The Mutual Fund Industry in India started

in with the formation of Unit Trust of India (UTI) with at the initiative of the

The mutual fund industry in India is one of the emerging industries in India

The Association of Mutual Funds in India (AMFI) is the industry body set up to facilitate the growth of the Indian mutual fund industry. It plays a pro-active role in identifying steps that need to

What is mutual Fund?

Mutual funds are investment avenues that pool the money of several investors to invest in financial instruments such as stocks, debentures etc. The appreciation made on the investments is distributed among the investors on the basis of the units held by each of them.

The mutual funds in India are governed by Association of Mutual Funds in India, the umbrella body for mutual funds, which is in turn governed by the Securities and Exchange Board of India (SEBI).

With the emergence of UTI and Phases that occurred the Mutual Fund Industry has entered its current phase of consolidation and growth. The graph indicates the

The history of mutual funds in India can be broadly divided into four distinct phases:-First Phase – 1964-87: The first scheme launched by UTISecond Phase – 1987-1993: Entry of Public Sector Funds

growth of assets over the consecutive phases over the years.

The Mutual Fund is managed by Professional Investment Managers who buys and sell securities for more effective growth of the funds. As u invest in a mutual fund company, as a mutual fund investor u become a “shareholder” of the mutual fund company. The savings thus provided are invested by mutual fund companies in securities, stock, debentures etc which in turn generate Profitable returns which are then passed over to the shareholders and are distributed appropriately.

Concept of Mutual Funds

By Structure:

Types of Mutual Fund Schemes

Open Ended Fund/Scheme: These are funds that you can buy and sell anytime during the year. It is available for subscription and repurchase on a continuous basis.

Close Ended Fund/Scheme: These are funds that are open only for a specific period after which you'd have to buy them from the secondary market. It has a stipulated maturity period of 5-7 years.

Interval schemes: These schemes combine the features of open ended and close ended schemes and are available for purchase or sale during a select period

By Investment Objective:

Growth: These are highly aggressive schemes and invest mainly in equities.

Income: Income funds invest in medium to long-term debt instruments. These are low risk and aim at a fixed current income .

Balanced: Also called Hybrid funds, these are a

combination of growth, debt and money market funds.

Money market schemes: These schemes invest in short term debt instruments and are highly liquid.

Tax saving: These are equity linked saving schemes that offer tax benefits under Section 80 C and have a compulsory lock in period of three years.

Special schemes: These are select funds that aim at replicating the performance of an index. Also there are funds that invest in specific sectors that fall under this category

Investing is made easier…

Comparison between FD, Bonds and Mutual Fund –   Features

Characteristics FD’s Bonds Mutual Funds

Accessibility Low Low High

Tenor Fixed (medium) Fixed (long) No Lock-in

Min. investment Rs.1000 Rs.5000 Rs.5000

Tax Benefits None 80L, 88 Dividend Tax-Free

Liquidity Low Very Low Very High

Convenience Medium Tedious Very High

Transparency None None Very High

5Top

Best Mutual Fund Schemes Performing in

India

Franklin India Bluechip | DSP BR Equity | HDFC Prudence | HDFC Top 200 | ICICI Pru Dynamic

Franklin India Bluechip is a time tested fund Launched in

1993. Making the best of increasing liquidity in Indian markets,

The Funds too have simply grown with market at a much faster

Pace.

Winning Strategy

We choose Franklin India Bluechip for his ability to contain

Declines Despite staying predominantly invested in equities.

The fund spotted value in private banking stocks in late 2008when these stocks were beaten down. Similarly it took the bold call of

holding a good chunk in capital goods stocks in 2010, when the restof the market did not see much in this segment. And these contrariancalls worked well, thanks to the fund’s eye for value.

Suitability

Franklin Bluechip is a good option for those just beginning to test watersinequities. it is this portfolio approachthat has helped build handsome wealth over the long term!

Fund Manager

Anand Radhskrishnan

Asset Size

Rs 5040 Crore as of Dec 2012

Minimum Investment

Rs 5000

FRANKLIN INDIA BLUECHIP

SNAPSHOT

Returns Meter

Bluechip

Rs700, 677

Sensex

Rs 59,079

5 years

10 years

Since Inception

Franklin India Bluechip

5.0 26.2 23.6

Sensex

0.3 19.2 9.2

Rock-Solid Performance

IF YOU THOUGHT a fund that diversified its portfoliotoo much and churned its stocks too many times will dono good, DSP BlackRock Equity will catch you wrong!This multi-cap fund, with a changing mix of large andmid-cap stocks has stood its ground quite well since its launch in April 1997.

Winning Strategy

The fund’s ability to constantly switch between growth and value styles in line with the market conditions, has made it an adept market reader.In the last one year,the fund churned its portfolio twice over.That simply means that it exits large-caps once it derives value from them.

SUITIBILITY

DSP BR Equity is a good fit in a buy and hold portfolio meant for the long term. The fund may be adept but it does slip sometimes with a defensive portfolio, it was caught unaware when the market took off northward in March 2009 after the bear onslaught. This fund can surprise you

Fund Manager

Apoorva Shah

Asset Size

Rs 2616 Crore as of Dec 2012

Minimum Investment

Rs 5000

Dec 93

Rs 10000

Dec 2013

SNAPSHOT

Returns Meter 5

years

10 years

Since Inception

DSP BR Equity

4.4 29.8 22.1

S&P CNX 500

-0.9 19.9 13.1

with short spurts of outperformance and sometimes slipups too. But if you let it be, it can generate wealth comfortably.

HDFC Prudence

A Fine Balancing Act

IF A FUND CAN HOLD a fourth less of equitythan regular diversified equity funds and still beatthe latter’s average, it has to be HDFC Prudence.With a return of 19 per cent since its launch inFebruary 1994.

Winning Strategy

HDFC Prudence does balance its portfolio well. But for aBalanced fund, its approach is quite aggressiveIts buy and hold approach hence mitigates risks associatedwith interest rate movements.That HDFC Prudence is managed by the same fund

manager since itsinception, when it was launched by Zurich Mutual, has also provided stabilityin terms of fund management.

Suitability

SNAPSHOT

Fund Manager

Prashant Jain

Asset Size

Rs 6239 Crore as of Dec 2012

Minimum Investment

Rs 5000

Returns Meter

5 years

10 years

Since Incep

tion

HDFC

Prudence

8.8

26.0

18.7

S&P Nifty

0.518.

58.1

HDFC Prudence is a good candidate for those wanting to contain downside

risks but looking for superior returns in an equity rally. Its sister fund HDFCBalanced is a little more conservative, often holding a tad less in equities than Prudence.

ICICI Pru Dynamic

An Aggressive Defender

IF YOU THINK of a fund that would defend your Portfolio aggressively but stay comfortably ahead ofIts benchmark S&P nifty, it has to beICICI Prudential Dynamic. You may have a tingeof surprise that this reclusive scheme even made it toour list of fabulous funds.

Winning Strategy

Cash calls together with aggressive churning is this fund’s trump card. now, acash call works well in a down market. But Sankaran naren, the fund manager,has used this in a bull run as well. In markets such as 2005 and 2006, the fundoutperformed its benchmark by 20-25 percentage points and in fact beat someof the peers in FundsIndia Five as well.

SNAPSHOT

Fund Manager

Sankaran Naren

Asset Size

Rs 3691 Crore as

of Dec 2012

Minimum Investment

Rs 5000

Returns Meter

5 years

10 years

Since

Inception

ICICI Pru Dynami

c

5.6

26.2

27.6

S&P Nifty

0.5

18.5

19.9

Suitability

A fund like ICICI Pru Dynamic would fit only a long-term investor’s portfolio. Its steep exit load can punish you for early exit. Besides quickly normalising your portfolio post phases of market dips, it also generates steady returns. But you will see the fund underperform, it moves to cash even as peers stay fully invested in equities.

HDFC TOP 200

Top of League

LAUNCHED in September 1996, large-cap focusedFund HDFC Top 200 can easily be termed as one ofThe most consistent performers in the equity funduniverse.

Winning Strategy

“Risk control is as important to wealth creation as isgenerating returns. An investor who generates moderatereturns fairly consistently with limited downside risk is likely to do better when compared with another investor who sometimes achieves spectacular returns but makes occasional considerable losses.” Prashant Jain, he remained true to the above statement in his managing HDFC Top 200. The fund, along with HDFC Equity, enjoys among the lowest expense ratios in the active fund category, thanks to massive asset size.

Suitability

HDFC Top 200 is suitable for any investor’s core portfolio. Its forgettable performance in 2011, though, has led to doubts in many an investor’s mind. Like few other HDFC funds, being fully invested in the market, besides holding highest exposure to stocks such as SBI, which underperformed,was the primary reason for the slip up. But the fund quietly accumulated SBI in 2011 when the stock under-performed. The stock is now up 46 per cent from its year

SNAPSHOT

Fund Manager

Prashant Jain

Asset Size

Rs 12,122 Crore as of Dec 2012

Minimum Investment

Rs 5000

Returns Meter

5 ye

ars

10 ye

ars

Since Incep

tionICICI Pru

Dynamic

7.2

29.5

22.6

S&P Nifty

-0.5

20.1

12.9

ago price

perhaps adding to your wealth as well, through HDFC Top 200.

Diversification - Mutual Funds aim to reduce the volatility of returns through

diversification by investing in a number of companies across a broad section of industries and sectors.

Liquidity - This mean that investors can sell their holdings in Mutual Fund investments anytime without worrying about finding a buyer at the right price.

Tax efficiency - Mutual Fund offers a variety of tax benefits. Please visit the tax corner section or consult your tax advisor for details.

Low transaction costs - Since Mutual Funds are a pool of money of many investors, the amount of investment made in securities is large. This therefore results in paying lower brokerage due to economies of scale.

Transparency - Prices of Mutual Funds are declared daily. Regular updates on the value of your investment are available. The portfolio is also disclosed regularly with

the fund

manager's investment strategy and outlook

Well-regulated industry - All the Mutual Funds are registered with SEBI and they function under strict regulations designed to protect the interests of investors.

Convenience of small investments - Under normal circumstances, an individual investor would

not be able to diversify his investments a Mutual Fund on the other hand allows even individual investors to hold a diversified array of securities due to the fact that it invests in a portfolio of stocks.

•Market Risk  At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. 

•Inflation Risk  Sometimes referred to as "loss of purchasing power." •Credit Risk In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures?•Interest Rate Risk  Changing interest rates affect both equities and bonds in many ways. Investors are reminded that "predicting" which way rates will go is rarely successful. A diversified portfolio can help in offsetting these changes.•Exchange Risk  A number of companies generate revenues. Changes in exchange rates may, therefore, have a positive or negative impact on companies which in turn would have an effect on the investment of the fund.•Investment Risk  The sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors such companies and may be more volatile than a more diversified portfolio of equities.•Changes in Government Policy Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.

Mutual Funds in India

ABN AMRO Mutual Fund Benchmark Mutual Fund Birla Sun Life Mutual

Fund Bharti AXA Mutual Fund BOB Mutual Fund CanaraRobero Mutual

Fund DBS Chola Mutual Fund Deutsche Mutual Fund DSP BlackRock Mutual

Fund Escorts Mutual Fund Fidelity Mutual Fund Fortis (ABN ) Mutual

Fund Franklin Templeton

Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund JM Financial Mutual

Fund Kotak Mahindra Mutual

Fund LIC Mutual Fund ICICI Prudential Mutual

Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund

Standard Chartered Mutual Fund Sundaram Mutual Fund Taurus Mutual Fund UTI Mutual Fund

Mutual Fund industry in India is in a very prominant stage. Still growing, still evolving. There have been various initiatives on various fronts and now the industry has reached close to Rs 8 lakh crore. But if compared with the size of mutual fund industries of most developed countries such as China and Australia, we are much smaller in size.When the Prime Minister took over the Finance Ministry from Pranab Mukherjee on his election as the President of the country, one of the first points the PM raised was that the mutual fund industry needs to be re-energised. Before this there had been various discussions which culminated into a circular issued by the Securities and Exchange Board of India on September 13, 2012.

At present, we have close to 50,000 distributors registered with AMFI. We also expect that the smaller towns will contribute more in the new cadre of distributors. The market sentiments have improved. In a long-term perspective, there is no doubt about growth of Indian economy. In such a scenario, an important initiative that will do well for the development of the industry will be penetration by more feet on Street. With the introduction of the new type and the announcement of free registration will support in achieving this objective of more feet on

Current Scenario of Mutual Fund Companies

street to sell mutual fund.

There is need to build awareness of the new funds among the investors with Constantly being in contact with them.

Suggestions

Some of investors have asked for periodical market report about stock market so that they can get the knowledge properly.Companies must try to locate hard working distributors who are providing good business in their respective geographical area. Investors are never going to accept the entry load. So such type of activity should Be avoided as much as possible.

The  company  shou ld  adver t i se   the i r   tax  sav ing  p lan  more  so   that they  can  ga in  more customers.

The mutual fund investors prefer more of the equity fund as they want more return on their money. Usually people preferred to invest in mutual fund seeing the performance of mutual fund scheme. Sometimes due to lack of detailed awareness

about mutual fund schemes the investors seek advice of distributors.Investors feel that the AMC should go for more promotional activities & should try to come up with new innovative schemes which can easily be understood by the investors.Even after seeing the market crash in May 2006 people still thinks that mutual fund is much reliable way to invest in stock market. So investors are not going for redemption during crash& were ready to wait. In fact during the crash time many people were ready to invest in mutual fund.So that’s a positive sign and the mutual fund sector may turn out to be its best in the near future.

Conclusion

BIBLOGRAPHY

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WIKIPEDIA

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MADE BY B.B.I STUDENTS………..

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