project on mutual funds as an investment avenue

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Project on mutual funds as an investment avenue Document Transcript

y 1. A SUMMER PROJECT REPORT ON MUTUAL FUND ASAN INVESTMENT AVENUE AT PRESENTED TO ARNI

SCHOOL OF BUSINESS MANAGEMENT KATHGARG,

INDORA (HP) 2009-11 PRESENTED BY RANJEET SINGH

SAINI ID:-AEMB0060A/09Projectsformba.blogspot.com

y 2. (A) MUTUAL FUND1. INTRODUCTION A Mutual Fund isa trust that pools the savings of a number of investors who share

a common financial goal. The money thus collected is invested

by the fund manager in different types of securities depending

upon the objective of the scheme. These could range from shares

to debentures to money market instruments. The income earned

through these investments and the capital appreciations realized

by the scheme are shared by its unit holders in proportion to the

number of units owned by them (pro rata). Thus a Mutual Fund

is the most suitable investment for the common man as it offers

an opportunity to invest in a diversified, professionally managed

portfolio at a relatively low cost. Anybody with an inventible

surplus of as little as a few thousand rupees can invest in MutualFunds. Each Mutual Fund scheme has a defined investment

objective and strategy A Mutual fund is the ideal investment

vehicle for todays complex and modern financial scenario.

Markets for equity shares, bonds and other fixed income

instruments, real estate, derivatives and other assets have become

mature and information driven. Price changes in these assets are

driven by global events occurring in faraway places. A typical

individual is unlikely to have the knowledge, skills, inclination

and time to keep track of events, understand their implications

and act speedily. An individual also finds it difficult to keep track

of ownership of his assets, investments, brokerage dues and bank

transactions etc. A draft offer document is to be prepared at the

time of launching the fund. Typically, it pre specifies the

investment objectives of the fund, the risk associated, the costs


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involved in the process and the broad rules for entry into and exit

from the fundProjectsformba.blogspot.com

y 3. and other areas of operation. In India, as in most countries,these sponsors need approval from a regulator, SEBI (Securities

exchange Board of India) in our case. SEBI looks at track records

of the sponsor and its financial strength in granting approval to

the fund for commencing operations. A sponsor then hires an

asset management company to invest the funds according to the

investment objective. It also hires another entity to be the

custodian of the assets of the fund and perhaps a third one to

handle registry work for the unit holders (subscribers) of the

fund. In the Indian context, the sponsors promote the Asset

Management Company also,in which it holds a majority stake. In

many cases a sponsor can hold a 100% stake in theAsset

Management Company (AMC). E.g. Birla Global Finance is the

sponsor of theBirla Sun Life Asset Management Company Ltd.,

which has floated different mutualfunds schemes and also acts as

an asset manager for the funds collected under

theschemes.Characteristics: A mutual fund actually belongs to

the investors who have pooled their funds. A mutual fund is

managed by investment professionals and other service

providers, who earn a fee for their services, from the fund. The

pool of funds is invested in a portfolio of marketableinvestments. The value of the portfolio is updated every day.

The investors share in the fund is denominated by units. The

value of the units changes with change in the portfolios value,

every day. The value of one unit of investment is called the Net

Asset Value or NAV.Projectsformba.blogspot.com

y 4. 2. HISTORY OF THE INDIAN MUTUAL FUNDINDUSTRY:The mutual fund industry in India started in 1963

with the formation of Unit Trust ofIndia, at the initiative of the

Government of India and Reserve Bank the. The history

ofmutual funds in India can be broadly divided into four distinct

phases.First Phase: 1964-1987An Act of Parliament established

Unit Trust of India (UTI) on 1963. It was set up by theReserve

Bank of India and functioned under the Regulatory and

administrative control ofthe RBI. In 1978 UTI was de-linked

from the RBI and the Industrial Development Bank ofIndia


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(IDBI) took over the regulatory and administrative control in

place of RBI. The firstscheme launched by UTI was Unit Scheme

1964. At the end of 1988 UTI had Rs.6,700crores of

AUM.Second Phase: 1987-1993 (Entry of Public Sector

Funds)In 1987 marked the entry of non- UTI, public sector

mutual funds set up by public sectorbanks and Life Insurance

Corporation of India (LIC) and General Insurance Corporation

ofIndia (GIC). SBI Mutual Fund was the first non- UTI Mutual

Fund established in June1987.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 fundindustry, giving

the Indian investors a wider choice of fund families. Also, 1993

was theyear in which the first Mutual Fund Regulations came

into being, under which all mutualfunds, except UTI were to be

registered and governed. The erstwhile Kothari Pioneer

(nowProjectsformba.blogspot.com

y 5. merged with Franklin Templeton) was the first private sectormutual fund registered inJuly 1993. The industry now functions

under the SEBI (Mutual Fund) Regulations1996.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 undermanagement was way ahead of other

mutual funds.Fourth Phase Since February 2003In February2003, following the repeal of the Unit Trust of India Act 1963

UTI wasbifurcated into two separate entities. One is the

Specified Undertaking of the Unit Trust ofIndia 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 otherschemes.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.Projectsformba.blogspot.com

y 6. The graph indicates the growth of assets over theyears.GROWTH IN ASSETS UNDER

MANAGEMENTNote:Erstwhile UTI was bifurcated into UTI

Mutual Fund and the Specified Undertaking of the UnitTrust of

India effective from February 2003. The Assets under

management of the Specified Projectsformba.blogspot.com


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y 7. Undertaking of the Unit Trust of India has therefore beenexcluded from the total assets of theindustry as a whole from

February 2003 onwards. 3. MUTUAL FUND STRUCTURE The

Structure Consists The structure of mutual funds in India is

governed by the SEBI Regulations, 1996. These regulations

make it mandatory for mutual funds to have a 3-tier structure of

Sponsors- Trustee-AMC (Asset Management Company). The

Sponsor is the promoter of mutual fund, and appoints the

Trustee. The Trustees are responsible to the investors in the

mutual funds, and appoint the AMC for managing the investment

portfolio. The AMC is the Projectsformba.blogspot.com

y 8. business face of the mutual funds, as it manages all the affairsof mutual funds. Themutual funds and AMC have to be

registered by the SEBI.SponsorSponsor is the person who acting

alone or in combination with another body corporateestablishes a

mutual fund. Sponsor must contribute at least 40% of the net

worth of theInvestment Managed and meet the eligibility criteria

prescribed under the Securities andExchange Board of India

(Mutual Funds) Regulations, 1996.The Sponsor is notresponsible

or liable for any loss or shortfall resulting from the operation of

the Schemesbeyond the initial contribution made by it towards

setting up of the Mutual FundTrustThe Mutual Fund is

constituted as a trust in accordance with the provisions of theIndianTrusts Act, 1882 by the Sponsor. The trust deed is

registered under the Indian RegistrationAct, 1908.TrusteeTrustee

is usually a company (corporate body) or a Board of Trustees

(body ofindividuals). The main responsibility of the Trustee is to

safeguard the interest of the unitholders and inter-alia ensure that

the AMC functions in the interest of investors and inaccordance

with the Securities and Exchange Board of India (Mutual Funds)

Regulations,1996, the provisions of the Trust Deed and the Offer

Documents of the respectiveSchemes. At least 2/3rd directors of

the Trustee are independent directors who are notassociated with

the Sponsor in any manner.Asset Management Company

(AMC)Projectsformba.blogspot.com

y 9. The AMC is appointed by the Trustee as the InvestmentManager of the Mutual Fund. TheAMC is required to be

approved by the Securities and Exchange Board of India (SEBI)


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toact as an asset management company of the Mutual Fund. At

least 50% of the directors ofthe AMC are independent directors

who are not associated with the Sponsor in anymanner. The

AMC must have a net worth of at least 10 crores at all

times.Registrar and Transfer AgentThe AMC if so authorized by

the Trust Deed appoints the Registrar and Transfer Agent tothe

Mutual Fund. The Registrar processes the application form,

redemption requests anddispatches account statements to the unit

holders.CustodianA custodian handles the investment back office

of a mutual fund. Its responsibilitiesinclude receipt and delivery

of securities, collection of income, distribution of dividends,and

segregation of assets between schemes. The sponsor of a mutual

fund cannot act as acustodian to the fund. For example, Deutsche

Bank is a custodian, but it cannot serviceDeutsche Mutual Fund,

its mutual fund arm.DepositoryIndian capital markets are moving

away from having physical certificates for securities,

toownership of these securities in dematerialized form with a

Depository.Projectsformba.blogspot.com

y 10. 4.MUTUAL FUND OPERATIONMutual Fund OperationFlow Chart Fund managers investors Invest inPass toInvestor

stock &securities Generate returnProjectsformba.blogspot.com

y 11. 5.TYPES OF MUTUAL FUNDDiagramA Mutual Fund mayfloat several schemes, which may be classified on the basis of

itsstructure, its investment objectives and other objectives.Open

Ended SchemesProjectsformba.blogspot.com

y 12. As the name implies the size of the scheme (fund) is open i.e. not specified or pre- determined. Entry to the fund is always

open, the investor who can subscribe at anytime. Such fund

stands ready to buy or sell its securities at anytime. The key

feature of Open- ended schemes is Liquidity. It implies that the

capitalization of the fund is constantly changing as investors sell

or buy their shares. Further, the shares or units are normally not

traded on the stock exchange but are repurchased by the funds at

announced rates. Open- ended schemes have comparatively

better liquidity despite the fact that these are not listed. The

reason is that investors can any time approach mutual fund for

sale of such units. No intermediaries are required. Moreover, the


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realizable amount is certain since repurchase is at a price based

on declared net asset value (NAV). The portfolio mix of such

schemes has to be investments, which are actively traded in the

market. Otherwise it will not be possible to calculate NAV. This

is the reason that generally open-ended schemes are equity based.

In Open-ended schemes, the option of dividend reinvestment is

available.Close-Ended Schemes A Close ended schemes have a

definite period after which their shares/units are redeemed. The

scheme is open for subscription only during a specified period at

the time of launch of a scheme. 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. In these types of schemes, the size of the fund kept

to be constant. SEBI regulations stipulate that at least one of the

two exit routes is provided to the investor i.e. either repurchase

facility or through listing on stock exchanges. These mutual

funds schemes disclose NAV generally on weekly

basis.Projectsformba.blogspot.com

y 13. Interval schemes Interval Schemes combine the features ofboth open-ended and close-ended schemes. They are open forsale or redemption during pre-determined intervals at NAV based

prices.Mutual Fund schemes by Investment Objectives:EQUITY

FUNDSThese funds invest a major part of their corpus in

equities. The composition of the fundmay vary from scheme to

scheme and the fund managers outlook on various scrips.The

Equity Funds are sub-classified depending upon their investment

objective, asfollows: 1. Growth Fund: Aim to provide capital

appreciations over the medium to long term. These schemes

normally invest a majority of their funds in equities and are

willing to bear short term decline in value for possible future

appreciation. These schemes are not for investors seeking regular

income or needing their money back in the short- term 2.

Diversified Equity Fund: Diversified equity funds are the most

popular among investors. They invest in many stocks across

many sectors, and because they have the freedom to chop and


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churn their portfolios as they like, diversified equity

fundsProjectsformba.blogspot.com

y 14. are a good proxy to the stock market. If a general exposure toequities is what you want, they are a good option. They can

invest in all listed stocks, and even in unlisted stocks. They can

invest in which ever sector they like, in what ever ratio they like.

3. Equity Linked Savings Schemes (ELSS): Equity linked

savings schemes (ELSS) are diversified equity funds that

additionally offer income tax benefits to individuals. ELSS is one

of the many section 80c instruments, along with the more popular

debt options like the PPF, NSC and infrastructure bonds. In this

Section 80c grouping. ELSS is unique. Being the only instrument

to offer a total equity exposure. 4. Index Fund: An index fund is a

diversified equity fund; with a difference- a fund manager has

absolutely no say in stock selection. At all times, the portfolio of

an index fund mirrors an index, both in its choice of stocks and

their percentage holding. As of March 2004, equity index funds

tracked either the Sensex or the Nifty. So, an index fund that

mirrors the Sensex will invest only in the 30 Sensex stocks,

which too in the same proportion as their weight age in the index.

5. Sector Fund: Sector funds invest in stocks from only one

sector, or a handful of sectors. The objective is to capitalize on

the story in the sectors, and offer investors a window to profitfrom such opportunities. Its a very narrow focus, because of

which sector funds are considered the riskiest among all equity

funds. 6. Mid Cap Fund: These are diversified funds that target

companies on the fast growth trajectory. In the long run, share

prices are driven by growth in a companys turnover and profits.

Market players refer to them as mid-sized companies and mid-

cap stocks with size in this context being benchmarked to a

companys marketProjectsformba.blogspot.com

y 15. value. So, while a typical large cap stock would have amarket capitalization of over Rs 1,000 crores, a mid-cap stock

would have a market value of Rs 250-2,000 crores.DEBT

FUNDSThese Funds invest a major portion of their corpus in

debt papers. Government authorities,private companies, banks

and financial institutions are some of the major issuers of

debtpapers. By investing in debt instruments, these funds ensure


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low risk and provide stableincome to the investors.Debt funds are

further classified as: 1. Gilt Funds: Invest their corpus in

securities issued by Government, popularly known as GOI debt

papers. These Funds carry zero Default risk but are associated

with Interest Rate risk. These schemes are safer as they invest in

papers backed by Government. 2. Income Funds: Income funds

aim to maximize debt returns for the medium to longer term.

Invest a major portion into various debt instruments such as

bonds, corporate debentures and Government securities. 3. MIPs:

Invests around 80% of their total corpus in debt instruments

while the rest of the portion is invested in equities. It gets benefit

of both equity and debt market. These scheme ranks slightly high

on the risk-return matrix when compared with other debt

schemes. 4. Short Term Plans (STPs): Meant for investors with

an investment horizon of3-6 months. These funds primarily

invest in short term papers like Certificate

ofProjectsformba.blogspot.com

y 16. Deposits (CDs) and Commercial Papers (CPs). Some portionof the corpus is also invested in corporate debentures. 5. Liquid

Funds: Also known as Money Market Schemes, These funds are

meant to provide easy liquidity and preservation of capital. These

schemes invest in short- term instruments like Treasury Bills,

inter-bank call money market etc. These funds are meant forshort-term cash management of corporate houses and are meant

for an investment horizon of 1day to 3 months. These schemes

rank low on risk-return matrix and are considered to be the safest

amongst all categories of mutual funds. 6. Floating Rate Funds:

These income funds are more insulated from interest rate than

their conventional peers. In other words, interest rate changes,

which cause the NAV of a conventional debt fund to go up or

down, have little, or no, impact on NAVs of floating rate

funds.BALANCED FUNDSThese funds, as the name suggests,

are a mix of both equity and debt funds. They invest inboth

equities and fixed income securities, which are in line with pre-

defined investmentobjective of the scheme. These schemes aim

to provide investors with the best of both theworlds. Equity part

provides growth and the debt part provides stability in

returns.Each category of funds is backed by an investment

philosophy, which is pre-defined in theobjectives of the fund.


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The investor can align his own investment needs with the

fundsobjective and invest accordingly.HYBRID FUNDS:-

Projectsformba.blogspot.com

y 17. 1. Growth and Income Fund: Strike a balance capitalappreciation and income for the investors. In these funds

portfolio is a mix between companies with good dividend paying

record and those with potential capital appreciation. These funds

are less risky than growth funds bit more than income funds. 2.

Asset Allocation Fund: These funds follow variable asset

allocation policy. These move in an out of an asset class (equity,

debt, money market or even non-financial assets). Asset

allocation funds are those, which follow more stable allocation

policies like balanced funds. Those, which flexible allocation

policies, are like aggressive speculative funds.6. COMPARISON

OF MUTUAL FUNDProjectsformba.blogspot.com

y 18. InvestMutual Investment Who Should ment RiskFundObjective Portfolio Invest Horiz on 3Equity Long-term Capital

Aggressive investors High Risk Stocks & Shares years +Funds

Appreciation Long term Inv. Capital Balanced ratio ofBalanced

Growth & Regular Market Risk equity and debt funds Moderate

& 2Funds Income and Interest to ensure higher Aggressive years

+ Risk returns at lower risk To generate returns that are NAV

varies Portfolio indices like 3Index Funds commensurate with

with index Aggressive investors. BSE, NIFTY etc years + returns

of performance respective indices 12 Interest Rate Government

Salaried & conservativeGilt Funds Security & Income months

Risk securities investors + Credit Risk & Debentures, 12 Salaried

& conservativeBond Funds Regular Income Interest Rate Govt

securities, months investors Risk Corporate Bonds + Treasury

Bills, Liquidity + Certificate of Park funds in current 2

daysMoney Moderate Income + Negligible Deposits, A/cs or

short-term - 3Market Reservation of Commercial Papers, Bank

Dep. weeks Capital Call MoneyShort-term Call Money,Funds 3

weeks CommPapers,(Floating - Liquidity + Little Interest Those

with surplus - Treasury Bills, CDs,short-term) Moderate Income

Rate short-term funds 3 Short-term Govt. months

securities.Projectsformba.blogspot.com


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y 19. 7.ADVANTAGES OF MUTUAL FUNDDiagram 6Affordability Diversification Variety Regulations Professional

Tax Benefits MgmtMutual Funds offer several benefits to an

investor that are unmatched by the otherinvestment options. Last

six years have been the most turbulent as well as exiting ones

forthe industry. New players have come in, while others have

decided to close shop by eitherselling off or merging with others.

Product innovation is now pass with the game shiftingto

performance delivery in fund management as well as service.

Those directly associatedwith the fund management industry like

distributors, registrars and transfer agents, andeven the regulators

have become more mature and responsible. 1. Affordability :

Small investors with low investment fund are unable to invest in

high-grade or blue chip stocks. An investor through Mutual

Funds can be benefited from a portfolio including of high priced

stock. 2. Diversification : Investors investment is spread across

different securities (stocks, bonds, money market, real estate,

fixed deposits etc.) and different sectors (auto, textile, IT etc.).

This kind of a diversification add to the stability

ofProjectsformba.blogspot.com

y 20. returns, reduces the risk for example during one period oftime equities might under perform but bonds and money market

instruments might do well do well and may protect principalinvestment as well as help to meet return objectives. 3. 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 4. Professional Management: Mutual Funds

employ the services of experienced and skilled professionals and

dedicated investment research team. The whole team analyses the

performance and balance sheet of companies and selects them to

achieve the objectives of the scheme. 5. Tax Benefits: Depending

on the scheme of mutual funds, tax shelter is also available. As

per the Union Budget-99, income earned through dividends from

mutual funds is 100% tax free. Under ELSS of open-ended

equity-oriented funds an exemption is provided up to Rs.

100,000/- under section 80C. 6. Regulation: 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


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AAA rating is considered the safest whereas a D rating is

considered poorcredit quality. A well-diversified portfolio might

help mitigate this risk.INFLATION RISK:Things you hear

people talk about: Rs. 100 today is worth more than Rs. 100

tomorrow.Remember the time when a bus ride costed 50

paisa?Mehangai Ka Jamana Hai.The root cause, Inflation.

Inflation is the loss of purchasing power over time. A lot oftimes

people make conservative investment decisions to protect their

capital but end upwith a sum of money that can buy less than

what the principal could at the time of

theProjectsformba.blogspot.com

y 23. investment. This happens when inflation grows faster thanthe return on your investment.A well-diversified portfolio with

some investment in equities might help mitigate this

risk.INTEREST RATE RISK:In a free market economy interest

rates are difficult if not impossible to predict. Changesin interest

rates affect the prices of bonds as well as equities. If interest rates

raise theprices of bonds fall and vice versa. Equity might be

negatively affected as well in a risinginterest rate environment. A

well-diversified portfolio might help mitigate this

risk.POLITICAL/GOVERNMENT POLICY RISK:Changes in

government policy and political decision can change the

investmentenvironment. They can create a favorable environmentfor investment or vice versa.LIQUIDITY RISK:Liquidity risk

arises when it becomes difficult to sell the securities that one has

purchased.Liquidity Risk can be partly mitigated by

diversification, staggering of maturities as wellas internal risk

controls that lean towards purchase of liquid securities.10.NET

ASSET VALUE Net Asset Value

(NAV)Projectsformba.blogspot.com

y 24. The net asset value of the fund is the cumulative market valueof the assets fund net of its liabilities. In other words, if the fund

is dissolved or liquidated, by selling off all the assets in the fund,

this is the amount that the shareholders would collectively own.

This gives rise to the concept of net asset value per unit, which is

the value, represented by the ownership of one unit in the fund. It

is calculated simply by dividing the net asset value of the fund by

the number of units. However, most people refer loosely to the


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NAV per unit as NAV, ignoring the "per unit". We also abide by

the same convention. Definition of NAV Net Asset Value, or

NAV, is the sum total of the market value of all the shares held in

the portfolio including cash, less the liabilities, divided by the

total number of units outstanding. Thus, NAV of a mutual fund

unit is nothing but the book value. Calculation of NAV The most

important part of the calculation is the valuation of the assets

owned by the fund. Once it is calculated, the NAV is simply the

net value of assets divided by the number of units outstanding.

The detailed methodology for the calculation of the asset value is

given below. Asset value is equal to Sum of market value of

shares/debentures + Liquid assets/cash held, if any +

Dividends/interest accrued Amount due on unpaid

assetsProjectsformba.blogspot.com

y 25. Expenses accrued but not paid Other liabilitiesNAV per unit= ------------------------------------------------------------------ No. of

units outstanding of the scheme Details on the above items For

liquid shares/debentures, valuation is done on the basis of the last

or closing market price on the principal exchange where the

security is traded For illiquid and unlisted and/or thinly traded

shares/debentures, the value has to be estimated. For shares, this

could be the book value per share or an estimated market price if

suitable benchmarks are available. For debentures and bonds,value is estimated on the basis of yields of comparable liquid

securities after adjusting for illiquidity. The value of fixed

interest bearing securities moves in a direction opposite to

interest rate changes Valuation of debentures and bonds is a big

problem since most of them are unlisted and thinly traded. This

gives considerable leeway to the AMCs on valuation and some of

the AMCs are believed to take advantage of this and adopt

flexible valuation policies depending on the situation.Interest is

payable on debentures/bonds on a periodic basis say every 6

months. But, withevery passing day, interest is said to be

accrued, at the daily interest rate, which iscalculated by dividing

the periodic interest payment with the number of days in

eachPeriod. Thus, accrued interest on a particular day is equal to

the daily interest ratemultiplied by the number of days since the

last interest payment date.Projectsformba.blogspot.com


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y 26. Usually, dividends are proposed at the time of the AnnualGeneral meeting and becomedue on the record date. There is a

gap between the dates on which it becomes due and theactual

payment date. In the intermediate period, it is deemed to be

"accrued".Expenses including management fees, custody charges

etc. are calculated on a daily basis.NAV and its impact on the

returnsWe feel that a MF with lower NAV will give better

returns. This again is due to the wrongperception about NAV. An

example will make it clear that returns are independent of

theNAV.Say, you have Rs 10,000 to invest. You have two

options, wherein the funds are same asfar as the portfolio is

concerned. But say one Fund X has an NAV of Rs 10 and

anotherFund Y has NAV of Rs 50. You will get 1000 units of

Fund X or 200 units of Fund Y.After one year, both funds would

have grown equally as their portfolio is same, say by25%. Then

NAV after one year would be Rs 12.50 for Fund X and Rs 62.50

for Fund Y.The value of your investment would be 1000*12.50 =

Rs 12,500 for Fund X and 200*62.5= Rs 12,500 for Fund Y.

Thus your returns would be same irrespective of the NAV.It is

quality of fund, which would make a difference to your returns.

In fact for equityshares also broadly this logic would

apply.Misconception about NAVThis situation arises from the

perception that a fund at Rs 10 is cheaper than say Rs 15 orRs

100. However, this perception is totally wrong and investors

would be much better offonce they appreciate this

fact.Projectsformba.blogspot.com

y 27. Two funds with same portfolio are same, no matter what theirNAV is. NAV is immaterial.Why people carry this perception is

because they assume that the NAV of a MF is similarto the

market price of an equity share. This, however, is not true.11.

BASIC CONCEPTS OF LOADS : 1. Entry Load: The load

charged at the time of investment is known as entry load. Its

meant to cover the cost that the AMC spends in the process of

acquiring subscribers commission payable to brokers,

advertisements, register expenses etc. The load is recovered by

way of charging a sale price higher than the prevailing NAV. 2.

Exist Load: Some AMC do not charge an entry load but they

charged an exist load i.e., they deduct a load before paying out

the redemption proceeds. Psychologically, investors are much


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more willing to pay exist loads as compared to entry loads. 3.

Unit: Units mean the investment of the unit holders in a scheme.

Each unit represents one undivided share in the assets of a

scheme. The value of each unit changes, depending on the

performance of the fund.12.FACTORS AFFECTING MUTUAL

FUND1. Governmental InfluencesMutual fund business is a

highly regulated business throughout the world as it seeks

toensure that quality and fairly priced schemes are available.

Governmental intervention thusin mutual fund market usually is

most needed to ensure that insurers are reliable. And inthe

developing countries the additional goal may be promotion of

domestic mutual fundindustry and ensuring the national mutual

fund industry contributes to overall

economicProjectsformba.blogspot.com

y 28. development. In a non technical sense mutual fund ispurchased in a good faith so the dutyof government intervention

in mutual fund industry is to ensure that this principle ofmutual

fund is never defeated.The ideology of government plays an

important role in mutual fund industry also. Forexample in the

past during 1991, the P .V Narsimha Rao government strongly

believed inliberalization also liberalized the mutual fund sector

which helped to allow private playersin the industry from 1993

and enhancing joint ventures with foreign companies.The presentgovernment with more focuses on foreign direct investments has

declared tofavor the rise FDI in mutual fund to 49% which

further enhances competition in theindustry.2. Taxation

PolicySocial equity being one of the motives behind tax

collections, government give certainexemptions from such

levying. One such exemption is deduction incurred by

taxpayerstowards investment in mutual fund coverage. Similarly,

capital invested in infrastructurebonds etc is offered with certain

concession under tax laws. The central idea behind

suchexemptions is that the capitals so allocated by individuals

reduce the ultimate burden onthe public infrastructure or helps in

creating such infrastructural facilities.The income tax rules

related to the mutual fund transactions can be classified

under:[A] Exemptions available to companies or businesses[B]

Exemptions available to insured individuals[A] Exemptions

available to companies Expenses deductible from commission


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earned by distributor, banker, national

distributor.Projectsformba.blogspot.com

y 29. Tax concessions under risk management practices of anenterprise In growth option equity schemes there no long term

capital gain by company. In dividend option equity schemes

there no tax. Return received by charitable trust is total

exempted from tax. Else schemes give to advantage of tax

saving, growth potential and return.[B] Tax rules governing

investment by individualsDeduction in respect of ELSS schemes

(sec 80C):Investment in this fund would enable you to avail the

benefits under clause (xiii) of asection 80C of the Income Tax

Act investment made in the schemes up to 1 lakh by theeligible

investor for deduction under this section of the Act.Since it will

be an income deduction an investment of Rs 1 lakh in this fund

can save offRs. 33600 from your tax payable liability (assuming

you are in the highest tax bracket)Investor will receive tax free

dividend in above case.Investor will also receive tax free

dividend by investing equity schemes in dividend

optionInvestors also receive tax free return by investing equity

schemes in growth option for longterm capital gain. C Tax

planningsAn individual can think of health ELSS schemes

purchase as a tool of tax planningexercise. For example people

who are marginally affected by tax liability can be aswellpurchase a ELSS fund get benefits of Rs. 33600 from tax. In

this way tax burden isbecome less by purchasing ELSS

fund.Thus tax law offer benefit to individuals/companies by way

of exemptions/deductions ofexpenditure incurred towards

purchase of mutual fund various schemes coverage fromtotal

taxable income.Projectsformba.blogspot.com

y 30. 3. Foreign Trade RegulationsWith the vast potential formutual fund in India due its large population in the countrymany

foreign companies are ready to enter into the Indian market. But

companies can bepermitted in India through joint ventures with

an Indian partner as well as come separatelyand the foreign

equity shall be restricted to only 25%. Another statement also

tells thatIndian subsidiaries of foreign companies shall not be

allowed to participate in bankingsector unless they entered in to

joint ventures with the Indian partners.But at present the mutual


17/37

fund regulator is in favor of hike in FDI cap from 25% to

49%,and is finalizing a report that will be submitted to the

government for a comprehensivelegislation for the industry. The

security exchange board of India and association of mutualfund

India have been advocating a hike in FDI limit for mutual fund

companies so that theforeign partners can infuse additional funds

in these companies to sustain their growth.The government will

need to amend the separate mutual fund Act for FDI capital as

wellas domestic company as this is the statutory provision unlike

sectors like civil aviation andtelecom, which have come through

notification.4. National IncomeThe relative importance of the

mutual fund Market within a country will also be dependentupon

economic development. With greater rates of economic growth,

consumption ofinvestment should increase as a result of

increased income, and an increased stock ofassets requiring

mutual fund. Furthermore, the development of mutual fund is

likely tofacilitate greater economic growth, implying that

economic growth may be endogenous.Consistent with these

arguments, studies find that the level of financial development

andProjectsformba.blogspot.com

y 31. economic development are positively related to the level ofmutual fund across emergingmarkets.5. Consumptions and

SavingsThe gross capital formation of any country is importantfor indication of its growth in thefuture years. It is quite

necessary to set up the rate of capital formation so that a large

stockof machines, tools and equipments are accumulated in a

country. Experience ofdevelopment in other countries suggests

that a high rate of capital formation was achievedto trigger rapid

rate of economic growth. With the hike in foreign capital coming

to Indiathe rate of capital formation is becoming boom to

insurers, which has given themopportunities. It is heartening to

them to note that latest savings rate of 28% is highest tillnow and

with the growth rate near to 8% is bringing a pool of buyers

purchasing power.This directly influences the demand for mutual

fund products.6. EmploymentThe effect of employment on

mutual fund industry is as direct as that on economicdevelopment

of any country. With the rising levels of employment the effect

on mutualfund industry is positive because employment adds to

the insured properties and assetsfrom every prospective be it due


18/37

to organized or unorganized.7. InflationThe midterm policy

review the strong macroeconomic indicators and RBI has revised

itsGDP growth estimates to the upper limit of the earlier

projection range 8% inflation (WPI)Projectsformba.blogspot.com

y 32. has been steadily moving up in recent times and RBI hashighlighted that primary articlesprices have been on of the key

contributors. However one needs to keep in mind thatrecent

increase in global oil prices.8. Money supplyThe central banks

has indicated that credit growth and money supply number are

likely tobe above its prosecution for the current fiscal year, the

statement to consider promptly allpossible measures as

appropriate to the evolving global and domestics situation

isindicative of phased increase in FII limits for gilt investment

could help in depending thesecurities market and is part of the

road map towards fuller convertibility.9. InterestInterest is major

factor for investment when a person find less return from

investment toolthan people move towards the higher returns tool

of investment.10. Risk factorAll investments in Mutual Fund and

securities are subject to market risks and the NAV ofthe fund

may go up or down depending on the factors and forces affecting

the securitymarket. There can be no assurance that the funds

objective will be achieved. Pastperformance of the

sponsors/Mutual fund/schemes/AMC is not necessarilyindicative ofthe future results. The name of the schemes does not

in any manner indicate their quality,their future prospects or

returns.The specific risk would be credit, market, illiquidity,

judgmental error, interest rate, swapsand forward

rates.Projectsformba.blogspot.com

y 33. 11. Demographic environmentThe demographic environmentsignificantly affects the demand for the mutual fundindustry.

Factors like the average age of the population, levels of

education, householdstructures income distribution, life style and

the extent of industrialization as well asurbanization terribly

influences the demand of mutual fund schemesIn India the

average age of the population is at an increasing trend following

the improvedmedical technology and better awareness of health

care requirements. As a result, the riskof investment death is

decreasing while connectivity is increasing. Simultaneously


19/37

thedemand for pension funds and income fund is expected to

grow. Forexample at the time of independence the average age of

dying for Indians was 45.Presently it has increased to 65

following better healthcare, improvements in medicalscience and

more health consciousness among the common man. By 2010 it

is expected torise to 75. Hence risk profile is also changing.

Earlier people are thanking about safely butat present people

thinking about capital growth.12. Social FactorsThe social

environment covers the customs, habits, level of education, tastes

and standardof living of people in the society. Todays social

environment is greatly influenced to amajor extent by the

changes in technological aspects. With the rapid progress

intechnology and economic liberalization, the physical

boundaries are gradually vanishing.As a result, the social life of

the people and their views towards risk and uncertainty of lifeand

health are gradually changing.Projectsformba.blogspot.com

y 34. These factors of social life are affecting human motivationsand emotions related to thephysical and mental incapacities, loss

of health and death. In general there are extremesapprehensions

of ones death, though it is certain. The perception of an

individual towardrisk and capital growth depends on the social

culture and religious belief. In the urbanizedarea people does

think about investment and capital growth. These beliefsultimatelyinfluence the buying behavior of a consumer.13.

EducationEducation is major factor of demand for mutual fund

product. if the education levels ishigher than the people know the

benefits of mutual fund the use mutual fund as investmenttool

and also take rise capital growth.MUTUAL FUND

PLAYERSThe Indian mutual fund industry is mainly divided

into three kinds of categories. These categories include public

sector players, nationalized banks and private sector and foreign

players.UTI Mutual Fund was one of the leading Mutual Fund

companies in India till May 2006with a corpus of more than

Rs.31, 000 Crore and it is the public sector mutual fund.Bank of

Baroda, Punjab National Bank, Can Bank and SBI are the major

nationalizedbanks mutual fund.At present mutual fund industry is

mainly dominated by private and foreign sector playerswhich

include major players like Prudential ICICI Mutual Fund, HDFC

Mutual Fund,Reliance Mutual Fund etc. are private sector mutual


20/37

funds players while FranklinTempleton etc. are major foreign

mutual fund players. At present there are more than 33players

operating in Indian. The brief introduction of major players is

given as follows.Projectsformba.blogspot.com

y 35. ABN AMRO Mutual FundABN AMRO Mutual Fund wassetup on April 15, 2004 with ABN AMRO Trustee (India)Pvt.

Ltd. as the Trustee Company. The AMC, ABN AMRO Asset

Management (India)Ltd. was incorporated on November4, 2003.

Deutsche Bank A G is the custodian of ABNAMRO Mutual

Fund.Birla Sun Life Mutual FundBirla Sun Life Mutual Fund is

the joint venture of Aditya Birla Group and Sun LifeFinancial.

Sun Life Financial is a global organization evolved in 1871 and

is beingrepresented in Canada, the US, the Philippines, Japan,

Indonesia and Bermuda apart fromIndia. Birla Sun Life Mutual

Fund follows a conservative long-term approach toinvestment.

Recently it crossed AUM of Rs. 10,000 Crore.Bank of Baroda

Mutual FundBank of Baroda Mutual Fund or BOB Mutual Fund

was setup on October30, 1992 underthe sponsorship of Bank of

Baroda. BOB Asset Management Company Limited is theAMC

of BOB Mutual Fund and was incorporated on November5,

1992. Deutsche BankAG is the custodian.HDFC Mutual

FundHDFC Mutual Fund was setup on June 30, 2000 with two

sponsors namely HousingDevelopment Finance CorporationLimited and Standard Life Investments Limited.HSBC Mutual

FundHSBC Mutual Fund was setup on May 27, 2002 with HSBC

Securities and CapitalMarkets (India) Private Limited as the

sponsor. Board of Trustees, HSBC Mutual Fundacts as the

Trustee Company of HSBC Mutual Fund.ING Vysya Mutual

FundProjectsformba.blogspot.com

y 36. ING Vysya Mutual Fund was setup on February 11, 1999with the same named TrusteeCompany. It is a joint venture of

Vysya and ING. The AMC, ING InvestmentManagement (India)

Pvt. Ltd. was incorporated on April 6, 1998.Prudential ICICI

Mutual FundThe mutual fund of ICICI is a joint venture with

Prudential PLC of America; one of thelargest life insurance

companies in the US of A. Prudential ICICI Mutual Fund was

setupon 13th of October 1993 with two sponsors, Prudential

PLC. and ICICI Ltd. The TrusteeCompany formed is Prudential


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ICICI Trust Ltd. and the AMC is Prudential ICICI

AssetManagement Company Limited incorporated on 22nd of

June 1993.Sahara Mutual FundSahara Mutual Fund was set up

on July 18, 1996 with Sahara India Financial CorporationLtd. as

the sponsor. Sahara Asset Management Company Private

Limited incorporated onAugust 31, 1995 works as the AMC of

Sahara Mutual Fund. The paid-up capital of theAMC stands at

Rs 25.8 crore.State Bank of India Mutual FundState Bank of

India Mutual Fund is the first Bank sponsored Mutual Fund to

launchoffshore fund, the India Magnum Fund with a corpus of

Rs. 225 cr. approximately. Todayit is the largest Bank sponsored

Mutual Fund in India. They have already launched 35Schemes

out of which 15 have already yielded handsome returns to

investors. State Bankof India Mutual Fund has more than Rs.

5,500 Crore as AUM. Now it has an investor baseof over 8 Lakhs

spread over 18 schemes.Projectsformba.blogspot.com

y 37. Tata Mutual FundTata Mutual Fund (TMF) is a Trust underthe Indian Trust Act, 1882. The sponsor for TataMutual Fund is

Tata Sons Ltd., and Tata Investment Corporation Ltd. The

investmentmanager is Tata Asset Management Limited and its

Tata Trustee Company Pvt. Limited.Tata Asset Management

Limiteds is one of the fastest in the country with more than

Rs.7,703 Crore (as on April 30, 2005) of AUM.Kotak MahindraMutual FundKotak Mahindra Asset Management Company

(KMAMC) is a subsidiary of KMBL. It ispresently having more

than 1,99,818 investors in its various schemes. KMAMC started

itsoperations in December 1998. Kotak Mahindra Mutual Fund

offers schemes catering toinvestors with varying risk - return

profiles. It was the first company to launch dedicatedgilt scheme

investing only in government securities.Reliance Mutual

FundReliance Mutual Fund (RMF) was established as trust under

Indian Trusts Act, 1882. Thesponsor of RMF is Reliance Capital

Limited and Reliance Capital Trustee Co. Limited isthe Trustee.

It was registered on June 30, 1995 as Reliance Capital Mutual

Fund, whichwas changed on March 11, 2004. Reliance Mutual

Fund was formed for launching ofvarious schemes under which

units are issued to the Public with a view to contribute to

thecapital market and to provide investors the opportunities to

make investments indiversified securities.Standard Chartered


22/37

Mutual FundStandard Chartered Mutual Fund was set up on

March 13, 2000 sponsored by StandardChartered Bank. The

Trustee is Standard Chartered Trustee Company Pvt. Ltd.

StandardProjectsformba.blogspot.com

y 38. Chartered Asset Management Company Pvt. Ltd. is the AMCwhich was incorporated withSEBI on December

20,1999.Franklin Templeton India Mutual FundThe group,

Franklin Templeton Investments is a California (USA) based

company with aglobal AUM of US$ 409.2 bn. (as of April 30,

2005). It is one of the largest financialservices groups in the

world. Investors can buy or sell the Mutual Fund through

theirfinancial advisor or through mail or through their website.

They have Open endDiversified Equity schemes, Open end

Sector Equity schemes, Open end Hybrid schemes,Open end Tax

Saving schemes, Open end Income and Liquid schemes, Closed

end Incomeschemes and Open end Fund of Funds schemes to

offer.Morgan Stanley Mutual Fund IndiaMorgan Stanley is a

worldwide financial services company and its leading in the

marketin securities, investment management and credit services.

Morgan Stanley InvestmentManagement (MISM) was

established in the year 1975. It provides customized

assetmanagement services and products to governments,

corporations, pension funds and non-profit organizations. Itsservices are also extended to high net worth individuals and

retailinvestors. In India it is known as Morgan Stanley

Investment Management Private Limited(MSIM India) and its

AMC is Morgan Stanley Mutual Fund (MSMF). This is the

firstclose end diversified equity scheme serving the needs of

Indian retail investors focusing ona long-term capital

appreciation.Escorts Mutual FundEscorts Mutual Fund was setup

on April 15, 1996 with Escorts Finance Limited as itssponsor.

The Trustee Company is Escorts Investment Trust Limited. Its

AMC wasincorporated on December 1, 1995 with the name

Escorts Asset Management

Limited.Projectsformba.blogspot.com

y 39. Benchmark Mutual FundBenchmark Mutual Fund was setupon June 12, 2001 with Niche Financial Services Pvt.Ltd. as the

sponsor and Benchmark Trustee Company Pvt. Ltd. as the


23/37

Trustee Company.Incorporated on October 16, 2000 and

headquartered in Mumbai, Benchmark AssetManagement

Company Pvt. Ltd. is the AMC.Can bank Mutual FundCan bank

Mutual Fund was setup on December 19, 1987 with Canara Bank

acting as thesponsor. Can bank Investment Management Services

Ltd. incorporated on March 2, 1993is the AMC. The Corporate

Office of the AMC is in Mumbai.Chola Mutual FundChola

Mutual Fund under the sponsorship of Cholamandalam

Investment & FinanceCompany Ltd. was setup on January 3,

1997. Cholamandalam Trustee Co. Ltd. is theTrustee Company

and AMC is Cholamandalam AMC Limited.LIC Mutual

FundLife Insurance Corporation of India set up LIC Mutual Fund

on 19th June 1989. Itcontributed Rs. 2 Crore towards the corpus

of the Fund. LIC Mutual Fund was constitutedas a Trust in

accordance with the provisions of the Indian Trust Act, 1882. .

The Companystarted its business on 29th April 1994. The

Trustees of LIC Mutual Fund have appointedJeevan Bima

Sahayog Asset Management Company Ltd as the Investment

Managers forLIC Mutual Fund.GIC Mutual FundGIC Mutual

Fund, sponsored by General Insurance Corporation of India

(GIC), aGovernment of India undertaking and the four Public

Sector General InsuranceCompanies, viz. National Insurance Co.

Ltd (NIC), The New India Assurance Co.

Ltd.Projectsformba.blogspot.com

y 40. (NIA), The Oriental Insurance Co. Ltd (OIC) and UnitedIndia Insurance Co. Ltd. (UII)and is constituted as a Trust in

accordance with the provisions of the Indian Trusts

Act,1882.Projectsformba.blogspot.com

y 41. (B) COMPANY INFORMATION1. HISTORYNJIndiaInvest Pvt. Ltd. is one of the leading advisors and

distributors of financialproducts and services in India.

Established in year 1994, NJ has over a decade of richexposure

in financial investments space and portfolio advisory services.

From a humblebeginning, NJ over the years has evolved out to

be a professionally managed, qualityconscious and customer

focused financial / investment advisory & distribution firm. NJ

prides in being a professionally managed, quality focused and

customer centricorganization. The strength of NJ lies in the


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strong domain knowledge in investmentconsultancy and the

delivery of sustainable value to clients with support from cutting-

edgetechnology platform, developed in-house by NJ.At NJ we

believe in having single window, multiple solutions that are

integrated for simplicity and sapience making innovations,

accessions, value-additions, a constant process providing

customers with solutions for tomorrow which will keep them

above the curve, today NJ has over INR30 billion* of mutual

fund assets under advice with a widepresence in over 135

locations* in 21states* in India. The numbers are reflections of

thetrust, commitment and value that NJ shares with its clients. NJ

Wealth Advisors, a division of NJ, focuses on providing financial

planning andportfolio advisory services to premium clients of

high net-worth. At NJ Wealth Advisors,we have developed

processes that focus on providing the best in terms of the advice

andthe ongoing management of your portfolio and financial

plans. At NJ, our experience, knowledge and understanding

enables us to provide you withthe expected value, in an enhanced

way. As a leading player in the industry, we continueto

successfully meet the expectations of our clients, through

meaningful andcomprehensive solutions offered by NJ Wealth

AdvisorsProjectsformba.blogspot.com

y

42. 2.VISION & MISSION OF NJ India invest VisionTo be theleader in our field of business through, Total Customer

Satisfaction Commitment to Excellence Determination to

Succeed with strict adherence to compliance Successful Wealth

Creation of our Customers Mission Ensure creation of the

desired value for our customers, employees and

associates,through constant improvement, innovation and

commitment to service & quality. Toprovide solutions which

meet expectations and maintain high professional &

ethicalstandards along with the adherence to the service

commitments3.PHILOSOPHYAt NJ our Service and Investing

philosophy inspire and shape the thoughts, beliefs,attitude,

actions and decisions of our employees. If NJ would resemble a

body, ourphilosophy would be our spirit which drives our

body.Service Philosophy:Our primary measure of success is

customer satisfaction We are committed to provide our

customers with continuous, long-termimprovements and value-


25/37

additions to meet the needs in an exceptional way. In our

effortsto consistently deliver the best service possible to our

customers, all employees of NJ willmake every effort to: think

of the customer first, take responsibility, and make prompt

service to the customer a priority deliver upon the commitments

& promises made on time anticipate, visualize, understand,

meet, exceed our customers needsProjectsformba.blogspot.com

y 43. bring energy, passion & excellence in everything we do behonest and ethical, in action & attitude, and keep the customers

interest supreme strengthen customer relationships by providing

service in a thoughtful & proactive manner and meet the

expectations, effectively Investing Philosophy: We aim to

provide Need-based solutions for long-term wealth creation We

aim to provide all customers of NJ, directly or indirectly, with

true, unbiased,need-based solutions and advice that best meets

their stated & un-stated needs. In ourefforts to provide quality

financial & investment advice, we believe that Clients want

need-based solutions, which fits them Long-term wealth

creation is simple and straight Asset-Allocation is the ideal &

the best way for long-term wealth creation Educating and

disclosing all the important facets which the customer needs to

be aware of, is important The solutions must be unbiased,

feasible, practical, executable, measurable and flexible Constantmonitoring and proper after-sales service is critical to complete

the ongoing process At NJ our aim is to earn the trust and

respect of the employees, customers,partners, regulators, industry

members and the community at large by following ourservice

and investing philosophy with commitment and without

exceptions.4.MANAGEMENTThe management at NJ brings

together a team of people with wide experience andknowledge in

the financial services domain. The management provides

direction andguidance to the whole organisation. The

management has strong visions for NJ as aglobally respected

company providing comprehensive services in financial

sector.The Customer First philosophy in deeply ingrained in the

management at NJ. The aimof the management is to bring the

best to the customers in terms of Range of products and

services offered Quality Customer

ServiceProjectsformba.blogspot.com


26/37

y 44. All the key members of the organisation put in great focus onthe processes & systemsunder the diverse functions of business.

The management also focuses on utilizingtechnology as the key

enabler for all the activities and to leverage the technology

forenhancing overall customer experience.The key members of

the management are:Mr. Neeraj Choksi Jt. Managing

DirectorMr. Jignesh Desai Jt. Managing DirectorSales Team:Mr.

Misbah Baxamusa National HeadMr. Naveen Rathod

V.P.Executive Team:Mr. Shirish Patel Information

TechnologyMr. Vinayak Rajput Finance & OperationsMr.

Abhishek Dubey Marketing & DevelopmentMr. Viral Shah

ResearchMr. Dhaval Desai Human Resources5.SERVICE

STANDARDSService in words, service in actionService is the

key to unlocking customer satisfaction, which again is key for

sustainabilityof any business. At NJ we understand this very

well. NJ has set strict processes in place todeliver quality services

to customers. At NJ strict quality service standards are set and

awell-defined process is established and followed religiously by

our quality customerservice teams. Performance is evaluated on a

frequent basis and glitches are ironed out. But quality service

also involves quality people in addition to processes. NJ

givessignificant focus to the proper training and development of

the people involved in theservice delivery chain.Further

we,Projectsformba.blogspot.com

y 45. Have well-defined "Privacy Policy" to keep clientsinformation confidential & internal audits done on the same at

regular intervals Receive various statistics which are analyzed

on an ongoing basis to improve the service standardsWe are

committed to improve and enhance our services and undertake

new serviceinitiatives. Such and other services differentiate us

with other service providers in theindustry.Our Service

Commitments The service commitments are to guide the

actions of the people at NJ. Clearly stated,customers can freely

communicate any such actions/events wherein they feel that any

ofthe following commitments have been breached /

compromised. At NJ we desire to honourour commitments at all

points of time and to all our customers without any bias. To

provide customer-focussed need-based valued services To

provide reliable, accurate and timely information To maintain


27/37

all records in privacy To optimize services/benefits at least

justifiable cost To develop and grow the customers business

To provide constructive after sales service To honour our

service commitments6.PRODUCTS Life Vista Life is counted

not in years, but in moments. Moments of truth, joy, achievement

and satisfaction. Of peace, tranquility, and freedom. At NJ, we

bring such moments to life.Connecting GoalsLife Vista is for

individuals who are looking for goal oriented planning. The

client wouldtypically have a family, with multiple goals directed

at meeting the obligations/goals inlife. Meeting obligations like

education and marriage of children, meeting basic needs

likepurchase of property, or business assets, would ideally be on

agenda for such clients.Retirement planning would also be an

important goal in life along with securing the futurefor those

dependent.Projectsformba.blogspot.com

y 46. Process of Connecting Goals With Life Vista we take theonus to help you achieve your goals in life. Our teamwould

undertake a detailed financial planning exercise for you. An ideal

personalised,financial plan would then be recommended after

detailed study. The team would thenconstantly monitor the

progress of your plan. Any changes in the environment that

mayhappen during the interim period would be incorporated into

your plan. At Life Vista ourobjective is to connect you with yourgoals and your dreams with reality.How we can help youWe will

do a detailed study of your goals and objectives in life and would

help you bydevising a comprehensive plan to help you achieve

them. We would also regularly monitoryour plans to make sure

that you are always on track to achieve your goals. Asset Vista

Wealth is not an end. Neither is it a beginning. Wealth is a

process, a journey. A journey of power, achievement and

responsibility . At NJ we ensure that this journey continues and

grows.Projectsformba.blogspot.com

y 47. Creating Wealth Asset Vista is ideal for individuals orcorporates looking for portfolio managementservices. Typically,

the client would have sizeable investments made into multiple

assetsand/or products. The need for Asset Vista may arise due to

time constraints, the size of theinvestments, or the need for

professional advice. The objective may be to have


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29/37

difficult.As investors we often may feel the lack of time and

energy to undertake monitoring andmanaging of our investments

in multiple avenues. This requires both dedicated efforts

andskills in portfolio management.At NJ Wealth Advisors we

realise the need for quality, unbiased portfolio advisoryservices.

At NJ we would aim to manage your portfolio with a superior,

time tested andmuch effective way of Asset Allocation keeping

in mind your risk profile.At NJ Wealth Advisors we offer you

with quality Portfolio Advisory Services underthe product

Asset Vista. Consolidated ReportingQuality online Wealth

Account: As a premium client you would have access to one of

the best online investmentaccounts that offer comprehensive

reports, many of which are unique in nature and givevaluable

insights on our investmentsProjectsformba.blogspot.com

y 50. Our online Wealth Account covers almost all the investmentavenues that you mayhave: Mutual Funds All AMCs, All

Schemes Direct Equity Life Insurance Physical Assets

Gold and Property Private Equity Business Debt Products o

Bank Deposits and Company Deposits o RBI / Infrastructure

Bonds o Postal Savings KVP, MIS, NSC o Debentures o Small

Savings PPF, NSS You would have access to Consolidated Net

Asset Reports which would give youa single view of all your

investments into different avenues as given above.Further, withineach of the Asset class we have many more reports and utilities.

Some ofthe reports covered are Consolidated:Consolidated

Asset Allocation, Consolidated Net Asset, Interest Income, Profit

& LossMutual Funds:Valuation, Transaction, Profit & Loss,

Performance, Portfolio reports like - AMC /Sector / Equity /

Credit / Debt Exposure, Weighted Average Maturity, Dividend

history,etcDirect Equity:Demat accounts, Transaction, Valuation,

Profit & LossLife Insurance:Policy Report, Premium Reminder,

Cash FlowDebt:Transaction, Interest Income, Maturity reports

for different AsseProjectsformba.blogspot.com

y 51. 8. 360 ADVISORY PLATFORM NJ believes in 360 Advisory Platform philosophy With this philosophy, we try

to offer all possible products, services and support which

anAdvisor would need in his business.The support functions are

generally in the following areas Business Planning and


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Strategy Training and Development Self and of employees

Products and Service Offerings Business Branding Marketing

Sales and Development Technology Advisors Resources -

Tools, Calculators, etc.. Research

CommunicationsProjectsformba.blogspot.com

y 52. With this comprehensive supporting platform, the NJ FundzPartners stays ahead of thecurve in each respect compared to

other Advisors/competitors in the market.Needless to say, the

complete NJ Fundz offering is hard to resis (C) RESEARCH

METHODOLOGY 1. RESEARCH PROBLEM:To know

investors behavior regarding mutual fund as an investment

avenue.2. RESEARCH OBJECTIVES (PRIMARY) : To know

investors behavior regarding mutual fund as an investment

avenue. RESEARCH OBJECTIVES (SECONDARY) To

identify the objectives of the investors for investing in a mutual

fund. To identify the investment patterns of investors. To find

out which scheme is better according to investors. To study

investors perceptions about level of satisfaction while investing

in mutualfunds.3. RESEARCH PLAN : DATA SOURCE We

have used primary data source to collect the data regarding

investors behavior formutual fund as an investment avenue. The

survey was conducted across jammu. RESEARCH APPROACH

Survey approach was under taken to know the behavior ofinvestor regarding mutualfund as an investment avenue.

RESEARCH INSTRUMENTProjectsformba.blogspot.com

y 53. Questionnaire was the instrument of collectingdataSAMPLING PLAN Sample unit: All the investors who are

occasionally or regularly investing in financialassets and non-

financial assetsSample size: Survey population comprises of the

total reputed businessman, Professionals, andindividual investor

was approx 70.Sampling method:In this study as suggested by

the company a sample of reputed Businessman,Professionals, and

individual investors was selected and it was selected through

non-probability, convenience sampling method. Because all the

Businessman, Professionals,and individual investors could not

be interviewed as per our requirement but according totheir

availability and accessibility we meet them.Contact methodThe


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total sample size for survey was 70 investors by personal

interviewProjectsformba.blogspot.com

y 54. 4. SURVEY ANALYSIS AND INTERPRETATION:GenderThere are 15 females and 55 males as respondents male

55 female 15 Gender of respondents(% ) 21% males females

79%Projectsformba.blogspot.com

y 55. Q1 what is your age? AGEPARTICULARS NO.20-30 2030-40 2540-50 1350-60 1060-ABOVE 2TOTAL 70 From the above

table we can say that awareness for investment in youngster has

been increased & thats why out of 70, 20 are youngster who do

investment and they come in the age group of 20-30, then comes

age group of30-40 from which 25people do investment and

other age group are 40-50 where they do investment of 13, 10

belongs to age group of50-60 they do the investment, and 2

belongs to the age group of60-above they do their investment.

We can say that youngsters are more careful for their

investment.Q2 what is your profession?

PROFESSIONPARTICULARS NO.BUSINESS4JOB IN

PRIVATE SECTOR 14JOB IN PUBLIC SECTOR35OTHERS

17TOTAL 100Projectsformba.blogspot.com

y 56. Now 70 people doing investment out of which 35 people arefrom public sector, 14 arefrom private sector, 4 are having their

business and 17 are others which include retiredpeople,

housewives and student. Reason for investment by all people was

to secure thefuture and reason given by people doing the job in

private was their higher salary andunsecured

job.Projectsformba.blogspot.com

y 57. Q3 Do you invest in mutual fund ? PARTICULARS YES 21NO 49 TOTAL 70From 70 people 21 of them are doing

investment in mutual fund and 49 of them are notinvesting in

mutual fund but they do investment in other sectors for which

information isgiven in the next question.Q4 If you are not

investing in mutual fund then where do you invest (in

proportion)? INVESTMENT PROPORTION EXCEPT

MF?PARTICULARS NOINSURANCE 40EQUIYTY

MARKET 10GOVT. SCHEME 30REAL ESTATE


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5COMMODITIES 15TOTAL 100.00People who were not

investing in mutual fund they do invest in sectors like

insurance,equity market, government schemes (includes banks,

bonds &other scheme ), real estate,commodities even people

those who do invest in mutual fund they also invest in

differentsectors. Out of 100%, 10% people do invest in equity

market, 40% invest in insurance,30% in government scheme, 5%

do invest in real estate and 15% do invest incommodities. People

do invest in equity market due to higher returns available in

it.Projectsformba.blogspot.com

y 58. Q5 Rank the company according to your preference from top(1) to bottom (11)?RANK THE MF FROM TOP 1 TO

BOTTOM 11?PARTICULARS NORELIANCE 11BIRLA

3TATA 3LOTUS 0SBI 31HDFC 0ICICI 21FRANKLIN TEMP.

0SUNDARAM 0UTI 1BENCHMARK 0TOTAL 70People who

were investing in mutual fund had given the rank to different

mutual fundcompanies on the basis of what they think about that

particular company and had givenranks to different companies.

Here in this data 31 people had given SBI as 1 st rank and

thesecond highest is ICICI where 21 people has given it as 1st

rank and the reasons behindgiving 1st rank were their return,

good credit in market and tax saving benefit.Q6 Do you compare

the returns or other benefits of mf schemes before investing?ANNUAL REPORT CHECKINGPARTICULARSYES 28NO

42TOTAL 70It is necessary to compare the returns and other

benefits because people do invest in forhigher returns so they

compare with other companies also. Here 28 people compare

theProjectsformba.blogspot.com

y 59. returns and other benefits of mutual fund scheme before aswell as after investing to seehow their investment is spread over

in different segments.Q7 which factors do you consider while

investing in mutual fund? SAFETYPARTICULARS NOEXT.

IMP. 48IMPORTANT 22NEUTRAL 0UNIMPORTANT 0EXT.

UNIMP 0TOTAL 70Investors consider different factors before

investment and for many reasons they invest indifferent scheme

of mutual fund. Here reason for investment is safety of their

money andsafety of their future so 48 people consider it ext

important, while 22 people says itsimportant for their


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investment.Many people consider very important to invest in

mutual fund to save tax or to take taxbenefit. Therefore 37 people

consider it as ext important to invest in tax saving schemewhile

32 people consider it as important for investment,1 person is

neutral about it, andnobody consider it as unimportant and ext

unimportant.Projectsformba.blogspot.com

y 60. RETURN EARNINGSPARTICULARS NOEXT. IMP.26IMPORTANT 44NEUTRAL 0UNIMPORTANT 0EXT.

UNIMP 0TOTAL 70Generally people invest in mutual fund

companies for higher returns with less risk ascompare equity

market and could able to earn good returns.26 people agree that

they doinvest in mutual fund for higher returns and consider it as

ext important, 44 investors areconsidering it as important .

LIQUIDITYPARTICULARS NOEXT. IMP. 6IMPORTANT

34NEUTRAL 25UNIMPORTANT 5EXT. UNIMP 0TOTAL

70Above graph reveals that some of the investors means 6 are

giving liquidity moreemphasis because by the way of open ended

scheme they can any time liquid theirposition, 5 investors had

given negative response about it while 34 of the investors

aregiving them least importance and 25 are neutral to

itProjectsformba.blogspot.com

y 61. Q8 How do you monitor the following. NAVPARTICULARS NOMONTHLY 20QUARTELY 26HALF

YEARLY 12YEARLY 7NEVER5TOTAL 70NAV is the net

asset value of your investment in units that comes of every week

by thisyou can come to know how much of your investment has

been increased so it becomesnecessary to monitor but period of

monitoring depends on investor. Here 20 of investor domonitor

monthly, 26 of investors monitors quarterly, 12 monitor half

yearly, 7 monitoryearly,5 never monitor. RISK FACTOR

PARTICULARS NOMONTHLY 14QUARTELY 26HALF

YEARLY 21YEARLY 5NEVER4TOTAL 70Risk factor is

necessary to be monitor at certain time period though there is not

much riskin investing in mutual fund as compare to equity

investment but monitoring is necessary tocheck the returns and

see that the managed properly. Here 14 of investors monitor

itmonthly, 26 of investors monitor it quarterly, 21 do half early

yearly and 5 do monitorProjectsformba.blogspot.com


34/37

y 62. yearly. Risk factor is monitored before investment also tocheck the scheme and to see

itsperformance.Projectsformba.blogspot.com

y 63. PORTFOLIO OF SECURITIES PARTICULARSNOMONTHLY 9QUARTELY 14HALF YEARLY 25YEARLY

15NEVER 7TOTAL 70Portfolio for securities means where the

co invest in different sectors as it is decided inadvance so after

making decision the AMC invest accordingly and it is been

monitoredproper time period as required, 9 of investor do

monitor monthly, 14 of investor monitorquarterly, 25 do half

yearly, most probably 15 of investors monitor it yearly and 7

nevermonitor. Investor check out portfolio to see where their

money is being invested. PROFILE OF FUND MANAGER

PARTICULARS NOMONTHLY 1QUARTELY4HALF

YEARLY 15YEARLY 28NEVER 22TOTAL 70Fund manager

is the person who manage the fund of investor who had invested

theirmoney in their company it is necessary that the fund

manager should be qualified enoughto manager the fund of the

investor because if he fails to manage the fund the

investorsmoney is not secure. So 1 investor monitor profile

monthly, 4 do quarterly, 28 do yearlyand 22 never monitor the

profile. Generally investors monitors the profile

beforeinvesting.Projectsformba.blogspot.com

y 64. Q9 Do you check out the annual reports of your scheme toevaluate the performance of your scheme? ANNUAL REPORT

CHECKINGPARTICULARSYES 61NO 9TOTAL 70In the

annual report of the scheme all the information of that particular

scheme are giveninformation about the performance of the

scheme, position of the scheme in the market,portfolio of the

scheme that where the investment has been done under this

scheme, profileof the fund manager is also given by this the

investors can come to know the position andqualification of the

fund manager. So most of the investors are monitoring the

annualreport.61 investors do monitor the annual report of the

scheme, 9 do not monitor theannual

report.Projectsformba.blogspot.com


35/37

y 65. Q10 Objectives for investment in mutual fund schemes (rankthem from 1most preferred to 4 leastpreferred).OBJECTIVES

FOR INVESTMENTPARTICULARS RANK 1 RANK 2 RANK

3 RANK4 TOTALRETURN/DIVIDEND 1534 21 0

70APPRECIATION 13 26 30 1 70TAX 42 10 17 1

70LIQUIDITY 0 0 2 68 70TOTAL 70 70 70 70Here in this

question the investors have ranked the factors on the basis of

their objectivesthat for what reason they had invested in that

particular scheme. 15 of investors had givenreturn/dividend 1st

rank because every investor want benefits for the risk they had

taken byinvesting in that scheme, 13 of investors had given

appreciation 1st rank because they wantsomething more

including their invested amount.42 of investor has given tax

saving as 1strank because while investing in some particular

scheme their amount invested isappreciated as well as they get

the tax benefit,0 has given 1st rank to liquidity

..Projectsformba.blogspot.com

y 66. 5. LIMITATION OF THE STUDY: Every research has itsown limitation and present research work is no exception to this

general rule the inherent limitation of the study are as under:

Interview method, which was followed in the present research

work, is relatively more time consuming. In addition to this it is

very expensive method, especially when spread geographicsample is taken. Questionnaire method can be used only when

respondents are literate and co-operative. Sample size was 70

that are not enough to study the awareness of Independent

individuals. As sampling techniques is convenient sampling so it

may result in personal bias. Even respondent give bias answers.

Time is main constraint of the research as we have been given

project as well as study

simultaneously.Projectsformba.blogspot.com

y 67. 6.FINDINGS AND RECOMMENDATIONS :From theabove analysis, I found that even though certainly not the best or

deepest ofmarkets in the world, it has ignited the growth rate in

mutual fund industry to providereasonable options for an

ordinary man to invest his savings.With the help of Give more

importance to safety and return attributes because Independent

Financial Advisors are more concern about safety and of giving


36/37

more benefit of the investments to their clients. Independent

Financial Advisors who are not suggesting their clients to invest

in mutual funds due to their lack of knowledge of mutual funds.

So, NJ India Invest should arrange mutual fund awareness

Program of their and other independent Financial Advi- sors on

regular basis. By providing better service NJ India Invest should

try to attract the Independent Finan- cial Advisors to join with

them. NJ India Invest should arrange special mutual fund

awareness program for general public. So they can directly

work with NJ India Invest as direct client. Majority of the

Government employees take into consideration tax benefits

before making any investment. So NJ India Invest should

highlight tax benefits in mutual funds. NJ India Invest should

launch its brand awareness campaign to be successful in Mutual

fund advisory service providero NJ India invest should also

concentrate on youngster who are interested in savings so make

them aware about different schemes for investment and arrange

seminars for col- lege going students, by this company gets more

customers connected for long period.o Put hoardings outside the

colleges making NJ INDIA known to them and try to attract

them.Projectsformba.blogspot.com

y 68. Key Findings: - Around 50% of the investors invest tomaximize their returns and they are ready to take moderate risksin their investment portfolio. Most of the investors give

importance to the fact that their investment should grow in value

over a period of time. Growth scheme is the most preferred for

investment Knowledge about mutual funds and their various

schemes is moderate among investors. It is necessary to make

Mutual Fund more popular in the eyes of investors as well as

distributors and also cater trust which has been lost due to US-

64. Most of the investors give importance to return, tax saving

etc. Objectives of the investor are to get something in return for

their investment and the risk they are taking. Here the objective

of the investor between the age of 20-30 is to earn the higher

return. While the age group above 30years concentrates on

safety and tax saving and they even take care of the

liquidity.Projectsformba.blogspot.com


37/37

y 69. BIBLIOGRAPHYBooks referred Ch 9 and Ch 10 fromDavid J. Luck & Ronald S. Rubin, 2003, Marketing Research,

Prentice Hall of India Pvt. Ltd, New Delhi chap-3 from Mutual

Fund in INDIA by Nalini Prava Tripathy, pg no37-84 publication

house Excel books. NJ India Invest monthly fact file.Web

Siteswww.amfi.comwww.indiainfoline.comwww.njindiainvest.c

omwww.mutualfundsearchonline.comProjectsformba.blogspot.c

om