The ready reckoner

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 TOPIC 1:CONCEPT AND ROLE OF MUTUAL FUNDS

SECTION ONE : CONCEPT AND ADVANTAGES

Emergence
 Because financial market become sophisticated and complex.
 In USA Mutual fund industry has overtaken banking industry

Concept of a MF
 Common pool of money
 Joint or “mutual” ownership
 Units are the representation of ownership

Constitution
 In US MF is constituted as an investment company.
 In India MF is constituted as a trust.

Advantages
 Portfolio diversification
 Professional management
 Reduction/diversification of risk
 Reduction of transaction carts
 Liquidity
 Convenience and flexibility

Disadvantages
 No control over cost
 No tailor-made portfolio
 Managing a portfolio of fund

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SECTION TWO: HISTORY OF MF IN INDIA

PHASE I – 1964 – 87 (UTI)

 MF Industry started in India in 1963 with formation of UTI
 Asset under management in 1987- 88: Rs. 6700 crores
 Launch of First Scheme - US 64
 Followed by ULIP in 1971, CGGA (1986), Mastershare (1987)
 UTI was the only player in the market enjoying monopoly position
 Huge mobilization on funds.

PHASE II – 1987 – 93 (Entry of Public Sector Funds)

 Establishment of SBI MF – the first non UTI MF.
 Followed by Canbank MF, LIC MF, BOI MF.
 Change in the mindset of the investors
 UTI was still the undisputed leader of the market.

PHASE III – 1993 –1996 (Emergence of Pvt. Funds)

 Entry of the Pvt. Sector funds in 1993
 JV of foreign fund management companies with Indian promoters
 Competition increased investors servicing techniques
 Investors started becoming selective.

PHASE IV – (SEBI Regulation for MF) 1996

 SEBI -the regulatory authority
 UTI comes under SEBI regulation voluntarily
 Government’s step for investor’s protection

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 SECTION THREE – TYPES OF FUNDS

(I) Closed-end or Open-end

Open-end Funds
An open-end fund is one that has units available for sale and repurchase at
all time. An investor can buy or redeem units from the fund itself at a price
based on the Net Asset Value (NAV) per unit.

Close-end Funds
A close ended fund makes a one-time sale of a fixed number of unit. It does
not allow investors to buy or redeem units directly from the funds.
However, to provide liquidity to investors many closed-end funds get
themselves listed on stock exchange.

Funds do offer “buy-back of funds/units” thus offering another avenue for

liquidity to closed-end fund investor.

(II) Load vs. No Load

Marketing of a new mutual fund scheme involves initial expense. These

expenses may be recovered from the investors in different ways at different
times. Three usual ways in which a fund’s sales expenses may be recovered
from the investors are:

1. At the time of investor’s entry into the fund/scheme, by deducting

a specific amount from his initial contribution: front-end or entry
load.
2. By charging the fund/scheme with a fixed amount each year,
during the stated number of years: deferred load.
3. At the time of the investor’s exit from the fund/scheme, by
deducting a specific amount from the redemption proceeds
payable to the investor: back end or exit load

These charges made by the fund managers to the investors to cover

distribution/sales/marketing expenses are often called “loads”. Funds that
charge front-end, back-end or deferred loads are called load funds. Funds
that make no such charges or loads for sales expenses are called no-load
funds.

In India, SEBI has defined a “load” as the one-time fee payable by the
investor to allow the fund to meet initial issue expenses including
brokers’/agents’/distributors’ commissions, advertising and marketing
expenses.

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 A load fund’s declared NAV does not include load charges

III. Tax-exempt vs. Non-Tax exempt Funds

Generally, when a fund invests in tax-exempt securities, it is called a tax-
exempt fund. In India, after the 1999 Union Government Budget, all of the
dividend income received from any of the mutual funds is tax-free in the
hands of the investors. However, funds other than Equity Funds have to
pay a distribution tax, before distributing income to investors. In other
words, equity mutual fund schemes are tax-exempt investment avenues,
while other funds are taxable for distributable income.

Mutual Fund Types

Once we have reviewed the fund classes, we are ready to discuss more
specific fund types. Funds are generally distinguished from each other by
their investment objectives and types of securities they invest in.

a. Broad Fund Types by Nature of Investments

Mutual funds may invest in equities, bonds or other fixed income
securities, or short-term money market securities. So we have Equity,
Bonds and Money Market Funds. All of them invest in financial
assets. But there are funds that invest in physical assets. For example,
we may have Gold or other Precious Metal Funds, or Real Estate
Funds.

b. Broad Fund Types by Investment Objective

Investors and hence the mutual funds pursue different objectives while
investing. Thus, Growth Funds invest for medium to long term capital
appreciation. Income Funds invest to generate regular income, and
less for capital appreciation. Value Funds invest in equities that are
considered under-valued today, whose value will be unlocked in the
future.

c. Broad Fund Types by Risk Profile

The nature of a fund’s portfolio and its investment objective imply
different levels of risk undertaken. Funds are therefore often grouped
in order of risk. Thus, Equity Funds have a greater risk of capital loss
than a Debt Fund that seeks to protect the capital while looking for
income. Money Market Funds are exposed to less risk than even the
Bond Funds, since they invest in short-term fixed income securities, as
compared to longer-term portfolios of Bond Funds.

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 Money Market Funds: Lowest rung in the order of risk level, Money Market
Funds invest in securities of a short-term nature, which generally means
securities of less than one-year maturity.

 Gilt Funds: Gilts are government securities with medium to long-term

maturities, typically of over one year (under one-year instruments being
money market securities).

 Debt Funds (or Income Funds): Next in the order of risk level, we have the
general category Debt Funds. Debt funds invest in debt instruments issued
not only by governments, but also by private companies, banks and financial
institutions and other entities such as infrastructure companies/utilities.

1. Diversifies Debt Funds

A debt fund that invests in all available types of debt securities, issued
by entities across all industries and sectors is a properly diversified
debt fund. A diversified debt fund is less risky than a narrow-focus
fund that invests in debt securities of a particular sector or industry.

2. Focused Debt Funds

Some debt funds have a narrow focus, with less diversification in its
investment. Examples include sector, specialized and offshore debt
funds. Other examples of focused funds include those that invest only
in Corporate Debentures and Bonds or only in Tax Free
Infrastructure or Municipal Bonds.

3. High yield Debt Funds

There are funds which seek to obtain higher interest rates by investing
in debt instruments that are considered “below investment grade”. e.g.
Junk Bond Funds.

4. Assured Return Funds – an Indian Variant

The SEBI permits only those funds whose sponsors have adequate
net-worth to offer assurance of return. e.g. MIPs. Investors have some
lock-in period.

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 5. Fixed Term Plan Series – Another Indian Variant
These are essentially closed-end. These plans do not generally offer
guaranteed returns. This scheme is for short-term investors who
otherwise place money as fixed term bank deposits or inter corporate
bonds.

 Equity Fund: As investors move from Debt Fund category to Equity Funds,
they face increased risk level.
1. No guarantee returns
2. High potential for growth of capital

Types of Equity Fund

a) Aggressive Growth Fund

 Maximum capital appreciation
 Invests in less researched or speculative shares.
 Very volatile & riskier.

b) Growth Fund
 Growth fund invest in companies whose earnings are expected to
 rise above average rate. e.g. Technology Fund
 Capital appreciation in 3 – 5 years
 Less volatile then aggressive growth fund.

c) Speciality Fund
They invest in companies that meet predefined criteria.
i) Sector Funds
 Technology Fund
 Pharmaceutical Fund
 FMCG Fund
ii) Offshore Funds
Invest in equities in one or more foreign countries.
iii) Small-Cap equity Funds
 Invest in shares of companies with relative lower market
capital.

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 d) Diversified Equity Funds
A fund that seeks to invest only in equities, except for a very small
portion in liquid money market securities, bur is not focused on any
one or few sectors or shares, may be termed a diversified equity fund.
While exposed to all equity price risks, diversified equity funds seek to
reduce the sector or stock specific risks through diversification.

i) Equity Linked Savings Schemes: An Indian Variant

Investment in these schemes entitles the investor to claim an
income tax rebate, but usually has a lock-in period before the end of
which funds cannot be withdrawn.

e) Equity Index Funds

An index fund tracks the performance of a specific stock market index.
The objective is to match the performance of the stock market by
tracking an index that represents the overall market.
 The funds invest in share that constitute the index and in
the same proportion on the index.

f) Value Funds
Value Funds try to seek out fundamentally sound companies whose
shares are currently under-prices in the market. Value Funds will add
only those shares to their portfolios that are selling at low price-
earnings ratios, low market to book value ratios and are undervalued
by other yardsticks.
 Fund concentrate on future growth prospect having good
potential

g) Equity Income Funds

There are equity funds that can be designed to give the investor a high
level of current income along with some steady capital appreciation,
investing mainly in shares of companies with high dividend yields.

 Hybrid Funds – Quasi Equity/Quasi Debt: Many mutual funds mix these
(money market, debt and equity) different types of securities in their
portfolios. Such funds are termed “hybrid funds” as they have a dual
equity/bond focus.

 Commodity Funds: While all of the debt/equity/money market funds

invest in financial assets, the mutual fund vehicle is suited for investment in
any other- for examples- physical assets.

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 Real Estate Funds: Specialised Real Estate Funds would invest in Real Estate
directly, or may fund real estate developers, or lend to them, or buy shares of
housing finance companies or may even buy their securities assets.

RISK HIERARCHY OF MUTUAL FUND

Equity Funds

Balanced
RISK Funds
LEVEL
Debt Funds

Gilt
Funds

Money
Market
Funds

TYPES OF FUNDS

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 TOPIC 2: FUND STRUCTURE & CONSTITUENTS

 In USA Mutual Funds are investment companies

 In UK, its unit trust or investment trusts
 In India, there is only unit trust (i.e. trust form)
- They are all under SEBI regulations

 Sponsor – Person or a body who sets up or form the trust

- Appoints board of trustees, AMC, custodian,
- Qualification
 Contribution 40 % net worth of AMC
 Should have firm financial track record for 5 years
 Hands over trust deed to trustees.

 Trustees – There can be a trustee company (comes under companies act, too)
or board of trustees (comes under Indian Trust Act only)
- Investments are held by them; in fiduciary capacity
- Appoints (with prior approval of SEBI) and overseas AMC functions
- Right to dismiss AMC (with SEBI approval)
- Reserves fees for services.
- Must furnish half-yearly report to SEBI on fund activities

 AMC
- AMCs are fund managers
- Should have a networth of Rs. 10 cr. all the time
- Can’t act as C trustees of any other mutual fund
- Answerable to trustees and needs to submit quarterly report to SEBI
on activities.
- Must comply with SEBI regulations

 Custodian – Appointed by board of trustees for safe keeping of securities as

independent entity of sponsors

 Transfer Agents – Issue and redeem units and other related services such as
preparation of transfer documents and updating investor records

 Distributors – Are appointed by AMC and may act on behalf of different

funds

 Independent individuals are appointed as agent

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 In merger of two AMCs, SEBI approval and consent of 75% unit holders are
required

AMC takeover by another sponsor

 SEBI approval required
 Inform the unit holders

Scheme takeover
 SEBI approval required
 Investors should be given option to redeem units incase they do not
consent for it

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 TOPIC 3: LEGAL AND REGULATORY ENVIRONMENT

SECTION A : REGULATORS IN INDIA

 SEBI - The capital markets regulators also regulates the mutual funds in
India. SEBI requires all mutual funds to be registered with them. SEBI issues
guidelines for all mutual funds operations - investment, accounts, expenses
etc.
 RBI as supervisor of banks owned mutual funds - As banks in India came
under the regulatory jurisdiction of RBI, bank owned funds to be under
supervision of RBI and SEBI.
 RBI as supervisor of Money Market Mutual Funds - RBI has supervisory
responsibility over all entities that operate in the money markets. Hence in
the past Money Market Mutual Funds scheme of Mutual funds had to be
abide by policies laid down by RBI. Recently, it has been decided that
Money Market Mutual Funds of registered mutual funds will be regulated
by SEBI through SEBI (Mutual Fund) Regulations 1996.
 Ministry of Finance - (MoF) ultimately supervises both the RBI & the SEBI
and plays the role of apex authority for any major disputes over SEBI
guidelines.
 Company Law Board - Dept of Company Affairs - Registrar of companies
AMCs of Mutual funds are companies registered under the companies Act
1956 and therefore answerable to regulatory authorities empowered by the
Companies Act.
 Stock Exchanges
Stock Exchanges are self-regulatory organizations supervised by SEBI. Many
of closed ended funds of AMCs are listed as stock exchanges and are traded
like shares
 Office of the Public Trustee
Mutual fund being public trust are governed by the Indian Trust Act 1882.
The Board of trustees or the Trustee Company is accountable to the office of
the public trustee, which in turn reports to the Charity commissioner
 Unit Trust of India
Unit Trust of India formed under UTI Act 1963.The Management of the Trust
is under a Board of trustees, which has names of RBI, IDBI, LIC, SBI with the
chairman appointed by the Government of India in consultation with the
IDBI.
 What are Self-Regulatory organizations?
A Self Regulatory organization (SRO) is an association representing a group
of market participants, which is empowered by the apex regulatory authority
to exercise pre-defined authority over regulation of their members. For
example stock exchanges.

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 However everybody representing a group of market participants does not
automatically become a SRO.
 Association of Mutual funds of India (AMFI )
AMFI is not a SRO. It has been formed in 1995 with the objective of
representing the Mutual fund industry collectively with a view
- To promote the interests of Mutual Funds and Unit holders.
- To set ethical, commercial and professional standards in the industry.
- To increase public awareness of Mutual funds in the country

SECTION B: INVESTORS RIGHT AND OBLIGATIONS

 Right of “Proportionate Beneficial Ownership”

 Right of timely services
 Unit holders entitled to receive dividend warrants within 30 days of date of
declaration
 Unit holders have right to payment of interest at 15% p.a. in the event of
failure on the part of Mutual fund to dispatch redemption proceeds within
ten working days.
 The Unit holders can claim unclaimed redemption proceeds or dividends due
within a period of 3 years of the due date at the prevailing NAV. After 3
years he/she will be paid at NAV applicable at the end of the third year.
 For initial offers unit holders have right to expect allotment of units within 30
days from the closure of mutual offer period.
 Right to information
 Right to approve changes in fundamental attributes of the scheme.
 Right to wind up a scheme if 75% of investors pass a resolution to that effect.
 Right to terminate AMC if 75% of the unit holders decides so, of course with
the prior approval of the SEBI

Legal Limitation to Investors Rights

 Unit Holders are not distinct from the Trust and therefore cannot sue the
Trust.
 Sponsors of a Mutual fund do not have any legal obligation to meet the
shortfall in case the assured return is not achieved.
 But if the offer document has specifically provided such guarantee by a
named sponsor, the investors will have the right to sue the sponsors to make
good any shortfall from his returns.
 A Prospective investors does not enjoy any right with respect to the fund
AMC or any other constituent Investor Complaints Redressal Mechanism.
 SEBI entertains receipt of complaints against Mutual Funds and intervenes
with Fund Management to help investor resolve his complaints. SEBI help
the investors in the new scheme by requiring the sponsor to appoint a

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 compliance officer who certified that all relevant SEBI and other regulations
have been complied with by the fund manager and sponsors.
 Investors are neither shareholders in the AMC nor depositors. Hence their
investments cannot be protected by any of these companies act regulators.

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 TOPIC 4: OFFER DOCUMENT (OD)

 Offer document describes a product, it is the most important source of

information for prospective investors.
 AMC or the sponsor issues it.
 This (OD) is the primary vehicle for the investment decision.
 It is a legal document that protects and governs the right of an investor.
 Key information memorandum (KIM) is the abridged version of offer
document. Application forms are issued along with the KIM.
 SEBI has designed standard format for issue of OD and KIM.
 Offer document and the KIM is valid for two years.
 ODs are to be updated, revised and printed once in every two years.
 Changes made in between these two years are circulated among investors in
form of addendum or some other source of communication to investors.
 Changes made in the OD has to be filed with SEBI and should be made
available at service centers and in the offices of distributors/brokers.
 Offer documents should contain
- Summary information at the cover page containing name, type of the
scheme, name of AMC and the mutual fund, opening and closing date
of the offer, price of units, highlights of the scheme and most
importantly disclaimer clause by SEBI.
- A glossary of defined terms used in the offer document.
- Risk factors – standard and scheme specific
- Due diligence certificate to be signed by Compliance
Officer/CEO/Managing Director/Whole Time Director
 The above points should be in the same sequence.
 Offer document contains fundamental attributes of the scheme –
- Type of the scheme
- Investment objective
a) Investment pattern
b) Investment policies
- Load and expenses
 Offer related information – all practical information needed by investor and
agents to make the entrustment in the proposed scheme.
 Condensed financial information for scheme launched during three fiscal
years.
 Constitution of the mutual fund.
 About objective of the fund.
 Activities of the sponsor.
 Name and addresses of the Board of Trustees/Directors
 Management of the fund

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 Associate Transactions and borrowing policies
- In case, scheme has invested more than 25% of its net assets in group
companies.
a) Business given to associate brokers should be in the limit of 5%
of sale and purchase made.
 NAV determination, valuation and accounting policies.
 Procedure for repurchases.
 Tax treatment of investments made in the scheme.
 Investors’ rights and services under the scheme.
- Access to information on NAV computation and unit price.
- Investors friendly services provided by the scheme and documents
available for inspection by the investors.
 Brief description of investor complaint history for the last three years of
existing schemes and their redressal mechanism.
 Any penalties pending litigation or proceedings should be mentioned in the
OD to alert the investors.

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 TOPIC 5:FUND DISTRIBUTION AND SALES PRACICES

 Who can invest?

- Residents
- Non-Residents
- Foreign citizens

 Need to look up OD to know who can invest.

 Types of distribution channels
- Individual agents,
- distribution companies,
- banks and NBFCs, and
- direct marketing for large value clients.
 AMFI code of ethics
- Interest of unit holders
- High service standards
- Adequate disclosures
- Fund management as per investment objectives
- Professional selling practices
- Unethical market practices
- Conflicts of interests
 AMFI recommendation for effective selling
- Full awareness of product characteristics
- Knowledge of client profile
- Establishing good relationship
- Understand client needs
- Help in choose investments
- Encourage early and regular investments
- Seek commitment for investments
 Advertising Code
- Code protects from misleading investors
- Classifies under two basics and performance
- Past performance is not a guarantee
- Dividends declared/paid shall be mentioned in rupee/unit along with
face value prevailing with NAV.
- Only compound and annualized yield can be advertised for schemes
for more than a year.
- Annualised yield must be shown for last one, three fine and since
launch.
- For less than one year performance may be shown in terms of total
returns and should not be annualized.
- Appropriate benchmark should be chosen.
- Once chosen should be consistent.

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 - Where any ranking has been made should be explained.

 Terms of appointment
- No approval required from SEBI
- Agent must be provided copy of abridged OD and copy of OD for
inspection.
- The customs will not have recourse to agents in case of errors, problems
or quality of investments. Agents must make disclosure, that units are
not endorsed and to not constitute his obligation.
- Agent is responsible at his expense for compliance with applicable
regulation in his jurisdiction.
- The fund will not be responsible for any losses claims, damages.
- Will offer or sell units at public offering price currently in effect. Orders
become effective only upon acceptance and confirmation by the fund.
- Commission rates : Each fund has to decide commission a commission
structure for its agents, there are no rules prescribed for governing
minimum or maximum.
 SEBI Regulation
- All initial expenses including brokerage should be limited to 6% of
resources raised under the scheme.
- Open-end funds can charge entry unit loads to cover distribution
expenses.
- If distribution expenses exceed those mentioned in OD should be borne
by AMC.
 Market practice:
- Up front, trial commission
- Agents obligations:
- Commission/other arrangements between the fund and the
agent/broker.
- Fund not answerable to sub brokers activities.
- Distributors need to make investor aware of whom they are dealing with
and whom they should contact in case of a problem.
 Fund broker practices in USA:
- Cap on sales/distribution expenses.
- Broker is not allowed to describe fund as no load fund if it has front end
or default load.
- Broker prohibited from recommending that purchase of units before ex
dividends may be advantageous.
- Prohibited from using commission as a basis for recommending a fund
- If investors units with in 7 days commission can be refunded.
- Preferred pricing to specific investors prohibited.

 Investor servicing
- Agents services limited to sale of units.

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- Agents can only provide with application form.
- Not authorized to accept cheques or other documents from investors.

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 TOPIC: SIX Accounting, Valuation & Taxation
Section A : Accounting

 The balance sheet of a mutual fund is different from the balance sheet of a
bank or a company. All of the fund’s assets belong to the investors and
are held in fiduciary capacity by the trustees.
 Mutual funds in India are required to follow the accounting policies laid
down in SEBI (Mutual Fund) Regulations, 1996 and the amendments in 1998.
 The fund does not account for investor’s subscriptions 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.
 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)
 NAV = Net Assets of the scheme / Number of Units Outstanding, i.e.
Market value of investments + Receivables + Other Accrued Income + Other
Assets = Accrued Expenses – Other Payable – Other Liabilities
No. of Units Outstanding as at the NAV date
 NAV of all schemes must be calculated and published at least weekly for
closed-end schemes and daily for open-end schemes.
 A fund’s 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
 SEBI requires that the fund must ensure that repurchase price is not lower
than 93% of NAV (95% in the case of a closed-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.
 The AMC may charge the scheme with investment management and
advisory fees subject to the following limits:
- @ 1.25% of the first Rs. 100 crores of weekly average net assts outstanding
in the accounting year, and @ 1% of weekly average net assets in excess of
Rs. 100 crores.

- For no load schemes, the AMC may charge an additional management fee
upto 1 % of weekly average net assets outstanding in the accounting year.

- In addition to fees mentioned above, the AMC may charge the scheme
with the following expenses:

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 A. Initial expenses of launching schemes (not exceed 6% of initial
resources raised under the scheme): and
B. Recurring expenses including:
i. marketing and selling expenses agents’ commission
ii. brokerage and transaction costs
iii. registrar services for transfer of units sold or redeemed
iv. fees and expenses of trustees
v. audit fees
vi. custodian fees
vii. costs related to investor communication
viii. costs of fund transfers from location to location
ix. costs of providing account statements and
dividend/redemption cheques and warrants
x. insurance premium paid by the fund
xi. winding up costs for terminating a fund or a scheme
xii. costs of statutory advertisements
xiii. other costs as approved by SEBI
 The total expenses charged by the AMC to a scheme, excluding issue or
redemption expenses but including investment management and advisory
fees, are subject to the following limits:
- on the first Rs. 100 crores of average weekly net assets- 2.5%
- on the next Rs. 300 crores of average weekly net assets- 2.25%
- on the next Rs. 300 crores of average weekly net assets- 2.0%
- on the balance of average weekly net assets- 1.75%

- For bond funds, the above percentages are required to be lower by 0.25%

SECTION 2 - VALUATION

Mutual Funds value their investments on a “mark to market” basis; on the

date of valuation; eg – if it’s a daily NAV, the portfolio is valued daily.

 Valuation of Traded Securities

- Where a security is traded on Stock Exchange (SE): valued at the
last quoted closing price where it is “principally traded”.

- If the security is not traded on the valuation day, take the value at which
it was traded on other SE on the earliest previous day, but not more than
30 days prior to valuation.

- Value of traded securities = Market price of traded securities x It’s

no. of shares or bonds

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Thinly Traded Equity/ Equity Related Securities :-
An equity /equity related instruments is thinly traded if :-
(i) Monthly trading value is less than Rs. 5 lacs and value less than 50,000
share volume
(ii) When trading is suspended up to 30 days take the last traded price
(iii) Trading is suspended for more than 30 days AMC/Trustee to make
valuation.

Thinly Traded Debt Securities :-

(i) Traded value (other than g-sec) is less than Rs. 15 crore for a period of
30 days prior to valuation date.
(ii) Add value traded on all exchanges
(iii) Such security to be valued using the method for non-traded debt.

Non-Traded Securities :-
(i) When not traded on any Stock Exchange for 30 days prior to valuation
date
(ii) Non-traded/thinly traded securities shall be valued “in good faith” by
AMC.

Non Traded/ Thinly Traded Equity Securities :-

 Net worth per share should be calculated.
 The value per share should be calculated on the basis of capitalization of
earnings.

 Capitalization rate will be determined by refering to P/E ratio of

comparable traded securities with an appropriate discount for lower
liquidity to be used.

 to P/E ratio of comparable traded securities with an appropriate discount for

lower liquidity to be used.

 If an individual security accounts for more than 5% of the total assets of the
scheme, shall be valued by an independent valuer. The proportion while it
bears to the total net assets. The scheme on date of valuation of non traded,
non-govt. debt with less than 182 days for maturity.

Non traded thinly traded debt securities

Upto 182 days maturity: valued as money market securities.
Over 182 days: would be classified as follows:

All Non Traded debt Securities

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 Investment Trade Non Investment Trade
(YTM basis)

Performing Assets Non performing Asset

 All Non-govt., investment grade debt securities to be valued on YTM (Yield

to Maturity) basis
 All Non-govt., non-investment grade performance assets would be valued at
a discount of 25 % of the face value
 All Non-govt. non-investment grade based on provisioning norms.

 Call money, bills purchased under rediscounting and short term deposits
with banks are valued at (cost + actual)

 Convertible debentures and bonds: Non-convertible component is to be

valued as a debt instrument, and convertible as any equity instrument.

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SECTION C: Taxation

Most countries do not impose any tax on this entity – the trust – because
the income it earns is meant for the investors. The trust is considered to be only a
pass-through entity. After the 1999/2000 Budget the investors are totally exempt
from paying any tax on the dividend income they receive from the mutual funds,
while certain types of schemes pay some taxes. Income distributed to unit-
holders by a closed-end or debt fund is liable to a dividend distribution tax of
10% plus a surcharge of 2% i.e. a tax of 10.2%.

In India –
 Generally, income earned by any MUTUAL FUND is exempt from tax.
 Income distributed to unit holders by a closed end or a debt fund is liable to a
dividend distribution tax of 10% plus a surcharge of 12% i.e. is a tax of 10.2%

 Wealth Tax: Ownership of units is not considered as ‘wealth’ under the

Wealth Tax Act, and is therefore not chargeable to wealth tax.

 Special Provisions for Offshore Fund Investors, NRIs, OCBs and FIIs:
Under Section 195 of the Act the Mutual Fund is required to deduct tax at
source at the rate of 20% on any long-term capital gains if the payee
Unitholder is a non resident. In respect to short term capital gains tax is
required to be deducted at source at the rate of 30% if the payee Unitholder is
a non-resident non-corporate and at the rate of 48% if the payee Unitholder is
a foreign company.

Capital Gains on Sale of Units

 However, if the investor sells his units and earns “Capital Gains”, the
investor is subject to the Capital Gains Tax as under :
If units are held for not more than 12 months, they will be treated as short term
capital asset, otherwise as long term capital asset. (This period is 36 months for
assets other than shares and listed securities).

24
 TOPIC 7 : INVESTOR SERVICES

 Prospective investors have no right.

 Investor should read the section, who can apply of the OD, which
categorizes the entities eligible to apply in the scheme.
 Procedure for repurchase of units is mentioned in the OD as well in the
KIM.
 KIM contains the application form to be filled by the investor.
 The form is generally distributed through the intermediaries such as banks,
agents, service centers of AMC.
 Investors (NRI, OCBs, and other foreign entities) should not take
permission from RBI, if investment is made in MF units.
 The mode of payment is usually by cheque or demand draft or cash in
certain cases.
 Application form represents an important agreement that investor has read
and understood OD and that he abides by the term and conditions of
investments.
 Automatic re-investment plan allows the investor to reinvest in additional
units, the amount of dividends or other distributions made by the fund.
 It is also known as ARP or dividend option.
 Automatic investment plan (AIP) requires the investor to invest a fixed sum
periodically. These are also known as Systematic Investment Plan.
 Voluntary Accumulation Plan (VAP) allows the investor flexibility with
respect to the amount and frequency of investment.
 Systematic Withdrawal Plan (SWP) allows investor to make systematic
withdrawal from his fund investment account on a periodic basis.
 Systematic Transfer Plan (STP) allows the investor to transfer specified
amount from one scheme to another on a periodic basis.
 Cheque writing – Some open end mutual funds provide the facility of
cheque book to the investor, treating his fund account as a bank savings
account.
 The fund must have RBI approval to offer this service.
 Several banks lend to investor against MF units, however, SEBI prohibits
MFs to issue such loans.
 MF also allows nomination and transfer facilities.

25
 TOPIC 8 :INVESTMENT MANAGEMENT
 Equity portfolio manager’s task:
- Constructing portfolio of equity shares or equity linked instruments that are
consistent with investment objective of the fund.
- Managing or constantly rebalancing portfolio to produce capital
appreciation and earnings that would reward investors with superior
returns.
 Approaches to portfolio management
a. Passive fund management:
e.g. Index funds with the objective to equal the return on a selected market
index.
b. Active fund management:
Growth investment style : The prime objective is to obtain capital
appreciation
Value investment style : A value manager buys companies that are believed
to be undervalued in the market, but are fundamentally very strong.
 Role of Securities Research in Active Fund Management
- Fundamental analysis
- Technical analysis
- Quantitative analysis
 Measures of Bond Yields
a. Current Yield
b. Yield to maturity
c. Yield curve
 Basic characteristics of Bond and Debt securities
1. Par value is the principal amount that the investors will be paid.
2. Coupon is the annual rate of interest.
3. Maturity refers to the tern of the bond.
4. Call or put provisions allows the issuer to redeem the bond before the
maturity.
Portfolio management organization structure:
 Fund Managers who performs the job of asset allocation
 Security Analysts & Researchers assist the fund manager in security
analysis
 Security dealers executes the buying and selling of securities.

Risks in Investing in Bonds:

 Interest Rate Risk
 Re-investment risk
 Call risk

26
 Default risk
 Inflation risk
 Liquidity risk

Duration:
 Measure the sensitivity of portfolio to change in interest rate

Debt Investment Strategies:

 Buy & Hold
 Duration management
 Credit selection
 Prepayment prediction

 SEBI has permitted use of derivative trading for hedging purposes, and not
for speculative purposes.

Debt Funds Organisation

 Interest Rate forecasting unit
 Funds managers
 Security dealer
 Risk manager

 SEBI’s main objective in laying down restrictions on AMC’s is to ensure

investor protection

How is the objective attained?

 Mandating minimum levels of diversification in MF investment
 No concentration on associate companies.
 Investments in approved securities only

Minimum portfolio diversification norms:

 Investment in equity shares or equity related instruments of a single company
are restricted o 10 % of NAV of scheme
 Investment in “rated investment grade” debt instruments issued by single
issuer to 15 % of NAV scheme & may be extended to 20 % with prior
approval of Board of AMC or Trustees
 Investments in unlisted shares to a maximum of 10 % of NAV scheme for
close end scheme & 5 % of NAV in open end schemes
 Invest abroad in ADR/GDR’s within an overall limit of US $ 500 millions for
all funds put together. There is a sub ceiling for individual MFS which
should not exceed 10 % on net assets managed by them as on date of last
audited Balance Sheet, subject to maximum of US $ 50 mn per MF

27
 MF’s under all its schemes taken together is not allowed to own more than 10
% of any company’s paid up capital carrying voting rights
 A scheme may invest in another scheme under same AMC or other MF
without charging any fees, provided that aggregate inter-scheme investment
made by all schemes under the same management does not exceed 5 % of
NAV of MF
 MFs are required to buy & sell securities only “for delivery”
 MF’s may invest in short-term deposit of schedules commercial banks,
pending final investment of funds pursuant to scheme objective
 MF’s not allowed to advance loans, except securities in accordance with
SEBI’s stock lending scheme
 MF’s prohibited from investing in excess of 25 % of net assets of any of its
schemes of fund in case of listed securities of group companies of sponsor.
 Inter scheme transfers at current market rates and investment objective
conformity to scheme to which transfer is made.

28
 TOPIC 9:Measuring and Evaluating Mutual Fund Performance
Different performance measures :
 Change in NAV =
NAV at the end of the period – NAV at the beginning of the period
- Very simple method.
- However does not give the correct picture, in case the fund has
distributed dividend.

 Total Return = Dividend distributions + change in NAV * 100

Beginning NAV

- Corrects the shortcoming of the first method by taking into account the
dividend distributed.
- Suitable for all types of funds. Performance must be interpreted in the
light of market conditions and investment objective.
- However, it ignores the fact that distributed dividend also get
reinvested.

Div
 ROI = { Units held+ / End NAV } - begin NAV
Ex-div NAV
100
Beginning NAV

- Most suitable method.

- Overcomes the limitation of second method by considering the
reinvestment of dividend.

29
 Expense Ratio
- Total expense/average net assets of the fund.
- is an indicator of the funds efficiency and cost effectiveness.
 Income Ratio
Net Investment Income
Net Assets

 Portfolio Turnover Ratio

- It measures the amount of buying and selling done by a fund. It gives an
idea of how fast the fund manager is churning his portfolio.
- High turnover ratio also indicates high transaction costs.
- Transaction Costs include all expenses related to trading such as
brokerage commission paid, stamp duty on transfer registrar fees and
custodians fees. It has significant bearing an fund performance.
 Fund Size
Small funds
- Easy to manage
- Achieve objective in focused manner with limited holding.
Large Funds
- Economics of scale
- Lower Expense Ratio
 Cash Holdings
- Enables meeting redemption needs
- A cushion against decline in market prices of shares/bonds
- May reduce the return on the portfolio

30
 Borrowing by mutual funds
- In India, fund cannot borrow to increase fund size
- As per SEBI regulation,
· Mutual Funds can borrow “only” to meet temporary liquidity
· Cannot borrow for a period more than 6 months
· Can borrow upto 20 % of its NET ASSETS.

Section B: EVALUATING FUND PERFORMANCE

 Basis of choosing an Appropriate Performance Benchmark:
- The asset class if invests in,
- An equity fund should be judged against another equity
fund & equity benchmark (Indices).
- The funds stated objective
Equity Funds
Index Fund – An Index fund invests in the stock comprising of the index in the
same ratio.
For example,
Market Index Fund - BSE Sensex
Nifty Index Fund - NIFTY
 This is a passive management style.
The difference between the return of this fund and its index benchmark can be
explained by “TRACKING ERROR”.
Active Equity Funds : The fund manager actively manages this fund. To
evaluate performance in such case we have to select an appropriate benchmark.
Large diversified equity fund - BSE 100
Sector fund - Sectoral Indices

Debt Funds :
 Debt fund can also be judged against a debt market index e.g. I-BEX
 Close ended debt funds can be measured against bank fixed deposits of
comparable maturity.

Money Market :
 Money market have portfolios of short term instruments. The general
practice is to benchmark it against short term bank deposits.

31
Criteria for peer group comparisons to be considered
 The investment objectives and risk profiles
 Expense ratio

Even when two funds with similar characteristics are otherwise comparable,
their returns must be calculated on a comparable basis. Hence,
1. Compare returns of two funds over the same periods only;
2. Similarly, only average annualized compound returns are comparable
3. Only after-tax returns of two different schemes should be compared.

32
 TOPIC 10: FINANCIAL PLANNING

 Financial planning is a process that helps a person work out where he or she
is now, what he/she may need in the future and what he/she must do to
reach the defined goals.
 The process involves gathering relevant financial information, setting life
goals, examining the person’s current financial status and coming up with a
strategy or plan for how the person can meet his/her goals given the person’s
current situation and future plans.
 The objective of financial planning is to ensure that the right amount of
money is available in the right hands at the right point in the future to
achieve and individual’s financial goals.

Why should a Fund Distributor become a Financial Planner?

 Strong potential demand for such services.
 Limited supply of Financial planners

 Mutual Fund/Financial planning : Availability of a variety of products to suit

different risk tolerance & return needs

Process of Financial planning:-

 Financial Planning is the overall process of advising clients on how to
achieve their financial goals.
 Financial Goals and Objectives refer to all goals and needs of a client
which have a monetary aspect to them. These are best defined when
the amount and the time frame are both clearly stated.
 Asset Allocation: The allocations of a client’s investments at a broad
level across various asset classes, which include hard assets (real
estate, jewellery, etc.) and financial assets.
 Risk Allocation: The extent of loss in value that a client can tolerate,
psychologically and financially and for how long they can withstand
such declines in value.
 Financial Plan: A document that details clearly in writing the financial
goals, available resources, time frame for investment, asset allocation,
specific investment, etc.
 Portfolio Rebalancing: The process of making changes to the asset
allocation and specific investment to ensure that the client’s
investment strategy stays consistent and current with changes in their
needs, financial situation and market conditions.

33
Financial Planning Process in Practice
 Establish and define the relationship with the client
 Define the Client’s Goals
 Gather and Analyse Data, Assess the Current Resources and Future
Income Potential of the client.
 Determine and shape the Risk Tolerance level of the Client.
(i) The client’s degree of risk-taking keeps changing with
market conditions.
(ii) The clients’ attitude towards risk is not consistent with their
resource availability and Financial goals.
 Ascertain the Client’s Tax Situation
 Recommend the Appropriate Asset Allocation, and Specific
Investments.
 Executing the plan and Making the Client Invest
 Reviewing Progress and Portfolio Rebalancing

The Client’s Responsibilities

 Set Measurable Financial Goals
 Understand the Effect of each Financial Decision
 Re-evaluate Financial Situation Periodically
 Start Planning as soon as possible
 Be Realistic in Expectations
 Realise that the “Client is in Charge”

Periodic Review & Portfolio Rebalancing

Monitor performance of clients portfolio on a regular basis & refine
strategy if required (Change in clients financial valuation. Change in
investment clients).
Responsibility of client :
The financial planner must educate his client on :-
 Set measurable financial goals & be realistic (comfort a.
retirement  what does the client mean by “comfort” in terms of
money requirement)
 Effect of each financial decision & correlation with others.
 Revaluate situation periodically
 Client must understand the planning process

34
Life Cycle stage guide:
Stages of lifecycle Surplus to save Risk tolerance Options
Childhood stage - - -
Young Unmarried High High Life Insurance, equity
Young Married High High Emergency fund
equity

Young Moderate Low/Moderat Investment for child

Married/Children e education
Married/Old Moderate Low Debt service/pension
Children provision

Post family/Pre- Low Low Pension Provision

retirement age

Retirement Nil Nil

Retirement – Categories of retirees

 Low pension/low capital
 Low pension/Moderate capital
 Sufficient pension/Substantial capital

Life Cycles and Wealth Cycles Stages

1. Wealth Cycle (categorization of clients depending on

 Accumulation stage (Building up wealth)
 Transition stage (implementation of plans)
 Reaping stage (cashing out the benefits of investments)
 Intergenerational transfer stage (transfer of wealth (legacy))
 Sudden wealth (Bonanza of fortune)

2. Goal oriented investing

 Specific and separate asset allocation and investment strategy
evolved to meet each individual goal

3. Financial planning for affluent investors

 Wealth creation: willing to take risk and make their net worth
grow.
 Wealth preservation: preserves the wealth that has been created

35
4. Trade off between higher returns with higher probability of lose or
nominal return with lower probability of loss

36
 CHAPTER 12 – Selecting Right Investment Product for Investors

 Historically gold has been prescribed as a hedge against inflation or as a

means of security in bad times.
 Financial deposits are relatively more liquid than physical assets.
 Bank deposits have been a favoured investment option with the Indian
Investor, mainly because of the liquidity and safety benefits they offer.
 Stock exchanges ensure a high degree of liquidity for equity shares.
 Historically, equities have yielded the highest return as compared to other
investment options.
 Companies pay different rates of interest on debentures depending upon how
strong their rating is. Borrowers with lower rating need to pay higher
interest.
 Issues involving debt securities with less than 18 months maturity need not
get rating.
 The deep discount bonds do not pay interest on periodic basis. Instead, they
yield a redemption value, which is higher than the issue price, the difference
being chargeable to tax as interest.
 Relief bonds issued by the RBI have become a popular investments options
for high networth individuals, in an era of declining interest rates and volatile
markets. These bonds are issued by RBI on behalf of GOI.
 In case of without profits insurance policy, if the individual survives the term
of policy, he does not receive anything.
 In India, Life Insurance is viewed more as an investment options than as a
vehicle for risk protection.
Compare only the comparable.

37
Topic 11.
Recommending Financial Planning Strategites to investors
Section - I

 Investment is a long term activity avoid Ad-hoc investment advice or

decisions.
 Jacob’s four-step program for developing modern portfolios.
1. Work with investors to develop long term goals,
2. Determine asset allocation of investments (equity, debt, money
market)
3. Determine the sector distribution
4. Select specific fund managers & their schemes

Type of investors & recommended investment portfolio

 Investor in the Accumulation Phase:

Asset Allocation
Diversified equity, sector and 65% to 80%
balanced funds
Income and gilt funds 15% to 30%
Liquid funds and bank deposit 5%

 Investor in the Transition Phase:

Should gradually start converting some of their equity investments into
income and cash funds to prepare for these financial commitments.

 Investors in the Distribution or Reaping Phase:

Asset Allocation
Diversified equity and balanced 15% to 30 %
funds
Income funds 65% to 80%
Cash funds 5%

 Selecting the right mutual fund (Bogle approach)

o 1 step : classify all equity schemes (growth, value equity income)
o 2 step : choose one of two strategies. Select mainstream growth or
value funds, providing broad diversification, or select either a
differentiated growth or value fund or a specialty fund whose risks
and returns will vary from the overall market.
o 3 step : Evaluate past returns of available funds (see past returns
history)

38
 o 4 step: Review the salient features of a scheme (see Fund size, Fund
age, portfolio managers experience in managing these type of
funds, cost of investments like load(entry/exit). Also see cash
position in the fund, portfolio concentration/Diversification,
market capital of fund, portfolio turnover,

 If beta of 1 means then fund value will fluctuate exactly with index value.
With less than 1 beta means less return in rising market but less loss in
falling market & more than 1 beta means fund is giving more return in
rising market & giving more loss in declining market.

 Selecting Debt/Bond/Income Fund:

Step 1: Narrow down the choice keeping the various debt instruments in
mind
Step 2: Know your investor objective as per investor’s age
profile/income/ mindset towards risk etc.
Step 3: See fund size, its age, relative yield, expense ratio, credit ratings,
composition, Average maturity, Tax implications, past return
history,

 Selecting money market fund:

Following points should be considered
o cost of the fund (go for lower expense ratio)
o quality of portfolio, (look at the credit quality of the instruments)
o yields (net)

 Selecting a balanced mutual fund:

Following points should be considered
o portfolio balance (exact weightage)
o debt portfolio character (quality)
o cost of fund
o returns
o other portfolio statistics.

39
 TOPIC 12 - Recommending Model portfolio & selecting the right Funds

 The table below compares the investment options discussed in the previous
section under the broad heads viz. return, safety, volatility, liquidity and
convenience.

Return Safety Volatility Liquidity

Convenienc
e

Equity High Low High High

Moderate

FI Bonds Moderate High Moderate Moderate

High

Corporate Moderate Moderate Moderate Low

Debentures Low

Company Fixed Moderate Low Low Low

Deposits Moderate

Bank Deposits Low High Low High

High

PPF Moderate High Low Moderate

High

Life Insurance Low High Low Low

Moderate

Gold Moderate High Moderate Moderate

Low

Real Estate High Low Moderate High Low

Mutual Funds High High Moderate High

High

 Direct Investment is recommended only for those investors who are willing
to invest the time required for research in stock selection (or have access to
sound practical advice) and posses the capacity to bear the inherent risk.

40
 Bonds lose value when general interest rates go up.
 For equity investment, investment through Mutual Funds is recommended
(instead of direct investment) because of the following advantages.
1. Mutual funds posses the requisite resources to resources to carry out
research and continuous market monitoring. It helps in identifying
stocks that have growth potentials.
2. Diversification is easily achievable by MUTUAL FUND with its pooled
resources.
3. Professional Management can be
provided by Mutual Funds.
4. Mutual Funds focus in
investment activities based on investment objectives.
5. Mutual Funds provided liquidity
6. Less transaction costs.
7. Convenience

The Investor Perspective: Funds vs. Other Products

Investment Risk Investment

Objective Horizon
Tolerance
Equity Term Capital High Long
Appreciation
FI Bonds Income Low Medium to Long
Medium to term
Corporate Income High Moderate Medium to Long
Debentures Low term
Company Fixed Income High Moderate Medium
Deposits Medium Low
Bank Deposits Income Generally Flexible all terms
Flexible
PPF Income Low Long

Life Insurance Risk Cover Low Long

Term

Gold Term Inflation Hedge Low Long

Real Estate Term Inflation Hedge Low Long

TOPIC 13: Risk & Financial Planning

41
Investment plans can be prepared for an investor only by assessing his needs and
risk profile.
 Based upon the risk levels of the various kinds of funds, Jacob’s
recommended following broad portfolio sub-allocation.
- Low risk (50 % G-see + MMUTUAL FUND)
- Moderate risk (40% Growth & Income + 30% G-sec) + 20%
Growth + 10% Index funds).
- High Risk/Aggressive (25% Growth funds + 25%
International funds + 25% Sector funds + 15% High yield bond funds +
10% Gold Funds)
 “Risk hence represents the volatility of earnings.
 Riskiness of equity fund depends upon the kind of stocks in the portfolio, the
diversification and the ability of the fund manager to time the market.
 Equity price risks are
- Company specific
- Sector specific and
- Market specific
 The ‘Standard deviation” (SD) measures the fluctuation of a funds returns
around a mean level, which can be a benchmark of another fund. This is the
best measure of total risk.
 Beta is a measure of systematic risk (market risk). A  is more than 1
indicates that the fund could fluctuate more in the same direction as the
markets while  is less than 1 denoted that the fund would fluctuate lesser
than the market in the same direction as the market.
 Bogle’s Ex marks or ‘R-squared’ measures how much of a funds fluctuations
is attributable to the movement in the overall markets, from 0 – 100%. Index
1funds have Ex-mark of nearly 100%.
 Risk adjusted performance is measured by Sharpe & Treynor ratios. Sharpe
ratio divides the risk premium by the funds standard deviation, while the
Treynor’s divided it by eta.
 A funds risk level is also measured by its P/E multiple
 All the above measure other than Beta or P/E ratio help measure the debt
portfolio as well. Debt portfolios are also exposed to default risk and the
interest rate risks.
 The average maturity or duration of a portfolio should be considered while
evaluating the riskiness of debt portfolios.
1

42
 Fund in accordance of their risk level.
i. Money Market Mutual Fund
ii. Municipal bond fund
iii. Corporate bond funds
iv. Mortgage funds 1
v. Govt. bond funds
vi. Index funds
vii. Income funds
viii. Balanced funds
ix. Growth & Income funds
x. International funds
xi. Precious metal funds
xii. Growth funds
xiii. Aggressive funds.
(Funds in italics are not available in India)

43
 TOPIC 14 - Recommending Model portfolio & selecting the right Funds

Section - I

 Avoid Ad-hoc investment advice (unsuitable) or decisions.

 Jacob’s four-step program for developing modern portfolios.
5. Work with investors to develop long term goals,
6. Determine asset allocation of investments (equity, debt, money
market)
7. Determine exact sector distribution
8. Select specific fund managers & their schemes
 Type of investors & recommended investment strategies :-
1. Investors in the accumulation phase (long term)
2. Investors in the transition phase (Age transition)
3. Investors in the distribution (expecting fixed inflows after retirement)
15 – 30% (equity), 65 – 80% (income funds), 5% (cash)
4. Investors in inter-generatioal transfer phase. (means investment for
dependents children, grandchildren by parents)
 Selecting the right mutual fund (Bogle approach)
Equity funds :
1 step : classify all equity schemes (growth, value equity income)
2 step : choose one of two strategies.
3 step : Evaluate past returns of available funds (see past returns history).
4. step: Review the salient features of a scheme (see  Fund size, Fund age,
portfolio managers experience in managing these type of funds, cost of
investments like load(entry/exit). Also see cash position in the fund, portfolio
concentration/Diversification, market capital of fund, portfolio turnover,
Here Beta: is used to measure risk. It is measured by volatility of its past price
relative market price. It is measured by volatility of its past price relative to
market price. If beta of 1 means then fund value will fluctuate exactly with index
value.
 With less than 1 beta means less return in rising market but less loss in falling
market.
 More than 1 beta means fund is giving more return in rising market & giving
more loss in declining market.

44
 Selecting Debt/Bond/Income Fund:
Step 1: Narrow down the choice/the universe by disqualifying other
investments instruments.
Step 2: Know your investor objective as per investor’s age
profile/income mindset.
Step 3: See  fund size, its age, relative yield, expense ratio, credit ratings,
composition, Average maturity, Tax implications, past return history,

 Selecting money market fund:

Following points should be considered
 cost of the fund (go for lower expense ratio), quality of
portfolio, yields (net)

 Selecting a balanced mutual fund:

Following points should be considered
 portfolio balance (exact weightage), Debt portfolio character
(quality), cost of fund, returns, other portfolio statistics.

45