Professional Documents
Culture Documents
FUND MANAGEMENT
Ankit Jain
Submitted by Name : ANKIT JAIN Roll Number: 22 Company Guide Name : Mr TAPAN BAISWAL Designation, Company : Faculty Guide Name: Mrs Seema Chaudary
Bharati Vidyapeeth University Institute of Management And Research New Delhi June 2010
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PREFACE
This is to certify that Mr Ankit Jain, a student of Bachelor of Business Administration has worked in the Finance and accounts division of Indiabulls Financial Services Ltd, under the able guidance and supervision of Mr. Manish Gupta Assistant Manager at Indiabulls Financial Services Ltd The period for which he was on training was for 8 weeks, starting from 5th May 2010 to 30th June 2010. This Summer Internship report has the requisite standard for the partial fulfillment of bachelor of business administration. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.
Signature (Student)
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ACKNOWLEDGEMENT
I have to thank Bharati Vidyapeeth University for giving me an opportunity to undertake my project work and for giving me knowledge in the field of finance during my three years course. I would sincerely like to thank Mr. Manish Gupta (Assistant Manager) also my company guide who provided me the right opportunity and environment to learn. Special thanks to Mr. Tapan Baiswal ( Manager- Finance) under whose able leadership and training I could grasp the essence of the mutual funds. Without the support and guidance of my faculty Guide Ms. Seema Chaudary. I could have failed to notice some of the criticalities and key areas of operation in this project. She has been an inspiration factor in this project to get more information and make this project more meaningful.
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TABLE OF CONTENTS
CHAPTER NO. 1.
TOPIC
PAGE NO.
EXECUTIVE SUMMARY 2 COMPANYS PROFILE 3 COMPANY INTRODUCTION: About Indiabulls 4 SWOT ANALYSIS 5 MUTUAL FUNDS Types of funds 6 Where Indiabulls invest surplus cash 7 Questionnaire 9 CONCLUSION
6 7 8
21 28
46 48
51
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BIBLIOGRAPHY
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EXECUTIVE SUMMARY The management had to depend upon certain relevant information for taking various strategic decisions. The information is made useful by its analysis and interpretation. My project was related to Fund Management. This project report is the outcome of my six weeks live project in Indiabulls. This project has been divided into the following chaptersMUTUAL FUNDS How to choose right type of mutual scheme Types of Funds Debt Equity Funds Equity Funds Balanced Funds
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HISTORY
Indiabulls Group is one of the top business houses in the country with business interests in Real Estate, Infrastructure, Financial Services, Retail, Multiplex and Power sectors. Indiabulls Group companies are listed in Indian and overseas financial markets. The Net worth of the Group exceeds USD 2 billion. Indiabulls has been conferred the status of a Business Superbrand by The Brand Council, Superbrands India. Indiabulls Financial Services is an integrated financial services powerhouse providing Consumer Finance, Housing Finance, Commercial Loans, Life Insurance, Asset Management and Advisory services. Indiabulls Financial Services Ltd is amongst 68 companies constituting MSCI - Morgan Stanley India Index. Indiabulls Financial is also part of CLSAs model portfolio of 30 Best Companies in Asia. Indiabulls Financial Services signed a joint venture agreement with Sogecap, the insurance arm of Societ Generale (SocGen) for its upcoming life insurance venture. Indiabulls Financial Services in partnership with MMTC Limited, the largest commodity trading company in India, is setting up Indias 4th Multi-Commodities Exchange. Indiabulls Real Estate Limited is Indias third largest property company with development projects spread across residential projects, commercial offices, hotels, malls, and Special Economic Zones (SEZs) infrastructure development. Indiabulls Real Estate partnered with Farallon Capital Management LLC of USA to bring the first FDI into real estate. Indiabulls Real Estate is transforming 14 million sqft in 16 cities into premium quality, high-end commercial, residential and retail spaces. Indiabulls Real Estate has diversified significantly in the following business verticals within the real estate space: Real Estate Development, Project Advisory & Facilities Management: Residential, Commercial (Office and Malls) and SEZ Development. Power: Thermal and Hydro Power Generation. Indiabulls Securities Limited is Indias leading capital markets company with All-India Presence and an extensive client base. Indiabulls Securities possesses state of the art trading platform, best broking practices and is the pioneer in trading product innovations. Power Indiabulls, in-house trading platform, is one of the fastest and most efficient trading platforms in the country. Indiabulls Securities Limited is the first and only brokerage house to be assigned the highest rating BQ - 1 by CRISIL.
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advantage, as at that time there was no company catering to the needs of retail segment through Internet.
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take place on the Indiabulls online network and it has an estimated customer base of 43,000 clients.
VISION
To be the largest financial services organization in Indian retail market and become a one stop shop for all non banking financial products and services for the retail customer.
MISSION
o Rapidly increase the number of our client relationships to clear market leader o Provide our clients with a very broad array of product offering
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Income Statement
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Indiabulls Professional Network offers real time prices, equity analysis, detailed data and news, intelligent analytics, and electronic trading capabilities, right at your fingertips. This powerful technology is complemented by knowledgeable and customer focused Relationship Managers who are available to help with financial planning and investment needs.
QUALITY POLICY
To achieve and retain leadership, Indiabulls shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Indiabulls will strive to exceed Customers expectations.
QUALITY OBJECTIVES
As per the Quality Policy, Indiabulls will:o Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services.
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o Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. o Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customers needs. o Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics. o Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients.
o Strive to be reliable source of value-added financial products and services
and constantly guide the individuals sand institutions in making a judicious choice of same.
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Commodities Platform
INDIABULLS
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o Indiabulls is Indias leading Financial Services and Real Estate company having over 640 branches across India. o Indiabulls serves the financial needs of more than 4,50,000 customers with its wide range of financial services and products from securities, derivatives trading, depositary services, research& advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. o Having around 4000 Relationship Managers, Indiabulls helps its clients to satisfy their customized financial goals. o Continued focus on potential high growth areas. o Relationship Manager Facilities is too good from another competitor. o Online trading platform o Personal relationship manager who assist the clients in share trading. o No annual maintenance charges o No custodial charges o It does not keep any condition as to collect minimum amount of brokerage from its clients. o Equity analysis report to support the investment decision of its clients. o Trading via branch network, telephones & Internet account i.e. both online & offline. o Strong market presence & increased market share leading to a virtuous cycle of growth & profitability.
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o The incentive model is created such that it leads to generation of higher revenue for the organization. This acts as a motivating factor for the employees to perform well. o An added advantage of Indiabulls is its strong brand name, which helps its sales force to sell the products. o Technology transforming desktop into NEAT like terminal for Internet trading. o Real time online transfer fund & exposure updating facility with HDFC, CITI Bank & ICICI Bank.
WEAKNESSES
o High Turnover Rate o Need to spend more to create good relationship with customers o High D.P. Charges (Depositary Participant charges) o It should have its own mutual funds i.e. Indiabulls as of now does not have its own mutual funds, instead of providing advices in mutual funds it should have its own mutual funds. o It should provide tips via training sessions and SMS. o Commodities are not traded online (MCX multi channel exchange, Ncdex national commodity derivative exchange of India Ltd.). o It does not provide with the indices of major world markets, ADR prices of Indian scripts. o Unlike some of its competitors like ICICI, HDFC Bank & Kotak, Indiabulls does not provide a complete catalogue of financial services (e.g. Banking facility)
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o Due to continuous need to meet the targets, some of the relationship managers crack under pressure & thus leave the organization. o There is no limit to the maximum number of clients that a relationship manager can handle. This affects the level of service provided to the clients who are not the volume traders.
OPPORTUNITIES:-
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o Companies like Share khan, ICICI Direct, Kotak, & private brokers are major threats to Indiabulls. o Local brokers capable of charging lower brokerage. o Industry competitors vying for the same target segment. o Changes in SEBI guidelines & other tax implications. o Increasing No. of branches all over India.
500 25 0 Mar-03 Mar-04 Mar-05 Jun-05 Jun-06 63 148 414
241
THREATS
o More increase in competition (There are many brokerage firms entering into market) o Competitors product price is low in comparison to India Bulls products o Deals only in share market (secondary) o Companies like Share khan, ICICI Direct, Kotak , & private brokers are major threats to Indiabulls. o Local brokers capable of charging lower brokerage. o Industry competitors vying for the same target segment. o Changes in SEBI guidelines & other tax implications.
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INVESTMENT INSTRUMENTS
The most important points an investor must take into consideration before setting his objectives is his risk appetite, returns expectations, investment horizon and liquidity. Look on investment instruments depending on the differing objectives of investors
Risk Low
Return Low
Investment Horizon Liquidity 30 - 365 days Moderate Low Low Moderate High High High High
Low to High Low-High 1 - 3 years Low Moderate 5 years Moderate Above 1 year Low 1 - 3 months
Government Securities Low Liquid funds Income funds Gilt funds Equity funds Low Moderate Moderate High
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MUTUAL FUNDS
Mutual Funds
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Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund
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ORGANISATION OF MUTUAL FUND Why do one need to invest in a Mutual Fund Flexibilty
Mutual Fund investments also offers you a lot of flexibility with features such as systematic investment plans ,systematic withdrawal plans & dividend reinvestment
Affordability
They are available in units so this makes it very affordable. Because of the large corpus, even a small investor can benefit from its investment strategy.
Liquidity
In open ended schemes ,you have the option of withdrawing or redeeming your money at any point of time at the current NAV
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Diversification
Risk is lowered with Mutual Funds as they invest across different industries & stocks.
Professional Management
Expert Fund Managers of the Mutual Fund analyse all options based on experience & research
Potential of return
The fund managers who take care of your Mutual Fund have access to information and statistics from leading economists and analysts around the world. Because of this, they are in a better position than individual investors to identify opportunities for your investments to flourish.
Low Costs
The benefits of scale in brokerage, custodial and other fees translate into lower costs for investors
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TYPES OF FUNDS
There are a wide variety of Mutual Fund schemes that cater to the needs, The different types of Mutual Funds are as follows:
Index Funds
These funds invest in the stocks of companies, which comprise major indices such as the BSE Sensex or the S&P CNX Nifty in the same weightage as the respective indice.
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Income schemes
Debt oriented schemes investing in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments.
Gilt Funds
These funds invest exclusively in government securities.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. They generally invest 40-60% in equity and debt instruments.
Fund of Funds
A Fund of Funds (FoF) is a mutual fund scheme that invests in other mutual fund schemes. Just as fund invests in stocks or bonds on your behalf, a FoF invests in other mutual fund schemes
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Debt/Income Fund
Low
Liquid Funds
Very Low
Gilt Funds
Very Low
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For Capital Appreciation go for equity sectoral funds, equity diversified funds or balanced funds. For Regular Income and Stability should opt for income funds/MIPs For Short-Term Parking of Funds go for liquid funds, floating rate funds, short-term funds. For Growth and Tax Savings go for Equity-Linked Savings Schemes.
Investment Objective Short-term Investment Capital Appreciation Regular Income Tax Saving
Ideal Instruments Liquid/Short-term plans Diversified Equity/ Balanced Funds Monthly Income Plans / Income Funds Equity-Linked Saving Schemes (ELSS)
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The track record of performance over last few years in relation to the appropriate yardstick and similar funds in the same category. How well the Mutual Fund is organized to provide efficient, prompt and personalized service. The degree of transparency as reflected in frequency and quality of their communications.
D) Evaluation of portfolio
Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio, fund managers style of investment, portfolio diversification, fund managers experience. Good equity fund should provide consistent returns over a period of time. Also expense ratio should be within the prescribed limits. These days fund house charge around 2.50% as management fees. Evaluation of bond funds involve it's assets allocation analysis, return's consistency, its rating profile, maturity profile, and its performance over a period of time. The bond fund with ideal mix of corporate debt and gilt fund should be selected
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DEBT FUNDS
These funds invest mainly in floating rate securities whose coupons are reset periodically, based on a predetermined benchmark. Floating Rates are expected to deliver superior risk adjusted return during the period of volatility and hardening of interest rates
Top 10 Floating Rate Debt Funds Templeton Floating Rate Income Fund STP
An open-end income scheme The primary objective of the scheme is to provide income consistent with the prudent risk from a portfolio comprising primarily of floating rate debt Fund instruments. The fund managers strive to minimise the risk arising from Objective: interest rate fluctuations.
Fund Objective:
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Fund Objective:
Fund Objective:
Fund Objective:
An open-end income scheme Fund Objective: The primary objective of the scheme is to provide income consistent with the prudent risk from a portfolio comprising primarily of floating rate debt instruments. The fund managers strive to minimise the risk arising from interest rate fluctuations.
EQUITY FUNDS
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A Mutual Funds Scheme that achieves the benefits of diversification by investing in the stocks of companies are called Equity Mutual Funds. This results in lowering of the risk of exposure to a single company or sector.
Fund Objective:
Fund Objective:
Fund Objective:
portfolio of value stocks. Value stocks are those, which have attractive valuations in relation to earnings or book value or current and/or future dividends.
Fund Objective:
The Scheme seeks to generate long-term capital appreciation for you from a portfolio made up predominantly of equity and equity related securities.
Fund Objective:
income.
BALANCED FUNDS
The aim of Balanced Funds is to provide both growth and regular income. Such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. They generally invest 40-60% in equity and the rest in debt instruments
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Fund Objective:
Fund Objective:
Fund Objective:
Open Ended Balance Scheme Fund Objective: To provide periodic returns and capital appreciation over a long period of time from a judicious mix of equity and debt investments with an aim to prevent/minimizes any capital erosion.
team the funds get invested in the Shares & securities as well as in Mutual funds (Reliance Liquidity Fund Daily Dividend Reinvestment Option).
CASH SURPLUS
MUTUAL FUNDS
FIXED DEPOSIT YES BANK RELIANCE LOTUS HDFC KOTAK LIC SBI ICICI ICICI BANK PUNJAB NATIONAL BANK HDFC BANK AXIS BANK PUBLIC SECTOR UNDERTAKI NG
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ANNEXURE
ANNEXURE 1
Questionnaire for data collection. Dear respondent, your valuable time and effort in filling this questionnaire are
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highly appreciated. The information collected through this questionnaire will be used for acedemic purpose only. Name: - _______________________________________
Age: -
18-40
40-60
60 and above
Profession
Others
Part 1: Decisions. Given below some considerable situations that will be helpful for you as an investor to decide what is the right time and the amount for making an investment in a particular equity. Mark your consent as per your preferences. Page 48 of 52
Decision
Disagree
least agree
strongly
1. Investment decision is based on advice from the broker 2. I invest in shares on personal analysis. 3. I prefer to do intraday trading rather than taking the holding of shares. 4. I invest in the mid cap rather than small or large cap. 5. I look for the market conditions before look on the investment options.
Section 2: Factors affecting equity primary and secondary market investment. What are the factors that you consider the most before making an investment in the equity market?
Factors
a) Company profile b) Rate of return c) market price d) liquidity in the trade e) secondary market situation f) lead managers image
Preferability
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g) regulatory environment
CONCLUSION
However, many instruments have long lock-in periods in excess of one year and, therefore, cannot be considered in the short run. Low-risk companies should invest at least 70 per cent of his portfolio in liquid funds," Liquid funds are better than bank fixed deposits as there is more liquidity. In case of a bank FD, company lose some interest if they break it before maturity. Also, liquid funds are more tax-efficient
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Today, many companies have started seeing mutual funds as the best way to invest in debts. They see debts as a safest option as compared to bank fixed deposits. Firstly because debt funds are more transparent than any other form of investment the investor is aware where his money is being used. Secondly, debts are less risky than equities though the returns from the latter are more. Besides regular and steady income, debt funds are also known for easy liquidity without the risk of volatility The short-term investment option (20 days to three months) help INDIABULLS put their idle surplus funds in debt market to earn interest. Returns range from 8-11 per cent, depending upon the condition of the money market.
Bibliography
www.indiabulls.com http://info.shine.com/company/Indiabulls-Financial-Services-Ltd/165.aspx http://www.moneycontrol.com/stocks/cptmarket/compsearchnew.php? fname=price&companyname http://www.moneycontrol.com/india/stockpricequote/financegeneral/indiabullsfinancialse rvices/21/22/profitloss/marketprice/IFS03 Business Standard, Mumbai Page 51 of 52
Financial Express Indian Express http://trackyourstock.com/indiabullsdemerger http://findarticles.com/p/articles/mi_m0HWW/is_34_3/ai_66678800/pg_4/ http://www.stockwatch.in/indiabulls-financial-services-ready-set-amc-2514 http://www.financialexpress.com/news/indiabulls-financial-services/114449/2 http://en.wikipedia.org/wiki/Porter_generic_strategies http://en.wikipedia.org/wiki/Porter_generic_strategies http://www.moneycontrol.com/stocks/marketstats/indcomp.php? optex=BSE&indcode=Finance%20-%20General ICFAI Publishing Press
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