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Sakkardara Square, Nagpur.

This is to certify that AVINASH B. KANAMPALLIWAR Bonafied Student of the Bachelor of Business Administration (BBA) course, Specialization in FINANCIAL MANAGEMENT, session 2011-2012, of the KAMLA NEHRU MAHAVIDYALAYA, NAGPUR. The candidate has worked under the supervision of Mrs.KIRAN GANGWANI and has satisfactory conducted project work for not less than one academic session. The project submitted by him is his own work and is complete so as to warrant its presentation for examination. This project work entitled ANALYSIS OF SELECTED DIVERSIFIED EQUITY MUTUAL FUND AND PERFORMANCE OF SELECTED AMCs IN INDIA.Which is in partial fulfillment requirement for the above course, is being forwarded to



AVINASH B. KANAMPALLIWAR hereby declare that with the exception
of the suggestion and guidance received from my supervisor a this project titled ANALYSIS OF SELECTED DIVERSIFIED EQUITY MUTUAL FUND AND PERFORMANCE OF SELECTED AMCs IN INDIA. is my original work. This dissertation as one, which is substantially the same as this has not been submitted by me for any other examination of this university or any other university.

Nagpur Date: -

BBA III (2011-2012)

This project is the outcome of the help and encouragement provided by all faculty members, who were a continuous source of inspiration and who guided me in all my endeavors. I take this opportunity to thank all those who were a great support behind this project and without their unconditional support this project on this paper would not have been completed. First of all I would like to thank my parents for giving me back-up and full support in completing this project. My heartfelt gratitude to Prof Head of Department, KAMLA NEHRU MAHAVIDYALAYA Nagpur for making available all the resources. I am indebted to Mrs.KIRAN GANGWANI my chief guide without whose support and timely suggestion this report would not have been completed. I express my sincere thanks to other staff members of my institute who directly or indirectly helped me in preparation of my project. Last but not least I would like to thank all those who are not mentioned, but whose contribution has been instrumental towards completion on of this project.

(BBA Final year)

SR NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. PERTICULAR PAGE NO.

Company Profile Objective Research Methodology Data Collection Data Analysis Conclusion Recommendation Limitation Bibliography

1.1 Project Objective


The basic objective of my project was to know performance of different equity mutual fund, regarding equity market, their indices and analyzing the upside and downside of mutual fund investing. Apart from this my project objective was to know how mutual fund industries performance is fluctuating with market volatility and also their present AUM

In this report various terminologies like Net Asset Value, performance, average AUM (Asset Under Management), indices performance etc are used which help investors who are having no knowledge regarding mutual fund different schemes. This will help investors to incur minimum losses, give investors basic idea regarding mutual fund schemes and also when and where to invest in mutual fund.

The limitation for my project was time constraint as I considered five years for my comparison. I didnt consider the general period. Also now a days security market is very volatile. Along with security market, mutual fund schemes are very volatile so information provided may vary from the actual current market position. And also mutual schemes performance is also volatile and changing day to day. So the information may be different from the actual information.

1.2 Research methodology Primary Source: - Visiting the organization (Observation Technique). Secondary Source: - Company broachers
Company website Internet Books

Method used for analysis: - Bar chart and pie chart are the tools that will be
used in.

2 # Industry profile
Diversified equity Mutual Fund has become increasingly popular in recent time. Diversified equity funds are the second largest category among all fund categories, with cash funds being at the top. What this mean is that from all the money being invested in Mutual Fund, most of it goes to cash fund with diversified equity funds. The bellwether BSE (Bombay Stock Exchange) Sensex has breached the 16000point mark and promises to do even better. The Nifty has also been steaming ahead, touching a new high of 4800 recently. Mutual Fund managers say that bull run is not entirely due to what former US Federal Reserve chief Alan Greenspan once called irrational exuberance; they are of the opinion that this market is based on Solid fundamentals, which is why they also expect even better times ahead in the near future.

Average Asset Under Management (AAUM)

From the latest Average Asset Management for all Mutual Fund houses, Corpus of the most of the Mutual Fund houses decreases in the year Jan31, 2010 as compared to the Dec31, 2009.

Some of the Mutual Fund houses mark increase in their Corpus but at very lower side as compared to the decrease in the larger side of certain big Mutual Fund houses like AIG, Birla Sun Life, Deutche Mutual Fund, HDFC Mutual Fund, ICICI Prudential, Kotak Mahindra Mutual Fund, LIC Mutual Fund, Reliance Mutual Fund, SBI Mutual Fund, TATA Mutual Fund etc.

Latest Average Asset Under Management for all Mutual Fund houses, increase or decrease in corpus, sales & redemption figures

Mutual Fund Name AIG Global Investment Group Mutual Fund Axis Mutual Fund Baroda Pioneer Mutual Fund Benchmark Mutual Fund Bharti AXA Mutual Fund Birla Sun Life Mutual Fund Canara Robeco Mutual Fund Deutsche Mutual Fund DSP Blackrock Mutual Fund Edelweiss Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund Fortis Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund IDFC Mutual Fund ING Mutual Fund

No. of Schemes
As on

Asset Under Management

Corpus As on Corpus Net inc/dec in corpus


Jan 31, 2010


Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009



15 27 14 43 218 85 115 94 37 30 49 431 181 164 93 297 162 94

Jan 31, 2010 Jan 31, 2010 Jan 29, 2010 Jan 31, 2010 Jan 31, 2010 Jan 29, 2010 Jan 29, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 29, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010

2,641.13 3,694.34 2,073.64 609.97 62,595.13 9,199.94 12,162.13 20,107.58 111.42 207.57 7,834.93 7,960.01 32,341.99 94,797.01 6,894.11 78,372.39 24,759.36 1,542.37

2,569.18 2,984.12 2,007.71 634.23 68,066.19 8,516.91 13,613.31 20,182.87 129.99 209.48 8,350.29 8,601.76 31,962.11 97,183.85 7,020.30 82,432.25 25,361.01 1,516.76

71.947 710.215 65.928 -24.266 -5471.065 683.032 -1451.182 -75.286 -18.564 -1.913 -515.369 -641.758 379.874 -2386.835 -126.198 -4059.86 -601.646 25.615

JM Financial Mutual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund L&T Mutual Fund LIC Mutual Fund Mirae Asset Mutual Fund Morgan Stanley Mutual Fund PRINCIPAL Mutual Fund Quantum Mutual Fund Reliance Mutual Fund Religare Mutual Fund Sahara Mutual Fund SBI Mutual Fund Shinsei Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund Taurus Mutual Fund UTI Mutual Fund

98 29 110 56 62 40 11 84 11 231 79 44 112 12 145 165 40 195

Jan 31, 2010 Jan 29, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 29, 2010 Jan 29, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 30, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010 Jan 31, 2010

9,025.18 4,315.47 36,781.33 2,619.37 47,440.30 264.22 2,302.24 8,064.98 86.34 117,248.57 13,823.34 608.33 36,623.30 400.15 13,755.84 22,298.89 1,911.51 74,509.87

Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009 Dec 31, 2009

8,853.16 4,252.27 41,401.75 2,900.59 51,501.85 264.14 2,299.41 8,148.11 84.90 119,981.79 15,865.25 499.15 37,900.13 447.65 13,075.69 23,778.93 1,898.04 78,203.44

172.025 63.202 -4620.42 -281.222 -4061.549 0.08 2.833 -83.131 1.435 -2733.222 -2041.91 109.186 -1276.828 -47.492 680.15 -1480.039 13.47 -3693.568

3. Literature survey

3.1 What is mutual fund?

A mutual fund is a common pool or fund of capital mobilized from a large number of investors and invested on their behalf in several securities in the market. All the returns from such investment, both in terms of dividends and capital appreciations, net of various incidental expenses, accrue to the investors. It works on the principle of small drop of water make a big ocean . For instance, one has Rs 1000 to invest, it may not fetch very much on its own. But, when it is pooled with Rs 1000 each from lot of other people, then one could create a big fund large enough to invest in wide varieties of shares and debentures on a commanding scale and thus, to enjoy collective investment. Mutual fund is formed by coming together of a number of investors who transfer their surplus funds to a professionally qualified organization to manage it. To get the surplus funds from investors, the fund adopts a simple technique. Each fund is divided into a small fraction called units of equal value. Each investor is allocated units in proportion to the size of his investment. Thus, every investor, whether big or small, will have a stake in the fund and can enjoy the wide portfolio of the investment held by the fund. Hence, mutual fund enables millions of small and large investors to participate in and derive the benefits of the capital market growth. A Mutual fund provides many financial and non-financial benefits to the investors. Like shares, all mutual funds provide returns in the form of dividend and capital appreciation and even bonus issues. The most significant benefit is one of risk reduction or risk diversification. 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 Fund. Each Fund schemes has a defined investment objective and strategy.

Mutual Fund operation flow chart is described below:-

This figure explains that a Mutual Fund is a type of investment where a number of investors money is pooled together and used by the fund manager ( referred to as Asset Management Company or AMC ) to invest in underlying securities in line with the objectives of the schemes. It is generally accepted that by spreading your investment you are spreading your risk, therefore investing in Mutual Fund is considered to be lower risk than direct investment. The first time a Mutual fund scheme is available for purchase is referred to as a New Fund Offering or NFO.

3.2 Origin of mutual fund

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the AUM to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in

December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs .47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. Consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

3.3 Regulatory structures of mutual funds in India:

The primary authority for regulating Mutual Funds in India is SEBI. SEBI requires all Mutual Funds to be registered with it. The SEBI (Mutual Funds) Regulations, 1996 outlined the broad framework of authorization process and selection criteria. Accordingly, the authorization for the mutual fund will be granted in two steps. The first step will involve approval and eligibility of each of the constituents of the mutual fund viz. sponsors, trustees, asset management company (AMC) and custodian. For this purpose the interested parties would be required to submit necessary information only in on prescribed formats). The second stage will involve formal authorization of the mutual funds for business. For this purpose the sponsor or the AMC would be required to apply to SEBI in an application form for authorization along with an application fee to be specified later.

The authorization shall be granted subject to conditions as may be considered necessary by SEBI and payment of auth9risation fee as may be specified. It shall be SEBI's endeavor to advise an applicant within 10 to 15 working days of receipt of his letter / application form regarding status of his application. The eligibility of the sponsor will be examined with respect to the following: Sponsor could be a registered company, scheduled bank or all India or State level financial institution;

More than one registered company can also act as sponsor for a mutual fund; Joint sponsorship with any of the entities in (a) above will also be eligible, and Sponsoring registered companies could be private or public limited companies either listed or unlisted.

Sponsor and where there is more than one sponsor, each of the sponsoring entities, must have a sound track record as evidenced by ;

Audited balance sheet and profit and loss .account for last five years; A positive net worth and consistent record of profitability and a good financial standing during the last five years; Good credit record with banks and financial institutions;

General reputation in the market; Organization and management, and

Fairness in business transactions. Sponsor or more than one sponsor put together should have at least a 40 per cent stake in the paid-up equity of the AMC.

3.4 Guidelines for mutual funds as per SEBI :

The AMC will be authorized by SEBI on the basis of the criteria indicated in the guidelines. SEBI regulations clearly state that all funds and schemes operational under them would be bound by their regulations. SEBI has recently taken following steps for the regulation of mutual funds:

Formation: Certain structural changes have also been made in the mutual fund industry, as part of which, mutual funds are required to set up asset management companies with fifty percent independent directors, separate board of trustee companies, consisting of a minimum fifty percent of independent trustees and to appoint independent custodians. This is to ensure an arm's length relationship between trustees, fund managers and custodians, and is in contrast with the situation prevailing earlier in which all three functions were often performed by one body which was usually the sponsor of the fund or a subsidiary of the sponsor . Thus, the process of forming and floating mutual funds has been made a tripartite exercise by authorities. The trustees, the asset management companies (AMCs) and the mutual fund shareholders form the three legs. SEBI guidelines provide for the trustees to

maintain an arm's length relationship with the AMCs and do all those things that would secure the right of investors. With funds being managed by AMCs and custody of assets remaining with trustees, an element of counter-balancing of risks exists as both can keep tabs on each other.

Registration: In January 1993, SEBI prescribed registration of mutual funds taking into account track record of a sponsor, integrity in business transactions and financial soundness while granting permission. This will curb excessive growth of the mutual funds and protect investor's interest by registering only the sound promoters with a proven track record and financial strength. In February 1993, SEBI cleared six private sect9r mutual funds viz. 20th Century Finance Corporation, Industrial Credit& Investment Corporation of India, Tata Sons, Credit Capital Finance Corporation, Ceat Financial Services and Apple Industries. Documents:

The offer documents of schemes launched by mutual funds and the scheme particulars are required to be vetted by SEBI. A standard format for mutual fund prospectuses is being formulated.

Code of advertisement: Mutual funds have been required to adhere to a code of advertisement.

Assurance on returns: SEBI has introduced a change in the Securities Control and Regulations Act governing the mutual funds. Now the mutual funds were prevented from giving any assurance on the land of returns they would be providing. However, under pressure from the mutual funds, SEBI revised the guidelines allowing assurances on return subject to certain conditions. Hence, only those mutual funds which have been in the market for at least live years are allowed to assure a maximum return of 12 per cent only, for one year. With this, SEBI, by default, allowed public sector mutual funds an advantage against the newly set up private mutual funds.

As per basic tenets of investment, it can be justifiably argued that investments in the capital market carried a certain amount of risk, and any investor investing in the markets with an aim of making profit from capital appreciation, or otherwise, should also be prepared to bear the risks of loss. Minimum corpus: The current SEBI guidelines on mutual funds prescribe a minimum s art-up corpus of Rs.50 crore for a open-ended scheme, and Rs.20 crore corpus: or closed-ended scheme, failing which application money has to be refunded. The idea behind forwarding such a proposal to SEBI is that in the past, the minimum corpus requirements have forced AMCs to solicit funds from corporate bodies, thus, reducing mutual funds into quasi-portfolio management outfits. In fact, the Association' of Mutual Funds in India (AMFI) has repeatedly appealed to the regulatory authorities for scrapping the minimum corpus requirements,

Institutionalization: The efforts of SEBI have, in the last few years, been to institutionalize the market by introducing proportionate allotment and increasing the minimum deposit amount to Rs.5000 etc. These efforts are to channel the investment of individual investors into the mutual funds. Investment of funds mobilized: In November 1992, SEBI increased the time limit from six months to nine months within which the mutual funds have to invest resources raised from the latest tax saving schemes. The guideline was issued to protect the mutual funds from the disadvantage of investing funds in the bullish market at very high prices and suffering from poor NAV thereafter.

Investment in money market: SEBI guidelines say that mutual funds can invest a maximum of 25 per cent of resources mobilized into money-market instruments in the first six months after closing the funds and a maximum of 15 per cent of the corpus after six months to meet short term liquidity requirements. Private sector mutual funds, for the first time, were allowed to invest in the call money market after this year's budget. As SEBI regulations limit their exposure to money markets, mutual funds are not major players in the call money market. Thus, mutual funds do not have a significant impact on the call money market. SEBI also conclude that mutual funds were not responsible for the unprecedented shooting up of call money rates. Some funds exceeded their limits in an effort to improve their sagging net asset values (NAVs), usually, funds can early only about 9-12 per cent. Thus, the prospect of earning more than 40 per cent may have been tempting,

Valuation of investment: SEBI should work in tandem with the Institute of Chartered Accountants of India (ICAI) to take up a fresh look at mutual fund regulations enacted in 1993. The valuation of investments, a key aspect of fund accounting, as on balance sheet date, needs review, SEBI regulations 1993, give discretionary powers to the fund managers as far as the valuation of the investment portfolio on the balance sheet date is concerned, There are no accounting standards or guidelines prescribed by the ICAI for the valuation of a mutual fund's investment portfolio.

The mutual funds are clearly taking advantage of this situation and valuing the portfolio at cost of acquisition. The subsequent depreciation or appreciation in the investment portfolio is not accounted for. Thus, the mutual funds may be able to show profits in the balance sheet even if there is severe erosion in the value of the investment portfolio. This erosion in the values of the investment portfolios is clearly seen in the net asset values (NA V) as on the balance sheet date. But the accounts of the mutual funds do not reveal the same. The objective of the accounting in case of a mutual fund should be besides showing details of income, expenses, assets and liabilities, has to reveal the true value of the fund. The value of the fund is already reflected in, its NAV and the balance sheet is expected to be in consonance with this value. This requires that the investment portfolio be calculated at market values, providing for any depreciation or appreciation. . The transparent and well understood declaration or Net Asset Values (NAVs) of mutual fund schemes is an important issue in providing investors with information as to the performance of the fund. SEBI had warned some mutual funds earlier of unhealthy market practices, and is currently working on a common format for calculating the net asset values (NAVs) of mutual funds, which are done in various ways by them at present. Inspection: SEBI inspect mutual funds every year. A full SEBI inspection of all f the 27 mutual funds was proposed to be done by the March 1996 to streamline their operations and protect the investor's interests. Mutual funds are monitored and inspected by SEBI to ensure compliance with the regulations. Underwriting: In July 1994, SEBI permitted mutual funds to take up underwriting of primary issues as apart of their investment activity. This step may assist the mutual funds in diversifying the business. Conduct: In September 1994, it was clarified by SEBI that mutual funds shall not offer buy back schemes or assured returns to corporate investors. The Regulations governing Mutual Funds and Portfolio Managers ensure transparency in their functioning. Voting rights: In September 1993, mutual funds were allowed to exercise their voting rights. Department of Company Affairs has reportedly granted mutual funds the right to vote as full-fledged shareholders in companies where they have equity investments.

3.5 Role of brokers in a mutual fund?

1. 2. 3. 4. 5. 6. Enable investment managers to buy sell securities. Brokers are registered member of the stock exchange. They charge commission for their services. In some cases provide investment managers with research report. Act as an important source of market information. Limit of 5% per broker.

3.6 Types of equity research done in mutual fund?

Fundamental Analysis: - Future earnings & risk profile considered (whether to buy or not). Here the forecasting is done on the basis of economic, industry & company data. Technical analysis is used more as a supplement to fundamental analysis rather than in isolation. Technical Analysis: - Study of historic data on company share price movements & volume (to find timing). Their belief is that by plotting the price movements over time, they can discern certain patterns which will help them to predict the future price movements of the stocks. Quantitative Analysis: - Equity valuation & evaluate the market as whole.

3.7 Types of mutual fund scheme

The expertise and professional skill developed by different Mutual Funds in Portfolio Management can be better expressed by listing the different financial products they have developed to be offered to the investors:


Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended

scheme depending on its maturity period. An open-ended fund or scheme do not have any fixed maturity period & are available to investors, for subscription & redemption, on an ongoing basis, during the NFO period & beyond. Investors may buy or sell these schemes directly from/to the fund, whenever they desire subject to specific business days/hours as may be prescribed by the AMC. The units of such schemes are available at NAV related prices (subject to applicable load) from the fund & every subscription/redemption results in a creation/extinguishment of units of the scheme. Though open-ended mutual fund schemes have no fixed investment period, equity oriented open-ended schemes are designed to offer potentially higher returns over the medium to long term by which we mean over 5 years. We should consider any investment in equity-oriented open-ended mutual fund schemes as a medium to longterm investment as encashment in the early years may result in loss of capital.

Close-ended Fund/Scheme: These funds have fixed, normally predefined maturity period which usually varies from 2-15 years. Investors in closed-ended funds generally receives certificate or depository receipts for their holdings in the scheme. The fund is open for subscription only during a NFO period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. These mutual funds schemes disclose NAV generally on weekly basis.


Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or closeended schemes as described earlier. Such schemes may be classified mainly as follows: Growth / Equity Oriented Scheme: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Balanced Fund: The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt

instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. 3. Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. 4. Gilt Fund:

These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. 5. Index Funds:

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. 6. Sector specific funds/schemes: These are the funds/schemes, which invest in the securities of only those sectors, or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

7. Tax Saving Schemes:

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme 8. Load or no-load Fund: A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. However, the investors should also consider the performance track record and service standards of the mutual fund, which are more important. Efficient funds may give higher returns in spite of loads. 9. No-load fund: Is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units. 10. Monthly Income Plan: To generate regular income through investments in debt and money market instruments and also to generate long-term capital appreciation by investing a portion in equity related instruments. Fund Objective :-Investors seeking regular income through investments in fixed income securities so as to get monthly/quarterly/half yearly dividend. The secondary objective of the scheme is to generate long term capital appreciation by investing a portion of schemes assets in equity and equity related instruments. Suitable for investor with medium risk profile and seeking regular income. 11. FMPs (Fixed Maturity Plans): These are close-ended income schemes with a fixed maturity date. The period could range from fifteen days to as long as two years or more. When the period comes to an end, the scheme matures and money is paid back. Like an income scheme, FMPs invest in fixed income instruments i.e. bonds, government securities, money market instruments etc. The tenure of these instruments depends on the tenure of the scheme.

In addition to the above, there are many other types of mutual funds which may be classified on the basis of their objectives and portfolios. These mutual funds are:


Special funds: Those funds which invest only in specialized channels like (a) gold

and silver, (b) a specific country (Japan Fund, India Fund, etc.), (c) a specific category of companies (Technology Fund);

2. funds; 3.

Leveraged funds: Leveraged funds are those which increase the size of the value

of the portfolio and benefit the shareholders by gains exceeding the cost of the borrowed

Real Estate fund: Such funds are meant for the real estate ventures.


Hedge funds: Funds that buy shares whose prices are likely to go up and sell

short, shares whose prices are expected to go down; and finally

Offshore funds: These specialize in investing in foreign companies.

3.8 Important characteristics of Mutual Fund :

A Mutual Fund actually belongs to the investors who have pooled their funds. The ownership of the Mutual Fund is in the hands of the Investors. A utual Fund is managed by investment professional and other service providers, who earn a fee for their services from the fund.

The pool of funds is invested in a portfolio of marketable investment.

The value of the portfolio is updated every day.

The investors share in the fund is denominated in units. The value of the units changes with change in the portfolio value, every day. The value of one unit of investment is called Net Asset Value (NAV).

3.9 Objectives of a Mutual Fund :

To provide an opportunity for lower income groups to acquire property without

much difficulty in the form of shares. To cater mainly the need of individual investors, whose means are small.

To manage investors portfolio that provides regular income, growth, safety, liquidity, tax advantage, professional management and diversification.

3.10 Advantages of Mutual Fund:The advantages of investing in a Mutual Fund extending PMS to the small investors are as under:

Professional Management-

The investor avails of the services of experienced and skilled professionals who are backed by a dedicated investment research team, which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.


Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

Convenient Administration :

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential Over a medium to long-term :

Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

Low Costs :

Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.


In open-ended schemes, you can get your money back promptly at net asset value related prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a stock exchange at the prevailing market price or avail of the facility of direct

repurchase at NAV related prices which some close-ended and interval schemes offer you periodically.


You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.


Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

Choice of Schemes:
Mutual Funds offers a family of schemes to suit your varying needs over a


Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

3.11 Disadvantages of amutual afund:

Fluctuating Returns:
Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved - just because a professional manager is looking after the fund, that doesn't mean the performance will be stellar. Another important thing to know is that mutual funds are not guaranteed by the U.S. government, so in the case of dissolution, you won't get anything back. This is

especially important for investors in money market funds. Unlike a bank deposit, a mutual fund will be insured by the Federal Deposit Insurance Corporation (FDIC).

Although diversification is one of the keys to successful investing, many mutual fund investors tend to over diversify. The idea of diversification is to reduce the risks associated with holding a single security; over diversification (also known as diworsification) occurs when investors acquire many funds that are highly related and, as a result, don't get the risk reducing benefits of diversification. At the other extreme, just because you own mutual funds doesn't mean you are automatically diversified. For example, a fund that invests only in a particular industry or region is still relatively risky.

Cash, Cash and More Cash:

As you know already, mutual funds pool money from thousands of investors, so everyday investors are putting money into the fund as well as withdrawing investments. To maintain liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolios as cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous.

Mutual funds provide investors with professional management, but it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage - usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money, these fees only magnify losses.

Misleading Advertisements:
The misleading advertisements of different funds can guide investors down the wrong

path. Some funds may be incorrectly labeled as growth funds, while others are classified as small cap or income funds. The Securities and Exchange Commission (SEC) requires that funds have at least 80% of assets in the particular type of investment implied in their names. How the remaining assets are invested is up to the fund manager.

However, the different categories that qualify for the required 80% of the assets may be vague and wide-ranging. A fund can therefore manipulate prospective investors by using names that are attractive and misleading. Instead of labeling itself a small cap, a fund may be sold as a "growth fund". Or, the "Congo High-Tech Fund" could be sold with the title "International High-Tech Fund".

Evaluating Funds:
Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's net asset value gives investors the total value of the fund's portfolio less liabilities, but how do you know if one fund is better than another? Furthermore, advertisements, rankings and ratings issued by fund companies only describe past performance. Always note that mutual fund descriptions/advertisements always include the tagline "past results are not indicative of future returns". Be sure not to pick funds only because they have performed well in the past - yesterday's big winners may be today's big losers.

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. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

3.12 The set-up of Mutual Fund:A Mutual Fund is set up in the form of a trust, which has sponsors, trustees, Asset management Company (AMC) and custodian. The trust is established by a sponsors or more than one sponsor who is like a promoter of a company. The trustees of the Mutual Fund hold its property for the benefits of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investment 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 superintendent and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the Mutual Fund. SEBI Regulations require that at least 2/3 of the directors of the trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All Mutual Funds are required to be registered with SEBI (as on January 15, 2002). There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund.

Dig. Organization of Mutual Fund

Fund Sponsor:
A 'sponsor' is any person who, acting alone or in combination with another body corporate, establishes a MF. The sponsor of a fund is similar to the promoter of a company. In accordance with SEBI Regulations, the sponsor forms a trust and appoints a Board of Trustees, and 'also generally appoints an AMC as fund manager. In addition, the sponsor also appoints a custodian to hold the fund assets. The sponsor must contribute at least 40% of the net worth of the AMC and possess a sound financial track record over five years prior to registration.

Mutual Fund:
A MF in India is constituted in the form of a trust under the Indian Trusts Act, 1882. The fund invites investors to contribute their money in the common pool, by subscribing to 'units' issued by various schemes established by the trust. The assets of the trust are held by the trustee for the benefit of unit holders, who are the, beneficiaries of the trust. Under the Indian Trusts Act, the trust or the fund has no independent legal capacity; it is the trustee(s) who have the legal capacity.

The MF or trust can either be managed by the Board of Trustees, which is a body of individuals, or by a Trust Company, which is a corporate body. Most of the funds in India are managed by Board of Trustees. The trustees being the primary; guardians of the unit holders funds and assets, a trustee has to be a person of high repute and integrity. The trustees, however, do not directly manage the portfolio securities. The portfolio is managed by the AMC as per the defined objectives, accordance with Trust Deed and SEBI (Mutual Funds) Regulations.

Asset Management Company:

The AMC, which is appointed by the sponsor or the trustees and approved by SEBI, acts like the investment manager of the trust. The AMC functions under the supervision

of its own Board of Directors, and also under the direction of the trustees and SEBI. AMC, in the name of the trust, floats and manages the different investment 'schemes' as per the SEBI Regulations and as per the Investment Management Agreement signed with the Trustees. Apart from these, the MF has some other fund constituents, such as custodians and depositories, banks, transfer agents and distributors. The custodian is appointed for safe keeping of securities and participating in the clearing system through approved depository. The bankers handle the financial dealings of the fund. Transfer agents a responsible for issue and redemption of units of MF. AMCs appoint distributors of brokers who sell units on behalf of the Fund, and also serve as investment advisers. Besides brokers, independent individuals are also appointed as 'agents' for the purpose of selling fund schemes to investors. The regulations require arm's length relationship between the fund sponsors, trustees, custodians and AMC.

Types of AMCs in Indian Context:

AMCs owned by banks. AMCs owned by financial institutions. AMCs owned by Indian private sector companies. AMCs owned by foreign institutional investors. AMCs owned by Indian & foreign sponsors.

Registrars & Transfer Agent(R & T Agent):

The Registrars & Transfer Agents(R & T Agents) are responsible for the investor servicing function, as they maintain the records of investors in mutual funds. They process investor applications; record details provide by the investors on application forms; send out to investors details regarding their investment in the mutual fund; send out periodical information on the performance of the mutual fund; process dividend payout to investor; incorporate changes in information as communicated by investors; &

keep the investor record up-to-date, by recording new investors & removing investors who have withdrawn their funds.


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. The net asset value (NAV) is the market value of the fund's underlying securities. It is calculated at the end of the trading day. Any open-end funds buy or sell order received on that day is traded based on the net asset value calculated at the end of the day. The NAV per units is such Net Asset Value divided by the number of outstanding units Market Value of Assets - Liabilities NAV = ----------------------------Units Outstanding For example., if the market value of the securities of a mutual fund scheme is Rs. 200 lakhs & the mutual fund has issued 10 lakhs units at Rs. 10 to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis- daily or weekly- depending

Sale Price:
Is the price you pay when you invest in a scheme or NAV a unit holder is charged while investing in an open-ended scheme is sale price. Also called Offer Price. It may include a sales load if applicable.

Repurchase Price:
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 unit. Also called, Front-end load. A load is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing & distribution expenses. Suppose the NAV per unit is Rs.10. if the entry as well as exit load charged were 1%, then the investors who buy would be required to pay Rs.10.10 & those who offer their units for repurchase to the mutual fund will get only Rs.9.9 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns.

No Load:
Schemes that do not charge a load are called No Load schemes. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units. In August 1994, SEBI had formed a six-member committee to suggest disclosure practices and standardised procedures for computation of net asset values for mutual fund schemes. The committee finalised its report on 12 December 1995 and the same was released on 1 January 1996.

3.14 The major guidelines for NAV:

There has been a major shift in the valuation of securities used for the calculation the net asset value (NAV) of the mutual fund scheme. Earlier, calculation of the NAV was done by valuing the securities at cost. This has now been changed to marking securities at market value. The investments which are shown in balance sheet should also be shown at

market value so that this comparable with the net asset value. Further marking all investments at market prices also permits inter- scheme comparison some extent.

It has been recommended that the NAVs of both open-end and close-end scheme be calculated on a weekly basis, at least.

The fees paid by the mutual fund to the asset management company should linked to the performance of the mutual fund schemes as against a flat rate charge earlier which did not take into account the mutual fund scheme's performance. It, now suggested that mutual funds would be paying a basic annual fee to the AMC computed as a percentage of the average weekly net asset value of the scheme and an additional fee calculated as a percentage of the net growth of the scheme. The AMC will have the discretion of floating no load or load schemes or a mixture of the two. Presently, mutual funds are permitted to deduct up to 6% from the net asset value to account for issue expenses. The report has suggested that repurchase and resale price of open-end schemes should be linked to the NA V of the scheme. Accordingly, the repurchase price of an open-end scheme should not be lower than 93 per cent of the net asset value and the resale price should not be more than 1.07 times the net asset value. Also, the spread between the repurchase and re-sale price should not exceed seven percentage points. It has been suggested that the failure of a mutual fund scheme to give the minimum assured returns should be met out of the funds of the asset management company and not the corpus of the mutual fund scheme. The report has suggested that the AMC should disclose custodian and registration fees and has done away with the distinction of short term and long term capital gains. The committee has suggested the disclosure of ratio of expenses to net assets and gross income to net assets. These guidelines would apply to all the mutual fund schemes launched in the future but it is not yet decided if these guidelines should be made applicable to existing schemes. Some members of the committee feel that existing schemes should adhere to these guidelines with effect from 1 April 1997. Mutual fund shares are quoted on a bidoffer basis. The offer price is the price at which the mutual fund will sell the shares. It is equal to the NA V per share plus any sales commission that the mutual fund may charge. The sales commission is referred to as a load. Within a short span of four to five years, mutual funds operation has become integral part of the Indian financial system. Investors in India look at mutual funds as a substitute of fixed deposits in banks rather than as a substitute for investment in securities. Mutual funds provide an opportunity for the risk-averse investors to share their risk and yet go in for high return equities in the capital market. The popularity of mutual funds has soared so have their diversity and complexity. Despite the many advantages (e.g. diversification, continuous professional management, low operating costs, shareholder services, liquidity, safety from loss due to unethical practices etc.), mutual funds are not for everyone. Critics argue that funds are boring, since shareholders do not have any say as to which

stocks are selected. Some people have been able to strike it rich with the right stock. That then is also a danger of getting carried away and ending up with a big stake in a promising company that is suddenly runs into deep trouble, plunges in value, and takes the life savings down with it. The chances of that happening with the mutual funds are much lower since they are diversified and professionally managed. The reason most investors do not excel in stock picking is that they succumb to certain common errors, many of which can be avoided or minimized with mutual funds. However, successful investing being a serious business requiring a well thought- out plan, investors do not need to be familiar with the characteristics of the different types 0 mutual funds. Too many investors do not understand what they are buying, or even what they are paying. With so many choices, investors make the wrong decisions. Besides investing in inappropriate and high-cost mutual funds, investors also buy laggards. There is no shortage of mediocre performers.

3.15 Risk involve in equity fund and sustainability of the product : Diversified equity funds :-

Equity instruments by nature are volatile and prone to price fluctuation on a daily basis due to both macro and micro factors. Trading volumes, settlement periods and transfer procedure may restrict the liquidity of these investments. The inability of the schemes to make the securities purchases due to settlement problems could the schemes to miss certain investments opportunities. Such funds are suited for investors with a long-term investments horizon with the appetite for risk to capital over short-term periods.

Mid and small-cap funds can be more volatile than their large-cap counterparts, especially because they are typically less liquid than the former. Flexible capitalization funds that own a combination of large and mid/small companies in their portfolio would therefore likely witness a mixed impact of market volatility over short-term periods.

Risk associated with mutual fund

The above pyramid speaks about the different types of risk and the respective growth associated with the risk. It can be seen that, at the lower level risk is very less and their more safety. This kind of portfolio is usually preferred by the in the third level of their life cycle i.e. mainly people who are pension holders. As we move on to the pyramid we see that there is average risk and reasonable growth and income. These are people in second level of their life cycle who are well settled in life who are ready to take the calculated risk.

The last level depicts a picture of people who can assume the highest risk. These are people who have just started their career who can take high risk. Investing in Mutual Funds, as with any security, does not come without risk. One of the most basic economic principles is that risk and reward are directly correlated. In other words, the greater the potential risk the greater the potential returns. The types of risk commonly associated with Mutual Funds are :-

Market risk :
Market risk relates to the market value of a security in the future. Market prices fluctuate and are susceptible to economic and financial trends, supply and demand, and many other factors that cannot be precisely predicted or controlled.

Political risk :
Changes in the tax laws, trade regulations, administered prices, etc are some of the many political factors that create market risk. Although collectively, as citizens, we have indirect control through the power of vote individually, as investors, we have virtually nocontrol.

Inflation risk :
Interest rate risk to future changes in interest rates. For instance, if investors invest in a long-term debt Mutual Fund schemes and interest rates increase, the NAV of the scheme will fall because the scheme will be end up holding debt offering lower interest rates.

Business risk :
Business risk is the uncertainity concerning the future existance, stability, and profitability of the issuer of the security. Business risk is inherent in all business ventures. The future financial stability of a company cannot be predicted or guaranteed, nor can the price of its securities. Adverse changes in business circumstances will reduce the market price of the companys equity resulting in proportionate fall in the NAV of the Mutual Fund schemes, which has invested in the equity of such a company.

Economic risk :
Economic risk involves uncertainity in the economy, which in turn can have adverse effect on a companys business. For instance, if monsoons fail in a year, equity stocks of agriculture-based companies will fall and NAVs of Mutual Funds, which have invested in such stocks, will fall proportionaly

3.16 Cost associated with investing in Mutual Funds :

Needless to say, an AMC incurs several expenses in managing the fund on behalf of the investors. Some of these are recurring expenses while others are one-time. The annual recurring expenses recovered as fund management fees from the investors include truste fees, custodian fees, registrar fees, investment management and advisory fees and other recurring operating expenses. This include ongoing marketing and selling expenses, brokerage and transaction costs, audit fees, costs related to providing accounting statement, dividend/redemption cheques and warrants, insurance premium paid by the fund, salaries to staff, etc. in general, Mutual Funds cannot exceed the fund management fees indicated in the offer documents. The AMC passes to these annual recurring expenses or fund management fees to the investors as entry or exit loads. The annual recurring expenses is normally expressed as a percentage of net assets and referred to as expense ratio. SEBI has given directives on the expense ratio to be changed by AMCs.The ratio is a graded ratio. For example, equity funds may charge up to 2.5 per cent of the average weekly net asset of the fund for the first Rs. 1,000 million, 2.25 per cent on the next Rs. 3000 million, 2 per cent on the following Rs. 3000 million and 1.75 per cent on any amount above this. Debt funds, balanced funds, and liquid funds may charge different amounts as prescribed by SEBI. These expense ratios from an upper limit .Given the structure of expenses, the bigger funds will obviously have lower expense ratios. Entry load or the front-end charge is applied when investors buy units of a scheme. Thus, if the entry load is 2 per cent, then the AMC deducts 2 per cent of the total fund mobilized straight away and invests the balance 98 per cent of the corpus to create the investors portfolio. Hence, if the face value of a scheme is Rs. 10, the opening NAV will be only Rs. 9.80 and not Rs. 10, since 2 per cent is deducted towards expenses. Exit load, or the back-end load, is levied when an investor exits the scheme (i.e. sell his units).for example, if a fund charges an exit load of 2 per cent and the NAV of the

scheme is Rs. 20 only Rs. 19.60 will be received when the units are redeemed or sold. Normally AMCs do not charge both entry and exit loads for a given scheme. A scheme may also be a no-load scheme, if the AMC chooses not to levy any load whatsoever on a scheme.

3.17 Investment in Equities:

Funds brought into a business by its shareholders are called equity. It is a measure of stake of a person or group of persons starting a business. When you buy a companys equity, you are in effect financing it, and being compensated with a stake in the business. You become part-owner of the company, entitled to dividends and other benefits that the company may announce, but without any guarantee of a return on your investments. Equity investments generally yields high returns, particularly if invested over a long period of time. In short term also, the returns vary from company to company and the particular market trends at that time. Basically, stock market is meant for the investors who want more returns and have an appetite of taking risks. In stock market, the classification of the investors is done on several basis including greedy investors. They generally look for vary high returns and lose their patience when the market declines. The major risk factors in investing in equity are that it is a single asset. If the value increases then the returns becomes high and if the value decreases/falls then there is a loss. In order to invest in direct equity investors has to consider many points. Lets see these points one by one:

Identify your Objective

Identify your objective first. If you want to increase the value investment in order to have a larger sum to spend at a later date, ypur primary objective must be capital growth.

Identify your Risk Tolerance and then Invest

People have different risk ability and needs. For example, a 30 year old professional will be keener to take risk than a 60 year old man. Risks also vary with the needs. After knowing your risk tolerance, you must invest. If you invest in risky areas without knowing your own risk appetite then it may give you a deep trouble.

Categorize your stock: Cyclical, growth or Defensive.

Investing in cyclical stock as those in cement, or steel sectors, requires the understanding of the economic scenario. Hence, an active involvement is necessary. Investing in growth stocks refer to the stocks in sectors where the future is bright like technology. Even here time makes a difference. Investing in defensive stocks has a thinking that the amount invested will go high slowly and steadily over a long term.

Check out the Technical Position

Can you actually sell your investments when you want to? This must be made clear before making investment.

Know the Company

You must know everything about company like its financial position, directors, business etc. Hence, investment in equity is not as easy as it looks like. One has to be very careful while investing in equities. The risk factor in equity is really high. But the market trends in the last two years have really attracted the investors towards this market. Investors are making their investment in Blue Chip Organization; Sector based equities, Mid Cap Stocks, Large cap Stocks and Small Cap Stocks.


How does investor in Equities make money?

Investors get returns on their investments in two ways: Dividend and Capital. The former depends on earning level of the particular company and the decision of its management. The latter happens when the market price of the shares rises above the level at which the investment was made. Say, you invested Rs. 10,000 by buying 100 shares of X Company at a price of Rs.50 and sold all the 100 shares later at the price of Rs100, you would have made a capital gain of Rs.5000.

Sale value of shares (Rs 100 X 100) Value of original investment (Rs 50 X 100) Capital Gain

Rs 10,000 Rs 5,000 Rs 5,000

3.19 Why do stock prices move up and down?

The market price of a particular share is dependant on the supply and demand of that particular company. If the players in the market feel that a particular company has a record of good performance or has the potential to do well in the future, the demand for the shares of the company increases and player are willing to pay higher prices to buy the shares. And since the number of shares issued by the company is consistent at constant at a given point in time, any increases in demand would only increase the market price. Fluctuation in stocks price occurs because companies make or lose money. But that is not the only reason. There are many other factors not directly related to the company or its sectors? Interest rates, for instance. When interest rates on deposits or bonds are high, stock prices generally go down. Money supply may also affect prices. If there is more floating around, some of it may flow into stocks, pushing up their prices. Other factors that cause price fluctuation are the time of year and public sentiments. Some stocks are seasonal, i.e. cyclical stocks; they do well only during certain parts of the year and worse during other parts. Publicity also affects stock prices. If a newspaper story reports that Xee television ha s bought a stake in Moon television, odds are that the prices of Xees stock will rise if the market thinks its a good decision. Otherwise it will fall. The price of Moon television stocks may also go up because investors may feel that it is now in better hands. Thus, many factors affect the price of a stock

4 # RELIANCE MUTUAL FUND Introduction: The Reliance group - one of India's largest business houses with revenues of Rs. 990 billion ($22.6 billion) that is equal to 3.5 percent of the country's gross domestic product was split into two. The group - which claims to contribute nearly 10 per cent of the country's indirect tax revenues and over six percent of India's exports - was divided between Mukesh Ambani and his younger brother Anil on June 18, 2005. The group's activities span exploration, production, refining and marketing of oil and natural gas, petrochemicals, textiles, financial services, insurance, power and telecom. The family also has interests in advertising agency and life sciences. Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 90,938 Crores(AAUM for Mar 08 ) and an investor base of over 66.87 Lakhs. Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 115 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capita l Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders."

Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Reliance Mutual fund has largest AUM in India. Reliance capital asset Management is no. 1 AMC in India but the picture is not the same in Chhattisgarh. In Chhattisgarh they are no. 2 AMC. Management of Reliance mutual fund wants to expand its feet in Chhattisgarh, before taking any step they want to understand market & investor and distributor behavior of SMEs, so they may plan accordingly to capture Chhattisgarh Market. In this research we have to analyze why, how, where, when & how much an investor invest & according to it, we have to make profile of investors. In this report I have endeavored to understand the factors affecting Investment behavior of an investor in Chhattisgarh. This behavioral study consists of how any investor invests in CG. What factor they consider, why these factors they consider, where do they invest, how do they invest, purpose behind investment, size of investment, timing of investment & duration of investment. This study gave us basis to profile investors. Vision Statement: To be a globally respected wealth creator, with an emphasis on customer care and a culture of good corporate governance. Mission Statement: To create and nurture a world-class, high performance environment aimed at delighting their customers.

About Reliance Capital Asset Management Ltd: Reliance Capital Asset Management Limited (RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vides their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on September 30, 2007 is Rs.152.02 crores. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders." Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI by their letter no. IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on March 31, 2005 is Rs.113.59 crores.

About Reliance Mutual Fund:

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settler /Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the Trustee. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no. IMD / PSP / 4958 / 2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capita l market and to provide investors the opportunities to make investments in diversified securities.

Incorporated Ownership Ownership Pattern

30/6/1995 Private Foreign - 0%, Domestic-100% Reliance Capital Ltd 117,248.57 as on 1/31/2010 27 22 8 1 30 Sundeep Sikka Madhusudan Kela Amitabh Mohanty Milind Nesarikar One Indiabullls Centre, Tower 1, Jupiter Mills Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai - 400013

Sponsor Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds Chief Executive Chief Investment Officer - Equity Chief Investment Officer - Debt Investor Relations Officer Address

Telephone Fax URL Email

(022) 30994600 (022) 30414899

Fund features:
Type of scheme Nature Option Inception date Face value (Rs/unit) Fund size (Rs.crore) Last dividend declared Minimum investment (Rs.) Purchase redemption NAV Entry load Exit load Open ended Equity Growth March28,2006 10 2114.71 as on jan. 29, 2010 NA 5000/Daily Daily 0% If redeemed between 0 to 1 year exit load is 1% Increase or decrease in fund size as on -150.06 December 31,2009 in (Rs. Crore )

Top 10 Holdings
Fund Size as on Fund Size ( Rs. in crores) Asset Allocation as on Equity Debt Others Jan 29, 2010 2114.71 Jan 29, 2010 86.8082894736842% 0% 13.1917105263158%

Company Name Other Equities State Bank of India Tata Consultancy Services Ltd. Divis Laboratories Ltd. Oil & Natural Gas Corpn Ltd Reliance Industries Ltd. Zee Entertainment Enterprises Ltd Reliance Infrastructure Ltd. Financial Technologies ICICI BANK LTD.

Instrument Equity Equity Equity Equity Equity Equity Equity

No. of Shares

Market Value (Rs. in crores) 237.08 133.68 132.52 122.21 109.64 104.64 99.60

Percentage of Net Assets 11.21 6.32 6.27 5.78 5.18 4.95 4.71

649999 1800000 2000000 999999 1000220 3800000

Equity Equity Equity

927357 606999 1100000

95.91 92.63 91.34

4.54 4.38 4.32

NAV of reliance mutual fund of one year as on 15 February 2010


9.0192 8.6825 10.1215 10.77 13.3403 12.8109 13.7938 14.5583 15.2390 14.98 14.8397 15.44 14.36

NAV High & Low Latest NAV Benchmark index- base sensex 52 week high 52 week low 14.36 as on Feb.15, 2010 4801.95 as on Feb. 15 , 2010 15.51 as on Jan. 18, 2010 8.21 as on March 9 , 2009

Comparison of Reliance NAV with BSE 100


BSE 100

Trailing return
As of 18 Feb 2010
Year-to-Date 1-Week 1-Month 3-Month 1-Year 2-Year 3-Year 5-Year

Fund Return
-5.12 0.38 -7.26 -3.67 64.08 -2.03 6.98 --

Category Return
-3.80 0.66 -6.73 -0.09 92.93 -2.66 7.11 20.50

S&P CNX Nifty

-6.02 1.26 -7.34 -3.30 76.06 -3.76 5.64 18.91

-6.51 1.08 -7.44 -3.95 81.11 -4.88 4.38 19.92

Annual return
Fund Return Category Average S&P CNX Nifty Sensex 2009 54.72 84.36 75.76 81.03 2008 -44.85 -55.27 -51.79 -52.45 2007 52.01 59.56 54.77 47.15 2006 -34.93 39.83 46.70 2005 -46.83 36.34 42.33

Quarterly returns
Year 2009 2008 2007 2006 Q1 -5.23 -25.27 -5.56 -Q2 39.79 -11.90 15.49 -6.89 Q3 15.18 0.31 13.49 13.64 Q4 1.39 -16.49 22.81 8.74



HDFC was incorporated in 1977 as the first specialized Mortgage Company in India. HDFC provides financial assistance to individuals, corporates and developers for the purchase or construction of residential housing. It also provides property related services (e.g. property identification, sales services and valuation), training and consultancy. Of these activities, housing finance remains the dominant activity. HDFC has a client base of around 9.5 lack borrowers, around 1 million depositors, over 91,000 shareholders and 50,000 deposit agents as at March 31, 2007. HDFC has raised funds from international agencies such as the World Bank, IFC (Washington), USAID, DEG, ADB and KfW, international syndicated loans, domestic term loans from banks and insurance companies, bonds and deposits. HDFC has received the highest rating for its bonds and deposits program for the twelfth year in succession. HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first life insurance company in the private sector to be granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory and Development Authority (IRDA) to transact life insurance business in India.

To be a dominant player in the Indian mutual fund space, recognized for its high levels of ethical and professional conduct and a commitment towards enhancing investor interests

HDFC Asset Management Company Limited:

HDFC assets Management Company limited was incorporated under the Companies Act, 1956, on December 10, 1999, and were approved to act as an Asset Management Company for the Mutual Fund by SEBI on July 3, 2000. The registered office of the HDFC assets Management Company limited is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Church gate, Mumbai - 400

020. In terms of the Investment Management Agreement, the Trustee has appointed HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the HDFC assets Management Company limited is Rs.75.161 crore.

The present share holding pattern of the HDFC Assets management company is as follows:
Particulars % of the paid up share capital HDFC 50.10 Standard Life Investments 49.90 Limited

The HDFC Assets management company is managing 18 open-ended schemes of the Mutual Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Tax Plan 2000 (HTP), HDFC Children's Gift Fund (HDFC CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP), HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF), HDFC Equity Fund (HEF), HDFC Top 200 Fund, (HT200), HDFC Capital Builder Fund (HCBF), HDFC Tax Saver (HTS), HDFC Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC Sovereign Gilt Fund (HSGF) and HDFC Cash Management Fund (HCMF). HDFC assets Management Company limited is also managing the respective Plans of HDFC Fixed Investment Plan, a closed ended Income Scheme.

The HDFC Assets management company has obtained registration from SEBI vide Registration No. - PM / INP000000506 dated December 22, 2000 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993.

Incorporated Ownership Ownership Pattern Sponsor

30/6/2000 Private Foreign - 40%, Domestic-60% Housing Development Finance Corporation Ltd, Standard Life Investments Ltd.

Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds Chief Executive Chief Investment Officer Investor Relations Officer Address

94,797.01 as on 1/31/2010 11 9 13 8 28 Milind Barve Prashant Jain Yezdi Khariwala Ramon House, 3rd Floor, H.T.Parekh Marg, 169, Backbay Reclamation, Churchgate Mumbai - 400020 022-22029111 / 66316333 022-22028862

Telephone Fax URL Email

Fund features:
Type of scheme Nature Option Inception date Face value (Rs/unit) Fund size (Rs.crore) Last dividend declared Minimum investment (Rs.) Purchase redemption NAV Entry load Exit load Open ended Equity Growth Jan 1, 1995 10 5400.17 as on Jan 31, 2010 NA 5000/Daily Daily 0% If redeemed between 0 to 1 year exit load is 1% Increase or decrease in fund size as on Dec 31, 4.21 2009 (Rs. Crore )

HDFC Equity-growth TOP 10 Holdings

Fund Size as on Fund Size ( Rs. in crores) Jan 31, 2010 5400.17

Asset Allocation as on Equity Debt Others

Jan 31, 2010 95.7696052631579% 0% 4.23040789473684%

Company Name Instrument State Bank of India ICICI BANK LTD. Oil & Natural Gas Corpn Ltd Bank of Baroda LIC Housing Finance Ltd Titan Industries Ltd Axis Bank Ltd Larsen & Toubro Ltd Gas Authority Of India Ltd Crompton Greaves Ltd Equity Equity Equity Equity Equity Equity Equity Equity Equity Equity

No. of Shares 1800000 4200000 2700000 3597500 2142000 1077710 1400000 972500 3400000 2975000

Market Value (Rs. In Crores) 370.19 348.75 296.03 207.04 164.96 161.75 143.60 138.47 133.98 129.10

Percentage of Net Asset 6.86 6.46 5.48 3.83 3.05 3 2.66 2.56 2.48 2.39

NAV of HDFC as on 15 Feb, 2010:


104.6650 99.1510 123.4680


136.23 172.8520 170.9270 185.7110 202.7950 220.77 227.2640 223.8960 235.84 221.5640

NAV High & Low

Latest NAV Benchmark index- base sensex 52 week high 52 week low 219.89 as on Feb 15, 2010 4096.20 as on Feb 15, 2010 236.92 as on Jan 18, 2010 91.23 as on mar 9, 2009

Comparison of HDFC NAV with BSE 100


BSE 100

Trailing Return of HDFC

As on 17 Feb 2010 Yearto-Date 1Week 1Month 3Month 1-Year 2-Year 3-Year 5-Year

Fund Return -3.25 1.85 -5.23 -1.50 120.47 8.80 13.42 27.31

Category Return -3.80 0.66 -6.73 -0.09 92.93 -2.66 7.11 20.50

S & P CNX Nifty -5.52 3.30 -6.44 -2.93 77.37 -3.74 5.83 18.97

Sensex -5.93 3.18 -6.41 -3.65 81.84 -4.77 4.60 20.05

Annual return of HDFC

Year Fund Return Category Average S&P CNX Nifty Sensex

2009 105.57 84.36 75.76 81.03

2008 -49.68 -55.27 -51.79 -52.45

2007 53.61 59.56 54.77 47.15

2006 35.86 34.93 39.83 46.70

2005 62.70 46.83 36.34 42.33

Quarterly return of HDFC

Q1 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 -3.14 -25.76 -1.91 18.82 1.63 0.05 -2.33 21.58 -12.92 5.47 36.88 11.98 5.69 -0.84

Q2 58.81 -13.64 15.93 -10.48 10.37 -11.57 34.59 -1.26 2.55 -12.49 3.72 -1.60 14.76 4.39

Q3 22.53 1.78 10.60 17.56 26.15 19.88 29.75 -9.62 -11.86 -13.41 42.93 8.02 5.14 -19.00

Q4 9.06 -22.88 22.14 8.65 15.00 20.24 32.67 14.47 23.49 0.11 26.14 15.97 -3.88 -8.71


SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with an investor base of over 4.6 million and over 20 years of rich experience in fund management consistently delivering value to its investors. SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of India' one of India's largest banking enterprises, and Society General Asset Management (France), one of the world's leading fund management companies that manages over US$ 500 Billion worldwide. Today the fund house manages over Rs 28500 crores of assets and has a diverse profile of investors actively parking their investments across 36 active schemes. In 20 years of operation, the fund has launched 38 schemes and successfully redeemed 15 of them, and in the process, has rewarded our investors with consistent returns. Schemes of the Mutual Fund have time after time outperformed benchmark indices, honored us with 15 awards of performance and have emerged as the preferred investment for millions of investors. The trust reposed on us by over 4.6 million investors is a genuine tribute to our expertise in fund management. SBI Funds Management Pvt. Ltd. serves its vast family of investors through a network of over 130 points of acceptance, 28 Investor Service Centres, 46 Investor Service Desks and 56 District Organizers.SBI Mutual is the first bank-sponsored fund to launch an offshore fund Resurgent India Opportunities Fund.


Equity schemes:
The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index. Magnum Magnum Magnum Magnum Magnum Magnum Magnum Magnum MSFUMSFUMSFUMSFUMSFU COMMA Fund Equity Fund Global Fund Index Fund Midcap Fund Multicap Fund Multiplier plus 1993 Sect oral Funds Umbrella

Emerging Business Fund IT Fund Pharma Fund Contra Fund FMCG Fund

SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Tax gain Scheme 1993 SBI ONE India Fund

Incorporated Ownership Ownership Pattern

29/6/1987 Public Foreign - 37%,

Sponsor Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds Chief Executive Chief Investment Officer Investor Relations Officer Address

Telephone Fax URL Email

Domestic-63% State Bank of India, Societe Generale Asset Management 36,623.30 as on 1/31/2010 15 11 12 4 7 Achal Kumar Gupta Navneet Munot G Kandasubramanian 191, Maker Tower 'E' 19th Floor,Cuffe Parade Mumbai - 400005 (022) 22180221/ 27 (022) 22189663

Fund features :
Type of scheme Nature Option Inception date Face value (Rs/unit) Fund size (Rs.crore) Last dividend declared Minimum investment (Rs.) Purchase redemption NAV Entry load Exit load Open ended

Equity Growth Jan 1, 1991 10 388.2 as on Jan 29, 2010 50% as on Oct 4, 2006 1000 Daily Daily 0% If redeemed between 0 to 1 year exit load is 1% Increase or decrease in fund size as on -4018 Dec 31,2009 (Rs. Crore )

Top 10 holdings

Fund Size as on Fund Size ( Rs. in crores) Asset Allocation as on Equity Debt Others

Jan 29, 2010 388.2 Jan 29, 2010 90.3630263157895% 1.288% 8.349%

Company Name


No. of Shares 190055 700358 70034 70032 90039 199021 98980 65046 211796 229517

Market Value (Rs. in crores) 19.88 17.52 17.34 16.84 16.68 16.53 15.43 13.38 13.30 12.96

Percentage of Net Assets 5.12 4.51 4.47 4.34 4.3 4.26 3.98 3.45 3.43 3.34

Reliance Industries Ltd ITC Ltd Infosys Technologies Ltd Bharat Heavy Electricals Ltd Asian Paints Limited ICICI BANK LTD. Hero Honda Motors Ltd State Bank of India Jindal Steel and Power Ltd. Bajaj Holdings & Investment Ltd.

Equity Equity Equity Equity Equity Equity Equity Equity Equity Equity

NAV of SBI Mutual Fund As on 15 Feb, 2010

FEBRUARY 2009 MARCH 2009 19.7900 18.8400


2009 2009 2009

22.9700 25.41 32.7900

2009 31.2700 2009 33.8400 36.0600

SEPTEMBER 2009 OCTOBER 2009 38.1000 NOVEMBER 2009 37.2200 DECEMBER 2009 37.7500 JANUARY 2010 39.23 FEBRUARY 2010 36.9600

Comparison of SBI Mutual Fund with BSE 100


BSE 100

Trailing Return

As of 18 Feb 201 0 Year-toDate 1-Week 1-Month 3-Month 1-Year 2-Year 3-Year 5-Year

Fund Return -4.41 0.32 -5.84 -0.56 91.63 -0.96 8.58 23.78

Category Return -3.80 0.66 -6.73 -0.09 92.93 -2.66 7.11 20.50

S&P CNX Nifty -6.02 1.26 -7.34 -3.30 76.06 -3.76 5.64 18.91

Sensex -6.51 1.08 -7.44 -3.95 81.11 -4.88 4.38 19.92

Annual return

2009 Fund Return Category Average S&P CNX Nifty Sensex 87.94 84.36 75.76 81.03

2008 -56.29 -55.27 -51.79 -52.45

2007 71.28 59.56 54.77 47.15

2006 51.47 34.93 39.83 46.70

2005 42.77 46.83 36.34 42.33

Quarterly return
6.27 -22.28 30.86 14.99 7.46 20.08 37.48 9.73 16.31 -10.58 54.52 0.26 -9.45 -6.88

Q1 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996
-0.77 -30.04 -3.70 26.37 -3.37 -3.45 -10.17 8.68 -27.96 36.82 44.78 4.27 6.56 5.11

52.51 -16.25 15.25 -8.37 11.80 -11.37 19.61 2.28 -5.06 -42.90 -6.61 -8.19 5.81 7.76

16.86 -4.01 17.94 13.76 22.98 15.25 34.65 -13.95 -17.89 -14.23 46.58 12.59 3.52 -16.34


Reliance Equity Mutual Fund

Reliance Mutual Fund is one of the leading Mutual Fund . On Jan 2010 Reliance as 86% Equity and 13% other fund NAV is very important for any mutual fund house an the NAV increase the fund earn more from March 09 it increases up to the June 09 but in between July 09 to Feb. 10 it fluctuates up and down. As compared to the last year Feb. 09 this years feb10 it increases from 9.0192 to 14.36 but as an average the NAV grown up graphically the highest NAV for R.M.F. during Feb. 09-feb 10 was 15.51 an on Jan 18, 2010 and low was 8.68 as on May,09 Its because of the recession. It left an mark on the fund house as it saw its return profits full by 16% to Rs. 126 crore in march 09 as compared to Rs. 150 cr on march 08. Trailing return is the return earnest by the fund for particular period fund return was very good before a year i.e feb.09 but after that it goes down gradually as it was 04.08 on Feb. 09 but before 3 month it fall down to -3.67 and now year to date today it badly falls down to the -5.12. A year before return from both the S and P CNX Nifty and Sensex was at the top but again it falls down at the year to date If we are talking about the annual return, then first as fund return from 07-08 it decreases very badly i.e. from 52.01 to -44.85 but in year 09 it recovered the loss and again gain the similar position like 07 is 54.72 but then is not sufficient for an Mutual Fund it has to be increased at certain rate of speed and about the S and CNX Nifty and Sensex it increase annually from year 05 to 09 only it was very much less in year 08 ie Sand P CNX Nifty -51.79 and Sensex -52.45. The reason behind decrease in return from fund S and P CNX Nifty and Sensex in year 08 was due to the decrease in the return of all quarter of the year 08. It is private ownership with 100% domestic ownership company has total asset of Rs. 117,248.57 cr. as on 1 Jan 10 27 open end equity.


It is privately owned Mutual Fund house with 40% foreign & 60% domestic ownership. Has the total asset of Rs. 94,797.04 cr as on 1 Jan, 2010.The present share holding of HDFC Asset Management Co. is HDFC 50.10 & Standard Life Investments Ltd. Is 49.90. Company holds 18 Open ended schemes. NAV of the HDFC increased from Feb 2009 to Feb 2010 but in between this it went down to the lowest position in the month of March 2009 with 99.1510, but after this it again increased regularly as compared to last year it has been increased by at least 110%. It was at the highest position in the month of Jan 2010 with 235.84. The fund return, S & P CNX Nifty AND Sensex return of HDFC was excellent year before from-today and it was also increased by approximately 400% in case of all returns, but again from last 3 months to year-to-date it again decreased at very rapid speed even though it goes into negative with -3.25, -5.52 & -5.93 respectively. In 2009 Annual return from fund, S & P CNX Nifty & Sensex was appreciative as compared to 2008 with Fund -49.68 to 105.57, S & P CNX Nifty -51.79 to 75.76 & Sensex from -52.45 to 81.03. But the first quarter of the year 2009 was very bad, the returns was -3.14 but it recovered in next quarter & increased to 58.81 but again decreased to 9.06 in last quarter of 2009.

SBI Mutual Fund

A joint Venture of SBI i.e. one of the Indias largest Banking Enterprise & Society General Asset Management (France). It is a public Co. with 37% foreign & 63% Domestic ownership. Has total Asset of Rs. 36,623.30, with 15 Open Ended Equity Funds. It has 90.36% of Equiyty , 1.288% Debts & remaining with others. NAV of SBI Mutual Fund increased by 90% from 19.79 inn Feb 2009 to 36.96 in Feb 2010, in between this from March 2009 it was increased regularly. NAV also fluctuates as same with the fluctuation in the BSE 100.

The SBI Mutual Fund returns adversely decreased year-to-date as compared to the last year i.e. from 91.63 to -4.41. Along with this the S & P CNX Nifty & Sensex also decreased according to the last year i.e. 76.06 & 81.11 to -6.02 & -6.51 resp. But annual return of the Fund, S & P CNX Nifty & Sensex recovered well in year 2009 as compared to the year 2008. As it was increased annually from 2005 but suddenly fall below 0 i.e. into the negative in the year 2008. Reason for fall/decrease in the returns due to decreased in all quarter of the year 2008, but in 2nd quarter of Feb 2009 it was recoveredwell but again fall down to 6.27 in 4th/lass quarter of the year 2009.

Why Equity Fund:

All of us aspire for wealth to be able to finance at least some of our dreams. Giving our family the very best, educating the children, including in a hobby things that can make our lives more rewarding. One of the best chances of doing so is by investing wisely and regularly today. When one is investing for the long-term, one has to look at generating a return that is greater than inflation. For example, if you get a return of 10% from your investment and inflation is 8% then the real return you have made is 2%. Studies show that Equity and Equity linked instruments tend to outperform all other forms of investment in the long run. Hence you should look at investing some portion of your money in Equity Market with an aim to meet future goal comfortably. From the bar chart given below we can see that returns averages of all the equity as compared to oyher is extremely large it is equivalent to the returns from the S & P Nifty, BSE 100, Sensex etc. It is a good source to earn more returns.

After interpreting the above data the following conclusion has been made. As I have compared three equity funds viz. Reliance Equity Mutual Fund, HDFC Equity Mutual Fund & SBI Equity Mutual Fund. I can conclude that though there were good positive returns for last one year but it has showed a decreasing negative return for last three quarter. We should consider investment in Equity-oriented schemes as medium to long-term investments as encashment in the early years may result in capital due to market fluctuation. The recovery I equity market has been a surprise element. While macroeconomic indicators accounts the globe continues to be gloomy, the domestic market has mange to add nearly 1000 points. When one is investing for a long term one has to look at generating return that is greter than inflation. Studies show that equity and equity linking instrument tends to outperform all other form of investment in the long run. Hence one should look at investing some portion of our money in the equity market with an aim to meet future goals comfortably. The cumulative annualized return of equity market as compare to other different asset classes has shown higher returns.

9 # Recommendation

Mutual Fund companies need to reduce entry load and exit load of Mutual Fund scheme to make people more interested in Mutual Fund. Mutual Fund need to increase the Net Asset Value and reduce the liability of all Schemes. Fund Manager need to increase their efficiency to make better portfolio and greater returns to the investors.

Products and Schemes should be recommended to the customers as per their requirement. Intensive promotional activities are needed to make Mutual Fund more popular investment solution in urban area.

Disclosure of terms condition of the Mutual fund contract is very essential and Investor Education is also equally important. More promotion is needed to make aware of Financial Market in India as a majority of the population in India lives in rural area and through promotional activities only we can make rural people aware about Mutual Fund, which is one of the best investment solutions in India.

10 # Bibliography

RAGHUNATHAN, 2008. Stock Exchanges, Investments and Derivatives. New Delhi: Tata Mc - Graw Hill Publishing Co., Ltd. GORDON, 2008. Financial Market and services. Himalaya books Pvt. Ltd.