Analysis Mutual Fund Performa

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ANALYSIS MUTUAL FUND PERFORMANCE AGAINST EXTABLISHED

PERFORMANCE BENCH MARK


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PREFACE

The stock market in India has been a kind of mysterious place for many people who think thatthe persons investing their money in the market are sort of gambling on their money. There is

usual misconception in the minds of the common man that because of the volatility of the

market, their hard earned money is not safe in the stock market.

However, this fear can be checked by proper research on a share someone is interested to invest

on. The market doesnt behave in an arbitrate manner but certain trends are repeated over the

time again and again. It is quite responsive towards the economic activities taking place in India

as well as around the whole world.

The broad objective of the project is to understand the behavioural pattern of Mutual Fundsover the past one year and a half so that one can understand the movement of the share on a

particular trading session as well as the impact of news coming from different quarters of the

market.

The project will provide a tool in the hands of the investors to take the decisions regarding their

investment inMutual Funds It will also give them the answer that whether it is right time to

invest in this share or not, and what could be the best time to invest in this share.

CONTENT

NALYSIS

CONTENTS


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2. ACKNOWLEDGWMENT 2

3. CONTENT 3

4. ABSTRACT 45. CONCEPT OF MUTUAL FUND 5

a. ORIGIN OF MUTUAL FUND 6

b. ABOUT MUTUAL FUNDS 7c. ADVANTAGES OF MUTUAL FUNDS 8d. TYPES OF MUTUAL FUND SCHEMES 10

6. COMPANY OVERVIEW 12

7. MUTUAL FUNDS INDUSTRY IN INDIA 158. STATISTICAL TOOLS 18

9. INFRASTRUCTURE MUTUAL FUND 23

a. MARKET CAPITALISATION 27

b. MEAN & STANDARD DEVIATION 28c. ANALYSIS WITH STATISTICAL TOOLS 29

d. PORTFOLIO ANALYSIS 30

e. COMPARISION WITH THE BENCHMARK INDEX 3310. EQUITY MUTUAL FUNDS 35

a. MARKET CAPITALISATION 40

b. MEAN & STANDARD DEVIATION 41

c. ANALYSIS WITH STATISTICAL TOOLS 42d. PORTFOLIO ANALYSIS 44

e. COMPARISION WITH THE BENCHMARK INDEX 46

11. DEBT MUTUAL FUND 47a. TOTAL FUND SIZE 51

b. MEAN & STANDARD DEVIATION 52

c. ANALYSIS WITH STATISTICAL TOOLS 53

d. PORTFOLIO ANALYSIS 55e. COMPARISION WITH THE BENCHMARK INDEX 56

12. RECOMONDATION 59

13. APPENDIX 60

CONTENTS

STATISTICAL ANALYSIS


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ABSTRACTSTRACT

This project offers a valuable opportunity to take a glimpse of the mutual fund in India. In

todays increasingly competitive and complex world there are large numbers of mutual funds

claiming to provide maximum return with minimum risk.

It is become very difficult to select the best mutual fund. There are more than 1000 schemes

available for the investors in India. It is very difficult to select a particular scheme on the basis of

their past records.

This project will try to analyze few popular mutual funds statistically on the basis of the risk

involved in each fund and the return of the same. Also an in-depth analysis of their portfolio will

be done which will give a better view for a funds resultant performance.

This project identifies the key factors that is making a fund perform better then is competitor.

The factors identified in this study will help fund manager design their funds portfolio and

provide optimum return to its investors. Also the said project will be used by Tata Asset

Management Company in the Eastern Zone to train its Relationship Managers in helping them

giving an in-depth view about their fund


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INTRODUCTION

CEPTA Mutual Fund is a trust that pools the savings of a number of investors who share a common

financial goal. The money thus collected is then invested in capital market instruments such as

shares, debentures and other securities. The income earned through these investments and the

capital appreciations realized are shared by its unit holders in proportion to the 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 describe mutual fund:


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Mutual Fund gets their earnings in two ways:

1. First is the most organic way, which is the dividend they get on the

securities they hold.

2. If the fund sells securities that have increased in capital gain. This is reflected in NAV of each

unit.

3. Third is by the redemption of their units by investors will be at discount to the current

NAV[net asset value].


CONCEPT


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COMPANYSPROFILE

About company

Gulf Bulls Securities Pvt. Ltd. is a company registered under the Companies Act, 1956 .It is a

professionally managed group headed by the directors, having vast experience in the stock

market.

The company is serving a diverse customer base of institutional and retail investors The

Company has a balanced mix of revenues from emerging markets and is well positioned to

leverage the growth potential offered by these markets.

GBS provides investors a robust platform to trade in Equities in NSE and BSE, and derivatives

in NSE. The company has a worldwide vision and it along with its associates is currently

providing state of the art stock broking services through all the major stock exchanges, trading

through NSE & BSE, depository services through CDSL and all the services are available under

the one roof. With its ability to evolve with the changing environment the Company has been

able to put itself to the forefront of stock broking activities. With its network spreading across

various parts of India, it has made a distinct mark among the stock broking houses and high net

worth corporate as well as individuals.

The company offers financial information, analysis, investment guidance, news & views, which

are designed to meet the requirements of everyone from a beginner to a savvy and well-informed

trader.

Our vision is to grow our business and make our presence across the world.


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Our mission is to create and introduce the new definition of investments around the globe.

Management Team:

Name Designation

Mr. Vivek Rana Chairman / Managing Director

Mr Rajiv Balhara Director

Mr. Kuldeep Sharma Director

Mr. Yajur Chaudhary Director

Mr. Rajneesh Aggarwal Director

Mr. Vipin Kumar Director

Mr. Gajraj Singh Director

Mr. Anil Kaushik Director


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ABOUT MUTUAL FUNDSA

A

ABOUTBOUT MUTUAL FUNDS

What Is a Mutual Fund?

A mutual fund is a company that invests in a diversified portfolio of securities. People who buy

shares of a mutual fund are its owners or shareholders. Their investments provide the money for

a mutual fund to buy securities such as stocks and bonds. A mutual fund can make money from

its securities in two ways: a security can pay dividends or interest to the fund or a security can

rise in value. A fund can also lose money and drop in value.

Different Funds, Different Features

There are three basic types of mutual fundsstock (also called equity), bond, and money

market. Stock mutual funds invest primarily in shares of stock issued by Indian or foreign

companies. Bond mutual funds invest primarily in bonds. Money market mutual funds invest

mainly in short-term securities issued.


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AB


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ADVANTAGES OF MUTUAL FUNDS 4OUT MUTUAL FUNDS


ADVANTAGES OF MUTUAL FUNDS

Why Invest in a Mutual Fund?

Mutual funds make saving and investing simple, accessible, and affordable. The advantages of

mutual funds include professional management, diversification, variety, liquidity, affordability,

convenience, and ease of recordkeepingas well as strict government regulation and full

disclosure.

Professional Management: Even under the best of market conditions, it takes an astute,

experienced investor to choose investments correctly, and a further commitment of time to

continually monitor those investments. With mutual funds, experienced professionals manage a

portfolio of securities for you full-time, and decide which securities to buy and sell based on

extensive

research. A fund is usually managed by an individual or a team choosing investments that best

match the funds objectives. As economic conditions change, the managers often adjust the mix

of the funds investments to ensure it continues to meet the funds objectives.

Diversification: Successful investors know that diversifying their investments can help reduce

the adverse impact of a single investment. Mutual funds introduce diversification to your

investment portfolio automatically by holding a wide variety of securities. Moreover, since you

pool your assets with those of other investors, a mutual fund allows you to obtain a more

diversified portfolio than you would probably be able to comfortably manage on your ownand

at a fraction of the cost. In short, funds allow you the opportunity to invest in many markets and

sectors. Thats the key benefit of diversification.


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Variety: Within the broad categories of stock, bond, and money market funds, you can choose

among a variety of investment approaches. Today there are more then 1000 types of mutual fund

available for the Indian investors.

Low Costs: Mutual funds usually hold dozens or even hundreds of securities like stocks and

bonds. The primary way you pay for this service is through a fee that is based on the total value

of your account. Because the fund industry consists of hundreds of competing firms and

thousands of funds, the actual level of fees can vary. But for most investors, mutual funds

provide professional management and diversification at a fraction of the cost of making such

investments independentlyTUAL FUNDS


Liquidity: Liquidity is the ability to readily access your money in an investment. Mutual fund

shares are liquid investments that can be sold on any business day. Mutual funds are required by

law to buy, or redeem, shares each business day. The price per share at which you can redeem

shares is known as the funds net asset value (NAV). NAV is the current market value of all the

funds assets, minus liabilities, divided by the total number of outstanding shares.

Convenience: You can purchase or sell fund shares directly from a fund or through a broker,

financial planner, bank or insurance agent, by mail, over the telephone, and increasingly by

personal computer. You can also arrange for automatic reinvestment or periodic distribution of

the dividends and capital gains paid by the fund. Funds may offer a wide variety of other

services, including monthly or quarterly account statements, tax information, and 24-hour phone

and computer access to fund and account information.


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Protecting Investors:Not only are mutual funds subject to compliance with their self-imposed

restrictions and limitations, they are also highly regulated by the federal government through the

U.S. Securities and Exchange Commission (SEC). As part of this government regulation, all

funds must meet certain operating standards, observe strict antifraud rules, and disclose complete

information to current and potential investors. These laws are strictly enforced and designed to

protect investors from fraud and abuse. But these laws obviously cannot help you pick the fund

that is right for you or prevent a fund from losing money. You can still lose money by investing

in a mutual fund. A mutual fund is not guaranteed or insured by the FDIC or SIPC, even if fund

shares are purchased through a bank.

ADVANALNDS SCHEMES

Types of Mutual Fund Scheme


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BY STRUCTURE:

Open Ended Schemes: These do not have a fixed maturity. You deal directly with the Mutual

Fund for your investments and redemptions. The key feature is liquidity. You can conveniently

buy and sell your units at Net Asset Value related prices.

Close Ended Schemes: Schemes that have a stipulated maturity period (ranging from 2 to 15

years) are called closed ended schemes. You can invest directly in the scheme at time of the

initial issue and thereafter you can buy and sell the units of the scheme on the stock exchanges

where they are listed. The market price of the stock exchange could from the schemes NAV on

account of demand and supply situation, unit holders expectation and other market factors.

Interval Schemes: These combine the features of open ended and closed ended schemes. They

may be traded at stock exchange or may be open for sale or redemption during pre determined

intervals at NAV related prices.

BY INVESTMENT OBJECTIVE:

Growth Schemes: Aim to provide capital appreciation over the medium to long term. These

schemes normally invest a majority of their funds n equities and are willing to bear short term

decline in value for possible future appreciation. These schemes are not for investors seeking

regular income or needing their money back in the short term.


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Income Schemes: aim to provide regular and steady income to investors. hese schemes

generally invest in fixed income securities such as bonds and corporate debentures. Capital

appreciation in such schemes may be limited.

Balanced Schemes: Aim to provide both growth and income by periodically distributing a part

of the income and capital gains they earn. They invest both in shares and fixed income securities

in the proportion indicated in their offer documents.

Money market Schemes: Aim to provide easy liquidity, preservation of capital

gains and moderate income. These schemes generally invest in safer, short term instruments such

as treasury bills, certificate of deposits, commercial papers etc. Return on these schemes may

fluctuate, depending upon the interest rates prevailing in the market.

OTHER SCHEMES

Tax Saving Schemes: These schemes offer tax rebates to the investor under tax law as

prescribed from time to time. This is made possible because the government offers tax incentives

for investment in specified avenues. For example Equity Linked Saving Schemes, and Pension

Schemes.

Special Schemes: This category includes index schemes that attempt to replicate the

performance of a particular index such as BSE Sensex or the NSE or industry specific schemes

or sectoral schemes.


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Index Fund Schemes: They are ideal for investors who are satisfied with a return approximately

equal to that of an index.

Sectoral Fund: These schemes are ideal for investors who have already decided to invest in a

particular sector or segment

TATISTICA

L ANALYSIS

COMPANY OVERVIEW

COMPANY OVERVIEW

Backed by one of the most trusted and valued brands in India, Tata Mutual Fund has earned the

trust of lakhs of investors with its consistent performance and world-class service.

Tata Mutual Fund manages around Rs. 22,980.76 crores (as on March 31, 2008) worth of assets

across its varied offerings. Tata Mutual Fund offers an investment option for everyone, whether

you are a businessman or salaried professional, a retired person or housewife, an aggressive

investor or a conservative capital builder.

The Tata Asset Management (TAM) philosophy is centered on seeking consistent, long-term

results. Tata Asset Management aims at overall excellence, within the framework of transparent

and rigorous risk controls.

Areas of Business


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A leading player in the mutual fund arena, TAM offers a wide array of product for institutional

and individual investors at various life stages across the risk- reward spectrum. The company

offers investment products under three main categories for every financial need and under varied

market conditions:

Equity funds Balanced funds Debt funds

The core strength of TAM stems not only from its sound systems and processes but also from the

quality of its intellectual capital, which is made up of the best and brightest minds. At the same

time, the company provides a robust risk management framework with inbuilt controls and

balances.

The title of theproject is Investors Perception About Mutual Fund This will

through light on how investors view our funds as a potential investment with

detailed perception. Quantify the results of our fund marketing strategy and

improve the quality of our investor communications with valuable investor

feedback.MUTUAL FUNDS SCHEMES

Core Values

The Tata Group has always sought to be a value-driven organization. These values continue to

direct the Group's growth and businesses. The five core Tata values that underpin the way we do

business are:


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Integrity: We must conduct our business fairly, with honesty and transparency. Everything we

do must stand the test of public scrutiny.

Understanding: We must be caring, show respect, compassion and humanity for our colleagues

and customers around the world, and always work for the benefit of the communities we serve.

Excellence: We must constantly strive to achieve the highest possible standards in our day-to-

day work and in the quality of the goods and services we provide.

Unity: We must work cohesively with our colleagues across the Group and with our customers

and partners around the world, building strong relationships based on tolerance, understanding

and mutual cooperation.

Responsibility: We must continue to be responsible, sensitive to the countries, communities and

environments in which we work, always ensuring that what comesfrom the people goes back to

the people many times over.

Statistical Tools

Mean

An average of the sub-period returns, calculated by summing the sub eturns and dividing by the

number of sub This shows the average return earned by a good comparative tool to assess

different types of fund.


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Standard Deviation

Standard deviation is a representation of the risk associated with a given security stocks, bonds,

property, etc.), or the risk of a portfolio of securities. Risk is an important factor in determining

how to efficiently manage a portfolio of investments because it determines the variation in

returns on the asset and/or portfolio and ives investors a mathematical basis for investment

decisions. The overall concept of risk is that as it increases, the expected return on the asset will

increase as a result of the risk premium earned higher return on an investment when said

investment carries a higher level of risk

where,

2 denoted standard deviation

N is number of period,

X2is average return of a security,

x is number actual return,

The larger the Standard Deviation in a period, the greater risk the security carries.


Beta


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A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the

market as a whole. Also known as "beta coefficient".

Where,

rameasures the rate of return of the asset,

rp

measures the rate of return of the portfolio of which the asset is a part,

Cov(ra,

rp,

) is the covariance between the rates of return.

Beta is calculated using regression analysis, and you can think of beta as the

tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the

security's price will move with the market. A Beta less than 1 means, the security will be less

volatile than the market. A beta of greater than 1 indicates that the security's price will be more

volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile

than the market.

Many utilities stocks have a beta of less than 1. Conversely, most high-tech Sensex-based stocks

have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing

more risk.

Sharpe Ratio

A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance.

The Sharpe ratio is calculated by subtracting the risk-free rate such as that of the 10-year U.S.


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Treasury bond - from the rate of return for a portfolio and dividing the result by the standard

deviation of the portfolio returns.

R is return from the security

Rfis the Risk free return

= standard deviation

The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a

result of excess risk. This measurement is very useful because although one portfolio or fund can

reap higher returns than its peers, it isonly a good investment if those higher returns do not come

with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk

performance has been.

A variation of the Sharpe ratio is the Sortino ratio, which removes the upward price movements

on standard deviation to measure only return against downward price volatility.

Sortino Ratio

A ratio developed by Frank A. Sortino to differentiate between good and bad


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volatility in the Sharpe ratio. This volatility allows the calculation to provide a risk fund's

performance without penalizing it for upward price changes. It it is calculated as follows:

The Sortino ratio is similar to the Sharpe ratio, except it uses downside deviation for the

denominator instead of standard deviation, the use of which doesn't discriminate between up and

down volatility.

P/E ratio

The P/E ratio (price-to-earnings ratio) of a stock (also called its "earnings multiple", or simply

"multiple", "P/E", or "PE") is a measure of the price paid for a share relative to the annual

income or profit earned by the firm per share. A higher P/E ratio means that investors are paying

more for each unit of income. It is a valuation ratio included in other financial ratios. The

reciprocal of the P/E ratio is known as the earnings yield.


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ANALYSIS

Treynor Ratio

A ratio developed by Jack Treynor that measures returns earned in excess of that which could

have been earned on a riskless investment per each unit of market risk. The Treynor ratio is

calculated as:

(Average Return of the Portfolio - Average Return of the Risk-Free Rate) / Beta of the Portfolio

In other words, the Treynor ratio is a risk-adjusted measure of return based on systematic risk. It

is similar to the Sharpe ratio, with the difference being that the Treynor ratio uses beta as the

measurement of volatility.

Also known as the "reward-to-volatility ratio".

STATISTICAL TOOLS

Fama

A factor model that expands on the capital asset pricing model (CAPM) by adding size and value

factors in addition to the market risk factor in CAPM. This model considers the fact that value

and small cap stocks outperform markets on a regular basis. By including these two additional

factors, the model adjusts for the outperformance tendency, which is thought to make it a better

tool for evaluating manager performance.

Here r is the portfolio's return rate, Rf is the risk-free return rate, and Km is the return of the

whole stock market. The "three factor" is analogous to the classical but not equal to it, since

there are now two additional factors to do some of the work. SMB and HML stand for "small


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[Market Capitalization] minus big" and "high [book-to-price ratio] minus low"; they measure the

historic excess returns of small caps over big caps and "value stocks" over "growth stocks".

Fama and French attempted to better measure market returns and, through research, found that

value stocks outperform growth stocks; similarly, small cap stocks tend to outperform large cap

stocks. As an evaluation tool, the performance of portfolios with a large number of small cap or

value stocks would be lower than the CAPM result, as the three factor model adjusts downward

for small cap and value outperformance.

STATISTICAL TOOLS


INFRASTRUCTURE MUTUAL FUND

INFRASTRUCTURE MUTUAL FUNDS

An Infrastructure fund is a managed vehicle through which investors gain exposure to the

underlying characteristics of infrastructure assets. Infrastructure is emerging strongly as an asset

class which can be particularly well suited to pension funds and other investors with a long-term

outlook. Infrastructure assets tend to display comparatively stable, long-term real return and

provide a good match for longdated liabilities.

They invest in private infrastructure companies, but the fnds themselves can be listed or unlisted.

For example, Macquarie has been investing in infrastructure for more than a decade and now

manages over 20 infrastructure funds around the world. Half of these are listed on the stock

exchange, with investors from pension funds and other institutions to retail investors. The rest

are unlisted funds in which the investors are largely pension funds and other institutions.


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The fund tens to either specialize in one class of infrastructure - for example invest only in

airport or only in toll-roads or they invest across various infrastructure sectors which meet

specified investment criteria. For example

The infrastructure assets can include telecommunications and broadcast infrastructure, utilities,

toll road, airport and other transport infrastructure. Fundamentally, infrastructure assets are

distinguished by displaying the following key characteristics:

Provide essential community services

Have strategic competitive advantage Have predictable long-term cash flow

These characteristics lead to the investment benefits outlined below.

Infrastructure assets display unique characteristic. Their essential and long-term nature,

combined with strong competitive position, lead to stable and predictable consumer demand and

cash generation. These assets tend to have a high fixed capital base with comparatively low

operating costs on average of between 10% and 30% of revenue. Along with the long-term

operating license and predictable demand, often in a regulated environment, this allows the

manager to forecast cash flows with accuracy.

Infrastructure assets have a low correlation to equity markets and other asset classes. For the

reason, it can provide valuable diversification in an investment.


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RASTRUCTURE MUTUAL FUNDS

OBJECTIVE OF THE STUDY

This project has been taken for GULF BULL stock broking limited. The objective of the study is

to know the role and performance of mutual funds & also help in determining the preference of

investors while investing in various types of mutual fund schemes. The company has established

a strong investors base in DEHRADUN so the key findings of the project will help the company

to understand their investors better, their needs, and expectations of the investors from a broker

and the potential of mutual funds scheme in DEHRADUN.

Many individuals find investments to be fascinating because they can participate in the decision

making process and see the results of their choices. Not all investments will be profitable, as

investor wills not always make the correct investment decisions over the period of years;

however, one should earn a positive return on a diversified portfolio. In addition, there is a

delight from the major success.

Investing is not a game but a serious subject that can have a major impact on investor's future

well being. Virtually everyone makes investments. Even if the individual does not select specific

assets such as stock, mutual funds, investments are still made through participation in pension

plan, and employee saving programmed or through purchase of life insurance or a home. Each of

this investment has common characteristics such as potential return and the risk you must bear.


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The future is uncertain, and one must determine how much risk you are willing to bear since

higher return is associated with accepting more risk.

The individual should start by specifying investment goals and would like to have true value of

his wealth. Once these goals are established, the individual should be aware of the mechanics of

investing and the environment in which investment decisions are made. These include the

process by which securities are issued and subsequently bought and sold, the regulations and tax

laws that have been enacted by various levels of government, and the sources of information

concerning investment that are available to the individual.


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MUTUAL FUNDSA CONCEPT

A mutual fund is simply a financial intermediary that allows a group of investors to pool their

money together with a predetermined investment objective. Each unit of any scheme represents

the proportion of pool owned by the unit holder (investor). The value of each unit of mutual

fund is termed as Net Asset Value. Appreciation or reduction in value of investments is reflected

in net asset value (NAV) of the concerned scheme, which is declared by the fund from time to

time. Mutual Funds schemes are managed by respective Asset Management Companies

sponsored by financial institutions, banks, private companies or international firms. An investor

can invest his money in one or more schemes of Mutual Fund according to his choice and

becomes the unit holder of the scheme. The income earned through these investments and the

capital appreciations realized are shared by its unit holders in proportion to the number of units

owned by them. Mutual Fund offers an investor the opportunity to invest even a small amount of

money. The mutual fund will have a fund manager who is responsible for investing the pooled

money into specific securities. Each Mutual Fund scheme is managed by qualified professionals,

who use this money to create a portfolio that includes stock and shares, bonds, gilt, money-

market instruments or combination of all. Thus, Mutual Fund will diversify ones portfolio over

a variety of investment vehicles thereby reducing the risk.

Mutual funds are one of the best investments ever created because they are very cost efficient

and very easy to invest in (one doesn't have to figure out which stocks or bonds to buy).

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 mutualfunds is diversification.

Mutual Funds offer several benefits to an investor such as potential return, liquidity,

transparency, income growth, good post tax return and reasonable safety. But before investing in


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a Mutual Fund an investor must identify his needs and preferences. He must also take in to

consideration the risks associated with such investments.

MUTUAL FUND FRAMEWORK:

MUTUAL FUND CONSTITUENTS

The FIGURE below illustrates the organizational set up of a mutual fund:


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Indian mutual funds are governed by two different structures. The Unit Trust of India follows

one defined by the UTI Act, 1963, and its subsequent amendments. All other mutual funds

follow the Securities and Exchange Board of India's (Mutual Funds) Regulations, 1996, which

are more rigorous from the viewpoint of disclosure and accountability. Despite the differences,

all mutual funds comprise four constituents -- sponsors, trustees, asset management companies

(AMCs) and custodians.

THE MUTUAL FUND

A mutual fund in India is constituted in the form of a Public Trust created under the Indian

Trusts Act, 1882. The Fund Sponsor acts as the Settler of the Trust, contributing to its initial

capital and appoints a Trustee to hold the assets of the Trust for the benefit of the unit-holders,

who are the beneficiaries of the Trust. The fund then invites investors to contribute their money

in the common pool, by subscribing to units issued by various schemes established by the

trust, units being the evidence of their beneficial interest in the fund.

SPONSOR

The sponsor initiates the idea to set up a mutual fund. It could be a registered company,

scheduled bank or financial institution. For Example: For Birla Mutual Fund, the sponsor is Birla

Growth Funds. In a joint venture like Sun F&C Mutual Fund, Foreign & Colonial Emerging

Markets is the sponsor and SUN Securities (India) Ltd, the co-sponsor


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A sponsor has to satisfy certain conditions, such as on capital, track record (at least five years'

operation in financial services), default-free dealings and a general reputation of fairness. The

sponsor appoints the trustees, AMC and custodian. Once the AMC is formed, the sponsor is just

a stakeholder. However, sponsors do play a key role in bailing out an AMC during a crisis

(Canara Bank's rescue of Canbank Mutual Fund).

TRUST / BOARD OF TRUSTEES

Trustees hold a fiduciary responsibility towards unit holders by protecting their interests.

Sometimes, as with Canara Bank, the trustee and the sponsor are the same. For others, like SBI

Funds Management, State Bank of India is the sponsor and SBI Capital Markets the trustee.

Trustees float and market fund schemes, and secure necessary approvals. They check if the

AMC's investments are within defined limits, whether the fund's assets are protected, and also

ensure that unit holders get their due returns.

Trustees also review any due diligence done by the AMC. For major decisions concerning the

fund, they have to take unit holders' consent. They submit reports every six months to SEBI;

investors get an annual report. Trustees are paid annually out of the fund's assets -- 0.05 per cent

of the weekly average net asset value.

FUND MANAGERS / AMCS

They are the ones who manage funds money. An AMC takes investment decisions, compensates

investors through dividends, maintains proper accounting and information for pricing of units,

calculates the NAV, and provides information on listed schemes and secondary market unit

transactions.


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It also exercises due diligence on investments, and submits quarterly reports to the trustees. A

fund's AMC can neither act for any other fund nor undertake any business other than asset

management. Its net worth should not fall below Rs. 10 crore. And, its fee should not exceed

1.25 per cent if collections are below Rs.100 crore and 1 per cent if collections are above Rs.100

crore. Sebi can pull up an AMC if it deviates from its prescribed role.

TRANSFER AGENTS

Transfer agents are responsible for issuing and redeeming units of the mutual fund and provide

other related services such as preparation of transfer documents and updating investor records. A

fund may choose to carry out this activity in-house and charge the scheme for the service at a

competitive market rate. Where an outside Transfer Agent is used, the fund investor will find the

agent to be an important interface to deal with, since all of the investor services that a fund

provides (besides the investment management) are going to be dependent on the transfer agent.

In India, besides brokers, independent, individuals are appointed as agents for the purpose of

selling the fund schemes to investors. These agents are not brokers in a formal sense and do not

belong to any stock exchange or organized self-regulatory body of brokers. While individuals

constitute the largest segment in the category of mutual fund distributors, other distributors

include Banks, Non Banking Finance Companies and Distribution Companies.


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CUSTODIAN

Often an independent organization, it takes custody of securities and other assets of a mutual

fund. Among public sector mutual funds, the sponsor or trustee generally also acts as the

custodian.

A custodian's responsibilities include receipt and delivery of securities, collecting income,

distributing dividends, safekeeping of units and segregating assets and settlements between

schemes. Their charges range between 0.15-0.2 percent of the net value of the holding.

Custodians can service more than one fund.SEBI's regulations specify each constituent's role

clearly. How well they act in concert determines the quality of the investor's experience with the

mutual fund.

NET ASSET VALUE (NAV)

A mutual fund is a common investment vehicle where the assets of the fund belong directly to

the investors. Investors subscriptions are accounted for by the fund not as liabilities or deposits

but as Unit Capital. On the other hand, the investments made on behalf of the investors are

reflected on the assets side and are the main constituent of the balance sheet. There are, however,

liabilities of a strictly short-term nature that may be part of the balance sheet. The funds Net

Assets are therefore defined as the assets minus the liabilities. As there are many investors in a

fund, it is common practice for mutual funds to compute the share of each investor on the basis

of the value of Net Assets Per Share/Unit, commonly known as the Net Asset Value (NAV).


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The following are the regulatory requirements and accounting definitions laid down by SEBI.

NAV = Net Assets of the scheme/Number of Units outstanding i.e. Market value of investments

+ Receivables + Other Accrued Income + other assets.

Accrued ExpensesOther payablesOther liabilities

No. Of units outstanding as at the NAV date For the purpose of the NAV calculation, the day on

which NAV is calculated by a fund is known as the valuation date.

A funds NAV is affected by four sets of factors: Purchase and sale of investment securities Valuation of all investment securities held Other assets and liabilities, and Units sold or redeemed

ADVANTAGES OF MUTUAL FUNDS

Professional expertise: Fund managers are responsible for implementing a consistent

investment strategy that reflects the goals of the fund. Fund managers monitor market and

economic trends and analyze securities in order to make informed investment decisions.


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Diversification: In order to reduce this risk, one needs to invest in different types of securities

such that they do not move in a similar fashion. Typically, when equity markets perform, debt

markets do not yield good returns. Note the scenario of low yields on debt securities over the last

three years while equities yielded handsome returns

Low cost of asset management:Since mutual funds collect money from millions of investors,

they achieve economies of scale. The cost of running a mutual fund is divided between larger

pools of money and hence mutual funds are able to offer you a lower cost alternative of

managing your funds. Equity funds in India typically charge you around 2.25% of your initial

money and around 1.5% to 2% of your money invested every year as charges. Investing in debt

funds costs even less. If you had to invest smaller sums of money on your own, you would have

to invest significantly more for the professional benefits and diversification.

Liquidity:Mutual funds are typically very liquid investments. Unless they have a pre-specified

lock-in, your money will be available to you anytime you want. Typically funds take a couple of

days for returning your money to you. Since they are very well integrated with the banking

system, most funds can send money directly to your banking account.

Well regulated: India mutual funds are regulated by the Securities and Exchange Board of

India, which helps provide comfort to the investors. SEBI forces transparency on the mutual

funds, which helps the investor make an informed choice. SEBI requires the mutual funds to


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disclose their portfolios at least six monthly, which helps one keep track whether the fund is

investing in line with its objectives or not.

DRAWBACKS OF MUTUAL FUNDS

No Guarantees-There is no guarantee that the mutual fund will always do well and provide

good returns to its unit holders, as no investment is risk free. However, risk is minimized to some

extent by investing in mutual funds.

Fees and Commissions- All funds charge administrative fees to cover their operational

expenses. Some funds also charge sales commissions or loads to compensate financial

consultants or planners, brokers etc.

Taxes- Most actively managed funds sell anywhere from 20% to 70% of the securities in their

portfolio during a typical year. If the fund makes a profit on its sales, the investor has to pay tax

on the income he receives even if he reinvests the money he made.

Management risk- the risk that an investor is taking here is that someone else is managing his

money. He depends on the fund manager to make the right decision regarding the portfolio. If the

manager does not perform as one had hoped then the investor may not make as much money as

he had expected.


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HISTORY OF MUTUAL FUNDS

MUTUAL FUNDS IN INDIA (1964 - 2005)

PHASE ONE (1964-1987):

The first stage of Mutual funds in India started with the setup of giant public sector mutual fund

UTI in 1964. This stage continued till 1987. In this stage UTI was the only player in the mutual

fund market. At the beginning of 1988 the total assets under management of UTI were 6700

crores.

PHASE TWO (1987-1993):

In 1987 govt. allowed six PSU banks, LIC and GIC to set up mutual funds. This increased the

number of players in the mutual fund to nine. At the end of 1994 there were 107 Mutual fund

schemes with 61028 Crores worth of assets under management.

PHASE THREE (1994 ONWARDS):

This stage saw the real boom of mutual fund industry. The GOI allowed private mutual fund to

operate. Kothari Pioneer is the first private sector Mutual Fund of India. As on 31stMarch 2000

there were 32 mutual funds with 1,13,005 crores worth of assets under management out of which

70,547 crores were in UTI alone. And on august 2000 there were a total of 33 mutual fund

schemes with 391 schemes and asset base of 1,02,844 crores. Today, we have 34 mutual funds

with numerous schemes for the investors to invest in.


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PHASE FOUR 1996 (SEBI REGULATION FOR MUTUAL FUNDS):

Deregulation and liberalization of the Indian economy introduced competition and provided

impetus to the growth of the industry. Finally, most investors small or large started shifting

towards mutual funds as opposed to banks or direct market investments.

More investor friendly regulatory measures were taken both by SEBI to protect the investor, and

by the Government to enhance investors return through tax benefits. A comprehensive set of

regulations for all mutual funds operating in India was introduced with SEBI (Mutual Fund)

Regulations, 1996. 1999 marked the beginning of a new phase in the history of the mutual fund

industry in India, a phase of significant growth in terms of both amounts mobilized from

investors and assets under management. Consider the growth in assets as seen in the figures

below:

The size of the industry grew rapidly, as seen in the figure of assets under management which

shot up from over Rs. 68000 crores to Rs. 113005 crores, a growth of nearly 60% in just one

year. Within the growing industry, by March 2000, the relative market shares of different players

in terms of amount mobilized and assets under management underwent a change.

1999YEAR OF THE FUNDS

Mutual funds had been around for a long period of time to be precise for 36 yrs but the year 1999

saw immense future potential and developments in this sector. This year signaled the year of

resurgence of mutual funds and the regaining of investor confidence in these MFs. This time

around all the participants were involved in the revival of the funds - the AMCs, the unit


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holders, the other related parties. However, the sole factor that gave lift to the revival of the

funds was the Union Budget. The budget brought about a large number of changes in one stroke.

It provided centre stage to the mutual funds, made them more attractive and provided

acceptability among the investors. The Union Budget exempted mutual fund dividend given out

by equity-oriented schemes from tax, both at the hands of the investor as well as the mutual fund.

No longer were the mutual funds interested in selling the concept of mutual funds they wanted to

talk business which would mean to increase asset base, and to get asset base and investor base

they had to be fully armed with a whole lot of schemes for every investor .So new schemes for

new IPOs were inevitable. The quest to attract investors extended beyond just new schemes.

The funds started to regulate themselves and were all out on winning the trust and confidence of

the investors under the aegis of the Association of Mutual Funds of India (AMFI)

One can say that today, the industry has moved from infancy to adolescence, it is now maturing

and the investors and funds are frankly and openly discussing difficulties, opportunities and

compulsions.


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TYPES OF MUTUAL FUNDS

A Mutual Fund may float several schemes, which may be classified on the basis of its structure,

its investment objectives and constitution.

INVESTMENT OBJECTIVE

Schemes can be classified by way of their stated investment objective such as Growth Fund,

Balanced Fund, and Income Fund etc


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EQUITY ORIENTED SCHEMES

These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds

in equities and a small portion in money market instruments. Such schemes have the potential to

deliver superior returns over the long term because the market boom and depression phases get

evened out over a longer time span. However, because they invest in equities, these schemes are

exposed to fluctuations in value especially in the short-term.Equity schemes are hence not

suitable for investors seeking regular income or needing to use their investments in the short-

term. They are ideal for investors who have a long-term investment horizon. The NAV prices of

equity fund fluctuates with market value of the underlying stock which are influenced by

external factors such as social, political as well as economic.

HDFC Growth Fund, HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity

schemes.


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SECTOR SPECIFIC

These schemes restrict their investing to one or more pre-defined sectors, e.g. technology sector,

pharmaceutical, information technology etc. Since they depend upon the performance of select

sectors only, these schemes are inherently more risky than general-purpose schemes. They are

suited for informed investors who wish to take a view and risk on the concerned sector.

SPECIAL SCHEMES:

INDEX SCHEMES

The primary purpose of an Index is to serve as a measure of the performance of the market as a

whole, or a specific sector of the market. An Index also serves as a relevant benchmark to

evaluate the performance of mutual funds. Some investors are interested in investing in the

market in general rather than investing in any specific fund. Such investors are happy to receive

the returns posted by the markets. As it is not practical to invest in each and every stock in the

market in proportion to its size, these investors are comfortable investing in a fund that they

believe is a good representative of the entire market. Index Funds are launched and managed for

such investors.

An example to such a fund is the HDFC Index Fund.

TAX SAVING SCHEMES

Investors (individuals and Hindu Undivided Families (HUFs)) are being encouraged to invest

in equity markets through Equity Linked Savings Scheme (ELSS) by offering them a tax

rebate. Units purchased cannot be assigned / transferred/ pledged / redeemed / switched out

until completion of 3 years from the date of allotment of the respective Units.


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The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations,

1996 and the notifications issued by the Ministry of Finance (Department of Economic Affairs),

Government of India regarding ELSS.

Subject to such conditions and limitations, as prescribed under Section 88 of the Income-tax Act,

1961, subscriptions to the Units not exceeding Rs.10, 000 would be eligible to a deduction, from

income tax, of an amount equal to 20% of the amount subscribed.

HDFC Tax Plan 2000 is such a fund.

REAL ESTATE FUNDS

Specialized real estate funds would invest in real estates directly, or may fund real estate

developers or lend to them directly or buy shares of housing finance companies or may even buy

their securitized assets.

DEBT BASED SCHEMES


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These schemes, also commonly called Income Schemes, invest in debt securities such as

corporate bonds, debentures and government securities. The prices of these schemes tend to be

more stable compared with equity schemes and most of the returns to the investors are generated

through dividends or steady capital appreciation. These schemes are ideal for conservative

investors or those not in a position to take higher equity risks, such as retired individuals.

However, as compared to the money market schemes they do have a higher price fluctuation risk

and compared to a Gilt fund they have a higher credit risk.

INCOME SCHEMES

These schemes invest in money markets, bonds and debentures of corporate with medium and

long-term maturities. These schemes primarily target current income instead of capital

appreciation. They therefore distribute a substantial part of their distributable surplus to the

investor by way of dividend distribution. Such schemes usually declare quarterly dividends and

are suitable for conservative investors who have medium to long-term investment horizon and

are looking for regular income through dividend or steady capital appreciation.

HDFC Income Fund, HDFC Short Term Plan and HDFC Fixed Investment Plans are examples

of bond schemes.


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objective of income and moderate capital appreciation and are ideal for investors with a

conservative, long-term orientation.

HDFC Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes.

REGULATORY ASPECTS OF MUTUAL FUNDS

SEBI MUTUAL FUNDS REGULATIONS, 1996

The regulatory framework for Mutual Fund Schemes as given by the SEBI Regulations is as

follows:

PROCEDURE FOR LAUNCHING OF SCHEMES

The asset management company shall launch no scheme unless the trustees approve such scheme

and a copy of the offer document has been filed with the Board.

Every mutual fund shall along with the offer document of each scheme pay filing fees.

The offer document shall contain disclosures which are adequate in order to enable the investors

to make informed investment decision including the disclosure on maximum investments

proposed to be made by the scheme in the listed securities of the group companies of the

sponsor.

No one shall issue any form of application for units of a mutual fund unless the form is

accompanied by the memorandum containing such information, as may be specified by the

Board.


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DISCLOSURES IN THE OFFER DOCUMENT

The offer document shall contain disclosures, which are adequate in order to enable the investors

to make informed investment decision (including the disclosure on maximum investments

proposed to be made by the scheme in the listed securities of the group companies of the

sponsor).

The Board may in the interest of investors require the asset management company to carry out

such modifications in the offer document as it deems fit.

In case no modifications are suggested by the Board in the offer document within 21 [working]

days from the date of filing, the asset management company may issue the offer document.

No one shall issue any form of application for units of a mutual fund unless the form is

accompanied by the memorandum containing such information as may be specified by the

Board.

INVESTMENT OBJECTIVES AND VALUATION POLICIES

The moneys collected under any scheme of a mutual fund shall be invested only in transferable

securities in the money market or in the capital market or in privately placed debentures or

securitized debts.

Provided that moneys collected under any money market scheme of a mutual fund shall be

invested only in money market instruments in accordance with directions issued by the Reserve

Bank of India.


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The mutual fund shall not borrow except to meet temporary liquidity needs of the mutual funds

for the purpose of repurchase, redemption of units or payment of interest or dividend to the unit

holders.

The mutual fund shall not advance any loans for any purpose.

Every mutual fund shall compute and carry out valuation of its investments in its portfolio and

publish the same in accordance with the valuation norms specified in Eighth Schedule

Every mutual fund shall compute the Net Asset Value of each scheme by dividing the net assets

of the scheme by the number of units outstanding on the valuation date.

The Net Asset Value of the scheme shall be calculated and published at least in two daily

newspapers at intervals of not exceeding one week:

The price at which the units may be subscribed or sold and the price at which such units may at

any time be repurchased by the mutual fund shall be made available to the investors.

RESTRICTIONS ON INVESTMENTS

A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by

a single issuer, which are rated not below investment grade by a credit rating agency authorized

to carry out such activity under the Act. Such investment limit may be extended to 20% of the

NAV of the scheme with the prior approval of the Board of Trustees and the Board of asset

Management Company.


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A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt instruments

issued by a single issuer and the total investment in such instruments shall not exceed 25% of the

NAV of the scheme. All such investments shall be made with the prior approval of the Board of

Trustees and the Board of Asset Management Company.

No mutual fund under all its schemes should own more than 10% of any company's paid up

capital carrying voting rights.

Transfers of investments from one scheme to another scheme in the same mutual fund shall be

allowed only if, -

Such transfers are done at the prevailing market price for quoted instruments on spot basis.

The securities so transferred shall be in conformity with the investment objective of the scheme

to which such transfer has been made.

A scheme may invest in another scheme under the same asset management company or any other

mutual fund without charging any fees, provided that aggregate inter scheme investment made

by all schemes under the same management or in schemes under the management of any other

asset management company shall not exceed 5% of the net asset value of the mutual fund.

The initial issue expenses in respect of any scheme may not exceed 6% of the funds raised under

that scheme.

Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of

purchases, take delivery of relative securities and in all cases of sale, deliver the securities and

shall in no case put itself in a position whereby it has to make short sale or carry forward

transaction or engage in badla finance.


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Every mutual fund shall, get the securities purchased or transferred in the name of the mutual

fund on account of the concerned scheme, wherever investments are intended to be of long-term

nature.

Pending deployment of funds of a scheme in securities in terms of investment objectives of the

scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled

commercial banks.

No mutual fund scheme shall make any investment in:

Any unlisted security of an associate or group company of the sponsor; or

Any security issued by way of private placement by an associate or group company of the

sponsor; or

The listed securities of group companies of the sponsor, which is in excess of 30% of the net

assets (of all the schemes of a mutual fund)

No mutual fund scheme shall invest more than 10% of its NAV in the equity shares or equity

related instruments of any company. Provided that, the limit of 10% shall not be applicable for

investments in index fund or sector or industry specific scheme.

A mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or equity

related investments in case of open-ended scheme and 10% of its NAV in case of close-ended

scheme.


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PRICING OF UNITS

Although NAV per unit defines the value of the investors holding in the fund, the fund may not

repurchase the investors unitsat the same price as NAV. However, SEBI requires that the fund

must ensure that repurchase price is not lower than 93% of NAV (95% in the case of a closed-

end fund). On the other side, a fund may sell new units at a price that is different from the NAV,

but the sale price cannot be higher than 107% of NAV. Also, the difference between the

repurchase price and the sale price of the unit is not permitted to exceed 7% of the sale price.

ADVERTISEMENT MATERIAL

The advertisement for each scheme shall disclose investment objective for each scheme.

An advertisement shall be truthful, fair and clear and shall not contain a statement, promise or

forecast which is untrue or misleading.

Advertisements shall not be so framed as to exploit the lack of experience or knowledge of the

investors.

All advertisements issued by a mutual fund or its sponsor or Asset Management Company shall

state, "all investments in mutual funds and securities are subject to market risks and the NAV of

the schemes may go up or down depending upon the factors and forces affecting the securities

market".

The advertisement shall not compare one fund with another, implicitly or explicitly, unless the

comparison is fair and all information relevant to the comparison is included in the

advertisement.


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MISLEADING STATEMENTS

The offer document and advertisement materials shall not be misleading or contain any statement

or opinion, which are incorrect or false.

LISTING OF CLOSE-ENDED SCHEMES

Every close-ended scheme shall be listed in a recognized stock exchange within six months from

the closure of the subscription.

Provided that listing of close-ended scheme shall not be mandatory

if the said scheme provides for periodic repurchase facility to all the unit holders with restriction,

if any, on the extent of such repurchase; or

if the said scheme provides for monthly income or caters to special classes of persons like senior

citizens, women, children, widows or physically handicapped or any special class of persons

providing for repurchase of units at regular intervals; or if the details of such repurchase facility

are clearly disclosed in the offer document; or if the said scheme opens for repurchase within a

period of six months from the closure of subscription.

REPURCHASE OF CLOSE-ENDED SCHEMES

The asset management company may at its option repurchase or reissue the repurchased units of

a close-ended scheme.

The units of close-ended schemes referred to in the provision to regulation 32 may be open for

sale or redemption at fixed pre-determined intervals if the maximum and minimum amount of

sale or redemption of the units and the periodicity of such sale or redemption have been

disclosed in the offer document.


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INFRASTRUCTURE MUTUAL FUND0000000000000000000

INFRASTRUCTURE MUTUAL FUNDSAn Infrastructure fund is a managed vehicle through which investors gain exposure to the

underlying characteristics of infrastructure assets. Infrastructure is emerging strongly as an asset

class which can be particularly well suited to pension funds and other investors with a long-term

outlook. Infrastructure assets tend to display comparatively stable, long-term real return and

provide a good match for longdated liabilities.

They invest in private infrastructure companies, but the fnds themselves can be isted or unlisted.

For example, Macquarie has been investing in infrastructure for more than a decade and now

manages over 20 infrastructure funds around the world. Half of these are listed on the stock

exchange, with investors from pension funds and other institutions to retail investors. The rest

are unlisted funds in which the investors are largely pension funds and other institutions.

The fund tens to either specialize in one class of infrastructure - for example invest only in

airport or only in toll-roads or they invest across various infrastructure ectors which meet

specified investment criteria. For example

The infrastructure assets can include telecommunications and broadcast nfrastructure, utilities,

toll road, airport and other transport infrastructure. Fundamentally, infrastructure assets are

distinguished by displaying the following ey characteristics:

Provide essential community services Have strategic competitive advantage Have predictable long-term cash flow


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These characteristics lead to the investment benefits outlined below.

Infrastructure assets display unique characteristic. Their essential and long-term nature,

combined with strong competitive position, lead to stable and predictable consumer demand and

cash generation. These assets tend to have a high fixed capital base with comparatively low

operating costs on average of between 10% and 30% of revenue. Along with the long-term

operating license and predictable demand, often in a regulated environment, this allows the

manager to forecast cashflows with accuracy.

Infrastructure assets have a low correlation to equity markets and other asset classes. For the

reason, it can provide valuable diversification in an investment portfolio. It also provides a good

match for the long-dated liabilities of ension funds due its long-life and inflation protected

returns. This stability in operating cashflows can reduce the overall volatility of returns for

investors and, in our experience; investors are finding this combination of sustainable yields,

lower volatility and inflation-linked return increasingly appealing.

But there are only five that have a sizeable money under management; and these four were

launched before 2006:

These funds include:

1.DSP ML TIGER Fund

2. Prudential ICICI Infrastructure Fund

3. Tata Infrastructure Fund

4. UTI Thematic Infrastructure Fund

These are are open-ended funds; this means you can invest in them whenever you like. We

expect some more infrastructure funds to hit the market but most of them would be close-ended


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(in open-ended funds, investors are free to sell their units anytime; in close-ended funds,

investors cannot sell their units for a minimum period of time -- this minimum period is decided

by the fund).

INFRASTRUCTURE MUTUAL FUNDS

Infrastructure, as a theme, covers several sectors like power utilities, power equipment and

construction companies best, technology sector funds could software stocks it traditionally

invests in), infrastructure funds are a few sectors.


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DSP Merllynch Tiger Fund

Here's a fund suitable for all types of investors. The aggressive ones will like the returns it offers

while the conservative ones will find peace in its diversification.

DSP T.I.G.E.R. Fund was launched at a very opportune time when the Sensex was around begun

to witness high grow launched in April 2004. In the past four years DSP India has performed

excellent and has become one of the best funds for the investor. open ended fund which can Its

Market capitalization as at 31/03/08 was 19,005.59 cr. Its

The broad investment mandate, large alleviate all their fears. An acron Reforms, the fund focuses

on sectors that are likely to prosper from growth related to economic reforms and infrastructure

development. With this as a starting point, the fund manager follows a top resorting to bottom-up

stock picking. Unlike other infrastructure offerings, its broader mandate has enabled it to tap into

sectors that core infrastructure funds do not - healthcare, FMCG, textiles, consumer non-

durables.

ICICI Prudential Infrastructure Fund


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ICICI Prudential Infrastructure has protected the downside well while growing at a fast pace. In

fact the fund emerged as the fourth best diversified in 2006.

ICICI Prudential Infrastructure fund was launched in

August 2005. It is an open ended fund having market

capitalization last 52 weeks highest NAV was 36.61.

UTUAL FUNDS

As infrastructure funds go, the fund is structured to exclude technology, FMCG and

pharmaceutical companies. But beyond this similarity, there exist discernible characteristics in

the fund's portfolio that set based funds.

Tata Infrastructure Fund

Tata Infrastructure Fund is one of the best fund and highly rated

fund. It has 2004.

It is an open ended fund having market capitalization of Rs. at

31/03/08. Its last 52 weeks highest NAV was 45.515 and lowest was

23.1237.

The fund achieved this essentially on the back of a large with some help from the mid caps. To

some extent one can attribute this stellar performance to the sector exposure that most

infrastructure funds maintain. But the real clincher had been the f has truly augmented the fund's

returns.


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UTI Thematic Infrastructure Fund

Indias infrastructure sector is expected to witness huge investments in the coming years. To

enable you to take advantage of this Infrastructure Advantage Fund.

As a 3 year close ended fund it focuses on investing in high growth infrastructure sectors

such as Airports, Banking, Construction, Engineering, Energy, Mining, Ports and Power among

others. The category pioneer, UTI Infrastructure has been going great guns. A runaway hit in

2005 and an exemplary success in 2006 & 2007, the fund is on a roll with the future looks just as

promising. he first infrastructure fund to be launched, it was a classic example of the early bird

getting the worm. It found a spot in the top quartile of the category in 2005, generating 57 per

cent returns and outdoing the average peer by a marginLapart from other infrastructure recently

received as a best equity fund award by CRISIL. It is considered as one of the best infrastructure

fund. TATA Infrastructure's astute ability to spot sector trends has handsomely. Tata

Infrastructure Fund was launched in December . 24,081.68 cr. As s large-cap growthwith fund

manager's ability to spot sector trends which boom, UTI now launches the UTI delivered

oriented focus, fund of more than 10 per cent. In 2006, it leapt to the topmost slot with returns of

61.48 per cent .


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REVIEW OF LITERATURE

Repositioning leading stock broker:

Kint Dorwin (1988) in his study, the strategic planner of the largest American discount security broker,

describes how a comparatively young firm took steps to re- position itself in the market so as not to be

caught unaware by the problems of encroaching maturity. The lessons of the exercise are: listen to the

customers, examine the competition and stake out the ground you intend to hold in the future.

Merging service quality and service satisfaction- an empirical test of an

integrative model:

Ko de Ruyter, Jose bloomer and Pascal Peeters (1997) in their study, recent research linking service

quality and service satisfaction has raised issues which require conceptual and empirical elaboration.

Among these are the conceptual overlaps as well as distinctions between these two customers

judgments, the role of expectations and perceptions and the question whether service satisfaction is a

super ordinate concept to quality or vice versa. In the article, an integrative model is presented in

which both concepts and their antecedents are delineated on the basis of conceptual advances made in

the services marketing literature recently.

Share trading on the web: a comprehensive review of design specifications

across the globe:

Robert Hudson, Kevin keasey, and Kevin Littler (2000) in their study, they had given the rapid increase,over the past couple of years, of share dealing services available on the web. This paper describers the

findings of a research study into the design specification of web based (net) share trading sides. The

purpose of the research is to highlight the key features of net trading sites across the globe and to

identify best of breed examples of the features. The research is based on the latest available literature

and a review of the majority of the sites across the globe.


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RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data collection

was given more importance since it is overhearing factor in attitude studies. One of the

most important users of research methodology is that it helps in identifying the

problem, collecting, analyzing the required information data and providing an

alternative solution to the problem .It also helps in collecting the vital information that is

required by the top management to assist them for the better decision making both day

to day decision and critical ones.

Data sources:

Research is totally based on primary data. Secondary data can be used only for the

reference. Research has been done by primary data collection, and primary data has

been collected by interacting with various people. The secondary data has been

collected through various journals and websites.

Sampling:

The sample size of my project is limited to 100 people only. Out of which only 20 people

had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.

Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.


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Research Methodology is away to systematically solve the research problem. It may understand as a

science of studying how research is done scientifically. In it various steps that are generally adopted

by a researcher for his research problem along with logic behind them.

RESEARCH DESIGNMy study is based on descriptive type of research design. It includes surveys & fact-finding enquiries

of different kinds. Its major purpose is description of the state of affairs as it exists as present.

DATA COLLECTIONThe success of research projects depends upon data. In any research program data collection is very

important, which is of two types: -

Primary Data :-Questionnaires, Observation, Interview.

Secondary Data :-Magazines, Internet, Brochures, Previous Reports, Manuals.

SAMPLE DESIGN SAMPLE SIZE: - 50 people from different locations of Dehradun.

SAMPLE AREA:- DEHRADUN

SAMLE TECHNIQUES:- Non Random Sampling


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DATA ANALYSIS

MARKET CAPITALISATION

KET CAPITALIZATIONThe above graph shows that ICICI Prudential Infrastructure Fund has maximum fund under

management as compared to other fund houses. It is followed by UTI Infrastructure fund, Tata

Mutual Fund and DSP Merllynch Tiger Fund respectively.


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MEAN & STANDARD DEVIATIONMEAN & STANDARD DEVIATION OF THE FUNDS

Calculated value of Mean andfund is shown in the chart below:

Mean Calculated above is for the period of past one year. We can see that there is not much

difference between the returns of these mutual funds. T.I.G.E.R fund has provided maximum

return of 4 been most successful fund for the past DSP Merllynch T.I.G.E.R fund it is the least

volatile fund of th earner and comparatively low risk earner highest return with least volatility.


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If Beta less than 1 means, the security will be less volatile than the market. A beta of greater than

1 indicates that the security's price will be more volatile than the market. As seen from the above

table UTI Infrastructure Fund is most volatile followed by Tata, DSP and ICICI Prudential

respectively. Now if market rise, UTI Infrastructure Fund will rise at faster rate than other fund,but if market falls, UTI Infrastructure Fund will fall at faster rate too.

Treynor ratio is a risk-adjusted measure of return based on systematic risk. Greater the value of

Treynor Ratio, better is the fund. Here again ICICI Prudential Infrastructure fund scores higherthan other funds.

Expense Ratio allowed by SEBI is 2.5% of the total asset under management. All the above

funds mentioned are below the mentioned ratio. But UTI Infrastructure fund is having maximumexpense ratio of 2.03%. Here again ICICI Infrastructure fund has least expense ratio. The reason

might be that it is well established fund house and hence requires comparatively less expense in

marketing expenditure.

PORTFOLIO ANALYSIS


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Portfolio of the fund describes compositions of various industries equity shares. Mutual funds

have much diversified portfolio as per the requirement of the fund. Infrastructure fund has

majority of its portfolio in industries like Energy, Engineering, Metal, Construction, and

Technology Industries.

IS


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There has been quite rational move by all the fund houses in including and excluding right firm

in their portfolio. ICICI Prudential made a huge change in its portfolio by introducing 4 new

companies and withdrawing from 4 existing companies. It invested into companies like ONGC,

Gujarat Ambuja Cement ltd, India Cement Ltd and Mahindra & Mahindra Ltd, all having huge

market potential. It let away with HDFC, GAIL which are at the moment hit by the market

factors.


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Both UTI & DSP Merllynch had similar changes this month with both buying the share of

Reliance Industries Infrastructure Ltd shares and selling Reliance Energy. DSP Merllynch

T.I.G.E.R Fund also purchased some shares in Idea Cellular Ltd. It is expected that Idea Cellular

is expected to do well in the recent future; hence it might be a good move.

Tata Infrastructure also did a positive move by Reliance Petroleum which is expected to do well.

Bharti Airtel is expected to merge with MTN of South Africa. This merger is expected to benefit

Bharti Airtel by giving global markets. Hence itll help its shareholder.

COMPARISION W

I


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The above shown graph describes the movement of the selected infrastructure funds with the

benchmark. Here the benchmark chosen in BSE Sensex. The data selected for the above graph is

for the past1 year. investing into Bharti Airtel and ARHMARK INDEX


It can be seen that when the BSE Sensex was on the rise, all the funds were

performing extremely well. The return is well above 100%. It can be seen that Tata Infrastructure

Fund was performing extremely well till Dec 07. It had provided maximum return as compared

to other fund houses and was rated best fund of the year by CRISIL and ICRA.

But when Sensex crashed in the January 08 we saw a steep fall in all the funds.

The fall was more the 100% to the Sensex. Thereafter, there was change in the high performer

with ICICI Infrastructure fund out performing other infrastructure funds. It can be seen in the

graph that ICICi Infrastructure performing best followed by Tata Mutual Fund, UTI

Infrastructure Fund and DSP Merllynch Fund.

COMPARSION WITH THE BENCHMARK INDEX

EQUITY MUTUAL FUNDS

EQUITY FUNDSThe term Equity Investment refers to the buying and holding of stocks in the stock market by

individuals & companies, then expecting income from dividends and capital gains when there is

a rise in the stock value. It also refers to the acquirement of ownership / equity participation in a

start-up company or a private company. When you invest in a start-up company, the investment

is termed as Venture Capital and is likely to be at a higher risk than the on-going concerns.

The Equity Funds, also known as Stock Fund, is a fund that invests in equities / stocks. These

funds are generally held in stock or cash unlike securities or bonds. This may be done by means


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of a mutual fund or exchange traded fund. The main objective of investing in an equity fund is to

have long-term growth via capital appreciation apart from dividends and interest as sources of

revenue. Explicit equity funds may have their focus on specific market sector and also include

certain amount of risk.

The Equity Funds are either via the mutual funds or by any other pooled investment vehicle.

These vehicles have their prices quoted, listed and publicized. The mutual funds are generally

under the management of renowned fund management firms. Under these types of holdings, the

investors can have diversified funds with the help and services of skilled professionals known as

fund managers. These fund managers are in charge of these funds.

Each equity fund can be distinguished from the other. For example, a fund can be growth

specific or and another can value specific. These funds can be invested only in securities from

one or more countries. Fund managed by the fund managers are actively managed and the Index

Fund reflects the specific market indices.


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HDFC Top 200 fund has the highest market capitalization as compared to other funds. Reliance

being the oldest fund has not been able to attract large number of investors. Tata P/E Equity fund

has the lowest market capitalization. The reason may be, it is the youngest fund of the lot

launched in December 2004.


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t

hrough Mean & Standard

In the above show chart, we can see SBI Magnum Contra Fund out performing other funds. It

has given a average return of 42.24 in the past 1 year followed by Reliance Growth Fund, HDFC

Top lowest average mean of 37.71.

While calculating their standard deviation, we see HDFC Top 200 having least SD of all. It

means that HDFC is least volatile fund of the lot. The most volatile fund is Reliance Growth

Fund. Tata is also on the higher side with SD of 27.14.


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So looking at the above chart, we can say that SBI Magnum is better fund as its average return is

highest and SD is low, though not lowest.

0

10


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Looking at the above given data, we have quite mixed reactions about these funds.

Beta of three funds is less than 1. It means that if market falls, there will comparatively small fall

in these funds, while if the market rises, there rise will also be comparatively less. So we can say

that these funds are less risky but will also give less return. Tata P/E equity fund is having beta of

more than 1 i.e. 1.01, which means 100% change in market will bring 101% change in the fund.

So this is comparatively more risky fund but is expected to give higher return. In the present


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market scenario where it is very difficult to say if market would rise or fall, it is very hard to say

whether a fund should have Beta more than 1 or less than 1.

Sharpe Ratio shows smart portfolios composition. HDFC Top 200 is having the highest Sharpe

Ratio of 1.44, followed by SBI Magnum Contra Fund, Reliance Growth Fund and Tata P/E

Equity Fund. Tata P/E is having the least at 1.19 which refers this fund as high returns but with

high risk.

Treynor Ratio measures returns earned in excess of that which could have been earned on a

riskless investment per each unit of market risk. Reliance Growth fund out scores other funds in

this ratio with Treynor Ratio equal to 1.41, followed by Tata P/E Equity Fund at 1.28, SBI

Magnum Contra Fund at 1.18 and HDFC Top 200 at 0.97.

The Sortino ratio measures the risk-adjusted return of an investment asset,

portfolio or strategy. The ratio is the actual rate of return in excess of the investor's target rate of

return, per u

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