Upload
myfriendabhishek
View
222
Download
0
Embed Size (px)
Citation preview
8/3/2019 Abhishek Apte Final Thesis Report
1/61
A Final Report Presentation on Progress
of Management Thesis Research OnA Macroscopic Examination of Mutual Fund as a goal
achievement tool with focus on SIP vis--vis lump
sum investment with particular reference to SBI, Birla
Sun Life and HDFC Mutual Funds
Prepared as a part of the Management Thesis Research-1
study as a the part of fulfillment of the requirements of the
MBA Program conducted by the ICFAI National College
Presented To:Mr. Vipin Desai
Senior Faculty and Research GuideICFAI National College
Presented byAbhishek S Apte(8NBVD069,0801213328)
ACKNOWLEDGEMENT
1
8/3/2019 Abhishek Apte Final Thesis Report
2/61
8/3/2019 Abhishek Apte Final Thesis Report
3/61
INTRODUCTIONSr.No. Particulars Page No.1 Introduction 4
2Management Thesis
5-33
i.History and Statistics regarding mutualfunds
5-13
ii. Objectives 13
iii.
Mutual Funds; Formation, working and
types14-22
iv.
Advantages and Disadvantages of
Mutual Funds23-30
v. Research Methodology 30-35
3
Introduction to companies under study
and short introduction to the schemes
under comparison SBI, Birla Sun Life
and HDFC Mutual Funds
35-48
vi.
Analysis of data with illustraton and
risks 48-81
vii. Findings and Facts and Conclusions 82
viii. Appendices 83-90
3
8/3/2019 Abhishek Apte Final Thesis Report
4/61
Mutual Funds Industry in India
The origin of mutual fund industry in India is with the introduction of the
concept of mutual fund by UTI in the year 1963. 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 dramatic
improvements, both quality wise as well as quantity wise. Before, the
monopoly of the market had seen an ending phase; the Assets under
Management (AUM) were Rs. 67bn. The private sector entry to the fund
family raised the AUM to Rs. 470 in March 1993 and till April 2004; it
reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the
total of it is less than the deposits of SBI alone, constitute less than 11% of
the total deposits held by the Indian banking industry.
The main reason of its poor growth is that the mutual fund industry in India
is new in the country. Large sections of Indian investors are yet to be
intellectuated with the concept. Hence, it is the prime responsibility of all
mutual fund companies, to market the product correctly abreast of selling.
4
8/3/2019 Abhishek Apte Final Thesis Report
5/61
Unit Trust of India is the first Mutual Fund set up under a separate act, UTI
Act in 1963, and started its operations in 1964 with the issue of units under
the scheme US-64.
History of mutual funds and Statistics
PHASES OF 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. The history of mutual fund in India can be broadly divided into four
distinct phases.
5
8/3/2019 Abhishek Apte Final Thesis Report
6/61
8/3/2019 Abhishek Apte Final Thesis Report
7/61
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 in 1964. At the
end of 1988 UTI had Rs.6, 700 cores of assets under management.
SECOND PHASE 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non-UTI, public sector mutual funds set up by the
public sector banks and Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC). SBI Mutual Fund was the
first non-UTI Mutual Fund established in June 1987
Name of the Mutual Fund Company Time of establishment
SBI Mutual Fund June - 1987
Can bank Mutual Fund December - 1987
Punjab National bank Mutual Fund August - 1989
Indian bank Mutual Fund November - 1989
Bank of India Mutual Fund June - 1990
Bank of Baroda Mutual Fund October - 1992
LIC Mutual Fund June - 1989
GIC Mutual Fund December - 1990
7
8/3/2019 Abhishek Apte Final Thesis Report
8/61
At the end of 1993, the mutual fund industry had assets under management
of Rs.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 the mutual funds except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first privates sector mutual fund registered in
July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in 1996. The industry
now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were
33 mutual funds with the total assets of Rs. 1, 12,805 cores. The Unit Trustof India with Rs. 44,541 cores of assets under management was way ahead
of other mutual funds.
FOURTH PHASE since February 2003
8
8/3/2019 Abhishek Apte Final Thesis Report
9/61
In February 2003, following the repeal of the Unit Trust of India Act 1963,
UTI was bifurcated into two separate entities. One is the specified
undertaking of the Unit Trust of India with assets under management of
Rs.29, 835 cores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The
specified undertaking of Unit Trust of India, functioning under anadministrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual fund
Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76, 000 cores of assets under management and with thesetting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations and with the recent mergers taking place among different
private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29
funds, which manage assets of Rs. 153108 cores under 421 schemes.
How Mutual Fund is working?
9
8/3/2019 Abhishek Apte Final Thesis Report
10/61
There are many entities involved in the mutual funds. Let us now discuss
each of these in details.
10
8/3/2019 Abhishek Apte Final Thesis Report
11/61
Trust Indian Trust Act of 1882 is applicable to MF. It has to be formed
under trust. It should have a board of trustees and trust. Two third of the
trustees should be independent persons.
Asset Management Company
An asset management company of AMC approved by SEBI has to managethe funds by making investments in various types of securities. Minimum net
worth for the AMC is Rs.10 cr. In the constitution of its board there should
be 50% independent directors.
Custodian
There is necessity of a custodian to hold the securities of various schemes ofthe fund in its custody. It should be registered with SEBI, only when it is
eligible to be a custodian of MF.
Registrar
The registrar maintains the account of investors for both the purpose of
investment and disinvestment.
Investors
Whoever invests in the units of MF, he is an investor. He is the key person
for the MF industry. Mostly small investors who cannot keep tract over the
11
8/3/2019 Abhishek Apte Final Thesis Report
12/61
capital market and are hesitant to take direct risk invest in MF with the sole
intention of maximizing returns.
STATISTICS
Market Potential:
Market potential for the growth of mutual funds is huge as no investment
avenue today is free from loopholes but they miss some finer aspects of theinvestors desires which mutual funds sharply satisfy during the natural
course of operations.
Demand for mutual funds:
12
8/3/2019 Abhishek Apte Final Thesis Report
13/61
The demand for mutual funds as compared to other sources of investments is
very low as compared to other sources as visible from the graph as given
below:
Banking Products have a large and seemingly unconquerable consumer
base. Hot on the trail are life mutual fund products as a rise in the literacy
rate has slowly started gaining awareness among the rural area and the
typical Indian considers it a feasible and safe idea to not only secure his own
future but also to leave a sustainable amount in the event of his demise.
Silently following are debit cards which have slowly not only associated
themselves to the ATM machines and easy cashless purchases but also
removed the tedious and cumbersome process of doing routine banking
activities like withdrawal and purchases of money. Today the Indian Bankscan proudly boast not only anytime banking but anywhere banking. Mutual
Funds are slowly taking a road ahead but will require some time to actually
make a big stage appearance sooner or later.
Ask anyone today what he wants to do with his income. The other person
immediately shoots back Invest. But go a step further and ask where and a
big question mark appears on his/her face. But every jungle has some or the
other part/corner that is unexplored or less explored but contains the most
unimaginable opportunities. Once such corner in todays world is Mutual
Funds.
13
8/3/2019 Abhishek Apte Final Thesis Report
14/61
8/3/2019 Abhishek Apte Final Thesis Report
15/61
To give a brief idea about the benefits available from Mutual Fund
investment
To give an idea of the types of schemes available.
To study the market trends of Mutual Fund investment.
To study some of the mutual fund schemes and analyse them
To observe the fund management process of mutual funds
To give an idea about the regulations of mutual funds
What is mutual fund?
15
8/3/2019 Abhishek Apte Final Thesis Report
16/61
8/3/2019 Abhishek Apte Final Thesis Report
17/61
buying units or portions of the mutual fund and thus on investing becomes a
shareholder or unit holder of the fund.
Mutual funds are considered as one of the best available investments as
compare to others they are very cost efficient and also easy to invest in, thus
by pooling money together in a mutual fund, investors can purchase stocks
or bonds with much lower trading costs than if they tried to do it on their
own. But the biggest advantage to mutual funds is diversification, by
minimizing risk & maximizing returns.
Thus a Mutual Fund is the most suitable investment for the common man as
it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. The flow chart below describes
broadly the working of a mutual fund
Scope of Mutual Funds has grown enormously over the years. In the first age
of mutual funds, when the investment management companies started to
offer mutual funds, choices were few. Even though people invested their
money in mutual funds as these funds offered them diversified investment
option for the first time. By investing in these funds they were able todiversify their investment in common stocks, preferred stocks, bonds and
other financial securities. At the same time they also enjoyed the advantage
of liquidity. With Mutual Funds, they got the scope of easy access to their
invested funds on requirements
17
8/3/2019 Abhishek Apte Final Thesis Report
18/61
But, in todays world, Scope of Mutual Funds has become so wide, that
peoplesometimes take long time to decide the mutual fund type, they are
going to invest in. Several Investment Management Companies have
emerged over the years who offer various types of Mutual Funds, each type
carrying unique characteristics and different beneficial features.
Type of Mutual Fund Schemes
18
8/3/2019 Abhishek Apte Final Thesis Report
19/61
BY STRUCTURE
19
8/3/2019 Abhishek Apte Final Thesis Report
20/61
Open Ended Schemes
An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy and
sell units at Net Asset Value ("NAV") related prices. The key feature of
open-end schemes is liquidity.
Close Ended Schemes
A closed-end fund has a stipulated maturity period which generally ranging
from 3 to 15 years. The fund is open for subscription only during a specified
period. Investors can invest in the scheme at the time of the initial public
issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to
the Mutual Fund through periodic repurchase at NAV related prices. SEBI
Regulations stipulate that at least one of the two exit routes is provided to the
investor.
Interval Schemes
Interval Schemes are that scheme, which combines the features of open-
ended and close-ended schemes. The units may be traded on the stock
exchange or may be open for sale or redemption during pre-determined
intervals at NAV related prices.
20
8/3/2019 Abhishek Apte Final Thesis Report
21/61
BY NATURE
Equity fund:
These funds invest a maximum part of their corpus into equities holdings.
The structure of the fund may vary different for different schemes and the
fund managers outlook on different stocks. The Equity Funds are sub-
classified depending upon their investment objective, as follows:
Diversified Equity Funds
Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)
Debt funds:
The objective of these Funds is to invest in debt papers. Government
authorities, private companies, banks and financial institutions are some of
the major issuers of debt papers. By investing in debt instruments, these
funds ensure low risk and provide stable income to the investors.
Gilt Funds: Invest their corpus in securities issued by Government,
popularly known as Government of India debt papers. These Funds carry
zero Default risk but are associated with Interest Rate risk. These
schemes are safer as they invest in papers backed by Government.
21
8/3/2019 Abhishek Apte Final Thesis Report
22/61
Income Funds: Invest a major portion into various debt instruments
such as bonds, corporate debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while
they take minimum exposure in equities. It gets benefit of both equity anddebt market. These scheme ranks slightly high on the risk-return matrix
when compared with other debt schemes.
Short Term Plans (STPs): Meant for investment horizon for three to six
months. These funds primarily invest in short term papers like Certificate
of Deposits (CDs) and Commercial Papers (CPs). Some portion of the
corpus is also invested in corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds
provides easy liquidity and preservation of capital. These schemes invest
in short-term instruments like Treasury Bills, inter-bank call money
market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon
of 1day to 3 months. These schemes rank low on risk-return matrix and
are considered to be the safest amongst all categories of mutual funds.
Balanced funds: As the name suggest they, are a mix of both equity and
debt funds. They invest in both equities and fixed income securities,
22
8/3/2019 Abhishek Apte Final Thesis Report
23/61
which are in line with pre-defined investment objective of the scheme.
These schemes aim to provide investors with the best of both the worlds.
Equity part provides growth and the debt part provides stability in
returns.
BY INVESTMENT OBJECTIVE
Growth Schemes: Growth Schemes are also known as equity schemes.
The aim of these schemes is to provide capital appreciation over medium
to long term. These schemes normally invest a major part of their fund in
equities and are willing to bear short-term decline in value for possible
future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The
aim of these schemes is to provide regular and steady income to
investors. These schemes generally invest in fixed income securities such
as bonds and corporate debentures. Capital appreciation in such schemes
may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and
income by periodically distributing a part of the income and capital gains
they earn. These schemes invest in both shares and fixed income
23
8/3/2019 Abhishek Apte Final Thesis Report
24/61
securities, in the proportion indicated in their offer documents (normally
50:50).
Money Market Schemes: Money Market Schemes aim to provide easy
liquidity, preservation of capital and moderate income. These schemes
generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.
OTHER SCHEMES
Tax Saving Schemes: Tax-saving schemes offer tax rebates to the
investors under tax laws prescribed from time to time. Under Sec.88 of
the Income Tax Act, contributions made to any Equity Linked Savings
Scheme (ELSS) are eligible for rebate.
Index Schemes: Index schemes attempt to replicate the performance of a
particular index such as the BSE Sensex or the NSE 50. The portfolio of
these schemes will consist of only those stocks that constitute the index.
The percentage of each stock to the total holding will be identical to the
stocks index weightage. And hence, the returns from such schemes would
be more or less equivalent to those of the Index.
Sector Specific Schemes: These are the funds/schemes which invest in
the securities of only those sectors or industries as specified in the offer
documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
24
8/3/2019 Abhishek Apte Final Thesis Report
25/61
dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they are more risky compared to
diversified funds. Investors need to keep a watch on the performance of
those sectors/industries and must exit at an appropriate time.
Types of returns
There are three ways, where the total returns provided by mutual funds canbe enjoyed by investors:
Income is earned from dividends on stocks and interest on bonds. A fund
pays out nearly all income it receives over the year to fund owners in the
form ofa distribution.
If the fund sells securities that have increased in price, the fund has a
capital gain. Most funds also pass on these gains to investors in a
distribution.
If fund holdings increase in price but are not sold by the fund manager,
the fund's shares increase in price. You can then sell your mutual fund
shares for a profit. Funds will also usually give you a choice either to
receive a check for distributions or to reinvest the earnings and get more
shares.
Net Assets Value (NAV)
25
8/3/2019 Abhishek Apte Final Thesis Report
26/61
The net asset value of the funds is the cumulative market value of the
assets fund net of its liabilities. In other words, if the funds is dissolved
or liquidated, by selling of all the assets on the fund, this is amount that
the shareholders would collectively own. This gives rise to the concept
of net asset value per unit, which is the value, respected by the
ownership of one unit in the fund. It is calculated simply by dividingthe net asset value of the by the number of units. However, most people
refer loosely to the NAV per unit as NAV, ignoring the per unit. We
also abide by the same convention.
Calculation of NAV
The most important part of the calculation is the valuation of the asset
owned by the fund. Once it is calculated, the NAV is simply the net
value of assets divided by the number of units outstanding. The detailed
methodology for the calculation of the assets value is given below.
Net Asset Value is equal to
= Net Assets of the Scheme / Number of units outstanding i.e.
26
8/3/2019 Abhishek Apte Final Thesis Report
27/61
(Market value of investment + Receivables +Other Accrued Income +
Other Assets Accrued Expenses Other Payables Other Liabilities
Advantages
Portfolio Diversification
An investment in mutual funds enables the unit holder to have awell diversified investment in various companies at almost anegligible cost in small volumes
Professional management
The investor in mutual funds is ridden from doing the cumbersome andtime consuming job of studying and analyzing performances of varioussecurities before investing as it is all professionally managed by theFund Managers and investors pooled money is invested only inavenues which are in a growth stage or likely to hit the growth stage of
the industry life cycle.
Reduction / Diversification of Risk
Here the investor enjoys a great advantage of investing in multiplestocks with a minimum amount at the same time with an expectation ofgood returns as a well diversified portfolio enables an investor toreturns from multiple companies at the same time.
27
8/3/2019 Abhishek Apte Final Thesis Report
28/61
Liquidity
Unlike traditional sources of investment, the investors money doesnot get blocked up to a fixed maturity period. The invested amountcan be withdrawn at the will of the investor by selling the existingunits invested and it also adds up to cover the opportunity cost that hemight incur.
Flexibility & Convenience
Unlike traditional sources of investment, the investors money does notget blocked up to a fixed maturity period. The invested amount can bewithdrawn at the will of the investor and it also adds up to cover theopportunity cost that he might incur.
Reduction in Transaction cost
Unlike other forms of investment there are no large operationalcosts nor does the investor need to go to a broker or a brokingfirm for the purpose of investing. The transaction costs are as lowas 2.5% entry load(abolished) and 1.25% exit load which ishardly anything as compared to investments in Life Insurancewhere the middleman earns as large as 10% per annum as trailcommission.
28
8/3/2019 Abhishek Apte Final Thesis Report
29/61
8/3/2019 Abhishek Apte Final Thesis Report
30/61
Though the investor can withdraw his money anytime and investit elsewhere yet during the time it lies with the fund house he/shehas no control over how much and where to invest
RESEARCH METHODOLOGY
This report is based on primary data, however primary datacollection is given more importance since it is overhearing factor inattitude studies. One of the most important users of researchmethodology is that it helps in identifying the problem, collecting,analyzing the required information data and providing an alternativesolution to the problem .It also helps in collecting the vital informationthat is required by the top management to assist them for the betterdecision making.
Data sources:
Research is totally based on primary data. Research has been done byprimary data collection, and primary data has been collected byinteracting with various people. Even secondary literature and guide
books of National Stock Exchange on mutual funds has been referred.
Duration of Study:
30
8/3/2019 Abhishek Apte Final Thesis Report
31/61
The study is being carried out for a period five months, from 1st August2009 to 30th October 2009.
Sampling:
Sampling Technique
The sampling technique being used by me is stratified randomsampling, where in I have divided my target customers for mutual fundsinto a strata of 10 customers per area and surveying each oneseparately.
Sampling procedure:
The sample is selected of them who are the customers and investors .Itis also collected through personal visits to persons, shops and various
brokering organization by informal talks and through filling up thequestionnaire prepared. The data shall be analyzed by usingmathematical/Statistical tools and techniques if possible.
Sample size:
The sample size of my project is limited to a sample population of 100people.
Sample design:
Data can be presented with the help of bar graph, pie charts, line graphs etc.
31
8/3/2019 Abhishek Apte Final Thesis Report
32/61
Procedure Adopted:
1. Studying the mutual fund concept
Reading about the mutual fund was the first step undertaken. This gave notonly in depth knowledge about what is been offered by the mutual fund andits scope in the current financial market but also proved useful whiledeveloping the questionnaire.
2. Decision on objective needed to be work on.
The next step and probably the most important one of all was to develop theresearch objective for the study needed to undertaken for understanding the
investors mindset and their awareness towards equity investments withreference to mutual funds. A thorough objective was already defined andthat required a reasonable degree of clarity which I managed to acquire afterconsulting with our faculty guide Mr. Vipin Desai.
3. Developing Survey instruments
All of the trainees designed a rough draft of a suitable questionnaire formatfor the survey. After a little discussion with our expert faculty guide andafter incorporating some changes incorporated by him the draft of the
questionnaire was finalized and I got myself a photo copy of the draft andultimately 100 copies of the draft per person.
After availing the copies, the survey work is under process at the end ofwhich the data so surveyed will be thoroughly analyzed under the expertguidance of the company guide.
32
8/3/2019 Abhishek Apte Final Thesis Report
33/61
4. Getting questionnaire filled through interacting with
different age groups, sex, monthly income and occupation.
Accordingly I target and stand outside various places and survey them as
per the table given below:
SBI Zonal Office Sayajigunj Race course
Landmark(ICICI Bank & IDEAShowroom)
Dandia Bazar
Progress
To this day I have completed surveying the stated sample of 100
people due to which I feel my progress is just on track and I amconfident of the fact that I will be able to complete the analysis andpresentation work soon.
Literature Viewed
The literature that has been viewed by me is mostly the reports readily
available in the library of ICFAI National College. In addition the statistics
produced in the leading magazines like The Competition Success Review,
and Indian Management Journal as a source of additional reading.
The two reports that have been referred as previous reports are:
33
8/3/2019 Abhishek Apte Final Thesis Report
34/61
Is direct investment in mutual funds better than share markets: An
analytical overview: sadik hussain
Mutual Funds Awareness survey: Birla Sun Life Mutual fund.
Both of the above reports aim at establishing a common belief that mutual
funds awareness and progress is at a very slow level in Baroda City and by
my research I would convince them that the mutual funds awareness inBaroda is also growing at a fast pace thanks to some active mutual fund
distribution houses like Religare Fin Mart Securities Pvt. Ltd., Karvy
Securities, Anand Rathi Investments etc. and also from the survey of the
people and their awareness regarding mutual funds.
Scenario Of Mutual Funds In India
34
8/3/2019 Abhishek Apte Final Thesis Report
35/61
8/3/2019 Abhishek Apte Final Thesis Report
36/61
sectors and identify stocks that promise high performance in thefuture.
This team works in tandem with a compliance and risk-monitoringdepartment, which ensures minimisation of operational risks while
protecting the interests of the investors.
Quite naturally many of our equity funds have delivered consistent
returns to investors and have repeatedly out performed benchmarkindices by wide margins.
THE BRAIN BEHIND THE GAME
Head Portfolio Management Services / Fund Manager :
Nipa Ladiwala
SBI Mutual Fund is Indias largest bank sponsored mutual fund and has anenviable track record in judicious investments and consistent wealthcreation.The fund traces its lineage to SBI - Indias largest bankingenterprise. The institution has grown immensely since its inception andtoday it is India's largest bank, patronised by over 80% of the top corporatehouses of the country.
SBI Mutual Fund is a joint venture between the State Bank of India andSocit Gnrale Asset Management companies that manages over US $500Billion Worldwide.In twenty years of operation, the fund has launched 38schemes and successfully redeemed fifteen of them. In the process it has rewardedits investors handsomely with consistent returns.A total of over 5.4 millioninvestors have reposed their faith in the wealth generation expertise of the MutualFund.
36
8/3/2019 Abhishek Apte Final Thesis Report
37/61
8/3/2019 Abhishek Apte Final Thesis Report
38/61
8/3/2019 Abhishek Apte Final Thesis Report
39/61
39
8/3/2019 Abhishek Apte Final Thesis Report
40/61
Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment
managers of Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla
Group and the Sun Life Financial Services Inc. of Canada. The joint venture brings
together the Aditya Birla Group's experience in the Indian market and Sun Life's
global experience.
Since its inception in 1994, Birla Sun Life Mutual fund has emerged as one
of India's leading Mutual Funds managing assets of a large investor base.
The fund offers a range of investment options, which include diversifiedand sector specific equity schemes, fund of fund schemes, hybrid and
monthly income funds, a wide range of debt and treasury products and
offshore funds.
BSLAMC follows a long-term, fundamental research based approach to
investment. The approach is to identify companies, which have excellent
growth prospects and strong fundamentals. The fundamentals include the
quality of the companys management, sustainability of its business modeland its competitive position, amongst other factors. Birla Sun Life Asset
Management Company has one of the largest team of research analysts in
the industry, dedicated to tracking down the best companies to invest in.
SCHEMES
BIRLA SUN LIFE CAPITAL PROTECTION ORIENTEDFUND-3 YRS- DIVIDEND
BIRLA SUN LIFE CAPITAL PROTECTION ORIENTEDFUND-3 YRS- GROWTH
Birla Sun Life Dynamic Bond Fund-Discipline Advantage Plan-Growth
Birla Sun Life Dynamic Bond Fund-Retail Plan-Growth
Birla Sun Life Dynamic Bond Fund-Retail Plan-Monthly Dividend
Birla Sun Life Dynamic Bond Fund-Retail Plan-QuarterlyDividend
Birla Sun Life Fixed Maturity Plan - Annual Series 3-Dividend
Birla Sun Life Fixed Maturity Plan - Annual Series 3-Growth
40
8/3/2019 Abhishek Apte Final Thesis Report
41/61
Avenues of Investment
Ranking of investment avenu
34
18
30
3
15 14
3636
410 8
2523
12
32
14139
25
39
30
82
56
40
10
20
30
40
50
60
Equity
Capital
Debt
Capital
Fixed
Deposite
Real Estate Others
Avenues of investme
Numberofpeople
1st Rank2nd Rank
3rd Rank
4th Rank
5th Rank
As evident from the above chart Fixed Deposits, Equity capital investments
and Real estate form a major part of preferred investment avenues of people.
The common belief that people displayed during the survey was that most of
them gave a prominent nod on the mention of fixed deposits. But
surprisingly from the survey it was revealed that fixed deposits no longerdominated the market as the leading and most trusted investment avenue but
the category of others showed most people ranking as 1st rank. On inquiring
people told that trust and safety was no longer a problematic factor due to
efficient corporate governance on them and strict regulatory controls and
avenues like gold exchange schemes, mutual funds, postal deposits and
41
8/3/2019 Abhishek Apte Final Thesis Report
42/61
saving schemes, NSC, KVP and some people displayed a small preference
towards bonds and debentures.
Motives behind investment
Investment needs of people
1
21
8
43
27
119
252629
9
20
39
1517
2728
18
9
18
52
22
1079
0
10
20
30
40
50
60
Tax benefits Return on
investment
Liquidity
position
Future
Security
Retirement
Benefits
Investment needs
Numberofpeopleran
kin
1st rank
2nd rank
3rd rank
4th rank
5th rank
Our analysis of the consolidated answers of people revealed that maximum
number of people naturally told they invested for returns. After the need for
returns is satisfied the people opined that they save for meeting expected
future needs for e.g marriage, pregnancy, educational fees of children, day-
to-day expenses like provisions, medicines etc as well as for unpredicted
future occurrences e.g. accident, donations and charity etc. After the abovebasic motives people opined that tax planning is the most important motive
that they consider for which mutual funds ELSS (Equity Linked Savings
Scheme) was opined as an effective avenue which provides an excellent
level of returns in spite of having a three year bond period as it gives the
option to switch between various schemes of the fund house and sti . Very
42
8/3/2019 Abhishek Apte Final Thesis Report
43/61
few people opined for liquidity availability as a separate motive as it already
gets covered and not surprisingly very few people consider retirement
planning as an avenue for investment.
Span of investment
Span of investment in various avenues
17%
43%
21%
19%
1 year
1-3 year
3-5 year
Excess of 5 years
The analysis of the responses of people revealed that most people invest for
a period of 1 to 3which is considered (as medium term) as a safe and
adequate period for investing their money and also getting a certain degree
of attractive returns. Some people also believe in investing for a relatively
higher period of 3 to 5 years for something more than the average investor.
Some people invest for a very short period and mostly invest in short term
sources of finance like liquidity fund, floating fund, monthly income plans in
various mutual fund schemes. While, the premium investors having large
43
8/3/2019 Abhishek Apte Final Thesis Report
44/61
idle funds prefer investments in the long term periods in excess of 5 years
mostly consisting of avenues like Real Estate, Life Insurance products and
even mutual fund schemes, national savings schemes and largely in equity
capital of multiple number of companies
Awareness of mutual funds
On being questioned about awareness of people 47% of the people replied
that they know about the concept of mutual funds while 53% of people
honestly and bluntly replied that they knew nothing about mutual funds and
neither were they interested in knowing about it as if it was somethingdangerous
Actual Investors in Mutual Funds
44
http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2543http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2222http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2543http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2222http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2543http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2222http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2543http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2222http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2222http://new.valueresearchonline.com/funds/newsnapshot.asp?schemecode=25438/3/2019 Abhishek Apte Final Thesis Report
45/61
From the analysis of the previous question we revealed tht a large proportion
of the sample population were not aware about mutual funds and not
surprisingly the number of people actually making the investment in mutual
funds turned out to be a much lower 25% while the number of people
actually not investing in mutual funds was relatively much higher i.e. 75%
which revealed the fact that there are a significant number of people who
invest in mutual funds without any actual basic knowledge and have
invested just because of experiences and pressures from other people e.g.
Family, relatives, marketing personnel, experiences of others etc. and also
a distinct class who have fair amount of know-how of how of
working of mutual funds but dont invest out of the fear of
market uncertainty.
45
8/3/2019 Abhishek Apte Final Thesis Report
46/61
AMC WiseInvestors
The above chart was the most complex chart to analyze because it was
difficult to categorize the investors into fanatics or die-hard fans of a
mutual fund house and of a purposeful and smart investor. As above chart
Birla Sunlife Mutual Fund rules the market with 65 people noding of
possession of units in BSL Muttual Fund House, followed by HDFC
Joining the race after recent declaration of dividends and lagging way
behind was found SBI Mutual Fund with a meagre fan-following.
But a pleasant surprise was the number of people who were purposefulinvestors who had investments pooled into more than one of the fund
houses and 10 to 12 people had investments in all the three fund houses.
This meant a pleasant discovery on the part of the mutual fund houses
and the realization of a fact that investors are now becoming smarter
46
8/3/2019 Abhishek Apte Final Thesis Report
47/61
learning from the one and half yearly recession and the turbulent share
market cyclones that passed through India..
Lumpsum V/S SIP
When enquired about the reasons for not investing in SIP as compared to
lump sum investments in mutual funds, the people put forward the above
reasons for not investing in mutual funds as per their understanding and
probably due to varied experiences while playing in the share market.
My Portfolio, My Choice
47
8/3/2019 Abhishek Apte Final Thesis Report
48/61
When the people were queried about how they preferred style ofdesigning an investment portfolio then most of them were found pointing
their fingers straight at their family members, relatives and friends as
their chief financial advisors. Some salaried income group opined that
they were getting the perceived value for thepayments they were getting
from their broker or intermediary who in their opinion were doing a fair
job and advising in the best intrest of their clients. Some knowledgeable
citizens to pointed out the value of self help and the slogan My
investment,my way.A small group of people still continues to follow the
traditional method of consulting market experts and/or investment gurus.
Frequency of checking the portfolio
48
8/3/2019 Abhishek Apte Final Thesis Report
49/61
The consumers on going through this question were found unwilling to
answer this question honestly and many of them pointed out that they
monitored their investments mostly each month while a distinct majority
pointed out that they never bothered to check their portfolio and largely
admitted that they had nothing like fixed expectations and whatever was
available as returns to them would be agreeable unless it was a loss. While
an equivalent majority of people decided larger frequency of time to monitor
portfolios like quarterly and yearly and some even sincerely prefer tomonitor their portfolios regularly at ten days or fortnight.
Ranking of reasons for investing in
mutual funds
49
8/3/2019 Abhishek Apte Final Thesis Report
50/61
From the consolidated answers of the people the reasons people putforward for investing in mutual funds were many. Majority of people out of
those who invest in mutual funds pointed out at risk profile of the mutual
funds and their ability to earn better returns as compared to traditional
investment avenues like fixed deposits, life insurance etc. Some of the
people pointed out that they liked the factors of professional management
and past performance in dealings as the main factors influencing their
decision to invest in mutual funds. Small majority of the people even pointed
that they also considered investing because of the lower costs involved andthe brand name of the asset management company as they perceived brand
name as the level of security of their invested sum.
Reasons for not investing
50
8/3/2019 Abhishek Apte Final Thesis Report
51/61
From the consolidated answers of the people the reasons people put
forward for not investing in mutual funds were many. Majority of people
out of those who invest in mutual funds blamed lack of knowledge,
uncertainty of returns, and bad experiences of past mutual funds
investment as common reasons. In addition people also agreed to
limitations like Risk profile, difficult of choosing appropriate funds and
lack of confidence in the ability of the fund managers.
The Way Forward for the Mutual Fund Investors
51
8/3/2019 Abhishek Apte Final Thesis Report
52/61
There is no one mutual fund that will be suitable to all kinds of investors. Hence,
mutual fund investors need to identify a suitable fund for them. This would be the
first step towards making successful investments in mutual funds. Identifying a
suitable fund can be done in a two-step manner as follow:
a. Selecting a fund with investment objectives and preferences, return
objectives, time horizon and risk tolerances that meet the requirements
of the investor.
b. Selecting a fund that has a detailed asset allocation strategy by fundtype category to reflect the investment objectives of the fund.
b. To select a suitable fund, investors should read the fund's prospectus
completely before making investment. By reading investment objectives,
the fund's financial goals and the type of securities chosen can be known.
c. An investor can make out whether or not a fund is advisable for him by
determining if the goals are congruent with his own investment goals.
d. Investor should also ensure that the fund is comparing itself with an
appropriate benchmark.
e. Another important aspect investors have to carefully examine is the fees
and expenses charged by the fund.
Finally, investors should always be conscious of the fact that mutual funds invest
their funds in capital market instruments such as shares, debentures, bonds and
money market instruments, and that all the capital market instruments have risk.
Therefore an investor is supposed to have full knowledge and understanding that
mutual fund investments are subject to market risk and should manage the risks
carefully for a safe and happy investment.
52
8/3/2019 Abhishek Apte Final Thesis Report
53/61
Conclusions
It is note worthy to notice the following facts regarding the public awareness
regarding various alternatives of investment and a growing shift from
traditional investment avenues like PPF, Fixed Deposits and Bonds etc. to
more profitable and short term investment avenues like mutual funds and
equity exchange stock market. But still in a saturated markets like baroda
mutual funds need to put extra efforts in pushing forward mutual fund as a
profitable avenue for investment.
Findings and Facts.
Lack of proper efforts to educate people regarding
mutual funds investment and promote themselves better as compared
to the traditional avenues.
Due to the abolition of entry load on mutual funds
investment the fund houses along with their broking partners have
faced a large shake up as investors are increasing their rush to invest
but the profitability of the fund houses has gone down.
Large scale confusion among employees of
mutual fund houses due to fear of unemployment due to lower
profitability of fund house and cost cutting activities.
Turbulent activity in the Indian Share Market has
shattered mutual fund hopes of finding new business.
53
8/3/2019 Abhishek Apte Final Thesis Report
54/61
Appendices
Questionnaire on the A Macroscopic view On Mutual Fund as a GoalAchievement Tool with Emphasis on SIP and Lump Some Investment
(Please tick or write the required details as per the questionformat,*=compulsory)
CUSTOMER PROFILE
*Name: _____________________________________________________
*Age: ________
Address: __________________________________________
__________________________________________
__________________________________________
__________________________________________
*Mobile No: __________________________
*Occupation: _____________________
*Annual Income: Up to Rs. 200000 Rs. 200000-400000
54
8/3/2019 Abhishek Apte Final Thesis Report
55/61
Rs. 400000-500000 > 500000
*Gender: Male Female
1. What is your preferred avenue for investment?
(Rank from 1 to 5 as per your choice, 1=most preferred, 5=last
preferred)
a) Equity Capital _____
b) Debt Capital/bonds _____
c) Fixed Deposits in Banks _____
d) Real Estate _____
e) Others _____
2. What is your goal of investment? (Please Rank 1 to 4)
1) Tax Benefits ______
2) Returns on investment ______
3) Liquidity position ______
4) Future Security ______
3. On an average what is the period for which you invest?
1 year 1-3 years 3-5 years
55
8/3/2019 Abhishek Apte Final Thesis Report
56/61
Excess of 5 years
4. Do you know about mutual funds?
Yes No
5. Do you invest in mutual funds? (If answer is yes then kindly skip question
no 8, and if it is no then please skip Q6 and Q8)
Yes No
6. If answer (to question no 5) is yes then kindly name the scheme you invest
SBI Mutual Fund HDFC Mutual Fund
Birla Sun Life Multiple
Others
_____________________________________________________
(In case ofother option kindly specify the name of the asset managementcompany)
7. How do you think you can describe your investment strategy in a word?
Aggressive Consultative Watchful Conservative
56
8/3/2019 Abhishek Apte Final Thesis Report
57/61
8. Do you know the concept ofSIP (Systematic Investment Plan)?
Yes No
9. How much have the last two financial years of recession affected your
portfolio?
Drastically Significantly Average Not at all
10. How lump sum investment can be beneficial as compared to SIP?
________________________________________________________
11. Which goals are achieved by Mutual funds?
_______________________________________________________________
_______________________________________________________________
12. How SIP can be beneficial?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
13. How lump sum investment can be beneficial as compared to SIP?
_______________________________________________________________
______________________________________________________________________________________________________________________________
14. Which scheme(s) do you select? e.g. monthly income or fixed maturity
plan etc.
57
8/3/2019 Abhishek Apte Final Thesis Report
58/61
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
15. What are the preferable reasons for preferring those schemes?
______________________________________________________________________________________________________________________________
_______________________________________________________________
16. Why do you prefer direct investment in mutual funds as compared to
Equity trading?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
17. How do you design your mutual funds portfolio?
_______________________________________________________________
_______________________________________________________________
18. Would you prefer investment in real estate funds or gold funds?Why?
______________________________________________________________________________________________________________________________
19. At how much frequency do you prefer to check your portfolio?
58
8/3/2019 Abhishek Apte Final Thesis Report
59/61
_______________________________________________________________
20. How do you perceive the service quality of mutual funds?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
21. Do you assess how much money has grown in mutual funds?
_______________________________________________________________
_______________________________________________________________
22. Do you know about the services ofwww.moneycontrol.com?
_______________________________________________________________
_______________________________________________________________
23. If mutual funds give you more than your traditional long term investments
(e.g. Fixed Deposits, Bonds Etc.). Would you consider investing in mutual
funds?
Definitely Yes I dont know Definitely No
24. What factors would you consider while making an investment in mutual
funds as compared to other sources of investment?(Please Rank 1 to 7)
59
http://www.moneycontrol.com/http://www.moneycontrol.com/8/3/2019 Abhishek Apte Final Thesis Report
60/61
High returns _____
Low costs _____
Professional management _____
Brand Name _____
Risk Profile _____
Past performance of the fund _____
Transparency
25. What is the reason for not investing in mutual funds particularly as
compared to mutual funds?(Please rank from 1 to 5)
Bad Experience ______
Lack of knowledge ______
Lack of confidence in service provider ______
Uncertainty of Returns ______
Difficulty in choosing ______
ABBREVIATIONS USED IN MUTUAL FUNDSNSDL-National Securities Depository Limited
SEBI- Securities and Exchange Board of India
AMFI-Association of Mutual Funds in India
60
8/3/2019 Abhishek Apte Final Thesis Report
61/61
AMC- Asset Management Company
MF- Mutual Funds
MoF- Ministry of Finance
Fun.Man-Fund Manager
BSE-Bombay Stock Exchange
61