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Project Report
On
CHANNELS OF DISTRIBUTION OF
MUTUALS FUNDS
Submitted towards partial fulfilment of requirements for award of
POST GRADUATE DIPLOMA IN MANAGEMENT
(BATCH-2010-12)
SUBMITTED BY: SUPERVISED BY:
M.UMAR ADIL (PGDM) DR.RACHNA SHARMA
ROLL NO - 2010015
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JAIPURIA INSTITUTE OF MANAGEMENT STUDIES
SECTOR 14C, VASUNDHARA, GHAZIABAD, 201012
CERTIFICATE
I hereby certify that the work which is being presented in this training report
entitled CHANNELS OF DISTRIBUTION OF MUTUAL FUNDS in partial
fulfilment of the requirements for the award of Post Graduation Diploma inManagement of Jaipuria Institute of Management Studies, Vasundhara is an authentic
record of my own work carried under the supervision of DR.RACHNA SHARMA
(Faculty PGDM) and Mr. Gyanendra Prakash (Assistance Vice President- Sales),
IDFC Mutual Fund.
M.UMAR ADIL
ROLL NO:2100015
This is to certify that the above statement made by the student is correct to the best of my
knowledge. I recommend submission of the report for the purpose of evaluation.
DR.RACHNA SHARMA
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Faculty, PGDM
ACKNOWLEDGEMENT
My Research project with CHANNELS OF DISTRIBITION OF MUTUAL FUNDS
proved to be highly valuable and informative.. I got some valuable insights from this
exercise, which has definitely enabled me to improve my vision ,skills and widen my
perspective towards banking in its modern prospect.
We would like to take this opportunity to express our deep gratitude to Mr.
Gyanendra Prakash (Assistance Vice President- Sales), IDFC Mutual Fund. IDFC
Mutual Fund, for providing the facilities to get an exposure for management system in
organization.
I express my gratitude towards DR.RACHNA SHARMA, (Faculty PGDM) who gave
me opportunity to complete my Research Project. I am also thankful to her for providing
me her able guidance, valuable suggestions and for sharing her experiences with me
without which this project may not have been successful.
I am also grateful to all my colleagues who continuously helped me in my project and for
their kind co-operation and by sparing their valuable time in providing me theinformation needed.
Date-
Place- Vashundhra, Ghaziabad
Submitted by- M.UMAR ADIL
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Roll. No. 2010015
Jaipuria Institute of Management Studies
Executive Summary
This project was undertaken to understand the distribution of mutual funds through
various channels.During the summer training in IDFC Mutual Fund, I learnt so many
things related to the mutual fund.
The project reflects performance of the IDFC Mutual Fund. This also includes various
products which are offered by the IDFC to the customer.
Also I have studied the mutual funds on different parameters such as broker commission,
Buyer and broker relationship ,various channels in supporting its distribution channels
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TABLE OF CONTENTS Page No.
1. Introduction 1
1.1 Profile of the Organization 3
1.2 Profile of the Study 11
2. Objectives of the Study 31
3. Research Methodology 32
3.1 Research Design 32
3.2Data Collection 33
3.3 Analytical Tools 33
4. Findings 74
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5. Recommendations 75
6. Limitations of the study 76
7. Bibliography 77
8. Annexure 78
1. Introduction
The Indian mutual fund industry in recent years has exponential growth and yet it is still
at a very nascent stage. We believe that the mutual fund industry has grown in terms of
size or choices available, but is a long distance from being regarded as a mature one. To
understand this one has to look at the global scenario. If one look at the global mutual
fund industry, one has see that assets have grown by 185% between 2000 and 2006. In
comparison, Indian assets outgrew at a staggering 446%, where as the US only grew by
158% and Europe by 242%.
As our economy continues to grow at a spectacular rate there is a huge amount of wealth
creating opportunities surfacing everywhere. Financial Planners have an immensely
responsible role to play by identifying these opportunities and channelling them into
wealth creating initiatives that would enable people to address their financial needs. To
give an overview of a recent study conducted by Invest India, there are about 321.8
millions paid workers in India. Of this only 5.3 millions have an exposure to mutual
funds. This is less than 2% of total work force. Even more interesting fact is that 77% of
them reside in super metros and Tier I cities. Again, about 4 millions come in the Rs
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90,000-5 lack income bracket. The penetration among the less than Rs 90,000 and more
than Rs 5 lack income bracket is very low. The need for the hour is to expend the market
boundaries and expand scope in Tier II and Tier III cities.
India is also one of the fastest growing markets for mutual funds, attracting a host of
global players. Hence, investors will have an even wider range of products to choose
from. The combination of the increase in number of fund houses along with new schemes
and the increase in the number of people parking their saving in mutual funds has
resulted in per cent during April-December 2007. This now stands at Rs 30314 billion as
against Rs 13476 billion for the corresponding period last year.
As on January 31, 2008, Indian assets stood at $ 137 billion and are growing. We already
have many experts expressing their concentration at the frequency of NFO launches. Yet
we have less than 1000 schemes in India, compared to 15000 in the US and 36000 in
Europe. The gap is significant and has to be filled up with unique and better priced
products.
There has also been a rapid rise in the HNI segment. India stands only second-best to
Korea in the Asia- Pacific region in terms of percentage growth. The total HNWI (High
Net Worth Individual) assets stood at about Rs 12 trillion and their assets are distributed
over various assets classes. To top them MFs will have to come up with structured
products, real estate funds, commodity based funds, art funds and the like.
Indian households have also increased their exposure to the capital market. Very
interestingly, the MF proportion in this has increased. In fact, there has been more than
2000% growth in the assets coming to MFs in the last 3 years. Statistics reveal that a
higher portion of investors savings is now invested in market-linked avenues like mutual
funds as compared to earlier times.
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1.1 Profile of the IDFC MUTUAL FUND
1.1 (a) History
The fund was established on March 13, 2000. Now the management of the fund has been
taken over by Standard Chartered Bank, the UK based banking conglomerate. The name
of the AMC too has been changed from ANZ AMC. Previously sponsored by ANZ
Banking Group, Australia, this fund has just set up its operations in the year 2000.
Australia and New Zealand Banking Group Limited, the previous sponsor of the fund, is
a leading international bank and is also one of the "Big Four" Australian commercial
banks providing a full range of banking and financial services with total assets of US $
97.35 billion as on 30th Sept, 1999. ANZ Funds Management is a core business unit of
the group and is one of Australia s large fund managers. It has a full range of investment
products and services managing more than AUD $ 13267.7 million in customer funds on
30th Sept., 1999. ANZ Banking Group has significant presence in 35 nations from the
Middle East thorough South Asia and East Asia to the Pacific
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1.1 (b)IDFC ASSET MANAGEMENT COMPANY
1.1 (b) (a) Sponsor
Infrastructure Development Finance Company Limited (IDFC).
1.1 (b) (b) Trustee
IDFC AMC Trustee Company Private Limited.
1.1 (b) (c) Chairman
Dr. Rajiv Lall.
1.1 (b) (d) CEO / MD
Mr. Naval Bir Kumar President
1.1 (b) (e) Compliance Officer
Ms. Jyothi Krishnan
1.1 (b) (f) Investor Service Officer
Mr. Praveen Bhatt
1.1 (b) (g) Assets Managed
Rs. 19,266.05 crore (Jun-25-2010)
1.1 (c) IDFC AMC (ASSET MANAGEMENT COMPANY)
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IDFC is a leading private sector diversified financial institution established by a
consortium of strong global and local institutions with the support and sponsorship of the
Government of India.
A majority of IDFCs shareholding (67% as of March 31, 2008) is held by reputed global
stalwarts that include respectable names like Government of India, International
Finance Corporation (IFC) - a member of the World Bank Group, Government of
Singapore, AIG, Morgan Stanley, Goldman Sachs, Citigroup, JP Morgan among
others. The best Indian financial institutions such as HDFC, LIC, SBI, and IDBI are
owners in IDFC, making it an institution of high repute and standing.
We are determined to construct a comprehensive asset management business that consists
of:
Private equity investments through IDFC Private Equity Company Limited
Project equity through IDFC Project Equity Company Limited, and
Public markets investment advisory services through IDFC Investment Advisors
Limited.
IDFC Private Equity manages a corpus of US$ 630 million and is Indias largest and
most active private equity fund focused on infrastructure. The two funds under
management are India Development Fund (IDF) and IDFC Private Equity Fund II.
.
1.1 (c) (a) IDFC Acquires Standard chartered Mutual Fund
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Infrastructure Finance Development Company Ltd today acquired mutual fund business
of Standard Chartered Bank. The company has received all necessary approvals from the
concerned regulatory authority, IDFC informed the Bombay Stock Exchange in a
communiqu here. The company had earlier signed an agreement with Standard
Chartered Bank in March for a consideration of Rs 820 crore.
Standard Chartered MF has around Rs 14,000 crore in assets of which Rs 4,000 crore is
in equity while rest is in debt. With this IDFC acquires Standard Chartered TrusteeCompany and Standard Chartered Asset Management Company, both of which represent
Standard Chartered mutual fund business in India.
IDFC is one of the leading infrastructure finance institutions, and the acquisition would
give it a foothold in the retail sector and improve its high margin fee based income.
1.1 (d) COMPETITIVE ADVANTAGES
1.1 (d) (a) Research
IDFC have our roots in equity research. Their original business model was to provideresearch and information services on Indian business and capital markets to institutional
customers. IDFC executive directors have equity research and investment experience in
leading banks and brokerage houses
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1.1 (d) (b) Experienced management team
Management team has hands on experience in financial services, especially targeted at
retail sales and relationship management.
1.1 (d) (c) Customer Relationship Management
IDFC MUTUAL FUND, ASSET MANAGEMENT COMPANY has developed a team of
Customer Relationship Managers across India to handle key customer accounts. These
people are experienced in financial services and have undergone in-house training. This
allows them to offer unbiased advice on investment products like mutual funds and other
investment products.
1.1 (d) (d) Robust Risk Management Systems:
IDFC asset Management Company manage the risks associated with their riskmanagement procedures rely primarily on internally developed Risk Management System
and systems provided by their vendors.
1.1 (d) (e) Business Decisions
An employee must not permit a decision about whether IDFC Asset Management
Company Pvt. Ltd. will do business with a current or prospective customer or supplier to
be influenced by unrelated interests. Decisions relating to placing IDFC Asset
Management Company Pvt. Ltd.'s business with current or prospective customers and
suppliers, and the volume of such business, must be based upon business considerations.
1.1 (e) SWOT ANALYSIS
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1.1 (e) (a) STRENGTHS
Research.
Customer Relationship Management.
Risk Management System.
1.1 (e) (b) WEAKNESS
Lack of banking arm to complete the bank broker depositary chain
Insignificance presence in institutional segments.
1.1 (e) (c) OPPORTUNITIES
Changing demographic with higher disposable income and increasing complex
financial instruments will drive the demand for investment advisory services
Rapid penetration of internet and computer needs that technology enabled
services will gain market share.
1.1 (e) (d) THREATS
Economic slowdown
Stock market fall will have a cascading effect on mutual fund mobilization
Increase or decrease in interest rates can effect debt or income mobilizations
Future changes in personal taxation rules can impact mutual funds sales
Increasing competition from large and particularly foreign players
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1.1(f) IDFC Schemes
Table 1.1 IDFC Schemes
No. of schemes 84
No. of schemes including options 269
Equity Schemes 24
Debt Schemes 209
Short term debt Schemes 19
Equity and Debt 3
Money Market 0
Gilt Fund 13
1.1(f) (a) Open Ended Schemes
IDFC All Seasons Bond Fund
IDFC Arbitrage Fund
IDFC Arbitrage Plus Fund
IDFC Asset Allocation Fund Aggressive plan
IDFC Asset Allocation Fund Conservative Plan
IDFC Asset Allocation Fund Moderate plan
IDFC Monthly Income Plan
IDFC All Seasons Bond Fund
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IDFC Cash Fund
IDFC Classic Equity Fund
IDFC Dynamic Bond Fund
IDFC Government Securities Fund Investment Plan
IDFC Government Securities Fund Short Term Plan
IDFC Imperial Equity Fund
IDFC Liquidity Manager
IDFC Enterprise Equity Fund
IDFC Nifty Fund
IDFC India GDP Growth Fund
IDFC Strategic Sector(50-50) Equity Fund
IDFC Small and Midcap Equity (SME) Fund
IDFC Premier Equity Fund
IDFC Super Saver Income Fund Investment Plan
IDFC Super Saver Income Fund Medium Term Plan
IDFC Super Saver Income Fund Short Term Plan
IDFC Tax Advantage (ELSS) Fund
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1.2 Profile of the Study
A mutual fund is a professionally-managed form of collective investments that pools
money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities.[1In a mutual fund, the fund manager, who is also
known as the portfolio 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.
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Legally known as an "open-end company" under the Investment Company Act of
1940(the primary regulatory statute governing investment companies), a mutual fund is
one of three basic types of investment companies available in the United States.[2] Outside
of the United States (with the exception of Canada, which follows the U.S. model),
mutual fund may be used as a generic term for various types of collective investment
vehicle. In the United Kingdom and Western Europe (including offshore jurisdictions),
other forms of collective investment vehicle are prevalent, including unit trusts, open-
ended investment companies (OEICs), SICAVs and unitized insurance funds. In
Australia and New Zealand the term "mutual fund" is generally not used; the name
"managed fund" is used instead.
1.2 (a) what is a Mutual Fund?
Mutual funds belong to the class of firms known as investment companies. While
companies may offer a "family" of funds under a single umbrella name and common
administration - for example, the Vanguard Group, Fidelity Investments, or Strong Funds
- each fund offered is a separately incorporated investment company. These are entitiesthat pool investor money to buy the securities that make up the funds portfolio. The idea
behind this pooling of investor money is to give each investor the benefits that come from
the ownership of a diversified portfolio of securities chosen and monitored daily by
experience professional advisers.
The funds create and sell new shares on demand. Investors` shares represent a portion of
the funds portfolio and income proportional to the number of shares they purchase.
Individual shareholders of the mutual funds have voting rights in the operation of the
fund, just as most holders of common stocks in corporations have the right to vote on
certain issues involving the running of the company. The key attribute of a mutual fund,
regardless of how it is structured, is that the investor is entitled to receive on demand, or
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within a specified period after demand, an amount computed by reference to the value of
the investors proportionate interest in the net assets of the mutual fund. This means that
the owner of mutual fund shares can "cash in," or redeem his or her shares at any time.
Mutual funds, therefore, are considered a liquid investment. The investors selling
(redemption) price may be higher or lower than the purchase price. It all depends on the
performance of the funds portfolio. The fund has an adviser who charges a fee for
managing the portfolio. The adviser decides when and what securities to buy and sell, and
is responsible for providing or causing to be provided all services required by the mutual
fund in carrying on its day-to-day activities. All fund investors get this built-in portfolio
management whether they own 50 shares or 10,000.
Figure 1.1 Concept of Mutual Fund
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1.2 (b) History of Mutual Fund in India
1.2 (b) (a) the Evolution
The formation of Unit Trust of India marked the evolution of the Indian mutual fund
industry in the year 1963. The primary objective at that time was to attract the small
investors and it was made possible through the collective efforts of the Government of
India and the Reserve Bank of India. The history of mutual fund industry in India can be
better understood divided into following phases:
1.2(b) (b) Phase 1. Establishment and Growth of Unit Trust of India - 1964-87
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Unit Trust of India enjoyed complete monopoly when it was established in the year 1963
by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to
operate under the regulatory control of the RBI until the two were de-linked in 1978 and
the entire control was transferred in the hands of Industrial Development Bank of India
(IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64),
which attracted the largest number of investors in any single investment scheme over the
years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of differentinvestors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift
Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (Indias
first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured
returns) during 1990s. By the end of 1987, UTI's assets under management grew ten
times to Rs 6700 crores.
1.2 (b) (c) Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public sector players entering the
market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of
India became the first non-UTI mutual fund in India. SBI Mutual Fund was later
followed 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.
1.2 (b) (d) Phase III. Emergence of Private Sector Funds - 1993-96
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The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to enter
the mutal fund industry in 1993, provided a wide range of choice to investors and more
competition in the industry. Private funds introduced innovative products, investment
techniques and investor-servicing technology. By 1994-95, about 11 private sector funds
had launched their schemes.
1.2 (b) (e) Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and stricter regulation from the SEBI
after 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.
Inventors 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 incometax. 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.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal
status as a trust formed by an Act of Parliament. The primary objective behind this was to
bring all mutual fund players on the same level. UTI was re-organized into two parts: 1.
The Specified Undertaking, 2. The UTI Mutual Fund
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1.2 (b) (f) Phase V. Growth and Consolidation - 2004 Onwards
The industry has also witnessed several mergers and acquisitions recently, examples of
which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C
Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more
international mutual fund players have entered India like Fidelity, Franklin Templeton
Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing
phase of growth of the industry through consolidation and entry of new international and
private sector players.
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1.2(c) Types of Mutual Funds
Figure 1.2 Types of Mutual Fund
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1.2 (d) Advantages of Mutual Fund
Table 1.2 Advantages of Mutual Fund
S. No. Advantage Particulars
1. Portfolio
Diversification
Mutual Funds invest in a well-diversified portfolio of
securities which enables investor to hold a diversified
investment portfolio (whether the amount of investment
is big or small).
2. Professional
Management
Fund manager undergoes through various research
works and has better investment management skills
which ensure higher returns to the investor than what
he can manage on his own.
3. 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.
4. Low
Transaction
Costs
Due to the economies of scale (benefits of larger
volumes), mutual funds pay lesser transaction costs.
These benefits are passed on to the investors.
5. Liquidity An investor may not be able to sell some of the shares
held by him very easily and quickly, whereas units of a
mutual fund are far more liquid.
6. 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
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7. Transparency Funds provide investors with updated information
pertaining to the markets and the schemes. All material
facts are disclosed to investors as required by theregulator.
8. 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 also offered to
the investors in most open-end schemes.
1.2 (e) Disadvantage of Investing Through Mutual Funds
Table 1.3 Disadvantage of the Mutual Fund
S. No. Disadvantage Particulars
1. Costs
Control Not
in the Hands
of an
Investor
Investor has to pay investment management fees and
fund distribution costs as a percentage of the value of
his investments (as long as he holds the units),
irrespective of the performance of the fund.
2. No
Customized
Portfolios
The portfolio of securities in which a fund invests is
a decision taken by the fund manager. Investors have
no right to interfere in the decision making process of
a fund manager, which some investors find as a
constraint in achieving their financial objectives.
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3. Difficulty in
Selecting a
SuitableFund Scheme
Many investors find it difficult to select one option
from the plethora of funds/schemes/plans available.
For this, they may have to take advice from financialplanners in order to invest in the right fund to achieve
their objectives.
1.2 (f) Mutual Fund Investment Strategies
1.2 (f) (a) Systematic Investment Plan (SIPs)
These are best suited for young people who have started their careers and need to build their
wealth. SIPs entail an investor to invest a fixed sum of money at regular intervals in mutual
fund scheme the investor has chosen. For instance an investor opting for SIP in xyz mutual
fund scheme will need to invest a certain sum of money every month / quarter /half year in the
scheme.
1.2 (f) (b) Systematic Withdrawal Plan (SWPs)
These plans are best suited for people nearing retirement. In these plans an investor invests in
a mutual fund scheme and is allowed to withdraw a fixed sum of money at regular intervals to
take care of expenses.
1.2 (f) (c) Systematic Transfer Plan (STPs)
They allow the investors to transfer on a periodic basis a specified amount from one scheme
to another within the same fund family meaning two schemes belonging to the same mutual
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fund. A transfer will be treated as redemption of units from the scheme from which the
transfer is made .Such redemption or investment will be at the applicable NAV. This service
allows the investor to manage his investment actively to achieve his objectives. Many funds
do not even charge even any transaction feed for this service an added advantage for the active
investor.
1.2 (g) Performance Evaluation
Parameters of mutual fund evaluation
Risk
Returns
Liquidity
Expense ratio
Composition of portfolio
1.2(g) (a)Risks Associated With Mutual Funds
Investing in mutual funds as with any security, does not come without risk. One of the most
basic economic principles is that risk and reward are directly correlated. In other words, the
greater the potential risk, the greater the potential return. The types of risk commonly
associated with mutual funds are:
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1.2 (g) (a) (a) Market Risk
Market risk relate to the market value of a security in the future. Market prices fluctuate and
are susceptible to economic and financial trends, supply and demand, and many other factors
that cannot be precisely predicted or controlled.
1.2 (g) (a) (b) Political Risk
Changes in the tax laws, trade regulations, administered prices etc. is some of the many
political factors that create market risk. Although collectively, as citizens, we have indirect
control through the power of our vote, individually as investors, we have virtually no control.
1.2 (g) (a) (c) Inflation Risk
Inflation or purchasing power risk, relates to the uncertainty of the future purchasing power
of the invested rupees. The risk is the increase in cost of the goods and services, as measured
by the Consumer Price Index.
1.2 (g) (a) (d) Interest Rate Risk
Interest Rate risk relates to the future changes in interest rates. For instance, if an investor
invests in a long term debt mutual fund scheme and interest rate increase, the NAV of the
scheme will fall because the scheme will be end up holding debt offering lowest interest rates.
1.2 (g) (a) (e) Business Risk
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Business Risk is the uncertainty concerning the future existence, stability and profitability of
the issuer of the security. Business Risk is inherent in all business ventures. The future
financial stability of a company cannot be predicted or guaranteed, nor can the price of its
securities. Adverse changes in business circumstances will reduce the market price of the
companys equity resulting in proportionate fall in the NAV of mutual fund scheme, which
has invested in the equity of such a company.
1.2 (g) (a) (f) Economic Risk
Economic Risk involves uncertainty in the economy, which, in turn can have an adverse
effect on a companys business. For instance, if monsoons fall in a year, equity stocks of
agriculture bases companies will fall and NAVs of mutual funds, which have invested in such
stocks, will fall proportionately.
1.2 (g) (b) Returns
Returns have to be studied along with the risk. A fund could have earned higher return than
the benchmark. But such higher return may be accompanied by high risk. Therefore, we have
to compare funds with the benchmarks, on a risk adjusted basis. William Sharpe created a
metric for fund performance, which enables the ranking of funds on a risk adjusted basis.
Sharpe Ratio = Risk Premium
Funds Standard Deviation
Trey nor Ratio = Risk Premium
Funds Beta
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Risk Premium = Difference between the Funds Average return and Risk free
return on government security or treasury bill over a given period .
1.2(g) (c) Liquidity
Most of the funds being sold today are open-ended. That is, investors can sell their existing
units, or buy new units, at any point of time, at prices that are related to the NAV of the fund
on the date of the transaction. Since investors continuously enter and exit funds, funds are
actually able to provide liquidity to investors, even if the underlying markets, in which the
portfolio is invested, may not have the liquidity that the investor seeks.
1.2(g) (d) Expense Ratio
Expense ratio is defined as the ratio of total expenses of the fund to the average net assets of
the fund. Expense ratio can actually understate the total expenses, because brokerage paid on
transactions of a fund are not included in the expenses. According to the current SEBI norms,
brokerage commissions are capitalized and included in the cost of the transactions.
Expense ratio = Total Expenses
Average Net Assets
1.2 (g) (e) Composition of the Portfolio
Credit quality of the portfolio is measured by looking at the credit ratings of the investments
in the portfolio. Mutual Fund fact sheets show the composition of the portfolio and the
investments in various asset classes over time.
Portfolio turnover rate is the ratio of lesser of asset purchased or sold by funds in the market
to the net assets of the fund.
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If Portfolio ratio is 100% means portfolio has been changed fully. When Portfolio ratio is high
means expense ratio is high.
Portfolio Ratio = Total Sales & Purchase
Net Assets of fund
In order to meaningfully compare funds some level of similarity in the following factors has
to be ensured:
Size of the funds
Investment objective
Risk profile
Portfolio composition
Expense ratios
1.2 (h) How Is A 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
(AMC) 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 they launch any scheme.
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1.2 (i) Association of Mutual Funds in India (AMFI)
With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August, 1995.AMFI is an apex body of
all Asset Management Companies (AMC) which has been registered with SEBI. Till date
all the AMCs are that have launched mutual fund schemes are its members. It functions
under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry toa professional and healthy market with ethical lines enhancing and maintaining standards.
It follows the principle of both protecting and promoting the interests of mutual funds as
well as their unit holders.
The objectives of Association of Mutual Funds in India: ---
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:-
This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.
It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the activities
of mutual fund and asset management. The agencies who are by any means
connected or involved in the field of capital markets and financial services also
involved in this code of conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.
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Association of Mutual Fund of India do represent the Government of India, the
Reserve Bank of India and other related bodies on matters relating to the Mutual
Fund Industry.
It develops a team of well qualified and trained Agent distributors. It implements
a programme of training and certification for all intermediaries and other engaged
in the mutual fund industry.
AMFI undertakes all India awareness programme for investors in order to
promote proper understanding of the concept and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate informationon Mutual Fund Industry and undertakes studies and research either directly or in
association with other bodies.
The sponsorers of Association of Mutual Funds in India: ---
Bank Sponsored
SBI Fund Management Ltd.
BOB Asset Management Co. Ltd.
Canbank Investment Management Services Ltd.
UTI Asset Management Company Pvt. Ltd.
1.2 (j) GLOSSARY
1.2 (j) (a) Back-end Load
Charge imposed by a mutual fund when an investor redeems shares. Redemption fees
and contingent deferred sales charges are examples.
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1.2 (j) (b) Contingents Deferred Sales Charges
Back-end load imposed on an investor who redeems shares. It is usually expressed as a
percentage of the original purchase price or of the value of shares redeemed. In most
cases, the longer the investor holds his shares, the smaller the deferred sales charge.
1.2 (j) (c) Distribution
Payments made to shareholders by the mutual fund. Interest and stock dividends earnedby the funds portfolio are passed to shareholders as dividends, while capital gains are
passed as capital gains distributions.
1.2 (j) (d) Dividend Reinvestment Fee
Fee charged when an investor uses dividends paid by a mutual fund to purchase
additional shares of the mutual fund.
1.2 (j) (e) Exchange Fee
Fee charged when an investor switches from one mutual fund to another in the same
family of funds.
1.2 (j) (f) Front-end Load
Sales charge applied at the time the investor purchases shares. Investment Companies -
The companies that pool investor monies to purchase securities. The Investment
Company Act of 1940 created three types of investment companies: face-amount
certificate companies, unit investment trusts and management companies.
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1.2 (j) (g) Management Companies
There are two types: open-end and closed-end. Open-end funds, which sell and buy
shares back on demand, are called mutual funds. Closed-end funds have a fixed number
of shares. After the initial public offering, shares in closed-end funds trade only on
exchanges. The price is determined by the market and does not necessarily reflect the net
asset value of the shares.
1.2 (j) (h) Management Fee
A fee paid by the mutual fund to its investment adviser and charged against fund assets,
generally 1% or less per year.
1.2 (j) (i) Net Asset Value
In effect, the share price of a fund computed daily by adding the value of the funds
securities and other assets, subtracting liabilities, and dividing by the number of shares
outstanding. For a mutual fund with a front-end load, net asset value is identical to the
"asked price" or "offering price."
1.2 (j) (j) Prospectus
A disclosure document which should provide the investor with full and complete
disclosure of all material information needed by the investor to make a decision whether
or not to invest. The prospectus generally incorporates the SAI by "reference."
1.2 (j) (k) Redemption Fee
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A fee charged to an investor who redeems shares. It is generally expressed as a
percentage of the value of shares redeemed.
1.2 (j) (l) Rule 12b-1 Fee
An asset-based sales load, permitted by SEC Rule 12b-1, representing annual charges of
up to 1-1/4% for specific sales or promotional activities of the mutual fund. Over time,
the amount paid in Rule 12b-1 fees can surpass the amount paid in sales fees charged by
load funds.
1.2 (j) (m) SAI
A disclosure document called a Statement of Additional Information. The SAI is not
required to be furnished by mutual funds to investors unless investors specifically request
it. Investors are responsible for information in the SAI, even if they dont request it.
1.2 (j) (n) Total Return
A computation of mutual fund performance which measures changes in total value over a
specified time period. Included in the computation are distributions paid to investors,
capital gains distributions and unrealized capital gains and losses. Since all fund activity
which has an effect on net asset value is represented, this measure provides a picture of
performance which is more complete than yield.
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1.2 (j) (o) Yield
A measure of mutual fund performance, which is figured by dividing the income
generated (dividends, capital gains distribution, etc.) per share for a specific time period
by the funds current price per share. For example if, during a year, a single share of a
fund had paid income totalling $1 and its share price was $10, the annual yield for that
year would be figured by dividing 1 by 10, which equals one tenth, or a yield of 10%.
2. OBJECTIVE OF THE STUDY
This study is conducted in order to find out:-
To study the performance of channels being used in its distribution of MUTUAL
FUND.
To study the performance of channels MUTUAL FUND.
To study the current marketing trends of mutual funds in the Indian market.
Risk and Return involved in distribution MUTUAL FUNDS.
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3. RESEARCH METHODOLOGY
3.1 RESEARCH
Methodology plays a significant role in any study including social science research. It
provides the essential tools/techniques to carry out the study in a scientific manner. The
concept of truth, usefulness, acceptability could be ascertained through paper
quantification, verification of fact through different method of study/procedures used.
3.2 RESEARCH METHODOLOGY
A system of models, procedures and techniques used to find the results of a research is
called a research methodology.
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3.3 RESEARCH DESIGN
A research design is a framework or blueprint for conducting the marketing research
project. It details the procedures necessary for obtaining the information needed to
structure or solve marketing research problems.
A research can be classified into three parts: -
Explanatory Research
Descriptive Research
Experimental Research
For my study, I have used Descriptive research.
3.4 DATA COLLECTION
Data are the input to any decision- making process in a business. The processing of data
gives statistics of importance of the study. Data can be classified into primary data and
secondary data.
3.4 (a) PRIMARY DATA
The data which are collected from the field under the control and supervision of an
investigator is known as primary data.
3.4 (b) SECONDARY DATA
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If data collected from journals, magazines, government publications, annual reports of
companies, etc; then such data are called as secondary data.
For my study purpose, I have used secondary data.
Table 3.1 Asset Allocation
93.55%
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93.55%
3.60% 2.85%
Eq
De
Ca
3.5 (a) (b) Interpretation
IDFC- IEF is the conservative fund. The investment objective of the scheme is to seek to
generate capital appreciation. In this fund, mostly part of the fund invested into equity
(93%) in large- cap companies, only approx. 4% part invested into debt and remaining
into cash (3%).
Table 3.2 Fund Performance in terms of capital appreciation
SIP Returns
Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Since Inception 51,000 72,356 16.29%
Last 3 Years 36,000 46,696 14.41%
Last 2 Years 24,000 32,052 30.09%
Last 1 Years 12,000 13,032 15.87%
Figure 3.2 Fund Performance in terms of capital appreciation
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0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Amount (in Rs.) 51,000 36,000 24,000 12,000
Value (in Rs.) 72,356 46,696 32,052 13,032
Since Inception Last 3 Year Last 2 Years Last 1 Year
3.5 (a) (c) Interpretation
IDFC- IEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the
amount is Rs. 13,032. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.) the
amount is Rs. 32,052 and from the inception time at the amount of Rs. 51,000 the current
value of the fund is Rs. 72,356.
Figure3.3 Fund performances in terms of return on capital
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1 6 . 2 91 7 . 6 9
3 0 . 7 3
1 6 . 4 7
0 . 0 0 %
5 . 0 0 %
1 0 . 0 0 %
1 5 . 0 0 %
2 0 . 0 0 %
2 5 . 0 0 %
3 0 . 0 0 %
3 5 . 0 0 %
S i nc e In c e p t io nL a s t 3 Y e a rs L a s t 2 Y e a rs L a s t 1 Y e a r
3.5 (a) (d) Interpretation
IDFC- IEF regularly provides the good capital appreciation to the investors. According to
the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the return
on capital is 16.47%. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.) the
return on capital is 30.73% and from the inception time the fund providing the return on
capital is 16.29%.
Table 3.3 Fund Performance in terms of Dividend
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Last 3 Dividends (Rs. /Unit)
8 June 2009 1.20 NAV 12.452
15 June 2009 1.20 NAV 12.0942
14 May 2008 1.50 NAV 13.9431
3.5 (a) (e) Interpretation
Since inception IDFC- IEF declared the dividend three times. First time it declared on 14May 2008 @ Rs. 1.50 at the NAV 13.9431. Second time it declared on 15June 2009 @
Rs. 1.20 at the NAV 12.0942 and last time it declared on 8 June 2009 @ Rs. 1.50 at the
NAV 12.452.
3.5 (b) IDFC Enterprise Equity Fund
(An open-ended fund)
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(IDFC- EEF)
3.5 (b) (a) Fund Features
Nature
Equity
Average AUM
Rs. 602.54 Crore
Fund manager
Mr. Kenneth Andrade
Inception Date
9 June 2006
Minimum Investment Amount
Rs. 5,000
SIP (Minimum Amount)
Rs. 1,000
Table 3.4 Asset Allocation
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Equity 93.68%
Debt 5.87%
Cash 0.45%
Figure 3.4 Asset Allocation
93.68%
5.87% 0.45%
Eq
De
Ca
3.5 (b) (b) Interpretation
IDFC- IEF is the initial level fund. The investment objective of the scheme is to seek to
generate capital appreciation. In this fund, mostly part of the fund invested into equity
(93%) in large- cap companies, only approx. 6% part invested into debt and only 1% part
invested into cash.
Table 3.5 Fund Performance in terms of Capital Appreciation
SIP Returns
Asset Allocation
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Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Since Inception 48,000 60,743 11.49%
Last 3 Years 36,000 44,002 13.56%
Last 2 Years 24,000 31,523 28.91%
Last 1 Years 12,000 12,983 15.67%
Figure 3.5 Fund Performance in terms of Capital Appreciation
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Amount (in Rs.) 48,000 36,000 24,000 12,000
Value (in Rs.) 60,743 44,002 31,523 12,983
Since Inception Last 3 Year Last 2 Years Last 1 Year
3.5 (b) (c) Interpretation
IDFC- EEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the
amount is Rs. 12,983. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.) the
amount is Rs. 31,523 and from the inception time at the amount of Rs. 48,000 the current
value of the fund is Rs. 60,743.
Figure 3.6 Fund performances in terms of return on capital
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1 1 . 4 91 3 . 5 6
2 8 . 9 1
1 5 . 6 7
0 . 0 0 %
5 . 0 0 %
1 0 . 0 0 %
1 5 . 0 0 %
2 0 . 0 0 %
2 5 . 0 0 %
3 0 . 0 0 %
S in c e In c e p t io n L a s t 3 Y ea rs L a s t 2 Y e a rs L a s t 1 Y ea r
3.5 (b) (d) Interpretation
IDFC- EEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the
return on capital is 15.67%. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.)
the return on capital is 28.91% and from the inception time the fund providing the return
on capital is 11.49%.
Table 3.6 Fund Performance in terms of Dividend
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Last Dividends (Rs. /Unit)
28 July 2009 1.00 NAV 10.7430
14 May 2008 1.50 NAV 13.0106
3.5 (b) (e) Interpretation
Since inception IDFC- EEF declared the dividend two times. First time it declared on 14
May 2008 @ Rs. 1.50 at the NAV 13.0106. Second time it declared on 28 July 2009 @
Rs. 1.00 at the NAV 10.7430.
3.5 (c) IDFC Classic Equity Fund
(An open-ended fund)
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(IDFC- CEF)
3.5 (c) (a) Fund Features
Nature
Equity
Average AUM
Rs. 268.84 Crore
Fund manager
Mr. Tridib Pathak
Inception Date
9 August 2005
Minimum Investment Amount
Rs. 5,000
SIP (Minimum Amount)
Rs. 1,000
Table 3.7 Asset Allocation
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Equity 94.75%
Debt 2.90%
Cash 2.36%
Figure 3.7 Asset Allocation
94.75%
2.90% 2.36%
Eq
De
Ca
3.5 (c) (b) Interpretation
IDFC- CEF is the moderate risky fund. The investment objective of the scheme is to seek
to generate capital appreciation. In this fund, mostly part of the fund invested into equity
(95%) in large, small and mid- cap companies, only approx. 3% part invested into debtand only 2% part invested into cash.
Table 3.8 Fund Performance in terms of capital appreciation
SIP Returns
Asset Allocation
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Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Since Inception 58,000 77,290 11.59%
Last 3 Years 36,000 43,007 11.93%
Last 2 Years 24,000 31,176 27.54%
Last 1 Years 12,000 12,920 14.64%
Figure 3.8 Fund Performance in terms of capital appreciation
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Amount (in Rs.) 58,000 36,000 24,000 12,000
Value (in Rs.) 77,290 43,007 31,176 12,920
Since Inception Last 3 Year Last 2 Years Last 1 Year
3.5 (c) (c) Interpretations
IDFC- CEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000 p.m.) the
amount is Rs. 12,920. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.) the
amount is Rs. 31,176 and from the inception time at the amount of Rs. 58,000 the current
value of the fund is Rs. 77,290.
Figure 3.9 Fund performances in terms of return on capital
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11.59% 11.93%
27.54%
14.64%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Since Inception Last 3 Years Last 2 Years Last 1 Year
3.5 (c) (d) Interpretation
IDFC- CEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs.12, 000 in 2009-10 (Rs.1, 000 p.m.) the
return on capital is 14.64%. After 24 months, the time period is 2008-10 (Rs. 1,000 p.m.)
the return on capital is 27.54% and from the inception time the fund providing the return
on capital is 11.59%.
Table 3.9 Fund Performance in terms of Dividend
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Last Dividends (Rs. /Unit)
22 August 2006 1.50 NAV 11.5580
28 May 2007 1.50 NAV 13.2659
22 Oct 2007 1.50 NAV 15.2703
3.5 (c) (e) Interpretation
Since inception IDFC- CEF declared the dividend three times. First time it declared on 22August @ Rs. 1.50 at the NAV 11.5580. Second time it declared on 28 May @ Rs. 1.50
at the NAV 13.2659 and last time it declared on 22 October @ Rs. 1.50 at the NAV
15.2703.
3.5 (d) IDFC Premier Equity Fund
(An open-ended fund)
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(IDFC- PEF)
3.5 (d) (a) Fund Features
Nature
Equity
Average AUM
Rs. 1,498.77 Crore
Fund manager
Mr. Kenneth Andrade
Inception Date
28 September2005
Minimum Investment Amount
Nil
SIP (Minimum Amount)
Rs. 2,000
Table 3.10 Asset Allocation
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Asset Allocation
Equity 93.55%
Debt 3.60%
Cash 2.85%
Figure 3.10 Asset Allocation
89.62%
7.28% 3.10%
Eq
De
Ca
3.5 (d) (b) Interpretation
IDFC- PEF is the aggressive fund. The investment objective of the scheme is to seek to
generate capital appreciation. In this fund, mostly part of the fund invested into equity
(90%) in small and mid- cap companies, only approx. 7% part invested into debt and only
3% part invested into cash.
Table 3.11 Fund Performance in terms of capital appreciation
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SIP Returns
Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Since Inception 1,12,000 2,16,678 28.09%
Last 3 Years 72,000 1,11,751 30.83%
Last 2 Years 48,000 77,535 54.23%
Last 1 Years 24,000 28,833 39.72%
Figure 3.11 Fund Performance in terms of capital appreciation
0
50,000
100,000
150,000
200,000
250,000
Amount (in Rs.) 112,000 72,000 48,000 24,000
Value (in Rs.) 216,678 111,751 77,535 28,833
Since Inception Last 3 Year Last 2 Years Last 1 Year
3.5 (d) (c) Interpretation
IDFC- PEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs. 24,000 in 2009-10 (Rs. 2,000 p.m.) the
amount is Rs. 28,833. After 24 months, the time period is 2008-10 (Rs. 2,000 p.m.) the
amount is Rs. 77,535 and from the inception time at the amount of Rs. 1, 12,000 the
current value of the fund is Rs. 2,16,678.
Figure 3.12 Fund performances in terms of return on capital
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2 8 . 0 93 0 . 8 3
5 4 . 2 3
3 9 . 7 2
0 . 0 0 %
1 0 . 0 0 %
2 0 . 0 0 %
3 0 . 0 0 %
4 0 . 0 0 %
5 0 . 0 0 %
6 0 . 0 0 %
S in c e In c e p tio n L a s t 3 Y e ars L a s t 2 Y ea rs L a s t 1 Y ea r
3.5 (d) (d) Interpretation
IDFC- PEF regularly provides the good capital appreciation to the investors. According
to the data amount invested by investors Rs. 24, 000 in 2009-10 (Rs.2, 000 p.m.) the
return on capital is 39.72%. After 24 months, the time period is 2008-10 (Rs. 2,000 p.m.)
the return on capital is 54.23% and from the inception time the fund providing the return
on capital is 28.09%.
Table 3.12 Fund Performance in terms of Dividend
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Last Dividends (Rs. /Unit)
28 Apr 2009 1.50 NAV 13.1031
29 March 2010 2.40 NAV 22.3426
3.5 (d) (e) Interpretation
Since inception IDFC- PEF declared the dividend two times. First time it declared on 28
April 2009 @ Rs. 1.50 at the NAV 13.1031. Second time it declared on 29 March 2010
@ Rs. 2.40 at the NAV 22.3426.
3.5 (e) IDFC Small & Midcap Equity Fund
(An open-ended fund)
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(IDFC- SMEF)
3.5 (e) (a) Fund Features
Nature
Equity
Average AUM
Rs. 705.91 Crore
Fund manager
Mr. Kenneth Andrade
Inception Date
7 march 2008
Minimum Investment Amount
Rs. 5,000
SIP (Minimum Amount)
Rs. 1,000
Table 3.13 Asset Allocation
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Equity 94.75%
Debt 2.90%
Cash 2.36%
Figure 3.13 Asset Allocation
83.92%
11.33%4.75%
Eq
De
Ca
3.5 (e) (b) Interpretation
IDFC- SMEF is the aggressive fund. The investment objective of the scheme is to seek to
generate capital appreciation. In this fund, mostly part of the fund invested into equity
(84%) in small and mid- cap companies, only approx. 11% part invested into debt andonly 5% part invested into cash.
Table 3.14 Fund Performance in terms of capital appreciation
SIP Returns
Asset Allocation
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Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Since Inception 27,000 46,811 53.75%
Last 2 Years 24,000 40,975 61.96%
Last 1Years 12,000 14,729 45.23%
Figure 3.14 Fund Performance in terms of capital appreciation
0
10,000
20,000
30,000
40,000
50,000
Amount (in Rs.) 27,000 24,000 12,000 Value (in Rs.) 46,811 40,975 14,729
Since Inception Last 2 Years Last 1 Year
3.5 (e) (c) Interpretation
IDFC- SMEF regularly provides the good capital appreciation to the investors.
According to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000
p.m.) the amount is Rs. 14,729. After 24 months, the time period is 2008-10 (Rs. 1,000
p.m.) the amount is Rs. 40,975 and from the inception time at the amount of Rs. 27,000
the current value of the fund is Rs. 46,811.
Figure 3.15 Fund performances in terms of return on capital
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5 3 . 7 5
6 1 . 9 6
4 5 . 2 3
0 . 0 0 %
1 0 . 0 0 %
2 0 . 0 0 %
3 0 . 0 0 %
4 0 . 0 0 %
5 0 . 0 0 %
6 0 . 0 0 %
7 0 . 0 0 %
S in c e In c e p t io n L a s t 2 Y e a rs L a s t 1 Y e a rs
3.5 (e) (d) Interpretation
IDFC- SMEF regularly provides the good capital appreciation to the investors.
According to the data amount invested by investors Rs. 12, 000 in 2009-10 (Rs.1, 000
p.m.) the return on capital is 45.23%. After 24 months, the time period is 2008-10 (Rs.
1,000 p.m.) the return on capital is 61.96% and from the inception time the fund
providing the return on capital is 53.75%.
Table 3.15 Fund Performance in terms of Dividend
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Last Dividends (Rs. /Unit)
29 Sep. 2009 1.50 NAV 12.3972
29 Apr. 2010 1.60 NAV 13.9863
3.5 (e) (e) Interpretation
Since inception IDFC- SMEF declared the dividend two times. First time it declared on
29 September 2009 @ Rs. 1.50 at the NAV 12.3972 and Second time it declared on 29
April 2010 @ Rs. 1.60 at the NAV 13.9863.
3.5 (f) IDFC Strategic Sector (50-50) Equity Fund
(An open-ended fund)
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IDFC- SS (50-50) - EF
3.5 (f) (a) Fund Features
Nature
Equity
Average AUM
Rs. 32.71 Crore
Fund manager
Mr. Kenneth Andrade
Inception Date
3 October 2008
Minimum Investment Amount
Rs. 5,000
SIP (Minimum Amount)
Rs. 1,000
Table 3.16 Asset Allocation
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Equity 88.41%
Debt 9.76%
Cash 1.82%
Figure 3.16 Asset Allocation
88.41%
9.76% 1.82%
Eq
De
Ca
3.5 (f) (b) Interpretation
IDFC- SS (50-50) - EF is the aggressive fund. The investment objective of the scheme is
to seek to generate capital appreciation. In this fund, mostly part of the fund invested into
equity (88%) invested amount up to 50% of the assets of the scheme in a chosen sector
(sector specific exposure) while the balance amount may be invested in companies across
market capitalization and across sectors (diversified exposure), only approx. 10% partinvested into debt and only 2% part invested into cash.
Table 3.17 Fund Performance in terms of capital appreciation
SIP Returns
Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Asset Allocation
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Since Inception 20,000 25,634 29.32%
Last 1 Years 12,000 12,929 14.79%
Figure 3.17 Fund Performance in terms of capital appreciation
0
5,000
10,000
15,000
20,000
25,000
30,000
Amount (in Rs.) 20,000 12,000
Value (in Rs.) 25,634 12,929
Since Inception Last 1 Year
3.5 (f) (c) Interpretation
IDFC- SS (50-50) - EF regularly provides the good capital appreciation to the investors.
According to the data amount invested by investors Rs. 12,000 in 2009-10 (Rs. 1,000
p.m.) the amount is Rs. 12,929 and from the inception time at the amount of Rs. 20,000
the current value of the fund is Rs. 25,634.
Figure 3.18 Fund performances in terms of return on capital
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2 9 . 3 2
1 4 . 7 9
0 . 0 0 %
5 . 0 0 %
1 0 . 0 0 %
1 5 . 0 0 %
2 0 . 0 0 %
2 5 . 0 0 %
3 0 . 0 0 %
S in c e In c e p t io n L a s t 1 Y e a rs
3.5 (f) (d) Interpretation
IDFC- SS (50-50) - EF regularly provides the good capital appreciation to the investors.
According to the data amount invested by investors Rs. 12, 000 in 2009-10 (Rs.1, 000
p.m.) the return on capital is 14.79% and from the inception time the fund providing the
return on capital is 29.32%.
3.5 (f) (e) Fund Performance in terms of Dividend
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Last Dividends (Rs. /Unit)-
NA
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3.5 (g) IDFC Tax Advantage (ELSS) Equity Fund
(An open-ended fund)
IDFC Equity Linked Saving Scheme
3.5 (g) (a) Fund Features
Nature
Equity
Average AUM
Rs. 84.51 Crore
Fund manager
Mr. Kenneth Andrade
Inception Date
26 December 2008
Minimum Investment Amount
Rs. 5,000
SIP (Minimum Amount)
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Rs. 500
Table 3.18 Asset Allocation
Equity 94.01%
Debt 5.99%
Figure 3.19 Asset Allocation
94.01%
5.99%
Eq
De
3.5 (g) (b) Interpretation
IDFC- TA (ELSS) Fund is the tax saving fund with the 3 years lock in period. The
investment objective of the scheme is to seek to generate capital appreciation with tax
rebate. In this fund, mostly part of the fund invested into equity (94%) in large, small and
mid- cap companies, only approx. 6% part invested into debt.
Asset Allocation
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Figure 3.21 Fund performances in terms of return on capital
41.88%
26.14%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
3.5 (g) (d) Interpretation
IDFC TA (ELSS) Fund regularly provides the good capital appreciation to the investors.
According to the data amount invested by investors Rs. 6, 000 in 2009-10 (Rs.500 p.m.)
the return on capital is 26.14% and from the inception time the fund provided the capital
appreciation 41.88%.
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Table 3.20 Fund Performance in terms of Dividend
Last Dividends (Rs. /Unit)
20 January 2010 2.50 NAV 14.9373
23 March 2010 1.00 NAV 14.3869
3.5 (g) (e) Interpretation
Since inception IDFC TA (ELSS) Fund declared the dividend two times. First time it
declared on 29 January 2010 @ Rs. 2.50 at the NAV 14.9373 and Second time it declared
on 23 March 2010 @ Rs. 1.00 at the NAV 14.3869.
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3.5 (h) IDFC Monthly Income Plan
(An open-ended fund)
(IDFC MIP)
3.5 (h) (a) Fund Features
Nature
Fund of fund
Average AUM
Rs. 264.48 Crore
Fund manager
Mr. Ashwin Patni
Inception Date:
25 February 2010
Minimum Investment Amount
Rs. 5,000
Dividend frequency
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Monthly and such other frequency as decided from time to time.
Table 3.21 Asset Allocation
Equity 21.67%
Debt 78%
Cash 0.33%
Figure 3.22 Asset Allocation
21.67%
78.00%
0.33%
Eq
De
Ca
3.5 (h) (b) Interpretation
IDFC- MIP is the regular income fund. The investment objective of the scheme is to seek
to generate capital appreciation with the security of principal amount. In this fund, mostly
part of the fund invested into debt (78%) in large, only approx. 22% part invested into
equity and only hardly 0.5% part invested into cash.
Asset Allocation
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Table 3.22 Fund Performance in terms of capital appreciation
One Time Returns
Period Investment (in Rs.) Value (in Rs.) Scheme Returns
Since Inception 5,000 5,179 3.58%
Figure 3.23 Fund Performance in terms of capital appreciation
4,900
4,950
5,000
5,050
5,100
5,150
5,200
Since Inception (As on 31/ 07/ 2010)
Since Inception (As on 31/ 07/
2010)
5,000 5,179
Amount (in Rs.) Value (in Rs.)
3.5 (h) (c) Interpretation
IDFC MIP regularly provides regular to the investors. According to the data amount
invested by investors Rs. 5,000 since the inception time the current value of the fund is
Rs. 5,179.
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Figure 3.24 Fund performances in terms of return on capital
3.58%
0.00%
1.00%
2.00%
3.00%
4.00%
1
Since Inception (As on 31/07/2010)
Since Inception (A
31/07/2010)
3.5 (h) (d) Interpretation
IDFC MIP regularly provides regular income to the investors. According to the data
amount invested by investors since the inception time the fund provided the capital
appreciation 3.58%
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Table 3.23 Fund Performance in terms of Dividend
Last Dividends (Rs. /Unit)
01 Jun 2010 0.0326 NAV 10.1653
05 July 2010 0.0327 NAV 10.2869
3.5 (h) (e) Interpretation
Since inception MIP declared the dividend two times. First time it declared on 01 Jun
2010 @ Rs. 0.0326 at the NAV 10.1653 and Second time it declared on 23 March 2010
@ Rs. 0.0327 at the NAV 10.2869.
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4. Results & discussions/Findings
I found the MIP is the best investment option for that investors, who is
looking to the regular income with secure his principal.
IDFC- IEF is the better for those customerss who want to invest for long
period. It is the conservative fund, which provides the good rate of return with
better capital appreciation.
IDFC- ELSS is entitled to deductions of the amount invested in Units of the
Scheme, subject to maximum of Rs. 1, 00,000 under and in terms of Section
80 C (2) (XIII) of the Income Tax Act, 1961.
IDFC- SME Fund for those customerss who want the good return with the
short period of time. It is one of the best funds in todays growing period.
IDFC- PEF is the one of the fund which has continues provide the better
return since 2005. It got the best performance award to the ICRA Online MF
Rank, LIPPER Fund Awards 2010 India, and Business world.
Now the IDFC is focusing to the IDFC- PEF and IDFC- SME Fund, for those
customerss who want to invest in equity.
During my training time I found that the customers who are looking the
better return with secure his principal the best portfolio is IDFC- MIP (30%),
IDFC- IEF (30%) and IDFC- SMEF (40%).
During my training time I found that banks are effective enough in increasing
the total assets under management (AUM) of the mutual fund industry as
compared to independent financial advisors (IFAs), brokers & other agents.
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Banks are increasingly turning their focus on mutual fund distribution due to
the scope of earning higher revenues by brokerage fee.
5. Recommendations
Indian market potential is high, investors are willing to pour money in
mutual funds, despite some temporary restraints, and other economic
factors are in favourable mode. Thus IDFC need proper management of
advisory services, more schemes, financial advisors and institutions to
cater untouched markets.
IDFC need to revise its business strategy. Investors perception is not
prioritized yet. Instead of completing targets, advisors working under
institutions should consider the requirement of investors. We need to
change pattern of selling mutual funds schemes.
IDFC should provide better after sales service, so it helps to the investors
become loyal to the company.
As the competitors provide the better incentives to the banks employs, so
they were attract to do more investments. So IDFC should try to give
better incentive to them.
IDFC is not doing advertisement of its products. So IDFC should focus
more on advertisement, so as to increase the sales and create awareness in
the public.
IDFC only focus on metro cities it should be focusing on urban and as
well as rural areas.
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LIMITATIONS OF THE STUDY
Limited resources are available to collect the information about the Mutual
fund.
Time period was limited to get the knowledge of the mutual fund in detail.
During the project knowledge was one of the constraints.
The busy schedule of the employees, so they did not enough time to
discuss the implications in detail.
Market is so much volatile, so it is difficult to forecast anything about it.
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6. BIBLIOGRAPHY
Book References
By Abhijit Dutta, Mutual Funds In India, C- 14, D.S.I.D.C. Work Centre Jhilmil
Colony, Delhi- 110095, 1st
Edition, Wisdom Publications, 2007.
By Nalini Prava Tripathy, Mutual Funds In India, Emerging Issues, A-45, Naraina
Phase-1, Delhi- 110028, 1st Edition, Excel Books Publications, 2007.
Web References
www.idfcmf.com
www.moneycontrolindia.com
http://www.nse-india.com
http://www.amfiindia.com
http://www.mutualfundsindia.com
http://www.sebi.gov.in
www.economictimes.com
www.valueresearchonline.com
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