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Performance of mutual funds and its awareness among the patrons in the present market with special reference to india infoline

Performance of mutual funds and its awareness among the patrons in the present market with special reference to india infoline

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  • 1. Projectsformba.blogspot.com Page |1 LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT Performance of mutual funds and its Awareness among the patrons in the present Market Submitted to Lovely Professional University In partial fulfillment of the requirements for the award of degree of MASTER OF BUSINESS ADMINISTRATION Submitted by: Supervisor: lovely professional university DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA
  • 2. Projectsformba.blogspot.com Page |2 ACKNOWLEDGMENTIt is difficult to acknowledge precious a debt as that of learning as it is the only debt that is difficultto repay except through gratitude.First and foremost I wish to express my profound gratitude to the almighty, the merciful &compassionate with those grace & blessings. I have been able to complete this work.I convey my heart full thanks to the Relationship manager ……………….. and the staff members ofINDIA INFOLINE LTD, with their help and corporation.It is my profound privilege to express my sincere thanks to …………………., Director LIMPhagwara, for giving me an opportunity to work on the project and giving me full support incompleting this project.I am very thankful to my guide …………………. (Lecturer in LIM, Phagwara) and mycoordinator ………………… for his full support in completing this project work.Last but not least, I would like to thank my parents & my friends for their full cooperation &continuous support during the course of this assignment.
  • 3. Projectsformba.blogspot.com Page |3 TABLE OF CONTENTSContents page no.Certificate 2Acknowledgement 3Table of content 4,5Executive summary 6Introduction to the Project 9  Introduction of mutual fund  Advantages and disadvantages  Types of mutual fund schemes  Sebi registered mutual funds  Pointers to measure mutual fund performance  Tax rules for mutual fund investors  History of mutual funds  Procedure of registered mutual funds  Evaluating portfolio performance  Investors financial planning and its results  7 investment tips to improve your returns  How to reduce risk while investingIntroduction to the company 35  Snapshot of India info line ltd.  Introduction of company  Unique approaches  Pillars of the organization  Milestone keys  History of India info line ltd
  • 4. Projectsformba.blogspot.com Page |4Objectives of the study and research methodology 45Data Presentation, Analysis and Interpretation 49  Comparison of 4 major mutual fundsConclusion & Suggestions 71Annexure 73  Questionnaire  Financial statements • Balance sheet • Profit and loss a/c  GlossaryBibliography 82
  • 5. Projectsformba.blogspot.com Page |5 EXECUTIVE SUMMARYRole of financial system is to enthusiast economic development. As investors are getting moreeducated, aware and prudent they look for innovative investment instruments so that they are able toreduce investment risk, minimize transaction costs, and maximize returns along with certain level ofconvenience as a result there has been as advent of numerous innovative financial instrument such asbonds, company deposits, insurance, and mutual finds. All of which could be matched withindividual’s investment needs. Mutual funds score over all other investment options in terms ofsafety, liquidity, returns, and are as transparent, convenient as it can get. Goal of a mutual fund is toprovide an efficient way to make money .In India there are 36 mutual funds with differentInvestment strategies and goals to choose from .different mutual funds have different risks, whichdiffer because of fund’s goals, funds manager, and investment styles. A mutual fund is an investment company that collects money from many people andinvests it in a variety of securities .the company then manages the money on an ongoing basis forindividuals and businesses. Mutual funds are an efficient way to invest in stocks, bonds, and othersecurities for three reasons: a) The securities purchased are managed by professional managers. b) Risk is spread out or diversified, because you have a collection of different stocks and bonds. c) Costs usually are lower than what you would pay on your own, since the funds buy in large quantities.
  • 6. Projectsformba.blogspot.com Page |6 OBJECTIVES OF THE STUDY1. The objective of the research is to study and analyze the awareness level of investors of mutual funds.2. To measure the satisfaction level of investors regarding mutual funds.3. An attempt has been made to measure various variable’s playing in the minds of investors in terms of safety, liquidity, service, returns, and tax saving.4. To get insight knowledge about mutual funds5. Understanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors6. To know the mutual funds performance levels in the present market7. To analyze the comparative study between other leading mutual funds in the present market.8. To know the awareness of mutual funds among different groups of investors.9. Finding out ways and means to improve on the services by INDIA INFOLINE LTD
  • 7. Projectsformba.blogspot.com Page |7
  • 8. Projectsformba.blogspot.com Page |8 RECOMMENDATIONS AND SUGGESTIONS:  Customer education of the salaried class individuals is far below standard. Thus Asset Management Company’s need to create awareness so that the salaried class people become the prospective customer of the future.  Early and mid earners bring most of the business for the Asset Management Company’s. Asset Management Company’s thus needed to educate and develop schemes for the person’s who are at the late earning or retirement stage to gain the market share.  Return’s record must be focused by the sales executives while explaining the schemes to the customer. Pointing out the brand name of the company repeatedly may not too fruitful.  The target market of salaried class individual has a lot of scope to gain business, as they are more fascinated to Mutual Funds than the self employed.  Schemes with high equity level need to be targeted towards self employed and professionals as they require high returns and are ready to bear risk.  Salary class individuals are risk averse and thus they must be assured of the advantage of “risk – diversification” in Mutual Funds.  There should be given more time & concentration on the Tier-3 distributors.  The resolution of the queries should be fast enough to satisfy the distributors  Time to time presentation/training classes about the products should be there.  There should be more number of Relationship Managers in different Regions because one RM can handle a maximum of 125 distributors efficiently and also to cover untapped market.  Regular activities like canopy should be done so as to get more interaction with the distributors.  Regular session should be organized on the handling of the india infoline software so as to resolve the account statement problem.  All the persons who have cleared the AMFI exam should be empanelled with Mutual Fund so as to be largest distributor base.
  • 9. Projectsformba.blogspot.com Page |9
  • 10. Projectsformba.blogspot.com Page |10 INTRODUCTIONWhat is a Mutual fund?Mutual fund is an investment company that pools money from shareholders and invests in a varietyof securities, such as stocks, bonds and money market instruments. Most open-end Mutual fundsstand ready to buy back (redeem) its shares at their current net asset value, which depends on thetotal market value of the funds investment portfolio at the time of redemption. Most open-endMutual funds continuously offer new shares to investors. Also known as an open-end investmentcompany, to differentiate it from a closed-end investment company. Mutual funds invest pooled cashof many investors to meet the funds stated investment objective. Mutual funds stand ready to selland redeem their shares at any time at the funds current netasset value: total fund assets divided by shares outstanding.In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to theinvestors and investing funds in securities in accordance with objectives as disclosed in offerdocument. Investments in securities are spread across a wide cross-section of industries and sectorsand thus the risk is reduced. Diversification reduces the risk because all stocks may not move in thesame direction in the same proportion at the same time. Mutual fund issues units to the investors inaccordance with quantum of money invested by them. Investors of Mutual funds are known as unitholders. The profits or losses are shared by the investors in proportion to their investments. The
  • 11. Projectsformba.blogspot.com Page |11Mutual funds normally come out with a number of schemes with different investment objectiveswhich are launched from time to time. In India, A Mutual fund is required to be registered withSecurities and Exchange Board of India (SEBI) which regulates securities markets before it cancollect funds from the public. In Short, a Mutual fund is a common pool of money in to whichinvestors with common investment objective place their contributions that are to be invested inaccordance with the stated investment objective of the scheme. The investment manager wouldinvest the money collected from the investor in to assets that are defined/ permitted by the statedobjective of the scheme. For example, an equity fund would invest equity and equity relatedinstruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitableinvestment for the common man as it offers an opportunity to invest in a diversified, professionallymanaged basket of securities at a relatively low cost. ADVANTAGES OF MUTUAL FUNDS
  • 12. Projectsformba.blogspot.com Page |12 • Professional Management. The major advantage of investing in a mutual fund is that you get a professional money manager to manage your investments for a small fee. You can leave the investment decisions to him and only have to monitor the performance of the fund at regular intervals. • Diversification. Considered the essential tool in risk management, mutual funds make it possible for even small investors to diversify their portfolio. A mutual fund can effectively diversify its portfolio because of the large corpus. However, a small investor cannot have a well- diversified portfolio because it calls for large investment. For example, a modest portfolio of 10 bluechip stocks calls for a few a few thousands. • Convenient Administration. Mutual funds offer tailor-made solutions like systematic investment plans and systematic withdrawal plans to investors, which is very convenient to investors. Investors also do not have to worry about investment decisions, they do not have to deal with brokerage or depository, etc. for buying or selling of securities. Mutual funds also offer specialized schemes like retirement plans, children’s plans, industry specific schemes, etc. to suit personal preference of investors. These schemes also help small investors with asset allocation of their corpus. It also saves a lot of paper work. • Costs Effectiveness A small investor will find that the mutual fund route is a cost-effective method (the AMC fee is normally 2.5%) and it also saves a lot of transaction cost as mutual funds get concession from brokerages. Also, the investor gets the service of a financial professional for a very small fee. If he were to seek a financial advisors help directly, he will end up paying
  • 13. Projectsformba.blogspot.com Page |13 significantly more for investment advice. Also, he will need to have a sizeable corpus to offer for investment management to be eligible for an investment adviser’s services. • Liquidity. You can liquidate your investments within 3 to 5 working days (mutual funds dispatch redemption cheques speedily and also offer direct credit facility into your bank account i.e. Electronic Clearing Services). • Transparency. Mutual funds offer daily NAVs of schemes, which help you to monitor your investments on a regular basis. They also send quarterly newsletters, which give details of the portfolio, performance of schemes against various benchmarks, etc. They are also well regulated and Sebi monitors their actions closely. • Tax benefits. You do not have to pay any taxes on dividends issued by mutual funds. You also have the advantage of capital gains taxation. Tax-saving schemes and pension schemes give you the added advantage of benefits under section 88. • Affordability Mutual funds allow you to invest small sums. For instance, if you want to buy a portfolio of blue chips of modest size, you should at least have a few lakhs of rupees. A mutual fund gives you the same portfolio for meager investment of Rs.1,000-5,000. A mutual fund can do that because it collects money from many people and it has a large corpus.
  • 14. Projectsformba.blogspot.com Page |14
  • 15. Projectsformba.blogspot.com Page |15 DISADVANTAGES OF MUTUAL FUNDS: • Professional Management- Did you notice how we qualified the advantage of professional management with the word "theoretically"? Many investors debate over whether or not the so-called professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. Well talk about this in detail in a later section. • Costs - Mutual funds dont exist solely to make your life easier--all funds are in it for a profit. The Mutual fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this tutorial we have devoted an entire section to the subject. • Dilution - Its possible to have too much diversification (this is explained in our article entitled "Are You Over-Diversified?"). Because funds have small holdings in so many different companies, high returns from a few investments often dont make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. • Taxes - When making decisions about your money, fund managers dont consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability. Equity funds, if selected in the right manner and in the right proportion, have the ability to play animportant role in achieving most long-term objectives of investors in different segments. While theselection process becomes much easier if you get advice from professionals, it is equally importantto know certain aspects of equity investing yourself to do justice to your hard earned money.
  • 16. Projectsformba.blogspot.com Page |16
  • 17. Projectsformba.blogspot.com Page |17 TYPES OF MUTUAL FUND SCHEMES 1. BY STRUCTURE • Open – Ended Schemes. • Close – Ended Schemes. • Interval Schemes. 2. BY INVESTMENT OBJECTIVE • Growth Schemes. • Income Schemes. • Balanced Schemes. 3. OTHER SCHEMES • Tax Saving Schemes. • Special Schemes.  Index Schemes.  Sector Specific Schemes.1. OPEN – ENDED SCHEMESThe units offered by these schemes are available for sale and repurchase on any business day atNAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such schemesthus offer very high liquidity to investors and are becoming increasingly popular in India. Pleasenote that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and maystop issuing further subscription to new investors. On the other hand, an open-ended fund rarelydenies to its investor the facility to redeem existing units.
  • 18. Projectsformba.blogspot.com Page |182. CLOSED – ENDED SCHEMESThe unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number ofunits. These schemes are launched with an initial public offer (IPO) with a stated maturity periodafter which the units are fully redeemed at NAV linked prices. In the interim, investors can buy orsell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capitalin closed-ended schemes usually remains unchanged. After an initial closed period, the scheme mayoffer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid ascompared to open-ended schemes and hence trade at a discount to the NAV. This discount tendstowards the NAV closer to the maturity date of the scheme.3. INTERVAL SCHEMESThese schemes combine the features of open-ended and closed-ended schemes. They may be tradedon the stock exchange or may be open for sale or redemption during pre-determined intervals atNAV based prices.4. GROWTH SCHEMESThese schemes, also commonly called Equity Schemes, seek to invest a majority of their funds inequities and a small portion in money market instruments. Such schemes have the potential todeliver superior returns over the long term. However, because they invest in equities, these schemesare exposed to fluctuations in value especially in the short term.5. INCOME SCHEMESThese schemes, also commonly called Debt Schemes, invest in debt securities such as corporatebonds, debentures and government securities. The prices of these schemes tend to be more stablecompared with equity schemes and most of the returns to the investors are generated throughdividends or steady capital appreciation. These schemes are ideal for conservative investors or thosenot in a position to take higher equity risks, such as retired individuals. However, as compared to the
  • 19. Projectsformba.blogspot.com Page |19money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund theyhave a higher credit risk.6. BALANCED SCHEMESThese schemes are commonly known as Hybrid schemes. These schemes invest in both equities aswell as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective ofincome and moderate capital appreciation and are ideal for investors with a conservative, long-termorientation.7. TAX SAVING SCHEMESInvestors are being encouraged to invest in equity markets through Equity Linked Savings Scheme(“ELSS”) by offering them a tax rebate. Units purchased cannot be assigned / transferred/ pledged /redeemed / switched – out until completion of 3 years from the date of allotment of the respectiveUnits.The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations, 1996and the notifications issued by the Ministry of Finance (Department of Economic Affairs),Government of India regarding ELSS.Subject to such conditions and limitations, as prescribed under Section 88 of the Income-tax Act,1961.8. INDEX SCHEMESThe primary purpose of an Index is to serve as a measure of the performance of the market as awhole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluatethe performance of mutual funds. Some investors are interested in investing in the market in generalrather than investing in any specific fund. Such investors are happy to receive the returns posted bythe markets. As it is not practical to invest in each and every stock in the market in proportion to its
  • 20. Projectsformba.blogspot.com Page |20size, these investors are comfortable investing in a fund that they believe is a good representative ofthe entire market. Index Funds are launched and managed for such investors.9. SECTOR SPECIFIC SCHEMES.Sector Specific Schemes generally invests money in some specified sectors for example: “RealEstate” Specialized real estate funds would invest in real estates directly, or may fund real estatedevelopers or lend to them directly or buy shares of housing finance companies or may even buytheir securitized assets.SEBI REGISTERED MUTUAL FUNDS1. FORTIS Mutual fund2. Alliance Capital Mutual fund,3. AIG Global Investment Group Mutual fund4. Benchmark Mutual fund,5. Baroda Pioneer Mutual fund6. Birla Mutual fund7. Bharti AXA Mutual fund8. Canara Robeco Mutual fund9. CRB Mutual fund (Suspended)10. DBS Chola Mutual fund,
  • 21. Projectsformba.blogspot.com Page |2111. Deutsche Mutual fund12. DSP Blackrock Mutual fund,13. Edelweiss Mutual fund14. Escorts Mutual fund,15. Franklin Templeton Mutual fund16. Fidelity Mutual fund17. Goldman Sachs Mutual fund18. HDFC Mutual fund,19. HSBC Mutual fund,20. ICICI Securities Fund,21. IL & FS Mutual fund,22. ING Mutual fund,23. ICICI Prudential Mutual fund24. IDFC Mutual fund,25. JM Financial Mutual fund26. JP Morgan Mutual fund27. Kotak Mahindra Mutual fund,29. LIC Mutual fund31. Morgan Stanley Mutual fund32. Mirae Asset Mutual fund33. Principal Mutual fund
  • 22. Projectsformba.blogspot.com Page |2234. Quantum Mutual fund,35. Reliance Mutual fund36. Religare AEGON Mutual fund37. Sahara Mutual fund,38. SBI Mutual fund39. Shriram Mutual fund40. Sundaram BNP Paribas Mutual fund,41. Taurus Mutual fund42. Tata Mutual fund,43. UTI Mutual fundIf the complaints remain unresolved, the investors may approach SEBI for facilitating redressal oftheir complaints. On receipt of complaints, SEBI takes up the matter with the concerned Mutual fundand follows up with it regularly. Investors may send their complaints to:SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)OFFICE OF INVESTOR ASSISTANCE AND EDUCATION (OIAE)EXCHANGE PLAZA, “G” BLOCK, 4TH FLOOR,BANDRA-KURLA COMPLEX,BANDRA (E), MUMBAI – 400 051.PHONE: 26598510-13
  • 23. P a g e | 23Pointers to Measure Mutual Fund Performance
  • 24. P a g e | 24MEASURES DESCRIPTION IDEAL RANGESTANDARD Standard Deviation allows to evaluate the volatility Should be near to it’s meanDEVIATION of the fund. The standard deviation of a fund return. measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return.BETA Beta > 1 = high risky Beta is a fairly commonly used measure of risk. It basically indicates the level of volatility associated Beta = 1 = Avg with the fund as compared to the benchmark. Beta <1 = Low RiskyR-SQUARE R- square measures the correlation of a fund’s R-squared values range movement to that of an index. R-squared describes between 0 and 1, where 0 the level of association between the funds volatility represents no correlation and and market risk. 1 represents full correlation.ALPHA Alpha is the difference between the returns one Alpha is positive = returns of would expect from a fund, given its beta, and the stock are better then market return it actually produces. It also measures the returns. unsystematic risk . Alpha is negative = returns of stock are worst then market. Alpha is zero = returns are same as market.SHARPE Sharpe Ratio= Fund return in excess of risk free The higher the Sharpe ratio,RATIO return/ Standard deviation of Fund. Sharpe ratios the better a funds returns are ideal for comparing funds that have a mixed relative to the amount of risk asset classes. taken. Tax Rules For Mutual Fund Investors*
  • 25. Equity Other schemes Divide Dividend distribution tax schemes nd P a g e | 25 incom e Short Long Short Long TDS All Equit Liquid Other Term Term Term Term Schem y Schemes Schemes Capit Capit Capital Capital es Sche al al Gains Gain mes Gains GainReside 10% NIL AS PER 10% NIL TAX NIL 28.32% 14.16%nt SLAB FREE (20% (25% (12.5%Individ with +10%surc +10%surchaual indexati harge+ed rge+3%educ/ HUF on) ucation ation cess) cess)Partner 10% NIL 30% 10% NIL TAX NIL 28.32% 22.66%ship FREE (20% (25% (20%+10%Firms with +10%surc surcharge+3 indexati harge+ed % on) ucation education cess) cess)AOP/B 10% NIL AS PER 10% NIL TAX NIL 28.32% 22.66%OI SLAB FREE (20% (25% (20%+10% with +10%surc surcharge+3 indexati harge+ed % on) ucation education cess) cess)Domest 10% NIL 30% 10% NIL TAX NIL 28.32% 22.66%ic FREE (20% (25% (20%+10%Compa with +10%surc surcharge+3nies indexati harge+ed %
  • 26. P a g e | 26 HISTORY OF MUTUAL FUNDThe mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at theinitiative of the Government of India and Reserve Bank. The history of mutual funds in India canbe broadly divided into four distinct phases: -First Phase – 1964-87An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the ReserveBank of India and functioned under the Regulatory and administrative control of the ReserveBank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank ofIndia (IDBI) took over the regulatory and administrative control in place of RBI. The firstscheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores ofassets 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 andLife 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
  • 27. P a g e | 27Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC establishedits 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 fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year inwhich the first Mutual Fund Regulations came into being, under which all mutual funds, exceptUTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged withFranklin Templeton) was the first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive andrevised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (MutualFund) Regulations 1996.The number of mutual fund houses went on increasing, with many foreign mutual funds settingup funds in India and also the industry has witnessed several mergers and acquisitions. As at theend of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. TheUnit Trust of India with Rs.44,541 crores of assets under management was way ahead of othermutual funds.Fourth Phase – since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcatedinto two separate entities. One is the Specified Undertaking of the Unit Trust of India with assetsunder management of Rs.29,835 crores as at the end of January 2003, representing broadly, theassets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking ofUnit Trust of India, functioning under an administrator and under the rules framed byGovernment 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 registeredwith SEBI and functions under the Mutual Fund Regulations. With the bifurcation of theerstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under managementand with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual FundRegulations, and with recent mergers taking place among different private sector funds, themutual fund industry has entered its current phase of consolidation and growth. As at the end ofSeptember, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421schemes.
  • 28. P a g e | 28WHAT IS THE PROCEDURE FOR REGISTERING A MUTUAL FUND WITH SEBI?An applicant proposing to sponsor a Mutual fund in India must submit an application in Form Aalong with a fee of Rs.25, 000. The application is examined and once the sponsor satisfies certainconditions such as being in the financial services business and possessing positive net worth forthe last five years, having net profit in three out of the last five years and possessing the general
  • 29. P a g e | 29reputation of fairness and integrity in all business transactions, it is required to complete theremaining formalities for setting up a Mutual fund. These include inter alia, executing the trustdeed and investment management agreement, setting up a trustee company/board of trusteescomprising two- thirds independent trustees, incorporating the asset management company(AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian.Upon satisfying these conditions, the registration certificate is issued subject to the payment ofregistration fees of Rs.25.00 lacs for details; see the SEBI (Mutual funds) Regulations, 1996.EVALUATING PORTFOLIO PERFORMANCEIt is important to evaluate the performance of the portfolio on an ongoing basis. The followingfactors are important in this process: Consider long-term track record rather than short-termperformance. It is important because long-term track record moderates the effects whichunusually good or bad short-term performance can have on a funds track record. Besides,longer-term track record compensates for the effects of a fund managers particular investmentstyle. Evaluate the track record against similar funds. Success in managing a small or in a fundfocusing on a particular segment of the market cannot be relied upon as an evidence ofanticipated performance in managing a large or a broad based fund. Discipline in investmentapproach is an important factor as the pressure to perform can make a fund manager susceptibleto have an urge to change tracks in terms of stock selection as well as investment strategy.The objective should be to differentiate investment skill of the fund manager from luck and toidentify those funds with the greatest potential of future success.INVESTORS FINANCIAL PLANNING AND ITS RESULTS.Planning for long term objectivesMany people get overwhelmed by the thought of retirement and they think how they will eversave the huge money that is required to lead a peaceful and happy retired life. However, the factis that if we save and invest regularly over a period of time, even a small sum of money can beadequate.
  • 30. P a g e | 30It is a proven fact that the real power of compounding comes with time. Albert Einstein calledcompounding "the eighth wonder of the world" because of its amazing abilities. Essentially,compounding is the idea that one can make money on the money one has already earned. Thatswhy, the earlier one starts saving, the more time money gets to grow.Through Mutual funds, one can set up an investment programme to build capital for retirementyears. Besides, it is an ideal vehicle to practice asset allocation and rebalancing therebymaintaining the right level of risk at all times.It is important to know that determination and maintaining the right level of risk tolerance can goa long way in ensuring the success of an investment plan. Besides, it helps in customizing fundcategory allocations and suitable fund selections. There are certain broad guidelines to determinethe risk tolerance.These are:Be realistic with regard to volatility. One needs to seriously consider the effect of potentialdownside loss as well as potential upside gain. Determine a "comfort level" i.e. If one is notconfident with a particular level of risk tolerance, and then select a different level.Regardless of the level of risk tolerance, one should adhere to the principles of effectivediversification i.e. The allocation of investment assets among different fund categories to achievea variety of distinct risk/reward objectives and a reduction in overall portfolio risk.It helps to reassess risk tolerance every year. The risk tolerance may change due to either majoradjustment in return objectives or to a realization that an existing risk tolerance is inappropriatefor ones current situation.Market cap of a company signifies its market value, which is equal to the total number of sharesoutstanding multiplied by the current stock price.The market cap has a role to play in the kind of returns the stock might deliver and the risk orvolatility that one may have to encounter while achieving those returns.For example, largecompanies are usually more stable during the turbulent periods and the mid cap and small capcompanies are more vulnerable.
  • 31. P a g e | 31As regards the allocation to each segment, there cannot be a standard combination applicable toall kinds of investors. Each one of us has different risk profile, time horizon and investmentobjectives.Besides, while deciding on the allocation, one has to keep in mind the fact whether the allocationis being done for an existing investor or for a new investor. While for an existing investor, theallocation that already exists has to be considered, for a new investor the right way to begin is byconsidering funds that invest predominantly in large cap stocks. The exposure to mid and smallcaps can be enhanced over a period of time.It is always advisable to take help of professionals to decide the allocation as well as select theappropriate funds. However, investors themselves have an important role to play in this process.All award-winning funds may not be suitable for everyoneMany investors feel that a simple way to invest in Mutual funds is to just keep investing in awardwinning funds. First of all, it is important to understand that more than the awards; it is themethodology to choose winners that is more relevant.A rating firm generally elaborates on the criteria for deciding the winner’s i.e. consistentperformance, risk adjusted returns, total returns and protection of capital. Each of these factors isvery important and has its significance for different categories of funds.Besides, each of these factors has varying degree of significance for different kinds of investors.For example, consistent return really focuses on risk. If someone is afraid of negative returns,consistency will be a more important measure than total return i.e. Growth in NAV as well asdividend received.A fund can have very impressive total returns overtime, but can be very volatile and tough for arisk adverse investor. Therefore, all the award winning funds in different categories may not besuitable for everyone. Typically, when one has to select funds, the first step should be to considerpersonal goals and objectives. Investors need to decide which element they value the most andthen prioritize the other criteria.
  • 32. P a g e | 32Once one knows what one is looking for, one should go about selecting the funds according tothe asset allocation. Most investors need just a few funds, carefully picked, watched andmanaged over period of time.7 INVESTMENT TIPS TO IMPROVE YOUR RETURNS1. Know your risk profileBefore you take a decision to invest in equity funds, it is important to assess your risk tolerance.Risk tolerance depends on certain factors like emotional temperament, attitude and investmentexperience. Remember, Vwhile ascertaining the risk tolerance, it is crucial to consider onesdesire to assume risk as the capacity to assume the risk. It helps to understand differentcategories of overall risk tolerance, i.e. Conservative, moderate or aggressive. While aconservative investor will accept lower returns to minimise price volatility, a moderate investorwould be all right with greater price volatility than conservative risk tolerances to pursue higherreturns. An aggressive investor wouldnt mind large swings in the NAV’s to seek the highestreturns. Though identifying the desire for risk is a tough job, it can be made easy by definingones comfort zone.2. Dont have too many schemes in your portfolioWhile it is true that diversification helps in earning better returns with a lower level offluctuations, it becomes counterproductive when one has too many funds in the portfolio. Forexample, if you have 15 funds in your portfolio, it does not necessarily mean that your portfoliois adequately diversified. To determine the right level of diversification, one has to considerfactors like size of the portfolio, type of funds and allocation to different asset classes. Therefore,it is possible that a portfolio having 5 schemes may be adequately diversified whereas anotherone with 10 schemes may have very little diversification. Remember, to have a well-balancedequity portfolio, it is important to have the right level of exposure to different segments of theequity market like large cap, mid-cap and small cap. In addition, for a decent portfolio size, it isall right to have some exposure in the sector and specialty funds.3. Longer time horizon provides protection from volatilityAs an equity fund investor, you need to understand that volatility is an integral part of the stockmarket. However, if you remain focused on the long-term objectives and follow a disciplinedapproach to investing, you can not only handle volatility properly but also turn it to youradvantage.4. Understand and analyze Good Performance
  • 33. P a g e | 33Good performance is a subjective thing. Ideally, to analyze performance, one should considerreturns as well as the risk taken to achieve those returns. Besides, consistency in terms ofperformance as well as portfolio selection is another factor that should play an important partwhile analyzing the performance. Therefore, if an investment in a Mutual fund scheme takes youpast your risk tolerance while providing you decent returns; it cannot always be termed as goodperformance. In fact, at times to ensure that your investment remains within the parametersdefined in the investment plan, you may to be forced to exit from that scheme. In other words,you need to assess as to how much risk did the fund manger subject you to, and did he give youan adequate reward for taking that risk. Besides, you also need to consider whether own riskprofile allows you to accept the revised level of risk5. Sell your fund, if you need toThere is no standard formula to determine the right time to sell an investment in Mutual fund orfor that matter any investment. However, you can definitely benefit by following certainguidelines while deciding to sell an investment in a Mutual fund scheme. Here are some of them:You may consider selling a fund when your investment plan calls for a sale rather than doing sofor emotional reasons. You need to hold a fund long enough to evaluate its performance overa complete market cycle, i.e. around three years or so. Many of us make the mistake of eitherholding on to funds for too long or exit in a hurry. It is important to do a thorough analysisbefore taking a decision to sell. In other words, if you take a wrong decision, there is always arisk of missing out on good rallies in the market or getting out too early thus missing out onpotential gains. You should consider coming out of a fund if its performance has consistentlylagged its peers for a period of one year or so. It doesnt make sense to hold a fund when it nolonger meets your needs. If you have made a proper selection, you would generally be requiredto make changes only if the fund changes its objective or investment style, or if your needschange.6. Diversified vs. Concentrated PortfolioThe choice between funds that have a diversified and a concentrated portfolio largely dependsupon your risk profile. As discussed earlier, a well - diversified portfolio helps in spreading theinvestments across different sectors and segments of the market. The idea is that if one or morestocks do badly, the portfolio wont be affected as much. At the same time, if one stock does verywell, the portfolio wont reap all the benefits. A diversified fund, therefore, is an ideal choice forsomeone who is looking for steady returns over the longer term. A concentrated portfolio worksexactly in the opposite manner. While a fund with a concentrated portfolio has a better chance ofproviding higher returns, it also increases your chances of underperforming or losing a largeportion of your portfolio in a market downturn. Thus, a concentrated portfolio is ideally suitedfor those investors who have the capacity to shoulder higher risk in order to improve the chancesof getting better returns.7. Review your portfolio periodically
  • 34. P a g e | 34It is always a good idea to review your portfolio periodically. For example, you may beginreviewing your portfolio on a half-yearly basis. Besides, you may be required to review yourportfolio in greater detail when your investments goals or financial circumstances change.HOW TO REDUCE RISK WHILE INVESTING:  Any kind of investment we make is subject to risk. In fact we get return on our investment purely and solely because at the very beginning we take the risk of parting with our funds, for getting higher value back at a later date. Partition itself is a risk.  Well known economist and Nobel Prize recipient William Sharpe tried to segregate the total risk faced in any kind of investment into two parts - systematic (Systemic) risk and unsystematic (Unsystemic) risk.  Systematic risk is that risk which exists in the system. Some of the biggest examples of systematic risk are inflation, recession, war, political situation etc.  Inflation erodes returns generated from all investments e.g. If return from fixed deposit is 8 per cent and if inflation is 6 per cent then real rate of return from fixed deposit is reduced by 6 per cent.  Similarly if returns generated from equity market is 18 per cent and inflation is still 6 per cent then equity returns will be lesser by the rate of inflation. Since inflation exists in the system there is no way one can stay away from the risk of inflation.  Economic cycles, war and political situations have effects on all forms of investments. Also these exist in the system and there is no way to stay away from them. It is like learning to walk.  Anyone who wants to learn to walk has to first fall; you cannot learn to walk without falling. Similarly anyone who wants to invest has to first face systematic risk; there can never make any kind of investment without systematic risk.  Another form of risk is unsystematic risk. This risk does not exist in the system and hence is not applicable to all forms of investment. Unsystematic risk is associated with particular form of investment.
  • 35. P a g e | 35 Suppose we invest in stock market and the market falls, then only our investment in equity gets affected OR if we have placed a fixed deposit in particular bank and bank goes bankrupt, than we only lose money placed in that bank. While there is no way to keep away from risk, we can always reduce the impact of risk. Diversification helps in reducing the impact of unsystematic risk. If our investment is distributed across various asset classes the impact of unsystematic risk is reduced. If we have placed fixed deposit in several banks, then even if one of the banks goes bankrupt our entire fixed deposit investment is not lost. Similarly if our equity investment is in Tata Motors, HLL, Infosys, adverse news about Infosys will only impact investment in Infosys, all other stocks will not have any impact. To reduce the impact of systematic risk, we should invest regularly. By investing regularly we average out the impact of risk. Mutual fund, as an investment vehicle gives us benefit of both diversification and averaging. Portfolio of mutual funds consists of multiple securities and hence adverse news about single security will have nominal impact on overall portfolio. By systematically investing in mutual fund we get benefit of rupee cost averaging. Mutual fund as an investment vehicle helps reduce, both, systematic as well as unsystematic risk.
  • 36. P a g e | 36
  • 37. P a g e | 37SNAPSHOT OF INDIA INFOLINE LTD.Date of Establishment October 1995Revenue Rs. 4,257.2 million (year ended March, 2007)Market Cap Rs. 5110.71 (April 21 2008)Corporate Address 84, Nariman Bhavan, Nariman Point, Mumbai - 400021, Maharashtra, IndiaBranches IndiaManagement Team Nirmal Jain - Founder R Venkataraman - Co-promoter and Executive Director Sat Pal Khattar - Non Executive Director Nilesh Vikamsey - Independent Director Kranti Sinha - Independent DirectorOverview India Infoline Limited provides the entire gamut of financial services entailing equity research, equities and derivatives trading, commodities trading, portfolio management services, mutual funds, life insurance, fixed deposits, GoI bonds and investment banking. It is proficient in equities broking, wealth advisory services and portfolio management services. The company is a member of BSE and NSE. It is a depository member of National Securities Depository Limited and Central Depository Securities Ltd. The parent company India Infoline Group also contains India Infoline Media and
  • 38. P a g e | 38 Research Services Limited, India Infoline Commodities Limited, India Infoline Marketing & Services, India Infoline Investment Services Limited and IIFL (Asia) Private Limited INTRODUCTION.India Infoline originally incorporated on October 18, 1995 as PROBITY RESEARCH ANDSERVICES PVT LTD. at Mumbai under the Companies Act, 1956 with Registration No.1193797.and became a public limited company on April 28, 2000. The name of the Companywas changed to India Infoline.com Limited on May 23, 2000 and later to India Infoline Limitedon March 23, 2001. It is the first Company in India to foray into the online distribution ofMutual Funds It is a one-stop financial services shop, most respected for quality of its advice,personalized service and cutting-edge technology. The No.1Corporate agent for ICICI PrudentialLife Insurance Company. Research acknowledged by Forbes as “Must Read for investor in SouthAsia” Listed on Bombay and National Stock Exchange with a net worth of INR 200 crore and amarket cap of over INR 1970 crore. The company has a network of 976 business locations(branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000customers. It is registered with NSDL as well as CDSL as a depository participant. Providing aone-step solution for clients trading in the equities market.
  • 39. P a g e | 39OUR UNIQUE APPROACHES:
  • 40. P a g e | 40PILLARS OF THE ORGANIZATIONP Unlike others, India Infoline has the concept of an Investment Team.P The brains behind all the investment strategies and decisions regarding Wealth ManagementServices are:
  • 41. P a g e | 41
  • 42. P a g e | 42MILESTONES KEY:- • Incorporated on 18 October 1995 as probity research and services. • Launched internet portal wwwindiainfoline.com in may 1999. • Commenced distribution of personal financial products like MF’s and RBI’s Bond in April 2000. • Launched online trading in shares branded as www.5paisa.com in July 2000. • Started life-insurance agency business in Dec. 2000 as corporate agent. • Became a depository participant of NSDL in September 2001. • Launched stock messaging services in May 2003. • Acquired commodities broking license in March 2004.History of India Infoline ltd.We were originally incorporated on October 18, 1995 as Probity Research and Services Private Limitedat Mumbai under the Companies Act, 1956 with Registration No. 11 93797. We commenced ouroperations as an independent provider of information, analysis and research covering Indian businesses,
  • 43. P a g e | 43financial markets and economy, to institutional customers. We became a public limited company onApril 28, 2000 and the name of the Company was changed to Probity Research and Services Limited. Thename of the Company was changed to India Infoline.com Limited on May 23, 2000 and later to IndiaInfoline Limited on March 23, 2001.In 1999, we identified the potential of the Internet to cater to a mass retail segment and transformedour business model from providing information services to institutional customers to retail customers.Hence we launched our Internet portal, www.indiainfoline.com in May 1999 and started providing newsand market information, independent research, interviews with business leaders and other specializedfeatures.In May 2000, the name of our Company was changed to India Infoline.com Limited to reflect thetransformation of our business. Over a period of time, we have emerged as one of the leading businessand financial information services provider in India.In the year 2000, we leveraged our position as a provider of financial information and analysis bydiversifying into transactional services, primarily for online trading in shares and securities and online aswell as offline distribution of personal financial products, like mutual funds and RBI Bonds. Theseactivities were carried on by our wholly owned subsidiaries.Our broking services was launched under the brand name of 5paisa.com through our subsidiary, IndiaInfoline Securities Private Limited and www.5paisa.com, the e-broking portal, was launched for onlinetrading in July 2000. It combined competitive brokerage rates and research, supported by Internettechnology Besides investment advice from an experienced team of research analysts, we also offer realtime stock quotes, market news and price charts with multiple tools for technical analysis.Acquisition of Agri Marketing Services Limited ("Agri")In March 2000, we acquired 100% of the equity shares of Agri Marketing Services Limited, from theirowners in exchange for the issuance of 508,482 of our equity shares. Agri was a direct selling agent ofpersonal financial products including mutual funds, fixed deposits, corporate bonds and post-officeinstruments. At the time of our acquisition, Agri operated 32 branches in South and West India servingmore than 30,000 customers with a staff of, approximately 180 employees. After the acquisition, wechanged the company name to India Infoline.com Distribution Company Limited.Facilities
  • 44. P a g e | 44Our main offices are located in approximately 4,000 square feet of office space located in Mumbai,India. Our India Infoline Branches collectively occupy an additional 10,000 square feet of office spacelocated throughout India, As on March 31, 2005, we have 73 branches across 36 locations in India.The table below shows the changes in the Registered Office of theCompany since Incorporation:Previous Address New Address Date of Change208-C, Agarwal Market, 1, Snehdeep, Gokhale Road, August 6, 1999Vile Pane (East), Vile Parle (East),Mumbai - 400 057. Mumbai - 400 057,1, Snehdeep, Gokhale Road, Building No. 24, 1st floor, Jan.,15, 2001 Vile Parle (East), Nirlon Complex, Mumbai - 400 057. Off Western Express Highway, Goregaon (E), Mumbai - 400 0063.Reason for ChangeRequirement of more floor space. Requirement of more floor space.The instances when the name of the Company was changed are cited below:Previous Name New NameProbity Research and Probity Research andServices Private-Limited Services LimitedProbity Research and India Infoline.com LimitedServices LimitedIndia Infoline.com Limited India Infoline LimitedDate of Change Reason for Change
  • 45. P a g e | 45April 28, 2000 Conversion from Private Limited to Public Limited CompanyMay 23, 2000 To focus on the retail financial intermediary business through an online set-up.March 23, 2001 To focus on the retail financial intermediary business through offline as well as online set-up.MARCH 2005- India Infoline fixes a price band between Rs 70 and Rs 80 for its forthcoming public issue. The companyis coming out with public issue of 1.18 crore shares with a face value of Rs 10 through the book buildingroute. The issue is slated to open on April 21 and close on April 27. Enam Financial Consultants PrivateLtd would be the sole book running lead manager to the issue while Intime Spectrum Registry Ltd is theregistrar to the issue.-India Infoline public issue gets 6.6 times oversubscription-IIL appoints R Mohan as VPMARCH 2008- India Infoline Ltd has informed that the Board of Directors of the Company have vide circularresolution passed on March 10, 2008 approved the appointment of Mr. A K Purwar, ex-Chairman of the State Bank of India, as an independent director on the Board of the Company.- India Infoline Ltd has informed that pursuant to the resignation of Mr. Nimish Mehta,Company Secretary and Compliance Officer of the Company. Ms. Falguni Sanghvi has beenappointed as the Company Secretary with effect from October 07, 2008.- The Company has splits its face value from Rs10/- to Rs2/-.
  • 46. P a g e | 46OBJECTIVES OF THE STUDY
  • 47. P a g e | 47  The objective of the research is to study and analyze the awareness level of investors of mutual funds.  To measure the satisfaction level of investors regarding mutual funds.  An attempt has been made to measure various variable’s playing in the minds of investors in terms of safety, liquidity, service, returns, and tax saving.  To get insight knowledge about mutual funds  Understanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors  To know the mutual funds performance levels in the present market  To analyze the comparative study between other leading mutual funds in the present market.  To know the awareness of mutual funds among different groups of investors. Finding out ways and means to improve on the services by INDIA INFOLINE LTD.RESEARCH METHODOLOGY
  • 48. P a g e | 48My research project has a specified framework for collecting the data in an effective manner.Such framework is called “RESEARCH DESIGN”. The research process which was followed byme consisted following steps.A. PROBLEM:The problem at hand was to study and measure the awareness level of people regarding mutualfunds in the city.B. DEVELOPING THE RESEARCH PLAN : The development of Research Plan has the following Steps:1. DATA SOURCES: Two types of data were taken into consideration i.e. Secondary data & primary data. My major emphasis was on gathering the primary data. The secondary data has been used to make things more clear.(i) Primary Data: Direct collection of data from the source of information, technology including personal interviewing, survey etc.(ii) Secondary Data: Indirect collection of data from sources containing past or recent past information like Bank’s Brochures, Annual publications, Books, Fact sheets of mutual funds, Newspaper & Magazines etc.2. RESEARCH INSTRUMENT A close friend questionnaire was constructed for my survey. Questionnaire consisting of a set of questions made to be filled by various respondents.3. SAMPLING PLAN The sampling plan calls for three decisions. a) Sampling Unit: I have completed my survey in Chandigarh, Union Territory.
  • 49. P a g e | 49 b) Sample Size: The sample consisted of 50 respondents. The sample was drawn from walk in customers of India Info line Ltd. The selection of the respondents was done on the basis of simple random sampling. c) Contact Methods I have contacted the respondents through personal interviews.C. COLLECTING THE INFORMATION After this, I have collected the information from the respondents with the help of questionnaireD. ANALYZE THE INFORMATION The next step is to extract the pertinent findings from the collected data. I have tabulated the collected data & developed frequency distributions. Thus the whole data was grouped aspect wise and was presented in tabular form. Thus, frequencies & percentages were prepared to render impact of the study.E. PRESENTATIONS OF FINDINGS This was the last step of the survey.
  • 51. P a g e | 51COMPARISON OF FOUR MAJOR MUTUAL FUNDSFRANKLIN TEMPLETON INDIA PRIMA PLUSMutual Fund Franklin Templeton Mutual FundScheme Name Franklin India Prima PlusScheme Type Open EndedScheme Category GrowthLaunch Date 29-Sep-1994SBI MAGNUM GLOBALMutual Fund SBI Mutual FundScheme Name SBI MAGNUM GLOBAL FUND 94 - GROWTHObjective of The Objective of the Scheme is to provideScheme investors with maximum growth opportunity.Scheme Type Open EndedScheme Category GrowthLaunch Date 06-Jun-2005MinimumSubscription Amount 2000
  • 52. P a g e | 52TATA (GROWTH) FUNDMutual Fund Tata Mutual FundScheme Name Tata Growth Fund - Growth The investment objective of the schemes will beObjective to provide income distribution & / or medium toOf long term capital gains. The scheme will invest inScheme equity and equity related instruments of well researched growth oriented companies.Scheme Type Open EndedScheme Category GrowthMinimumSubscription Rs.5000/-Amount
  • 53. P a g e | 53RELIANCE GROWTH FUNDMutual Fund Reliance Mutual FundScheme Name Reliance Growth FundObjective The primary investment objective is to achieveof Scheme long term growth of capital by investing in equity and equity related securities through a research based investment approachScheme Type Open EndedScheme Category GrowthLaunch Date 25-Sep-1995MinimumSubscription 5000Amount
  • 54. P a g e | 54 Investment needs?From the above graph it is clear that there are many people who have participated in thesurvey and the major portion of the survey indicates that the people are interested ininvesting in mutual funds for the sake o their family financial security. From the abovegraph it also reveals that the minor portion of the graph that is to build a corpus forretirement does not play a major role in the investment decisions.
  • 55. P a g e | 55These are the findings from the survey which include the number of participants and thetype of the participants. This survey includes all types of participants which may give exactresults for the evaluationWhich of the following do you think as a tax saving scheme?
  • 56. P a g e | 56Comparison large cap top performing Mutual fundsThis graph represents the scheme assets of the four major companies. The valuesmentioned in the graph are in crores
  • 57. P a g e | 57This graph represents the latest NAV’s values of all the four major companies in whichreliance capital is the one with highest NAV and Tata is the one with the lowest NAV.
  • 58. P a g e | 58This graph stands a symbolic representation of the annual returns of the four majorcompanies to their customers for the last 3 months. This value is of 14may 2009.
  • 59. P a g e | 59This graph stands a symbolic representation of the annual returns of the four majorcompanies to their customers for the last 5 years. The value is of 14may 2009.
  • 60. P a g e | 60This graph is the result of the daily NAV’s of the Franklin Templeton India prima plusscheme for the last one and half year.This also represents the trend of the previous years. This data is collected by collecting theNAV values of the previous one and half year their average is taken monthly and a graph isdrawn on the basis of the average values.
  • 61. P a g e | 61
  • 62. P a g e | 62In the same manner as explained above the remaining three graphs of Tata Growth fund,SBI Magnum Global fund, reliance global fund is been drawn. This graph is the result ofthe daily NAV’s of the Franklin Templeton India prima plus scheme for the last one andhalf year. This also represents the trend of the previous years.This data is collected by collecting the NAV values of the previous one and half year theiraverage is taken monthly and a graph is drawn on the basis of the average values.
  • 63. P a g e | 63This graphical representation shows the percentage of the net assets the company holds interms of the debt, equity and others. The above graph shows the graphical representationof Franklin India Prima Plus
  • 64. P a g e | 64This graphical representation shows the percentage of the net assets the company holds interms of the debt, equity and others. The above graph shows the graphical representationof Reliance Growth Fund.
  • 65. P a g e | 65This graphical representation shows the percentage of the net assets the company holds interms of the debt, equity and others. The above graph shows the graphical representationof Tata Growth Fund.
  • 66. P a g e | 66This graphical representation shows the percentage of the net assets the company holds interms of the debt, equity and others. The above graph shows the graphical representationof SBI Magnum Global Fund.
  • 67. P a g e | 67The Graph is based on the income of the consumer and their investment in variousschemes. Income Vs Investment Scheme 100% 80% Tax Saving 60% Money market 40% Balance Growth 20% Income 0% Below 2 2 lac to 4 lac to 6 lac to Above 8 Lac 4 lac 6 lac 8 lac lacInterpretation I. Lower income group of below 2 lakh are more attracted towards the income and money market Schemes as they cannot afford to take too much of risk. II. Balanced scheme is more popular with the income group of 2 lakh to 6 lakh . This group is even inclined towards growth Schemes to certain extent . III. Persons with a salary of 6 lakh and above are fascinated by tax saving and money market schemes.
  • 68. P a g e | 68The Graph is showing the influential factor among the consumer. Influential Factor 35 30 No.of People 25 20 Series1 15 10 5 0 Internet T.V paper/Magazine Friends/Family Banners NewsInterpretation I. Major chunk are fascinated by the Newspapers/ Magazine. II. Second best instrument to fascinate the customer is the internet. Because internet provide the easy and quickest way to get the information.
  • 69. P a g e | 69Which factor influence you most to invest through India Infoline Ltd? FACTORS PERCENTAGEBank Services 20%Safety 42%Word Of Mouth 14%Advertisement 6%Past Experience 18%INTERPRETATIONWhen asked that what factor affect most while investing in Mutual Funds through India InfolineLtd than wide preference is given to safety. 42% investors choose safety.20% bank services,18% past experience, 14% word of mouth and 6% advertisement.
  • 70. P a g e | 70To how much extent are you satisfied with the services offered by India Infoline Ltd?Extremely Satisfied 80%Satisfied To Lesser Extent 10%Dissatisfied To Lesser Extent 5%Extremely Dissatisfied 5%INTERPRETATIONOut of the respondents 80% are extremely satisfied with the services offered by India InfolineLtd 10% are satisfied to lesser extent, 5%are extremely dissatisfied.
  • 71. P a g e | 71 INTERPRETATION As FII’s have entered Indian markets Sensex have crossed 10000 mark and investors have earned a lot in last financial year. Indians are becoming aware of various investment options. People have started taking risk as they want to book profits. Investors prefer more equity schemes than debt schemes, around 60% of the investors invest in equity schemes and balanced schemes. Investors want to take risk as they want to yield better returns. Investors want high returns, liquidity, safety and tax benefit. Among all investors gives want to have safety for their money. Around 91% of the investors prefer open ended schemes rather than close ended schemes as there is flexibility in open ended schemes. Investors prefer both systematic investment plan and lump sum. It depends upon the availability of funds that the investor wants to invest in SIP or as lump sum. Some of the investors invest in both ways i.e. through SIP as well as lump sum. Basically it depends upon the availability of fund. When questions were asked about the performance of mutual funds in future 50% of investors said strong future, 35% of the investors said very strong future and 15% of the investors said moderate future.RECOMMENDATIONS AND SUGGESTIONS:
  • 72. P a g e | 72 Customer education of the salaried class individuals is far below standard. Thus Asset Management Company’s need to create awareness so that the salaried class people become the prospective customer of the future. Early and mid earners bring most of the business for the Asset Management Company’s. Asset Management Company’s thus needed to educate and develop schemes for the person’s who are at the late earning or retirement stage to gain the market share. Return’s record must be focused by the sales executives while explaining the schemes to the customer. Pointing out the brand name of the company repeatedly may not too fruitful. The target market of salaried class individual has a lot of scope to gain business, as they are more fascinated to Mutual Funds than the self employed. Schemes with high equity level need to be targeted towards self employed and professionals as they require high returns and are ready to bear risk. Salary class individuals are risk averse and thus they must be assured of the advantage of “risk – diversification” in Mutual Funds. There should be given more time & concentration on the Tier-3 distributors. The resolution of the queries should be fast enough to satisfy the distributors. Time to time presentation/training classes about the products should be there. There should be more number of Relationship Managers in different Regions because one RM can handle a maximum of 125 distributors efficiently and also to cover untapped market. Regular activities like canopy should be done so as to get more interaction with the distributors. Regular session should be organized on the handling of the india infoline software so as to resolve the account statement problem. All the persons who have cleared the AMFI exam should be empanelled with Mutual Fund so as to be largest distributor base. Should have to provide more advertisements, canopies in the shopping mall, main markets because no. of people visiting these places are mostly of service classes
  • 73. P a g e | 73 and they have to save tax, hence there is more opportunity of getting more no. of applications.CONCLUSIONThese were my objectives of my project  To get an insight knowledge about mutual funds  Understanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors  To know the mutual funds performance levels in the present market  To analyze the comparative study between other leading mutual funds in the present market.  To know the awareness of mutual funds among different groups of investors.  To evaluate consumer feedback on mutual fundsFinding out ways and means to improve on the services by india infoline ltd.I satisfied my objectives of the project in the following manner1. Complete insight knowledge about the mutual funds were mentioned in the project2. Different ratios with complete graphical representation were explained in the project3. To know the performance levels of the project I have done the comparative analysis of theproject using the four major leading mutual fund companies using different parameters.4. To know the consumer awareness I have done the survey using different customers so as toanalyse the views about the mutual funds and perception of the customer in the present scenario.5. To evaluate the ways and means to improve india infoline ltd. I have mentioned varioussuggestions that are listed above
  • 75. P a g e | 75PERSONAL DETAILS:Name:Mobile Number:Adress:_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Occupation: _____________________Age: ____________________________1. Of the following what at present are your investment needs?a. To build a corpus for retirementb. To save for children education/ marriagec. To provide for medical emergenciesd. To provide for family financial securitye. To create wealthf. All of the above2. Which of the following you think as investment for tax- saving?a. Mutual fundsb. Fixed depositc. Insuranced. Ppfe. All of the above3. Have you ever been invested in mutual funds?a. Yes b. No
  • 76. P a g e | 764. If you had Rs 1000/- where you prefer to investa. Mutual fundb. Fixed depositc. Direct equityd. Life insurancee. Postal office deposit5. Out of the following in which Mutual Fund you have invested? a) b) Tata Mutual Fund . c) Franklin Templeton . d) Reliance . e) ICICI Prudential . f) SBI . g) Other If any ,Please Specify6. To how much extent are you satisfied with the services offered by india infoline ltdregarding mutual funds? a) Exteremly satisfied. b) Satisfied to the lesser extent d) Dissatisfied to lesser extent e) Extremely dissatisfied.7. Out of the following which option would you prefer ? a) Close ended .
  • 77. P a g e | 77 b) Open ended .8. Do you prefer SIP (Systematic Investment Plan) or investing lump sum? a) SIP b) Lump sum c) Depends upon the financial conditionFinancial statements of india infoline ltd.Balance sheet (Rs.in Millions)
  • 78. P a g e | 78
  • 79. P a g e | 79Profit and loss account (Rs.in Millions)
  • 80. P a g e | 80
  • 81. P a g e | 81 GLOSSARY OF SOME CONCEPTSAMC The AMC is the corporate entity, which markets and manager and manages a mutual fundscheme and in return receives a management fee from the fund corpus. SEBI specifies that anAMC must be separate entity the trust that manages it.NAVIt is the value of unit of a Mutual Fund scheme and represents its true worth. NAV is arrived atby dividing total value of all investment made under the scheme by number of units of thescheme. NAV is critical yardstick of the funds performance.UNITSUnits in a mutual fund scheme are similar to shares of a joint company. These are always indenominations of Rs. 10 each the sum total of all the units constitutes corpus of mutual fund.SPONSORSSponsor of a mutual fund are those who establish the mutual fund trust and the AMC theyconstitute the shareholders of the AMC and receive dividends on profits made by the AMC.SEBI rules stipulate that mutual fund trust as well as the AMC must maintain an arms lengthrelationship with the sponsors to avoid any conflict to interests, which may affect the unitholders.
  • 82. P a g e | 82INCOME FUNDThese Funds invest largely in fixed income securities like bonds and debentures. Such funds earnreturns more regularly than a growth fund but level of returns over longer periods normally lagbehind those offered by growth funds while returns in such funds may be regular, their scale mayfluctuate depending upon the prevalent interest rates and credit quality of the debt securities.GROWTH FUNDSGrowth funds predominantly invest in stock market securities and carry risks larger than incomefunds. Since stock markets travel through a natural cycle of boom and bursts one shouldnormally stay invested inequity funds for a longer times to earn higher returns.Equity funds may earn higher but they also carry larger risks. For risk taking investor equity arebest suited.BALANCED FUNDSA balanced fund is the mixture of income fund and growth fund invested partly in equity toachieve a trade-of between risk and return.CLOSE ENDEDIn a close-ended fund an investor is allowed to subscribe only during the period of the initialoffer. Close-ended funds mature after a specified period.OPEN ENDED FUNDSThose funds in which investor can invest & withdraw whenever they wish, after the close ofinitial offer. Withdrawals are allowed at NAV minus a back end load.LOCK IN PERIODTime period during which investor can neither redeem nor they transfer their holdings to others.Lock in period is imposed to allow fund manager to deploy money for an adequate period oftime to earn a reasonable return premature withdrawals may destabilize the fund & are notbeneficial to the interests of investors.MANAGEMENT FEESAn AMC that mangers & markets a mutual fund scheme is entitled to a management fee@ 1% to25% of the total funds managed, it could be charged to the scheme irrespective of theperformance of the scheme.
  • 83. P a g e | 83REDEMPTIONDisbursement of unit capital on the maturity of that particular scheme to all its existing unitholders.MARKET PRICEThe price at which units of mutual funds are quoted in stock exchange where they are listed.REGISTRAROrganization appointed by an AMC to the schemes it is registered, monitored, and regulated bySEBI, it provides required services like system capabilities back up, accepts and processesinvestors applications in informs AMC about amounts received/disbursed for subscription/purchase/ redemption it also handles communications with investors, perform data entry servicesand dispatches account statements.CUSTODAINBanking organization that keeps in safe custody all the securities & other instruments belongingto the fund to insure smooth inflow & outflow of securities. It is also approved regulated andregistered with SEBI.EXIT LOADValue of deduction from NAV on the date when one choose to withdraw from a fund, load isimposed because withdrawals carry transaction cost to AMC it can not be more than 6% of NAVof corpus as prescribed by SEBI many schemes offer redemption facility without exit load.ENTRY LOADCharge paid by unit holder when he invests an amount in the scheme. Mutual funds incur manyexpenses during an issue, which are charged to the scheme. Such load is called entry load.LIQUIDITYAbility of investors to change its unit into cash within minimum time as and when he needsmoney.TRANSPARENCYBasic feature of mutual funds is transparency, their functioning is very efficient, well monitored& transparent working of AMC is regulated by SEBI it is audited weekly, it has to work understrict guidelines issued by SEBI, and its NAV is calculated and published daily so that there is nochance of any default in the working of Mutual Funds.
  • 84. P a g e | 84 BIBLIOGRAPHY Books  David F, Swensen. 2005. Unconventional Success. A fundamental Approach to Personal Investment Free Press 416  D.C. Anjaria. Dhaivat Anjaria. 2001 AMFI’s Mutual Fund Testing Programme.WebsitesWWW.GOOGLE.COMWWW.YAHOO.COMWWW.WIKIPEDIA.COMWWW.INDIAINFOLINE.COM