at any time, it is essential that market value of their investments is used to determine the price at which such entry exit will take place. The net assets represent the market value of assets, which belonthe investors, on a given date.Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fu
in net asset terms.
NAV = Net Assets of the scheme / Number of Units Outstanding
Where Net Assets are calculated as:-
(Market value of investments + current assets and other assets + Accrued incomcurrent liabilities and other liabilities – less accrued expenses) / No. of Units Outstanas at the NAV date
NAV of all schemes must be calculated and published at least weekly for closed-
schemes and daily for open-end schemes.
The major factors affecting the NAV of a fund are:
Sale and purchase of securities Sale and repurchase of units Valuation of assets Accrual of income and expenses
SEBI requires that the fund must ensure that repurchase price is not lower than 93%
NAV (95% in the case of a closed-fund). On the other side, a fund may sell new units price that is different from the NAV, but the sale price cannot be higher than 107 %NAV. Also the difference between the repurchase price and the sale price of the unit ispermitted to exceed 7% of the sale price.
Measuring Mutual Fund Performance:We can measure mutual fund’s performance by different method:
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• Absolute Return Method:
Percentage change in NAV is an absolute measure of return, which finds the appreciation between two points of time, as a percentage.e .g: If NAV of one fund changes from Rs.20 to Rs.22 in 12 months then Absolute return = (22 – 20)/20 X 100 =10%
• Simple Annual Return Method :
Converting a return value for a period other than one year, into a value for one yeacalled as annualisation. In order to annualize a rate, we find out what the return wouldfor a year, if the return behaved for a year, in the same manner it did, for any otfractional period.E .g: If NAV of one fund changes from Rs.20 to Rs.22 in 6 months thenAnnual Return = (22 – 20) /20 X 12/6 X 100 = 20%
• Total Return Method:
The total return method takes into account the dividends distributed by the mutual fuand adds it to the NAV appreciation, to arrive at returns.Total Return =(Dividend distributed + Change in NAV)/ NAV at the start X 100e .g: If NAV of one fund changes from Rs.20 to Rs.22 in 6 months if in between dividenRs. 4 has been distributed thenTotal Return = {4 + (22 – 20)}/20 X 100 = 30%
• Total Return when dividend is reinvested:
This method is also called the return on investment (ROI) method. In this method,dividends are reinvested into the scheme as soon as they are received at the tprevailing NAV (ex-dividend NAV).= ((Value of holdings at the end of the period/ value of the holdings at the beginnin1)*100E.g. An investor buys 100 units of a fund at Rs. 10.5 on January 1, 2007. On June 30, 2he receives dividends at the rate of 10%. The ex-dividend NAV was Rs. 10.25.
December 31, 2007, the fund’s NAV was Rs. 12.25.Value of holdings at the beginning period= 10.5*100= 1050Number of units re-invested = 100/10.25 = 9.756
End period value of investment = 109.756*12.25 = 1344.51 Rs.Return on Investment = ((1344.51/1050)-1)*100
= 28.05%
• Compounded Average Annual Return Method:
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This method is basically used for calculating the return for more than 1 year. In method return is calculated with the following formula:
A = P X (1 + R / 100) N
Where P = Principal investedA = maturity valueN = period of investment in yearsR = Annualized compounded interest rate in %
R = {(Nth root of A / P) – 1} X 100E. g: If amount invested is Rs. 100 & in the end we get return of Rs. 200 & perioinvestment is 10 years then annualized compounded return is
200 = 100 (1 + R / 100) 10 Rate = 7.2 %
RETURNS:
Returns have to be studied along with the risk. A fund could have earned higher retthan the benchmark. But such higher return may be accompanied by high risk. Therefwe have to compare funds with the benchmarks, on a risk adjusted basis. William Shacreated a metric for fund performance, which enables the ranking of funds on a adjusted basis.
Sharpe Ratio = Risk PremiumFunds Standard DeviationTreynor Ratio = Risk Premium
Funds BetaRisk Premium = Difference between the Fund’s Average return and Risk free returngovernment security or treasury bill over a given period .
LIQUIDITY :
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Most of the funds being sold today are open-ended. That is, investors can sell texisting units, or buy new units, at any point of time, at prices that are related to the Nof the fund on the date of the transaction. Since investors continuously enter and funds, funds are actually able to provide liquidity to investors, even if the underlymarkets, in which the portfolio is invested, may not have the liquidity that the inveseeks.
EXPENSE RATIO:
Expense ratio is defined as the ratio of total expenses of the fund to the averageassets of the fund. Expense ratio can actually understate the total expenses, becabrokerage paid on transactions of a fund are not included in the expenses. Accordinthe current SEBI norms, brokerage commissions are capitalized and included in the cothe transactions.
Expense ratio = Total ExpensesAverage Net Assets
COMPOSITION OF THE PORTFOLIO:
Credit quality of the portfolio is measured by looking at the credit ratings of investments in the portfolio. Mutual Fund fact sheets show the composition of the portand the investments in various asset classes over time.Portfolio turnover rate is the ratio of lesser of asset purchased or sold by funds inmarket to the net assets of the fund.If Portfolio ratio is 100% means portfolio has been changed fully. When Portfolio rat
high means expense ratio is high.
Portfolio Ratio = Total Sales & PurchaseNet Assets of fund
In order to meaningfully compare funds some level of similarity in the following factors to be ensured:
Size of the funds Investment objective Risk profile Portfolio composition Expense ratios
Fund evaluation against benchmark :
Funds can be evaluated against some performance indicators which are knownbenchmarks.
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There are 3 types of benchmarks: Relative to market as whole Relative to other comparable financial products Relative to other mutual funds
Relative to market as whole:
There are different ways to measure the performance of fund w.r.t market asEquity Funds
• Index Fund – An Index fund invests in the stock comprising of the index in thesame ratio. This is a passive management style.
For example,
Market Index Fund - BSE Sensex
Nifty Index Fund - NIFTY
The difference between the return of this fund and its index benchmark can be explaby “TRACKING ERROR”.
• Active Equity Funds: The fund manager actively manages this fund. To evaluate performance in such casehave to select an appropriate benchmark.
Large diversified equity fund - BSE 100
Sector fund - Sectoral Indices
• Debt Funds:Debt fund can also be judged against a debt market index e.g. I-BEX
Relative to other comparable financial products:
Schemes ReturnConvenience
Safety Volatility Liquidity
Equity HighModerate
Low High High
FI Bonds Moderate High Moderate Moderate
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High
CorporateDebentures
ModerateLow
Moderate Moderate Low
Company FixedDeposits
ModerateModerate
Low Low Low
Bank Deposits LowHigh
High Low High
PPF ModerateHigh
High Low Moderate
Life Insurance LowModerate
High Low Low
Gold ModerateLow
High Moderate Moderate
Real Estate HighLow
Moderate High Low
Mutual Funds HighHigh
High Moderate High
Schemes InvestmentObjective
Risk Tolerance
InvestmentHorizon
Equity Term Capital Appreciation High Long
FI Bonds Income Low Medium to Long term
CorporateDebentures
Income High Moderate Medium to Long term
Company FixedDeposits
Income Moderate Low Medium
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Bank Deposits Income Generally Flexible all terms
PPF Income Low Long
Life Insurance Risk Cover Low Long
Gold Inflation Hedge Low Long
Real Estate Inflation Hedge Low Long
TAX TREATMENT FOR THE INVESTORS (UNITHOLDERS):-
Tax benefits of investing in the Mutual Fund
As per the taxation laws in force as at the date of the Offer Document, some broadincome tax implications of investing in the units of the Scheme are stated below. Theinformation so stated is based on the Mutual Fund's understanding of the tax laws inforce as of the date of the Offer Document, which have been confirmed by its auditors The information stated below is only for the purposes of providing general informationto the investors and is neither designed nor intended tobe a substitute for professionatax advice. As the tax consequences are specific to each investor and in view of thechanging tax laws, each investor is advised to consult his or her or its own taxconsultant with respect to the specific tax implications arising out of his or her or itsparticipation in the Scheme.
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Implications of the Income-tax Act, 1961 as amended by the Finance Act, 2006
To the Unit holders
(a.) Tax on Income
In accordance with the provisions of section 10(35)(a) of the Act, income received by
all categories of unit holders in respect of units of the Fund will be exempt fromincome-tax in their hands.Exemption from income tax under section 10(35) of the Act would, however, not applyto any income arising from the transfer of these units.
(b.) Tax on capital gains:
As per the provisions of section 2(42A) of the Act, a unit of a Mutual Fund, held by theinvestor as a capital asset, is considered to be a short-term capital asset, if it is heldfor 12 months or less from the date of its acquisition by the unit holder. Accordingly, ifthe unit is held for a period of more than 12 months, it is treated as a long-term capita
asset.
Computation of capital gainCapital gains on transfer of units will be
computed after taking into account the cost of their acquisition. While calculating long-term capital gains, such cost will be indexed by using the cost inflation index notifiedby the Government of India.
Individuals and HUFs, are granted a deductionfrom total income, under section 80C of the Act upto Rs. 100,000, in respect ofspecified investments made during the year (please also refer paragraph d).
Long-term capital gainsAs per Section 10(38) of the Act, long-term
capital gains arising from the sale of unit of an equity oriented fund entered into in arecognized stock exchange or sale of such unit of an equity oriented fund to themutual fund would be exempt from income-tax, provided such transaction of sale ischargeable to securities transaction tax.
Pursuant to an amendment made in theFinance Act, 2006, effective 1 April 2006, companies would be required to include suchlong term capital gains in computing the book profits and minimum alternated taxliability under section 115JB of the Act.
Short -term capital gainsAs per Section 111A of the Act, short-term
capital gains from the sale of unit of an equity oriented fund entered into in arecognized stock exchange or sale of such unit of an equity oriented fund to the
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mutual fund would be taxed at 10 per cent, provided such transaction of sale ischargeable to securities transaction tax.
The said tax rate would be increased by a surcharge of:- 10 per cent in case of non-corporate Unit holders, where the total income exceedsRs.1,000,000,- 10 per cent in case of resident corporate Unit holders, and
- 2.5 per cent in case of non-resident corporate unit holders irrespective of the amountof taxable income.
Further, an additional surcharge of 2 per cent byway of education cess would be charged on amount of tax inclusive of surcharge.
In case of resident individual, if the income fromshort term capital gains is less than the maximum amount not chargeable to tax, thenthere will be no tax payable.
Further, in case of individuals/ HUFs, being residents, where the total incomeexcluding short-term capital gains is below the maximum amount not chargeable to
tax1, then the difference between the current maximum amount not chargeable to taxand total income excluding short-term capital gains, shall be adjusted from short-termcapital gains. Therefore only the balance short term capital gains will be liable toincome tax at the rate of 10 percent plus surcharge, if applicable and education cess.
Non-residentsIn case of non-resident unit holder who is a
resident of a country with which India has signed a Double Taxation AvoidanceAgreement (which is in force) income tax is payable at the rates provided in the Act,as discussed above, or the rates provided in the such agreement, if any, whichever ismore beneficial to such non-resident unit holder.
Investment by MinorsWhere sale / repurchase is made during the
minority of the child, tax will be levied on either of the parents, whose income isgreater, where the said income is not covered by the exception in the proviso tosection 64(1A) of the Act. When the child attains majority, such tax liability will be onthe child.
Losses arising from sale of units
- As per the provisions of section 94(7) of the Act, loss arising on transfeof units, which are acquired within a period of three months prior to therecord date (date fixed by the Fund for the purposes of entitlement of theunit holder to receive the income from units) and sold within a period ofnine months after the record date, shall not be allowed to the extent ofincome distributed by the Fund in respect of such units.
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- No tax is required is to be withheld from long term capital gains arisingfrom sale of units in equity oriented fund schemes, that are subject tosecurities transaction tax.
- In respect of short-term capital gains arising to foreign companies(including Overseas Corporate Bodies), the Fund is required to deduct taxat source at the rate of 10.46 per cent (10 per cent tax plus 2.5 per cent
surcharge thereon plus additional surcharge of 2 per cent by way oeducation cess on the tax plus surcharge). In respect of short-term capitagains arising to non-resident individual unit holders, the Fund is required todeduct tax at source at the rate of 11.22 per cent (10 per cent tax plus 10per cent surcharge thereon2 plus additional surcharge of 2 per cent byway of education cess on the tax plus surcharge).
(d.) Wealth Tax
Units held under the Schemes of the Fund are not treated as assetswithin the meaning of section 2(ea) of the Wealth Tax Act, 1957 and therefore, not
liable to wealth-tax.
(e.) Securities Transaction Tax
Nature of Transaction Current tax rate Tax rate effective (%) 1 June2006 (%) Delivery based purchase transaction in equity shares or units of equityoriented fund entered in a recognized stock exchange 0.1 0.125 Delivery based saletransaction in equity shares or units of equity oriented fund entered in a recognizedstock exchange 0.1 0.125 Non-delivery based sale transaction in equity shares or unitsof equity oriented fund entered in a recognized stock exchange. 0.02 0.025 Sale ofunits of an equity oriented fund to the mutual fund 0.2 0.25 Value of taxable securities
transaction in case of units shall be the price at which such units are purchased orsold.
A deduction in respect of securities transaction taxpaid is not permitted for the purpose of computation of business income or capitagains.
However, if the total income of an assesseeincludes any business income arising from taxable securities transactions, he shall beentitled to a rebate3 from income-tax of an amount equal to the securities transactiontax paid by him in respect of the taxable securities transactions entered during thecourse of his business.
The maximum amounts of total income, not chargeable to tax are as under: Type of person Maximum amount of income not chargeable to tax
Women Rs. 135,000Senior citizens Rs. 185,000Other individuals and HUFs Rs. 100,000
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How is a mutual fund set up?
A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset
management company (AMC) and custodian. The trust is established by a sponsor or
more than one sponsor who is like promoter of a company. The trustees of the mutualfund hold its property for the benefit of the unit holders. Asset Management Company
(AMC) approved by SEBI manages the funds by making investments in various types of
securities. Custodian, who is registered with SEBI, holds the securities of various
schemes of the fund in its custody. The trustees are vested with the general power of
superintendence and direction over AMC. They monitor the performance and
compliance of SEBI Regulations by the mutual fund.
SEBI Regulations require that at least two thirds of the directors of trustee company or
board of trustees must be independent i.e. they should not be associated with the
sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds arerequired to be registered with SEBI before they launch any scheme.
Association of Mutual Funds in India (AMFI)
With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August, 1995.AMFI is an apex body of
all Asset Management Companies (AMC) which has been registered with SEBI. Till dateall the AMCs are that have launched mutual fund schemes are its members. It
functions under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to
a professional and healthy market with ethical lines enhancing and maintaining
standards. It follows the principle of both protecting and promoting the interests of
mutual funds as well as their unit holders.
The objectives of Association of Mutual Funds in India: ---
The Association of Mutual Funds of India works with 30 registered AMCs of the countryIt has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:-
This mutual fund association of India maintains a high professional and
ethical standard in all areas of operation of the industry.
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It also recommends and promotes the top class business practices and code
of conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management. The agencies who are by
any means connected or involved in the field of capital markets and financial
services also involved in this code of conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in themutual fund industry.
Associations of Mutual Fund of India do represent the Government of India,
the Reserve Bank of India and other related bodies on matters relating to the
Mutual Fund Industry.
It develops a team of well qualified and trained Agent distributors. It
implements a programme of training and certification for all intermediaries
and other engaged in the mutual fund industry.
AMFI undertakes all India awareness programme for investors in order topromote proper understanding of the concept and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate
information on Mutual Fund Industry and undertakes studies and research either
directly or in association with other bodies.
The sponsorers of Association of Mutual Funds in India :---
- Bank Sponsored
- SBI Fund Management Ltd.
- BOB Asset Management Co. Ltd.
- Canara bank Investment Management Services Ltd.
- UTI Asset Management Company Pvt. Ltd.
Institutions -
- GIC Asset Management Co. Ltd.
- Jeevan Bima Sahayog Asset Management Co. Ltd.
Private Sector: -
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- Morgan Stanley Investment Management Pvt. Ltd.
- Principal Asset Management Co. Pvt. Ltd.
- Prudential ICICI Asset Management Co. Ltd.
- Standard Chartered Asset Mgmt Co. Pvt. Ltd.
Tips on buying mutual funds:-
1. Determine your financial objectives and how much money you have to invest. Make
sure the fund’s objectives coincide with your own. Don’t change your objectives or
exceed the amount set aside for investment unless you have good reason.
2. Always obtain all available information before you invest. Request the prospectus,
the Statement of Additional Information and the latest shareholder report from eachfund you are considering.
3. Never invest in periodic payment plans unless you are virtually certain that you will
not have to redeem early. If you redeem early or do not complete the plan, you may
have to pay sales charges of up to 51% of your investment.
4. Be on the alert for incorporation by reference. You will have "no excuse" for not
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knowing this information, if a problem arises. You may be legally presumed to know
materials incorporated by reference in a prospectus or other documents.
5. Always determine all sales charges, fees and expenses before you invest. Fees such
as 12b-1 fees can cost you dearly and charges for reinvestment of dividends and
capital gains distributions can substantially add to your costs. Shop around among the
many funds offered and compare the various fees and costs connected with funds thatappeal to you.
6. Learn the costs of redemption. Sometimes investors are surprised to learn that they
have to pay to get out of funds through back-end loads or redemption fees. Find out
the redemption costs before you invest so you won’t be unpleasantly surprised when
you redeem your shares.
7. Never treat the risks of investment in a fund lightly. Weigh the risks of the funds you
want to buy against your ability to tolerate the ups and downs of the market and your
investment goals. Be extra cautious when considering investing in funds with highyield/high risk portfolios. Junk bond problems, for example, invariably affect the fund’s
performance.
8. Don’t be misled by the name of a fund. Some funds have been given names
denoting safety, stability and low risk, despite the fact that the underlying investments
in the portfolio are volatile and highly risky.
AUM
Assets Under Management (AUM) as at the end of May-2008 (Rs in
Lakhs)
Mutual Fund Name Average AUM For The Month
Excluding Fundof Funds -
Domestic butincluding Fund
of Funds -
Fund Of Funds -Domestic
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Overseas
1. ABN AMRO Mutual Fund 592459.08 20979.02
2. AIG Global Investment Group MutualFund
456809.8 0
3. Benchmark Mutual Fund 280241.84 0
4. Bharti AXA Mutual Fund N/A N/A
5. Birla Sun Life Mutual Fund 4142342.8 1854.08
6. BOB Mutual Fund 6776.69 07. Canara Robeco Mutual Fund 420417.41 0
8. DBS Chola Mutual Fund 185289.01 0
9. Deutsche Mutual Fund 1240531.71 0
10. DSP Merrill Lynch Mutual Fund 2155962.79 0
11. Edelweiss Mutual Fund N/A N/A
12. Escorts Mutual Fund 17065.31 0
13. Fidelity Mutual Fund 887973.14 2763.41
14. Franklin Templeton Mutual Fund 2799087.37 23660.71
15. HDFC Mutual Fund 5610729.27 0
16. HSBC Mutual Fund 1847223.18 0
17. ICICI Prudential Mutual Fund 5906002.34 3359.41
18. IDFC Mutual Fund 1427291.26 3776.66
19. ING Mutual Fund 916079.34 47916.62
20. JM Financial Mutual Fund 1296780.93 0
21. JPMorgan Mutual Fund 273018.18 0
22. Kotak Mahindra Mutual Fund 2217001.56 30651.82
23. LIC Mutual Fund 1864914.45 0
24. Lotus India Mutual Fund 788330.4 0
25. Mirae Asset Mutual Fund 216037.01 0
26. Morgan Stanley Mutual Fund 350997.47 0
27. PRINCIPAL Mutual Fund 1670542.76 0
28. Quantum Mutual Fund 6632.78 0
29. Reliance Mutual Fund 9843093.38 0
30. Sahara Mutual Fund 19814.33 0
31. SBI Mutual Fund 3179496.78 0
32. Sundaram BNP Paribas Mutual Fund 1459384.72 0
33. Tata Mutual Fund 2449586.66 0
34. Taurus Mutual Fund 33550.65 0
35. UTI Mutual Fund 5465168.28 0
Grand Total 60026632.68 134961.73
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Company profile:
About Standard Chartered Mutual Fund
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Standard Chartered Mutual Fund is well-established fund house and is sponsored by
the Standard Chartered Group. At Standard Chartered Mutual Fund we strive to launch
not just innovative products, but products that truly add value to our investors. We
were among the first to launch an active management debt fund-the Dynamic Bond
Fund - that had the capability to mimic a cash fund or an income fund depending on
market situations. The Short term and Medium term funds that were uniquely
positioned at various points along the interest rate curve with the sole objective of maximizing value to investors with different investment time horizons.
Lately this innovation was again brought to the fore with the launch of the Standard
Chartered Enterprise Equity Fund, a close-ended fund that sought to invest a portion in
Equity IPOs. The fund also launched the Standard Chartered Premier Equity fund an
equity fund that seeks to generate wealth by investing in relatively smaller companies.
We manage our schemes through well-researched and thoroughly tested processes
like the 3 D Factor (For debt funds and helps us in predicting interest rate movements)
and the Equity Circle process. SCMF also pioneered several service initiatives that
helped increase transactional ease. It was the first mutual fund to initiate
Across the counter redemptions for all classes of investors in liquid funds,
Toll Free No accessible in 976 cities
Phone transact service wherein investors can redeem without having any
Personal Identification Number
Standard Chartered Mutual Fund currently manages assets in excess of Rs 15801.53Cr
as on 5th February 2008 and has touched the lives of more than lakhs of investors
residing in more than 1000 Indian towns.
Schemes ManagedScheme NameGrindlays Cash Fund (G)
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Grindlays CF - Inst Plan (G)
Grindlays Dynamic Bond (G)
Grindlays FRF - LTP Inst (G)
Grindlays Floating Rate (G)
Grindlays FRF- Inst Plan (G)
Grindlays FRF - LTP (RP) (G)
Grindlays GSec - Inv Plan (G)Grindlays GSec Fund - PF (G)
Grindlays GSec - STP (G)
Grindlays SSIF - MTP A (G)
Grindlays SSIF STP - Inst (G)
GSSIF STP - MF Plan C (G)
GSSIF STP - Super Inst C (G)
Grindlays SSIF (G)
Grindlays SSIF - STP (G)
SC All Seasons Bond - RP (G)
StanChart Arbitrage - Inst (G)
StanChart Arbitrage Fund (G)
StanChart Classic Equity (G)
StanChart Enterprise Equity(G)
StanChart Imperial Equity (G)
StanChart Imperial Equity (G)
StanChart Liquidity Manager –G
StanChart Liq. Manager Plus-G
StanChart Premier Equity (G)
StanChart Small&Midcap Eqty –G
StanChart Tax Saver Fund (G)
HDFC Asset Management Company Private Ltd
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The fund was established on March 13, 2000. Now the management of the fund has
been taken over by Standard Chartered Bank, the UK based banking conglomerate.
The name of the AMC too has been changed from ANZ AMC. Previously sponsored by
ANZ Banking Group, Australia, this fund has just set up its operations in the year 2000.
Australia and New Zealand Banking Group Limited, the previous sponsor of the fund, is
a leading international bank and is also one of the "Big Four" Australian commercial
banks providing a full range of banking and financial services with total assets of US $97.35 billion as on 30th Sept, 1999. ANZ Funds Management is a core business unit of
the group and is one of Australia s large fund managers. It has a full range of
investment products and services managing more than AUD $ 13267.7 million in
customer funds on 30th Sept., 1999. ANZ Banking Group has significant presence in
35 nations from the Middle East through South Asia and East Asia to the Pacific.
No. of schemes 84
No. of schemes includingoptions
269
Equity Schemes 24
Debt Schemes 209
Short term debt Schemes 19
Equity & Debt 0
Money Market 0
Gilt Fund 13
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Open Ended Schemes
Scheme Name
Performance ( % Return )
Fund Size
As On30
Days
91
Days1 Year 3 Year
Rs. in
Cr.
As on
IDFC Arbitrage Fund -
Plan A (Regular) -
Dividend
Jun 24,
2008
0.4885 1.4969 7.4858NA 953.23
May 30,
2008
IDFC Arbitrage Fund -
Plan A (Regular) - Growth
Jun 24,
2008
0.4876 1.4962 7.492NA 953.23
May 30,
2008
IDFC Arbitrage Fund -
Plan B (I P) - Dividend
Jun 24,
2008
0.5326 1.625 8.027NA 953.23
May 30,
2008
IDFC Arbitrage Fund -
Plan B (I P) - Growth
Jun 24,
2008
0.5317 1.6241 8.0317NA 953.23
May 30,
2008
IDFC Arbitrage Plus Fund
- Plan A - Dividend
Jun 24,
2008NA NA NA NA NA NA
IDFC Arbitrage Plus Fund
- Plan A - Growth
Jun 24,
2008NA NA NA NA NA NA
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IDFC Arbitrage Plus Fund
- Plan B - Dividend
Jun 24,
2008NA NA NA NA NA NA
IDFC Arbitrage Plus Fund
- Plan B - Growth
Jun 24,
2008NA NA NA NA NA NA
IDFC ASBF - Plan A -
Annual Dividend
Jun 24,
2008
0.2939 -5.3391
6.86175.820
7 35.34May 30,
2008
IDFC ASBF - Plan A -
Growth
Jun 24,
2008
0.2935 1.5911 8.20786.761
1 35.34May 30,
2008
IDFC ASBF - Plan A - Half
Yly Div
Jun 24,
2008
0.293
-0.806
7.33855.933
635.34
May 30,
2008
IDFC ASBF - Plan A - Qtly
Dividend
Jun 24,
2008
0.2937 0.1307 7.16526.019
2 35.34May 30,
2008
IDFC Cash Fund - Plan A -
Daily Dividend
Jun 24,
2008
0.4832 1.2309 4.6024.952
1 75.61May 31,
2008
IDFC Cash Fund - Plan A -
Growth
Jun 24,
2008
0.6198 1.5808 5.94115.971
2 75.61May 31,
2008
IDFC Cash Fund - Plan A -
Wkly Div
Jun 24,
2008
0.4063 1.1466 4.51464.942
2 75.61May 31,
2008
IDFC Cash Fund - Plan B -
IP - Daily Div
Jun 24,
2008
0.4832 1.2365 4.60884.977
3 75.61May 31,
2008
IDFC Cash Fund - Plan B -
IP - Growth
Jun 24,
2008
0.6206 1.5821 5.9428 5.981 75.61 May 31,
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IDFC D B F- Plan A -
Growth
Jun 24,
2008
-
0.3294
1.459310.400
2
7.397
3 21.9May 30,
2008
IDFC F R F - IP - LTP - Plan
B - Annual Div.
Dec 7,
2007
0.6768
NA NA
0.298
5
4659.8
Nov 30,
2007
IDFC F R F - IP - LTP - Plan
B - Daily Div
Jun 24,
2008
0.6358 1.8665 7.357NA
3416.1
5
May 30,
2008
IDFC F R F - IP - LTP - Plan
B - Growth
Jun 24,
2008
0.7264 2.133 8.4368 6.934 3416.1
5
May 30,
2008
IDFC F R F - IP - LTP - Plan
B - Mtly Div
Jun 24,
2008
0.0577 1.2852 6.7581 3.4005 3416.1
5
May 30,
2008
IDFC F R F - IP - LTP - Plan
B - Qtly Div
Jun 24,
2008
0.726 -
0.30027.2733
6.187
6 3416.1
5
May 30,
2008
IDFC F R F - IP - LTP - PlanB - Wkly Div Jun 24,2008
0.6483 1.8515 7.37214.019
3 3416.15 May 30,2008
IDFC F R F - LTP - Plan A -
Daily Div.
Jun 24,
2008
0.5893 1.733 6.8208NA
3416.1
5
May 30,
2008
IDFC F R F - LTP - Plan A -
Growth
Jun 24,
2008
0.6727 1.9831 7.84076.543
8 3416.1
5
May 30,
2008
IDFC F R F - LTP - Plan A -
Mtly Div.
Jun 24,
2008
0.5995 1.711 6.17645.371
7 3416.1
5
May 30,
2008
IDFC F R F - LTP - Plan A -
Qtly Div.
Jun 24,
2008
0.6722 -
0.4767
6.6976 5.807 3416.1 May 30,
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5
5 2008
IDFC F R F - LTP - Plan A-
Annual Div.
Jun 24,
2008
0.6728 1.9793 6.89144.998
4 3416.1
5
May 30,
2008
IDFC F R F - STP - Plan A -
Daily Div
Jun 24,
2008
0.414 1.2201 4.62694.953
8 117.63May 31,
2008
IDFC F R F - STP - Plan A -
Growth
Jun 24,
2008
0.5317 1.5688 5.99765.964
7 117.63May 31,
2008
IDFC F R F - STP - Plan A -
Mthly Div
Jun 24,
2008
0.4198 1.2276 4.85184.889
3 117.63May 31,
2008
IDFC F R F - STP - Plan A -
Wkly Div
Jun 24,
2008
0.4259 1.2227 4.65094.959
9 117.63May 31,
2008
IDFC F R F - STP - Plan B -IP - Daily Div
Jun 24,2008
0.4144 1.2212 4.6456 4.969 117.63 May 31,2008
IDFC F R F - STP - Plan B -
IP - Growth
Jun 24,
2008
0.5315 1.5692 5.99925.968
6 117.63May 31,
2008
IDFC F R F - STP - Plan B -
IP - Mthly Div
Feb
21,
2007
0.4808 1.4559 5.50254.770
9 140.47 Jul 31,
2007
IDFC F R F - STP - Plan B -
IP - Wkly Div
Jun 24,
2008
0.4228 1.2227 4.65074.980
5 117.63May 31,
2008
IDFC F R F - STP - Plan C - Jun 24, 0.4342 1.2668 4.8759 5.251 117.63 May 31,
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Super I P - Daily Div 20083
2008
IDFC F R F - STP - Plan C -
Super I P - Growth
Nov 7,
2007NA
-
17.080
8
-
13.053
5
-
0.910
3
140.47 Jul 31,
2007
IDFC F R F - STP - Plan C -
Super I P - Monthly Div
Dec
10,
2006
-
0.4678
0.1209 3.5741NA 364.26
Nov 30,
2006
IDFC F R F - STP - Plan C -
Super I P - Weekly Div
Dec
10,
2006
0 02.259
NA 364.26Nov 30,
2006
IDFC G Sec Fund -
Investment - Plan A -Annual Div.
Jun 24,2008 -0.5188
-
3.5388
7.86555.885
7 8.05 May 30,2008
IDFC G Sec Fund -
Investment - Plan A -
Growth
Jun 24,
2008
-
0.5197
0.9384 8.6436.453
2 8.05May 30,
2008
IDFC G Sec Fund -
Investment - Plan A - HY
Div.
Jun 24,
2008
-
0.5185
-
2.70987.8489
5.844
3 8.05May 30,
2008
IDFC G Sec Fund -
Investment - Plan A -
Qtrly Div.
Jun 24,
2008
-
0.5188
-
0.46887.8695
5.907
8 8.05May 30,
2008
IDFC G Sec Fund - Short
Term - Plan A - Growth
Jun 24,
2008
-
0.3101
-
0.31164.1879
4.078
3 0.29May 30,
2008
IDFC G Sec Fund - Short
Term - Plan A - Mthly Div.
Jun 24,
2008
-
0.3097
-
0.18733.7783
3.623
9 0.29May 30,
2008
IDFC G Sec Fund - Short
Term - Plan A - Qtly Div.
Jun 24,
2008
-
0.3094
-
1.2873
2.1828 3.110 0.29 May 30,
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4
2008
IDFC G-Sec Fund - IP - PF
Plan - Plan B - Annual
Dividend
Dec 2,
20050 0
0.8139NA 17.5
Apr 30,
2008
IDFC G-Sec Fund - IP - PF
Plan - Plan B -Qty
Dividend
Jun 24,
2008
-
0.0653
-
0.86439.2156
6.425
5 17.64May 30,
2008
IDFC G-Sec Fund - IP- PF
Plan - Plan B - Growth
Jun 24,
2008
-
0.0665
1.519910.298
8
7.125
8 17.64May 30,
2008
IDFC G-Sec Fund - PF Plan
- Plan A - Annual Dividend
Jun 24,
2008-0.066
-
5.28488.9937
6.3775 17.64
May 30,
2008
IDFC G-Sec Fund - PF Plan
- Plan A - Growth
Jun 24,
2008
-
0.0659
1.519910.330
7
7.203
9 17.64May 30,
2008
IDFC G-Sec Fund - PF Plan
- Plan A - Qtly Dividend
Jun 24,
2008
-
0.0662 -0.861
9.217 6.498
17.64May 30,
2008
IDFC Imperial Equity Fund
- Dividend
Jun 24,
2008
-
12.498
6
-
5.08376.4711
NA 144.49May 30,
2008
IDFC Imperial Equity Fund
- Growth
Jun 24,
2008
-
12.499
5
-
5.45396.0593
NA 144.49May 30,
2008
IDFC Liquidity Manager
Fund - Daily Div
Jun 24,
2008
0.4837 1.2568 4.7504NA 34.65
May 31,
2008
IDFC Liquidity Manager
Fund - Monthly Div
Jun 24,
2008
0.504 1.2843 4.8135NA 34.65
May 31,
2008
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IDFC Liquidity Manager
Fund - Weekly Div
Jun 24,
2008
0.4989 1.2631 4.7622NA 34.65
May 31,
2008
IDFC Liquidity Manager
Fund -Growth
Jun 24,
2008
0.6205 1.6159 6.1409NA 34.65
May 31,
2008
IDFC Liquidity Manager
Fund Plus - Daily Div
Jun 24,
2008
0.5514 1.6129 6.0924NA
2420.4
1
May 31,
2008
IDFC Liquidity Manager
Fund Plus - Growth
Jun 24,
2008
0.7084 2.0725 7.8835NA
2420.4
1
May 31,
2008
IDFC Liquidity Manager
Fund Plus - Monthly Div
Jun 24,
2008
0.5616 1.6275 6.1181NA
2420.4
1
May 31,
2008
IDFC Liquidity Manager
Fund Plus - Weekly Div
Jun 24,
2008
0.568 1.618 6.1035NA
2420.4
1
May 31,
2008
IDFC Premier Equity Fund
- Dividend
Jun 24,
2008
-
12.631
5
0.498912.003
7 NA 785.32May 30,
2008
IDFC Premier Equity Fund
- Growth
Jun 24,
2008
-12.631
5
0.498912.003
7 NA 785.32May 30,
2008
IDFC SSIF - Invt. Plan -
Plan A - Ann Div.
Jun 24,
2008
-
0.4539-5.639
8.59435.483
9 68.94May 30,
2008
IDFC SSIF - Invt. Plan -
Plan A - Growth
Jun 24,
2008
-
0.4535
1.0729 9.91396.193
168.94
May 30,
2008
IDFC SSIF - Invt. Plan -
Plan A - H Y Div.
Jun 24,
2008
-
0.4536
-
3.49948.8549
4.689
9 68.94May 30,
2008
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IDFC SSIF - Invt. Plan -
Plan A - Qtly Div.
Jun 24,
2008
-
0.4522
-
1.28748.8493
5.615
5 68.94May 30,
2008
IDFC SSIF - MTP - Plan A -
Bimonthly Dividend
Jun 24,
2008
0.1003 0.6906 6.25785.626
7
181.93
May 30,
2008
IDFC SSIF - MTP - Plan A -
Daily Dividend
Jun 24,
2008
0.1575 1.5463 6.2093NA 181.93
May 30,
2008
IDFC SSIF - MTP - Plan A -
Fortnightly Dividend
Jun 24,
2008
0.1601 1.5166 6.0223NA 181.93
May 30,
2008
IDFC SSIF - MTP - Plan A -
Growth
Jun 24,
2008
0.19 1.7778 7.0329 6.4605 181.93
May 30,
2008
IDFC SSIF - MTP - Plan A -
Monthly Dividend
Jun 24,
2008
0.1091 1.5082 6.0738NA 181.93
May 30,
2008
IDFC SSIF - Short Term -
Plan A - Fortnightly Div
Jun 24,
2008
-
0.2826
0.9306 6.7801NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan A - Growth
Jun 24,
2008
-
0.2652
1.1583 7.75086.746
3 261.54May 30,
2008
IDFC SSIF - Short Term -
Plan A - Monthly Dividend
Jun 24,
2008
-
0.3178
0.9134 6.63215.804
9 261.54May 30,
2008
IDFC SSIF - Short Term -
Plan B - Fortnightly Div
Jun 24,
2008
-
0.2618
0.9887 7.0197NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan B - Growth
Jun 24,
2008-0.243
1.219 8.0156NA 261.54
May 30,
2008
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IDFC SSIF - Short Term -
Plan B - Monthly Dividend
Jun 24,
2008
-
0.2987
0.9688 6.9434NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan C - Super IP - Frtly
Div
Jun 24,
2008
-
0.2548
1.0057 6.9577NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan C - Super IP - Growth
Jun 18,
2008
0.1099 1.7759 8.4959NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan C - Super IP -
Monthly Div
Jun 24,
2008
-
0.2901
0.9874 4.4279NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan D - MF Plan - Growth
Jun 24,
2008
-
0.2612
1.1675NA NA 261.54
May 30,
2008
IDFC SSIF - Short Term -
Plan D - MF Plan - Monthly
Div
Jun 24,
2008
-
0.3107
0.925NA NA 261.54
May 30,
2008
IDFC acquires StanChart's mutual fund
Infrastructure Finance Development Company Ltd today acquired mutual fund
business of Standard Chartered Bank. The company has received all necessary
approvals from the concerned regulatory authority, IDFC informed the Bombay Stock
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Exchange in a communiqué here. The company had earlier signed an agreement with
Standard Chartered Bank in March for a consideration of Rs 820 crore.
Standard Chartered MF has around Rs 14,000 crore in assets of which Rs 4,000 crore is
in equity while rest is in debt. With this IDFC acquires Standard Chartered Trustee
Company and Standard Chartered Asset Management Company, both of which
represent Standard Chartered's mutual fund business in India.IDFC is one of the leading infrastructure finance institutions, and the acquisition would
give it a foothold in the retail sector and improve its high margin fee based income.
Study and Survey:
Objective
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This study is conducted in order to find out:-
- Current trends of mutual funds in the Indian market.
- Investor’s perception towards mutual funds investment option.
- Different views of professional advisors.
RATIONALE OF STUDY
The study of this nature is being conducted on the behalf of IDFC AMC (Standard
charted) for prediction of future of mutual funds in Indian emerging market. A high
level of competition entering the mutual funds sector, companies need to catch up
with the ever changing demands of the industry. The study is being conducted to get
an edge over other MFs houses in the mutual fund industry. It is also done in order to
know as to how much knowledge and money the consumers contribute in the MFsschemes.
Survey Methodology
Survey comprises collecting, organizing, and evaluating data, reaching at a specificconclusion and at the same time careful evaluation of the conclusion. Collection of data has been done by two ways (1) primary data collection; and (2) secondary datacollection, through questionnaires and websites, magazines, newspapers, documents,etc. Area of data collection was HDFC Bank branches at Chandnichowk, Ashok vihar(Delhi). Analysis of data has been done with the help of spss software. Articles are
attached from various magazines. Conclusion is drown from result of different dataprocessing and articles analyzation.
LIMITATIONS OF THE STUDY
The survey was conducted in chandnichowk and ashok vihar. The standard of living,per capita income of people, earning style, etc. of this region is different from otherareas. Therefore, the inferences drawn from the survey can’t be generalized.
Another major limitation was unwillingness of
respondents to reveal information. Due to lack of sufficient time and hesitation toreveal information regarding their investments, it was a difficult task to extractinformation from them.Sample size was also small i.e. 100. Therefore, it is very difficult to infer correctconclusions from small sample.
Findings
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1. This graph clearly shows that young people are more likely to visit bank
branches. Thus more chances of getting long term, more risk taker and
aggressive investors.
Figure 1
Age group
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2. Here data shows that people are willing to earn more return than
that of they earn in traditional ways of investment.
Expected returns
Figure 2
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3. This graph predicts that generally consumers keep a smaller part of
their disposable income aside for different investment options.
% of disposable income
Figure 3
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4. This graphical representation clearly shows that investors give smaller
part of their investment pool to mutual funds investment.
% of total investment
Figure 4
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5. These pillars provide a clear thought to our mind that in India
professional advisors are more reliable source to get mutual funds related
information.
No. of persons
Figure 5
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6. This chart is showing that Indian investors are willing to stay invested
for a time duration of more than 12 months. They have patience, they
want to earn more money on their investment, and this is a bright sign for
mutual funds industry.
Figure 6
Key findings:-
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# Study found that more young people are likely to involved in financial activities.
They more frequently visit banks and meet financial advisors. This is an opportunity
for mutual funds houses to attract these people.
# More than 50% of surveyed persons willing to take high risk for high rate of return.
This indicates that riskier investment options can also attract big pool of money if
investors are properly convinced.# Study shows professional advisors are considered to be more reliable source of
mutual funds information, not because they provide human touch to investor but
others are not aggressively proposed, advertised, availed and used .
# An another observation made by study was , many a time advisors themselves do
not get timely updates from AMCs. This leads them not to offer some of schemes those
may give good returns.
# technological advancements are at nascent stage. Therefore these channels will
take time to come in picture. In other words these are seems to narrow ways to walk.
# surveyed persons are not having knowledge of more than 10 AMCs name and not
more than 7 schemes of any one of mutual fund houses. This requires an aggressive
marketing of funds. So that awareness level of investor can be improved.
Professional advisors think that investors are not educated properly. They (investor)
rely on what others say or what they (advisors) say. It’s easy to convince them for
investment but not so easy to make them clear about market affecting factors. “Stock
market is going low and I am already losing, you are asking for investment in market,
sorry I am not interested.” An investor grievance.
Conclusion & recommendations:
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Questionnaires
[I] For staff of HDFC Bank Ltd. and Brokers.
1. How long have you been selling mutual funds?
2. By what way did you used to communicate to your clients?
3. Do you still follow the same modes?
4. Industry is changing, consumer`s perception is changing, Indian economy is
also dynamic, growing, how do you justify your job with such a changing
scenario?
5. How do you describe ‘technological innovation in mutual funds ‘, by what
extent seen and foreseen changes are caused by it?
6. If I keep all recommendations aside and simply ask you, what factors do you
consider before suggesting any scheme to a prospective client?
7. Demand and supply mechanism moreover is applicable to buying and
selling, what is the present seen of this mechanism for mutual funds in India?
8. Data says that in US number of mutual funds schemes are more than that of
number of listed companies at stock exchange whereas in India not more than
1000 schemes. How do you react on this situation?
9. One side double digit inflation rate, RBI’s norms for curbing liquidity from
market, high price of fuel, are putting pressure on consumer’ s savings, on the
other side SEBI and RBI are relaxing norms for AMCs business. How these two
repelling poles can stand simultaneously?
10. Number of distribution channels is increasing just to cater untouched
market. What do you think?
11. Finally, where do you see this industry in coming 10years horizon?
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[II] For clients of HDFC Bank Ltd.
1. Which of the following age bands do you fall in to?
Less than 21
21 to 25
25 to 35
35 to 60
Above 60
2. What is your primary source of income?
Your pension
Your salary
Income from your business
Rental income from investment properties
3. What is your return expectation on your investment?
Up to 8%
Between 8% to 18%
Above 18%
4. How would you describe/rate your level of knowledge of financial products?
Low level of knowledge
Medium level of knowledge
High level of knowledge
5. What level of risk are you willing to accept on your investment?
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I want to protect my capital
I am comfortable with a small degree of risk
I am comfortable accepting the fact that investment could decline
I am willing to tolerate putting my principal at risk by investing in volatile
investments
6. What percent of your disposable income do you keep aside for different
investment options?
0% to 5%
5% to 10%
10% to 15%
15% to 20%
20% to 30%
Above 30%
7. What percent of above mentioned percentage part do you invest in mutual
funds?
0% to 5%
5% to 10%
10% to 20%
20% to 30%
30% to 50%
Above 50%
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8. Which of the following source of mutual funds information do you like to opt
for?
Professional advisory
Company advisory
Mutual fund prospects
Newspaper, magazine, television
Mutual fund rating service
9. How long are you planning to stay invested?
Long term > 12 months
Medium term 6 – 12 months
Short term < 6 months
10. How likely are you stay invested during volatile times?
Unlikely you will stay invested
Likely you will stay invested
Highly likely to remain invested
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Back-end Load - Charge imposed by a mutual fund when an investor redeems
shares. Redemption fees and contingent deferred sales charges are examples.
Contingent Deferred Sales Charges - Back-end load imposed on an investor who
redeems shares. It is usually expressed as a percentage of the original purchase
price or of the value of shares redeemed. In most cases, the longer the investor
holds his shares, the smaller the deferred sales charge.
Distribution - Payments made to shareholders by the mutual fund. Interest and
stock dividends earned by the fund’s portfolio are passed to shareholders as
dividends, while capital gains are passed as capital gains distributions.
Dividend Reinvestment Fee - Fee charged when an investor uses dividends paid
by a mutual fund to purchase additional shares of the mutual fund.
Exchange Fee - Fee charged when an investor switches from one mutual fund to
another in the same family of funds.
Front-end Load - Sales charge applied at the time the investor purchases shares.
Investment Companies - The companies that pool investor monies to purchase
securities. The Investment Company Act of 1940 created three types of
investment companies: face-amount certificate companies, unit investment
trusts and management companies.
Management Companies - There are two types: open-end and closed-end. Open-
end funds, which sell and buy shares back on demand, are called mutual funds.
Closed-end funds have a fixed number of shares. After the initial public offering,
shares in closed-end funds trade only on exchanges. The price is determined by
the market and does not necessarily reflect the net asset value of the shares.
Management Fee - A fee paid by the mutual fund to its investment adviser and
charged against fund assets, generally 1% or less per year.
Net Asset Value - In effect, the share price of a fund computed daily by adding
the value of the fund’s securities and other assets, subtracting liabilities, and
dividing by the number of shares outstanding. For a mutual fund with a front-end
load, net asset value is identical to the "asked price" or "offering price."
Prospectus - A disclosure document which should provide the investor with full
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and complete disclosure of all material information needed by the investor to
make a decision whether or not to invest. The prospectus generally incorporates
the SAI by "reference." (See SAI definition.)
Redemption Fee - A fee charged to an investor who redeems shares. It is
generally expressed as a percentage of the value of shares redeemed.
Rule 12b-1 Fee - An asset-based sales load, permitted by SEC Rule 12b-1,
representing annual charges of up to 1-1/4% for specific sales or promotional
activities of the mutual fund. Over time, the amount paid in Rule 12b-1 fees can
surpass the amount paid in sales fees charged by load funds.
SAI - A disclosure document called a Statement of Additional Information. The
SAI is not required to be furnished by mutual funds to investors unless investors
specifically request it. Investors are responsible for information in the SAI, even
if they don’t request it.
Total Return - A computation of mutual fund performance which measures
changes in total value over a specified time period. Included in the computation
are distributions paid to investors, capital gains distributions and unrealized
capital gains and losses. Since all fund activity which has an effect on net asset
value is represented, this measure provides a picture of performance which is
more complete than yield.
Yield - A measure of mutual fund performance, which is figured by dividing the
income generated (dividends, capital gains distribution, etc.) per share for aspecific time period by the fund’s current price per share. For example if, during
a year, a single share of a fund had paid income totaling $1 and its share price
was $10, the annual yield for that year would be figured by dividing 1 by 10,
which equals one tenth, or a yield of 10%.
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References:-
www.IDFCMF.com
www.moneycontrolindia.com
http://www.nse-india.com
http://www.amfiindia.com
http://www.mutualfundsindia.com
http://www.sebi.gov.in
www.businessmapsofindia.com
www.ceicdata.com
www.economictimes.com
www.valueresearchonline.com