ABSTRACT

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is invested by the fund manager in different types of
securities depending upon the objective of the scheme. These could range from shares to
debentures to money market instruments. The income earned through these investments and the
capital appreciations realized by the scheme are shared by its unit holders in proportion to the
number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment
for the common man as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few
thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment
objective and strategy.
Mutual Funds now represent perhaps most appropriate investment opportunity for most
investors. As financial markets become more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing. As the investor always try to maximize the returns and minimize the risk.
Mutual fund satisfies these requirements by providing attractive returns with affordable risks.
The basic purpose of the study is to give broad idea on Mutual Funds and analyze various
schemes to highlight the diversified investment that Mutual Fund offers to its investors. Through
this study one can understand how to invest in Mutual Funds and turn the raw investment into
ripen fruits by taking wise decisions, taking the risk factors into account.
The Study covers the basic meaning, concept, structure and the organization of the Mutual
Funds. The Study is restricted to explain only the returns provided by the Mutual Funds from
various schemes

INDEX
S.No:
1.

CONTENTS

PAGE NO.

INTRODUCTION

1-7

Objectives of the Study

Need of the Study
Scope of the Study
Methodology of the Study
Limitation of the Study

2.

REVIEW OF LITERATURE

8-45

3.

COMPANY PROFILE

46-56

4.

DATA ANALYSIS AND

INTERPRETATION

57-70

5.

FINDINGS & SUGGESTION

71-73

6.

CONCLUSION

74-75

7.

BIBLIOGRAPHY

76

CHAPTER I

INTRODUCTION

INTRODUCTION TO MUTUAL FUND

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing
funds in securities in accordance with objectives as disclosed in offer document.
Investments in securities are spread across a wide cross-section of industries and sectors and thus
the risk is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of mutual funds are known as unit
holders.

The profits or losses are shared by the investors in proportion to their investments. The mutual
funds normally come out with a number of schemes with different investment objectives which are
launched from time to time. A mutual fund is required to be registered with Securities and Exchange
Board of India (SEBI) which regulates securities markets before it can collect funds from the
public.

A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management
Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor
who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit
of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by
making investments in various types of securities. Custodian, who is registered with SEBI, holds the
securities of various schemes of the fund in its custody. The trustees are vested with the general
power of superintendence and direction over AMC. They monitor the performance and compliance
of SEBI Regulations by the mutual fund.

OBJECTIVES
MAIN OBJECTIVE:

A study on comparative analysis of mutual funds in Kotak Mutual Fund schemes, are
effecting on the financial performance of the company.

ANCILLARY OBJECTIVES:

To know the different mutual fund schemes in KOTAK mutual Fund.

To know the concept of Mutual funds.
To know how the KOTAK Mutual funds are participating in the stock market.
To know how the KOTAK Mutual funds are effecting on the overall performance of the

KOTAK Company
To know the final conclusions on mutual funds.

NEED OF THE STUDY

The primary objective of doing this project is to know about mutual funds and its
functioning with special reference to SBI Mutual Funds. This project helps us to know in detail
about mutual fund industry right from its inception stage, growth and future prospects. It also
helps in understanding different schemes of mutual funds. The study is focused on SBI mutual
funds and their schemes like equity, income, balance as well as the returns associated with those
schemes.
The project study tries to ascertain the asset allocation, entry load, exit load, associated with the
mutual funds. Ultimately this would help in understanding the benefits of mutual funds to
investors.

SCOPE OF THE STUDY:

The study is limited to the analysis made on two major types of schemes offered by six banks. Each
scheme is calculated in term of their risk and return using different performance measurement
theories. The reasons for such performance in immediately analyzed in the commentary. Column
charts are used to reflect the portfolio risk and return.
METHODOLOGY:
Meaning of research: The method and technique that are used for conducting the research.
Research methodology is a systemic way of solving research problem this methodology includes
all the stages of research such as research process, research design, sampling design, data
collection, data analysis, data interpretation and data presentation.
Research Process: - This is the process of conducting entire research in such away to solve the
research problem. It includes identification of problem conducting the research and interpretation
of the data and reporting.
To test the Different Mutual fund Schemes and its effect on the Business with reference to the
KOTAK Mutual Funds.

Research design: - It indicates a design of research problem and research process

1. Information collected from the Questionnaire to the KOTAK Mutual Fund
Hyderabad branch.
2. I collect all the Financial Statements from the KOTAK Mutual fund websites.

Data collection:-The objective of the present study can be accomplished by conducting a

systematic research to know the effect of KOTAK Mutual Fund Schemes on the Business.
1. Primary data

The information presented in the report is primary data, i.e. the data

Collected from the KOTAK MONEY through the Questionnaire.

2. Secondary data
Secondary data is taken from
Website
KOTAK Journals
Security Analysis (sem-3)
Brocuhers

Tools for data analysis:- To analyse the information (or) data collected form Branch Manager
and various financial Statements the following tools are used:
1. Percentages
2. Averages
3. Range
4. Graphs
5. Bar Chart

LIMITATIONS
Mostly the data is related to the secondary data.

To collect the primary data from the company is difficult task and it is a confidential

matter to the company.

The product is restricted to only mutual funds.
The data is only limited to financial performance of the mutual funds.
The collected primary data is only from the one branch head of Hyderabad.
The comparison for the financial performance of the company is taken only for 3 years.

CHAPTER-II
LITERATURE REVIEW

DEFINITION:
Mutual fund is the pool up savings of small investors to raise funds called mutual funds. Mutual
funds are invested in diversified portfolio to spread risk. While it opens an investment channel to
small investors, it reduces risks, improves liquidity and results in stable returns and better capital
appreciation in the long run.

CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual fund in India

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s,
Government allowed public sector banks and institutions to set up mutual funds.
In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of
SEBI are to protect the interest of investors in securities and to promote the development of and to
regulate the securities market.
As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to
protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993.
Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital
market. The regulations were fully revised in 1996 and have been amended thereafter from time to
time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests
of investors.
All mutual funds whether promoted by public sector or private sector entities including those
promoted by foreign entities are governed by the same set of Regulations. There is no distinction in
regulatory requirements for these mutual funds and all are subject to monitoring and inspections by
SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these
entities are of similar type
You can make money from a mutual fund in three ways:
1)

Income is earned from dividends on stocks and interest on bonds.

2)

If the fund sells securities that have increased in price, the fund has a capital gain.

3)

If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit

10

Advantages of Mutual Funds:

Professional Management - The primary advantage of funds is the professional

management of your money. Investors purchase funds because they do not have the time or
the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way
for a small investor to get a full-time manager to make and monitor investments.

Diversification - By owning shares in a mutual fund instead of owning individual stocks or

bonds, your risk is spread out. The idea behind diversification is to invest in a large number
of assets so that a loss in any particular investment is minimized by gains in others.

Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a
time, its transaction costs are lower than what an individual would pay for securities
transactions.

Liquidity - Just like an individual stock, a mutual fund allows you to request that your
shares be converted into cash at any time.

Simplicity Minimum investment is small.

Disadvantages:
Dilution - It's possible to have too much diversification. Because funds have small holdings in
so many different companies, high returns from a few investments often don't make much
difference on the overall return.

Taxes - When making decisions about your money, fund managers don't consider your personal
tax situation.

11

MUTUAL FUND
Mutual fund is a trust that pools money from a group of investors (sharing common financial
goals) and invest the money thus collected into asset classes that match the stated investment
objectives of the scheme. Since the stated investment objective of a mutual fund scheme
generally forms the basis for an investor's decision to contribute money to the pool, a mutual
fund can not deviate from its stated objectives at any point of time.
Every Mutual Fund is managed by a fund manager, who using his investment management skills
and necessary research works ensures much better return than what an investor can manage on
his own. The capital appreciation and other incomes earned from these investments are passed on
to the investors (also known as unit holders) in proportion of the number of units they own.

12

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets
of the fund in the same proportion as his contribution amount put up with the corpus (the total
amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit
holder.
Any change in the value of the investments made into capital market instruments (such as shares,
debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the
market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is
calculated by dividing the market value of scheme's assets by the total number of units issued to
the investors.
For example:
A.

If the market value of the assets of a fund is Rs. 100,000

B.

The total number of units issued to the investors is equal to 10,000.

C.

Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D.

Now if an investor 'X' owns 5 units of this scheme

E.

Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by

the NAV of the scheme)

ADVANTAGES OF MUTUAL FUND

1. Portfolio Diversification Mutual Funds invest in a well-diversified portfolio of securities
which enables investor to hold a diversified investment portfolio (whether the amount of
investment is big or small).
2. Professional Management Fund manager undergoes through various research works and has
better investment management skills which ensure higher returns to the investor than what he can
manage on his own.
3. Less Risk

Investors acquire a diversified portfolio of securities even with a small

investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely
2 or 3 securities.
4. Low Transaction Costs Due to the economies of scale (benefits of larger volumes), mutual
funds pay lesser transaction costs. These benefits are passed on to the investors.

13

5. Liquidity An investor may not be able to sell some of the shares held by him very easily and
quickly, whereas units of a mutual fund are far more liquid.
6. Choice of Schemes Mutual funds provide investors with various schemes with different
investment objectives. Investors have the option of investing in a scheme having a correlation
between its investment objectives and their own financial goals. These schemes further have
different plans/options

DISADVANTAGES OF MUTUAL FUND

1.Costs Control Not in the Hands of an Investor Investor has to pay investment management
fees and fund distribution costs as a percentage of the value of his investments (as long as he
holds the units), irrespective of the performance of the fund.
2. No Customized Portfolios The portfolio of securities in which a fund invests is a decision
taken by the fund manager. Investors have no right to interfere in the decision making process of
a fund manager, which some investors find as a constraint in achieving their financial objectives.
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.

14

TYPES OF MUTUAL FUNDS

General Classification of Mutual Funds
Open-end Funds / Closed-end Funds
Open-end Funds
Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The
fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous
selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not
required to keep selling new units to the investors at all times but is required to always
repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated
every day.
Closed-end Funds
Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are
known as Closed-end Funds. The corpus of a Closed-end Fund remains unchanged at all times.
After the closure of the offer, buying and redemption of units by the investors directly from the
Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors
with two avenues to liquidate their positions:
1.

Closed-end Funds are listed on the stock exchanges where investors can buy/sell units

from/to each other. The trading is generally done at a discount to the NAV of the scheme. The
NAV of a closed-end fund is computed on a weekly basis (updated every Thursday).
2.

Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case, the

corpus of the Fund and its outstanding units do get changed.

Load Funds/no-load funds
0Load Funds
Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning,
fund managers salary etc. Many funds recover these expenses from the investors in the form of
load. These funds are known as Load Funds. A load fund may impose following types of loads
on the investors:

15

Entry Load Also known as Front-end load, it refers to the load charged to an investor

at the time of his entry into a scheme. Entry load is deducted from the investors contribution
amount to the fund.
Exit Load Also known as Back-end load, these charges are imposed on an investor

when he redeems his units (exits from the scheme). Exit load is deducted from the redemption
proceeds to an outgoing investor.

Deferred Load Deferred load is charged to the scheme over a period of time.

Contingent Deferred Sales Charge (CDSS) In some schemes, the percentage of exit

load reduces as the investor stays longer with the fund. This type of load is known as Contingent
Deferred Sales Charge.
No-load Funds
All those funds that do not charge any of the above mentioned loads are known as No-load
Funds.
Tax-exempt Funds/ Non-Tax-exempt Funds
Tax-exempt Funds
Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end
equity oriented funds are exempt from distribution tax (tax for distributing income to investors).
Long term capital gains and dividend income in the hands of investors are tax-free.
Non-Tax-exempt Funds
Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds,
except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising
out of sale of units by an investor within 12 months of purchase are categorized as short-term
capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities
Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor

16

BROAD MUTUAL FUND TYPES

1. Equity Funds
Equity funds are considered to be the more risky funds as compared to other fund types, but they
also provide higher returns than other funds. It is advisable that an investor looking to invest in
an equity fund should invest for long term i.e. for 3 years or more. There are different types of
equity funds each falling into different risk bracket. In the order of decreasing risk level, there
are following types of equity funds:

17

Aggressive Growth Funds - In Aggressive Growth Funds, fund managers aspire for
maximum capital appreciation and invest in less researched shares of speculative nature.
Because of these speculative investments Aggressive Growth Funds become more volatile
and thus, are prone to higher risk than other equity funds.
a.

Growth Funds - Growth Funds also invest for capital appreciation (with time horizon of

3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in
companies that are expected to outperform the market in the future. Without entirely adopting
speculative strategies, Growth Funds invest in those companies that are expected to post above
average earnings in the future.
b.

Specialty Funds - Specialty Funds have stated criteria for investments and their

portfolio comprises of only those companies that meet their criteria. Criteria for some specialty
funds could be to invest/not to invest in particular regions/companies. Speciality funds are
concentrated and thus, are comparatively riskier than diversified funds. There are following types
of specialty funds:
1. Sector Funds: Equity funds that invest in a particular sector/industry of the market are known
as Sector Funds. The exposure of these funds is limited to a particular sector (say Information
Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why
they are more risky than equity funds that invest in multiple sectors.
2. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one
or more foreign companies. Foreign securities funds achieve international diversification and
hence they are less risky than sector funds. However, foreign securities funds are exposed to
foreign exchange rate risk and country risk.
3. Mid-Cap or Small-Cap Funds:
Funds that invest in companies having lower market capitalization than large capitalization
companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap
companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than
Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores.
18

Market Capitalization of a company can be calculated by multiplying the market price of the
company's share by the total number of its outstanding shares in the market. The shares of MidCap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to
volatility in share prices of these companies and consequently, investment gets risky.
4. Diversified Equity Funds - Except for a small portion of investment in liquid money market,
diversified equity funds invest mainly in equities without any concentration on a particular
sector(s). These funds are well diversified and reduce sector-specific or company-specific risk.
However, like all other funds diversified equity funds too are exposed to equity market risk. One
prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As
per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times.
ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time
of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption
by the investor before the expiry of the lock-in period makes him liable to pay income tax on
such income(s) for which he may have received any tax exemption(s) in the past.
Equity Index Funds - Equity Index Funds have the objective to match the performance of a
specific stock market index. The portfolio of these funds comprises of the same companies that
form the index and is constituted in the same proportion as the index. Equity index funds that
follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that
follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are
less diversified and therefore, are more risky.
2.Debt/IncomeFunds
Funds that invest in medium to long-term debt instruments issued by private companies, banks,
financial institutions, governments and other entities belonging to various sectors (like
infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile
funds that seek to generate fixed current income (and not capital appreciation) to investors. In
order to ensure regular income to investors, debt (or income) funds distribute large fraction of
their surplus to investors. Although debt securities are generally less risky than equities, they are
subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To

19

minimize the risk of default, debt funds usually invest in securities from issuers who are rated by
credit rating agencies and are considered to be of "Investment Grade".

a.

Diversified Debt Funds - Debt funds that invest in all securities issued by entities

belonging to all sectors of the market are known as diversified debt funds. The best feature of
diversified debt funds is that investments are properly diversified into all sectors which results in
risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors
which further reduces risk for an individual investor.
b.

Focused Debt Funds* - Unlike diversified debt funds, focused debt funds are narrow

focus funds that are confined to investments in selective debt securities, issued by companies of a
specific sector or industry or origin. Some examples of focused debt funds are sector, specialized
and offshore debt funds, funds that invest only in Tax Free Infrastructure or Municipal Bonds.
Because of their narrow orientation, focused debt funds are more risky as compared to
diversified debt funds. Although not yet available in India, these funds are conceivable and may
be offered to investors very soon.
c.

Assured Return Funds - Although it is not necessary that a fund will meet its objectives

or provide assured returns to investors, but there can be funds that come with a lock-in period
and offer assurance of annual returns to investors during the lock-in period. Any shortfall in
returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds
are generally debt funds and provide investors with a low-risk investment opportunity. However,
the security of investments depends upon the net worth of the guarantor (whose name is
specified in advance on the offer document). To safeguard the interests of investors, SEBI
permits only those funds to offer assured return schemes whose sponsors have adequate networth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e.
Monthly Income Plans of UTI) that assured specified returns to investors in the future.
d.

Fixed Term Plan Series

Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of
less than one year) that offer a series of plans and issue units to investors at regular intervals.
Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series
20

usually invest in debt / income schemes and target short-term investors. The objective of fixed
term plan schemes is to gratify investors by generating some expected returns in a short period.
3.Also known as Government Securities in India, Gilt Funds invest in government papers
(named dated securities) having medium to long term maturity period. Issued by the Government
of India, these investments have little credit risk (risk of default) and provide safety of principal
to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk.
Interest rates and prices of debt securities are inversely related and any change in the interest
rates results in a change in the NAV of debt/gilt funds in an opposite direction.
4. Money Market/Liquid Funds
Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt
instruments. These securities are highly liquid and provide safety of investment, thus making
money market / liquid funds the safest investment option when compared with other mutual fund
types. However, even money market / liquid funds are exposed to the interest rate risk. The
typical investment options for liquid funds include Treasury Bills (issued by governments),
Commercial papers (issued by companies) and Certificates of Deposit (issued by banks).
5.HybridFunds
As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities,
debts and money market securities. Hybrid funds have an equal proportion of debt and equity in
their portfolio. There are following types of hybrid funds in India:
a.Balanced Funds
The portfolio of balanced funds includes assets like debt securities, convertible securities, and
equity and preference shares held in a relatively equal proportion. The objectives of balanced
funds are to reward investors with a regular income, moderate capital appreciation and at the
same time minimizing the risk of capital erosion. Balanced funds are appropriate for
conservative investors having a long term investment horizon.
b.Growth-and-Income Funds Funds that combine features of growth funds and income funds
are known as Growth-and-Income Funds. These funds invest in companies having potential for
21

capital appreciation andthose known for issuing high dividends. The level of risks involved in
these funds is lower than growth funds and higher than income funds.
6. Commodity Funds
Those funds that focus on investing in different commodities (like metals, food grains, crude oil
etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds.
A commodity fund that invests in a single commodity or a group of commodities is a specialized
commodity fund and a commodity fund that invests in all available commodities is a diversified
commodity fund and bears less risk than a specialized commodity fund. Precious Metals Fund
and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples
of commodity funds.
7. Real Estate Funds
Funds that invest directly in real estate or lend to real estate developers or invest in
shares/securitized assets of housing finance companies, are known as Specialized Real Estate
Funds. The objective of these funds may be to generate regular income for investors or capital
appreciation.
8. ExchangeTradedFunds (ETF)
Exchange Traded Funds provide investors with combined benefits of a closed-end and an openend mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock
exchanges like a single stock at index linked prices. The biggest advantage offered by these
funds is that they offer diversification, flexibility of holding a single share (tradable at index
linked prices) at the same time. Recently introduced in India, these funds are quite popular
abroad.
9. Fund of Funds
Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund
schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a
portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds
maintain a portfolio comprising of equity/debt/money market instruments or non financial assets.
Fund of Funds provide investors with an added advantage of diversifying into different mutual
22

fund schemes with even a small amount of investment, which further helps in diversification of
risks. However, the expenses of Fund of Funds are quite high on account of compounding
expenses of investments into different mutual fund schemes.
Risk Hierarchy of Different Mutual Funds
Thus, different mutual fund schemes are exposed to different levels of risk and investors should
know the level of risks associated with these schemes before investing. The graphical
representation hereunder provides a clearer picture of the relationship between mutual funds and
levels of risk associated with these funds:

23

MUTUAL FUND 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 in vesting 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 entitles, namely sponsor, mutual fund trust, AMC and
custodian. The sponsor establishes the mutual fund and gets its 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.
The sponsor is required to contribute at lease 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 favour 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.

24

MUTUAL FUND STRUCTURE

Sponsor Company
(E.g. Prudential, ICICI)

Establishes the MF as a trust

Registers the MF with SEBI

Managed by a Board of
Trustees
Mutual Fund
(E.g. Prudential, ICICI, Mutual
Fund)

Hold unit-holders funds in MF

enter into an agreement with
SEBI and ensure compliance

AMC
(e.g. prudential ICICI Asset
Management Company)

Float MF funds
Manages the fund as per SEBI
guidelines and AMC agreement

Custodian

Provide custodial services

Registrar

Provides registrar and transfer

services

Distributors

Provides the network for

distribution of the scheme to the
investors

25

STATE BANK OF INDIA

State Bank of India is the first Bank sponsored Mutual Fund to launch offshore
fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it
is the largest Bank sponsored Mutual Fund in India. They have already launched
35 Schemes out of which 15 have already yielded handsome returns to investors.
State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it
has an investor base of over 8 lakhs. Spread over 18schemes
UNIT TRUST OF INDIA (UTI)
UTI, the first bank to begin operations as new private banks in 1994 after the
Government of India allowed new private banks to be established. UTI Bank was
jointly promoted by the Administrator of the specified undertaking of the Unit Trust
of India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance
Corporation Ltd. Also with associates viz. National Insurance Company Ltd., the
New India Assurance Company, The Oriental Insurance Corporation and United
Insurance Company Ltd
UTI Bank in India today is capitalized with Rs. 232.86 Crores with 47.50% public
holding other than promoters. It has more than 200 branch offices and Extension
Counters in the country with over 1250 UTI Bank ATM proving to be one of the
largest ATM networks in the country. UTI Bank India commits to adopt the best
industry practices internationally to achieve excellence. UTI Bank has strengths in
retail as well as corporate banking.
By the end of December 2005, UTI Bank in India had over 2.7 million debit cards.
This is the first bank in India to offer the AT PAR Cheque facility, without any
charges, to all its Savings Bank customers in all the places across the country where it
has presence.
26

The latest offerings of the bank along with Dollar variant is the Euro and Pound
Sterling variants of the International Travel Currency Card. The Travel Currency
Card is a signature based pre-paid travel card which enables travellers global access
to their money in local currency of the visiting country in a safe and convenient way.
Stock Exchange where the shares of UTI Bank are listed:

Stock Exchange

Code No. ISIN No.

Ahmedabad

Code No. 63134

Mumbai

Code No. 532215 A Group

NSE

Code No. UTIBANKEQ

OTCEI

Code No. Permitted Security

NSDL

ISIN No. INE238A01026

CDSL

ISIN No. INE238A01026

Share Capital of UTI Bank

Authorized Share Capital: Rs. 300 Crores
Paid Up Share Capital: Rs. 232.86 Crores
Declared Rate of Interests by UTI Bank
Year 1998-99 - 10% (Pro-rata)
Year 1999-00 - 12%
Year 2000-01 - 15%
Year 2001-02 - 20%
Year 2003-03 - 22%
Year 2004-04 - 25%
UTI Mutual Fund is managed by UTI Asset Management Company Private Limited
(Estb: Jan 14, 2004) who has been appointed by the UTI Trustee Company Private
27

Limited for managing the schemes of UTI Mutual Fund and the schemes transferred /
migrated from UTI Mutual Fund.
The UTI Asset Management Company has its registered office at: UTI Tower,
Gn Block, Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051 will provide
professionally managed back office support for all business services of UTI Mutual
Fund (excluding fund management) in accordance with the provisions of the
Investment Management Agreement, the Trust Deed, the SEBI (Mutual Funds)
Regulations and the objectives of the schemes. State-of-the-art systems and
communications are in place to ensure a seamless flow across the various activities
undertaken by UTI AMC.
UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)
Regulations, 1993 on February 3 2005, for undertaking portfolio management
services and also acts as the manager and marketer to offshore funds through its 100
% subsidiary, UTI International Limited, registered in Guernsey, Channel Islands.
UTI Mutual Fund has a track record of managing a variety of schemes catering to the
needs of every class of citizenry. It has a nationwide network consisting 70 UTI
Financial Centers (UFCs) and UTI International offices in London, Dubai and
Bahrain. With a view to reach to common investors at district level, 4 satellite offices
have also been opened in select towns and districts. It has a well-qualified,
professional fund management team, who has been highly empowered to manage
funds with greater efficiency and accountability in the sole interest of unit holders.

HSBC
28

HSBC is the largest bank in Hong Kong and second largest group in the world after
Citicorp. Before moving its headquarter to London in 1990, it was headquartered in
Hong Kong. HSBC India is having branches in Ahmedabad, Bangalore, Chennai,
Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana,
Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam.
HSBC NRI centers are located in Asia-Pacific, the Middle East, Europe and North
America. HSBC NRI centres provide full range of personal and private banking
products in India and overseas. HSBC Internet banking adds to the services of HSBC
India abroad.
HSBC India, along with HSBC Investment product and HSBC Insurance, it offers
international Gold Card and Classic Credit Cards from VISA and MasterCard and
debit cards from Visa. HSBC in India gives 24 hour banking services, extensive
network of ATMs, integrated Call Centre and also HSBC e-banking.
HSBC Bank India Fact File
The HSBC Group develops and applies advanced technology to the efficient and
convenient delivery of banking and related financial services. HSBC Bank India
provides the following:
Self-service banking with over 150 in-branch and off-branch ATMs and
24-hour phone banking.
Trade and corporate banking services with real-time access to a
centralised information database
Instantaneous inter-city transactions through online connections between
all branches

ICICI BANK
29

ICICI Limited was established in 1955 by the World Bank, the Government of India
and the Indian Industry, for the promotion of industrial development in India by
giving project and corporate finance to the industries in India.
ICICI Bank has grown from a development bank to a financial conglomerate and has
become one of the largest public financial institutions in India. ICICI Bank has
financed all the major sectors of the economy, covering 6,848 companies and 16,851
projects. As of March 31, 2000, ICICI had disbursed a total of Rs. 1, 13,070 crores,
since inception.
ICICI Bank Fact Files
Total assets: Rs.146, 214 crore (December 31, 2005)
Network

: 530 branches

ATMs

: Over 1,880

Abroad Subsidiaries

: United Kingdom and Canada

Abroad branches

: Singapore and Bahrain

Representative offices

: United States, China, United Arab Emirates,

Bangladesh and
South Africa.

ABN AMRO
30

Profile
ABN AMRO is an international bank with European roots. We have a clear focus on
consumer and commercial clients in our local markets and focus globally on select
multinational corporations and financial institutions, as well as private clients. Our
business mix gives us a competitive edge in our chosen markets and client segments.
Our strategy is built on leveraging our advantages as a Group to create the best value
for ? and with ? our clients.
We are active in four principal customer segments: Personal Banking, Private
Banking, Business and Commercial and Corporate and Institutional.
Although we serve a broad range of clients, our strategic focus is on the mid-market
segment. This is the client area where we have a strong and distinctive competitive
advantage and where we feel we can be most profitable in the future.
The ABN AMRO Corporate Values and Business Principles provide the framework
within which we carry out our operations.
In brief...
ABN AMRO is a prominent international bank, our history going back to 1824.
ABN AMRO ranks eighth in Europe and 12th in the world based on total assets, with
more than 4,000 branches in 53 countries, a staff of more than 99,000 full-time
equivalents and total assets of EUR 1,120.1 bln (as at 1 November 2011).
Organisation
We implement our strategy through a number of Business Units (BUs). These units
are responsible for managing a distinct region, client segment or product segment,
while also sharing expertise and operational excellence across the Group.
We have five regional Client BUs: the Netherlands, Europe, North America, Latin
America and Asia. These BUs serve about 20 million consumer clients and small to
larger businesses worldwide. We have two global Client BUs to serve clients with.
31

The BU Private Clients provides private banking services to wealthy individuals and
families and has EUR 150 bln in Assets under Administration (as at July 2010). The
BU Global Clients serves our 550 multinational clients.
We have three Product BUs: Global Markets, Asset Management and Transaction
Banking.

Global Markets develops products for our commercial clients across the
globe.

Transaction Banking is our product organisation covering all payments

and trade in the bank for our retail, private client, and commercial
markets.

Asset Management, which is one of the world's leading asset managers,

operates from over 20 locations worldwide and manages EUR 211 bln
worth (as at July 2011) of assets for private investors and institutional
clients.

Services
Services was established to create cost savings through consolidation and
standardisation. It focuses on further exploiting new market solutions for support
services with the aim to achieve better products and services for our clients at lower
costs.
Group Functions
Group Functions collaborates with the BUs in maximising client and shareholder
value. Its basic functions are governance (facilitating the implementation of
Managing Board policy throughout the bank), standard and policy setting (setting the
parameters that the BUs work within), and sharing expertise across the company.

32

Segments
To provide all our clients with even better products and services, we also have a
cross-BU Consumer Client Segment and a cross-BU Commercial Client Segment.
These segments focus on aligning the Client BUs with the Product BUs, sharing best
practices and exchanging winning formulas across the Group in order to deliver highquality solutions to our client bases across the world
Corporate Values
Our Corporate Values provide the foundation for the bank's Business Principles. The
bank formulated these Corporate Values in 1997.
Our values and principles also help us on our journey to sustainable development. By
living according our defined Corporate Values and Business Principles we can meet
the needs of our organization and stakeholders today, thus protecting, sustaining and
enhancing human, natural and financial capital for the future. Read more about
ABN AMRO and sustainable development.
Integrity: Above all, we are committed to integrity in all that we do, always,
everywhere.
Teamwork: It is the essence of our ability to succeed as a trusted preferred supplier
of financial solutions to our clients. Our overriding loyalty is to the good of the whole
organization. We learn from each other and share our skills and resources across
organizational boundaries for our clients' benefit and our own.
Respect: We respect every individual. We draw strength from equal opportunity and
diversity, at the same time supporting personal growth and development. We value
and we all benefit from the entrepreneurial spirit of each individual.
Professionalism: We are committed to the highest standards of professionalism, we
pursue innovation, we deploy imagination, we are open to new ideas and we act
decisively and consistently. We are determined to deliver outstanding quality so that
our relationships with our clients will be long lasting and close.
33

Business Principles
A compass to guide us on our journey
ABN AMRO is an ambitious institution, committed to continuous improvement in
everything we do. Our success depends on excellent performance and a solid
reputation. Transparency and dialogue are of crucial importance in all our
relationships if we are to maintain our reputation as a respectable and reliable
institution.
Based on our four Corporate Values, we have formulated Business Principles to guide
all our employees in their daily work. Defining them clarifies what we stand for and
unites us as a group.
These Business Principles are:

We are the heart of our organization

We pursue excellence

We aim to maximize long-term shareholder value

We manage risk prudently and professionally

We strive to provide excellent service

We build our business on confidentiality

We assess business partners on their standards

We are a responsible institution and a good corporate citizen

We respect human rights and the environment

We are accountable for our actions and open about them

Business Principles alone are not the answer to every problem, but they do challenge

us to translate their spirit into our daily practice and shift our horizons beyond shortterm profit to long-term value creation through sustainable development.

34

Performance Measures of Mutual Funds

The most important and widely used measures of performance are:

The Treynor Measure

The Sharpe Measure

Jenson Model

Fama Model

The Trevnor Measure

Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's
Index. This Index is a ratio of return generated by the fund over and above risk free rate of return
(generally taken to be the return on securities backed by the government, as there is no credit risk
associated), during a given period and systematic risk associated with it (beta). Symbolically, it
can be represented as:
Treynor's index (Ti) = (Ri - Rf)/Bi
Where, Ri represents return on fund, Rf is risk free rate of return and Hi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and positive Treynor's
Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index
is an indication of unfavorable performance.
The Sharpe Measure
In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of
returns generated by the fund over and above risk free rate of return and the total risk associated
with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about.
So, the model evaluates funds on the basis of reward per unit of total risk. Symbolically, it can be
written as:
Sharpe Index (Si) = (Ri Rf)/Si
Where, Si is standard deviation of the fund.
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a
low and negative Sharpe Ratio is an indication of unfavorable performance.

35

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk premium by a
numerical risk measure. The total risk is appropriate when we are evaluating the risk return
relationship for well diversified portfolios. On the other hand, the systematic risk is the relevant
measure of risk when we are evaluating less than fully diversified portfolios or individual stocks.
For a well-diversified portfolio the total risk is equal to systematic risk. Rankings based on total
risk (Sharpe measure) and systematic risk (Treynor measure) should be identical for a welldiversified portfolio,as the total risk is reduced to systematic risk. Therefore, a poorly diversified
fund that ranks higher on Treynor measure, compared with another fund that is highly
diversified, will rank lower on Sharpe Measure.
Jenson Model
Jensons model proposes another risk adjusted performance measure.
This measure was developed by Michael Jenson and is sometimes referred to as the Differential
Return Method. This measure involves evaluation of the returns that the fund has generated vs.
the returns actually expected out of the fund given the level of its systematic risk. The surplus
between the two returns is called Alpha, which measures the performance of a fund compared
with the actual returns over the period. Required return of a fund at a given level of risk (Bi) can
be calculated as:
Ri = Rf+ Bi (Rm Rf)
Where, Rm is average market return during the given period. After calculating it alpha can be
obtained by subtracting required return from the actual return of the fund.
Higher alpha represents superior performance of the fund and vice versa. Limitation of this
model is that it considers only systematic risk not the entire risk associated with the fund and an
ordinary investor can not mitigate unsystematic risk, as his knowledge of market is primitive.
Fama Model
The Eugene Fama model is an extension of Jenson model. This model compares the
performance, measured in terms of returns, of a fund with the required return commensurate with
the total risk associated with it. The difference between these two is taken as a measure of the
36

performance of the fund and is called net selectivity.

The net selectivity represents the stock selection skill of the fund manager, as it is the excess
return over and above the return required to compensate for the total risk taken by the fund
manager. Higher value of which indicates that fund manager has earned returns well above the
return commensurate with the level of risk taken by him.
Required return can be calculated as: Ri = Rf + Si/Sm*(Rm Rf)
Where, Sm is standard deviation of market returns. The net selectivity is then calculated by
subtracting this required return from the actual return of the fund. Among the above performance
measures, two models namely, Treynor measure and Jenson model use systematic risk based on
the premise that the unsystematic risk is diversifiable. These models are suitable for large
investors like institutional investors with high risk taking capacities as they do not face paucity
of funds and can invest in a number of options to dilute some risks. For them, a portfolio can be
spread across a number of stocks and sectors.
However, Sharpe measure and Fama model that consider the entire risk associated with fund are
suitable for small investors, as the ordinary investor lacks the necessary skill and resources to
diversified. Moreover, the selection of the fund on the basis of superior stock selection ability of
the fund manager will also help in safeguarding the money invested to a great extent. The
investment in funds that have generated big returns at higher levels of risks leaves the money all
the more prone to risks of all kinds that may exceed the individual investors risk appetite.

37

LIST OF AMCS
Kotak mutual funds
ABN AMRO Mutual fund
Birla Mutual fund
Deutsche Mutual fund
DSP Merrill Lynch Mutual fund
Franklin Templeton Mutual fund
HDFC Mutual fund
HSBC Mutual fund
ING Vysya Mutual fund
JM Financial Mutual fund
Kotak Mahindra Mutual fund
LIC Mutual fund
Morgan Stanley Mutual fund
Principal Mutual fund
Prudential KOTAK Mutual fund
Reliance Mutual fund
SBI Mutual fund
Sundaram Mutual fund
TATA Mutual fund
Unit Trust of India Mutual fund
UTI Mutual fund

38

LIST OF SCHEMES IN PRUKOTAK

Open-Ended Schemes
Prudential KOTAK Aggressive Plan - Dividend
Prudential KOTAK Aggressive Plan - Growth
Prudential KOTAK Balanced Plan -Dividend
Prudential KOTAK Balanced Plan -Growth
Prudential KOTAK Discovery Fund Institutional option -1
Prudential KOTAK Dynamic Plan - Dividend
Prudential KOTAK Dynamic Plan - Growth
Prudential KOTAK Dynamic Plan Institutional option-1
Prudential KOTAK Emerging Star - Dividend
Prudential KOTAK Emerging Star - Growth
Prudential KOTAK Emerging Star Institutional option-1
Prudential KOTAK FMCG Fund - Dividend
Prudential KOTAK FMCG Fund -Growth
Prudential KOTAK Flexible income plan Daily Dividend
Prudential KOTAK Flexible income plan Monthly Dividend
Prudential KOTAK Floating rate plan A - Dividend
Prudential KOTAK Floating rate plan B - Growth
Prudential KOTAK Gilt Fund - Investment plan -Dividend
Prudential KOTAK Gilt Fund - Investment plan -Growth
Prudential KOTAK Growth plan - Dividend
Prudential KOTAK Growth plan - Growth
Prudential KOTAK Income multiplier fund Dividend
Prudential KOTAK Income multiplier fund - Growth
Prudential KOTAK Income plan - Dividend
Prudential KOTAK Income plan - Growth
Prudential KOTAK Index Fund
Prudential KOTAK Infrastructure Fund Dividend
Prudential KOTAK Infrastructure Fund Growth
39

Prudential KOTAK Liquidity Institutional plan - Growth

Prudential KOTAK Liquidity Institutional plus plan Dividend
Prudential KOTAK Liquid plan Dividend
Prudential KOTAK Liquid plan Growth
Prudential KOTAK Liquid super Institutional plan Growth
Prudential KOTAK Long term plan Dividend
Prudential KOTAK MIP cumulative
Prudential KOTAK Power - Dividend
Prudential KOTAK Power - Growth
Prudential KOTAK Services industries Fund Dividend
Prudential KOTAK Services industries Fund Growth
Prudential KOTAK Tax plan Dividend
Prudential KOTAK Tax plan-Growth
Prudential KOTAK Technology Fund Dividend
Prudential KOTAK Technology Fund Growth
Prudential KOTAK Very Aggressive plan Growth
Prudential KOTAK Very Cautious plan - Dividend
IN PRUKOTAK MANY SCHEMES ARE AVAILABLE MORE SCHEMES, LIKE
OPEN ENDED, CLOSED-ENDED, REDEEMED SCHEMES.
BUT HERE SELECTED TWO SCHEMES ONLY FROM OPEN-ENDED.

40

TYPES OF MUTUAL FUND SEHEMES

BY STRUCTURE

Open-Ended Schemes

Close-Ended Schemes

Interval Schemes

BY INVESTMENT OBJECTIVE

Growth Schemes

Income Schemes

Balanced Schemes

Money Market Schemes

OTHER SCHEMES

Tax saving Schemes

Special Schemes

Index Schemes

Sector Specific Schemes

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

By Structure:
Open-ended funds
An open ended fund is one that is available for subscription all through the year. These do not have
a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related
prices. The key feature of open-end schemes is liquidity.

Closed-ended funds
A closed end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The
fund is open for subscription only during a specific period. Investors can invest in the scheme at the
41

time of the initial public issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where they are listed.

Interval funds
These combine the features of open-ended and closed-ended schemes. They are open for sale or
redemption during pre-determined intervals at NAV related prices.

By Investment Objective:
Growth funds
The aim of growth funds is to provide capital appreciation over the medium to long-term. Such
schemes normally invest the majority of their corpus in equities. It has been proven that returns
from stocks, have outperformed most other kind of investments held over the long term. Growth
schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

Income funds
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 and government
securities. Income funds are ideal for capital stability and regular income.

Balanced funds
The aim of balanced funds is to provide both growth and regular income. Such schemes periodically
distribute a part of their earning and investment both in equities and fixed income securities in the
proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes
may not normally keep pace, or fall equally when the market falls. These are ideal for investors
looking for a combination of income and moderate growth.Money market fund
For over 30 years, money market funds have treated investors well. Money market funds have been
around for 30 years and are a very popular place for investors to park their money.

42

Money market funds are a type of mutual fund that invests in short-term (less than a year) debt
securities of agencies of the U.S. Government, banks and corporations and U.S. Treasury Bills.
They are fixed at $1 per share and only the yield fluctuates.

Load Funds
A load fund is one that charges a commission for entry of exit. That is, each time you buy or sell
units in the fund, a commission will be payable. Typically entry exit loads range from 1% to 2%. It
could be corpus is put to work.

No-Load Funds
A No-Load fund is one that does not charge a commission for entry or exit. That is, no commission
is payable on purchase or sale of units in the fund. The advantage of a No-Load fund is that the
entire corpus is put to work.

Other Schemes:
Tax saving Schemes:
These schemes offer tax rebates to the investor under specific provisions of the Indian income tax
laws as the Government offers tax incentives for investment in Equity Linked Saving Scheme
(ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. The Act also
provide opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual
funds, provided the capital asset has been sold to April 1,2000 and the amount is invested before
September 30,2000.

Special Schemes:
Industry Specific Schemes
Industry Specific Schemes invest in the industries specified in the offer document. The investment
of these funds is limited to specific like Info Tech, FMCG, and Pharmaceuticals etc.
Index Schemes:
43

Index Funds attempt to replicate the performance of a particular index such as the BSE sensex or
the NSE.
SECTORAL SCHEMES:
Sectoral funds are those, which invest exclusively in a specified industry or a group of industries or
various segments such as A Group shares or initial public offerings.
FREQUENTLY USED TERMS
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit
NAV is the net asset value of the scheme divided by the number of units outstanding on the
Valuation Date.
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load.
This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem
their units on maturity. Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also called, Front-end load. Schemes that
do not charge a load are called No Load schemes.
Repurchase or Back-end Load
Is a charge collected by a scheme when it buys back the units from the unit holders.

44

CHAPTER -III
COMPANY PROFILE

45

Kotak Mahindra Bank

Type
Traded as
Industry
Founded
Headquarters
Key people
Products

Website

Public
BSE: 500247
NSE: KOTAKBANK
Financial service
1985 (as Kotak Mahindra Finance Ltd)
Mumbai, India
Uday Kotak (Vice Chairman) & (MD)
Deposit accounts, Loans, Investment services, Business banking
solutions, Treasury and Fixed income products etc.

www.kotak.com

Kotak Mahindra Bank (BSE: 500247, NSE: KOTAKBANK) is an Indian financial service
firm established in 1985. It was previously known as Kotak Mahindra Finance Limited, a nonbanking financial company. In February 2004, Kotak Mahindra Finance Ltd, the group's flagship
company was given the license to carry on banking business by the Reserve Bank of India (RBI).
Kotak Mahindra Finance Ltd. is the first company in the Indian banking history to convert to a
bank. Today it has more than 20,000 employees and Rs. 10,000 crore in revenue.[2]
Mr. Uday Kotak is Executive Vice Chairman & Managing Director of Kotak Mahindra Bank
Ltd. In July 2012 Mr. C. Jayaram and Mr. Dipak Gupta, whole time directors of the Bank, were
appointed the Joint Managing Directors of Kotak Mahindra Bank. Dr. Shankar Acharya is the
46

chairman of board of Directors in the company. The Bank has its registered office at Nariman
Bhavan, Nariman Point, Mumbai.

History
It bought stressed assets from a number of banks, at full loan value of Rs 1,000 crore in 2006. [3]
In January 2012, the bank reported a 32% rise in net profit to Rs188 crore for the quarter ended
December 2011 against Rs. 142 crore the corresponding quarter last year.[4] Kotak Mahindra
bank also reached the top 100 most trusted brands of India in The Brand Trust Report published
by Trust Research Advisory in 2012.
The group specializes in offering top class financial services catering to every segment of the
industry. The various group companies include.

Kotak Mahindra Capital Limited

Kotak Mahindra Securities Limited

Kotak Mahindra Inc

Kotak Mahindra (International) Limited

Global Investments Opportunities Fund Limited

Kotak Mahindra(UK) Limited Kotak Securities Limited

Kotak Mahindra Old Mutual Life Insurance Company Limited

Kotak Mahindra Asset Management Company Limited

Kotak Mahindra Trustee Company Limited

Kotak Mahindra Investments Limited

Kotak Forex Brokerage Limited

Kotak Mahindra Private-Equity Trustee Limited

47

Group Structure
Kotak
Mahindra Bank

Kotak
Mahindra
Capital
Company

Kotak
Securities

Kotak
Mahindra
Investments

Kotak
Mahindra
Prime

Kotak
Mahindra
Asset
Management
Company

Kotak Mahindra (UK)

Kotak Mahindra
Securities

Kotak Mahindra
( International)
Global Investment
Opportunities Fund

Kotak Mahindra Inc.

48

Kotak
Mahindra
Trust
Company

BOARD OF DIRECTORS
Dr. Shankar Acharya, Non-Executive Part-time Chairman

49

Dr. Shankar Acharya, (66 years) B.A. (Hons.) from Oxford University and Ph.D. (Economics)
from Harvard University, has considerable experience in various fields of economics and
finance. He is a Honorary Professor at the Indian Council for Research on International
Economic Relations (ICRIER) and a Board Member of ICRIER and the Administrative Staff
College of India (ASCI). He was Chief Economic Adviser, Ministry of Finance, Member,
Securities and Exchange Board of India (SEBI) and Member, Twelfth Finance Commission. He
has held several senior positions in the World Bank, including Director of World Development
Report (1979) and Research Adviser. He was re-appointed as the Non-Executive Chairman of the
Bank at the Annual General Meeting held on 28th July 2010 for a period of three years with
effect from 20th July 2010. He is on the Board of Eros International Media Ltd. and The South
Asia Institute for Research and Policy (Private) Limited, Sri Lanka. Dr. Acharya is the Chairman
of the Audit Committee of the Bank, Member of the Audit Committee of Eros International
Media Limited and the Chairman of the Shareholders Grievance/Investors Relations Committee
of Eros International Media Ltd.

Mr. Uday Kotak, Executive Vice-Chairman and Managing Director

50

Mr. Uday Kotak, (53 years) holds a Bachelors degree in Commerce and an MBA from Jamnalal
Bajaj Institute of Management Studies, Mumbai. He is the Executive Vice-Chairman and
Managing Director of the Bank and its principal founder and promoter. Under Mr. Kotaks
leadership, over the past 26 years, Kotak Mahindra group established a prominent presence in
every area of financial services from stock broking, investment banking, car finance, life
insurance and mutual funds. Mr. Kotak is the recipient of several prestigious awards. He is a
member of the Government of Indias high level committee on Financing Infrastructure, the
Primary Market Advisory Committee of SEBI, Member of the Board of Governors of Indian
Council for Research on International Economic Relations, National Institute of Securities
Markets and National Council of CII and Chairman of the CII Capital Markets Committee. He is
also a Governing Member of the Mahindra United World College of India.
Mr. C. Jayaram, Joint Managing Director

Mr. C. Jayaram, (56 years) B. A. (Economics), PGDM-IIM, Kolkata, is Joint Managing Director
of the Bank and is currently in charge of the Wealth Management Business of the Kotak Group.
He also oversees the international subsidiaries and the alternate asset management business of
the group. He has varied experience of over 34 years in many areas of finance and business and
was earlier the Managing Director of Kotak Securities Limited. He has been with the Kotak
Group for 22 years and has been instrumental in building a number of new businesses at Kotak
Group. Prior to joining the Kotak Group, he was with Overseas Sanmar Financial Ltd.
51

Mr. Dipak Gupta, Joint Managing Director

Mr. Dipak Gupta, (51 years) B.E. (Electronics), PGDM-IIM, Ahmedabad, is the Joint Managing
Director of the Bank and has over 26 years of experience in the financial services sector, 20 years
of which have been with the Kotak Group. He is responsible for Group HR, administration,
infrastructure, operations and IT. He is also responsible for asset reconstruction business of the
Bank. Mr. Dipak Gupta was responsible for leading the Kotak Groups initiatives into the
banking arena. He was the Executive Director of Kotak Mahindra Prime Limited. Prior to joining
the Kotak Group, he was with A. F. Ferguson & Company for approximately six years.
Mr. Asim Ghosh

Mr. Asim Ghosh, (64 years) is a B.Tech, IIT Delhi and MBA from the Wharton School,
University of Pennsylvania. Mr. Ghosh commenced his career in consumer goods marketing with
Procter & Gamble in the U.S. and Canada and worked subsequently with Rothmans International
as a Senior Vice President of one of Canadas major breweries. He moved to Asia in 1989 as
CEO of the Frito Lay (Pepsi Foods) start up in India. Thereafter, he was in executive positions
with Hutchison in Hong Kong and India for 16 years. He continued as the CEO of Vodafone
Essar Limited till 31st March 2010 and as a Non-Executive Director till 9th February 2011. He is
also on the Board of Husky Energy Inc., other Husky Group Companies and some Hutchison
Whampoa Group Companies.
Dr. Sudipto Mundle
52

Dr. Sudipto Mundle, (63 years) graduated from St. Stephen College, and has a Ph.D. in
Economics from the Delhi School of Economics. He was a Director in the Strategy & Policy
Department, Asian Development Bank, and also India Chief Economist at ADBs India Resident
Mission. He was appointed as a Director of the Bank with effect from 21st July 2011. He is a
Partner Director of The Governance Group, Singapore; an Emeritus Professor & Member, Board
of Governors, National Institute of Public Finance and Policy; Member, Board of Governors of
Institute of Economic Growth; Member, Monetary Policy Technical Advisory Committee,
Reserve Bank of India; Member, National Statistical Commission, Government of India; and
President of PREETI Foundation. In his earlier career Dr. Mundle was Economic Advisor in the
Ministry of Finance, Govt. of India; and Reserve Bank of India Chair Professor at the National
Institute of Public Finance and Policy. He has also served in other academic institutions
including the Indian Institute of Management, Ahmedabad and Centre for Development Studies,
Trivandrum. He was a Fulbright Scholar at Yale University, USA; and had visiting assignments
at Cambridge University, UK; Institute of Social Studies, Netherlands; and Japan Foundation,
Japan.

Mr. Prakash Apte

53

Mr. Prakash Apte, (58 years)B.E. (Mechanical), is presently the Chairman of Syngenta India
Limited, one of the leading agri business companies in India. Mr. Apte, in a career spanning over
35 years has considerable experience in various areas of management and business leadership.
During more than 15 years of very successful leadership experience in agri business, he has
gained varied knowledge in various aspects of Indian Agri Sector and has been involved with
many initiatives for technology, knowledge and skills up gradation in this sector, which is so
vital for Indias food security. He was instrumental in setting up the Syngenta Foundation India
which focuses on providing knowledge and support for adopting scientific growing systems to
resource poor farmers and enabling their access to market. He is a Director of Syngenta
Foundation India and Kotak Mahindra Old Mutual Life Insurance Limited. Mr. Apte is a member
of Audit Committee of Syngenta India Limited.
Mr. Amit Desai
Mr. Amit Desai, (53 years) B.Com, LLB, is an eminent professional with 31 years of experience.
He is also on the Board of Kotak Mahindra Trustee Company Limited and Terra DeKM India
Pvt. Ltd. Mr. Desai was a member of Audit Committee of Kotak Mahindra Trustee Company
Limited till 26th April 2013.
Mr. Narendra P. Sarda

Mr. N.P. Sarda, (66 years) B.Com, F.C.A., is a Chartered Accountant for more than 40 years. He
is a former partner of M/s. DeloitteHaskin & Sells, Chartered Accountants, the past President of

54

the Institute of Chartered Accountants of India (in 1993) and was a public representative Director
of the Stock Exchange, Mumbai (BSE).

YEAR MILESTONE
1986
1987
1990
1991

Kotak Mahindra Finance Limited starts the activity of Bill Discounting

Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market
The Auto Finance division is started
The Investment Banking Division is started. Takes over FICOM, one of India's largest

1992

financial retail marketing networks

Enters the Funds Syndication sector
Brokerage and Distribution businesses incorporated into a separate company - Kotak

1995

Securities. Investment Banking division incorporated into a separate company - Kotak

Mahindra Capital Company
The Auto Finance Business is hived off into a separate company -Kotak Mahindra
Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra

1996

takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford
vehicles. The launch of Matrix Information Services Limited marks the Group's entry

1998

into information distribution.

Enters the mutual fund market with the launch of Kotak Mahindra Asset Management

2000

Company.
Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business.
Kotak Securities launches its on-line broking site (now www.kotaksecurities.com).

2000

Commencement of private equity activity through setting up of Kotak Mahindra

2001
2001

Venture Capital Fund.

Matrix sold to Friday Corporation
Launches Insurance Services
Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company

2004
2005
2006
2006
2007
2009
2010

to do so.
Launches India Growth Fund, a private equity fund.
Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime
(formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Mahindra.
Launches a real estate fund
Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company
and Securities
Launched a Pension Fund under the New Pension System
Kotak Mahindra Bank Ltd. Opened a representative office in Dubai
55

2011
2012

Entered Ahmedabad Commodity Exchange as anchor investor

Ahmedabad Derivatives and Commodities Exchange, a Kotak anchored enterprise,
became operational as a national commodity exchange.
Kotak Mahindra Bank Ltd entered into a Business Cooperation arrangement with
CIMB Group Sdn Bhd, Malaysia.

Awards
Recent achievements
At Kotak Mahindra Group we take a client-centric view and constantly innovate to provide you
with the best of services and infrastructure. We have regularly received accolades that stand
testimony to our success in this endeavour. Some of our recent achievements are:
BANKING

ICAI Award
Excellence in Financial Reporting under Category 1 - Banking Sector for the year ending
31st March, 2011

Asiamoney
Best Local Cash Management Bank 2011

IDG India
Kotak won the CIO 100 'The Agile 100' award 2011

IDRBT
Banking Technology Excellence Awards Best Bank Award in IT Framework and
Governance Among Other Banks' - 2010
Banking Technology Award for IT Governance and Value Delivery, 2009

IR Global Rankings
Best Corporate Governance Practices - Ranked among the top 5 companies in Asia
Pacific, 2010

FinanceAsia
Best Private Bank in India, for Wealth Management business, 2010
56

Kotak Royal Signature Credit Card

Was chosen "Product of the Year" in a survey conducted by Nielsen in 2010

IBA Banking Technology Awards

Best Customer Relationship Achievement - Winner 2009 & 2010
Best overall winner, 2008
Best IT Team of the Year, 4 years in a row from 2007 to 2010
Best IT Security Policies & Practices, 2008

Euromoney
Best Private Banking Services (overall), 2010

Emerson Uptime Champion Awards

Technology Senate Emerson Uptime Championship Award in the BFSI category, 2009

WEALTH MANAGEMENT

FinanceAsia
Best Private Bank India - FinanceAsia 2011

MISCELLANEOUS

Best Local Trade Bank in India

The UK based Trade & Forfaiting Review awarded Kotak Mahindra Bank Ltd. the
Bronze Award in the category of Best Local Trade Bank in India at the TFR Awards 2012.

LACP Vision Awards 2011 for Annual Report 2011-11

Platinum Award - Best among Banking Category, APAC
Gold Award - Most Creative Report, APAC
Ranked No. 21 among Top 50 Reports, APAC
Ranked No. 87 among the World's Top 100 Annual Reports

Businessworld
'Most Valuable CEO' overall, 2011 awarded to Mr. Uday Kotak, Executive Vice
Chairman & Managing Director

CNBCTV 18
'Best Performing CFO in the Banking/Financial Services sector by CNBCTV 18 CFO
Awards 2011 awarded to Mr. Jaimin Bhatt
57

GIREM
GIREM awarded Kotak Realty Funds Group, the "Investor of the Year" Award for 2010

IBA Banking Technology Awards

Best Use of Business Intelligence - up, 2009
Best Enterprise Risk Management - Runner up, 2009

The Great Places to Work Institute, India

Best Workplaces in India, 2009

Hewitt
10th Best Employer in India, 2008, 2009 & 2010

Financial Insights Innovation Award

Best Innovation in Enterprise Security Management in the Asia Pacific Region, 2010

Frost & Sullivan

Best Passenger Vehicle Finance Company in India, 2007

CNBC TV 18
Indian Business Leader of the Year, 2009 awarded to Uday Kotak, Executive Vice
Chairman & Managing Director

INTERNATIONAL ASSET MANAGEMENT

Global Investor (Editorial Award)

Asian Asset Manager of the Year, 2010

ASSET MANAGEMENT

ICRA Mutual Fund Awards 2010

Kotak Liquid (Regular Plan) - Ranked as a Seven Star Fund for its 1 year performance
Kotak Flexi Debt Fund - Ranked as a Five Star Fund for its 1 year performance
Kotak Flexi Debt Fund - Ranked as a Five Star Fund for its 3 year performance
Kotak 30 - Ranked as a Five Star Fund for its 3 year performance

INVESTMENT BANKING

FinanceAsia
Best Investment Bank in India, 2011
58

Best Equity House in India, 2011

Best Broker in India, 2011

Asiamoney
Best Domestic Equity House, 2011
Best Local Brokerage in the Asiamoney Brokers Poll 2011

Global Finance
Best Investment Bank in India, 2011

Euromoney Real Estate Poll

Best Bank for Equity Finance in India, 2011

Asset Asian Awards

Best Domestic Investment Bank, 2011

FinanceAsia Country Awards for Achievement

Best Investment Bank in India, 2007, 2008, 2009, 2010 & 2011
Best Equity House in India, 2009 & 2011

Asiamoney Best Domestic Bank Awards

Best Domestic Equity House, 2009, 2010 & 2011

IFR Asia
India Equity House of the Year, 2009

Global Finance
Best Investment Bank in India, 2009, 2010 & 2011

Asset Asian Awards

Best Domestic Investment Bank, 2007, 2008, 2009 & 2010

SECURITIES

FinanceAsia
Best Broker in India - 2011

CNBC Financial Advisor Awards

Best Performing Equity Broker, 2009 & 2010

Asiamoney Brokers Poll

Best Local Brokerage, 2007, 2008, 2009 & 2010
Best Analyst in India Sanjeev Prasad, 2006, 2007, 2008, 2009 & 2010
59

FinanceAsia Country Awards for Achievement

Best Broker in India, 2007, 2010 & 2011

Thomson Extel Surveys Awards

India's Leading Equity House, 2008

SuperBrands Council of India

Business Superbrand India, 2009

60

CHAPTER IV
DATA ANALYSIS & INTERPRETATION

61

NAV History Historical value for a period of

5-Nov-2013 to 28-Jan-2014
SBI MUTUAL FUND
Magnum Equity Fund Growth & Dividend
DATE

DIVIDEND

GROWTH

05-Nov-2013

42.14

42.17

12-Nov-2013

35.57

40.47

19-Nov-2013

37.84

43.06

26-Nov-2013

38.33

43.61

03-Dec-2013

39.31

44.73

10-Dec-2013

40.06

45.58

17-Dec-2013

38.80

44.15

24-Dec-2013

39.68

45.15

31-Dec-2013

41.52

47.24

07-Jan-2014

42.51

48.36

14-Jan-2014

41.46

47.17

21-Jan-2014

33.74

43.24

28-Jan-2014

34.89

39.70

1SBI MAGNUM EQUITY FUND Dividend & Growth

62

INTERPRETATION:

The above graph indicates that the Equity Fund - Growth and Dividend from the 1st
week of Dec is almost performing same but in 2nd week of Jan the performance of
Growth has drastically changed when compared to Dividends, and again the
performance showed is similar in rest of the weeks. Because of declaring Dividends
frequently, the performance of Dividend always shows less when compared with
others.

NAV History Historical value for a period of

5-Nov-2013 to 28-Jan-2014
63

UTI MUTUL FUND

UTI Equity Fund Growth & Dividend
DATE
DIVIDEND GROWTH
05-Nov-2013
41.42
44.89
12-Nov-2013
39.88
43.22
19-Nov-2013
42.09
45.60
26-Nov-2013
40.80
44.21
03-Dec-2013
41.63
45.11
10-Dec-2013
41.30
45.20
17-Dec-2013
41.85
45.36
24-Dec-2013
42.73
46.31
31-Dec-2013
44.30
48.02
07-Jan-2014
45.68
49.51
14-Jan-2014
44.91
48.68
21-Jan-2014
38.30
41.50
28-Jan-2014
39.10
42.39

UTI EQUITY FUND Dividend & Growth

64

INTERPRETATION:

From the above graph we can observe that Growth is showing more performance than
Dividends. In the month of Feb we can see that Growth has fallen down in the last
week and raised in first week and the Dividend has also raised in the 1st week of Feb.
Because of declaring Dividends frequently, the performance of Dividend always
shows less when compared with others

65

NAV History Historical value for a period of

5-Nov-2013 to 28-Jan-2014
HSBC MUTUAL FUND
HSBC Equity Fund Growth & Dividend
DATE
DIVIDEND

GROWTH

05-Nov-2013

44.25

106.75

12-Nov-2013

42.82

103.31

19-Nov-2013
26-Nov-2013
03-Dec-2013

45.02
43.96
45.27

108.62
106.06
109.22

10-Dec-2013

46.10

111.23

17-Dec-2013

45.20

109.06

24-Dec-2013

46.12

111.27

31-Dec-2013

47.68

114.92

07-Jan-2014

48.95

118.11

14-Jan-2014

48.40

116.78

21-Jan-2014

41.49

100.10

28-Jan-2014

42.67

102.96

66

HSBC EQUITY FUND Dividend & Growth

INTERPRETATION:

The above graph there is little fluctuations in the values of Dividends and Growth.
But here we can see that Growth is again performing well. It showed a less
performance in the last week and Dividend showed similar performance in all the
weeks. Because of declaring Dividends frequently, the performance of Dividend
always shows less when compared with others.

NAV History Historical value for a period of

5-Nov-2013 to 28-Jan-2014
ICICI PRUDENTIAL MUTUAL FUND
ICICI EMERGING STAR FUND Growth & Dividend
DATE
DIVIDEND
GROWTH
05-Nov-2013

24.13

36.87

12-Nov-2013
19-Nov-2013

23.63
25.86

36.10
39.51

26-Nov-2013
03-Dec-2013

25.14
26.05

38.42
39.80

10-Dec-2013

27.85

42.56

17-Dec-2013

28.07

41.95

24-Dec-2013

28.06

42.88

31-Dec-2013
07-Jan-2014
14-Jan-2014
21-Jan-2014
28-Jan-2014

30.19
31.14
29.62 67
23.25
23.55

46.12
47.58
45.26
38.30
38.80

ICICI

ICICI EQUITY FUND Dividend & Growth

68

INTERPRETATION:

From the above graph it indicates that the Growth and Dividend are performing
similar but in the month of Feb both of them have declined .It had drastically
fallen in the month of the Feb. From the 1st week of Dec to 1st week of Feb
both have increased and the performance showed is well. Because of declaring
Dividends frequently, the performance of Dividend always shows less when
compared with others.

NAV History Historical value for a period of

ABN AMRO MUTUAL FUND
69

ABN AMRO Equity Fund Growth & Dividend

DATE
DIVIDEND
GROWTH
05-Nov-2013
22.48
41.10
12-Nov-2013
21.67
39.62
19-Nov-2013
23.00
42.04
26-Nov-2013
22.24
40.64
03-Dec-2013
23.04
42.12
10-Dec-2013
23.78
43.46
17-Dec-2013
23.26
42.52
24-Dec-2013
17.61
43.46
31-Dec-2013
18.54
45.76
07-Jan-2014
19.33
47.71
14-Jan-2014
18.75
46.28
21-Jan-2014
15.20
37.52
28-Jan-2014
15.55
38.41

ABN AMRO EQUITY FUND Dividend & Growth

70

INTERPRETATION:

In this you can see that right from the starting month Growth is showing good
performance compare to Dividends. There are some fluctuations in growth, but
in dividends the values shown are almost constant. Because of declaring
Dividends frequently, the performance of Dividend always shows less when
compared with others.

71

NAV History Historical NAV for a Period from 1-Dec-2013 to 28-Jan-2014

NATIONAL BANKS

COPERATE BANKS

SBI
Dividen

DATE

Growth

UTI
Dividend

HSBC
Growth

Dividend

ICICI
Growth

Dividend

ABN AMRO
Growth

Dividend

Growth

5/11/2013
42.14

42.17

41.42

44.89

44.25

106.75

24.13

36.87

22.48

41.10

35.57

40.47

39.88

43.22

42.82

103.31

23.63

36.10

21.67

39.62

37.84

43.06

42.08

45.60

45.02

108.62

25.86

39.51

23.00

42.04

38.33

43.61

40.80

44.21

43.96

106.06

25.14

38.42

22.24

40.64

39.31

44.73

41.63

45.11

45.27

109.22

26.05

39.80

23.04

42.12

40.06

45.58

41.30

45.20

46.10

111.23

27.85

42.56

23.78

43.46

38.80

44.15

41.85

45.36

45.20

109.06

28.07

41.95

23.26

42.52

39.68

45.15

42.73

46.31

46.12

111.27

28.06

42.88

17.61

43.46

41.52

47.24

44.30

48.02

47.68

114.92

30.19

46.12

18.54

45.76

42.51

48.36

45.68

49.51

48.95

118.11

31.14

47.58

19.33

47.71

41.46

47.17

44.91

48.68

48.40

116.78

29.62

45.26

18.75

46.28

33.74

43.24

38.30

41.50

41.49

100.10

23.25

38.30

15.20

37.52

34.89

39.70

39.10

42.39

42.67

102.96

23.55

38.80

15.55

38.41

12/11/2013
19/11/2013
26/11/2013
3/12/2013
10/12/2013
17/12/2013
24/12/2013
31/12/2013
7/1/2014
14/01/2014

21/01/2014
28/01/2014

INTERPETATION
Dividend of ABN AMRO is less compare to the dividend of HSBC.
HSBC growth is large compared to SBI growth.

PERFORMANCE CHART OF DIVEDEND AND GROUTH

72

INTERPRETATION:

The above graph clearly indicates the overall performance of Equity Fund-Dividend
and Growth of all the banks taken into consideration. In SBI, from the 1st week of
Dec both are almost performing same but in 2nd week of Jan the performance of
Growth has drastically changed when compared to Dividends, and again the
performance showed is similar in rest of the weeks. In UTI, we can observe that
Growth is showing more performance than Dividends. In the month of Feb we can
see that Growth has fallen down in the last week and raised in first week and the
Dividend has also raised in the 1st week of Feb. In HSBC, there are little fluctuations
in the values of Dividends and Growth. But here we can see that Growth is again
performing well. It showed a less performance in the last week and Dividend showed
similar performance in all the weeks. In ICICI it indicates that the Growth and
Dividend are performing similar but in the month of Feb both of them have declined
.It had drastically fallen in the month of the Feb. From the 1st week of Dec to 1st
week of Feb both have increased and the performance showed is well. In HDFC, right
from the starting month Growth is showing good performance compare to Dividends.
There are some fluctuations in Growth, but in dividends the values shown are almost
constant. Because of declaring Dividends frequently, the performance of Dividend
always shows less when compared with others.
From the above graph it clearly indicates that the HDFC bank is showing excellent
performance when compared to other Banks. The Corporate Banking sectors are
showing good performance than nationalized Banking sectors.

73

CHAPTER-V
FINDING & SUGGESTIONS

74

FINDINGS:
1. From the table 1 (i.e.) SBI bank we can see that both Dividend and Growth are
similar to each other .where as growth has been increased in the 2 nd week of
Jan with a value of 29.64%.
2. In UTI bank table we can see that growth has performed well when compared
to dividends. There was a slight fluctuation in the values of dividends and
growth.
3. When we see corporate banks (i e) HDFC the performance of Growth is very
good when compared to Dividends. This bank has been shown a positive
performance when compared to other banks were it is good for investing in this
bank.
4. When we see ICICI bank both the Dividends and Growth are equal or similar
to each other there is no change in them. In the month of Feb it raised in the
first week but it had a drastic fall in all the following weeks.
5. When we see HSBC bank here again growth has been performed well when we
compare to dividends. This increase in the value has been reached to certain
extent and it has been declined in last week of Feb.

75

SUGGESTIONS:
1. If we compare Nationalized and Corporate banks we can see that corporate
banks have performed well during these 3 months.
2. Nationalized banks performed well up to certain extent and it values were
declining further. This decline may cause due to declaration of any dividends in
those banks and so it was showing low values.
3. In Nationalized banks we can see internally in Dividends SBI bank has
performed well and if wee see Growth UTI bank has performed well.
4. In corporate banks we can see internally in Dividends and Growth HDFC bank
has performed relatively well when compare to other banks. Both the values
are high in this bank. It had reached to a maximum height.
5. So its better for investors to invest in corporate sectors rather than investing in
Nationalized sector which gives them maximum number of return for their
investment.

76

CONCLUSION:
1. Corporate sectors provide good services if we see through customer point of
view. They are very caring to their customers.
2. With the increase in infrastructure, technology, introduction of various schemes
and services, online trading its clear that any one wants to invest will surely
invest in corporate banks.
3. Now u can see most of them are opening their account in corporate banks
instead of nationalized banks this is due to extra benefit & services which they
are getting from that sector.

77

TIPS FOR MUTUAL FUND INVESTORS:

These are the few exact as regards investment in MFs taken from the book with
Marketing for the 90s given by the Wall Street. Check your letter of offer of funds
prospectus to guard yourselves against any hidden fees.
Ensue that the funds track record is the same as that of the current management.
Avoid mutual funds that charge exit fees at the back end door (fees charged by MF
from the unit holders at the time to redemption of the units).
Buy the funds with no sale charged loads. (A load is a charge by the fund when
investor buys it is called the entry load or when he sells is called the exit load).
If the charge is heavy by the mutual fund to discourage the investors from taking
short positions in the funds units because too many investors sell their units at a time
then the fund has to sell its holdings to meet the obligations that yield into vital of the
fines overall return. Most short funds like guilt funds (these are the funds which can
be invested only in government securities and treasury bills thus the investors have an
opportunity to buy risk free securities). These funds yield a better return than a money
market fund. It is good for the investors who desire safety of principal amount.
Money market funds (these funds in views in money market instruments such as
treasury bills, govt.bonds, certificates of bank deposits, commercial deposits). They
charge no loads, however loads are limited by SEBI to 7%.
Check funds performance in bear as well as the bull market.
Guard fund risk by checking its portfolio for diversification volatility.

78

BIBLIOGRAPHY

Books References:
1. Security Analysis and Portfolio Management

(Fischer & Jordan)

2. Investment Decisions

(V.K. Bhalla)
3. Security Analysis & Portfolio Management

(Robbins)

WEBSITES
www.mutualfundsindia.com
www.kotak.com
www.sbimf.com
www.uti.com
www.moneycontrol.com
www.amfiindia.com
www.nse-india.com

79