Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Report On
Submitted by:-
Ashutosh
Suthar
BBA 2nd
year
Sekhawati College Of
Management and IT
SIKAR
(RAJ.)
Executive summary
A mutual fund is a fund in which an investor's money is
combined with the money of many other investors. The total
amount of money is invested by a professional manager
according to the specific mutual fund's investment objective.
Each investor holds a share of the total fund, and is entitled to a
portion of the profits of the fund (and, of course, would share in
any investment losses).
PREFACE
INTRODUCTION
”Mutual Fund are a pool of savings collected from a number
of small investors, sharing a common financial goal. The
money thus collected is invested by experienced
professionals called fund managers, according to the pre-
decided objectives in diverse types of securities like
Government sponsored Debentures and Bonds, shares of
public and private sector companies, bank guaranteed
instruments.
Thus a Mutual Fund is the most
suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with an investible
surplus of as little as a few thousand rupees can invest in
Mutual Funds. Each Mutual Fund scheme has a defined
investment objective and strategy.
A Mutual Fund is the ideal
investment vehicle for today’s complex and modern financial
scenario. Markets for equity shares, bonds and other fixed
income instruments, real estate, derivatives and other assets
have become mature and information driven. Price changes
in these assets are driven by global events occurring in
faraway places. A typical individual is unlikely to have the
knowledge, skills, inclination and time to keep track of
events, understand their implication and speedily. An
individual also finds it difficult to keep track of ownership of
his assets, investment, brokerage dues and bank transaction
etc.
A mutual fund is the answer to all
these situations.It appoints professionally qualified
experience staff that manages each of these functions on a
full time basis. The large pool of money collected in the fund
allows it to hire such staff at a very low cost to each investor.
MUTUAL FUND
BY STRUCTURE CLASSIFICATION:-
• Open ended fund: An open ended fund is one that is
available for subscription all through the year. These
don’t have a fixed maturity. Investors can conveniently
buy and sell units at Net Asset Value (NAV) related
prices. The key feature of open ended schemes is
liquidity.
OTHER SCHEMES
• TAX SAVING SCHEMES:-
What are the tax benefits for investing in mutual fund units?
• SPECIAL SCHEMES:-
SECTORIAL SCHEMES:-
Sectorial funds are those, which invest exclusively in a
specified industry or a group of industries or various
segments such as ‘A’ group shares or initial public
offerings.
INDEX SCHEMES:-
Index funds attempt to replicate the performance of a
particular index such as the BSE sensex or the NSE
50.
What is BSE & NSE?
BSE is an abbreviation of the Bombay Stock Exchange. Of the 22 stock exchanges
in India, Bombay Stock Exchange is the largest with over 6,000 stocks listed. The
BSE accounts for over two thirds of the total trading volume in the country.
Established in 1875, the exchange is also the oldest in Asia. It was the first one to
be recognised by the Government of India under the Securities Contracts
(Regulation) Act, 1956 and it is the only one that had the privilege of getting
permanent recognition ab-initio. The market capitalization of the BSE is Rs.5
trillion. The BSE `Sensex' is a widely used market index for the BSE.
The Exchange provides an efficient and transparent market for trading in equity,
debt instruments and derivatives. It aims to promote, develop and maintain a
well-regulated market for dealing in securities and to safeguard the interest of
members and the investing public having dealings on the Exchange.
FUNDS INDUSTRY:
The private sector entry to the fund family raised AUM to
Rs. 470 bn in March 1993 and till April 2004; it reached the
height of 1,540 bn.Putting the AUM of the Indian Mutual
Funds Industry into comparison, the total of it is less than the
deposits of SBI alone, constitute less than 11% of the total
deposits held by the Indian banking industry.
The main reason of its poor growth is that the mutual fund
industry in India is new in the country. Large sections of
Indian investors are yet to be intellectuated with the concept.
Hence, it is the prime responsibility of all mutual fund
companies, to market the product . Each phase is briefly
described as under.
Trustees
Trustees Mutual
MutualFund
Fund
(A(A
Trust)
Sponsors
Sponsors
(Holding property
(Holding of of
property Trust) (Promoters)
(Promoters)
fund)
fund)
Custodians
Custodians
(Safe custody
(Safe custodyof of
fund
fund
securities etc.)
securities etc.)
ASSEST MANAGEMENT
COMPANY
REGISTRAR INVESTMENT
AND TRANSFER ADVISORS
AGENT
FUND LEGAL
ACCOUNTING
ADVISORS
LEND FUND
MANAGERS MANAGER
AUDITORS
FUNCTIONS OF AMC:-
The major strength of any AMC lies in its investment function.
Investment function is specialized function which, depending on
operational strategies of AMCs, can further be divided into
specialized categories. The investment department may be classified
in four segments. These can be
1. Fund manager
2. Research and Planning cell
3. Dealer
4. Underwriter
FUND MANAGER:-
Asset Management Company manages the investment of
fund through a fund manager. AMC may evolve its own
criterion for number off fund managers. His basic function is
to decide about which, when, how much and at what rate
securities are to be sold or bought. To a great extent the
success of any scheme depends on the caliber of the fund
manager.
Many mutual funds especially in bank sponsored funds; the
entire investment exercise is not left to one individual. They
have created committees to handle their investments. One
such mutual fund has created two committees. First is
‘investment committee’ which is broad based committee
having even nominees of the sponsor? It collectively decides
about the primary market investment. This committee in
times to come has a prominent role to play in the success of
mutual funds especially in light of institutionalization of public
issues. Another line which mutual funds are curiously
looking to is fund participation in a venture even before it
goes public. Another line participation in a venture even
before it goes public. The intense competition in securing bid
for good new issue, has also led mutual funds to finance the
companies at embryonic stage. The second is ‘MARKET
OPERATION COMMITTEE’ having the assignment of
disinvestment and interacting with secondary market.
DEALER :-
To execute the sale and purchase transaction in capital or
money market, a separate section may be created under the
charge of a person called dealer having deep understanding
of stock market operations. Sometimes, this division is
under the charge of marketing division of AMC. Dealer is to
comply with all formalities of sale and purchase through
brokers. Such brokers are to be approved by board of
directors of AMC.
UNDERWRITER:-
Recently mutual funds have been permitted by SEBI to go in
for understanding of public issues to generate additional
income for their schemes. Activity will be subject to the
following understanding restrictions:
INTRODUCTION
What is ULIP?
Unit linked life insurance plan provides you the opportunity
to participate in market linked returns while enjoying the
valuable benefits of life insurance.This plan enables you to
protect your loved ones, while making your money grow.
Your premiums are invested in units of the investment fund
(equity, debt, money market, security bonds etc.)of your
choice, based on the prevailing unit price.On maturity you
receive the value of your units.On death you receive the
greater of the value of your units and your selected basic
sum assured.A policy,which provides for life insurance
where the policy value at any time varies according to the
value of the underlying assets at the
time.
Funds of ULIP
MF Vs ULIP
Mutual funds are essentially short to medium term products.
The liquidity that these products offer is valuable for
investors. ULIPs, in contrast, are now positioned as long-
term products and going ahead, there will be separate
playing fields for ULIPS and MFs, with the product
differentiation between them becoming more pronounced.
ULIPs do not seek to replace mutual funds, they offer
protection against the risk of dying too early, and also help
people save for retirement. Insurance has to be an integral
part of one's wealth management portfolio. Further,
exposure of Indian households to capital markets is limited.
ULIPs and mutual funds are, therefore, not likely to
cannibalise each other in the long run. While ULIPs as an
investment avenue is closest to mutual funds in terms of
their functioning and structure, the first and foremost
purpose of insurance is and will always be 'protection'. The
value that it provides cannot be downplayed or
underestimated
As per IRDA's new guidelines, which
came into effect on July 1, there has to be a minimum lock-in
period of three years for ULIPs, a minimum term of atleast
five years and the death benefit payable or sum assured
under the single-premium product has to be at least 125 per
cent of the single premium paid, among other major policy
changes. The new guidelines will stop ULIPs being
positioned as short term investments products, and they will
look less like mutual funds and more like insurance policies.
New ULIPs now come with a minimum term value of five
years, whereas in mutual fund’s ELSS there is a lock-in
period of just three years. If an investor decides to withdraw
money from ULIP after three years, the amount depends on
the surrender value given by the company.
For instance:- ULIP and a mutual fund, giving the same return of 20% per
annum. The insurance company charges 40% of the first year's premium as
selling expenses and 5% of premium every year as administrative charges.
A person buys a unit-linked policy for 20 years, with a life coverage of Rs 20
lakh, and pays a premium of Rs 1 lakh per annum.
In first year, Rs 40,000 will be deducted from his premium as commission, and
Rs 5,000 as administrative charge. If the person's age is 30, the mortality
charge of Rs 2,763 will also be deducted.
But when his investment in Mutual Fund then
he pays only 2.25% as entry load.
• You have to invest for atleast 3 years in ULIP, but MFs are
not like that
FIRST
SECOND THIRD
CATEGORY
CATEGORY CATEGORY
FIRST CATEGORY
SECOND CATEGORY
THIRD CATEGORY
Out of ten public sector players five will sell out, close down
or merge with stronger players in three to four years. In the
private sector this trend has already started with two
mergers and one takeover. Here too some of them will down
their shutters in the near future to come.
But this does not mean there is no room for other players.
The market will witness a flurry of new players entering the
arena. There will be a large number of offers from various
asset management companies in the time to come. Some
big names like Fidelity, Principal, and Old Mutual etc. are
looking at Indian market seriously. One important reason for
it is that most major players already have presence here and
hence these big names would hardly like to get left behind.
The mutual fund industry is awaiting the introduction of
derivatives in India as this would enable it to hedge its risk
and this in turn would be reflected in it’s Net Asset Value
(NAV).
SEBI is working out the norms for enabling the existing
mutual fund schemes to trade in derivatives. Importantly,
many market players have called on the Regulator to initiate
the process immediately, so that the mutual funds can
implement the changes that are required to trade in
Derivatives.
Global Scenario
• India has around 1.6 million net users who are prime
target for these funds and this could just be the beginning.
The Internet users are going to increase dramatically and
mutual funds are going to be the best beneficiary. With
smaller administrative costs more funds would be mobilized
.A fund manager must be ready to tackle the volatility and
will have to maintain sufficient amount of investments
which are high liquidity and low yielding investments to
honor redemption.
Investment Managers:
SBI FUNDS MANAGEMENT PRIVATE LIMITED
63% 37%
ORGANISATIONAL STRUCTURE OF
SBI MUTUAL FUND
CEO
NATIONAL VICE
CIO
SALES HEAD PRESIDENT
BRANCH
FUND MANAGERS
MANAGERS
NORTH EAST
DELHI U.P.
PUNJAB
RAJASTHAN JAIPUR
SWOT ANALYSIS
STRENGTHS:-
1.) Brand Name:
• The biggest strength is the tag of SBI is going to be the
largest banking group of finance industries.
1. Compatible Price:
Prices of different schemes of SBI Mutual Funds are much
more compatible than others.
2. Diversified Schemes:
We have diversified schemes which are an exception case of
SBI Mutual Fund.
3. Less Risk:
Our debt schemes are 100% free form market risk. Even as
our portfolio is that diversified so equities are also less risky
than others.
2. Tough Competitions:
There is a very tough competition because of large number of
Asset Management Companies.
OPPORTUNITIES:-
1. Hoarding:
Most of the Indians have black money that too in huge
amount i.e. the do not have money in banks, so approaching
them is beneficial.
4. Branch Expansion:
Large no. of branches are opening day by day and even we
are traping the countries having almost same type of socio-
economic condition & even same culture etc.
THREATS:-
Regulatory Aspects
General Obligations:
• Every asset management company for each scheme
shall keep and maintain proper books of accounts,
records and documents, for each scheme so as to
explain its transactions and to disclose at any point of
time the financial position of each scheme and in
particular give a true and fair view of the state of affairs
of the fund and intimate to the Board the place where
such books of accounts, records and documents are
maintained.
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.
• 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 ten per cent of any company's paid up capital
carrying voting rights.
• 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.
BOOKS:
MAGAZINES:-
1 Business world.
2 Money Outlook
3 Business Today
4 Offer Documents of Different Schemes.
NEWSPAPERS:-
1. Economic Times.
WEBSTIES:
1) WWW.AMFIINDIA.COM
2) WWW.SBIMF.COM