A project report on a mutual fund concept at birla sun life insurence

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A project report on a mutual fund concept at birla sun life insurence

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A project report on a mutual fund concept at birla sun life insurence

  1. 1. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYObjectives and Research MethodologyObjective 1. To understand the behavior pattern of business class with respect to investments. 2. To test the awareness of various investment products among the business class. 3. Build relations with the newly interested business classResearch Methodology: Conclusive research The research undertaken was conclusive research as the data needswere clear. The research was conducted to study about the investment pattern of businesspeople.Sampling processPopulation:- Element: The research was restricted to business people. Extent: Bhosari Industrial Area, PuneSample size: The total sample size consists of 100 business people.Sampling method:-Non probability:- The business people were selected on the basis of convenience. Babasabpatilfreepptmba.com
  2. 2. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYData Collection:-For the research purpose the data is collected in the form of Primary data and Secondarydata.  Primary data is collected in the form of Structured Questionnaire.  Secondary data is collected from various Boucher’s, Books, Magazines and Web sites. Primary Data:- Primary data is collected through direct interviews and telephonicinterviews. The data is collected from the business person through questionnaireswhich was prepared depending upon the need of study. A structuredquestionnaire was prepared to collect the dataSecondary Data:- The source of secondary data were published Journals, magazines, likeinvestime and web sites,www.amfi.comwww.indiainfolin.comwww.birlasunlife.comwww.mutualfundindia.comwww.valuereserchonline.com Babasabpatilfreepptmba.com
  3. 3. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYLimitations:-  Sample size is very small as compared to the total population.  Most of the business people don’t five out the exact invest figures their assets and their finical planning  The method which is applied for the data collection may not be right  Lack of knowledge in the survey sample about the mutual funds.  The result obtained from the sample may not be the result of the whole population. Babasabpatilfreepptmba.com
  4. 4. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYIntroduction to Mutual Funds A mutual fund is the ideal investment vehicle for today’s complex & modernfinancial scenario. Markets for enquiry shares bonds and other fixed income instruments,real estate, derivatives and other assets have become mature and information driven.Price changes in these assets are driven by global events occurring in faraway places. Atypical individual is unlikely to have the knowledge, skills, inclination and time to keeptrack of events, understand their implications and act speedily. An individual also finds itdifficult to keep track of ownership of this assets, investments, brokerage dues & banktransactions etc. A mutual fund is the answer to all these situations. It appoints professionallyqualified and experienced staff that manages each of these functions on a full time bases.The large pool of money collected in the fund allows it to hire such staff at a very; lowcost to each investor. In effect the mutual fund vehicle exploits economies of scale in allthree areas – research, investments, transaction processing. While the concept ofindividual coming together to invest the money collectively is not new, the mutual fundin its present form is a 20 th century phenomenon. In fact mutual funds gained popularityonly after the Second World War. Globally there are thousands of firms offering tens ofthousands of mutual funds with different investment objectives. Today mutual fundscollectively manage almost as much as or more money as compared to banks.To get a better understanding of mutual funds it is necessary to know the industry indetail. In the following sections a detailed descriptions of the mutual funds industry willbe discussed. Babasabpatilfreepptmba.com
  5. 5. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYConcept of a mutual fund A mutual fund is a common pool of money into which investors place theircontributions that are to be invested with a stated objective. The ownership of the fund isthus joint or mutual and the fund belongs to all investors. A single investors ownership ofthe fund is in the same ratio as the amount of contribution made by him or bears to thetotal amount of the fund.Meaning of Mutual Fund Mutual Funds are investment products that operate on the principles of ‘Strengthin Numbers’. They collect money from a large group of investors, pool it together, andinvest it in various securities in line with their objective. They are an alternative toinvesting directly. A more convenient alternative yet no less rewarding. Take stocks,trading into the market by yourself would mean knowing at the very least, how to analyzeand track companies, the way of the market and the intermediaries who will help you buyand sell shares. A mutual fund that invests in stocks relieves you of all such hassles,while giving you the same investment option for individual’s handicapped by a lack ofinvesting acumen or time, or generally disciplined to take charge of their personalfinances.Mutual funds are not magic investment vehicles that do it all you’ll have to come to termswith the fact that they assure neither returns nor the value of yours original investment.You’ll have to accept the reality that even they, who are supposedly experts ininvestments matter, can go wrong. These are inherent risks, but these can be managed.Mutual funds offer several advantages that make them a powerful and convenient wealthcreation vehicle worthy of yours consideration Babasabpatilfreepptmba.com
  6. 6. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYCharacteristics of a Mutual Fund  A Mutual fund actually belongs to the investors who have pooled their funds. The ownership of the mutual funds is in the hands of the investors.  In case of mutual fund the contributors and the beneficiaries of the funds are the same class of people namely the investors.  Investment professionals manage a mutual fund and other service providers, who earn a fee for their services provided, from the fund.  The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day.The investor’s share in the fund is denominated by “UNITS”. The value of the unitschanges with the change in the portfolio’s value, everyday. The value of one unit ofinvestment is called as the net asset value or NAVHOW ARE THE MUTUAL FUNDS STRUCTURED?Mutual funds can be structured in the following ways: • Company form, in which investors hold shares of the mutual fund. In this structure, management of the fund is in the hands of an elected board, which in turn appoints investment managers to manage the fund. • Trust form, in which the funds of the investors are held by a trust, on behalf of the investors. The trust appoints investment managers and monitors their functioning in the interest of investors. Babasabpatilfreepptmba.com
  7. 7. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY The company form of organization is very popular in the United States. In India, mutual funds are organized as trusts. The trust is created by sponsor, who is the actually the entity interested in creating the mutual fund business. The trust is either managed by a Board of trustees, or by a trustee company, formed for this purpose. The investor’s funds are held by the trust.Types of Mutual FundsOpen-End Funds An open-ended fund is one that has unit’s available foe sale and repurchase at alltimes. An investor can buy or redeem units from the fund itself at a price based on theNet Asset Value (NAV) per unit. NAV per unit is obtained by dividing the amount of themarket value of the fund’s assets by the number of units outstanding. The number ofoutstanding goes up or down every time the fund issues new units or repurchase existingunits.Closed-End Funds Unlike an open-end fund, the ‘unit capital ‘of a closed-ended fund is fixed, as itmakes a one-time sale of a fixed number of units. Closed-ended funds do not allowinvestors but or redeem units directly from the funds. However, to provide the much-needed liquidity to investors, any closed-end funds get themselves listed on stockexchanges. Trading through a stock exchange enables investors to buy or sell units of aclosed-end mutual fund from each other.Load and No-Load Funds Babasabpatilfreepptmba.com
  8. 8. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Marketing of a new mutual fund scheme involves initial expenses. These expensesmay be recovered from the investors in different ways at different times. Three usualways in which a funds sales expenses may recover from the investors are: 1. At the time of investors entry into the fund/scheme, by deducting a specific amount from his Initial contribution, or 2. By charging the fund/scheme with a fixed amount each year, during the stated number of years, or 3. At the time of the investors exit from the fund/scheme, by deducting a specified amount from the redemption proceeds payable to the investor.These charges made by the fund managers to the investors to coverdistribution/sales/marketing expenses often called "loads". The load charged to theinvestor at the time of his entry into a scheme is called “front-end or entry load". Theload amount charged to the scheme over period of time is called a deferred load. The loadthat the investor pays at the time his exit is called a "back-end or exit load".Some funds may also charge different amounts of loads to the investors, depending uponhow many years the investor is stayed with the fund; the longer the investor stays withthe fund, less the amount of” exit load" he charged. This is called “contingent deferredsales charge".Funds that charge front-end, back-end or deferred loads are called load funds. Funds thatmake no such charges or loads for sales expenses are called no-load funds.A load funds declared NAV does not include the loads. Hence, a new investor must addany front-end load amount per unit the NAV per unit to calculate his purchase price. Anoutgoing investor needs to deduct the amount of any back-end load per unit from his saleprice per unit to get to know the net sale proceeds he would receive. Babasabpatilfreepptmba.com
  9. 9. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYTax Exempt and Non-Tax Exempt FundsGenerally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. Inthe U.S.A, For example, municipal bonds pay interest that is tax-free, while interest oncorporate and other bonds is taxable. In India, after the 1999 Union Government Budget,all of the dividend income received from many of the Mutual funds is tax-free in thehands of the investor.However, funds other than Equity Funds have to pay a distribution tax, beforedistributing income to investors. In other words, equity mutual fund schemes are tax-exempt investment avenues, while other funds are taxable for distributable income.While Indian Mutual funds currently offer tax-free income, any capital gains arising outof sale of fund nits are taxable. All these tax considerations are important in the decisionon where to invest as the tax exemptions or concessions alter returns obtained from theseinvestments. Hence, classification Of Mutual funds from the taxability perspective hasgreat significance for investors.Broad Fund types by Nature of Investments Mutual funds may invest in equities, bonds or other fixed income securities, orshort-term money market securities. So we have Equity, Bond 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 Metals Funds, or Real Estate Funds.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 Fundsinvest to generate regular income, and less for capital appreciation. Value Funds invest Babasabpatilfreepptmba.com
  10. 10. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYin equities that are considered under-valued today, whose value will be unlocked in thefuture.Broad Fund Types by Risk Profile The nature of a funds portfolio and its investment objective imply different levelsof risk undertaken. Funds are therefore often grouped in order of risk. Thus, Equity fundshave a greater risk of capital loss than a Debt Fund that seeks to protect the capital whilelooking for income. Money Market Funds are exposed to less risk than even the BondFunds, since they invest in short-term fixed income securities, as compared to longer-term portfolios of Bond Funds.Money Market Funds Often considered the lowest rung order of risk level, Money Market Fundsinvest in securities of a short-term nature, which generally means securities of less thanone-year maturity. The typical, short-term interest-bearing instruments these fundsinvest in include Treasury Bills issued by governments. Certificates of Deposit issuedby banks and Commercial Paper issued by companies. In India Money market Mutualfunds also invest in the inter-bank call money market. The major strengths of moneymarket funds are the liquidity and safety or principal that investors can normally expectfrom short-term investments. Babasabpatilfreepptmba.com
  11. 11. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYGilt Funds Gilts are government securities with medium to long-term maturities, typically ofover one year (under one-year instruments being money market securities). In India wehave now seen the emergence of Government Securities or Gilt Funds that invest ingovernment paper called dated securities (unlike Treasury Bills that mature less Thesefunds have little risk of default and hence offer better protection of principal.However, investors have to recognize the potential changes in values of debt securitiesheld by the funds that are caused by changes in the market price of debt securitiesquoted on the stock exchanges (Just like the equities).Debt securities prices fall wheninterest rate levels increase (and vice versa).Debt Funds (or Income Funds) Next in the order of risk level, we have the general category Debt Funds. Debtfunds invest in debt instruments issued not only by governments, but also by privatecompanies, banks and financial institutions and other entities such as infrastructurecompanies/utilities.By investing in debt, these funds target low risk and stable income for the investor astheir key objectives. However, as compared to the money market funds, they do have ahigher price fluctuation risk, since they invest longer-term securities. Similarlycompared to Gilt Funds, general debt funds do have a higher risk of default by theirborrowers.Debt Funds are largely considered as Income Funds as they do not target capital Babasabpatilfreepptmba.com
  12. 12. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYappreciation, look for high current income, and therefore distribute a substantial part oftheir surplus to investors. Income funds that target returns substantially above marketlevels can face more risks. The Income Funds fall largely in the category of Debt Fundsas they invest primarily in fixed income generating debt instruments. Again, differentinvestment objectives set by the fund managers would result in different risk profiles.Diversified Debt Funds A debt fund that invests in all available types of debt securities, issued by entitiesacross all industries and sectors is a properly diversified debt fund.While debt funds offer high income and less risk than equity funds, investors need torecognize that debt securities are subject to risk of default by the issuer on payment ofinterest or principal.A diversified debt fund has the benefit of risk reduction through diversification andsharing of any default-related losses by a large number of investors. Hence a diversifieddebt fund is less risky than a narrow-focus fund that invests in debt securities of aparticular sector or industry.Focused Debt FundsSome debt funds have a narrower focus, with less diversification in its investments.Examples include sector, specialized and offshore debt funds.These funds are similar to the funds described later in the equity category except thatdebt funds have a substantial part of their portfolio invested in debt instruments and aretherefore more income oriented and inherently less risky than equity funds. Howeverthe Indian financial markets have demonstrated that debt funds should not beautomatically considered to be less risky than equity funds, as there have beenrelatively large default by issuers of debt and many funds have non-performing assetsin their debt portfolios. It should also be recognized that market values of debtsecurities will also fluctuate more as Indian debt markets witness more trading and Babasabpatilfreepptmba.com
  13. 13. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYinterest rate volatility in the future.High Yield Debt FundsUsually, Debt Funds control the borrower default risk by investing in securities issued byborrowers who are rated by credit rating agencies and are considered to be of"investment grade". There are High Yield Debt Fund that seek to obtain higher returns byinvesting in debt instruments that are considered "below investment grade”.’ Clearly,these funds are exposed to higher risk.In U.S.A., funds that invest in debt instruments that are not backed by tangible assets andrated below investment grade (popularly known as junk bonds) are called Junk BondFunds. These funds tend to be more volatile than other debt funds, although they mayearn higher returns as a result of the higher risks taken.Assured Return FundsFundamentally, mutual funds hold assets in trust for investors. All returns and risks arefor account of the investor. The role of the fund Manager is to provide the professionalmanagement service and to ensure the highest possible return consistent with theinvestment objective of the fund. Assured return debt fund certainly reduce the risk level. Babasabpatilfreepptmba.com
  14. 14. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYFixed Term PlansFixed Term Plans are closed-end, but usually for shorter term-less than a year. Being ofshort duration, they are not listed on a stock exchange.As investors move from Debt Fund category to Equity Funds they face increased risklevel.However, there is a large variety of Equity Funds and all of them are not equally risk-prone. Investors and their advisors need to sort out and select the right equity fund thatsuits their risk appetiteEquity funds invest a major portion of their corpus in equity shares issued by companies,acquired directly in initial public offerings or through the secondary market. Equity fundswould be exposed to the equity price fluctuation risk at the market level at the industry orsector level and at the company-specific level. Equity Funds Net Asset Values fluctuatewith all these price movements. These prices are caused by all kinds of external factors,political and social as well as economic. Hence, Equity Funds are generally considered atthe higher end of the risk spectrum among all funds available in the market. Equity fundsadopt different investment strategic resulting in different levels of risk. Hence, they aregenerally separated into different types in terms of their investment styles. Some of themajor types of equity funds, arranged in order of higher to lower risk level.Aggressive Growth FundsThere are many types of stocks/shares available in the market; Blue Chips that arerecognized market leaders, less researched stocks that are considered to have futuregrowth potential, and even some speculative stocks of somewhat unknown or unprovenissuers. Fund managers seek out and invest in different types of stocks in line with theirown perception of potential returns and appetite for risk. Babasabpatilfreepptmba.com
  15. 15. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYAggressive growth funds target maximum capital appreciation, invest in less researchedor speculative shares and may adopt speculative investment strategies to attain theirobjective of high returns for the investor. Consequently, they tend to be more volatile andriskier than other funds.Growth FundsThese funds invest in companies whose earnings are expected to rise at an above averagerate. These companies may be operating in sectors like technology considered having agrowth potential, but not entirely unproven and speculative. The primary objective ofGrowth Funds is capital appreciation over a three to five year span. Growth funds aretherefore less volatile than funds that target aggressive growth.Specialty FundsThese funds have a narrow portfolio orientation and invest in only companies that meetpre-defined criteria. For example, at the height of the South African apartheid regime,many funds in the U.S. offered plans that promised not to invest in South Africancompanies. Some funds may build portfolios that will exclude Tobacco companies.Funds that invest in particular regions such as the Middle East or the ASEAN countriesare also an example of specialty funds. Within the Specialty Funds category, some fundsmay be broad-based in terms of the types of investments in the portfolio. However, mostspecialty funds tend to be concentrated funds, since diversification is limited to one typeof investment. Clearly, concentrated specialty funds tend to be more volatile thandiversified funds. Babasabpatilfreepptmba.com
  16. 16. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYSector FundsSector funds portfolios consist of investments in only one industry or sector of themarket such as Information on Technology, Pharmaceuticals or Fast Moving ConsumerGoods that have recently been launched in India. Since sector funds do not diversify intomultiple se Offshore Funds.Offshore FundsThese funds invest in equities in one or more foreign countries thereby achievingdiversification across the countrys borders. However they also have additional risks -such as the foreign exchange rate risk - and their performance depends on the economicconditions of the countries they invest in. Offshore Equity Funds may invest in a singlecountry (hence riskier) or many countries (hence more diversified).Small Cap Equity FundsThese funds invest in shares of companies with relatively lower market capitalizationthan that of big, blue chip companies. They may thus be more volatile than other funds,as smaller companies shares are not very liquid in the markets. In terms of riskcharacteristics, small company funds may be aggressive-growth or just growth type. Babasabpatilfreepptmba.com
  17. 17. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYOption Income FundsOption Income Funds write options on a significant part of their portfolio. While optionsare viewed as risky instruments, they may actually help to control volatility, if properlyused. Conservative option funds invest in large, dividend paying companies, and then selloptions against their stock positions. This ensures a stable Income stream in the form ofpremium income through selling options and dividends.Diversified Equity FundsA fund that seeks to invest only in equities except for a very small portion in liquidmoney market securities, but is not focused on any one or few sectors or shares, may betermed a diversified equity funds seek to reduce the sector or stock specific risks throughdiversification. They have mainly market risk exposure. Diversified funds arc clearly atthe lower risk level than growth fundsEquity Linked Saving Schemes: An Indian VariantIn India, the investors have been given tax concessions to encourage them to invest inequity markets through these special schemes. Investment in these schemes entitles theinvestor to claim an income tax rebate, but usually has a lock-in period before the end ofwhich funds cannot be withdrawn. These funds are subject to the general SEBIinvestment guidelines for all equity funds, and would be in the Diversified Equity Fundcategory. However, as there are no specific restrictions on which sectors these fundsought to invest in, investors should clearly look for where the Fund ManagementCompany proposes to invest and accordingly judge the level of risk involved. Babasabpatilfreepptmba.com
  18. 18. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYEquity Index FundsAn index fund tracks the performance of a specific stock market index. The objective isto match the performance of the stock market by tracking an index that represents theoverall market. The fund invests in shares that constitute the index and in the sameproportion as the index. Since they generally invest in a diversified market indexportfolio, these funds take only the overall market risk, while reducing the sector andstock specific risks through diversification.Value FundsValue Funds try to seek out fundamentally sound companies whose shares arc currentlyunder-priced in the market. Value Funds will add only those shares to their portfolios thatare selling at low price-earnings ratios, low market to book value ratios and areundervalued by other yardsticks.Value funds have the equity market price fluctuation risks, but stand often at a lower endof the risk spectrum in comparison with the Growth Funds. Value Stocks may be from alarge number of sectors and therefore diversified.Equity Income fundsUsually income funds are in the Debt Funds category, as they target fixed incomeinvestments. However, there are equity funds that can be designed to give the investor ahigh level of current income along with some steady capital appreciation, investingmainly in shares of companies with high dividend yields. Babasabpatilfreepptmba.com
  19. 19. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYHybrid Funds – Quasi Equity/Quasi DebtMoney market holdings will constitute a lower proportion in the overall portfolios of debtor equity funds. There are funds that, however, seek to hold a relatively balanced holdingof debt and equity securities in their portfolio. Such funds are termed "hybrid funds" asthey have a dual equity/bond focus.Balanced FundA balanced fund is one that has a portfolio comprising debt instruments, convertiblesecurities, and Preference equity shares. Their assets are generally held in more or lessequal proportions between debt/money market securities and equities. By investing in amix of this nature, balanced funds seek to attain the objectives of income, moderatecapital appreciation and preservation of capital, and are ideal for investors with aconservative and long-term orientation.Growth-and-Income FundsUnlike income-focused or growth-focused funds, these funds seek to strike a balancebetween capital appreciation and income for the investor. Their portfolios are a mixbetween companies with good dividend paying records and those with potential forcapital appreciation. These funds would be less risky than pure growth funds, thoughmore risky than income fund. Babasabpatilfreepptmba.com
  20. 20. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYCommodity FundsCommodity funds specialize in investing in different commodities directly or throughshares of commodity companies or through commodity future contracts. Specializedfunds may invest in a single commodity or a commodity group such as edible oils orgrains, while diversified commodity funds will spread their assets over manycommodities.Real Estate FundsSpecialized Real Estate Funds would invest in Real Estate directly, or may fund realestate developers, or lend to them, or buy shares of housing finance companies or mayeven buy their securities assets.The funds may have a growth orientation or seek to give investors regular income. Therehas recently been an initiative to offer such an income fund by the HDFC.TYPES OF MUTUAL FUND:-MUTUALFUND WHO Objective Investment Risk IdealTYPE SHOULD portfolio investment INVESTDiversified equity Moderate and High growth Equity shares High 1-3yearsfunds aggressive investorsSector fund Aggressive High growth Equity shares Very high 1-3years investorsIndex fund Moderate To generate Portfolio like Returns of 1-3years investors returns which BSE. Sensex, NAV, very are similar to Nifty,etc with index the returns of performance the respective index Babasabpatilfreepptmba.com
  21. 21. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYEquity linked Moderate and Long-term Equity shares High 1-3yearssaving aggressive growth withscheme(ELSS) investors tax savingBalance fund Moderate and Growth and Balance ratio of Capital Over 2 aggressive regular equity and debt market risk years investors income fund to ensure and interest higher returns at rate risk lower riskBond funds Salaried and Regular Predominantly Credit risk Over conservative income debenture and interest 9-12months investors government rate risk securities, corporate bondsGilt fund Salaried and Security and Government Interest rate Over 12 conservative income securities risk months investorsShort-term funds Investors with Liquidity and Call money Linked 3weeks surplus short- moderate commercial interest rate 3months term fund income papers, treasury risk bill short-term G-secsLiquidity funds Investors who Liquidity Treasury bills, Negligible 2days park their +moderate certificate of Risk 3weeks fund in income deposits , current preservation commercial account or of capital papers, short term securities call bank fixed money deposits Babasabpatilfreepptmba.com
  22. 22. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYBenefits of Mutual Fund Portfolio DiversificationReturn on investment from just one industry or sector are subject to how well or poorlythe industry fares. But with mutual fund one’s money is invested across different sector.This reduces the risk of low returns on investments, because rarely do different sectorsdecline at the same time. Professional ManagementA mutual fund draws on the professional expertise of a team of research analysts andfund managers in investing one’s saving in a number of securities. Reduction of Transaction CostsThe purchase or sale of financial assets through the exchanges entails a certain proportionof changes known as transaction made. Investments through mutual fund reduce thesecosts considerably as they enjoy the benefits of economies of scale. LiquidityIf one invests in an open-ended mutual fund, one can claim the money at net asset valuerelated prices from the mutual fund itself. Babasabpatilfreepptmba.com
  23. 23. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Convenience and FlexibilityOne has access to up-to-date information on the value of the investment in addition to theinvestments that have been made by the scheme, the proportion allocated to differentassets and the fund manager’s investment strategy. Return PotentialInvesting in a Mutual Fund reduces paperwork and helps to avoid many problems such asbad deliveries, delayed payments and follow up with brokers and companies. MutualFunds save time and make investing easy and convenient. TransparencyThrough features such as regular investment plans, regular withdrawal plans and dividendreinvestment plans, one can systematically invest or withdraw funds according to onceneeds and convenience. AffordabilityInvestors individually may lack sufficient funds to invest in high-grade stocks. A mutualfund because of its large corpus allows even a small investor to take the benefit of itsinvestment strategy. Babasabpatilfreepptmba.com
  24. 24. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Well RegulatedAll Mutual Funds are registered with SEBI and they function within the provisions ofstrict regulations designed to protect the interests of investors. The operations of MutualFunds are regularly monitored by SEBI.Mutual Fund Industry-A ProfileOrigin of Mutual Funds The Mutual Fund industry traces its roots to England in the mid – 1800’s. Theenactment of two British laws, the joint stock companies Acts of 1862 and 1867,permitted investors, for the first time to share in the profits of an investments enterprise,and limited investor liability to the amount of investment capital devoted to theenterprise. Shortly thereafter, in 1868, the Foreign and Colonial Government Trustformed in London. This trust resembled a mutual fund in basic structure, providing “theinvestor of moderate means the same advantage as the large capitalists… by spreadingthe investment over a number of different stocks.”This concept of offering the investment potential of financial markets to all individualsspawned additional “investment companies” in Britain and Scotland and among otherthings helped finance the development of the post-civil was US economy. Most of theearly British investment companies or trusts resembled today’s closed-end funds byissuing a fixed number of shares to groups of investors whose “pooled” assets wereinvested in various companies. The Scottish American Investment Trust, formed on Babasabpatilfreepptmba.com
  25. 25. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYFebruary 1, 1873 by fund pioneer Robert Fleming, was significant because it invested inthe economic potential of the United States Chiefly through American railroad bonds.Many other trusts followed that not only target investment in America, but moreimportantly led to the introduction of investment fund concept on U. S shares in the late1800’s and early 1900’s.History of the Indian Mutual Fund Industry The mutual fund industry in India started in 1963 with the formation of Unit Trustof India, at the initiative of the Government of India and Reserve Bank the. The history ofmutual funds in India can be broadly divided into four distinct phases--------------------------------------------------------------------------------First Phase – 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set upby the Reserve Bank of India and functioned under the Regulatory and administrativecontrol of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and theIndustrial Development Bank of India (IDBI) took over the regulatory and administrativecontrol in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At theend 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 sectorbanks and Life Insurance Corporation of India (LIC) and General Insurance Corporationof India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June Babasabpatilfreepptmba.com
  26. 26. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of BarodaMutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had setup its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004crores.Third Phase – 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was theyear in which the first Mutual Fund Regulations came into being, under which all mutualfunds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer(now merged with Franklin Templeton) was the first private sector mutual fund registeredin July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensiveand revised Mutual Fund Regulations in 1996. The industry now functions under theSEBI (Mutual Fund) Regulations 1996.The number of mutual fund houses went on increasing, with many foreign mutual fundssetting up funds in India and also the industry has witnessed several mergers andacquisitions. As at the end of January 2003, there were 33 mutual funds with total assetsof Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets undermanagement 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 Trustof 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 otherschemes. The Specified Undertaking of Unit Trust of India, functioning under an Babasabpatilfreepptmba.com
  27. 27. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYadministrator and under the rules framed by Government of India and does not comeunder the purview of the Mutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. With thebifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores ofassets under management and with the setting up of a UTI Mutual Fund, conforming tothe SEBI Mutual Fund Regulations, and with recent mergers taking place amongdifferent private sector funds, the mutual fund industry has entered its current phase ofconsolidation and growth. As at the end of September, 2004, there were 29 funds, whichmanage assets of Rs.153108 crores under 421 schemes.The graph indicates the growth of assets over the yearsGROWTH IN ASSETS UNDER MANAGEMENT Babasabpatilfreepptmba.com
  28. 28. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Growth of MF 250000 200000 150000 Rs. in Crores 100000 Rs. In Crore 50000 0 Mar- Mar- Mar- Mar- Mar- Mar- Mar- 65 87 93 03 04 05 06 YearLIST OF MUTUAL FUNDS IN INDIAMutual Fund Sponsors Year of EntryBank sponsoredBOB Asset Management Co. Ltd Bank of Baroda 1992Can Bank Investment Management Canara Bank 1987Services Ltd.,S.B.I. Funds Management Ltd., State Bank of India 1987UTI Asset Management Co., Pvt. SBI, PNB, BOB, LIC 1963Ltd., InstitutionsG.I.C. Asset Management Co. Ltd., General Insurance 1990 Corporation & other 4 PSU GICJeevan Bhima Sahyoga Asset LIC 1989Management Co. Ltd., Private Sectors Babasabpatilfreepptmba.com
  29. 29. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYBenchmark Asset Management Co. NICHE Financial 2001Pvt. Ltd., ServicesChola Mandalam Asset Chola Mandalam 1997Management Co. Ltd., InvestmentsEscorts Asset Management Ltd., Escorts Finance 1996J. M. Capital Management Pvt. J.M. Shares and Stock 1994Ltd., BrokersKotak Mahindra Asset Management Kotak Mahindra Bank 1998Co. Ltd.,Reliance Capital Asset Reliance Capital 1995Management Co. Ltd.,Sahara Asset Management Co. Pvt. Sahara India Finance 1996Ltd.,Sundaram Asset Management Co. Sunadaram Finance 1996Ltd.,Tata Asset Management Pvt. Ltd., Tata Sons 1995 Joint Ventures Predominantly IndianBirla Sun Life Asset Management Birla Global Finance 1994Pvt. Ltd.,D.S.P. Merrill Lynch Fund D.S.P. Merrill Lynch 1996Manager Ltd.,HDFC Asset Management Co. Ltd., HDFC & Std Life 2000 Investment Joint Ventures Predominantly ForeignAlliance Capital Asset Management Alliance Capital 1994Pvt. Ltd., ManagementDeutsche Asset Management Pvt. Deutsche Asset 2002Ltd., ManagementFranklin Templeton Asset Franklin Templeton 1996Management Pvt. Ltd., InvestmentsHSBC Asset Manageent Pvt. Ltd., HSBC Security 2002ING Inveatment Management Pvt. ING Group 1999Ltd.,Morgan Stanley Investment Morgan Stanley 1993Management Pvt. Ltd.,Prudential ICICI Asset Prudential ICICI 1993Management Pvt. Ltd.,Principal Asset Management Co. Principal Financial 1994Pvt. Ltd., ServiceStandard Charted Asset Standard Charted Bank 2000Management Ltd., ( Source: Outlook Money : Laymen’s guide to MUTUAL FUND ) Babasabpatilfreepptmba.com
  30. 30. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYSales Practices in the Indian Mutual Fund MarketAgent commissions Agents are compensated by the funds through commissions, commission rates.In India there are no rules prescribed for governing the minimum r maximumcommissions payable by a fund to its agents. Each fund has discretion to decide thecommission structure for its agents. Thus sundaram pays commission to its agents as abasic rates plus an incentive that depends on the volume of business. In recent timesfunds have been paying commissions in the range of 1.5-2 % on equity oriented fundsand 0.4-0.8 % on debt based funds. Higher commissions are generally paid in case ofinvestments that are made with the purpose of taking tax benefits, since investors arerequired to lock in their funds for a longer period.SEBI RegulationsAlthough SEBI does not prescribe the minimum or maximum amount of commissionpayable by a fund to agents under SEBI (MF) Regulations, 1996, all initial expensesincluding Brokerage paid to agents are limited to 6 % of resources raised under theschemes. In additions, SEBI regulated open-end funds are authorized to charge the Babasabpatilfreepptmba.com
  31. 31. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYinvestors are “entry & exit” loads to cover the fund distribution expenses. These loadsshould not exceed the percentage specified in the scheme’s offer document. In case theagents commissions paid by the fund result in over all distribution expenses are to beborne by AMC i.e. the excess cannot be passed on to the unit holders.A no – load, charging no entry or exit loads is authorized to charge the schemes with thecommissions paid to agents as part of the regular management & marketing expensesallowed by SEBI. SEBI puts a cap on the total expenses (including commissions) that canbe charged to a scheme each year. Any excess over allowable expenses is required to beborne by the AMC.Marker PracticeSome funds pay the entire commission up- fronts to the agents (i.e. at the time of sale ofunits), while others pay apart of it up-front and the balance in phases. The latter practiceis known as trail commission. Some funds follow the practice of non-paying the balanceto the agent if the investor exits the scheme before a specified period or stop paying thecommission after the investor exits whenever he does.On the issue of commissions, is that of rebating by the agent to the investor of a part ofthe commission received from the fund on the sale to that investor. Although agentcommissions in the in the mutual industry are not at the same levels as in insurance,investors have come to expect such rebates from agents of all financial products. It ispossible in future such rebates might reduce in future & may even disappear. Hedistributors themselves will tend to realize that they provide useful processing andadvisory services to investors, & have to incur costs in the process that need to becovered from their well deserve commissions received from the fundsAgents ObligationCommission/other arrangements are between the fund and agent/broker. Sub-brokersserve as agents of the principle agent and the fund is not answerable for their activities. Babasabpatilfreepptmba.com
  32. 32. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYClearly, given the need for and widespread existence of a sub-broker network in Indiatheir role cannot be washed away. But the distributors need to make the investors awareof whom they are dealing with, whom the commission rebate is received from, & whomshould they contact in case of any problems. Agents are well advised to practice honesty& transparency in explaining the commission structure & the timing of any rebatepayment to the investors, whose trust will build a long-term relationship.The AMFI Code of EthicsOne of the objects of the Association of Mutual Funds in India (AMFI) is to promote theinvestors’ interest by defining and maintaining high ethical and professional standards inthe mutual fund industry. In pursuance of this objective, AMFI had constituted aCommittee under the Chairmanship of Shri A. P. Pradhan with Shri S. V. Joshi, Shri C.G. Parekh and Shri M. Laxman Kumar as members. This Committee, working in closeco-operation with Price Waterhouse–LLP under the FIRE Project of USAID, has draftedthe Code, which has been approved and recommended by the Board of AMFI forimplementation by its members. I take opportunity to thank all of them for their efforts.The AMFI Code of Ethics, “The ACE” for short, sets out the standards of good practicesto be followed by the Asset Management Companies in their operations and in theirdealings with investors, intermediaries and the public. SEBI (Mutual Funds) Regulation1996 requires all Asset Management Companies and Trustees to abide by the Code ofconduct as specified in the Fifth Schedule to the Regulation. The AMFI Code has beendrawn up to supplement that schedule, to encourage standards higher than thoseprescribed by the Regulations for the benefit of investors in the mutual fund industry. Babasabpatilfreepptmba.com
  33. 33. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYThis is the first edition of the Code and it may be supplemented further as may benecessary. I hope members of AMFI would implement the code and ensure that theiremployees are made fully aware of the Code.1.0 INTEGRITY1.1 Members and their key personnel, in the conduct of their business shall observe high standards of integrity and fairness in all dealings with investors, issuers, market intermediaries, other members and regulatory and other government authorities.1.2 Mutual Fund Schemes shall be organized, operated, managed and their portfolios of securities selected, in the interest of all classes of unit holders and not in the interest of  Sponsors  Directors of Members  Members of Board of Trustees or directors of the Trustee company  Brokers and other market intermediaries  Associates of the Members  A special class selected from out of unit holders2.0 Due Diligence2.1 Members in the conduct of there Asset Management business shall at all time.  Render high standards of service.  Exercise due diligence.  Exercise independent professional judgement. Babasabpatilfreepptmba.com
  34. 34. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY2.2 Members shall have and employ effectively adequate resources and procedures, which are needed for the conduct of Asset Management activities.3.0 Disclosures3.1 Members shall ensure timely dissemination to all unit holders of adequate, accurate, and explicit information presented in a simple language about the investment objectives, investment policies, financial position and general affairs of the scheme.3.2 Members shall disclose to unit holders investment pattern, portfolio details, ratios of expenses to net assets and total income and portfolio turnover wherever applicable in respect of schemes on annual basis.3.3 Members shall in respect of transactions of purchase and sale of securities entered into with any of their associates or any significant unit holder.  Submit to the Board of Trustees details of such transactions, justifying its fairness to the scheme.  Disclose to the unit holders details of the transaction in brief through annual and half yearly reports.3.4 All transactions of purchase and sale of securities by key personnel who are directly involved in investment operations shall be disclosed to the compliance officer of the member at least on half yearly basis and subsequently reported to the Board of Trustees if found having conflict of interest with the transactions of the fund.4.0 Professional Selling Practices Babasabpatilfreepptmba.com
  35. 35. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY4.1 Members shall not use any unethical means to sell, market or induce any investor to buy their products and schemes4.2 Members shall not make any exaggerated statement regarding performance of any product or scheme.4.3 Members shall endeavor to ensure that at all times  Investors are provided with true and adequate information without any misleading or exaggerated claims to investors about their capability to render certain services or their achievements in regard to services rendered to other clients,  Investors are made aware of attendant risks in members’ schemes before the investors make any investment decision,  Copies of prospectus, memoranda and related literature is made available to investors on request,  Adequate steps are taken for fair allotment of mutual fund units and refund of application moneys without delay and within the prescribed time limits and,  Complaints from investors are fairly and expeditiously dealt with.4.4 Members in all their communications to investors and selling agents shall  Not present a mutual fund scheme as if it were a new share issue  Not create unrealistic expectations  Not guarantee returns except as stated in the Offer Document of the scheme approved by SEBI, and in such case, the Members shall ensure that adequate resources will be made available and maintained to meet the guaranteed returns.  Convey in clear terms the market risk and the investment risks of any scheme being offered by the Members.  Not induce investors by offering benefits, which are extraneous to the scheme. Babasabpatilfreepptmba.com
  36. 36. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY  Not misrepresent either by stating information in a manner calculated to mislead or by omitting to state information which is material to making an informed investment decision.5.0 Investment Practice5.1 Members shall manage all the schemes in accordance with the fundamental investment objectives and investment policies stated in the offer documents and take investment decisions solely in the interest of the unit holders.5.2 Members shall not knowingly buy or sell securities for any of their schemes from or to  Any director, officer, or employee of the member  Any trustee or any director, officer, or employee of the Trustee Company6.0 Operations6.1 Members shall avoid conflicts of interest in managing the affairs of the schemes and shall keep the interest of all unit holders paramount in all matters relating to the scheme.6.2 Members or any of their directors, officers or employees shall not indulge in front running (buying or selling of any securities ahead of transaction of the fund, with access to information regarding the transaction which is not public and which is material to making an investment decision, so as to derive unfair advantage).6.3 Members or any of their directors, officers or employees shall not indulge in self- dealing (using their position to engage in transactions with the fund by which they benefit unfairly at the expense of the fund and the unit holders).6.4 Members shall not engage in any act, practice or course of business in connection with the purchase or sale, directly or indirectly, of any security held or to be acquired by any scheme managed by the members, and in purchase, sale and Babasabpatilfreepptmba.com
  37. 37. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY redemption of units of schemes managed by the members, which is fraudulent, deceptive or manipulative.6.5 Members shall not, in respect of any securities, be party to-  Creating a false market,  Price rigging or manipulation  Passing of price sensitive information to brokers, Members of stock exchanges and other players in the capital markets or take action, which is unethical or unfair to investors.6.6 Employees, officers and directors of the Members shall not work as agents/ brokers for selling of the schemes of the Members, except in their capacity as employees of the Member or the Trustee Company.6.7 Members shall not make any change in the fundamental attributes of a scheme, without the prior approval of unit holders except when such change is consequent on changes in the regulations.6.8 Members shall avoid excessive concentration of business with any broking firm, and excessive holding of units in a scheme by few persons or entities.7.0 Reporting Practices7.1 Members shall follow comparable and standardized valuation policies in with the SEBI Mutual Fund Regulations.7.2 Accordance Members shall follow uniform performance reporting on the basis of total return.7.3 Members shall ensure scheme wise segregation of cash and securities accounts.8.0 Unfair Competition Babasabpatilfreepptmba.com
  38. 38. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Members shall not make any statement or become privy to any act, practice or competition, which is likely to be harmful to the interests of other Members or is likely to place other. Members in a disadvantageous position in relation to a market player or investors, while competing for investible funds.9. O Observance of Statutes, Rules and Regulations Members shall abide by the letter and spirit of the provisions of the Statutes, rules and regulations, which may be applicable, and relevant to the activities carried on by the members.10.0 Enforcement Members shall  Widely disseminate the AMFI Code to all persons and entities covered by it  Make observance of the Code a condition of employment  Make violation of the provisions of the code, a ground for revocation of contractual arrangement without redress and a cause for disciplinary action  Require that each officer and employee of the Member sign a statement that he/she has received and read a copy of the Code  Establish internal controls and compliance mechanisms, including assigning supervisory responsibility  Designate one person with primary responsibility for exercising compliance with power to fully investigate all possible violations and report to competent authority  File regular reports to the Trustees on a half yearly and annual basis regarding observance of the Code and special reports as circumstances require Babasabpatilfreepptmba.com
  39. 39. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY  Maintain records of all activities and transactions for at least three years, which records shall be subject to review by the Trustees  Dedicate adequate resources to carrying out the provisions of the CodeProcedure for registering a mutual fund with SEBI. An applicant proposing to sponsor a mutual fund in India must submit an Application in Form A along with a fee of Rs.25, 000. The application isexamined and once the sponsor satisfies certain conditions such as being in thefinancial services business and possessing positive net worth for the last fiveyears, having net profit in three out of the last five years and possessing thegeneral reputation of fairness and integrity in all business transactions, it isrequired to complete the remaining formalities for setting up a mutual fund. Theseinclude inter alias, executing the trust deed and investment managementagreement, setting up a trustee company/board of trustees comprising two- thirdsindependent trustees, incorporating the asset management company (AMC), Babasabpatilfreepptmba.com
  40. 40. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYcontributing to at least 40% of the net worth of the AMC and appointing acustodian. Upon satisfying these conditions, the registration certificate is issuedsubject to the payment of registration fees of Rs.25.00 lacs for details; see theSEBI (Mutual Funds) Regulations, 1996. Babasabpatilfreepptmba.com
  41. 41. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYSECURITIES AND EXCHANGE BOARD OF INDIAINVESTMENT MANAGEMENT DEPARTMENTTrends in Transactions on Stock Exchanges by Mutual Funds (since January 2000) Equity (Rs in Crores) Debt (Rs in Crores) Net Net Gross Gross Purchase/ Gross Gross Purchase/ Purchase Sales Sales Purchase Sales Sales Jan 2000-March 2000. 11070.54 11492.19 -421.65 2764.72 1864.29 900.43 April 2000 -March 2001. 17375.78 20142.76 -2766.98 13512.17 8488.68 5023.49 April 2001-March 2002. 12098.11 15893.99 -3795.88 33583.64 22624.42 10959.22 April 2002-March 2003 14520.89 16587.59 -2066.70 46663.83 34059.41 12604.42 April 2003-March 2004 36663.58 35355.67 1307.91 63169.93 40469.18 22700.75 April 2004-March 2005 45045.25 44597.23 448.02 62186.46 45199.17 16987.29 April 2005-March 2006 100389.30 86083.64 14305.66 109622.51 73003.67 36618.84 April 2006. 12752.47 9631.91 3120.56 11227.96 6800.08 4427.88 May 2006 (upto 19th) 11837.29 7406.65 4430.64 9746.45 4110.53 5635.92 Total (April - May 06) 24589.76 17038.56 7551.20 20974.41 10910.61 10063.80Trends in Transactions on Stock Exchanges by Mutual Funds(Provisional and subject to revision) May 2006 Equity (Rs in crores) Debt (Rs in crores) Gross Net Purchases Gross Net Purchases/ Transaction Date Purchases Gross Sales / Sales Purchases Gross Sales Sales 02.05.06 543.63 494.80 48.83 389.58 324.42 65.16 03.05.06 722.59 580.21 142.38 555.27 229.88 325.39 04.05.06 855.53 580.62 274.91 285.41 119.01 166.40 05.05.06 761.83 527.42 234.41 409.98 152.30 257.68 08.05.06 401.00 571.78 -170.78 537.41 204.32 333.09 09.05.06 726.92 575.41 151.51 564.28 234.27 330.01 10.05.06 981.53 453.30 528.23 813.02 397.06 415.96 11.05.06 456.65 524.58 -67.93 1475.45 246.91 1228.54 12.05.06 778.21 422.04 356.17 619.55 365.87 253.68 15.05.06 1274.82 489.46 785.36 748.34 344.06 404.28 16.05.06 1103.60 760.39 343.21 925.49 271.92 653.57 17.05.06 707.24 513.94 193.30 1325.27 636.61 688.66 18.05.06 1244.54 481.85 762.69 738.64 360.11 378.53 19.05.06 1279.20 430.85 848.35 358.76 223.79 134.97 Total 11837.29 7406.65 4430.64 9746.45 4110.53 5635.92 Market meltdown shows Mutual Funds run with the bulls, get mauled by the bears Babasabpatilfreepptmba.com
  42. 42. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYUnderperformance is worrying: MFs have lagged the Sensex by 3.5 percentage pointsover a month to 8.7 percentage points over a yearTake all diversified equity mutual fund schemes. Find out how they fared over varioustime periods. Crunch the numbers. Put them against the market benchmark, the BSESensex. What do you get? A rather uninspiring look at fund managers, experts who wepay about 2.5 per cent of our investment to outperform markets.Take a look:• During the past month, when the Sensex crashed by 25.4 per cent, the average fall in158 diversified equity funds was 28.9 per cent-an underperformance of 3.4 percentagepoints. Only one out of 10 funds managed to beat the Sensex in this period.• In the past two weeks, when the Sensex fell by 12.8 per cent, the funds on an averagefell by 16.6 per cent, an underperformance of 3.8 percentage points, with just 16 of 161funds being able to beat the Sensex. In other words, just 9.9 per cent of funds were ableto deliver returns better than the Sensex.• A study of 161 diversified mutual funds over the past week, two weeks, one month,three months, six months, 12 months and 36 months shows that on an average the fundshave been lagging the Sensex in all but the 36-month period.But it is not merely the level but the extent of underperformance thats disturbing. Barring36-month comparisons, in all other time frames, the percentage of funds that has laggedthe Sensex has ranged from 74.6 per cent for 12-month performance to 96.3 per cent overone week-which means more than nine out of 10 funds delivered below benchmarkreturns.Now, the industry is likely to say that when you invest in an equity mutual fund, it is notfor weeks or months but years. Which is right? Over a three year period, between June2003 and June 2006, when the Sensex rose by 40.7 per cent per annum, 52 out of 61funds (or 85.2 per cent) outperformed. On an average, the funds outperformed the Sensexby 9.6 percentage points, rising 50.3 per cent per annum during the period (SBI MagnumGlobal and SBI Magnum Umbrella dished out returns of 82 and 79 per cent, per annum). Babasabpatilfreepptmba.com
  43. 43. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYThe former is an arbitrage fund, buying companies as well as futures with a minimum 25per cent debt exposure, and because of which its volatility, and hence theunderperformance, is low. The latter invests in international equities, with exposures tocompanies like 3M, Atlas Cop co AB, BASF AG and so on.On the other end of the spectrum, the one fund that consistently figures among the threeworst performers is Taurus Discovery Stock, whose objective is to "identify and selectlow priced stocks through price discovery mechanism" to bring long term capitalappreciation. Its top holdings include J P Associates, NDTV, SRF and Reliance Capital.The problem with many underperforming funds is really their exposure to mid-cap andsmall-cap stocks. These stocks are neither liquid enough to sell in quantities, nor do theyhave futures to hedge with (only 142 actively traded shares do). As a result, when a fallcomes, funds are unable to exit on time or in quantities as the stocks hit lower circuits.Much of which points to the direction of investments in the last leg of the Bull run thatbegan in April 2003. Fund managers have not been seeking value or growth but ridingmomentum, that is, following the latest fast-growing fad and moving to the next.Something likes stocks staccato.A strategy that has worked well for them on the rise. But today, when the bulls are takinga much needed breather before stampeding on the 8-10 per cent GDP growth highway,the short-term weak links are showing that while funds can match the Indian bull march,theyre in a Canadian forest when it comes to dealing with the Grizzly.Mutual fund (MF) houses disappointed investors during the May 10 to June 9 periodswith equity schemes across-the-board showing sharp fall in returns.Equity funds of LIC Mutual Fund lead the pack, registering a fall of 29.91% on returnduring the period under review. The average NAV (net asset value) of two equity fundschemes decreased from Rs 18.08 to Rs 12.67.Among the two equity fund schemes, the highest decline in NAV was registered in thecase of LIC MF Equity Fund-D. The funds NAV declined from Rs 14.67 to Rs 10.28.R Swami Nathan, Associate VP, IDBI Capital, said, "Over heated market was waiting foran opportunity to cool down. The correction started in a broad-based manner irrespective Babasabpatilfreepptmba.com
  44. 44. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYof large cap, mid cap or small cap scrip’s. The effect of the market downfall has beenexperienced in the erosion of the net asset value of mutual fund equity schemes.""At this juncture when the market is volatile, an investor should take stock of hisportfolio for a review. He can add some equity funds, provided his asset allocation planpermits. This is the time one can look at the equity funds again for investment with amedium to long-term perspective," Mr. Swami Nathan pointed out.The top 5 MF houses according to the average NAV of equity fund schemes as on June 9,2006 are Reliance Capital MF (Rs 81.79), Franklin Templeton MF (Rs 57.88), Birla SunLife MF (Rs 52.50), HDFC MF (Rs 40.78) and Prudential ICICI MF (Rs 34.09). Amongthese, highest decline in average NAV of equity funds was seen in the case of RelianceCapital MF (26.82%).Abstract International mutual funds are key contributors to the globalization of financialmarkets and one of the main sources of capital flows to emerging economies. Despitetheir importance in emerging markets, little is known about their investment allocationand strategies. This article provides an overview of mutual fund activity in emergingmarkets. It describes their size, asset allocation, and country allocation and then focuseson their behavior during crises in emerging markets in the 1990s. It analyzes data at boththe fund-manager and fund-investor levels. Due to large redemptions and injections,funds flows are not stable. Withdrawals from emerging markets during recent crises werelarge, which is consistent with the evidence on financial contagion. Babasabpatilfreepptmba.com
  45. 45. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYStructure of Mutual Funds in IndiaLike other countries, India has a legal framework within which mutual funds beconstituted. Unlike in the UK, where two distinct ‘trust’ and ‘corporate’ structures arefollowed with separate regulations, in India open-end and closed end funds operate underthe same regulatory structure and are constituted along one unique structure – as unittrusts. A mutual fund in India is allowed to issue open-end and closed-end schemes undera common legal structure. Therefore, a mutual fund may have several different schemes(open-end and closed-end) under it. That is under one unit trust, at any point of time.The structure is required to be followed by mutual funds in India is laid down under SEBI(mutual fund) regulations, 1996. In the following paragraphs, we look at the structure ofeach of the fund constituent Babasabpatilfreepptmba.com
  46. 46. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY SEBI TRUSTEE SPONSOR OPERATIONS AMC FUND MANAGER MARKET / SALES MUTUAL FUND SCHEMES INVESTOR Babasabpatilfreepptmba.com
  47. 47. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYSponsorWhat a promoter is to a company, a sponsor is to a mutual fund. The sponsor initiates theidea to set up a mutual fund. It could be a financial services company, a bank or afinancial institution. It could be Indian of foreign. It could do it alone or through a jointventure. In order to run a mutual fund in India, the sponsor has to obtain a license fromSEBI. For this, it has to satisfy certain conditions, such as a capital and profits, backrecords (at least five years in financial services), default free dealings and a generalreputation for fairness.Asset Management Company (AMC)An AMC is the legal entity formed by the sponsor to run a mutual fund. It’s the AMCthat employs fund managers and analyst, and other personnel. It’s the AMC that handlesall operational matters of a mutual fund – from launching schemes to managing them tointeracting with investors.The people in the AMC who should matter the most to you are those who take investmentdecisions. There is the head of the fund house, generally referred to as the chief executiveofficer (CEO). Under him comes the chief investment officer (CIO), who shapes thefunds investment philosophy and fund managers who manage its schemes. A team ofanalysts, who track markets, sectors and companies, assists them.Trustees Babasabpatilfreepptmba.com
  48. 48. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYTrustees are like internal regulations in a mutual fund, and their job is to protect theinterests of unit holders. Trustees are appointed or corporate bodies. In order to ensurethey are impartial and fair, SEBI rules mandate that at least two thirds of the trustees beindependent that is, not have any association with the sponsor.Trustees appoint the AMC, subsequently seeks their approval for the work it does andreports periodically to them on how the business is being run. Trustees float and marketschemes and secure necessary approvals. They check if the AMC investments are withindefined limits and whether the funds accountable for financial irregularities in the mutualfund.CustodianA custodian handles the investment back office of a mutual fund. Its responsibilitiesinclude receipt and delivery of securities, collection of income, and distribution ofdividends and segregation of assets between schemes. The sponsor of a mutual fundcannot act as a custodian to the fund. This condition, formulated in the interest ofinvestors, ensures that the assets of a mutual fund are not in the hands of its sponsor. Forexample Deutsche Bank is a custodian but it cannot service Deutsche Mutual Fund, itsmutual fund arm.RegistrarRegistrars also known as transfer agents, handles all investor related services. Thisincludes issuing and red reaming units. Sending fact sheet and annual reports. Some fund Babasabpatilfreepptmba.com
  49. 49. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYhouses handle such functions in house. Others outsource it to registrars; Karvy andCAMS are the more popular ones. It doesn’t really matter which model your mutual fundopts for, as long as it is prompt and efficient in servicing you. Most mutual funds inaddition to registrars also have investor service centers of their own in some cities.Recent Trends in Mutual Fund IndustryThe most important trend in the mutual fund industry is the aggressive expansion of theForeign owned mutual fund companies and the decline of the companies floated byNationalized Banks and smaller Private Sector players.Many Nationalized banks got into the mutual fund business in the early nineties and gotoff to a good start due to the stock market boom prevailing then. These banks did notreally understand the mutual fund business and they just viewed it as another kind ofbanking activity. Few hired specialized staff and generally chose to transfer staff from theparent organization. The performance of the schemes floated by these funds was notgood.Some schemes offered guaranteed returns and their parent organization had to bail outthese AMCs by paying large amounts of money as the difference between the guaranteedand actual returns. The service levels were also very bad. Most of these AMCs have notbeen able to retain staff, float new schemes etc. and it is doubtful whether, barring a fewexceptions they have serious plans of continuing the activity in a major way.The experience of some of the AMCs floated by private sector Indian companies was alsovery similar. They quickly realized that the AMC business, which makes money in thelong term and requires deep-pocketed support in the intermediate years. Some have soldout to Foreign owned companies, some have merged with others and there is generalrestructuring going on.The Foreign owned companies have deep pockets and come in here with the expectationof a long haul. They can be credited with introducing many new practices such as new Babasabpatilfreepptmba.com
  50. 50. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYproduct innovation, sharp improvement in service standards and disclosure, usage oftechnology, broker education and support etc. In fact they have forced the industry toupgrade itself and service levels of organizations like UTI have improved dramatically inthe last few years in response to the competition provided by these companies.Future ScenarioThe asset base will continue to grow at an annual rate of about 30 to 35% over the nextfew years as investors shift their assets from banks and other traditional avenues. Some ofthe older and private sector players will either close shop or be taken over.In the coming years the market will witness a flurry of new players entering the arena.There will be a large number of offers from various AMCs in the time to come. Some bignames like Fidelity, Principal, Old Mutual etc. are looking at Indian market seriously.One important reason for it is that most major players already have presence here andhence these big names would hardly like to get left behind. The mutual fund industry isawaiting the introduction ofDerivatives in India as this would enable it to hedge its risk and this in turn would bereflected in its NAV.SEBI is working out the norms for enabling the existing mutual fund schemes to trade inderivatives. Importantly, many market players have called on the regulator to initiate theprocess immediately, so that the mutual funds can implement the changes that arerequired to trade derivatives. Babasabpatilfreepptmba.com
  51. 51. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYGlobal Scenario Some basic facts  The money market mutual fund segment has a total corpus of $ 1.48 trillion in the U.S. against a corpus of $ 100 million in India.  Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity and Capital are non-bank mutual funds in this group.  In the U.S. the total number of schemes is higher than that of the listed companies while in India we have just 277 schemes  Internationally, mutual funds are allowed to go short. In India fund managers do not have such leeway.  In the U.S. about 9.7 million households will manage their assets on-line by the year 2003, such a facility is not yet of avail in India.  On- line trading is a great idea to reduce management expenses from the current 2 % of total assets to about 0.75 % of the total assets.  85% of the core customer bases of mutual funds in the top 50-broking firms in the U.S. are expected to trade on-line by 2003. Internationally, on- line investing continues its meteoric rise. Many have debated about the success of e- commerce and its breakthroughs, but it is true that this aspect of technology could and will change the way financial sectors function. However, Babasabpatilfreepptmba.com
  52. 52. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY mutual funds cannot be left far behind. They have realized the potential of the Internet and are equipping themselves to perform better.In fact in advanced countries like the U.S.A, mutual funds buy- sell transactions havealready begun on the Net, while in India the Net is used as a source of Information.Such changes could facilitate easy access, lower intermediation costs and better servicesfor all. A research agency that specializes in Internet technology estimates that over thenext four years Mutual Fund Assets traded on- line will grow ten folds from $ 128 billionto $ 1,227 billion; whereas equity assets traded on-line will increase during the periodfrom $ 246 billion to $ 1,561 billion. This will increase the share of mutual funds from34% to 40% during the period. Such increases in volumes are expected to bring aboutlarge changes in the way Mutual Funds conduct their business.Here are some of the basic changes that have taken place since the advent of the Net.Lower CostsDistribution of funds will fall in the online trading regime by 2003. Mutual funds couldbring down their administrative costs to 0.75% if trading is done on- line. As per SEBIregulations, bond funds can charge a maximum of 2.25% and equity funds can charge2.5% as administrative fees. Therefore if the administrative costs are low, the benefits arepassed down and hence Mutual Funds are able to attract mire investors and increase theirasset base.Better advice Babasabpatilfreepptmba.com
  53. 53. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYMutual funds could provide better advice to their investors through the Net rather than throughthe traditional investment routes where there is an additional channel to deal with the Brokers.Direct dealing with the fund could help the investor with their financial planning. In India,brokers could get more Net savvy than investors and could help the investors with theknowledge through get from the Net.New investors would prefer onlineMutual funds can target investors who are young individuals and who are Net savvy,since servicing them would be easier on the Net.India has around 1.6 million net users who are prime target for these funds and this couldjust be the beginning. The Internet users are going to increase dramatically and mutualfunds are going to be the best beneficiary. With smaller administrative costs more fundswould be mobilized .A fund manager must be ready to tackle the volatility and will haveto maintain sufficient amount of investments which are high liquidity and low yieldinginvestments to honor redemption.Net-based advertisementsThere will be more sites involved in ads and promotion of mutual funds. In the U.S. siteslike AOL offer detailed research and financial details about the functioning of differentfunds and their performance statistics. a is witnessing a genesis in this area . There aremany sites such as indiainfoline.com and indiafn.com that are doing something similarand providing advice to investors regarding their investments. Babasabpatilfreepptmba.com
  54. 54. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYIn the U.S. most mutual funds concentrate only on financial funds like equity and debt.Some like real estate funds and commodity funds also take an exposure to physicalassets. The latter type of funds are preferred by corporate who want to hedge theirexposure to the commodities they deal with.For instance, a cable manufacturer who needs 100 tons of Copper in the month of Januarycould buy an equivalent amount of copper by investing in a copper fund. For Example,Permanent Portfolio Fund, a conservative U.S. based fund invests a fixed percentage ofit’s corpus in Gold, Silver, Swiss francs, specific stocks on various bourses around theworld, short –term and long-term U.S. treasuries etc.In U.S.A. apart from bullion funds there are copper funds, precious metal funds and realestate funds (investing in real estate and other related assets as well.). In India, theCanada based Dundee mutual fund is planning to launch a gold and a real estate fundbefore the year-end.In developed countries like the U.S.A there are funds to satisfy everybody’s requirement,but in India only the tip of the iceberg has been explored. In the near future India too willconcentrate on financial as well as physical funds. Corpus:- Investing in a scheme is a simple process. Juts walk into any office of themutual fund or that of its representatives. Fill up a short and simple form, andhand over a cheque. Yours money gets added to the pool already with the scheme,given to it by numerous other investors like you. The total money available with ascheme at any point in time is referred to as the “Corpus” or Asset undermanagement ’the mutual fund, on your and other investors behalf invests thiscorpus in various securities in line with its sated objectives Babasabpatilfreepptmba.com
  55. 55. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Units: Mutual fund issues you ‘units’ against your investment. A unit is the currencyof a fund. What a share is to company, a unit is to a fund.Net asset value (NAV):NAV: (Net asset of the scheme /number of unit’s o/s) (Number of units outstanding as at the NAV)You are allotted units on the basis of a scientific mechanism. This price, measuredper unit, is called the Net Asset Value (NAN) of the unit. Just as share or land isbought and sold at its NAV. if for example, you were to invest Rs 10000 inscheme when it’s NAVIs Rs 10. You will be allotted 1000 units (10000/10) roughly – the fund charges anominal processing fee. The NAV of any scheme tells how much each units of its is worth at anypoint in time, and is therefore the simplest measure of how it is performing.Schemes NAV is its net assets (Market value of the securities its own minus itowes) divided by the number of units it has issued. A scheme NAV is dynamic figure. The market value of a schemes portfolio,changes from day to day, as prices of shares and bonds move up or down. The number ofunits outstanding also changes as new investors come into the scheme and told ones Babasabpatilfreepptmba.com
  56. 56. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYleave. If the NAV of your scheme rises from Rs 10 to Rs, 11 over a period of time, yourscheme is said to have generated a return of 10%. Similarly, if its NAV falls from Rs 10to Rs 9, it is said to have lost 10% Fund house have to calculate and disclose the NAV’s of their schemes daily fundNAV’s can be easily looked up. While dailies give a random listing of schemes thefinancial papers are more exhaustive in their coverage. NAV information is also availableon website, of the mutual fund concerned and of independent data providers. Wheninvested in a scheme, its NAV is the figure to track as it qualifies your returns and yourpurchase price and sale price will be based on it.Load:- Although the NAV represents scheme current market value it is not the exact price atwhich an investor enters or exits the scheme. Fund houses levy a nominal charge, onmost of their schemes, to meet their processing costs and to discourage investors fromlacking. This charge is referred to as ‘load’ and it is price you pay over and above thefund NAV when you buy or cell units. You pay an ‘entry load’ at the time buying units and an ‘exit load’ while selling.Loads are always expressed as percentage of the NAV, and have the effect of reducingyour returns. An entry load increases your NAV, which places fewer units in your hands.An exit load decrease you’re NAV of Rs 10 and it levies an entry and exit load of 1%(10 paisa) each. So when you buy units you’ll pay Rs 10.1 (10+0.10)per unit, not Rs 10.Similarly if you sell you’ll get Rs 9.90(10-0.10) per unit, not Rs 10. Under SEBI rules,the sum of entry and exit loads charged by a scheme cannot exceed 7%Cost of investment in mutual fund:- Babasabpatilfreepptmba.com
  57. 57. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Another entry that eats into your return is ‘expenses’ this is what your fundcharges you for managing your only. Fund managers have to be paid a fee, as do theother constraints involved in managing your money. All this entails costs, which yourscheme recovers from you, within limits. Every year, a fund charges same amount toyour schemes NAV reducing your returns by that amount. SEBI rules allow equityschemes to charge a maximum of 2.5%of corpus as expenses every year, thecorresponding figure for debt schemes is 2.25%SEBI also decides what kind of expenses a fund can charge its unit holders and what itcannot. For e.g.: the cost of running a campaign about a fund having won an awardcannot be charged to investors.Disclosures:- From time to time, your fund house will share with you informationrelating to your scheme. It does this in various ways, in various degrees. UnderSEBI rules, fund houses have to send to all unit holder’s annual reports disclosingthe complete portfolio of all units holders’ annul reports disclosing the completeportfolio of all units holders’ annul reports disclosing the compete portfolio of alltheir schemes and publish half-yearly results in newspapers. These documentshade light on your schemes performing over various time periods, and how itstands up, given market conditions. Some fund house goes beyond such mandatory information sharing. Whateverinformation is relevant to your investment they send it to you on a quarterly basis, Babasabpatilfreepptmba.com
  58. 58. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYthrough fax and newsletters. Most fund houses update their scheme portfolio ontheir website even quicker, the norm being on a monthly basis. This informationyou can use to make an investment in the schemesRedemption:- Whenever you want, you can sell your units, partly or fully back to your fund.Although it’s sale from your point of view in mutual fund parlance it is called ‘repurchase ‘or redemption’ you’ll have to fill up another short and simple fromyour Mutual fund will pay you the schemes NAV prevailing on that date minusthe exit load,Mail you a cheque within three to five days. DISTRIBUTION COMPANIES. A distribution company has several agents and distributors working for it, and is the transitional interface with the mutual fund. It is institutional agent for a mutual fund, and earns commissions on funds mobilized. Distribution companies are a very popular channel with mutual fund today. Babasabpatilfreepptmba.com
  59. 59. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Company ProfileIntroduction:-VISION:”To be the most trusted name in investment and wealth management, to bethe preferred employer in the industry and to be a catalyst for growth andexcellence of the asset management business in India”.MISSION:To consistently pursue investors wealth optimization by: • Achieving superior and consistent investment results • Creating a conducive environment to hone and retain talent • Providing customer delight • Institutionalizing system-approach in all aspects of functioning • Upholding highest standards of ethical values at all times . Biral Sun Life Financial Services offers a range of financial services for residentIndians and Non Residents Indians.Birla Sun Life Distribution Co. Ltd. a part of the Joint Babasabpatilfreepptmba.com
  60. 60. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANYVenture between The Aditya Biral Group and Sun Life Financial of Canada. The synergyof these two accomplished conglomerates brings the global financial know-how and localmarket insight. It is the aim of the company to offer diverse and top quality financialservices to customers. The Mutual Fund and Insurance companies provide wealthmanagement and protection products to customers while the Distribution and Securitiescompanies provide brokerage and trading services for investment in equities, debtsecurities, fixed deposits, etc. It is said that: "To acquire wealth is difficult, to preserve it more difficult, but tonourish it wisely, the most difficult of all." The company’s commitment to excellence along with a roots up approach toresearch and analysis, coupled with technology driven processes has enabled them toexcel at this challenging task and in a span of four years emerge as one of the leadingdistribution houses of the country."Knowledge is a treasure but practice is the key to it" The company believes that the desire for knowledge increases with the acquisitionof it. At Birla Sun Life Distribution they make the best use of intellect and expertiseputting knowledge to good practice. As and when and where investors need it. For company the concept of perfect service is contently expanding. This alongwith transparent business ethics, inspired and innovative solutions is what their investorshave come to expect from them. A fact, which has been reaffirmed by recognition and awards, conferred on themby the leading names of the India Financial Services Industry. Babasabpatilfreepptmba.com
  61. 61. A MUTUAL FUND CONCEPT BIRLA SUN LIFE DISTRIBUTION COMPANY Birla Sun Life Financial Services Birla Sun Life Birla Sun Life Birla Sun Life Mutual Fund Insurance DistributionBirla Sun Life Asset Management CompanyLimited: Biral Sun Life Mutual Fund follows a conservative long-term approach toinvestment, which is based on identifying companies that have good credit-worthinessand are fundamentally strong. It places a lot of emphasis on quality of management andrisk control. This is done through extensive analysis that includes factory visits and fieldresearch. It has one of the largest team of research analysts in the industry. The companyis one of Indias leading, private mutual funds with a large customer base. It has beenrecognized nationally with coveted awards. Babasabpatilfreepptmba.com

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