CHAPTER I

INTRODUCTION

Balancing of funds in any economy is very important which includes issuing & collecting
of funds.
Not only for balancing but also to provide liquidity for ideal capital there are many
financial products such as bank deposits, NSS savings, securities, insurance etc., in India, which
have some risk & returns.
But in recent times there are new types of products developed in the financial markets such as
derivatives, commodities, mutual funds among which mutual funds is one of best source of
investment to the financial markets and investors. Which are developed in U.S and landed into
India where it is growing at slow phase
This project is to create an idea of which type of fund is better from the investor point of
view in the Standard Chartered Mutual Fund Company.

Introduction to mutual funds

A mutual fund is a trust that pools the money of a number of investors and invests it in
different types of securities to earn a return. The money held in the trust is divided into shares of
equal value called units. Investors become unit-holders and are allotted units based on the
amount of their investment. The trustees of the mutual fund trust appoint an Asset Management
Company (AMC) to manage the investments. They also appoint registrars, auditors, custodians
and other service-provides to support the smooth functioning of the fund. The decisions on how to
invest the money in the trust are taken by the AMC, which has an investment management fee.

History of mutual funds

UTI was the first mutual fund setup in 1963 in early 1990s; the government permitted public
sector banking and institutes to set up mutual funds.
In order to protect the investors and promoters and regulate the securities markets, SEBI act
was passed in year 1992.
As far as mutual funds are concerned, the SEBI formulates policies and regulates the mutual
funds to protect the investors. SEBI modified the regulations of mutual funds in 1993. Thereafter
private sector entities entered the capital markets sponsoring mutual funds in big way. The
2

regulations were revised in 1996, subjected and advertised time to time.

SEBI has also issued guidelines for mutual funds periodically to protect the interest of investors.

SET UP OF MUTUAL FUND

A mutual fund is in the form of a trust, which has sponsor, trustees, Asset Management
Companies (AMC) and custodians. The trust is established by a sponsor or more than one sponsor
who is like promoter of a company. The trustees of the mutual fund hold its property for the
benefits of the unit holders. Asset management companies approved by SEBI, manage the funds
by making investments in various types of securities. Custodian, who is registered with SEBI,
holds the securities of the various schemes of the fund in his custody. The trustees are vested with
the general power of the superintendents and direction over AMC. They monitor the performance
and compliance of the SEBI regulations by the mutual fund.
SEBI Regulations required that at least two-third of the directors of trustee company or
Board of Trustees must be independent i.e. they should not be associated with the sponsors. Also,
50% of the directors must be independent. All mutual funds are required to be registered with
SEBI before they launch any scheme.

ORGANIZATION OF MUTUAL FUNDS

PROCESS OF MUTUAL FUNDS

1. Investors: The people who purchase and hold the units.

2. SEBI: Governing body for asset management companies (AMC)
3. Distributors: The person who brings investors into schemes for commission
4. Transfer agents: the person who manages the investors a/c
5. Custodians: the custodian maintains custody of individual records
6. Sponsors: A promoter of mutual fund is referred as sponsors
7. Trustees: A mutual fund has to be constituted in the form of a trust, created through a trust deed

Characteristics of mutual funds companies:

1. Pooled vehicle: It pools money from investors and invest in stock markets.
2. Professional management: Its investment done by professionals (fund managers)
3. Money in trust: Invested money will be in trust where by accounts are maintained.
4. Schemes: Investment styles in which investments are done as per investor wish.
5. Legal framework: It has an entity, which was authorized by SEBI & GOVT.,

NEED of study
to know the history, organizational structure and types of mutual finds available in the
market, the process of funding system and level of risk and returns in mutual funds market as well
as to have a clear idea about the schemes which give different types of returns and coverages in
mutual fund market.
To know the tax benefits allowed by government of India in mutual fund investments and
also a variety of tax laws apply to mutual funds.

SCOPE OF THE STUDY

scope of the study has covered the following segments.
4

History of the mutual funds

Characteristics of mutual fund companies
Objective of investment
Organizational structure and process of mutual funds
Types of funds
Advantage of investment in mutual funds
Company and industry profiles
Tax benefits provided by the Indian government

Even though it is studied, on the basis of statistical data, some times it may

Limitations
or may not correlated because of some external factors like political, government, natural
calamities etc which may effect stock performance.

Mutual funds are growing better but there is no assurance that it will yield
stable returns

The other limitation of a Mutual Fund is the trading limitation, where the

Funds are liquid in general; many Mutual Funds (called open-ended Funds) cannot be
bought or sold in the middle of the trading day. Investor can only buy and sell them at the
end of the day, after they have calculated the current value of their holdings.

Generally AMC takes some days to collect the funds. After collecting, they
go for market for this time our capitals remain idle.

OBJECTIVES
SEBI has laid down the basic objectives of the investment management of mutual funds.
According to the SEBI regulations, the money collected under any scheme of a mutual find shall
be invested only in transferable securities in the money market or in the capital market or in
privately placed debentures or securities or securitized debt.

To know risk & return involved in different types of Mutual funds schemes
To evaluate the benefits of investing in mutual funds
To analyze which combination will be better from the investor point of

To know in depth study of mutual funds.

To know the risk factors affecting the NAVs growth

view.

METHODOLOGY
Primary Data:
5

The information has been taken from websites which are maintained

by the BSE India, AMFI India and Standard Chartered Mutual Fund company.
Secondary Data:

Some information has been taken from the books which are written

by well known authors, News papers.

Theoretical background of topic:

Risk is present in every decision. Assessing risk and incorporating the same in the final
decision is an integral part of financial analysis.
The objective in decision-making is not to eliminate or avoid risk often it may be neither
feasible nor necessary to do so but to properly assess it and determine whether it is worth
bearing.
The return is compensation for risk bearing at particular point of time that is almost
represented by percentage.

CHAPTER II

REVIEW OF LITERATURE

TYPES OF MUTUAL FUND SCHEMES

SCHEMES ACCORDING TO MATURITY PERIOD:
A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
depending on its maturity period.
OPEN-ENDED FUND/SCFHEME:
An open-ended fund or scheme is one that is available for subscription and repurchase on
a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently
buy and sell units at NAV related prices, which declares on a daily basis. The key feature of openended scheme is liquidity. Under this scheme, the investors are free to draw or withdraw a fund
from the same at any point of time after an initial login period. UTI 1964 unit scheme is an
example of such fund. Other examples are Birla mutual fund, JM mutual fund, Alliance etc.

CLOSE-ENDED FUND/SCHEME:
A Close-ended fund/scheme has a stipulated maturity period e.g.: 5-7 years. The fund is
open for subscription only during a specified period at the time of launching the scheme. Investors
can invest in the scheme at the time of initial public issue and there after they can buy or sell the
units of the scheme on the stock exchanges where 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 the mutual fund
through periodic repurchases at NAV related prices. SEBI Regulation stipulate that at least one of
the two exit routes is provided to the investor that is either repurchase facility or through listing on
stock exchange.
These mutual funds schemes disclose NAV generally on weekly basis. Units of such
schemes can be redeemed only on termination through dealing in secondary markets. E.g.: stock
can share, stock can stop, can grow, SBI magnum master share, Morgan Stanley.
SCHEMES ACCORDING TO INVESTMENT OBJECTIVE:
A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objectives. Such schemes may be open-ended or close-ended schemes
as described earlier. Such schemes may be classified as follows:
GROWTH/EQUITY ORIENTED SCHEMES:
The aim of growth funds is to provide capital appreciation over the medium to long-term.
Such schemes normally invest a major part of their corpus in equities. Such funds have
comparatively high risks. These schemes provide different options to the investors like dividend
option, capital appreciation, etc., and the investors may choose an option depending on their
preferences. The investors must indicate the option in the application form. The mutual funds also
allow the investors to change the options at a later date. Growth schemes are good for investors
having a long-term outlook seeking appreciation over a period of time.
INCOME/DEBT ORIENTED SCHEMES:
The aim of income funds is to provide regular and steady income to the investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures,
government securities and money market instruments. Such funds are less risky compared to
8

equity schemes. These funds are not affected because of change in interest rates in the country. If
the interest rate falls, NAVs of such funds are likely to increase in the short run and vice-versa.
However, long-term investors may not bother about these fluctuations.
BALANCED FUND:
The aim of balanced growth fund is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion indicated in their
offer documents. These are appropriate for investors looking for moderate growth.
They generally invest 40 60% in equity and debt instruments. These funds are also
affected because of fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
MONEY MARKET OR LIQUID FUND:
These funds are also income funds and their aim is to provide easy liquidity, preservation
of capital and moderate income. These schemes invest exclusively in safer.
Short-term instruments such as treasury bills, certificates of deposits, commercial papers and
inter-bank call money, government securities etc. Returns on these schemes fluctuate much less
compare to other funds. These funds are appropriate for corporate and individual investors as a
mean to park their surplus funds for short periods.
TAX SAVING SCHEMES:
These schemes offer tax rebates to the investors under specific provision of the Income Tax Act,
1961 as the Government offer tax incentives for investment in specified avenues. e.g.: Equity
Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax
benefits. These schemes are growth-oriented and invest pre-dominantly in equities. Their growth
opportunities and risks associated are like any equity-oriented schemes.
SPECIALISED FUNDS:
These funds offer special schemes so as to meet the specific needs of specific categories of
people like pensioners, widows etc. There are also funds foe investments in securities of specified
areas. For instance, Japan fund, South Korea fine etc.
9

OTHER CLASSIFICATION
INDEX FUNDS:
Index funds replicate the portfolio of a particular index such as the BSE Sensitive index,
S&P NSE 50 index (nifty), etc. These schemes invest in the securities in the same weight age
comprising of an index.
NAVs of such schemes would rise or fall in accordance with the rise or fall in the index,
through not exactly by the same percentage due to some factors known as tracking error in
technical terms. Necessary disclosures in this regard are made in the offer document of the mutual
fund scheme.
SECTOR SPECIFIC FUNDS/SCHEMES:
These are the funds/schemes, which invest in the securities of only those sectors or industries as
specified in the offer documents. E.g.: Pharmaceuticals, Software, and Fast Moving Consumer
Goods (FMCG), Petroleum stocks etc. The returns in these funds are dependant on the
performance of the respective sectors/industries. While these funds may give higher return, they
are more risky compared to diversified funds. Investors need to keep a watch on the performance
of those sectors/industries and must exit at an appropriate time. They may also seek advice of an
expert.
LOAD OR NO-LOAD FUND:
A load Fund is one that charges a percentage of NAV for entry or exit. That is, each time
one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual
fund for marketing and distribution expensed. Suppose the NAV per unit is Rs. 10 and those who
offer their units for repurchase to the mutual fund will get only Rs. 9.90p per unit. The investor
should take the loads into consideration while making investment as these affect their
yields/returns.
However, the investors should also consider the performance track record and service
standards of the mutual fund, which are more important. Efficient fund may give higher returns in
spite of loads.
A no-load fund is one that does not charge for entry or exit. It means the investors can
10

enter the fund/scheme at NAV and no additional charges are payable on purchase or
Sale of units.
REAL ESTATE FUND:
These are close-ended mutual funds with investments in real estate and properties. It is a
long term yielding funds.
OFF-SHORE FUNDS:
Such mutual funds invest in securities of foreign companies such investment require
Reserve Bank of Indias permission.
LEVERAGE FUND:
It is also known as borrowed funds. These are used to increase the value of portfolio and
benefit of members by gains rising out of excess of gains over cost of borrowed funds. Such
mutual funds invest in risky trading and speculative investments.
AGGRESSIVE GROWTH FUNDS:
It aims at capital, it is characterized by high turnover, investment in new risk taking
companies, risk taking approach, capital appreciation etc.
ASSET ALLOCATION FUNDS:
These depend on the asset class to be included in the portfolio. Such funds include common
stocks, foreign stocks, previous metals real estate stocks, bonds, money market instruments,
foreign currencies and other mutual fund units.
NEW DIRECTION FUNDS:
These funds invest in companies engaged in scientific and technical research fields. Such
as birth control, anti-pollution, space research, captive power generation plants.

ADVANTAGES OF INVESTMENTS IN A MUTUAL FUND ARE:

There are number of advantages of investment for small investors which arise as a result
11

of their parking funds with mutual fund. Like:

Professional management
Diversification
Convenient administration
Return potential
Low costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits

REASONS FOR THE ADVANTAGES:

Security and reduced risk.

Availability of expert advice of professional management.
Diversification of portfolio for best returns.
Automatic investment of returns.
Best selection and timing of investment through professional approach.
Liquidity of investment.
Such invest promote savings habit.
Tax shelter from various taxes.
Safety because of government regulation.
Economies of scale, which maximize returns and minimizes cost.
Saving schemes of mutual funds.

REASONS FOR RISE AND DOWNFALL OF PRICE:

1.
2.

Government policies
Natural calamities

3. Management of performance
4. Internal and external factor
1.

Political reasons

Brief about benefiTS OF MUTUAL FUNDS:

Professional Management
Mutual Funds provide the services of experienced and skilled processionals, backed by a
dedicated investment research team that analyses the performance and prospects of companies and
selects suitable investments to achieve the objectives of the scheme.
Diversification
12

Mutual Funds invest in a number of companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because seldom do all stocks decline at the same time
and in the same proportion. You achieve this diversification through a Mutual Fund with far less
money than you can do on your own.
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad
deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your
time and make investing easy and convenient.
Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they
invest in a diversified basket of selected securities.
Low Costs
Mutual Funds are relatively less expensive way to invest compared to directly investing in the
capital markets because the benefits of scale in brokerage, custodial and other fees translate into
lower costs for investors.
Liquidity
In open-ended schemes, the investor gets the money back promptly at net asset value related
prices from the Mutual Fund. In close-ended schemes, the units can be sold on a stock exchange
at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV
related prices by the Mutual Fund.
Transparency
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and the
Fund managers investment strategy and outlook.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw Funds according to your needs and
convenience.
13

Affordability
Investors individually may lack sufficient Funds to invest in high-grade stocks. A Mutual Fund
because of its large corpus allows even a small investor to take the benefit of its investment
strategy.
Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
Risk associated:
A comparison of both banks and mutual funds on various aspects is done in the following table.
Returns
Administrative
Risk
Investment options
Network
Liquidity
Quality of assets
Interest calculation

BANKS
Low
High
Low
Less
High penetration
At a cost
Not transparent
Minimum balance between 10th & 30th

MUTUAL FUNDS
Better
Low
Moderate
More
Low but improving
Better
Transparent
Every day

Guarantee

of every month
Maximum Rs.1 lack on deposits

None

THE SPONSERS OF ASSOCIATION OF MUTUAL FUNDS IN INDIA:

Banks

14

SBI Fund Management Ltd.

BOB Asset Management Co. Ltd.

Canbank Investment Management Services Ltd.
UTI Asset Management Company Pvt. Ltd.

GIC Asset Management Co. Ltd.

Jeevan Bima Sahayog Asset Management Co. Ltd.

Institutions

Private Sector-India:

Benchmark Asset Management Co. Pvt. Ltd.

Cholamandalam Asset Management Co. Ltd.
Credit Capital Asset Management Co. Ltd.
Escorts Asset Management Ltd.
JM Financial Mutual Fund
Kotak Mahindra Asset Management Co. Ltd.
Reliance Capital Asset Management Ltd.
Sahara Asset Management Co. Pvt. Ltd
Sundaram Asset Management Company Ltd.
Tata Asset Management Private Ltd.

Predominantly Indian Joint Ventures:

Birla Sun Life Asset Management Co. Ltd.

DSP Merrill Lynch Fund Managers Limited
HDFC Asset Management Company Ltd.

Predominantly Foreign Joint Ventures:

ABN AMRO Asset Management (I) Ltd.

Alliance Capital Asset Management (India) Pvt. Ltd.
Deutsche Asset Management (India) Pvt. Ltd.
Fidelity Fund Management Private Limited
Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
HSBC Asset Management (India) Private Ltd.
ING Investment Management (India) Pvt. Ltd.
Morgan Stanley Investment Management Pvt. Ltd.
Principal Asset Management Co. Pvt. Ltd.
Prudential ICICI Asset Management Co. Ltd.
Standard Chartered Asset Mgmt Co. Pvt. Ltd.

RISKS ASSOCIATED WITH MUTUAL FUND INVESTMENT:

15

At the cornerstone of investing is the basic principle that the greater risk you take, the
greater potential reward you get. Risk is defined as short-term price variability. But on a long-term
basis, risk is the possibility that the accumulated real capital will be insufficient to meet financial
goals of the investor.
Mutual funds offer incredible flexibility in managing investment risk. Diversification and
Automatic Investing (SIP) are two key techniques used to reduce investment risk considerably
and to reach long-term financial goals of investor. All investments involve some form of risk. The
following risks are associated with mutual fund investments.

Market Risk:
The prices or yields of all the securities in which a mutual funds invests, in a particular market
rise or fall due to broad outside influences. Therefore mutual fund investments are subject to
market risk.
Interest Risk:
Changing interest rates affect the debt mutual funds in many ways. When interest prices raise, the
prices of already existing bonds fall thus reducing the returns from the funds.
Effect of Loss of key Professionals and Inability to Adapt:
A mutual funds key asset is often the fund manager who runs the business. Failure or inability to
attract/retain such qualified key personnel may impact the prospects of the mutual fund
companies.
Investment Risk:
The sartorial fund schemes, investments will be predominantly in equities of selected companies
in particular sectors. Accordingly, the NAV of the Schemes are linked to the equity performance
of such companies and may be more volatile than a more diversified portfolio of equities.

Changes in Government policy:

Changes in Government policy especially in regard to the tax benefits may impact the business
16

prospects of the mutual funds.

CHAPTER III

COMPANY PROFILE:

17

NETWORTH HISTORY
INTRODUCTION:
Ever since its inception in 1993, Networth Stock Broking Limited (NSBL) has sought to
provide premium financial services and information, so that the power of investment is vested
with the client. We equip those who invest with us to make intelligent investment decisions,
providing them with the flexibility to either tap into our extensive knowledge and expertise, or
make their own decisions.
NSBL made its debut into the financial world by servicing Institutional clients, and proved
its high scalability of operations by growing exponentially over a short period of time. Now,
powered by a top-notch research team and a network of experts, we provide an array of retail
broking services across the globe - spanning India, Middle East, Europe and America. We are a
Depository participant at Central Depository Services India (CDSL) and National Securities
Depository (NSDL).
Our strong support, technology-driven operations and business units of research,
distribution and advisory coalesce to provide you with a one-stop solution to cater to all your
broking and investment needs. Our customers have been participating in the booming
commodities markets with our membership at the Multi Commodity Exchange of India (MCX)
and National Commodity & Derivatives Exchange (NCDEX) through Networth Stock.Com Ltd.
NSBL is a member of the National Stock Exchange of India Ltd (NSE) and the Bombay
Stock Exchange Ltd (BSE) on the Capital Market and Derivatives (Futures & Options) segment.
It is also a listed company at the BSE.
Net worth Stock Broking Limited (NSBL) has sought to provide premium financial
services and information.
VISION:
Owing to the vision and expertise of our team of experts, Net worth has established itself
as one of the premier financial services organization in India. Net worth professionals form the
backbone of the organization, pooling together their expertise from top financial service and
broking houses.
A strong team of professionals experienced and qualified pool of human resources drawn
from top financial service & broking houses form the back bone of our sizeable infrastructure.
18

Highly technology oriented, the company's scalability of operations and the highest level of
service standards has ensured rapid growth in the number of locations & the clients serviced in a
very short span of time.
TEAM OF EXPERTS:
Raj Bhandari
Director & Head Dealing
Mr. Raj Bhandari has over 8 years of Capital Market experience at NSBL. His expertise
includes dealing and servicing the institutional and retail segments.
S.Girish Dev
Head Operations & Technology
Over the span of 14 years, Mr. Girish Dev has acquired an in-depth knowledge of the
Capital Market. His experience covers a wide spectrum, ranging from Arbitrage & Client dealing
across several exchanges and client categories to setting up operations, including those of a
Foreign Brokerage and one of the first major e-broking ventures in the country. He has led
compliance, e-business and book-building IPO activities, and has also contributed in developing a
technology-sustained infrastructure that supports broking trading and settlement.
S.P. Jain
Chairman & Managing Director
The primary force behind the founding and the listing of Networth Stock Broking Ltd.,
S.P. Jain has propelled the company forward from its very origins. With over 14 years of
experience in the Capital market and financial services, he is at the helm of NSBL, working
closely with the research division and guiding the organization to the forefront of financial
services in India.

Sathyan Rajan
Director& Head Sales
19

With over a decade in the industry and experience in various capacities, Mr. Sathyan Rajan
brings to NSBL insights from the length and breath of the financial sector. He has previously
worked with Karvy Stock Broking Ltd., one of the largest retail networks in the country, and was
responsible for establishing the companys overseas network. His transition from research to sales
marked a significant step in his career.
J. Gopalakrishnan
Vice President & Southern Region Head
Mr. J. Gopals 15 years of Capital Market experience is replete with the distinguished
leadership roles he has played in the organizations he was involved with. At Anush Shares &
Securities Pvt. Ltd., where he served for 12 years, he was the Head of Operations. He has also
headed the finance, trading & settlement operations at Karvy Stock Broking Ltd., where he
worked for 3 years.
Suhas Bade
Director
Mr. Suhas Bade heads NSBLs Investment Banking Division. As a Management
Consultant, Mr. Bade has lead organizations through the various stages of their lifecycle to
achieve and surpass growth targets. His wide-ranging experience in the field includes funds
mobilization, placement of equity and BPR services for SME.
Satish Pasari
Country Head Distribution and Advisory
From a career in consumer durables (with four years of experience with in Videocon
International) to a comprehensive knowledge and experience in the equity markets, Mr. Satish
Pasari has acquired a gamut of experience across sectors. Over the span of 11 years, Mr.Pasari has
handled distribution of financial services in retail, HNI and institutional segments. He has
previously worked with Karvy Stock Broking Ltd.

STANDARD CHARTERED MUTUAL FUNDS:

20

Standard Chartered Mutual Fund (SCMF or the Fund) (erstwhile the ANZ Grind lays
Mutual Fund) has been Constituted as a Trust vide a Trust Deed dated December 29, 1999 in
accordance with the provisions of the Indian Trust Act, 1882 (2 of 1882). The Mutual Fund was
registered with the Securities & Exchange Board of India (SEBI) on March 13, 2000.
Standard Chartered Bank, with Standard Chartered Trustee Company Private Limited, has
sponsored SCMF (Formerly known as the ANZ Grind lays Trustee Company Private Limited)
(The Trustee) As Trustee and Standard Company Private Limited) (the AMC) as the
Investment Manager for all the Schemes of SCMF.
SCMF comprised of Fourteen Debt Funds, Six open-ended and eight closed-ended
schemes as on March 31, 2005.The total Funds under Management (FuM) under the fourteen
Schemes as on March 31, 2005 aggregated to Rs. 7023.52 Crores.
Year 2004-2005 was the fifth year of operation of SCMF. Up to March 31, 2005 SCMF
has launched only debt funds, with the objective of meeting the diverse risk-return requirements
of debt fund investors.
During the year under review, Grind lays Floating Rate Fund - Long Term Plan and
Standard Chartered All Seasons Bond Fund were launched. Nine close-ended schemes were also
launched during the year. The AMC is in the process of continuously building resources and as at
March 31, 2005 had a fully operational AMC Office in Mumbai and sales offices in 18 cities.
SPONSOR
Standard Chartered Bank (SCB) is a member of the Standard Chartered Group, which is
a multinational banking and financial services group with a unique emerging markets network.
Standard Chartered is the world's leading emerging markets bank and has offices in many
countries in the Asia Pacific Region, South Asia, the Middle East, Africa, and United Kingdom.
Through the years SCB has grown its operations and is now a truly international bank offering a
wide array of financial products and services. As an organization, SCB is committed to delivering
consistently superior performance and to building shareholder value. With more than 150 years in
the emerging markets the Bank has unmatched Knowledge and understanding of its customers in
its markets. SCB operates in India through various branches that are spread in various cities and
offer a complete range of banking and financial products.
It is the largest foreign bank in India.
21

STANDARD CHARTERED TRUSTEE COMPANY PRIVATE LIMITED

The Trustee is a company incorporated under the Companies Act, 1956 and is the Trustee
to the Fund vides Trust Deed dated December 29, 1999 as amended from time to time.
The Trustee is 100% owned by Standard Chartered Bank. The Trustee is the exclusive
owner of the Trust Fund and holds the same in trust for the benefit of the unit holders.
The SEBI (Mutual Funds) Regulations, 1996 as amended from time to time, the
Investment Management Agreement, the Stock Exchanges and other regulatory agencies.
STANDARD CHARTERED ASSET MANAGEMENT COMPANY PRIVATE LTD
As at March 31, 2005, the Atul held equity share capital of the AMC 75% by Standard
Chartered Bank and 25% C. Choksey Group of Companies. The AMC formerly known as ANZ
Grindlays Asset Management Company Private Limited was sponsored by the ANZ Banking
Group, the holding of ANZ was acquired by Standard Chartered Bank and subsequently on March
13, 2001 the name of the AMC was changed to Standard Chartered Asset Management Company
Private Limited. The AMC is the Investment Manager for all the Schemes under SCMF.
BOARD OF DIRECTORS
Standard Chartered Trustee Company Private Limited
Mr. Sanjeev Agrawal (Chairman)
Mr. Dattatraya M. Sukthankar
Mr. Jamsheed G. Kanga
Mr. Sukant Kelkar
Standard Chartered Asset Management Company Private Limited
Mr. Paul Jebson (Chairman)
Dr. A.C. Shah
Mr. Atul C. Choksey
Mr. Pradip Madhavji
Mrs. Bakul Patel
Mr. Naval Bir Kumar (Managing Director)

INDUSTRY PROFILE
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The history of
mutual funds in India can be broadly divided into four distinct phases

22

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in place of
RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had
Rs.6,700 crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed
by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993. In the 1993
SEBI (Mutual Fund) Regulations were substituted by more comprehensive and revised Mutual
Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations
1996. The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions. As
at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of
other mutual funds.

23

FOURTH PHASE - Since February 2005

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India
with assets under management of Rs.29,835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed
by Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of
the erstwhile UTI which had in March 2000 more than Rs.76,000 crore of AUM and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with
recent mergers taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of September, 2006, there
were 29 funds, which manage assets of Rs.1,53,108 crore under 421 schemes.
MUTUAL FUNDS IN 2006
2006 was a great year for investors in equity mutual funds because of rally of equitydiversified category, which gained 107%, compare to 93% in 2005 at the end of April due to war
for oil in Iraq many companies loose their NAV values except Reliance & some other FMCGs.
But due to broad combination of cherry news robust FIIs a favorable monsoon creates good
results for Q1&Q2 and wonder to markets and sensex gained 83.57% within eight months.

MUTUAL FUNDS IN 2007

It is time to be safer in debt funds where equity funds are in damaging period where
negative rally run in sector funds like FMCG 15%, PHARMA _11% , where 7200 cr worth of
investments from 14 top fund houses pulled by corporate investors to balance their B/S.
MUTUAL FUNDS IN 2008
Its a better time for both equity & debt funds because of FIIs pumped around 12000cr in
to Indian financial market where sensex has reached 16k and later at end of 2nd month it reached
24

17k.and shows positive NAVs for unit holders.

The graph indicates the growth of assets over the years.

Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit
Trust of India effective from February 2003. The Assets under management of the Specified
Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the
industry as a whole from February 2003 onwards.

25

CHAPTER IV

DATA ANALYSIS & INTERPRETATION

26

TAXATION IN MUTUAL FUND:

A variety of tax laws apply to mutual funds, which are broadly listed below:
Capital Gains:
Units of mutual fund schemes held for a period more than 12 months are treated as long-term
capital assets. In such cases, the unit-holder has the option to pay capital gains tax at either 20%
(with indexation) or 10% without indexation.
Tax Deducted at Source (TDS):
For any income credited or paid by a fund, no tax is deducted or with held at source. The relevant
sections in the Income Tax Act governing this provision are Section 194k and 19
Wealth Tax:
Mutual fund units are not currently treated as assets under Section 2 of the Wealth Tax Act and are
therefore not liable to tax.
Income from units:
Any income received from units of the schemes of a mutual fund specified under section 23(D) is
exempt under Section 10(33) of the Act. While section 10(23D) exempts income of specified
mutual funds from tax (which currently includes all mutual funds operating in India), Section
10(33) exempts income from funds in the hands of the unit-holders.
Section 88:
The investment in mutual funds designated as Equity Linked Saving Scheme (ELSS) qualifies for
rebate under Section 88. The maximum amount that can be invested in these schemes is Rs.10,
000, therefore the maximum tax benefit available works out to Rs.2000. Apart from ELSS
schemes, the benefit of Section 88 is also available in select schemes of some funds such as UTI
ULIP, KP Pension Plan etc.

27

VOLATILITY MEASUREMENTS OF MUTUAL FUND

When considering a funds volatility, an investor may find it difficult to decide which fund
will provide the optimal risk-reward combination.
OPTIMAL PORTFOLIO THEORY AND MUTUAL FUNDS
On examination of the relationship between portfolio returns and risk is the efficient
frontier, a curve that is a part of the modern portfolio theory. The curve forms from a graph
plotting return and risk indicated by volatility, which is represented by standard deviation.
According to the modern portfolio theory, funds lying on the curve are yielding the maximum
returns possible given the amount of volatility.
Notice that as standard deviation increases, so does the return. Once expected returns of a
portfolio reach a certain level, an investor must take on a large amount of volatility for a small
increase in return. Obviously, portfolios that have a risk/return relationship plotted far below the
curve are not optimal as the investor is taking on a large amount of instability for a small return.
To determine if the proposed fund has an optimal return for the amount of volatility acquired, an
investor needs to do an analysis of the funds standard deviation.
Note that the modern portfolio theory and volatility are not the only means investors use to
determine and analyze risk, which may be caused by many different factors in the market. Not all
inventors therefore evaluate the chance of losses the same way things like tolerance and
investment strategy will affect how an investor views his or her exposure to risk.

Standard Deviation:
The standard deviation essentially reports a funds volatility, which indicates the tendency
of the returns to rise or fall drastically in a short period of time. A security that is volatile is also
considered higher risk because its performance may change quickly in either direction at any
moment. The standard deviation of a fund measures this risk by measuring the degree to which the
fund fluctuates in relation to its mean return, the average return of a fund over a period of time.
A fund that has a consistent four-year return of 3%, for example, would have a mean, or
average, of 3%. The standard deviation for this fund would then be 0 because the funds return in
any given year does not differ from its four-year mean of 3%. On the other hand, a fund that in
28

each of the last four years returned 5%, 17%, 2%, and 30% will have a mean return of 11%. The
fund will also exhibit a high standard deviation because each year the return of the fund differs
from the mean return. This fund is therefore more risky because it fluctuates widely between
negative and positive returns within a short period.
A note to remember is that, because volatility is only one indicator of the risk affecting a
security, a stable past performance of a fund is not necessarily a guarantee of future stability.
Since unforeseen market factors can influence volatility, a fund that this year has a standard
deviation close or equal to zero may behave differently in the following year.
To determine how well a fund is maximizing the return received for its volatility, one can compare
the fund to another with a similar investment strategy and similar returns. The fund with the lower
standard deviation would be more optimal because it is maximizing the return received for the
amount of risk acquired. Consider the following.
With the S&P 500 Fund B, the investor would be acquiring a larger amount of volatility
risk than necessary to achieve the same returns as Fund A. Fund A would provide the investor
with the optimal risk/return relationship.

Beta:
While standard deviation determines the volatility of a fund according to the disparity of
its returns over a period of time, beta, another useful statistical measure, determines the volatility,
or risk, of a fund in comparison to that of its index or benchmark. A fund with a beta very close to
1 means the funds performance closely matches the index or benchmark a beta greater than 1
indicates grater volatility than the overall market, and a beta less than 1 indicates less volatility
than the bench mark. If, for example, a fund has a beta of 1.05 in relation to the S&P 500, the fund
has been moving 5% more than the index. Therefore, if the S&P 500 increased 15%, the fund
would be expected to increase 15.75%. On the other hand, a fund with a beta of 2.4 times more
than its corresponding index. If the S&P 500 moved 10%, the fund would be expected to rise
24%, and, if the S&P 500 declined 10%, the fund would be expected to lose 24%.
Investors expecting the market to be bullish may choose funds exhibiting high betas,
which increase investors chances of beating the market. If an investor expects the market to be
bearish in the near future, the funds that have betas less than 1 are a good choice because they
would be expected to decline less in value than the index. For example, if a fund had a beta of 0.5
29

and the S&P CNX 500 declined 6%; the fund would be expected to decline only 3%. Be aware of
the fact that beta by itself is limited and can be skewed due to factors of other than the market risk
affecting the funds volatility.

R-Squared (R2):
The R-squared of a fund advised investors if the beta of a mutual fund is measured against
an appropriate benchmark. Measuring the correlation of a funds movements to that of an index,
R-squared described the level of association between the funds volatility and market risk, or more
specifically, the degree to which a funds volatility is a result of the day-to-day fluctuations
experienced by the overall market. R-squared values range between 0 and 1, where 0 represents
the least correlation and 1 represents full correlation. If a funds beta has an R-squared value that
is close to 1, the beta of the fund should be trusted. On the other hand, an R-squared value that is
close to 0 indicates that the beta is not particularly useful because the fund is being compared
against an inappropriate benchmark.
An inappropriate benchmark will skew more than just beta. Alpha is calculated using beta,
so if the R-squared value of a fund is low, it is also wise not to trust the figure given for alpha.

Alpha:
Alpha I used to measure the extra return rewarded to investor for taking on risk posed by
factors other than market volatility. It measures how much if any of this extra risk helped the fund
out perform its corresponding benchmark. Using beta, alphas computation compares the funds
performance to that of the benchmarks risk adjusted returns and establishes if the funds returns
outperformed the markets given the same amount of risk. For example, if a fund has an alpha of 1,
it means that the fund out performed the benchmark by 1%. Negative alphas are bad in that they
indicate the fund under performed for extra, fund-specific risk that the funds investors undertook.

RISK/RETURN MEASURES:
SHARPE RATIO:
A ratio developed by Bill Sharpe to measure risk-adjusted performance. It is calculated by
subtracting the risk free rate from the rate of return for a portfolio and dividing the result by the
30

standard deviation of the portfolio returns.

Where rp = Expected portfolio return

rp = Risk free rate
p = Portfolio deviation
The Sharpe ratio tells us whether the returns of a portfolio are because of smart investment
decisions or a result of excess risk. A mutual fund may have Sharpe ratio between 0.5 and 3. A
Sharpe Ratio of over 1.0 is good. Outstanding funds achieve something over 2.0.

INVESTMENT VALUATION MEASURES

P/E RATIO
P/E is the ratio of a companys share price to its per-share earnings. To calculate the P/E
take the current stock price of a company and divide by its earnings per share (EPS):
P/E Ratio = Market price of the Share/Earnings Per Share
The ratio expresses the stock price in terms of the earnings per share (EPS). The P/E ratio
is a common measure of the value of stocks. Thus, we deduce that the P/E uses the earnings of a
company to value that companys stock. The level of a companys stock price largely is based on
the companys profit-in-hand, here defined as total profits over the past 12 months.

P/B RATIO:
Price-to-book value (P/B) is the ratio of market price of a companys shares (share price) over its
book value of equity the book value of equity, in turn, is the value of a companys assets
expressed on the balanced sheet. This number is defined as the difference between the book value
of asset and the book value of liabilities.
31

P/B Ratio = Market price of the Share/Book value of Share

Book value of Share=Book value of Assets-Book value of Liabilities
P/B is a method used for finding low price stocks that the market has neglected. If a company is
trading for less than its book value (or has a P/B less than 1), it normally tells investors that either
the market believes the asset value is overstated, or the company is earning a very poor (even
negative) return on its assets.
If the former is true, then investors are well advised to stay away of the companys shares
because there is a chance that assets value will face a downward correction by the market, leaving
investors with negative returns. If the latter is true, there is a chance that new management or new
business conditions will prompt a turn around in prospects and give strong positive returns. Even
if this doesnt happen, a company trading at less than book value can be broken up for its asset
value, earning shareholders a profit.
A company with a very high share price relative to its asset value, on the other hand, is
likely to be one that has been earning a very high return on its assets. Any additionally good news
may already b accounted for in the price.
EXPENSE RATIO
Expense ratio is defined as the total expenses of a fund to the net assets of the fund. An
expense ratio of 1.45 means that the fund spends Rs.1.45 per Rs.100 of net assets towards
operating expenses and management fees to service providers and AMC.
The offer document consists the 3-year expense history of the schemes managed by the
AMC. The expense ratios committed in offer documents, and the actual expenses incurred are also
provided.
Expense ratio can actually understate the total expenses, because brokerage paid on
transactions of a fund are not included in the expenses. According to the current SEBI norm,
brokerage, commissions are capitalized and included in the cost of the transaction. Expense ratios
are also sensitive to the size and type of fund. Larger the fund, lower the expense ratio. Equity
funds have lower expense ratio than bond funds.
PORTFOLIO TURNOVER RATE:
Portfolio turnover ratio is the rate of aggregate sales/purchases made by funds in the
32

market to the net assets of the fund. A higher turnover rate means that the fund is churning its
portfolio very aggressively. A 100% turnover rate means that transactions are large enough to have
churned the entire portfolio over. A higher rate means that the fund manager is trying to profit
from most market turns, but such a strategy comes with higher transactions costs too. A fund with
a value-based strategy is most likely having a lower turnover ratio. This ratio has to be evaluated
against the stated objective of the fund, and investment philosophy of the fund manager.

BENCHMARKS:
Benchmarks are independent portfolios that are not managed by any fund manager, but are
representative of the behavior of returns from the market. For example BSE and S&P CNX Nifty.
The movement of these indices represents the movement in prices, and therefore returns, of large,
actively traded stocks in the equity market. If an investor has invested in an index fund, the return
from the index fund will have to compare with the risk and return of equity portfolio that invests
only in equity, but is not an index fun; investors may want to know how his performance
compares with an independent portfolio like the Nifty or the Sensex. These independent portfolios
used to understand fund manager performance, are called benchmarks.

Benchmarks used in Mutual fund Industry

The BSE Sensex and S&P CNX Nifty are used as benchmarks for actively managed all equity
portfolios. If the equity portfolio is broader based, S&P CNX 500 is used as the benchmarks. For
bond funds, the Ibex, an index for government bond is used as benchmark. If a fund has
investments in equity and debt markets, depending on the asset allocation, a benchmark is created,
which combines the relevant equity and bond market benchmarks. Evaluating the performance of
the Mutual fund with respect to a benchmark Over the same period of time, it is possible to
observe how the returns of a bench mark and NAV of the mutual fund have behaved this will
provide an indication of the extent to which the mutual fund portfolio has tracked the underlying
benchmark.
We can create a common size graph, assuming an investment of Rs.100 in both the mutual
fund and the benchmark on the date of inception of the fund. We can see in a normalized graph,
the relative performance of a mutual fund and the benchmark. These comparisons tell us whether
33

a fund has done as well as the benchmark, better or worse than a benchmark. In mutual fund
Industry, a fund that performs better than the benchmark is known to have out-performed; those
that did worse are called under-performers
In general the risk and return is of two types:
1. Risk and return of a Single asset model.
2. Risk and return of a Portfolio model.

Formula for Single Asset Model:

The rate of return on an asset for a given time period is defined as follows.

When Probability is given

Risk (standard deviation) = 2 =pi (Ri-R)2

Where
2= variance
Ri = return for the i th possible outcome
Pi = probability associated with the ith possible outcome
R= expected return

When times observed returns are given:

Return formula is same

Risk (standard deviation)
2 = (Ri-R)2
N
Where N = number of observations

Formula for Portfolio Asset Model:

34

Return on portfolio =

Rp = X1*R1+X2*R2++Xi*Ri
Risk of portfolio if two schemes

p=[X1212+X2222+2X1X2P12 12]
Risk of port folio if there is n-schemes =

[Xi Xj Pij i j]1/2

Where
p =Standard deviation of portfolio return
X1= Proportion of portfolio invested in security 1
1= Standard deviation of the return on security 1
X2= Proportion of portfolio invested in security 2
2= Standard deviation of the return on security 2
P12=coefficient of correlation between the returns on securities 1& 2

NET ASSET VALUE (NAV):

The Net Asset Value of the fund is the cumulative market value of the assets in the fund or
net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the
assets in the fund, the shareholders would collectively own this amount. 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
outstanding.
NAV of a unit:
Market value of Fund investment + receivables + accrued income liabilities accrued expenses
Number of units outstanding

Relation between Risk and Return:

35

Total risk is a combination of unique risk and market risk which is measured as beta,
According to CAPM (Capital Asset Pricing Model) risk and return are relate in a linear fashion.

SCHEME: 1
Mutual fund

Standard Chartered Mutual Fund

Scheme Name

Standard Chartered Classic Equity Fund

To generate long term capital growth from a diversified

Objective of Scheme
Scheme Type
Scheme Category
Launch Date
Indicate Load Separately

portfolio of predominantly equity & equity related instrument

Open Ended
Growth
June 27, 2007
Entry load less than 5 cr-2.25%,Exit load within 2 years

2.00%
Minimum Subscription Amount Rs. 5000
Return since allotment
43%

Scheme name
Standard chartered classic equity
fund growth

Net asset value

Sales price

Date

12.82

12.90

31-Mar-2009

PORTFOLIO FOR MONTH ENDED MARCH 2009

INDUSTRY TYPE
PETROLEUM PRODUCTS
TEXTILES
MEDIA & ENTERTAINMENT
OIL
NON FERROUS METALS
TEA & COFFEE
PESTICIDES
TEXTILES & SYNTHETIC
HOTELS
AUTO-ANCILLARIES
DIVERSIFIED
CONSTRUCTION & HOUSING
BANKS
36

% OF PORTFOLIO
0.004
0.24
0.47
1.25
1.34
1.65
1.69
1.91
2.27
2.40
3.19
3.41
6.62

CEMENT
CONSUMER NON-DURABLES
FERROUS METALS
INDUSTRIAL CAPITAL GOODS
SOFT WARE
PHARMACEUTICALS
AUTOMOBILES
TOTAL

7.19
8.99
9.48
9.97
10.73
11.92
11.94
100

SCHEME: 2
Mutual fund

Standard Chartered Mutual fund

Scheme Name

Standard Chartered premier Equity Fund

To generate long-term capital growth from a portfolio of predominantly
equity & equity related instruments. The scheme portfolio would seek to
acquire, inter alias, small & medium size business with good long term
potential, which are available at cheap valuations. Such securities would be

Objective of
Scheme

identified through disciplined fundamental research keeping in view medium

to long term trends in the business environment .the scheme shall endeavor to
accumulate long term investor wealth by opening subscriptions to units during
periods when stocks are available at reasonable subscriptions to units during
periods when stocks are available at reasonable valuations .by doing so, the
fund manager would endeavor to prevent short-term money from flowing into
the fund which can prove detrimental to the interest of long term investors

Scheme Type

Open Ended

Scheme Category Growth

Launch Date

September 29, 2007

Indicate Load

Entry load less than 5 cr-2.25%,Exit load within 2 years 2.00%

Separately
Minimum
Subscription
Amount
37

Rs. 5000

Return since

42.20% (31-March-2009)

allotment

Scheme name

Net Asset value

Sales price

Date

12.82

12.90

31-Mar-2009

Standard chartered premier equity

fund growth

PORTFOLIO FOR MONTH ENDED MARCH 2009

INDUSTRY

% OF PORTFOLIO

TEA & COFFEE

TRANSPORTATION & AIR LINES
TEXTILES
PHARMACEUTICALS
HEALTH CARE SERVICES
BANKS
SOFT WARE
TEXTILES & SYNTHETIC
FERROUS METALS
CONSTRUCTIONS
AUTO-ANCILLARIES
TEXTILES PRODUCTS
RETAILING
MEDIA & ENTERTAINMENT
CONSUMER NON-DURABLES
INDUSTRIAL CAPITAL GOODS
TOTAL

1.21
1.87
2.00
2.11
2.59
2.63
3.87
4.78
4.79
5.02
5.02
5.98
6.77
10
12
26.74
100

38

Mutual fund
Scheme name

Standard Chartered Mutual fund

Standard chartered all

Objective of Scheme

Season bond fund plan growth

SCASBF is a open ended scheme seeking to generate optimal returns with
high liquidity by active management of the portfolio ,by predominantly in
debt oriented mutual fund schemes and money market instruments

Scheme Type
Scheme Category
Launch Date
Indicate Load Separately

Open Ended
Growth
March 31,2008
0.60% of NAV on units purchased /switched up to Rs 25 lacks and

Minimum Subscription

redeemed within 6mounths from the date of purchase /switch

Rs. 500/- &in multiples of Re1

Amount
Return since allotment

4.87%

SCHEME: 3

Scheme name

Net asset
Value

Sale price

Date

10.737

31-Mar-2009

Standard chartered all

Season bond fund plan

10.6688

growth

PORTFOLIO FOR MONTH ENDED MARCH 2009

39

Name

% of Portfolio

SCLM(Mutual fund)
GCF(Mutual fund)
CBLO
TOTAL

58.88
37.89
3.49
100

SCHEME: 4
Mutual fund

Standard Chartered Mutual Fund

Scheme Name

Grind lays Dynamic bond fund

SCASBF is a open ended scheme seeking to generate optimal returns

Objective of Scheme

with high liquidity by active management of the

portfolio ,by predominantly in debt oriented mutual fund schemes and
money market instruments

Scheme Type
Scheme Category
Launch Date
Indicate Load

Open Ended
Growth
June, 25, 2004
Exit load 0.5% in redemption with in six months up to 5 lacs

Separately
Minimum Subscription

Rs. 500

Amount
Return since allotment

6.54% (31/mar/2008)

Scheme name
Standard chartered premier equity
fund plan growth
40

Net asset value Sales price Date

12.6951

12.67

31-Mar-09

NAME
American express bank
Ing vysya bank
Karnataka bank Ltd
State bank of patiala
State bank of travancore
CP & CD total
NTPC
PSU Bonds / FI-Fixed total
CBLO
Net current Assets
GGSF-PF
Investment in MF units total
Total

RATING
P1+
P1+
P1+
P1+
P1+
AAA(so)
None
None
None

% OF PORTFOLIO
17.52
1.77
10.50
17.41
17.42
64.64
23.38
23.38
1.61
6.65
3.72
3.72
100

INDIVIDUAL RISK &RETURN

FUND NAME

Risk

Return

Standard chartered classic equity fund

2.73
Standard chartered premier equity fund 2.948
Standard chartered all season bond fund 0.1459

5.8
7.699
0.368

Grindlays dynamic Bond fund

0.1009

0.1082

Risk & RETURN FOR two portfolio mode

41

FUND NAME

Risk

Return

Standard chartered classic equity fund & Standard chartered premier

5.088251 6.7495

equity fund
Standard chartered classic equity fund & Standard chartered all season

1.372937 3.084

bond fund
Standard chartered classic equity fund & Grind lays dynamic bond fund
Standard chartered premier equity fund& Standard chartered all season

1.357913 2.95045
1.491497 4.0345

bond fund
Standard chartered all season bond fund& Grindlays dynamic bond fund
Standard chartered all season bond fund& Grind lays dynamic bond

1.472311 3.89995
0.090442 0.23445

Fund

INDIVIDUALLY

Highest return:
Standard chartered premier equity

7.699

fund
Lowest risk:
Grind lays dynamic bond fund

0.1082

Portfolio:
Highest return:
Standard chartered classic equity
fund & Standard chartered premier
equity fund

42

6.7495

Lowest risk:
Standard chartered all season bond 0.090442
fund& Grind lays dynamic bond
fund

43

CHAPTER VI

Findings

44

FINDINGS:

This analysis has given a clear difference between equity & non-equity

In this analysis we can say that equity is yielding well returns when they are

funds.
individually but with low risk.

Debts are better for stable returns and not only stable but also some
appraisal in long run.

When we observe present market conditions capital from equity related are
giving 65% & remaining from non-equity Funds. Performance may be vastly different
owing to one or many of the below factors:
1.
Size of the funds
2.
Investment objective
3.
Risk profile
4.
Portfolio composition
5.
Expense ratios.

When 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 go for debt, it is still stable but not satisfactory.

GRINDLAYS DYNAMIC BOND FUND giving 0.368 & another debt

fund giving 0.1009.

Recommendations

As per my observation equity funds with well diversified are giving better

returns with moderate risk, where as debt markets are giving stable returns with better
45

liquidity
Therefore, as per my knowledge, it is better to have a diversification between equity &
debt, which we can yield, better returns at a moderate risk.

When we observe 2-portfolio model, it is clear diversifying is a better souse

to have a better returns

Now equity markets are growing very fast with a number of good stable

companies and as per SEBI news in next three years there might be 280 companies to
come to Indian markets. So I think its better to go for equity related schemes with a well
diversified scripts like FMCG, AUTOMOBILE, SOFTWARE, and RETAIL BUSINESS &
REAL ESTATES.

Thanks to scheme developers who are transferred from more concentrating

on debt funds to equity funds from 2005, which can help investors to have a moderate risk
at better returns.

Another way of motivating investors by developing balanced funds

Conclusion:

46

It is a good year for Indian financial markets where by BSE sensex has reached 10k, 11k
and now near by 12k and budget 2010 has given boost for markets by liberalizing for mutual
funds to enter into foreign markets, which can reduce the risk by well global diversified and in
India the flow of money from FIIs has reached 18000cr &
Mutual funds collected around 12000cr. This flow of money will give healthy
development to Indian financial markets. Apart from this Mr.P.CHITHAMBARAM finance
minister of India has planned to increase the debt from money markets.

Bibliography:

47

www.standardcharteredmf.com
www.amfiindia.com
www.bseindia.com
Financial Management BY PRASUNA CHANDRA
Security Analysis and portfolio management V.K.Bhalla
Financial Markets & Services (Revised Edition-2007) by Gordan,

Nartarajan

48

Mutual Funds in India (Second Edition)- H. Sadhak

ECONOMIC TIMES news paper