Beruflich Dokumente
Kultur Dokumente
Submitted by:-
ROHAN KAMBLI
(Roll No.180)
Research Guide:
Prof.Dr.Pradip Manjrekar
Placement Head
Department of Business Management
Padmashree DR. D.Y. Patil University
CBD Belapur, Navi Mumbai
FEBRUARY 2010
1
“MUTUAL FUND”
2
DECLARATION
dissertation has not formed the basis for the award of any degree,
Place: Mumbai
Date:
ROHAN KAMBLI
3
CERTIFICATE
in business management and that the dissertation has not formed the
basis for the award previously of any degree, diploma, associate ship,
Place: Mumbai
Date:
4
ACKNOWLEDGMENTS
the project. Without her help it would have been impossible for me to
Place:
Date:
5
TABLE OF CONTENTS
1 EXECUTIVE 10-11
SUMMARY
2 METHODOLOGY / 13-15
RESEARCH DESIGN
3 LITERATURE REVIEW 15-16
4 INTRODUCTION 18-22
5 THE OBJECTIVES OF
ASSOCIATION OF
MUTUAL FUND IN 24-26
INDIA
6 BENEFITS OF 28-32
MUTUAL FUNDS
7
TYPES OF MUTUAL
34-45
FUNDS
8 47-51
PROCEDURE TO
INVEST IN MUTUAL
FUND
9 STRUCTURE OF THE 52-53
INDIAN MUTUAL
6
FUND INDUSTRY
10 55-59
ADVANTAGES OF
MUTUAL FUND
11 61-63
LIMITATIONS OF
MUTUAL FUNDS
12 65-68
PLANS OF MUTUAL
FUNDS
13 FUTURE OF MUTUAL 70-74
FUNDS IN INDIA
14 RIGHTS OF A 76-77
MUTUAL FUND UNIT
HOLDER
15 RECENT TRENDS IN 79-81
MUTUAL FUND
INDUSTRY
16 83-84
MUTUAL FUNDS IN
INDIA
17 SWOT OF THE 86-88
ORGANISATION
18 90-92
PARTIES INVOLVED
IN MUTUAL FUND
DEALINGS
7
19 RISKS IN MUTUAL 94-97
FUNDS
20 EVOLUTION OF 99-102
MUTUAL FUNDS IN
INDIA
21 THE SPONSOR OF 104-106
ASSOCIATION OF
MUTUAL FUNDS IN
INDIA
22 BASIC FEATURE OF 108
MUTUAL FUNDS
23 GOALS OF THE FUND 110
24 RESULT AND 112-120
ANALYSIS
25 FINDING 122
27 CONCLUSION 126
28 ANNEXURE 128-132
8
CHAPTER – 1
EXECUTIVE SUMMARY
9
EXECUTIVE SUMMARY
I have kept in mind purpose and scope of project and have treated all
Since I have taken the topic as “mutual fund in India” I have included
Mutual fund is a company which shares the income and risk with its
10
stock exchange operations with relatively modest outlay. Now, these
investors can enjoy the wide portfolio of the investment held by the
This project also serves the information related to the risk involved in
11
CHAPTER – 2
12
METHODOLOGY / RESEARCH DESIGN
Type of Study:
Types of Data:
Sampling plan:
returns.
13
CHAPTER – 3
LITERATURE REVIEW
14
LITERATURE REVIEW
Robert F.HALSEY
Author - R.M.SRIVASTAVA
15
Financial statement:
Like in the US and Japan, mutual funds are on their way to becoming
an indispensable investment avenue for Indian investors. This
comprehensive handbook by an expert lays out the working of Indian
mutual funds, their operational and regulatory mechanisms, the
advantages and limitations of investing in them along with sensible
approaches to personal financial planning. The author's experience of
handling hundreds of training programmes ensures an engaging and
easy to understand approach to mastering.
Highlights
16
The different types of equity, debt, balanced and liquid
schemes available for investment - and the rewards and risks
each one.
NAV - what it reveals, its calculation and finer nuances.
The costs of investing in mutual funds - loads, expenses and
management fee.
The safety net of mutual fund investing - information disclosure
and investor protection stipulated by SEBI.
Financial planning based on investment needs and goals, life
stage and risk tolerance.
17
by an academic specializing on investments and a journalist well-
versed in mutual funds. It devotes considerable attention to the
different kinds of securities that funds invest in. Other topics such as
return and risk analysis, mutual fund analysis, the efficient-markets
hypothesis, currency fluctuations, bond characteristics compare
mutual funds to alternative vehicles, especially closed-end funds,
unit-investment trusts and individual stocks and bonds. The authors
cover eleven risk factors that one should know about, before
investing in any fixed-income portfolio, the text is interspersed with
short cases and numerical examples that illustrate important points.
Author : H. Sadhak
18
industry in India. It provides a thorough analysis of mutual funds to
the general public and fund managers alike
19
CHAPTER – 4
INTRODUCTION
20
INTRODUCTION
Thus a Mutual Fund is the most suitable investment for the common
21
HISTORY OF MUTUAL FUND:-
was unit scheme 1964 or the infamous unit 64. The second phase of
the mutual fund industry began with the public sector bank and Life
mutual fund regulation was put in place. The industry now functions
22
The industry faced its toughest challenge when the US 64 fiasco
regular mutual fund working under the SEBI regulation. Thanks to the
boom in the stock market, UTI managed to clean up its act and
industry also came out of the controversy without any major setbacks.
Mutual funds have been around for a long time, dating back to the
early 19th century. The first modern American mutual fund opened in
1924, yet it was only in the 1990‟s that mutual funds became
nearly tripled during that decade. With recent surveys showing that
In any case, it‟s important that you know how these investments work
23
The concept of mutual funds was introduced in India with the
the sole mutual fund until 1987, when some public sector banks and
CONCEPT:-
24
Mutual fund make it easy and less costly for investors to satisfy
securities
25
CHAPTER – 5
26
THE OBJECTIVES OF ASSOCIATION OF
27
India, the Reserve Bank of India and other related bodies on matters
mutual funds.
At last but not the least association of mutual fund of India also
bodies.
SEBI. Till date all the AMCs are that have launched mutual fund
29
CHAPTER – 6
30
BENEFITS OF MUTUAL FUNDS
1.Professional
1. investment management –
manager is certainly worth the fees you will pay. Good mutual
31
primary asset you are buying is the manager, who will be
investment objectives.
2.
2.Diversification –
32
of diversification and asset allocation, without investing the
individual portfolio.
3.Low Cost –
own just one security rather than many, you still enjoy the
big advantage is that you can move your funds easily from one
33
4.Liquidity - In open-ended schemes, you can get your money
back promptly at net asset value related prices from the mutual
fund itself.
mutual funds. You can find a mutual fund that matches just
about any investing strategy you select. There are funds that
through the variety and picking the best for you. Professional
34
selecting a particular investment. Thus, by investing in mutual
investor.
7.Liquidity
time.
35
CHAPTER – 7
36
TYPES OF MUTUAL FUNDS
These funds do not have a fixed maturity and one can invest in such
funds on any working day, during business hours. Investors can buy
1. Open-ended Funds
conveniently buy and sell units at Net Asset Value ("NAV") related
37
Top five open-end schemes are:
2. Close-ended schemes
Such funds have a fixed maturity period and are open for subscription
only for a specified period. After the expiry of this period, investors
can buy or sell the units on the stock exchanges where such funds
are listed. Some funds also have the option of periodic repurchase,
whereby investors can sell back their units to the fund at NAV related
prices.
38
A closed-end fund has a stipulated maturity period which generally
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. In
funds give an option of selling back the units to the Mutual Fund
stipulate that at least one of the two exit routes is provided to the
investor.
39
3. Interval schemes
4. Growth schemes
Such funds are aimed at capital appreciation over the medium to long
equities.
their corpus in equities. It has been proven that returns from stocks,
have outperformed most other kind of investments held over the long
40
term. Growth schemes are ideal for investors having a long-term
5. Balanced schemes
long-term.
41
6. Income schemes
capital and to provide fixed income over the medium to long term.
Income Funds are ideal for capital stability and regular income.
42
7. Money market schemes
earn interest and have high liquidity. Though these are considered to
rates prevailing in the market. These are ideal for Corporate and
periods.
Schemes are applicable for deduction u/s 88 of the Income Tax Act,
1961.
43
These schemes offer tax rebates to the investors under specific
allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act
9. Index schemes
indices, such as the BSE SENSEX, CNX Nifty, etc which are called
the base index. Investments in such funds are made in the same
44
Infrastructure, etc) or a group of industries, or various segments (like
Such funds are listed and traded on the stock exchange in a similar
oil, petroleum).
the NAV of these schemes may not normally keep pace, or fall
45
equally when the market falls. These are ideal for investors looking
A Load Fund is one that charges a commission for entry or exit. That
is, each time you buy or sell units in the fund, a commission will be
payable. Typically entry and exit loads range from 1% to 2%. It could
be worth paying the load, if the fund has a good performance history.
A No-Load Fund is one that does not charge a commission for entry
46
in the fund. The advantage of a no load fund is that the entire corpus
is put to work.
47
Bank sector schemes
48
CHAPTER – 8
49
PROCEDURE TO INVEST IN MUTUAL FUND
Your financial goals will vary, based on your age, lifestyle, financial
these needs, the quantum of risk you are willing to take and your
The important thing is to choose the right mutual fund scheme which
suits your requirements. The offer document of the scheme tells you
its objectives and provides supplementary details like the track record
50
of other schemes managed by the same Fund Manager. Some
track record of the performance of the fund over the last few years in
Investing in just one Mutual Fund scheme may not meet all your
51
4. Invest regularly
say every month. By investing a fixed sum each month, you buy
fewer units when the price is higher and more units when the price is
low, thus bringing down your average cost per unit. This is called
followed by investors all over the world. You can also avail the
5. Start early
plan. If you start now, you will make more than if you wait and invest
various mutual fund schemes and start investing. You may reap the
rewards in the years to come. Mutual Funds are suitable for every
52
kind of investor - whether starting a career or retiring, conservative or
53
CHAPTER – 9
INDUSTRY
54
STRUCTURE OF THE INDIAN MUTUAL FUND
INDUSTRY
India which has a total corpus of Rs700bn collected from more than
categories i.e. equity, balanced, income etc with some being open-
Bank and SBI Funds Management floated by the State Bank of India
55
are the largest of these. GIC AMC floated by General Insurance
Corporation and Jeevan Bima Sahayog AMC floated by the LIC are
The third largest categories of mutual funds are the ones floated by
largest of these are Prudential ICICI AMC and Birla Sun Life AMC.
is in excess of Rs250bn.
56
CHAPTER – 10
57
ADVANTAGES OF MUTUAL FUND
1. Professional Management
lack the time, the inclination or the skills to manage their own
manage the investments for the benefit of their investors in return for
a management fee.
2. Diversification
58
For example, economic conditions like a rise in interest rates may
way, the value of the overall portfolio should gradually increase over
3. Convenient Administration
up with brokers and companies. Mutual Funds save your time and
4. 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
59
5. Choice of Schemes
A mutual fund can, and typically does have several schemes to cater
6. Legal Framework
Since the investors are often not so well qualified to invest, the
regulations are:
5. Valuation of securities;
60
7. Tax Benefits
Dividend income from mutual fund units will be exempt from income
tax with effect from July 1, 1999. Further, investors can get rebate
also available under section 54EA and 54EB with regard to relief from
8. Return Potential
thereby reducing overall portfolio risk. In other words, the right way to
potential to earn.
9. Liquidity
purchase facility. Thus, the investor does not have to worry about
61
finding a buyer for his investment –a risk normally associated with
10. Transparency
scheme, the proportion invested in each class of assets and the fund
11. Flexibility
convenience.
12. Affordability
stocks. A mutual fund because of its large corpus allows even a small
62
CHAPTER – 11
63
LIMITATIONS OF MUTUAL FUNDS
1. No Guarantees
the value of mutual fund shares will go down as well, no matter how
invest in mutual funds than when they buy and sell stocks on their
own. However, anyone who invests through a mutual fund runs the
Even if you don't use a broker or other financial adviser, you will pay
64
3. Taxes
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.
4. Management risk
When you invest in a mutual fund, you depend on the fund's manager
manager does not perform as well as you had hoped, you might not
5. Dilution
return. Dilution is also the result of a successful fund getting too big.
When money pours into funds that have had strong success, the
65
manager often has trouble finding a good investment for all the new
money.
66
CHAPTER – 12
67
PLANS OF MUTUAL FUNDS
1) Growth Plan
2) Dividend plan
1. Growth plan
companies that pay out dividends. The hope is that these rapidly
general, growth funds are more volatile than other types of funds,
rising more than other funds in bull markets and falling more in bear
markets.
68
Some growth plan schemes are:
2. Dividend Plan
purchase. Unlike with a Direct Stock Purchase Plan, with a DRIP the
69
would normally send as a check and instead it will reinvest them to
purchase more shares in the company for you, all without charging a
over when his/her money from the dividends is used to purchase new
Programs.
70
Dividend payout plan
be completed before the record date. If an investor does not own the
stock before the ex-dividend date, he or she will be ineligible for the
dividend payout. Further, for all pending transactions that have not
reduces the value of the company (it comes from the company's cash
value (because neither the buyer nor the seller are eligible for the
dividend).
71
CHAPTER – 13
72
FUTURE OF MUTUAL FUNDS IN INDIA
rest of the decade. In the last 5 years we have seen annual growth
73
Let us discuss with the following table:
Ma
Month/Ye Mar- Mar- Mar-
Mar-02 Mar-03 r- Sep-04 4-Dec
ar 98 00 01
04
Change
in % over 15 14 13 12 - 18 3
last yr
Source – RBI
74
Mutual Fund AUM‟s Growth
Change in
% over 26 13 12 25 45 9 1
last yr
75
We have approximately 29 mutual funds which is much less
expansion.
'B' and 'C' class cities are growing rapidly. Today most of the
advice.
Here's the standard suggestion that goes with the above analysis:
bonds. Either ignore the long-run historical data, or bet against it. In
76
theory it's possible to increase one‟s return by preferring those stocks
and markets that have been falling in value or doing worse than
77
CHAPTER – 14
78
RIGHTS OF A MUTUAL FUND UNIT HOLDER
79
the scheme or affect the interest of the unit holder. The
80
CHAPTER – 15
INDUSTRY
81
RECENT TRENDS IN MUTUAL FUND
INDUSTRY
smaller private sector players. Many nationalized banks got into the
mutual fund business in the early nineties and got off to a good start
due to the stock market boom prevailing then. These banks did not
really understand the mutual fund business and they just viewed it as
Few hired specialized staff and generally chose to transfer staff from
floated by these funds was not good. Some schemes had offered
82
between the guaranteed and actual returns. The service levels were
Most of these AMCs have not been able to retain staff, float new
companies was also very similar. They quickly realized that the AMC
have sold out to foreign owned companies, some have merged with
The foreign owned companies have deep pockets and have come in
here with the expectation of a long haul. They can be credited with
83
THE THREE BASIC FEATURES OF MUTUAL FUNDS
sells.
c) The buying and selling of securities within the mutual fund portfolio
investors even if they have not sold any of their mutual fund shares.
84
CHAPTER – 16
85
MUTUAL FUNDS IN INDIA
investment objective. The mutual fund will have a fund manager who
the number of units owned by them. Thus a Mutual Fund is the most
a relatively low cost. The flow chart below describes broadly the
86
While the concept of individuals coming together to invest
money collectively is not new, the mutual fund in its present form is a
only after the Second World War. Globally, there are thousands of
fund, the risk associated, the costs involved in the process and the
broad rules for entry into and exit from the fund and other areas of
operation.
case. SEBI looks at track records of the sponsor and its financial
87
CHAPTER – 17
88
SWOT OF THE ORGANISATION
decision.
The results of this analysis have been fed into marketing and
strategy formulation.
Through our SWOT analysis, our clients have been able to take
Strengths - to build on
Weaknesses - to cover
89
Opportunities - to capture
SWOT Analysis
Strengths:
customer
Weakness:
90
Opportunities:
centric Services.
Threats;
* Execution risk.
91
CHAPTER – 18
DEALINGS
92
PARTIES INVOLVED IN MUTUAL FUND
DEALINGS
1. INVESTORS
Investors are the people who actually invest their money into the
Mutual Fund is a kind of solution for investors who lack the time, the
93
2. TRUSTEES
Trustees are the people within a mutual fund organization who are
properly taken care of. In return for their services, they are paid
all the establishment costs that are related to its activity out of its
4. DISTRIBUTORS
94
scheme, although there are occasions when an AMC may choose to
the distributor could be; who have their own or franchised network
reaching out to investors all across the country; distributors who are
distributors who are small and marginal players with limited reach.
95
CHAPTER – 19
96
RISKS IN MUTUAL FUNDS
who take up mutual fund route for investments believe that there risk
securities that match there risk appetite. They are ignorant about the
minimizing the market volatility and hence take the help of fund
97
value of holdings of a mutual funds. Each risk that makes overall
A. Business Risk:
would suffer.
exodus of FIIs.
C. Sentiments Risk:
98
discussions, monsoon, all and many more affect the stock market.
D. Industry Risk:
Some industries get sudden boom or some get sudden shocks. Some
E. Political Risk:
F. Scheme Risk-
risk and return have direct relation with each other. More the risk,
99
2. Investment Risks-
is investment risk
time to sell stocks, due to liquidity pressure, they have to sell it. This
100
CHAPTER – 20
101
EVOLUTION OF MUTUAL FUNDS IN INDIA
Introduction:
The mutual fund industry in India started in 1963 with the formation
of Unit Trust of India, at the initiative of the Reserve Bank and the
debate had taken place in the parliament before this institution saw
small investors….
102
…..Investment in the securities market for a person who is not well
versed in the operations of the money and the equity markets is not
easy. Amongst the middle class there are few to watch the share
market or watch for investment opportunities. For one thing , the man
who knows something about this things has not got the money and
for another, the who knows nothing about this is afraid to invest in
securities not knowing whit will happen to his money. The share
scares that are created owing to the operations by what are called
stock exchange….
103
On why should it be in public sector?
….a desire on the part of the people that the savings of the
…in view of the socialist economy which we are aiming at, in think it
is necessary that a trust like this should be instate sector. There are
many reasons for people to complain about the working of the state
of that, I do not think in this country people have very great faith in
sector…
104
….after this moment gathers momentum and people develop
more such trust in the public sector and some in the private sector.
105
CHAPTER – 21
106
THE SPONSOR OF ASSOCIATION OF
1.Bank Sponsored
2.Institutions
107
3.Private Sector
Indian:-
108
Predominantly Foreign Joint Ventures:-
109
CHAPTER – 22
110
BASIC FEATURES OF MUTUAL FUNDS
sells.
c) The buying and selling of securities within the mutual fund portfolio
investors even if they have not sold any of their mutual fund shares.
111
CHAPTER – 23
112
GOALS OF THE FUND
Only companies that meet certain criteria will be included in the fund.
investor returns. Both of these types of funds are designed for long-
either because you have retired, are saving to buy a house or are
unable to work, you need to look at funds that will not only grow over
time, but will also provide you with an income. For example, dividend
basis.
113
CHAPTER – 24
114
RESULT AND ANALYSIS
Result:-
From the above graph, it is clear, peoples are not aware about mutual
72% people known what is mutual fund because they aware about
115
Youngsters have so aware about mutual fund. 80% youngsters
116
Result:
As shown above chart 60% business men want to invest money into
the mutual fund because they have interest in mutual fund, maximum
customers want to invest our money into the mutual fund because
their interest decreased in equity market they know that in this field,
want to invest your money into the mutual fund, 56% youngsters and
40% private employees want to invest money into the mutual fund.
117
Result:
We know that mutual fund is not always risk free. According to the
customers who know what is mutual fund, they also know it is not
always risk free. Problem has that maximum people are not aware
118
Result:
From the above graph, mostly customers want to invest your money
Youngsters and business men have interest in mutual fund; they like
to take risk because they know that, if risk is high then return may be
mutual fund.
119
Result:
collected, clearly shows that investors have two types mutual fund, it
is 18%. They want earn maximum profit from mutual fund. These
customer want to increase number of units and also invest other plan
120
Result:
The result of the primary data shows that investors of reliance mutual
fund who invested in other mutual fund having the higher percentage
is the brand name in India, the company has good reputation in the
121
Result:
collection, clearly shows that the investors are satisfy with the
122
Result:
Reliance Mutual fund and the rest 26% are not satisfied. Customers
123
CHAPTER – 25
FINDING
124
FINDING
People are investing their money in the Gold because there are
more return from that but now a days business men and the
Now a days reliance mutual fund has a high market than other
Most of the people are satisfied with the reliance mutual fund
125
CHAPTER - 26
126
SUGGESTION & RECOMMENDATION
investment.
People should invest more in the Mutual fund because they can
127
CHAPTER – 27
CONCLUSION
128
CONCLUSION
If you need the funds to generate income either because you have
retired, are saving to buy a house or are unable to work, you need to
look at funds that will not only grow over time, but will also provide
So today the mutual fund is the most important investment for all the
people.
129
CHAPTER – 28
ANNEXTURE
130
ANNEXTURE
Name: ______________________________________
Age: __________
Address: _____________________________________
Email._______________________________________
a) Yes b) no
a) Yes b) no
131
3. Is Mutual fund always risk free?
a) yes
b) No
c) I don‟t know
sector?
a) Mutual fund
b) Property
c) Gold
d) Shares
e) Insurance
132
5. If yes, Which AMC (asset Management Company) will
you prefer?
e) other
a) One
b) Two
d) None
133
7. According to you which company has more demand in the
market?
e) other
d) other
134
9. What is your view about reliance mutual fund?
A} yes b} no
__________________________________________________
__________________________________________________
________________________.
Signature__________________
135
CHAPTER – 29
MUTUAL FUNDS
136
CASE STUDY- PENSION PLANS V/S
MUTUAL FUNDS
about planning for various life stages. Financial planning to take care
of Rs 3 m over 3 years.
137
The client has been suggested a single premium plan of Rs 1 m
and stocks.
Let us first take a look at how investments in the unit linked pension
138
Pension plan: Preparing for the future
(%) (%)
If the client decides to buy the pension plan, then he would be paying
one-time charges on the same are 2.50% (i.e. in the first year). In
be invested in the 100% equity ULPP option. This amount will remain
139
The charges for any additional top-ups in the second year too would
One-time charges for any top-ups from the third year onwards fall to
third year amount (Rs 990,000) will remain invested for a 20-yr period
growth rate (CAGR) of 10% p.a. over a 22-Yr tenure, the client‟s
tenure.
140
How do mutual funds fare?
*FMC is assumed to be 2.00% for the first 5 years, 1.75% for the next
charge associated with the ULPP above, mutual funds usually have
for each of his three annual investments (of Rs 1,000,000), the net
141
years, 1.75% for the next 5 years and 1.50% for the remaining period
that as the corpus for a mutual fund scheme grows over a period of
time, economies of scale come into play. This helps the mutual fund
spread its costs over a larger corpus, thereby reducing its overall cost
The reason why ULPP scores over mutual funds is because of a low
FMC. The FMC on the ULPP under review is 0.80% throughout the
2.00% range. Over the long term, FMC makes a significant impact by
In our view therefore, the client would be better off investing his
142
However, analysis on pension plans versus mutual funds would be
1.Maturity proceeds
2.Diversification
143
Also, in case an individual feels that a particular mutual fund has not
particular scheme and invest in another scheme that fits into his
criteria (i.e. modify his portfolio). The same is not entirely possible
with a ULPP- since the individual has already invested his entire
3. Track record
Several equity funds have a track record to boast of. A good track
However, the same is not the case with unit linked insurance plans,
which are a recent phenomenon. While some of them may have done
well over the short time period that they have existed, we would like
So what is the bottom line? As can be seen from our calculations and
144
equity funds; but ofcourse one needs to keep in mind the inherent
RECENT TRENDS
retur
n(%)
Discovery 56
40
83
145
Nifty Junior BeES 134. 43.34
71
41
Serv 08
S.M.I.L.E. 48
69
14
Plan A 12
146
Data from Value Research, as on October 27, show that the top 20
But, interestingly, they held only 2.51% of the assets (or investor
That is, just Rs 4,836 crore out of Rs 192,574 crore, including tax-
Another way to look at it: The 20 funds that more than doubled
returns constitute only 0.77% of the total assets of the mutual fund
This is startling stats, and tells that mutual fund investors have
147
The best returns were given by ICICI Prudential Discovery
Fund Rs 28.59crore.
The third best scheme, JM Multi Strategy Fund, returned 138.83%. Its
Gold Fund (Rs 1,685.96crore) and Birla Sun life Mid-cap (A) (Rs
780.91crore).
But the World Gold Fund and the AIG World Gold Fund (corpus Rs
280.61crore) that also features in the top 20 schemes are not really
equity funds.
148
The Income Tax Act, 1961, defines an equity fund as that which
invests an average 65% of its assets in Indian equities over the last
twelve months.
funds that, in turn, invest in gold and other precious metals and
mining stocks.
What goes in favour of these schemes is the fact that they are small.
classic, The Intelligent Investor: "As a fund grows, its fees become
more lucrative, making its managers reluctant to rock the boat. The
very risk that managers took to generate their initial high returns
could now drive the investors away and jeopardize all that fee
149
income. So the biggest funds resemble a herd of identical and
The other question to ask is, why have investors missed out on the
paid.
150
More than half the top-20 schemes had assets under Rs 100crore.
"So, we have got fresh flows. But retail participation is still missing. If
Sensex hits the 20,000 mark again retail investors would come in," he
been in hibernation that has of course been hitting us. But we are
The industry that is grappling with missing flows and a new norm for
officials.
151