Professional Documents
Culture Documents
PROJECT REPORT
ON
OF
SUBMITTED TO SUBMITTED BY
PROF: SAMARJEET SEN D.RAVI H2-23
GUPTA
(3rd SEMESTER)
SPECIALIZATION –MARKETING + FINANCE
NOTICE
THIS PROJECT IS SOLELY DONE BY ME , AND SHOULD BE TAKEN AS FOR
READING AND UNDERSTANDING PURPOSE ONLY. IT MAY BE WITH
RESULTS WHICH MAY ALTER FULLY OR PARTIALY. TAKE THIS PROJECT
ONL FOR UNDERSTAND PUPOSE.
ACKNOWLEDGEMENT
We are thankful to MR. Samarjeet sen gupta who has given this opportunity
for doing a project work on “MUTUAL FUND”. From this study we have
gathered knowledge of services which are provided by the mutual fund
houses and also find out which of the firm is having good service.
1) INTRODUCTION
Stocks
Bonds
Bonds are basically the money which you lend to the government or a company,
and in return you can receive interest on your invested amount, which is back
over predetermined amounts of time. Bonds are considered to be the most
common lending investment traded on the market.
There are many other types of investments other than stocks and bonds
(including annuities, real estate, and precious metals), but the majority of
mutual funds invest in stocks and/or bonds.
Regulatory authorities
To protect the interest of the investors, SEBI formulates policies and regulates
the mutual funds. It notified regulations in 1993 (fully revised in 1996) and
issues guidelines from time to time. MF either promoted by public or by private
sector entities including one promoted by foreign entities is governed by these
Regulations.
SEBI approved Asset Management Company (AMC) manages the funds by
making investments in various types of securities. Custodian, registered with
SEBI, holds the securities of various schemes of the fund in its custody.
2) Mutual funds
Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. thus mutual funds
has Variety of flavors, Being a collection of many stocks, an investors can go for
picking a mutual fund might be easy. There are over hundreds of mutual funds
scheme to choose from
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
These schemes have a pre-specified maturity period. One can invest directly in
the scheme at the time of the initial issue. Depending on the structure of the
scheme there are two exit options available to an investor after the initial offer
period closes. Investors can transact (buy or sell) the units of the scheme on the
stock exchanges where they are listed. The market price at the stock exchanges
could vary from the net asset value (NAV) of the scheme on account of demand
and supply situation, expectations of unit holder and other market factors.
Alternatively some close-ended schemes provide an additional option of selling
the units directly to the Mutual Fund through periodic repurchase at the
schemes NAV; however one cannot buy units and can only sell units during the
liquidity window. SEBI Regulations ensure that at least one of the two exit
routes is provided to the investor
iii) INTERVAL SCHEMES
Interval Schemes are that scheme, which combines the features of open-ended
and close-ended schemes. The units may be traded on the stock exchange or may
be open for sale or redemption during pre-determined intervals at NAV related
prices
i) EQUITY FUND
These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund
manager’s outlook on different stocks. The Equity Funds are sub-classified
depending upon their investment objective, as follows:
Equity investments are meant for a longer time horizon, thus Equity funds rank
high on the risk-return matrix
As the name suggest they, are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme. These schemes aim to provide investors with
the best of both the worlds. Equity part provides growth and the debt part
provides stability in returns
Growth Schemes: Growth Schemes are also known as equity schemes. The aim
of these schemes is to provide capital appreciation over medium to long term.
These schemes normally invest a major part of their fund in equities and are
willing to bear short-term decline in value for possible future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The aim of
these schemes is to provide regular and steady income to investors. These
schemes generally invest in fixed income securities such as bonds and corporate
debentures. Capital appreciation in such schemes may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and income
by periodically distributing a part of the income and capital gains they earn.
These schemes invest in both shares and fixed income securities, in the
proportion indicated in their offer documents (normally 50:50).
Money Market Schemes: Money Market Schemes aim 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.
Other scheme
Tax scheme
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed
from time to time. Under Sec.88 of the Income Tax Act, contributions made to
any Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Index scheme
These are the funds/schemes which invest in the securities of only those sectors
or industries as specified in the offer documents. E.g. Pharmaceuticals, Software,
Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in
these funds are dependent on the performance of the respective
sectors/industries. While these funds may give higher returns, they are more
risky compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.
Types of return
There are three ways, where the total returns provided by mutual funds can be
enjoyed by investors:
Income is earned from dividends on stocks and interest on bonds. A fund pays
out nearly all income it receives over the year to fund owners in the form of a
distribution.
If the fund sells securities that have increased in price, the fund has a capital
gain. Most funds also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the
fund's shares increase in price. You can then sell your mutual fund shares for a
profit. Funds will also usually give you a choice either to receive a check for
distributions or to reinvest the earnings and get more shares
Dividend Plan: Under the Dividend Plan, the fund distributes a substantial part
of the surplus to investors in the form of dividend (income distribution).
Growth Plan: Under the Growth Plan, an investor realizes only the capital
appreciation on the investment (by an increase in NAV) and normally does not
get any income in the form of income distribution.
Net asset value (NAV) represents a fund's per share market value. This is the
price at which investors buy ("bid price") fund shares from a fund company and
sell them ("redemption price") to a fund company. It is derived by dividing the
total value of all the cash and securities in a fund's portfolio, less any liabilities,
by the number of shares outstanding. An NAV computation is undertaken once
at the end of each trading day based on the closing market prices of the
portfolio's securities.
For example, if a fund has assets of $50 million and liabilities of $10 million, it
would have a NAV of $40 million.
This number is important to investors, because it is from NAV that the price per
unit of a fund is calculated. By dividing the NAV of a fund by the number of
outstanding units, you are left with the price per unit. In our example, if the fund
had 4 million shares outstanding, the price-per-share value would be $40 million
divided by 4 million, which equals $10.
This pricing system for the trading of shares in a mutual fund differs
significantly from that of common stock issued by a company listed on a stock
exchange. In this instance, a company issues a finite number of shares through
an initial public offering (IPO), and possibly subsequent additional offerings,
which then trade in the secondary market. In this market, stock prices are set by
market forces of supply and demand. The pricing system for stocks is based
solely on market sentiment.
Because mutual funds distribute virtually all their income and realized capital
gains to fund shareholders, a mutual fund's NAV is relatively unimportant in
gauging a fund's performance, which is best judged by its total return.
3. Economies of Scale - Mutual fund buy and sell large amounts of securities at
a time, thus help to reducing transaction costs, and help to bring down the
average cost of the unit for their investors.
4. Liquidity - Just like an individual stock, mutual fund also allows investors to
liquidate their holdings as and when they want.
2. Costs – The biggest source of AMC income, is generally from the entry & exit
load which they charge from an investors, at the time of purchase. The mutual
fund industries are thus charging extra cost under layers of jargon
3. Dilution - Because funds have small holdings across different companies, high
returns from a few investments often don't make much difference on the overall
return. Dilution is also the result of a successful fund getting too big. When
money pours into funds that have had strong success, the manager often has
trouble finding a good investment for all the new money.
4. Taxes - when making decisions about your money, fund managers don't
consider your personal tax situation. For example, when a fund manager sells a
security, a capital-gain tax is triggered, which affects how profitable the
individual is from the sale. It might have been more advantageous for the
individual to defer the capital gains liability.
6) MUTUAL FUND CHOOSEN FOR STUDY
Launched in Feb 24, 1995, the fund is an open-ended growth scheme with a
LARGE CAP theme.
OBJECTIVE
Fund features
Nature Equity
Option Growth
Inception date Feb24-1995
nav Daily
Entry load 0%
Mutual fund
NAV
Latest nav 146.80 as on dec 2009
Risk
mean -0.55
beta 0.93
Portfolio
No of stocks 47
What’s in?
Asset allocation
equty
debt
cash & equivalent
7) MUTUAL FUNDS CHOOSEN FOR COMPARISION
OBJECTIVE
Fund features
Nature Equity
Option Growth
nav Daily
Entry load 0%
Mutual fund
Registrar
Franklin Templetion Asset Managment (India) Pvt. Ltd.
Franklin Templetion Centre, no.7,
3rd Cross Street, Adyar
Chennai
Tel.-24407000
NAV
Risk
mean -0.28
beta 7.87
Portfolio
No of stocks 58
What’s in?
Asset allocation
OBJECTIVE
Fund features
Nature Equity
Option Growth
nav Daily
Entry load 0%
Mutual fund
Registrar
Computer Age Management Services Private Limited
A&B, Lakshmi Bhavan
609, Anna Salai
Chennai
Nav
Risk
mean -0.54
beta 0.92
Portfolio
No of stocks 41
What’s in?
Maruti Suzuki India Ltd
Financial Technologies
What’s out?
Asset allocation
OBJECTIVE
Fund features
Nature Equity
Option Growth
nav Daily
Entry load 0%
Mutual fund
Registrar
Karvy Computershare Pvt. Ltd.
21, Avenue 4,
Street No 1, Banjara Hills
Hyderbad
NAV
mean -0.47
beta 0.93
Portfolio
No of stocks 49
What’s out?
Reliance
Infrastructure
Ltd.
Exide
Industries Ltd
Jindal Steel
and Power
Ltd.
Asset allocation
OBJECTIVE
Fund features
Nature Equity
Option Growth
nav Daily
Entry load 0%
Exit load If redeemed between 0 year to 1
year exit load is 1%
Mutual fund
Registrar
Karvy Computershare Pvt. Ltd.
21, Avenue 4,
Street No 1, Banjara Hills
Hyderbad
NAV
Risk
mean -0.40
beta 0.73
Portfolio
No of stocks 21
What’s in?
What’s out?
Hindustan
Petroleum
Corporation
Ltd
Asset allocation
Face Value 10 10 10 10 10
(Rs/Unit)
Last 80 % as on NA NA NA NA
Dividend march
Declared 30,2000
Entry Load 0% 0% 0% 0% 0%
Exit Load If If If If If
redeemed redeemed redeemed redeemed redeemed
between 0 between 0 between 0 between 0 between 0
days to 7 year to 1 days to year to 1 year to 1
days exit year exit 365 days year exit year exit
load is load is 1% exit load is load is 1% load is 1%
0.5% 1%
Findings
60
50
40
30
Increase or decrease in funds
20 since oct 30,2009(rs crore)
10
0
Birla Franklin ING Core Morgan Reliance
-10 sunlife Asian Equity Stanley A Equity
advantage Equity Fund Fund
f) Reliance mutual fund has the highest increase in funds since oct,2009.
g) All funds are showing positive growth but birla sunlife is showing
negative growth.
2) On the basis of NAV
200
150
52 - Week Low
100
52 - Week High
50
0
Birla Franklin ING Core Morgan Reliance
sunlife Asian Equity Stanley A Equity
advantage Equity Fund Fund
findings:
company 1 3 6 1 3 5 SINCE
MONT MONTH MONTH YEA YEA YEA INCEPTIO
H S S R R R N
a) For the 1 st month performance of birla sunlife advantage fund is much lower
– 1.18, the best performance is of Morgan Stanley 1.53.
b)For the initial time period of 3 months the lowest performer is FRANKLIN
ASIAN EQUITY -0.54, MORGAN STANLEY is still performing well as 11.05%.
d)Since inception the best performer of the above mutual funds is BIRLA
SUNLIFE MUTUAL ADVANTAGE.
100
80
0
1 MONTH 3 MONTHS 6 MONTHS 1 YEAR SINCE
INCEPTION
-20
e)From the graph it is clear that the best performer of mutual fund is
MORGAN STANLEY.
f)The second good performer is BIRLA SUNLIFE ADVANTAGE MUTUAL FUND.
9
8
7
6
5
4
3 mean
2 Standard deviation
1
0 beta
-1
Findings:
small NA NA NA 5.16 AS ON NA
NOV 2009
No of 47 58 41 49 21
stocks
( P/E ratio, P/B ratio, market capital all are taken AS ON NOV 2009)
p/b ratio= stock price/ (total assets- intangible assets and liabilities.)}
Graph on p/e & p/b ratio
35
30
25
20
P/E
15
P/B
10
0
Birla sunlife Franklin Asian ING Core Equity Morgan Stanley Reliance Equity
advantage Equity Fund A Fund
No of stocks
60
50
40
30 No of stocks
20
10
0
Birla sunlife Franklin ING Core Morgan Reliance
advantage Asian Equity Equity Fund Stanley A Equity Fund
Findings:
a) P/E ratio of ING Core Equity Fund is maximum, while the minimum is of
FRANKLIN ASIAN EQUITY.
b) P/B ratio of ING Core Equity Fund is maximum, while the minimum is of
FRANKLIN ASIAN EQUITY.
120
100
80
equity
60
debt
20
0
Birla sunlife Franklin Asian ING Core Morgan Reliance
advantage Equity Equity Fund Stanley A Equity Fund
findings
8) Bibliography
1) Www. Mutualfundindia.com
2) www.birlasunlife mutualfund.com
3) www.franklin funds.com
4) www.reliancemutualfund.com
5) www.morganstnleymutualfunds.com
6) www.google.com
7) www. Ing corefunds.com