marketing if financial services

7/28/2019 marketing if financial services

http://slidepdf.com/reader/full/marketing-if-financial-services 1/25

Mutual Funds in India• C. Private Sector

2. Foreign

- AIG Global Asset Management Company (India) Pvt.

Ltd.- BNP Paribas Asset Management India Private Limited

- FIL Fund Management Private Limited

- Franklin Templeton Asset Management (India) PrivateLimited

- Goldman Sachs Asset Management (India) PrivateLimited

- Mirae Asset Global Investments (India) Pvt. Limited

- Pramerica Asset Managers Private Limited




3. Joint Ventures - Predominantly Indian

- Birla Sun Life Asset Management Company

Limited

- DSP BlackRock Investment Managers Private

Limited- HDFC Asset Management Company Limited

- ICICI Prudential Asset Mgmt.Company Limited




4. Joint Ventures - Predominantly Foreign

- AEGON Asset Management Company Pvt. Ltd.

- Bharti AXA Investment Managers Pvt. Ltd.- HSBC Asset Management (India) Private Ltd.

- ING Investment Management (India) Pvt. Ltd.

- JPMorgan Asset Management India Pvt. Ltd.

- Morgan Stanley Investment Management Pvt. Ltd.

- Principal Pnb Asset Management Co. Pvt. Ltd.

- Shinsei Asset Management (India) Pvt. Ltd.



Terminology• Asset Allocation

– Diversifying investments in different assets such as stocks, bonds, real estate,cash in order to optimize risk.

• Fund Manager

– The individual responsible for making portfolio decision for a mutual fund, in

line with fund’s objective.• Fund Offer Document

– Document with investment objectives, risk factors, expenses summary, how toinvest etc

• Dividend

– Profits given to the investor from time to time.

• Growth

– Profits ploughed back into scheme. This causes the NAV to rise.• NAV

– Market value of assets of scheme minus its liabilities.



Terminology• Entry Load/Front-End Load

– The commission charged at the time of buying the fund.– To cover costs for selling, processing

• Exit Load/Back- End Load– The commission or charge paid when an investor exits from a mutual fund.

Imposed to discourage withdrawals– May reduce to zero as holding period increases.

• Sale Price/ Offer Price– Price you pay to invest in a scheme. May include a sales load. (In this case, sale

price is higher than NAV)

• Re-Purchase Price/ Bid Price–

Price at which close-ended scheme repurchases its units

• Redemption Price– Price at which open-ended scheme repurchases its units



Types of Mutual Fund Schemes• By Structure

– Open-Ended – anytime enter/exit

– Close-Ended Schemes – listed on exchange, redemption after period of scheme is over.

• By Investment Objective

– Equity (Growth) – only in Stocks – Long Term (3 years or more)

– Debt (Income) – only in Fixed Income Securities (3-10 months)

– Liquid/Money Market (including gilt) – Short-term Money Market (Govt.)

– Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)

• Other Schemes

– Tax Saving Schemes

– Special Schemes like ULIP



Types of Funds - By StructureOPEN ENDED FUNDS CLOSE ENDED FUNDS

Investors can buy and sell units of the

fund, at any time, directly from the fund.

It is open for sale only for a specified

period, after which further sales are

closed.

They are traded at NAV related prices. They are traded at a discount to NAV.

The corpus keeps on changing. The corpus of closed ended funds

remains unchanged.

The unit capital is not fixed but variable. The unit capital is fixed, one time sale.

Any time redemptions always allowed,

except when there is lock in period.

Redemption of Units on expiry date



Mutual Fund ProductsGROWTH

SCHEMES

INCOME

SCHEMES

BALANCED

SCHEMES

LIQUID/

MM SCHEMES

Objective To provide capital

appreciation over

the medium to

long term

To provide regular

and steady

income to

investors

To provide both

growth and

income

To provide easy

liquidity,

preservation of

capital and

moderate

income.

Ideal For Investors in their

prime earning

years.

Investors seeking

growth over long

term.

Retired people &

others in need of

regular secured

income

Investors looking

for a combination

of income and

moderate growth

Corporates

&individuals as a

means to park

their surplus

funds for short

periods.



Risk High

Risk Low MMMF

Gilt Funds

Debt Funds

Balanced Funds

Index Funds

Diversified Equity Funds

Sector Funds

Low returnLow return High returnHigh return

Risk Return Hierarchy of Different Funds



Equity Funds• Diversified equity funds

• Index funds

•Value funds

• Mid-cap funds

• Equity-linked savings schemes(ELSS)

• Sector funds like Auto, Health Care, FMCG etc

• Dividend Yield Funds

• Others (Exchange traded funds etc)



Equity Linked Savings Scheme (ELSS)

• 3 year lock in period

• Minimum investment of 90% in equitymarkets at all times

• Eligible u/s 80 C upto Rs.1 lakh

• Dividends are tax free

• Benefit of Long term Capital gain taxation• Ideal for Investors seeking tax incentives



Index Fund & Exchange Traded Fund(ETF)• Simplest and least risky of all equity funds.

• Investment in all the scrips and in exactly the same proportion as the scrips liein their underlying benchmark index

• While an index fund buys and sells scrips on the stock exchanges, an ETF

(Exchange Traded Fund) appoints market participants• They exchange a basket of securities (whose composition exactly matches that

of the benchmark index) against the ETF unit. These ETF units are then tradedon stock exchanges like stocks

• While index funds can be bought or sold from the MF or through an agent likeany other ordinary scheme, ETFs can only be bought and sold on exchanges,therefore you need a DEMAT account to buy/sell them.



Debt Funds

••CorporateCorporate BondBond fundsfunds

••GiltGilt fundsfunds

•• FloatingFloating raterate fundsfunds

••BondBond indexindex fundsfunds



Mutual Funds vs Other InvestmentsWhat does one look for while investing

• Safety

• Regulatory Framework

• Return – Absolute/Inflation adjusted

• Liquidity

•Tax Savings

• Future Financial Planning

• Ease of Management



Mutual Funds vs Other InvestmentsOther Investment Options

• Bank Deposits

• Post Office Deposit Schemes

• Public Provident Fund(PPF)

• Govt/Infrastructure Bonds

• Direct Equity

• Insurance/ULIPs• Real Estate

• Gold & Precious Stones



Fund Structure



Fund Structure•• A mutual is set up in the form of a trust which hasA mutual is set up in the form of a trust which has

(i)(i) SponsorSponsor

(ii)(ii) TrusteesTrustees

(iii)(iii) Asset Management Company (AMC)Asset Management Company (AMC)

(iv) Custodian(iv) Custodian•• The sponsors set up the trust as promotersThe sponsors set up the trust as promoters

•• The trustees hold the property in trust for the benefit of theThe trustees hold the property in trust for the benefit of theunitholdersunitholders. They are vested with general powers of . They are vested with general powers of superintendence and direction over the AMC and they monitorsuperintendence and direction over the AMC and they monitortheir performance and compliance with the SEBI regulations.their performance and compliance with the SEBI regulations.

•• The AMC manages the funds.The AMC manages the funds.

•• The custodian holds the securities of the fund in its custody.The custodian holds the securities of the fund in its custody.



Fund Structure• The Mutual Fund is constituted as a trust in

accordance with the provisions of the IndianTrusts Act, 1882 by the Sponsor.

•• The instrument of trust should be in the formThe instrument of trust should be in the formof a deed duly registered and executed by theof a deed duly registered and executed by thesponsor insponsor in favourfavour of the trusteesof the trustees under theIndian Registration Act, 1908.

•• The contents of the trust deed have beenThe contents of the trust deed have beenprescribed by the SEBI.prescribed by the SEBI.



Registration of Mutual FundsRegistration of Mutual Funds•• To carry on their business, mutual funds mustTo carry on their business, mutual funds must

be registered with the SEBI.be registered with the SEBI.

•• The registration is granted on the fulfillmentThe registration is granted on the fulfillmentof the prescribed eligibility criteria for theof the prescribed eligibility criteria for the

sponsors in terms of track record, contributionsponsors in terms of track record, contribution

to the net worth of the AMC, appointment of to the net worth of the AMC, appointment of

trustees, AMC and custodian.trustees, AMC and custodian.



Sponsor• Sponsor is the person who acting alone or in

combination with another body corporate establishes amutual fund.

• Sponsor must contribute at least 40% of the net worthof the Investment Managed and meet the eligibilitycriteria prescribed under the Securities and ExchangeBoard of India (Mutual Funds) Regulations, 1996.

• The Sponsor is not responsible or liable for any loss orshortfall resulting from the operation of the Schemesbeyond the initial contribution made by it towardssetting up of the Mutual Fund.



Trustees• The trustees are vested with the general power of

superintendence and direction over AMC. Theymonitor the performance and compliance of SEBI

Regulations by the mutual fund.• The main responsibility of the trustees is to safeguard

the interest of the unit holders and inter alia ensurethat the AMC functions in the interest of investors andin accordance with the Securities and Exchange Boardof India (Mutual Funds) Regulations, 1996, theprovisions of the Trust Deed and the Offer Documentsof the respective Schemes.



Appointment of TrusteesAppointment of Trustees•• A person can be appointed as a trustee on theA person can be appointed as a trustee on the fulfilmentfulfilment of of

the prescribed conditions, such as that he should be a personthe prescribed conditions, such as that he should be a personof ability, integrity and standing, who has not been guilty of of ability, integrity and standing, who has not been guilty of moral turpitude/ convicted of any economic offence/violationmoral turpitude/ convicted of any economic offence/violation

of any securities lawsof any securities laws•• TwoTwo--thirdsthirds of of thethe trusteestrustees of of aa mutualmutual fundfund mustmust bebe

independentindependent personspersons andand notnot associatedassociated withwith thethe sponsorssponsors ininanyany mannermanner.. TheThe trusteestrustees shouldshould enterenter intointo anan investmentinvestmentmanagementmanagement agreementagreement withwith thethe AMCAMC forfor thethe purposepurpose of of makingmaking investmentsinvestments..

•• TheThe trusteestrustees wouldwould havehave thethe rightright toto obtainobtain fromfrom thethe AMC,AMC, allallinformationinformation concerningconcerning thethe operationsoperations of of thethe variousvarious schemesschemesof of thethe mutualmutual fundfund managedmanaged byby itit..



Role & Responsibility of Asset Management Company•• The sponsor of the mutual fund/trustees would appointThe sponsor of the mutual fund/trustees would appoint

the AMC, with the prior approval of the SEBI.the AMC, with the prior approval of the SEBI.

•• Its appointment can be terminated by a majority of Its appointment can be terminated by a majority of

trustees or 75 per cent of thetrustees or 75 per cent of the unitholdersunitholders of the scheme.of the scheme.•• The eligibility criteria for the appointment of an AMCThe eligibility criteria for the appointment of an AMC

include sound track record, adequate professionalinclude sound track record, adequate professionalexperience, not guilty of moral turpitude, nonexperience, not guilty of moral turpitude, non--convictionconvictionfor any economic offence/violation of any securities laws,for any economic offence/violation of any securities laws,

inclusion of 50 per cent independent directors and netinclusion of 50 per cent independent directors and networth of at least Rs. 10worth of at least Rs. 10 crorecrore..



Role & Responsibility of Asset Management Company

•• AnAn AMCAMC cannotcannot actact asas aa trusteetrustee of of aa mutualmutual fundfund

•• ItIt cancan undertakeundertake otherother businessbusiness activitiesactivities inin thethe

naturenature of of portfolioportfolio managementmanagement services,services,managementmanagement andand advisoryadvisory servicesservices toto offshoreoffshore

funds/funds/ pensionpension funds/providentfunds/provident funds/funds/ ventureventure

capitalcapital funds,funds, managementmanagement of of insuranceinsurance funds,funds,

financialfinancial consultancyconsultancy andand exchangeexchange of of researchresearch onon aacommercialcommercial basis,basis, if if anyany of of thesethese activitiesactivities dodo notnot

conflictconflict withwith thethe activitiesactivities of of thethe mutualmutual fundfund..



Role & Responsibility of Asset Management Company•• ItIt isis obligatoryobligatory forfor anan AMCAMC toto taketake allall reasonablereasonable stepssteps

andand exerciseexercise duedue diligencediligence toto ensureensure thatthat thethe investmentinvestmentof of fundsfunds conformsconforms toto thethe provisionsprovisions of of thethe SEBISEBIregulationsregulations andand thethe trusttrust deeddeed..

•• ItIt cancan purchase/sellpurchase/sell securitiessecurities uptoupto aa maximummaximum of of 55 perpercentcent of of thethe total,total, throughthrough aa brokerbroker associatedassociated withwith thethepromoterpromoter..

•• ItIt isis requiredrequired toto disclosedisclose detailsdetails of of allall transactionstransactions

with/throughwith/through thethe sponsor/associatesponsor/associate companiescompanies..•• TheThe AMCAMC hashas toto filefile detailsdetails of of securitiessecurities transactionstransactions byby

itsits keykey personnelpersonnel inin theirtheir ownown namename oror onon behalf behalf of of thetheAMC,AMC, toto thethe trustees/SEBItrustees/SEBI..