Dsp black rock projct


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Dsp black rock projct

  1. 1. A RESEARCH PROJECT REPORT ON A STUDY ON THE ANALYSIS OF MUTUAL FUND & PRODUCT MARKETING INCLUDING MICROMARKETING Submitted to Mahamaya Technical University (Noida) In the partial fulfillment of the requirement for the award of MASTER OF BUSINESS ADMINISTRATION Under the supervision of Submitted By: Dr Prachi Nagar, Sana Fatima (Professor) IAMR MBA (2012-14)
  4. 4. To complete this operational workout report I received help from many sources which need to mention here specially. I am very thankful to Mr. Nikhil Kumar Branch Head Dsp blackrock mutual fund Patna for giving me an opportunity in getting exposure of functional expect and practical experience of the Organization. I express my heartiest gratitude to Mr. Shinjan Bose (Sr. Relationship Manager) dsp blackrock mutual fund Patna who as my organizational guide extended a helping hand and careful supervision in making this project report reality. Last but not the least I am very obliged to the management and staff members of Dsp blackrock mutual fund ,Patna, Who co-operated with me, devoting there valuable time for working and preparing this project report and I cannot forget my class friends. With Best Regard Sana Fatima AcknowledgementAcknowledgement
  5. 5. For a student of professional course like MBA the significance of the practical knowledge gained through the survey training is enormous. It is during this period that one gets an opportunity to know how the market works in the real world. So, keeping in this mind I joined a leading financial sector like DSP BLACKROCK MUTUAL FUND LTD, for my summer training programme. I was assigned to study about Mutual Funds Investments. I have tried my best to find out all the relevant information and analyze it to the best of my ability. Sana Fatima PrefAcePrefAce
  6. 6. Executive Summary The title of my project is "Analysis of Mutual fund & Product marketing including micromarketing.” is going to be proved useful for the organization, as well as for me not only in theoretical aspects but also in pragmatic aspects. The current mutual fund industry in India is proving to be a limelight for every organization concerned. Being a part of mutual fund industry Dsp blackrock mutual fund through its channel partners is moving towards higher level of performance that is measurable through various relevant formations. This project aims at analyzing the mutual industry with special reference to DSP BLACK ROCK. It acts as a guide to know the present status of mutual fund and its due importance. Compatibility in terms of various marketing tools used to analyze mutual fund and to know the customer perception and relative market share and growth with the help of the project.
  7. 7. Contents Acknowledgment 04 Preface 05 Executive Summary 06 1) Introduction 07-24  Company Profile 2) About Mutual Fund 25-45  History of Mutual Fund  Benefits of Mutual Fund  Drawbacks of Mutual Fund  Entities Involved in Organizing Mutual Fund  Types of Mutual Fund  Net Asset Value (NAV)  Portfolio Management 3) Objective 46 3) Methodology 46- 57  Survey Form  Finding 5) About HDFC Mutual fund 58-63  Why HDFC Mutual Fund?  Systematic Investment Plan (SIP) 6) Top Mutual Fund 64-66  Top 10 Mutual Fund In Each Category  Top 10 Mutual Fund (Open Ended)  Top 10 Mutual Fund (Close Ended) 7) Limitation 67 8) Finding 68 9) Suggestions 69 10) Bibliography 70
  8. 8. Company Profile: The DSP Group, headed by Mr. Hemendra Kothari, is one of the oldest financial services firms in India. It has a track record of over 145 years and was one of the founding members of the Bombay Stock Exchange. BlackRock is the largest listed asset management company in the world. It is a premier provider of investment solutions through a variety of product structures, including individual and institutional separate accounts, mutual funds and other pooled investment vehicles, and the industry- leading iShares® ETFs to investors around the world. BlackRock is a truly global firm that combines the benefits of worldwide reach with local service and relationships. It has a deep presence in every major capital market in the world, which results in greater insights into increasingly interconnected financial markets. Managing assets for investors in North and South America, Europe, Asia, Australia, the Middle East and Africa, the firm today employs more than 9,300 talented professionals and maintains offices in 26 countries around the world. BlackRock’s investor base includes corporate, public, union and industry pension plans; governments; insurance companies; third-party mutual funds; endowments; foundations; charities; corporations; official institutions; sovereign wealth funds; banks; financial professionals; and individuals worldwide. With our three-dimensional approach to managing the organization, we seek to: • Ensure consistency on a global basis; IntroductIonIntroductIon
  9. 9. • Allow for the tailoring of products and services according to client or local needs; • Promote teamwork among our employees worldwide; and • Facilitate operational integrity and efficiency Title: - Analysis of Mutual fund, Product marketing Micro Marketing Consist of Analysis of Mutual funds Market, Its portfolio and Various Markets Aspects. ABOUT DSB BLACK ROCK • DSP Black Rock Investment Managers Pvt. Ltd. is the investment manager to DSP Black Rock Mutual Fund. • The philosophy of DSP Black Rock Investment Managers Pvt. Ltd. has been grounded in the belief that experienced investment professionals, using a disciplined process and sophisticated analytical tools, can consistently add value to client portfolios. • DSP Black Rock Investment Managers Pvt. Ltd. takes a three dimensional approach to the management of the organization, incorporating functional, product and regional elements in support of clients' goals. The functional dimension looks at the company's operations by specific task, such as account management or operations. The product dimension brings together the cross-disciplinary expertise critical to managing client assets in each class. Finally, the regional aspect of the company's model recognizes the unique, geography-specific needs of clients as well as the importance of local regulatory issues.
  10. 10. ABOUT BLACKROCK GROUP Black Rock, Inc. is a U.S. based multinational investment management corporation based in New York City. As the world's largest asset manager, Black Rock is a leading provider of investment, advisory and risk management solutions. The company acquired Barclays Global Investors in December 2009, solidifying its position as the largest investment manager in the world. As of September 30, 2012, Black Rock had $3.67 trillion in assets under management. Founded in 1988, initially as a risk management and fixed income institutional asset manager, Black Rock has evolved into the world's most respected and prudent fiduciary. According to Ralph Schlosstein, CEO of Evercore Partners, a New York-based investment bank: “Black Rock is the most influential financial institutions in the world”. BLACKROCK MUTUAL FUND Revenue US$ 9.08 billion (2011) Net income US$ 2.239 billion (2011) AUM US$ 3.792 trillion (2012) Total assets US$ 178.4 billion (2010) Total equity US$ 24.3 billion (2009) Employees 10,100 (2011)
  11. 11. MISSION DSP BLACK ROCK mission is to be a leading, global, client-focused, innovative and low-cost provider of financial services through the distribution channels of the client’s preference in markets to create value. BLACK ROCK GROUP FINANCIAL HIGHLIGHTS New York, January 19, 2012 — BlackRock, Inc. (NYSE:BLK) today reported full year diluted EPS of $12.37, up 17% from 2010. Fourth quarter 2011 net income(1) of $555 million was down 7% from third quarter 2011 and 16% from a year ago. Operating income for the fourth quarter and full year 2011 was $808 million and $3.2 billion, respectively. The full year 2011 operating margin was 35.8%. In the fourth quarter, BlackRock repurchased approximately 618,000 shares. As adjusted(2) results. Full year 2011 operating income of $3.4 billion improved $225 million, or 7%, and diluted EPS of $11.85 improved 8% compared with 2010. Fourth quarter diluted EPS was $3.06,including operating income of $3.14 per diluted share and net non- operating expense of $0.08 per diluted share. Operating margin was 39.7% for full year 2011, an improvement compared with 2010. Fourth quarter 2011 results include restructuring charges (not included in as adjusted
  12. 12. results) of $32 million related to a 3.4% reduction in the fourth quarter work force. For the full year, BlackRock continued to make investments in focus areas, which is reflected in the net addition of over 900 employees during the year. “We finished 2011 with solid annual revenue and earnings growth despite challenging market conditions, particularly in the second half of the year,” said Laurence D. Fink, Chairman and CEO of BlackRock. “Our results reinforce the underlying strength and momentum of our diversified client-focused model. Our mix of businesses, together with unparalleled risk management capabilities and a sharp focus on execution, have allowed us to deliver strong results through highly challenging market cycles. This momentum was reflected in the fourth quarter as we generated net inflows of $23.8 billion in long term net new business. In addition, with the investments made over the course of 2011, we remain well positioned to execute against key themes driving our industry in the coming years.” Assets under management (“AUM”) closed the quarter at $3.513 trillion, up 5% since third quarter-end and down 1% since year-end 2010. Results reflected strong inflows of $23.8 billion in long-term products (equity, fixed income, multiasset class and alternative investments) and a $143.3 billion improvement in market and investment performance. Total net inflows of $24.6 billion included $10.9 billion of inflows in cash management largely offset by $10.1 billion of planned distributions in our advisory business. For the year, we recorded $67.3 billion of long-term net new business, before giving effect to the final BGI merger-related outflows of $28.3 billion recorded in the first half of the year.
  13. 13. BOARD OF DIRECTORS Laurence Fink Chairman Laurence Fink CEO Robert Kapito President Kendrick R. Wilson, Vice President Philipp Hildebrand Vice President Charles Hallac Director Gary Shedlin Director Bennett W. Golub Director Robert W. Fairbairn Director
  14. 14. COMPARATIVE BUSINESS FIGURES Q4 2011 Q4 2010 % Chan ge Q3 2011 % Chan ge AUM $3,512,61 $3,560968 1% $3,345,067 5% GAAP basis: Revenue $227 $2493 11% $2,225 0% Operating income $808 $940 14% $777 4% Net income $555 $657 16% $595 7% Diluted EPS $3.05 $3.35 9% $3.23 6% CORPORATE SOCIAL RESPONSIBILITY Our Chairman, Hemendra Kothari, has always been a passionate wildlife enthusiast. His enthusiasm towards wildlife led him to set up the Wildlife Conservation Trust (WCT), a few years after he sold his financial services company to Merrill Lynch (now Bank of America). WCT is a Mumbai-based registered public charitable trust dedicated and committed to the preservation, protection and conservation of wildlife across India. WCT collaborates with NGOs and aligns itself with the government to problem-solve for the many stakeholders involved in saving India's forests and wild animals. Further, it helps fund NGOs that are actively involved in health and education initiatives around national parks and makes communities that reside in forest areas aware of the importance of India's jungles. Another important aspect of WCT's interventions are the 'WCT Wildlife Service Awards' which were introduced to motivate the forest staff along with associated agencies such as the judiciary, police department and eco-development committees who work closely with the Forest Department to curtail man-animal conflict, forest degradation and poaching. WCT has been conducting consultations and workshops on various threads of wildlife conservation involving forest officials, wildlife biologists, conservation NGOs, researchers, wild lifers, corporates, writers and film-makers. It is the organisation's belief that by working in unison, the country can help find solutions to the many problems confronting India's wildlife and forests.
  15. 15. BLACK ROCK FOUNDATION In 1988, Larry Fink and Robert S. Kapito left First Boston to found a company that would provide clients with asset management services from a risk management perspective. Initially, BlackRock was under the umbrella of The Blackstone Group and was called Blackstone Financial Management. Fink joined Blackstone in 1988 as a partner, along with Kapito, Ralph Schlosstein, Bennett Golub, Barbara Novick, Susan Wagner, Keith Anderson and Hugh Frater. Before joining Blackstone, Fink, Kapito, Golub and Novick worked together at First Boston. As Managing Director at First Boston, Fink and his team pioneered the mortgage-backed securitiesmarket in the United States. Blackstone Financial Management changed its name to BlackRock Financial Management a few years later to mitigate potential confusion with other Blackstone Group affiliates and to reduce the need for certain corporate governance restrictions that had been placed on it by The Blackstone Group. The BlackRock team spun out of Blackstone and became an independent financial services firm. Fink cut a deal with the PNC Financial Services Group when they purchased 70% of BlackRock. Subsequently, PNC contributed a number of its other asset management subsidiaries into Black Rock which then consolidated the various entities into an integrated asset management firm. In 1999, with $165 billion in assets under management, the firm went public although PNC remained its dominant shareholder. On June 17, 2002, BlackRock Virginia Municipal Bond Trust declared the Trusts' first monthly dividends, payable on July 1, 2002, for shareholders of record as of June 26, 2002. . BlackRock grew organically, through lift-outs and their first acquisition was on January 28, 2005 when they purchased State Street Research Management, a mutual-fund business that had previously been owned by MetLife. This acquisition added a sizable equity business to BlackRock's funds. On September 29, 2006, BlackRock completed its merger with Merrill Lynch Investment Managers (MLIM), halving PNC's ownership and giving Merrill Lynch a 49.5-percent stake in the company. On October 1, 2007, BlackRock acquired the fund-of- funds business of Quellos Capital Management. On April 30, 2009, BlackRock hired 43 employees from R3 Capital Management, LLC and took control of the $1.5 billion fund. BlackRock Financial Management Inc. has been retained by the New York Fed to manage and eventually liquidate the assets held in a newly formed Delaware limited liability company (LLC) to fund the purchase of residential mortgage-backed securities(RMBS) from the securities lending portfolio of several regulated U.S. insurance subsidiaries of AIG. In December 2009, the company acquired Barclays Global Investors (BGI), giving it control of the iShares system. The division formerly branded BGI is headquartered in San Francisco, and also has research and portfolio management teams in London,Sydney, Tokyo, Toronto and other cities, as well as client service offices in several additional major financial centers in North America, Europe and Asia.
  16. 16. After the close of trading, on Friday, April 1, 2011, BlackRock (NYSE:BLK) replaced Genzyme (NASDAQ:GENZ) on the S&P 500 index. In October 2012, BlackRock bought a stake in the Moscow Exchange (MICEX-RTS) from Russia's state-backed private equity fund ahead of its expected IPO. What is BLACK ROCK? Wouldn't you want to be a part of a brand that enjoys a unique, strategic positioning in the Indian and the International market? Black rock is a major global financial services company that ranks 13th in the Fortune 500 list, operating in over 50 countries with over 120000 employees worldwide. It is the only MNC bank in India with a strong established retail presence through Black rock, and is fully poised to be a part of the growth potential of the Indian Banking Industry. In India it has an established track record of over 75 years and enjoys the goodwill and loyalty of over 1.5 million customers in India. We are sure you will be excited at the prospect of being part of an organization, which has the best of both the worlds: Access to global expertise blended with a deep knowledge and understanding of the local market. Black rock is looking for top talent. But why should you choose us above other companies? The answer is one word: Diversity. No other Bank offers the diversity of growth opportunities and cultures that you'll find at DSP BLACKROCK MUTUAL FUND. Another attraction of Black rock is the opportunity for lifelong learning. We have an aggressive and fast paced career development for our employees through on the job and Leadership Programs followed by an excellent Performance Management System. Our boundary-less environment also supports "horizontal learning." Through Dsp blackrock mutual fund's professional communities and various forums, people talk to each other and share knowledge in the Bank.
  17. 17. History of Mutual Fund • The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases: • First Phase – 1964-87 • An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. • Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian Mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, Under which all mutual funds, except UTI were to be registered and governed. The Erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first Private sector mutual fund registered in July 1993.
  18. 18. • The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. • The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21, 805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. • Fourth Phase – since February 2003 • In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. • The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of October 31, 2003, there were 31 funds, which manage assets of Rs.126726 crores. One can say that the industry is moving from infancy to adolescence, the industry is maturing and the investors and funds are frankly and openly discussing difficulties opportunities and compulsions.
  19. 19. About Mutual Fund What is a mutual fund? : - A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund: As of early 2008, the worldwide value of all mutual funds totals more than $26 trillion. There are predominantly two ways in order to make investment in Mutual Fund. 1) SIP (Systematic investment plan) 2) Lump sum (One Time) SIP :- SIP allow the investor to invest in Mutual fund as a recurring basic, means they can systematically like monthly, quarterly and half yearly a certain amount of money invest in Mutual Fund. This plan option of investment basically beneficial for those employees who set their salary on monthly basis. Lump sum:- This mode of investment allow investor to invest their money at a onetime like fixed deposit in bank.
  20. 20. How funds rotate from investor to investor.
  21. 21. Entities Involved in Organizing Mutual Fund Unit Holders: - The investors who buy the unit of a mutual fund is called unit holders. Sponsors: - Person or a body who set up or form the trust. Appoints board of trustees. Qualification of AMC Custodian. Hands over trust deed to trustees. Trustees: - There can be Trustee Company. Investments are hold by the trustees.
  22. 22. Right to dismiss AMCs. Reserves fees for services. AMCs: - AMCs are the fund manager. Should have a net worth of Rs 10 Cr all the time. Most company with SEBI regulations. Mutual Fund: - A mechanism for pooling the resources by issuing units to the Investors and investing funds in securities in accordance with the Objectives disclosed in after documents. Transfer Agent: - Issue and redeem the units and other related services such as preparation of transfer documents and updating investor’s records. Distributers: - Appointed by AMC and may act on behalf of different funds. Custodians:- Appointed by board of trustees for safe keeping of securities as independent entity of sponsors investment for the common man as it after an opportunity to invest in a professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund. Mutual fund Operation Flow Chart There are many entities involved and the diagram below illustrates the organizational setup of the Mutual Fund. Unit Holder Sponsors Trustees AMC
  23. 23. Unit Holder is investors who buy the unit of a mutual fund, Sponsors is who set up or form the trust, Appoints board of trustees, Qualification of AMC Custodian, Hands over trust deed to trustees. Trustees can be Trustee Company; Investments are hold by the trustees, Right to dismiss AMCs, and Reserves fees for services. AMCs are the fund manager. It should have a net worth of Rs 10 Cr all the time. Most company with SEBI regulations. Transfer Agent issue and redeem the units and other related services such as preparation of transfer documents and updating investor’s records and Distributers appointed by AMC and may act on behalf of different funds, Custodians appointed by board of trustees for safe keeping of securities as independent entity of sponsors investment for the common man as it after an opportunity to invest in a professionally managed basket of securities at a relatively low cost. Benefits of Mutual Fund Professional Management Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. • Diversification: Mutual Funds invest in a number of companies across a broad cross- section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this SEBI The Mutual Fund Transfer Agent Custodian
  24. 24. diversification through a Mutual Fund with far less money than you can do on your own. • Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. • Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. This can be said substantially as various schemes of SBI has outperformed market in the matter of returns as they have provided returns to the tune of 100 %(SBI Magnum Contra Fund) • Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. • Liquidity: In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. • Transparency: An investor gets regular information on the value of his/her investment in addition to disclosure on the specific investments made by him/her in the scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook. • Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.
  25. 25. • Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy as all investors weather big or small will be treated equally. • Choice of Schemes: Mutual Funds offers a family of schemes to suit your varying needs over a lifetime. An investor can choose from among a number of schemes whichever suit his or her need. Drawbacks of Mutual Fund Mutual funds have their drawbacks and may not be for everyone: • No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when
  26. 26. they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. • Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. • Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. • Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers. Types of Mutual Fund Mutual fund schemes may be classified on the basis of its structure and its investment objective. By Structure: • Open-ended Funds: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. • Closed-ended Funds: A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a
  27. 27. specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. • Interval Funds: Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices. By Investment Objective: • Growth Funds: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. • Income Funds: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. • Balanced Funds: The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their Offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. • Money Market Funds: The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. • Load Funds: A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. • No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. Other Schemes:
  28. 28. • Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000. Special Schemes • Industry Specific Schemes: Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc. • Index Schemes: Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. • Sectoral Schemes: Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings. (I) Closed-end or Open-end Open-end Funds An open-end fund is one that has units available for sale and repurchase at all time. An investor can buy or redeem units from the fund itself at a price based on the Net Asset Value (NAV) per unit. Close-end Funds A close ended fund makes a one-time sale of a fixed number of unit. It does not allow investors to buy or redeem units directly from the funds. However, to provide the much- needed liquidity to investors many closed-end funds get themselves listed on stock exchange. Funds do offer “buy-back of funds/units” thus offering another avenue for liquidity to closed-end fund investor. (II) Load vs. No Load Marketing of a new mutual fund scheme involves initial expense. These expenses may be recovered from the investors in different ways at different times. Three usual ways in which a fund’s sales expenses may be recovered from the investors are: 1. At the time of investor’s entry into the fund/scheme, by deducting a specific amount from his initial contribution: front-end or entry load.
  29. 29. 2. By charging the fund/scheme with a fixed amount each year, during the stated number of years: deferred load. 3. At the time o the investor’s exit from the fund/scheme, by deducting a specific amount from the redemption proceeds payable to the investor: back end or exit load These charges made by the fund managers to the investors to cover distribution/sales/marketing expenses are often called “loads”. Funds that charge front- end, back-end or deferred loads are called load funds. Funds that make no such charges or loads for sales expenses are called no-load funds. In India, SEBI has defined a “load” as the one-time fee payable by the investor to allow the fund to meet initial issue expenses including brokers’/agents’/distributors’ commissions, advertising and marketing expenses.  A load fund’s declared NAV does not include local charges III. Tax-exempt vs. Non-Tax exempt Funds Generally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. In India, after the 1999 Union Government Budget, all of the dividend income received from any of the mutual funds is tax-free in the hands of the investors. However, funds other than Equity Funds have to pay a distribution tax, before distributing income to investors. In other words, equity mutual fund schemes are tax-exempt investment avenues, while other funds are taxable for distributable income. Mutual Fund Types Once we have reviewed the fund classes, we are ready to discuss more specific fund types. Funds are generally distinguished from each other by their investment objectives and types of securities they invest in. a. Broad Fund Types by Nature of Investments Mutual funds may invest in equities, bonds or other fixed income securities, or short-term money market securities. So we have Equity, Bonds and Money Market Funds. All of them invest in financial assets. But there are funds that invest in physical assets. For example, we may have Gold or other Precious Metal Funds, or Real Estate Funds. b. Broad Fund Types by Investment Objective Investors and hence the mutual funds pursue different objectives while investing. Thus, Growth Funds invest for medium to long term capital appreciation. Income Funds invest to generate regular income, and less for capital appreciation. Value
  30. 30. Funds invest in equities that are considered under-valued today, whose value will be unlocked in the future. c. Broad Fund Types by Risk Profile The nature of a fund’s portfolio and its investment objective imply different levels of risk undertaken. Funds are therefore often grouped in order of risk. Thus, Equity Funds have a greater risk of capital loss than a Debt Fund that seeks to protect the capital while looking for income. Money Market Funds are exposed to less risk than even the Bond Funds, since they invest in short-term fixed income securities, as compared to longer-term portfolios of Bond Funds.  Money Market Funds: Lowest rung in the order of risk level, Money Market Funds invest in securities of a short-term nature, which generally means securities of less than one-year maturity.  Gilt Funds: Gilts are government securities with medium to long-term maturities, typically of over one year (under one-year instruments being money market securities).  Debt Funds (or Income Funds): Next in the order of risk level, we have the general category Debt Funds. Debt funds invest in debt instruments issued not only by governments, but also by private companies, banks and financial institutions and other entities such as infrastructure companies/utilities. 1. Diversifies Debt Funds A debt fund that invests in all available types of debt securities, issued by entities across all industries and sectors is a properly diversified debt fund. A diversified debt fund is less risky than a narrow-focus fund that invests in debt securities of a particular sector or industry. 2. Focused Debt Funds Some debt funds have a narrow focus, with less diversification in its investment. Examples include sector, specialized and offshore debt funds. Other examples of focused funds include those that invest only in Corporate Debentures and Bonds or only in Tax Free Infrastructure or Municipal Bonds. 3. High yield Debt Funds There are funds which seek to obtain higher interest rates by investing in debt instruments that are considered “below investment grade”. e.g. Junk Bond Funds. 4. Assured Return Funds – an Indian Variant The SEBI permits only those funds whose sponsors have adequate net-worth to offer assurance of return. e.g. MIPs. Investors have some lock-in period. 5. Fixed Term Plan Series – Another Indian Variant
  31. 31. These are essentially closed-end. These plans do not generally offer guaranteed returns. This scheme is for short-term investors who otherwise place money as fixed term bank deposits or inter corporate bonds.  Equity Fund: As investors move from Debt Fund category to Equity Funds, they face increased risk level. 1. No guarantee returns 2. High potential for growth of capital Types of Equity Fund a) Aggressive Growth Fund • Maximum capital appreciation • Invests in less researched or speculative shares. • Very volatile & riskier. b) Growth Fund • Growth fund invest in companies whose earnings are expected to • Rise above average rate. e.g. Technology Fund • Capital appreciation in 3 – 5 years • Less volatile then aggressive growth fund. c) Speciality Fund They invest in companies that meet predefined criteria. i) Sector Funds • Technology Fund • Pharmaceutical Fund • FMCG Fund ii) Offshore Funds Invest in equities in one or more foreign countries. iii) Small-Cap equity Funds • Invest in shares of companies with relative lower market Capital. d) Diversified Equity Funds A fund that seeks to invest only in equities, except for a very small portion in liquid money market securities, bur is not focused on any one or few sectors or shares, may be termed a diversified equity fund. While exposed to all equity price risks, diversified equity funds seek to reduce the sector or stock specific risks through diversification.
  32. 32. i) Equity Linked Savings Schemes: An Indian Variant Investment in these schemes entitles the investor to claim an income tax rebate, but usually has a lock-in period before the end of which funds cannot be withdrawn. e) Equity Index Funds An index fund tracks the performance of a specific stock market index. The objective is to match the performance of the stock market by tracking an index that represents the overall market. • The funds invest in share that constitute the index and in the same proportion on the index. f) Value Funds Value Funds try to seek out fundamentally sound companies whose shares are currently under-prices in the market. Value Funds will add only those shares to their portfolios that are selling at low price-earnings ratios, low market to book value ratios and are undervalued by other yardsticks. • Fund concentrate on future growth prospect having good potential g) Equity Income Funds There are equity funds that can be designed to give the investor a high level of current income along with some steady capital appreciation, investing mainly in shares of companies with high dividend yields.  Hybrid Funds – Quasi Equity/Quasi Debt: Many mutual funds mix these (money market, debt and equity) different types of securities in their portfolios. Such funds are termed “hybrid funds” as they have a dual equity/bond focus.  Commodity Funds: While all of the debt/equity/money market funds invest in financial assets, the mutual fund vehicle is suited for investment in any other- for examples- physical assets.  Real Estate Funds: Specialized Real Estate Funds would invest in Real Estate directly, or may fund real estate developers, or lend to them, or buy shares of housing finance companies or may even buy their securities assets. RISK HIERARCHY OF MUTUAL FUND Gilt Funds Diversified Debt Funds Balanced Funds Equity Income Funds
  33. 33. RISK LEVEL LEGAL AND REGULATORY ENVIRONMENT REGULATORS IN INDIA • SEBI - The capital markets regulators also regulates the mutual funds in India. SEBI requires all mutual funds to be registered with them. SEBI issues guidelines for all mutual funds operations - investment, accounts, expenses etc. • RBI as supervisor of banks owned mutual funds - As banks in India came under the regulatory jurisdiction of RBI, bank owned funds to be under supervision of RBI and SEBI. • RBI as supervisor of Money Market Mutual Funds - RBI has supervisory responsibility over all entities that operate in the money markets. Hence in the past Money Market Mutual Funds scheme of Mutual funds had to be abide by policies laid down by RBI. Recently, it has been decided that Money Market Mutual Funds of registered mutual funds will be regulated by SEBI through SEBI (Mutual Fund) Regulations 1996. • Ministry of Finance - (MoF) ultimately supervises both the RBI & the SEBI and plays the role of apex authority for any major disputes over SEBI guidelines. • Company Law Board - Dept of Company Affairs - Registrar of companies AMCSs of Mutual funds are companies registered under the companies Act 1956 and therefore answerable to regulatory authorities empowered by the Companies Act. • Stock Exchanges Stock Exchanges are self-regulatory organizations supervised by SEBI. Many of closed ended funds of AMCs are listed as stock exchanges and are traded like shares • Office of the Public Trustee Mutual fund being public trust is governed by the Indian Trust Act 1882. The Board of trustees or the Trustee Company is accountable to the office of the public trustee, which in turn reports to the Charity commissioner • Unit Trust of India Money Market Funds
  34. 34. Unit Trust of India formed under UTI Act 1963.The Management of the Trust is under a Board of trustees, which has names of RBI, IDBI, LIC, SBI with the chairman appointed by the Government of India in consultation with the IDBI. • What are Self-Regulatory organizations? A Self Regulatory organization (SRO) is an association representing a group of market participants, which is empowered by the apex regulatory authority to exercise pre-defined authority over regulation of their members. For example stock exchanges. However everybody representing a group of market participants does not automatically become a SRO. • Association of Mutual funds of India (AMFI ) AMFI is not a SRO. It has been formed in 1995 with the objective of representing the Mutual fund industry collectively with a view - To promote the interests of Mutual Funds and Unit holders. - To set ethical, commercial and professional standards in the industry. - To increase public awareness of Mutual funds in the country INVESTORS RIGHT AND OBLIGATIONS • Right of “Proportionate Beneficial Ownership” • Right of timely services • Unit holders entitled to receive dividend warrants within 30 days of date of declaration Unit holders have right to payment of interest at 15% p.a. in the event of failure on the part of Mutual fund to dispatch redemption proceeds within ten working days. • The Unit holders can claim unclaimed redemption proceeds or dividends due within a period of 3 years of the due date at the prevailing NAV. After 3 years he/she will be paid at NAV applicable at the end of the third year. • For initial offers unit holders have right to expect allotment of units within 30 days from the closure of mutual offer period. • Right to information • Right to approve changes in fundamental attributes of the scheme. • Right to wind up a scheme if 75% of investors pass a resolution to that effect. • Right to terminate AMC if 75% of the unit holders decides so, of course with the prior approval of the SEBI Legal Limitation to Investors Rights • Unit Holders are not distinct from the Trust and therefore cannot sue the Trust. • Sponsors of a Mutual fund do not have any legal obligation to meet the shortfall in case the assured return is not achieved.
  35. 35. • But if the offer document has specifically provided such guarantee by a named sponsor, the investors will have the right to sue the sponsors to make good any shortfall from his returns. • Prospective investors do not enjoy any right with respect to the fund AMC or any other constituent Investor Complaints Redressal Mechanism. • SEBI entertains receipt of complaints against Mutual Funds and intervenes with Fund Management to help investor resolve his complaints. SEBI help the investors in the new scheme by requiring the sponsor to appoint a compliance Officer who certified that all relevant SEBI and other regulations have been complied with by the fund manager and sponsors. • Investors are neither shareholders in the AMC nor depositors. Hence their investments cannot be protected by any of these companies act regulators. OFFER DOCUMENT (OD) • Offer document describes a Product; it is the most important source of information for prospective investors. • AMC or the sponsor issues it. • This (OD) is the primary vehicle for the investment decision. • It is a legal document that protects and governs the right of an investor. • Key information memorandum (KIM) is the abridged version of offer document. Application forms are issued along with the KIM. • SEBI has designed standard format for issue of OD and KIM. • Offer document and the KIM is valid for two years. • ODs are to be updated, revised and printed once in every two years. • Changes made in between these two years are circulated among investors in form of addendum or some other source of communication to investors. • Changes made in the OD have to be filed with SEBI and should be made available at service centers and in the offices of distributors/brokers. • Offer documents should contain - Summary information at the cover page containing name, type of the scheme, name of AMC and the mutual fund, opening and closing date of the offer, price of units, highlights of the scheme and most importantly disclaimer clause by SEBI. - A glossary of defined terms used in the offer document. - Risk factors – standard and scheme specific - Due diligence certificate to be signed by Compliance Officer/CEO/Managing Director/Whole Time Director • The above points should be in the same sequence.
  36. 36. • Offer document contains fundamental attributes of the scheme – - Type of the scheme - Investment objective a) Investment pattern b) Investment policies - Load and expenses • Offer related information – all practical information needed by investor and agents to make the entrustment in the proposed scheme. • Condensed financial information for scheme launched during three fiscal years. • Constitution of the mutual fund. • About objective of the fund. • Activities of the sponsor. • Name and addresses of the Board of Trustees/Directors • Management of the fund • Associate Transactions and borrowing policies - In case, scheme has invested more than 25% of its net assets in group companies. a) Business given to associate brokers should be in the limit of 5% of sale and purchase made. • NAV determination, valuation and accounting policies. • Procedure for repurchases. • Tax treatment of investments made in the scheme. • Investors’ rights and services under the scheme. - Access to information on NAV computation and unit price. - Investor’s friendly services provided by the scheme and documents available for inspection by the investors. • Brief description of investor complaint history for the last three years of existing schemes and their redressal mechanism. • Any penalties pending litigation or proceedings should be mentioned in the OD to alert the investors. Portfolio Management What is Portfolio?  The set of all securities held by an investor is called his portfolio. The portfolio may contain just one security. However, since in general no one puts all one’s eggs in one basket, it will contain several securities. Such a portfolio is known as diversified portfolio can consist of any combination of shares, bonds, derivatives and such. It means the total holdings of securities belonging to any person.
  37. 37. What is Portfolio Management?  Portfolio management refers to the selection of securities and their continuous shifting in the portfolio to optimize return to suit the objective of an investor. The following three major activities are involved in an efficient portfolio management. a) Identification of assets or securities, allocation of investment and identifying asset classes. b) Deciding about major weights/proportion of different assets/securities in the portfolio. c) Security selection within the asset classes as identified earlier. What are the different alternatives of investment?  There are following alternatives available for investment:- (1) High Risk High Gain modes of investments a) Shares b) Derivatives c) Mutual fund (2) Fixed interest most secured mode of investments a) Debenture/ Bonds b) Fixed deposit c) Government instruments (PPF, Indira & Vikas Patra, National Savings Schemes) d) Life insurance Net Asset Value (NAV) Net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is the value, represented by the ownership of
  38. 38. one unit in the fund. Like a share or a stock has a market price that fluctuates everyday according to the performance of that particular scrip similarly NAV fluctuates on a daily basis. Apart from this when a new scheme is launched it is sold at an offer price of Rs.10/unit and it is listed once all the money is collected and forms are cleared. It is calculated simply by dividing the net asset value of the fund by the number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention. Calculation of NAV The most important part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The detailed methodology for the calculation of the asset value is given below. NAV = ((Current Assets – Current Liabilities) / No. Of Outstanding Units) Asset value = Sum of market value of shares/debentures + Liquid assets/cash held, if any + Dividends/interest accrued +Amount due on unpaid assets + Expenses accrued but not paid Objective The objective of the research is to study consumer perception about mutual funds as an investment option. There are basically two parts of the research: • Consumer perception about mutual fund
  39. 39. • Comparative analysis across the mutual fund sector A comparative study about the different mutual fund schemes as well as different AMCs using secondary data would reveal the strengths provide a guide to investors. Decision regarding the investment option and portfolio to be chosen can be easily made by glancing through the comparative analysis result. Users of the study • Asset management companies • Mutual fund distributors • Investors • Researchers of the Mutual fund market
  40. 40. Methodology Data collection was done using questionnaire administration methodology. A questionnaire containing both open ended and closed ended questions was designed. Sampling techniques followed was Stratified random sampling. The target respondents were people having an annual income coming from different demographic backgrounds. Respondent’s demographic background such as income, age and occupation formed an important part of the research. The response of people having no income source was ignored as their response would have been irrelevant for our study. Contact with respondent was made through e-mails, telephone and direct meetings. The list of respondents will be further skimmed for identifying leads for investing in SBI Mutual Fund. The sample size taken was 200 respondents. In our study we have used three methods of scaling, namely  Likert scale (Likert scales consist of a series of statements where the respondent provides answers in the form of agreement or disagreement.)  Semantic differential Scale (semantic differential scales are used to describe a set of beliefs that underline a person’s attitude towards an organization , product or brand There was no restriction on the geographic location of the respondents. The responses were fed into MS Excel sheet and analyzed using bar and pie charts. Wherever possible suitable co-relation between responses have been made for garnering better event – cause relationship.
  41. 41. DATA SOURCES Various sources of information can be broadly divided into two categories. (1) Primary Data: Information gathered through the questionnaire in this survey is called primary date. For collection of primary data survey method was used. It was structured questionnaire which is based on the closed ended as well as open ended questions, which are obtained through direct communication with the people & filling up of questionnaires. The questionnaire designed was to provide dual information sharing type, it is seriously under taken that anyone who is seriously under taken that anyone who is undergoing the process, should find his interest or else he might show disinterest towards the programmed. The questionnaire was equally important both to the customers as well as to the bank to drawn out its prospects. METHOD USED FOR PRIMARY DATA: * Personal interview (one to one) * Telephonic interview (Through Phone) (2) Secondary Data: The information already gathered for some other purpose and is used in the study is called secondary Data. The secondary data was collected through the * Internet * Assistant Manager of Standard chartered Bank * Journals * Newspapers * Books
  42. 42. SURVEY ON CONSUMER PERCEPTION ABOUT MUTUAL FUND Name:……………………………………………... Address:…………………………………………... …………………………………………... Occupation:……………………………………….. Ph No:................................................................. 1. To which age group do you belong? 18-35 36-50 Above 50 2. Your income group is Below 1 lakh 1-2 lakhs 2-5 lakhs 5-8 lakhs Above 8 lakhs 3. What is your occupation? Manager Doctor Engineer Govt. Employee Others (plz Specify ……………….) 4. How many dependants you have in your family? 1 2 3 4 > 4 none 5. Which you think is the most feasible option to invest your savings? Fixed deposits Mutual Fund Stock Market Real estate Insurance policies others 5. How aware are you about the stock market and its recent trends? Highly Aware Somewhat Aware Not much Aware Least Aware No idea at all 6. Have you heard about the Dsp blackrock mutual fund? Yes No 7. Do you know that BLACK ROCK is a mutual fund distributer? Yes No 8 .Which brand strikes you first as you come across the word “Mutual Fund”? SBI Dsp black rock Reliance HDFC UTI others 9 .As an investor which institution would you prefer to invest in ? SBI Dsp black rock Reliance HDFC UTI others 10. What kind of interaction from the company would you appreciate? Personal Contact Telephonic Contact Online Letters/Mails
  43. 43. 11. How do you rate Mutual Fund as an investment? Highly Safe Neither Safe Unsafe Highly Safe nor Unsafe 12. What are your reasons for mutual fund investments? Tax Exemption Long Term Gains Time Saving Ease of Investment Low Risk Involve 13. Are you aware about systematic investment planning? Yes No 14. Which mode will you prefer to invest in mutual fund? SIP Non SIP 15. Do you think is it right time to invest in mutual fund? Yes No 16. How much satisfied have you been with your mutual fund investments? Fully Satisfied Somewhat Satisfied Neutral Unsatisfied Highly Unsatisfied 17. Given a choice, whom would you prefer to manage your portfolio. A Reputed Share Broker A Reputed Fund Manager Do it on your own Take advice of acquaintances dealing in funds 18. What will be your criteria for selecting a fund? It’s Portfolio Net Asset Value Dividend Declared Growth Option 19. What would be the pulling factor for your choice? Brand Image Brand Name Past Performance Trust In the brand 20. What suggestions would you give to DSP BLACK ROCK to stand the fierce competition in the Banking industry? ................................................................................................................................................................................................................... .............................................................................
  44. 44. Finding 2. Age of respondent 3. Occupation of respondent Manager, 15% Doctor,3% Engineer,8% Govt Employee ,23% Others,51%
  45. 45. 4. Income range of respondent 4. Most feasible option to invest
  46. 46. 5. Awareness about stock market 6. Awareness about Mutual Fund
  47. 47. 7. First brand recall as related to Mutual Funds 12% 30% 22% 19% 6% 11% SBI Franklin Reliance HDFC UTI Others 8. Institution, investors prefer to invest in.
  48. 48. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% SBI Reliance Franklin HDFC UTI Others 9. Kind of interaction potential investors expect from firms personnal contact 49% telephonic contact 23% online 8% letters/mails 20% personnal contact telephonic contact online letters/mails 10. How safe is mutual fund investment?
  49. 49. 0 10 20 30 40 50 60 70 80 Highly Safe Safe Neither Safe Nor Unsafe Unsafe Highly Unsafe 12. Reason for mutual fund investment 32% 28% 4% 4% 32% tax exemption long term gains time saving ease of investment low risk involved
  50. 50. 14. Preferred fund manager 15. Criteria for selecting mutual fund 15. Your criteria for selecting a fund 24% 41% 21% 14% Share Broker Fund Manager On Own Advice From Acquaintances
  51. 51. 0 10 20 30 40 50 60 70 80 90 portfolio NAV Dividend declared Growth option 16. Pulling factor for your choice. Brand Image 12% Brand Name 26% Past Performance 25% Trust In The Brand 37% Brand Image Brand Name Past Performance Trust In the Brand
  52. 52. HDFC Mutual Fund Why HDFC Mutual Fund? HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in the country with consistent and above average fund performance across categories since its incorporation on December 10, 1999. While our past experience does make us a veteran, but when it comes to investments, we have never believed that the experience is enough. SYSTEMATIC INVESTMENT PLAN (SIP) HDFC MF SIP is similar to a Recurring Deposit. Every month on a specified date an amount you choose is invested in a mutual fund scheme of your choice. The dates currently available for SIPs are the 1st, 5th, 10th, 15th, 20th and the 25th of a month. You’ll be amazed to learn about the many benefits of investing through HDFC MF SIP. Benefit 1 Become A Disciplined Investor Being disciplined - It’s the key to investing success. With the HDFC MF Systematic Investment Plan you commit an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100 thereof*) to be invested every month in one of our schemes. Think of each SIP payment as laying a brick. One by one, you’ll see them transform into a building. You’ll see your investments accrue month after month. It’s as simple as giving at least 6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. It’s the perfect solution for irregular investors. *Minimum amounts may differ for each Scheme. Please refer to SIP Enrolment Form for details. Benefit 2 Reach Your Financial Goal Imagine you want to buy a car a year from now, but you don’t know where the down-payment will come from. HDFC MF SIP is a perfect tool for people who have a specific, future financial requirement. By investing an amount of your choice every month, you can plan for and meet financial goals, like funds for a child’s education, a marriage in the family or a comfortable postretirement life. The table below illustrates how a little every month can go a long way.
  53. 53. Monthly Savings - What your savings may generate Savings per month (for 15 years) Total amount invested (Rs. in Lacs) Rate of return 6.0% 8.0% 10.0% (rupees in lacs, 15 years later)* 5000 9.0 14.6 17.4 20.9 4000 7.2 11.7 13.9 16.7 3000 5.4 8.8 10.4 12.5 2000 3.6 5.8 7.0 8.3 1000 1.8 2.9 3.5 4.2 *Monthly instalments, compounded monthly, for a 15-year period. Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Please read Risk Factors. Benefit 3 Take Advantage of Rupee Cost Averaging Most investors want to buy stocks when the prices are low and sell them when prices are high. But timing the market is timeconsuming and risky. A more successful investment strategy is to adopt the method called Rupee Cost Averaging. To illustrate this we’ll compare investing the identical amounts through a SIP and in one lump sum. Imagine Suresh invests Rs. 1000 every month in an equity mutual fund scheme starting in January. His friend, Rajesh, invests Rs. 12000 in one lump sum in the same scheme. The following table illustrate how their respective investments would have performed from Jan to Dec:
  54. 54. Suresh’s Investment Rajesh’s Investment Month NAV Amount Units Amount Units Jan-04 9.345 1000 107.0091 12000 1284.1091 Feb-04 9.399 1000 106.3943 Mar-04 8.123 1000 123.1072 Apr-04 8.750 1000 114.2857 May-04 8.012 1000 124.8128 Jun-04 8.925 1000 112.0448 Jul-04 9.102 1000 109.8660 Aug-04 8.310 1000 120.3369 Sep-04 7.568 1000 132.1353 Oct-04 6.462 1000 154.7509 Nov-04 6.931 1000 144.2793 Dec-04 7.600 1000 131.5789 *NAV as on the 10th every month. These are assumed NAVs in a volatile market Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Rupee Cost Averaging neither ensures you profits nor protects you from making a loss in declining markets. Please read Risk Factors. As seen in the table, by investing through SIP, you end up buying more units when the price is low and fewer units when the price is high. However, over a period of time these market fluctuations are generally averaged. And the average cost of your investment is often reduced. At the end of the 12 months, Suresh has more units than Rajesh, even though they invested the same amount. That’s because the average cost of Suresh’s units is much lower than that of Rajesh. Rajesh made only one investment and that too when the per-unit price was high.Suresh’s average unit price = 12000/1480.6012 = Rs. 8.105 Rajesh’s average unit price = Rs. 9.345
  55. 55. Benefit 4 Grow Your Investment With Compounded Benefits It is far better to invest a small amount of money regularly, rather than save up to make one large investment. This is because while you are saving the lump sum, your savings may not earn much interest. With HDFC MF SIP, each amount you invest grows through compounding benefits as well. That is, the interest earned on your investment also earns interest. The following example illustrates this. Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs. 5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs. Arjun also starts working when he is 20 years old. But he doesn’t invest monthly. He gets a large bonus of Rs. 3 lakhs at 25 and decides to invest the entire amount. Both of them decide not to withdraw these investments till they turn 50. At 50, Neha’s Investments have grown to Rs. 46,68,273* whereas Arjun’s investments have grown to Rs. 36,17,084*. Neha’s small contributions to a SIP and her decision to start investing earlier than Arjun have made her wealthier by over Rs. 10 lakhs. *Figures based on 10% p.a. interest compounded monthly.
  56. 56. Disclaimer: TheThe illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Please read Risk Factors. Benefit 5 Do All This Effortlessly Investing with HDFC MF SIP is easy. Simply give us post-dated cheques or opt for an Auto Debit from your bank account for an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100 thereof*) and we’ll invest the money every month in a fund of your choice. The plans are completely flexible. You can invest for a minimum of six months, or for as long as you want. You can also decide to invest quarterly and will need to invest for a minimum of two quarters. Key Statistics As on 28 Feb 2009 Average Assets under Management : Rs. 56,864.39 crore No. of investors : 31,73,154 No. of ARN certified distributors : 33,162 To know more about our products please visit our Products section. To find out you current financial health and tips about financial planning, please visit out Calculators section. For additional information/ clarification you can email us at cliser@hdfcfundcom If you wish to speak to any of our customer service executives, you can SMS HDFCMF to 56767 or provide us with your contact & query details and we will have someone get in touch with you.
  57. 57. HDFC Asset Management Company Limited HDFC Asset Management Company Limited (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the Mutual Fund by SEBI on June 30, 2000. The sponsor HDFC was incorporated in 1977 as first specialized housing finance institution in India. HDFC provides financial assistance to individuals, corporate and developers for the purchase and construction of residential housing. It also provides property-related services, training and consultancy. In the mutual fund venture, HDFC has tied up with Standard Life, one of the leading Insurance companies in the United Kingdom, having vast experience in management of funds. HDFC has developed a strong and dedicated team of agents that market its fixed deposit products. These key partners would constitute the backbone of the marketing and distribution network of Mutual Fund and will remain a central theme of the organizational framework in times to come. Corpus under management: Rs.22538.6675 Crs. as on Apr 30, 2006.
  58. 58. Top 10 Funds in Each Category Rank Scheme Name Date NAV (Rs.) Last 6 Months % 1 Taurus Infrastructure Fund - Growth May 22 , 2009 10.28 90.3704 2 DSP BlackRock World Gold Fund - Growth May 22 , 2009 13.2308 87.1612 3 Principal Junior Cap Fund - Growth May 22 , 2009 14.11 85.1706 4 Junior BeES May 22 , 2009 72.3952 83.7847 5 Principal Emerging Blue-chip Fund - Growth May 22 , 2009 18.42 83.2836 6 JM Mid Cap Fund - Growth May 22 , 2009 18.7361 81.5127 7 JM Multi Strategy Fund - Growth May 22 , 2009 11.9862 75.2394 8 SBI Magnum Midcap Fund - Growth May 22 , 2009 16.93 75.0776 9 DBS Chola Opportunities Fund - Cumulative May 22 , 2009 31.6 74.9723 10 SBI Magnum Sector Umbrella - Emerging Businesses Fund - Growth May 22 , 2009 23.98 74.654
  59. 59. TOP 10 OPEN ENDED FUNDS - PERIOD (LAST 3 MONTHS) Rank Scheme Name Date NAV (Rs.) Last 3 Months % 1 Taurus Infrastructure Fund - Growth May 22 , 2009 10.28 98.4556 2 JM Basic Fund - Growth May 22 , 2009 15.2392 96.9831 3 JM Emerging Leaders Fund - Growth May 22 , 2009 5.7689 88.0407 4 SBI Magnum Midcap Fund - Growth May 22 , 2009 16.93 86.2486 5 Principal Junior Cap Fund - Growth May 22 , 2009 14.11 84.6859 6 SBI Magnum Sector Umbrella - Emerging Businesses Fund - Growth May 22 , 2009 23.98 84.4615 7 Sahara Banking and Financial Services Fund - Growth May 22 , 2009 17.9347 83.5127 8 JM Mid Cap Fund - Growth May 22 , 2009 18.7361 79.2945 9 Bank BeES May 22 , 2009 705.7994 78.5398 10 Reliance Banking Exchange Traded Fund May 22 , 2009 710.0949 78.4059
  60. 60. TOP 10 CLOSE ENDED FUNDS - PERIOD (LAST 3 MONTHS) Rank Scheme Name Date NAV (Rs.) Last 3 Months % 1 ING C.U.B. Fund - Growth May 22 , 2009 10.84 70.9779 2 Principal PNB Long Term Equity Fund - 3 Year Plan - Series I - Growth May 22 , 2009 7.42 65.9955 3 Principal PNB Long Term Equity Fund - 3 Year Plan - Series II - Growth May 22 , 2009 6.85 64.6635 4 Franklin India Smaller Companies Fund - Growth May 22 , 2009 8.9708 64.3455 5 SBI Infrastructure Fund - Series I - Growth May 22 , 2009 8.54 62.9771 6 Sundaram BNP Paribas Select Small Cap Fund - Growth May 22 , 2009 7.557 62.2614 7 HDFC Infrastructure Fund - Growth May 22 , 2009 8.081 61.62 8 JM Equity Tax Saver Fund - Series I - Growth May 22 , 2009 6.097 60.3841 9 Sundaram BNP Paribas Select Thematic Funds Energy Opportunities - Growth May 22 , 2009 6.8904 59.0068 10 Birla Sun Life Long Term Advantage Fund - Series 1 - Growth May 22 , 2009 7.2973 58.3615
  61. 61. Limitation 1) Limited Database: - I can only call to those people who have sufficient fund to invest, but most of the people have not such amount of fund to invest in Mutual fund. 2) Awareness: - Awareness of the people about Mutual Fund, they believe in traditional fund like RD (Recurring Deposit), FD (Fixed Deposit) and many government securities they are not going to believe in Mutual Fund because they worry about their principal money. 3) Area Limitation: - I can only visit local area (Patna). 4) Time Limitation:- I can work only office hour, because in mutual fund investor are very crossly related to time. 5) Recession:- In this period most the investor are not welling to invest in mutual fund 6) Insufficient Documents:- In mutual fund only those investor can invest who have PAN card, Bank Account
  62. 62. Finding  I found the work environment in Dsp blackrock mutual fund (Patna Branch) is very conducive; all the staffs are very cooperative to each other.  Now a day’s BLACK ROCK is going to very popular AMC in Patna by dint of their services and the customers are very happy with their service . The staffs of BLACK ROCK are too enthusiastic and happy about their work.  Awareness of the people about Mutual Fund, they believe in traditional fund like RD (Recurring Deposit), FD (Fixed Deposit) and many government securities they are not going to believe in Mutual Fund because they worry about their principal money. In this period most the investor are not willing to invest in mutual fund.
  63. 63. Suggestion The main suggestions inferred from the finding are as follows:-  The DSP group should focus on advertisement through various medium.  The DSP group should increase the number of branches in the region to compete with others.  The DSP group should introduce credit card service in the branch which has a good demand in the market.  The DSP group should make the process smooth.  DSP group must pay attention toward small customers also.  The DSP group should design its product as per the need of middle & small businessman.  DSP group should motivate its salesman on time.  The sales of marketing department should be improved.
  64. 64. Bibliography Web Site:- www.mutualfundsindia.com www.google.co.in www.amfindia.com www.blackrock.com www.indiainfoline.com News papers:- Business Standard Economics Times Journal & Magazine:- India Today Business & Economy Business world Business Today Books:- Marketing Research (GC Beri) Marketing Management (ICFAI University)