FYP-Study On Mutual Fund Schemes-NJ India Invest

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A PROJECT REPORT On STUDY OF MUTUAL FUND SCHEMES AT NJ INDIA INVEST PVT. LTD. (PUNE) Submitted In partial fulfillment of MASTER DEGREE IN BUSINESS ADMINISTRATION University of Pune (2007-2009) By SANGEETA ROHRA MASTER OF BUSINESS ADMINISTRATION Allana Institute of Management Science, Pune.
CERTIFICATE
This to certify that SANGEETA ROHRA an M.B.A student of Allana Institute of Management Sciences has undergone a summer internship in NJ INDIA INVEST PVT.LTD. Under the title Study of mutual fund Schemes. She has successfully completed her project work in partial fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION.
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This report is the record of the students own effort your able supervision and guidance.
Prof. RASHMI SUNDRIYAL (Internal Guide) Date :--------Place:----------
DR.K.K. SINGH [Director] Date-------Place:------
DECLARATION
This is to declare that the project STUDY OF MUTUAL FUND SCHEMES is entirely genuine work done by me without copying any material from any available source. It is authentic effort put in by me.
SANGEETA ROHRA
MASTER OF BUSINESS ADMINISTRATION (ALLANA INSTITUTE OF MANAGEMENT SCIENCES)
ACKNOWLEDGEMENT
The last two months with NJ INDIA INVEST PVT.LTD. has been full of learning and sense of contribution toward the organization. I would like to thank NJ INDIA INVEST for giving me an opportunity of learning and contributing through this project. I would like to thanks all the people who knowingly and unknowingly supported me in my endeavor. As a student of ALLANA INSITUTE OF MANAGEMENT SCIENCES, I would first of all like to express my gratitude o Mr. K. K. SINGH for assigning me such a topic STUDY OF MUTUAL FUND SCHEMES to work upon in NJ INDIA INVEST PVT.LTD. During the actual project work, Prof. RASHMI SUNDRIYAL {Project Guide} has been a source of inspiration through her constant guidance; personal interest; encouragement and help. I convey my sincere thanks to her in project. I am also grateful to her for responding Confidence in my abilities end giving me the freedom to work on my project. The project couldnt have been completed without timely and vital help of other office staff. Special thanks to Mr. SWAPNIL ADMANE for their invaluable guidance, keen interest, co-operation, inspiration and of course moral support through my project session.
[SANGEETA ROHRA]
About NJ
NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm. NJ prides in being a professionally managed, quality focused and customer centric organisation. The strength of NJ lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cuttingedge technology platform, developed in-house by NJ. At NJ we believe in

having single window, multiple solutions that are integrated for simplicity and sapience making innovations, accessions, value-additions, a constant process providing customers with solutions for tomorrow which will keep them above the curve, today
NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360 Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 8,600* NJ Fundz Network Partners and over 4,500*
normal advisors associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients.
Vision & Mission
To be the leader in our field of business through,

Total Customer Satisfaction Commitment to Excellence Determination to Succeed with strict adherence to compliance Successful Wealth Creation of our Customers
Mission :
Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments.
Philosophy
At NJ our service and investing philosophy inspire and shape the thoughts, attitude, actions and decisions of our employees. If NJ would beliefs, At NJ our Service and Investing philosophy inspire and shape the resemble a body, our philosophy would be our spirit which drives our body. Service Philosophy: Our primary measure of success is customer satisfaction
We are committed to provide our customers with continuous, longterm improvements and value-additions to meet the needs in an exceptional way. In our efforts to consistently deliver the best service possible to our customers, all employees of NJ will make every effort to:
think of the customer first, take responsibility, and make prompt service to the customer a priority
deliver upon the commitments & promises made on time anticipate, visualize, understand, meet, exceed our customers needs
bring energy, passion & excellence in everything we do be honest and ethical, in action & attitude, and keep the customers interest supreme
strengthen customer relationships by providing service in a thoughtful & proactive manner and meet the expectations, effectively
Investing Philosophy: We aim to provide Need-based solutions for long-term wealth creation
We aim to provide all customers of NJ, directly or indirectly, with true, unbiased, need-based solutions and advice that best meets their stated & un-stated needs. In our efforts to provide quality financial & investment advice, we believe that

Clients want need-based solutions, which fits them Long-term wealth creation is simple and straight Asset-Allocation is the ideal & the best way for long-term wealth creation
Educating and disclosing all the important facets which the customer needs to be aware of, is important
The solutions must be unbiased, feasible, practical, executable, measurable and flexible
Constant monitoring and proper after-sales service is critical to complete the on-going process
At NJ our aim is to earn the trust and respect of the employees, customers, partners, regulators, industry members and the community at large by following our service and investing philosophy with commitment and without exceptions
Management
The management at NJ brings together a team of people with wide experience and knowledge in the financial services domain. The management provides direction and guidance to the whole organisation. The management has strong visions for NJ as a globally respected company providing comprehensive services in financial sector. The Customer First philosophy in deeply ingrained in the management at NJ. The aim of the management is to bring the best to the customers in terms of

Range of products and services offered Quality Customer Service
All the key members of the organisation put in great focus on the processes & systems under the diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage the technology for enhancing overall customer experience.
The key members of the management are: Mr. Neeraj Choksi Mr. Jignesh Desai Sales Team: Mr. Misbah Baxamusa Mr. Kulbhushan Nandwani Mr. Prashant Kakkad Executive Team: Mr. Shirish Patel Mr. Vinayak Rajput Mr. Abhishek Dubey Mr. Viral Shah Mr. Dhaval Desai Jt. Managing Director Jt. Managing Director National Head A.V.P. A.V.P. Information Technology Finance & Operations Marketing & Development Research Human Resources
People & Culture
People Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout the organisation. At NJ can also experience the creativity, one-to-one responsiveness, collaborative approach and passion for delivering value.
At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent due to the education-centric approach and the experience in handling different clients groups across diverse product profiles. NJ understands that the people are the most important assets of the company and it is not the company that grows but the people. NJ hence undertakes rigorous training and educational activities for enhancing the entire team at NJ. NJ also believes in the Learning through Responsibility concept for its employees. For people at NJ success is not a new word, but is a regular stepping-stone to realising the one vision that everyone shares. Culture: At NJ we believe in transforming the lives of our customers. We exist to create a difference a change towards a better life. The culture at NJ reflects this responsibility, this dream of transforming lives. And we at NJ are always excited and enthused in doing so. We believe in keeping You First, providing you with products and services that meet your stated and unstated needs. Client satisfaction and client service is the Mantra we constantly recite. This service oriented philosophy runs throughout the organization, from top to bottom. Employees are given ample freedom in their work. The objective is to keep an open, healthy environment with ample scope for enterprise, improvement, innovations and out-of-the box solutions
Our efforts are constantly engaged in improving our existing services, offering new and innovative solutions that go beyond your expectations. This focus has made us one of the most respected and preferred service providers, especially in the mutual fund industry.
Service Standards
Service in words, service in action
Service is the key to unlocking customer satisfaction, which again is key for sustainability of any business. At NJ we understand this very well. NJ has set strict processes in place to deliver quality services to customers. At NJ strict quality service standards are set and a well-defined process is established and followed religiously by our quality customer service teams. Performance is evaluated on a frequent basis and glitches are ironed out. But quality service also involves quality people in addition to processes. NJ gives significant focus to the proper training and development of the people involved in the service delivery chain. Further we,
Have well-defined "Privacy Policy" to keep clients information confidential & internal audits done on the same at regular intervals
Receive various statistics which are analysed on an ongoing basis to improve the service standards
We are committed to improve and enhance our services and undertake new service initiatives. Such and other services differentiate us with other service providers in the industry. Our Service Commitments The service commitments are to guide the actions of the people at NJ. Clearly stated, advisors can freely communicate any such actions/events wherein they feel that any of the following commitments have been breached / compromised. At NJ we desire to honour our commitments at all points of time and to all our advisors without any bias.
To provide advisor-focussed need-based valued services To provide reliable, accurate and timely information To maintain all records in privacy To optimise services/benefits at least justifiable cost To develop and grow the advisors business To provide constructive after sales service To honour our service commitments
Past Recognitions Some of the awards & recognitions that we have received in past Year 2000: For Outstanding Performance presented by Chairman, Prudential Plc. at London
Year 2002: For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London Year 2003: For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London Year 2004: Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh, Scotland Year 2004: For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia Year 2006: Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual Fund Plc at Mumbai Year 2006: Award Vietnam Comments from Industry Stalwarts: The essence of investment consultancy lies in optimal asset allocation as against security selection or timing the markets for clients. NJ understands this very well and has added significant
value to the clients through this approach. I am sure with this new initiative; a much larger number of clients will be able to benefit from this approach. I wish them all the best in this initiative
CHAPTER: 1
INTRODUCTION
INTRODUCTION OF THE STUDY

Mutual funds now represent perhaps the most appropriate investment opportunity for most small investors. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. It is no wonder then that in the birthplace of mutual fund-the U.S.A.-the fund industry has already overtaken the banking industry, with more money under mutual fund management than deposited with banks.
The Indian mutual fund industry has already opened up many exciting investment opportunity to Indian investors. We have started witnessing the phenomenon of more savings now being entrusted to the funds. Despite the expected continuing growth in the industry, mutual fund is still a new financial intermediary in India. Hence, it is important that the investors, the mutual fund agents / distributors, financial planners, investment advisors and even the fund employees acquire better knowledge of what mutual funds are, what they can do for investors and what they cannot, and how they function differently from other financial intermediaries such as the banks. The Association of Mutual Funds in India has commissioned this Workbook will also serve as a guide to the AMFI Mutual Fund Testing Programmed for distributors and employees of mutual funds.
Mutual Funds normally invest in a well-diversified portfolio of securities. Each investor in a fund is a part owner of all of the funds assets. This enables him to hold a diversified investment portfolio even with a small amount of investment, which would otherwise require big capital.
Even if an investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund in the management of the investors portfolio. The investment management skills, along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own. Few investors have the skills and resources of their own to succeed in todays fast-moving, global and sophisticated markets.
EXECUTIVE SUMMARY
The project titled Comparison of Mutual Fund Scheme being carried out for NJ INDIA INVESTS PVT. LTD. Today an investor is interested in tracking the value of his investments, whether he invests directly in the market or indirectly through Mutual Funds. This dynamic change has taken place because of a number of reasons. With globalization and the growing competition in the investments opportunity available he would have to make guided and rational decisions on whether he gets an acceptable return on his investments in the funds selected by him, or if he needs to switch to another fund. In order to achieve such an end the investor has to understand the basis of appropriate preference measurement for the fund, and acquire the basic knowledge of the different measures of evaluating the performance
of the fund. Only then would he be in a position to judge correctly whether his fund is performing well or not, and make the right decision. This project is undertaken to help the investors in tracking the performance of their investments in Mutual Funds and has been carried out with the objective of giving performance analysis of Mutual Fund. The methodology for carrying out the project was very simple that is through secondary data obtained through various mediums like fact sheet of the funds, the Internet, Business magazines, Newspaper, etc. the analysis of Mutual Funds has been done with respect to its various parameters. I hope NJ INDIA INVEST PVT. LTD., Pune will recognize this as well as take more references from this project report.
INTRODUCTION OF THE PROJECT

In a Mutual Fund, many investors contribute to form a common pool of money. This pool of money is invested in accordance with an objective. The ownership of the fund is thus joint of mutual; the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him bears to the total amount of the fund. A mutual fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. Thus, a growth fund would buy mainly equity assets ordinary shares, preference, warrants, etc. An income fund would mainly buy debt instruments such as debentures and bonds. The funds assets are owned
by the investors in the same proportion as their contribution bears to the total contributions of all investors put together. An investor can buy the shares from a company only when the company makes a share issue. At other times, a share can be purchased from another investor through the stock exchange if the share is listed. A shareholder can sell the share to the company only when the company announces share buy back. At other times, he can sell share to another investor through a stock exchange. The price observed in a stock exchange is a reasonable estimate of the fair value of the share. An open-end mutual fund is quite different in this respect. In an open-end mutual fund, investors can buy units from the fund and sell units to the fund continuously. The stock exchange is not in the picture. To ensure that there is fairness, sale and purchase has to take place at fair value of the unit. In other words, each share or unit that an investor holds needs to be assigned a value. Since the units held by an investor evidence the ownership of the funds assets, the value of the total assets of the fund when divided by the total number of units issued by the mutual fund gives us the value of one unit. This is generally called the Net Asset Value (NAV) of one unit or one share. The total value of an investors part ownership is thus determined by multiplying the NAV with the number of units held.
OBJECTIVES OF THE STUDY:
The project was conducted for the following objective:1) To gain an understanding and knowledge of Mutual Funds as an Investment Tool. 2) To study the product profile of the company. 3) To evaluate the performance of selected schemes of Mutual Fund of different companies. 4) To compare the Mutual fund schemes on different parameters. 5) To analyze the performance factor of the Fund based on different drivers associated with the specific fund. 6) To study the diversification of mutual fund. 7) To know the different Asset management companies involve in MUTUAL FUND. Scope of the study:
The Indian securities market is the scope of this project and funds floated therein. The whole project was based with the agenda to analyze existing mutual funds and determine their performance factors .In depth analysis of individual fund is not scope but on the other hand performance of funds and finding their reasons as in general is the primary motive behind this project. The area of the project work is pune city and its location where the survey has been undertaken those are Hinjewadi IT Park, Magarpatta IT Park, WNS, Baner symphony Soft Ware, Zensar IT Park, and Senapati Bapat Road.
LIMITATIONS OF THE STUDY: Every work has its own limitation. Limitations are extent to which the process should not exceed. Limitations of this project are:1. Duration of project was not enough to make a conclusion on such a vast subject time. Constraint has become a big limitation. 2. The analysis is based on historical data and thus indicates the past performance, which may not always be indicative of the future performance. 3. Different schemes consider different market indices as their benchmarks, but for purpose of uniformity in the study all schemes have to be compared against same benchmark index. 4.Weekly NAVS have been considered for the study. Daily NAVs would have given more precise result for the study.
5. It is difficult to get full insight of how fund managers have deployed their funds. 6. There are more than 30 companies and offering various ranges of products and analyzing all of them is again a difficult task. 7. Mutual Fund industry performance is dependent on daily churning of portfolio and Net Asset Value of each fund changes every day, thus the fund which in comparison is doing better today may not perform well tomorrow and thus it affects the analysis process. All the above mentioned statements are the limitations of the project. Time, Sample Size & Mentality of investor are the main limitations of the project. The study is being done by taking and keeping all limitation in mind. The project is completed in prescribed time. To find the Awareness of Mutual Fund the Sample Size is not at all enough because the population size is much bigger than the sample size and the last limitation was to change the mentality of the investor to invest in a particular type of the Investment Product. As the Indian Market have a large number of potential customer to draw a conclusion in such a small size may not be reliable.
CHAPTER:2
COMPANY PROFILE
About
NJ
NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm. NJ prides in being a professionally managed, quality focused and customer centric organisation. The strength of NJ lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cuttingedge technology platform, developed in-house by NJ. At NJ we believe in

NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the
services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360 Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 8,600* NJ Fundz Network Partners and over 4,500* normal advisors associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients.
Vision & Mission

Mission:
Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and
commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments.
Philosophy

Management

All the key members of the organisation put in great focus on the processes & systems under the diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage the technology for enhancing overall customer experience. The key members of the management are: Mr. Neeraj Choksi Mr. Jignesh Desai Sales Team: Mr. Misbah Baxamusa Mr. Kulbhushan Nandwani Mr. Prashant Kakkad National Head A.V.P. A.V.P. Jt. Managing Director Jt. Managing Director
People
&
Culture
People Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout the organisation. At NJ can also experience the creativity, one-to-one responsiveness, collaborative approach and passion for delivering value.
At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent due to the education-centric approach and the experience in handling different clients groups across diverse product profiles. NJ understands that the people are the most important assets of the company and it is not the company that grows but the people. NJ hence undertakes rigorous training and educational activities for enhancing the entire team at NJ. NJ also believes in the Learning through Responsibility concept for its employees. For people at NJ success is not a new word, but is a regular stepping-stone to realising the one vision that everyone shares. Culture: At NJ we believe in transforming the lives of our customers. We exist to create a difference a change towards a better life. The culture at NJ reflects this responsibility, this dream of transforming lives. And we at NJ are always excited and enthused in doing so. We believe in keeping You First, providing you with products and services that meet your stated and unstated needs. Client satisfaction and client service is the Mantra we constantly recite. This service oriented philosophy runs throughout the organization, from top to bottom. Employees are given ample freedom in their work. The objective is to keep an open, healthy environment with ample scope for enterprise, improvement, innovations and out-of-the box solutions
Our efforts are constantly engaged in improving our existing services, offering new and innovative solutions that go beyond your expectations. This focus has made us one of the most respected and preferred service providers, especially in the mutual fund industry.
Service
Standards
Service in words, service in action Service is the key to unlocking customer satisfaction, which again is key for sustainability of any business. At NJ we understand this very well. NJ has set strict processes in place to deliver quality services to customers. At NJ strict quality service standards are set
and a well-defined process is established and followed religiously by our quality customer service teams. Performance is evaluated on a frequent basis and glitches are ironed out. But quality service also involves quality people in addition to processes. NJ gives significant focus to the proper training and development of the people involved in the service delivery chain. Further we,
We are committed to improve and enhance our services and undertake new service initiatives. Such and other services differentiate us with other service providers in the industry.
Our Service Commitments The service commitments are to guide the actions of the people at NJ. Clearly stated, advisors can freely communicate any such actions/events wherein they feel that any of the following commitments have been breached / compromised. At NJ we desire to honour our commitments at all points of time and to all our advisors without any bias.
Past Recognitions Some of the awards & recognitions that we have received in past Year 2000: For Outstanding Performance presented by Chairman, Prudential Plc. at London
Year 2002: For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London Year 2003: For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London Year 2004: Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh, Scotland Year 2004: For Outstanding Performance at by Deputy CEO, Prudential Malaysia
Singapore
Year 2006: Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual Fund Plc at Mumbai Year 2006: Award Vietnam
Comments from Industry Stalwarts: The essence of investment consultancy lies in optimal asset allocation as against security selection or timing the markets for clients. NJ understands this very well and has added significant value to the clients through this approach. I am sure with this new initiative; a much larger number of clients will be able to benefit from this approach. I wish them all the best in this initiative
CHAPTER NO 3:
THEORETICAL FRAMEWORK
Mutual Funds: An overview Introduction

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment for the common strategy.
A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and complex and modern financial scenario. Markets for equity 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. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc. A mutual fund is the answer to all there situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20 th century phenomenon. In fact, mutual funds gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with different investment objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in
most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund. In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.
HISTORY OF MUTUAL FUND IN INDIA: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. FIRST PHASE 1964-87 An act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under management. SECOND PHASE 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) 1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry has assets under management of Rs. 47,004 crores. THIRD PHASE 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS) With the entry private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, expect UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of other mutual funds.
FOURTH PHASE SINCE FEBRUARY 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. 29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs. 153108 crores under 421 schemes.
FUTURE SCENARIO The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names 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 and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have
called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
RECENT TRENDS IN MUTUAL FUND INDUSTRY
The most important trend in mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players.
Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organizations. The performance of most of the schemes floated by these funds was not good. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by paying large amounts of money as the diffrence between the guaranteed and actual returns. The service levels were also very bad.
Most of these AMCs have not been able to retain staff, float new schemes etc. And it is doubtful whether, barring a few exceptions, 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 also very similar. They quickly realized that the AMC business, which makes money in the long term and requires deep-pocketed support in the
intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on.
The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact, they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these.
LIST OF MEMBERS:
A) Bank Sponsored 1) Joint Ventures Predominantly Indian a. SBI Funds Management Private Ltd.
2) Others a. BOB Asset Management Co. Ltd. b. Canbank Investment Management Services Ltd. c. UTI Asset Management Co. Pvt. Ltd.
B) Institutions a. Jeevan Bima Sahayog Asset Management Co. Ltd.
C) Private Sector 1. Indian a. Benchmark Asset Management Co. Private Ltd. b. Cholamandalam Asset Management Co. Ltd. c. Credit Capital Asset Management Co. Ltd. d. Escorts Asset Management Ltd. e. J.M. Financial Asset Management Private Ltd. f. Kotak Mahindra Asset Management Co. Ltd. g. Quantum Asset Management Co. Private Ltd. h. Relience Capital Asset Management Ltd. i. Sahara Asset Management Co. Private Ltd. j. Sundaram Asset Management Co. Ltd. k. Tata Asset Management Ltd. 2. JOINT VENTURES PREDOMINANTLY INDIAN a. Birla Sun Life Asset Management Co. Ltd.
b. DSP Merrill Lynch Fund Managers Ltd. c. HDFC Asset Management Co. Ltd. d. Prudential ICICI Asset Management Co. Ltd.
3. JOINT VENTURES PREDOMINANTLY FOREIGN a. ABN AMRO Asset Management (India) Ltd. b. Deutsche Asset Management (India) Private Ltd. c. Fidelity Fund Management Private Ltd. d. Franklin Templeton Asset Management (India) Private Ltd. e. HSBC Asset Management (India) Private Ltd. f. ING Investment Management (India) Private Ltd. g. Morgan Stanley Investment Management Private Ltd. h. Principal PNB Asset Management Co. Private Ltd. i. Standard Charted Asset Management Co. Private.
TYPES OF MUTUAL FUNDS Mutual fund schemes may be classified on the basis of its structure and its investment objective. By Structure:
OPEN ENDED FUNDS An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. The key feature of open-end schemes is liquidity. CLOSED-ENDED FUNDS A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. INTERVAL FUNDS Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective: GROWTH FUNDS The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. INCOME FUNDS
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. BALANCED FUNDS The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.
MONEY MARKET FUNDS The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Loads Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission
will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. NO-LOAD FUNDS A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. OTHER SCHEMES: TAX SAVING SCHEMES These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30,20. SPECIAL SCHEMES INDUSTRY SPECIFIC SCHEMES Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceutical etc. INDEX SCHEMES
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. SECTORAL SCHEMES Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as A Group shares or initial public offerings.
BENEFITS OF MUTUAL FUND INVESTMENT: Professional Management: Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.
Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund managers investment strategy and outlook. Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can
systematically invest or withdraw funds according to your needs and convenience.
Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large of its large corpus allows even a small investor to take the benefit of its investment strategy. Choice of Scheme: Mutual Fund offers a family of schemes to suit your varying needs over a lifetime. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
DRAWBACKS OF MUTUAL FUND:
No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.
Fees and Commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or loads to compensate brokers, financial consultants, or financial
planners. Even if you dont use a broker or other financial advisor, you will pay a sales commission if you buy shares in a Load Fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
Management Risk: When you invest in a mutual fund, you depend on the funds manager to make the right decisions regarding the funds portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
CHAPTER NO 4:
RESEARCH METHODOLOGY
MEANING OF RESEARCH A research is a careful investigation or enquiry, especially through search for new facts in any branch of knowledge. It is a systemized effort to gain more knowledge. Research Methodology is a way to systematically solve the research problem. It includes not only the research methods, but also the logic behind using the methods. The methods of research used in this project were as follows: Analytical Research Applied Research
ANALYTICAL RESEARCH In analytical research the researcher has to use the facts already available, and analyze these to make the critical evaluation of the material. In this project I have used many raw data from the various sources and analyzed it for underlying trends. APPLIED RESEARCH Applied Research aims at finding a solution for an immediate problem. Research aimed at certain conclusions (say a solution) facing a concrete social or business problem is an example of applied research. Thus the central aim of applied research is to find a solution for some pressing practical problem. In this project, in the last section, by means of assumptions I have found the feasibility of a project that the organization means to undertake. The analysis of the trends followed by the mutual funds was Analytical Research.
OBJECTIVE OF RESEARCH METHODOLOGY It intends, verifies or correct knowledge. It enables us to have a better understanding of our world. It aids in purposive planning. Research initiates, formulates, deflects and clarifies theories. METHODS OF DATA COLLECTION Data is primarily of two kinds. 1. Primary data. INTERVIEWING It is the most commonly used method of data collection. It is two ways purposive communication between interviewer and the respondent aimed
at obtaining and recording information pertinent to the subject matter of the study. 2. Secondary data. Secondary data may be defined as a data that has been collected earlier for some purpose other than the purpose of the present study. Any data that is available to the prior commencement of the research project is secondary data and it is called historic data.
USES OF SECONDARY DATA It acts as a reference for the present study. The secondary data can be the useful benchmark on which the finding of the study can be tested. At times it may be the only source of data. SOURCES OF SECONDARY DATA 1. Published sources 2. Unpublished sources DATA COLLECTION METHODS CAN BE CLASSIFIED AS FOLLOWS Observations Interviewing Experimentation Simulations Projective techniques
IN THIS PROJECTS THE TWO METHODS OF COLLECTION WERE USED 1. Interviewing 2. Published source of data in the form of fact sheets RESEARCH DESIGN Type of Research Descriptive Nature of Research Quantitative Type of Question Close Ended Types of Questionnaire Structured Types of Analysis Statistical Analysis
CHAPTER NO 5: DATA ANALYSIS & INTERPRETATION
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EXCELLENT PAST PERFORMANCE

Mutual Fund Equity schemes have delivered very attractive returns in last 5 years, giving over 51% returns annually
Scheme Name Average of Diversified Mutual fund Schemes BSE 30 (Sensex) NSE 50 No. of Diversified Schemes considered 3 Years 5 Years 7 Years 10 Years 27.79 12.69 12.9 6
20.98 23.7 23.08 46
35.10 29.19 27.78 30
31.92 23.4 22.11 20
Opportunity for you to offer your clients with such equity-related products for long-term wealth creation
* Returns as on 23rd August,2008
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PENETRATION OF FINANCIAL PRODUCTS
Investor Base Across Various Financial Products

250 200 150 100 50 0
240
Customers in millions
110 16
Credit Cards Banking
40
Debit Cards
17
Mutual Funds Life Insurance
15
General Insurance
1.5
Online Trading
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Penetration of Mutual Funds is very low Going forward, the opportunity is big
Source: www.rbi.org.in www.irdaindia.org www.sebi.gov.in
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Investors Looking for Products with following Features :-
Excellent Returns that can beat Inflation Liquidity of the money Tax Efficient Returns Tax Deduction benefits under Section 80 C Professionally Managed Transparent Easily Understood Looking for products which help in Wealth Creation in long term
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LOW PENETRATION OF MUTUAL FUNDS IN INDIA

Few people have been exposed to the idea & advantages of mutual funds and even fewer actually invest in mutual funds, because of lack of adequate no. of advisors
Measure Rupees invested in Mutual Funds out of 100 MF Industry size as % size of economy (GDP) Total size / value of MF industry (Rs. Lac Crores) *for House Holds savings
US > 30 83% > 469 *Figures are approx.
India <2 6% >5
Opportunity to offer such products to clients Every person can be a customer !!

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LOW COMPETITION OF MUTUAL FUND ADVISORS

Lack of competition represents a very big opportunity to grow your business anywhere in India.
> 20 Lacs Insurance Advisors V/s < 55,000 Mutual Fund Advisors Very Few Financial Advisors
>35 Insurance Advisors V/s 1 Mutual Fund Advisor
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Developing Mutual Fund Advisory Business
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1st in India to offer Complete Business Platform to financial advisors / firms to manage, monitor and grow their advisory practice Integrated, comprehensive, convergent & practical business solutions Understands what is needed to grow & manage a financial advisory practice
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NJ MANAGERS Personal Attention Dedication: NJ is dedicated to your growth hence has a limit of
only 80 advisors for all Employees. Employee's complete focus is on expanding your business & growth as their own growth is linked to your growth Single focus / expertise on mutual funds unlike other distributors Experienced and qualified sales force show you the right direction Interact with apprehensive clients to help in client acquisition through Ongoing Client Meets, Joint Calls etc.
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NJ RESEARCH NJ KNOWLEDGE EDGE

Regular publications:
Monthly magazine 'FUNDZ WATCH Weekly reports Daily market update Daily MF track and much more...
Research reports
: Recommendations, market insight, analyses etc
Ongoing interaction through product training, Fund Manager Meets etc. Launch Presentations of all prominent products of various Mutual Funds
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NJ ADVANTAGE Single Interaction Point

Effective integration of different products and services for simplicity that deliver effective, dynamic solutions that work for you.
Dedicated Relationship Manager for every Fundz Network Partner. Single Service Point Get/ Deposit Applications of All AMCs/ All schemes at NJ PSC. NJ Customer care - Single contact point for all queries across all AMCs/ All problems.
SINGLE WINDOW - MULTIPLE SOLUTIONS

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CHAPTER: 6 FINDINGS,SUGGESTIONS AND CONCLUSION
FINDINGS From the above data analysis and interpretations, following observations can be made:
The DSP ML Equity (Growth) scheme was started way back in April 1997 and since then it has been a consistent performer. The scheme is benchmarked against Nifty. The average equity exposure of the portfolio in last one year has been around 94.26% and 5.74% in cash and equivalents. In the current month however it had 89.58% of assets in equity and 10.42% in cash and equivalent segments. The scheme has a corpus of Rs. 469.8094 crores (Aug 2007), which is not among the best in the industry but its growth from Rs. 68.63 crores as on November 2004 definitely points towards the rising investor confidence in this scheme. In last six months the corpus has grown over. The HSBC Equity (growth) scheme is mandated to invest upto 95100% in the equity related instruments and 0-5% in debt and money market instruments. As of Aug 2007, it has allocated 89.44% of its assets in equity and rest in cash and equivalent. Over a period of one year the asset allocation in equities has not fluctuated much with average allocation at 88.6%. The scheme had a corpus of Rs. 973.5673 crores as on Aug 2007 and has gone down by 25% over a period of last one year. The UTI Equity (Growth) scheme is managing assets worth Rs. 1635.4454 crores as on Aug 2007 but has witnessed significant reduction from Rs. 4472 crores when it was launched. However over a period of one year assets under management of the scheme has increased by 45%. As per stated guidelines it could invest at least 80% of its net assets in equity and equity related instruments and upto 20% in Debt and Money market instruments. As on Aug 2007, the scheme has allocated 97.94% of its assets in equities and rest in cash and equivalent with average equity allocation of its assets in last one year.
The LIC equity (Growth) scheme has a corpus of Rs. 91.1291 crores as on Aug 2007 and has gone up by 41% in last one year. As per stated guidelines it could invest 80%-100% of its net assets in equity and equity related instruments and upto 20% in Debt and Money market instruments. As on Aug 2007, the scheme has allocated 101.92% of its assets in equities. Average equity allocation in last one year has been at 95.9% of assets under management of the scheme.
SUGGESTIONS Following suggestions and recommendations can be made the above analysis and findings.
1. The AMC (Asset Management Company) should create awareness among the individuals about the benefits of Mutual Funds & the returns from the Mutual Fund market. 2. This can be done by arranging at the household level or by conducing external program at a public place to educate people about the nature, benefits & importance of Mutual Funds. 3. As on many people are not aware about mutual fund & other financial products, industry should conduct surveys to gauge the preferences of the investors as many people do not invest there savings due to lack of knowledge & because of high risk. 4. They should have customer care department. 5. Make your future secure by investing in Mutual Funds, as investments in mutual funds may assure based on various available schemes and funds, higher rate of return that conventional investments like Banks and Post Office may not provide. 6. The prospective investors should diversify their monthly income by preparing the Monthly Budget and they cab generate savings out of their regular income to invest in the monthly plan of Mutual Funds. 7. It is found that minimum investment in case of HSBC Equity Fund is Rs. 10,000 which is double than HDFCs, hence it is suggested to reduce it so that more number of invertors can invest. 8. Investors who want to gain consistent profit but in a long time duration can invest in these companies. The net asset value of the funds under consideration had proved to be bullish and bearish in a very short period. But if we see the trend these schemes shows bullish nature on an average.
9. Dividend acts as a good promotion tool to investors. In all AMC taken above only UTI equity fund has given dividend, so other AMC can go for dividend. 10. In case of LIC Equity Fund, since the AMC has made short term borrowings from money market and hence it might have affect its performance. Hence it is recommended that AMC should attract more investors rather than borrowings from market.
CONCLUSION
1. In case of UTI Equity Fund, though the schemes performance has taken a beating in the recent past but frontline stocks in the portfolio and better performance in bearish phase do provide some comfort. At the same time its sector calls are likely to show the good performance once rerated. Going forward investors should
closely watch its performance before trimming down the exposures. 2. Seeing the past market rally the LIC Equity (Growth) scheme shows a lackluster performance and has been ranked at the bottom of the charts most of the time since its inception. Its one year and three returns are far below the returns posted by benchmark and peers despite the average equity exposure of 95% past one year. The scheme had trailed its peers and benchmark all the time during the selected time frame shows high risk profile compared to its peers. 3. Birla Equity Fund, has been very consistent in the performance. The scheme has given 41.02% annualized return since inception. In almost all the time periods considered it has consistently beaten the benchmark and the peer group average. In last one year the scheme has delivered 48.77% return while the peer group and the benchmark deliver 39.91% & 37.45% respectively. The scheme has over the last three years remained in the top quartile. 4. Over the years since the Mutual Fund industry started witnessing positive contribution in the capital market both, Public sector and Private sector Mutual Fund institutions has made enough efforts to meet the investors demands and likely will continue in future too.
CHAPTER: 7 BIBLIOGRAPHY
BOOKS REFERRED
WEBSITES www.njindiainvest.com www.amfiindia.com
Product And Services Taxman Amfi Course Book
www.moneycontrol.com www.karvy.com www.Valueresearchonline.com
CHAPTER: 1
INTRODUCTION
The Indian mutual fund industry has already opened up many exciting investment opportunity to Indian investors. We have started witnessing the phenomenon of more savings now being entrusted to the funds. Despite the expected continuing growth in the industry, mutual fund is still a new financial intermediary in India. Hence, it is important that the investors, the mutual fund agents / distributors, financial planners, investment advisors and even the fund employees acquire better knowledge of what mutual funds are, what they can do for investors and what they cannot, and how they function differently from other financial intermediaries such as the banks. The Association of Mutual Funds in India has commissioned this Workbook will also serve as a guide to the AMFI M usual Fund Testing Programmed for distributors and employees of mutual funds.
Even if an investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund
in the management of the investors portfolio. The investment management skills, along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own. Few investors have the skills and resources of their own to succeed in todays fast-moving, global and sophisticated markets.
EXECUTIVE SUMMARY
The project titled Comparison of Mutual Fund Scheme being carried out for NJ INDIA INVESTS PVT. LTD. Today an investor is interested in tracking the value of his investments, whether he invests directly in the market or indirectly through Mutual Funds. This dynamic change has taken place because of a number of reasons. With globalization and the growing competition in the investments opportunity
available he would have to make guided and rational decisions on whether he gets an acceptable return on his investments in the funds selected by him, or if he needs to switch to another fund. In order to achieve such an end the investor has to understand the basis of appropriate preference measurement for the fund, and acquire the basic knowledge of the different measures of evaluating the performance of the fund. Only then would he be in a position to judge correctly whether his fund is performing well or not, and make the right decision. This project is undertaken to help the investors in tracking the performance of their investments in Mutual Funds and has been carried out with the objective of giving performance analysis of Mutual Fund. The methodology for carrying out the project was very simple that is through secondary data obtained through various mediums like fact sheet of the funds, the Internet, Business magazines, Newspaper, etc. the analysis of Mutual Funds has been done with respect to its various parameters. I hope NJ INDIA INVEST PVT. LTD., Pune will recognize this as well as take more references from this project report.

In a Mutual Fund, many investors contribute to form a common pool of money. This pool of money is invested in accordance with an objective. The ownership of the fund is thus joint of mutual; the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him bears to the total amount of the fund.
A mutual fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. Thus, a growth fund would buy mainly equity assets ordinary shares, preference, warrants, etc. An income fund would mainly buy debt instruments such as debentures and bonds. The funds assets are owned by the investors in the same proportion as their contribution bears to the total contributions of all investors put together. An investor can buy the shares from a company only when the company makes a share issue. At other times, a share can be purchased from another investor through the stock exchange if the share is listed. A shareholder can sell the share to the company only when the company announces share buy back. At other times, he can sell share to another investor through a stock exchange. The price observed in a stock exchange is a reasonable estimate of the fair value of the share. An open-end mutual fund is quite different in this respect. In an open-end mutual fund, investors can buy units from the fund and sell units to the fund continuously. The stock exchange is not in the picture. To ensure that there is fairness, sale and purchase has to take place at fair value of the unit. In other words, each share or unit that an investor holds needs to be assigned a value. Since the units held by an investor evidence the ownership of the funds assets, the value of the total assets of the fund when divided by the total number of units issued by the mutual fund gives us the value of one unit. This is generally called the Net Asset Value (NAV) of one unit or one share. The total value of an investors part ownership is thus determined by multiplying the NAV with the number of units held.
OBJECTIVE OF THE STUDY:
The project was conducted for the following objective:8) To gain an understanding and knowledge of Mutual Funds as an Investment Tool. 9) To study the product profile of the company. 10) To evaluate the performance of selected schemes of Mutual
Fund of different companies. 11) To compare the Mutual fund schemes on different
parameters.
12)
To analyze the performance factor of the Fund based on
different drivers associated with the specific fund. 13) 14) To study the diversification of mutual fund. To know the different Asset management companies involve
in MUTUAL FUND. Scope of the study: The Indian securities market is the scope of this project and funds floated therein. The whole project was based with the agenda to analyze existing mutual funds and determine their performance factors .In depth analysis of individual fund is not scope but on the other hand performance of funds and finding their reasons as in general is the primary motive behind this project. The area of the project work is pune city and its location where the survey has been undertaken those are Hinjewadi IT Park, Magarpatta IT Park, WNS, Baner symphony Soft Ware, Zensar IT Park, and Senapati Bapat Road.
LIMITATION OF THE STUDY: Every work has its own limitation. Limitations are extent to which the process should not exceed. Limitations of this project are:1. Duration of project was not enough to make a conclusion on such a vast subject time. Constraint has become a big limitation.
2. The analysis is based on historical data and thus indicates the past performance, which may not always be indicative of the future performance. 3. Different schemes consider different market indices as their benchmarks, but for purpose of uniformity in the study all schemes have to be compared against same benchmark index. 4.Weekly NAVS have been considered for the study. Daily NAVs would have given more precise result for the study. 5. It is difficult to get full insight of how fund managers have deployed their funds. 6. There are more than 30 companies and offering various ranges of products and analyzing all of them is again a difficult task. 7. Mutual Fund industry performance is dependent on daily churning of portfolio and Net Asset Value of each fund changes every day, thus the fund which in comparison is doing better today may not perform well tomorrow and thus it affects the analysis process. All the above mentioned statements are the limitations of the project. Time, Sample Size & Mentality of investor are the main limitations of the project. The study is being done by taking and keeping all limitation in mind. The project is completed in prescribed time. To find the Awareness of Mutual Fund the Sample Size is not at all enough because the population size is much bigger than the sample size and the last limitation was to change the mentality of the investor to invest in a particular type of the Investment Product. As the Indian
Market have a large number of potential customer to draw a conclusion in such a small size may not be reliable.
CHAPTER NO 3: THOERITCAL FRAMEWORK
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy. A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and complex and modern financial scenario. Markets for equity 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. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.
A mutual fund is the answer to all there situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20 th century phenomenon. In fact, mutual funds gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of
mutual funds with different investment objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations.
A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.
In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.
HISTORY OF MUTUAL FUND IN INDIA: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. FIRST PHASE 1964-87 An act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under management. SECOND PHASE 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) 1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the
first non-UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry has assets under management of Rs. 47,004 crores. THIRD PHASE 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)
With the entry private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, expect UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of other mutual funds. FOURTH PHASE SINCE FEBRUARY 2003
FUTURE SCENARIO
The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names 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 and hence these big names would hardly like to get left behind.
The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
Most of these AMCs have not been able to retain staff, float new schemes etc. And it is doubtful whether, barring a few exceptions, 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 also very similar. They quickly realized that the AMC business, which makes money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on.
LIST OF MEMBERS:
D) Bank Sponsored 3) Joint Ventures Predominantly Indian b. SBI Funds Management Private Ltd.
4) Others d. BOB Asset Management Co. Ltd.
e. Canbank Investment Management Services Ltd. f. UTI Asset Management Co. Pvt. Ltd.
E) Institutions b. Jeevan Bima Sahayog Asset Management Co. Ltd.
F) Private Sector 4. Indian l. Benchmark Asset Management Co. Private Ltd. m. Cholamandalam Asset Management Co. Ltd. n. Credit Capital Asset Management Co. Ltd. o. Escorts Asset Management Ltd. p. J.M. Financial Asset Management Private Ltd. q. Kotak Mahindra Asset Management Co. Ltd. r. Quantum Asset Management Co. Private Ltd. s. Relience Capital Asset Management Ltd. t. Sahara Asset Management Co. Private Ltd. u. Sundaram Asset Management Co. Ltd. v. Tata Asset Management Ltd. 5. JOINT VENTURES PREDOMINANTLY INDIAN e. Birla Sun Life Asset Management Co. Ltd. f. DSP Merrill Lynch Fund Managers Ltd. g. HDFC Asset Management Co. Ltd. h. Prudential ICICI Asset Management Co. Ltd.
6. JOINT VENTURES PREDOMINANTLY FOREIGN j. ABN AMRO Asset Management (India) Ltd.
k. Deutsche Asset Management (India) Private Ltd. l. Fidelity Fund Management Private Ltd. m. Franklin Templeton Asset Management (India) Private Ltd. n. HSBC Asset Management (India) Private Ltd. o. ING Investment Management (India) Private Ltd. p. Morgan Stanley Investment Management Private Ltd. q. Principal PNB Asset Management Co. Private Ltd. r. Standard Charted Asset Management Co. Private.
TYPES OF MUTUAL FUNDS Mutual fund schemes may be classified on the basis of its structure and its investment objective. By Structure: OPEN ENDED FUNDS An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. The key feature of open-end schemes is liquidity.
CLOSED-ENDED FUNDS A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
INTERVAL FUNDS Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective: GROWTH FUNDS The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. INCOME FUNDS The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.
BALANCED FUNDS The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.
MONEY MARKET FUNDS The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Loads Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. NO-LOAD FUNDS
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. OTHER SCHEMES: TAX SAVING SCHEMES These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30,20. SPECIAL SCHEMES INDUSTRY SPECIFIC SCHEMES Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceutical etc. INDEX SCHEMES
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50.
SECTORAL SCHEMES
Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as A Group shares or initial public offerings.
BENEFITS OF MUTUAL FUND INVESTMENT: Professional Management: Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.
Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund managers investment strategy and outlook. Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can
systematically invest or withdraw funds according to your needs and convenience. Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large of its large corpus allows even a small investor to take the benefit of its investment strategy.
Choice of Scheme: Mutual Fund offers a family of schemes to suit your varying needs over a lifetime. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
Fees and Commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or loads to compensate brokers, financial consultants, or financial planners. Even if you dont use a broker or other financial advisor, you will pay a sales commission if you buy shares in a Load Fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If
your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
CHAPTER NO 4: RESEARCH METHODOLOGY
MEANING OF RESEARCH
A research is a careful investigation or enquiry, especially through search foe new facts in any branch of knowledge. It is a systemized effort to gain more knowledge. Research Methodology is a way to systematically solve the research problem. It includes not only the research methods, but also the logic behind using the methods. The methods of research used in this project were as follows: Analytical Research Applied Research ANALYTICAL RESEARCH In analytical research the researcher has to use the facts already available, and analyze these to make the critical evaluation of the material.
In this project I have used many raw data from the various sources and analyzed it for underlying trends. APPLIED RESEARCH
Applied Research aims at finding a solution for an immediate problem. Research aimed at certain conclusions (say a solution) facing a concrete social or business problem is an example of applied research. Thus the central aim of applied research is to find a solution for some pressing practical problem.
In this project, in the last section, by means of assumptions I have found the feasibility of a project that the organization means to undertake. The analysis of the trends followed by the mutual funds was Analytical Research.
OBJECTIVE OF RESEARCH METHODOLOGY It intends, verifies or correct knowledge. It enables us to have a better understanding of our world. It aids in purposive planning. Research initiates, formulates, deflects and clarifies theories. METHODS OF DATA COLLECTION Data is primarily of two kinds. 3. Primary data.
INTERVIEWING
It is the most commonly used method of data collection. It is two ways purposive communication between interviewer and the respondent aimed at obtaining and recording information pertinent to the subject matter of the study. 4. Secondary data.
Secondary data may be defined as a data that has been collected earlier for some purpose other than the purpose of the present study. Any data that is available to the prior commencement of the research project is secondary data and it is called historic data.
USES OF SECONDARY DATA It acts as a reference for the present study. The secondary data can be the useful benchmark on which the finding of the study can be tested. At times it may be the only source of data. SOURCES OF SECONDARY DATA 3. Published sources 4. Unpublished sources
DATA COLLECTION METHODS CAN BE CLASSIFIED AS FOLLOWS
Observations Interviewing Experimentation Simulations Projective techniques

IN THIS PROJECTS THE TWO METHODS OF COLLECTION WERE USED
3. Interviewing 4. Published source of data in the form of fact sheets RESEARCH DESIGN Type of Research Descriptive Nature of Research Quantitative Type of Question Close Ended Types of Questionnaire Structured
Types of Analysis Statistical Analysis
CHAPTER: 6
FINDING, SUGGESSIONS AND CONCLUSION
FINDINGS
From the above data analysis and interpretations, following observations can be made: The DSP ML Equity (Growth) scheme was started way back in April 1997 and since then it has been a consistent performer. The scheme is benchmarked against Nifty. The average equity exposure of the portfolio in last one year has been around 94.26% and 5.74% in cash and equivalents. In the current month however it had 89.58% of assets in equity and 10.42% in cash and equivalent segments. The scheme has a corpus of Rs. 469.8094 crores (Aug 2007), which is not among the best in the industry but its growth from Rs. 68.63 crores as on November 2004 definitely points towards the rising investor confidence in this scheme. In last six months the corpus has grown over. The HSBC Equity (growth) scheme is mandated to invest upto 95100% in the equity related instruments and 0-5% in debt and money market instruments. As of Aug 2007, it has allocated 89.44% of its assets in equity and rest in cash and equivalent. Over a period of one year the asset allocation in equities has not fluctuated much with average allocation at 88.6%. The scheme had a corpus of Rs. 973.5673 crores as on Aug 2007 and has gone down by 25% over a period of last one year. The UTI Equity (Growth) scheme is managing assets worth Rs. 1635.4454 crores as on Aug 2007 but has witnessed significant reduction from Rs. 4472 crores when it was launched. However over a period of one year assets under management of the scheme has increased by 45%. As per stated guidelines it could invest at least 80% of its net assets in equity and equity related instruments and upto 20% in Debt and Money market instruments. As on Aug
2007, the scheme has allocated 97.94% of its assets in equities and rest in cash and equivalent with average equity allocation of its assets in last one year. The LIC equity (Growth) scheme has a corpus of Rs. 91.1291 crores as on Aug 2007 and has gone up by 41% in last one year. As per stated guidelines it could invest 80%-100% of its net assets in equity and equity related instruments and upto 20% in Debt and Money market instruments. As on Aug 2007, the scheme has allocated 101.92% of its assets in equities. Average equity allocation in last one year has been at 95.9% of assets under management of the scheme.
SUGGESSIONS
Following suggestions and recommendations can be made the above analysis and findings.
11.The AMC (Asset Management Company) should create awareness among the individuals about the benefits of Mutual Funds & the returns from the Mutual Fund market. 12.This can be done by arranging at the household level or by conducing external program at a public place to educate people about the nature, benefits & importance of Mutual Funds. 13.As on many people are not aware about mutual fund & other financial products, industry should conduct surveys to gauge the preferences of the investors as many people do not invest there savings due to lack of knowledge & because of high risk. 14.They should have customer care department. 15.Make your future secure by investing in Mutual Funds, as investments in mutual funds may assure based on various available schemes and funds, higher rate of return that conventional investments like Banks and Post Office may not provide. 16.The prospective investors should diversify their monthly income by preparing the Monthly Budget and they cab generate savings out of their regular income to invest in the monthly plan of Mutual Funds. 17.It is found that minimum investment in case of HSBC Equity Fund is Rs. 10,000 which is double than HDFCs, hence it is suggested to reduce it so that more number of invertors can invest. 18.Investors who want to gain consistent profit but in a long time duration can invest in these companies. The net asset value of the funds under consideration had proved to be bullish and bearish in a very short period. But if we see the trend these schemes shows bullish nature on an average.
19.Dividend acts as a good promotion tool to investors. In all AMC taken above only UTI equity fund has given dividend, so other AMC can go for dividend. 20. In case of LIC Equity Fund, since the AMC has made short term borrowings from money market and hence it might have affect its performance. Hence it is recommended that AMC should attract more investors rather than borrowings from market.
CONCLUSION 5. In case of HSBC Equity (Growth) fund, though it has yet to witness bear phase but its performance so far has been encouraging. And if it manages this kind of performance and sticks to its investment objective it wont be a limiting factor for long. 6. In case of UTI Equity Fund, though the schemes performance has taken a beating in the recent past but frontline stocks in the portfolio and better performance in bearish phase do provide some
comfort. At the same time its sector calls are likely to show the good performance once rerated. Going forward investors should closely watch its performance before trimming down the exposures. 7. Seeing the past market rally the LIC Equity (Growth) scheme shows a lackluster performance and has been ranked at the bottom of the charts most of the time since its inception. Its one year and three returns are far below the returns posted by benchmark and peers despite the average equity exposure of 95% past one year. The scheme had trailed its peers and benchmark all the time during the selected time frame shows high risk profile compared to its peers. 8. Birla Equity Fund, has been very consistent in the performance. The scheme has given 41.02% annualized return since inception. In almost all the time periods considered it has consistently beaten the benchmark and the peer group average. In last one year the scheme has delivered 48.77% return while the peer group and the benchmark deliver 39.91% & 37.45% respectively. The scheme has over the last three years remained in the top quartile. 9. Over the years since the Mutual Fund industry started witnessing positive contribution in the capital market both, Public sector and Private sector Mutual Fund institutions has made enough efforts to meet the investors demands and likely will continue in future too.
CHAPTER: 7
ANNEXURE
QUESTIONARE AND BIBLIOGRAPHY
QUESTIONNAIRE
NAME: AGE: ADDRESS: SEX:
E-MAIL:
1) Are o YES o NO
you aware of NJ
INDIA INVEST PVT. LTD.
Consultancy?
If NO, are you aware of any of following consultancy? India Bulls ENAM Sherekhan HDFC
2) Which are the Financial Services you are aware of? INSURANCE MUTUAL FUND TAX PLANNING BONDS/FD PERSONAL PORTFOLIO MANAGEMENT STOCK 3) From which media you come to know about Financial Services Magazine Newspaper TV Radio Interest Agents Franchisee Hoardings Friends Others 4) Would you like to invest in Financial Sector? Yes Go to (5)
No Go to (6)
5) Which Financial Service you will prefer to invest and why? INSURANCE MUTUAL FUNDS TAX PLANNIG BOND/FD PERSONAL PORTFOLIO MANAGEMENT STOCK: 6) Reason Being: High Risk Lack of Knowledge Previous Loss Lack of Financial Planning 7) How much percentage you will like to invest from your annual income? INSURANCE 5 to 10%, 10 to 15%, 15 to 20% 20% and above
MUTUAL FUNDS 5 to 10%, PPM 5 to 10%, TAX 10 to 15%, 15 to 20% 20% and above 10 to 15%, 15 to 20% 20% and above
5 to 10%, STOCK 5 to 10%,
10 to 15%,
15 to 20%
20% and above
10 to 15%,
15 to 20%
20% and above
BONDS/FD 5 to 10%, 10 to 15%, 15 to 20% 20% and above
8) What is your Preferable Period for investment? January March April June July September October December
9) To invest through consultancy? Yes No If No, then why?
10)
If yes, what all services you expect from consultancy?
BOOKS REFERRED
WEBSITES www.njindiainvest.com www.amfiindia.com www.moneycontrol.com
www.karvy.com www.Valueresearchonline.com
A PROJECT REPORT On STUDY OF MUTUAL FUND SCHEMES
AT NJ INDIA INVEST PVT. LTD. (PUNE)
Submitted In partial fulfillment of MASTER DEGREE IN BUSINESS ADMINISTRATION University of Pune
(2007-2009)
By
SANGEETA ROHRA MASTER OF BUSINESS ADMINITRATION Allana Institute of Management Science, Pune.
CERTIFICATE
This to certify that SANGEETA ROHRA an M.B.A student of Allana Institute of Management Sciences has undergone a summer internship in NJ INDIA INVEST PVT.LTD. Under the title Study of mutual fund Schemes. She has successfully completed his project work in partial fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION. This report is the record of the students own effort your able supervision and guidance.
Prof. RASHMI SUNDRIYAL K.K. SINGH
Dr.
(Internal Guide) Date :--------Date-------Place:--------Place:--------
[Director]
DECLARATION
This is to declare that the project STUDY OF MUTUAL FUND SCHEMES is entirely genuine work done by me without copying any material from any available source. It is authentic effort put in by me.
SANGEETA ROHRA
MASTER OF BUSINESS ADMINISTRATION (ALLANA INSTITUTE OF MANAGEMENT SCIENCES)
ACKNOWLEDGEMENT
The last two months with NJ INDIA INVEST PVT.LTD. has been full of learning and sense of contribution toward the organization. I would like to thank NJ INDIA INVEST for giving me an opportunity of learning and contributing through this project. I would like to thanks all the people who knowingly and unknowingly supported me in my endeavor.
As a student of ALLANA INSITUTE OF MANAGEMENT SCIENCES, I would first of all like to express my gratitude o Mr. K. K. SINGH for assigning me such a topic STUDY OF MUTUAL FUND SCHEMES to work upon in NJ INDIA INVEST PVT.LTD.
During the actual project work, Prof. RASHMI SUNDRIYAL {Project Guide} has been a source of inspiration through her constant guidance; personal interest; encouragement and help. I convey my sincere thanks to
her in project. I am also grateful to her for responding Confidence in my abilities end giving me the freedom to work on my project. The project couldnt have been completed without timely and vital help of other office staff. Special thanks to Mr. SWAPNIL ADMANE for
their invaluable guidance, keen interest, co-operation, inspiration and of course moral support through my project session.
[SANGEETA ROHRA]
CHAPTER: 1
INTRODUCTION

The Indian mutual fund industry has already opened up many exciting investment opportunity to Indian investors. We have started witnessing the phenomenon of more savings now being entrusted to the funds. Despite the expected continuing growth in the industry, mutual fund is still a new financial intermediary in India. Hence, it is important that the investors, the mutual fund agents / distributors, financial planners, investment advisors and even the fund employees acquire better knowledge of what mutual funds are, what they can do for investors and what they cannot, and how they function differently from other financial intermediaries such as the banks. The Association of Mutual Funds in India has commissioned this Workbook will also serve as a guide to the
AMFI Mutual Fund Testing Programmed for distributors and employees of mutual funds.
Even if an investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund in the management of the investors portfolio. The investment management skills, along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own. Few investors have the skills and resources of their own to succeed in todays fast-moving, global and sophisticated markets.
EXECUTIVE SUMMARY
The project titled Comparison of Mutual Fund Scheme being carried out for NJ INDIA INVESTS PVT. LTD. Today an investor is interested in tracking the value of his investments, whether he invests directly in the market or indirectly through Mutual Funds. This dynamic change has taken place because of a number of reasons. With globalization and the growing competition in the investments opportunity available he would have to make guided and rational decisions on whether he gets an acceptable return on his investments in the funds selected by him, or if he needs to switch to another fund. In order to achieve such an end the investor has to understand the basis of appropriate preference measurement for the fund, and acquire the basic knowledge of the different measures of evaluating the performance of the fund. Only then would he be in a position to judge correctly whether his fund is performing well or not, and make the right decision. This project is undertaken to help the investors in tracking the performance of their investments in Mutual Funds and has been carried out with the objective of giving performance analysis of Mutual Fund. The methodology for carrying out the project was very simple that is through secondary data obtained through various mediums like fact sheet of the funds, the Internet, Business magazines, Newspaper, etc. the analysis of Mutual Funds has been done with respect to its various parameters. I hope NJ INDIA INVEST PVT. LTD., Pune will recognize this as well as take more references from this project report.

In a Mutual Fund, many investors contribute to form a common pool of money. This pool of money is invested in accordance with an objective. The ownership of the fund is thus joint of mutual; the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him bears to the total amount of the fund. A mutual fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. Thus, a growth fund would buy mainly equity assets ordinary shares, preference, warrants, etc. An income fund would mainly buy debt instruments such as debentures and bonds. The funds assets are owned by the investors in the same proportion as their contribution bears to the total contributions of all investors put together. An investor can buy the shares from a company only when the company makes a share issue. At other times, a share can be purchased from another investor through the stock exchange if the share is listed. A shareholder can sell the share to the company only when the company announces share buy back. At other times, he can sell share to another investor through a stock exchange. The price observed in a stock exchange is a reasonable estimate of the fair value of the share.
An open-end mutual fund is quite different in this respect. In an open-end mutual fund, investors can buy units from the fund and sell units to the fund continuously. The stock exchange is not in the picture. To ensure that there is fairness, sale and purchase has to take place at fair value of the unit. In other words, each share or unit that an investor holds needs to be assigned a value. Since the units held by an investor evidence the ownership of the funds assets, the value of the total assets of the fund when divided by the total number of units issued by the mutual fund gives us the value of one unit. This is generally called the Net Asset Value (NAV) of one unit or one share. The total value of an investors part ownership is thus determined by multiplying the NAV with the number of units held.
OBJECTIVES OF THE STUDY:
The project was conducted for the following objective:15) To gain an understanding and knowledge of Mutual Funds
as an Investment Tool. 16) 17) To study the product profile of the company. To evaluate the performance of selected schemes of Mutual
Fund of different companies. 18) To compare the Mutual fund schemes on different
parameters. 19) To analyze the performance factor of the Fund based on
different drivers associated with the specific fund. 20) 21) To study the diversification of mutual fund. To know the different Asset management companies involve
in MUTUAL FUND. Scope of the study: The Indian securities market is the scope of this project and funds floated therein. The whole project was based with the agenda to analyze existing mutual funds and determine their performance factors .In depth analysis of individual fund is not scope but on the other hand performance of funds and finding their reasons as in general is the primary motive behind this project.
The area of the project work is pune city and its location where the survey has been undertaken those are Hinjewadi IT Park, Magarpatta IT Park, WNS, Baner symphony Soft Ware, Zensar IT Park, and Senapati Bapat Road.
LIMITATIONSOF THE STUDY: Every work has its own limitation. Limitations are extent to which the process should not exceed. Limitations of this project are:1. Duration of project was not enough to make a conclusion on such a vast subject time. Constraint has become a big limitation. 2. The analysis is based on historical data and thus indicates the past performance, which may not always be indicative of the future performance. 3. Different schemes consider different market indices as their benchmarks, but for purpose of uniformity in the study all schemes have to be compared against same benchmark index. 4.Weekly NAVS have been considered for the study. Daily NAVs would have given more precise result for the study. 5. It is difficult to get full insight of how fund managers have deployed their funds. 6. There are more than 30 companies and offering various ranges of products and analyzing all of them is again a difficult task. 7. Mutual Fund industry performance is dependent on daily churning of portfolio and Net Asset Value of each fund changes every day, thus the
fund which in comparison is doing better today may not perform well tomorrow and thus it affects the analysis process. All the above mentioned statements are the limitations of the project. Time, Sample Size & Mentality of investor are the main limitations of the project. The study is being done by taking and keeping all limitation in mind. The project is completed in prescribed time. To find the Awareness of Mutual Fund the Sample Size is not at all enough because the population size is much bigger than the sample size and the last limitation was to change the mentality of the investor to invest in a particular type of the Investment Product. As the Indian Market have a large number of potential customer to draw a conclusion in such a small size may not be reliable.
CHAPTER:2
COMPANY PROFILE
About
NJ
NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established
in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm. NJ prides in being a professionally managed, quality focused and customer centric organisation. The strength of NJ lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cuttingedge technology platform, developed in-house by NJ. At NJ we believe in

NJ Fundz Network was established in year 2003 as a dedicated platform offering comprehensive services and support to the independent financial advisors. The services offered by NJ Fundz Network are increasingly recognized as the best and most comprehensive in nature. The scope, depth, and quality of the services and support is unmatched in the industry. NJ Fundz Network is proud to be the pioneers in India in providing the 360 Advisory platform to independent advisors. With this NJ has managed to successfully transform the business of many independent financial advisors, bringing them on equal footing or even better than the strongest competitors in the industry. NJ has over 8,600* NJ Fundz Network Partners and over 4,500* normal advisors associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients.
Vision & Mission

Mission:
Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments.
Philosophy

Management

All the key members of the organisation put in great focus on the processes & systems under the diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage the technology for enhancing overall customer experience. The key members of the management are: Mr. Neeraj Choksi Mr. Jignesh Desai Sales Team: Mr. Misbah Baxamusa National Head Jt. Managing Director Jt. Managing Director
Mr. Kulbhushan Nandwani Mr. Prashant Kakkad
A.V.P. A.V.P.
People
&
Culture
People Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout the organisation. At NJ can also experience the creativity, one-to-one responsiveness, collaborative approach and passion for delivering value. At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent due to the education-centric approach and the experience in handling different clients groups across diverse product profiles. NJ understands that the people are the most important assets of the company and it is not the company that grows but the people. NJ hence undertakes rigorous training and educational activities for enhancing the entire team at NJ. NJ also believes in the Learning through Responsibility concept for its employees.
For people at NJ success is not a new word, but is a regular stepping-stone to realising the one vision that everyone shares. Culture: At NJ we believe in transforming the lives of our customers. We exist to create a difference a change towards a better life. The culture at NJ reflects this responsibility, this dream of transforming lives. And we at NJ are always excited and enthused in doing so. We believe in keeping You First, providing you with products and services that meet your stated and unstated needs. Client satisfaction and client service is the Mantra we constantly recite. This service oriented philosophy runs throughout the organization, from top to bottom. Employees are given ample freedom in their work. The objective is to keep an open, healthy environment with ample scope for enterprise, improvement, innovations and out-of-the box solutions Our efforts are constantly engaged in improving our existing services, offering new and innovative solutions that go beyond your expectations. This focus has made us one of the most respected and preferred service providers, especially in the mutual fund industry.
Service
Standards
Service in words, service in action Service is the key to unlocking customer satisfaction, which again is key for sustainability of any business. At NJ we understand this very well. NJ has set strict processes in place to deliver quality services to customers. At NJ strict quality service standards are set and a well-defined process is established and followed religiously by our quality customer service teams. Performance is evaluated on a frequent basis and glitches are ironed out. But quality service also involves quality people in addition to processes. NJ gives significant focus to the proper training and development of the people involved in the service delivery chain. Further we,
We are committed to improve and enhance our services and undertake new service initiatives. Such and other services differentiate us with other service providers in the industry.
Our Service Commitments The service commitments are to guide the actions of the people at NJ. Clearly stated, advisors can freely communicate any such actions/events wherein they feel that any of the following commitments have been breached / compromised. At NJ we desire to honour our commitments at all points of time and to all our advisors without any bias.

Past Recognitions Some of the awards & recognitions that we have received in past Year 2000: For Outstanding Performance presented by Chairman, Prudential Plc. Year 2002: For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London Year 2003: For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London Year 2004: at London
Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh, Scotland Year 2004: For Outstanding Performance at by Deputy CEO, Prudential Malaysia
Singapore
Year 2006: Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual Fund Plc at Mumbai Year 2006: Award Vietnam Comments from Industry Stalwarts: The essence of investment consultancy lies in optimal asset allocation as against security selection or timing the markets for clients. NJ understands this very well and has added significant value to the clients through this approach. I am sure with this new initiative; a much larger number of clients will be able to benefit from this approach. I wish them all the best in this initiative
CHAPTER NO 3:
THEORETICAL FRAMEWORK

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment for the common strategy.
A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and complex and modern financial scenario. Markets for equity 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. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc. A mutual fund is the answer to all there situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20 th century phenomenon. In fact, mutual funds gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with different investment objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in
most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund. In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.
HISTORY OF MUTUAL FUND IN INDIA: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. FIRST PHASE 1964-87 An act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under management. SECOND PHASE 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) 1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry has assets under management of Rs. 47,004 crores. THIRD PHASE 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS) With the entry private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, expect UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of other mutual funds.
FOURTH PHASE SINCE FEBRUARY 2003
FUTURE SCENARIO The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names 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 and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
Most of these AMCs have not been able to retain staff, float new schemes etc. And it is doubtful whether, barring a few exceptions, 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 also very similar. They quickly realized that the AMC business, which makes
money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on.
LIST OF MEMBERS:
G) Bank Sponsored 5) Joint Ventures Predominantly Indian c. SBI Funds Management Private Ltd.
6) Others g. BOB Asset Management Co. Ltd. h. Canbank Investment Management Services Ltd. i. UTI Asset Management Co. Pvt. Ltd.
H) Institutions c. Jeevan Bima Sahayog Asset Management Co. Ltd.
I) Private Sector 7. Indian w. Benchmark Asset Management Co. Private Ltd. x. Cholamandalam Asset Management Co. Ltd. y. Credit Capital Asset Management Co. Ltd. z. Escorts Asset Management Ltd. aa.J.M. Financial Asset Management Private Ltd. bb. Kotak Mahindra Asset Management Co. Ltd.
cc. Quantum Asset Management Co. Private Ltd. dd. Relience Capital Asset Management Ltd.
ee. Sahara Asset Management Co. Private Ltd. ff. Sundaram Asset Management Co. Ltd. gg.Tata Asset Management Ltd. 8. JOINT VENTURES PREDOMINANTLY INDIAN i. Birla Sun Life Asset Management Co. Ltd. j. DSP Merrill Lynch Fund Managers Ltd. k. HDFC Asset Management Co. Ltd. l. Prudential ICICI Asset Management Co. Ltd.
9. JOINT VENTURES PREDOMINANTLY FOREIGN s. ABN AMRO Asset Management (India) Ltd. t. Deutsche Asset Management (India) Private Ltd. u. Fidelity Fund Management Private Ltd. v. Franklin Templeton Asset Management (India) Private Ltd. w. HSBC Asset Management (India) Private Ltd. x. ING Investment Management (India) Private Ltd. y. Morgan Stanley Investment Management Private Ltd. z. Principal PNB Asset Management Co. Private Ltd. aa.Standard Charted Asset Management Co. Private.
TYPES OF MUTUAL FUNDS Mutual fund schemes may be classified on the basis of its structure and its investment objective. By Structure: OPEN ENDED FUNDS An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. The key feature of open-end schemes is liquidity. CLOSED-ENDED FUNDS A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
INTERVAL FUNDS
Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective: GROWTH FUNDS
The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. INCOME FUNDS The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. BALANCED FUNDS The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.
MONEY MARKET FUNDS
The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Loads Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. NO-LOAD FUNDS A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. OTHER SCHEMES: TAX SAVING SCHEMES These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EB by investing in Mutual Funds,
provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30,20. SPECIAL SCHEMES INDUSTRY SPECIFIC SCHEMES Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceutical etc. INDEX SCHEMES Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. SECTORAL SCHEMES Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as A Group shares or initial public offerings.
BENEFITS OF MUTUAL FUND INVESTMENT:
Professional Management: Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.
Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund managers investment strategy and outlook. Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can
systematically invest or withdraw funds according to your needs and convenience. Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large of its large corpus allows even a small investor to take the benefit of its investment strategy. Choice of Scheme: Mutual Fund offers a family of schemes to suit your varying needs over a lifetime. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
Fees and Commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or loads to compensate brokers, financial consultants, or financial planners. Even if you dont use a broker or other financial advisor, you will pay a sales commission if you buy shares in a Load Fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
CHAPTER NO 4: RESEARCH METHODOLOGY
MEANING OF RESEARCH A research is a careful investigation or enquiry, especially through search for new facts in any branch of knowledge. It is a systemized effort to gain more knowledge.
Research Methodology is a way to systematically solve the research problem. It includes not only the research methods, but also the logic behind using the methods. The methods of research used in this project were as follows: Analytical Research Applied Research ANALYTICAL RESEARCH In analytical research the researcher has to use the facts already available, and analyze these to make the critical evaluation of the material. In this project I have used many raw data from the various sources and analyzed it for underlying trends. APPLIED RESEARCH Applied Research aims at finding a solution for an immediate problem. Research aimed at certain conclusions (say a solution) facing a concrete social or business problem is an example of applied research. Thus the central aim of applied research is to find a solution for some pressing practical problem. In this project, in the last section, by means of assumptions I have found the feasibility of a project that the organization means to undertake. The analysis of the trends followed by the mutual funds was Analytical Research.
OBJECTIVE OF RESEARCH METHODOLOGY It intends, verifies or correct knowledge. It enables us to have a better understanding of our world. It aids in purposive planning. Research initiates, formulates, deflects and clarifies theories. METHODS OF DATA COLLECTION
Data is primarily of two kinds. 5. Primary data. INTERVIEWING It is the most commonly used method of data collection. It is two ways purposive communication between interviewer and the respondent aimed at obtaining and recording information pertinent to the subject matter of the study. 6. Secondary data. Secondary data may be defined as a data that has been collected earlier for some purpose other than the purpose of the present study. Any data that is available to the prior commencement of the research project is secondary data and it is called historic data.
USES OF SECONDARY DATA It acts as a reference for the present study. The secondary data can be the useful benchmark on which the finding of the study can be tested. At times it may be the only source of data. SOURCES OF SECONDARY DATA
5. Published sources 6. Unpublished sources DATA COLLECTION METHODS CAN BE CLASSIFIED AS FOLLOWS Observations Interviewing Experimentation Simulations Projective techniques IN THIS PROJECTS THE TWO METHODS OF COLLECTION WERE USED 5. Interviewing 6. Published source of data in the form of fact sheets RESEARCH DESIGN Type of Research Descriptive Nature of Research Quantitative Type of Question Close Ended Types of Questionnaire Structured Types of Analysis Statistical Analysis
NJ FUNDZ NETWORK Only Real Provider of a Complete Business Platform
Fundz Network
www.njfundz.com
EXCELLENT PAST PERFORMANCE

Mutual Fund Equity schemes have delivered very attractive returns in last 5 years, giving over 51% returns annually
Scheme Name Average of Diversified Mutual fund Schemes BSE 30 (Sensex) NSE 50 No. of Diversified Schemes considered 3 Years 5 Years 7 Years 10 Years 27.79 12.69 12.9 6
20.98 23.7 23.08 46
35.10 29.19 27.78 30
31.92 23.4 22.11 20
Opportunity for you to offer your clients with such equity-related products for long-term wealth creation
* Returns as on 23rd August,2008
Fundz Network
www.njfundz.com
PENETRATION OF FINANCIAL PRODUCTS
Investor Base Across Various Financial Products

250 200 150 100 50 0
240
Customers in millions
110 16
Credit Cards Banking
40
Debit Cards
17
Mutual Funds Life Insurance
15
General Insurance
1.5
Online Trading
www.njfundz.com
Penetration of Mutual Funds is very low Going forward, the opportunity is big
Source: www.rbi.org.in www.irdaindia.org www.sebi.gov.in
Fundz Network
LOW PENETRATION OF MUTUAL FUNDS IN INDIA

Few people have been exposed to the idea & advantages of mutual funds and even fewer actually invest in mutual funds, because of lack of adequate no. of advisors
Measure Rupees invested in Mutual Funds out of 100 MF Industry size as % size of economy (GDP) Total size / value of MF industry (Rs. Lac Crores) *for House Holds savings
US > 30 83% > 469 *Figures are approx.
India <2 6% >5
Opportunity to offer such products to clients Every person can be a customer !!

Fundz Network
www.njfundz.com
LOW COMPETITION OF MUTUAL FUND ADVISORS

Lack of competition represents a very big opportunity to grow your business anywhere in India.
> 20 Lacs Insurance Advisors V/s < 55,000 Mutual Fund Advisors Very Few Financial Advisors
>35 Insurance Advisors V/s 1 Mutual Fund Advisor
Fundz Network
www.njfundz.com
Developing Mutual Fund Advisory Business
NJ FUNDZ NETWORK
1st in India to offer Complete Business Platform to financial advisors / firms to manage, monitor and grow their advisory practice Integrated, comprehensive, convergent & practical business solutions Understands what is needed to grow & manage a financial advisory practice
Fundz Network
www.njfundz.com
NJ MANAGERS Personal Attention Dedication: NJ is dedicated to your growth hence has a limit of
only 80 advisors for all Employees. Employee's complete focus is on expanding your business & growth as their own growth is linked to your growth Single focus / expertise on mutual funds unlike other distributors Experienced and qualified sales force show you the right direction Interact with apprehensive clients to help in client acquisition through Ongoing Client Meets, Joint Calls etc.
Fundz Network
www.njfundz.com
NJ RESEARCH NJ KNOWLEDGE EDGE

Regular publications:
Monthly magazine 'FUNDZ WATCH Weekly reports Daily market update Daily MF track and much more...
Research reports
: Recommendations, market insight, analyses etc
Ongoing interaction through product training, Fund Manager Meets etc. Launch Presentations of all prominent products of various Mutual Funds
Fundz Network
www.njfundz.com
NJ ADVANTAGE Single Interaction Point

Effective integration of different products and services for simplicity that deliver effective, dynamic solutions that work for you.
Dedicated Relationship Manager for every Fundz Network Partner. Single Service Point Get/ Deposit Applications of All AMCs/ All schemes at NJ PSC. NJ Customer care - Single contact point for all queries across all AMCs/ All problems.
SINGLE WINDOW - MULTIPLE SOLUTIONS

Fundz Network
www.njfundz.com
CHAPTER: 6 FINDINGS,SUGGESTIONS AND CONCLUSION
FINDINGS From the above data analysis and interpretations, following observations can be made:
The DSP ML Equity (Growth) scheme was started way back in April 1997 and since then it has been a consistent performer. The scheme is benchmarked against Nifty. The average equity exposure of the portfolio in last one year has been around 94.26% and 5.74% in cash and equivalents. In the current month however it had 89.58% of assets in equity and 10.42% in cash and equivalent segments. The scheme has a corpus of Rs. 469.8094 crores (Aug 2007), which is not among the best in the industry but its growth from Rs. 68.63 crores as on November 2004 definitely points towards the rising investor confidence in this scheme. In last six months the corpus has grown over. The HSBC Equity (growth) scheme is mandated to invest upto 95100% in the equity related instruments and 0-5% in debt and money market instruments. As of Aug 2007, it has allocated 89.44% of its assets in equity and rest in cash and equivalent. Over a period of one year the asset allocation in equities has not fluctuated much with average allocation at 88.6%. The scheme had a corpus of Rs. 973.5673 crores as on Aug 2007 and has gone down by 25% over a period of last one year. The UTI Equity (Growth) scheme is managing assets worth Rs. 1635.4454 crores as on Aug 2007 but has witnessed significant reduction from Rs. 4472 crores when it was launched. However over a period of one year assets under management of the scheme has increased by 45%. As per stated guidelines it could invest at least 80% of its net assets in equity and equity related instruments and upto 20% in Debt and Money market instruments. As on Aug 2007, the scheme has allocated 97.94% of its assets in equities and rest in cash and equivalent with average equity allocation of its assets in last one year.
The LIC equity (Growth) scheme has a corpus of Rs. 91.1291 crores as on Aug 2007 and has gone up by 41% in last one year. As per stated guidelines it could invest 80%-100% of its net assets in equity and equity related instruments and upto 20% in Debt and Money market instruments. As on Aug 2007, the scheme has allocated 101.92% of its assets in equities. Average equity allocation in last one year has been at 95.9% of assets under management of the scheme.
SUGGESTIONS Following suggestions and recommendations can be made the above analysis and findings.
21.The AMC (Asset Management Company) should create awareness among the individuals about the benefits of Mutual Funds & the returns from the Mutual Fund market. 22.This can be done by arranging at the household level or by conducing external program at a public place to educate people about the nature, benefits & importance of Mutual Funds. 23.As on many people are not aware about mutual fund & other financial products, industry should conduct surveys to gauge the preferences of the investors as many people do not invest there savings due to lack of knowledge & because of high risk. 24.They should have customer care department. 25.Make your future secure by investing in Mutual Funds, as investments in mutual funds may assure based on various available schemes and funds, higher rate of return that conventional investments like Banks and Post Office may not provide. 26.The prospective investors should diversify their monthly income by preparing the Monthly Budget and they cab generate savings out of their regular income to invest in the monthly plan of Mutual Funds. 27.It is found that minimum investment in case of HSBC Equity Fund is Rs. 10,000 which is double than HDFCs, hence it is suggested to reduce it so that more number of invertors can invest. 28.Investors who want to gain consistent profit but in a long time duration can invest in these companies. The net asset value of the funds under consideration had proved to be bullish and bearish in a very short period. But if we see the trend these schemes shows bullish nature on an average.
29.Dividend acts as a good promotion tool to investors. In all AMC taken above only UTI equity fund has given dividend, so other AMC can go for dividend. 30. In case of LIC Equity Fund, since the AMC has made short term borrowings from money market and hence it might have affect its performance. Hence it is recommended that AMC should attract more investors rather than borrowings from market.
CONCLUSION 10.In case of HSBC Equity (Growth) fund, though it has yet to witness bear phase but its performance so far has been encouraging. And if it manages this kind of performance and sticks to its investment objective it wont be a limiting factor for long.
11.In case of UTI Equity Fund, though the schemes performance has taken a beating in the recent past but frontline stocks in the portfolio and better performance in bearish phase do provide some comfort. At the same time its sector calls are likely to show the good performance once rerated. Going forward investors should closely watch its performance before trimming down the exposures. 12.Seeing the past market rally the LIC Equity (Growth) scheme shows a lackluster performance and has been ranked at the bottom of the charts most of the time since its inception. Its one year and three returns are far below the returns posted by benchmark and peers despite the average equity exposure of 95% past one year. The scheme had trailed its peers and benchmark all the time during the selected time frame shows high risk profile compared to its peers. 13.Birla Equity Fund, has been very consistent in the performance. The scheme has given 41.02% annualized return since inception. In almost all the time periods considered it has consistently beaten the benchmark and the peer group average. In last one year the scheme has delivered 48.77% return while the peer group and the benchmark deliver 39.91% & 37.45% respectively. The scheme has over the last three years remained in the top quartile. 14.Over the years since the Mutual Fund industry started witnessing positive contribution in the capital market both, Public sector and Private sector Mutual Fund institutions has made enough efforts to meet the investors demands and likely will continue in future too.
CHAPTER: 7 BIBLIOGRAPHY
BOOKS REFERRED
WEBSITES www.njindiainvest.com www.amfiindia.com www.moneycontrol.com www.karvy.com

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www.final-yearproject.com | www.finalyearthesis.

Prof. RASHMI SUNDRIYAL (Internal Guide) Date :--------Place:----------

DR.K.K. SINGH [Director] Date-------Place:------

Vision & Mission

To be the leader in our field of business through,

Range of products and services offered Quality Customer Service

People & Culture

Service in words, service in action

INTRODUCTION OF THE STUDY

INTRODUCTION OF THE PROJECT

OBJECTIVES OF THE STUDY:

Vision & Mission

To be the leader in our field of business through,

Range of products and services offered Quality Customer Service

Mutual Funds: An overview Introduction

FOURTH PHASE SINCE FEBRUARY 2003

RECENT TRENDS IN MUTUAL FUND INDUSTRY

B) Institutions a. Jeevan Bima Sahayog Asset Management Co. Ltd.

systematically invest or withdraw funds according to your needs and convenience.

DRAWBACKS OF MUTUAL FUND:

CHAPTER NO 5: DATA ANALYSIS & INTERPRETATION

NJ FUNDZ NETWORK Only Real Provider of a Complete Business Platform

EXCELLENT PAST PERFORMANCE

20.98 23.7 23.08 46

35.10 29.19 27.78 30

31.92 23.4 22.11 20

PENETRATION OF FINANCIAL PRODUCTS

Investor Base Across Various Financial Products

Source: www.rbi.org.in www.irdaindia.org www.sebi.gov.in

Investors Looking for Products with following Features :-

LOW PENETRATION OF MUTUAL FUNDS IN INDIA

US > 30 83% > 469 *Figures are approx.

India <2 6% >5

Opportunity to offer such products to clients Every person can be a customer !!

LOW COMPETITION OF MUTUAL FUND ADVISORS

Developing Mutual Fund Advisory Business

NJ RESEARCH NJ KNOWLEDGE EDGE

: Recommendations, market insight, analyses etc

NJ ADVANTAGE Single Interaction Point

SINGLE WINDOW - MULTIPLE SOLUTIONS

CHAPTER: 6 FINDINGS,SUGGESTIONS AND CONCLUSION

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Product And Services Taxman Amfi Course Book

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INTRODUCTION OF THE STUDY

INTRODUCTION OF THE PROJECT

OBJECTIVE OF THE STUDY:

To analyze the performance factor of the Fund based on

CHAPTER NO 3: THOERITCAL FRAMEWORK

Mutual Funds: An overview Introduction

RECENT TRENDS IN MUTUAL FUND INDUSTRY

4) Others d. BOB Asset Management Co. Ltd.

E) Institutions b. Jeevan Bima Sahayog Asset Management Co. Ltd.

DRAWBACKS OF MUTUAL FUND:

CHAPTER NO 4: RESEARCH METHODOLOGY

Observations Interviewing Experimentation Simulations Projective techniques

Types of Analysis Statistical Analysis

CHAPTER NO 5: DATA ANALYSIS & INTERPRETATION

FINDING, SUGGESSIONS AND CONCLUSION

QUESTIONARE AND BIBLIOGRAPHY

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5 to 10%, STOCK 5 to 10%,