Professional Documents
Culture Documents
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Acknowledgements
At the outset, I would like to thank GlobeOp for giving me the
approval to do this project in the organization. I am grateful to Mrs
Asmalata, HR Manager of GlobeOp for giving me an opportunity
to work with GlobeOp and understand its corporate culture.
Last but not the least I would like to convey my special thanks to
all the faculty members of ICFAI National College, Thane, for
giving me this opportunity to work on this project and for
providing us the computer lab and library facilities.
Regards,
Shailesh Bhavsar
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Summary
“Money doesn't just make the world go 'round. It also keeps the
presses humming and the subpoenas flying.”
ValuaResearchOnline, CEO
Dhirendra Kumar
This choice issue also points at a potential problem in the new tax
regime. For this freedom of choice to be really meaningful,
investors should be able to switch investments from one instrument
to another without losing the tax-exempt status. Today, if you
make an investment in an ELSS fund with the intention of saving
for your retirement, then you have to stay with that same fund till
you retire. If the fund starts doing badly at some point in the future,
you would surely want to switch to another fund and you can,
because the mandated lock-in in the ELSS is only three years.
However, if you switch to another investment, then that new
investment will not have the tax-exempt status of the old ones.
When the second investment is eventually en-cashed, the returns
you make on it will be taxable.
It’s now almost two years since the Kelkar committee’s report on
Tax reforms was made public. During this period, there have been
three budgets presented by two governments, which supposedly
have a very different approach to economic reforms. Yet, we find
that the most significant tax reforms that have been undertaken
have been very much along the lines of the Kelkar committee’s
recommendations. It is reasonable to infer that future reforms may
well be further implementations of Kelkar recommendations. A re-
reading of that committee’s report suggests that we are generally
headed for fewer tax exemptions and an even simpler exemptions
structure.
Also, the government could afford to offer a higher limit than the
current one lakh because tax is simply getting deferred rather than
permanently exempt. In such a regime, the returns you get from
tax-break investments would become even more important it would
only be those returns that would tax-exempt. Investing in a low
return avenue would hardly mean any gains.
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Chapter I
-Objectives
-Limitations
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Objectives
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Limitations
Though the present study is aimed to achieve the above mentioned
objectives in full earnest and accuracy, it was hampered due to
certain limitations. Some of the limitations of this study may be
summarized as follows:
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Chapter II
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This sector has grown rapidly as leading banks and insurance firms
cash in on India’s reputation as Asia’s top location for customer
care operations
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Business outsourcing
Software development
Shared services
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Industry Snapshots:
1. The financial services industry is composed of three primary
sectors: banking, securities and commodities, and insurance. (
Bureau of Labor Statistics)
2. The financial industry’s annual rate of growth (1.2% annually
between 2002 and 2012) represents 964,000 new jobs created
by 2012. (Business Today, Monthly Labor Review, February
2005)
3. The 2003 Gross Domestic Product generated by the financial
industry was over $2.5 trillion in current dollars, a 20.4%
share of the total GDP ( Bureau of Economic Analysis)
4. The following financial services occupations are expected to
increase in employment by over 18% from 2002 to 2012:
personal financial advisors (34.6%), financial analysts
(18.7%), and credit analysts (18.7%). (Bureau of Labor
Statistics)
5. Employment growth is expected in management and
professional jobs in banking, customer service representatives
as well as securities and financial services sales
representatives. ( Bureau of Labor Statistics)
6. Growing areas of the insurance industry are medical services
and health insurance in addition to the industry’s expansion
into the broader financial services field. ( Bureau of Labor
Statistics)
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Workforce Issues:
1. The combined effects of technology, deregulation, and
mergers will continue to affect total employment growth and
the mix of occupations in the banking sector.
2. Deregulation of the financial services industry allows banks
to offer a variety of financial and insurance products that they
were once prohibited from selling. The need to develop,
analyze, and sell these new services will spur demand for
securities and financial services sales representatives,
financial analysts, and personal financial advisors.
3. As workers retire and insurance providers diversify and
expand into financial services, positions will be available for
new workers to enter the field. Medical services and health
insurance is the field within the insurance sector predicted to
grow the most in the next decade.
Skills Sets
1. Office and administrative occupations in insurance typically
require a high school education, but many institutions make
educational opportunities available to encourage in-house
advancement. Managerial, sales and professional occupations
typically require at least a bachelor’s degree.
2. Bank tellers and other clerks usually need only a high school
education. Most banks seek people who have good basic
math and customer service skills.
3. Financial services sales agents usually need a college degree;
a major or courses in finance, accounting, economics,
marketing, or related fields serve as excellent preparation.
Sales agents selling securities need to be licensed by the
National Association of Securities Dealers, and agents selling
insurance also must obtain licensure by state.
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Key Advantages
1. Companies save money by moving jobs from the front office
to more cost-effective, back-office locations in India. This
trend is on the rise due to merger activity and advancements
in Internet technology and e-commerce.
2. India’s financial-services sector is projected to grow by more
than 25% over the next decade.
3. Compared to New York City and Philadelphia, back office
advantages of India include:
a. Less employee turnover
b. Shorter employee commute
c. Lower utility costs
d. Lower corporate taxes
e. Lower cost of living
4. The skill set required for back office jobs are readily
available in India at a reasonable cost.
5. Due to technological advancement it is possible to the clients
to get access of their portfolio information from the server
situated different countries.
6. Highly specialized systems are created to make its easy
access to the user client as well as the data base management
team.
7. The current data is extracted from a standard system which is
identical to all the people in the world. But its cost is more to
an individual. Therefore financial service providers which
extract bulk data in less cost and provide the same to their
clients.
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Leading Companies:
• Prudential Financial
• Chubb Corporation
• Dun & Bradstreet Corporation
• Dow Jones Information Services
• Merrill Lynch & Company
• Equitable Companies
• HP Financial Services
• Toa Re Reinsurance Company Of America
• National Westminster Bank
• Bank of Tokyo
• U.S. Federal Reserve
• Chase Manhattan Bank
• Bank of New York
• CIT Financial
• Mellon Bank
• Paine Weber Group
• Morgan Stanley
• Dean Witter Reynolds
• First Chicago Trust
• Barclays PLC
• Brown Brothers Harriman
• Dumitomo Bank
• Deutsche Bank
• Prudential Insurance
• ICICI Onesource
• E-Serve Financial Services
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Chapter III
Company Profile-Introduction
An overview
Services Offered
-Trade Administration
-Middle and Back Office
-Fund Administration
-Risk Reporting
-Client Web Access
Culture
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An Overview
GlobeOp® Financial Services (GFSSM) delivers independence,
choice and flexibility to the specialized middle and back office,
administration and risk measurement needs of hedge funds, fund of
funds, family wealth managers, institutional investors, proprietary
trading desks and corporate treasury departments.
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Services Offered
GlobeOp® offers fund managers the ability to implement a world-
class operational infrastructure through customizable outsourced
solutions. The up-front investment for fund managers is minimal,
and the speed and convenience of implementation is greater than
what could be achieved by architecting and building solutions in-
house. In each customer relationship, GlobeOp works flexibly,
collaboratively, and responsively to support each customer's
growth and success. GlobeOp provides:
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1. Trade Capture
2. Real Time Analytics
3. Multiple Systems Support
4. Data Aggregation
Trade Capture
Data Aggregation
Fund administration:
GlobeOp®'s focus on hedge funds, emphasis on technology, and
deep knowledge of complex financial instruments, uniquely
positions us to provide truly independently derived NAVs and
best-practices administration support for domestic and offshore
funds.
1) Fund Valuation: NAV Calculation on a monthly, weekly or
daily basis. Investors receive the comfort of GlobeOp's
independent pricing and valuation. Investment in technology such
as Koger System’s N*TAS™ to handle investor allocation and
statement production helps us increase our speed in reporting to
investors without sacrificing quality. GFSSM supports series
accounting and equalization.
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Risk reporting:
GlobeOp’s Risk Services provide a fully integrated solution
supporting all post-trade risk analysis needs. The services are
targeted towards the hedge fund community and investors. It
capitalizes on our experience with a diverse client base spanning
all types of hedge fund strategies such as equity long/short, relative
value fixed income, convertible arbitrage, macro, credit arbitrage,
emerging markets, etc.
1) Full Services: GlobeOp’s Risk Services end products are the
risk results available through our internet based report writer.
GlobeOp handles all necessary tasks: security master & historical
data maintenance, risk engine configuration, risk calculations
performed on GlobeOp's computation servers and report writer
maintenance. Full support and training is provided.
2) Sophistication and Flexibility: GlobeOp's Risk Services
include: position and exposure reporting using advanced factor
models; scenario analysis; stress testing; strategy specific risk
modeling; model based VaR computations, style monitoring.
GlobeOp Risk offers a high degree of flexibility in both reporting
and modeling.
Through its integration with GlobeOp Financial Services, GlobeOp
Risk clients benefit from a state-of-the-art infrastructure for data
aggregation that enables us to do high quality, position level risk
analysis. No other risk analytics service provider has such an
infrastructure in place. This integration is particularly beneficial for
funds of funds where position aggregation for underlying funds is a
key requirement.
3) Complete Transparency: In cases where transparency is an
issue GlobeOp Risk can provide third party performance data on
risk to hedge fund investors, without revealing the actual position
data.
4) Individual Level Customization: Factor models can be
customized to meet the manager needs for investigating and
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Culture:
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Chapter IV
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Brief Description:
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About Bloomberg
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Bloomberg University
To support the Bloomberg Professional service, we provide a
comprehensive range of customer support and training facilities for
each and every user. These free-of-charge services and seminars
are accessible online, on-site and even through conference calls to
help users get the most from our products. It's all part of our
service.
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Start
Finish
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Key learnings:
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GID 150798
Name DIGITAL DISPATCH Instrument Type EQUITY
SYSTEMS INC
Short Name CA25385Q1046 Currency CAD
Exchange TOR - Toronto Stock Exchange
Comments Modified by rshetty on 31-Jan-2005 at 05:59 and the data was clean
Kondor Name DIGITAL DISPATCH Kondor Short Name CA25385Q1046
SYSTEMS INC
Short Name (R3000) Country CA
CUSIP 25385Q104 RIC DD.TO
SEDOL 2166416 ISIN CA25385Q1046
Bloomberg Unique ID Bloomberg ID DD CN
Bloomberg Name Bloomberg Yellow Key Equity
Bloomberg Short Name Bloomberg Number
Security CA25385Q1046 Security Description DIGITAL DISPATCH
SYSTEMS INC
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Client
H2CAP
Action Update
Kondor Short Name KR7032390007
Kondor Name KT FREETEL CO LTD
Financial Center US KR
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Listed below are the installations that have the Equities: CA6565681021
Number Instrument
GID Kondor Name Currency Exchange
of Deals Type
Suggestions:
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Chapter V:
Project Work
-Background of the study
-Scope and methodology
-Personal Taxation
- Concluding Observations
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The most appropriate and commonly applied tool for assessing the
financial performance is tracking the “Net Asset Value” (NAV) per
unit of mutual funds. The net asset value can be defined as the
aggregate market value of the invested portfolio of equity mutual
funds plus the ‘cash’ or ‘its equivalent’ in hand less total external
liabilities.
Since equity mutual funds issue units (akin to shares issued by
companies) to the subscribers, the aggregate market value of
invested portfolio is marked against the total number of units
issued by the equity mutual funds outstanding in the books of
accounts of equity mutual funds at any given time. Numerically, it
is the same as the number of units subscribed by the investors.
NAV per unit at any given time is computed dividing market value
(net of fund’s liabilities) of invested portfolio of mutual funds and
cash in hand by the total number of outstanding units at that point
of time.
In the project, month-end values form the basis of NAV per unit.
NAV’s per unit have been adjusted for dividend, bonus and rights
issues for appropriate comparison and include all income and
profits/loss on value of financial assets held under the mutual funds
during period of our study. Bonus factor has been calculated by
dividing “the number units after the bonus issue” with “the number
of units before the bonus issue”, for instance, bonus factor for issue
of two bonus units for every three units held will be taken as 5/3.
Ex-rights net asset value per unit has been calculated dividing “net
asset value of units held just before the right issue plus the value
paid for subscribing the right entitlement” with “the number of
units held by the investor after the rights issue”. Dividend, if any,
has been taken as reinvested at the internal rate of return.
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The study period, 2004-05, has been segregated into two phases,
phase-1 (April 2004- September 2004) and phase-2 (October 2004-
March 2005), to ascertain whether their performances varied
during the two phases. Thus, the compounded rate of return for
sample funds has been computed for 2004-05 on an aggregative
basis and for two phases, phase-1 and phase-2 on disaggregate
basis.
The sample has been classified into two groups, namely, private
sector and public sector undertaking equity mutual funds. The
observations considered for each fund are from the date of
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All equity mutual funds in the sample have been in operation for
more than three years as on March 2005. Besides, the period may
be considered adequate for peer group comparison of rates of
return.
Where,
Rm =Return on market portfolio (BSE-100 National
Index) for nth month.
IVn = BSE-100 index value at the end of nth month.
IV (n-1) = BSE-100 index value per unit at the of (n-1) th
month
Finally, rates of return are on pre-tax basis for two major reasons:
1. The tax rates differ among investors and
2. It is better to exclude the impact of taxes on the performance
of equity mutual funds.
Personal taxation
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Chapter VI:
Related Literature
-Ground Rules of MF Investing
-When to say Goodbye to MFs
-Advantages & Disadvantages of MF
-Do’s and Don’ts for Investors
-Things to be known while investing
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The others did not know when to exit and so we are just trying to
put forward some situations when the investor should consider
withdrawing their investments from the funds.
The above list is certainly not exhaustive and individuals will have
other better reasons to quit as well. It’s just that most don’t know
when to apply thought and so these would come in handy.
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Advantages
Professional Management — Professional money managers
research, select, and monitor the performance of the securities the
fund purchases.
Disadvantages
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Unit Trust of India was the first mutual fund set up in India in the
year 1963. In early 1990s, Government allowed public sector
banks and institutions to set up mutual funds.
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must indicate the option in the application form. The mutual funds
also allow the investors to change the options at a later date.
Growth schemes are good for investors having a long-term outlook
seeking appreciation over a period of time.
Balanced Fund
These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These
schemes invest exclusively in safer short-term instruments such as
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Gilt Fund
Index Funds
There are also exchange traded index funds launched by the mutual
funds which are traded on the stock exchanges.
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. They may also seek advice of an expert.
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Mutual funds cannot increase the load beyond the level mentioned
in the offer document. Any change in the load will be applicable
only to prospective investments and not to the original investments.
In case of imposition of fresh loads or increase in existing loads,
the mutual funds are required to amend their offer documents so
that the new investors are aware of loads at the time of
investments.
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An investor should take into account his risk taking capacity, age
factor, financial position, etc. As already mentioned, the schemes
invest in different type of securities as disclosed in the offer
documents and offer different returns and risks. Investors may also
consult financial experts before taking decisions. Agents and
distributors may also help in this regard.
How long will it take for transfer of units after purchase from
stock markets in case of close-ended schemes?
Can a mutual fund change the nature of the scheme from the
one specified in the offer document?
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On the other hand, it is likely that the better managed scheme with
higher NAV may give higher returns compared to a scheme which
is available at lower NAV but is not managed efficiently. Similar is
the case of fall in NAVs. Efficiently managed scheme at higher
NAV may not fall as much as inefficiently managed scheme with
lower NAV. Therefore, the investor should give more weightage to
the professional management of a scheme instead of lower NAV of
any scheme. He may get much higher number of units at lower
NAV, but the scheme may not give higher returns if it is not
managed efficiently.
Are the companies having names like mutual benefit the same
as mutual funds schemes?
under the purview of SEBI. On the other hand, mutual funds can
mobilize funds from the investors by launching schemes only after
getting registered with SEBI as mutual funds.
Almost all the mutual funds have their own web sites. Investors
can also access the NAVs, half-yearly results and portfolios of all
mutual funds at the web site of Association of mutual funds in
India (AMFI) www.amfiindia.com. AMFI has also published
useful literature for the investors.
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Recommendations:
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References:
1. Mutual Fund Insight magazine/15 March-14 April
edition/Editor: Mr.Dhirendra Kumar.
4. www.mutualfundsindia.com
5. www.globeop.com
6. www.valueresearchonline.com
7. www.bloomberg.com
8. www.bseindia.com
10. www.amfiindia.com
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LITERATURE REVIEW
S.Narayan Rao , et. al., evaluated performance of Indian mutual funds in a bear market
through relative performance index, risk-return analysis, Treynor’s ratio, Sharpe’s ratio,
Sharpe’s measure , Jensen’s measure, and Fama’s measure. The study used 269 open-
ended schemes (out of total schemes of 433) for computing relative performance index.
Then after excluding funds whose returns are less than risk-free returns, 58 schemes are
finally used for further analysis. The results of performance measures suggest that most
of mutual fund schemes in the sample of 58 were able to satisfy investor’s expectations
by giving excess returns over expected returns based on both premium for systematic risk
and total risk.
Bijan Roy, et. al., conducted an empirical study on conditional performance of Indian
mutual funds. This paper uses a technique called conditional performance evaluation on a
sample of eighty-nine Indian mutual fund schemes .This paper measures the performance
of various mutual funds with both unconditional and conditional form of CAPM,
Treynor- Mazuy model and Henriksson-Merton model. The effect of incorporating
lagged information variables into the evaluation of mutual fund managers’ performance is
examined in the Indian context. The results suggest that the use of conditioning lagged
information variables improves the performance of mutual fund schemes, causing alphas
to shift towards right and reducing the number of negative timing coefficients.
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Mishra, et al., (2002) measured mutual fund performance using lower partial moment. In
this paper, measures of evaluating portfolio performance based on lower partial moment
are developed. Risk from the lower partial moment is measured by taking into account
only those states in which return is below a pre-specified “target rate” like risk-free rate.
Kshama Fernandes(2003) evaluated index fund implementation in India. In this paper,
tracking error of index funds in India is measured .The consistency and level of tracking
errors obtained by some well-run index fund suggests that it is possible to attain low
levels of tracking error under Indian conditions. At the same time, there do seem to be
periods where certain index funds appear to depart from the discipline of indexation.
Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds
matched to randomly selected conventional funds of similar net assets to investigate
differences in characteristics of assets held, degree of portfolio diversification and
variable effects of diversification on investment performance. The study found that
socially responsible funds do not differ significantly from conventional funds in terms of
any of these attributes. Moreover, the effect of diversification on investment performance
is not different between the two groups. Both groups underperformed the
Domini 400 Social Index and S & P 500 during the study period.
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