1

A
PROJECT STUDY REPORT
On
Training Undertaken at

Titled:
“A study on mutual fund
and
awareness of Mutual Funds among insurance advisors"
Submitted in partial fulfillment for
The award degree of
Master of Business Administration

Renaissance University
Indore, (Madhya Pradesh.)

SUBMITTED BY: SUBMITTED TO:

RAJ SINGH Mr. MRIDUL DHADHICH
M.B.A. III Sem. HEAD OF DEPARTMENT, Indore

RU2103010026
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2021-2023
PREFACE

The summer training of a management studies play an important role in developing his as
well groomed professional. It allows a student to give theoretical concepts a practical in the
field of application. If gives the candidate an idea of dynamic & versatile professional world
as well as exposure to intricacies & complexities of corporate world.

Doing the summer training at NJ INDIA INVEST was great experience. An opening
experience to the concepts of marketing department helped me in understanding the
concepts that are applied by the organization since it`s inception has progressed a lot & is
walking guideline of success, As the organization is marching with the speeds towards the
horizon. This division is holding with a greater speed to keep the pace with the major players
in the market.

During the MBA course we are taught dozen of subjects which if not applied properly are a
simple waste of time. Implementing & in learning of concept of marketing in the market
provider an opportunity to practically. I got a chance to apply our theory & acceptance myself
with the functioning of marketing in a period of 6 weeks exposure to the corporate
environment. I got a learning of basics of marketing etc.

Real learning places it`s worth only when it gives sweet fruits in future. Summer training is
one way to learning at work. I enjoyed the interesting experience & every part of it.
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ACKNOWLEDGEMENT

This summer report project would not have been possible without support and assistance of
all the specialists working in this area. I would like to take this opportunity to thank each one
of the intellectual exchanges, valuable suggestions, critical reviews and technical assistance.

First of all, I am highly indebted to Mr. Balveer Arora (BM) for giving me opportunity to work
under their personal guidance. I express my sincere gratitude to other member of department
for their valuable time and suggestions, me to complete
this project successfully.

I am highly thankful to my Chancellor (RU) Mr. Swapnil Kothari and all faculty member of my
institute who extended their support and guidance throughout the period of summer training.

I am thankful to all my trainers during this training helped me whatever little way they could
during period.

I also feel to recognize the constructive feedback of my friend and moral support of my family
for without them this project would not have been possible.
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EXECUTIVE SUMMARY

The project titled “A study of mutual fund and awareness among insurance advisors” being
carried out for NJ INDIA INVESTS PVT. LTD. Today an investor is interested in tracking the
value of his investments, whether he invests directly in the market or indirectly through
Mutual Funds. This dynamic change has taken place because of a number of reasons. With
globalization and the growing competition in the investments opportunity available he would
have to make guided and rational decisions on whether he gets an acceptable return on his
investments in the funds selected by him, or if he needs to switch to another fund.
In order to achieve such an end the investor has to understand the basis of appropriate
preference measurement for the fund, and acquire the basic knowledge of the different
measures of evaluating the performance of the fund. Only then would he be in a position to
judge correctly whether his fund is performing well or not, and make the right decision.
This project is undertaken to help the investors in tracking the performance of their
investments in Mutual Funds and has been carried out with the objective of giving
performance analysis of Mutual Fund.

The methodology for carrying out the project was very simple that is through secondary data
obtained through various mediums like fact sheet of the funds, the Internet, Business
magazines, Newspaper, etc. the analysis of Mutual Funds has been done with respect to its
various parameters. I hope NJ INDIA INVEST PVT. LTD., Indore will recognize this as well
as take more references from this project report.
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TABLE OF CONTENTS

Chapter Name Page No.

Objective of study ……………………………………………………………...6

Industry profile …………………………………………………………………7

Types of mutual fund…………………………………………………………..17

Advantage of mutual fund……………………………………………………..23

Disadvantage of mutual fund…………………………………………………..24

Major mutual fund companies in India……………………………………........36

Factor affecting mutual fund……………………………………………………37

Company profile…………………………………………………………………..45

Why insurance agents should sell mutual fund………………………………59

Research Methodology………………………………………………………......64

Questionnaire…………………………………………………………………….66

Summary of finding …………………………………………………………….68

Suggestions……………………………………………………………………....74

Bibliography……………………………………………………………................76

Conclusion………………………………………………………………………...77
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INDUSTRY OVERVIEW

MUTUAL FUND

INTRODUCTION:-

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

The flow chart below describes broadly the working of a Mutual Fund.

A Mutual Fund is a body corporate registered with the Securities and Exchange Board of
India (SEBI) that pools up the money from individual/corporate investors and invests the
same on behalf of the investors/unit holders, in Equity shares, Government securities, Bonds,
Call Money Markets etc, and distributes the profits. In the other words, a Mutual Fund allows
investors to indirectly take a position in a basket of assets. Mutual Fund is a mechanism for
pooling the resources by issuing units to the investors and investing funds in securities in
accordance with objectives as disclosed in offer document. Investments in securities are
spread among a wide cross-section of industries and sectors thus the risk is reduced.
Diversification reduces the risk because all stocks may not move in the same direction in the
same proportion at same time. Investors of mutual funds are known as unit holders.
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The investors in proportion to their investments share the profits or losses. The mutual funds
normally come out with a number of schemes with different investment objectives which are
launched from time to time. A Mutual Fund is required to be registered with Securities
Exchange Board of India (SEBI) which regulates securities markets before it can collect
funds from the public.

Characteristics:

 A mutual fund actually belongs to the investors who have pooled their funds.

 A mutual fund is managed by investment professionals and other service providers,

who earn a fee for their services, from the fund.

 The pool of funds is invested in a portfolio of marketable investments. The value of the
portfolio is updated every day.

 The investor’s share in the fund is denominated by ‘units’. The value of the units
changes with change in the portfolio’s value, every day. The value of one unit of
investment is called the Net Asset Value or NAV.
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HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the Government of India and Reserve Bank. Though the growth was slow, but
it accelerated from the year 1987 when non-UTI players entered the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both
qualities wise as well as quantity wise. Before, the monopoly of the market had seen an
ending phase; the Assets Under Management (AUM) was Rs67 billion. The private sector
entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it
reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund
industry can be broadly put into four phases according to the development of the sector.
Each phase is briefly described as under.

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

First Phase: 1964-1987

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in place
of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI
had Rs.6,700 cores of assets under management.

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

In 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in
June1987followed by Canara bank Mutual Fund (Dec87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov89), Bank of India (Jun 90), Bank of Baroda Mutual
Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual
fund in December
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1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,
004 cores.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The
industry now functions under the SEBI (Mutual Fund) Regulations1996.As at the end of
January 2003; there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit
Trust of India with Rs.44541 crores of assets under management was way ahead of other
mutual funds.

Fourth Phase – Since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with
assets under management of Rs.29, 835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The second
is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI
and functions under the Mutual Fund Regulations. The graph indicates the growth of assets
over the years.
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Growth of mutual fund business in India in the four decades from 1964, when UTI was set up
is given in the table below:-

Aggregate Aggregate
investment in Crores investment in Crores
Period(Year) of Rupees Period(Year) of Rupees

1964-69 65 2001-02 94571.00

1969-74 172 2002-03 1,21,805

19774-79 402 2003-04 1,39,616

1979-84 1261 2004-05 1,49,554

1986-87 4563.68 2005-06 2,31,862

1987-88 6738.81 2006-07 3,26,388

1988-89 13455.65 2007-08 5,05,152

1989-90 19110.92 2008-09 4,17,300

1990-91 23060.45 2009-10 6,13,979

1991-92 37480.20 2010-11 5,92,250

1992-93 46988.02 2011-12 5,87,217

1993-94 61301.21 2012-13 7,01,443

1994-95 75050.21 2013-14 8,25,240

1995-96 81026.52 2014-15 10,82,757

1996-97 80539.00 2015-16

1997-98 68984.00 2016-17

1998-99 63472.00 2017-18

1999-00 107966.10 2018-19

2000-01 90587.00 2019-20

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NOTE:- Industry AUM tripled from 1.50 lac crore 2003 to 4.50 lac crore in Nov. 08.

Note: Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management of the
Specified undertaking of the Unit Trust of India has therefore been excluded from the total
assets industry as a whole from February 2003 onwards.

MUTUAL FUND STRUCTURE

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The Structure Consists

The structure of mutual funds in India is governed by the SEBI Regulations, 1996. These
regulations make it mandatory for mutual funds to have a 3-tier structure of Sponsors-
Trustee-AMC (Asset Management Company). The Sponsor is the promoter of mutual fund,
and appoints the Trustee. The Trustees are responsible to the investors in the mutual funds,
and appoint the AMC for managing the investment portfolio. The AMC is the business face of
the mutual funds, as it manages all the affairs of mutual funds. The mutual funds and AMC
have to be registered by the SEBI.

Sponsor

A sponsor is a body corporate who establishes a mutual fund. It may be one person acting
alone or together with another body corporate. Sponsor must contribute at least 40% of the
net worth of the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is
not responsible or liable for any loss or shortfall resulting from the operation of the Schemes
beyond the initial contribution made by it towards setting up of the Mutual Fund

Board of Trustee:

Mutual fund requires to have an independent board of Trustee, where two third of the
trustees should be independent person who are not associated with the sponsor in any
manner. The board of trustees of the trustee company holds the property of the mutual fund
in trust for the benefit of the unit holders. The board of trustees is responsible for protecting
the unit holder’s interest.

Asset Management Company (AMC)

The role of asset Management Company is highly significant in the mutual fund operation.
The AMC is appointed by the Trustee. They are the fund managers i.e. they invest the
investors money in various securities ( equity, debt and money market instruments) after
proper research of market conditions and the financial performance of individual companies
and specific securities in the efforts to meet or beat average market return and analysis. The
AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act
as an asset management company of the Mutual Fund. At least 50% of the directors of the
AMC are independent directors who are not associated with the Sponsor in any manner. The
AMC must have a net worth of at least 10 crores at all times. They also look after the
administrative functions of a mutual fund for which they charge management fee.
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Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the
Mutual Fund. The Registrar processes the application form, redemption requests and
dispatches account statements to the unit holders.

Custodian

Mutual fund is required by law to protect their portfolio securities by splacing them with a
custodian. Nearly all mutual funds use qualified bank custodians. Only a registered custodian
under the SEBI regulation can act as a custodian to a mutual fund. A custodian handles the
investment back office of a mutual fund.

Fee structure:-

Custodian charges range between 0.15% to 0.20% on the net value of the customer’s
holding for custodian services space is one important factor which has fixed cost element.

IMPORTANT CHARACTERISTICS OF A MUTUAL FUND

 A Mutual Fund actually belongs to the investors who have pooled their
Funds. The ownership of the mutual fund is in the hands of the Investors.

 A Mutual Fund is managed by investment professional and other

Service providers, who earns a fee for their services, from the funds.

 The pool of Funds is invested in a portfolio of marketable investments.

 The value of the portfolio is updated every day.

 The investor’s share in the fund is denominated by “units”. The value

of the units changes with change in the portfolio value, every day. The

value of one unit of investment is called net asset value (NAV).

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 The investment portfolio of the mutual fund is created according to The stated
Investment objectives of the Fund.

RESPONSIBILITY OF CUSTODIANS: -

 Receipt and delivery of securities

 Holding of securities.

 Collecting income

 Holding and processing cost

 Corporate actions etc

RATE OF RETURN ON MUTUAL FUNDS:-

An investor in mutual fund earns return from two sources:

 Income from dividend paid by the mutual fund.

 Capital gains arising out of selling the units at a price higher than the

acquisition price

Formation and regulations:

 Mutual funds are to be established in the form of trusts under the Indian trusts act and
are to be operated by separate asset management companies (AMC s)

 AMC’s shall have a minimum Net worth of Rs. 5 crores;

 AMC’s and Trustees of Mutual Funds are to be two separate legal entities and that an
AMC or its affiliate cannot act as a manager in any other fund;

 Mutual funds dealing exclusively with money market instruments are to be regulated
by the Reserve Bank Of India

 Mutual fund dealing primarily in the capital market and also partly money market
instruments are to be regulated by the Securities Exchange Board Of India (SEBI)
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 All schemes floated by Mutual funds are to be registered with SEBI

TYPES OF MUTUAL FUND

Diagram
 16

Schemes according to maturity period : -

A mutual fund scheme can be classified into open-ended scheme or close ended scheme
depending on its maturity period.

 Open ended fund/scheme:

An open-ended fund or scheme is one that is available for subscription and repurchase on a
continuous basis. These schemes not have a fixed maturity period. Investors can
conveniently buy and sell units at Net Asset Value (NAV) related prices which are on a daily
basis. The key feature of open-end schemes is liquidity.

 Close ended Fund/scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is
open for subscription only during a specified period at the time of launch of the scheme.
Investors can invest in the scheme at the time of the initial public issue and thereafter they
can buy or sell the units of the scheme on the stock exchanges where the units are listed. In
order to provide an exit route to the investors some close ended funds give an option of
selling back the units to the mutual fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the investors
i.e. either repurchase facility or through listing on stock exchanges. These mutual funds
schemes disclose NAV generally a weekly basis.

 Schemes according to investment objective:

A scheme can also be classified as growth scheme, income scheme, or balance scheme
considering its investment objective. Such schemes may be open-ended or close-ended
scheme as described earlier. Such schemes may be classified mainly as follows:

 Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term,
thereby offering higher returns at relatively lower volatility. At the same time, such
funds can yield great capital appreciation as, historically, equities have outperformed
all asset classes in the long term. Hence, investment in equity funds should be
considered for a period of at least 3-5 years. It can be further classified as:

1. Growth Fund: Aim to provide capital appreciations over the medium to long term.
These schemes normally invest a majority of their funds in equities and are willing to
bear short term decline in value for possible future appreciation. These schemes are
not for investors seeking regular income or needing their money back in the short term
 17

2. Diversified Equity Fund: Diversified equity funds are the most popular among
investors. They invest in many stocks across many sectors, and because they have
the freedom to chop and churn their portfolios as they like, diversified equity funds are
a good proxy to the stock market. If a general exposure to equities is what you want,
they are a good option. They can invest in all listed stocks, and even in unlisted
stocks. They can invest in which ever sector they like, in what ever ratio they like.

3. Equity – Linked Savings Schemes (ELSS): Equity – linked savings schemes (ELSS)
are diversified equity funds that additionally offer income tax benefits to individuals.
ELSS is one of the many section 80c instruments, along with the more popular debt
options like the PPF, NSC and infrastructure bonds. In this Section 80c grouping.
ELSS is unique. Being the only instrument to offer a total equity exposure.

4. Index Fund: An index fund is a diversified equity fund; with a difference- a fund
manager has absolutely no say in stock selection. At all times, the portfolio of an index
fund mirrors an index, both in its choice of stocks and their percentage holding. As of
March 2004, equity index funds tracked either the Sensex or the Nifty. So, an index
fund that mirrors the Sensex will invest only in the 30 Sensex stocks, which too in the
same proportion as their weight age in the index.

5. Sector Fund: Sector funds invest in stocks from only one sector, or a handful of
sectors. The objective is to capitalize on the story in the sectors, and offer investors a
window to profit from such opportunities. It’s a very narrow focus, because of which
sector funds are considered the riskiest among all equity funds.

6. Mid – Cap Fund: These are diversified funds that target companies on the fast –
growth trajectory. In the long run, share prices are driven by growth in a company’s
turnover and profits. Market players refer to them as ‘mid-sized companies’ and ‘mid-
cap stocks’ with size in this context being benchmarked to a company’s market value.
So, while a typical large cap stock would have a market capitalization of over Rs 1,000
crores, a mid-cap stock would have a market value of Rs 250-2,000 crores.
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Mutual Fund Equity schemes have delivered very attractive returns in last 5 years, giving
over 51% returns annually

 DEBT FUNDS:-These Funds invest a major portion of their corpus in debt papers.
Government authorities, private companies, banks and financial institutions are some
of the major issuers of debt papers. By investing in debt instruments, these funds
ensure low risk and provide stable income to the investors.

Debt funds are further classified as:

1. Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
GOI debt papers. These Funds carry zero Default risk but are associated with Interest
Rate risk. These schemes are safer as they invest in papers backed by Government.

2. Income Funds: Income funds aim to maximize debt returns for the medium to longer
term. Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

3. MIPs: Invests around 80% of their total corpus in debt instruments while the rest of the
portion is invested in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.

4. Short Term Plans (STPs): Meant for investors with an investment horizon of 3-6
months. These funds primarily invest in short term papers like Certificate of Deposits
 19

(CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures.

5. Liquid Funds: Also known as Money Market Schemes, These funds are meant to
provide easy liquidity and preservation of capital. These schemes invest in shortterm
instruments like Treasury Bills, inter-bank call money market etc. These funds are
meant for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months. These schemes rank low on risk-return

6. matrix and are considered to be the safest amongst all categories of mutual funds.

7. Floating Rate Funds: These income funds are more insulated from interest rate than
their conventional peers. In other words, interest rate changes, which cause the NAV
of a conventional debt fund to go up or down, have little, or no, impact on NAVs of
floating rate funds.

 HYBRID FUNDS:-

1. BALANCED FUNDS:-These funds, as the name suggests, are a mix of both equity
and debt funds. The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for investors
looking for moderate growth. They generally invest 40-60% in equity and debt
instruments. These funds are also affected because of fluctuations in shares prices in
the stock markets. However, NAVs of such funds are likely to be less volatile
compared to pure equity funds. Following are balanced funds classes:-

a. Debt-oriented funds -Investment below 65% in equities.

b. Equity-oriented funds -Invest at least 65% in equities, remaining
in debt.

2. Growth and Income Fund: Funds that combine features of growth funds 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.

3. Asset Allocation Fund: Mutual funds may invest in financial assets like equity,
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
 20

4. Outlook for specific markets. In other words, fund managers may switch over to equity
if they expect equity market to provide good returns and switch over to debt if they
expect debt market to provide better returns.

 Comparison of Investment Products

Return Safety Volatility Liquidity Convenie

nce
Equity High Low High High Moderate
Bonds Moderate High Moderate Moderat High
e
Corporate Moderate Moderate Moderate Low Low
Debenture
s
Corporate Moderate Low Low Low Moderate
FDs
Bank Low High Low High High
Deposits
PPF Moderate High Low Moderat High
e
Life Low High Low Low Moderate
Insurance
Gold Moderate High Moderate Moderat Gold
e
Real High Moderate High Low Low
Estate
Mutual High High Moderate High High
Funds
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ADVANTAGES OF MUTUAL FUND:

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

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 the regulator.
 22

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.

9. Safety

Mutual Fund industry is 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.

 DISADVANTAGE OF MUTUAL FUND

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.

3. Difficulty in Selecting a Suitable Fund 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 financial
planners in order to invest in the right fund to achieve their objectives.

4. Delay in Redemption:-

The redemption of the funds though has liquidity in 24-hours to 3 days takes formal
application as well as needs time for redemption. This becomes cumbersome for the
investors.

5. Non-availability of loans:-
 23

Mutual funds are not accepted as security against loan. The investor cannot deposit the
mutual funds against taking any kind of bank loans though they may be his assets.

RISK V/S. RETURN:

 RISK
INVOLVED IN
MUTUAL FUND :
 24

RISK INVOLVED IN MUTUAL FUND :

THE RISK-RETURN TRADE-OFF

The most important relationship to understand is the risk-return trade-off. Higher the risk
greater the returns/loss and lower the risk lesser the returns/loss. Hence it is up to you, the
investor to decide how much risk you are willing to take. In order to do this you must first be
aware of the different types of risks involved with your investment decision.

MARKET RISK:

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting
the market in general lead to this. This is true, may it be big corporations or smaller mid-sized
companies. This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works
on the concept of Rupee Cost Averaging (“RCA”) might help mitigate this risk.

CREDIT RISK:

The debt servicing ability (may it be interest payments or repayment of principal) of a

company through its cash flows determines the Credit Risk faced by you. This credit risk is
measured by independent rating agencies like CRISIL who rate companies and their paper.
 25

An ‘AAA’ rating is considered the safest whereas a ‘D’ rating is considered poor credit quality.
A well-diversified portfolio might help mitigate this risk.

INFLATION RISK:

Things you hear people talk about: “Rs. 100 today is worth more than Rs. 100 tomorrow.”
“Remember the time when a bus ride costed 50 paisa?”“Mehangai Ka Jamana Hai.”The root
cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people
make conservative investment decisions to protect their capital but end up with a sum of
money that can buy less than what the principal could at the time of the investment. This
happens when inflation grows faster than the return on your investment. A welldiversified
portfolio with some investment in equities might help mitigate this risk.

INTEREST RATE RISK:

In a free market economy interest rates are difficult if not impossible to predict. Changes in
interest rates affect the prices of bonds as well as equities. If interest rates raise the prices of
bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate
environment. A well-diversified portfolio might help mitigate this risk.

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment environment.
They can create a favorable environment for investment or vice versa.

LIQUIDITY RISK:

Liquidity risk arises when it becomes difficult to sell the securities that one has purchased.
Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as
internal risk controls that lean towards purchase of liquid securities.
 26

MUTUAL FUND INVESTING STRATEGIES:

1. Systematic Investment Plans (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
the Mutual fund scheme the investor has chosen, an investor opting for SIP in xyz Mutual
Fund scheme will need to invest a certain sum on money every month/quarter/half-year in
the scheme.

2. Systematic Withdrawal Plans (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 his expenses

3. Systematic Transfer Plans (STPs)

They allow the investor 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 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 investments actively to achieve his objectives.
Many funds do not even charge any transaction fees for his service – an added advantage
for the active investor.
 27

FACTORS AFFECTING MUTUAL FUND

1. Governmental Influences

Mutual fund business is a highly regulated business throughout the world as it seeks to
ensure that quality and fairly priced schemes are available. Governmental intervention thus in
mutual fund market usually is most needed to ensure that insurers are reliable. And in the
developing countries the additional goal may be promotion of domestic mutual fund industry
and ensuring the national mutual fund industry contributes to overall economic development.
In a non technical sense mutual fund is purchased in a good faith so the duty of government
intervention in mutual fund industry is to ensure that this principle of mutual fund is never
defeated. The ideology of government plays an important role in mutual fund industry also.
For example in the past during 1991, the P .V Narsimha Rao government strongly believed in
liberalization also liberalized the mutual fund sector which helped to allow private players in
the industry from 1993 and enhancing joint ventures with foreign companies. The present
government with more focuses on foreign direct investments has declared to favour the rise
FDI in mutual fund to 49% which further enhances competition in the industry.

2. Taxation Policy
Social equity being one of the motives behind tax collections, government gives certain
exemptions from such levying. One such exemption is deduction incurred by taxpayers
towards investment in mutual fund coverage. Similarly, capital invested in infrastructure
bonds etc is offered with certain concession under tax laws. The central idea behind such
exemptions is that the capitals so allocated by individuals reduce the ultimate burden on the
public infrastructure or helps in creating such infrastructural facilities. The income tax rules
related to the mutual fund transactions can be classified under:

[A] Exemptions available to companies or businesses

[B] Exemptions available to insured individuals

[A] Exemptions available to companies

Expenses deductible from commission earned by distributor, banker, national
distributor.
Tax concessions under risk management practices of an enterprise
In growth option equity schemes there no long term capital gain by company.
In dividend option equity schemes there no tax.
Return received by charitable trust is total exempted from tax.
Else schemes give to advantage of tax saving, growth potential and return.
 28

[B] Tax rules governing investment by individuals

Deduction in respect of ELSS schemes (sec 80C):

Investment in this fund would enable you to avail the benefits under clause (xiii) of a section
80C of the Income Tax Act investment made in the schemes up to 1 lakh by the eligible
investor for deduction under this section of the Act.
Since it will be an income deduction an investment of Rs 1 lakh in this fund can save off Rs.
33600 from your tax payable liability (assuming you are in the highest tax bracket) Investor
will receive tax free dividend in above case. Investor will also receive tax free dividend by
investing equity schemes in dividend option Investors also receive tax free return by investing
equity schemes in growth option for long term capital gain.

[C] Tax Planning

An individual can think of health ELSS schemes purchase as a tool of tax planning exercise.
For example people who are marginally affected by tax liability can be as well purchase a
ELSS fund get benefits of Rs. 33600 from tax. In this way tax burden is become less by
purchasing ELSS fund. Thus tax law offer benefit to individuals/companies by way of
exemptions/deductions of expenditure incurred towards purchase of mutual fund various
schemes coverage from total taxable income.

3. Foreign Trade Regulations:-

With the vast potential for mutual fund in India due its large population in the country many
foreign companies are ready to enter into the Indian market. But companies can be permitted
in India through joint ventures with an Indian partner as well as come separately and the
foreign equity shall be restricted to only 25%. Another statement also tells that Indian
subsidiaries of foreign companies shall not be allowed to participate in banking sector unless
they entered in to joint ventures with the Indian partners. But at present the mutual fund
regulator is in favor of hike in FDI cap from 25% to 49%, and is finalizing a report that will be
submitted to the government for a comprehensive legislation for the industry. The security
exchange board of India and association of mutual fund India have been advocating a hike in
FDI limit for mutual fund companies so that the foreign partners can infuse additional funds in
these companies to sustain their growth. The government will need to amend the separate
mutual fund Act for FDI capital as well as domestic company as this is the statutory provision
unlike sectors like civil aviation and telecom, which have come through notification.

4. National Income:-
The relative importance of the mutual fund Market within a country will also be dependent
upon economic development. With greater rates of economic growth, consumption of
investment should increase as a result of increased income, and an increased stock of
assets requiring mutual fund. Furthermore, the development of mutual fund is likely to
facilitate greater economic growth, implying that economic growth may be endogenous.
Consistent with these arguments, studies find that the level of financial development and
economic development are positively related to the level of mutual fund across emerging
markets.
 29

5. Consumptions and Savings:-

The gross capital formation of any country is important for indication of its growth in the future
years. It is quite necessary to set up the rate of capital formation so that a large stock of
machines, tools and equipments are accumulated in a country. Experience of development in
other countries suggests that a high rate of capital formation was achieved to trigger rapid
rate of economic growth. With the hike in foreign capital coming to India the rate of capital
formation is becoming boom to insurers, which has given them opportunities. It is heartening
to them to note that latest savings rate of 28% is highest till now and with the growth rate
near to 8% is bringing a pool of buyer’s purchasing power. This directly influences the
demand for mutual fund products.

6. Employment:-

The effect of employment on mutual fund industry is as direct as that on economic

development of any country. With the rising levels of employment the effect on mutual fund
industry is positive because employment adds to the insured properties and assets from
every prospective be it due to organized or unorganized.

7. Inflation

The midterm policy review the strong macroeconomic indicators and RBI has revised its GDP
growth estimates to the upper limit of the earlier projection range 8% inflation (WPI) has been
steadily moving up in recent times and RBI has highlighted that primary articles prices have
been on of the key contributors. However one needs to keep in mind that
recent increase in global oil prices.

8. Money supply

The central banks has indicated that credit growth and money supply number are likely to be
above its prosecution for the current fiscal year, the statement “to consider promptly all
possible measures as appropriate to the evolving global and domestics situation “is indicative
of phased increase in FII limits for gilt investment could help in depending the securities
market and is part of the road map towards fuller convertibility.

9. Interest

Interest is major factor for investment when a person find less return from investment tool
than people move towards the higher returns tool of investment.

10. Risk factor

All investments in Mutual Fund and securities are subject to market risks and the NAV of the
fund may go up or down depending on the factors and forces affecting the security market.
There can be no assurance that the fund’s objective will be achieved. Past performance of
the sponsors/Mutual fund/schemes/AMC is not necessarily indicative of the future results.
 30

The name of the schemes does not in any manner indicate their quality, their future
prospects or returns.
The specific risk would be credit, market, illiquidity, judgmental error, interest rate, swaps and
forward rates.

11. Demographic environment

The demographic environment significantly affects the demand for the mutual fund industry.
Factors like the average age of the population, levels of education, household structures
income distribution, life style and the extent of industrialization as well as urbanization terribly
influences the demand of mutual fund schemes In India the average age of the population is
at an increasing trend following the improved medical technology and better awareness of
health care requirements. As a result, the risk of investment death is decreasing while
connectivity is increasing. Simultaneously the demand for pension funds and income fund is
expected to grow. For example at the time of independence the average age of dying for
Indians was 45. Presently it has increased to 65 following better healthcare, improvements in
medical science and more health consciousness among the common man. By 2010 it is
expected to rise to 75. Hence risk profile is also changing. Earlier people are thinking about
safely but at present people thinking about capital growth.

12. Social Factors

The social environment covers the customs, habits, level of education, tastes and standard of
living of people in the society. Today’s social environment is greatly influenced to a major
extent by the changes in technological aspects. With the rapid progress in technology and
economic liberalization, the physical boundaries are gradually vanishing. As a result, the
social life of the people and their views towards risk and uncertainty of life and health are
gradually changing.
These factors of social life are affecting human motivations and emotions related to the
physical and mental incapacities, loss of health and death. In general there are extremes
apprehensions of one’s death, though it is certain. The perception of an individual toward risk
and capital growth depends on the social culture and religious belief. In the urbanized area
people does think about investment and capital growth. These beliefs ultimately influence the
buying behaviour of a consumer.

13. Education

Education is major factor of demand for mutual fund product. if the education levels is higher
than the people know the benefits of mutual fund the use mutual fund as investment tool and
also take rise capital growth.

MUTUAL FUND PLAYERS

 31

The Indian mutual fund industry is mainly divided into three kinds of categories. These
categories include public sector players, nationalized banks and private sector and foreign
players.

UTI Mutual Fund was one of the leading Mutual Fund companies in India till June 2010 with a
corpus of more than Rs. 80217.18 Crore and it is the public sector mutual fund. Bank of
Baroda, Punjab National Bank, Can Bank and SBI are the major nationalized banks mutual
fund. At present mutual fund industry is mainly dominated by private and foreign sector
players which include major players like Prudential ICICI Mutual Fund, HDFC Mutual Fund,
Reliance Mutual Fund etc. are private sector mutual funds players while Franklin Templeton
etc. are major foreign mutual fund players. At present there are more than 38 players
operating in Indian.

Latest Average Asset Under Management for all Mutual Fund houses, increase or decrease in
corpus, sales & redemption figures..

Amount in \ Crores
No. of
Mutual Fund Name Asset Under Management
Schemes*
Net inc/dec
As on Corpus As on Corpus
in corpus
AIG Global Investment 44 Jun 30, 1,014.66 May 31, 1,030.86 -16.202
Group Mutual Fund 2010 2010
60 Jun 30, 2,999.19 May 31, 4,715.89 -1716.705
Axis Mutual Fund
2010 2010
Baroda Pioneer Mutual 31 Jun 30, 3,075.20 May 31, 4,759.53 -1684.337
Fund 2010 2010
17 Jun 30, 2,250.37 May 31, 2,263.15 -12.779
Benchmark Mutual Fund
2010 2010
45 Jun 30, 692.74 May 31, 724.17 -31.426
Bharti AXA Mutual Fund
2010 2010
217 Jun 30, 63,111.55 May 31, 73,828.03 -10716.484
Birla Sun Life Mutual Fund
2010 2010
Canara Robeco Mutual 89 Jun 30, 8,533.44 May 31, 10,661.95 -2128.507
Fund 2010 2010
116 Jun 30, 9,016.87 May 31, 10,102.46 -1085.587
Deutsche Mutual Fund
2010 2010
98 Jun 30, 21,415.75 May 31, 21,884.95 -469.201
DSP Blackrock Mutual Fund
2010 2010
41 Jun 30, 282.76 May 31, 261.09 21.673
Edelweiss Mutual Fund
2010 2010
30 Jun 30, 195.50 May 31, 198.23 -2.729
Escorts Mutual Fund
2010 2010
61 Jun 30, 7,878.87 May 31, 7,457.84 421.031
Fidelity Mutual Fund
2010 2010
Fortis Mutual Fund 111 Jun 30, 5,162.39 May 31, 7,537.44 -2375.053
 32

2010 2010
Franklin Templeton Mutual 172 Jun 30, 34,563.92 May 31, 35,774.79 -1210.867
Fund 2010 2010
173 Jun 30, 86,648.10 May 31, 101,863.31 -15215.214
HDFC Mutual Fund
2010 2010
84 Jun 30, 5,353.19 May 31, 5,851.11 -497.918
HSBC Mutual Fund
2010 2010
ICICI Prudential Mutual 328 Jun 30, 73,795.43 May 31, 87,709.81 -13914.385
Fund 2010 2010

6 Jun 30, 28.18 - - -

IDBI Mutual Fund
2010
173 Jun 30, 20,965.76 May 31, 26,614.77 -5649.013
IDFC Mutual Fund
2010 2010
92 Jun 30, 1,495.47 May 31, 1,645.42 -149.951
ING Mutual Fund
2010 2010
90 Jun 30, 5,657.99 May 31, 8,950.43 -3292.441
JM Financial Mutual Fund
2010 2010
31 Jun 30, 4,030.79 May 31, 3,784.98 245.816
JP Morgan Mutual Fund
2010 2010
Kotak Mahindra Mutual 123 Jun 30, 28,540.87 May 31, 40,657.52 -12116.648
Fund 2010 2010
66 Jun 30, 3,693.42 May 31, 5,170.69 -1477.279
L&T Mutual Fund
2010 2010
62 Jun 30, 30,049.38 May 31, 38,962.82 -8913.437
LIC Mutual Fund
2010 2010
37 Jun 30, 252.13 May 31, 236.50 15.633
Mirae Asset Mutual Fund
2010 2010
Morgan Stanley Mutual 11 Jun 30, 2,256.80 May 31, 2,253.67 3.128
Fund 2010 2010
20 Jun 30, 921.26 May 31, 823.38 97.876
Peerless Mutual Fund
2010 2010
84 Jun 30, 6,827.97 May 31, 7,647.76 -819.785
PRINCIPAL Mutual Fund
2010 2010
11 Jun 30, 101.04 May 31, 101.72 -0.685
Quantum Mutual Fund
2010 2010
193 Jun 30, 101,320.15 May 31, 118,973.14 -17652.99
Reliance Mutual Fund
2010 2010
92 Jun 30, 10,918.47 May 31, 15,464.10 -4545.625
Religare Mutual Fund
2010 2010
44 Jun 30, 741.62 May 31, 765.23 -23.614
Sahara Mutual Fund
2010 2010
116 Jun 30, 33,733.39 May 31, 36,235.76 -2502.377
SBI Mutual Fund
2010 2010
11 Jun 30, 273.08 May 31, 323.71 -50.627
Shinsei Mutual Fund
2010 2010
Sundaram BNP Paribas 138 Jun 30, 12,717.49 May 31, 13,976.11 -1258.621
 33

Mutual Fund 2010 2010

169 Jun 30, 18,464.10 May 31, 22,673.43 -4209.33
Tata Mutual Fund
2010 2010
49 Jun 30, 2,438.65 May 31, 3,056.16 -617.506
Taurus Mutual Fund
2010 2010
212 Jun 30, 64,445.65 May 31, 78,617.15 -14171.505
UTI Mutual Fund
2010 2010

Major Mutual Fund Companies in India:-

Birla Sun Life Mutual Fund:-

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial.
Sun Life Financial is a global organization evolved in 1871 and is being represented in
Canada, USA, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun
Life Mutual Fund follows a conservative long-term approach to investment. Recently it
crossed AUM of Rs. 62,367crores.

BOB Mutual Fund:-

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the
sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of
BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the
custodian.

HDFC Mutual Fund:-

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing
Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund:-

 34

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets
(India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the
trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund:-

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee
Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management
(India) Pct. Ltd. was incorporated on April 6, 1998

ICICI Prudential Mutual Fund:-

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest
life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of
October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company
formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management
Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund:-

Sahara Mutual Fund was setup on July 18, 1996 with Sahara India Financial Corporation Ltd.
as the sponsor. Sahara Asset Management Company Private Limited incorporated on
August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC
stands at Rs. 25.8 crores.

SBI Mutual fund:-

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch off fund,
the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest
Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which
15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has
more than Rs. 37417 Crores as AUM. Now it has an investor base of over 8 Lac spread over
18 schemes.

Tata Mutual Fund:-

 35

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsores for Tata
Mutual Fund are Tata Sons Ltd. and Tata Investment Corporation Ltd. The investment
manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited.
Tata Asset Management Limited's is one of the fastest in the country with more than Rs.
21,935 crores (as on April 30, 20) of AUM.

Kotak Mahindra Mutual fund:-

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is
presently having more than 1,99m,818 investors in its various schemes. KMAMC started its
operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to
investors with varying risk - return profiles. It was the first company to launch dedicated gilt
Scheme investing only in government securities.

UTI Mutual Fund:-

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the
UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI Asset
Management Company presently manages a corpus of over Rs.20000 Crore. The
sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB),
State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI
Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds,
Equity Funds and Balance funds.

Reliance Mutual Fund:-

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The
sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the
Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was
changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various
schemes under which units are issued to the Public with a view to contribute to the capital
market and to provide investors the opportunities to make investments in diversified
securities.

Franklin Templeton India Mutual Funds:-

 36

The group, Frnaklin Templeton Investments is a California (USA) based company with a
global AUM of 34003 crores (as of June 30). It is one of the largest financial services groups
in the world. Investors can buy or sell the Mutual Fund through their financial advisor or
through mail or through their website. They have Open end Diversified Equity schemes,
Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving
schemes, Open end Income and Liquid schemes, closed end Income schemes and Open
end fund of funds schemes to offer.

Morgan Stanley mutual

Morgan Stanley is a worldwide financial services company and its leading in the market in
securities, investmenty management and credit services. Morgan Stanley Investment
Management (MISM) was established in the year 1975. It provides customized asset
management services and products to governments, corporations, pension funds and non-
profit organisations. Its services are also extended to high net worth individuals and retail
investors. In India it is known as Morgan Stanley Investment Management Private Limited
(MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end
diversified equity scheme serving the needs of Indian retail investors focussing on a long-
term capital appreciation

Escorts mutual Fund:-

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its
sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was
incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Benchmark Mutual Funds:-

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services
Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee
Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark
Asset Management company Pvt. Ltd. is the AMC.

Canara Robeco Mutual Funds:-

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the
sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is
the AMC. The corporate office of the AMC is in Mumbai.
 37

LIC Mutual Funds:-

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed
Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in
accordance with the provisions of the Indian Trust Act, 1882. . The Company started its
business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima
Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual
Fund.

REGULATORY MEASURES BY SEBI:

Like Banking & Insurance up to the nineties of the last century, Mutual Fund industry in India
was set up and functioned exclusively in the state monopoly represented by the Unit Trust of
India. This monopoly was diluted in the eighties by allowing nationalized banks and
insurance companies (LIC & GIC) to set up their institutions under the Indian Trusts Act to
transact mutual fund business, allowing the Indian investor the option to choose between
different service providers. Unit Trust was a statutory corporation governed by its own
incorporating act. There was no separate regulatory authority up to the time SEBI was made
a statutory authority in 1992. but it was only in the year 1993, when a government took a
policy decision to deregulate Indian Economy from government control and to transform it
market oriented, that the industry was opened to competition from private and foreign
players. By the year 2000 there came to be established in the market 34 mutual funds
offerings a variety of about 550 schemes.

SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) REGULATIONS,

1996:-

The fast growing industry is regulated by Securities and Exchange Board of India (SEBI)
since inception of SEBI as a statutory body. SEBI initially formulated “SECURITIES AND
EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) REGULATIONS, 1993” providing
detailed procedure for establishment, registration, constitution, management of trustees,
asset management company, about schemes/products to be designed, about investment of
funds collected, general obligation of MFs, about inspection, audit etc. based on experience
 38

gained and feedback received from the market SEBI revised the guidelines of 1993 and
issued fresh guidelines in 1996 titled “SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996”. The said regulations as amended from time to
time are in force even today.

The SEBI mutual fund regulations contain ten chapters and twelve schedules. Chaptere
containing material subjects relating to regulation and conduct of business by Mutual Funds.

REGISTRATION OF MUTUAL FUND:

Application for registration

1. An application for registration of a mutual fund shall be made to the Board in Form A by
the sponsor.

Application fee to accompany the application

2. Every application for registration under regulation 3 shall be accompanied by

nonrefundable application fee as specified in the Second Schedule.

Application to conform to the requirements

3. An application which is not complete in all respects shall be liable to be rejected:

Provided that, before rejecting any such application, the applicant shall be given an
opportunity to complete such formalities within such time as may be specified by the Board.

Furnishing information

4. The Board may require the sponsor to furnish such further information or clarification as
may be required by it.

Eligibility criteria

5. For the purpose of grant of a certificate of registration, the applicant has to fulfill the
following, namely:-

(a) The sponsor should have a sound track record and general reputation of fairness and
integrity in all his business transactions.
 39

Explanation: For the purposes of this clause “sound track record” shall mean the sponsor
should,—

(i) Be carrying on business in financial services for a period of not less than five years; and

(ii) The net worth is positive in all the immediately preceding five years; and

(iii) The net worth in the immediately preceding year is more than the capital contribution of
the sponsor in the asset management company; and

(iv) the sponsor has profits after providing for depreciation, interest and tax in three out of the
immediately preceding five years, including the fifth year;

(b) In the case of an existing mutual fund, such fund is in the form of a trust and the trust
deed has been approved by the Board;

(c) The sponsor has contributed or contributes at least 40% to the net worth of the asset
management company:

Provided that any person who holds 40% or more of the net worth of an asset management
company shall be deemed to be a sponsor and will be required to fulfill the eligibility criteria
specified in these regulations;

(d) The sponsor or any of its directors or the principal officer to be employed by the mutual
fund should not have been guilty of fraud or has not been convicted of an offence involving
moral turpitude or has not been found guilty of any economic offence.

(e) Appointment of trustees to act as trustees for the mutual fund in accordance with the
provisions of the regulations;

(f) Appointment of asset management company to manage the mutual fund and operate the
scheme of such funds in accordance with the provisions of these regulations;

(g) Appointment of a custodian in order to keep custody of the securities 10[or gold and gold
related instruments and carry out the custodian activities as may be authorized by the
trustees.

Consideration of application
 40

8. The Board, may on receipt of all information decide the application.

Grant of Certificate of Registration

9. The Board may register the mutual fund and grant a certificate in Form B on the applicant
paying the registration fee as specified in Second Schedule.

Terms and conditions of registration

10. The registration granted to a mutual fund under regulation 9, shall be subject to the
following terms and conditions:

(a) The trustees, the sponsor, the asset management company and the custodian shall
comply with the provisions of these regulations;

(b) The mutual fund shall forthwith inform the Board, if any information or particulars
previously submitted to the Board was misleading or false in any material respect;

(c) The mutual fund shall forthwith inform the Board, of any material change in the
information or particulars previously furnished, which have a bearing on the registration
granted by it;

(d) Payment of fees as specified in the regulations and the Second Schedule.

Rejection of application

11. Where the sponsor does not satisfy the eligibility criteria mentioned in regulation 7, the
Board may reject the application and inform the applicant of the same.

Payment of annual service fee:

12. A mutual fund shall pay before the 15th April each year a service fee as specified in the
Second Schedule for every financial year from the year following the year of registration:

Provided that the Board may, on being satisfied with the reasons for the delay permit the
mutual fund to pay the service fee at any time before the expiry of two months from the
commencement of the financial year to which such fee relates.
 41

COMPANY OVERVIEW

1. INTRODUCTION:-
“Success is a journey, not a destination.” If we look for examples to prove this quote then we
can find many but there is none like that of NJ India Invest Pvt. Ltd. Back in the year 1994,
two people created history by establishing NJ India Invest Pvt. Ltd. leading advisors and
distributors of financial products and services in India.

NJ has over a decade of rich exposure in financial investments space and portfolio advisory
services. From a humble beginning, NJ over the years has evolved out to be a professionally
managed, quality conscious and customer focussed financial / investment advisory &
distribution firm.

NJ prides in being a professionally managed, quality focused and customer

centric organisation. The strength of NJ lies in the strong domain knowledge in investment
consultancy and the delivery of sustainable value to clients with support from cutting-edge
technology platform, developed in-house by NJ.

At NJ we believe in …

 having single window, multiple solutions that are integrated for simplicity and
sapience
 making innovations, accessions, value-additions, a constant process
 providing customers with solutions for tomorrow which will keep them above the curve,
today

NJ has over INR 1,31,752 Cr.* of mutual fund assets under advice with a wide presence in
over 120 locations* in 25 states* and 1700+ employees in India. The numbers are reflections
of the trust, commitment and value that NJ shares with its clients
 42

NJ Wealth Advisors, a division of NJ, focuses on providing financial planning and portfolio
advisory services to premium clients of high net-worth. At NJ Wealth Advisors, we have
developed processes that focus on providing the best in terms of the advice and the ongoing
management of your portfolio and financial plans.

At NJ, our experience, knowledge and understanding enables us to provide you with the
expected value, in an enhanced way. As a leading player in the industry, we continue to
successfully meet the expectations of our clients, through meaningful and comprehensive
solutions offered by NJ Wealth Advisors

2. VISION & MISSION OF NJ India invest:-

 Vision

To be the leader in our field of business through,

 Total Customer Satisfaction

 Commitment to Excellence
 Determination to Succeed with strict adherence to compliance
 Successful Wealth Creation of our Customers

 Mission

Ensure creation of the desired value for our customers, employees and associates, through
constant improvement, innovation and commitment to service & quality. To provide solutions
which meet expectations and maintain high professional & ethical standards along with the
adherence to the service commitments.

3. PHILOSOPHY:-
At NJ our Service and Investing philosophy inspire and shape the thoughts, beliefs, attitude,
actions and decisions of our employees. If NJ would resemble a body, our philosophy would
be our spirit which drives our body.
Service Philosophy:

Our primary measure of success is customer satisfaction …

We are committed to provide our customers with continuous, long-term improvements and
value-additions to meet the needs in an exceptional way. In our efforts to consistently deliver
the best service possible to our customers, all employees of NJ will make every effort to:

 think of the customer first, take responsibility, and make prompt service to the
customer a priority
 43

 deliver upon the commitments & promises made on time

 anticipate, visualize, understand, meet, exceed our customer’s needs

 Bring energy, passion & excellence in everything we do.

 be honest and ethical, in action & attitude, and keep the customer’s interest supreme

 Strengthen customer relationships by providing service in a thoughtful & proactive

manner and meet the expectations, effectively.

Investing Philosophy:

We aim to provide Need-based solutions for long-term wealth creation

We aim to provide all customers of NJ, directly or indirectly, with true, unbiased, need-based
solutions and advice that best meets their stated & un-stated needs. In our efforts to provide
quality financial & investment advice, we believe that

 Clients want need-based solutions, which fits them

 Long-term wealth creation is simple and straight

 Asset-Allocation is the ideal & the best way for long-term wealth creation

 Educating and disclosing all the important facets which the customer needs to be
aware of, is important

 The solutions must be unbiased, feasible, practical, executable, measurable and

flexible
 Constant monitoring and proper after-sales service is critical to complete the ongoing
process.

At NJ our aim is to earn the trust and respect of the employees, customers, partners,
regulators, industry members and the community at large by following our service and
investing philosophy with commitment and without exceptions.

4. MANAGEMENT:-

The management at NJ brings together a team of people with wide experience and
knowledge in the financial services domain. The management provides direction and
guidance to the whole organization. The management has strong visions for NJ as a globally
respected company providing comprehensive services in financial sector.
 44

The Customer First philosophy in deeply ingrained in the management at NJ. The aim of the
management is to bring the best to the customers in terms of -

 Range of products and services offered

 Quality Customer Service

All the key members of the organization put in great focus on the processes & systems under
the diverse functions of business. The management also focuses on utilizing technology as
the key enabler for all the activities and to leverage the technology for enhancing overall
customer experience.

The key members of the management are:

Mr. Neeraj Choksi Jt. Managing Director

Mr. Jignesh Desai Jt. Managing Director

Key Sales Team:

Mr. Misbah Baxamusa National Head

Mr. Naveen Rathod V.P. (Sales)

Mr. Kulbhushan Nandwani A.V.P. (Marketing)

Mr. Prashant Kakkad A.V.P. (Sales)

Key Executive Team :

Mr. Shirish Patel Information Technology

Mr. Abhishek Dubey Business Process

Mr. Vinayak Rajput Operations

Mr. Dhaval Desai Human Resources

Mr. Col. Dixit Administration

Mr. Tejas Soni Finance

 45

Mr. Viral Shah Research

Mr. Rakesh Tokarkar Compliance

5. People & culture:-

People:

Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can
witness the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely
throughout the organization. At NJ can also experience the creativity, one-to-one
responsiveness, collaborative approach and passion for delivering value.

At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent
due to the education-centric approach and the experience in handling different
clients groups across diverse product profiles.

NJ understands that the people are the most important assets of the company and it is
not the company that grows but the people. NJ hence undertakes rigorous training
and educational activities for enhancing the entire team at NJ . NJ also believes in the
‘Learning through Responsibility’ concept for its employees.

For people at NJ success is not a new word, but is a regular stepping - stone to
realising the one vision that everyone shares.

Culture

At NJ we believe in transforming the lives of our customers. We exist to create a

difference a change towards a better life. The culture at NJ reflects this
responsibility, this dream of transforming lives. And we at NJ are always
excited and enthused in doing so.

We believe in keeping ‘You First’, providing you with products and services that meet your
stated and unstated needs. Client satisfaction and client service is the Mantra we constantly
recite. This service oriented philosophy runs throughout the organization, from top to
bottom.
 46

Employees are given ample freedom in their work. The objective is to keep an open, healthy
environment with ample scope for enterprise, improvement, innovations and out-of-the box
solutions

Our efforts are constantly engaged in improving our existing services, offering new
and innovative solutions that go beyond your expectations. This focus has made us
one of the most respected and preferred service providers, especially in the mutual
fund industry.

6. SERVICE STANDARDS:-

Service in words, service in action

Service is the key to unlocking customer satisfaction, which again is key for
sustainability Business. At NJ we understand this very well. NJ has set strict
processes in place to delivered service to customers. AT NJ strict quality service
standards are set and a well defined established and followed religiously by our
quality customer service team.

Performance evaluated on a frequent basis and glitches are iron out.

But quality service also involves quality people in addition to processes. NJ gives
Significant the proper training and development of the people involved in the service
delivery chain.

Further Welth:

Have well-defined “Privacy Policy” to keep clients information confidential & internal
done on the same at regular intervals.

Receive various statistics which are analyzed on an ongoing basis to improve the
standards.

We are committed to improve and enhance our services and undertake new
Services initiative and other services differentiate us with other services providers in
the industry.
 47

Our service commitment…..

The service commitments are to guide the actions of the people at NJ. Clearly stated
Customers can freely communicate any such action /events wherein they feel that any
Of the commitments have been breached/ compromised . At NJ we desire to honors Our
commitments all points of the time and to all our customers without any bias.

 To provide customer-focused need-based valued services.

 To provide reliable, accurate and timely information.

 To maintain all records in privacy.

 To optimize services/benefits at least justifiable cost.

 To develop and grow the customers business.

 To provide constructive after sales service.

 To honors our service commitments.

As NJ Wealth Advisor’s Global Private Client, you get comprehensive set of

services that ensure you stay informed, insightful, in command, of your investments at all
times.

7. PRODUCTS:-

Life Vista

Life is counted not in years, but in moments. Moments of truth, joy, achievement and
satisfaction of peace, tranquillity, and freedom. At NJ, we bring such moments to life.

How we can help you?

We will do a detailed study of your goals and objectives in life and would help you by
devising a comprehensive plan to help you achieve them. We would also regularly monitor
your plans to make sure that you are always on track to achieve your goals.
Asset Vista

Wealth is not an end. Neither is it a beginning. Wealth is a process, a journey. A journey of

power, achievement and responsibility.
At NJ we ensure that this journey continues and grows.
 48

How we can help you?

We will seek to manage and monitor your portfolio as per your objectives and your risk
profile. We would manage your portfolio the Asset Allocation way which is the most effective
& ideal way to manage investments. You would also have access to consolidated portfolio
reports that enable you to see all your investments into multiple avenues at a single place.

8. SERVICES PROVIDED TO CLIENT:-

As NJ Wealth Advisor’s Global Private Client, you get comprehensive set of services that
ensure you stay informed, insightful, in command, of your investments at all times.

Comprehensive Financial Planning:-

We all have many responsibilities and goals in our lives. We have dreams and aspirations for
a better future. But quite often we are not sure as to how we will fulfil these goals and
aspirations. Life changes over time. We may never be sure what today holds for us
tomorrow. What if something goes wrong? How do we make sure that we get what we wish?

A comprehensive Financial Plan is what you need. At NJ Wealth Advisors we offer you with
Comprehensive Financial Planning solutions which would involve …

A detailed study of your goals

Preparation of a comprehensive Financial Plan
 49

Monitoring of the Financial Plan on an on-going basis

At NJ Wealth Advisors we offer you with comprehensive Financial Planning Services under
the product – Life Vista.

Quality Portfolio Advisory:-

Making money is easy. Managing money is difficult. And managing money in today’s
complex financial markets with multiple products on an ongoing basis becomes even more
difficult.

As investors we often may feel the lack of time and energy to undertake monitoring and
managing of our investments in multiple avenues. This requires both dedicated efforts and
skills in portfolio management.

At NJ Wealth Advisors we realise the need for quality, unbiased portfolio advisory services.
At NJ we would aim to manage your portfolio with a superior, time tested and much effective
way of Asset Allocation keeping in mind your risk profile.

At NJ Wealth Advisors we offer you with quality Portfolio Advisory Services under the product
– Asset Vista.

Consolidated Reporting:-

Quality online Wealth Account:

As a premium client you would have access to one of the best online investment accounts
that offer comprehensive reports, many of which are unique in nature and give valuable
insights on our investments

Our online Wealth Account covers almost all the investment avenues that you may have:

Mutual Funds – All AMCs, All Schemes

Direct Equity

Life Insurance

Physical Assets – Gold and Property

Private Equity – Business

Debt Products

 Bank Deposits and Company Deposits

 RBI / Infrastructure Bonds
 Postal Savings – KVP, MIS, NSC
 Debentures
 Small Savings – PPF, NSS
 50

You would have access to Consolidated Net Asset Reports which would give you a single
view of all your investments into different avenues as given above.

Further, within each of the Asset class we have many more reports and utilities. Some of the
reports covered are …

Consolidated:

Consolidated Asset Allocation, Consolidated Net Asset, Interest Income, Profit & Loss

Mutual Funds:

Valuation, Transaction, Profit & Loss, Performance, Portfolio reports like - AMC / Sector /
Equity / Credit / Debt Exposure, Weighted Average Maturity, Dividend history, etc

Direct Equity:

Demat accounts, Transaction, Valuation, Profit & Loss

Life Insurance:

Policy Report, Premium Reminder, Cash Flow

Debt:

Transaction, Interest Income, Maturity reports for different Asset

Dedicated team:-

At NJ Wealth Advisors, we work in a team concept to provide quality, effective and timely
service to our clients. The team is designed keeping you at the beginning or the end of the
flow as the originator and the end receiver of any request or service.

The team handling you consists of the Relationship Manager and the Account
Manager who would be in direct touch with you. This would be supported by the
Centralised Research Team, the Chief Portfolio Manager and the Service Team. All the
important investment decisions and/or plans recommended to you are actually prepared
and /or approved by the Chief Portfolio Manager with inputs from the Research Team.
 51

The structure ensures that all the Plans and recommendations that you receive are
unbiased, based on true research & detailed study, and suited to your needs.

Quality Customer Service

NJ realizes the true importance of quality customer service. The service commitments are to
guide the actions taken at NJ. Clearly stated, customers can freely communicate any such
actions/events wherein they feel that the following commitments have been breached. At NJ we
desire to honour our commitments at all points of time and to all customers without any bias.

Quality Service:

Highlights-

You will receive regular portfolio reports in hard copies to serve as record
All records are maintained for the plans and recommendations and minutes of all the
meetings are kept.
Dedicated Account Manager directly oversees the operational support to you Quality
Advisory.

True, unbiased recommendations.

Each plan is unique in nature to suit your needs and profile.
 52

Defined Process followed in investment consultancy / portfolio management.

All the plans are prepared and/or approved in line with the set process by Chief
Portfolio Manager with inputs from the Research Team.

Quality Communications support:

Daily Market Update Email

Daily MF tracker-for short term debt fund Email

Weekly performance report Email/ Hard copy

Comprehensive monthly fact shee Hardcopy

Research articles and reports Email / Hardcopy

 53

9. 360° – ADVISORY PLATFORM:-

With this philosophy, we try to offer all possible products, services and support which an
Advisor would need in his business.

The support functions are generally in the following areas …

Business Planning and Strategy

Training and Development – Self and of employees
Products and Service Offerings
Business Branding
Marketing
Sales and Development
Technology
Advisors Resources - Tools, Calculators, etc..
 54

Research
Communications

With this comprehensive supporting platform, the NJ Fundz Partners stays ahead of the
curve in each respect compared to other Advisors/competitors in the market.

Recognitions

Some of the awards & recognitions that we have received in past

Year2000:
For Outstanding Performance presented by Chairman, Prudential Plc. at London.

Year2002:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at
London.

Year2003:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at
London.

Year2004:
Among Most Valued Business Associates presented by HDFC Standard Life at
Edinburgh,Scotland.
Year 2004:

For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia.

Year2006:
Award for mobilizing the Highest Number of SIPs at National Level by Fidelity Mutual
Fund Mumbai.

Year2006:
Award – Vietnam
 55

WHY INSURANCE AGENTS SHOULD SELL MUTUAL FUND?

Reason 1: Easy to make more clients …

The Penetration of Mutual Funds is very low …

Whereas relatively,

The Penetration of Insurance is very high ….

Opportunity for you to acquire more clients …

Now no call of yours should get waste

Reason 2: low competition of mutual fund advisors:-

Lack of competition represents a very big opportunity to grow your business anywhere in
India.

> 22 Lacs Insurance Advisors

V/s

< 70,000 Mutual Fund Advisors

(Very Few Financial Advisors)

(>35 Insurance Advisors V/s 1 Mutual Fund Advisor)

A huge DEMAND of Quality Mutual Fund Agents …

There is a genuine need for more than 2 lakh mutual fund advisors in India …(our
estimates)
 56

Reason 3: More satisfaction to your clients:-

If you are not selling mutual funds then you must not be aware of what they truly are
and the possibilities that they offer in providing solutions that meet the diverse needs
of different clients.

With mutual funds in your offering, you are in a much better position to fully meet the
client’s financial and investment needs.

Your client would ideally like you to do that and will be happy once to offer him
multiple solutions.

Reason 4: Additional source of income:-

Mutual fund is one product today that potentially has no limits to the volumes that
you can generate.
The important differentiation here with insurance is that you income is not based
on the premium you collect but on the entire AUM (assets under
management) that you have mobilized to counter the low rates.
An agent’s AUM running into crores in quite common in the industry. The income
from mutual funds can complement your earnings from insurance and may even
substitute them in future …

Reason 5: Leveraging existing clientele base:-

How to get more out of what you already have?

Well, mutual fund is just the perfect answer to that question.
The truth is that there is a lot of potential to generate further income from your
existing clientele base.
Much of the investment needs of clients are unexplored and unfulfilled that you can
satisfy.
 57

Reason 6: Strong industry growth ahead:-

There is a very strong growth of mutual funds ahead …

The reasons are many – good product, low penetration, huge market, growing
income, changing mindset, lack of other attractive investment products, etc.

In US, almost every third household invests in mutual funds.

The US MF industry size is about 67% of the US GDP and is 1.5 times of the bank
deposits in US.
The situation is though almost opposite in India with the MF industry size here equal to
6% of GDP and bank deposits are 10.50 times of the total industry size.
The potential is huge and India is expected to follow in on the lines of the more
developed countries.

Reason 7: Retention and loyalty of clients:-

The underlying logic can be found in the growth of multiplexes, shopping malls,
after all the human nature is basically the same …
People today look for easy, fast, and single service point that provides them with
solutions that meets their multiple needs.
your client would probably invest in mutual funds some day or later …
Why not you do the same before anyone else gets to your client?

Reason 8: Greater choice of products:-

Till now we haven’t really talked about what choices you can offer to your clients … In
fact, you can offer cash-flow management, to long-term goal oriented planning to your
clients.
Your basket would include pure equity funds (Diversified / Sectoral / Index Funds) to
pure debt funds (Gilt / Income / Short Term Plans / Floating / Liquid Funds) to hybrid
funds (MIPs / Balance / Arbitrage Funds) to the tax saving ELSS.
With a vast range of Fund houses and many more schemes – the choices are
virtually endless, and one is sure to find what one needs.
 58

Reason 9: Be a Complete Financial Advisor …

What next to Insurance?

There is an opportunity for you to transcend to the next level and offer ‘real solutions’
that will truly add value to your clients.
You should develop yourself and grow more as a ‘Financial’ advisor rather than just
‘Insurance’ agent.
The learning can extend beyond products to markets, to equities, debt,
economy, etc to understanding real financial planning, funds management, etc

Reason 10: Helps in selling ULIPs …

If your focus is also selling ULIPS then, dealing in mutual funds should also help you
in better understanding and helping communicate the same to your clients.
It is a general observation in western countries that as an economy progresses, term
plans and ULIPs have increasing % of fresh investments from clients as far as
insurance is considered.
Your presence in mutual funds would be an advantage to you going forward.

Reason 11: Market Potential of mutual funds:-

 Low Penetration of Mutual Funds in INDIA

Few people have been exposed to the idea & advantages of mutual funds and even fewer
actually invest in mutual funds, because of lack of adequate no. of advisors
 59

Opportunity to offer such products to clients …

Every person can be a customer!!

Reason12: EXCELLENT PAST PERFORMANCE

Mutual Fund Equity schemes have delivered very attractive returns in last 5 years, giving
over 51% returns annually

Opportunity for you to offer your clients with such equity-related products for long-term wealth
creation
 60

RESEARCH METHODLOGY

 Title of Study:-

A study of mutual fund and awareness of mutual fund

among insurance advisors.

OBJECTIVE OF STUDY:-

1) Understanding Mutual Funds

2) Understanding Market Potential of Mutual funds.

3) Understanding which mutual fund is good for whom

4) Analyzing Awareness of Mutual Funds among insurance advisors.

 61

METHOD OF STUDY-
Data collection:-

1. Primary data
2. Secondary data:- Book , Internet, Magazines

NOTE:-Data for the study was collected by the survey method with the accessories
questionnaire Keeping in mind the objectives. The primary data was for attaining the
objective while the Secondary data were used to write the literature & get the information.

Primary data

Primary data can be obtained through direct communication with respondents or through
personal interaction. There are several method of collecting primary data through survey &
descriptive research. I have used questioner from as for collecting primary data. Which have
been very helpful for me to analyze the exact market potential of and awareness of mutual
fund and mutual fund advisors.

Secondary data:

Secondary data means, the data has already collected and analyzed by someone else.
Various sources of secondary data are as follow……

Books

Magazines

Internet

Newspapers

Reports

Projects etc.

Data sources

The study is based on primary data only. For this, A questionnaire was prepared consisting
of both open and closed ended questions. Answers are collected by personal interview with
the insurance advisors of different insurance company by formal and informal talks.
 62

Sample size:
The sample size of my project was limited to 150 people only.

Limitation of the study:

Due the constraints, survey was conducted at Udaipur branch. So result cann’t represent the
whole market.
 63

Questionnaire

AWARENESS OF MUTUAL FUNDS AMONG

INSURENCE ADVISORS

Name: ------------------------- Age: -------------- Address: ----------------------------

Contact no: ---------------------------------- E-mail ID: -------------------------------
Experience in business: ----------------------------

1. What are the products in your existing business?

a. life insurance b. general insurances
c. postal scheme d. others

2. Do you know about Mutual Fund SIP 8th wonder of the world as a product for wealth
creation of customers?
a. Yes b. No
c. know slightly

3 Do you know about revenue and commission in Mutual Fund and SIP business for
advisors?
a. Yes b. No
c. know slightly

4. Do you know the advantages of adding up Mutual Fund and SIP as a product along
with your existing product?
a. Yes b. No
c. Would like to know

5. Would you like to attend business opportunity program organized by NJ India Invest?
a. Yes b. No
c) Yes but not now
 64

6. Can we send representative from NJ India Invest for more information about Mutual
Fund?
a. Yes b. No c) Yes but with an appointment

7. Have you cleared your AMFI exam?

a. Yes b. No

8 If no, would you like to give the exam if adequate reading materials and training
given?
a. Yes b. No
AnyComments______________________________________________________________
______________________________________________
 65

SUMMARY OF FINDINGS

1. What are the products in your existing business?

a. life insurance b. general insurances

c. postal scheme d. others

Ans:-

No of Response %
Life Insurance 120 80
General Insurance 18 12
Postal schemes 3 2
Others 9 6

life insurance
general insurance
postal schemes
others
 66

2. Do you know about Mutual Fund SIP 8th wonder of the world as a product for wealth
creation of customers?
a. Yes b. No
c. know slightly

Ans:-

No of Response %
Yes 48 32
No 69 46
Know Slightly 33 22

Yes
No
Know Slightly

.3 Do you know about revenue and commission in Mutual Fund and SIP business for advisors?

a. Yes b. No

c.know slightly

Ans:-

No of Response %
Yes 60 40
No 75 50
Would Like to Know 15 10
 67

Yes
No
Would like to know

4. Do you know the advantages of adding up Mutual Fund and SIP as a product along with
your existing product?

a. Yes b. No

c. Would like to know

Ans:-

No of Response %
Yes 18 12
No 48 32
Would Like to Know 84 56
 68

Yes
No
Would like to know

5. Would you like to attend business opportunity program organized by NJ India Invest?

a. Yes b. No

cYes but not now

Ans:-

No of Response %
Yes 54 36
No 78 52
Yes but not now 18 12

Yes
No
Yes but not now
 69

6. Can we send representative from NJ India Invest for more information about Mutual Fund?

a. Yes b. No c)Yes but with an appointment

Ans:-

No of Response %
Yes 63 42
No 69 46
Yes but not now 18 12

yes
no
yes but not now

7. Have you cleared your AMFI exam?

a. Yes b. No

Ans:-

No of Response %
 70

Yes 12 8
No 138 92

Yes
No

8 If no, would you like to give the exam if adequate reading materials and training given?

a. Yes b. No

Ans:-

No of Response %
Yes 48 32
No 102 68
 71

Yes
No

It was a very tough task to create an awareness of mutual fund among the insurance
advisors. Mostly they were happy with the insurance product what they are selling and
are not ready to add up a new product in their selling basket. Lic agents were not
ready to sell “Mutual fund” because they have mis-conception that in mutual fund is
only related to equity market and due to the recent economic slowdown people are not
ready to invest in the market. After explaining to them about less competition among
mutual fund advisors rather than insurance advisors and after making him understand
about the proper concept of mutual fund, some of them were considered and were
ready to come to meeting or BOP program for becoming mutual fund advisor

Through this research I found that mostly youth insurance advisors were interested to
become mutual fund advisor and want to add up a new product in their selling basket.
The People who were older, were afraid to appear in any kind of exam. They usually
said that they didn’t have time for the training as made mandatory by AMFI.
 72

SWOT ANALYSIS of Mutual Funds:-

A type of fundamental analysis of the health of a companies by examining its strengths(S),
weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed
to.

I. STRENGTHS:-

 Distribution channel strategy: The mutual funds are continuously improving the
distribution of its products. Its online and Internet-based access offers a combination
of excellent growth prospects and its retail direct business also saw growth of 27% in
2002 and 15% in 2003.

 Various sources of income: The mutual fund has many sources of income throughout
the group, and this diversity within the group makes the company more flexible and
resistant to economic and environmental changes.

 Large pool of installed capacities.

 Increasing liberalization of government policies

II. WEAKNESS:-

 Emerging markets: since there is more investment demand in the United States,
Japan and the rest of Asia, The mutual fund should concentrate on these markets,
especially in view of low global interest rates.

 Mutual funds are like many other investments without a guaranteed return: there is
always the possibility that the value of your mutual fund will depreciate. Unlike fixed-
income products, such as bonds and Treasury bills, mutual funds experience price
fluctuations along with the stocks that make up the fund. When deciding on a
particular fund to buy, you need to research the risks involved – just because a
professional manager is looking after the fund, that doesn’t mean the performance will
be stellar.

 Fees: In mutual funds, the fees are classified into two categories: shareholder fees
and annual operating fees. The shareholder fees, in the forms of loads and
redemption fees are paid directly by shareholders purchasing or selling the funds. The
annual fund operating fees are charged as an annual percentage – usually ranging
from 1-3%. These fees are assessed to mutual fund investors regardless of the
performance of the fund. As you can imagine, in years when the fund doesn’t make
money, these fees only magnify losses.

III. OPPORTUNITIES:-
 73

 Potential markets: The Indian rural market has great potential. All the major market
leaders consider the segments and real markets for their products. A senior official in
a one of the leading company says foray into rural India already started and there has
been realization that the rural market is both price and quantity conscious.

 Entry of MNCs: Due to multinationals are entering into market job opportunities are
increasing day by day. Also India Mutual Fund majors are tie up with other financial
institutions.

IV. THREATS:-

 Increased Competition: With intense competition by so many local players causing

headache to the current marketers. In addition to this though multinational brands are
not yet established but still they will soon hit the mark. Almost 60 to 70% of the
revenue is spending on the management and services.

 Hedge funds: sometimes referred to as ‘hot money’, are also causing a threat for
mutual funds have gained worldwide notoriety for bringing the markets down. Be it a
crash in the currency, stock or bond market, usually a hedge fund prominently figures
somewhere in the picture.
 74

Conclusions

Mutual fund industry in India is still in it`s adolescent`s stage. It has wide opportunities to
advance. With the entry of private player & foreign player, the sector seems poised for
growth. With the interest rates falling & people now becoming unwilling to save in bank,
mutual fund can be a better option. But people do not invest their hard earned money into
mutual funds. This is because of unawareness about mutual funds & their benefits. This is
the root cause of slow growth of mutual funds industry. The three reasons for the restricted
growth of mutual funds industry in India are:

 The mutual funds industry is working confined to the metros & larger cities of the
country, baring the large investment potential present in even smaller cities of the
country
 The mutual fund products are seen to be reasonable complex to be understood by the
common middle class person.
 Mutual funds are to be providing only the equity stokes. The investor`s are unaware of
the fact that they can also enrich the investor`s portfolio with debt scheme.

We see that all AMC`s firmly admit the fact that India is the most emerging market in Asia.
If is as, it means that people have purchased power & disposable income. If the mutual
fund can influence these buyers to invest in their funds then it would be benefits to both of
them.

However, it must be said that even these difficult times, the mutual funds industry is
continuing it`s efforts to improve customer satisfaction as well as set new standards in
areas such as transparence and disclosure norms. Mutual fund benchmark indices have
been devised for benchmarking the performance of individual funds in the India mutual
funds marketplace.

In order to improve the training process of mutual funds distribution, the association of
mutual funds in India (AMFI) has introduced the AMFI certification programme. The
security & exchange Board of India (SEBI) has made it. Mandatory to all distributor &
agents of mutual funds to pass the AMFI certification programme. The improvement of
knowledge of distributors & agents will ultimately help the investors to make informed
investment.
 75

Suggestions:

 Most leads complain about its fees that are Rs. 8000/Rs.6900. they said that it is too
much amount to complete AMFI exam and become NJ partner. I know it is nothing in
spite of our company gives them. Consideration can be made to reduce the fee to stop
de motivating from taking our services.

 NJ has almost 25% market stake of mutual fund advisor (almost 15,000 MF advisors
are partner of NJ. whereas total MF advisors are 75,000 in India.) but NJ is lacking
somewhere in its marketing. NJ needs to advertise its brand to gain the image of a
mutual fund distributer in the minds of insurance advisors who are more concern with
RR and other mutual fund distributors.
 76

Bibliography

Website Referred:

1 www.njindiainvest.com
2 www.moneycontrol.com
3 www.amfiindia.com
4 www.indiainfoline.com
5 www.equityresearch.com

Book referred:
1. Management of financial service: V. K. Bhalla
2. Security analysis & Investment Management: A. V. Adhani
3. Financial management: M. Y. Khan, P. k. Jain
4. Principal of marketing: Philip Kotlar, Armstrong G.
5. Research methodology: C. R. Kothari
6. Marketing Research: Philip kotler