M&M Financial Services Report on Mutual Fund Analysis

Mahindra & Mahindra Financial Services ltd

A
COMPARATIVE ANALYSIS OF MUTUAL
FUND SCHEMES
WITH REFERENCE TO

Mahindra & Mahindra Financial services Ltd, BANGALORE

A project report submitted to College name in partial fulfillment for the award of

POST GRADUATIUON DIPLOMA IN BUSINESS MANAGEMENT
In

MARKETING

Submitted by:

NAME REG. NO

UNDER THE ESTEEMED GUIDANCE OF

Faculty Name

Management Faculty

College logo

College Name

Address

Sajith GS Page 1


A COMPARATIVE ANALYSIS OF MUTUAL
FUND SCHEMES
WITH REFERENCE TO

Mahindra & Mahindra Financial services Ltd, BANGALORE

A project report submitted to College Name in partial fulfillment for the award of

POST GRADUATIUON DIPLOMA IN BUSINESS MANAGEMENT
In

MARKETING

Submitted by:

Name Reg No.

UNDER THE ESTEEMED GUIDANCE OF

NAME

Head- HR & Corporate Relations

COLLEGE LOGO

Place

YEAR

Sajith GS Page 2


CERTIFICATE

This is to certify that the project work titled
‘A COMPARATIVE ANALYSIS OF MUTUAL FUND SCHEMES’, submitted by name is his
original and bonafide work submitted in partial fulfillment of the requirement for the
award of Post graduation Diploma in Business Management of COLLEGE NAME

The said student has submitted a ‘project report’ that has been verified and
found satisfactory.

FACULTY NAME

Head- HR & Corporate Relations

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DECLARATION

I, Sajith G.S. do hereby declare that the report titled
“A COMPARATIVE ANALYSIS OF MUTUAL FUND SCHEMES” has been
done by me under the guidance of Mr.NAME, HR and Corporate Relation,
COLLEGE NAME.

This report is submitted in partial fulfillment for awarding of degree of
Post graduation Diploma in Business Management in COLLEGE NAME. I
also declare that all facts included in this report are original and no part of this
work has been replicated or been submitted by me for the award of any other
degree or diploma elsewhere.

Place:
Date: 31-08-08 NAME

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ACKNOWLEDGEMENT

I would like to take this opportunity to extend my sincere gratitude to
Mr. Manager Name, state head distribution channel Mahindra and Mahindra
financial services ltd (finsmart) for providing me the opportunity to conduct a
project study in his esteemed organization.

I would like to express my most sincere gratitude to my Faculty Guide
and my Company Guide Mr. Name, cluster head investment products, Mahindra
financial services ltd for the constant guidance, encouragement and motivation
they extended for the project study.

I also regard my sincere thanks to my Parents, Friends, Well-wishers and all those
who are directly and indirectly have helped me in completion of this project.

Any task will not be completed successfully without sincere effort and effort of
various people who have sensibly, logically, systematically blended their thoughts
and efforts in achieving goals. I have been able to make this research in a very
short period of time that was at my disposal. Hence it gives me great pleasure to
my thanks and gratitude to those who have been instrumental directly as well as
indirectly in completion of the study

SAJITH GS

TABLE OF CONTENTS

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CONTENTS PAGE NUMBER
Abstract 02
Introduction 03
Objective 03
Methodology 05
Schedule 06
Company Profile 07
What is Mutual Funds 09
Evolution of Mutual Funds 12
Mutual Fund Types 17
Mutual Fund Classification 19
Various Plan of Mutual Funds 21
Risk Hierarchy of Mutual Funds 24
Structure of Mutual Funds 25
NAV and other terms 27
Advantage of Mutual Funds 31
Disadvantage of Mutual Funds 33
Structure of Organization 34
Gap Analysis 35
Problem Statement 36
SWOT Analysis 38
Mutual Fund scheme analysis 39
Chronicle Order of Companies 42

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Asset Under Management 43
Marketing Experience 45
Finding and Observation 47
Conclusion 48
Suggestion 49
Bibliography 51

ABSTRACT
Being such a hot and much talked about financial product in the recent times, I take it as a great
opportunity to study and analyze the Indian mutual fund Industry and give my observation on it. It will not only
help building my career but it will also help Mahindra finance in certain aspect.

The Indian Mutual Funds Industry has witnessed a sea change since UTI was first established in 1963.
From a single player the number of players has increased to more than 30 and the number of schemes has

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spiraled to more than 3500. The last decade has been a period of rapid growth for the MF industry. The industry is
in nascent stage at present. It has come a long way and still has lots of potential for growth.

My project in Mahindra finance mainly deals with selling through several financial channels available in
the market. And my main aim is to attain profit for the company and give them good business. For selling I have
done various surveys to get the database and then I have done proper market segment based on their income etc.
Because no two clients are same so we have to deal everyone according to their needs. And after that we do
telephonic calls and try to get appointment with the person so to give them knowledge about the product and
then try to sale the product to them.

And in these project my main aim to see which schemes are giving better returns and at a reasonable
risk. But risk itself is a very subjective terms that depend on person to person. And also how asset management
companies are performing and how their ranking in investment terms is.

And during the course of the project I have not only learnt about mutual fund industry but also try to
understand customer behavior and also who can be the potential client for the company.

INTRODUCTION

The definition of a mutual fund is a form of collective investment that pools money from many investors
and invests their money in stocks, bonds, short-term money market instruments, and/or other securities. In a
mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or losses, and
collects the dividend or interest income. The investment proceeds are then passed along to the individual
investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated
daily based on the total value of the fund divided by the number of shares currently issued and outstanding.

PURPOSE

 The purpose of the study at the Mahindra finance is to get the insight knowledge into mutual fund
industry and also try to gain some knowledge in equity market

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 I also have to see analysis of mutual fund of various fund houses available in the market

 Try to understand consumer behavior and then do their market segment and then try to sell their
product

PROJECT OBJECTIVE

1) To gain knowledge about the various investment

2) To understand the selling techniques of mutual fund

3) It will help me to improve my communication skills and as well manners as to how to remain in front of client.

4) It will help me to understand stock market better.

5) To have the feel of real life work experience.

6) It will help me to learn commitment as well as discipline.

7) It will make me more confident and interactive.

8) To generate revenue for the company.

9) To understand behavior of the client.

10) To gain insight knowledge of mutual fund and how it benefit the investors.

LIMITATION

1) Sometime stock market are not performing well so people are not interested to invest
2) Sometime because of negative sentiments in the market people are not ready to invest for e.g. the subprime
crisis in US affected the stock market in India.

3) Many people have good knowledge of the equity market by themselves so they don’t want to invest in mutual
fund

4) Many are looking for the short term benefits for which sometime mutual fund is not the best option

5) Many people who want to have high risk high return are not suitable for mutual fund

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6) Some people are not ready to invest in mutual fund because of the lack of knowledge about the product

7) Most of the time people are busy in their schedule and so they don’t want to listen to anything on the
telephone calls.

8) In small towns people are not willing to purchase mutual fund because of lack of knowledge they rather prefer
to invest in real state

9) It is also difficult to measure economic factor associated with time constrain

10) Time constrain

IMPLEMENTATION OF THEORY IN THE PROJECT-

Whatever I have learnt in the 1 st and 2nd semester theory most of all the concept are put into practice firstly I
can say market segmenting in this whole process of investing I have segmented various customer based on their
income , occupation etc . And also try to understand consumer behavior either meeting them directly or at field
work. I have also done lot of telephone calls that help me to know their responses and to know that how much
people know investing in the mutual fund or either they are having no knowledge for that. When I meet customer
I have to tell them about net asset value and annualized return for that I have to use all the concept of my
financial management. And since I am taking specialization as marketing this project would help me in shaping
and building my career and also this work experience would help me a lot.

METHODOLOGY -

Firstly I did survey and based on that I collect the database and then did the telephonic call and get the
customer information and then try to fix appointment with them so to give them knowledge about our product
and how to invest. After calling to customer and at the time of meeting I did market segmentation based on
income etc because no two client are same so for every client we have to deal him differently for e.g. A low
earning person who don’t have to give tax for him scheme such as equity linked saving scheme which is related to

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tax is of no use so for every client there is a different investment option so we have to recognize that and based
on the need we have to offer different schemes of different mutual fund as well as different asset management
company product to him by this way we help them to get into good schemes according to their needs. And
sometimes i also tried to contact HR manager of small firms and try to convince about our product and if he feels
satisfied then we take permission to give corporate presentation to his employees and then try to convince and
then sell the product. We also provide them after sale service by sending them statement every month and also
the factsheet of the various AMC so they can know there return exactly and also know properly that where their
money is invested. And then I also have prepared questionnaire for the person whom I meet to recognize the
factors which they take into account while investing in mutual fund and then also I see various factors like age ,
occupation , income group , locality and then see how this factor affect while investing in various schemes.

SCOPE:

This project provides me with learning insight about mutual fund and also little bit about equity market. The
Mutual fund industry in India comprises of a large number of fund houses and schemes, however the project is
limited to study of a few fund houses and schemes which are performing well in the current market scenario. The
analysis will mainly be carried on mainly by the data collected from client and from the internet

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SCHEDULE

ACTIVITY TIME PERIOD

Training on mutual fund- learns about the concept of mutual
fund and the different schemes related to different mutual
fund. And also Something about taxation and Financial
04-07-08 to 10-07-08
planning

Then class on asset management and also done survey by asking 11-07-08 to 20-08-08
People to fill questionnaire

Marketing of mutual fund by telephonic 11-07-08 to 27-08-08

Call and try to fix appointment with them and then give them
product knowledge and then try to close the deal

For marketing of mutual fund I have visited to Tech- Mahindra 15-08-08 to 22-08-08
for 7 days to give them the product knowledge and also try to
sale the product.

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Submission of project proposal report 17-08-08 to 19-08-08

Submit of project interim report 21-08-08 to 26-08-08

Submission of project final report 29-08-08 to 31-08-08

Total project period 04-07-08 to 31-08-08

COMPANY PROFILE-

Mahindra & Mahindra Financial Services Limited, a subsidiary of Mahindra & Mahindra Limited, was
established in the year 1991 with a vision to become the number one semi urban and rural Finance Company. In
a short span of 12 years, it has become one of the India’s leading non-banking finance company providing finance
for acquisition of utility vehicles, tractors and cars. It has more than 350 branches covering the entire India and
services over 6, 00,000 customer contracts.

The Mahindra group is a US$4.5 billion conglomerate and a leading manufacturer of multi –utility
vehicles .The Group celebrated its 60 th anniversary in 2005-06.It has a leading presence in key sectors of the Indian
economy, including trade and financial services. (Mahindra intertra de, Mahindra & Mahindra Financial Services
Ltd.) , automotive components, information technology & telecom (Tech Mahindra), and infrastructure
development. Mahindra group is among top ten industrial houses in India.

Mahindra and Mahindra financial services ltd operates in various location of the country to have a faster
response to the needs of all customer for finance and in particular the dealer and customer for M&M products.

Recently it has received the necessary permission from Reserve Bank of India (RBI) to start the
distribution of Mutual Fund products through its network. Hitherto the company was only participating in the
liability requirements of its customers and with mutual fund distribution business, it can also participate in
their asset allocation. When it comes to investing everyone has unique needs based on their own objective and
risk profile.

Even though many investment avenues such as fixed deposit, bonds etc exists, equities typically
outperform these investments, over a longer period of time. We are of the opinion that, systematic investment in

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equity will allow you to create Wealth. Hence only through proper allocation of your portfolio, you can get the
maximum return with moderate risk. Investing in equity is not as straight forward as investing in bonds or bank
deposits. It requires expertise and time. Our Investment Advisory services will help you to invest your money in
equity through different Mutual Fund Schemes. For instance there are some products of Mutual Fund, which
allows you to manage your cash flow by providing liquidity (liquid Funds) as well give you tax free return.

SHARE MARKET

A Share market is the place where buying and selling of shares takes place. Nowadays due to internet and
advanced technology buying and selling of shares takes place anywhere in India and also from foreign country;
there is no need to be physical present in exchanges like NSE and BSE. These share market has a great impact on
the mutual fund because of the schemes of mutual fund most of the investment of mutual fund goes into equity
market either scheme can be in the form of index fund, or equity diversified or either money can be invested in
small cap, large cap, mid cap so we can say that sensex movement had a great correlation with the increase or
decrease of net asset value of mutual fund so we can easily say that mutual funds are heavily depended on share
market. Financial markets like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are countries
economic barometer (a guide to economic growth). Stock markets like NSE and BSE enable trading of a company's
stock.

BSE Sensex (sensitive index) is the prime and old indicator of stock market trend in India. It consist of 30 stocks
representing wide spread industries. It is also calculated using well attested method called free float market
capitalization method (market capitalization of all shares in free float). Free float shares are those that are
available for trading in open market. The rest may me promoters holding, FDI holdings, locked in shares, ESOPS
etc. market Capitalization takes into consideration only those shares issued by the company that are readily
available for the trading in the market.

Market capitalization = Price of its stock * No. of stocks issued by the company

Free float market capitalization rate = market capitalization * free float factor

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BSE determines the free float factor for each company based on detailed information submitted by the companies
in the prescribed format. Free-float factor is the multiple with which the total market capitalization of a company
is adjusted to arrive at the Free-Float market capitalization. Once the free float of a company is determined, it is
rounded of to the higher multiple of 5. A Free-Float factor of say 0.55 means that only 55 % of market
capitalization of the company will be considered for index calculation.

SENSEX = Free Float market capitalization of 30 companies

Index Divisor

MAIN TEXT:

WHAT IS MUTUAL FUND?

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The
money thus collected is then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital appreciations realized are shared by its
unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

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Mutual Fund Operation Flow Chart

A mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario. Markets
for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have
become mature and information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and
time to keep track of events, understand their implications and act speedily. An individual also finds it
difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.

A mutual fund is the answer to all these situations. It appoints professionally qualified and experienced
staff that manages each of these functions on a full time basis. The large pool of money collected in the
fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle
exploits economies of scale in all three areas - research, investments and transaction processing. While the
concept of individuals coming together to invest money collectively is not new, the mutual fund in its
present form is a 20th century phenomenon. In fact, mutual funds gained popularity only after the Second
World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with
different investment objectives. Today, mutual funds collectively manage almost as much as or more
money as compared to banks.

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Thus a mutual fund is the most suitable investment for the common man as its offers an opportunity to invest in a
diversified, professionally managed portfolio at a relatively low cost. Thus the mutual fund is packed product
which consists of following attributes:-

 Professionally manage portfolio
 Diversification
 Convenience
 Tax benefits u/s 80c
 Liquidity
 Lesser risk

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Mutual fund scheme is prepared by fund manager of that company where offer document contains

 Load structure (exit load /exit load)
 Type of fund
 Investment objective
 Asset allocation
 Plans and options
 Minimum application
 Bench mark index

EVOLUTION OF MUTUAL FUNDS 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 objective then was to attract the small investors and introduce them
to market investment. The history of mutual funds in India can be broadly divided into four distinct phases

Phase 1- 1964-87: Growth of Unit Trust of India

In 1963, UTI was established by an act of Parliament. The first scheme launched by UTI was Unit Scheme 1964.
Later in 1970’s and 80’s, UTI started innovating and offering different schemes to suit the different classes of
investors. Unit Link Insurance Plan (ULIP) was launched in 1971. Six new schemes were introduced between 1981
and 1987. The asset under management of UTI was increased from Rs. 600 crores in 1984 to Rs. 6700 cr. by the
end of 1987.

Phase 2- 1987-1993: Entry of public sector funds

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1987 marked the entry of public sector mutual funds. With the opening up of the economy, many public sector
banks and financial institutions were allowed to establish mutual funds. State Bank of India established the first
non UTI mutual fund- SBI Mutual Fund in November 1987. This was followed by Canbank Mutual Fund, LIC Mutual
Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. From 1987-
88 to 1992-93, the asset under management increased from Rs.6700 cr. to Rs.47004 cr.

Phase 3-1993-1996: Emergence of Private Funds

A new era of mutual fund industry began in 1993 with the permission granted for the entry of private sector
funds. This gave the Indian investors a broader choice of ‘fund families’ and increasing competition to the existing
private sector funds. Foreign fund management companies entered joint ventures with Indian companies to start
the mutual fund business in India. These private funds have bought in with them the latest product innovation,
investment management techniques and investor-servicing technology that make the Indian mutual fund industry
today a vibrant and growing financial intermediary. During the year 1993-94, five private sector mutual funds
launched their schemes followed by six others in 1994-95. Due to the SEBI regulatory in Indian mutual fund
industry, the fund industry began to witness much greater investor confidence in due course. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July
1993.

Phase 4-1996-1999: Growth and SEBI regulation

Since 1996, the mutual fund industry in India saw tighter regulation and higher growth. It scaled new heights
in terms of mobilization of funds and number of funds. Deregulation and liberalization of the Indian economy had
introduced competition and provided impetus to the growth of industry. Measures were taken both by SEBI to
protect the investor and by the Government to enhance investors’ returns through tax benefits.

A comprehensive set of regulations for all mutual funds operating in India was introduced with SEBI (mutual fund)
Regulations, 1996. These regulations set uniforms standards for all funds. The budget of Union Government in
1999 took a big step in exempting all mutual fund dividends from income tax in hands of investors. During this
phase, both SEBI and AMFI launched investor awareness programmes aimed at educating all investors about
investing through mutual funds.

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Phase 5-1999-2004: Emergence of a large and uniform industry

The other major development in the fund industry has been the creation of a level playing field for all mutual
funds operating in India. This happened in February 2003, when the UTI Act was repealed. Unit Trust of India no
longer has a special legal status as a trust established by an Act of Parliament. Instead, it has also adopted the
same structure as any other fund in India- a Trust and an Asset Management Company. UTI Mutual Fund is the
present name of the erstwhile Unit Trust of India. UTI Mutual Fund is now under the SEBI’s (Mutual Fund)
Regulations, 1996 like all other Mutual Fund in India. UTI Mutual Fund is still the largest player in the Indian Fund
industry.

The emergence of a uniform industry with the same structure, operations and regulations made it easier for
distributers and investors to deal with any fund house in India. 1999 marked the beginning of a new phase in the
history of the mutual fund industry in India, a phase of significant terms of both amounts mobilized from investors
and asset under management. Between 1999 and 2005, the size of the industry has doubled in terms of asset
under management which has gone up from Rs. 68000 cr. to Rs. 1, 50,000cr. Within the growing industry, the
relative share of different players in terms of amount mobilized and asset under management have also
undergone changes.

2003-2004: A retrospect:

This year was extremely eventful for mutual funds. The aggressive competition in the business took its toll and
two more mutual funds bit the dust. Alliance decided to remain in the ring after a highly public bidding war did
not yield an acceptable price, while Zurich has been sold to HDFC Mutual. The growth of the industry continued to
be corporate focused barring a few initiatives by mutual funds to expand the retail base. Large money brought
with it the problems of low retention and consequently low profitability, which is one of the problems plaguing
the business. But at the same time, the industry did see spectacular growth in assets, particularly among the
private sector players, on the back of the continuing debt bull run. Equity did not find favor with investors since
the market was lack-luster and performances of funds, barring a few, were quite disappointing for investors. The
other aspect of this issue is that institutional investors do not usually favor equity. It is largely a retail segment
product and without retail depth, most mutual funds have been unable to tap this market.

Impact of local and international developments

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During the year we had two major political developments that affected the mutual fund industry. The standoff
between India and Pakistan at the beginning of the financial year saw the debt market being extremely volatile.
Investors pulled out of funds and this also put pressure on fund managers to hold returns and at the same time
meet redemption commitments. The equity markets were equally subdued but the industry did not react greatly
to this since equity funds were in any case not a significant part of the mobilization in the last few years. With the
stand down on the Indian side, the debt markets recovered and with that the inflow of funds into our industry
soared once again. But at the end of the year the industry was hit by another war – the impending US attack on
Iraq and consequent oil price pressures once again made the debt market volatile. It is a mark of the maturing of
the Indian investor that redemptions were only need based and the industry did not see as much outflows as one
feared.

Product innovations

With the bond yields plateauing and with the mutual fund industry trying to attract people to the equity market,
the year also saw some remarkable products flavors for Indian investors. Birla Sunlife Mutual Fund led the pack
with an equity fund focused on dividend yield stock, a bond index fund and a bond-for-units swap product. Some
of the other innovative products were the series of exchange-traded funds from Benchmark, including a liquid
index traded fund. Prudential-ICICI also launched an exchange-traded fund, the SPICE, in association with BSE.

The industry focused also on making existing products more attractive by adding on a number of service features
and cost control measures. Same day redemption in liquid funds, “institutional” plans which would reduce the
overall cost of investment and bonus units in lieu of dividend were some of these features.

A new Emphasis on Risk Management

The year also saw a tremendous emphasis on risk management. A number of mutual funds were already taking
steps to mitigate risks not only in operations as in the past, but also in the area of management of funds. A
committee constituted by AMFI carried the initiative taken under the FIRE (Financial Institutions Reform and
Expansion) Project forward and developed a risk management framework for the industry. The subsequent
circular by SEBI is perhaps one of the most comprehensive attempts to address the issue of risk in the mutual fund

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business and carries with it the added advantage of phase wise escalation starting with mandatory items and
moving towards best practices.

GROWTH IN ASSETS UNDER MANAGEMENT

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The graph of total asset under management is given above

AMFI and its role

One of the most effective industry bodies today is probably the Association of Mutual Funds in India (“AMFI”). It
has been a forum where mutual funds have been able to present their views, debate and participate in creating

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their own regulatory framework. The association was created originally as a body that would lobby with the
regulator to ensure that the fund viewpoint was heard. Today, it is usually the body that is consulted on matters
long before regulations are framed, and it often initiates many regulatory changes that prevent malpractices that
emerge from time to time. This year some of the major initiatives were the framing of the risk management
structure, a code of conduct and registration structure for mutual fund intermediaries, which were subsequently
mandated by SEBI. In addition, this year AMFI was involved in a number of developments and enhancements to
the regulatory framework. AMFI works through a number of committees, some of which are standing committees
to address areas where there is a need for constant vigil and improvements and other which are ad hoc
committees constituted to address specific issues. These committees consist of industry professionals from
among the member mutual funds. There is now some thought that AMFI should become a self-regulatory
organization since it has worked so effectively as an industry

Phase 6: From 2004 0nwards: Consolidation and Growth

The industry has lately witnessed a spate of mergers and acquisitions, most recent ones
being the acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund by Principal, and
PNB Mutual Fund by Principal. At the same time, more international players continue to enter India, including
Fidelity, one of the largest funds in the World. The stage is now set for growth through consolidation and the
entry of new international and private sector players. As at the end of August 2008, there were 32 funds.

Number of schemes

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MUTUAL FUND TYPES

All mutual funds would be either close-end or open-end, and either load or no-load. These classifications
are general. For example all open-end funds operate the same way; or in case of a load fund a deduction is made
from investors’ subscription or redemption and only the net amount used to determine his number of shares
purchased or sold.

Once we have reviewed the fund classes, we already to discuss more specific fund types. Funds are
generally distinguished from each other by their investment objectives and types of securities they invest in. we
now look at major types of fund available under the general classifications as discussed above. It may be noted
some of the following fund types are not yet available popular in India at present.

a) Broad fund types by nature of investments
Mutual funds may invest in equities, bonds or fixed income securities, or short-term money
market securities. Some have equity, bond or money market or liquid funds. All these invest in financial
assets. But there are funds that invest in physical assets. For example, there is Gold or other precious
metal funds and there are real estate funds.

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b) Broad fund types by investment objective
Investors and hence the mutual funds pursue different objectives while investing. Thus, growth funds
invest for medium to long term capital appreciation. Income funds invest to generate regular income and
less for capital appreciation. Value funds invest in equities that are considered undervalued today, whose
value will be unlocked in future.

c) Broad fund types by risk profile
The nature of a fund’s portfolio and its investment objective imply different levels of risk under
taken. Funds are therefore, often grouped in order of risk. Thus, equity funds have a greater risk of
capital loss than a debt fund that seeks to protect the capital while looking for income. Liquid funds are
exposed to less risk than bond funds. Since they invest in short-term fixed income securities, as
compared to longer-term portfolios of bond funds.
Fund managers often try to alter the risk profile of funds by suitably changing the investment objective.
For example, a fund house may structure an “Equity Income Fund” investing in shares that don’t
fluctuate much in value and offer steady dividends-say power sector companies, or a real estate income
fund that invests only in income-producing assets. A balanced fund seeks to produce a lower risk
portfolio by mixing equity investments with debt investments. Investors and their advisors need to
understand both the investment objective and the level of risk of the different types of funds.

MUTUAL FUND CLASSIFICATION

Open-end Vs Closed-end Funds

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An open-end fund is one that sells and repurchases units at all times. When the fund sells units, the investor
buys them from the fund. When the investor redeems the units, the fund repurchases the units from the investor.
An investor can buy units or redeem units from the fund itself at a price on the net asset value (NAV) per unit.NAV
per units is obtaining by dividing the amount of market value of the fund’s asset (plus accrued income minus the
fund liabilities) by the number of units outstanding. The number of units outstanding goes up or down every time
the fund sells new units or repurchases existing units. In other words, the ‘unit capital’ of an open- end mutual
fund is not fixed but variable. When sale of unit exceed repurchase, the fund increases in size. When the
repurchase exceeds sale, the fund shrinks.

A closed-end fund is a one-time sale of fixed number of units and it is fixed. After the offer closes, closed-end
funds don’t allow investors to buy or redeem units directly from the funds. However, to provide the much-needed
liquidity to investors, closed-end funds list on a stock exchange. Trading through stock exchange enables investors
to buy or sell units of a closed-end mutual fund from each other, through a stockbroker, in the same fashion as
buying or selling shares of a company. The fund’s units may be traded at a discount or premium to NAV based on
investor’s perceptions about the fund’s future performance and other market factors affecting the demand for or
supply of the fund’s units. The number of outstanding units of a closed-end fund does not vary on account of
trading in the fund’s units at the stock exchange. Sometimes, closed-end funds do offer “buy-back of fund
shares/units”, thus offering another avenue for liquidity to closed-end fund investors. In this case, the mutual
fund actually reduces the number of outstanding units. In India, SEBI regulations ensure that the closed end
scheme investors are given at least one of the two exit avenues.

Load and No-load Funds:

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Marketing of a new mutual fund scheme involves initial expenses. These expenses may be recovered from
the investors in different ways at different times. Three usual ways in which a fund’s marketing expenses may
recover from the investors are:

 At the time of investor’s entry into the fund/scheme, by deducting a specific amount from his
contribution
 By charging the fund/scheme with a fixed amount each year, during a specified number of years.
 At the time of investor’s exit from the fund/scheme, by deducting a specified amount from the
redemption proceeds payable to the investor.
These charge imposed on the investors to cover distribution/sales/marketing expenses are often
called “loads”. The load charged to the investor at the time of entry into a scheme is called a “front-end load or
entry load”. This is the first case. The load amount charged to the scheme over a period of time is called a
“deferred load”. This is the second case above. The load that the investor pays at the time of his exit is called a
“back-end load or exit load”. This is the third case above. Some fund may also charge different amount of loads to
the investors, depending upon how many years the investor has stayed with the fund; the longer the investors
stay with the fund, less the amount of ‘exit load’ he is charged. This is called “contingent deferred sales charge”.

Fund that charge front-end, back-end or deferred loads are called load funds. Funds that make no such charges or
loads for sales expenses are called no-load funds.

Tax-exempt Vs Non Tax-exempt Funds

When a fund invests in tax-exempt securities, it is called a tax-exempt fund. In India, any income received by
mutual funds is tax-free. After the 1999 Union Government Budget, all of the dividend income received from any
of the mutual fund is tax free in the hands of the investor. However, funds other than open-end equity oriented
funds have to pay a distribution tax, before distributing income to investors. In other words, open-end equity
oriented mutual fund schemes are tax exempt, while other funds are taxable for distributable income.

Sajith GS Page 28


VARIOUS PLAN OF MUTUAL FUND:

Growth Plan:
Dividend is not paid-out under a Growth Plan and the investor realizes only the capital appreciation on the
investment (by an increase in NAV).

Income Plan:
Dividends are paid-out to investors under an Income Plan to the investors. However, the NAV of the
mutual fund scheme under an Income Plan falls to the extent of the dividend payout.

Dividend Re-investment Plan:
Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional units in
open-ended funds. In most cases mutual funds offer the investor an option of collecting dividends or re-
investing the same.

Retirement Pension Plan:
Some schemes are linked with retirement pension. Individuals participate in these plans for themselves,
and corporate participate for their employees.
Insurance Plan:
UTI and LIC Mutual Funds have some schemes that offer insurance cover to investors.
Systematic Investment Plan (SIP):
Here the investor is given the option of preparing a pre-determined number of post-dated cheques in favor
of the fund. The investor is allotted units on the date of the respective cheques at the applicable NAV.

Systematic Withdrawal Plan:
As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the investor the
facility to withdraw a pre-determined amount / units from his fund at a pre-determined interval. The
investor's units will be redeemed at the applicable NAV as on that day.

BY INVESTMENT OBJECTIVE

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1) Growth Funds
The aim of growth fund is to provide capital appreciation over the medium to long term. Such
schemes normally invest a majority of their corpus in equities. It has proved that return from stock, have
outperformed most other kinds of investment held over the long term. Growth schemes are ideal for
investors having a long term outlook seeking growth over a period of time. Growth funds invest in
companies whose earnings are expected to rise at an above average rate. These companies may be operating in
sectors like technology considered having a growth potential. Growth funds are therefore, less volatile than funds
that target aggressive growth.
2) Income Funds (Debt Funds)
The aim of income fund is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures and government securities.
Income funds are ideal for capital stability and regular income. These funds do not target capital
appreciation but look for current income, and therefore distribute a substantial part of their surplus to
investors. Income funds targets high return and can face more risk.
3) Balanced fund
The aim of balanced fund is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income securities in the
proportion indicated in their offer document. By investing in a mix of nature, balanced funds seek to
attain the objectives of income, moderate capital appreciation and preservation of capital and are ideal for
investors with a conservative and long-term orientation. In a rising stock market, the NAV of these
schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors
looking for a combination of income and moderate growth.
4) Money market funds (Liquid Funds)
The aim of money market fund is to provide easy liquidity, preservation of capital and moderate income.
These schemes generally invest in safer short term instrument such as treasury bills, certificate of deposit,
commercial papers and inter-bank call money. Return on these schemes may fluctuate depending upon the
interest rates prevailing in the market. These are ideal for corporate and individual investors as a means to park
their surplus fund for short periods.

5) Gilt Funds
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Gilt funds are government securities with medium to long term maturities, typically of over one
year. In India, we have Government securities or Gilt Funds that invest in government paper called dated
securities. Since the issuer is the Government of India or States, these funds have little risk of default and
hence offer better protection of principal. However, Gilt Securities, like all debt securities, face interest
rate risk. Debt Securities price fall when interest rate level increase (and vice versa). Investors have to
understand the potential change in NAV s of gilt funds on account of changes in interest rates in the
economy.
6) Equity Linked Tax Saving schemes
These scheme offer tax rebates to the investors under specific provision of the Indian income tax
laws as the government offers tax incentive for investment in specified avenues. Investment made in the
equity linked saving schemes (ELSS) and pension schemes are allowed as deduction u/s 88 of the income
tax act, 1961. The act also provides opportunity to investors to save capital gains u/s 54EA and 54EB by
investing in mutual funds.

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RISK HIERARCHY OF MUTUAL FUNDS
RISK

Money Debt Fund Equity Fund
Market Fund

Hybrid Fund
Gilt Fund

Growth and Aggressive
High Yield
Income Funds Growth Fund
Debt Funds

Growth Funds

Focused Flexible Asset
Debt Funds Allocation Fund
Value Funds

Diversified Equity
Fund

Equity Income
Funds

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Money Market Diversified Balanced Funds Index Fund
Gilt Funds
Funds Debt Fund

TYPE OF FUND

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STRUCTURE OF MUTUAL FUND:

SEBI

Trustee Sponsor

AMC

FUND MANAGER MKT/SALES

MUTUAL FUND DISTRIBUTOR

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SCHEMES

INVESTOR

THE STRUCTURE CONSISTS OF:

The Fund Structure

Sponsor is defined as any person who, acting alone or in combination with another body corporate, establishes a
mutual fund. The sponsor of a fund is akin to the promoter of a company as he gets the fund registered with SEBI.
The sponsor will form a Trust and appoint a Board of Trustees. The sponsor will also generally appoint an Asset
Management Company as fund managers. The sponsor, either directly or acting through the Trustees, will also
appoint a Custodian to hold the fund assets. As per the SEBI regulation, for a person to qualify as a sponsor, he
must contribute at least 40% of the net worth of AMC and possess a sound financial track record over five years
prior to registration.

TRUST

The mutual fund in India is constituted in the form of a Public Trust created under the Indian Trust Act, 1882. The
fund sponsor acts as the settler of the Trust, contributing to its initial capital, and appoints a Trustee to hold the
assets of the Trust for the benefit of unit holder, who are the beneficiaries of the Trust. The fund then invites
investors to contribute their money in common pool, by subscribing to “units” issued by various schemes
established by the trust. Under the Indian Trusts Act, the Trust or the Fund has no independent legal capacity
itself, rather it is the Trustee or Trustees who have the legal capacity and therefore all acts in relation to the trust
are taken on its behalf by the Trustees. The Trustee hold the unit-holders money in a fiduciary capacity, i.e., the
money belongs to the unit-holders and is entrusted to the fund for the purpose of investment.

TRUSTEE

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Trustee is usually a company (corporate body) or a board of Trustees (body of individuals) .The main responsibility
of the Trustee is to safeguard the interest of the Unit holders and inter alias ensure that the AMC functions in the
interest of investors and in accordance with the Securities and Exchange board of India (MUTUAL FUNDS)
Regulations. Most of the funds in India are managed by Board of Trustees. The Trustees do not directly manage
the portfolio of securities. The Trustee being the primary guardian of the unit-holders’ funds and assets, a Trustee
has to be a person of high repute and integrity.

ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the trustee as the investment manager of the mutual fund. The AMC is required to be
approved by the Securities and Exchange Board of India (SEBI) to act as Asset Management Company of the
mutual fund. The AMC would, in the name of the Trust, float and then manage the different investment
“schemes” as per SEBI regulations and as per the investment management agreement it signs with the Trustees.
The Asset Management Company of a mutual fund must have a net worth of at least Rs. 10 crores at all times.
Directors of the AMC, both independent and non-independent, should have adequate professional experience in
financial services and should be individuals of high moral standing. At least 50% of the directors of the AMC are
independent directors who are not associated with the Sponsor in any manner.

NAV-:

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the
net asset value of the scheme divided by the number of units outstanding on the Valuation Date.

How is NAV calculated?

The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and
the resultant value divided by the number of units in the fund is the fund’s NAV.

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Expense Ratio

AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising
expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100 in assets
under management.

A fund's expense ratio is typically to the size of the funds under management and not to the returns
earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets
in the fund, the lower should be its expense.

Entry load and an exit load

Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds (entry load
and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called
no-load funds. Entry load is charged at the time an investor purchases the units of a scheme. The entry load
percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at the time of
redeeming (or transferring an investment between schemes). The exit load percentage is deducted from the NAV at
the time of redemption (or transfer between schemes). This amount goes to the Asset Management Company and not
into the pool of funds of the scheme.

How does "entry load" affect the investment returns?

A 2.25% entry load sounds small. But it still bites a chunk off the returns over a long period of time. For
instance, Rs 1 lakh invested directly in the no-load option of an equity fund that grows at a rate of 15% over
a period of 20 years yields around Rs 16.36 lakh against Rs 15.99 lakh that a load fund would return—a
difference of Rs 36,820. This is because even a small sum of 2.25% gets compounded over the years.

The pinch remains the same even in a systematic investment plan (SIP). As SIPs entail investments on a
regular basis, say every month, you end up paying entry loads on all your investment installments. Assume
you had invested Rs 5,000 in Reliance Vision Fund (RVF) on January 1, 2003 through a monthly SIP. If
you had withdrawn your entire investment after five years, on December 31, 2007, you would have got back
Rs 11.52 lakh in the no-load option and Rs 11.25 lakh in a load option, a difference of a cool Rs 25,914.

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Are investments in mutual fund units risk-free or safe?

This depends on the underlying instrument that a mutual fund invests in, based on its investment
objectives. Mutual funds that invest in stock market-related instruments cannot be termed “risk-free or
safe” as investment in shares are inherently risky by nature, whereas funds that invest in fixed-income
instruments are relatively safe and those that invest only in government securities are the safest.

Why Mutual Funds are an investment option?

Firstly, we are not all investment professionals. We go to a doctor when we need medical advice or a
lawyer for legal guidance, similarly mutual funds are investment vehicles managed by professional fund
managers. And unless you rate highly on the Investment IQ Quiz, we recommend you use this option for
investing. Mutual funds are like professional money managers, however a key factor in their favor is that
they are more regulated and hence offer investors the ability to analyze and evaluate their track record.

Secondly, investing is becoming more complex. There was a time when things were quite simple - the
market went up with the arrival of the first monsoon showers and every year around Diwali. Since India
started integrating with the world (with the start of the liberalization process), complex factors such as an
increase in short-term US interest rates, the collapse of the Brazilian currency or default on its debt by the
Russian government, have started having an impact on the Indian stock market. Although it is possible for
an individual investor to understand Indian companies (and investing) in such an environment, the process
can become fairly time consuming. Mutual funds (whose fund managers are paid to understand these
issues and whose asset management company invests in research) provide an option of investing without
getting lost in the complexities.

Lastly, and most importantly, mutual funds provide risk diversification: Diversification of a portfolio is
amongst the primary tenets of portfolio structuring (see The Need to Diversify). And a necessary one to
reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to
apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a
professional. Mutual funds represent one such option.

Sajith GS Page 38


How to select a mutual fund scheme?

What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best
performing fund? The answer is no. Mutual fund investing requires as much strategic input as any other
investment option. But the advantage is that the strategy here is a natural extension of your asset
allocation plan (use our Asset Allocator to understand what your optimum asset allocation plan should be,
based on your personal risk profile). The following processes are important to select a mutual fund
scheme.

 Identify funds whose investment objectives match your asset allocation needs
Just as you would buy a computer that fits your needs and budget, you should choose a mutual fund
that meets your risk tolerance (need) and your risk capacity (budget) levels (i.e. has similar investment
objectives as your own). Typical investment objectives of mutual funds include fixed income or equity,
general equity or sector-focused, high risk or low risk, blue-chips or turnarounds, long-term or short-
term liquidity focus. The investment objectives match yours are
 Evaluate past performance, look for consistency. Although past performance is no guarantee of future
performance, it is a useful way of assessing how well or badly a fund has performed in comparison to its
stated objectives and peer group. A good way to do this would be to identify the five best performing
funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one
year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons
as they would have thus demonstrated their ability to be not only good but also, consistent
performers. .

Are investments in mutual fund units risk-free or safe?

This depends on the instrument mutual fund invests in, based on its investment objectives. Mutual funds
that invest in stock market-related instruments cannot be termed “risk-free or safe” as investment in shares
are inherently risky by nature, whereas funds that invest in fixed-income instruments are relatively safe
and those that invest only in government securities are the safest.

Role of a Fund Manager:

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Fund managers are responsible for implementing a consistent investment strategy that reflects the goals
and objectives of the fund. Normally, fund managers monitor market and economic trends and analyze
securities in order to make informed investment decisions.

How are mutual funds regulated?

All Asset Management Companies (AMCs) are regulated by SEBI and or the RBI (in case the AMC is
promoted by a bank). In addition, every mutual fund has a board of directors that represents the unit
holders’ interests in the mutual fund.

ADVANTAGE OF MUTUAL FUND:

Mutual funds provide the services of experienced and skilled professionals, backed by a dedicated investment
research team that analyze the performance and prospect of companies and select suitable investments to
achieve the objective of the scheme.

If mutual fund is emerging as the favorite investment vehicles, it is because of the many advantages it has over
other forms and avenues of investing, particularly for the investor who has limited resources available in terms of
capital ability to carry out detailed research and marketing monitoring. The following are the major advantages
offered by mutual funds to all investors:

 Portfolio Diversification: Mutual Fund normally invests in a well-diversified portfolio of securities.
Each investor in a fund is an owner of the fund’s assets. This enables him to tell a diversified investment
portfolio even with a small amount of investment, which would otherwise require big capital.
 Professional Management: Even if an investor has a big amount of capital available to him, he
benefits from the professional management skills bought in by the fund in the management of the
investor’s portfolio. The investment management skills, along with the needed research into available
investment options, ensure a much better return that what an investor can manage own his own. Few
investors have the skills and resources of their own to succeed in today’s fast-moving, global and
sophisticated markets.

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 Reduction/Diversification of Risk: An investor in a mutual fund acquired a diversified portfolio; no
matter how small is his investment. Diversification reduces the risk of loss, as compared to investing
directly in one or two shares of debentures or other investments. When an investor invests directly, all the
risk of potential loss is his own. While investing in the pool of funds with other investors, any loss on one
or two securities is also shared with other investors. This risk reduction is one of the most important
benefits of a collective investment vehicle like mutual funds.
 Liquidity: Often, investors hold shares or bonds they cannot directly, easily or quickly sell.
Investment in a mutual fund, on the other hand, is more liquid. An investor can liquidate the investment
by selling the units to the fund if it is an open end fund, or by selling the units in the stock market if the
fund is a closed-end fund, since closed end funds have to be listed on a stock exchange, in any case, the
investor in a closed end fund receives the sale proceeds at the end of a period specified by the mutual fund
or the stock exchange.

 Convenience and Flexibility: Mutual fund management companies offer many investor services that
a direct market cannot get. Within the same fund family, investor can easily transfer or switch their
holdings from one scheme to another. They can also invest or withdraw their money at regular investors
in most open end schemes. Mutual fund investment process has been made further more convenient with
the facility offered by funds for investors to buy or sell their units through the internet or email using
other communication means. The investors also get updated market information fro the funds. The
information about the share is also shared by the fund managers in a transparent manner, with all material
facts required by regulators to be disclosed to the investors.

 Safety: Mutual fund industry is well regulated. All funds are registered with SEBI which lays down
rules to protect the investors. Thus, investors also benefit from the safety of a regulated investment
environment.

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DISAGVANTAGE OF MUTUAL FUND:

While the benefits of investing through mutual fund far outweigh the disadvantages, an investor and his advisor
will do well to be aware of a few shortcomings of using the mutual fund as an investment vehicle.

 No control over cost: An investor in a mutual fund has any control over the overall cost of investing.
He pays the investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are usually payable as a percentage of the value of his
investment, whether the fund value is raising or declining. A mutual fund investor also pays fund
distribution cost, which he would not incur in direct investing. However, this shortcoming only means
that there is a cost to obtain the benefits of mutual fund services, and this cost is often less than the cost of
direct investing by the investors. Besides the regulators have prescribed a ceiling on the maximum
expenses that the fund managers can charge to the schemes, thus limiting the investors’ expenses of
investing through mutual funds.
 No Tailor-made Portfolio: Investors who invest on their own portfolios of shares, bonds and other
securities. Investing through funds means he delegates this decision to the fund managers. High-net-worth
individuals or large corporate investors may find this to be a constraint in achieving their objectives.

Sajith GS Page 42


However, most mutual funds help investors overcome this constraint by offering families of schemes-a
large number of different schemes- within the same fund. In each schemes there are various plans and
options. An investor can choose from different investment plans and options. An investor can choose
from different investment schemes/plans/options and construct an investment portfolio that meets his
investment objectives.

 Managing a Portfolio of Funds: Availability of a large number of options from mutual funds cam
actually mean too much choice for the investor. He may again need advice on how to select a fund to
achieve his objectives, quite similar to the situation when he has to select individual shares or bonds to
invest in. Fortunately, India now has a large number of AMFI registered and tested fund distributers and
financial planners who are capable of guiding the investors.

Structure of the organization

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Company’s structure

Structure of the company consists of following entities:-

 Country head
 State head distribution channel
 Cluster heads of investments
 Individual brokers
 Back office operation
 Sales team

State head looks after all the operation in Karnataka region like Bellary, Mysore and other cities of Karnataka and
coordinates with asset management companies i.e. AMCs and reports to country head, and cluster heads of
investments are responsible for sales team and report to state head distribution channel and sales people who
directly interact with investors for the investments report to cluster head investment. Sales team is supported by
back office operations, like role of back office operation

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Gap analysis
Customers expect different levels of services from different organizations for example the level of customer
services from different organizations. For example, the level of customer services expected from a fast food outlet
differs from that of a restaurant at a star hotel. Therefore, an organization should understand customer

Sajith GS Page 45


expectations and deliver the service in a way that matches these expectations. Some of the gaps that MAHINDRA
FINANCE (finsmart) should minimize to improve the quality of services delivered to their customer are:-

Gap 1. Consumer Expectation----------------------Management Perception Gap

This gap arises as service marketers may not always understand what consumers expect in a service. This
type of gap has an impact on the consumer’s evaluation of service quality

Gap 2.Management Perception ------------ Service Quality Specification Gap

This gap arises from the fact that many services provider fail to set appropriate service standards required
to deliver the service expected by the customer

Gap 3.Service Quality Specification ----- Actual Service Delivery Gap

This gap results from the employee’s inability to deliver the service according to the standards set. This may
be due to unclear standards or due lack of empowerment

Gap 4.Service Delivery--------------- External Communications Gap

This gap arises due to poor external communications that affect consumer expectations about a service
and his perception of the delivered service

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Problem statement:-

As described above in structure the main four entities that are responsible for providing good/bad services
are as follows

 Sales team
 Back office
 Cams
 AMCs

Sales team generates new clients with the help database given by the company, then sales team
interacts them as per the appointments, now investor decides about the investments then sales executive
provides them the application form of respective schemes then after filling the application form, application
form comes to back office where application gets processed then application reaches to CAMs and ,later

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respective AMCs receive that application form, from the CAMs and then AMCs will send the account statement
along with a folio number of that mutual fund schemes through which investor comes to know about units
purchased by him and NAV of his mutual fund scheme

Here the entire process takes around 3-4 days, so because of the share market performance the
NAV of that fund fluctuates because mutual funds are dependent on share market so once customer agrees on
particular NAV, any change at the time of purchase effects the profitability of investor

Because allotment of NAV is subject to realization of the cheque so as number of units this generally does not
matches with the investor’s expectation not only this investors do not get their account statements on prescribed
date so investor has to enquire about the account statement time and again

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SWOT analysis of the company and its competitor

STRENGTH WEAKNESS

 BRANDNAME
 KNOWN TO BE ETHICAL  COMPANY IS JUST 1YR OLD
 SUPPORT FROM OTHER DIVISIONS OF  LACK OF MANPOWER
MAHINDRA  NOT HAVING NECESSARY
 PRESENCE IN ALL OVER INDIA INFRASTRUCTURE
 EXPERIENCED PEOPLE IN THE COMPANY  STRONG ASSOCIATION WITH ITS
 UNBIASNESS AUTOMOBILE SECTOR
( MAHINDRA SCORPIO )

OPPORTUNITY THREATS

 ZERO BASE  INDIVIDUAL BROKERS
 LACK OF PROPER SERVICES AVAILABLE IN  ITS COMPETITOR’S
THE MARKET PROMOTIOAL ACTIVITIES
 ABSENCE OF LEADER IN THE MARKET, IN
DISTRIBUTION ( MUTUAL FUNDS)  ITS COMPETITOR’NEW BUSINESS PLANS
 HUGE POTENTIAL OF MUTUAL FUND  ATTRITION
MARKET  LACK OF MANPOWER
 GROWTH OF MUTUAL FUND MARKET  NOT HAVING NECESSARY
 INCREASE IN INCOME LEVEL OF PEOPLE INFRASTRUCTURE

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A COMPARATIVE ANALYSIS OF MUTUAL FUND SCHEMES
Equity Diversified Scheme

Scheme NAV 1 year 3 year 5 year Since
annualized annualized annualized Inception

Birla Sun Life Frontline Equity Fund 58.39 -0.53 26.659 34.53 36.58

DBS Chola Opportunities Fund- 34.98 09.83 25.7 33.17 12.39
Cumulative

DSP Merrill Lynch Equity Fund-Growth 10.96 05.36 N.A N.A 8.56

DSP Merrill Lynch India T.I.G.E.R Fund – 37.63 -04.33 29.13 N.A 38.34
Growth

DSP Merrill Lynch Top 100 Equity 69.38 06.92 30.923 37.71 44.36
Growth Fund

DWS Alpha Equity Growth Fund 62.76 08.23 29.07 38.283 39.77

DWS Investment Opportunity Fund 31.20 11.23 30.27 N.A 29.07

Fidelity Equity Fund –Growth 23.15 -04.41 23.47 N.A 29.49

HDFC Growth Fund-Growth 60.53 08.61 28.24 34.63 31.77

HSBC Equity Fund- Growth 85.34 08.91 25.19 41.81 46.15

ICICI Prudential Dynamic Plan-Growth 72.81 01.98 27.67 31.78 29.76

ICICI Prudential Infrastructure Fund- 25.17 17.82 N.A N.A 34.26
Growth

IDFC Imperial Equity fund-Growth 16.27 06.82 N.A N.A 17.48

Kodak 30-Growth 81.09 05.78 26.67 39.29 45.02

Kodak Opportunities-Growth 35.71 08.57 26.61 39.28 41.39

Reliance growth fund-growth 331.5 06.97 26.72 47.17 31.91

Reliance Regular Saving Fund-Equity- 20.86 18.41 26.56 N.A 22.62
Growth

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SBI Magnum Sector Umbrella-Contra 34.73 09.11 16.74 22.78 17.64
Fund-Growth

Sundaram BNP Paribas CAPEX 19.18 -06.67 N.A N.A 20.18
opportunities Fund-Growth

Sundaram BNP Paribas Select Focus- 71.01 13.47 30.40 36.91 40.29
Growth

Tata Equity PE Fund-Growth 31.91 02,87 22.71 N.A 32.81

Tata Infrastructure Fund-Growth 29.56 04.78 32.06 N.A 36.26

Templeton India Growth Fund-Growth 82.19 10.51 24.84 N.A 32.63

UTI Dividend Yield Fund-Growth 19.68 06.28 21.49 N.A 22.68

UTI Contra Fund-(G) 10.64 02.12 16.49 N.A 18.82

ELSS

Scheme Name NAV 1 Year 3 Year 5 Year Since
Annualized Annualized Annualized Inception

DWS Tax Saving Fund 12.34 1.59 N.A N.A 8.52

Fidelity Tax Advantage Fund 14.23 -1.43 N.A N.A 14.48

Franklin India Taxshield-Growth 112.2 08.39 14.23 27.32 26.56

HDFC Long Term Tax Adv. Fund 68.49 05.29 12.38 18.45 24.32

HSBC Tax Saver Equity Fund 12.56 1.62 16.86 N.A 17.86

Kodak Tax Saver Scheme 14.43 -10.13 22.49 N.A 15.64

Principal Personal Tax Saver 82.40 -5.85 24.51 33.74 26.49

Reliance Tax Saver-Growth 17.64 3.06 12.73 N.A 13.45

Sundaram BNP Paribas Tax Saver 32.61 7.63 22.50 40.94 29.56

Tata Tax Advantage Scheme 19.41 3.57 13.57 17.83 17.78

Balance

Sajith GS Page 51



Birla Sun Life Balanced Fund 29.34 -2.82 14.42 21.39 13.21

DSP Merrill Lynch Balanced 46.82 7.19 22.72 22.72 18.38
Fund-Growth
FT India Balanced Fund-Growth 36.62 0.36 18.52 25.78 18.62

HDFC Balanced Fund-Growth 34.27 5.61 14.72 21.62 17.82

Kodak Balance Fund 20.53 2.75 17.78 28.43 17.77

Tata Balanced Fund-Growth 56.82 0.08 18.79 26.78 19.72

UTI Children’s Career Balanced 12.45 1.24 09.57 16.84 15.22

MIP


Baroda Pioneer MIP Fund 14.96 5.67 12.78 N.A 12.93

Birla Sun Life Savings MIP 2 14.54 13.54 22.37 N.A 18.59
Savings-Growth

DBS Chola MIP Regular-Growth 15.55 5.54 10.74 14.43 10.89

FT India Monthly Income Plan 22.46 3.84 7.72 9.22 09.73

HSBC MIP Savings-Growth 1.4 3.56 8.78 N.A 10.99

LICMF MIP-Growth 27.67 7.65 10.67 09.78 09.49

Principal MIP-MIP Growth 15.36 9.67 11.64 N.A 08.96

Reliance MIP 15.68 8.11 10.76 19.89 16.56

Tata Monthly Income Fund (G) 21.45 5.61 13.41 17.41 17.72

Gilt Fund


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Birla Sun Life Gilt Plus Regular 31.40 07.33 10.68 14.78 12.93
Plan – Growth

DSP Blackrock G Sec Plan A Long 31.98 06.91 11.28 13.65 12.06
Duration – Growth

DWS Gilt Fund - Regular – Growth 10.99 08.11 16.67 26.41 21.02

Fidelity Flexi Gilt Fund – Growth 11.87 08.98 15.99 29.10 26.09

ICICI Prudential Gilt Fund 31.65 05.82 11.67 18.54 12.91
Investment Plan - Growth

Mirae Asset Gilt Fund - 10.36 9.61 18.51 24.61 19.71
Investment Plan - Provident Fund

Reliance Gilt Securities Fund 11.92 10.17 19.71 32.76 29.62
-Retail – Growth

Templeton India Govt. Securities 32.66 08.45 13.41 18.34 14.72
Fund - Composite Plan –Growth

Debt (Income) Fund


Birla Sun Life Income Fund - 33.11 06.47 09.89 10.78 10.18
Growth

Birla Sun Life Income Plus - 41.41 05.68 09.18 11.68 11.28
Growth

Canara Robeco Income Scheme 18.99 09.73 09.87 10.78 10.20
- Growth

ICICI Prudential Income Fund – 29.42 06.44 09.74 08.99 09.18
Growth

IDFC Dynamic Bond Fund - Plan 18.71 07.61 07.99 09.98 09.64
A - Growth

Kotak Bond Regular Plan – 25.64 08.61 10.61 11.45 10.23
Growth

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Reliance Income Fund - Retail - 30.89 07.81 09.78 11.28 10.93
Growth Plan – Growth

CHRONICLE ORDER OF COMPANIES GIVING MOST RETURN.

Fund Category 5 Yr
Return

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DSPML T.I.G.E.R. Fund Equity: Diversified 45.45

Tata Infrastructure Equity: Diversified 44.92

Magnum Contra Equity: Diversified 44.81

Kodak Opportunities Equity: Diversified 44.57

UTI Infrastructure Equity: Diversified 43.14

Reliance Growth Equity: Diversified 42.88

Magnum Multiplier Plus Equity: Diversified 42.76

Sundaram BNP Paribas Select Midcap Equity: Diversified 40.64

HDFC Top 200 Equity: Diversified 39.29

BoB Growth Equity: Diversified 38.57

Principal Child Benefit Hybrid: Equity-oriented 36.79

Magnum Balanced Hybrid: Equity-oriented 31.24

HDFC Prudence Hybrid: Equity-oriented 29.68

Birla Sun Life Income Debt: Medium-term 8.29

ABN AMRO Flexi Debt Plan Debt: Medium-term 7.78

ICICI Prudential Long-term Debt: Medium-term 7.55

Birla Dynamic Bond Retail Debt: Medium-term 7.51

Kotak Flexi Debt Debt: Medium-term 7.47

Sundaram BNP Paribas S... Equity: Diversified 43.35

ICICI Prudential Dynamic Equity: Diversified 43.26

DWS Investment Opportunity Equity: Diversified 43.07

DSPML Equity Fund Equity: Diversified 42.89

DSPML Top 100 Equity Reg Equity: Diversified 41.96

Kotak 30 Equity: Diversified 41.33

Sajith GS Page 55


Assets Under Management (AUM) as at the end of July-2008 (Rs in Lakhs)

Average AUM for the month
Mutual Fund Name Excluding Fund Of Funds

1. ABN AMRO Mutual Fund 640038.55

2. AIG Global Investment Group MF 313127.37

Sajith GS Page 56


3. Benchmark Mutual Fund 331997.2

4. Bharti AXA Mutual Fund N/A

5. Birla Sun Life Mutual Fund 3590604.4

6. BOB Mutual Fund 7239.32

7. Canara Robeco Mutual Fund 288506.51

8. DBS Chola Mutual Fund 237199.85

9. Deutsche Mutual Fund 1291156.7

10. DSP Merrill Lynch Mutual Fund 1667547.7

11. Escorts Mutual Fund 14333.34

12. Fidelity Mutual Fund 835886.21

13. Franklin Templeton Mutual Fund 2684222.2

14. HDFC Mutual Fund 4477316.8

15. HSBC Mutual Fund 1488820.1

16. ICICI Prudential Mutual Fund 5432187.1

17. ING Mutual Fund 860829.61

18. JM Financial Mutual Fund 1294474.3

19. JPMorgan Mutual Fund 217099.25

20. Kodak Mahindra Mutual Fund 1807062.8

21. LIC Mutual Fund 1405616.2

22. Lotus India Mutual Fund 792523.55

23. Mirae Asset Mutual Fund 110713.84

24. Morgan Stanley Mutual Fund 320501.42

25. Principal Mutual Fund 1320730.2

26. Quantum Mutual Fund 6353.84

27. Reliance Mutual Fund 9093794

28. Sahara Mutual Fund 17870.15

Sajith GS Page 57


29. SBI Mutual Fund 2917896.1

30. Standard Chartered Mutual Fund 1273348.5

31. Sundaram BNP Paribas MF 1256370.5

32. Tata Mutual Fund 1967893.3

33. Taurus Mutual Fund 32016.93

34. UTI Mutual Fund 4898281.3

Grand Total 52893559

Assets under Management (AUM) is a term used by financial services companies in the mutual fund and
money management, investment management, wealth management, and private banking businesses to
gauge how much money they are managing. Many financial services companies use this as a measure of
success and comparison against their competitors; in lieu of revenue or total revenue they use total assets
under management.

By this table I want to show which company has how much money to handle. Asset under management
means the total amount of money that asset management company has to manage in different schemes
that they are having for which they appoint fund manager who has to invest money according to the
objective of the scheme and try to keep portfolio which can give maximum returns to the investors. By
looking at this table we can see total asset under management is 52893559 lakhs. So after looking at this
huge amount we can say lot of people is now started investing in mutual fund.

RANKING OF THE COMPANY

By looking at this table we can rank various asset management companies on the basis of asset under
management. They are as follows:

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1) Reliance mutual fund

2) ICICI prudential mutual fund

3) UTI mutual fund

4) BIRLA sun life mutual fund

5) SBI mutual fund

By looking at this rank we can say that in India people prefer to invest in reliance
scheme and they are having great faith on Reliance Company.

MARKETING EXPERIENCE:
The project has been a great learning experience. It has provided me with practical learning opportunities in
selling and marketing. And these training would be a great help for me to give shape to my career.

The first phase in this project was to learn about the product it means to have good knowledge about the mutual
fund for that we were given proper training in the company by the big people from ABN AMRO bank, Kodak Life
Insurance etc.

The second phase was to do lot of telephonic calls and try to take appointment from the people. Once he is ready
to give appointment then try to meet him at any suitable place after meeting him try to give him full knowledge
about the product because lot of people have don’t have any idea of the investment in mutual fund then we try to
recognize his needs and also income level because that help us to give him right product and design his portfolio

Sajith GS Page 59


well because every person has different needs because some wants to save money for immediate future. Some
wants to save for their children’s education or marriage and some for tax benefits so we have to plan according to
the need of investors. And then I try to give them that product which are useful for them and try to close the deal.

Another approach that I tried is to meet the HR manager of small companies and try to give them knowledge
about the product by meeting them directly because as a marketing guy you have to think that anybody can be
customer for you so you have to be confident and try to talk to them properly and try to explain them merit of the
products and give them proper facts that would help you to close the deal

Another approached that I tried is that I began to use my personal network of friends and asked them to speak to
their acquaintances – personal and official and check if they might be interested in investments. Even here I got
great response from my friends and was able to fix many appointments to take things further.

And then I also have visited TECH MAHINDRA for two weeks and try to give them knowledge about the product
and help them to invest especially to save their tax.

And then I also try to increase my database in the way that I used to call the same person who has invested with
me previously and ask them whether if any of your friends or relatives is ready to invest and then try to take their
numbers and call them.

But overall it is a wonderful experience because what I learnt in theory during my 1 st and 2nd semester I am
applying them in the real life situation. And I also want to thank my company guide Mr. T Raghunath sir
because he was able to solve all our problems and also give us proper suggestion whenever needed and guide us
through any situation.

And one most important thing is that I have learnt from this training is that what I was expecting since I am doing
my MBA I would be given an executive job but it is not like that because everybody has to learn basic and start
from scratch. But all this things taught me a lot especially how to remain humble and honest.

Team playing capability

Here in Mahindra finance I have learned working in team with a common objective with my other
colleagues where I have learn coordination , time management , and work life balance and also I have developed
my convincing , interpersonal and selling skills also I have experienced what is the work pressure and how to
handle that with your consistent performance

Confidence to interact with company executives and others:-

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I have joined Mahindra and Mahindra financial services Ltd. (Fin smart) on 04 th July 2008; there first
we went through training about financial market and how to approach to the customer by making cold calls and
getting reference from them

My first appointment was pretty good where I learned that you should be fully equipped with the product you
want to sell because , after all you have to convince your client and that is your core job, where my superior
helped me in a big time in guiding me , educating me and providing necessary inputs. In my process here I
interacted with Director of the company Mindware, entrepreneurs, software professionals, etc… all together it
was different experience it working in real corporate world

Final findings and observations

From the comparison of various mutual fund schemes, it is understand that the equity
diversified scheme is providing a good return for a longer period of investment. But the return is wholly
depending on the market. So the risk is higher compare to any other schemes. On the other hand the Gilt fund is
investing in Government securities, treasury bills, bonds, debentures etc. But in this case the return is low. But risk
is very low comparable to an equity diversified scheme. In the ELSS scheme, there is a locking period of 3 years.
Still most of the tax schemes give a good return through dividends also. But the MIP scheme is not giving a good
return. As this scheme is also investing in bonds and debentures, it gives a continuous return to the investors.

GAP ANALYSIS

Sajith GS Page 61

M&M Financial Services Report on Mutual Fund Analysis

M&M Financial Services Report on Mutual Fund Analysis

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