Professional Documents
Culture Documents
INTRODUCTION
Introduction to the Study of mutual funds: Mutual investors. stocks Funds A and are Mutual bonds, professionally fund Money managed invests pool our of money in some from a group of
manager Market
funds or
securities
including and
instruments
combination
decides the best time to buy and sell. By pooling our resources
with other
investors in Mutual Funds, they can diversify even a small investment over a wide spectrum.
With the emergence of the capital market at the centre stage of the Indian financial system from its marginal role a decade earlier, the Indian capital market also witnessed during the same period a significant institutional development in the form of diversified structure of Mutual Funds. A Mutual fund is a special type of investment institution which acts as an investment conduct.
It pools the savings, particularly of the relatively small investors, and invests them in a welldiversified portfolio of sound investment. As an investment intermediary, it offers a variety of services/advantages to the relatively small investors who on their own cannot successfully construct and manage investment portfolio mainly due to the small size of their funds, lack of expertise and experience, and so on. These services include the diversification of portfolio, expertise of the professional management, liquidity of investment, tax shelter, reduced risk and reduced cost.
Mutual fund is the most suitable investment mode 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 mutual funds. Each Mutual fund scheme has a defined investment objective and strategy.
2 The most important trend in the Mutual Fund industry is the aggressive expansion of the foreign owned Mutual Fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Funds issue and redeem shares on demand at the fund's net asset value (NAV). Mutual fund management fees typically range between 0.5% and 2% of assets per year, exchange fees and other administrative charges also apply. According to SEBI - Mutual Fund is defined as - A fund established in the form of a trust to raise moneys through the sale of units to the public or a section of the public under one or more schemes for investing in securities, including money market instruments. Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in the offer document.
DEFINITIONS
A mutual fund is a trust that pools the savings of a number of investors with common financial goals. The collected money is invested in various instruments like debentures, shares, etc. The income generated from these instruments and the capital appreciation is shared by the investors in proportion to the number of units owned by them.
Sources of Data
Secondary data is the data which is already available i.e. they refer to the data, have already been collected and analyzed by someone else. But here the source of data is collected through various Mutual Fund which
THEORITICAL FRAMEWORK
Mutual Fund Industry in India:
The origin of Mutual fund industry in India is with the introduction of the concept of Mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian Mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470bn in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.
9 Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700crores of assets under management.
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. 1,21,805crores. The Unit Trust of India with Rs.44,541crores of assets under management was way ahead of other mutual funds.
10
Mutual Funds have become extremely popular over the last 20 years. What was once just another obscure financial instrument is now a part of our daily lives. More than 80 million people, or one half of the households in America, invest in mutual funds That means that, in the United States alone, trillions (yes, with a "T") of dollars are invested in mutual funds.
In fact, too many people, investing means buying mutual funds. After all, its common knowledge that investing in mutual funds is (or at least should be) better than simply letting our cash waste away in a savings account, but, for most people, that's where the understanding of funds ends.
11
12
13
When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.
Market value of the funds investments + Receivables + Accrued Income Liabilities Accrued Expenses NAV= Number of Outstanding units
14 A Mutual fund is managed by investment professionals and others services providers, who earn a fee for their services, from the fund. The pool of the funds is invested in a portfolio of marketable investments. The value of the portfolio is updated everyday. The investors share in the fund is denominated by units. The value of the units changes with the change in the portfolios value, everyday. The value of one unit of the investment is called as the Net Asset Value or NAV The investment portfolio of the Mutual fund is created accordingly to the stated investment objectives of the funds.
There are many entities involved and the diagram below illustrates the organizational set up of a Mutual Fund:
15
SPONSOR COMPANY
Establishes the Mutual Fund as a trust registers the Mutual Fund with SEBI
MUTUAL FUND
Hold unit-holders funds in MF Enter into an agreement with SEBI and ensure compliance.
Float MF funds Manages the fund as per SEBI Guidelines and AMC agreement
16
CUSTODIAN
REGISTRAR
TRANSFER AGENTS
Sponsor
Sponsor is the person who acting alone or in combination with another body corporate establishes a Mutual Fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and should meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund by the sponsor.
Trust
The trust deed provisions provide that The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 of the India Trusts Act, 1882 by the sponsor. The trust deed is registered under the Indian Registration Act, 1908.
Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the sponsor in any manner.
17 The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an Asset management company of the Mutual Fund. At least 50% of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crores at all times. An asset management company is an investment management firm that invests the pooled funds of retail investors in securities in line with the stated investment objectives. For a fee, the investment company provides more diversification, liquidity, and professional management consulting service than is normally available to individual investors.
Custodian:
A trust company, bank or similar financial institution responsible for holding and safeguarding the securities owned within a mutual fund. A mutual fund's custodian may also act as the mutual fund's transfer agent, maintaining records of shareholder transactions and balances. Also referred to as a Mutual Fund Corporation.
Mutual Funds should be formed as a trust under Indian Trust Act and should be operated by Asset Management Companies. Mutual Funds need to set up a Board of Trustee Companies. They should also have their Board of Directories.
18 The net worth of the Asset Management Company should be at least Rs.5 crore. Asset Management Companies and Trustees of a MF should be two separate and distinct legal entities. The Asset Management Companies or any of its companies cannot act as managers for any other fund. Asset Management Company has to get the approval of SEBI for its articles and Memorandum of Association. All Mutual Fund Schemes should be registered with SEBI. Mutual Funds should distribute minimum of 90% of their profits among the investors.
Professional Management
Qualified professionals manage our money and they have research team that continuously analyses the performance and prospects of companies. They also select suitable investment to achieve the objectives of the schemes and expertise which will add value to our investment. These fund managers are in a better position to manage our investment and get higher returns.
Diversification
The clich, dont put all our eggs in one basket it really applies to the concept of intelligent investing. Diversification lowers our risk of loss by spreading our money across various industries. It is a rare occasion when all the stocks decline at the same time and in the same proportion. Sector funds will spread our investment across only one industry and it would not be wise for our portfolio to be skewed towards these types of funds for obvious reasons.
Choice of Schemes
Mutual Funds offer a variety of schemes that will suit to our needs over a life time. When we enter a new stage in our life, we need to do is sit down with our investment advisor who will help us to rearrange our portfolio to suit our altered lifestyle.
Affordability
As small investors, many find that it is so not possible to buy shares of large corporations. Mutual funds generally buy and sell securities in large volumes which allow investors to benefit
19 from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment requirements. we can invest with a minimum of Rs. 500 in a on a regular basis.
Tax Benefits
Investments held by investors for a period of 12 months or more qualify for Capital gains and will be taxed accordingly (10% of the amount by which the investment appreciated, or 20% after factoring in the benefits of cost indexation, whichever is lower). These investments also get the benefits of indexation.
Liquidity
With open-ended funds, we can redeem all or part of our investment any time we wish and receive the current value of the shares or the NAV related price. Funds are more liquid than most investment in shares, deposits and bonds and the process is standardized, making it quick and efficient so that we can get our cash in hand as soon as possible.
Transparency
The performance of a Mutual fund is reviewed by various publications and rating agencies, making it easy for investors to compare one to the other. Once we are part of a Mutual fund scheme, we are provided with regular updates, for example daily NAVs, as well as information on the specific investment made and the fund managers strategy and out look of the scheme.
Well Regulated
All Mutual Funds are registered by 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.
Flexibility:
20 Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, we can systematically invest or withdraw funds accordingly to our needs and convenience.
Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.
The Mutual Funds can be classified under the following types: According to the Structure
21
Close-Ended Scheme
A Close-ended scheme has a stipulated maturity period. E.g. 5-7 years. A Close-ended scheme is one in which the subscription period for the Mutual Fund remains open only for a specific period, called the redemption period. At the end of this period, the entire corpus is
22 disinvested and the proceeds distributed to unit holders. After final distribution the scheme ceases to exist. Such schemes can be rolled over by approval of unit holders.
Interval Schemes
Interval schemes are those that combine both the features of both open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale redemption during predetermined intervals at NAV related prices.
23 and supply of financial resources is met by funds raised through loans, advances and issuance of securities.
However, the buoyancy in the capital market has increased the reliance of the corporate sector has more than doubled. The changing pattern of corporate financing indicates that the banking sector is loosing its prominence vis--vis the other financial sector. Direct financing by mutual funds to the corporate sector has substantially increased after SEBI guidelines allowed the corporate sector to reserve 20% of the public issues for Indian Mutual funds. Mutual funds have also widened the private placement market for corporate securities. Mutual funds have enabled the corporate sector to raise capital at reduced costs and have opened an avenue for alternative source of capital. Mutual funds in India have merged as a critical institutional linkage among various tax incentives and benefits on mutual fund investment are offered by the Government their role in the mobilization of savings and the development of the economy will assume more significance. They provide much needed impetus to the money market and the stock markets, in addition to direct and indirect support to the corporate sector. Above all mutual funds have given a new direction to the flow of personal savings and semiurban areas to reap benefits of stock market investments. Indian mutual funds are thus playing a very crucial development role in allocation resources in the emerging market economy.
Sale Price
The price we pay when we invest in scheme also called offer price. It may include a sale load.
Repurchase Price
It is the price at which a close-ended schemes repurchases its unit and it may include a back-end load. This is also called Bid price.
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Redemption Price
It is the price at which a open-ended schemes repurchases their units and closed- ended schemes redeem their units on a maturity. Such prices are NAV related.
INDUSTRY PROFILE
BOMBAY STOCK EXCHANGE (BSE) About the Bombay Stock Exchange
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is
25 widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, BSE (Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organization structure, the Board formulates larger policy issues and exercises overall control. The committees constituted by the Board are broad-based. The day-to-day operations of the Exchange are managed by the Managing Director and a management team of professionals.
Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.
26 known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.
COMPANY PROFILE
Inter-connected Stock Exchange of India Limited (ISE) is a national-level stock exchange, providing trading, clearing, settlement, risk management and surveillance support to its Trading Members. It has 841 Trading Members, who are located in 131 cities spread across 25 states. These intermediaries are administratively supported through the regional offices at Delhi, Kolkata, Patna, Ahmedabad, Coimbatore and Nagpur, besides Mumbai. ISE has been promoted by 14 Regional stock exchanges to provide cost effective trading linkage to all the members of the participating Exchanges. ISE aims to address the needs of small
27 companies and retail investors by harnessing the potential of regional markets, so as to transform them into a liquid and vibrant market using state-of-the art technology and networking. ISE has floated ISE Securities & Services Limited as a wholly owned subsidiary under the policy formulated by the Securities and Exchange Board of India (SEBI) for Revival of Small Stock Exchanges. The policy enunciated by SEBI permits a stock exchange to float a subsidiary, which can take up membership of larger stock exchanges, such as the National Stock Exchange of India Limited (NSE), and Bombay Stock Exchange Limited (BSE). ISS has been registered by SEBI as a Trading-cum-Clearing Member in the Capital Market segment and Futures & Options segment of NSE and Capital Market segment of BSE. Trading Members of ISE can access NSE and BSE by registering themselves as Sub-brokers of ISS. Thus, the trading intermediaries of ISS can access other markets in addition to the ISE market. ISS, thus provides the investors in smaller cities, a one-stop solution for cost-effective and efficient trading and settlement services in securities. Complementing the stock trading function, ISEs depository participant (DP) services reach out to intermediaries and investors at industry-leading prices. The full suite of DP services are offered using online software, accessible through multiple connectivity modes - leased lines, VSATs and internet. Operation of the demat account by a client requires just a few mouse clicks. The Research Cell has been established with the objective of carrying out quality research on various facets of the Indian financial system in general and the capital market in particular. It brings out a monthly newsletter titled NISE and a fortnightly publication titled V share. The Research Cell plans to expand its activities by publishing a host of value based research publications, covering a number of areas, such as equities, derivatives, bonds, mutual funds, risk management, pension funds, money markets and commodities. The ISE Training Centre conducts class-room training programmes on different subjects related to the capital market, such as equities trading and settlement, derivatives trading, day trading, arbitrage operations, technical analysis, financial planning, compliance requirement, etc. Through these
28 courses, the training centre provides knowledge to stockbrokers, sub-brokers, professionals and investors to also appear for the certificate courses conducted by the stock exchanges. It also aims to make and build the professional careers of MBAs, post graduates and graduates, with a view to enabling them to work effectively in securities trading, risk management, financial management, corporate finance disciplines or function as intermediaries (viz. stock brokers, sub-brokers, merchant bankers, clearing bankers, etc.)
MISSION OF ISE
ISE endeavors to consolidate the small, fragmented and less liquid markets into a national-level, liquid market by using state-of-the-art infrastructure and support systems.
OBJECTIVES OF ISE
Create a single integrated national level solution with access to multiple markets for providing high cost-effective service to millions of investors across the country. Create a liquid and vibrant national level market for all listed companies in general and small capital companies in particular. Optimally utilize the existing infrastructure and other resources of participating Stock Exchanges, which are under-utilized now.
Provide a level playing field to small Traders and Dealers by offering an opportunity to participate in a national markets having investment-oriented business. Provide clearing and settlement facilities to the Traders and Dealers across the Country at their doorstep in a decentralized mode. Spread demats trading across the country.
NETWORK OF INTERMEDIARIES
29 As at the beginning of the financial year 2003-04, 548 intermediaries (207 Traders and 341 Dealers) are registered on ISE. A broad of members forms the bedrock for any Exchange, and in this respect, ISE has a large pool of registered intermediaries who can be tapped for any new line of business.
The philosophy of ISE is to have an aggressive pricing policy for the various products and services offered by it. The aim is to penetrate the retail market and strengthen the position, so that a wide variety of products and services having appeal for the retail market can be offered using a common distribution channel. The aggressive pricing policy also ensures that the intermediaries have sufficient financial incentives for offering these products and services to the end-clients.
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Shri K. Rajendran Nair Shri A. K. Mago Shri H. C. Parekh Shri K. V. Thomas Shri Santosh Muchhal Shri Bharat M. Meisheri Shri Debaraj Biswal
- Chairman, Public Interest Director - Public Interest Director - Public Interest Director - Shareholder Director - Shareholder Director - Shareholder Director - Shareholder Director
31
Shri Dharmendra B. Mehta Shri P. Sivakumar Shri Surendra Holani Shri Rajeeb Ranjan Kumar Shri P. J. Mathew
- Shareholder Director - Shareholder Director - Trading Member Director - Trading Member Director - Managing Director
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CHAPTER-4
33
Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr.
Equity & Debt Growth Oct 9, 1995 10 374.66 as on Apr 30, 2012
Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load
Exit Load
OBJECTIVE
To provide investors long term capital appreciation along with the liquidity of an openended scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio of equities of high growth companies and balance the risk through investing the rest in a relatively safe portfolio of debt
Equity 73.01
Debt 17.16
34
10%
17%
TOP 10 HOLDINGS
Perce ntage of Net Assets 9.84 Percenta ge of Change with last month -26.06
Stock Cash
P/E NA
Qty NA
Valu e 36.86
35
ICICI BANK LTD. HDFC Bank Ltd Sundaram Finance Ltd. Muthoot Finance Ltd. Bajaj Holdings & Investment Ltd. Torrent Pharmaceutical s Ltd DrReddys Laboratories Ltd. WABCO India Ltd. State Bank of India
Banks Banks
15.71 24.65
7.06 6.37
299,69 4 439,75 7
26.44 23.86
-3.87 -8.24
NBFC NBFC Auto & Auto Ancillaries Pharmaceut icals & Biotechnolo gy Pharmaceut icals & Biotechnolo gy Auto & Auto Ancillaries
10.54 5.59
6.14 4.47
23.01 16.75
0.2 -5.38
16.7
4.01
15.03
2.89
20.42
3.73
209,37 0
13.96
-3.45
34.44
3.29
69,883
12.32
0.08
21.74
3.19
69,802
11.94
10.4
Banks
18.69
3.14
54,996
11.76
2,701.31
SECTOR ALLOCATION(%)
36
Construction materials Consumer Durables Current Assets FI FMCG Garments, Fashion wear, Lifestyle HFC Media and Entertainment NBFC Non Ferrous metals Pharmaceuticals & Biotechnology Software and Consultancy Services Sovereign Telecom Services
2.35 2.49 9.84 2.78 1.83 1.23 4.11 2.72 13.13 2.66 11.86 7.3 1.34 1.9
37
Telecom Services Sovereign Software and Consultancy Services Pharmaceuticals & Biotechnology Non Ferrous metals NBFC Media and Entertainment HFC Garments, Fashionwear, Lifestyle FMCG FI Current Assets Consumer Durables Construction materials Construction and Infrastructure Banks Auto & Auto Ancillaries 0 5 10 15 20
Sector Name
Series1
sector Allocation
38
SCHEME PERFORMANCE (%) AS ON MAY 22, 2012 1 Month -4.8 3 Months -2.88 6 Months 5.97 1 Year -6.58 3 Years 5.27 5 Years 4.28 Since Inception 13.69
NAV
NAV 48.46 50.51
47.14
28.73
31-03-2009
31-03-2010
31-03-2011
31-03-2012
39
FUND FEATURES Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr. Open Ended Equity Growth Feb 14, 2006 10 706.48 as on Apr 30, 2012
Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load
OBJECTIVE
To provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of equity stocks of companies whose market capitalization is atleast equal to or more than the least market capitalized stock of BSE 100 Index
ASSET ALLOCATION(%)
40
Equity 93.52
Debt 0
0% 6%
94%
TOP 10 HOLDINGS
Percentage of Net Percent age of
Stock
Sector
P/E
Qty
Value
41 Assets Change with last month 822,370 1,250,000 44.61 39.57 4.25 45.73
Banks Auto & Auto Ancillaries Software and Consultancy Services Banks Petroleum, Gas and petrochemical products
24.65 60.91
6.31 5.6
18.73 15.71
5.51 5.04
158,037 403,527
38.91 35.61
15.09 20.19
12.18
4.63
438,544
32.68
-0.4
Yes Bank Tata Consultancy Services Ltd. Divis Laboratories Limited Dr Reddys Laboratories Ltd. Housing Development Finance Corporation Ltd
Banks Software and Consultancy Services Pharmaceuticals & Biotechnology Pharmaceuticals & Biotechnology
12.68
3.87
781,696
27.34
-4.6
24.01
3.8
215,202
26.83
7.11
22.47
3.76
309,982
26.54
11.67
34.44
3.25
130,222
22.96
0.09
HFC
25.27
3.22
337,975
22.77
0.05
SECTOR ALLOCATION(%)
42 Auto & Auto Ancillaries Banks Chemicals Construction and Infrastructure Construction materials Current Assets Engineering and Capital Goods FI FMCG Food & Food Processing, Beverages HFC Industrial Products Media and Entertainment Mining and Minerals Miscellaneous Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology Power Generation Power Transmission Software and Consultancy Services Steel and Ferrous Metal Telecom Services Tobacco & Pan Masala 10.73 16.24 3.37 0.25 2.22 6.48 0.4 1.37 6.93 0.27 3.22 0.47 1.96 2.02 0.07 11.25 11.16 1.05 1.56 14.81 0.88 3.14 0.13
43
Tobacco & Pan Masala Telecom Services Steel and Ferrous Metal Software and Consultancy Services Power Transmission Power Generation Pharmaceuticals & Biotechnology Petroleum, Gas and petrochemical products Miscellaneous Mining and Minerals Sector Name Media and Entertainment Industrial Products HFC Food & Food Processing, Beverages FMCG FI Engineering and Capital Goods Current Assets Construction materials Construction and Infrastructure Chemicals Banks Auto & Auto Ancillaries 0 2 4 6 8 10 12 14 16 18 Series1
Sector Allocation
44 SCHEME PERFORMANCE (%) AS ON MAY 21 2012 1 3 6 Month Months Months 1 Year 3 Years -5.92 -7.46 5.51 -6.83 5.67
5 Years 1.64
NAV
NAV 14.1 14.56 13.78
7.65
31-03-2009
31-03-2010
31-03-2011
31-03-2012
45 FUND FEATURES Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr. Open Ended Equity Growth Jan 1, 1991 10 517.4 as on Apr 30, 2012 50 % as on Oct 4, 2006 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load
Exit Load
OBJECTIVE To provide the investor Long-term capital appreciation by investing in high growth companies along with the liquidity of an open-ended scheme through investments primarily in equities and the balance in debt and money market instruments.
ASSET ALLOCATION(%)
46
Equity 91.8
Debt 0
0% 8%
92%
TOP 10 HOLDINGS
P/E 15.71
Qty 569,419
Infosys Ltd. ITC Ltd Bharti Airtel Ltd State Bank of India
Banks
18.69
5.37
129,991
27.79
2.04
Pharmaceuticals Dr Reddys Laboratories & Biotechnology 34.44 Ltd. HDFC Bank Ltd Reliance Industries Ltd Banks Petroleum, Gas and petrochemical products 24.65
4.76 4.61
139,766 439,757
24.64 23.86
-9.61 17.64
12.18
4.18
290,039
21.61
-0.41
Software and Tata Consultancy Consultancy Services Ltd. Services Tata Motors Ltd Auto & Auto Ancillaries
24.01
4.09
169,768
21.16
6.58
60.91
3.53
577,122
18.27
14.43
SECTOR ALLOCATION(%)
48
Auto & Auto Ancillaries Banks Chemicals Current Assets Engineering and Capital Goods FMCG HFC Mining and Minerals NBFC Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology Power Transmission Software and Consultancy Services Steel and Ferrous Metal Telecom Services
8.68 19.69 2.11 8.2 2.13 6.64 2.97 2.11 2.99 10.38 9.97 3.88 13.31 1.53 5.4
49
Telecom Services Steel and Ferrous Metal Software and Consultancy Services Power Transmission Pharmaceuticals & Biotechnology Petroleum, Gas and petrochemical Sector Name NBFC Mining and Minerals HFC FMCG Engineering and Capital Goods Current Assets Chemicals Banks Auto & Auto Ancillaries 0 5 10 15 20 25 Series1
Sector Allocation
50
SCHEME PERFORMANCE (%) AS ON MAY 22, 2012 Month -6.81 3 Months -7.52 6 Months 3.82 1 Year -6.26 3 Years 9.49 5 Years 6.32 Since Inception 10.46
DATE NAV
31-3--2009 20.49
31-3-2010 39.77
31-3-2011 44.02
31-3-2012 42.72
NAV
NAV 44.02 39.77 42.72
20.49
31-3--2009
31-3-2010
31-3-2011
31-3-2012
51
The objective of the scheme is to provide the investors an opportunity to earn, in accordance with their requirements, through capital gains or through regular dividends, returns that would be higher than the returns offered by comparable investment avenues through investment in debt & money market securities
52
ASSET ALLOCATION(%)
Cash & Equivalent 52.13
Equity 0
Debt 47.87
0%
48% 52%
TOP 10 HOLDINGS
53
Stock
P/E
Qty
CBLO GOI Power Finance Corporation Ltd Vijaya Bank Industrial Development Bank of India Ltd. Andhra Bank Sundaram Finance Ltd. Housing Development Finance Corporation Ltd Axis Bank Ltd Rural Electrification Corporation
NA NA
26.79 9.24
NA NA
14.6 5.04
10 148.54
FI Banks
7.96 5.01
9.14 8.46
NA NA
4.98 4.61
0.13 1.13
NA NA NA
HFC Banks
25.27 10.78
8.02 7.91
NA NA
4.37 4.31
0.91 0.43
FI
7.48
5.47
NA
2.98
-0.39
SECTOR ALLOCATION(%)
54
Banks
33.25
Current Assets
26.79
FI
14.61
HFC
8.02
NBFC
8.09
Sovereign
9.24
55
Sovereign
NBFC
Sector Name
HFC
FI
Series1
Current Assets
Banks
10
15
20
25
30
35
Sector Allocation
RISK&RETURN
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SCHEME PERFORMANCE (%) AS ON MAY 22,2012 1 3 6 Month Months Months 1 Year 3 Years 1.03 2.09 6.75 10.51 6.53
5 Years 5.69
NAV
NAV 25.73
21.17
22.41
23.45
31-03-2009
31-03-2010
31-03-2011
31-03-2012
57 FUND FEATURES Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr. Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Open Ended Equity Growth Jan 17, 2002 10 35.73 as on Apr 30, 2012 NA 5000 Daily Daily Entry Load is 0%.
Exit Load
OBJECTIVE
The scheme will adopt a passive investment strategy. The scheme will invest in stocks comprising the S&P CNX Nifty index in the same proportion as in the index with the objective of achieving returns equivalent to the Total Returns Index of S&P CNX Nifty index by minimizing the performance difference between the benchmark index and the scheme. The Total Returns Index is an index that reflects the returns on the index from index gain/loss plus dividend payments by the constituent stocks.
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ASSET ALLOCATION(%)
Cash & Equivalent 3.81
Equity 96.19
Debt 0
0% 4%
96%
TOP 10 HOLDINGS
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Sector FMCG
P/E 32.92
Qty 112,476
Petroleum, Gas and petrochemical products 12.18 Software and Consultancy Services Banks
7.39
35,437
2.64
-0.75
Infosys Ltd. ICICI BANK LTD. Housing Development Finance Corporation Ltd HDFC Bank Ltd Larsen & Toubro Limited
18.73 15.71
6.98 5.98
10,127 24,205
2.49 2.14
-14.22 -0.68
25.27 24.65
5.78 5.73
30,643 37,719
2.06 2.05
9.59 4.55
18.44
3.89
11,321
1.39
-6.2
Software and Tata Consultancy Consultancy Services Ltd. Services Tata Motors Ltd State Bank of India Auto & Auto Ancillaries Banks
24.01
3.75
10,750
1.34
6.65
60.91 18.69
3.28 3.27
36,995 5,458
1.17 1.17
14.9 2.26
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SECTOR ALLOCATION(%) Auto & Auto Ancillaries Banks Chemicals Construction and Infrastructure Construction materials Current Assets Engineering and Capital Goods FI FMCG HFC Mining and Minerals Non Ferrous metals Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology Power & Control equipment Manufacturer Power Generation Power Transmission Realty Software and Consultancy Services Steel and Ferrous Metal Telecom Services Utilities - Gas, Power 8.81 19.38 0.91 0.51 2.35 3.81 3.89 0.84 10.25 5.78 1.68 1.81 12.3 4.05
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Utilities - Gas, Power Telecom Services Steel and Ferrous Metal Software and Consultancy Services Realty Power Transmission Power Generation Power & Control equipment Pharmaceuticals & Biotechnology Petroleum, Gas and petrochemical Non Ferrous metals Mining and Minerals HFC FMCG FI Engineering and Capital Goods Current Assets Construction materials Construction and Infrastructure Chemicals Banks Auto & Auto Ancillaries 0 5 10 15 20 25
Sector Name
Series1
Sector Allocation
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RISK&RETURN
SCHEME PERFORMANCE (%) AS ON MAY 22,2012 1 3 6 Month Months Months 1 Year 3 Years -8.23 -12.01 0.49 -11.26 4.48
5 Years 1.25
NAV
NAV 49.53 44.6
45.08
25.82
31-03-2009
31-03-2010
31-03-2011
31-03-2012
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Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr.
Open Ended Equity Growth Aug 8, 2005 10 402.83 as on Apr 30, 2012
Last Divdend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load
NA 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
OBJECTIVE
The investment objective of the scheme will be to provide attractive returns to the Magnum holders / Unit holders by means of capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio, will be reinvested. The following table shows percentage portfolio allocation.
ASSET ALLOCATION
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Equity 95.14
Debt 0
Chart Title
0% 5%
TOP 10 HOLDINGS
65
Reliance Industries Ltd Gujarat State Fertilizers & Chemicals Ltd Power Grid Corporation of India Ltd
Sector Mining and Minerals Petroleum, Gas and petrochemical products Fertilizers, Pesticides & Agrochemicals Petroleum, Gas and petrochemical products Fertilizers, Pesticides & Agrochemicals Power Transmission Petroleum, Gas and petrochemical products Fertilizers, Pesticides & Agrochemicals Mining and Minerals Non Ferrous metals
P/E 27.06
Qty 800,454
Value 28.2
11.38
6.7
998,704
26.97
0.9
17.28
6.66
798,216
26.84
-13.7
12.18
6.47
350,047
26.08
-0.42
4.58
5.59
511,391
22.5
-33.3
17.32
5.52
1,999,100
22.24
3.06
Gujarat State Petronet Ltd. United Phosphorus Limited (New) Gujarat Mineral Development Corporation Limited Hindalco Industries Ltd
6.83
4.91
3,000,000
19.79
-13.6
23.59
4.32
1,496,780
17.41
-10.72
13.41 10.02
3.69 3.59
801,725 1,198,510
14.87 14.47
2.05 -6.85
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Construction and Infrastructure Construction materials Current Assets Fertilizers, Pesticides & Agrochemicals Mining and Minerals Non Ferrous metals Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology Power Generation Power Transmission Steel and Ferrous Metal Sugar Utilities - Gas, Power
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Utilities - Gas, Power Sugar Steel and Ferrous Metal Power Transmission Power Generation Sector Name Pharmaceuticals & Biotechnology Petroleum, Gas and petrochemical Non Ferrous metals Mining and Minerals Fertilizers, Pesticides & Current Assets Construction materials Construction and Infrastructure 0 5 10 15 20 25 30 Series1
Sector Allocation
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RISK $ RETURN
SCHEME PERFORMANCE (%) AS ON MAY 28,2012 1 3 6 5 Month Months Months 1 Year 3 Years Years -4.91 -12.41 -8.09 -20.32 2.03 2.57
DATE NAV
31-03-2009 12.76
31-03-2010 24.24
31-03-2011 24.12
NAV
NAV 24.24 24.12 21.05 12.76
31-03-2009
31-03-2010
31-03-2011
31-03-2012
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PERFORMANCE EVALUATION
We are interested in discovering if the management of a mutual fund is performing well, that is, Has management done better through merely buying the market picking a large number of Securities randomly and holding them throughout period? One of the most popular ways of measuring managements performance is by comparing the yields for the managed portfolio with the market or with a random portfolio.
The following formula can be used to evaluate mutual fund performance:NAVt + DT/NAVt-1 -1
Where NAVt = per share net asset value at the end of the year t DT = capital appreciation during a year NAVt-1 = per share net asset value at the end of the year
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NAVt-1 25.82
NAVt 45.08
Dt(NAVt-NAVt-1) 19.26
72
NAVt-1 12.76
NAVt 21.05
Dt(NAVt-NAVt-1) 8.29
73
NAV
RANK
216.98
160.26
149.18
129.93
128.15
43.07
74
RANK
129.93
128.15
SBI OPEN SBI OPEN ENDED ENDED BLUECHIP INDEX FUND FUND
SBI OPEN SBI OPEN SBI OPEN ENDED ENDED ENDED COMMA BALANCED INCOME FUND FUND FUND
INTERPRETATION:
From the table it is observed that SBI magnum equity fund is good when compared to remaining funds. The performance of the fund is good, so the first rank is given to SBI Equity fund, second rank is given to SBI magnum blue chip fund, Third rank is given to SBI magnum index fund, fourth rank is given to SBI magnum comma fund, fifth rank is given to SBI magnum balanced fund and sixth rank is given to SBI magnum income fund. It is taken on the basis of the net asset value.
FINDINGS
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As per my knowledge a fund with a better diversification of funds and opting for changes based upon the market fluctuation. Under the eyes of efficient fund manager can produce a high return. The Biggest advantage with mutual funds is that the investor dont need huge amount to be invested in all his favorite stocks and bonds. Most mutual funds have a minimum investment of RS 5000 This analysis has given a clear difference between equity & non-equity funds Debts are better for stable returns & not only stable but also some appraisal in long run In this analysis we can say that equity are yielding well returns when thy are individually but with risk
In this analysis we can say that equity are yielding well returns when they are individually I long run
Funds performance may be vastly different owing to one or many of below factors: 1) Size of the funds 2) Investment objective 3) Risk portfolio 4) Portfolio composition 5) Expense ratios When we equity funds like SCCEF it is well diversified scheme where by it has indifferent industries whose stocks are hot now such as SBI, BAJAJ AUTO LTD. In addition, different AAA graded scripts where generally have high stability will reduce unfortunate risk. When we gone for debt its still stable but not satisfactory because on a average GRINDLAYS DYNAMIC BOND FUND giving 0.368 & another debt fund giving 0.1009.
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SUGGESTIONS
The fund house has to reduce the total risk involved in the fund in order to increase the return with good portfolio construction. The fund house should select the innovative way of portfolio construction and should see the attracting areas of investing funds. The fund houses should concentrate on the market conditions according to that they have to set the benchmark and invest in different sectors. The fund houses should invest in good and attracting sectors to reduce standard deviation. The fund house should try to reduce little more beta in order to generate more returns to investors.
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CONCLUSIONS
Indian mutual fund industry possesses great potential for growth. The drivers for growth are Structural changes in the financial sector The private sector has grown by 51.84% since 1999, The growth has been primarily in open-ended products. Development in the previous three years was dominated by the growth of debt products. But with the positive outlook for equity markets, there have been increasing flows into equity products.
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BIBLIOGRAPHY
BOOKS
MUTUAL FUNDS IN INDIA : S.KRISHNA MURTHY, Second edition, Chandra Bose calcutta : DONALD E. FISHER & RONALD J. JORDAN : PRASANNA CHANDRA : V.A.AVADHANI, Fourth edition Himalaya Publications, Hyderabad
NEWS PAPERS
The Economic Times Business Line Business standard Business world
WEBSITES
www.mutualfundsindia.com www.nseindia.com www.standardchartedmf.com www.amfiindia.com www.bseindia.com
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