Beruflich Dokumente
Kultur Dokumente
Santosh Rajpurohit G I H M (Pondicherry University) HDFC Mutual Fund Mr. Himanshu Verma Mr. Anish Vasant
Special Thanks
Mr. Shaurya Pratap Singh College Director Ms. Shipra Singh College Coordinator Mr. Amit Doshi Branch Manager HDFC AMC Ms. Prathna Dave Manager HDFC AMC
PREFACE
For any management course, summer training is essential and important part of curriculum of MBA degree. It is an exposure to corporate environment and help MBA aspirants to get acquainted with organizational norms, procedure, practices, ethics, and culture. It also gives an insight of actual functioning of the organization. It helps the student to understand and to correlate with theoretical 1
aspect with practical reality. It was the great experience with HDFC AMC during summer project which has helped me to improve my communication and interpersonal skills and also give me the better understanding of the subject.
ACKNOWLEDGEMENT
Pondicherry University is outstanding among the Central Universities in India. Teaching and research are its primary functions as in other Central Universities. Pondicherry University believes in creating and disseminating knowledge and skills in core and frontier areas through innovative educational programs, research, consulting and publishing and developing a new age of professionals 2
with a high level of competence and deep sense of ethics and commitment to the code of professional conduct. I Santosh Rajpurohit the students of MBA Batch 2010-12 program is required to undertake Summer Internship Programmer in order to fulfill the requirements of the MBA course as per the assignments given by the Pondicherry university. SIP contains detailed information regarding the activities done. This SIP gives a clear-cut idea about practical field that how theoretical knowledge is different from practical aspects & how can I use my knowledge to solve these problems. However I have collected following Company, Customers and Competitors data during my SIP. I extend my sincere thanks to all the staff members of HDFC AMC for providing a very hospitable and helpful work environment and making my summer training an exciting and memorable event I also acknowledge heart felt gratitude for all those people who have made available tons of information required for our Project. The successful accomplishment of any task is incomplete without acknowledging the contributing personalities who both assisted and inspired and lead us to visualize the things that turn them into successful stories for our successors. I thank the Almighty God for his grace bestowed on us throughout this project. Last, but not the least, I would like to thank my Parents and all my Friends for their wholehearted direct and indirect support and encouragement.
INSIDE
Company Details Growth of HDFC Mutual Fund History of Mutual Fund Organization of Mutual fund Research on Mutual fund Types of Mutual fund Conclusion Bibliography
INTRODUCTION
The significant outcome of the government policy of liberalization in industrial and financial sector has been the development of new financial instruments. These new instruments are expected to impart greater competitiveness, flexibility and 4
efficiency to the financial sector. Growth and development of various mutual fund products in Indian capital market has proved to be one of the most catalytic instruments in generating momentous investment growth in the capital market. These is a substantial growth in the mutual fund market due to a high level of precision in the design and marketing of variety of mutual fund products by banks and other financial institution providing growth, liquidity and return. In this context, prioritization, preference building and close monitoring of mutual funds are essential for fund managers to make this the strongest and most preferred instrument in Indian capital market for the coming years. With the decline in the bank interest rates, frequent fluctuations in the secondary market and the inherent attitude of the Indian small investors to avoid risk, Mutual Funds are taking their place. Mutual funds combine various elements of liquidity, return and security in making themselves as the best possible alternative for the small investors in Indian market. I have attempted to study various need expectations of small investors from different types of mutual funds available in the Indian market and identify the risk return perception with the purchase of Mutual Funds. The Indian financial system in general and the mutual fund industry in particular continue to take turn around from early 1990s. During this period mutual funds have pooled huge investments for the corporate sector. The investment habit of the small investors particularly has undergone a sea change. Increasing number of players from public as well as private sectors has entered in to the market with innovative schemes to cater to the requirements of the investors, in India and abroad. For all investors, particularly the small investors, mutual funds have provided a better alternative to obtain benefits of expertise- based equity investments to all types of investors.
COMPANY PROFILE
The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. In 1998, Standard Life Investment Limited became the dedicated investment management company of The Standard Life Group and is owned 100% by the Standard Life Assurance Company. With the global assets under management of approximately US$186.45 billion as at March 31, 2005, Standard Life Investment Limited is one of the worlds major investment companies and is responsible for investing money on behalf of five million retail and institutional clients worldwide. With its headquarters in Edinburgh, Standard Life Investment Limited has an extensive and developing global presence with operations in the United Kingdom, Ireland, Canada, USA, China, Korea and Hong Kong. In order to meet the different needs and risk profiles of its clients, Standard Life Investment Limited manages a diverse portfolio covering all the major markets world-wide, which includes a range of private and public equities, government and company bonds, property investments and various derivative instruments. HDFC Trustee Company Ltd. A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited. HDFC asset Management Company (AMC) HDFC AMC was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the Mutual Fund by SEBI on July 3, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, 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 AMC is Rs. 75.161 crore. The present share holding pattern of AMC is as follows:
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals. On obtaining the regulatory approvals, the Schemes of Zurich India Mutual Fund has now migrated to HDFC Mutual Fund on June 19, 2003. The AMC 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 TaxSaver (HTS), HDFC Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC Sovereign Gilt Fund (HSGF) and HDFC Cash Management Fund (HCMF). The AMC is also managing the respective Plans of HDFC Fixed Investment Plan, a closed ended Income Scheme. The AMC 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. The Certificate of Registration is valid from January 1, 2001 to December 31, 2003. The AMC is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund.
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What is particularly noteworthy is that bulk of the mobilization has been by the private sector mutual funds rather than public sector mutual funds. Indeed private MFs saw a net inflow of Rs. 7819.34 crore during the first nine months of the year as against a net inflow of Rs.604.40 crore in the case of public sector funds. Mutual funds are now also competing with commercial banks in the race for retail investors savings and corporate float money. The power shift towards mutual funds has become obvious. The coming few years will show that the traditional saving avenues are losing out in the current scenario. Many investors are realizing that investments in savings accounts are as good as locking up their deposits in a closet. The fund mobilization trend by mutual funds in the current year indicates that money is going to mutual funds in a big way. The collection in the first half of the financial year 1999-2000 matches the whole of 1998-99. India is at the first stage of a revolution that has already peaked in the U.S. The U.S. boasts of an Asset base that is much higher than its bank deposits. In India, mutual fund assets are not even 10% of the bank deposits, but this trend is beginning to change. Recent figures indicate that in the first quarter of the current fiscal year mutual fund assets went up by 115% whereas bank deposits rose by only 17%. (Source: Thinktank, The Financial Express September 99) This is forcing a large number of banks to adopt the concept of narrow banking wherein the deposits are kept in Gilts and some other assets, which improves liquidity and reduces risk. The basic fact lies that banks cannot be ignored and they will not close down completely. Their role as intermediaries cannot be ignored. It is just that Mutual Funds are going to change the way banks do business in the future.
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Third Phase - 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 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. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.
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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. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
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By Structure:
Open-ended Funds An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. Closed-ended Funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified 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 they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
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By Investment Objective:Income Funds The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and government securities. Income Funds are ideal for capital stability and regular income. Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer shortterm instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods.
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Load Funds: A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds: A no-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.
Other Schemes:Tax saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000. Special Schemes: Industry Specific Schemes Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG and Pharmaceuticals etc.
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Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sense or the NSE 50 Sectoral Schemes Sect oral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.
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In the above graph shows how Mutual Fund works and how investor earns money by investing in the Mutual Fund. Investors put their saving as an investment in mutual fund. The fund manager, who is a person who takes the decisions where the money should be invested in securities according to the schemes objective. Securities include Equities, Debentures, Govt. securities, Bonds and Commercial Paper etc. These securities generate returns to the fund manager. The fund manager passes beck return to the investor.
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3. Receive dividend within 42 days of their declaration and receive the redemption or repurchase proceeds within 10 days from the date of redemption or repurchase. 4. Vote in accordance with the Regulations to:a. Approve or disapprove any change in the fundamental investment policies of the scheme, which are likely to modify the scheme or affect the interest of the unit holder. The dissenting unit holder has a right to redeem the investment. b. Change the Asset Management Company. c. Wind up the schemes. 5. Inspect the documents of the Mutual Funds specified in the scheme's offer document.
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would like to take some risk and invest in equity funds/capital market. However, since their appetite for risk is also limited, they would rather have some exposure to debt as well. For these investors, balanced funds provide an easy route of investment. Armed with the expertise of investment techniques, they can invest in equity as well as in good quality debt thereby reducing risk and providing the investor with better returns than he could otherwise manage. Next problem is that of our funds or money. A single person cant invest in multiple high-priced stocks for the sole reason that his pockets are not likely to be deep enough. This limits him from diversifying his portfolio as well as benefiting from multiple investments. Investing through MF route enables an investor to invest in many good stocks and reap benefits even through a small investment. This not only diversifies the portfolio and helps in generating returns from a number of sectors but reduces the risk as well. Through identification of the right fund might not be an easy task, a good investment consultants and counselors will can investors take informed decision. Investing in just one Mutual Fund scheme may not meet all investment needs. One might consider investing in a combination of schemes to achieve your specific goals. Here is the risk, return grid that shows how and where an investor can invest according to his risk, returns appetite. An investor can see different kinds of funds where in he can get maximum benefit with utmost care.
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4. Investing too little too late: People do not pay themselves first. Most people these days have too many bills to pay every month, and planning for your future often takes a backseat. Regardless of age or income, if you do not place long-term investing among your top priorities, you may not be able to meet your financial goals. The sooner you start, the less you have to save every month to reach your financial goals. 5. Do not put all your eggs into one basket, diversify: When it comes to investing, most of us do not appreciate the importance of diversification. While we know that we should not put all our eggs in one basket, we often relate this concept to stocks and bonds. Take the time to discuss the importance of diversifying investments among different assets categories and industries. When you spread your holdings around, you do not have to rely on the success of just one investment.
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Mutual funds serve as a link between the saving public and the capital markets. They mobilize savings from the investors and bring them to borrowers in the capital markets. Today mutual funds are fast emerging as the favorite investment vehical because of the many advantages they have over other forms and avenues of investing. The major advantages offered by mutual funds to all investors are: Professional Management Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification 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
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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.
Variety
Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly it offers an opportunity to investors to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund ( equity scheme) and Income Fund (Debt scheme) depending on his risk appetite and thus creates balanced portfolio easily or simply just buy a Balanced scheme.
Convenient Administration Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and 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 Cost Mutual Finds 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. Liquidity In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can 28
be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Transparency 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. Flexibility 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. Affordability Investors individually may lack sufficient funds to invest in high-grade stock. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy. Choice of schemes Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. Regulations All Mutual Funds are registered with SEBI and they function within the provision of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. Tax Benefits Any income distributed after March 31, 2002 will be subject to tax in assessment of all unit holders. However, as a measure of concession to unit holders of open-
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ended equity-oriented funds, income distributions for the year ending March 31,2003,will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction up to Rs 9000 from the Total income will be admissible in respect of income from investments specified in Section 80L, including income from units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax.
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Some facts for the growth of mutual funds in India 100% growth in the last 6 years. Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide. Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required. 31
We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities. Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products. SEBI allowing the MF's to launch commodity mutual funds. Emphasis on better corporate governance. Trying to curb the late trading practices.
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Investors cannot sue the trust, as they are the same as the trust and cant sure themselves. UTI is governed by the UTI act, 1963 and is voluntarily under SEBI regulations. UTI can borrow as well as lend and also engage in other financial services activities. SROs are the second tier in the regulatory structure; SROs cannot do any legislation on their own. All stock exchanges are SROs. AMFI is an industry association of mutual funds. AMFI is not yet a SEBI registered SRO. AMFI has created code for mutual funds. AMFI aims at increasing investor awareness about mutual finds, encouraging best practices and bringing about high standards of professional behavior in the industry.
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AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well-qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.
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FUTURE SCENARIO
The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal, Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind. In the U.S. most mutual funds concentrate only on financial funds like equity and debt. Some like real estate funds and commodity funds also take an exposure to physical assets. The latter type of funds are preferred by corporates who want to hedge their exposure to the commodities they deal with. For instance, a cable manufacturer who needs 100 tons of Copper in the month of January could buy an equivalent amount of copper by investing in a copper fund. For Example, Permanent Portfolio Fund, a conservative U.S. based fund invests a fixed percentage of its corpus in Gold, Silver, Swiss francs, specific stocks on various bourses around the world, short term and long-term U.S. treasuries etc. 36
In U.S.A. apart from bullion funds there are copper funds, precious metal funds and real estate funds (investing in real estate and other related assets as well.).In India, the Canada based Dundee mutual fund is planning to launch a gold and a real estate fund before the year-end. In developed countries like the U.S.A there are funds to satisfy everybodys requirement, but in India only the tip of the iceberg has been explored. In the near future India too will concentrate on financial as well as physical funds. The mutual fund industry is awaiting the introduction of DERIVATIVES in the country as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). SEBI is working out the norms for enabling the existing mutual fund schemes to trade in Derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
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DIFFERENT TERMS
Sale Price Sale price is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load. Repurchase Price 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 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 Sales load is a charge collected by a scheme when it sells the units. Also called, Front-end load. Schemes that do not charge a load are called No Load schemes.
The performance of a particular scheme of mutual fund is denoted by Net Assets Value (NAV).Mutual fund invest the money collected from the investors in securities markets. In simple word, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the 38
market vale of securities of a scheme divided buy the total no of units of the scheme of any particular date. For example if the market value if securities of a mutual fund scheme is Rs. 200 lakhs and mutual fund has issue 10 lakhs units of Rs.10 each 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 of weeklydepending on the type of scheme. The net assets value (NAV) is the actual value of one unit of a given scheme in any given business day. The NAV reflect the liquidation value of the funds investments on that particular day after accounting for all expenses. It is calculated by deducting all liabilities except unit capital of the fund from the realizable value of all assets and dividing it by number of units outstanding. So NAV is equals toMarket / fair value of schemes (+) Receivables (+) Accrued income (+) Other assets (-) Accrued expenses (-) Payables (-) Other liability (/) Number of unit outstanding. Here, "other assets" includes any income due to the fund but not received as on the valuation date (for example, dividend announced by a company but yet to be received). Similarly, "other liabilities" includes expenses payable by the fund, for example management fees payable to the AMC. Thus, SEBI requires that all expenses and incomes are accrued up to the valuation date and considered for NAV computation.
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Net Asset Value - NAV 1. In the context of mutual funds, the total value of the fund's portfolio less liabilities. The NAV is usually calculated on a daily basis.
2. In terms of corporate valuations, the book value of assets less liabilities. Notes: The NAV is usually below the market price because the current value of the funds assets is higher than the historical financial Net Asset Value Per Share - NAVPS 1. The value of a mutual fund share. Calculated by dividing the total net asset value of the fund by its number of outstanding shares. 2. A fundamental analysis indicator that gives an estimate of the value of a fund's shares after all assets are sold and all liabilities are paid off. Notes: 1. In other words, NAVPS is the value of a single unit of a mutual fund. This
figure is affected by both its underlying value and market forces. It is important to consider both these factors when buying a mutual fund because the price that the fund investors pay is based on them. 2. The NAVPS is usually below the market price per share because the
current value of the fund's assets is higher than the value appearing on the historical financial statements used in the NAVPS calculation. Financial statements used in the NAV.
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Unit Unit means the interest of the holders in a scheme. Each unit represents one undivided share in the assets of a scheme. The value of each changes depending on the performance of the fund. Asset Management Company (AMC) Making decisions regarding investment of the money of the unit holders is a tricky affair. People at the helm of affairs need to have knowledge about investment alternatives and should also have up- to- date information. This is where the role of an Asset Management Company comes into play. The AMC has to act as the investment manager of the Trust under the Board supervision and direction of the Trustees. The AMC should also be approved and registered with the SEBI as an AMC. Directors of the AMC should have adequate professional experience in financial services and should be individuals of high moral standing. One of the other objectives of forming an AMC is that of bringing about transparency in the working of a mutual fund. The AMC and its directors are answerable to the Trustees and must submit quarterly reports to them on AMC activities. They also have to make required disclosures to the investors in areas such as calculation of NAV and repurchase price. Lock in period: Lock-in-period is the minimum period for which investment made in new units of a scheme cannot be redeemed. Normally, this is specified for tax saving schemes.
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Systematic transfer plan: This is a plan offered by some funds under which an investor may choose to transfer a specified amount from their investments in one scheme of the fund to another scheme of the same fund at periodic intervals (usually monthly or quarterly). Systematic investments plan: Under these plans, the investor gives a mandate to the mutual fund to allot fresh units at specified intervals (monthly, quarterly, etc.) against which the investor provides post-dated cheques. On the specified dates, the cheques are realized by the mutual fund and, additional units at the prevailing NAV are allotted to the investor. This is highly convenient for a person who has a regular source of income and wishes to allocate a portion of the same towards savings. The investor does not need to spend time and effort in evaluating investments in each time interval and probably ensures that the surplus funds do not remain idle. It carries an additional advantage of Rupee Cost Averaging. By investing a fixed amount at regular intervals, one ends up buying more units when the price is low, and fewer units when the price is high. As a result, over a period of time, the average unit costs will always be less than average market price per unit, irrespective of whether the market is rising, falling or fluctuating.
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Conclusion
Following were my learning at HDFC Mutual Fund: Exposure to the financial market as a whole in practical world with respect to financial management as a subject in our academics. Knowledge with regards to getting the information from all employees Practical exposures from the view point of dealing with people form business prospective by offering them my companys products. First time experience of tracing the activities of the competitors in order to provide competitive edge to My SIP Company. Develop the ability to differentiate profitable and non-profitable customer for organization.
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BOOKS INVESTMENT MANAGEMENT , SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT STATISTICS FOR MANAGEMENT BY V.K.BHALLA BY LEVIN & RUBIN
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