Rahul Mutual Fund Report

7/29/2019 Rahul Mutual Fund Report

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Introduction

Introduction

To get a high-quality return from Funds investors generally baffle in taking

decision for choosing the optimum funds. We here trying to get out from this

problem by comparing two funds.



I am emphasising to establish a analytical comparison between diversified

Equity- Growth funds and Sectorial Funds..

Diversified funds hold low risk than Sectorial funds because sectorial funds

concentrate only a particular sector of economy. Since we know that profit is in

proportion to risk so it make a point to study that return from sectorial funds

should be higher than diversified funds.

Comparing mutual funds is fairly simple when you have a good understanding

of the key statistics and know how to employ them effectively. The key

statistics listed below should serve you well in comparing mutual funds.

Mutual Fund Returns

Average Return

Risk-Adjusted Return

Mutual Fund Risk

Standard Deviation

Beta

Risk-to-Return



Sharpe Ratio

Coefficient of Variation

Treynor Ratio

NAV

About Mutual Funds

A mutual fund share represents a proportionate ownership of all the underlying

securities in the fund, allowing investors to spread their money over many more

securities than one person could typically put together in a portfolio. A mutual

fund is a more diversified than a typical individual's portfolio, thereby reducing

your comparative risk and, consequently increasing your comparative return.

The amount of capital needed to obtain this diversification is too large for the

average individual investor.

Besides, mutual funds can achieve economies of scale in trading and transaction

costs, economies unavailable to the typical individual investor. Also,

professional money managers should be able to earn above average returns

through successful securities analysis. Moreover, mutual funds allow



individuals to earn a certain return without needing to constantly monitor the

market.

Diversification

Successful investors know that diversifying their investments can help reduce

the adverse impact of a single investment. Mutual funds introduce

diversification to your investment portfolio automatically by holding a wide

variety of securities. Moreover, since you pool your assets with those of other

investors, a mutual fund allows you to obtain a more diversified portfolio than

you would probably beable to comfortably manage on your own — and at a

fraction of the cost. In short, funds allow you the opportunity to invest in many

markets and sectors. That‘s the key benefit of diversification.

Types of mutual funds:

Wide variety of Mutual Fund Schemes exist to cater to the needs such as

financial position, risk tolerance and return expectations etc. The table below

gives an overview into the existing types of schemes in the Industry.



1. Schemes according to Maturity Period:

Open - Ended Schemes

Close - Ended Schemes

Interval Schemes

2. Fund according to Investment Objective:

Growth Schemes

Income Schemes

Balanced Schemes

Money Market Schemes

3. Other Schemes

Tax Saving Schemes

Special Schemes

Index Schemes

Sector Specific Schemes

1. Schemes according to Maturity Period:



(A). An open ended mutual fund

A mutual fund that continually creates new shares on demand. Mutual fund

shareholders buy the funds at net asset value and may redeem them at any time

at the prevailing Net Asset Value.

(B). An close ended mutual fund

A mutual fund that closes after the initial offering, and has fixed duration open

for subscription only during a specified period. Listing in a recognized stock

exchange is a basic feature of a closed-ended mutual fund. Existing

investors/new investors can exit from or invest in these funds at the quoted

market prices subject to a specified bid/offer spread.

2. Fund according to Investment Objective:

(A). Growth / Equity Oriented Scheme

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

long- term. Such schemes normally invest a major part of their corpus in



equities. Such funds have comparatively high risks. These schemes provide

different options to the investors like dividend option, capital appreciation, etc.

and the investors may choose an option depending on their preferences. The

investors must indicate the option in the application form. The mutual funds

also allow the investors to change the options at a later date. Growth schemes

are good for investors having a long-term outlook seeking appreciation over a

period of time.

(B). Income / Debt Oriented Scheme

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, Government securities and money market instruments.

Such funds are less risky compared to equity schemes. These funds are not

affected because of fluctuations in equity markets. However, opportunities of

capital appreciation are also limited in such funds. The NAVs of such funds are

affected because of change in interest rates in the country. If the interest rates

fall, NAVs of such funds are likely to increase in the short run and vice versa.

However, long term investors may not bother about these fluctuations.



(C). Balanced Fund

The aim of balanced funds is to provide both growth and regular income as

such schemes invest both in equities and fixed income securities in the

proportion indicated in their offer documents. These are appropriate for

investors looking for moderate growth. They generally invest 40-60% in equity

and debt instruments. These funds are also affected because of fluctuations in

share prices in the stock markets. However, NAVs of such funds are likely to be

less volatile compared to pure equity funds.

(D). Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity,

preservation of capital and moderate income. These schemes invest exclusively

in safer short-term instruments such as treasury bills, certificates of deposit,

commercial paper and inter-bank call money, government securities, etc.

Returns on these schemes fluctuate much less compared to other funds. These

funds are appropriate for corporate and individual investors as a means to park

their surplus funds for short periods.

3. Other Funds



(A). Sectorial funds

Sectorial funds are those funds that restrict their investments to a particular

segment or sector of the economy. These funds concentrate on one industry

such as Infrastructure, Power , Auto , Heath care, Media , Pharmaceuticals etc.

The idea is to allow investors to place bets on specific industries or sectors,

which have strong growth potential. These funds tend to be more volatile than

funds holding a diversified portfolio of securities in many industries. Such

concentrated portfolios can produce tremendous gains or losses, depending on

whether the chosen sector is in or out of flavor.

(B). Index Funds

An index fund is a type of mutual fund that builds its portfolio by buying stock

in all the companies of a particular index and thereby reproducing the

performance of an entire section of the market. Investing in an index fund is a

form of passive investing. Passive investing has two big advantages over active

investing. First, a passive stock market mutual fund is much cheaper to run than

an active fund. Second, a majority of mutual funds fail to beat broad indexes

such as the S&P 500.



(C).Tax saving funds or Equity Linked Svings Scheme (ELSS) :

These funds have a lock-in period of three years. Much better when compared

to the lock-in periods of four and 15 years of NSC and PPF respectively. The

dividends earned will be tax free. When you sell the units of these funds, you

can avail of the long-term capital gain for which there is no tax. View the three

year lock-in period as a benefit. Because when you invest in equity, you must

take a long-term view. The real potential of equities starts to show only after a

few years. This allows you to ignore the short-term slumps and stay invested for

the long haul. Also, the lock-in gives fund managers the freedom to take sector

and stock bets, which they are not able to do in the regular equity schemes.

Before we go on to that, we would like to explain a term: market cap. You will

come across it quite often as we talk of fund managers investing in large cap,

small cap and mid cap.

Market capitalisation = Market price of the share x The number of shares in a

company

Large cap = Companies with a market cap of over Rs 1,500 crore (Rs 15

billion)

Mid cap = Those between Rs 25 crore (Rs 250 million) and Rs 1,500 crore (Rs

15 billion)

Small cap = Those less than Rs 25 crore (Rs 250 million



PRINCIPAL INVESTMENT STRATEGIES

At least 80% of the Diversified Equity Fund‘s net assets (including borrowings

for investment purposes) consists of common stocks of

large-capitalization U.S. companies that are diversified among various

industries and market sectors. For this purpose, City National Asset



Management, Inc. (―CNAM‖), the Fund‘s investment adviser, considers a large-

capitalization company to be a company with a market

capitalization satisfying Standard & Poor‘s eligibility criteria for inclusion in

the S&P 500 Index at the time of investment (currently $4

billion or greater). This investment strategy may be changed at any time, with

60 days‘ prior notice to shareholders.

CNAM manages a portion of the Diversified Equity Fund‘s assets by

replicating the holdings of the S&P 500 Index other than tobaccorelated

companies. The investments of the remainder of the Fund are typically equity

securities that a sub-adviser believes have one or more

of the following characteristics: a price significantly below the intrinsic value of

the issuer; favorable prospects for earnings growth; above

average return on equity and dividend yield; and sound overall financial

condition of the issuer.

Up to 20% of the Diversified Equity Fund‘s net assets may consist of equity

securities, consisting primarily of common stock, of midcapitalization

companies. For this purpose, CNAM considers a mid-capitalization company to

be a company with a market capitalization

satisfying Standard & Poor‘s eligibility criteria for inclusion in the S&P Midcap

400 Index at the time of investment (currently $1 billion to



$4.4 billion). In addition to investing in U.S. corporations, the Fund invests in

U.S. dollar denominated sponsored American Depositary

Receipts of foreign corporations. The Fund‘s sub-advisers may buy and sell

securities in the Fund‘s portfolio frequently, which may result

in higher transaction costs and produce capital gains and losses. The Fund‘s

sub-advisers may determine to sell a security when its target

value is realized, its earnings deteriorate, changing circumstances affect the

original reasons for the security‘s purchase, or more attractive

investment alternatives are identified.

PRINCIPAL RISKS OF INVESTING IN THE FUND

As with any mutual fund, there are risks to investing. None of the Diversified

Equity Fund, CNAM and the Fund‘s sub-advisers can

guarantee that the Fund will meet its investment goal. The Fund will expose

you to risks that could cause you to lose money. Here are the

principal risks to consider:

Market Risk of Equity Securities – By investing in common stocks, the Fund

may expose you to a sudden decline in the share price of a

particular portfolio holding or to an overall decline in the stock market. In

addition, the Fund‘s principal market segment may underperform



other segments or the market as a whole. The value of your investment in the

Fund will fluctuate daily and cyclically based on movements

in the stock market and the activities of individual companies in the Fund‘s

portfolio.

Index Risk – The performance of the portion of the Fund designed to replicate

the S&P 500 Index may not exactly match the performance

of the Index. That portion of the Fund does not hold every stock contained in

the Index and the performance of the stocks held in the Fund

may not track exactly the performance of the stocks held in the Index.

Furthermore, unlike the Index, the Fund incurs management fees,

12b-1 fees (for Class N shares only), administrative expenses and transaction

costs in trading stocks.

Medium Capitalization (Mid-Cap) Companies – Investments in mid-cap

companies may involve greater risks than investments in larger,

more established companies, such as limited product lines, markets and

financial or managerial resources. In addition, the securities of midcap

companies may have greater price volatility and less liquidity than the securities

of larger capitalized companies.

Foreign Investments (American Depositary Receipts) – Foreign investments

tend to be more volatile than domestic securities, and are



subject to risks that are not typically associated with domestic securities (e.g.,

unfavorable political and economic developments and the

possibility of seizure or nationalization of companies, or the imposition of

withholding taxes on income). The Fund invests in U.S. dollar

denominated American Depositary Receipts of foreign companies (―ADRs‖)

which are sponsored by the foreign issuers. ADRs are subject to

the risks of changes in currency or exchange rates (which affect the value of the

issuer even though ADRs are denominated in U.S. dollars)

and the risks of investing in foreign securities.

Sub-Adviser Allocation – The Fund‘s performance is affected by CNAM‘s

decisions concerning how much of the Fund‘s portfolio to

allocate for management by each of the Fund‘s sub-advisers or to retain for

management by CNAM.

Management – The Fund‘s performance depends on the portfolio managers‘

skill in making appropriate investments. As a result, the Fund

may underperform the equity market or similar funds.

Defensive Investments – During unusual economic or market conditions, or for

temporary defensive or liquidity purposes, the Fund may

invest 100% of its assets in cash or cash equivalents that would not ordinarily

be consistent with the Fund‘s investment goals.CNI CHARTER FUNDS



PERFORMANCE

The bar chart and the performance table that follow illustrate some of the risks

and volatility of an investment in the Diversified Equity

Fund by showing changes in the Fund‘s performance from year to year and by

showing the Fund‘s average annual total r eturns for 1, 5 and



10 years and since inception. Of course, the Fund‘s past performance (before

and after taxes) does not necessarily indicate how the Fund

will perform in the future. Call (888) 889-0799 or visit

www.cnicharterfunds.com to obtain updated performance information.

This bar chart shows the performance of the Diversified Equity Fund‘s

Institutional Class shares based on a calendar year.

29.18%

13.53%7.35%

14.72%

0.63%

28.46%

12.51% 13.36%

(38.08)%

(6.96)%

-60%

-40%

-20%

0%

20%

40%



60%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Best Quarter

16.06%

Q2 2003

Worst Quarter

(23.29)%

Q4 2008

This table shows the average annual total returns of each class of the

Diversified Equity Fund for the periods ended December 31, 2012.

The table also shows how the Fund‘s performance compares with the returns of

an index comprised of companies similar to those held by

the Fund.

Average Annual Total Returns(1)

(for the periods ended December 31, 2012) One Year Five Years Ten Years

Since Inception

Institutional Class

Return Before Taxes 13.36% (1.15)% 5.55% 8.75%

Return After Taxes on Distributions 13.21% (1.26)% 4.87% 6.33%



Return After Taxes on Distributions and Sale of Fund Shares 8.88% (0.99)%

4.73% 6.34%

Class N

Return Before Taxes 13.02% (1.40)% 5.27% 8.63%

S&P 500 Index

(Reflects no deduction for fees, expenses or taxes) 16.00% 1.66% 7.10% 9.37%

(1) Performance for ―Since Inception‖ for all classes is shown for periods

beginning October 20, 1988, which is the date the predecessor to the

Diversified Equity Fund (the

―Predecessor Fund‖) commenced operations. On September 30, 2005, the

Predecessor Fund reorganized into the Fund. The performance results for

Institutional Class shares

of the Fund before September 30, 2005, reflect the performance of the

Predecessor Fund‘s Class I shares. Class A shares of the Predecessor Fund, the

predecessor to the Class N

shares of the Fund, commenced operations on December 30, 2002.

The performance results for Class N shares of the Fund for the period of

December 30, 2002, to September 29, 2005, reflect the performance of the

Predecessor Fund‘s Class



A shares. The performance results for Class N shares of the Fund for the period

of October 20, 1988 to December 30, 2002, reflect the performance of the

Predecessor Fund‘s

Class I shares. The performance of the Predecessor Fund‘s Class I Shares has

not been adjusted to reflect the higher Rule 12b-1 fees and expenses applicable

to the Fund‘s Class

N shares. If it had, the performance of the Fund‘s Class N shares would have

been lower than that shown.

For the index shown the measurement period used in computing the returns of

the index for the ―Since Inception‖ period begins on October 31, 1988.

After-tax returns are calculated using the historical highest individual federal

marginal income tax rates and do not reflect the impact of

state and local taxes. Actual after-tax returns depend on an investor‘s tax

situation and may differ from those shown. The performance of

Institutional Class shares does not reflect Class N shares‘ Rule 12b-1 fees and

expenses. After-tax returns for Class N shares will vary from

the after-tax returns shown above for Institutional Class shares. The after-tax

returns shown are not relevant to investors who hold their

Fund shares through tax-deferred arrangements, such as 401(k) plans or

individual retirement accounts.CNI CHARTER FUNDS | PAGE 5



CNI-SM-016-0500

INVESTMENT MANAGER

City National Asset Management, Inc.

SUB-ADVISERS

SKBA Capital Management, LLC (―SKBA‖)

Turner Investments, L.P. (―Turner‖)

PORTFOLIO MANAGERS

Thomas Kuo and Dimitry Kirstman are primarily responsible for the day-to-day

management of the portion of the Fund‘s assets managed

by CNAM and have served as portfolio managers of the Fund since March

2012. Andrew W. Bischel, Kenneth J. Kaplan, Joshua J. Rothé

and Shelley H. Mann are responsible for the day-to-day management of the

portion of the Fund‘s assets managed by SKBA and have served

as portfolio managers for the Fund since 2006. Robert E. Turner is responsible

for the day-to-day management of the portion of the Fund‘s

assets managed by Turner and has served as portfolio manager for the Fund

since 2008.



PURCHASE AND SALE OF FUND SHARES

The minimum initial investment for Institutional Class shares is $1,000,000.

The minimum initial investment for Class N shares is $1,000.

There is no minimum for subsequent investments in Institutional Class shares or

Class N shares. The Fund reserves the right to change the



minimum amount required to open an account or to add to an existing account

without prior notice. The Fund may accept investments

of smaller amounts at its discretion; however, your financial institution or

financial professional may establish higher minimum investment

requirements than the Fund and may also independently charge you transaction

fees and additional amounts in return for its services.

The shares of the Diversified Equity Fund are redeemable. You may redeem

some or all of your shares on any day the NYSE is open for

regular session trading. The Fund ordinarily pays redemption proceeds on the

business day following the redemption of your shares.

However, the Fund reserves the right to make payment within seven days of the

redemption request. Redemption proceeds will be sent to

you via check to your address of record or will be wired to your bank via the

instructions on your account.

TAX INFORMATION

The Diversified Equity Fund intends to make distributions that may be taxed as

ordinary income or capital gains.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL

INTERMEDIARIES



If you purchase the Diversified Equity Fund through a broker-dealer or other

financial intermediary (such as a bank), the Fund and its

related companies may pay the intermediary for the sale of Fund shares and

related services. These payments may create a conflict of interest

by influencing the broker-dealer or other intermediary and your salesperson to

recommend the Fund over another investment. Ask your

salesperson or visit your financial intermediary‘s web site for more information.



Literature Review

Literature Review

Empirically, most papers have concentrated on the issue whether managed

funds are able to outperform some relevant benchmark portfolios. Typically, the

conclusion of these papers has been that, on average, funds did not significantly



earn more than the passive benchmark performance on a risk-adjusted basis

after deduction of expenses and commissions. Some authors even find that risk-

adjusted fund returns are significantly negative. However, some individual

funds were found to outperform the benchmarks significantly

Factors affecting mutual funds

Risk

Risk can be a great ally when trying to estimate the reward potential of a stock

investment. The greater the stock volatility, or risk, the greater also is the

reward. There are several new risk measurements that give guidance for

selecting mutual stocks.

Time Horizon

The time horizon of an individual will also influence the performance measures

he/she will look at more closely. If you are investing for less than four years,

you need a fund with consistent performance, so all your money will be there

when you need it. You also do not have time to earn back a large commission



charge on the front end.

Conversely, if you plan to invest your money for 30 years, neither consistency

nor load is very important: you have plenty of time for the market to recover.

With a long-term horizon, your biggest enemies are poor performance and high

annual expenses, both of which can erode that all-important compounding.

Index funds Vs. activety managed equity funds

Deciding between mutual and index funds is not a matter of attempting to

assess which is better, but simply a matter of selecting one's own personal

investment style. Index funds are specially attractive to more passive investors,

who do not believe in constant out-

The major attractiveness of index funds lies in their low cost for the investor.

Low fees and low turnover holds down transaction costs and minimizes capital-

gains taxes.

Index funds are steady performers that have been trouncing the average mutual

fund for along time. They are great core holdings, particularly for beginning

investors and anyone

They are managed so that their returns will match, as exactly as possible, the



returns of a broad market index. If the overall market goes up, the index fund

will go up almost exactly as far. The most popular and well-known index funds

track the Standard & Poor's 500, which is basically a group of the largest blue-

chip stocks on the market.

Index funds are often criticized for chasing mediocrity; their returns will always

be slightly behind the market as a whole, by the margin of the (generally very

low) expenses.

However, over the last 3-,5-,and 10-year periods, the indexes (and index funds)

have outperformed almost three-quarters of all portfolio managers. There are

certainly managers who have consistently beaten the indexes. But some

investors are more comfortable knowing that they will get whatever the market

gives out, and they are not subject to the whims of a portfolio manager who

may or may not live up to his or her track record.

Growth Funds :

Growth Fund, mainly mutual funds that is, or made up of shares in companies

in order to better yield dividends. They do resubmit the potential for higher

growths but then this is a bit risky. In general, investors prefer to invest in the



fund for general fund revenue growth, because they offer a better return

potentials. Besides their main objective is to strive for both dividend income

and capital as they invest in companies that have a reputation for dividends and

capital gains.

They also called as equity funds as the goal is to achieve long-term growth of

capital, and then stable income. It is always prudent to invest in diversified

growth fund that not only covers a group of companies, but also various sectors,

as well as investments it allows the investor bifurcate its resources, thus

opening them up to a wide range of options. For example, if you invest in

Growth Fund, which has five stock options it IT, cement, steel, pharmaceutical

and FMCG (Fast Moving Consumer Goods). Now say two or three of those five

stocks are not doing well enough, and you losses on investments, still you will

have several more units left to look forward too.

Growth funds, mainly fall into two categories: 1) Aggressive, 2) Conservatives.

Aggressive Growth Fund mutual fund, which is trying to achieve high income

from capital gains. Investments held in these funds are companies that show

high growth potential. People invest in this kind of growth funds should be

prepared to accept the high risk of compromise to return. They also referred to



as "capital appreciation fund" or "maximum capital gains fund". For example:

the possibility of US Franklin funds. Now the Conservative part. Conservative

Growth Fund is just opposite the aggressive growth fund. This investment is

mainly targeted at people who are willing to earn the section on a regular basis,

then a high capital gains. He is safe and secured and non-risky investments.

Basically, most investors prefer to invest in specific sectors such as IT

(information and technology) and FMCG (Fast Moving Consumer Goods). To

meet their needs, sector specific scheme launched to enable investors to decide

how aggressive or conservative they want to be. As of today the most popular

forms of industry funds, although a number of other funds also exist. Some

examples of Birla IT Fund, the Union of the new millennium, and prudential

ICICI FMCG fund. These funds basically

invest in various sectors, mainly focusing on the order of the activities of many

domestic companies. This makes his specialty, rather than fund industry.

However, they are contrary to greater risk than large diversified investment

funds, but you can expect longer term, and returns.



Benefits of Growth funds

Growth Fund, mainly mutual funds that is, or made up of shares in companies

in order to better yield dividends. They do resubmit the potential for higher

growths but then this is a bit risky. In general, investors prefer to invest in the

fund for general fund revenue growth, because they offer a better return

potentials. Besides their main objective is to strive for both dividend income

and capital as they invest in companies that have a reputation for dividends and

capital gains.

They also called as equity funds as the goal is to achieve long-term growth of

capital, and then stable income. It is always prudent to invest in diversified

growth fund that not only covers a group of companies, but also various sectors,

as well as investments it allows the investor bifurcate its resources, thus

opening them up to a wide range of options. For example, if you invest in

Growth Fund, which has five stock options it IT, cement, steel, pharmaceutical

and FMCG (Fast Moving Consumer Goods). Now say two or three of those five

stocks are not doing well enough, and you losses on investments, still you will

have several more units left to look forward too.



Growth funds, mainly fall into two categories: 1) Aggressive, 2) Conservatives.

Aggressive Growth Fund mutual fund, which is trying to achieve high income

from capital gains. Investments held in these funds are companies that show

high growth potential. People invest in this kind of growth funds should be

prepared to accept the high risk of compromise to return. They also referred to

as "capital appreciation fund" or "maximum capital gains fund". For example:

the possibility of US Franklin funds. Now the Conservative part. Conservative

Growth Fund is just opposite the aggressive growth fund. This investment is

mainly targeted at people who are willing to earn the section on a regular basis,

then a high capital gains. He is safe and secured and non-risky investments.

Basically, most investors prefer to invest in specific sectors such as IT

(information and technology) and FMCG (Fast Moving Consumer Goods). To

meet their needs, sector specific scheme launched to enable investors to decide

how aggressive or conservative they want to be. As of today the most popular

forms of industry funds, although a number of other funds also exist. Some

examples of Birla IT Fund, the Union of the new millennium, and prudential

ICICI FMCG fund. These funds basically

invest in various sectors, mainly focusing on the order of the activities of many

domestic companies. This makes his specialty, rather than fund industry.



However, they are contrary to greater risk than large diversified investment

funds, but you can expect longer term, and returns.

NAV

The Term Net Asset Value (NAV) is used by investment companies to measure

net assets. It is calculated by subtracting liabilities from the value of a fund's

securities and other items of value and dividing this by the number of

outstanding shares. Net asset value is popularly used in newspaper mutual fund

tables to designate the price per share for the fund.

The value of a collective investment fund based on the market price of

securities held in its portfolio. Units in open ended funds are valued using this

measure. Closed ended investment trusts have a net asset value but have a

separate market value. NAV per share is calculated by dividing this figure by

the number of ordinary shares. Investments trusts can trade at net asset value or

their price can be at a premium or discount to NAV.



Value or purchase price of a share of stock in a mutual fund. NAV is calculated

each day by taking the closing market value of all securities owned plus all

other assets such as cash, subtracting all liabilities, then dividing the result (total

net assets) by the total number of shares outstanding.

Calculating NAVs - Calculating mutual fund net asset values is easy. Simply

take the current market value of the fund's net assets (securities held by the fund

minus any liabilities) and divide by the number of shares outstanding. So if a

fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then

the price per share (or NAV) is Rs.50.00.

Mutual Fund Industry



The mutual fund industry is a lot like the film star of the finance

business.Though it is perhaps the smallest segment of the industry, it is also the

most glamorous – in that it is a young industry where there are changes in the

rulesof the game everyday, and there are constant shifts and upheavals. The

mutual fund is structured around a fairly simple concept, the mitigation of risk

through the spreading of investments across multiple entities, which is achieved

by the pooling of a number of small investments into a large bucket.Yet it has

been the subject of perhaps the most elaborate and prolonged regulatory effort

in the history of the country.

As on September 30, 2006, the domestic mutual fund industry held assets under

management of over Rs 290,000 crore (Rs 2,900 billion); a growth of nearly

46% over the last 12 months.

Other statistics reveal that a higher portion of investors' savings is now invested

in market-linked avenues like mutual funds as compared to earlier times. Media

reports suggest that a number of new fund houses will commence operations in

the near future.



Hence investors will have an even wider range of products to choose from.

Meanwhile the existing ones are keeping investors occupied by regularly

launching new fund offers (NFOs).

In effect, one would be tempted to conclude that the domestic mutual fund

industry has finally "come of age". However, we at Personal have a slightly

different view on the state of affairs. Sure, the industry has grown in terms of

asset size and Rs 300,000 crore (Rs 3,000 billion) could well be the next

landmark. But that's hardly a reason to celebrate. More fund houses or funds

don't make the industry, existence of the right ones does.

We believe that the mutual fund industry has only grown in terms of size or

choices available, but is still a long distance from being regarded as a mature

one. For example, for all the NFOs being launched incessantly, there are very

few that can truly claim to be unique or have the ability to add value to

investors' portfolios.

In fact, the industry's functioning style could well classify as a classic example

of herd mentality at work. Products like monthly income plans (MIPs), mid cap

funds, flexi cap funds and derivatives-based funds have found favor with

various industry players at the same time.



Is it a case of all fund houses thinking alike? Similarly, the launch of NFOs has

largely coincided with conducive market sentiments (read upswing in markets)

and investor euphoria.

In the recent past, close-ended funds have emerged as the season's flavour.

Fund houses have been quoted as saying that the close-ended nature promotes

long-term investing and enables the fund manger to make investment decisions

with a long-term perspective.

While we don't dispute this argument, the timing of launch of close-ended funds

does make us curious. It coincides with a regulation issued by the markets

regulator, the Securities and Exchange Board of India (Sebi), that only close-

ended NFOs will be permitted to charge initial issue expenses.

Conversely, open-ended NFOs will be required to meet sales, marketing and

other related expenses from the entry load and not through initial issue

expenses. Weren't long-term investing and the other virtues of close-ended

funds relevant earlier?

Another initiative which is conspicuous by its absence is investor education. It

would be safe to say that most fund houses have done precious little to further

the cause of investor education.



Mutual fund distributors who help fund houses garner monies continue to rule

the roost. They have been lavished with attractive brokerage structures, regular

NFO launches (read opportunity to make "big bucks") and other incentives.

In turn, these distributors have on numerous occasions been guilty of mis-

selling and acting in their own interest, rather than the investor's. Despite this,

the investor, who should be at the very core of every fund house's activity, has

been left to fend for himself.

In recent times, Sebi has been forced (at an alarming frequency) to step in to aid

the investor. For issues like lack of uniqueness in NFOs, method of declaring

dividends, issue expenses on NFOs among others, when it seemed like the

investor's interests are being compromised with, the regulator introduced

measures to safeguard the investor.

This doesn't reflect too well on the mutual fund industry. Instead of playing

"follow the regulator", one would expect the mutual fund industry to

proactively take steps and act in the investor's interests.

Don't get us wrong, we aren't suggesting that every fund house is guilty of

transgression, but most of them have erred on one front or the other. Sure some

fund houses have been responsible and acted in a forthright manner; sadly, they

are in a minority.



An asset size of Rs 300,000 crore shouldn't be seen as a milestone or even a

reason to celebrate. Instead, fund houses should get their act in place and work

towards revamping the mutual fund industry into a better and "mature"

investment destination.

Mutual funds are a versatile investment avenue and hold the potential to emerge

as preferred investment avenues for retail investors. Few would dispute the fact

that a large section of the investing community remains untapped as far as

mutual funds are concerned. Should this potential be tapped, fund houses (along

with investors) stand to emerge as the biggest beneficiaries.

However, for this to happen, the mutual fund industry must finally come of age.

And the onus for achieving this rests with the fund houses.

History of Mutual Funds in World



The advent of mutual funds in 1774 heralded a significant development in the

democratization of investing, allowing the average person to participate in the

markets through a reasonably priced, pooled product diversified to manage risk.

That one small fund saw the beginnings of a new financial services industry that

has now grown to US$22.72 trillion in assets around the world.

The history of the mutual fund is more than two centuries old with the creation

in 1774 of what‘s believed to be the first (closed-end) mutual fund by Dutch

merchant Adriaan Van Ketwich. Subscription to the fund, which Van Ketwich

called ―Eendragt Maakt Magt‖ (―unity creates strength‖), was available to the

public until all 2,000 units were purchased. After that, participation in the fund

was available only by buying shares from existing shareholders in the open

market. The fund‘s prospectus required an annual accounting, which investors

could view if they requested. Two subsequent funds set up in the Netherlands

increased the emphasis on diversification to reduce risk, escalating its appeal to

smaller investors with minimal capital.

These early mutual funds then took root in England and France before heading

to the United States in the 1890s. Most of the first mutual funds were of the

closed-end variety, issuing a fixed number of shares. What is hailed as the first



modern-day mutual fund, Massachusetts Investors Trust, was created on March

21, 1924. It was the first mutual fund with an open-end capitalization, allowing

for the continuous issue and redemption of shares by the investment company.

After just one year, the fund grew to $392,000 in assets from $50,000. The fund

went public in 1928 and eventually became known as MFS Investment

Management. The first Canadian fund, Canadian Investment Fund Ltd. (CIF),

was established in 1932, with assets of $51 million in 1951. It changed its name

to Spectrum United Canadian Investment Fund in Nov 1996 and this fund

changed name at the end of August 2002 to CI Canadian Investment Fund.

‗Ordinary‘ investors save

The growth of mutual funds and their impact on investing in general was

nothing short of revolutionary. For the first time, ordinary investors with

minimal capital could pool their resources into a professionally managed,

diversified basket of investments, rather than going the more expensive route of

buying individual stocks of varying risks. This was considered a giant step in

the democratization of investments for the average person.

The first major sign of growth and popularity of mutual funds in Canada took

place in the early 1960‘s when total assets doubled from $540 million in 1960



to more than $1 billion by the end of 1963. But the largest influx into mutual

funds in Canada came during the 1990s when double-digit interest rates that

had lured Canadian savers into GICs tumbled and investors moved into

investments with the potential for higher returns.

Growth of mutual funds in Canada.

Interest rates and mutual fund sales had a direct correlation in the 1990s. In

May 1990, the Bank of Canada rate – on which financial institutions base their

interest rates – stood at one of its highest levels ever -- 14.05 per cent. The

Bank rate steadily declined and by January 1993, was sliced in half at 6.81 per

cent and by the end of December 1993 it was down again to 4.11 per cent.

Mutual fund sales surged 140 per cent from the end of 1992 to the end of 1993

and strong markets sent assets up to almost $114.6 billion. The Bank rate

dropped to 3.25 per cent in January 1997 before slowly climbing to five per

cent in January 2000.

At the same time, mutual funds continued their climb and became the fastest-

growing segment of the Canadian financial services sector during the 1990s,

with assets under management increasing from $25 billion in December 1990 to

$426 billion by December 2001, an increase of 1,700 per cent. These assets



were managed in about 1,800 different mutual funds held in more than 50

million unit holder accounts.

Mutual funds offer Canadians a superior means of accumulating wealth through

access to a broad range of personalized investment solutions based on sound

investing principles.

Mutual funds include:

Professional portfolio management

Streamlined and convenient administration

Risk management through diversification

Innovative solutions that meet a wide range of investment objectives and

evolving investor needs

Opportunities for foreign and domestic investment that may not

otherwise be directly accessible to investors

Liquidity, enabling investors to respond to changes in their personal

circumstances

Access to investing for all types of people, including those who prefer to

invest small amounts at regular intervals



Choice of purchase methods and fee structures, including full service,

fee-for-service and do-it-yourself

Accountability and fairness to investors through industry regulation and

transparency

Foreign Property Rule

The Foreign Property Rule (FPR) was introduced in Canada in 1971 to ensure

that a substantial proportion of tax-deferred retirement savings flowed to

Canadian companies and provided support for the development of Canada‘s

capital markets. The FPR applied mainly to those in tax-deferred savings plans

such as RRSPs, and it was up to the mutual fund industry to come up with a

compromise.

The Canadian mutual fund industry responded with great innovation in 1999,

creating ―clone‖ global funds that qualified as Canadian content and were

therefore 100 per cent eligible for personal RRSPs. These clone funds used

sophisticated derivative products to mirror the performance of an underlying

international fund -- while retaining their eligibility as ―domestic‖ content. To

get this global exposure, MERs were slightly higher than for stand-alone,

domestic funds.



In 2000, the federal government increased the restriction on foreign property

content in personal RRSP accounts to 30 per cent from 25 per cent, following

comments by many financial observers that investors who bought strictly

Canadian funds were only availing themselves of three per cent of the world‘s

investment opportunities as well as international diversification.

Then in July 2005, the federal budget changes went into effect, removing the

30% restriction on foreign content and ―clone‖ funds were dismantled. Since

then international and global funds have taken a significantly larger share in the

mutual fund portfolios of many Canadian investors.

As of the end of August 2007, mutual fund assets in Canada stood at more than

$695.9 billion and foreign sales have gained a larger part of mutual fund assets.

For the latest statistics compiled by IFIC, the industry association representing

mutual fund managers and dealers, please visit www.ific.ca.

The growth of the industry

To meet the growing regulatory and trade needs of the mutual fund industry, the

Canadian Mutual Funds Association was established in 1963. Original members



of the CMFA were individual mutual funds themselves, and not fund

management companies, as is the case currently. In 1963, the CMFA published

a Code of Ethics and Regulation for its members. Ten years later, it formally

incorporated with a mandate to engage in and support activities conducive to

high ethical standards and efficiency of administration and operations within

the Canadian mutual fund industry. In 1976, the CMFA changed its name to

The Investment Funds Institute of Canada (IFIC).

Since then, IFIC has taken an integral role in the regulatory development of the

mutual fund industry in Canada, proactively influencing and advancing industry

issues within the regulatory framework, while increasing our members‘

efficiencies, knowledge and proficiency. IFIC provides a consistently high level

of service to enable dealer and manager members to work together in a co-

operative forum to enhance the integrity and growth of the industry and

strengthen investor confidence.

Specifically, IFIC:

Created its Recommendations for a Code of Sales Practices for the Mutual Fund

Industry, which was published in 1996. It was adopted two years later by



securities regulators and incorporated by securities regulators into an

enforceable rule.

Published its Privacy Code in 2000

Developed a guide in 2002 to assist members in complying with their

obligations regarding Canada‘s Proceeds of Crime (Money Laundering) and

Terrorist Financing Act and regulations

Produced in 2004 a comprehensive toolbox of measures for IFIC members to

detect and deter short-term abusive trading, which has since become part of the

OSC‘s latest recommendations on the subject

Was vocal in the federal government removing foreign content limits on tax-

deferred savings plans

Has always been supportive of raising RRSP contribution limits and

encouraging government to find ways in which Canadians can better save for

their retirement

In 2006-2007, created a charter framework and readiness checklist to provide

assistance to fund managers and legal counsel charged with drafting or

reviewing an IRC charter

Introduced a new statistics reporting method in 2007 to show both where the

money is managed and where clients are making their purchases



Works with the Canadian Investment Funds Standards Committee to achieve a

single set of industry-wide categories for Canadian investment funds on an

ongoing basis

In 2006, created the Investor Education Award presented during the Canadian

Investment Awards.

History of Mutual Fund in India



The mutual fund industry in India started in 1963 with the formation of Unit

Trust of India, at the initiative of the Government of India and Reserve Bank

the. The history of mutual funds in India can be broadly divided into four

distinct phases

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It

was set up by the Reserve Bank of India and functioned under the Regulatory

and administrative control of the Reserve Bank of India. In 1978 UTI was de-

linked from the RBI and the Industrial Development Bank of India (IDBI) took

over the regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700

crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public

sector banks and Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI

Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec

87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund



(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC

established its mutual fund in June 1989 while GIC had set up its mutual fund

in December 1990.

At the end of 1993, the mutual fund industry had assets under management of

Rs.47,004 crores.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund

families. Also, 1993 was the year in which the first Mutual Fund Regulations

came into being, under which all mutual funds, except UTI were to be

registered and governed. The erstwhile Kothari Pioneer (now merged with

Franklin Templeton) was the first private sector mutual fund registered in July

1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry

now functions under the SEBI (Mutual Fund) Regulations 1996.



The number of mutual fund houses went on increasing, with many foreign

mutual funds setting up funds in India and also the industry has witnessed

several mergers and acquisitions. As at the end of January 2003, there were 33

mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India

with Rs.44,541 crores of assets under management was way ahead of other

mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI

was bifurcated into two separate entities. One is the Specified Undertaking of

the Unit Trust of India with assets under management of Rs.29,835 crores as at

the end of January 2003, representing broadly, the assets of US 64 scheme,

assured return and certain other schemes. The Specified Undertaking of Unit

Trust of India, functioning under an administrator and under the rules framed by

Government of India and does not come under the purview of the Mutual Fund

Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and

LIC. It is registered with SEBI and functions under the Mutual Fund

Regulations. With the bifurcation of the erstwhile UTI which had in March



2000 more than Rs.76,000 crores of assets under management and with the

setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund

Regulations, and with recent mergers taking place among different private

sector funds, the mutual fund industry has entered its current phase of

consolidation and growth.

Assets Management Company (AMC)

List of major AMC of world



This is a list of wold‘s leading corporations that provide financial asset

management

Acadian Asset Management

AllianceBernstein

Allianz Global Investors

Ameriprise Financial, Inc.

Barclays Global Investors

Bear Stearns

BlackRock

Columbia Management Group

Covestor

Citigroup Asset Management (now merged into the subsidiaries of Legg

Mason)

Credit Suisse

Deutsche Asset Management

F&C Asset Management

Fidelity Investments

Global Investment House

The Hartford Financial Services Group

Henderson Group



ING Investment Management

Invesco Perpetual

Kenneth L. Fisher (Fisher Investments)

Legal & General

Legg Mason

Lord Abbett & Co.

Mekong Capital

Morgan Keegan & Company - Morgan Asset Management

M&G

New Star Asset Management

Northern Trust

PTI Securities & Futures

Putnam Investments

Prudential Financial

Schroders

Smith Breeden

ThinkEquity Partners, LLC

T. Rowe Price

Global Alliance Realty



Major AMC of India

List of India‘s leading Asset Management Companies -

Deutsche Bank has compiled a shortlist of top- performing funds from India‘s

leading fund houses. These have been chosen through a rigorous selection

procedure and constantly undergo a comprehensive review. They cover all the

fund categories and cater to varied investor needs and risk profile. Choose from

the following fund houses:

ABN Amro Asset Management Pvt Ltd

AIG GIG Asset Management Pvt Ltd

Benchmark Asset Management Pvt Ltd

Birla Sun Life Asset Management Pvt Ltd

Deutsche Asset Management Pvt Ltd

DSP Merrill Lynch Asset Management Pvt Ltd

Fidelity Asset Management Pvt Ltd

Franklin Templeton Asset Management Pvt Ltd

HDFC Asset Management Pvt Ltd

HSBC Asset Management Pvt Ltd

ICICI Prudential Asset Management Pvt Ltd



ING Asset Management Pvt Ltd

JP Morgan Asset Management Pvt Ltd

Kotak Mahindra Asset Management Pvt Ltd

Optimix Asset Management Pvt Ltd

Principal PNB Asset Management Pvt Ltd

Reliance Asset Management Pvt Ltd

SBI Asset Management Pvt Ltd

Standard Chartered Asset Management Pvt Ltd

Sundaram BNP Paribas Asset Management Pvt Ltd

Tata Asset Management Pvt Ltd

UTI Asset Management Pvt Ltd

Major AMC of India

AIG



AIG offers asset management services through AIG Investments, a group of

international companies which provide investment advice and market asset

management products and services to clients around the world. AIG

Investments was formed in 1996 by consolidating the investment divisions of

various AIG subsidiaries worldwide. In its short history, it has grown both

organically and by acquisition.

AIG Investments is headquartered in New York and has a total of 46 investment

offices operating in regional centers in North America, Europe, South America,

Africa and Asia and employing over 2,100 persons as of 30 September 2008.

Additionally, the extensive network and resources of AIG, which operates in

130 countries and jurisdictions, complement AIG Investments‘ network.

AIG Investments offers the widest range of investment capabilities divided into

five major groups – Equity, Fixed Income, Real Estate, Private Equity, Hedge

funds and Other Alternate asset classes. It is also one of the largest asset

management firms in the world with nearly US $676 billion in assets as of 30

September 2008.



Our strengths lie in our globally integrated operations and investment teams,

our disciplined and established investment processes, and the knowledge and

expertise of our diverse group of employees.

With AIG as our parent company, we also enjoy the benefits of a premier

insurance and financial services organization with a distinguished history,

renowned financial leadership and extensive resources.

AIG major funds in India are-

Growth :

AIG Global Investment Group Mutual Fund

AIG India Equity Fund- Institutional Plan- Dividend Option

AIG India Equity Fund- Institutional Plan- Growth Option

AIG India Equity Fund- Regular Plan- Dividend Option

AIG India Equity Fund- Regular Plan- Growth Option

AIG Infrastructure and Economic Reform Fund - Institutional Plan-

Dividend

AIG Infrastructure and Economic Reform Fund - Institutional Plan-

Growth



AIG Infrastructure and Economic Reform Fund - Regular Plan-Dividend

AIG Infrastructure and Economic Reform Fund - Regular Plan-Growth

Income

AIG India Treasury Fund-Institutional Plan-Daily Dividend Option

AIG India Treasury Fund-Institutional Plan-Growth Option

India Treasury Fund-Institutional Plan-Monthly Dividend Option

AIG India Treasury Fund-Institutional Plan-Weekly Dividend Option 1

AIG India Treasury Fund-Retail Plan-Bonus Option

AIG India Treasury Fund-Retail Plan-Daily Dividend Option

AIG India Treasury Fund-Retail Plan-Growth Option

AIG India Treasury Fund-Retail Plan-Monthly Dividend Option

AIG India Treasury Fund-Retail Plan-Quarterly Dividend Option

AIG India Treasury Fund-Retail Plan-Weekly Dividend Option

AIG India Treasury Fund-Super Institutional Plan-Daily Dividend Option

AIG India Treasury Fund-Super Institutional Plan-Growth Option

AIG India Treasury Fund-Super Institutional Plan-Monthly Dividend

Option



AIG India Treasury Fund-Super Institutional Plan-Weekly Dividend

Option

AIG Short Term Fund-Institutional Plan-Growth Option

AIG Short Term Fund-Institutional Plan-Monthly Dividend Option

AIG Short Term Fund-Institutional Plan-Weekly Dividend Option

AIG Short Term Fund-Retail Plan-Bonus Option

AIG Short Term Fund-Retail Plan-Growth Option

AIG Short Term Fund-Retail Plan-Monthly Dividend Option

AIG Short Term Fund-Retail Plan-Weekly Dividend Option

Liquid

AIG India Liquid Fund-Institutional Plan-Daily Dividend Option

AIG India Liquid Fund-Institutional Plan-Growth Option

AIG India Liquid Fund-Institutional Plan-Weekly Dividend Option

AIG India Liquid Fund-Retail Plan-DailyDividend Option

AIG India Liquid Fund-Retail Plan-Growth Option

AIG India Liquid Fund-Retail Plan-Monthly Dividend Option

AIG India Liquid Fund-Retail Plan-Quarterly Dividend Option

AIG India Liquid Fund-Retail Plan-Weekly Dividend Option

AIG India Liquid Fund-Super Institutional Plan-Daily Dividend Option



AIG India Liquid Fund-Super Institutional Plan-Growth Option

AIG India Liquid Fund-Super Institutional Plan-Weekly Dividend Option

HDFC Asset Management Company Limited (AMC)



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 July 3, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.

Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.

In terms of the Investment Management Agreement, the Trustee has appointed

the HDFC Asset Management Company Limited to manage the Mutual Fund.

The paid up capital of the AMC is Rs. 25.161 crore.

The present equity shareholding pattern of the AMC is as follows :

Particulars % of the paid up equity capital

Housing Development Finance Corporation Limited 60

Standard Life Investments Limited 40

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,

following a review of its overall strategy, had decided to divest its Asset



Management business in India. The AMC had entered into an agreement with

ZIC to acquire the said business, subject to necessary regulatory approvals.

The AMC is managing 24 open-ended schemes of the Mutual Fund viz.

HDFC Growth Fund (HGF)

HDFC Balanced Fund (HBF)

HDFC Income Fund (HIF)

HDFC Liquid Fund (HLF)

HDFC Long Term Advantage Fund (HLTAF)

HDFC Children's Gift Fund (HDFC CGF)

HDFC Gilt Fund (HGILT)

HDFC Short Term Plan (HSTP)

HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF)

HDFC Equity Fund (HEF)

HDFC Top 200 Fund (HT200)

HDFC Capital Builder Fund (HCBF)

HDFC TaxSaver (HTS)

HDFC Prudence Fund (HPF)

HDFC High Interest Fund (HHIF)

HDFC Cash Management Fund (HCMF)



HDFC MF Monthly Income Plan (HMIP)

HDFC Core & Satellite Fund (HCSF)

HDFC Multiple Yield Fund (HMYF)

HDFC Premier Multi-Cap Fund (HPMCF)

HDFC Multiple Yield Fund . Plan 2005 (HMYF-Plan 2005)

HDFC Quarterly Interval Fund (HQIF)

HDFC Arbitrage Fund (HAF).

The AMC is also managing 11 closed ended Schemes of the HDFC Mutual

Fund

HDFC Long Term Equity Fund

HDFC Mid-Cap Opportunities Fund

HDFC Infrastructure Fund, HDFC Fixed Maturity Plans

HDFC Fixed Maturity Plans - Series II, HDFC Fixed Maturity Plans -

Series III

HDFC Fixed Maturity Plans - Series IV

HDFC Fixed Maturity Plans - Series V

HDFC Fixed Maturity Plans - Series VI

HFDC Fixed Maturity Plans - Series VII



HFDC Fixed Maturity Plans - Series VIII.

The AMC is also providing portfolio management / advisory services and such

activities are not in conflict with the activities of the Mutual Fund. The AMC

has renewed its registration from SEBI vide Registration No. - PM /

INP000000506 dated December 8, 2006 to act as a Portfolio Manager under the

SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is

valid from January 1, 2007 to December 31, 2009.

HSBC Asset Management Pvt Ltd

HSBC Mutual Fund is one of the premier asset management companies in

India. We aim to offer you with optimum investment performance (with an

institutionalised investment management process), efficient service, and a

flexible product range to create wealth in the long term. Our diverse range of

products across the risk spectrum range from liquid / cash funds, fixed income

funds, balanced funds to equity funds suited for both individual as well as

institutional investors. Through our product range, we aim to be true to our



reputation in India of being a provider of international quality investment

products and services.

Click here to visit our Mutual Fund website for more details.

Portfolio Management Services :

With HSBC Portfolio management services, we aim to provide long-term

wealth creation to high net-worth individuals through active portfolio

management. We believe that it takes a committed perfectionist to bring out the

very best in an investment. Our portfolio management team aims to be just that

- perfectionists - who will analyse your risk profile and accordingly custom

design an investment portfolio for you. With their local knowledge of capital

markets coupled with the global markets coupled with the global strength and

capabilities of HSBC Group, you can expect nothing short of a rewarding

experience.

Click here to visit our Portfolio Management Services website for more details.

Welcome to HSBC Global Asset Management India, the core global investment

platform of the HSBC Group.



World class investment solutions backed by the strength of HSBC Group.:

HSBC Global Asset Management has an outstanding track record and a

longstanding presence globally. With approximately $299 billion (as on 31

October 2008) assets under management worldwide and presence in about 20

countries, it is one of the premier fund management organisations in the world.

HSBC Global Asset Management in India provides a comprehensive range of

investment management solutions to a diverse client base and committed to

delivering consistent investment performance, world class service and a broad

range of solutions for all types of investors. Our range of offerings in India

come under 2 broad categories –

Mutual Fund and Portfolio Management Services.

HSBC major funds in India are-

Growth Schemes

Balanced Schemes

Income Schemes

Money Market Schemes



Open-ended schemes

These funds do not have a fixed maturity and one can invest in such funds on

any working day, during business hours. Investors can buy or sell units of open-

ended schemes directly from the fund house at NAV related prices.

Close-ended schemes

Such funds have a fixed maturity period and are open for subscription only for a

specified period. After the expiry of this period, investors can buy or sell the

units on the stock exchanges where such funds are listed. Some funds also have

the option of periodic repurchase, whereby investors can sell back their units to

the fund at NAV related prices.

Interval schemes

Interval schemes are a combination of both open and close-ended schemes.

Investors can purchase or redeem their shares from the fund house at pre-

determined intervals at NAV related prices



Growth schemes

Such funds are aimed at capital appreciation over the medium to long term.

Usually, such funds invest a major portion of the portfolio in equities.

Balanced schemes

Such funds have a balanced portfolio and invest in equity and preference shares

in addition to fixed income securities. The aim of such funds is to provide both

income and capital appreciation over a long-term.

Income schemes

These schemes invest primarily in fixed income instruments issued by the

government, banks, financial institutions and private companies. The main

objective of income schemes is preservation of capital and to provide fixed

income over the medium to long term.

Money market schemes

Money market schemes invest in short-term debt instruments, which earn

interest and have high liquidity. Though these are considered to be the safest

investment option, such funds are subject to fluctuations in the rates of interest.



Tax saving schemes

Such schemes are aimed at offering tax rebates to investors under specific

provisions of the Income Tax Act, 1961. For instance, investors of Equity

Linked Savings Schemes (ELSS) and Pension Schemes are applicable for

deduction u/s 88 of the Income Tax Act, 1961.

Index schemes

Such funds strive to mirror the performance of specific market indices, such as

the BSE SENSEX, CNX Nifty, etc which are called the base index. Investments

in such funds are made in the same stocks as the base index and in similar

proportion.

Sector-specific schemes

Such funds invest in a specific industry or sector. The investments could be in a

particular industry (Banking, Pharmaceuticals, Infrastructure, etc) or a group of

industries, or various segments (like ‗A‘ Group shares).



Exchange-traded funds

Such funds are listed and traded on the stock exchange in a similar manner as

stocks. Such funds invest in a basket of stocks and aim at replicating an index

(S&P CNX Nifty, BSE Sensex) or a particular industry (banking, information

technology) or commodity (gold, crude oil, petroleum).

Capital protection funds

These funds are designed to safeguard the capital invested therein, by investing

in suitable securities.



JP Morgan Asset Management Pvt Ltd

JPMorgan Asset Management is one of the six largest active investment

managers in the world on the basis of assets under management (Source:

Pensions & Investments, December 2005). As of 30 June 2007, assets under

management stand at US$1,108.6 billion - a reflection of the high regard in

which we are held by investors across the world.

We are a truly global investment manager, with over 5,700 employees in 40

cities around the world. We employ over 670 investment professionals

(portfolio managers, analysts, investment team heads etc) who are based in

investment centres across Europe, Asia, Japan and the Americas, connected by

four investment hubs in London, New York, Tokyo and Hong Kong.

We manage assets on behalf of a broad range of private and institutional

investors. Private investors primarily access our expertise through pooled funds,

including a range of Luxembourg-domiciled SICAVs, UK-domiciled OEICs

and investment trusts and our Hong Kong-registered JF funds.



Institutional investors can choose to invest through pooled funds or segregated

portfolios, and the same highly-regarded investment teams are used in both

cases. Institutional clients include pension funds, charities & foundations,

corporates and central banks.

It is our aim to be the world‘s best investment manager by delivering to each

and every investor:

Excellence and continuity in investment management

A comprehensive and competitive range of products

The highest quality of client service

Global coverage with local delivery

JP Morgan Mutual Fund

The Mutual Fund was established as a trust under the Indian Trusts Act, 1882,

in terms of the Trust Deed dated December 4, 2006 and is registered under the

Indian Registration Act, 1908. The fund has been registered with SEBI vide

Registration No.MF/053/07/01

JPMorgan Mutual Fund India Private Limited

JPMorgan Mutual Fund Private Limited, a company incorporated under the

Companies Act, 1956, acts as the trustee company of the Fund.



Board of Directors

Mr. Jagadish Salunkhe

Mr. P. G. R. Prasad

Dr. Dharmendra Bhandari

Mr. M. G. Bhide

JPMorgan Asset Management India Private Limited

In conformity with the Regulations, JPMorgan Asset Management India Private

Limited, a company registered under the Companies Act, 1956 and having its

registered office at Mafatlal Centre, 9th Floor, Nariman Point, Mumbai 400

021, has been appointed as the investment manager to the Fund.

JPMorgan Asset Management India Private Limited ("AMC") was approved by

SEBI to act as the asset management company for the Fund vide letter no.

IMD/MS/86193/07 dated February 12, 2007. The AMC manages the Scheme /

options of the Fund in accordance with the provisions of the Investment

Management Agreement, the Trust Deed, the Regulations and the objectives of

each Scheme / option.



Kotak Mahindra Asset Management Pvt Ltd

Kotak Mahindra is one of India's leading financial institutions, offering

complete financial solutions that encompass every sphere of life. From

commercial banking, to stock broking, to mutual funds, to life insurance, to

investment banking, the group caters to the financial needs of individuals and

corporates.

The group has a net worth of around Rs.5,997 crore and employs around 20,000

employees across its various businesses servicing around 5 million customer

accounts through a distribution network of branches, franchisees, representative

offices and satellite offices across 370 cities and towns in India and offices in

New York, London, Dubai, Mauritius and Singapore.

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly

owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual

Fund (KMMF). KMAMC started operations in December 1998 and has over 10

Lac investors in various schemes. KMMF offers schemes catering to investors

with varying risk - return profiles and was the first fund house in the country to

launch a dedicated gilt scheme investing only in government securities.



OBJECTIVE OF

THE STUDY



OBJECTIVE OF THE STUDY

Objective of my study can be defined with the help of following points.

To analyze the two major types of Mutual Funds.

To understand the return of funds on historic return of 3 Years.

To suggest the retail investors where they can earn more return in

proportion to risk

To find out that Sectorial funds are really provide higher return as they

have higher risk.



Research

Methodology



Research Methodology

According to Clifford Woody-research comprises defining and redefining

problems, formulating hypothesis, or suggested solutions; collecting, organizing

and evaluating data, making deductions and reaching conclusions; and at last

carefully testing the conclusions to determine whether they fit the formulating

hypothesis. The purpose of research is gaining knowledge, which will be used

for solving problems (applied research) or for satisfying one‘s thirst for

knowledge (pure research).

Objective of the study-

“All progress is born of inquiry. Doubt is often better than over confidence,

for it leads to inquiry and inquiry leads to invention.”

Research is a systematic method to gain new knowledge. The purpose of

research is to discover answers to questions through the application of scientific

procedure. The main aim of research is to find out the truth that is hidden and

has not been discovered yet. Research is thus an original contribution to the

existing stock of knowledge making for its advancement.

Research methodology used for the study is as follows: -



Type of Research

Descriptive & Analytical Research

Descriptive research includes surveys and fact findings enquiries of

different kinds. The major purpose of describes research is description of the

state of affairs as it exists at present. In social science and business research

we quite often use the term Ex post facto research for descriptive research

studies. The main characteristic of this method is that the researcher has no

control over the variable, he can only report what has happened or what is

happening. The methods of research utilized in descriptive research are

survey methods of all kinds, including comparative and correlational

methods.

Analytical research, on the other hand, the researcher has to use facts or

information already available, and analyze these to make a critical

evaluation of the material.



Research Design

Descriptive Design:- It enables researchers to describe or present a picture of

phenomena under investigation. The objective of this study is to answer the

who, when, where & how of the subject.

Data Type

Secondary Data:

Secondary data means data that are already available i.e., they refers to the data

which have already been collected and analyzed by someone else. When the

researcher utilizes secondary data, then he has to look into various sources from

where he can obtain them.

Data Sourse

Books

websites

magazines

Duration-



Findings and

Analysis



Findings and Analysis

Table.1 : Top 10 Equity (Diversified Funds

Ran

k

Scheme Name NAV

As on Mar

26’09

Return

in 3

Years%

Since

Incept

n

1 Reliance Regular Savings Fund - Equity –

Growth

13.44 6.75 8.02

2 DSP BlackRock Top 100 Equity Fund –

Growth

52.31 3.66 31.46

3 Sahara Growth Fund – Growth 46.58 3.64 26.32

4 IDFC Imperial Equity Fund – Growth 11.11 2.38 3.55

5 Birla Sun Life Frontline Equity Fund –

Growth

42.02 2.19 24.4

6 IDFC Premier Equity Fund – Growth 12.71 1.9 7.11

7 DWS Alpha Equity Fund – Growth 44.31 1.65 27.23

8 UTI Dividend Yield Fund – Growth 15.19 1.42 11.45

9 HSBC Equity Fund – Growth 60.97 1.16 33.26

10 DWS Investment Opportunity Fund – 20.23 1.14 14.63



Growth

Table.2 :Top 10 Equity (Sectorial Funds)

Rank Scheme Name NAV

As on Mar

26’09

Return

in 3

Years%

Since

Incepti

1 Reliance Diversified Power Sector Fund –

Growth

40.51 10.7 33.16

2 ICICI Prudential Infrastructure Fund –

Growth

17.56 6.84 17.08

3 Reliance Banking Fund – Growth 36.39 5.01 24.76

4 UTI Thematic Banking Sector Fund –

Growth

16.98 1.85 21.27

5 Reliance Pharma Fund – Growth 21.27 -1.95 17.39

6 UTI Infrastructure Fund – Growth 17.92 -2 12.89

7 Tata Infrastructure Fund – Growth 18.26 -2.51 14.68



8 Franklin FMCG Fund – Growth 11.05 -5.09 3.06

9 ICICI Prudential FMCG – Growth 30.57 -5.45 11.83

10 Canara Robeco Infrastructure Fund –

Growth

30.89 -6.5 11.95



Conclusion



Conclusion

While studying the performance measurement of mutual funds, one particular

area caught my attention. As we are comparing two special funds Diversified

Equity and Sectorial Equity funds. We took top 10 AMC‘s funds in both

segment on the basis of return. Based on the analysis of two tables following

conclusions can be draw-

There is high variation in return of sectorial funds compare to diversified

funds.

Return of top 3 schemes in both funds have a difference that diversified

funds are giving less return.

NAV is in proportion to return in case of sectorial funds whereas in

sectorial funds though return is high but NAV is not high.

Another conclusion that we can draw from our results is that size does

not matter. The size of a fund does not affect the performance of a fund.



Recommendations and

suggestions



Recommendations and suggestions

While studying the performance measurement of mutual funds I will like to

give suggestion to investors and AMC both. To avoid unsystematic risk

Investors invest in Mutual funds where they can in bunches of equity shares. So

it a kind of relief to balance negative return by positive return in portfolio.

For Investors-

By investing through divesrsified equity fund an investor invest in equity

funds of various company of various sector whereas in investing sectorial

funds investor look only in companies of a particular sector.

After analysing the top 10 schemes of both funds I would like to

recommend to investor that-

Due to lots of ups and down in economy investors should switch there

portfolio accordingly, we can see that in current market situation where

there is global slow down India is facing problem in its all time premium

sector i.e Information Technology so in top 10 funds we are not having

any I.T scheme. So the investors of IT funds earned highest positive



return in good time are facing highest negative return which means that

in diversified equity funds these heavy losses from IT sectors companies

are covered with other sectors companies..

Hence we have Power sector scheme on top position which is performing

with 10.7 % in last three year it reflect that since power is extreme need

of human being and due to heavy demand of power even in market

slowdown this scheme is resulting better so we can not find such

advantage with diversified funds.

This comparison of both funds also suggest that equity fund is giving a

moderate return and not touching negative return while major sectorial

funds schemes are performing in negative return so it because of high

risk associated with sectorial funds.

If we talk about inception point of scheme we will find that as the scheme

is get older NAV grow up. We can view in table of diversified fund

HSBC equity growth fund is giving highest return with 33 % return but

on ranking in 7th , whereas in sectorial funds Reliance power sector fund

is showing highest return from its inception point and also it is on rank 1



in respect of list, it means that we are seeing a constant performance by

sectorial funds which is lacking in diversified funds.

For AMC-



Limitations



Limitations

Although it‘s good to go through this type of study during the MBA programme

but

during my project I have faced the following limitations :

Role of SEBI become a point of argument because performance of

companies under various funds are loosing reliability after scandal of

SATYAM

Results of comparison is not certified by the AMC though it was a total

transpartent procedure of comparison.

Due to high pace fluctuation every interpretation on a day results unfair

in next day.

Lack of time duration is flaw for this study.



Bibliography



Bibliography

1. Business Today

2. Economics Times

3. Financial Express

4. Kothari.C.R; ―RESEARCH METHODOLOGY‖; Second Edition;

2002; wishwa Prakashan, New Delhi.

Webliography

www.amfiindia.org

www.mutualfundsindia.com

http://www.mutualfundsindia.com/



Rahul Mutual Fund Report

Documents

Transcript of Rahul Mutual Fund Report