This document provides an overview of balanced and diversified mutual funds in India. It discusses India's economic performance and growth of the mutual fund industry. Balanced funds aim to generate capital appreciation and income through a mix of equity, debt and money market securities. Diversified funds focus on long-term capital growth through equity and equity-related securities. Top performing balanced and diversified funds are highlighted based on their returns and portfolio characteristics. Benefits of investing in mutual funds such as diversification, tax efficiency, convenience and expert management are also outlined.

1. BALANCED & DIVERSIFIED
MUTUAL FUNDS
Submitted by:
Aparana Mittal
FORE School of

2. Gross Savings (2000-2013)
Household Financial Assets (Last 3 years)
(as a % of GDP at current market prices)
GDP Growth Rate (2000-2014)
India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund
4.15
5.39
3.88
7.97
7.05
9.48 9.57 9.32
6.72
8.59 8.91
6.69
4.5 4.7
5.5
0
2
4
6
8
10
12
23.2 22.6
25.4
28.7
32.4133.4434.6
36.82
32.02
33.6933.68
31.3530 30.5
0
5
10
15
20
25
30
35
40
20002001200220032004200520062007200820092010201120122013
1.6 1.6 1.6
8.6 8.8 8.9
0.1 0.1 0.1
2.9 2.9 3
1.7 1.7 1.70.8 0.8 0.81.2 1.3 1.3
11.5 11.7 11.9
0
5
10
15
20
25
30
35
2012 2013 2014
Physical Savings
Shares, debentures and
MF
Claims on Government
Provident and pension
fund
Life Insurance Fund
Non-banking deposits
Source : http://planningcommission.nic.in/data/datatable/0814/comp_databook.pdf Source :
http://planningcommission.nic.in/data/datatable/0814/comp_databook.pdf
Source : http://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=662#4
9.90%
46%
3.40%
11%
17.10%
12.50%
Currency
Deposits
Shares/Debentures/
Mutual Funds
Claims on
Government
Insurance
Provident Fund
Decomposition of portfolio of Indian
household
(1990-91 to 2010-11)
Source: RBI, Annual Report

3. India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund
7486
7037 6709
9051
10597
0
2000
4000
6000
8000
10000
12000
FY10 FY11 FY12 FY13 Sep-14
I
N
R
B
n
CAGR 4.86%
Growth in the AUM
Source: The Association of Mutual Funds in India (AMFI); Data as of September
2014
Note: Figures from FY11 - FY13 corresponds to average AUM for the quarter Jan
- Mar (Q4)
Growth in the Market – Sensex &
NIFTY
Source: BSE Sensex and NSE Nifty data as on December 2014
The Indian mutual fund industry has shown
relatively slow growth in the period FY 10-13
growing at a CAGR of approximately 4.86%.
Average AUM stood at INR 9051 billion in FY13.
However, AUM increased to ~ INR 10,597 billion as
of September 2014.
Lackluster stock market performance, rising
inflation and anticipation of a rise in interest
rates has led to a tapering of growth in the
Indian mutual fund industry in the recent years.
0
5000
10000
15000
20000
25000
30000
0
2000
4000
6000
8000
10000
CAGR 19.48%
SENSEX
NIFTY
CAGR 17.69%

4. Penetration (as a % of GDP) vis-à-vis other
countries and world average
7.00%
70%
61%
37%
37%
India
US
France
Brazil
World Average
Despite the relatively low penetration of mutual
funds in India, the market is highly concentrated.
Though, there are 46 AMCs operating in the sector,
approximately 79 per cent of the AUM is
concentrated with 10 of the leading players in the
market.
There have been recent instances of consolidation in
the market and market concentration is expected to
remain in the near-term.
Birla Sun Life
Mutual Fund,
10%
DSP BlackRock
Mutual Fund, 4%
Franklin
Templeton
Mutual Fund,
5%
HDFC Mutual
Fund, 13%
ICICI Prudential
Mutual Fund,
12%
IDFC Mutual
Fund, 4%
Kotak Mahindra
Mutual Fund, 4%
Reliance Mutual
Fund, 12%
SBI Mutual Fund,
7%
UTI Mutual
Fund, 8%
Others, 21%
Market Share of leading Mutual
Funds (basis AUM)
Source : AMFI data (September 2014)
India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund

5. AUM Composition by Product Category
20% 16% 19%
0%
1%
1%
49% 57%
47%
26%
22%
29%
2% 2% 2%3% 2% 2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014
Gold ETF
Balanced
Equity Oriented
Debt Oriented
Gilt
 AUMs in debt and liquid money market funds have seen
an increase in FY14. Reasons being :
 Anticipation of RBI rate cuts
 Desire for investors to seek a fixed return
 Debt oriented products (investing in debt instruments
with maturity > 3 months) have gained most traction.
 Clear shift in investor interest from equity.
 Gold ETF’s have grown at an extremely fast pace
(popularity of gold as an investment)
AUM Composition by Investor
Category
47%
2%
1%
28%
22%
Corporates
Banks/FIs
FIIs
High Networth
Individuals
Retail
Source : AMFI data (September 2014)
 Industry composition of AUM is driven primarily by
the corporate segment
 Corporate Investment focus on debt/money market
funds to earn short term returns and liquidity
management
 Retail share is expected to rise. Growth drivers :
 Increased investor awareness
 Product penetration
 Greater distribution reach
 HNIs -> fastest growing investor segment
AUM growth restricted to top 5 cities of India (Mumbai,
Delhi, Bangalore, Chennai and Kolkata) – 74% of AUM
India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund
Source : AMFI data (September 2014)

6. Key challenges
 Limited incentives for distributors for MF
products as compared to other financial
products
 Lack of product differentiation and ability
to communicate value to investors
 Low MF penetration and relatively lower
addition of retail investors
 Lack of investor awareness about MF
industry
 Evolving nature of industry regulations
How to combat ?
 Wider distribution reach
 Improve overall investor awareness
 Investor education drives
What lies ahead ?
 Investors
o Penetration and awareness
(through on-ground investor
engagement campaigns by AMFI,
AMCs and distributors) in Tier II,
Tier III (B-15 cities) and rural
markets is expected to increase
 Products
o Traditional debt and equity
oriented products could continue
to dominate the market.
 Channels
o Structural shift from “transaction-
led” pricing model to an “advisory-
led” pricing model has been
initiated by the regulator
 Competition
o Wave of consolidation
o Retain and strengthen asset base
India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund

7. Balanced Mutual Fund
Investment Objective
To generate long-term capital appreciation
and current income by creating a portfolio
invested in equity-equity related securities
as well as fixed income and money market
securities.
Suitable for investors seeking :
• Capital growth and income over a long-term
investment horizon
• Investment primarily in equity/equity-related
securities, with balance exposure in money
market and debt securities
• High Risk
Rank 1 Rank 2 Rank 3 Rank 4 Rank 5
• ICICI
Prudential
Balanced
Fund
• HDFC Balanced
Fund
• HDFC Prudence
Fund
• Tata Balanced
Fund
• Birla Sun Life 95 Fund
• Canara Robeco Balance
• ICICI Prudential Balanced
Advantage Fund
• Reliance Regular Savings
Fund – Balanced
• SBI Magnum Balanced
Fund
• DSP BlackRock
Balanced Fund
• Franklin India
Balanced Fund
• UTI Balanced Fund
Kotak Balance
Top 5 Balanced Funds – Consistent
Performers (as per CRISIL, Sep-14)
India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund
Source : http://www.crisil.com/capital-markets/crisil-mf-ranking-list.html

8. CRISIL
Rank
Mutual Fund Scheme AUM
(Rs. Cr)
1-yr 2-yr 3-yr 5-yr Fund Managers
1 ICICI Pru Balanced Fund 968.82 16 3 3 2 Yogesh Bhatt (Equity) and Avnish
Jain (Debt)
2 HDFC Balanced Fund 1911.59 6 1 4 1 Chirag Setalvad and Rakesh Vyas
(Overseas investments)
3 Reliance RSF - Balanced (G) 634.41 21 21 7 9 Sanjay Parekh, Amit Tripathi and
Jahnvee Shah
4 DSP BlackRock Balanced Fund 501.35 19 23 15 11 Vinit Sambre and Dhawal Dalal
5 Kotak Balance 178.84 39 36 17 17 Emmanuel Elango and Abhishek
Bisen
Source : Moneycontrol.com
Asset Allocation (average of above
schemes)
Equity
70%
Debt
30%
Top Sector Holdings
 Banks
 Pharmaceuticals
 Automobiles
 Computers-softwares
 Construction Projects
 Consumer Durables/Non-
Durables
 NBFC
Some Facts :
 ICICI Fund had the best
performance in 2010 of 62.43%
and worst performance in 2008 of
-41.22%
 HDFC Balanced Fund has the
lowest expense ratio of 2.15%
 STCG is charged at 15% (holding
period <=12 months) along with
the Securities Transaction Tax of
0.001%
India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund

9. India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund
Diversified Mutual Fund
Investment Objective
To generate long term capital appreciation and
secondary objective being income generation and
distribution of dividend from a portfolio
constituted of equity and equity related securities
Suitable for investors seeking :
• Long-term capital growth
• Investment in equity and equity-related
securities to form a diversified portfolio
• High Risk
Top 5 Diversified Funds – Consistent Performers (as per CRISIL, Sep-14)
Rank 1 Rank 2 Rank 3 Rank 4 Rank 5
Franklin India
High Growth
Companies
Fund
ICICI
Prudential
Exports and
Other Services
Fund
Principal
Growth Fund
Tata Ethical
Fund
UTI MNC Fund
Birla Sun Life Equity
Fund
Birla Sun Life Long
Term Advantage Fund
Franklin India Prima
Plus
HSBC India
Opportunities Fund
Kotak Classic Equity
Fund
Kotak Select Focus
Fund
Tata Equity PE Fund
Birla Sun Life Advantage Fund
Birla Sun Life India GenNext
Fund
Birla Sun Life Special
Situations Fund
DSP BlackRock Opportunities
Fund
DWS Investment Opportunity
Fund
Franklin India Flexi Cap Fund
HDFC Capital Builder Fund
HDFC Equity Fund
Birla Sun Life Dividend
Yield Plus
DSP BlackRock Equity
Fund
DSP BlackRock Focus 25
Fund
HDFC Core and Satellite
Fund
HDFC Premier MultiCap
Fund
IDFC Classic Equity
Fund
Reliance Vision Fund
SBI Contra Fund
HDFC Growth
Fund
HDFC Large
Cap Fund
Religare
Invesco PSU
Equity Fund
SBI PSU Fund
Sundaram
Select
Thematic
Funds PSU
Opportunities
Source : http://www.crisil.com/capital-markets/crisil-mf-ranking-list.html

10. India’s
economic
performance
Overview of
Indian MF
Industry
Balanced
Mutual
Fund
Performance
of the Fund
Diversified
Mutual
Fund
Performance of
the Fund
CRISIL
Rank
Mutual Fund Scheme AUM
(Rs. Cr)
1-yr 2-yr 3-yr 5-yr Fund Managers
1 Franklin India High Growth
Companies Fund
799.94 75.8 39 39.3 18.9 Neeraj Gaurh and Roshi Jain
2 Tata Equity P/E Fund 475.63 66.7 30.5 28.9 14.4 Atul Bhole
3 Reliance RSF – Equity (G) 2462.69 54.3 21.5 28.1 12.5 Om Prakash Kuckian and Jahnvee
Shah
4 DSP-BR Equity Fund 1898.07 50.3 22.8 24.8 12.9 Apoorva Shah
5 HDFC Growth Fund 1140.48 41.4 18.2 20.1 12.3 Srinivas Rao Ravuri and Rakesh
Vyas (Overseas Investments)
Equity
96%
Debt
4%
Asset Allocation (average of
above schemes)
Top Sector Holdings
 Banks
 Automobiles
 Technology
 Healthcare
 Chemicals
 Diversified
 Energy
 Services
 Textiles
 Communication
Some Facts :
• Franklin MF had the best
performance in 2010 of 154.27%
and worst performance in 2009 of -
61.91%
• Reliance RSF – Equity and DSP-BR
Equity Fund have the lowest
expense ratio of 2.3%
• STCG is charged at 15% (holding
period <=12 months) along with
the Securities Transaction Tax of
0.001%
Source : Moneycontrol.com

11. Why invest in a Mutual Fund?
Diversification
•Diversification across sectors, stocks and asset classes (debt, equity, gold etc.)
•Reduced risk, higher return potential
Beat Inflation
•Generate inflation adjusted returns (when compared to bank deposits)
Tax efficient instruments
•Mutual fund investment in all asset class for a period of more than one year is considered as long term for the
tax purpose.
Convenience and Economical
•Low investment amount (begins from Rs. 500)
•Ability to buy or sell on any business day
•Choice based on individual’s goal and investment needs
Expert Managers
•Dedicated research team
•Experienced fund manager
Liquidity
•Open-ended : Investors have the advantage of getting their money back promptly based on the NAV
•Close-ended : Can be traded on stock exchange
Safety and Transparency
•Regular information about current value of investment
•Well-regulated market by SEBI gives investors an assurance that their investment is in safe hands

12. What will
be the role
of an
Investment
Advisor?
Discover
investor’s
personal
financial
objectives
Provide education
and guidance to
investors
Assess an
investor’s
entire
financial
situation
Monitors the
portfolio and
recommends
adjustments
Design a
customized
investment
plan
Screens industry best
service provider to
complement
investor’s goals
Works with
the
providers
to
implement
investment
plan
Monitors and tracks
the providers
Source : http://www.bw-adv.com/Articles/Role-of-Investment-Advisor.pdf