Balanced Mutual Fund Final

7/28/2019 Balanced Mutual Fund Final

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APROJ ECT REPORT ON

COMPARITIVE ANALYSIS ON BALANCED MUTUAL FUND

SUBMITTED IN PARTIAL FULFILLMENT FOR

POSTGRADUATE DIPLOMAINBANKING

Programme of

GOA

Submitted by :- Under Guidance :-

BRENDA COELHO MR.TREVOR FERNANDES

QUEENIE COELHO MR.ROHIT CHOPRA

PRANITA PILANKAR

STEFF IE NICHOL

MALBERT MONSERRATE


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CERTIFICATE

This is to certify that MS BRENDA COELHO,QUEENIE COELHO,PRANITA PILANKAR,STEFFIE NICHOL

,MALBERT MONSERRATE. Students of Institute of Finance,Banking and Insurance-Goa has

completed project work On COMPARITIVE ANALYSIS ON BALANCED MUTAL FUND under my

guidance and supervision.

I certify that this is an original work and has not been copied from any source .

Name and Signature of Guide :

MR.TREVOR FERNANDES

MR.ROHIT CHOPRA

Name of Project:COMPARITIVE ANALYSIS ON BALANCED MUTUAL FUNDDate


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DECLARATION

I hereby declare that this Project Report entitled COMPARITIVE ANALYSIS ON

BALANCED MUTUAL FUND submitted in the partial fulfilment of the requirement of

POSTGRADUATEDIPLOMAINBANKINGOf INSTITUTE OF

FINANCE,BANKING & INSURANCE GOA. Is based on COMPARITIVEANALYSISOF BALANCED MUTUAL FUND, The Data was collected from Different

Business books and Magazines & Business websites.

SUBMITTED BY

BRENDA COELHO

QUEENIE COELHO

PRANITA PILANKAR

STEFF IE NICHOL

MALBERT MONSERRATE

\


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CONTENTS

Sr.No. Chapter Name

Page no.

1. Introduction

1-25

2. Mutual Fund in India

26-32

3. Balanced Mutual Fund

33-36

4. ICICI PRUDENTIAL BALANCED MUTUAL FUND

37-38

5. CANARA ROBECO BALANCED MUTUAL FUND

39-40

6. HDFC BALANCED MUTUAL FUND

41-44

7. RELIANCE BALANCED MUTUAL FUND

45-46

8. SBI MAGNUM BALANCED MUTUAL FUND

47-48

9. COMPARITIVE ANALYSIS ON BALANCED MUTUAL FUND

49-55


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1

CHAPTER NO 1

Introduction of Mutual Fund

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who

share a common financial goal. This pool of money is invested in

accordance with a stated objective. The joint ownership of the fund is

thus Mutual, i.e. the fund belongs to all investors. The money thus

collected is then invested in capital market instruments such as shares,


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Debentures and other securities. The income earned through these

investments and the capital appreciations realized are shared by its unit

holders in proportion 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. A Mutual Fund is an investment tool

that allows small investors access to a well-diversified portfolio of

equities, bonds and other securities. Each shareholder participates in the

gain or loss of the fund. Units are issued and can be redeemed as needed.

The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of

industries and sectors and thus the risk is reduced. Diversification reduces

the risk because all stocks may not move in the same direction in the

same proportion at the same time. Mutual fund issues units to the

investors in accordance with quantum of money invested by them.

Investors of mutual funds are known as unit holders.


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When an investor subscribes for the units of a mutual fund, he becomes

part owner of the assets of the fund in the same proportion as his

contribution amount put up with the corpus (the total amount of the

fund). Mutual Fund investor is also known as a mutual fund shareholder

or a unit holder.

Any change in the value of the investments made into capital market

instruments (such as shares, debentures etc) is reflected in the Net Asset

Value (NAV) of the scheme. NAV is defined as the market value of the

Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is

calculated by dividing the market value of scheme's assets by the total

number of units issued to the investors.
http://www.appuonline.com/mf/knowledge/concept.htmlhttp://www.appuonline.com/mf/knowledge/concept.html


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What is Net Asset Value (NAV) of a scheme?

The performance of a particular scheme of a mutual fund is denoted by Net

Asset Value (NAV).

Mutual funds invest the money collected from the investors in securities

markets. In simple words, Net Asset Value is the market value of the securities

held by the scheme. Since market value of securities changes every day, NAV

of a scheme also varies on day to day basis. The NAV per unit is the market

value of securities of a scheme divided by the total number of units of the

scheme on any particular date. For example, if the market value of securities of

a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs

units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20.

NAV is required to be disclosed by the mutual funds on a regular basis - daily orweekly - depending on the type of scheme.

The price or NAV a unit holder is charged while investing in an open-ended

scheme is called sales price. It may include sales load, if applicable.

Repurchase or redemption price is the price or NAV at which an open-ended

scheme purchases or redeems its units from the unit holders. It may include

exit load, if applicable.

If schemes in the same category of different mutual funds are available,

should one choose a scheme with lower NAV?

Some of the investors have the tendency to prefer a scheme that is available at

lower NAV compared to the one available at higher NAV. Sometimes, they

prefer a new scheme which is issuing units at Rs. 10 whereas the existing

schemes in the same category are available at much higher NAVs. Investors

may please note that in case of mutual funds schemes, lower or higher NAVs of

similar type schemes of different mutual funds have no relevance. On theother hand, investors should choose a scheme based on its merit considering

performance track record of the mutual fund, service standards, professional

management, etc. This is explained in an example given below.

Suppose scheme A is available at a NAV of Rs.15 and another scheme B at

Rs.90. Both schemes are diversified equity oriented schemes. Investor has put

Rs. 9,000 in each of the two schemes. He would get 600 units (9000/15) in

scheme A and 100 units (9000/90) in scheme B. Assuming that the markets go

up by 10 per cent and both the schemes perform equally well and it isreflected in their NAVs. NAV of scheme A would go up to Rs. 16.50 and that of


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scheme B to Rs. 99. Thus, the market value of investments would be Rs. 9,900

(600* 16.50) in scheme A and it would be the same amount of Rs. 9900 in

scheme B (100*99). The investor would get the same return of 10% on his

investment in each of the schemes. Thus, lower or higher NAV of the schemes

and allotment of higher or lower number of units within the amount aninvestor is willing to invest, should not be the factors for making investment

decision. Likewise, if a new equity oriented scheme is being offered at Rs.10

and an existing scheme is available for Rs. 90, should not be a factor for

decision making by the investor. Similar is the case with income or debt-

oriented schemes.

On the other hand, it is likely that the better managed scheme with higher NAV

may give higher returns compared to a scheme which is available at lower NAV

but is not managed efficiently. Similar is the case of fall in NAVs. Efficientlymanaged scheme at higher NAV may not fall as much as inefficiently managed

scheme with lower NAV. Therefore, the investor should give more weight age

to the professional management of a scheme instead of lower NAV of any

scheme. He may get much higher number of units at lower NAV, but the

scheme may not give higher returns if it is not managed efficiently.


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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund:

MUTUAL FUND SET UP

A mutual fund is set up in the form of a trust, which has sponsor,

trustees, asset Management Company (AMC) and custodian. The trust is

established by a sponsor or more than one sponsor who is like promoter of a

company. The trustees of the mutual fund hold its property for the benefit of

the unit holders. Asset Management Company approved by SEBI manages the

funds by making investments in various types of securities. Custodian, who is

registered with SEBI, holds the securities of various schemes of the fund in its

custody. The trustees are vested with the general power of superintendence

and direction over AMC. They monitor the performance and compliance of

SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee

company or board of trustees must be independent i.e. they should not be

associated with the sponsors. Also, 50% of the directors of AMC must be

independent. All mutual funds are required to be registered with SEBI before


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they launch any scheme. However, Unit Trust of India (UTI) is not registered

with SEBI (as on January 15, 2002).

The formation and operations of Mutual Funds in India is solely guided by SEBI

(Mutual Funds) Regulations, 1993, which came into force on 20th January,

1996, through a notification on 9th December, 1996. these Regulations make it

mandatory for Mutual Funds to have a three-tier structure of :

A Sponsor Institution to promote the Fund. A team of Trustees to oversee the operations and to provide checks for

the efficient, profitable and transparent operations of the fund and

An Asset Management Company (AMC) to actually deal with the funds.Sponsoring Institution:

The Company, which sets up the mutual fund, is called the Sponsor. SEBI has

laid down certain criteria to be met by the sponsor. The criterion mainly deals

with adequate experience, good past track record, net worth etc.

Sponsor appoints the Trustees, Custodian and the AMC with the priorapproval of SEBI, and in accordance with SEBI Regulations.

Sponsor must have at least 5-year track record of business interest in theFinancial Markets.

Trustees:

Trustees are the people with long experience and good integrity in the

respective fields carry the crucial responsibility in safeguarding the interests of

the investors. For this purpose, they monitor the operations of the different

schemes. They have wide ranging powers and they can even dismiss AMC with

the approval of SEBI. The Indian Trust Act governs them.


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Asset Management Company:

The AMC actually manages the funds of the various schemes. The AMC

employs a large number of professionals to make investments, carry out

research &to do agent and investor servicing. In fact, the success of any Mutual

Fund depends upon the efficiency of this AMC. The AMC submits a quarterly

report on the functioning of the mutual fund to the trustees who will guide and

control the AMC.

The AMC is usually a private limited company, in which the sponsors and their

associations or joint venture partners are shareholders. The AMC has to be

registered by SEBI and should have a minimum Net worth of Rs.10 cores all

times. The role of the AMC is to act as the Investment Manager of the Trust

along with the following functions:

It manages the funds by making investments in accordance with theprovision of the Trust Deed and Regulations

The AMC shall disclose the basis of calculation of NAV and Repurchaseprice of the schemes and disclose the same to the investors.

Funds shall be invested as per Trust Deed and Regulations.Registrars and Transfer Agents:

The Registrars and Transfer Agents are responsible for the investor servicing

functions, as they maintain the records of investors in the mutual funds. They

process investor applications , record details provided by the investors on

application forms, send out periodical information on the performance of the

mutual fund; process dividend pay-out to the investors; incorporate changes

in information as communicated by investors; and keep the investor record up

to date, by recording new investors and removing investors who have

withdrawn their funds.


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Custodian:

Custodians are responsible for the securities held in the mutual funds portfolio.

They discharge an important back-office function, by ensuring that securities

that are bought are delivered and transferred to the books of mutual funds,

and that funds are paid-out when mutual fund buys securities. They keep the

investment account of the mutual fund, and also collect the dividends and

interest payments due on the mutual fund investments. Custodians also track

corporate actions like bonus, issues, right offers, offer for sale, buy back and

open offers for acquisition.


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ADVANTAGES OF MUTUAL FUND

Portfolio Diversification: - Mutual Funds invest in a well-diversified

portfolio of securities which enables to hold a diversified investment

portfolio (whether the amount of investment is big or small).

Professional Management: - Fund manager undergoes through various

research works and has better investment management skills which ensure

higher returns than what he can manage on his own.

Less Risk: - Investors acquire a diversified portfolio of securities even with a

small investment in a Mutual Fund. The risk in a diversified portfolio is

lesser than investing in merely 2 or 3 securities.

Low Transaction: - Costs due to economies of scale (benefits of larger

volumes), mutual funds pay lesser transaction costs. These benefits are

passed on to the investors.

Liquidity: - An investor may not be able to sell some of the shares held byhim very easily and quickly, whereas units of a mutual fund are far more

liquid.

Choice of Schemes: - Mutual Funds provide investors with various schemes

with different investment objectives. Investors have the option of investing

in a scheme having a correlation between its investment objectives and

their own financial goals. These schemes further have different

plans/options.

Transparency: - Funds provide investors with updated information

pertaining to the markets and the schemes. All material facts are

disclosed to the investors as required by the regulator.


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Flexibility: - Investors also benefit from the convenience and flexibility

offered by Mutual Funds. Investors can switch their holdings from a debt

scheme to an equity scheme and vice-versa. Option of systematic (at

regular intervals) investment and withdrawal is offered to the investors

in most open-end schemes.

Safety: - Mutual Fund industry is a part of a well-regulated investment

environment where the interests of the investors are protected by the

regulator. All funds are registered with SEBI and complete transparency is

forced.

Disadvantages of Mutual Funds

Professional Management - Many investors debate whether or not the

professionals are any better than you or I at picking stocks. Management

is by no means infallible, and, even if the fund loses money, the manager

still gets paid.

Costs - Creating, distributing, and running a mutual fund is an expensive

proposition. Everything from the managers salary to the investors

statements cost money. Those expenses are passed on to the investors.

Since fees vary widely from fund to fund, failing to pay attention to the

fees can have negative long-term consequences. Remember, every

dollar spend on fees is a dollar that has no opportunity to grow over

time.

Dilution - It's possible to have too much diversification. Because funds

have small holdings in so many different companies, high returns from a

few investments often don't make much difference on the overall

return. Dilution is also the result of a successful fund getting too big.

When money pours into funds that have had strong success, the

manager often has trouble finding a good investment for all the new

money.
http://c/terms/d/dilution.asphttp://c/terms/d/dilution.asp


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Taxes - When a fund manager sells a security, a capital-gains tax is

triggered. Investors who are concerned about the impact of taxes need

to keep those concerns in mind when investing in mutual funds. Taxes

can be mitigated by investing in tax-sensitive funds or by holding non-tax

sensitive mutual fund in a tax-deferred account.


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TYPES OF MUTUAL FUNDS

Open-end Funds

Funds that can sell and purchase units at a point in time are classified as Open-

end Funds. The fund size (corpus) of an open-end fund is variable (keeps

changing) because of continuous selling (to investors) and repurchases (from

the investors) by the fund. An open-end fund is not required to keep selling

new units to the investors at all times but is required to always repurchase,

when an investor wants to sell his units. The NAV of an open-end fund is

calculated every day.

Close-end Funds

Funds that can sell a fixed number of units only during the New Fund offer

(NFO) period are known as Closed-end Funds. The corpus of a Closed-end Fund

remains unchanged at all times. After the closure of the offer, buying

redemption of units by the investors directly from the funds is not allowed.

However, to protect the interests of the investors, SEBI provides investors with

two avenues to liquidate their positions:

Closed-end Funds are listed on the stock exchanged where investors canbuy/sell units from/to each other. The trading is generally done at a

discount to the NAV of the scheme. The NAV of a closed-end fund is

computed on a weekly basis (updated every Thursday).

Closed-end Funds may also offer buy-back of units to the unitsholders. In this case, the corpus of the Fund and its outstanding units do

get changed.


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Load Funds

Mutual funds incur various expenses on marketing, distribution, advertising,

portfolio churning, fund managers salary etc. Many funds recover these

expenses from the investors in the form of load. These funds are known as

Load Funds. A load fund may impose following types of loads on the investors:

Entry Load- Also Known as Front-end load, it refers to the load chargedto an investor at the time of his entry into a scheme. Entry load is

deducted from the investors contribution amount to the fund.

Exit Load- Also known as Back-end load, these charges are imposed onan investor when he redeems his units (exits from the scheme). Exit

load is deducted from the redemption proceeds to an outgoing

investor.

Deferred Load- Deferred load is charged to the scheme over a period oftime.

Contingent Deferred Sales Charge (CDSC) - In some schemes, thepercentage of exit load reduces as the investor stays longer with the

fund. This type of load is known as Contingent Deferred Sales Charge.

No-load Funds

All those funds that do not change any of the above mentioned loads are

known as No-load Funds.

Tax-exempt Funds

Funds that invest in securities free from tax are known as Tax-exempt Funds.

All open-end equity oriented funds exempt from distribution tax (tax for

distribution income to investors). Long term capital gains and dividend income

in the hands of investors are tax-free.

Non-Tax-exempt Funds


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Funds that invest in taxable securities are known as Non-Tax-Exempt Funds. In

India, all funds, except open-end equity oriented funds are liable to pay tax on

distribution income. Profits arising out of sale of units by an investor within

12months of purchase are categorized as short-term capital gains, which are

taxable. Sale of units of an equity oriented fund is subject to Securities

Transaction Tax (STT). STT is deducted from the redemption proceeds to an

investor.


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1. Equity Funds

Equity funds are considered to be the more risky funds as compared to the

other types of fund, but they also provide higher returns than any other funds.

It is advisable that an investor looking to invest in an equity fund should invest

for long term i.e. for 3years or more. There are different types of equity funds

each falling into different risk bracket. In the order if decreasing risk level,

there are following types of equity funds:

a. Aggressive Growth Funds: - in Aggressive Growth Funds, fund managersaspire for maximum capital appreciation and invest in less researched

shares of speculative nature. Because of these speculative investments

Aggressive Growth Funds become more volatile and thus, are prone to

higher risk than other equity funds.

b. Growth Funds: - Growth Funds also invest for capital appreciation(withtime horizon of 3 to 5 years) but they are different from Aggressive

Growth Funds in the sense that they invest I companies that are


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expected to outperform the market in the future. Without entirely

adopting speculative strategies, Growth Funds invest in those companies

that are expected to post above average earnings in the future.

c. Specialty Funds: - Specialty Funds have stated criteria for investmentsand their portfolio comprises of only those companies that meet their

criteria. Criteria for some specialty funds could be to invest/ not to

invest in particular regions/companies. Specialty funds are concentrated

and thus, are comparatively riskier than diversified funds. There are

following types of specialty funds:

i. Sector Funds: Equity Funds that invest in a particularsector/industry of the market are known as Sector Funds. The

exposure of these funds is limited to a particular sector (say

Information Technology, Banking, pharmaceuticals or Fast MovingConsumer Goods) which is why they are more risky than equity

funds that invest in multiple sectors.

ii. Foreign Securities Funds: Foreign Securities Equity Funds have theoption to invest in one or more foreign companies. Foreign

securities fund achieve international diversification and hence they

are less risky than sector funds. However, foreign securities funds

are exposed to foreign exchange rate risk and country risk.

iii. Mid-Cap or Small-Cap Funds: Funds that invest in companieshaving lower market capitalization than larger capitalization

companies are called Mid-Cap or Small-Cap Funds. Market


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capitalization of Mid-Cap companies is less than that if big, blue

chip companies (less than Rs. 2500 crores but more than Rs. 500

crores) and Small-Cap companies have market capitalization of less

than Rs. 500 crores. Market Capitalization of a company can be

calculated by multiplying the market price of the companys share

by the total number of its outstanding shares in the market. The

shares of Mid-Cap or Small-Cap Companies are not as liquid as

Large-Cap Companies which gives rise to volatility in share prices of

these prices of these companies and consequently, investment gets

risky.

iv. Option Income Funds: While not yet available in India, OptionIncome Funds write options on a large fraction of their portfolio.

Proper use of options can help to reduce volatility, which is

otherwise considered as a risky instrument. These funds invest in

big, high dividend yielding companies, and then sell options against

their stock positions, which generate stable income for investors.

d. Diversified Equity Funds- Except for a small portion of investment inliquid money market, diversified equity funds invest mainly in equities

without any concentration on a particular sector(s). These funds are well

diversified and reduce sector-specific or company-specific risk. However,

like all other funds diversified equity funds too are exposed to equity

market risk. One prominent type of diversified equity fund in India is

Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum

of 90% of investments by ELSS should be in equities at all times. ELSS


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investors are eligible to claim deduction from taxable income (up to Rs

1lakh) at the time of filing the income tax return. ELSS usually has a lock-

in period and in case of any redemption by the investor before the

expiry of the lock-in period makes him liable to pay income tax on such

income(s) for which he may have received any tax exemption(s) in the

past.

e. Equity Index Funds- Equity Index Funds have the objective to match theperformance of a specific stock market index. The portfolio of these

funds comprises of the same companies that form the index and is

constituted in the same proportion as the index. Equity index funds that

follow broad indices (like S&P CNX Nifty, Sensex) are less risky than

equity index funds that follow narrow sectoral indices (like BSEBANKEX

or CNX Bank Index etc). narrow indices are less diversified and therefore,

are more risky.

f. Value Funds- Value Funds invest in those companies that have soundfundamentals and whose share prices are currently under-valued. The

portfolio of the funds comprises of share that are trading at a Low Price

to Earning Ratio ( Market Price per share/ Earning per share) and a low

Market to Book Value ( Fundamental Value) Ratio. Value Funds may

select companies from diversified sectors and are exposed to lower risk

level as compared to growth funds or specialty funds. Value stocks are

generally from cyclical industries ( such as cement, steel, sugar etc.)

which make them volatile in the short-term. Therefore, it is advisable to

invest in Value Funds with a long-term time horizon as risk in the long

term, to a large extent, is reduced.


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g. Equity Income or Dividend Yield Funds- The objective of Equity Incomeor Dividend Yield Equity Funds is to generate high recurring income and

steady capital appreciation for investors by investing in those companies

which issue high dividends (such as Power or Utility companies share

prices). Equity Income or Dividend Yield Equity Funds are generally

exposed to the lowest risk level as compared to other equity funds.

2. Debt/Income Funds

Funds that invest in medium to long-term debt instruments issued by

private companies, banks, financial institutions, governments and other

entities belonging to various sectors(like infrastructure companies etc.) are

known as Debt/Income Funds. Debt funds are low risk profile funds that

seek to generate fixed current income (and not capital appreciation) to

investors. In order to ensure regular income to investors, debt (or income)

funds distribute large fraction of their surplus to investors. Although debt

securities are generally less risky than equities, they are subject to credit

risk ( risk of default) by the issuer at the time of interest or principal

payment. To minimize the risk of default, debt funds usually invest in

securities from issuers who are rated by credit rating agencies and are

considered to be of Investment Grade. Debt funds that target high

returns are more risky. Based on different investment objectives, there can

be following types of debt funds:

a. Diversified Debt Funds- Debt Funds that invest in all securities issued byentities belonging to all sectors of the market are known as diversified

debt funds. The best feature of diversified debt funds is that investments

are properly diversified into all sectors which results in risk reduction.


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Any loss incurred, on account of default by a debt issuer, is shared by all

investors which further reduces risk for an individual investor.

Focused Debt Funds- Unlike diversified debt funds, focused debt funds are

narrow focus that are confined to investments in selective debt securities,

issued by companies of a specified sector or industry or origin. Some examples

of focused debt funds are sector, specialized and offshore debt funds, funds

that invest only in Tax.

b. Free Infrastructure or Municipal Bonds. Because of their narroworientation, focused debt funds are more risky as compared to

diversified debt funds. Although not yet available in India, these funds

are conceivable and may be offered to investors very soon.

c. High Yield Debt Funds- As we now understand that risk of default ispresent in all debt funds and therefore, debt funds generally try tominimize the risk of default by investing in securities issued by only

those borrowers who are considered to be of investment grade. But,

High Yield Debt Funds adopt a different strategy and prefer securities

issued by those issuers who are considered to be of below investment

grade. The motive behind adopting this art of risky strategy is to earn

higher interest returns from these issuers. These funds are more volatile

and bear higher default risk, although they may earn at times higher

returns for investors.

d. Assured Return Funds- Although it is not necessary that a fund will meetits objectives or provide assured to investors, but there can be funds

that come with a lock-in period and offer assurance of annual returns to


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investors during the lock-in period. Any shortfall in returns is suffered by

the sponsors or the Asset Management Companies (AMCs). These funds

are generally debt funds and provide investors with a low-risk

investment opportunity. However, the security of investments depends

upon the net worth of the guarantor (whose name is specified in the

advance on the offer document). To safeguard the interests of investors,

SEBI permits only those funds to offer assured return schemes whose

sponsors have adequate net-worth to guarantee returns in the future. In

the past, UTI had offered assured return schemes (i.e. Monthly Income

Plans of UTI) that assured specified returns to investors in the future. UTI

was not able to fulfill its promises and faced large shortfalls in the

returns. Eventually, government had to intervene and took over UTIs

payment obligations on itself. Currently, no AMC in India offers assured

returns schemes to investors, though possible.

e.

Fixed Term plan Series- Fixed Term plan Series usually are closed-endschemes having short term maturity period( of less than one year) that

offer a series of plans and issue units to investors at regular intervals.

Unlike closed-end funds, fixed term plans are not listed on the

exchanges. Fixed term plan series usually invest in debt/income schemes

and target short-term investors. The objective of fixed term plan

schemes is to gratify investors by generating some expected returns in a

short period.

1. Gilt Funds-Also known as Government Securities on India, Gilt Funds invest in

Government papers(named dated securities ) having medium to long

term maturity period. Issued by the Government of India, these


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investments have little credit risk (risk of default) and provide safety of

principal to the investors. However, like all debt funds, gilt funds are

exposed to interest rate risk. Interest rates and prices of debt securities

are inversely related and any change in the interest rates results in a

change in the NAV of debt/gilt funds in an opposite direction.

2. Money Market/Liquid FundsMoney market / liquid funds invest in short-term (maturity within one

year) interest bearing debt instruments. These securities are highly

liquid and provide safety of investments, thus making money market/

liquid funds the safest investment option when compared with other

mutual fund types. However, even money market/ liquid funds are

exposed to the interest rate risk. The typical investment options for

liquid funds include Treasury Bills (issued by Governments), Commercial

papers (issued by companies) and Certificates of Deposit (issued byBanks).

3. Hybrid FundsAs the name suggests, hybrid funds are those funds whose portfolio

includes a blend of equities, debt and money market securities. Hybrid

funds have an equal proportion of debt and equity in their portfolio.

There are following types of hybrid funds in India:

a. Balanced Funds- The portfolio of balanced funds include assets likedebt securities, convertible securities and equity and preference

shares held in a relatively equal proportion. The objectives of

balanced funds are to reward investors with a regular income,

moderate capital appreciation and at the same time minimizing the


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risk of capital erosion. Balanced funds are appropriate for

conservative investors having a long term investment horizon.

b. Growth-and-Income Funds- Funds that combine features of growthfunds and income funds are known as Growth-and-Income Funds.

These funds invest in companies having potential for capital

appreciation and those known for issuing high dividends. The level of

risks involved in these funds is lower than growth funds and higher

than income funds.

c. Asset Allocation Funds- Mutual Funds may invest financial assets likeequity, debt, money market or non-financial (physical)assets like real

estate, commodities etc.. Asset allocation funds adopt a variable

asset allocation strategy that allows fund managers to switch over

from one asset class to another at any time depending upon their

outlook for specific markets. In other words, fund managers may

switch over to equity if they expect equity market to provide goodreturns and switch over to debt if they expect debt market to provide

better returns. It should be noted that switching over from one asset

class to another is a decision taken by the fund manager on the basis

of his own judgment and understanding of specific markets and

therefore, the success of these funds depends upon the skill of a fund

manager in anticipating market trends.

4. Commodity FundsThose funds that focus on investing in different commodities (like

metals, food grains, crude oil etc.) or commodity companies or

commodity futures contracts are termed as Commodity Funds. A

commodity fund that invests in a single commodity or a group of


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commodities is a specialized commodity fund and a commodity fund

that invests in all available commodities is a diversified commodity fund

and bears less risk than a specialized commodity fund. Precious Metals

Fund and Gold Funds (that invest in gold, gold futures or shares of gold

mines) are common examples of commodity funds.

5. Real Estate FundsFunds that invest directly in real estate or lend to real estate developers

or invest in shares/securitized assets of housing finance companies, are

known as Specialized Real Estate Funds. The objective of these funds

may be to generate regular income for investors or capital appreciation.

6. Exchange Traded Funds(ETF)Exchange Traded Funds provide investors with combined benefits of a

closed-end and an open-end mutual fund. Exchange Traded Funds followstock market indices and are traded on stock exchanges like a single

stock at index liked prices. The biggest advantage offered by these funds

is that they offer diversification, flexibility of holding a single share

(tradable at index linked prices) at the same time. Recently introduced in

India, these funds are quite popular abroad.


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7. Fund of FundsMutual Funds that do not invest in financial or physical assets, but do

invest in other mutual fund schemes offered by different AMCs, are

known as Fund of Funds. Fund of Funds maintain a portfolio comprising

of units of other mutual fund schemes, just like conventional mutual

funds maintain a portfolio comprising of equity/debt/money market

instruments or non-financial assets. Fund of funds provide investors with

an added advantage of diversifying into different mutual fund schemes

with even an added advantage of diversifying into different mutual fund

schemes with even a small amount of investment, which further helps in

diversification of risks. However, the expenses of Fund of Funds are

quite high on account of compounding expenses of investments into

different mutual fund schemes.


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CHAPTERNO2

MUTUALFUNDININDIA

The Evolution of the Mutual Fund in India is with different Phases:

In 1963, the Unit Trust of India enjoyed complete monopoly by an act of

Parliament. UTI was set up by the Reserve Bank of India and continued to

operate under the regulatory control of the RBI till the two were de-linked

in 1978 and the entire control was transferred in the hands of Industrial

Development Bank of India (IDBI). In 1964 the UTI launched its first scheme

named as Unit Scheme 1964 (US-64), which attracted the largest number of

investors in any single investment scheme over the yearsIn 1970's and 1980's UTI launched more innovative schemes to suit the

needs of different investors. In 1971 it launched ULIP, between 1981-84 six

more schemes between, in 1986 the Children's Gift Growth Fund and India

Fund which was the first offshore fund for India. In 1987 the Mastershare

and in 1990's the Monthly Income Schemes which were offering assured

returns. By the end of 1987, UTI's assets under management grew ten times

to Rs 6700 crores.


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Phase II. Entry of Public Sector Funds - 1987-1993

In the year 198, The Indian Mutual Fund industry witnessed many public sector

players entering the market. In November 1987, SBI Mutual Fund from the

State Bank of India became the first non-UTI mutual fund in India. SBI MutualFund was later found by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank

Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual

Fund. By 1993, the assets under management of the industry increased seven

times to Rs. 47,004 crores. However, UTI remained to be the leader with about

80% market share.

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fundmanagement companies to enter the Mutual Fund Industry was in the year

1993.

Phase IV. Growth and SEBI Regulation - 1996-2004

In the year 1996 the mobilization of funds and the number of players operating

in the industry reached new heights as investors started showing more interest

in mutual funds. Investors' interests were safeguarded by SEBI and the

Government offered tax benefits to the investors in order to encourage them.SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform

standards for all mutual funds in India. The Union Budget in 1999 exempted all

dividend incomes in the hands of investors from income tax. Various Investor

Awareness Programmes were launched during this phase, both by SEBI and

AMFI, with an objective to educate investors and make them informed about

the mutual fund industry.

Today there are plenty of investment avenues open. Some of them include

banks deposits, bonds, stocks, mutual fund investments and corporatedebentures. Investors may invest money in banks, bonds and corporate

debentures where the risk is low and so are the returns. On the contrary,

stocks of companies have high risk but the returns are also proportionately

high.

Mutual fund investments carry low risk because of their diversified nature. It is

important to understand the benefits of mutual funds before investing the

money you really care about.


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The size of Indian mutual fund industry has grown in recent few years. India

can now boast of having dominance in this industry. The total Asset Under

Management popularly known as AUM has increased from Rs.1, 01, 565 crores

in January 2000 to Rs.5, 67, 601.98 crores in April 2008.

According to the Association of Mutual Funds in India, the growth of mutual

fund industry has been exceptional. This industry has indeed come a very long

way with only 34 players in the market and more than 480 schemes.

One of the major factors contributing to the growth of this industry has been

the booming stock market with an optimistic domestic economy. Second most

important reason for this growth is a favorable regulatory regime which has

been enforced by SEBI. This regulatory board has improved the market

surveillance to protect the investor's interest.

NAV is directly proportionately to the bearish trends of the market. Top mutual

funds also suffer because of the fluctuations in the market. The pooled money

is invested in shares, debentures and treasury bills and thus has high risk

involved.

Indian mutual funds however reveal this multi-dimensional avenue and all the

intricacies in a highly fashionable manner. It provides a lot of scope to

understand the scenario and make some thoughtful investments for decent

return

Some of the top mutual funds in India are:

* Reliance Mutual Fund

* UTI Mutual Fund

* Kotak Mutual Fund

* HDFC Mutual Fund

* Prudential ICICI Mutual Fund


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BENEFITS OF MUTUAL FUND INVESTMENT

AffordableAlmost everyone can buy mutual funds. Even for a sum of Rs 1,000 an investor

can invest in a mutual fund.

Professional Management

For an average investor, it is a difficult task to decide what securities to buy,

how much to buy and when to sell. By buying a mutual fund, you acquire a

professional fund manager who manages your money. This is the person who

decides what to buy for you, when to buy it and when to sell. The fund

manager takes these decisions after doing adequate research on the economy,

industries and companies, before buying stocks or bonds. Most mutual fund

companies charge a small fee for providing this service which is called the

management fee.

Diversification

According to finance theory, when your investments are spread across several

securities, your risk reduces substantially. A mutual fund is able to diversify

more easily than an average investor across several companies, which anordinary investor may not be able to do. With an investment of Rs 5000, you

can buy stocks in some of the top Indian companies through a mutual fund,

which may not be possible to do as an individual investor.

Liquidity

Unlike several other forms of savings like the public provident fund or National

Savings Scheme, you can withdraw your money from a mutual fund on

immediate basis.


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Mutual Fund Not So Popular In India:Why??

Mutual funds are supposed to tap savings of the common man. Yet, in a

country of 120 crore people or 1.2 billion people, there are only 4 crore or 40

million (3.5 per cent) mutual fund unit investors. In US, every second citizen is

a mutual fund unit holder.

Poor investor interest: Assets managed by mutual funds are falling. For the

month ended March 2012, assets under management with all mutual funds

plunged 13 per cent to Rs. 5,87,000 crore, according to Association of Mutual

funds in India (Amfi) data. This is the lowest since June 2009. This means

investors have pulled out money. While March usually sees a high outflow of

funds as corporate India pulls out money to meet tax and other working capital

requirement, the absence of a diverse retail base hurts. The industry needs

more common people to own mutual fund units and not just large corporates

to park their money.

Other attractive investment avenues: For the common man, the Indian

government offers saving schemes with sovereign guarantee. With high

interest rates and tax rebates, post office schemes like public provident fund or

National Saving certificate offer better returns to investors. Individuals

have Rs. 5,19,162 crore invested in the post office or government guarantee

schemes, according to Karvy, securities firm. Employee Provident fund andpublic provident funds manage another Rs. 2,81,000 crore. This is more than

the size of the total mutual fund industry in India. High bank deposit rates also

reduce the risk appetite. Indian individuals own fixed deposits and government

guaranteed bonds worth Rs.22,16,307 crore, according to Karvy.

Another Rs. 6,20,000 crore is held in savings bank accounts with public and

private sector banks

Equity assets stagnant: Mutual funds manage Rs. 1,82,000 crore in equity

assets, according tothe Amfi data. This is barely 3 per cent of the total market capitalization of the

Bombay Stock Exchange. Foreign institutional investors control five times that.

A successful asset management business is evaluated on the basis of the equity

assets it manages. However, with sovereign guarantee schemes dominating

most of the household investible surplus, it is a challenge to ask individuals to

take risks.

Individuals prefer direct equity investment: Direct equity holding is

estimated at Rs. 22,73,043 crore, more than 11 times equity assets managed


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by mutual funds and a third of the BSE market cap. This means investors prefer

to buy or sell shares on their own and not rely on mutual funds. Mutual funds

have failed to educate this segment to allocate resources to them.

Tough business to be in: Fidelity, one of the biggest mutual fund manager inthe world, sold its India business to L&T Finance Holdings recently. They are

not the first foreign company to exit. Most of the foreign exits from India were

due to global restructuring or M&A. Fidelitys exit from a loss-making India

business highlights problems of doing business in India. It is not clear yet why

Fidelity decided to exit. However, an exit by one of the largest mutual fund

company in the world should not be taken lightly.

Restrictive mandate: The mutual fund industry in US relies heavily on US

state and private pension funds to manage a large amount of money. So

Fidelity and Templeton are engaged by state pension funds to manage a

portion of the pension money. In India, pension reforms are part of a major

political wrangle. Politicians do not allow government pension funds to invest

in equity markets. Even if some agree, they are not able to push through any

reforms that could push up assets under management for mutual funds.


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CHAPTER NO 3

Balanced Mutual Fund


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Balanced funds are mutual funds that invest in both equities and debt

instruments. They normally keep their equity component in the range of 60%-

75% and the rest in debt products or cash. Some balanced mutual funds areconsidered to be more aggressive in that they have a larger equity component.

For example, HDFC Prudence keeps its equity allocation around 75% in most of

the cases and rest 25% in debt or cash. However, others like Reliance Regular

Savings Balanced are considered less aggressive and have a lower equity

component around 60-65% .

From the taxmans point of view, any mutual fund which has equity

component more than 65% is considered as an Equity Fund and so long term

capital gains from sale of balanced mutual fund units too are exempted from

tax after one year just like in the case of pure equity mutual funds .As balanced funds have to maintain their ratios between equity and debt by a

fixed percentage, they have to periodically adjust their asset allocation. So, if a

balanced fund has a ratio of 70:30 (Equity: Debt) and suppose it reaches 77:23,

the fund manager will make sure that he sells the excess equity portion to

rebalance the fund back to 70:30.This asset allocation by balanced funds

leads to superior returns over the longer term. But in the short term, balanced

funds will not out perform pure equity based funds especially in bull runs. So

you always have to give balanced funds a long time to see the performance.

As balanced funds are not exposed to equity in the same way as regular equity

diversified funds whose equity exposure is generally 95% or more in an

average scenario, their fall in case of market crash is lower than pure

diversified funds. This is why these funds do better in downturns than

diversified equity funds

How Do Balanced Mutual Funds Work?

Investment in Stocks: One can draw some similarity of balanced funds with

well diversified funds. Asset allocated for stocks are diversified into different

sectors which are performing with high returns. Fund allocation weightage is

determined by the stocks' return potentials. The top stock, for example may

get an allocation of say 10% and the lesser the potential the lesser is the

percentage allocation of funds. The same pattern is then repeated for anothersector of stocks. Sectors are chosen subject to various parameters.


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Investment in Bonds: The allocation to bonds is distributed among bonds

issued by governments and banks. Municipal bonds, called as munis,

sometimes find their way into this. This investment provides guaranteed

returns at a steady rate over a period. This gives the stability to the entire fundcushioning the violent fluctuations of aggressive stock investment.

Balanced Fund v/s Other Types of Funds

Blend of Growth and Safety:The unique proposition of spreading the

investment into two broad divisions of mutual fund investing is hard to find inother class of funds.

Freedom to decide allocation: freedom to switch over from one proportion to

the other, which is from 60:40 to 40:60 patterns. You can switch over when

you perceive a growth opportunity or a threat into the other from the existing.

This you can reverse when you perceive the situation leading to it has changed.

No other type of fund has this freedom, having chosen the fund, you have to

go through the mandate of the fund.

Best balanced mutual funds keep allocation flexible and open to changes as

per demands of market conditions but subject to regulations by laws of

government and SEC (Securities & Exchange Commission).

Risky Proposition: Consider a situation when the stock market is having a bull

run (long rally). Then you can expect a great appreciation in its principal.

Naturally any manager would be tempted to divert as much cash at his

command to stocks as possible. It could go as high as 80% with just 20% for


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debt instruments. Other types of funds differ here because of SEC regulations

and funds' own mandate.

Advantages of Balanced Mutual Funds:

The most striking advantage is being able to switch over from one

combination to the other available to a more aggressive growth oriented

stocks when the market is bullish and vice versa

It provides diversity in true sense with portfolio containing top stocksand bonds for a blend of growth and safety.

There is no trouble in managing an assortment of investments yourself.

The one fund gives it all and reduces your overall problem of managing

the investment.

Disadvantages of Balanced Mutual Funds:

Dependent on the expertise of fund manager with respect to

changes in portfolio.May not give high returns as equity funds and underperform in

bull market.


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CHAPTERNO4

ICICIPRUDENTIALBALANCEDMUTUAL

FUND

ICICI Prudential Balanced Fund is an open-ended balanced fund. It takes care of

the asset allocation by constantly investigating market outlook and

performance and accordingly by increasing / decreasing equity exposure based

on the market outlook and using a core debt portfolio to do the rebalancing.

This fund seeks to optimize the risk-adjusted return by distributing assets

between both equity and debt markets. In bullish markets equity allocation

can go upto 80%. In bearish markets equity allocation can go down to 65%.

This dynamic allocation along with core debt portfolio reduces the volatility of

return

Investor Profile

This Plan is ideal for -

Investors seeking exposure to both equity and debt markets through onefund

Investors considering reasonable returns with and lower risk throughdiversification.

Key Benefits


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Provides the twin benefits of growth from equity markets and steadyincome from debt markets.

Lower volatility of returns and lower risk through diversification.

Key Features

Type: Open ended Balanced Fund

Application Amount: Rs.5,000 (plus in multiples of Rs.1)

Min. Additional Investment: Rs.500/- and in multiples thereof

Entry Load: Nil.

Exit Load: a) If the amount, sought to be redeemed/switched out within a

period of 15 Months from the date of allotment, an exit load of 1% of theapplicable Net Asset Value shall be charged.(b) If the amount, sought to be

redeemed or switched out, is invested for a period of more than 15 Months

from the date of allotment - Nil.

Redemption Cheques Issued: generally within 3 business day for Specified RBI

locations and additional 3 Business Days for Non-RBI locations.

Minimum Redemption Amt.: Rs. 500 and in multiples of Re. 1,

Systematic Investment Plan: Monthly: Minimum Rs. 1000 + 5 post-dated

cheques for a miminum of Rs. 1000 each. Quarterly: Minimum Rs.5000 + 4

post-dated cheques of Rs. 5000 each.

Systematic Withdrawal Plan: Minimum of Rs.500/- and Multiples thereof

Net Asset Value Periodicity: Calculated & Declared on every Business day

Tax Benefits: Capital Gains Tax and Indexation benefit


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CHAPTERNO5

CANARAROBECOBALANCED

MUTUALFUND

To seek to generate long term capital appreciation and / or income from a

portfolio constituted of equity and equity related securities as well as fixed

income securities (debt and money market securities).

Minimum Investment:

Lump sum Investment: Rs 5000 and multiples of Re.1/- thereafter, NRI /FII / OCBs: Rs.50,000/- & in multiples of Rs.1,000/-, Corporate / Trusts &

Institutional Investors: Rs.50,000/- & in multiples of Rs.10,000/-,

Additional Purchase: Rs.3,000/- Repurchase: Minimum of 300 units or

with a minimum repurchase value of Rs 3000.

Systematic Investment Plan (SIP) Minimum instalment amount - Rs.1,000.00 and Rs. 2,000.00 respectively for Monthly and Quarterly

frequency respectively and in multiples of Re 1.00 thereafter.

Systematic Transfer Plan (STP) / Systematic withdrawal plan(SWP)

Minimum instalment amount - Rs. 1,000.00 and Rs. 2,000.00

respectively for Monthly and Quarterly frequency respectively and in

multiples of Re 1.00 thereafter.


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Asset Allocation:

Instruments Minimum Maximum

Equity & Equity related instruments 40% 75%

Debt Securities including Securitied debt having ratingabove AA or equivalent, Money market Instruments,

Govt. Securities

25% 60%

Plans & Options:

Plan Name

Canara Robeco Balance - Dividend Option

Canara Robeco Balance - Growth Option

Load Structure:

Entry Load: Nil

Exit Load: Lump Sum / SIP / STP: 1% - If redeemed/switched out within 1 year

from the date of allotment, Nil - if redeemed / switched out after 1 year from

the date of allotment.

Scheme Liquidity/Switch: Liquidity by way of repurchases facility through CRAMC Branches or offices of the Registrar and Transfer Agents (R & T).

Switch-over option to the investors within the fund to/from other open ended

Scheme(s) or to/from new Scheme(s) that may be launched from time to time.


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CHAPTER NO 6

HDFC BALANCED MUTUAL FUND

Investment Objective

The primary objective of the Scheme is to generate capital appreciation along

with current income from a combined portfolio of equity and equity related

and debt and money market instruments.

Basic Scheme Information

Nature of Scheme Open Ended Balanced Scheme

Inception Date September 11, 2000

Option/Plan Dividend Option, Growth Option. The Dividend

Option offers Dividend Payout and Reinvestment

Facility.

Entry Load

(For Lumpsum Purchases

and investments through

SIP/STP)

NIL

Unfront commission shall be paid directly by the

investor to the ARN Holder (AMFI registered

Distributor) based on the investors' assessment

of various factors including the service renderedby the ARN Holder.

Exit Load

(as a % of the Applicable

NAV)

In respect of each purchase / switchin of units,

an Exit Load of 1.00% is payable if Units are

redeemed / switched-out within 1 year from the

date of allotment..

No Exit Load is payable if Units are redeemed /switched-out after 1 year from the date of


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allotment.

Minimum Application

Amount

For new investors: Rs.5000 and any amount

thereafter.

For existing investors: Rs. 1000 and any amount

thereafter.

Lock-In-Period Nil

Net Asset Value

Periodicity

Every Business Day.

Redemption Proceeds Normally dispatched within 3-4 Business days

Investment Pattern

The Scheme will be invested in equity and equity related instruments as well as in debt

and in money market instruments in normal circumstances. The following table provides

the asset allocation of the Scheme's portfolio.

The asset allocation under the Scheme will be as follows:

Sr.

No.

Type of Instruments Normal

Allocation

(% of Net

Assets)

Normal Deviation

(% of Normal

Allocation)

Risk Profile

of

the

Instrument1 Equity and Equity

Related Instruments

60 20 Medium to

High

2 Debt Securities

(including securitised

debt) and Money

Market instruments

40 30 Low to

Medium

Investment Strategy

The balanced product is positioned as a lower risk alternative to a pureequities scheme, while retaining some of the upside potential from equities

exposure. The Scheme provides the Investment Manager with the flexibility to

shift allocations in the event of a change in view regarding an asset class.

Asset allocation between equities and debt is a critical function in a balanced

fund. It is proposed to continuously monitor the potential for both debt and

equities to arrive at a dynamic allocation between the asset classes.

The equity and debt portfolios of the Scheme would be managed as per therespective investment strategies detailed herein.


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Equity Investments:

The investment approach would be based on the concept of economic earning

power and cash return on investments.

Five basic principles serve as the foundation for this investment approach.

They are as follows:

Focus on the long term

View our investments as conferring a proportionate ownership of the business.

Maintain a margin of safety (i.e. the price of purchase represents a discount to

the intrinsic value of that business).

Maintain a balanced outlook on the market by regularly monitoring economic

trends and investor sentiment.

The decision to sell a holding would be based on one of three reasons :

The anticipated price appreciation has been achieved or is no longer probabe.

Alternative investments offer superior total return prospects, or

A fundamental change has occurred in the company or the market in which it

competes.

In summary, the assessment of investment value is a function of extensive

research and based on data and reasoning, rather than current fashion and

emotion. The idea is to develop a model that allows us to identify "businesseswith superior growth prospects and good management, at a reasonable

price".

In order to implement the investment approach effectively, it would be

important to periodically meet the management face to face. This would

provide an understanding of thei broad vision and commitment to the long-

term business objectives. These meetings would also be useful in assessing key

determinants of management quality such as orientation to minority

shareholders, ability to cope with adversity and approach to allocating surpluscash flows. Discussions with management would also enable benchmarking

actual performance against stated commitments.

Debt Investments :

Debt securities (in the form of non-convertible debentures, bonds, secured

premium notes, zero interest bonds, deep discount bonds, floating rate bond /

notes, securitised debt, pass through certificates, asset backed securities,

mortgage backed securities and any other domestic fixed income securities

including structured obligations etc.) include, but are not limited to:


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Debt obligations of / Securities issued by the Government of India, State and

local Governments, Government Agencies and statutory bodies (which may or

may not carry a state / central government guarantee).

Securities that have been guaranteed by Government of India and State

Governments.Securities issued by Corporate Entities (Public / Private sector undertakings).

Securities issued by Public / Private sector banks and development financial

institutions.

Risk Control

Investments made from the net assets of the Scheme(s) would be in

accordance with the investment objective of the Scheme(s) and the provisionsof the SEBI (MF) Regulations. The AMC will strive to achieve the investment

objective by way of a judicious portfolio mix comprising of Debt Securities and

Money Market Instruments and equity / equity related instruments. Every

investment opportunity in Debt Securities and Money Market Instruments

would be assessed with regard to credit risk, interest rate risk and liquidity risk.

Systematic Investment Plan (SIP) Details

SerialNo.

Scheme Name MinimumApplication

Amount(Rs.)

Entry Load#

Exit Load #

1 HDFC Balanced

Fund -

Dividend/Growth

Rs.500 for

Monthly &

Rs.1500 for

Quarterly

NIL In respect of each purchase /

switch-in of units, an Exit Load of

1.00% is payable if Units are

redeemed / switched-out within 1

year from the date of allotment.

No Exit Load is payable if Units are

redeemed / switched-out after 1

year from the date of allotment.


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CHAPTER NO 7

RELIANCE BALANCED MUTUAL FUND

Reliance Regular Savings Fund (An open ended Scheme) Balanced Option: The

primary investment objective of this Option is to generate consistent return

and appreciation of capital by investing in mix of securities comprising of

Equity, Equity related Instruments & Fixed income instruments.

Reliance Regular Savings Find-Hybrid Option was launched on June 9,2005 and

subsequently Hybrid Option has been changed to Balanced Option w.e.f

January 13,2007. Consequently, benchmark of Reliance Regular Savings Fund

Balanced option has been changed to Crisil Balanced Fund Index from Crisil

MIp Index with effect from February 21, 2008. Accordingly performance of the

scheme is from January 13, 2007

Investment ObjectiveInvestment Objective (Balanced Option): The primary

investment objective of this Option is to generate consistent return and

appreciation of capital by investing in mix of securities comprising of Equity,

Equity related Instruments & Fixed income instruments.

Asset Allocation

Instruments Asset Allocation Risk Profile

Equity and Equity Related Securities 50 -75% Medium to HighDebt and Money Market Instruments 25- 50% Low to Medium

The average maturity of the debt portfolio will normally be maintained

between 1 and 7 years.

Minimum Application Amount: Rs.500/- and in multiple of Re.1 thereafter.

Investors can also avail of the Systematic Investment Plan (SIP) with an option

to invest as low as Rs.100/-per month.


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Minimum additional purchase amount:Rs. 500/- and in multiples of Re. 1

thereafter.

Load Structure

Entry Load

*In terms of SEBI circular no. SEBI/IMD/CIR No.4/

168230/09 dated June 30, 2009, no entry load will be

charged by the Scheme to the investor effective August 1,

2009. Upfront commission shall be paid directly by the

investor to the AMFI registered Distributors based on the

investors' assessment of various factors including the

service rendered by the distributor.

NIL

Exit Load

Under both Retail and Institutional Plan exit load isapplicable as below:

if redeemed or switched out on or before completion of 1

year from the date of allotment of units.1%

if redeemed or switched out after the completion of 1 year

from the date of allotment of units.NIL


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CHAPTER NO 8

SBI MAGNUM BALANCED MUTUAL

FUND

This Fund invests in a mix of equity and debt investments. It provides a good

investment opportunity to investors who do not wish to be completely

exposed to equity markets, but are looking for relatively higher returns than

those provided by debt funds.

Key BenefitSBI Magnum Balanced Fund invests in a equities across market capitalisation/

money market instruments.

To provide investors long term capital appreciation along with the liquidity of

an open-ended scheme by investing in a mix of debt and equity. The scheme

will invest in a diversified portfolio of equities of high growth companies and

balance the risk through investing the rest in a relatively safe portfolio of debt.

Asset Allocation

InstrumentNormal Allocation (% of Net

Assets)

Risk

Profile

Equities & equity related

instruments

Not less than 50% Medium

to High

Debt Instruments like

debentures, bonds, khokas, etc.

Upto 40% Medium

to Low

Securitized debt Not more than 10% of Medium


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investments in debt

instruments

to High

Money Market Instruments Balance Low

Date of Inception 31/12/1995

Minimum

ApplicationRs.1,000/-

Entry Load NA

Exit LoadFor exit within 1 year from the date of allotment - 1 %;

For exit after 1 year from the date of allotment - Nil

SIP

Rs.500/month - 12 months

Rs.1000/month - 6months

Rs.1500/quarter - 12 months

SWP Rs. 500/- per month or quarter


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CHAPTER NO.9

COMPARISON OF DIFFERENT

BALANCED MUTUAL FUNDS

Comparison of different types of Mutual funds will be done on the basis of

1) PERFORMANCE

Performance of Various Funds depending upon the Returns (%),during 1

month,6months,1year,3years,and five years respectively.

2) NAV (NET ASSET VALUE):

NET ASSET VALUE OF DIFFERENT FUNDS AS ON OCTOBER 12,2012,AND ALSO

AS ON DECEMBER 20,2011.

3) INVESTMENT DETAILS

Investment Details on Basis of Expenses Ratio (%),Front-End Load,Back-End

Load,Minimun Initial Investment(Rs),Tenure(yrs)


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Quantitative Measures

a) Assets under Management (AUM)This denotes the size of the fund or the scheme. Larger funds have higher

AUM and vice versa.

b) Annual ReturnA return is a measurement of how much an investment has increased or

decreased in value over any given time period. In particular, an annual return is

the percentage by which it increased or decreased over any twelve-month

period.

Return = ((End_price + Start_price) / Start_price)*100

Eg:

c) Expense RatioMutual funds too charge a fee for managing your money. This involves

the fund management fee, agent commissions, registrar fees, and selling and

promoting expenses. All this falls under a single basket called expense ratio or

annual recurring expenses that is disclosed every March and September and is

expressed as a percentage of the fund's average weekly net assets. Expense

ratio states how much you pay a fund in percentage term every year to

manage your money.

Date NAV Returns

January, 2005 18.12 -January, 2006 30.07 65.95 %

January, 2007 34.91 16.10 %

January, 2008 42.95 23.03 %


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51

d) Price Earnings RatioA companys PE is the ratio of the share price of a company to its earnings

per share (EPS). If EPS is one, the PE ratio will reflect the price that an investor

will pay for this one rupee of the company's profits.

An equity fund is a collection of shares. Therefore, a fund's PE is the

average of the PEs of all stocks, in proportion to their presence in the portfolio.

Because fund portfolios change, the PE will also change and this will not reflect

the growth prospects of the underlying assets. A fund's PE is the weighted

average PE of its stocks.

A fund's PE ratio can tell us whether the fund has more growth stocks or

value stocks compared to another fund.

e) Turnover RatioThe turnover ratio represents the percentage of a fund's holdings that

change every year. To put it simply, a turnover rate of 100 per cent implies that

the fund manager has replaced his entire portfolio during the period given.


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52

DATA ANALYSIS OF VARIOUS BALANCED MUTUAL FUND

1) IN TERMS PERFORMANCE (FIG NO 1)

As per the fig no1

In terms of Returns over a Short Period of Time, Reliance Balanced Plan

gives an impressive Returns, but however its Returns over long period of

time reduces.

In terms of Returns Over a longer Period of Time, HDFC Balanced Mutual

gives good returns.

FUND

NAME

1MONTH

RETURN(%)

6MONTH

RETURN(%)

1YEAR

RETURN(%)

3YEAR

RETURN(%)

5YEAR

RETURN(%)

Canara

Robeco

Balance

3.49 8.67 14.61 10.47 7.07

HDFC

Balanced

4.67 6.01 12.21 14.62 11.73

ICICI

Prudential

Balanced.

4.42 7.12 15.82 11.37 4.75

Reliance

Regular

Savings

Balanced

4.65 10.62 18.55 10.12 10.29

SBI

Magnum

Balanced

4.29 11.38 15.80 4.86 2.99
http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75


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53

0

2

4

6

8

10

12

14

16

18

20

1MONTH

Return

6MONTH

RETURN

1YEAR

RETURN

3YEARS

RETURN

5YEAR

RETURN

Canara Robeco Balance

HDFC Balanced

ICICI Prudential Balanced.

Reliance Regular Savings

Balanced

SBI Magnum Balanced


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54

2) IN TERMS OF NAV (Net Asset value) FIG 1.1

Fund Name NAV AS ONOCT 12 2012

AS ON DEC 20,2011

CanaraRobecoBalance-G

68.15 55.64

HDFC

Balanced-G

62.22 50.07

ICICI

PrudentialBalanced-G

52.65 42.60

RelianceRegularSavingsBalanced-G

24.40 18.82

SBI

MagnumBalanced-

G

52.77 41.65

0

10

20

30

40

50

60

70

80

Canara

Robeco

Balance-G

HDFC

Balanced-G

ICICI

Prudential

Balanced-G

Reliance

Regular

SavingsBalanced-G

SBI Magnum

Balanced-G

NAV AS ON OCT 12 2012

NAV AS ON DEC 20,2011
http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=204http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2791http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=686http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=844http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=75


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3) IN TERMS OF INVESTMENTS DETAILS fig 1.2

Fund

Name

Expense

Ratio %

Front-

End

Load %

Back-

End

Load %

Min

Initial

Inv. (Rs)

Tenure (Yrs.)

Canara

Robeco

Balance

1.66 0.00 0.00 5,000 7, 5, 19, 9, 9,

6, 4, 2, 4, 2,

0, 0, 3, 1

HDFC

Balanced

1.98 0.00 0.00 5,000 6, 12, 5, 9, 2,

0

ICICI

Prudential

Balanced

2.28 0.00 0.00 5,000 13, 7, 12, 7,

4, 7, 3, 0, 4,

4, 4, 1, 3, 3,

0, 0

Reliance

Regular

Savings

Balanced

2.19 0.00 0.00 500 7, 2, 7, 5, 5,

0

SBI

Magnum

Balanced

2.32 0.00 0.00 1,000 11, 17, 7, 7,

7, 0, 6, 5, 2,

3, 1

As per the Fig 1.2

SBI MAGNUM Balanced Has the Highest Expense Ratio and theMinimum Investment.

Reliance Balanced Mutual Fund has the Average Expense Ratio, but thelowest Minimum investment.
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Balanced Mutual Fund Final

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