1

Sikkim-Manipal University of Health

Medical and Technological Sciences Manipal - 576104.

PROJECT REPORT Submitted in partial Fulfillment of

Master of Business Administration (MBA-FINANCE) Entitled

“Comparative Performance Measurement of

Mutual Funds in India”

By

Amrita Verma Roll no.1208010879

Study Center: Eduway Academy Pvt. Ltd. CBD Belapur, Navi Mumbai (Center code-1736)

Sikkim-Manipal University of Health, Medical and technological Sciences

Distance Education Wing Syndicate House Manipal-576104.

SEPTEMBER 2014

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Acknowledgements

I would like to take this opportunity to thank all those people without whom this project would have been impossible. First and foremost, Mr. Arvind Sonawane, for his expert guidance, and encouragement. I would like to thank Miss. Maryam R Shaikh, for guiding me to prepare for this project. I am extremely grateful to those who directly and indirectly helped me in completing my project work and making it successful.

Amrita Verma

Roll no. 1208010879 MBA Student

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Students Declaration

I, Amrita Verma, student of MBA Programme, (Roll no.1208010879),

Sikkim-Manipal University studying through Eduway Academy Pvt.Ltd (center code: 01736) CBD Belapur hereby declare that this project entitled

“Comparative Performance Measurement of Mutual Funds in India”

Submitted in partial fulfillment for the degree of Masters of Business Administration (MBA) to Sikkim-Manipal University, India is my original work and not submitted for the award of any Degree, Diploma, Fellowship or any other similar Title or Prizes.

All the above information provided from our institution is true to the best of my knowledge to fulfill and restrict this project work only and his information exceeds beyond. These facts and figures quoted here are true information but not to quote or publish else than outside of this project work.

Place: Eduway Academy Pvt Ltd, CBD Belapur

Amrita Verma

Date: Roll no.1208010879 Sikkim-Manipal University MBA Student

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Bonafide Certificate:

BONAFIDE CERTIFICATE

This is to Certified that this project report titled

“Comparative performance Measurement of

Mutual Funds in India” is the bonafide work of Amrita Verma Who carried out the project work under my supervision. Signature Signature Head of Department Faculty Incharge Department: Management Department: Mangement Institution: EAPL Institution: EAPL

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Study center: Eduway Academy Pvt. Ltd.

Project Assessment

Examiner’s Certification

This MBA Project Report By

Amrita Verma

Roll no.1208010879

of Sikkim-Manipal University

Undertaken through Eduway Academy, CBD Belapur

Entitled Is approved and Accepted in Quality and Form

Internal Examiner: Signature:

Name: Qualification: Designation: Department: Institution: External Examiner: Signature:

Name: Qualification: Designation: Department: Institution:

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University Guide’ Certification

This is to certify that this MBA Project Entitled

“Comparative performance measurement

of Mutual Funds in India”

Is submitted in partial Fulfillment of the requirement Degree of

MASTER OF BUSINESS ADMINISTRATION (MBA) By

Amrita Verma Roll no: 1208010879

Under

Sikkim-Manipal University of Health, Medical and Technology Sciences, Manipal.

Has worked under my supervision and guidance. I hereby state that no part of

this report has been submitted for the award of any Degree, Diploma, Fellowship or any other similar titles or prizes and that the work has not been

published in any journal or magazine. Certified By

Name:

Designation:

Organization:

Signature:

Date :

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The HR Manager ____________________________________ Date: Dear Sir/Madam, ___________________________ is a bona fide student of Sikkim Manipal University Department of Distance Education, currently enrolled in the third semester of the MBA program, with specialization in the area of _________________. As part of the requirements of the MBA degree, he/she is required to complete a Project of approximately eight months’ duration in his/her area of specialization. This should ideally be a live Project on an ongoing problem faced by the organization, under the supervision of a company guide. The objective of the project is to enable the student to apply his/her theoretical knowledge, problem solving and analytical skills and to equip himself/herself to face the challenges of the real world. Evaluation of the project will be based on a written report, as well as an oral presentation, after which a certificate of completion should be given by the organization. I would be grateful if an opportunity could be given to _______________________ work on such a project in your esteemed organization. Please review his/her enclosed resume and let me know if a suitable project would be available in his/her area of specialization. Looking forward to a positive response, Sincerely, Company Head Signature with Seal

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INDEX

Sr.No. TOPIC Page no.

1 EXECUTIVE SUMMARY 9

2 RESEARCH OBJECTIVE 10

3 SCOPE OF PROJECT 10

4 RESEARCH METHODOLGY 10

5 FINDINGS AND ANALYSIS 11

6 LIMITATIONS 11

7 ABOUT INDIA INFOLINE 12

8 INTRODUCTION OF MUTUAL FUND 17

9 RECOMMENDATION 37

10 CONCLUSION 42

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Executive Summary

The project has been carried out at “India Infoline Ltd” with the title

“Comparative Analysis of Mutual Fund on the basis of Alpha, Beta and Standard

Deviation”.

The main function of having analysis of Mutual fund is to pinpoint the strong

points and weaknesses of mutual fund schemes.

For this I have taken the following parameters: Analyzing Mutual Fund using:-

1. Alpha: - I came to know how particulars Mutual Fund schemes performed related to

what it was expected to do.

2. Beta:- By comparing Mutual Fund on the basis of beta we come to know how

volatile a particular Mutual Fund as related to stock market is.

3. Standard Deviation:- The standard deviation of a fund measures this risk by

measuring the degree to which the fund fluctuates in relation to its mean return.

4. Schemes selected for project:-

Equity Diversified Balanced Fund Debt fund Liquid fund

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RESEARCH OBJECTIVE:

To evaluate investment performance of selected mutual funds in terms of risk and

return. Also to analyze the performance of mutual fund schemes on the basis of various

parameters. Primarily to understand the basic concepts of Mutual fund and its benefits as

an investment avenue.

Secondly, to compare and evaluate the performance of different schemes of mutual

fund companies on the basis of risk, return and volatility

SCOPE OF PROJECT:

The Schemes were categorized and selected on evaluating their performance and

relative risk. The scope of the project is mainly concentrated on the different categories

of the mutual funds such as equity schemes, debt funds, balanced funds and liquid fund.

RESEARCH METHODOLGY:

Research Methodology is a very organized and systematic medium through which a

particular case or problem can be solved. It is analytical, descriptive and quantitative

research where the comparison between the different mutual fund schemes is made on the

basis of risk, volatility and return.

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FINDINGS AND ANALYSIS:

The collection of information is based on the secondary probe. The information

has been collected through various books, and internet.

An attempt has been made to evaluate the performance of the selected mutual

fund schemes. Performance of mutual fund schemes has been evaluated by using the

following performance measures

(a) Risk (b) Standard Deviation.

(c) Beta

LIMITATIONS:

To get an insight in the process of risk and return and deployment of funds by

fund manager is difficult.

The project is unable to analyse each and every scheme of mutual funds to create

awarness about risk and return. The risk and return of mutual fund schemes can

change according to the market conditions

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ABOUT THE COMPANY INDIA INFOLINE:

INDIA INFOLINE is a one-stop financial services shop, most respected for

quality of its advice, personalized service and cutting-edge technology.

VISION is “to be the most respected company in the financial services space.” India Infoline Ltd:

India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the Stock

Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India Infoline

group, comprising the holding company, India Infoline Ltd and its subsidiaries, straddles the

entire financial services space with offerings ranging from Equity research, Equities and

derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds,

Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan

products and Investment banking. India Infoline also owns and manages the websites,

www.indiainfoline.com and www.5paisa.com .

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India Info line Ltd, being a listed entity, is regulated by SEBI (Securities and

Exchange Board of India). It undertakes equities research which is acknowledged by

none other than Forbes as 'Best of the Web' and '…a must read for investors in Asia'

India Infoline's research is available not just over the internet but also on

international wire services like Bloomberg , Thomson First Call and Internet Securities

where it is amongst the most read Indian brokers.

Its various subsidiaries are in different lines of business and hence are governed

by different regulators.

Geographical presence

IIL has pan-India presence across 94 cities. It started off with major branches in

metros and now it is focusing on Tier II and III cities. In Q1-FY07 the company opened

56 branches, taking the total number of branches to 233 branches. Almost 50%of the

revenue comes from centers in Maharashtra and Delhi.

Followed by other regions. Investment Highlights

Strong growth in Industry volumes and rising retail participation Average daily volumes

in the equity markets (cash and derivative combined) have increased by

72%from to Rs.167bn in FY 05 to Rs.288bn in FY 06.With the economy growing at 7-

8% a mounting per capita income and growing BPO culture, there is a new class of young

investors, which are moving towards the equity market.

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IIL is majorly present in the retail segment. With the rising income levels, risk- taking

ability of people and the confidence in the India Inc, participation from the retail crowd is

increasing y-o-y. IIL is aggressively increasing its presence by opening branches in

different cities. In FY QI-07, they roll out 56 new branches and acquired 25000 new

customers. And it expects them to have 350 and 430 branches by FY 08 respectively.

The subsidiaries of India Info line Ltd are: India Infoline Securities Pvt Ltd:

India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is

engaged in the businesses of Equities broking and Portfolio Management Services. It

holds memberships of both the leading stock exchanges of India viz. the Stock Exchange,

Mumbai (BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash

and Derivatives segments of the NSE as well as the Cash segment of the BSE.

India Infoline Commodities Pvt Ltd:

India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,

which is engaged in the business of commodities broking. They have memberships with

the MCX and NCDEX, two leading Indian commodities exchanges, and has recently

acquired membership of DGCX.

India Infoline Distribution Co Ltd (IILD):

India Infoline Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd and is

engaged in the business of distribution of Mutual Funds, IPOs, Fixed Deposits and

other small savings products. It is one of the largest 'vendor-independent' distribution

houses and has a wide pan-India footprint of over 232 branches coupled with a huge

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number of 'feet-on-street', which help source and service customers across the length and

breadth of India.

Mortgages & Loans:

IILD has also entered the business of distribution of mortgages and loan products

during the year 2005-2006.

India Infoline Insurance Services Ltd:

India Infoline Insurance Services Ltd is also a 100% subsidiary of India Infoline Ltd

and is a registered Corporate Agent with the Insurance Regulatory and Development

Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co

Ltd, which is India's largest private Life Insurance Company.

India Infoline Investment Services Ltd:

India Infoline Investment Service Ltd is also a 100% subsidiary of India Infoline Ltd.

It has an NBFC licence from the Reserve Bank of India (RBI) and offers margin- funding

facility to the broking customers.

Management of India infoline: Mr. Nirmal Jain

Nirmal Jain is the founder and Chairman of India Info line Ltd. He holds an MBA

degree from IIM Ahmedabad, and is a Chartered Accountant and a Cost Accountant. He

has had an impeccable professional and academic track record. He then joined hands with

two local brokers to set up their equity research division Inquire, in 1994. His work set

new standards for equity research in India. In 1995, he founded his own independent

financial research company, now known as India Info line Ltd.

Mr. R Venkataraman

Venkataraman is the co-promoter and Executive Director of India Infoline Ltd. He

holds a B.Tech degree in Electronics and Electrical Communications Engineering from

IIT Kharagpur and an MBA degree from IIM Bangalore. He has held senior managerial

positions in various divisions of ICICI Limited, including ICICI Securities Limited, their

investment banking joint venture with J P Morgan of USA and with BZW and Taib Capital

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Corporation Limited. He has also held the position of Assistant Vice President with G E

Capital Services India Limited in their private equity division.

The Board of Directors Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India

Infoline comprises: 1. Mr Sat Pal Khattar (Non Executive Director) Mr Sanjiv Ahuja (Independent Director)

2. Mr Nilesh Vikamsey (Independent Director) Mr Kranti Sinha (Independent Director)

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INTRODUCTION TO MUTUAL FUND

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

common financial goal. The money thus collected is invested by the fund manager in

different types of securities depending upon the objective of the scheme.

These could range from shares to debentures to money market instruments. The income earned

through these investments and the capital appreciation realized by the scheme are shared by its

unit holders in proportion to the number of units owned by them (pro rata).

Thus a Mutual Fund is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost.

Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual

Funds.

Each Mutual Fund scheme has a defined investment objective and strategy mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario.

Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives

and other assets have become mature and information driven. Price changes in these assets are

driven by global events occurring in faraway places.

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A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of

events, understand their implications and act speedily. An individual also finds it difficult to keep

track of ownership of his assets, investments, brokerage dues and bank transactions etc.

Draft offer document is to be prepared at the time of launching the fund. Typically, it pre

specifies the investment objectives of the fund, the risk associated, the costs involved in the

process and the broad rules for entry into and exit from the fund and other areas of operation. In

India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities

exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial

strength in granting approval to the fund for commencing operations.

A sponsor then hires an asset management company to invest the funds according to the

investment objective. It also hires another entity to be the custodian of the assets of the fund and

perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management Company also, in

which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset

Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset

Management Company Ltd., which has floated different mutual funds schemes and also acts

as an asset manager for the funds collected under the schemes.

ORGANIZATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up

of a mutual fund

Organization of a Mutual Fund

A Mutual Fund is set up in the form of trust, which has sponsor, trustees, asset management

company (AMC), and custodian. The trust is established by sponsor or more than one sponsor who

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is like a promoter of company. The trustee of mutual fund holds its property for the benefit of unit

holders. Asset Management Company (AMC) approved by SEBI manages the funds by making

investments in various types of securities. Custodian, who registered with SEBI, holds the securities

of the fund in its custody. The trustees are vested with the general power of superintendence and

direction over AMC. They monitor the performance and compliance of SEBI regulations by mutual

fund.

SEBI regulations required that at least two thirds of the directors of trustee company or

board of trustees must be independent i.e. they should not be associated with sponsors. Also, 50%

of the directors of the AMC must be independent. All mutual funds are required to be registered

with SEBI before they launch their schemes.

MAJOR MUTUAL FUND COMPANIES IN INDIA 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 A G is the custodian of ABN AMRO Mutual Fund.

BIRLA SUN LIFE MUTUAL FUND

Birla 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 a

AUM of

Rs.10, 000 crores. BANK OF BARODA MUTUAL FUND Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,

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1992 under the sponsorship of Bank of Baroda. BOB Assets Management Company Limited is

the AUM of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is

the custodian.

HDFC MUTUAL FUND

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing

Development Finance Corporation Limited and Standard Life Investments Limited.

ING VYSYA MUTUAL FUND ING Yysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It

is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd.

was on corporaed on April 6, 1998.

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 13

October, 1993 with two sponsors, Prudential Plc. and the AMC is Prudential ICICI Asset

Management Company Limited incorporated on 22 June, 1993.

SAHARA MUTUAL FUND

Sahara Mutual Fund was setup on July 18, 1996 with Sahara India financial Corporation Ltd.

as the sponsor. Sahara Assets 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.

STATE BANK OF INDIA MUTUAL FUND

State 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 crore approximately.

Today it is the largest Bank sponsored Mutual Fund in India. They already launched 35

schemes out of which 15 have already yield 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.

TATA MUTUAL FUND

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TATA Mutual Fund 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 manger is Tata

management Limited is one of the fastest in the country with more than Rs.7,703 Crore(as on 2005)

of AUM.

KOTAK MAHINDRA ASSTE MANAGEMENT COMPANY

Kotak Mahindra Asset Management Company is a subsidiary of KMBL. It is presently

having more than 1, 99,818 investors in its various schemes. KMAMC stared 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 to dedicated gilt scheme investing only

in government securities.

UNIT TRUST OF INDIA MUTUAL FUND

UTI Asset Management Company Private Limited, established in Jan 24, 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.20,

000 crore. The sponsors of UTI Mutual Fund are Bank of Baroda, Punjab National Bank, State Bank

of India, and Life Insurance Corporation of India. The schemes of UTI Mutual Fund are Liquid

Funds, assets Management Funds, Index Funds and Balanced Funds.

RELIANCE MUTUAL FUND

Reliance Mutual Fund 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 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 investments in diversified securities.

STANDARD CHARTERED MUTUAL FUND

Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by Standard

Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered

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Asset Management Company Pvt. Ltd is the AMC which was incorporated with SEBI on December

20, 1999.

FRANKLIN TEMPLETON MUTUAL FUND

The group, Franklin Templeton investment is a California based company with a global AUM

of US $409.2(as on 2005). It is one of the largest financial service group 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.

MORGAN STANLEY MUTUAL FUND

Morgan Stanley is a world wide financial services company and its leading in the market in

securities, investment management and credit services. Morgan Stanley investment management

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

extending to high net worth individuals and retail investors. In India it is known as Morgan

Stanley investment management Private Ltd. and its AMC is Morgan Stanley Mutual Fund. This is

the first closed end diversified equity scheme serving the needs of Indian retail investors

focusing on the long term capital appreciation.

ESCORT MUTUAL FUNDS

Escort Mutual Funds was set up on April 15th, 1996 with Escorts Finance Ltd. as its sponsor.

The Trustee Company is Escorts Investments Trust Ltd.. its AMC was incorporated on Dec1st,

95 with the name Escorts Asset Management Ltd. ALLAINCE CAPITAL MUTUAL FUND

Allaince Capital Mutual Fund was set up 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 Pvt. Ltd. with the corporate office in

Mumbai.

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BENCHMARK MUTUAL FUND

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt.

Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the trustee Company.

incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Assets Management

Company Pvt. Ltd. is the AMC.

CAN BANK MUTUAL FUND

Can Bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as

the sponsor. Canara bank investment Management Service Ltd. incorporated on March 2, 1993 is

the AMC. The Corporate Office of the AMC is in Mumbai.

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.

LIC MUTUAL FUND

Life Insurance Corporation on India setup LIC Mutual Fund on 19th June 1989. It contributed

Rs.2 crore 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 bsiness on

29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset

Management Company Ltd. as the Investment Managers for mutual fund. GIC MUTUAL FUND

GIC Mutual Fund, sponsored by General Insurance Corporation of India, a government of

India undertaking and the four Public Sector General Insurance Companies, viz. National

Insurance Co. Ltd, the New India Assurance Co. Ltd. the Oriental Insurance Co. Ltd and United

India Insurance Co. Ltd and is constituted as a Trust in Accordance with the provisions of the

Indian Trusts Act, 1882.

Types of Mutual Funds

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

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By Structure: Open-ended Funds

An open-end fund is one that is available for subscription all through the year. These do

not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")

related prices. The key feature of open-end schemes is liquidity.

Closed-ended Funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest

in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of

the scheme on the stock exchanges where they are listed. In order to provide an exit route to the

investors, some close-ended funds give an option of selling back the units to the Mutual Fund

through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one

of the two exit routes is provided to the investor.

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are

open for sale or redemption during pre-determined intervals at NAV related prices.

By Investment Objective: Growth Funds:

The aim of growth funds is to provide capital appreciation over the medium to long-

term. Such schemes normally invest a majority of their corpus in equities. It has been proven

that returns from stocks, have outperformed most other kind of investments held over the long

term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a

period of time.

Income Funds:

The aim of income funds is to provide regular and steady income to investors. Such

schemes generally invest in fixed income securities such as bonds, corporate debentures and

Government securities. Income Funds are ideal for capital stability and regular income.

Balanced Funds:

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The aim of balanced funds is to provide both growth and regular income. Such schemes

periodically distribute a part of their earning and invest both in equities and fixed income

securities in the proportion indicated in their offer documents. In a rising stock market, the NAV

of these schemes may not normally keep pace, or fall equally when the market falls. These are

ideal for investors looking for a combination of income and moderate growth.

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital

and moderate income. These schemes generally invest in safer short-term instruments such as

treasury bills, certificates of deposit, commercial paper and inter- bank call money. Returns on

these schemes may fluctuate depending upon the interest rates prevailing in the market. These

are ideal for Corporate and individual investors as a means to park their surplus funds for short

periods.

Load Funds:

A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or

sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to

2%. It could be worth paying the load, if the fund has a good performance history.

No-Load Funds:

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no

commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is

that the entire corpus is put to work.

Other Schemes:

Tax Saving Schemes:

These schemes offer tax rebates to the investors under specific provisions of the Indian

Income Tax laws as the Government offers tax incentives for investment in specified avenues.

Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed

as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to

investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the

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capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30,

2000.

Special Schemes: Industry Specific Schemes:

Industry Specific Schemes invest only in the industries specified in the offer document.

The investment of these funds is limited to specific industries like InfoTech, FMCG, Pharmaceuticals

etc.

Index Schemes: Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. Sectoral Schemes:

Sectoral Funds are those, which invest exclusively in a specified industry or a group of

industries or various segments such as 'A' Group shares or initial public offerings.

BENEFITS OF MUTUAL FUND INVESTMENT

Professional Management:

Mutual Funds provide the services of experienced and skilled professionals, backed by

a dedicated investment research team that analyses the performance and prospects of

companies and selects suitable investments to achieve the objectives of the scheme.

Diversification:

Mutual Funds invest in a number of companies across a broad cross-section of industries and

sectors. This diversification reduces the risk because seldom do all stocks decline at the same time

and in the same proportion. You achieve this diversification through a Mutual Fund with far less

money than you can do on your own.

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Convenient Administration:

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems

such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds

save your time and make investing easy and convenient.

Return Potential:

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as

they invest in a diversified basket of selected securities.

Low Costs:

Mutual Funds are a relatively less expensive way to invest compared to directly investing in

the capital markets because the benefits of scale in brokerage, custodial and other fees translate

into lower costs for investors.

Liquidity:

In open-end schemes, the investor gets the money back promptly at net asset value

related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock

exchange at the prevailing market price or the investor can avail of the facility of direct repurchase

at NAV related prices by the Mutual Fund.

Transparency:

You get regular information on the value of your investment in addition to disclosure

on the specific investments made by your scheme, the proportion invested in each class of assets

and the fund manager's investment strategy and outlook.

Flexibility:

Through features such as regular investment plans, regular withdrawal plans and dividend

reinvestment plans, you can systematically invest or withdraw funds according to your needs and

convenience.

Affordability

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Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund

because of its large corpus allows even a small investor to take the benefit of its investment

strategy.

Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions of

strict regulations designed to protect the interests of investors. The operations of Mutual

Funds are regularly monitored by SEBI.

LIMITATION OF MUTUAL FUND INVESTMENT 1. No Control Over Cost:

An Investor in mutual fund has no control over the overall costs of investing. He pays an

investment management fee (which is a percentage of his investments) as long as he remains

invested in fund, whether the fund value is rising or declining. He also has to pay fund distribution

costs, which he would not incur in direct investing.

However this only means that there is a cost to obtain the benefits of mutual fund services.

This cost is often less than the cost of direct investing.

2. No Tailor-Made Portfolios:

Investing through mutual funds means delegation of the decision of portfolio composition to

the fund managers. The very high net worth individuals or large corporate investors may find this to

be a constraint in achieving their objectives.

However, most mutual funds help investors overcome this constraint by offering large no. of

schemes within the same fund.

3. Managing A Portfolio Of Funds:

Availability of large no. of funds can actually mean too much choice for the investors.

He may again need advice on how to select a fund to achieve his objectives.AMFI has taken

initiative in this regard by starting a training and certification program for prospective Mutual Fund

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Advisors. SEBI has made this certification compulsory for every mutual fund advisor interested in

selling mutual fund.

4. Taxes:

During a typical year, most actively managed mutual funds sell anywhere from 20 to 70

percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay

taxes on the income you receive, even if you reinvest the money you made.

5. Cost of Churn:

The portfolio of fund does not remain constant. The extent to which the portfolio changes is

a function of the style of the individual fund manager i.e. whether he is a buy and hold type of

manager or one who aggressively churns the fund. It is also dependent on the volatility of the

fund size i.e. whether the fund constantly receives fresh subscriptions and redemptions.

Such portfolio changes have associated costs of brokerage, custody fees etc. that lowers the

portfolio return commensurately.

Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its

liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the

fund, this is the amount that the shareholders would collectively own. This gives rise to the

concept of net asset value per unit, which is the value, represented by the ownership of one unit

in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units.

However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also

abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the fund.

Once it is calculated, the NAV is simply the net value of assets divided by the number of units

outstanding. The detailed methodology for the calculation of the asset value is given below.

Asset value is equal to Sum of market value of shares/debentures

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+ Liquid assets/cash held, if any + Dividends/interest accrued Amount due on unpaid assets Expenses accrued but not paid

HISTORY OF MUTUAL FUND Mutual Funds in India (1964-2000)

The end of millennium marks 36 years of existence of mutual funds in this country.

The ride through these 36 years is not been smooth. Investor opinion is still divided. While

some are for mutual funds others are against it.

UTI commenced its operations from July 1964 .The impetus for establishing a formal

institution came from the desire to increase the propensity of the middle and lower groups to save

and to invest. UTI came into existence during a period marked by great political and economic

uncertainty in India. With war on the borders and economic turmoil that depressed the financial

market, entrepreneurs were hesitant to enter capital market.

UTI commenced its operations from July 1964 "with a view to encouraging savings and

investment and participation in the income, profits and gains accruing to the Corporation from the

acquisition, holding, management and disposal of securities." Different provisions of the UTI

Act laid down the structure of management, scope of business, powers and functions of the

Trust as well as accounting, disclosures and regulatory requirements for the Trust.

The opening up of the asset management business to private sector in 1993 saw

international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital

International along with the host of domestic players join the party. But for the equity funds,

the period of 1994-96 was one of the worst in the history of Indian Mutual Funds.

1999-2000 Year of the funds

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

year 1999 saw immense future potential and developments in this sector. This year signaled the

year of resurgence of mutual funds and the regaining of investor confidence in these MF’s. This

time around all the participants are involved in the revival of the funds the AMC’s, the unit

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

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

An insight of the Union Budget on mutual funds taxation benefits is provided later.

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

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

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

fund. No longer were the mutual funds interested in selling the concept of mutual funds they

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

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

schemes for new IPO’s were inevitable. The quest to attract investors extended beyond just new

schemes. The funds started to regulate themselves and were all out on winning the trust and

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

One cam say that the industry is moving from infancy to adolescence, the industry is

maturing and the investors and funds are frankly and openly discussing difficulties

opportunities and compulsions.

Future Scenario

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next

few years as investor’s shift their assets from banks and other traditional avenues. Some of

the older public and private sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with stronger

players in three to four years. In the private sector this trend has already started with two

mergers and one takeover. Here too some of them will down their shutters in the near future to

come.

But this does not mean there is no room for other players. The market will witness a flurry

of new players entering the arena. There will be a large number of offers from various asset

management companies in the time to come. Some big names like Fidelity, Principal, Old Mutual

etc. are looking at Indian market seriously. One important reason for it is that most major

players already have presence here and hence these big names would hardly like to get left

behind.

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The mutual fund industry is awaiting the introduction of derivatives in India as this would

enable it to hedge its risk and this in turn would be reflected in it’s Net Asset Value (NAV).

SEBI is working out the norms for enabling the existing mutual fund schemes to trade in

derivatives. Importantly, many market players have called on the Regulator to initiate the

process immediately, so that the mutual funds can implement the changes that are required to

trade in Derivatives.

GROWTH IN ASSETS UNDER MANAGEMENT

RECENT TRENDS IN MUTUAL FUND INDUSTRY

The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity.

Few hired specialized staff and generally chose to transfer staff from the parent organizations. The

performance of most of the schemes floated by these funds was not good. Some schemes had

offered guaranteed returns and their parent organizations had to bail out these AMC’s by paying

large amounts of money as the difference between the guaranteed and actual returns. The service

levels were also very bad.

Most of these AMC’s have not been able to retain staff, float new schemes etc. and it is doubtful

whether, barring a few exceptions, they have serious plans of continuing the activity in a major

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way. The experience of some of the AMC’s floated by private sector Indian companies was also

very similar. They quickly realized that the AMC business is a business, which makes money in

the long term and requires deep-pocketed support in the intermediate years.

Some have sold out to foreign owned companies, some have merged with others and

there is general restructuring going on. The foreign owned companies have deep pockets and

have come in here with the expectation of a long haul. They can be credited with introducing many

new practices such as new product innovation, sharp improvement in service standards and

disclosure, usage of technology, broker education and support etc. In fact, they have forced

the industry to upgrade itself and service levels of organizations like UTI have improved

dramatically in the last few years in response to the competition provided by these.

WHY SHOULD INVESTORS INVEST IN MUTUAL FUND?

An investor avails of the service of experienced and skilled professionals who are backed by a

dedicated of companies and selects suitable investments to achieve the objectives of the schemes.

• Mutual funds invest in a number of companies across a broad cross- section of industries

and sectors. This diversification reduces the risk because seldom do all the stocks decline

at the same time and in the same proportion. The investors achieve this diversification

through a mutual fund with far less money than you can do on our own.

Investing in a mutual fund reduces paperwork and helps an investor avoid many problems

such as bad deliveries, delayed payments and unnecessary follow.

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EMERGING ISSUES IN MUTUAL FUND • Rating of Mutual Fund Schemes:

Total returns has been the criteria for measuring the performance of mutual fund. Therefore,

CRISIL has development a composite performance ranking which measures performance for each of

the open- ended schemes. According to CRISIL, this measures is applicable only to those schemes,

which are at least two years old and disclose 100% of their portfolios.

• Changes in Mutual Fund due to the Advent of Net: As per SEBI regulations, bond funds and equity funds can charge a maximum of 2.25% and 2.5% as administrative fees, respectively. Mutual Funds could bring down their

administrative costs to 0.75%, if trading is done online and consequently improves the return

potential of their schemes. Mutual Funds could provide better advise or servise to their investors

through the Net.

• New Norms on NPA Classification:

The Malegan committee has made important recommendations regarding norms on

classification of NPAs in debt securities and norms for valuation of liquid securities in a mutual

fund schemes. The committee has recommended that debt securities held by mutual fund in

their portfolio can be classified as NPA, if the principal or interest is not received for six months.

The mutual funds will have to disclose the NPAs to unit holders in a half-yearly basis.

• INFLUENCE OF TECHNOLOGY:

A majority of the mutual fund have their own websites providing basic information

relating to the schemes. Mutual Fund has begun to use electronic fund transfer method top

remit their dividends and redemption proceeds. However, the most significant influence of

technology is seen in servicing investors. So technology can bridge the gap between investor

education and products positioning.

• PRODUCT INNOVATION:

Product innovation is an emerging feature in the mutual fund industry in India. Most of

the products offered by mutual fund can be divided among three classes of cash funds, income

funds and equity funds. The year 2002 was different in that the products offered were far more

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innovative. Templeton India launched a debt fund that would invest predominantly in floating

rate bonds.

• INDICES FOR MUTUAL FUNDS:

The AMFI has recently launched four indices for gilt funds and another set of indices for

balanced funds, bond funds, monthly income plans and liquid funds. The indices, which have

been developed and will be maintained by ICICI securities and finance companied and

CRISIL.com, respectively, will be mandated for use by mutual funds to enable the comparison of

performance.

• FUNDS OF FUNDS:

The SEBI may soon permit mutual funds to float a new category of funds called “funds of

funds”, which will invest in other mutual fund schemes. These scheme will enable people to

invest in different mutual funds schemes through a single find.

MUTUAL FUND BEST PRCTICES

THE PRACTICE OF “RESTFUL” Risk- Reward Relationship:

A clear and direct relationship of risk with reward has to be developed and the concept

instilled in the mind of the investor, and this is the basis of all classification of Mutual Fund.

Ease of Business:

The business of Mutual Fund is not an easy one. It is easy only for the ones who have either

been in the business for a long time, or for the people, institutions which have been in the

investment space for a long time and are willing to experiment and learn from their mistake, and

can be flexible.

Service:

The service provision ought to be flawless, for after all, Mutual Fund is a service, and the

only way the number of customers can be increased and the existing ones retained is by

providing a higher level of service, thereby increasing customer satisfaction.

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Trust / Transparency:

A high level of transparency has to be built into the system of processes and

investments in Mutual Fund. This is of vital importance as the terms “Transparency” and “Trust”, in

the case of Mutual Funds is synonyms. Trust in the firm would come only with transparency.

And with Trust would come more business.

Fairness to Investors:

This, of course, is an offshoot of the previous point that we made. No business can

survive unless it is fair to the customer. However, what is important here is that it has to be made

evidently clear that the firm is actually being fair to its customers. Modesty doesn’t help, and this

has to be told to your customers so that they actually notice.

Utility: The objective of the investment have to be always kept in mind while marketing Mutual Fund, for if there is a deviation, its utility is lost, or the customers remain unsatisfied.

Liquidity:

This has again and again highlighted, for it the basic premise that most investors invest in

Mutual Fund only because of the high level of liquidity. There has to be a good market development

for your issue, so that there is a ready market available for them.

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RECOMMENDATION

Remember to pack the following investment gems in your luggage as you set forth on your financial journey. These guideposts reinforce and expand the key points covered throughout Building Your Mutual Fund Portfolio.

• Diversify for investment success: Develop a solid plan based on your age, time horizon,

liquidity needs, income and risk tolerance. Stick with it until your circumstances change.

• Periodically rebalance your holdings to y o u r original asset allocation benchmark:

By doing this, you will wind up selling shares in expensive funds and reinvesting in

cheaper ones.

• Invest as much as you can in stock funds: As a rough rule, try to hold a percentage

at least equal to “100 minus your age” in stocks. Senior citizens might consider 110

minus their ages to avoid growing too conservative.

• Don’t hop from fund to fund: Traders often lag the long-range returns of the stock and

bonds markets.

• Set your sights on building wealth slowly: Get rich quick schemes often backfire.

People who amass fortunes through speculation frequently also learn how it feels to get

poor quickly

• Keep it simple: Basic investment plans often work best on the quest for wealth.

• Avoid gimmicks: Don’t invest in anything you don’t understand. Pain vanilla funds

survive the test of time better than faddish peers that make use of derivatives and other

arcane strategies.

• Do your home work before starting out: Never buy or sell Mutual Funds solely on the basis

of tips. If a suggestion seems to have merit, do your own analysis.

• Focus on risk, return and cost when evaluating funds: Keep in mind that a fund’s risk

and expenses are easier to predict than its return.

• Judge past performance with a grain of salt: Historic returns don’t always predict

future results, especially if a fund’s management or investment style has changed recently.

• Don’t neglect the prospectus: You’ll find the guts of this document in the “financial -

highlights”. Look for past expense rations, portfolio turnovers, total annual returns and year

to year changes in assets

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• Consider hiring a stockbroker or financial planner if you need help with your

portfolio: Just make sure the individual is competent and will your needs. The more

you understand about investment risks, return and costs, better you can evaluate the kind of

jobs your advisor is doing.

• Don’t overlook estate planning in your investment game plan: A living trust has

important advantage over a will.

• Make sure your Mutual Fund accounts are titled correctly: Individual, joint, custodial and

trust account are four common alternatives. The manners of titling takes precedence over

any instructions in your heirs know about your accounts.

• Take advantage of fund company service: Telephone reps often can furnish answers to

your questions.

• Let time work for you: At 10 percent annually – the long run average return on stocks

your money doubles every 7.3 years, quadruples every 14.6 years and expands tenfold every

24.2 years.

• Emphasize time over market timing: Buy good stock funds and stay with them for the long

haul. Even professional have trouble predicting the market’s next move.

• Invest regularly: It’s been demonstrated that you can do well over the long haul even if

you invest money each year at or near the market’s annual peak.

• Recognize that the risk of being in stock decreases as your holding period lengthens:

Known as time diversification, it works because the good years far outweigh the bad over

lengthy period. On average, seven out of every ten years are winners in the stock market.

• Save as much of your paycheck as you can: The older you get and the higher your

income, the larger the percentage you should strive to set aside.

• Consider painless and efficient automatic investment plans, as offered by many fund

companies. Your monthly investment go straight into your chosen fund from either a bank

account or your paycheck.

• Pay attention to what T-bills yield relative to stocks: by dividing the yield on the former

by the yield on the latter, when 91 days T-bills yield more than twice the sensex 30’s

yield, it could signal that stocks have become overpriced

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• Conversely, recognize the excellent value offered by stocks any time the T- bills /stock

yield ration is considerably below 2. At the extreme, stock market condition could be highly

favorable when both numbers are about equal.

• Don’t expect good or bad times to last forever. Stocks can stay overvalued or

undervalued for surprisingly long stretches, but bull markets always come to an end, and

so do bear markets.

• Use standard deviation instead of beta to evaluate a mutual fund’ risk: The former is a

pure, unbiased measure of volatility, which is not tied to a particular stock- price index as

is beta. Standard deviation measures the extent to which returns bob up and down around

their average.

• Examine your fund’s composite PE ratio: The average price earnings ratio for all the

stocks it holds. If a fund’s PE is well above that of the Sensex 30’s, it faces greater possible

losses in a correction or bear market.

• Remember that volatile funds might not be so bad when held in appropriate proportions

within a broad portfolio. Combining funds that rise and fall at different times could

result in an overall smoother ride.

• Combine funds that follow the growth and value stock picking styles: as one style

normally is out of favour when the other is in. your portfolio’s fluctuations will be less

erratic if you include investments from both camps.

• Don’t give up stock funds, even if you’re retired: A 65 year old retiree can expect to

live another 20 years or so. If you need income, take your dividends in cash. If that’s

insufficient, make systematic withdrawals from a diversified portfolio.

• But don’t set up a systematic withdrawal plan without forst calculating how long your

capital will last: given your expected return and withdrawal rate. Considering the impact

of taxes and inflation, you risk depleting your nest egg if your annual withdrawal rate

exceeds about 6 percent.

• Stay away from funds that are not members of reputable families: Unless you know the

manager has an excellent record. In particular, avoid tiny funds those with assts less than

400 million unless they are promising members of an established group

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• Don’t assume that laggard funds will bounce back: Long term losers have perennially

poor performance records, along with outsized expenses, a small and declining asset

base, high portfolio turnover and, sometimes, legal problems.

• Don’t look to your nest egg for thrills and excitement: Some times, relatively dull

investments, such as index funds, are best.

• Keep in minds that about 70 percent of actively managed funds under perform the

market: because operating expenses, transaction costs and cash holdings lower returns.

This represents the main argument in favor of index funds.

• Favor index funds for a meaningful “core ”portion of your stock allocation: say 25 to 50

percent or so. With these portfolios you need not worry that a fund manager might jump

ship. With a passive approach, it doesn’t matter so much who’s in control.

• Beware of gimmicks when shopping for an index fund: Avoid “enhanced” index

portfolios that claim they can outperform the sensex or other benchmarks. Plain vanilla

products with rock bottom costs are best.

• Include small cap and international funds in your portfolio for better risk adjusted

performance: Younger investors with long time horizons should take a significant stake

in these categories.

• Look beyond a fund’s name to its actual investment policies and portfolio holdings.

• Avoid small stock portfolios with assets greater than 20,000 million or so unless

you’re convinced the management is exceptionally talented.

• Keep in mind that small stocks move in cycles of five to seven years, during which they

either outperform or underperform the large blue chips.

• Conversely, do take bigger positions in small stocks when they’re cheap: Small

companies represent excellent value when the PE of any funds approximates that of the

sensex.

• Don’t hesitate to venture abroad: International investing is a great way to round out a

portfolio, since about two-thirds of world stock market values exist outside India.

• Lean to international rather than global funds for your over-seas exposure:The former

invest exclusively in foreign markets, whereas the latter have stakes in stateside

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stocks as well. With international funds, you can fine tune your overseas exposure

more precisely.

• Check the foreign weightings of your domestic stock funds: which could hold up to 15

percent or more of their assets in non- Indian issues to try to improve performance.

You may already have more international exposure than you think.

• Maintain modest stake in emerging stock markets: as well if you have a lengthy

investment horizon. Developing nations offer exciting long term growth potential.

• Don’t expect international diversification to reduce your portfolio’s volatility all the

time: Normally, it works reasonably well, but during a global panic, all the world’s

major stock exchanges could tumble together.

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CONCLUSION:

I order to study the concept of mutual fund we should note that a mutual fund is a trust that pools the money of several investors and manages investments on behalf. The fund collects this money from investors through various schemes. Each schemes is differentiated by its objectives of investments or in other words a broadly defined purpose of how the collected money is going to be involved.

Investors invest in mutual fund due to following advantages: they have professional management, diversification, convenient administration, return potential, low cost, liquidity.

By comparing the above mentioned schemes I came to know the risk and return relation between the specified schemes. Therefore investors before investing in any Mutual Fund schemes they should study the risk and return relation. And if the risk and returns is been matched with their planning, then only the investors should go for Mutual Fund schemes.

So the future of mutual funds in India is bright, because it meets investor s needs perfectly. This will give boost to Indian investors and will attract foreign investors also. It will lead to the growth of strong institutional framework that can support the capital markets in the long run.