aj nj mutual fund

A

SUMMER TRAINING REPORT

ON

“SCOPE FOR MUTUAL FUND ADVISORY BUSINESS IN

MODASA & BAYAD”

FOR

N.J. INDIAINVEST PVT.LTD

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

UNDER MBA PROGRAMME BATCH NO. 2009-2011

SUBMITTED TO

GROW MORE FACULTY OF MANAGEMENT STUDIES

AHMEDABAD-UDDAIPUR HIGHWAY, AT.BERNA,

HIMMATNAGAR, DIST.S.K. GUJARAT-3830012.

(Affiliated to Gujarat Technological University, Ahmedabad)

SUBMITTED BY:

ANKIT CHAUHAN ROLL NO. 021

HARUNRASID MODASIYA ROLL NO. 059

NJ FUNDZ NETWORKS

Grow More Faculty Of Management Study, Himmatnagar

PREFACE

The prosperity, development and success of any country depend upon

perfectness and properly structured in Management. In modern era, management

is the ‘Heart’ of fast industrial growth and development. Practical training is one

of the most important and unforgettable experience.

As a part of practical management, project work is very essential as it gives

a golden opportunity to students to verify application of thrones. Through this I

come to know different areas, people, culture etc. which enhance my knowledge

& experience for, this study I had selected much esteemed & well known

company named “NJ IndiaInvest Pvt. Ltd.

Practical study also develops my attitude towards business environment &

market scenario. Every business must be aware with each part of market in detail

which includes customers, competitors, media etc.

The beginning of this study is carried by “Market Research”. And in this

step process my fires step was “

NJ FUNDZ NETWORKS


NJ FUNDZ NETWORKS


ACKNOWLEDGEMENT

Sometimes words fall short to show gratitude, the same happened with me during

this project. The immense help and support received from NJ India Invest Pvt Ltd.

overwhelmed me during the project.

My sincere gratitude to Mr. Mehul Shah (Sr. executive-sales), Mr. Sunil Patel ,and

Mr. Umesh Pithadiya (my college guide)whose co-operation and guidance proved

immensely helpful to me during the course of summer training.

I also wish to acknowledge my sincere thanks to the entire concern faculty for

their valuable advice and suggestions.

Last but not the least ; my heartfelt love for my parents, whose constant support

and blessings helped me throughout this project.

NJ FUNDZ NETWORKS


EXECUTIVE SUMMARY

The objective of carrying out this proposal is concerned with the Indian financial

market and the role of mutual fund in these financial market.

It also includes the enhancement of mutual fund investing, investors &

comparison with mutual fund in developed countries.

It would also cover growth & performance of mutual fund which will include

the structure, types, growth & operational highlights of mutual fund & its

schemes.

Also the invest management of mutual fund & investor protection will be

studied with the help of mutual fund regulation.

NJ FUNDZ NETWORKS


TABLE OF CONTENTS

Chapter Name

CH. NO. CONTENT PAGE NO.

1 Well come to NJ IndiaInvest Pvt. Ltd 1

2 Industry profile

1.Introduction

2.Characterists

2

2

4

3. History Of Indian mutual fund Industry 5

4 Growth In Assets Under Management 8

5

6

Mutual Fund Structure

Types Of Mutual Fund

10

15

7

8

9.

Advantages Of Mutual Fund

Disadvantages Of Mutual Fund

Risk Involved In Mutual Fund

23

25

28

10 Factor Affecting Mutual Fund 33

11 Company Overview 41

1.Introduction

2.Vision & Mission Of NJ IindiaInvest Pvt. Ltd.

42

43

NJ FUNDZ NETWORKS


3.Philosophy

4.Management

5.People & Culture

6.Service Standard

7..Products

8..Service Provided to Client

9.360 degree Advisory Platform

44

46

48

50

52

52

59

12 Why Insurance Agent Should Sell Mutual Fund 62

13

14

Research Methodology

Analysis Of Survey

70

72

15 Summary OF Finding 80

16 Suggestion 81

17 Conclusion 82

18

19

Biblography

Annexure:Questionnaires

83

84

2010

Grow More Faculty Of Management Study, Himmatnagar Page 1

1. WELL-COME TO NJ INDIAINVEST PVT. LTD.

2010


2. INDUSTRY PROFILE

MUTUAL FUND

1.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.

2010


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.

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.

2010


2.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.

2010


3. 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.

2010


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

1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004

cores.

2010


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.44,541 crores of assets under management

was way ahead of other mutual funds.

Fourth Phase – Since February 2003

n 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.

2010


4. GROWTH IN ASSETS UNDER MANAGEMENT

2010


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.

2010


5 .MUTUAL FUND STRUCTURE

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.

2010


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.

2010


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.

RESPONSIBILITY OF CUSTODIANS: -

➢ Receipt and delivery of securities

➢ Holding of securities.

➢ Collecting income

➢ Holding and processing cost

➢ Corporate actions etc

2010


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

2010


➢ 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)

➢ All schemes floated by Mutual funds are to be registered with SEBI

2010


6. TYPES OF MUTUAL FUND

Diagram

2010


� Schemes according to matur ity per iod : -

mutual fund scheme can be classified into open-ended scheme or close ended scheme A

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.

2010


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

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 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.

2010


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.

2010


Mutual Fund Equity schemes have deli vered 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.

2010


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 (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.

2010


� 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

4. outlook for specific markets. In other words, fund managers may switch over to equity if

2010


they expect equity market to provide good returns and switch over to debt if they expect debt

market to provide better returns.

2010


7. 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.

2010


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.

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.

2010


8. 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.

2010


5. Non-availability of loans: 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.

2010


RISK V/S. RETURN:

2010


9. 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.

2010


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. 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 well diversified portfolio with some investment in

equities might help mitigate this risk.

2010


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.

2010


� NET ASSET VALUE

Net Asset Value (NAV) The net asset value of the fund is the cumulative market value of

the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off

all the assets in the fund, this is the amount that the shareholders would collectively own. This

gives rise to the concept of net asset value per unit, which is the value, represented by the ownership

of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the

number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per

unit". We also abide by the same convention.

Definition of NAV

Asset Value, or NAV, is the sum total of the market value of all the shares held in the

portfolio Net including cash, less the liabilities, divided by the total number of units outstanding.

Thus, NAV of a mutual fund unit is nothing but the 'book value.'

Calculation of NAV The most important part of the calculation is the valuation of the assets

owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the

number of units outstanding. The detailed methodology for the calculation of the asset value is given

below.

2010


Asset value is equal to

Sum of market value of shares/debentures

Liquid assets/cash held, if any

+ Dividends/interest accrued Amount due on

Unpaid assets Expenses accrued but not paid

Other li abili ties

NAV per unit = ------------------------------------------------------------------

No. of units outstanding of the scheme

NAV and its impact on the returns We feel that a MF with lower NAV will give better

returns. This again is due to the wrong perception about NAV. An example will make it clear that

returns are independent of the NAV. Say; you have Rs 10,000 to invest. You have two options,

wherein the funds are same as far as the portfolio is concerned. But say one Fund X has an NAV of

Rs 10 and another Fund Y has NAV of Rs 50. You will get 1000 units of Fund X or 200 units of

Fund Y. After one year, both funds would have grown equally as their portfolio is same, say by 25%.

Then NAV after one year would be Rs 12.50 for Fund X and Rs 62.50 for Fund Y. The value of

your investment would be 1000*12.50 = Rs 12,500 for Fund X and 200*62.5 = Rs 12,500 for Fund

Y. Thus your returns would be same irrespective of the NAV. It is quality of fund, which would

make a difference to your returns. In fact for equity shares also broadly this logic would apply.

2010


10. 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 favor the rise FDI in mutual fund to 49% which

further enhances competition in the industry.

2. Taxation Poli cy

Social equity being one of the motives behind tax collections, government give 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

2010


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.

[B] Tax rules governing investment by individuals

education 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

2010


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.

2010


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.

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

2010


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.

2010


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. 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.

2010


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 thanking 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 behavior of a consumer.

2010


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.

2010


11. COMPANY OVERVIEW

2010


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 person

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 focused financial/ investment advisory & distribution firm.

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

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

2010


NJ has over INR 76 billion* of mutual fund assets under advice with a wide presence in over 110

locations* in 20 states* and 1000 employees and 12 lacs customer in India. The numbers are

reflections of the trust, commitment and value that NJ shares with its clients

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.

First in Indian mutual fund industry to offer a complete business platform to advisors.

PRODUCT ON OFFER TO PARTNERS

* mutual fund – All AMCs,All Schemes.

*Company fixed diposits.

*Real Estate.

2. VISION & MISSION OF NJ India invest: -

� Vision

To be the leader in our field of business through,

➢ Total Customer Satisfaction

2010


➢ 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. PHIL OSOPHY:-

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 Phil osophy:

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

2010


� 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,

2010


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

organisation. The management has strong visions for NJ as a globally respected company

providing comprehensive services in financial sector.

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 organisation 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.

2010


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

Mr. Viral Shah Research

Mr. Rakesh Tokarkar Compliance

2010


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

realizing the one vision that everyone shares.

2010


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.

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.

2010


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.

2010


Further We:

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.

Our service commitment…..

he 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 develop and grow the customers business.

➢ To provide constructive after sales service.

➢ To honour 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.

2010


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.

w 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.

2010


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

fulfill 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

Monitoring of the Financial Plan on an on-going basis

2010


At NJ Wealth Advisors we offer you with comprehensive Financial Planning Services under the

product – Life Vista.

2010


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 realize 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 – Al l AMCs, Al l Schemes

Direct Equity

Life Insurance

Physical Assets – Gold and Property

2010


Private Equity – Business

Debt Products

➢ Bank Deposits and Company Deposits

➢ RBI / Infrastructure Bonds

➢ Postal Savings – KVP, MIS, NSC

➢ Debentures

➢ Small Savings – PPF, NSS

2010


QUALITY CUSTOMER SERVISE

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 your Quality.

Advisory.

True, unbiased recommendations.

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

Defined Process followed in investment consultancy / portfolio management.

All the plans are prepared and/or approved in line with the set process by Chief

2010


Portfolio Manager with inputs from the Research Team.

Quality Communications support:

Daily market update Email

Daily MF tracker-for sort term debt fund Email

Weekly performance report Email/ Hard

copy Comprehensive monthly fact sheet Hardcopy

Research articles and reports Email / Hardcopy

2010


9. 360° – ADVISORY PLATFORM:-

2010


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..

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 …

Year 2000:

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

Year 2002:

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

2010


Year 2003:

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

Year 2004:

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.

Year 2006:

Award for mobilizing the Highest Number of SIPs at National Level by Fidelity Mutual

Fund Plc at Mumbai.

Year 2006: Award –

Vietnam

2010


12. 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 advisor

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

2010


> 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)

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.

2010


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

Form 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

2010


your existing clientele base.

Much of the investment needs of clients are unexplored and unfulfilled that you can

satisfy.

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.

2010


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?

2010


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.

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

2010


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

Opportunity to offer such products to clients …

Every person can be a customer!!

2010


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

2010


13. RESEARCH METHODLOGY .

OBJECTIVE OF STUDY

1. Understanding Mutual Funds

2. Understanding Market Potential of Mutual funds.

3. Understanding the awareness of mutual fund in rural &semi urban region.

4. Understanding how mutual fund better than other financial product.

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

2010


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

Newspaper

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.

Sample size :

The sample size of my project was limited to 200 people only

Limitation of the study:

Due the constraints, survey was conducted at Modasa & Bayad in Himmatnagar branch. So result

can’t represent the whole market.

2010


14. ANALYSIS OF SURVEY

1. Being a financial advisor, how many years of experience you are having?

Less than 1 year ( ) 1 to 3 years ( )

3 to 5 years ( ) 5 to 10 years ( )

More than 10 year ( )

Percentage (%)

Less than 1 year 15%

1 to 3 years 20%

3 to 5 years 45%

5 to 10 years 05%

More than 10 year 15%

2010


2. In Which Financial Segment you are working?

Mutual Fund [ ] Insurance [ ]

Equity [ ] Post [ ]

Tax advisor [ ] others [ ]

LIC [ ]

Percentage (%)

Mutual Fund 3%

Insurance 25%

Equity 30%

Post 10%

Tax advisor 1.5%

LIC 11%

Others 19.5%

2010


3. Are you aware about Mutual Fund?

Yes [ ] No. [ ]

Percentage (%)

Yes 17%

No 83%

17%

83%

Yes

No

2010


4. Are you agree about mf easy way to earn compare to other?

Yes [ ] No. [ ]

Percentage (%)

Yes 14%

No 86%

2010


5. If yes, then why?

Tex benefits [ ] More Trustable [ ]

Easy to convey [ ] Good schemes [ ]

More returns [ ] Less competitors [ ]

Percentage (%)

Tex benefits 12.5%

More Trustable 7.5%

Easy to convey 17.5%

Good schemes 12.5%

More returns 15%

Less competitors 35%

2010


6. If No, then why? What your expectation?

� Because public don’t know about mutual fund.

� Because it’s Depend upon Stock Market Index & Market have no Guaranty

7. Have you passed out the AMFI exam?

Yes [ ] No. [ ]

Percentage (%)

Yes 06%

No 94%

6%

94%

Yes

No

2010


8. Would you like to give AMFI exam?

Yes [ ] No. [ ]

Percentage (%)

Yes 11%

No 89%

2010


9.Would you like to joint N.J funds network?

Yes [ ] No [ ]

Percentage (%)

Yes 10%

No 90%

10. If no, please give reason?

� Advisor have no time for new business.

� It’s More expensive.

� People don’t want to leave current segmentation.

2010


15. SUMMARY OF FINDING

• It was found that awareness of mutual fund among other financial in semi-urban area is very

low.

• Advisors haven’t knowledge about mutual fund & they have misconception that in mutual

fund They is only related to equity market.

• It found that customer are prefer safe financial product in Modasa & Bayad. They do not take

risk.

• Semi urban people like only guarantee return financial product.

• Some of people interesting but they have bad experience because they was invested then market

gone down.

• Through this research it found than mostly youth insurance advisor interested

become mutual fund advisor and want to add up a new product in their selli ng

basket

• LIC agents were not ready to sell “Mutual fund” because Return have guaranteed in LIC.

• They were considered and ready to come to meeting or BOP program for becoming mutual fund

advisor..

2010


16. 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 14500 MF advisors are partner of NJ. whereas total MF advisors are

70,000 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.

� NJ Fundz should give AMFI exam material in Gujarati to increase the ratio of advisors of NJ

IndiaInvest Pvt. Ltd.

2010


17. CONCLUSION

1. Advisory Point Of View::

• Fees are more than other competitor in NJ Fundz Network.

• Now, Entry load is zero because of that Advisors are not interesting in mutual fund.

• Advisor cannot take private from investor because they are relative & friend.

• People do not know better English in Semi Urban region.

2 Investor Point Of View::

• Investors have no more time for daily seen the equity market because they are

investing in Mutual Fund.

• Low transaction for mutual fund.

• Investors money is diversify in different company.

• Mutual funds have risk because it depends on equity market.

2010


18. Bibliography

Website-

� http://www.njindiainvest.com

� http://www.moneycontrol.com

� http://www.amfiindia.com

� http://www.indiainfoline.com

� http://www.equityresearch.com

� http://www.valueresearchonline.com

� http://www.rediffmoney.com

� http://www.bseindia.com

� http://www.nseindia.com

� http://www.investopedia.com

� http://www.theeconomoctimes.com

Book::-

� Friedman, A.G. (1992) 'How Mutual Fund Works' - Management &

Working.

2010


19.ANNEXURE: QUESTIONNAIRE

I, Student of Masters of Business Administration am conducting a research for the purpose of

knowing the “SCOPE FOR MUTUAL FUND ADVISIORY BUSINESS IN MODASA &

BAYAD” . Here with I assure you that data given by you will be used only for research purpose.

Personal Details:-

• Name:-__________________________________________________________

• Mobile no.:-_______________________________________________________

• Email:-___________________________________________________________

• Qualification :

S.S.C [ ] H.S.C [ ]

GRADUATION [ ] POSTGRADUATIO [ ]

1. Being a financial advisor, how many years of experience you are having?

Less than 1 year ( ) 1 to 3 years ( )

3 to 5 years ( ) 5 to 10 years ( )

More than 10 year ( )

2. In Which Financial Segment you are working?

Mutual Fund [ ] Insurance [ ]

Equity [ ] Post [ ]

Tax advisor [ ] others [ ]

LIC [ ]

2010


3. Are you aware about Mutual Fund?

Yes [ ] No. [ ]

4. Are you agree about mf easy way to earn compare to other?

Yes [ ] No. [ ]

5. If yes, then why?

Tex benefits [ ] More Trustable [ ]

Easy to convey [ ] Good schemes [ ]

More returns [ ] Less competitors [ ]

6. If No, then why? What your expectation?

_________________________________________________________________

7. Have you passed out the AMFI exam?

Yes [ ] No. [ ]

8. Would you like to give AMFI exam?

Yes [ ] No. [ ]

9. Would you like to joint N.J funds network?

Yes [ ] No [ ]

10. If no, please give reason?

__________________________________________________________________

Thank You

aj nj mutual fund

Documents