Sinhgad Management Institute, Pune

Project Report On

“Potential and Competition Analysis in PSU (Public Sector

Unit) Channel for Third Party Products (Mutual Fund)”

With

Birla Sun Life Asset Management Company

Submitted By:-
Avinash Kr Singh
Roll No.:- 07
Course: - PGDM
(Finance & Mkt)
Batch 2008-2010
 ACKNOWLEDEMENT

I would like to thank Mr.Kaustubh Sinde (PSU channel head) for giving me an
opportunity to undergo training in the field of Investment Industry. Without him my
project would not have been completed, throughout my project he guided me, they
taught me the process of working, gave all the information I required. He never makes
me feel different from them rather superior and a part of Birla Sun Life Assets
Management Company and gave me such friendly environment.

I also like to thank Mr.Pradumya, Mr.Mahesh and Mrs.Pooja (PSU channel) who
has given his and her valuable and important guidance and they were extremely
supportive and cooperative throughout my training period.

This acknowledgement would be really incomplete if I fail to express my gratitude to

Prof. Gautam Phirwani and Prof. Vijay Rao, for his belief in my abilities. They
always encouraged me and motivate me to give my sincere efforts.

In the last I express my gratitude to Birla Sun Life Asset Management Company’s
staff for his incredible and loving support and advice throughout my project and belief
in my abilities to meet their expectations.
 EXECUTIVE SUMMARY

This Project has been undertaken “Potential and Competition Analysis in PSU
(Public Sector Unit) Channel for Third Party Products (Mutual Fund)” with Birla Sun
Life Asset Management Company. Through this project I came to know about the
various products of the company and also know about its competitors in investment
sector. To observe discipline in Investor’s asset allocation by periodic readjustment as
per the suggested option provided by company is the main and basic objective of this
project.

In this project I was assigned a job to sit in the public banks and sell mutual fund
plans of Birla Sun Life to the vulnerable customer as well as non customer of the bank
through branch manager and third party officer. I used to identify the need of the
customer and according to their need I suggested them the appropriate scheme to
them.

My another very important work was ‘Channel Development’ in which I sell the
mutual fund plans and build an strong relationship with bank officers. This
srelationship helps to create a brand image in front of banks. These banks are the
distributors of our company and through our company’s image; bank officers gave the
preferences to Birla’s products and sell birla’s mutual fund in front of our competitor.

The findings of the project were to develop selling skills in institutions and know
customer’s behavior in various age and sex groups. Through this project I understood
the investment policies in various sectors and also the current market condition of
competitors. I also identify the effects of global meltdown on Indian investors to
invest the money and their investing areas.
NOMENCLATURE AND ABBREVIATION

1. Sponsor Promoter of the Mutual fund

2. Trustee Responsible for investor in Mutual fund

3. AMC Asset Management Company

4. Large Cap Company having a market capitalization

Of Rs. 3500 cr and above

5. Mid Cap Company having a market capitalization

Of Rs. 2000 cr

6. NAV Net Asset Value

7. Repurchase Price It is the price at which a close-ended

Scheme repurchases its unit.

8. Redemption Price it is the price at which open-ended

Schemes repurchases their units and

Closed ended schemes redeem their

Units on maturity

9. Entry load the cost charged by the mutual fund

Companies to the new investor when

They purchase M.F. units

10. Exit load the amount charged by M.F. companies

When investor sell their units before Maturity

 TABLE OF CONTENTS

��.1 Introduction of The Selected Topic

��.2 Basic Objective of The Project
��.3 Scope of The Project
��.4 Limitations of The Project
��.5 Research Methodology
��.6 Basic Information About The Company
��.7 Theoretical Background and Data analysis
��.8 Observations And Conclusions
��.9 Required Recommendations
��.10 Bibliography And References
��.11 Annexure
��.12 Learning Through This Project
 Introduction of the Topic:-
“Potential and Competition Analysis in PSU (Public
Sector Unit) Channel for Third Party Products (Mutual
Fund)”

From the starting of my Summers Internship, I have been selected for the PSU
channel to overlook the third party products (mutual fund) in the various banks. I have
been taught by my senior about all the products and selling skills. From the starting of
first day of the bank I observed that Bank is a very huge place to sell the third party
products (mutual fund). It has a huge potential both for bank products and third party
products, so seeing this, each and every competitor company ready to grill the
opportunity to sell the mutual fund and insurance in the banks. In this way, I found
that this is a very big place to work and this place has huge potential with a lot of
competitors. After completed my Internship from Birla sun Life Asset Management
Company, I chose the topic in which I could show the total potential and total
competition analysis which I have seen during my summer’s internship. In my topic
selection, I am totally focus upon few things –

��.1 cover all the untapped and tapped areas for the mutual fund in the banks
��.2 find out the total market share of Birla’s products in the banks
��.3 find out the total fund performance and investor’s preferences
��.4 find out the importance of that particular PSU among its investors and
account holder
��.5 find out the total number of competitors and their total shares in the
banks

Total Potential Analysis of Mutual Funds in Bank:-

In the total Potential Analysis of banks, banks shows that the total capacity of the
Banks products and total Third party products. They are covering the tapped and
untapped areas of the banks. Bank has a very huge place for investment. The Prior
bank products are Saving Account, Fixed Deposit, and Recurring Deposit etc. Bank
has a huge investor list so through his capacity banks are able to invest the money in
third party products. If we point out the total percentage of investment, we find out-
Bank products
Fixed Deposit 35%
Saving Account 50%
Recurring Deposit15%

Third party Products

mutual 65%
Insurance 35%

In this graph we calculate that, if in the banks (side 1) fixed deposit (blue), saving
account (purple) and recurring deposite (green) cover the 100% of the investment than
for (side 2), third party products as a mutual fund (yellow) it should be 65% and for
Insurance (red) it should 35%. Its mean bank has the same and balanced opportunity
for bank products as well as third party products. This opportunity is depend upon the
offer, benefit of the investor, investment security and need or demand of the investor.
Total Competition Analysis of Mutual Funds in Bank:-

In the total competitor analysis of banks, banks shows the total number of Asset
management companies who has been tied up from the banks and selling their
products. When I was sitting at the banks I find out that there are five big companies
in pune who sell their products as a market leader so suppose these are the only
companies who sell their products so we will find out that -

Reliance28%
HDFC 21%
ICICI 11%
Kotak 11%
Birla 29%

Through this graph we will find out that Birla Sun Life and Reliance are the market
leader with 28% and 29% and than HDFC, ICICI, Kotak are the runners. In this
competition analysis we get that Public Sector Unit has a huge opportunity as an
investment. It is depend upon the companies that how they offer the exit fund, how
they offer new fund, and they make their investor’s asset allocation. If they
successfully do all the things, they will attract the investors according to the fund
requirement.
Basic Objective of the Project

The project was undertaken to make people aware about the various investment which
are beneficial to them. The primary objective of the summer’s report contains-to learn
about the investment sector, in this learning part I came to know that the various field
where I can put my money during meltdown period. The other main thing was to give
financial advice to the client, in this important part I provide the knowledge to my
client. This is a very important point because in this point I gave all the market and
product knowledge to my client so according to the investor’s need and demand I help
him to select the fund to invest the money. Another point is to develop the selling skill
in front of the competitors in the market. Selling skills help me to understand the need
of the investors and give me full support to crack them. And the last but not the least
point is to enhance communication skill in front of the investors and the market, this is
a very important and necessary part related to the selling, if I fail to explain the fund
plans and fail to explain all the benefit part to the investment, it never help me to sell
the product. In the last I find out there are two types of objectives in my summers
project. I am able to divide them into two parts one is basic or primary objectives and
secondary objectives. Basic or primary objectives cover the whole project and
summary of the project and secondary objectives cover the extra things which I learn
during the internship. During my summer’s internship I analyzed many thing and
learnt from those things so according to those thing I prepare my objectives and
according to the preferences I able to divide them into basic or primary and secondary
objectives.

• Basic and Primary objectives of the project -

a. Institutional selling- The basic objective of my summer’s internship is
to sell the mutual fund through PSU Channel. I have done Institutional
selling through three banks and their seven branches. This kind of
Business to Business selling helps me to improve my selling skills and
build a strong relationship.
b. Channel Development- Channel Development is another basic
objective of my summer internship. In PSU channel I worked with the
Branch Manager and Third party officer of the bank and sold the mutual
fund through them. In channel development we are trying to build a
relationship with bank and bank officer and forced him to sell third party
products.
c. Situation Analysis- Situation Analysis is a very important and necessary
part of the project. In situation analysis we are conducting the market
analysis for the investment through our investors. When I was doing my
 internship that time market became volatile and that was the time of
recession so that time situation analysis helps me to know the investor’s
point of view for investment.

• Secondary objectives of the project-

a. To understand the procedure of working & getting the experience of
working in the company- As a summer trainee, we were getting a core
experience of working in an organization and feel the professional
culture.
b. To make people aware of Mutual fund its various schemes and
benefit of it- we were providing the product knowledge and market
analysis to our investor.
c. To learn & observe all the activities done in Marketing Department-
during our summer’s internship we were getting the selling skills and
learn the marketing activities.
d. To notice the criteria of working- In the office, we knew the various
criteria of working.
e. To analyze and innovate better idea of working- at the starting of the
internship, our senior told the way of work but time to time it is
necessary to generate new idea of work.
f. To find loopholes if any and present solution- during our work, if we
found any loopholes so we were trying to make it right.
g. To see the importance of Co-operation between the department and
the way they work- to make the co-operation between the department
and the office employees are a very important thing.

Scope of the Project

Mutual fund works under various channels. I did my project under PSU Channel
where I am working with banks. In PSU channel, there are only one PSU Head and
three other employees. Those employees work under the PSU head. I am allotted as a
summer trainee and I have to report to my mentor, who was one of them among the
three employees. At end of the week our PSU Head conducted a meeting and each &
every body related to the PSU channel with summer trainees have to submit a report
to him. In this way, my scope of work is only related to the PSU channel in the office.

In PSU channel, my work was to sell the third party product

(mutual fund) in the banks. Another work is to channel development through strong
relationship with our distributors. Banks are the distributors for PSU channel so my
project as well as summer internship related to the banks. In this way, my scope of
work is only related to the banks only.

In the asset management company works depend upon the relationship

between the company and their distributor channel. Distributor channel play a very
important role to sell the products of Asset Management Company. In this way the
scope of working in Asset Management Company is limited and works around the
distributors. Second important thing is office culture for different channel is totally
different. Those who work in the PSU channel, they looking different distributors. In
this way scope is still became limited. In the AMC scope is limited but it has a huge
potential with a lot of advantages. Scope of the project widely opens because-

• Diversification: The best mutual funds design their portfolios so individual

investments will react differently to the same economic conditions. For
example, economic conditions like a rise in interest rates may cause certain
securities in a diversified portfolio to decrease in value. Other securities in the
portfolio will respond to the same economic conditions by increasing in value.
When a portfolio is balanced in this way, the value of the overall portfolio
should gradually increase over time, even if some securities lose value.
• Regulatory oversight: Mutual funds are subject to many government
regulations that protect investors from fraud.
• Low cost: Mutual fund expenses are often no more than 1.5 percent of your
investment. Expenses for Index Funds are less than that, because index funds
are not actively managed. Instead, they automatically buy stock in companies
that are listed on a specific index.
• Transparency: Mutual Fund schemes are said to be Transparent because
they show the clear allocation of Funds to Investors.
 Limitations of the Project

As a summer’s trainee, my work is related to the PSU channel. PSU channel is part of
those channels which was working for asset Management Company so my work was
only limited to the PSU channel. This is the main limitation of the project that I m
only working for PSU Channel. Second important thing is that I am only seeing the
banks of pune region. I was only working for Bank of Baroda and UCO Bank and
working in the branches like Deccan Jymkhana, and Karve Road. So in this way, the
limitation of my project is limited and under the pune region. For this type of
limitation, I think there are some drawbacks, which are-

• No Guarantees: No investment is risk free. If the entire stock market declines

in value, the value of mutual funds shares will go down as well, no matter how
balanced the portfolio. Investors encounter fewer risks when they invest in
mutual funds than when they buy and sell stocks on their own. However,
anyone who invests through a mutual fund runs the risk of losing money.
• Management risk: When you invest in a mutual fund, you depend on the
fund's manager to make the right decisions regarding the fund's portfolio. If the
manager does not perform as well as you had hoped, you might not make as
much money on your investment.
• Fees and commissions: All funds charge administrative fees to cover their
day-to-day expenses. Some funds also charge sales commissions or "loads" to
compensate brokers, financial consultants, or financial planners. Even if you
don't use a broker or other financial adviser, you will pay a sales commission if
you buy shares in a Load Fund.
• Taxes: During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If your fund
makes a profit on its sales, you will pay taxes on the income you receive, even
if you reinvest the money you made.

So in this way we were seeing that there are big drawbacks in the project. These
drawbacks are the biggest boundary for Asset Management Company as well as for
the project. As a summer’s trainee, we worked under these boundaries.
 Research Methodology

During the summer’s Internship, I did my research work through a Questionnaire. In

my questionnaire I put question regarding investor’s income and current market
situation. This type of study help me to know that the perception of investor and I
know that if the time is going bad so where the investor put their money. So the
sample of my project is selected through a questionnaire. Questionnaire was
conducted with the name of “INVESTMENT PLANNING QUESTIONNAIRE” in
which I put five questions. Each question is related to a specific point of view. It is a
close ended questionnaire. This questionnaire was filled by Two Hundred investors.
The first question is related to the investor’s income and in the question I gave four
option which is start from the below 150000 to above 500000.it show me the
investor’s potentiality to invest the money. Second question is related to the
investment, I sit in the banks where investor invest in banks products so my question
is if they have saving money and want to invest so which field they like to invest?
This question is very important. My third question is related to the investment concern
of investor. In this question I want to know that what investor think before invest the
money in the market. My fourth question is related to the risk and I want to know the
aggression of the investor. If investor is very aggressive and want to take risk than he
invest in Equity funds but if investor is offensive than he invest in debt funds. There
were only three type of risk in investment which are- Low risk, Moderate risk and
High risk. This question is very close to the market situation analysis. My last but not
the least question is about the future investment means if market is going good and
investor can get good return so in near future what are the areas where investor invest
the money. This question is also very near of market situation analysis. In the last of
my

Questionnaire, I collect the personal information of the investor. Through this detail I
am able to divide my questionnaire into various parts. Various aspects of my
questionnaire are-

Relationship between age group and investment in mutual fund-

Age investment percentage in mutual fund

above 25 38%
26-35 26%
36-55 14%
56-70 10%
above 71 12%

��.2 Relationship between sex and investment in mutual fund -

��.3 Relationship between age and their fund preferences-

age fund preferencespercentage

above 25Equity Fund 28%
26-35 Balance Fund 18%
36-55 Balance Fund 20%
56-70 Debt Fund 22%
above 71Debt Fund 12%

��.4 Relationship between age and risk bearer in mutual fund-

age risk bearer%

above 25low 28%
26-35 high 22%
36-55 Moderate 21%
56-70 low 18%
above 71low 11%

a
So in this way we can identify a relationship between investor and their
investment. In the last we can identify the market situation analysis and investor
saving fund through this questionnaire. The scales for questionnaire are age group,
income, sex, risk and investor’s saving but these scales are depend upon the
market condition and company policy. Companies play a very important role for
questionnaire.

INVESTMENT PLANNING QUESTIONNAIRE

��.1 Which Income group you fall in?

Below 1, 50,000 1, 50,000—3, 00,000

3, 00,000 – 5, 00,000 5, 00,000 and above

��.2 In which type of Investment Instrument do you invest more?

Equity/Mutual Fund Fixed Deposit

Insurance Others, Please

specify

What is your area of concern for Investments?

Return Tax savings

Safety and Security Others, Please specify

��.4 How much Risk are you ready to bear?

High Risk Moderate Risk

Low Risk
 ��.5 Which Investment Option would you prefer for your Future?

Equity/Mutual Fund Fixed Deposit

Insurance Others, Please

specify

PERSONAL DETAILS

NAME:

AGE:

MARITIAL STATUS: MARRIED SINGLE

OCCUPATION:

CONTACT NO.:

E-MAIL ID:

Information about the Company

Birla Sun Life Asset Management Company Limited (BSLAMC), the investment
managers of birla mutual fund, is a joint venture between the Aditya Birla Group and
the Sun Life Financial Services of Canada. The joint venture brings together the
Aditya Birla group’s experience in the Indian market and Sun Life’s global
experience. Since inception Birla Sun Life Mutual Fund (BSLMF) has emerged as
one of India’s leading mutual funds. Currently it has over Rs. 25,000 crores of assets
under management and an investor base of over 12 lakhs. It offers a range of
comprehensive investment options, which include diversified and sector specific
equity schemes balanced and monthly income plans, and wide range of debt and
treasury products, and offshore funds. It currently has a range of 64 investment
schemes including 2 offshore funds, designed to cater of every need of the investor.
BSLAMC also offers portfolio advisory services for high net worth investors, which
is a rapidly growing business segment for the company.

BSLAMC is India’s first asset management

company to be avoided the ISO 9001:2000 certification by DNV Netherlands- a proof
of its relentless commitment to high quality in design, development, sales and
marketing of investment products, its investment management and its customer
service. It has been recognized both nationally and internationally with coveted
awards. Since the launch of its schemes in 1995, BSLMF has been the catalyst
towards growth of the private sector’s asset management business and has had a lot of
cutting edge innovations to its credit. BSLAMC follows a conservative long-term
approach to investment, which is based on identifying companies that have good
credit- worthiness and are fundamentally strong. It places a lot of emphasis on quality
of management and risk control. This is done through extensive analysis that includes
factory visits and field research. It has one of the largest teams of research analysts in
the industry. It has a nationwide presence in 105 locations around India with 35 full-
fledged branches. BSLAMC strives to provide transparent, ethical and research based
investments and wealth management services.

Board of Directors-
Mr. Kumar Mangalam Birla, Chairman

Mr. Donald Stewart

Mr. Ashok Goenka

Mr. N.N.Jambusaria

Mr. Ajay Srinivasan

Mr.S.S.Raman

Mr. N.C. Singhal

Mr. Gary Comerford, alternate to Mr. Donald Stewart

Mr. Stephan Rajotte

Vision Statement- “To be a premium global conglomerate with a clear focus

on each business.”

Mission Statement- “To deliver superior value to our customers, shareholders,

employees and society at large.”

Values of the Company-

• Integrity
• Commitment
• Passion
• Seamlessness
• Speed

Globally The Group is:-

��.1 A metals powerhouse, among the world’s most cost efficient aluminum
and copper producers.
��.2 No.1 in viscose staple fibre
��.3 The 4th largest producer of insulators
��.4 The 4th producer of carbon black
��.5 Among the best energy efficient fertilizer plants
In India, the Group is:-
��.1 A premier branded garments player
��.2 The 2nd largest player in cement
��.3 The 2nd largest in the chlor-alkali sector
��.4 Among the top 5 mobile telephone companies
��.5 A leading player in Life Insurance and Asset Management

Beyond Business:-
��.1 works in 3700 villages
��.2 runs 45 Schools and 18 Hospitals

Theoretical Background and Data Analysis

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 appreciations realized
are shared by its unit holders in proportion to the number of units owned by them.
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. 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 and it clarifies the concept of mutual fund.
Mutual funds process and structure is very important and it helps a trainee to
understand the market as well as investor’s point of view. Mutual fund’s process is
very simple. It start from the investor and reached the fund manager where fund
manager invest the money in securities which generate returns. So process is-

STRUCTURE OF MUTUAL FUND:-

Sponsor is the person who acting alone or in combination with another body corporate
establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of
the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. The
Sponsor is not responsible or liable for any loss or shortfall resulting from the
operation of the Schemes beyond the initial contribution made by it towards setting up
of the mutual fund. The Mutual Fund is constituted as a trust in accordance with the
provisions of the Indian Trusts Act, 1882 by the Sponsor. The Trust deed is registered
under the Indian Registration Act, 1908.Trustee is usually a company (corporate
body) or a board of Trustees (body of individuals). The main responsibility of the
Trustee is to safeguard the interest of the unit holders and inter alia ensure that the
AMC functions in the interest of investors and in accordance with the securities and
exchange Board of India ( Mutual Funds) Regulations, 1996, the provisions of the
Trust deed and the officer Documents of the respective Schemes. At least 2/3rd
directors of the Trustee are independent directors who are not associated with the
securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the
provisions of the Trust Deed and the Offer Documents of the respective Schemes. At
least 2/3rd directors of the Trustee are independent directors who are not associated
with the sponsor in any manner. The AMC is appointed by the Trustee as the
investment Manager of the Mutual fund .The AMC is required to be approved by the
Securities and Exchange Board of India (SEBI) to act as an asset management
company of the Mutual Fund. At least 50% of the directors of the AMC are
independent directors who are not associated with the Sponsor in any manner. The
AMC are independent directors who are not associated with the sponsor in any
manner. The AMC must have a net worth of at least 10 crore at all times. The AMC if
so authorized by the trust deed appoints the Registrar and Transfer agent to the mutual
fund. The Registrar processes the application form, redemption request and dispatches
account statement to the unit holders. The Registrar and Transfer agent also handles
communication with investors and updates investor’s records.

TYPES OF MUTUAL FUND:-

Wide varieties of Mutual Fund Schemes exist to cater to the needs such as
financial position, risk tolerance and return expectations etc. The table below gives an
overview into the existing types of schemes in the Industry.
AGGRESSIVE GROWTH FUNDS:-

These funds seek to provide maximum growth of capital with secondary emphasis on
dividend or interest income. They invest in common stocks with a high potential for
rapid growth and capital appreciation. Aggressive growth funds are suitable for those
investors who can afford to assume the risk of potential loss in value of their
investment in the hope of achieving substantial and rapid gains. They are not suitable
for investors who must conserve their principal or who must maximize their current
income.

GROWTH FUNDS:-

Like aggressive growth funds, growth fund generally invests in stocks for growth
rather than income. They are considered more conservative in their approach because
they usually invest in established companies to achieve long-term growth. Growth
fund provides low current income but the investor principal is more stable then it
would be in an aggressive growth fund. While the growth potential may be less over
the short term, many growth funds have superior long-term performance records.
These funds are suitable for growth oriented investors but not investors who are
unable to assume risk or who are dependent on maximizing current income from there
investments.
GROWTH AND INCOME FUNDS:-

Growth and income funds seek long-term growth of capital as well as current income.
The investments strategies use to reach these goals vary among funds. Growth and
income funds have low to moderate stability of principal and moderate potential for
current income and growth. They are suitable for investors who can assume some risk
to achieve growth of capital but want to maintain a moderate level of current income.

FIXED INCOME FUNDS:-

The goal of fixed income fund is to provide high current income consistent with the
level of capital. Growth of capital is of secondary importance.

Fixed income funds offer a higher level of current income than money market funds,
but a lower stability of principal. Fixed income funds are suitable for investors who
want to maximize current income and who can assume a degree of capital risk in
order to do so.

EQUITY FUNDS:-

Funds that invest in stocks represent the largest category of mutual fund. Generally
the investment objective of this class of fund is long-term capital growth with some
income. There are however many type of equity funds.

BALANCED FUNDS:-
The Balanced funds aims to provide both growth and income. These funds invest in
both shares and fixed income securities in the proportion indicated in their offer
documents. It is an idea for investors who are looking for the combinations of income
and moderate growth.

MONEY MARKET FUNDS/ LIQUID FUNDS:-

For the cautious investors these funds provide a very high stability of principal while
seeking a moderate to high current income. They invest in highly liquid; virtually risk
free, short-term debt securities of agencies of the Indian government, banks and
corporation and treasury bills. Because of their short-term investments, money market
mutual funds are able to keep a virtually constant unit price; only the yield fluctuates.
Money market funds are suitable for those investors who want high stability of
principal and current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS:-

These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The funds enable investor
to diversify holding among many companies within an industry, a more conservative
approach than investing directly in one particular company. Sector funds offer an
opportunity for sharp capital gains in cases where the fund’s industry is “in favor” but
also entail the risk of capital losses when the industry is out of Favor. While sectors
funds restrict holdings to a particular industry, other specialty funds such as index
funds gives investors a broadly diversified portfolio and attempt to mirror the
performance of various market averages.
OPEN ENDED SCHEMES:-

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell
units at NAV- related prices from and to the mutual fund on any business day. These
schemes have unlimited capitalization, open-ended schemes do not have a fixed
maturity, there is no cap on the amount you can buy from the fund and the unit capital
keep growing. These funds are not generally listed on any exchange. Open-ended
schemes are preferred for their liquidity. Such funds can issue and redeem units any
time during the life of schemes. Hence unit capital of open-ended funds can fluctuate
on a daily basis. The advantages of open ended schemes are: -

��.1 Any time exit option

��.2 Any time enter option.

CLOSE ENDED SCHEMES:-

Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such
scheme cannot issue new units except in case of bonus or right issue. However after
the initial issue you can buy or sell units of the schemes on the stock exchange where
they are listed. The market price of the unit could vary from the NAV of the schemes
due to demand and supply factor.
HOW LONG TO KEEP INVESTMENT TO GET
MAXIMUM RETURNS:-

Get desired returns technically open-ended funds you can withdraw your investments
even within a week, but to positive time frame is required are:

Funds Time Period

Equity Funds 3 Years (plus)
Balanced Funds 18 months to 3 Years
MIP’s 1 Year (plus)
Income Funds 6 months to 1 Year
Liquid Funds few days to 6 months

WHAT RETURNS CAN I EXPECT IF I KEEP MY

MONEY FOR SUGGESTED TIME FRAMES:-

Funds Returns

Sector funds 22% to 25% p.a

Balance funds 15% to 18% p.a
MIP’s Pension Plans 12% to 15% p.a
Income Funds 10% to 12% p.a
Liquid Funds 7% to 9%
p.a
The above-mentioned returns in the table are indicative and not assured. All
investments in MUTUAL FUNDS are securities and are subject to market risk and the
NAVs of the schemes may go up and down depending upon the factors and forces
affecting the security market including the fluctuations in the internal rates .The past
performance of the MUTUAL FUNDS is not indicative of future performance.

THE RISK RETURNS GRAPHS FOR VARIOUS:-

FUNDS

Liquid Funds

Income Funds

Balanced Funds

Equity Funds

Sector Funds

RISKS

S
The above Graph shows the Risk and Returns generated by different Funds. Liquid
Funds are less Risky and also generate less Returns where as Sector Funds are more
Risky but generate more Returns by the example of above two Funds it is clear that
Risk and Returns are directly proportional to each other. Other Funds like Equity
Funds, Balanced Funds and Income Funds are also gives the same percentage of
Returns as the Risk involved.

The asset management company shall issue to the applicant

whose:

• Application has been accepted, unit certificates or a statement of accounts

• Specifying the number of units allotted to the applicant as soon as possible
• But not later than six weeks from the date of closure of the initial
• Subscription list and or from the date of receipt of the request from the unit
• Holders in any open ended scheme

Restrictions on Investments:

• A mutual fund scheme shall not invest more than 15% of its NAV in debt
instrument issued by a single issuer, which are rated not below investment
grade by a credit rating agency authorize to carry out such activity under the
act. Such investment limit may be extended to 20% of the NAV of the scheme
with the prior approval of the Board of Trustees and the Board of Asset
Management Company.
 • A mutual fund Scheme shall not invest more than 10% of its NAV in unrated
debt instrument issued by a single issuer and the total investment in such
instruments shall not exceed 25% of the NAV of the Board of Trustees and the
Board of Asset management.

• No mutual funds under all its schemes should own more than 10% of any
company’s paid up capital carrying voting rights.

• Such transfers are done at the prevailing market price for quoted instrument on
spot basis.

• The securities so transferred shall be in conformity with the investment

objectives of the scheme to which such transfer has been made.

• A scheme may invest in another scheme under the same asset management
company or any other mutual fund without charging any fees, provided that
aggregated intercourse inter scheme investment made by all schemes under the
same management or in schemes under the management of any other asset
management company shall not exceed 5% of the net asset value of the mutual
fund.

The initial issue expenses in respect of any scheme may not exceed 6% of the funds
raised under that scheme.

• Every mutual fund shall buy and sell securities on the basis of deliveries and
shall in all cases of purchases, take delivery of relative securities and in all
cases of sale, deliver the securities and shall in no case put itself in a position
whereby it has to make short sale or carry forward transaction or engage in
Badla finance.
• Every mutual fund shall get the securities purchased or transferred in the name
of the mutual fund on account of the concerned scheme, wherever investments
are intended to be of long-term nature.

• Pending deployment of funds of a scheme a mutual fund can invest the funds of
the scheme in short term deposits of scheduled commercial banks.

• No mutual fund scheme shall make any investment in;

o Any unlisted security of an associate or group company of the sponsor or

o Any security issued by way of private placement by an associate or

group company of the sponsor.

o The listed securities of group companies of the sponsor which is in

excess of 30% of the net assets (of all the schemes of a mutual fund)

o No mutual fund scheme shall invest more than 105 of its NAV in the
equity shares or equity related instrument of any company. Provided
that, the limit of 10 percent shall not be applicable for investments in
index fund or sector or industry specific schemes.
 Observations and Conclusions

Due to the falling Rate of Interest on Bank deposits, it is obvious that Investment in
Mutual Fund will grow in year to come. However lack of knowledge of Mutual Funds
is a hindering factor in expected growth of Mutual Funds Business. Under noted
problems are envisaged in this area

• Difficult in convincing people for investment.

• Difficult to change mind of the investor according to age and

Profession.

• Difficult to make an approach to investors.

• Difficult to take an appointment with professional people.
• Difficult to get the documents required for formalities from investors
• Difficult to overcome an impassionate person who wants return in less time.
• Difficult to follow up the people whose names are being stored in a data.
• Difficult to remove the fear of risk from the minds of investors.

Some facts for the growth of mutual funds in India:-

• 100% growth in the last 6 years.
• Number of foreign AMC’s is in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under
management worldwide.
• Our saving rate is over 23%, highest in the world. Only canalizing these
savings in mutual funds sector is required.
• We have approximately 29 mutual funds which is much less than US having
more than 800. There is a big scope for expansion.
• 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds
are concentrating on the 'A' class cities. Soon they will find scope in the
growing cities.
• Mutual fund can penetrate rural like the Indian insurance industry with simple
and limited products.
 • SEBI allowing the MF's to launch commodity mutual funds.

PROJECT FINDINGS:-

• There is a great potential for investment in Mutual Funds as people wants to save
for various future obligation.
• Since Rate of Interest on Bank deposit is falling people will be attracted towards
investments in Mutual Funds because of high rate of returns.
• Comparatively people of small towns are less aware of other investment avenues
as Mutual Fund.
• People of young age group are ready to take risk and they can be targeted for
investment in Mutual Fund.
• Advertising can also play a major part as it has been seen that people buy mutual
fund looking at the brand name.

RECOMMENDATION

• India is passing through a tremendous growth phase with an average growth

rate of 7-8% per annum. With this growth phase there is growth in each and
every sector, hence there is rush to by shares and equities. It is also a very good
time for mutual fund companies but it is advisable for them and their brokers
that they don’t just sell mutual funds but sell the right kind of scheme which is
comfortable to a person nature of taking risk and need,
 • There is a general ignorance and questions about, what are mutual funds? What
are different schemes of mutual funds? How to invest in a mutual? And many
more. This thing should be handled by mutual fund companies and their
brokers to provide knowledge to their clients.

• It has been seen that there is a major increase in the percentage of young
investors who have large amount of disposable income with them and want to
invest, these type of prospective clients should be tapped at an early stage.

• Small towns, villages are still untapped and can also acts as an business area of
very huge potential.

• Now even co-operative society can invest up to 10% of their capital in mutual
funds which open the door to new and very important client base.

BIBLIOGRAPHY & REFERENCES

To collect the data from various sites and books are very important because it help to
remove the confusion from the trainees mind. During my summer’s Internship I
utilized the Birla Sun Life’s Connect and get the necessary information and fund
information from the Common Application form.

Web sites:
 • www.principalindia.com
• www.moneycontrol.com
• www.amfi.com
• www.indiainfoline.com
• www.valueresearchonline.com
• www.sharekhan.com
• www.sebi.in.gov
• www.bseindia.com

BOOKS:

• AMFI ADVISORS MODULE

• Birla Sun Life’s CONNECT
• Birla Sun Life’s Common Application Form

Annexure

ASSOCIATION OF MUTUAL FUNDS IN INDIA:-

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 date all 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 holder.

The objectives of Association of Mutual Funds in India:-

The Association of Mutual Funds of India works with 30 registered AMCs of

the country. It 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 high professional and ethical
standards in all areas of operation of the industry. 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 that 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 SEBI’s guidelines in the
mutual fund Industry.
• Association of Mutual Fund in 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 program of training and certification for all intermediaries and
other engaged in the mutual fund industry.
• AMFI undertakes all India awareness programmed for investor’s in order to
promote proper understanding of the concepts and working of mutual funds.
• At last but not the least association of mutual fund of India also disseminate
information’s on Mutual Fund Industry and undertakes studies and research
either directly or in association with other bodies.
Regulatory Aspects:

Schemes of mutual funds:-

• The Asset management company shall launch no schemes unless the trustees
approve such scheme and a copy of the offer has been filed with the Board.

• Every mutual fund shall along with the offer documents of each scheme pay
filing fees.

• The offer document shall contain disclosures which are adequate in order to
enable the investors to make informed investment decision including the
disclosure non maximum investments proposed to be made by the scheme in
the listed securities of the group companies of the sponsor. A close-ended
scheme shall be fully redeemed at the end of the maturity period. “Unless a
majority of the unit holders otherwise decide for its rollover by passing a
resolution”.

• The mutual fund and asset management company shall be liable to refund the
application money to the applicants:-

• If the mutual fund fails to receive the minimum subscription amount referred to
in clause (i) of sub- regulation.
 • If the moneys received from the applicants for units are in excess of
subscription as referred to in clause (ii) of sub-regulation.

Learning through This Project

During this project I have learn about corporate ethics and some of the important
points which are mentioned below-

��.1 I came to know about investment sector as whole.

��.2 I understood how to search data and how to convert them.
��.3 I developed a convincing attitude to convert leads into sale.
��.4 I understood that customer relationship is one of the most important
factors in business and every sale personal should follow this.
��.5 I improved on my communication skill in the process of giving corporate
presentations.
��.6 Finally I learned how team co-ordinate is carried on to chase targets
which are important in marketing and selling of a product.

Every week a team meeting was scheduled. The team members

where requested to attend the meeting where the current market situation and
personal assessment was made by project guide. He used to motivate us for the
achievement of the company as well as our individual target.
44