36244864 performance-comparison-and-investors-perception-about-investing-in-mutual-funds-at-nj-india-invest-2010

A SUMMER INTERSHIP PROJECT REPORT

ON

“Performance Comparison and

Investors Perception about Investing in mutual funds"

At

Udaipur, Rajasthan

IN THE PARTIAL FULFILLMENT FOR THE AWARD OF

OF MASTERS IN BUSINESS ADMINISTRATION

SUBMITTED TO

ADVENT INSTITUE OF MANAGEMENT STUDIES

UDAIPUR

UNDER THE GUIDANCE OF: SUBMITTED BY:

ADVENT INSTITUTE OF MANAGEMENT STUDIES 1

Mr. AMIT SONI VAIBHAV KUMAR JHANWAR

AUTHORISATION

This report is submitted as partial fulfillment of the requirement of MBA program of

RAJASTHAN TECHNICAL UNIVERSITY. The report on the title “Performance Comparison

and Investors Perception about Investing in mutual funds " is an original work

and has not been submitted to any other institution or university for the award of any

degree or diploma.

Place: Udaipur

Date : VAIBHAV KUMAR JHANWAR


ACKNOWLEDGEMENT

Apart from individual efforts, the success of any project depends largely on the

encouragement of many others involved directly and indirectly. I take this opportunity to

express my heartfelt gratitude to the people who have been influential in the progress of

this project. I consider it my pleasant duty to acknowledge my deep sense of gratitude to

Mr. Amit Soni, Branch Manager, NJ India Invest, Udaipur for his continuous

guidance and direction to the exercise.

I am also grateful to Mr. Yogesh Jain, Mr. Jitendra Jain - Sales Executive for his

cooperation and guidance in learning the nuances of MF Industry.

I would like to thank all the people of NJ India Invest, Udaipur for the support they gave

for the completion of the project.

Date:

Place: Udaipur


PREFACE

Finance & its functions are the part of economic activity. Finance is very essentially

needed for all types of organizations viz; small, medium, large-scale industries & service

sector. Hence the role of finance manager & the subject finance accounting gained

maximum importance. Liberalization, globalization & privatization created new

challengers to entrepreneur & corporate in carrying they’re day to day activities. So,

“finance is regarded as the life blood of a business organization.”

Master of business administrator is professional course which develop a new body of

knowledge & skill set & make as available for those seeking challenging carriers in the of

liberalization & globalization.

The goal of the Summer Training is to give a corporate exposure to the students as well

as to give them an opportunity to apply theory into the practice. The real business

problems are drastically different from class-room case solving. Summer Project aims to

providing little insight into working of an organization to a management trainee. Among

every stage of knowledge being inculcated in students, practical training in the corporate

world plays a significant role in exhibiting and pruning their capabilities.

The purpose behind writing a report is to put in to works the practical training that is

imparted into me that gives a better and a clear understanding of the experience I got.

“Performance Comparison

and

Investors Perception about Investing in mutual funds”

Table of Contents


S.No. ParticularsP.No.

1. Objective of study 1

2. History of Indian Mutual Fund Industry 2-3

3. Basic Organisation of a Mutual Fund 4

4. Important characteristics of a mutual fund 5

5. Objective of a mutual fund 6

6. Mutual fund – But why 6-8

7. Disadvantages of Mutual fund 9

8. Mutual fund structure 10

9. Mutual fund who invests? 11

10. Organisation and management of mutual fund 12-15

11. Mutual fund – types 16

12. Mutual fund – scheme types 17-19

13. Different modes of receiving the income earned

from mutual fund investments 19-20

14. Mutual fund investing strategies 20

15. Mutual fund risk associated 21-22

16. Performance measures of mutual fund 23-27

17. Mutual fund companies in India 28

18. Mutual fund Do and Dont’s 29-31

19. Future of mutual fund industry in India 32-34

20. Rolf of AMFI 35-36

21. SEBI guidelines for mutual fund 37-39

22. ULIP v/s. Mutual fund 39

23. Growth in asset under management 40-42

24. Assets under mgmt as on June 30, 2010 43

25. BCG Report on Equity MF 44-48


26. Performance Comparison of Different MF in India 49-53

27. Company Overview – About NJ India Invest 54-55

28. Philosophy 55-56

29. Vision and Mission 56

30. Division 57-58

31. Management 58-59

32. Products 59

33. People 60

34. Culture 60

35. Service standards 61-62

36. Recognitions 62-63

37. 360° – Advisory Platform 64-65

37. Mutual funds Advisor 66

38. Know your Client – KYC 67-69

39. NISM for CPE Registration Form 70

40. Questionnaire 71-73

41. Responses 74

42. Suggestions 75

43. Conclusion 76

44. Recommendations 77

45. Bibliography and websites 78

OBJECTIVE OF STUDY

1 ) Understanding Mutual Funds


2 ) Understanding Market Potential of Mutual funds.

3 ) Understanding which mutual fund is good for whom.

4) Analyzing Awareness of Mutual Funds among insurance advisors, Post Office -

RD/FD agents.

5) Analyzing risk and return involved in different schemes of mutual funds.

6) Recruitment of partners for NJ Invest.

7) Analyzing investors perception about investing in mutual funds.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

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. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry.


In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was \ 67 billion. The private sector entry to the fund family raised the AUM to \470 billion in March 1993 and till April 2004; it reached the height if \1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

The history of mutual funds in India can be broadly divided into four distinct phases:

First Phase: 1964-1987

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. 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 \ 6,700 cores of assets under management.

Second Phase: 1987-1993 (Entry of Public Sector Funds)

In 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 June1987followed by Canara bank 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 had assets under management of \ 47, 004 cores.

Third Phase: 1993-2003 (Entry of Private Sector Funds)

With the entry of 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, except 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 industry now functions under the SEBI (Mutual Fund) Regulations1996.As at the end of January 2003; there were 33 mutual funds with total assets of \ 1,21,805 crores. The Unit Trust of India with \ 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 \ 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 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. The graph indicates the growth of assets over the years.

Basic Organisation of a Mutual Fund

There are many entities involved and the diagram below illustrates the organizational

set up of a Mutual Fund. These entities will be explained later in the report.


Mutual Funds diversify their risk by holding a portfolio of instead of only one asset. This

is because by holding all your money in just one asset, the entire fortunes of your

portfolio depend on this one asset. By creating a portfolio of a variety of assets, this

risk is substantially reduced.

Mutual Fund investments are not totally risk free. In fact, investing in Mutual Funds

contains the same risk as investing in the markets, the only difference being that due

to professional management of funds the controllable risks are substantially reduced. A

very important risk involved in Mutual Fund investments is the market risk. However,

the company specific risks are largely eliminated due to professional fund

management.

IMPORTANT CHARACTERISTICS OF A MUTUAL FUND

A Mutual Fund actually belongs to the investors who have pooled their Funds.

The ownership of the mutual fund is in the hands of the Investors.


A Mutual Fund is managed by investment professional and other Service

providers, who earns a fee for their services, from the funds.

The pool of Funds is invested in a portfolio of marketable investments.

The value of the portfolio is updated every day.

The investor’s share in the fund is denominated by “units”. The value of the units

changes with change in the portfolio value, every day. The value of one unit of

investment is called net asset value (NAV).

The investment portfolio of the mutual fund is created according to The stated

Investment objectives of the Fund.

OBJECTIVES OF A MUTUAL FUND

To Provide an opportunity for lower income groups to acquire without much difficulty, property in the form of shares.

To cater mainly of the need of individual investors who have limited means.


To Manage investors portfolio that provides regular income, growth, safety, liquidity, tax advantage, professional management and diversification.

MUTUAL FUND—BUT WHY??

Here are some of the Advantages offered by Mutual Funds-:

Number of available options

Mutual funds invest according to the underlying investment objective as specified at the

time of launching a scheme. So, we have equity funds, debt funds, gilt funds and many

others that cater to the different needs of the investor. The availability of these options

makes them a good option. While equity funds can be as risky as the stock markets

themselves, debt funds offer the kind of security that is aimed for at the time of making

investments. Money market funds offer the liquidity that is desired by big investors who

wish to park surplus funds for very short-term periods. Balance Funds cater to the

investors having an appetite for risk greater than the debt funds but less than the equity

funds.

Diversification

Investments are spread across a wide cross-section of industries and sectors and so the

risk is reduced. Diversification reduces the risk because all stocks don’t move in the

same direction at the same time. One can achieve this diversification through a Mutual

Fund with far less money than one can on his own.


Professional Management

Mutual Funds employ the services of skilled professionals who have years of experience

to back them up. They use intensive research techniques to analyze each investment

option for the potential of returns along with their risk levels to come up with the figures

for performance that determine the suitability of any potential investment.

Liquidity

Mutual Funds offer the benefit of liquidity which provides the investor with the option of

easy conversion to money. As in the case of fixed deposits, where the investor can get

his money back only on the completion of a fixed period, an investor can get his money

back as and when he wants. Investors can redeem their money at the prevailing NAV’s

(Net Asset Values). Mutual funds directly re-purchase at the current NAV.

Well Regulated

Unlike the company fixed deposits, where there is little control with the investment being

considered as unsecured debt from the legal point of view, the Mutual Fund industry is

very well regulated. All investments have to be accounted for, decisions judiciously

taken. SEBI acts as a true watchdog in this case and can impose penalties on the AMCs

at fault. The regulations, designed to protect the investors’ interests are also

implemented effectively.

Transparency

Being under a regulatory framework, mutual funds have to disclose their holdings,

investment pattern and all the information that can be considered as material, before all

investors. This means that the investment strategy, outlooks of the market and scheme

related details are disclosed with reasonable frequency to ensure that transparency

exists in the system. On the other hand, the investor is totally clueless in case of the

other investment alternatives as nothing is disclosed.

Savings

Tax saving schemes of Mutual Funds offer investor a tax rebate under section 88 of the

Income Tax Act. Under this section, an investor can invest up to \ 10,000 per Financial

year in a tax saving scheme. The rate of rebate under this section depends on the

investor’s total income


Flexible and Affordable

Mutual Funds offer a relatively less expensive way to invest when compared to other

avenues such as capital market operations. The fee in terms of brokerages, custodial

fees and other management fees are substantially lower than other options and are

directly linked to the performance of the scheme. Investment in mutual funds also offers

a lot of flexibility with features such as regular investment plans, regular withdrawal

plans and dividend reinvestment plans enabling systematic investment or withdrawal of

funds. Even the investors, who could otherwise not enter stock markets with low

investible funds, can benefit from a portfolio comprising of high-priced stocks because

they are purchased from pooled funds.

Disadvantages of mutual funds

Mutual funds are good investment vehicles to navigate the complex and unpredictable world of investments. However, even mutual funds have some inherent drawbacks. Understand these before you commit your money to a mutual fund.

No assured returns and no protection of capital

If you are planning to go with a mutual fund, this must be your mantra: mutual funds do not offer assured returns and carry risk. For instance, unlike bank deposits, your investment in a mutual fund can fall in value. In addition, mutual funds are not insured or guaranteed by any government body (unlike a bank deposit, where up to \ 1 lakh per bank is insured by the Deposit and Credit Insurance Corporation, a subsidiary of the Reserve Bank of India). There are strict norms for any fund that assures returns and it is


now compulsory for funds to establish that they have resources to back such assurances. This is because most closed-end funds that assured returns in the early-nineties failed to stick to their assurances made at the time of launch, resulting in losses to investors. A scheme cannot make any guarantee of return, without stating the name of the guarantor, and disclosing the net worth of the guarantor. The past performance of the assured return schemes should also be given.

Restrictive gains

Diversification helps, if risk minimization is your objective. However, the lack of investment focus also means you gain less than if you had invested directly in a single security.

Assume, Reliance appreciated 50 per cent. A direct investment in the stock would appreciate by 50 per cent. But your investment in the mutual fund, which had invested 10 per cent of its corpus in Reliance, will see only a 5 per cent appreciation.

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 fund's manager to make the right decisions regarding the fund's 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.

MUTUAL FUND—STRUCTURE


A mutual fund is structured as mentioned above. Firstly, the investor invests his money in the fund. Every mutual fund organization has a sponsor who is required to contribute a minimum of 40% of the net worth of the AMC. It is the duty of the sponsor to establish a fund and apply to SEBI for its registration. A person or a group of persons known as trustee is given an overall authority over the fund managers. They basically safeguard the assets of the fund. The fund is created which is managed by the AMC which is given the powers to take all decisions relating to the investment. There is another entity known as the custodian, who basically stocks a fund’s securities and other assets. The registrar is an institution which maintains a register of all the unit holders of a fund along with their ownership. Finally, the SEBI is the ultimate authority.

MUTUAL FUND—who invests?


Sponsor

Mutual fundTrustees

ASSET MANAGEMENT COMPANY

Custodian Registrar

Investor Profile:

An investor normally prioritizes his investment needs before undertaking an

investment. Different goals will be allocated to different proportions of the total

disposable amount. Investments for specific goals normally find their way into the debt

market as risk reduction is of prime importance, this is the area for the risk-averse

investors and here, Mutual Funds are generally the best option. One can avail of the

benefits of better returns with added benefits of anytime liquidity by investing in open-

ended debt funds at lower risk, this risk of default by any company that one has chosen

to invest in, can be minimized by investing in Mutual Funds as the fund managers

analyze the companies financials more minutely than an individual can do as they have

the expertise to do so.

Moving up the risk spectrum, there are people who would like to take some risk and

invest in equity funds/capital market. However, since their appetite for risk is also

limited, they would rather have some exposure to debt as well. For these investors,

balanced funds provide an easy route of investment, armed with expertise of

investment techniques, they can invest in equity as well as good quality debt thereby

reducing risks and providing the investor with better returns than he could otherwise

manage. Since they can reshuffle their portfolio as per market conditions, they are

likely to generate moderate returns even in pessimistic market conditions.

Next comes the risk takers, risk takers by their nature, would not be averse to investing

in high-risk avenues. Capital markets find their fancy more often than not, because

they have historically generated better returns than any other avenue, provided, the

money was judiciously invested. Though the risk associated is generally on the higher

side of the spectrum, the return-potential compensates for the risk attached.

ORGANISATION AND MANAGEMENT OF MUTUAL FUNDS

In India Mutual Fund usually formed as trusts, three parties are generally involved viz.

Settler of the trust or the sponsoring organization.


The trust formed under the Indian trust act, 1982 or the trust company

registered under the Indian companies act, 1956

Fund mangers or The merchant-banking unit

Custodians.

MUTUAL FUNDS TRUST:

Mutual fund trust is created by the sponsors under the Indian trust act, 1982, which

is the main body in the creation of Mutual Fund trust.The main functions of Mutual Fund

trust are as follows:

Planning and formulating Mutual Funds schemes.

Seeking SEBI’s approval and authorization to these schemes.

Marketing the schemes for public subscription.

Seeking RBI approval in case NRI’s subscription to Mutual Fund is Invited

Attending to trusteeship function. This function as per guidelines can be

assigned to separately established trust companies too. Trustees are required to

submit a consolidated report six monthly to SEBI to ensure that the guidelines

are fully being complied with trusted are also required to submit an annual

report to the investors in the fund.

FUND MANAGERS (OR) THE ASSET MANAGEMENT COMPANY (AMC)

AMC has to discharge mainly three functions as under:

I. Taking investment decisions and making investments of the funds through

market dealer/brokers in the secondary market securities or directly in the

primary capital market or money market instruments.

II. Realize fund position by taking account of all receivables and realizations,

moving corporate actions involving declaration of dividends,etc to compensate

investors for their investments in units; and

III. Maintaining proper accounting and information for pricing the units and arriving

at net asset value (NAV), the information about the listed schemes and the

transactions of units in the secondary market. AMC has to feed back the trustees


about its fund management operations and has to maintain a perfect information

system.

CUSTODIANS OF MUTUAL FUNDS:-

Mutual funds run by the subsidiaries of the nationalized banks had their respective

sponsor banks as custodians like canara bank, SBI, PNB, etc. Foreign banks with

higher degree of automation in handling the securities have assumed the role of

custodians for mutual funds. With the establishment of stock Holding Corporation

of India the work of custodian for mutual funds is now being handled by it for

various mutual funds. Besides, industrial investment trust company acts as sub-

custodian for stock Holding Corporation of India for domestic schemes of UTI, BOI

MF, LIC MF, etc

RESPONSIBILITY OF CUSTODIANS:-

Receipt and delivery of securities

Holding of securities.

Collecting income

Holding and processing cost

Corporate actions etc

FUNCTIONS OF CUSTOMERS:-

Safe custody

Trade settlement

Corporate action

Transfer agents

FORMATION AND REGULATIONS


1. Mutual funds are to be established in the form of trusts under the Indian trusts

act and are to be operated by separate asset management companies (AMC s)

2. AMC’s shall have a minimum Net worth of \ 5 crores;

3. AMC’s and Trustees of Mutual Funds are to be two separate legal entities and

that an AMC or its affiliate cannot act as a manager in any other fund;

4. Mutual funds dealing exclusively with money market instruments are to be

regulated by the Reserve Bank Of India

5. Mutual fund dealing primarily in the capital market and also partly money market

instruments are to be regulated by the Securities Exchange Board Of India

(SEBI)

6. All schemes floated by Mutual funds are to be registered with SEBI

Schemes:-

1. Mutual funds are allowed to start and operate both closed-end and open-end

schemes;

2. Each closed-end schemes must have a Minimum corpus (pooling up) of \ 20

crore;

3. Each open-end scheme must have a Minimum corpus of \ 50 crore

4. In the case of a Closed –End scheme if the Minimum amount of \ 20 crore

or 60% of the target amount, which ever is higher is not raised then the entire

subscription has to be refunded to the investors;

5. In the case of an Open-Ended schemes, if the Minimum amount of \ 50 crore or

60 percent of the targeted amount, which ever is higher, is no raised then the

entire subscription has to be refunded to the investors.

Investment norms:-

1. No mutual fund, under all its schemes can own more than five percent of any

company’s paid up capital carrying voting rights;

2. No mutual fund, under all its schemes taken together can invest more than 10

percent of its funds in shares or debentures or other instruments of any single

company;


3. No mutual fund, under all its schemes taken together can invest more than 15

percent of its fund in the shares and debentures of any specific industry, except

those schemes which are specifically floated for investment in one or more

specified industries in respect to which a declaration has been made in the offer

letter.

4. No individual scheme of mutual funds can invest more than five percent of its

corpus in any one company’s share;

5. Mutual funds can invest only in transferable securities either in the money or in

the capital market. Privately placed debentures, securitized debt, and other

unquoted debt, and other unquoted debt instruments holding cannot exceed 10

percent in the case of growth funds and 40 percent in the case of income funds.

Distribution:

Mutual funds are required to distribute at least 90 percent of their profits annually in

any given year. Besides these, there are guidelines governing the operations of mutual

funds in dealing with shares and also seeking to ensure greater investor protection

through detailed disclosure and reporting by the mutual funds. SEBI has also been

granted with powers to over see the constitution as well as the operations of mutual

funds, including a common advertising code. Besides, SEBI can impose penalties on

Mutual funds after due investigation for their failure to comply with the guidelines.

MUTUAL FUND—TYPES

1. OPEN-ENDED MUTUAL FUNDS:-

The holders of the shares in the Fund can resell them to the issuing Mutual Fund

company at the time. They receive in turn the net assets value (NAV) of the shares at

the time of re-sale. Such Mutual Fund Companies place their funds in the secondary

securities market. They do not participate in new issue market as do pension funds or

life insurance companies. Thus they influence market price of corporate securities.


Open-end investment companies can sell an unlimited number of Shares and thus keep

going larger. The open-end Mutual Fund Company Buys or sells their shares. These

companies sell new shares NAV plus a Loading or management fees and redeem

shares at NAV. In other words, the target amount and the period both are indefinite in

such funds.

2. CLOSED-ENDED MUTUAL FUNDS:-

A closed–end Fund is open for sale to investors for a specific period, after which further

sales are closed. Any further transaction for buying the units or repurchasing them,

Happen in the secondary markets, where closed end Funds are listed. Therefore new

investors buy from the existing investors, and existing investors can liquidate their

units by selling them to other willing buyers. In a closed end Funds, thus the pool of

Funds can technically be kept constant. The asset management company (AMC)

however, can buy out the units from the investors, in the secondary markets, thus

reducing the amount of funds held by outside investors. The price at which units can be

sold or redeemed Depends on the market prices, which are fundamentally linked to the

NAV. Investors in closed end Funds receive either certificates or Depository receipts,

for their holdings in a closed end mutual Fund.

MUTUAL FUND SCHEME TYPES

Equity Diversified Schemes:-

These schemes mainly invest in equity. They seek to achieve long-term capital

appreciation by responding to the dynamically changing Indian economy by moving

across sectors such as Lifestyle, Pharma, Cyclical, Technology, etc.

Sector Schemes:-


These schemes focus on particular sector as IT, Banking, etc. They seek to generate

long-term capital appreciation by investing in equity and related securities of

companies in that particular sector.

Index Schemes:-

These schemes aim to provide returns that closely correspond to the return of a

particular stock market index such as BSE Sensex, NSE Nifty, etc. Such schemes invest

in all the stocks comprising the index in approximately the same weightage as they are

given in that index.

Exchange Traded Funds (ETFs):-

ETFs invest in stocks underlying a particular stock index like NSE Nifty or BSE Sensex.

They are similar to an index fund with one crucial difference. ETFs are listed and traded

on a stock exchange. In contrast, an index fund is bought and sold by the fund and its

distributors.

Equity Tax Saving Schemes:-

These work on similar lines as diversified equity funds and seek to achieve long-term

capital appreciation by investing in the entire universe of stocks. The only difference

between these funds and equity-diversified funds is that they demand a lock-in of 3

years to gain tax benefits.

Dynamic Funds:-

These schemes alter their exposure to different asset classes based on the market

scenario. Such funds typically try to book profits when the markets are overvalued and

remain fully invested in equities when the markets are undervalued. This is suitable for

investors who find it difficult to decide when to quit from equity.

Balanced Schemes:-


These schemes seek to achieve long-term capital appreciation with stability of

investment and current income from a balanced portfolio of high quality equity and

fixed-income securities.

Debt Schemes:-

These schemes basically invest in debt.

Medium-Term Debt Schemes:-

These schemes have a portfolio of debt and money market instruments where the

average maturity of the underlying portfolio is in the range of five to seven years.

Short-Term Debt Schemes

These schemes have a portfolio of debt and money market instruments where the

average maturity of the underlying portfolio is in the range of one to two years.

Money Market Debt Schemes:-

These schemes invest in debt securities of a short-term nature, which generally means

securities of less than one-year maturity. The typical short-term interest-bearing

instruments these funds invest in Treasury Bills, Certificates of Deposit, Commercial

Paper and Inter-Bank Call Money Market.

Medium-Term Gilt Schemes:-

These schemes invest in government securities. The average maturity of the securities

in the scheme is over three years.

Short-Term Gilt Schemes:-

These schemes invest in government securities. The securities invested in are of short to

medium term maturities.

Floating Rate Funds:-

They invest in debt securities with floating interest rates, which are generally linked to

some benchmark rate like MIBOR. Floating rate funds have a high relevance when

interest rates are on the rise helping investors to ride the interest rate rise.


Monthly Income Plans (MIPS):-

These are basically debt schemes, which make marginal investments in the range of 10-

25% in equity to boost the scheme’s returns. MIP schemes are ideal for investors who

seek slightly higher return that pure long-term debt schemes at marginally higher risk.

DIFFERENT MODES OF RECEIVING THE INCOME EARNED FROM

MUTUAL FUND INVESTMENTS

Mutual Funds offer three methods of receiving income:

Growth Plan:-

In this plan, dividend is neither declared nor paid out to the investor but is built into the

value of the NAV. In other words, the NAV increases over time due to such incomes and

the investor realizes only the capital appreciation on redemption of his investment.

Income Plan:-

In this plan, dividends are paid-out to the investor. In other words, the NAV only reflects

the capital appreciation or depreciation in market price of the underlying portfolio.

Dividend Re-investment Plan

In this case, dividend is declared but not paid out to the investor, instead, it is

reinvested back into the scheme at the then prevailing NAV. In other words, the

investor is given additional units and not cash as dividend.

MUTUAL FUND INVESTING STRATEGIES

1. Systematic Investment Plans (SIPs)

These are best suited for young people who have started their careers and need to

build their wealth. SIPs entail an investor to invest a fixed sum of money at regular


intervals in the Mutual fund scheme the investor has chosen, an investor opting for SIP

in xyz Mutual Fund scheme will need to invest a certain sum on money every

month/quarter/half-year in the scheme.

2. Systematic Withdrawal Plans (SWPs)

These plans are best suited for people nearing retirement. In these plans, an investor

invests in a mutual fund scheme and is allowed to withdraw a fixed sum of money at

regular intervals to take care of his expenses

3. Systematic Transfer Plans (STPs)

They allow the investor to transfer on a periodic basis a specified amount from one

scheme to another within the same fund family – meaning two schemes belonging to

the same mutual fund. A transfer will be treated as redemption of units from the

scheme from which the transfer is made. Such redemption or investment will be at the

applicable NAV. This service allows the investor to manage his investments actively to

achieve his objectives. Many funds do not even charge any transaction fees for his

service – an added advantage for the active investor.

MUTUAL FUNDS—RISK ASSOCIATED

Investing in Mutual Funds, as with any security, does not come without risk. One of the

most basic economic principles is that risk and reward are directly correlated. In other

words, the greater the potential risk the greater the potential return. The types of risk

commonly associated with Mutual Funds are:

1) MARKET RISK:-

Market risk relates to the market value of a security in the future. Market prices

fluctuate and are susceptible to economic and financial trends, supply and demand,

and many other factors that cannot be precisely predicted or controlled.

2) POLITICAL RISK:-


Changes in the tax laws, trade regulations, administered prices, etc are some of the

many political factors that create market risk. Although collectively, as citizens, we

have indirect control through the power of our vote individually, as investors, we have

virtually no control.

3) INFLATION RISK:-

Interest rate risk relates to future changes in interest rates. For instance, if an investor

invests in a long-term debt Mutual Fund scheme and interest rates increase, the NAV of

the scheme will fall because the scheme will be end up holding debt offering lower

interest rates.

4) BUSINESS RISK:-

Business risk is the uncertainty concerning the future existence, stability, and

profitability of the issuer of the security. Business risk is inherent in all business

ventures. The future financial stability of a company cannot be predicted or

guaranteed, nor can the price of its securities. Adverse changes in business

circumstances will reduce the market price of the company’s equity resulting in

proportionate fall in the NAV of the Mutual Fund scheme, which has invested in the

equity of such a company.

5) ECONOMIC RISK:-

Economic risk involves uncertainty in the economy, which, in turn, can have an adverse

effect on a company’s business. For instance, if monsoons fail in a year, equity stocks

of agriculture-based companies will fall and NAVs of Mutual Funds, which have invested

in such stocks, will fall proportionately.


PERFORMANCE MEASURES OF MUTUAL FUNDS

Mutual Fund industry today, with about 40 players and more than six hundred

schemes, is one of the most preferred investment avenues in India. However, with a

plethora of schemes to choose from, the retail investor faces problems in selecting

funds. Factors such as investment strategy and management style are qualitative, but

the funds record is an important indicator too.

Though past performance alone cannot be indicative of future performance, it is,

frankly, the only quantitative way to judge how good a fund is at present. Therefore,

there is a need to correctly assess the past performance of different Mutual Funds.

Worldwide, good Mutual Fund companies over are known by their AMC’s and this fame

is directly linked to their superior stock selection skills.


For Mutual Funds to grow, AMC’s must be held accountable for their selection of

stocks. In other words, there must be some performance indicator that will reveal the

quality of stock selection of various AMC’s.

Return alone should not be considered as the basis of measurement of the

performance of a Mutual Fund scheme, it should also include the risk taken by the fund

manager because different funds will have different levels of risk attached to them.

Risk associated with a fund, in a general, can be defined as Variability or fluctuations in

the returns generated by it. The higher the fluctuations in the returns of a fund during a

given period, higher will be the risk associated with it. These fluctuations in the returns

generated by a fund are resultant of two guiding forces. First, general market

fluctuations, which affect all the securities, present in the market, called Market risk or

Systematic risk and second, fluctuations due to specific securities present in the

portfolio of the fund, called Unsystematic risk. The Total Risk of a given fund is sum of

these two and is measured in terms of standard deviation of returns of the fund.

Systematic risk, on the other hand, is measured in terms of Beta, which represents

fluctuations in the NAV of the fund vis-à-vis market. The more responsive the NAV of a

Mutual Fund is to the changes in the market; higher will be its beta. Beta is calculated

by relating the returns on a Mutual Fund with the returns in the market. While

Unsystematic risk can be diversified through investments in a number of instruments,

systematic risk cannot. By using the risk return relationship, we try to assess the

competitive strength of the Mutual Funds one another in a better way. In order to

determine the risk-adjusted returns of investment portfolios, several eminent authors

have worked since 1960s to develop composite performance indices to evaluate a

portfolio by comparing alternative portfolios within a particular risk class.

The most important and widely used measures of performance are:

The Treynor’Measure

The Sharpe Measure

Jenson Model

Fama Model

1) The Treynor Measure:-


Developed by Jack Treynor, this performance measure evaluates funds on the basis of

Treynor's Index. This Index is a ratio of return generated by the fund over and above

risk free rate of return (generally taken to be the return on securities backed by the

government, as there is no credit risk associated), during a given period and

systematic risk associated with it (beta). Symbolically, it can be represented as:

Treynor's Index (Ti) = (Ri - Rf)/Bi.

Where,

Ri represents return on fund,

Rf is risk free rate of return, and

Bi is beta of the fund.

All risk-averse investors would like to maximize this value. While a high and positive

Treynor's Index shows a superior risk-adjusted performance of a fund, a low and

negative Treynor's Index is an indication of unfavorable performance.

2) The Sharpe Measure :-

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is

a ratio of returns generated by the fund over and above risk free rate of return and the

total risk associated with it.

According to Sharpe, it is the total risk of the fund that the investors are concerned

about. So, the model evaluates funds on the basis of reward per unit of total risk.

Symbolically, it can be written as:

Sharpe Index (Si) = (Ri - Rf)/Si

Where,

Si is standard deviation of the fund,

Ri represents return on fund, and

Rf is risk free rate of return.


While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a

fund, a low and negative Sharpe Ratio is an indication of unfavorable performance.

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk

premium by a numerical risk measure. The total risk is appropriate when we are

evaluating the risk return relationship for well-diversified portfolios. On the other hand,

the systematic risk is the relevant measure of risk when we are evaluating less than

fully diversified portfolios or individual stocks. For a well-diversified portfolio the total

risk is equal to systematic risk. Rankings based on total risk (Sharpe measure) and

systematic risk (Treynor measure) should be identical for a well-diversified portfolio, as

the total risk is reduced to systematic risk. Therefore, a poorly diversified fund that

ranks higher on Treynor measure, compared with another fund that is highly

diversified, will rank lower on Sharpe Measure.

3) Jenson Model:-

Jenson's model proposes another risk adjusted performance measure. This measure

was developed by Michael Jenson and is sometimes referred to as the differential

Return Method. This measure involves evaluation of the returns that the fund has

generated vs. the returns actually expected out of the fund1 given the level of its

systematic risk. The surplus between the two returns is called Alpha, which measures

the performance of a fund compared with the actual returns over the period. Required

return of a fund at a given level of risk (Bi) can be calculated as:

Ri = Rf + Bi (Rm - Rf)

Where,

Ri represents return on fund, and

Rm is average market return during the given period,

Rf is risk free rate of return, and

Bi is Beta deviation of the fund.


After calculating it, Alpha can be obtained by subtracting required return from

the actual return of the fund. Higher alpha represents superior performance of the fund

and vice versa. Limitation of this model is that it considers only systematic risk not the

entire risk associated with the fund and an ordinary investor cannot mitigate

unsystematic risk, as his knowledge of market is primitive.

4) Fama Model:-

The Eugene Fama model is an extension of Jenson model. This model compares the

performance, measured in terms of returns, of a fund with the required return

commensurate with the total risk associated with it. The difference between these two

is taken as a measure of the performance of the fund and is called Net Selectivity.

The Net Selectivity represents the stock selection skill of the fund manager, as it is the

excess returns over and above the return required to compensate for the total risk

taken by the fund manager. Higher value of which indicates that fund manager has

earned returns well above the return commensurate with the level of risk taken by him.

Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)

Where,

Ri represents return on fund,

Sm is standard deviation of market returns,

Rm is average market return during the given period, and

Rf is risk free rate of return.

The Net Selectivity is then calculated by subtracting this required return from

the actual return of the fund.

Among the above performance measures, two models namely, Treynor measure and

Jenson model use Systematic risk is based on the premise that the Unsystematic risk is

diversifiable. These models are suitable for large investors like institutional investors

with high risk taking capacities as they do not face paucity of funds and can invest in a

number of options to dilute some risks. For them, a portfolio can be spread across a

number of stocks and sectors. However, Sharpe measure and Fama model that consider

the entire risk associated with fund are suitable for small investors, as the ordinary ADVENT INSTITUTE OF MANAGEMENT STUDIES 32

investor lacks the necessary skill and resources to diversify. Moreover, the selection of

the fund on the basis of superior stock selection ability of the fund manager will also help

in safeguarding the money invested to a great extent. The investment in funds that have

generated big returns at higher levels of risks leaves the money all the more prone to

risks of all kinds that may exceed the individual investors' risk appetite.

Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963

and 1987 marked the existance of only one mutual fund company in India with \ 67bn

assets under management (AUM), by the end of its monopoly era, the Unit Trust of India

(UTI). By the end of the 80s decade, few other mutual fund companies in India took their

position in mutual und market. The new entries of mutual fund companies in India were

SBI Mutual Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank

Mutual Fund, Bank of India Mutual Fund.

The succeeding decade showed a new horizon in indian mutual fund industry. By the end

of 1993, the total AUM of the industry was \ 470.04 bn. The private sector funds started

penetrating the fund families. In the same year the first Mutual Fund Regulations came

into existance with re-registering all mutual funds except UTI. The regulations were

further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now

merged with Franklin Templeton. Just after ten years with private sector players

penetration, the total assets rose up to \ 1218.05 bn. Today there are 40 mutual fund

companies in India.


MUTUAL FUNDS- DO’s and DONT’s

We all have come across ads which say that “Mutual Funds are subject to market risk,

please read the offer document carefully before investing”. Likewise there are many do’s

and dont’s one has to keep in mind before getting into investing in mutual funds. The

following points might help one to optimize his/her investment decision—

Assess yourself:

Self-assessment of one’s needs; expectations and risk profile is of prime importance

failing which; one will make more mistakes in putting money in right places than

otherwise. One should identify the degree of risk bearing capacity one has and also

clearly state the expectations from the investments. Irrational expectations will only

bring pain.

Try to understand where the money is going:

It is important to identify the nature of investment and to know if one is compatible with

the investment. One can lose substantially if one picks the wrong kind of mutual fund. In

order to avoid any confusion it is better to go through the literature such as offer

document and fact sheets that mutual fund companies provide on their funds.

Don't rush in picking funds, think first:

One first has to decide what he wants the money for and it is this investment goal that

should be the guiding light for all investments done. It is thus important to know the risks

associated with the fund and align it with the quantum of risk one is willing to take. One

should take a look at the portfolio of the funds for the purpose. Excessive exposure to


any specific sector should be avoided, as it will only add to the risk of the entire portfolio.

Mutual funds invest with a certain ideology such as the "Value Principle" or "Growth

Philosophy". Both have their share of critics but both philosophies work for investors of

different kinds. Identifying the proposed investment philosophy of the fund will give an

insight into the kind of risks that it shall be taking in future.

Invest. Don’t speculate:

A common investor is limited in the degree of risk that he is willing to take. It is thus of

key importance that there is thought given to the process of investment and to the time

horizon of the intended investment. One should abstain from speculating which in other

words would mean getting out of one fund and investing in another with the intention of

making quick money. One would do well to remember that nobody can perfectly time the

market so staying invested is the best option unless there are compelling reasons to

exit.

Don’t put all the eggs in one basket:

This old age adage is of utmost importance. No matter what the risk profile of a person

is, it is always advisable to diversify the risks associated. So putting one’s money in

different asset classes is generally the best option as it averages the risks in each

category. Thus, even investors of equity should be judicious and invest some portion of

the investment in debt. Diversification even in any particular asset class (such as equity,

debt) is good. Not all fund managers have the same acumen of fund management and

with identification of the best man being a tough task, it is good to place money in the

hands of several fund managers. This might reduce the maximum return possible, but

will also reduce the risks.

Be regular:

Investing should be a habit and not an exercise undertaken at one’s wishes, if one has to

really benefit from them. As we said earlier, since it is extremely difficult to know when

to enter or exit the market, it is important to beat the market by being systematic. The

basic philosophy of Rupee cost averaging would suggest that if one invests regularly

through the ups and downs of the market, he would stand a better chance of generating

more returns than the market for the entire duration. The SIPs (Systematic Investment

Plans) offered by all funds helps in being systematic. All that one needs to do is to give


post-dated cheques to the fund and thereafter one will not be harried later. The

Automatic investment Plans offered by some funds goes a step further, as the amount

can be directly/electronically transferred from the account of the investor.

Find the right funds:

Finding funds that do not charge much fees is of importance, as the fee charged

ultimately goes from the pocket of the investor. This is even more important for debt

funds as the returns from these funds are not much. Funds that charge more will reduce

the yield to the investor. Finding the right funds is important and one should also use

these funds for tax efficiency. Investors of equity should keep in mind that all dividends

are currently tax-free in India and so their tax liabilities can be reduced if the dividend

payout option is used. Investors of debt will be charged a tax on dividend distribution

and so can easily avoid the payout options.

Keep track of your investments:

Finding the right fund is important but even more important is to keep track of the way

they are performing in the market. If the market is beginning to enter a bearish phase,

then investors of equity too will benefit by switching to debt funds as the losses can be

minimized. One can always switch back to equity if the equity market starts to show

some buoyancy.

Know when to sell your mutual funds:

Knowing when to exit a fund too is of utmost importance. One should book profits

immediately when enough has been earned i.e. the initial expectation from the fund has

been met with. Other factors like non-performance, hike in fee charged and change in

any basic attribute of the fund etc. are some of the reasons for to exit. For more on it,

read "When to say goodbye to your mutual fund."


FUTURE OF MUTUAL FUND INDUSTRY IN INDIA

Why Invest in Gold?

Historically, gold has been a proven method of preserving value when a national currency was losing value. If your investments are valued in a depreciating currency, allocating a portion to gold assets is similar to a financial insurance policy. In the past year, the climb in the price of gold above $700 per ounce is due to many factors, one being that the dollar is losing value.

Reasons favoring to invest to Gold

* The dollar is weak and getting weaker due to national economic policies which don't appear to have an end.

* Gold price appreciation makes up for lost interest, especially in a bull market.

* The last four years are the beginning of a major bull move similar to the 70's when gold moved from $38 to over $800.

* Central banks in several countries have stated their intent to increase their gold holdings instead of selling.

* All gold funds are in a long term uptrend with bullion, most recently setting new all-time highs.

* The trend of commodity prices to increase is relative to gold price increases.

* Worldwide gold production is not matching consumption. The price will go up with demand.

* Most gold consumption is done in India and China and their demand is increasing with their increase in national wealth.

* Several gold funds reached all-time highs in 2010 and are still trending upward.

* The short position held by hedged gold funds is being methodically reduced.


Gold Mutual funds

A relatively safe method of buying and owning gold stocks allows the owner to diversify among many stocks and allows the investing decisions to be made by a professional. Investment methods vary among funds and provide many different styles of portfolio management for an investor to choose from. Prices move faster and further in both directions than the price of gold.

* Provide professional management and diversification within the gold sector.

* Are more volatile than the S&P index.

* May or may not have any correlation with the general market.

* Move daily with the price of gold, but not always.

* Move proportionally more than gold, up and down.

* If you believe in 'buy low, sell high', gold is still low, but climbing.

The real estate sector and the road ahead

Real Estate Mutual Funds ('REMFs')

The SEBI Board has now approved the guidelines for the much awaited Real Estate

Mutual Funds. "Real Estate Mutual Fund Scheme" is defined to mean a scheme of a

mutual fund which has investment objective to invest directly or indirectly in real estate

property.

Governing Law

It is proposed that REMFs will be governed by the provisions and guidelines issued under

SEBI (Mutual Funds) Regulations. REMFs, shall initially, be close ended. The units of

REMFs shall be compulsorily listed on the Stock Exchanges and Net Asset Value (NAV) of

the scheme shall be declared daily.

Custodian


The REMFs would be required to appoint a Custodian who has been granted a Certificate

of Registration to carry on the business of Custodian of securities by the SEBI Board. The

custodian would safe keep the title of real estate properties held by the REMFs.

Investment Criterion:

It is proposed that REMFs could invest in the following: -

* Directly in real estate properties within India;

* Mortgage (housing lease) backed securities;

* Equity shares / Bonds / Debentures of listed / unlisted companies which deal in properties and also undertake property development; and in

* Other securities.


Role of ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

The Association of Mutual Funds of India works with 43 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors.

The objectives are as follows:

This mutual fund association of India maintains a high professional and ethical standard in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.


Association of Mutual Fund of India does represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry.

AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

With effect from June 1, 2010 AMFI Mutual Fund Certification program is discontinued.

Accordingly, test for AMFI Mutual Fund (Basic) Module and AMFI Mutual Fund (Advisors)

Module will not be conducted from June 1, 2010. National Institute of Securities Markets

(NISM) would be conducting Mutual Fund Distributors Certification Examination from June

1, 2010 onwards.

AMFI Refresher Course stands discontinued with effect from June 1, 2010. Consequently

the mandate given to Indian Institute of Capital Markets (IICM) and Centre for Education

and Learning (CIEL) by AMFI for conducting Refresher Course stands withdrawn. NISM is

conducting 'Continuing Professional Education' (CPE) Program for Mutual Fund

Distributors from June 1, 2010.


SEBI guidelines for mutual fund

Mutual funds cannot invest more than 10 per cent of the total net assets of a scheme in the short-term deposits of a single bank, the Securities and Exchange Board of India.

Announcing guidelines for parking of funds in short-term deposits of scheduled commercial banks (SCBs) by mutual funds, the regulator said that investment cap would also take into account the deposit schemes of the bank's subsidiaries.

The Sebi has also defined 'short term' for funds' investment purposes as a period not exceeding 91 days.

Besides, the parking of funds in short-term deposits of all SCBs has been capped at 15 per cent of the net asset value (NAV) of a scheme, which can be raised to 20 per cent with prior approval of the trustees.

The parking of funds in short-term deposits of associate and sponsor SCBs together should not exceed 20 per cent of total deployment by the MF in short-term deposits, it added.

The Sebi said that these guidelines are aimed at ensuring that funds collected in a scheme are invested as per the investment objective stated in the offer document of an MF scheme.

The new guidelines would be applicable to all fresh investments whether in a new scheme or an existing one. In cases of an existing scheme, where the scheme has already parked funds in short-term deposits, the asset management company have been given three-months time to conform with the new guidelines.

The Sebi has also asked the trustees of a fund to ensure that no funds are parked by a scheme in short term deposit of a bank, which has invested in that particular scheme.

The Sebi guidelines say that asset management companies (AMCs) shall not be permitted to charge any investment and advisory fees for parking of funds in short-term deposits of banks in case of liquid and debt-oriented schemes.


What are the new SEBI guidelines all about?

Relevant extract of the SEBI circular released on June 30, 2009 (SEBI/IMD/CIR No. 4/168230/09) is as follows:

'In order to empower the investors in deciding the commission paid to distributors in accordance with the level of service received, to bring about more transparency in payment of commissions and to incentivise long term investment, it has been decided that:

There shall be no entry load for all mutual fund schemes

The scheme application forms shall carry a suitable disclosure to the effect that

the upfront commission to distributors will be paid by the investor directly to the distributor, based on his assessment of various factors including the service rendered by the distributor

Of the exit load or CDSC charged to the investor, a maximum of 1% of the

Redemption proceeds shall be maintained in a separate account which can be used by the AMC to pay commissions to the distributor and to take care of other marketing and selling expenses. Any balance shall be credited to the scheme immediately

The distributors should disclose all the commissions (in the form of trail

commission or any other mode) payable to them for the different competing

schemes of various mutual funds from amongst which the scheme is being

recommended to the investor.

This circular shall be applicable for :

Investments in mutual fund schemes (including additional purchases and

switch-in to a scheme from other schemes) with effect from August 1, 2009


Redemptions from mutual fund schemes (including switch-out from other

schemes) with effect from August 1, 2009

New mutual fund schemes launched on and after August 1, 2009; and

Systematic Investment Plans (SIPs) registered on or after August 1, 2009'

ULIPs vs Mutual Funds

ULIP MUTUAL FUND

INVESTMENT

AMOUNTS

Determined by the investor and can be modified as well

Minimum investment amounts are determined by the fund house

EXPENSES

No upper limits, expenses determined by the insurance company

Upper limits for expenses chargeable to investors have been set by the regulator

PORTFOLIO DISCLOSURE

Not mandatoryQuarterly disclosures are mandatory

MODIFYING ASSESTS ALLOCATION

Generally permitted for free or at a nominal cost

Entry/exit loads have to be borne by the investor

TAX BENEFITSSection 80C benefits are available on all ULIP investments

Section 80C benefits are available only on investments in tax-saving funds


GROWTH IN ASSETS UNDER MANAGEMENT

Latest Average Asset Under Management for all Mutual Fund houses, increase or decrease in corpus, sales & redemption figures..

Amount in \ Crores

Mutual Fund NameNo. of

Schemes*Asset Under Management

As on Corpus As on CorpusNet inc/dec in corpus

AIG Global Investment Group Mutual Fund

44 Jun 30, 2010

1,014.66 May 31, 2010

1,030.86 -16.202

Axis Mutual Fund 60 Jun 30,

20102,999.19 May 31,

20104,715.89 -1716.705

Baroda Pioneer Mutual Fund

31 Jun 30, 2010

3,075.20 May 31, 2010

4,759.53 -1684.337

Benchmark Mutual Fund 17 Jun 30,

20102,250.37 May 31,

20102,263.15 -12.779

Bharti AXA Mutual Fund 45 Jun 30,

2010692.74 May 31,

2010724.17 -31.426

Birla Sun Life Mutual Fund 217 Jun 30,

201063,111.55 May 31,

201073,828.03 -10716.484

Canara Robeco Mutual Fund 89 Jun 30,

20108,533.44 May 31,

201010,661.95 -2128.507

Deutsche Mutual Fund 116 Jun 30,

20109,016.87 May 31,

201010,102.46 -1085.587

DSP Blackrock Mutual Fund 98 Jun 30,

201021,415.75 May 31,

201021,884.95 -469.201

Edelweiss Mutual Fund 41 Jun 30,

2010282.76 May 31,

2010261.09 21.673

Escorts Mutual Fund 30 Jun 30,

2010195.50 May 31,

2010198.23 -2.729

Fidelity Mutual Fund 61 Jun 30,

20107,878.87 May 31,

20107,457.84 421.031

Fortis Mutual Fund 111 Jun 30,

20105,162.39 May 31,

20107,537.44 -2375.053

Franklin Templeton Mutual Fund

172 Jun 30, 2010

34,563.92 May 31, 2010

35,774.79 -1210.867

HDFC Mutual Fund 173 Jun 30,

201086,648.10 May 31,

2010101,863.31 -15215.214

HSBC Mutual Fund 84 Jun 30,

20105,353.19 May 31,

20105,851.11 -497.918

ICICI Prudential Mutual Fund

328 Jun 30, 2010

73,795.43 May 31, 2010

87,709.81 -13914.385

IDBI Mutual Fund 6 Jun 30,

201028.18 - - -


http://www.mutualfundsindia.com/amc_snapshot.asp?amc_name=AM051






















IDFC Mutual Fund 173 Jun 30,

201020,965.76 May 31,

201026,614.77 -5649.013

ING Mutual Fund 92 Jun 30,

20101,495.47 May 31,

20101,645.42 -149.951

JM Financial Mutual Fund 90 Jun 30,

20105,657.99 May 31,

20108,950.43 -3292.441

JP Morgan Mutual Fund 31 Jun 30,

20104,030.79 May 31,

20103,784.98 245.816

Kotak Mahindra Mutual Fund

123 Jun 30, 2010

28,540.87 May 31, 2010

40,657.52 -12116.648

L&T Mutual Fund 66 Jun 30,

20103,693.42 May 31,

20105,170.69 -1477.279

LIC Mutual Fund 62 Jun 30,

201030,049.38 May 31,

201038,962.82 -8913.437

Mirae Asset Mutual Fund 37 Jun 30,

2010252.13 May 31,

2010236.50 15.633

Morgan Stanley Mutual Fund

11 Jun 30, 2010

2,256.80 May 31, 2010

2,253.67 3.128

Peerless Mutual Fund 20 Jun 30,

2010921.26 May 31,

2010823.38 97.876

PRINCIPAL Mutual Fund 84 Jun 30,

20106,827.97 May 31,

20107,647.76 -819.785

Quantum Mutual Fund 11 Jun 30,

2010101.04 May 31,

2010101.72 -0.685

Reliance Mutual Fund 193 Jun 30,

2010101,320.15 May 31,

2010118,973.14 -17652.99

Religare Mutual Fund 92 Jun 30,

201010,918.47 May 31,

201015,464.10 -4545.625

Sahara Mutual Fund 44 Jun 30,

2010741.62 May 31,

2010765.23 -23.614

SBI Mutual Fund 116 Jun 30,

201033,733.39 May 31,

201036,235.76 -2502.377

Shinsei Mutual Fund 11 Jun 30,

2010273.08 May 31,

2010323.71 -50.627

Sundaram BNP Paribas Mutual Fund

138 Jun 30, 2010

12,717.49 May 31, 2010

13,976.11 -1258.621

Tata Mutual Fund 169 Jun 30,

201018,464.10 May 31,

201022,673.43 -4209.33

Taurus Mutual Fund 49 Jun 30,

20102,438.65 May 31,

20103,056.16 -617.506

UTI Mutual Fund 212 Jun 30,

201064,445.65 May 31,

201078,617.15 -14171.505

* indicates currently in operation

MUTUAL FUND DATA FOR THE MONTH ENDED - JUN 30 , 2010

Amount in \ Crores

























Category

No. of new

schemes launched

during the

month

SalesRedem-ption

Asset Under Management

New

schemesExisting schemes

Total Total as on Jun 30 ,

2010

as on May 31 ,

2010

Inflow/ Outflow

BBank Sponsored

4 732 106079 106811 127239 109815 130275 -20460

C Institutions 0 0 68385 68385 79151 30049 38963 -8914

D

Private Sector & Joint Venture :

Indian 14 1997 214500 216497 253087 208508 260790 -52282

Predominantly Indian

11 4357 221387 225744 273178 257689 299262 -41573

Predominantly Foreign

0 0 24009 24009 26168 20931 22231 -1300

Grand Total (B+C+D)

29 7086 634360 641446 758823 626992 751521 -124529

ASSETS UNDER MANAGEMENT AS ON JUNE 30, 2010

Amount in \ CroresNature Structure


Open End

Close End

Total

Balanced 16540 1356 17896

ELSS 21739 3129 24868

FOF Investing Overseas

2638 - 2638

Gilt 3229 - 3229

GOLD ETF 1939 - 1939

Growth 161850 16350 178200

Income 274647 36868 311515

Liquid/Money Market

71871 - 71871

Other ETF 1135 - 1135

Total 555588 57703 613291

Today there are over 40 AMC’s offering a huge number of schemes giving the investor a

huge horizon to choose from. The market has become very competitive with the

companies fighting tooth and nail to attract and keep the investor from investing in their

competitor’s schemes. Today, Reliance Mutual Funds is the leading company in this

sector with total assets under management being \101,320.15 Crores. While HDFC being

in the second position with \ 86,648.10 Crores.

BCG Report on Equity MF

BCG

- Boston Consulting Group is a Global Management Consulting group

- World's leading Advisor on Business Strategy

- Founded in 1963, has presence in 40 countries with 69 offices

The Report


- Study done by BCG on Equity MF industry in colaaboration with CAMS

- Based on detailed analysis of Equity MF data of CAMS from 2003-2010

- Group discussions done with IFAs in various cities for the report

- Purpose of the report to track direction of Equity MF industry and recommend new

themes for future course

Numbers from the report

- MF investments as % of household savings have increased from 1.1% in 1994 to7.9% in 2008

- 90% of investment comes from ticket size of less than 1 Lac

- Inflows from SIP have gown from 2% in 2005 to 15% in 2009

- Share of top 10 cities in business has reduced from 90% in 2003 to 74% in 2010Mumbai & delhi account for 45% of Total AUM

Growth of Equity AUM


Citywise Split of Customer type

Outside top10 Cities, around 80% of AUM is contributed by Retail investorsMF penetration almost negligible outside top 30 cities

REDEMPTION ANALYSIS: APRIL 2008-MARCH 2010


IS: A87% of retail investors(<1 lac) have redeemed at profit

SIP GAINING MARKETING SHARE CONTINUOUSLY

GAINSIP inflows as a % of total inflows are now 19% With 97% of SIP in electronic mode, SIP

is becoming preferred mode of investment

ING MELSS INFLOW


ELSS is a highly popular product and one of the fastest growing product categories outside top 10 cities

FUTURE COURSE OF IFAs

RCH 2010

CITY TIERWISE DISTRIBUTION OF OTHER FINANCIAL PRODUCTS


Comparison of city tiers in urban India (2005-06)

The Bottom 5000 cities contribute 49% of Savings Deposits and 35% of LI premium, but less than 1% of Equity AUM.

MF industry skewed towards top 30 cities. (These cities contribute 96% of AUM)

- The Equity MF industry is poised for a strong growth ahead

- The retail penetration for the product is still low

- SIP & ELSS are going to be 2 focus products for growth in the market

- Huge untapped opportunity for Mutual Fund industry outside the Top 20 cities

- AMCs have to work on innovative products and efficient marketing plans to reach

out to maximum customers

- IFAs have to adapt to new scenario and change their value proposition to the

investors

IERWISE DISTRIBUTION OF

OTHER FINANCIAL PRODUCTSADVENT INSTITUTE OF MANAGEMENT STUDIES 53

Performance Comparison of Different Mutual funds in India

TOP 10 - EQUITY FUNDS - PERIOD (LAST 12 MONTHS)

Rank Scheme Name Date NAV (\)

Last 12 Months %

1 Reliance Pharma Fund - Growth Aug 2 , 2010 52.3031 84.2481

2 Franklin Pharma Fund - Growth Aug 2 , 2010 57.503 69.4777

3 Religare Mid N Small Cap Fund - Growth Aug 2 , 2010 14.32 58.2766

4 UTI Growth Sector Fund - Pharma and Healthcare - Growth

Aug 2 , 2010 36.11 57.3631

5 Reliance Equity Opportunities Fund - Growth

Aug 2 , 2010 34.5871 57.2405

6 DSP BlackRock Small and Midcap Fund - Growth

Aug 2 , 2010 17.449 56.5587

7 UTI Master Value Fund - Growth Aug 2 , 2010 51.33 55.1714

8 SBI Magnum Sector Umbrella - Emerging Businesses Fund - Growth

Aug 2 , 2010 40.37 54.4248

9 Reliance Banking Fund - Growth Aug 2 , 2010 96.5722 53.3597

10 ING Dividend Yield Fund - Growth Aug 2 , 2010 22.84 53.239

*Note:- Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.

TOP 10 -DEBT FUNDS - PERIOD (LAST 12 MONTHS)


Last 12 Months %

1 HDFC Multiple Yield Fund - Plan 2005 - Growth

Aug 2 , 2010 15.6995 16.0704


http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=HD071


http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=IN096

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=RC030

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=SB081

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=SB081

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=UT005

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=DS074

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=DS074





http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=LT190

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=KP017


2 Reliance Monthly Income Plan - Growth Aug 2 , 2010 20.9161 13.4424

3 HDFC Monthly Income Plan - Long Term Plan - Growth

Aug 2 , 2010 22.0101 13.3122

4 HDFC Multiple Yield Fund - Growth Aug 2 , 2010 17.1464 13.027

5 Escorts Income Bond - Growth Aug 2 , 2010 25.8844 12.8519

6 HSBC MIP - Savings Plan - Growth Aug 2 , 2010 18.836 10.9224

7 Fortis Fixed Term Plan - Series 13 - Plan D - Reg - Growth

Aug 2 , 2010 12.1829 10.5579

8 Franklin Templeton FTF - Series X (5 Years) - Plan C - Growth

Aug 2 , 2010 12.5285 10.1935

9 Franklin Templeton FTF - Series VIII (60 Months) - Plan A - Growth

Aug 2 , 2010 13.3151 10.0906

10 Franklin Templeton Fixed Tenure Fund - Series 6 - Growth

Aug 2 , 2010 14.345 9.6253


TOP 10 -GILT FUNDS - PERIOD (LAST 12 MONTHS)


Last 12 Months %

1 Religare Gilt Fund - Long Duration Plan - Regular - Growth

Aug 2 , 2010 10.918 14.5853

2 Baroda Pioneer Gilt Fund - Growth Aug 2 , 2010 13.9253 14.2972

3 Birla Sun Life Govt Securities Fund - Long Term - Growth

Aug 2 , 2010 27.4525 11.2199


http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=AC015


http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=BB007



http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TM092






http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=AB520

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=AB520

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=HS030

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=EM004





4 HSBC Gilt Fund - Growth Aug 2 , 2010 11.8055 5.665

5 Birla Sun Life Gilt Plus Liquid Plan - Growth

Aug 2 , 2010 21.5371 5.2672

6 Kotak Gilt Investment PF & Trust Plan - Growth

Aug 2 , 2010 32.2841 5.189

7 Kotak Gilt - Investment Regular Plan - Growth

Aug 2 , 2010 31.6285 5.0306

8 Edelweiss Gilt fund - Growth Aug 2 , 2010 10.2807 4.8692

9 JM G Sec Regular Plan - Growth Aug 2 , 2010 30.3123 4.6949

10 Birla Sun Life Govt Securities Fund - Short Term Debt - Growth

Aug 2 , 2010 18.4819 3.9444


TOP 10 -ETF FUNDS - PERIOD (LAST 12 MONTHS)


Last 12 Months %

1 Kotak PSU Bank ETF Aug 2 , 2010 421.5922 51.0064

2 PSU Bank Benchmark Exchange Traded Scheme

Aug 2 , 2010 408.5409 49.9027

3 Bank BeES Aug 2 , 2010 1048.8289 38.5478

4 Reliance Banking Exchange Traded Fund Aug 2 , 2010 1068.7396 38.1473

5 Junior BeES Aug 2 , 2010 117.1604 37.6133

6 Gold BeES Aug 2 , 2010 1741.8806 20.0607

7 UTI Gold Exchange Traded Fund Aug 2 , 2010 1740.6737 19.7211



http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=BE019






http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=KM251



http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM019

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=ED050





http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=BM016

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=BM016


8 Kotak Gold ETF Aug 2 , 2010 1740.3649 19.6779

9 Quantum Gold Exchange Traded Fund - Growth

Aug 2 , 2010 866.0506 19.6509

10 Reliance Gold Exchange Traded Fund - Dividend

Aug 2 , 2010 1693.133 19.2341


TOP 10 -MIP FUNDS - PERIOD (LAST 12 MONTHS)


Last 12 Months %

1 HDFC Multiple Yield Fund - Plan 2005 - Growth

Aug 2 , 2010 15.6995 16.0704

2 Reliance Monthly Income Plan - Growth Aug 2 , 2010 20.9161 13.4424

3 HDFC Monthly Income Plan - Long Term Plan - Growth

Aug 2 , 2010 22.0101 13.3122

4 HDFC Multiple Yield Fund - Growth Aug 2 , 2010 17.1464 13.027

5 HSBC MIP - Savings Plan - Growth Aug 2 , 2010 18.836 10.9224

6 Tata MIP Plus - Growth Jul 31 , 2010 15.6519 9.4936

7 Canara Robeco Monthly Income Plan - Growth

Aug 2 , 2010 28.37 9.4403

8 UTI Monthly Income Scheme - Growth Aug 2 , 2010 19.0651 9.045

9 LIC MF Floater - Monthly Income Plan - Growth

Aug 2 , 2010 17.6897 9.0356

10 HDFC Monthly Income Plan - Short Term Plan - Growth

Aug 2 , 2010 16.6877 9.0346




http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=LC062

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=LC062


http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=CM025

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=CM025

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA091










http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=QU006

http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=QU006



COMPANY OVERVIEW

About Us:

Doing the 'right' thing is a virtue most desirable. The difference between success and

failure is often not dictated by knowledge or expertise but by its actual application and

perseverance. When it comes to successful wealth creation for customers, it is

something that we believe & practice. For us it is more than a mission; it is what defines

our lives and our actions at NJ IndiaInvest. With this passion, we continue to evolve and

make the right product accessions and service innovations in our offerings. To the

advisors, we offer a 360 comprehensive business platform with unmatched IT solutions,

empowering them to set the best practice standards and deliver real value to their

customers. Over the years, our passion has seen us grow from strength to strength and

expand rapidly, setting new benchmarks in the process. But to us, what really matters

most is the number of lives we have managed to transform and we still have a long way

to go...

NJ India Invest 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 cutting-

edge 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 had over INR 5,050* Crores of mutual fund assets under advice with a wide presence

in over 130 locations* in 22 states* in India. The numbers are reflections of the trust,

commitment and value that NJ shares with its clients.

At NJ, we continue to innovate, enrich our intellect, and ask critical questions. We

challenge our own processes and systems on constant basis to emerge more convinced.

At NJ, we continue to expand the scope and depth of our offerings, making apt use of

technological support.

Philosophy:

At NJ our Service and Investing philosophy inspire and shape the thoughts, beliefs,

attitude, actions and decisions of our employees. If NJ would 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, long-term 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 customer's needs

- bring energy, passion & excellence in everything we do

- be honest and ethical, in action & attitude, and keep the customer’s 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.

Vision:

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.

Division:

NJ IndiaInvest has two broad distinct divisions of business as follows:

NJ Fundz Network, started in 2003, is a dedicated channel for providing independent

financial advisors or IFA's with a complete business platform for the strengthening and

development of their advisory practice. NJ offers advisors under its network will all the

products; support and services that enables them add considerable value to their

business, emerge as a 'new age professional financial advisor' and compete confidently

in the industry.

NJ Fundz Network is a unique, first time in India concept that offers such comprehensive

business platform to independent financial advisors.

Established as a distinct entity, NJ Wealth Advisors Pvt. Ltd. seeks to offer

comprehensive financial planning and portfolio advisory services to premium clients.

With NJ Wealth Advisors, NJ seeks to leverage the strong financial advisory and portfolio

management skills gained in over a decade of experience in the industry. NJ Wealth


Advisors offers its clients with quality, unbiased, need-based advisory services &

investment solutions.

This sporadic growth in terms of need of performers in financial advisory services has

lead to the crunch of available performers. Though lots of youngsters are getting into

financial advisory services, but the greatest challenge is of RIGHT SELLING, for which

adequate Training is a prerequisite. Advisory function demands updated knowledge,

backed up by honed skills to fetch effective business. Building long term relationship

with clients depends upon possessing clear edge over others in the field. Hence

continuous people development has an important role in building this fraternity .

Technology has traditionally been NJ's key strength. Our offering on the technological

front is unmatched, vibrant, and comprehensive in nature. Our focus & commitment on

technology can be gauged from the fact that we have set-up distinct entity with a very

strong, talented work-force for the sole purpose of providing the best to NJ in terms of

technology and support. Finlogic Technologies (India) Pvt. Ltd. does all the development

& support work in-house on a continuous basis. It has successfully developed &

implemented a powerful support system for the mutual fund distribution business at NJ

with a provision for integrating the same with other investment products as well as the

financial accounting system.

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 Jt. Managing Director

Mr. Jignesh Desai Jt. Managing Director

Key Sales Team:

Mr. Misbah Baxamusa National Head

Mr. Naveen Rathod V.P. (Sales)

Mr. Kulbhushan NandwaniA.V.P. (Marketing)

Mr. Prashant Kakkad A.V.P. (Sales)

Key Executive Team :

Mr. Shirish Patel Information Technology

Mr. Abhishek Dubey Business Process

Mr. Vinayak Rajput Operations

Mr. Dhaval Desai Human Resources

Mr. Col. Dixit Administration

Mr. Tejas Soni Finance

Mr. Viral Shah Research

Mr. Rakesh Tokarkar Compliance

Products:

NJ offers advisory and distribution services on the following products.

1. Mutual funds – covering all AMCs & all schemes,


2. Fixed deposits of companies,

3. Government/RBI bonds,

4. Infrastructure Bonds,

5. Approved securities for charitable trusts, etc.

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 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,

customers 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 customers without any bias.

- To provide customer-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 customers ’ business

- To provide constructive after sales service

- To honour our service commitments

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 - Prashat Jain, CIO, HDFC AMC

The success of any business lies in innovation ahead of times and NJ has proved it time

again - Rajan Krishnan, Principal Pnb AMC.


360° – Advisory Platform

NJ believes in “360° – Advisory Platform” philosophy …

With this philosophy, NJ try to offer all possible products, services and support which an Advisor would need in his business.

The support functions are generally in the following areas …

Business Planning and Strategy Training and Development – Self and of employees

Products and Service Offerings

Business Branding

Marketing

Sales and Development

Technology

Advisors Resources - Tools, Calculators, etc..

Research

Communications

With this comprehensive supporting platform, the NJ Fundz Partners stays ahead of the curve in each respect compared to other Advisors/competitors in the market.

Needless to say, the complete NJ Fundz offering is hard to resist


Support 360° Advisory Support

Technology Sales Support

Research DeskMarketing Support

360° Platform

Marketing Support

Marketing Support Sales & Development

Printshop

Communications

Business Planning

Technology Support

Technology Partner’s Desk

Training & Support

I-Gurukul NJ Research Support

Financial Tools

Customer Care

NJ Advantage

Mock CPE TestADVENT INSTITUTE OF MANAGEMENT STUDIES 69

Self Development HR Consultancy

Customer SupportTraining Support

http://www.njfundz.com/sup_customercare.php

http://www.njfundz.com/sup_tools.php

http://www.njfundz.com/sup_research.php

http://www.njfundz.com/sup_iguru.php

http://www.njfundz.com/sup_partdesk.php

http://www.njfundz.com/sup_tech.php

http://www.njfundz.com/sup_buss.php

http://www.njfundz.com/sup_commu.php

http://www.njfundz.com/sup_printshop.php

http://www.njfundz.com/sup_salesdev.php

http://www.njfundz.com/sup_marketing.php

MUTUAL FUND ADVISOR

There exists a great potential & opportunity to establish your own mutual fund advisory practice in India. If you are an existing provider of other investment or insurance solutions then you can add mutual funds to your basket and move towards being a 'complete financial advisor'.

NJ FUNDZ PARTNER

NJ Fundz Network is a dedicated platform offering comprehensive and unique products and services for the growth & development of independent financial advisors. NJ's 360° Advisory Platform, offers advisors with cutting edge solutions and effective support to create business brand and offer quality value-added services to clients.

360° - Advisory Platform

NJ offers you with a unique, comprehensive business platform to help you grow & develop your advisory practice in a powerful, effective way. The platform delivers much more to you, keeping you above curve - both on your business front and on client services.

Opportunities:

Associate with NJ platform today to gain the NJ Edge

Multiple product range for your customers

Working with the Leading Brand in Financial Advisory


Complete Back Office Support

Best Technology support

View all your reports, statements, brokerage, CRM and many more in a Single

Window

Get your own branded Marketing Material at your door step

Get regular information regarding new offerings & schemes

Be a part of largest community of IFA's in India

Get the dedicated Relationship Manager for your business development

Get the facility for your client to invest Online or Offiline and view reports of

various kind for both

Enrollment For All Products

KNOW YOUR CLIENT (KYC)

In order to comply with regulatory provisions under the Prevention of Money

Laundering Act 2002, Rules issued thereunder and related guidelines/circulars issued

by SEBI, KYC formalities are required to be completed for all Unit Holders, including

Guardians and Power of Attorney holders, for any investment (whether new or

additional purchase) of \ 50,000 or more in mutual funds. For the convenience of

investors in mutual funds, all mutual funds have made special arrangements with

CDSL Ventures Ltd. (CVL), a wholly owned subsidiary of Central Depository Services

(India) Ltd. (CDSL)).

DOCUMENTS AND INFORMATION TO BE PROVIDED BY INVESTORS:

Investors in mutual fund schemes have to provide:

(1) Proof of Identity

(2) Proof of Address

(3) PAN Card

(4) Photograph


The originals of these documents along with a copy each to be presented and the

original will be returned after verification. Alternatively, investors can also provide an

attested true copy of the relevant documents. Attestation could be done by Notary

Public/ Gazetted Officer/ Manager of a Scheduled Commercial Bank.

Instead of providing the required documents again and again to different mutual

funds in which one would like to invest, CVL, on behalf of all mutual funds will carry

out the process of KYC and issue an acknowledgement.

Investors have to provide the relevant documents and information ONLY ONCE for

complying with KYC. After that Investors could invest in the schemes of all mutual

funds by merely attaching a copy of the KYC acknowledgement slip with the

application form / transaction slip when investing for the first time in every folio (Post

KYC) in each Mutual Fund house, without the necessity to submit the KYC documents

again.

Any subsequent changes in address or other details could be intimated to any of the

POS (with relevant documentary evidence) and the same will get updated in all the

mutual funds where the investor has invested.

This facility is being provided absolutely FREE OF COST to the investors. To begin

with, investors investing \ 50,000 or more will have to comply with KYC effective from

1st February, 2008.

WHERE TO COMPLETE THE FORMALITIES

The details regarding the POS (Point of Services) is available in the AMFI site. In case

of investments through POA, the investor as well as POA have to complete the KYC.




NISM for CPE Registration Form


QUESTIONNAIRE

I am doing MBA at Advent Institute of Managemt Studies and this is to acknowledge that the following survey is purely for academic purpose. My project topic is about knowing the "Performance Comparison and Investors Perception about Investing in mutual funds” The identity of the respondent will be kept confidential and it does not carry any commercial value.

A study of preferences of the investors for investment in mutual funds.

1. What kind of investments you prefer most? Pl tick (√). All applicable

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, etc f. Shares/Debentures g. Gold/ Silver h. Real Estate

I. PPF j. PF

2. While investing your money, which factor you prefermost? Any one

Liquidity Low Risk High Return Company reputation

3. Have you ever invested your money in mutual fund?

Yes No

If yes,a) Where do you find yourself as a mutual fund investor?

Totally ignorant [ ]

Partial knowledge of mutual funds [ ]

Aware only of any specific scheme in which you invested [ ]

Fully aware [ ]

b) In which kind of mutual you would like to invest?

Public [ ] Private [ ]

c) how do you come to know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

d) Which mutual fund scheme have you used?

Open-ended Close-ended

Liquid fund Mid- Cap

Growth fund Regular Income fund

Long-Cap Sector fund

If no,


a) If not invested in Mutual Fund then why?

Not aware of MF Higher risk Not any specific reason

4. which feature of the mutual funds allure you most?

Diversification [ ]

Better return and safety [ ]

Reduction in risk and transaction cost [ ]

Regular Income [ ]

Tax benefit [ ]

5. In which Mutual Fund you have invested? Please tick (√). All applicable.

a. SBIMF

b. UTI

c. HDFC

d. Reliance

e. ICICI prudential funds

f. JM mutual fund

g. Other. Specify

6. When you invest in Mutual Funds which mode of investment will you prefer?

a. One Time Investment b. Systematic Investment Plan (SIP)

7. Where from you purchase mutual funds?

Directly from the AMCs [ ]

Brokers only [ ]

Brokers/ sub-brokers [ ]

Other sources [ ]

8. Which AMC will you prefer to invest?

Assets Management Co.

a. SBIMF

b. UTI

c. Reliance

d. HDFC

e. Kotak

f. ICICI


g. JM finance

9. Which sector are you investing in mutual fund sector?

i. General 1st

ii. Oil and petroleum

iii. Gold fund

iv. Diversified equity fund

v. Power sector

vi. Debt fund

vii. Banking fund

viii. Real estate fund

10. How would you like to receive the returns every year?

a. Dividend payout b. Dividend re-investment c. Growth in NAV

11. Personal Details:

(a). Name:-

(b). Add: -

(c). Age:- Contact No:-

(d). Qualification:- Graduation/PG Under Graduate Others

(e). Occupation. Pl tick (√)

Govt. Sec Pvt. Sec Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick (√).

Up to \ 10,000 \10,001 to 15000

\15,001 to 20,000 \ 20,001 to 30,000 \ 30,001 and above

No of Response %Yes 24 32No 51 68


It was a very tough task to create an awareness of mutual fund among the insurance advisors. Mostly they were happy with the insurance product what they are selling and are not ready to add up a new product in their selling basket. LIC agents were not ready to sell “Mutual fund” because they have mis-conception that in mutual fund is only related to equity market and due to the recent economic slowdown people are not ready to invest in the market. After explaining to them about less competition among mutual fund advisors rather than insurance advisors and after making him understand about the proper concept of mutual fund, some of them were considered and were ready to come to meeting or BOP program for becoming mutual fund advisor.

Through this research I found that mostly youth insurance advisors were interested to become mutual fund advisor and want to add up a new product in their selling basket. The people who were older, were afraid to appear in any kind of exam. They usually said that they didn’t have time for the training as made mandatory by AMFI.

Investors mostly aged people believe to invest in FD for sure return rather than MFs.

Mostly insurance advisors said that commission in MFs is too low to sell in mkt and comparison with 1 ULIP policy commission its too less.

mostly investors who invested in FDs, RDs think that there is a greater risk and due to lack of advisors they didn't get their right value.

Suggestions

Most leads complain about its fees that are \ 8000/ \ 6900. they said that it is too much amount to complete AMFI exam and become NJ partner. I know it is nothing in spite of our


company gives them. Consideration can be made to reduce the fee to stop de motivating from taking our services.

NJ has almost 25% market stake of mutual fund advisor (almost 15,000 MF advisors are partner of NJ. whereas total MF advisors are 75,000 in India.) but NJ is lacking somewhere in its marketing. NJ needs to advertise its brand to gain the image of a mutual fund distributer in the minds of insurance advisors who are more concern with RR and other mutual fund distributors.

Whereas, the exam Structure is changed w.e.f. June 5, 2010 with new fee structure and NISM for CPE exam. The certificate validity is also reduced from 5 yrs to 3 yrs. and ARN fee increased by over 1000% from \ 500 to 5000 and validity will reduced from 5 yrs to 3 yrs.

CONCLUSION

From the analysis of the responses received from the investors in Udaipur, majorities of

the investors are found to be conscious and enlightened regarding their investments,

returns and growth.


We have a good market in Udaipur, which comprises potential investors, but due to lack

of basic promotions and publicity these investors are fully aware and whosoever is

aware, their investments decision are done on the basis of security, analysis of risk yield

and return.

The Indian mutual fund industry needs to widen its range of products with affordable and

competitive schemes to tap the semi-urban and rural markets in order to attract more

investors.

The industry has still not been able to penetrate among retail investors and it needs to

share best practices from mature markets like US and Britain where mutual funds are

the most preferred form of investment. Mutual fund companies need to introduce

products for the semi-urban and rural markets that are affordable and yet competitive

against low-risk assured returns of government sponsored saving schemes such as post

office saving deposits.

The industry is also overwhelmed by scarce technological infrastructure and needs to

collaborate with other sectors of the economy such as banking and telecommunications.

Mutual fund companies are also required take advantage of the growing opportunity in

the commodities market. Further, the mutual funds could also enable the small investors

to participate in the real estate boom through real estate mutual funds. With a strong

regulatory framework, clear guidelines and the talent to back it up, the Indian mutual

fund industry is in a position to cater to the new breed of investors who are keen to

diversify their risks.

RECOMMENDATIONS

Marketing tools should be used at the point of purchase, advertisements through

mass media like newspapers, magazines, exhibitions, SMS on mobiles, and on

internets.


Organize programmes for customer awareness in developing areas and establish

a confidence and belief among the customers residing their.

BIBLIOGRAPHY

Magazines

Business World

Outlook Money

NJ Fundz Network July 2010 Monthly

Offer documents of different schemes


Fund Fact Sheet

Investment and Portfolio Management by Prassnna Chandra

WEBSITES

www.moneycontrol.com/mutual funds

www.amfiindia.com

www.mutualfundsindia.com

www.google.com

www.njindiainvest.com

www.njfundz.com

www.nism.ac.in

www.investopedia.com


Documents

36244864 performance-comparison-and-investors-perception-about-investing-in-mutual-funds-at-nj-india-invest-2010