sulabha arun ithape


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sulabha arun ithape

  1. 1. A PROJECT REPORT ON“MUTUAL FUND AS AN INVESTMENT AVENUE AT N. J INDIA INVEST” A detailed study done i “FINANCE” Submitted in partial fulfillment of the requirement for the award of degree of Bachelor of Business Administration (BBA) under Bharati Vidyapeeth Deemed University, Pune. Submitted by NAME: SULABHA .A. ITHAPE ROLL NO: 15 BATCH: 2010-2013 Under the guidance of Prof. SONALI ATHAWALE Bharati Vidyapeeth‟s Institute of Management & Entrepreneurship Development Navi Mumbai 1
  2. 2. ACKNOWLEDGEMENT I would sincerely like to give my heartfelt acknowledgement and thanks to my parents.Any amount of thanks given to them will never be sufficient. I would sincerely like to thank our Director Dr. D. Y. PATIL. I would also like to thankmy project guide Prof. SONALI ATHAWALE for him valuable support and guidancewhenever needed. I also feel heartiest sense of obligation my library staff members & seniors who helped incollection of Data and materials and also in this processing as well as in drafting manuscript. Last, but not the least, I would like to thank my friends & colleagues for always beingthere.Place: Navi Mumbai.Date:Signature of the student:(SULABHA .A. ITHAPE) 2
  3. 3. EXECUTIVE SUMMARY A Mutual Fund is a trust that pools the savings of a number of investors who sharea common financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned through theseinvestments and the capital appreciation realized is shared by its unit holders in proportion tothe number of units owned by them. Thus a Mutual Fund is the most suitable investment forthe common man as it offers an opportunity to invest in a diversified, professionally managedbasket of securities at a relatively low cost. Portfolio managers evaluate their portfolio performance and identify the sources ofstrength and weakness. The evaluation of the portfolio provides a feed back about theperformance to evolve a better management strategy. Even through evaluation of portfolioperformance is considered to be the last stage of investment process, the managed portfoliosare commonly known as mutual funds. Various managed portfolios are prevalent in thecapital market. Their relative merits of return and risk criteria have to be evaluated. The performance evaluation of mutual fund is a vital matter of concern to the fundmanagers, investors, and researchers alike. The core competence of the company is to meetobjectives and the needs of the investors and to provide optimum return for their risk. Thisstudy tries to find out the risk and return allied with the mutual fund. Mutual Fund is one such option which can invest in all other investment options. Itsprinciple of diversification allows the investors to taste all the fruits in one plate just byinvesting in it; the investor can enjoy the best investment option as per the investmentobjective. Every other investment option has more or less some shortcomings. Such as ifsome are good at return then they are not safe, if some are safe then either they have lowliquidity or low safety or both likewise, there exists no single option which can fit to the needof everybody. But mutual funds have definitely sorted out this problem. Now everybody canchoose their fund according to their investment objectives. 3
  4. 4. As the mutual fund is managed by experts so they are ready to switch to the profitable optionalong with the market movement. This project gave me a great learning experience and at the same time it gave meenough scope to implement my analytical ability. The analysis and advice presented in thisproject report is based on market research on the saving and investment practices of theinvestors and preferences of the investors for investment in Mutual Funds. Mutual funds pool money from different investors and invest in different investmentsources like stocks, shares, bonds etc. A professional fund manager manages these and returnsare paid in form of dividends. Some schemes assured fixed returns that are less in risk andsome offer dividends based on the market fluctuations and prices. Mutual funds have to besubscribed in units and the purchase or sale is dependent on NAV (Net Asset Value), takinginto consideration the exit and entry load factors into account. Indian Mutual fund industry has undergone a massive change in the last few yearswith the launch of many conglomerates in India. They have introduced professional dexterityand technology in handling capitals both nationally and internationally. Owing to thisinvestors have spoilt choice for a diverse range of policies depending on their portfolios. NJ India Invest Pvt. Ltd. is one of the leading advisors and distributors of financialproducts and services in India. Established in year 1994, NJ has over a decade of richexposure in financial investments space and portfolio advisory services. From a humblebeginning, NJ over the years has evolved out to be a professionally managed, qualityconscious and customer focused financial / investment advisory & distribution firm. We arelooking for candidates. We have opening for Direct Sales, Alternate Sales, Channel Sales,Mutual Fund, Demit, IPV, KYC, AMFI, NCFM, NISM, and CFP. In the project consists of data and its analysis collected through survey done on 70people. For the collection of Primary data I made a questionnaire and surveyed of 70 people.This project covers the topic “THE MUTUAL FUND AS AN INVESTMENT AVENUE ATN. J. INDIA INVEST PVT LTD”. The data collected has been well organized and presented.Indian Mutual fund industry has undergone a massive change in the last few years with thelaunch of many conglomerates in India. They have introduced professional dexterity and 4
  5. 5. technology in handling capitals both nationally and internationally. Owing to this investorshave spoilt choice for a diverse range of policies depending on their portfolios. 5
  6. 6. TABLE OF CONTENTSPARTICULARS: PAGE NO:Chapter 1: Introduction of the Project 1 1.1: Concept & Significance of the Study 1 1.2: Objective of the Study 1 1.3: Scope and Limitations 2 1.4: Literature Review 3Chapter 2: Introduction to Industry 6 2.1: Characteristics 8 2.2: History of Mutual Funds 8 2.3: Structure of the mutual fund 9 2.4: Types of the Mutual Fund 12 2.5: Mutual Fund Categories 15 2.6: Mutual Fund Schemes by investment objective 18 2.7: Advantages & Disadvantages of the Mutual Fund 21 2.8: Mutual Funds players 24 2.9: Introduction to the Company 29Chapter 3: Research Methodology 41 3.1: Research Design 42 3.2: Data Collection Techniques and Tools 42 3.3: Sample Design 43Chapter 4: Survey Analysis and Interpretation 45Chapter 5: Conclusions and Suggestions 57AnnexureBibliography 6
  7. 7. CHAPTER 1 1. INTRODUCTION TO STUDY OF MUTUAL FUNDS1.1 CONCEPT & SIGNIFICANCE OF THE STUDY:Mutual funds are a pool of securities with variety of investment options and risk andreturn combination catering the needs and requirement of every investor. A MutualFund is a trust that pools the savings of a numbers of investors who share a commonfinancial goal. The money thus collected is invested by the fund manager in differenttypes of securities depending upon the objective of the scheme. These could rangefrom shares to debentures to money market instruments.In Short, a Mutual fund is a common pool of money in to which investors withcommon investment objective place their contributions that are to be invested inaccordance with the state the investment objective of the scheme. The investmentmanager would invest the money collected from the investor in to assets that aredefined permitted by the stated objective of the scheme. For example, a equity fundwould invest equity and equity related instruments and a debt fund would invest inbonds, debentures, gilts etc. Mutual fund is a suitable investment for the common manas it offers an port unity to invest in a diversified, professionally managed basket ofsecurities at a relatively low cost.1.2 OBJECTIVES:The main objective is to study the trends in the Mutual Fund Industry right from itsinception in India and to suggest certain investment techniques and strategies keepingin mind the various regulations. In order to achieve this, it is most important to rectifythe prevailing environment of information about the mutual fund industry and thatindividual investors are educated about the unique advantages of mutual fundinvesting in a deregulated, high risk competitive market. 7
  8. 8. The main objective of the study in posed which of the criteria researcher believed torequired research:1) To examine the return from selected MF.2) To documents investment on selected assets allocation trends of mutual fund.3) To minimize risk and remove the unsystematic risk.4) To identified systematic risk.5) To scrutinize the fund administration method in the mutual funds industry.6) The reports help in understanding the operations of the industry right from itsinitiation stage to expansion and future initiatives.7) Identify the Objectives for investment in mutual fund schemes.8) Identify the survey analysis and interpretation about mutual fund.1.3 SCOPE & LIMITATION :SCOPE:Scope of Mutual Funds has grown enormously over the years. In the first age ofmutual funds, when the investment management companies started to offer mutualfunds, choices were few. Even though people invested their money in mutual funds asthese funds offered them diversified investment option for the first time. By investingin these funds they were able to diversify their investment in common stocks,preferred stocks, bonds and other financial securities. At the same time they alsoenjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easyaccess to their invested funds on requirement.But, in today world, Scope of Mutual Funds has become so wide, that peoplesometimes take long time to decide the mutual fund type, they are going to invest in.Several Investment Management Companies have emerged over the years who offervarious types of Mutual Funds, each type carrying unique characteristics and differentbeneficial. 8
  9. 9. To understand the broad scope of Mutual Funds we need to discuss the main types ofMutual Funds that are normally offered by the Mutual Companies.LIMITATION:Every research has its own limitation and present research work is no exception to thisgeneral rule the inherent limitation of the study are as under:·Interview method, which was followed in the present research work, is relativelymore time consuming.In addition to this it is very expensive method, especially when spread geographicsample is taken.Questionnaire method can be used only when respondents are literate and co-operative.· Sample size was 70 that are not enough to study the awareness ofIndependent individuals.·As sampling techniques is convenient sampling so it may result in personal bias.Even respondent give bias answers.Time is main constraint of the research as we have been given project as well as studysimultaneously.1.4 LITERATURE REVIEW:A study was conducted by Grinblatt and Titman (1989) to examine the superior stockselection abilities of mutual fund managers through which researcher generatedabnormal returns. For this purpose a sample of 274 funds was taken from 1974to1984. Study applied Jensen Measure and compared the abnormal returns of activeand passive investment strategies both with and without transaction costs, fees, andexpenses. The results showed that the actual returns of these funds do not exhibitabnormal performance indicating that investors cannot take advantage of the superiorabilities of these portfolio managers by purchasing shares in the mutual funds.A company that collected money from a group of people with common investmentobjectives to buy different securities is called mutual fund. The collected holding of 9
  10. 10. these securities was known as its portfolio Mark (2007). According to Teri (2007)mutual fund is a professional investment company which managed collection ofstocks, bonds, or other securities owned by a group of investor. Each mutual fund hada fund manager who purchased and sold the fund‟s investment according to the fundgoals. Fund managers were responsible to analyze the economic conditions, industrytrends, government regulations and the impact on stocks before selecting thesecurities for investment.Mutual funds provided investment facility to the small investors who cannot afford toinvest the large sums of money Teri (2007). Basically these small investors investedmoney into a common fund and handover the investment decision to fund manager.Many people often regard the beginning of Foreign and Colonial Government Trust asthe beginning of modern day mutual funds. But the beginning of mutual funds datesback to Seventeenth century when the first "pooling of money" for investments wasdone in 1774. Following the financial crisis of 1772-1773 a Dutch merchant Ketwichinvited investors to come together to form an investment trust under the name ofEendragt Maakt Magt David (2007). The purpose of the trust was to providediversification at low cost to the small investors.In order to spread risk, the fund invested in various countries such as Austria,Denmark, German States, Spain, Sweden, Russia etc. In 18th century AmsterdamStock Exchange had only a small number of listed equities due to which the trustinvested only in bonds. However after war with England many colonial bondsdefaulted due to which there was sharp decline in the investments. As a result, shareredemption was suspended in 1782 and later the interest payments were decreasedtoo. The fund was no longer attractive for investors and vanished. These early mutualfunds before heading to the United States took root in England and France in the1890s. On the other hand “Massachusetts Investors Trust of Boston” was the firstopen-end fund Formed in 1924. The growth of pooled investments was hampered bystock market crash of 1929 and the Great Depression but Securities Act of 1933 andCompany Act of 1940 restored investor‟s confidence and industry witnessed steadygrowth after that.Several measures are used in the literature on mutual fund performance evaluation butthere is (still) a large controversy around them. Some of the important risk-adjustedtechniques include the Sharpe (1966) measure, the Treynor (1965) measure and the 10
  11. 11. Jensen (1968) measure. These measures were frequently called traditional measuresof performance evaluation and were based on the idea that the combination of anyportfolio with the risk-free asset is located in the expected return or beta space. TheJensen measure has been the most commonly used performance measure in academicand non-academic empirical studies. On the other hand Sharpe‟s reward-to-variabilityratio was also very popular and was frequently used by the researchers. Some of theempirical work on the performance of mutual funds was given below.Sharpe (1966) introduced the measure to evaluate the mutual funds‟ risk-adjustedperformance. The measure was known as reward-to-variability ratio (CurrentlySharpe Ratio). With the help of this ratio he evaluated the return of 34 open-endmutual funds in the period 1945-1963. The results showed the capital market wasextremely efficient due to which majority of the sample had lower performance ascompared to the Dow Jones Index. Sharpe (1966) found that from 1954 to 1963 only11 funds outperformed the Dow-Jones Industrial Average (DJIA) while 23 funds wereoutperformed by the DJIA. Study concluded that the mutual funds were inferiorinvestments during the period.Previously two- and three-moment analyses were used to analyze the mutual fundperformance relative to market performance. But Joy and Porter (1974) applied first-,second-, and third-degree stochastic dominance principles to investigate the samequestion. Study suggested that the proper test of mutual fund performance relative tothe market (DJIA) is a test employing stochastic dominance principles. Such a testnecessitates a pair wise comparison between each fund and the DJIA. Therefore Joyand Porter (1974) collected the performance data for the 34 funds analyzed by bothSharpe (1966) and Arditti (1971) for the ten-year period 1954-1963. Price anddividend data were also collected for the DJIA over the same period. Study supportedthe earlier Sharpe (1966) study and opposed the Arditti (1971) work and concludedthat mutual fund performance was inferior to market performance over the period1954-1963. 11
  12. 12. CHAPTER 2 2. INTRODUCTION ON THE MUTUAL FUND INDUSTRY :The mutual fund industry in India started in 1963 with the formation of Unit Trust ofIndia, at the initiative of the Government of India and Reserve Bank the. The historyof mutual funds in India can be broadly divided into four distinct phases.First Phase: 1964-1987An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up bythe Reserve Bank of India and functioned under the Regulatory and administrativecontrol of the RBI. In 1978 UTI was de-linked from the RBI and the IndustrialDevelopment Bank of India (IDBI) took over the regulatory and administrativecontrol in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. Atthe end of 1988 UTI had Rs.6, 700 crores of AUM.Second Phase: 1987-1993 (Entry of Public Sector Funds)In 1987 marked the entry of non- UTI, public sector mutual funds set up by publicsector banks and Life Insurance Corporation of India (LIC) and General InsuranceCorporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fundestablished in June1987.Third Phase: 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian mutualfund industry, giving the Indian investors a wider choice of fund families. Also, 1993was the year in which the first Mutual Fund Regulations came into being, underwhich all mutual funds, except UTI were to be registered and governed. The firstprivate sector mutual fund registered in July 1993. The industry now functions underthe SEBI (Mutual Fund) Regulations1996.As at the end of January 2003; there were33 mutual funds with total assets of Rs.1, 21,805 cores. The Unit Trust of India withRs.44, 541 crores of assets under management was way ahead of other mutual funds.Fourth Phase – Since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI wasbifurcated into two separate entities. One is the Specified Undertaking of the Unit 12
  13. 13. Trust of India with assets under management of Rs.29, 835 crores as at the end ofJanuary 2003, representing broadly, the assets of US 64 scheme, assured return andcertain other Schemes. 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 FundRegulations.The graph indicates the growth of assets over the years.GROWTH IN ASSETS UNDER MANAGEMENTNote: Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking ofthe Unit Trust of India effective from February 2003. The Assets under management of theSpecified Undertaking of the Unit Trust of India has therefore been excluded from the totalassets of the industry as a whole from February 2003 onwards. 13
  14. 14. 2.1 CHARACTERISTICS:• A mutual fund actually belongs to the investors who have pooled their funds.• A mutual fund is managed by investment professionals and other service providers, whoearn a fee for their services, from the fund.• The pool of funds is invested in a portfolio of marketable investments. The value of theportfolio is updated every day.• The investor‟s share in the fund is denominated by „units‟. The value of the units changeswith change in the portfolio‟s value, every day. The value of one unit of investment is calledthe Net Asset Value or NAV.2.2 HISTORY OF MUTUAL FUNDS Unit Trust of India is the first Mutual Fund set up under a separate act, UTI Act in1963, and started its operations in 1964 with the issue of units under the scheme US-64 In the year 1987 Public Sector banks like State Bank of India, Punjab NationalBank, Indian Bank, Bank of India, and Bank of Baroda have set up mutual funds. Apart from these above mentioned banks Life Insurance Corporation [LIC] andGeneral Insurance Corporation [GIC] too have set up mutual funds With the entry of Private Sector Funds a new era has started in Mutual FundIndustry [ex:- Reliance Mutual Fund, Deutsche Mutual Fund, ICICI Mutual Fund,HDFC Mutual Fund etc]Which are the other institutions that have floated Mutual Funds in India?Currently public sector banks like SBI, Canada Bank, ICICI, HDFC, institutions likeIDBI, LIC Foreign Institutions like Alliance, Morgan Stanley, Templeton and Privatefinancial companies like Kothari Pioneer, DSP Merrill Lynch, Santarem, KodakMahindra etc. have floated their own mutual fundsHow many Mutual Funds are there in India currently? Presently there are 38Mutual Funds in India and close to 400 mutual fund schemes. 14
  15. 15. Why has the concept of mutual funds taken so long to pick up in India? Even inthe US the concept of mutual funds has started picking up only in the last decade.This whole process of investor education and investor awareness takes a lot of time.But Indian investors are now beginning to understand the benefits of investingthrough the mutual funds route and hence the collections are beginning to pick up.What is the total size of the mutual fund sector in India? Currently the total fundsunder mutual fund management in India are a little over Rs. 2, 65,805 crores as onJune 2006*. Out of this UTI accounts for nearly 70 percent while the private fundsaccount for around 22 percent. The balance 8 percent is managed by mutual fundsfloated by public sector banks and financial institutions.2.3 STRUCTURE OF THE MUTUAL FUND : 15
  16. 16. The Structure Consists The structure of mutual funds in India is governed by the SEBIRegulations, 1996. These regulations make it mandatory for mutual funds to have a 3-tier structure of Sponsors- Trustee-AMC (Asset Management Company). The Sponsoris the promoter of mutual fund, and appoints the Trustee. The Trustees are responsibleto the investors in the mutual funds, and appoint the AMC for managing theinvestment portfolio. Business face of the mutual funds, as it manages all the affairsof mutual funds. The mutual funds and AMC have to be registered by the SEBI.SPONSOR:Sponsor is the person who acting alone or in combination with another body corporateestablishes a mutual fund. Sponsor must contribute at least 40% of the net worth ofthe Investment Managed and meet the eligibility criteria prescribed under theSecurities and Exchange Board of India (Mutual Funds) Regulations, 1996.TheSponsor is not responsible or liable for any loss or shortfall resulting from theoperation of the Schemes beyond the initial contribution made by it towards setting upof the Mutual FundTURST:Trust The Mutual Fund is constituted as a trust in accordance with the provisions ofthe Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under theIndian Registration Act, 1908.TRUSTEE:Trustee is usually a company (corporate body) or a Board of Trustees (body ofindividuals). The main responsibility of the Trustee is to safeguard the interest of theunit holders and inter-alia ensure that the AMC functions in the interest of investorsand in accordance with the Securities and Exchange Board of India (Mutual Funds)Regulations,1996, the provisions of the Trust Deed and the Offer Documents of therespective Schemes. At least 2/3rd directors of the Trustee are independent directorswho are not associated with the Sponsor in any manner.ASSET MANAGEMENT COMPONY:The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund.The AMC is required to be approved by the Securities and Exchange Board of India(SEBI) to act as an asset management company of the Mutual Fund. At least 50% of 16
  17. 17. the directors to the AMC are independent directors who are not associated with theSponsor in any manner. The AMC must have a net worth of at least 10 crores at alltimes.REGISTRAR AND TRANSFER AGENT:The AMC if so authorized by the Trust Deed appoints the Registrar and TransferAgent to the Mutual Fund. The Registrar processes the application form, redemptionrequests and dispatches account statements to the unit holders.CUSTODIAN:A custodian handles the investment back office of a mutual fund. Its responsibilitiesinclude receipt and delivery of securities, collection of income, distribution ofdividends, and segregation of assets between schemes. The sponsor of a mutual fundcannot act as a custodian to the fund. For example, Deutsche Bank is a custodian, butit cannot service Deutsche Mutual Fund, its mutual fund arm.DEPOSITORY:Indian capital markets are moving away from having physical certificates forsecurities, to ownership of these securities in „dematerialized‟ form with a Depository. 17
  18. 18. 2.4 TYPES OF THE MUTUAL FUNDDIAGRAMA MUTUAL FUNDWhat are open-ended and close-ended mutual funds schemes?In an open-ended mutual fund there are no limits on the total size of the corpus.Investors are permitted to enter and exit the open-ended scheme at any point of timeat a price that is linked to the net asset value (NAV). In case of close-ended funds, thetotal size of the corpus is limited by the size of the initial offer.Do both open-ended and close-ended funds come out with an initial offering?Yes. But the only difference is that in case of open-ended funds, a month after theinitial offer closes the continuous offer period starts when the investor can enter andexit the fund at a price linked to the NAV Unit trust of India is the first mutual fund set up under a separate act, uti act in1963, and started its operations in 1964 with the issue of units under the scheme us-64 18
  19. 19.  In the year 1987 public sector banks like state bank of India, Punjab national bank,Indian bank, bank of India, and bank of Baroda have set up mutual funds. A part from these above mentioned banks life insurance corporation and generalinsurance corporation too have set up mutual funds With the entry of private sector funds a new era has started in mutual fund industry[e.g.:- principal mutual fund]Which are the other institutions that have floated mutual funds in India?Currently sector banks like SBI, Canada bank, bob, private sector banks like ICICI,HDFC, foreign institutions like principal, Morgan Stanley, temple ton, fidelity andprivate financial companies like Kodak, dsp Merrill lynch, etc. Have floated their ownmutual fundsHow many mutual funds are there in India currently?Presently there are 33 mutual funds in India and close to 700 mutual fund schemes.Why has the concept of mutual funds taken so long to pick up in India?Even in the us the concept of mutual funds has started picking up only in the lastdecade. This whole process of investor education and investor awareness takes a lot oftime. But Indian investors are now beginning to understand the benefits of investingthrough the mutual funds route and hence the collections are beginning to pick upregulatory body of mutual fundWhat is the regulatory body for mutual funds?Securities exchange board of India (SEBI) is the regulatory body for all the mutualfunds mentioned above. All the mutual funds must get registered with SEBI. The onlyexception is the UTI, since it is a corporation formed under a separate act ofparliament risk managementHow do mutual funds diversify their risks?Financial theory states that an investor can reduce his total risk by holding a portfolioof assets instead of only one asset. This is because by holding all your money in justone asset, the entire fortune of your portfolio depends on this one asset. By creating aportfolio of a variety of assets, this risk is substantially reduced. 19
  20. 20. Can mutual funds be viewed as risk-free investments?No. Mutual fund investments are not totally risk free. In fact, investing in mutualfunds contains the same risk as investing in the markets, the only difference being thatdue to professional management of funds the controllable risks are substantiallyreduced.What are the risks involved in investing in mutual funds?A very important risk involved in mutual fund investments is the market risk. Whenthe markets experience a downturn, most funds will reflect this decline in theirNAVs. However, the company specific risks are largely eliminated due toprofessional fund management.How much return can i expect by investing in mutual funds?Investors need to be clear that mutual funds are essentially medium to long terminvestments. Hence, short-term abnormal profits will not be sustainable in the longrun. But in the medium to long run the mutual funds tend to outperform most otheravenues of investments at the same time avoiding the risk of direct investmentaccompanied with professional fund managementWhat is the difference between mutual funds and portfolio managementschemes?While the concept remains the same of collecting money from investors, pooling themand investing the funds, the target investors are different. In the case of portfoliomanagement the target investors are high net worth investors while in case of mutualfunds the target investors are the retail investors.Association of mutual funds in India (AMFI)The association of mutual funds in India (AMFI) is dedicated to developing the Indianmutual fund industry on professional, healthy and ethical lines and to enhance andmaintain standards in all areas with a view to protect and promote the interests ofmutual funds and their unit holders. 20
  21. 21. 2.5 MUTUAL FUND CATEGORIES:Mutual funds fall into the following categories: money market funds, bonds funds,stocks funds, balanced funds, and asset allocation funds.A) Stock fundsAs the name implies, stock mutual funds invest mainly in common stocks. Thesestocks may be sold on the New York Stock Exchange, the NASDAQ or otherexchanges.The objective of a stock fund is long-term capital appreciation versus generatingincome (dividends) more common with bond funds. However, stock funds maygenerate modest dividends from the stocks in the portfolio and from short-term cashinvestments. These stocks tend to be larger capitalized stocks versus smaller growthstocks.There are four basic types of stock funds.Stock Fund TypesLarge Cap: Primarily invests in "Blue-chip" companies - large, well-knownindustrials, utilities, technology, and financial services companies with large marketcapitalization. Large cap stocks are perceived to be less risky than smaller capitalizedcompanies.Mid Cap: Primarily invests in companies whose market capitalization is smaller thanlarge caps but larger than small caps. Mid caps are generally considered more riskythan large cap stocks but have a higher return expectation.Small Cap: Primarily invests in emerging companies, thought to have potential forfuture growth and profit. Small caps are generally considered the riskiest stockscompared to larger capitalized firms but carry the expectation of higher returns.Small cap funds are subject to greater volatility than those in other asset categories.International: Primarily invests in stocks traded on foreign exchanges but purchasedin the United States by U.S. fund companies. International funds are subject toadditional risks such as currency fluctuation, political instability and the potential forilliquid markets. 21
  22. 22. Sector: Primarily invests in specific industry sectors such as technology, financials,health, or energy. Since sector funds focus their investments on companies involvedin a specific industry sector, the funds may involve a greater degree of risk that aninvestment in other mutual funds with greater diversification.Many investors buy stock mutual funds because, historically, stocks haveoutperformed other types of investments over the long term. However, the value ofthe stocks in the funds portfolio may go up or down as the market rises or declines.Remember, past performance is no guarantee of future resultsB) Bond fundsBond funds1 invest in various types of bonds - issued by corporations, municipalities,and the U.S. government. Bond mutual funds are designed mostly to provide investorswith a steady stream of income2 versus capital gains.Bond Funds:Invest in bonds, which are debt securities, or IOUs, issued by corporations orgovernments in exchange for money loaned to them. Generally, the issuer agrees torepay the loan by a specific date and to make regular interest payments to the lenderuntil then.Are a basket of bonds with different durations, yields, credit quality, and values?Because of this, bond funds never mature as would be the case with buying anindividual bond.Share value and dividends will fluctuate as interest rates fluctuate and new bonds arepurchased or others are sold or mature.Produce profits that consist primarily of dividend distributions.May generate modest capital gains.Fluctuate in value, so it is possible to sell shares at a higher or lower price than youpaid for them.Bond Fund Types:Government: Primarily invest in bonds issued by the U.S. Department of Treasuryas well as various federal agencies. Government bonds are generally taxable. 22
  23. 23. Municipal: Primarily invest in municipal bonds issued by state and localgovernments and their agencies to fund projects such as schools, streets, highways,hospitals, bridges, and airports. Municipal bonds can be insured or non-insuredsecurities. Income generated from municipal bonds may be tax free at both thefederal and state level (consult the fund‟s prospectus).Corporate: Primarily invest in bonds issued by corporations to help fund businessactivities. Income from corporate bonds is taxable.1. Bond fund shares are not guaranteed and will fluctuate with market conditions andinterest rates and include a greater risk to principal than Certificates of Deposit.Shares, when redeemed, may be worth more or less than their original cost.2. Income may be subject to the Alternative Minimum Tax (AMT) and capitalappreciation from discounted bonds may be subject to state and local taxes.C) Money market fundsMoney market funds invest in short-term securities such as Treasury bills. Mostmoney market funds offer a higher rate of interest than bank savings accounts, andsome are free of federal or state taxes. But unlike bank savings accounts, moneymarket funds are not FDIC insured.Money market mutual funds are designed to be more stable than stock or bond funds.Money market funds are designed to provide steady dividend income on theinvestment amount, although the yield may fluctuate daily.Taxable: Invest in short-term obligations from corporations.Tax-free: Invest in short-term obligations from government entities.D) Balanced Funds:Invest in stocks, bonds, and cash investments, in varying proportions.Produce dividend and capital gain distributions and share price appreciation inproportion to their allocation among the three major asset classes. 23
  24. 24. E) Asset Allocation Funds:In an asset allocation fund, the manager will diversify the assets among each category:cash, bonds, and stocks and weight them according to the portfolio strategy. Themanager will redistribute the weightings according to market conditions. Portfoliostrategies generally differ according to risk tolerance:Aggressive Growth Strategy PortfolioGrowth Strategy PortfolioGrowth and Income Strategy PortfolioIncome Strategy PortfolioAsset allocation funds are usually made up of a combination of other mutual fundswithin the same fund family. As market conditions change, the manager has thediscretion to reduce exposure in one fund and increase it in another. Just about allmutual fund families allow you to switch between funds in the same family and class(A, B, or C shares) without incurring any cost.2.6 MUTUAL FUND SCHEMES BY INVESTMENT OBJECTIVES:EQUITY FUNDS:-These funds invest a major part of their corpus in equities. The composition of thefund may vary from scheme to scheme and the fund manager‟s outlook on variousscrip‟s. The Equity Funds are sub-classified depending upon their investmentobjective, as follows:1. Growth Fund: Aim to provide capital appreciations over the medium to long term.These schemes normally invest a majority of their funds in equities and are willing tobear short term decline in value for possible future appreciation. These schemes arenot for investors seeking regular income or needing their money back in the short-term 24
  25. 25. 2. Diversified Equity Fund: Diversified equity funds are the most popular amonginvestors. They invest in many stocks across many sectors, and because they have thefreedom to chop and churn their portfolios as they like, diversified equityare a good proxy to the stock market. If a general exposure to equities is what youwant, they are a good option. They can invest in all listed stocks, and even in unlistedstocks. They can invest in which ever sector they like, in whatever ratio they like.3. Equity -Linked Savings Schemes (ELSS): Equity – linked savings schemes(ELSS) are diversified equity funds that additionally offer income tax benefits toindividuals. ELSS is one of the many section 80c instruments, along with the morepopular debt options like the PPF, NSC and infrastructure bonds. In this Section 80cgrouping. ELSS is unique. Being the only instrument to offer a total equity exposure.4. Index Fund: An index fund is a diversified equity fund; with a difference- a fundmanager has absolutely no say in stock selection. At all times, the portfolio of anindex fund mirrors an index, both in its choice of stocks and their percentage holding.As of March 2004, equity index funds tracked either the Sensex or the Nifty. So, anindex fund that mirrors the Sensex will invest only in the 30 Sensex stocks, which tooin the same proportion as their weight age in the index.5. Sector Fund: Sector funds invest in stocks from only one sector, or a handful ofsectors. The objective is to capitalize on the story in the sectors, and offer investors awindow to profit from such opportunities. It‟s a very narrow focus, because of whichsector funds are considered the riskiest among all equity funds.6. Mid – Cap Fund: These are diversified funds that target companies on the fast –growth trajectory. In the long run, share prices are driven by growth in a company‟sturnover and profits. Market players refer to them as „mid-sized companies‟ and „mid-cap stocks‟ with size in this context being benchmarked to a company‟s market value.So, while a typical large cap stock would have a market capitalization of over Rs1,000 crores, a mid-cap stock would have a market value of Rs 250-2,000 crores.DEBT FUNDS:-These Funds invest a major portion of their corpus in debt papers. Governmentauthorities, private companies, banks and financial institutions are some of the major 25
  26. 26. issuers of debt papers. By investing in debt instruments, these funds ensure low riskand provide stable income to the investors. Debt funds are further classified as:1. Gilt Funds: Invest their corpus in securities issued by Government, popularlyknown as GOI debt papers. These Funds carry zero Default risk but are associatedwith Interest Rate risk. These schemes are safer as they invest in papers backed byGovernment.2. Income Funds: Income funds aim to maximize debt returns for the medium tolonger term. Invest a major portion into various debt instruments such as bonds,corporate debentures and Government securities.3. MIPs: Invests around 80% of their total corpus in debt instruments while the restof the portion is invested in equities. It gets benefit of both equity and debt market.These scheme ranks slightly high on the risk-return matrix when compared with otherdebt schemes.4. Short Term Plans (STPs): Meant for investors with an investment horizon of 3-6months. These funds primarily invest in short term papers like Certificate of Deposits(CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested incorporate debentures.5. Liquid Funds: Also known as Money Market Schemes, These funds are meant toprovide easy liquidity and preservation of capital. These schemes invest in short- terminstruments like Treasury Bills, inter-bank call money market etc. These funds aremeant for short-term cash management of corporate houses and are meant for aninvestment horizon of 1day to 3 months. These schemes rank low on risk-returnmatrix and are considered to be the safest amongst all categories of mutual funds.6. Floating Rate Funds: These income funds are more insulated from interest ratethan their conventional peers. In other words, interest rate changes, which cause theNAV of a conventional debt fund to go up or down, have little, or no, impact onNAVs of floating rate funds.BALANCED FUNDS:-These funds, as the name suggests, are a mix of both equity and debt funds. Theyinvest in both equities and fixed income securities, which are in line with pre-definedinvestment objective of the scheme. These schemes aim to provide investors with the 26
  27. 27. best of both the worlds. Equity part provides growth and the debt part providesstability in returns. Each category of funds is backed by an investment philosophy,which is pre-defined in the objectives of the fund. The investor can align his owninvestment needs with the funds objective and invest accordingly.HYBRID FUNDS:-1. Growth and Income Fund: Strike a balance capital appreciation and income forthe investors. In these funds portfolio is a mix between companies with good dividendpaying record and those with potential capital appreciation. These funds are less riskythan growth funds bit more than income funds.2. Asset Allocation Fund: These funds follow variable asset allocation policy. Thesemove in an out of an asset class (equity, debt, money market or even non-financialassets). Asset allocation funds are those, which follow more stable allocation policieslike balanced funds. Those, which flexible allocation policies, are like aggressivespeculative funds.2.7 ADVANTAGES & DISADVANTAGES OF THE MUTUALFUND:A) ADVANTAGESWhat are the key advantages of mutual fund investing?Diversification:Using mutual funds can help an investor diversify their portfolio with a minimuminvestment. When investing in a single fund, an investor is actually investing innumerous securities. Spreading your investment across a range of securities can helpto reduce risk. A stock mutual fund, for example, invests in many stocks - hundredsor even thousands. This minimizes the risk attributed to a concentrated position. If afew securities in the mutual fund lose value or become worthless, the loss may beoffset by other securities that appreciate in value. Further diversification can beachieved by investing in multiple funds which invest in different sectors orcategories. This helps to reduce the risk associated with a specific industry or 27
  28. 28. category. Diversification may help to reduce risk but will never completely eliminateit. It is possible to lose all or part of your investment.Professional Management:Mutual funds are managed and supervised by investment professionals. As per thestated objectives set forth in the prospectus, along with prevailing market conditionsand other factors, the mutual fund manager will decide when to buy or sell securities.This eliminates the investor of the difficult task of trying to time the market.Furthermore, mutual funds can eliminate the cost an investor would incur whenproper due diligence is given to researching securities. This cost of managingnumerous securities is dispersed among all the investors according to the amount ofshares they own with a fraction of each dollar invested used to cover the expenses ofthe fund. What does this mean? Fund managers have more money to research moresecurities more in depth than the average investor.Convenience:With most mutual funds, buying and selling shares, changing distribution options, andobtaining information can be accomplished conveniently by telephone, by mail, oronline.Although a funds shareholder is relieved of the day-to-day tasks involved inresearching, buying, and selling securities, an investor will still need to evaluate amutual fund based on investment goals and risk tolerance before making a purchasedecision. Investors should always read the prospectus carefully before investing inany mutual fund.Liquidity:Mutual fund shares are liquid and orders to buy or sell are placed during markethours. However, orders are not executed until the close of business when the NAV(Net Average Value) of the fund can be determined. Fees or commissions may ormay not be applicable. Fees and commissions are determined by the specific fundand the institution that executes the order. 28
  29. 29. Minimum Initial Investment:Most funds have a minimum initial purchase of $2,500 but some are as low as$1,000. If you purchase a mutual fund in an IRA, the minimum initial purchaserequirement tends to be lower. You can buy some funds for as little as $50 per monthif you agree to dollar-cost average, or invest a certain dollar amount each month orquarter.B) DISADVANTAGESRisks and Costs:Changing market conditions can create fluctuations in the value of a mutual fundinvestment. There are fees and expenses associated with investing in mutual fundsthat do not usually occur when purchasing individual securities directly. As with anytype of investment, there are drawbacks associated with mutual funds.No Guarantees: The value of your mutual fund investment, unlike a bank deposit,could fall and be worth less than the principle initially invested. And, while a moneymarket fund seeks a stable share price, its yield fluctuates, unlike a certificate ofdeposit. In addition, mutual funds are not insured or guaranteed by an agency of theU.S. government. Bond funds, unlike purchasing a bond directly, will not re-pay theprinciple at a set point in time.The Diversification "Penalty.": Diversification can help to reduce your risk of lossfrom holding a single security, but it limits your potential for a "home run" if a singlesecurity increases dramatically in value. Remember, too, that diversification does notprotect you from an overall decline in the market.Costs: In some cases, the efficiencies of fund ownership are offset by a combinationof sales commissions, 12b-1 fees, redemption fees, and operating expenses. If thefund is purchased in a taxable account, taxes may have to be paid on capital gains.Keep track of the cost basis of your initial purchase and new shares that are acquiredby reinvesting distributions. Its important to compare the costs of funds you areconsidering. Always look at "net" returns when comparing fund performances. Netreturn is the bottom line; an investments true return after all costs is deducted. 29
  30. 30. 2.8 MUTUAL FUND PLAYERS:The Indian mutual fund industry is mainly divided into three kinds of categories.These categories include public sector players, nationalized banks and private sectorand foreign players.UTI Mutual Fund was one of the leading Mutual Fund companies in India till May2006with a corpus of more than Rs.31, 000 Crores and it is the public sector mutualfund. Bank of Baroda, Punjab National Bank, Can Bank and SBI are the majornationalized banks mutual fund.At present mutual fund industry is mainly dominated by private and foreign sectorplayers which include major players like Prudential ICICI Mutual Fund, HDFCMutual Fund, Reliance Mutual Fund etc. are private sector mutual funds players whileFranklin Templeton etc. are major foreign mutual fund players. At present there aremore than 33players operating in Indian. The brief introduction of major players isgiven as follows.ABN AMRO Mutual Fund:ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee(India)Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management(India)Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is thecustodian of ABNAMRO Mutual Fund.Birla Sun Life Mutual Fund:Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun LifeFinancial. Sun Life Financial is a global organization evolved in 1871 and is beingrepresented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apartfrom India. Birla Sun Life Mutual Fund follows a conservative long-term approach toinvestment. Recently it crossed AUM of Rs. 10,000 Crore.Bank of Baroda Mutual Fund:Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992under the sponsorship of Bank of Baroda. BOB Asset Management Company Limitedis the AMC of BOB Mutual Fund and was incorporated on November 5, 1992.Deutsche Bank AG is the custodian. 30
  31. 31. HDFC Mutual Fund:HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely HousingDevelopment Finance Corporation Limited and Standard Life Investments Limited.HSBC Mutual Fund:HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and CapitalMarkets (India) Private Limited as the sponsor. Board of Trustees, HSBC MutualFund acts as the Trustee Company of HSBC Mutual Fund.ING Vysya Mutual Fund:ING Vysya Mutual Fund was setup on February 11, 1999 with the same namedTrustee Company. It is a joint venture of Vysya and ING. The AMC, ING InvestmentManagement (India) Pvt. Ltd. was incorporated on April 6, 1998.Prudential ICICI Mutual Fund:The mutual fund of ICICI is a joint venture with Prudential PLC of America; one ofthe largest life insurance companies in the US of A. Prudential ICICI Mutual Fundwas setup on 13th of October 1993 with two sponsors, Prudential PLC. and ICICILtd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC isPrudential ICICI Asset Management Company Limited incorporated on 22nd of June1993.Sahara Mutual Fund:Sahara Mutual Fund was set up on July 18, 1996 with Sahara India FinancialCorporation Ltd. as the sponsor. Sahara Asset Management Company Private Limitedincorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. Thepaid-up capital of the AMC stands at Rs 25.8 crore.State Bank of India Mutual Fund:State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launchoffshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately.Today it is the largest Bank sponsored Mutual Fund in India. They have alreadylaunched 35Schemes out of which 15 have already yielded handsome returns to 31
  32. 32. investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crore as AUM.Now it has an investor base of over 8 Lash spread over 18 schemes.Tata Mutual Fund:Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsor forTata Mutual Fund is Tata Sons Ltd., and Tata Investment Corporation Ltd. Theinvestment manager is Tata Asset Management Limited and its Tata TrusteeCompany Pvt. Limited. Tata Asset Management Limited is one of the fastest in thecountry with more than Rs.7, 703 Crore (as on April 30, 2005) of AUM.Kotak Mahindra Mutual Fund:Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL.It is presently having more than 1, 99,818 investors in its various schemes. KMAMCstarted its operations in December 1998. Kotak Mahindra Mutual Fund offersschemes catering to investors with varying risk - return profiles. It was the firstcompany to launch dedicated gilt scheme investing only in government securities.Reliance Mutual Fund:Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882.The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co.Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital MutualFund, which was changed on March 11, 2004. Reliance Mutual Fund was formed forlaunching of various schemes under which units are issued to the Public with a viewto contribute to the capital market and to provide investors the opportunities to makeinvestments in diversified securities.Standard Chartered Mutual Fund:Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored byStandard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt.Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC whichwas incorporated with SEBI on December 20, 1999.Franklin Templeton India Mutual Fund:The group, Franklin Templeton Investments is a California (USA) based companywith a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest 32
  33. 33. financial services groups in the world. Investors can buy or sell the Mutual Fundthrough their financial advisor or through mail or through their website. They haveOpen end Diversified Equity schemes, Open end Sector Equity schemes, Open endHybrid schemes, Open end Tax Saving schemes, Open end Income and Liquidschemes, closed end Income schemes and Open end Fund of Funds schemes to offer.Morgan Stanley Mutual Fund India:Morgan Stanley is a worldwide financial services company and its leading in themarket in securities, investment management and credit services. Morgan StanleyInvestment Management (MISM) was established in the year 1975. It providescustomized asset management services and products to governments, corporations,pension funds and non-profit organizations. Its services are also extended to high networth individuals and retail investors. In India it is known as Morgan StanleyInvestment Management Private Limited (MSIM India) and its AMC is MorganStanley Mutual Fund (MSMF). This is the first close end diversified equity schemeserving the needs of Indian retail investors focusing one long-term capitalappreciation.Escorts Mutual Fund:Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as itssponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC wasincorporated on December 1, 1995 with the name Escorts Asset ManagementLimited.Benchmark Mutual Fund:Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial ServicesPvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the TrusteeCompany. Incorporated on October 16, 2000 and headquartered in Mumbai,Benchmark Asset Management Company Pvt. Ltd. is the AMC.Can bank Mutual Fund:Can bank Mutual Fund was setup on December 19, 1987 with Canada Bank acting asthe sponsor. Can bank Investment Management Services Ltd. incorporated on March2, 1993is the AMC. The Corporate Office of the AMC is in Mumbai. 33
  34. 34. Cholas Mutual Fund:Cholas Mutual Fund under the sponsorship of Cholas Mandela Investment & FinanceCompany Ltd. was setup on January 3, 1997. Cholas Mandela Trustee Co. Ltd. is theTrustee Company and AMC is Cholas Mandela AMC Limited.LIC Mutual Fund:Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. Itcontributed Rs. 2 Crore towards the corpus of the Fund. LIC Mutual Fund wasconstituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882.. The Company started its business on 29th April 1994. The Trustees of LIC MutualFund have appointed Jevons Bema Sabayon Asset Management Company Ltd as theInvestment Managers for LIC Mutual Fund.GIC Mutual Fund:GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), aGovernment of India undertaking and the four Public Sector General InsuranceCompanies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co.Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co.Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the IndianTrusts Act,1882. 34
  35. 35. 2. 9 INTRODUCTION TO THE COMPANYContact Person Mr. Ashwani Pratap SinghAddress NJ Center, 901, Udhna Udhyog Nagar Sangh Commercial Complex, Central Road No.10, Udhna.State GujaratCountry IndiaMobile 9312874636  COMPANY PROFILE:NJ India Invest Pvt. Ltd. is one of the leading advisors and distributors of financialproducts and services in India.Established in year 1994, NJ has over a decade of rich exposure in financialinvestments space and portfolio advisory services. From a humble beginning, NJ overthe years has evolved out to be a professionally managed, quality conscious andcustomer focused financial / investment advisory & distribution firm.We are looking for candidates. We have opening for Direct Sales, Alternate Sales,Channel Sales, Mutual Fund, Demit, IPV, KYC, AMFI, NCFM, NISM, and CFP. 35
  36. 36.  INTRODUCTION:A evolving, emerging & enterprising group with its roots in the financial servicessector and today expanding into newer horizons with great passion.The vision of the group is to be leaders in businesses driven by customer satisfaction,commitment to excellence and passion for continued value creation for allstakeholders. This vision has helped us grow and build the trust of our customers andassociates which is at the cornerstone of everything we do. Trust is also at the heart ofour success and the driver for passion for our success.NJ Group is a leading player in the Indian financial services industry known for itsstrong distribution capabilities. The journey of NJ began in 1994 with theestablishment of NJ India Invest Pvt. Ltd., the flagship company, to cater to investorneeds in the financial services industry. Today, the Wealth Advisory Network, alsoknown as the NJ Funds Network, started in 2003 is among the largest networks ofwealth advisors in India.Over the years, NJ Group has diversified into other businesses and today has thepresence in businesses ranging from wealth advisory network, asset management, realestate, insurance broking, training & development and technology. Our richexperience in financial services, combined with execution capabilities and strongprocess & system orientation, has enabled us to shape a rising growth trajectory in ourbusinesses.NJ Group is based out of Surat in Gujarat (India) and has presence in over 100*locations in India and has over 1,000* employees.  HISTORY NJ INDIA INVESTS PVT. LTDThis is one of the leading advisors and distributors of financial products and servicesin India. Established in year 1994, NJ has over a decade of rich exposure in financialinvestments space and portfolio advisory services. From a humble beginning, NJ over 36
  37. 37. the years has evolved out to be a professionally managed, quality conscious andcustomer focused financial investment advisory & distribution firm.NJ prides in being a professionally managed, quality focused and customer centricorganization. The strength of NJ lies in the strong domain knowledge in investmentconsultancy and the delivery of sustainable value to clients with support from cutting-edge technology platform, developed in-house by NJ.At NJ we believe in …• having single window, multiple solutions that are integrated for simplicity andsapience• making innovations, accessions, value-additions, a constant process• providing customers with solutions for tomorrow which will keep them above thecurve, todayNJ has over INR 30 billion* of mutual fund assets under advice with a wide presencein over 135 locations* in 21states* in India. The numbers are reflections of the trust,commitment and value that NJ shares with its clients.NJ Wealth Advisors, a division of NJ, focuses on providing financial planning andportfolio advisory services to premium clients of high net-worth. At NJ WealthAdvisors, we have developed processes that focus on providing the best in terms ofthe advice and the ongoing management of your portfolio and financial plans.At NJ, our experience, knowledge and understanding enables us to provide you withthe expected value, in an enhanced way. As a leading player in the industry, wecontinue to successfully meet the expectations of our clients, through meaningful andcomprehensive solutions offered by NJ Wealth Advisors.  VISION & MISSION OF NJ INDIA INVESTVISION: To be the leader in our field of business through, 37
  38. 38. Total Customer SatisfactionCommitment to ExcellenceDetermination to Succeed with strict adherence to complianceSuccessful Wealth Creation of our CustomersMISSION:Ensure creation of the desired value for our customers, employees and associates,through constant improvement, innovation and commitment to service & quality.Top povide solutions which meet expectations and maintain high professional &ethical standards along with the adherence to the service commitments  PHILOSOPHYAt NJ India invest pvt ltd. Our Service and Investing philosophy inspire and shape thethoughts, beliefs, attitude, actions and decisions of our employees. If NJ wouldresemble a body, our philosophy would be our spirit which drives our body.SERVICE PHILOSOPHY:Our primary measure of success is customer satisfaction …We are committed to provide our customers with continuous, long-termimprovements and value-additions to meet the needs in an exceptional way. In ourefforts to consistently deliver the best service possible to our customers, all employeesof NJ will make every effort to:Think of the customer first, take responsibility, and make prompt service to thecustomer a priorityDeliver upon the commitments & promises made on time • anticipate, visualize,understand, meet, exceed our customer‟s needsProjectsformba.blogspot.comBring energy, passion & excellence in everything we doBe honest and ethical, in action & attitude, and keep the customer‟s interest supreme 38
  39. 39. Strengthen customer relationships by providing service in a thoughtful & proactivemanner and meet the expectations, effectivelyINVESTING PHILOSOPHY:We aim to provide Need-based solutions for long-term wealth creation We aim toprovide all customers of NJ, directly or indirectly, with true, unbiased, need-basedsolutions and advice that best meets their stated & un-stated needs. In our efforts toprovide quality financial & investment advice, we believe thatClients want need-based solutions, which fits themLong-term wealth creation is simple and straightAsset-Allocation is the ideal & the best way for long-term wealth creationEducating and disclosing all the important facets which the customer needs to beaware of, is importantThe solutions must be unbiased, feasible, practical, executable, measurable andflexibleConstant monitoring and proper after-sales service is critical to complete the on-going processAt NJ our aim is to earn the trust and respect of the employees, customers partners,regulators, industry members and the community at large by following our serviceand investing philosophy with commitment and without exceptions.  MANAGEMENTThe management at NJ brings together a team of people with wide experience andknowledge in the financial services domain. The management provides direction andguidance to the whole organization. The management has strong visions for NJ as aglobally respected company providing comprehensive services in financial sector.The „Customer First‟ philosophy in deeply ingrained in the management at NJ. Theaim of the management is to bring the best to the customers in terms of 39
  40. 40. Range of products and services offeredQuality Customer ServiceAll the key members of the organization put in great focus on the processes & systemunder the diverse functions of business. The management also focuses on utilizingtechnology as the key enabler for all the activities and to leverage the technology forenhancing overall customer experience. The key members of the management are:Mr. Neeraj Choksi Jt. (Managing Director)Mr. Jignesh Desai Jt. (Managing Director)Sales Team:Mr. Misbah Baxamusa (National Head)Mr. Naveen RathodV.P Executive Team :Mr. Shirish Patel (Information Technology)Mr. Vinayak Rajput (Finance & Operations)Mr. Abhishek Dubey (Marketing & Development)Mr. Viral Shah (Research)Mr. Dhaval Desai (Human Resources) 40
  41. 41.  SERVICE STANDARDS SERVICESERVICE STANDARDS Service in words, service in action Service is the key tounlocking customer satisfaction, which again is key for sustain ability of any business.At NJ we understand this very well. NJ has set strict processes in place to deliverquality services to customers. At NJ strict quality service standards are set and a well-defined process is established and followed religiously by our quality customerservice teams. Performance is evaluated on a frequent basis and glitches are ironedout.But quality service also involves quality people in addition to processes. NJ givessignificant focus to the proper training and development of the people involved in theservice delivery chain. Further we,. Have well-defined "Privacy Policy" to keep clients‟ information confidential &internal audits done on the same at regular intervalsReceive various statistics which are analyzed on an ongoing basis to improve theservice standards.We are committed to improve and enhance our services and undertake new serviceinitiatives. Such and other services differentiate us with other service providers in theindustry.Our Service Commitments …The service commitments are to guide the actions of the people at NJ. Clearly stated,customers can freely communicate any such actions/events wherein they feel that anyof the following commitments have been breached / compromised. At NJ we desire tohonourour commitments at all points of time and to all our customers without anybias.  To provide customer- focused need-based valued services  To provide reliable, accurate and timely information  To maintain all records in privacy  To optimize services/benefits at least justifiable cost  To develop and grow the customers‟ business  To provide constructive after sales service 41
  42. 42.  Life To honor our service commitments  PRODUCTSLife Vista:Vista Life is counted not in years, but in moments. Moments of truth, joy,achievement and satisfaction. Of peace, tranquility, and freedom. At NJ, we bringsuch moments to life.Connecting Goals:Life Vista is for individuals who are looking for goal oriented planning. The clientwould typically have a family, with multiple goals directed at meeting theobligations/goals in life. Meeting obligations like education and marriage of children,meeting basic needs like purchase of property, or business assets, would ideally be onagenda for such clients.  PROCESSProcess of Connecting GoalsWith Life Vista we take the onus to help you achieve your goals in life. Our teamwould undertake a detailed financial planning exercise for you. An ideal personalized,financial plan would then be recommended after detailed study. The team would thenconstantly monitor the progress of your plan. Any changes in the environment thatmay happen during the interim period would be incorporated into your plan. At LifeVista our objective is to connect you with your goals and your dreams with reality.How we can help youWe will do a detailed study of your goals and objectives in life and would help you bydevising a comprehensive plan to help you achieve them. We would also regularlymonitor your plans to make sure that you are always on track to achieve your goal. 42
  43. 43. Asset VistaWealth is not an end. Neither is it a beginning. Wealth is a process, a journey.A journey of power, achievement and responsibility.At NJ we ensure that this journey continues and grows.Creating Wealth:Asset Vista is ideal for individuals or corporate looking for portfolio managementservices. Typically, the client would have sizeable investments made into multipleassets and/or products. The need for Asset Vista may arise due to time constraints, thesize of the investments, or the need for professional advice. The objective may be tohave effective management of portfolio aimed at capital creation with capitalprotection at the backdrop.Process of Wealth Creation:Asset Vista sees your portfolio as a reflection of your profile aimed to fulfill theidentified objectives. Asset Vista would include a detailed risk assessment andrecommendation of an ideal asset allocation for you. Post asset allocation, a portfoliowould be prepared and dynamically managed on an ongoing basis. Asset Vista wouldensure that your portfolio is logical, strategic, and in tune with the changingenvironment and always on track to achieve the defined objectives.How we can help youWe will seek to manage and monitor your portfolio as per your objectives and yourrisk profile. We would manage your portfolio the Asset Allocation way which is themost effective & ideal way to manage investments. You would also have access toconsolidated portfolio reports that enable you to see all your investments into multipleavenues at a single place.  SERVICES PROVIDED TO CLIENTSERVICES PROVIDED TO CLIENT 43
  44. 44. As NJ Wealth Advisor‟s Global Private Client, you get comprehensive set of servicesthat ensure you stay informed, insightful, in command, of your investments at alltimes.Comprehensive Financial Planning:We all have many responsibilities and goals in our lives. We have dreams andaspirations for a better future. But quite often we are not sure as to how we will fulfillthese goals and aspirations. Life changes over time. We may never be sure what todayholds for us tomorrow. What if something goes wrong? How do we make sure that weget what we wish? A comprehensive Financial Plan is what you need. At NJ WealthAdvisors we offer you with Comprehensive Financial Planning solutions which wouldinvolve … A detailed study of your goals Preparation of a comprehensive Financial Plan Monitoring of the Financial Plan on an on-going basisAt NJ Wealth Advisors we offer you with comprehensive Financial Planning Servicesunder the product – LIFE VISTA.Quality Portfolio Advisory:Making money is easy. Managing money is difficult. And managing money intoday‟s complex financial markets with multiple products on an ongoing basisbecome seven more difficult.As investors we often may feel the lack of time and energy to undertake monitoringand managing of our investments in multiple avenues. This requires both dedicatedefforts and skills in portfolio management.At NJ Wealth Advisors we realized the need for quality, unbiased portfolio advisoryservices. At NJ we would aim to manage your portfolio with a superior, time testedand much effective way of Asset Allocation keeping in mind your risk profile.At NJ Wealth Advisors we offer you with quality Portfolio Advisory Services underthe product – ASSET VISTA 44
  45. 45. Consolidated Reporting:Quality online Wealth Account:As a premium client you would have access to one of the best online investmentaccounts that offer comprehensive reports, many of which are unique in nature andgive valuable insights on our investments. Our online Wealth Account covers almostall the investment avenues that you may have:  Mutual Funds – All AMCs, All Schemes  Direct Equity  Life Insurance  Physical Assets – Gold and Property  Private Equity – Business  Debt Products o Bank Deposits and Company Deposits o RBI / Infrastructure Bonds o Postal Savings – KVP, MIS, NSC o Debentures o Small Savings – PPF, NSSYou would have access to Consolidated Net Asset Reports which would give you asingle view of all your investments into different avenues as given above.Further, within each of the Asset class we have many more reports and utilities. Someof the reports covered are …Consolidated:Consolidated Asset Allocation, Consolidated Net Asset, Interest Income, Profit &LossMutual Funds:Valuation, Transaction, Profit & Loss, Performance, Portfolio reports like - AMC/Sector / Equity / Credit / Debt Exposure, Weighted Average Maturity, Dividendhistory, etcDirect Equity:Demand accounts, Transaction, Valuation, Profit & Loss 45
  46. 46. Life Insurance:Policy Report, Premium Reminder, Cash FlowDebt:Transaction, Interest Income, Maturity reports for different. 46
  47. 47. CHAPTER 3 3. RESEARCH METHODOLOGY  RESEARCH PROBLEM:To know investor‟s behavior regarding mutual fund as an investment avenue.  RESEARCH OBJECTIVES (PRIMARY) :To know investor‟s behavior regarding mutual fund as an investment avenue.  RESEARCH OBJIECTIVES (SECONDARY) : To identify the objectives of the investors for investing in a mutual fund.· Toidentify the investment patterns of investors.· To find out which scheme is betteraccording to investors.· To study investors‟ perceptions about level of satisfactionwhile investing in mutual funds.  RESEARCH PLAN:DATA SOURCEWe have used primary data source to collect the data regarding investors‟ behavior formutual fund as an investment avenue. The survey was conducted across Jammu.·RESEARCH APPROACHSurvey approach was under taken to know the behavior of investor regarding mutualfund as an investment avenue.·RESEARCH INSTUMENTQuestionnaire was the instrument of collecting data.  SAMPLING PLANSample unit: 47
  48. 48. All the investors who are occasionally or regularly investing in financial assets andnon-financial assetsSample size:Survey population comprises of the total reputed businessman, Professionals, andindividual investor was approx 70.Sampling method:In this study as suggested by the company a sample of reputed Businessman,Professionals, and individual investor‟s was selected and it was selected through non-probability, convenience sampling method. Because all the Businessman,Professionals, and individual investor‟s could not be interviewed as per ourrequirement but according to their availability and accessibility we meet them.Contact method:The total sample size for survey was 70 investors by personal interview.3.1 DATA COLLECTION TECHNIQUES AND TOOLS:This study is completely based on the secondary data. This is collected from varioussources especially from the journal – Mutual Fund- Insight based o value researchMagazines. And addition to others journals, magazines, articles, books and thepublisher and unpublished documents of the mutual funds have been consider in theresearch.3.2: RESEARCH DESIGN:The research design is the conceptual framework within which researcher study isconducted and it construct the blue print for collection of data, measurement of data,statistical tools for analysis and analysis of variance. Research design included anonline of what the researcher will do from writing the hypothesis and its operationalimplication to the final analysis of data. 48
  49. 49. Decisions regarding what, when, how much, by what means concerning an inquiry ora research study constitute a research design. Further more research design meansarrangement of condition for collection and analysis of data in a manner that aims tocombine relevance to the research purpose with economy in procedure. Goodresearcher design is often features like flexible, appropriate, efficient and economical.Here hypothesis testing research is those where the researcher test the hypothesis ofcasual relationship between variables.Fund managers of the assets management company also do the researcher to identifythe market and would find period to buy, to hold and to sell the scrip. Fund managershaving foods researcher team who continuous analysis of economic market,fundamental analysis, efficient market and technical analysis of the particular index.Today researcher team should identify the international financial market and howinternational financial instruments value could identified. Financial crisis affectmarket total risk and total risk and total return, its indicate how to diversified theportfolio, how to totally remove the unsystematic risk.Researcher decided proper plan to action and define variable. Variable also identifieddependent and independent. Researcher specified research processing and analyzingof the data.3.3 SAMPLING PLAN:Sample unit:All the investors who are occasionally or regularly investing in financial assets andnon-financial assetsSample size:Survey population comprises of the total reputed businessman, Professionals, andindividual investor was approx 70.Sampling method:In this study as suggested by the company a sample of reputed Businessman,Professionals, and individual investor‟s was selected and it was selected through non-probability, convenience sampling method. Because all the Businessman, 49
  50. 50. Professionals, and individual investor‟s could not be interviewed as per ourrequirement but according to their availability and accessibility we meet them.Contact method:The total sample size for survey was 70 investors by personal interview. 50
  51. 51. CHAPTER 4 4: SURVEY ANALYSIS AND INTERPRETATIONGenderThere are 15 females and 55 males as respondentsMale -55Female -15Q1 what is your age?AGE PEOPLE20-30 2030-40 2540-50 1350-60 1060- 2ABOVETOTAL 70 30 25 20 15 PEOPLE 10 5 0 20-30 30-40 40-50 50-60 60- ABOVE 51
  52. 52. From the above table we can say that awareness for investment in youngster has beenincreased & that‟s why out of 70, 20 are youngster who do investment and they comein the age group of 20-30, then comes age group of 30-40 from which 25 people doinvestment and other age group are 40-50 where they do investment of 13, 10 belongsto age group of 50-60 they do the investment, and 2 belongs to the careful for theirinvestment.Q 2. What is your profession?PROFESSION N0. OF PEOPLEBUSINESS 4JOB IN PRIVATE 14SECTORJOB IN PUBLIC 35SECTOROTHERS 17TOTAL 70 N0. OF PEOPLE 40 35 30 25 20 15 N0. OF PEOPLE 10 5 0 BUSINES S JOB IN JOB IN PUBLIC OTHERS PRIVATE SECTOR SECTORNow 70 people doing investment out of which 35 people are from public sector, 14are from private sector, 4 are having their business and 17 are others which includeretired people, housewives and students. Reason for investment by all people was to 52
  53. 53. secure the future and reason given by people doing the job in private was their highersalary and unsecured job.Q 3. Do you invest in mutual fund?ANS: PEOPLEYES 21NO 49TOTAL 70 PEOPLE YES NOFrom 70 people 21 of them are doing investment in mutual fund and 49 of them arenot investing in mutual fund but they do investment in other sector for whichinformation is given in the next question. 53
  54. 54. Q.4 If you are not investing in mutual fund then where do you invest (inproportion)?PARTICULARS PEOPLEINSURANCE 20EQUITY MARKET 10GOVT. SCHEME 30REAL ESTATE 5COMMODITIES 5TOTOAL 70 PEOPLE 35 30 25 20 15 10 5 PEOPLE 0People who were not investing in mutual fund they do invest in sectors like insurance,equity market, government schemes (includes banks, bonds & other scheme ), realestate, commodities even people those who do invest in mutual fund they also investin different sectors. Out of 100%, 10% people do invest in equity market, 20% investin insurance, 30% in government scheme, 5% do invest in real estate and 5% doinvest in commodities. People do invest in equity market due to higher returnsavailable in it. 54
  55. 55. Q.5 Rank the company according to your preference from top (1) tobottom (11)?PARTICULARS PEOPLERELIANCE 11BIRLA 3TATA 3LOTUS 0SBI 31HDFC 0ICICI 21OTHERS 1TOTAL 70 PEOPLE RELIANCE BIRLA TATA LOTUS SBI HDFC ICICI OTHERSPeople who were investing in mutual fund had given the rank to different mutual fundcompanies on the basis of what they think about that particular company and hadgiven ranks to different companies. Here in this data 31 people had SBI as 1” rankand the second highest is ICICI where 21 people has given it as 1” rank and thereasons behind giving 1” rank were their return, good credit in market and tax savingbenefits. 55
  56. 56. Q.6 Do you compare the returns or other benefits of MF schemes beforeinvesting?ANNUAL REPORT CHECKINGPARTICULARS PEOPLEYES 28NO 42TOTAL 70 PEOPLE YES NOIt is necessary to compare the returns and benefits because people do invest in forhigher returns so they compare with other companies also. Here 28 people comparethe returns and other benefits of mutual fund scheme before as well as after investingto see how their investment is spread over in different segments. 56
  57. 57. Q.7 which factors do you consider while investing in MF for safety and liquidity?SAFETYPARTICULARS PEOPLEEXT. IMP 48IMPORTANT 22NEUTRAL 0UNIMPORTANT 0EXT.UNIMP 0TOTAL 70 SAFETY PEOPLE 60 50 40 30 20 10 SAFETY PEOPLE 0Investors consider different factors before investment and for many reasons theyinvest in different scheme of mutual fund. Here reason for investment is safety oftheir money and safety of their future so 48 people considers it ext important, while22 people says it‟s important for their investment. 57
  58. 58. LIQUIDITYPARTICULARS PEOPLEEXT. IMP 6IMPORTANT 34NEUTRAL 25UNIMPORTANT 05EXT.UNIMP 0TOTAL 70 LIQUIDITY PEOPLE 40 35 30 25 20 15 10 LIQUIDITY PEOPLE 5 0Above graph reveals that some of the investors means 6 are giving liquidity moreemphasis because by the way of open ended scheme they can any time liquid theirposition, 5 investors had given negative response about it while 34 of the investors aregiving them least importance and 25 are natural to it. 58
  59. 59. Q.8 how do you monitor the following?NAVPATICULARS PEOPLEMONTHLY 20QUARTERLY 26HALF YEARLY 12YEARLY 7NEVER 5TOTAL 70 NAV PEOPLE 30 25 20 15 10 NAV PEOPLE 5 0NAV is the net asset value of your investment in units that comes of every week bythis you can come to know how much of your investment has been increased so itbecomes necessary to monitor but period of monitoring depends on investor. Here 20of investor do monitor monthly, 26 of investor monitors quarterly, 12 monitor halfyearly, 7 monitor yearly, 5 never monitor. 59
  60. 60. PROFILE OF FUND MANGAGERPATICULARS PEOPLEMONTHLY 1QUARTERLY 4HALF YEARLY 15YEARLY 28NEVER 22TOTAL 70 PROFILE OF FUND MANGAGER PEOPLE 30 25 20 15 10 PROFILE OF FUND 5 MANGAGER PEOPLE 0Fund manager is the person who manage the fund of investor who had invested theirmoney in their company it is necessary that the fund manager should be qualifiedenough to managers the fund of the investor because if he fails to manage the fund theinvestors money is not secure. So 1 investor monitor profile monthly, 4 do quarterly,28 do yearly and 22 never monitor the profile before investing. 60
  61. 61. Q.9 Do you check out the annual reports of your scheme to evaluate theperformance of your scheme ?PARTICULARS PEOPLEYES 61NO 9TOTAL 70 PEOPLE YES NOIn the annual report of the scheme all the information of that particular scheme aregiven information about the performance of the scheme, position of the scheme in themarket, portfolio of the scheme that where the investment has been done under thisscheme, profile of the fund manager is also given by this the investors can come toknow the position and qualification of the fund manager. So most of the investors aremonitoring the annualreport.61 investors do monitor the annual report of the scheme,9 do not monitor the annual report. 61
  62. 62. Q10. Objectives for investment in mutual fund schemes (rank them from 1mostpreferred to 4 least preferred).OBJECTIVES FOR INVESTMENT:PARTICULARS RANK 1 RANK 2 RANK 3 RANK 4 TOTALRETURN/ 15 34 21 0 70DIVIDENDAPPRECIATION 13 26 30 1 70TAX 42 10 17 1 70LIQUIDITY 0 0 2 68 70TOTAL 70 70 70 70 80 70 60 50 RETURN/ DIVIDEND 40 APPRECIATION 30 TAX LIQUIDITY 20 10 0 RANK 1 RANK 2 RANK 3 RANK 4 TOTALHere in this question the investors have ranked the factors on the basis of theirobjectives that for what reason they had invested in that particular scheme. 15 ofinvestors had given return/dividend 1st rank because every investor want benefits forthe risk they had taken by investing in that scheme, 13 of investors had givenappreciation 1st rank because they want something more including their investedamount.42 of investor has given tax saving as 1strank because while investing insome particular scheme their amount invested is appreciated as well as they get thetax benefit,0 has given 1st rank to liquidity…. 62
  63. 63. CHAPTER 5 5: CONCLUSIONS AND SUGGESTIONS A) CONCLUSIONMutual fund has become one of the important sources for investing. With theconvenience of investing in bunch of securities under expert guidance with variety ofrisk and return combination.Gone are the days of investing blindly or solely on the recommendation of yourbroker or financial planner. You have all of the information you need, and it is all justa click away.Take some time to get to know the tools. Experiment with a few hypothetical trades,and track your results in one of your portfolios. And most importantly, never stoplearning.This project gave me a great learning experience and at the same time it gave meenough scope to implement my analytical ability. The analysis and advice presentedin this project report is based on market research on the saving and investmentpractices of the investors and preferences of the investors for investment in MutualFunds. In the project consists of data and its analysis collected through survey done on 70people. For the collection of Primary data I made a questionnaire and surveyed of 70people. This project covers the topic “THE MUTUAL FUND AS AN INVESTMENTAVENUE AT N. J. INDIA INVEST PVT LTD”. The data collected has been wellorganized and presented 63
  64. 64. B) SUGGESTIONSMutual funds outperform every other investment option on three parameters, itsecures high whereas it‟s moderate at one comparing it with the other options, we findthat equities gives us high returns with low safety. Even the convenience involvedwith investing in equities is just moderate.The other option offering high return is real estate but that even comes with highvolatility and moderate safety level, even the liquidity and convenience involved aretoo low. Gold have always been a favorite among Indians but when we look at it as aninvestment option them it definitely doesn‟t gives a very bright picture. Although itensures high safety but the returns generated and liquidity are moderate.Similarly, the other investment options are not at par with mutual funds and serve theneeds of only a specific customer group. Straightforward, we can say that mutual fundemerges as a clear winner among all the options available.• Give more importance to safety and return attributes because Independent FinancialAdvisors are more concern about safety and of giving more benefit of the investmentsto their clients.• Independent Financial Advisors who are not suggesting their clients to invest inmutual funds due to their lack of knowledge of mutual funds. So, NJ India Investshould arrange mutual fund awareness Program of their and other independentFinancial Advi- sors on regular basis.• By providing better service NJ India Invest should try to attract the IndependentFinancial Advisors to join with them.• NJ India Invest should arrange special mutual fund awareness program for generalpublic. So they can directly work with NJ India Invest as direct client.• Majority of the Government employees take into consideration tax benefits beforemaking any investment. So NJ India Invest should highlight tax benefits in mutualfunds. 64