![A PROJECT REPORT ON “Comparatives Study of Balanced Mutual Funds Offer by Various Companies in Indian Market.” AT SURAT Submitted To VEER NARMAD UNIVERSITY IN PARTIAL FULFILLMENT OF THE MASTER OF BUSINESS ADMINISTRETION (M.B.A-III) ACADMIC YEAR (2008-2009) PREPARED BY:GUIDED BY: VINAY CHAUDHARI Dr. V.B.PATEL (D.B.I.M) Mr. AVINASH CHACHRE COLLEGE CERTIFICATE This is to certify that the summer project report entitled “Comparatives Study of Balanced Mutual Funds Offer by Various Companies in Indian Market.”out by Gaurav k. Chaudhari at NJ India Invest Pvt. Ltd. as a partial fulfillment of the requirement for the degree of Master of Business Administration (M.B.A.) during academic year 2008-09. PROJECT GUIDEDDR. V.B.PATEL MR. AVINASH CHACHRE (DBIM) Project Guided. Place: Surat Date: Time: DECLARATION I here by declare that the summer project report titled “Comparatives Study of Balanced Mutual Funds Offer by Various Companies in Indian Market.”is an original piece of work done by me for the fulfillment of the award of degree of Master of Business Administration. And whatever information has been taken from any sources had been duly acknowledge. I further declare that, this project is carried out for academic purpose only. CHAUDHARI GAURAV K. ACKNOWLEDGEMENT I would like to take this opportunity to express my deep sense of gratitude towards my college DEPARTMENT OF BISINESS & INDUSRIEAL MANAGEMENT COLLEGE AT VNSGU SURAT for giving me this tremendous opportunity to work in the industry for the real time project. I am also thankful to Mr. AVINASH CHACHRE (MENTOR) of NJ India Invest Pvt. Ltd., Ahmedabad for giving me an opportunity for getting invaluable experience in such reputed organization. At the same time, I am very much thankful to all staff members of NJ India Invest Pvt. Ltd. for their kind co-operation. I express my gratitude to Dr.V.B.PATEL, of DEPARTMENT OF BUSINESS & INDUSTRIAL MANAGEMENT. VNSGU,SURAT. P r e f a c e The research provides an opportunity to a student to demonstrate application of his/her knowledge, skill and competencies required during the technical session. Research also helps the student to devote his/her skill to analyze the problem to suggest alternative solution, to evaluate them and to provide feasible recommendation on the provided data. The research is on the topic of ““Comparatives Study of Balanced Mutual Funds Offer by Various Companies in Indian Market.”although I have tried my level best to prepare this report. An error free reports every effort has been made to offer the most authenticated position with accuracy. SR. No.ParticularsPage No1TITTLE PAGE2COLLEGE CERTIFICATE23DECLARATION34AKNOWLEDGEMENT45PREFACE56EXECUTIVE SUMMURY77INTRODUCTION88INDUSTRY ANALYSIS99COMPANY PROFILE5410RESERCH METHODOLOGY8611DATA ANALYSIS AND INTERPRETATION9212FINDIGS10413CONCUTION10514SUGGESTION10615LIMITATION OF THE STUDY10716BIBLOGRAPHY108 Executive Summary: This project is on study of Comparatives Study of Balanced Mutual Funds Offer by Various Companies in Indian Market.” .It is about how to measure the mutual fund and study the factors affecting the Balanced mutual fund. This project has been a great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. This project as a whole can be divided into two parts: The first part gives an insight about the mutual funds and its various aspects. It is purely based on whatever I learned at NJ INDIAINVEST PVT. LTD. One can have a brief knowledge about mutual funds and all its basics through the project. Other than that the real servings come when one moves ahead.. All the topics have been covered in a very systematic way. The language has been kept simple so that even a layman could understand. All the data have been well analyzed with the help of charts and graphs. The second part consists of data analysis,. The data collected has been well organized and presented. Hope the research findings and conclusions will be of use. OVERALL PERFORMANCE of the Blalanced funds has been good on a risk –return adjusted basis. The volatility has been more than that of the benchmark return, but at the same time other parameters are well served. ABOUT MUTUAL FUNDS CONCEPT Individuals or institutions when have surplus money, i.e. savings, would like to invest with the common and logical motive of growing money by getting returns on the investments. There are various avenues to park money towards fulfillment of your objective of return on investment. One can invest money either where you can get assured returns & hence the risk is low but returns also are low compared to the high risk investments. The other way is through investing in shares i.e. equity market. Generally the returns on equity investments are higher than debt investment but risk also is higher. To get good returns one really needs to understand the economy and performance of companies where you are investing money. For a common man it may be cumbersome while managing own profession, job or business. Hence the concept of mutual fund has evolved to manage the funds i.e. on behalf of the investor; fund managers will be taking decisions to maximize the investor’s returns. The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market.The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first Mutual Fund Regulations came into existence with re-registering all mutual funds except UTI. The regulations were further given a revised shape in 1996. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. Just after ten years with private sector player penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 34 mutual fund companies in India. MUTUAL FUND INDUSTRY The Phases of Growth The Indian mutual industry has come a long way since the inception of UTI in 1963.According to AMFI, the evolution of the industry can be classified broadly into four phases, which mark its transition from a period when UTI ruled the roost to a period of competition and increased awareness among investors. i) First Phase (1964-87) – UTI all the way This phase begin with the inception of the Unit Trust of India (UTI). It remained the only mutual fund player in the country till 1987. UTI started its operation in July 1964 “with a view to encouraging savings and investments and participation in income, profits and gains accruing to the corporation from acquisition, holding, management and disposal of securities.” In short, it was set up by Indian government with a view to augment small savings in the country and to channelize these savings to the capital markets. UTI witnessed a slow and steady growth over the 1970s and the 1980s and by the end of 1988 it had an AUM of Rs.67bn. It still continues to be the largest player in the domestic mutual fund industry with an AUM of Rs. 23,500 cr as on March 31, 2008. ii) Second Phase (1987-1993) – Enter Public sector Mutual Funds Public sector mutual funds set up by public sector banks, Life insurance Corporation of India (LIC) and the General insurance Corporation of India (GIC) entered in the market in 1987. The first non mutual fund was the SBI Mutual Fund established in June 1987, followed by Canbank Mutual Fund in December 1987, Punjab National Bank Mutual Fund in August 1989, India Bank Mutual Fund in Nov 1989, Bank of India Mutual Fund in June 1990 and Bank of Baroda Mutual Fund in Oct 1992. LIC set up its mutual Fund in Jun e 1989 while GIC established its Mutual Fund in Dec 1990. During this period, the total asset of the industry grew to about Rs. 610bn with the total number of schemes increasing to about 167 by the end of 1994. 1992-93Amount MobilisedAssets Under ManagementMobilisation as % of gross Domestic SavingsUTI11,05738,2475.2%Public Sector1,9648,7570.9% iii) Third Phase of (1993-2003) – Private players enter the scene This phase marked the entry of private sector funds. The phase also signaled the intensification of competition. Both domestic and foreign players entered the market, offering a wide variety of schemes to investors. Kothari Pioneer Mutual Fund was the first private sector fund to establish in association with the foreign fund. Private players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International entering the market. The total AUM by the end of Jan 31, 2003 increased to $ 34,927mn from $23,260mn in March 1995 with a CAGR of 6.92%. iv) Fourth Phase (since Feb 2003)– UTI’s restructuring and beyond In Feb 2003 UTI ACT 1963 was replaced and UTI was bifurcated into two separate entities: Specified undertaking of Unit Trust of India, which is still under the Govt. of India and the UTI Mutual Fund Ltd. This was done in the wake of the sever payment crisis that UTI suffered on account of its assured return schemes of US-64 that finally resulted in an adverse impact on the India capital markets. US-64 was the first scheme launched by UTI with a significant equity exposure and the returns of which were not linked to the market. However, the industry has overcome that shock and is hoped to have learnt its lesson. Major Mutual Fund Companies in India: Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of Kotak Mahindra Bank Limited (KMBL). It is presently having more than 1,99,800 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities. ii) HDFC Mutual Fund HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated June 30, 2000. HDFC Mutual Fund was setup with two sponsors namely Housing Development Finance Corporation Limited and Standard Life Investments Limited. iii) Unit Trust of India Mutual Fund UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crores. The sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds. iv) Prudential ICICI Mutual Fund The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993. v) Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investmentsindiversifiedsecurities. vi) ABN AMRO Mutual Fund ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank AG is the custodian of ABN AMRO Mutual Fund.vii) Birla Sun Life Mutual FundBirla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores.viii) Bank of Baroda Mutual Fund (BOB Mutual Fund)Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian. ix) HSBC Mutual FundHSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. x) ING Vysya Mutual FundING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya & ING. The AMC, ING Investment Management Pvt. Ltd. was incorporated on April 6, 1998. xi) Sahara Mutual FundSahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.xii) State Bank of India Mutual FundState Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.xiii) Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and Tata Trustee Company Pvt. Ltd. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 Crores (on April 30, 2005). xiv) Standard Chartered Mutual FundStandard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20, 1999. xv) Franklin Templeton India Mutual Fund The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer. xvi) Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organizations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). xvii) Escorts Mutual Fund Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited. xviii) Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsor. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India Private Ltd. with the corporate office in Mumbai. xix) Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited. xx) LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund. xxi) GIC Mutual Fund GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882. The Players in the Mutual Fund Industry The players in the Indian Mutual Funds Industry are similar to some extent to the players in other financial services industry. The players are as follows: SEBI The Securities Exchange Board of India (SEBI) is the regulatory authority for all the mutual funds sponsored by the public/private sector banks, financial institutions, private sector companies, non- banking finance companies and foreign institutional investors. SEBI has laid down the rules and regulations regarding the obligations of the entities involves in a mutual fund, its establishment and launch of different schemes, investments and valuation, financial reporting, conduct and operations of mutual funds. Asset Management Company (AMC) Its role is highly significant in the mutual funds operation. They are the fund managers i.e. they invest the investors money in various securities after proper research and analysis. They also look after the administrative functions of a mutual fund for which they charge management fee. Intermediaries They act as a link between the mutual fund companies and the investors. The intermediaries include brokers, sub- brokers, and investment houses. The other intermediary- registrar and transfer agents perform activities, which are associated with maintaining records concerning units already issued or to be issued by the company. The registrar also performs other activities such as dividend payment, investor grievance, etc. Investors Investors subscribe to the units issued by the mutual funds in the hope of getting a return commensurate with the risk involved. SEBI protects the interest of the investors through the guidelines laid down under SEBI (Disclosure and Investor Protection) Guidelines, 2000. The mutual fund investor mainly includes individual, HUF, corporate and trusts. Types of Mutual Funds There are many types of mutual funds available to the investor. However, these different types of funds can be grouped into certain classifications for better understanding. Structure of a Mutual Fund SOURCE: http://amfiindia.com ASSOCIATION OF MUTUAL FUNDS IN INDIA:- With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995. AMFI is an apex body of all Asset Management Companies (AMC), which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holder The objectives of Association of Mutual Funds in India:- The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives, which juxtaposes the guidelines of its Board of Directors. The objectives are as follows: This mutual fund association of India maintains high professional and ethical standards in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies that are by any means connected or involved. In the field of capital markets and financial services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund Industry. Association of Mutual Fund in India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a program of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awareness programmed for investor’s in order to promote proper understanding of the concepts and working of mutual funds. At last but not the least association of mutual fund of India also disseminate information’s on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies. Regulatory Aspects: Schemes of mutual funds:- The Asset management company shall launch no schemes unless the trustees approve such scheme and a copy of the offer has been filed with the Board. Every mutual fund shall along with the offer documents 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 non maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor. A close-ended scheme shall be fully redeemed at the end of the maturity period. “Unless a majority of the unit holders otherwise decide for its rollover by passing a resolution”. The mutual fund and asset management company shall be liable to refund the application money to the applicants:- If the mutual fund fails to receive the minimum subscription amount referred to in clause (i) of sub- regulation. If the moneys received from the applicants for units are in excess of subscription as referred to in clause (ii) of sub-regulation. The asset management company shall issue to the applicant whose: Application has been accepted, unit certificates or a statement of accounts Specifying the number of units allotted to the applicant as soon as possible But not later than six weeks from the date of closure of the initial Subscription list and or from the date of receipt of the request from the unit Holders in any open ended scheme. Rules Regarding Advertisement:- The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false. Investment objectives and valuation policies:- The price at which the units may be subscribed or sold the price at which such unit may at any time be repurchased by the mutual fund shall be made available to the investors. General Obligation:- Every asset management company for each scheme shall keep and maintain proper book of accounts, records and document, for each scheme so as to explain its transaction 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. The financial year for all the scheme shall end as of March 31 of each year. Every mutual fund or the asset management company shall prepare in respect of each financial year an annual report and annual statement of accounts of the schemes and the fund as specified in Eleventh Schedule. Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in any way associated with the auditor of the asset management comp Procedure for Action In Case Of Default:- On and from the date of the suspension of the certificate or the approval, as the case may be, the mutual fund, trustees or asset management company, during the period of suspension and shall be subject to the direction of the Board with regard to any records, documents, or securities that may be in its custody or control relating to its activities as mutual funds, trustees or the asset management company. Some facts for the growth of mutual funds in India:- ,[object Object]](https://image.slidesharecdn.com/collegecertificate-090725114300-phpapp01/85/College-Certificate-1-320.jpg)
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Comparative Study of Balanced Mutual Funds in India
- 2. Number of foreign AMC’s is in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.
- 3. Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required.
- 4. We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion.
- 5. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
- 6. Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products.
- 8. Dividend Payout Option: Investors who choose the dividend payout option on their investments will receive dividends as and when such dividends are declared by the scheme. Dividends are paid out to the investors in the form of warrants or are directly credited to the investor’s bank account.
- 9. Dividend Re-investment Option: Investors who opt for the dividend reinvestment option do not take the amount of dividend out of the scheme. They re-invest the dividends that are declared by the mutual funds back into the mutual funds itself, at a NAV that is prevalent immediately after the declaration of dividend or the NAV at the time of re-investment. This NAV is known as ex-div NAV.
- 11. Some specific funds scheme can be designed to have a minimum period of investment.
- 12. Example: Investments in special “Equity Linked Savings Scheme” are eligible for tax rebates. In order to enjoy the tax rebate, the investor is required to stay invested for a period of 3 years.
- 14. Purchases:
- 15. In respect of valid applications received upto 3 p.m. by the Mutual Fund, same day’s closing NAV shall be applicable.
- 16. In respect of valid applications received after 3 p.m. by the Mutual Fund, the closing NAV of the next business day shall be applicable.
- 17. Redemption:
- 18. In respect of valid applications received upto 3 p.m. by the Mutual Fund, same day’s closing NAV shall be applicable.
- 19. In respect of valid applications received after 3 p.m. by the Mutual Fund, the closing NAV of the next business day shall be applicable.
- 20. Liquid fund
- 21. Purchases:
- 22. In respect of valid applications, closing NAV of the day immediately before the day on which funds are available for utilization by the fund shall be applicable. However, in respect of any application received after 1 p.m. by the Mutual Fund and the funds are available for utilization by the fund on the same day, closing NAV of the same day shall be applied.
- 23. Redemption
- 27. However, income distributed to unit-holders by a closed-end or debt fund is liable to a dividend distribution tax at a rate stipulated by the Government. This tax is not applicable to distributions made by open-end-equity-oriented funds (funds with more than 50% of their portfolio in Equity).
- 28. Dividend Distribution Tax is payable by the fund on its distributions and out of its income, the investor pays indirectly since the fund’s NAV and the value his investment will come down by the amount of tax paid by the fund.
- 29. Example: If a closed-end or a debt fund declares a dividend distribution of Rs.100, Rs.10.20 (Tax Rate 10.2%) will be the tax in the hands of the fund. While the investor will get Rs.100, the fund will have Rs.10.20 less to invest. The fund’s current cash flow diminish by Rs.10.20 paid as tax, and its impact will be reflected in the lower value of the fund’s NAV and hence investor’s investment on a compound basis in future periods.
- 30. Since the tax is on distributions, it makes income schemes less attractive in comparison to growth schemes, as the objective of income schemes is to pay regular dividends.
- 31. The fund cannot avoid the tax even if the investor chooses to reinvest the distribution back into the fund.
- 33. Income distributed by a fund is exempted in the hands of investors
- 34. No TDS on any income distribution by mutual fund
- 35. Capital Gains on Sale of Units: If the investor sells his units and earn ‘Capital Gains’, the investor is subject to the Capital Gains Tax as under:
- 36. If units are held for more than 12 months, they will be treated as short term capital asset, otherwise as long term capital asset.
- 37. Tax law definition of Capital Gains: Sale Consideration – (Cost of Acquisition + Cost of Improvements + Cost of Transfer)
- 38. If the units were held for over one year, the investor gets the benefit of “Indexation”, which means his purchase price is marked up by an inflation index, so his capital gain amount is less than otherwise. Purchase Price of a long term capital asset after indexation is computed as:
- 39. Cost of Acquisition or Improvement:
- 41. 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.
- 42. No mutual fund under all its schemes should own more than 10% of any company's paid up capital carrying voting rights.
- 43. 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.
- 44. 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.
- 45. The initial issue expenses in respect of any scheme may not exceed 6% of the funds raised under that scheme.
- 46. 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.
- 47. 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.
- 48. No mutual fund scheme shall make any investment in;
- 49. Any unlisted security of an associate or group company of the sponsor; or
- 50. Any security issued by way of private placement by an associate or group company of the sponsor; or
- 51. 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)
- 53. Benjamin Graham advocates 50/50 split between equities & bonds, the common approach to start with. When value of equities goes up, balance can be restored by liquidating part of the equity portfolio and vice versa. This is the basic defensive or conservative investment approach. But it is good to get half a return of a rising market and to avoid the full losses of a falling market.
- 54. 50/50 Portfolio of Mutual Funds
- 55. Bogle suggested the following combinations
- 56. A Basic Managed Portfolio: 50% in diversified Equity Value Funds
- 59. A Basic Indexed Portfolio: 50% in Total Stock Market/Index Funds
- 61. A Simple Managed Portfolio: 85% in Balanced 60/40 Fund
- 63. A Complex Managed Portfolio: 20% in Diversified Equity Fund
- 68. A Readymade Portfolio: Single Index Fund with 60/40 Equity/Bond holding
- 70. Graham’s 50/50 is the basic asset allocation. Bogle recommends adjusting the percentages for each group in terms of their lifecycle phases. During the Accumulation Phase, an investor would be building assets by periodic investments of capital & reinvestment of all dividends received. During the Distribution Phase, he will stop adding assets and start receiving dividends as income. Considered with conjunction with the investor’s age, he recommends the following strategic allocations:
- 74. ReturnSafety ConvenienceVolatilityLiquidityEquityHighLowHighHighFI BondsModerateHigh ModerateModerateCorporate DebenturesModerateModerateModerateLowCompany Fixed DepositsModerateLowLowLowBanks DepositsLowHighLowHigh PPFModerateHighLowModerateLife InsuranceLowHighLowLowGoldModerateHighModerateModerateReal EstateHighModerateHighLowMutual FundsHighHighModerateHigh
- 75. By Performance: The comparison on the basis of performance highlights the flexibility offered by mutual funds from the investor’s perceptive. An investor can choose from a wide variety of funds to suit his risk tolerance, investment horizon & investment objective.Investment ObjectiveRisk ToleranceInvestment HorizonEquityCapital AppreciationHigh Long TermFI BondsIncomeLowMedium-Long TermCorporate DebenturesIncomeHigh-Medium-LowMedium-Long TermCompany Fixed DepositsIncomeHigh-Medium-LowMediumBank DepositsIncomeGenerally LowFlexible-All TimesPPFIncomeLowLong TermLife InsuranceRisk CoverLowLong TermGoldInflation HedgeLowLong TermReal EstateInflation HedgeLowLong TermMutual FundsCapital Growth, IncomeHigh-Medium-LowFlexible-All Times RISK RETURN GRID Risk Tolerance/Return ExpectedFocusSuitable ProductsBenefits offered by MFsLowDebtBank/ Company FD, Debt based FundsLiquidity, Better Post-Tax returnsMediumPartially Debt, Partially EquityBalanced Funds, Some Diversified Equity Funds and some debt Funds, Mix of shares and Fixed DepositsLiquidity, Better Post-Tax returns, Better Management, DiversificationHighEquityCapital Market, Equity Funds (Diversified as well as Sectoral)Diversification, Expertise in stock picking, Liquidity, Tax free dividends BANKS V/S MUTUAL FUNDS BANKS MUTUAL FUNDSReturnsLowBetterAdministrative ExpensesHighLowRiskLowModerateInvestment OptionsLessMoreNetworkHigh penetrationLow but improvingLiquidityAt a costBetterQuality of AssetsNot transparentTransparentInterest calculationMinimum balance between 10th & 30th. of every monthEverydayGuaranteeMaximum Rs.1 lakh on depositsNone COMPANY INFORMATION 1. HISTORY NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focussed financial / investment advisory & distribution firm. NJ prides in being a professionally managed, quality focused and customer centric organisation. The strength of NJ lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cutting-edge technology platform, developed in-house by NJ. At NJ we believe in … having single window, multiple solutions that are integrated for simplicity and sapience making innovations, accessions, value-additions, a constant process providing customers with solutions for tomorrow which will keep them above the curve, today NJ has over INR 30 billion* of mutual fund assets under advice with a wide presence in over 60 locations* in 15 states* in India. The numbers are reflections of the trust, commitment and value that NJ shares with its clients. NJ Wealth Advisors, a division of NJ, focuses on providing financial planning and portfolio advisory services to premium clients of high net-worth. At NJ Wealth Advisors, we have developed processes that focus on providing the best in terms of the advice and the ongoing management of your portfolio and financial plans. At NJ, our experience, knowledge and understanding enables us to provide you with the expected value, in an enhanced way. As a leading player in the industry, we continue to successfully meet the expectations of our clients, through meaningful and comprehensive solutions offered by NJ Wealth Advisors 2.VISION & MISSION OF NJ India invest Vision To be the leader in our field of business through, Total Customer Satisfaction Commitment to Excellence Determination to Succeed with strict adherence to compliance Successful Wealth Creation of our Customers Mission Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments 3.PHILOSOPHY At NJ our Service and Investing philosophy inspire and shape the thoughts, beliefs, attitude, actions and decisions of our employees. If NJ would resemble a body, our philosophy would be our spirit which drives our body. Service Philosophy: Our primary measure of success is customer satisfaction … We are committed to provide our customers with continuous, long-term improvements and value-additions to meet the needs in an exceptional way. In our efforts to consistently deliver the best service possible to our customers, all employees of NJ will make every effort to: think of the customer first, take responsibility, and make prompt service to the customer a priority deliver upon the commitments & promises made on time anticipate, visualize, understand, meet, exceed our customer’s needs bring energy, passion & excellence in everything we do be honest and ethical, in action & attitude, and keep the customer’s interest supreme strengthen customer relationships by providing service in a thoughtful & proactive manner and meet the expectations, effectively Investing Philosophy: We aim to provide Need-based solutions for long-term wealth creation We aim to provide all customers of NJ, directly or indirectly, with true, unbiased, need-based solutions and advice that best meets their stated & un-stated needs. In our efforts to provide quality financial & investment advice, we believe that Clients want need-based solutions, which fits them Long-term wealth creation is simple and straight Asset-Allocation is the ideal & the best way for long-term wealth creation Educating and disclosing all the important facets which the customer needs to be aware of, is important The solutions must be unbiased, feasible, practical, executable, measurable and flexible Constant monitoring and proper after-sales service is critical to complete the on-going process At NJ our aim is to earn the trust and respect of the employees, customers, partners, regulators, industry members and the community at large by following our service and investing philosophy with commitment and without exceptions. 4.MANAGEMENT The management at NJ brings together a team of people with wide experience and knowledge in the financial services domain. The management provides direction and guidance to the whole organisation. The management has strong visions for NJ as a globally respected company providing comprehensive services in financial sector. The ‘Customer First’ philosophy in deeply ingrained in the management at NJ. The aim of the management is to bring the best to the customers in terms of Range of products and services offered Quality Customer Service All the key members of the organisation put in great focus on the processes & systems under the diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage the technology for enhancing overall customer experience. The key members of the management are: Mr. Neeraj Choksi Jt. Managing Director Mr. Jignesh Desai Jt. Managing Director Sales Team:Mr. Misbah Baxamusa National HeadMr. Naveen Rathod V.P. Executive Team:Mr. Shirish Patel Information TechnologyMr. Vinayak Rajput Finance & OperationsMr. Abhishek Dubey Marketing & DevelopmentMr. Viral Shah ResearchMr. Dhaval Desai Human Resources 5.SERVICE STANDARDS Service in words, service in action Service is the key to unlocking customer satisfaction, which again is key for sustainability of any business. At NJ we understand this very well. NJ has set strict processes in place to deliver quality services to customers. At NJ strict quality service standards are set and a well-defined process is established and followed religiously by our quality customer service teams. Performance is evaluated on a frequent basis and glitches are ironed out. But quality service also involves quality people in addition to processes. NJ gives significant focus to the proper training and development of the people involved in the service delivery chain. Further we, Have well-defined Privacy Policy to keep clients’ information confidential & internal audits done on the same at regular intervals Receive various statistics which are analyzed on an ongoing basis to improve the service standards We are committed to improve and enhance our services and undertake new service initiatives. Such and other services differentiate us with other service providers in the industry. Our Service Commitments … The service commitments are to guide the actions of the people at NJ. Clearly stated, customers can freely communicate any such actions/events wherein they feel that any of the following commitments have been breached / compromised. At NJ we desire to honour our commitments at all points of time and to all our customers without any bias. To provide customer-focussed need-based valued services To provide reliable, accurate and timely information To maintain all records in privacy To optimize services/benefits at least justifiable cost To develop and grow the customers’ business To provide constructive after sales service To honour our service commitments 6.PRODUCTS Life Vista Life is counted not in years, but in moments. Moments of truth, joy, achievement and satisfaction. Of peace, tranquility, and freedom. At NJ, we bring such moments to life. Connecting Goals Life Vista is for individuals who are looking for goal oriented planning. The client would typically have a family, with multiple goals directed at meeting the obligations/goals in life. Meeting obligations like education and marriage of children, meeting basic needs like purchase of property, or business assets, would ideally be on agenda for such clients. Retirement planning would also be an important goal in life along with securing the future for those dependent. Process of Connecting Goals With Life Vista we take the onus to help you achieve your goals in life. Our team would undertake a detailed financial planning exercise for you. An ideal personalised, financial plan would then be recommended after detailed study. The team would then constantly monitor the progress of your plan. Any changes in the environment that may happen during the interim period would be incorporated into your plan. At Life Vista our objective is to connect you with your goals and your dreams with reality. How we can help you We will do a detailed study of your goals and objectives in life and would help you by devising a comprehensive plan to help you achieve them. We would also regularly monitor your plans to make sure that you are always on track to achieve your goals. Asset Vista Wealth is not an end. Neither is it a beginning. Wealth is a process, a journey.A journey of power, achievement and responsibility . At NJ we ensure that this journey continues and grows. Creating Wealth Asset Vista is ideal for individuals or corporates looking for portfolio management services. Typically, the client would have sizeable investments made into multiple assets and/or products. The need for Asset Vista may arise due to time constraints, the size of the investments, or the need for professional advice. The objective may be to have effective management of portfolio aimed at capital creation with capital protection at the backdrop. Process of Wealth Creation Asset Vista sees your portfolio as a reflection of your profile aimed to fulfill the identified objectives. Asset Vista would include a detailed risk assessment and recommendation of an ideal asset allocation for you. Post asset allocation, a portfolio would be prepared and dynamically managed on an ongoing basis. Asset Vista would ensure that your portfolio is logical, strategic, and in tune with the changing environment and always on track to achieve the defined objectives. How we can help you We will seek to manage and monitor your portfolio as per your objectives and your risk profile. We would manage your portfolio the Asset Allocation way which is the most effective & ideal way to manage investments. You would also have access to consolidated portfolio reports that enable you to see all your investments into multiple avenues at a single place. 7.SERVICES PROVIDED TO CLIENT As NJ Wealth Advisor’s Global Private Client, you get comprehensive set of services that ensure you stay informed, insightful, in command, of your investments at all times. Comprehensive Financial Planning We all have many responsibilities and goals in our lives. We have dreams and aspirations for a better future. But quite often we are not sure as to how we will fulfill these goals and aspirations. Life changes over time. We may never be sure what today holds for us tomorrow. What if something goes wrong? How do we make sure that we get what we wish? A comprehensive Financial Plan is what you need. At NJ Wealth Advisors we offer you with Comprehensive Financial Planning solutions which would involve … A detailed study of your goals Preparation of a comprehensive Financial Plan Monitoring of the Financial Plan on an on-going basis At NJ Wealth Advisors we offer you with comprehensive Financial Planning Services under the product – Life Vista. Quality Portfolio Advisory Making money is easy. Managing money is difficult. And managing money in today’s complex financial markets with multiple products on an ongoing basis becomes even more difficult. As investors we often may feel the lack of time and energy to undertake monitoring and managing of our investments in multiple avenues. This requires both dedicated efforts and skills in portfolio management. At NJ Wealth Advisors we realise the need for quality, unbiased portfolio advisory services. At NJ we would aim to manage your portfolio with a superior, time tested and much effective way of Asset Allocation keeping in mind your risk profile. At NJ Wealth Advisors we offer you with quality Portfolio Advisory Services under the product – Asset Vista. Consolidated Reporting Quality online Wealth Account: As a premium client you would have access to one of the best online investment accounts that offer comprehensive reports, many of which are unique in nature and give valuable insights on our investments Our online Wealth Account covers almost all the investment avenues that you may have: Mutual Funds – All AMCs, All Schemes Direct Equity Life Insurance Physical Assets – Gold and Property Private Equity – Business Debt Products Bank Deposits and Company Deposits RBI / Infrastructure Bonds Postal Savings – KVP, MIS, NSC Debentures Small Savings – PPF, NSS You would have access to Consolidated Net Asset Reports which would give you a single view of all your investments into different avenues as given above. Further, within each of the Asset class we have many more reports and utilities. Some of the reports covered are … Consolidated:Consolidated Asset Allocation, Consolidated Net Asset, Interest Income, Profit & LossMutual Funds: Valuation, Transaction, Profit & Loss, Performance, Portfolio reports like - AMC / Sector / Equity / Credit / Debt Exposure, Weighted Average Maturity, Dividend history, etc Direct Equity:Demat accounts, Transaction, Valuation, Profit & LossLife Insurance:Policy Report, Premium Reminder, Cash Flow Debt: Transaction, Interest Income, Maturity reports for different Asset 8. 360° – ADVISORY PLATFORM NJ believes in “360° – Advisory Platform” philosophy … With this philosophy, we try to offer all possible products, services and support which an Advisor would need in his business. The support functions are generally in the following areas … Business Planning and Strategy Training and Development – Self and of employees Products and Service Offerings Business Branding Marketing Sales and Development Technology Advisors Resources - Tools, Calculators, etc.. Research Communications With this comprehensive supporting platform, the NJ Fundz Partners stays ahead of the curve in each respect compared to other Advisors/competitors in the market. Needless to say, the complete NJ Fundz offering is hard to resis. ORGANIZATION STRUCTURE Managing Director Vice President Associate Vice President Branch Manager Branch Manager Branch Manager RM RM RM RM RM RM (Direct) (Indirect) (Direct) (Indirect) (Direct) (Indirect) RE RE RE RE RE RE CRO CRO CRO RM: - Relationship Manager RE: - Relationship Executive CRO: - Customer Relationship Officer Employees profile: As per information regarding the employees working in NJ INDIA INVEST, there are mainly ELEVAN employees for there administrative work. The Name, Designation and Educational Qualification of the employees are as under:- SO.NO.EMPLOYEE NAMEDESIGNETIONEDUCATIONQUILIFICATION1Mr. NIRAJ CHOKSICHAIRMANM.B.A2Mr. JIGNESH DESAICHAIRMANENGINEERING3Mr. MISBAH BAXAMUSAMDM.B.A4Mr. KULBHUSHAN NANDWANIAVPM.B.A5Mr. DHAVAL DESAIHR MANAGERM.B.A6Mr. ABHISHEK DUBEYMARKETING MANAGERM.B.A7Mr. VIRAL SHAHRESEARCH ANALYSTM.B.A8Mr. SARFARAZ PATELRMM.B.A9Mr. PARITOSH DESAIREM.B.A10Mr. MANOJ PATELREM.B.A11Mr. CHIRAG DESAIREM.B.A Administration Office: Mr. Misbah Baxamusa / Mr. Kulbhusan Nandwani 914-917, 9th Floor, Vishwa Karma Arcade, Majura Gate. Surat-395002. Tel +91 -261-3095213, 3095214 Fax: +91-261-2435775 Mobile: +98241 14952/+98244 77845 Email: misbah@njindiainvest.com / kulbhushan@njindiainvest.com TECHNICAL SUPPORT: Rajeev Topiwala / Shirish Patel 11/1236, Nanavat Main Road Surat-395003. Tel +91-261-2429284/2425995 Fax: +91-261-2435775 Email: rajeev@njfundz.com / shirish@njindiainvest.com SURAT: Mr. Kulbhusan Nandwani / Mr. Sarfaraz Patel714-717, 7th Floor, Vishwa Karma Arcade, Majura Gate. Surat-395002. Tel +91 -261-3095213, 3095214, 3965001 Fax: +91-261-2453014Mobile: +9374543688 / +9327916750Email: kulbhushan@njindiainvest.com / sarfaraz@njindiainvest.com DEPARTMENTATION GROUP COMPANY NJ INDIAINVEST is a company, which is involved in this business from past 13 years as a client focused need based investment advisory firm. It has developed it’s own IT Industry known as Finlogic India Pvt. Ltd. i.e., technology to support for client as well as its employees in their daily routine works. There is a very qualified staff for IT who has prepared a web site for the organization known as www.njindiainvest.com which provides a valuable support to clients as well as to the employees in trading. All the valuable information, are available on above mentioned web site. ABOUT FINLOGIC PVT.LTD: Finlogic Technologies India Pvt. Ltd (previously Finlogic India) was started in 2000 with a view to develop software applications to support the growing (financial services) distribution business. The company posse’s strong domain knowledge in the investment distribution space, as the company was promoted by NJ India Invest Pvt. Ltd, a leading investment distribution company. The company has successfully developed & implemented a powerful support system for the mutual fund distribution business at NJ India Invest Pvt.Ltd with a provision for integrating the same with other investment products as well as the financial accounting system The company also possesses contents of the Indian mutual fund industry viz. NAV, Dividends, Portfolios, AMC information, Scheme Information, corpus of all the open ended mutual fund schemes. The company provides the data of the same in different formats the objective of the company is to develop sophisticated technologies across various platforms to service e the investment distribution companies & investment management companies. Also it plans to supply the distributors & manufacturing companies with relevant data & content for the mutual fund industry & other relevant economic data. The company has competence on various technology platforms viz. JAVA, SQL, Server, Oracle, VB, and may others, also it has a strong team for designing having competence on Adobe Photoshop, dream weaverFlash etc. TECHNOLOGY Technology is the biggest differentiator NJ pots a lot of efforts and resources are put in to build a technological edge to give you the best possible services to you so that you give the same to your clients. Technology has been and is our key strength. What we offer on the technological front is unique and comprehensive. Our focus can be gauged from the fact that we have a separate sister concern started for the sole purpose of providing the best support to NJ in terms of technology. High infrastructure spending is done to improve & strengthen our deliverables on this technological front. Finlogic Technologies (India) Pvt. Ltd. does all the development work in-house on a continuous basis through its team of talented professionals. All the tools, services, products, etc offered by NJ has been developed in-house according to what we feel In today’s world much is dictated by two important words – Information and Technology. NJ realizes this more than anyone else. And that’s way we make constant efforts to keep you ahead of the curve and ensure that you and your client receive quality, accurate and timely information. But technology by itself cannot make a difference. Only when technology is combined with strong domain knowledge and understanding of customer needs, can it truly help make a significant difference. And this is what NJ has achieved and aims to continue doing so. Your Total Technology Solution Website creation and Management On-line Automatic Investment Accounts to all clients Centralized Online Automatic Advisor Account (Partners Desk) for Management, MIS, Portfolio Access, etc Marketing, Sales and other support through application of technology There exists a strong difference in quality, scope and type of reports offered by NJ against other distributors. NJ, with very strong domain knowledge – especially in mutual funds, and with investment-management perspective offers reports that are superior to other advisors and brokers and are even superior compared to what many good banks offer. Further, the Partners Desk service offered by NJ is a pioneering effort in the industry. The kind of tools and reports offered on the Desk is unique, more useful and superior to those offered by other distributors. Data Management at NJ NJ has made arrangements to receive the following … Details of transaction of any nature in Mutual Funds by any client, through our Associates or us, on a Daily basis NAV, Dividend, and other details of all the Mutual Fund schemes on a Daily basis Monthly Portfolio and other important information of all the Mutual Fund schemes All relevant details of Direct Equities like – Prices, Dividends, Bonus, Market Capitalization’s, etc on a Daily basis All relevant market related information in addition to economic, event-specific, key economic variables, etc on a Daily basis at NJ and the same in used in providing you and your clients with up-to-date information and reports. DIVISION OF NJ IndiaInvest:- NJ Fundz network a division of NJ INDIAINVEST is solely and wholly dedicated t investment advisors. NJ Fundz Network offers a complete business platform to investment advisors to service their customers effectively