““INTER FIRM COMPARISON INTER FIRM COMPARISON OF MUTUAL FUND OF MUTUAL FUND

INDUSTRY” INDUSTRY” (2005-2009)(2005-2009)

PRESENTATION ON PRESENTATION ON SUMMER TRAINING SUMMER TRAINING PROJECT REPORTPROJECT REPORT

ANKIT CHHABRAMBA/08/48

AnandRathi (AR) is a leading full service securities firm AnandRathi (AR) is a leading full service securities firm

providing the entire gamut of financial services.providing the entire gamut of financial services. Founded in 1994 by Mr. AnandRathi.Founded in 1994 by Mr. AnandRathi. Today has a pan India presence as well as an international Today has a pan India presence as well as an international

presence through offices in Dubai and Bangkok.presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services AR provides a breadth of financial and advisory services

including wealth management, investment banking, including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance etc.commodities, mutual funds and insurance etc.

SERVICESSERVICES Call n TradeCall n Trade Mutual FundMutual Fund Depository servicesDepository services CommoditiesCommodities IPOsIPOs InsuranceInsurance Online ReportsOnline Reports BondsBonds TradingTrading CurrencyCurrency Premium securitiesPremium securities

CONCEPT OF MUTUAL FUNDCONCEPT OF MUTUAL FUND A mutual fund is a professionally-A mutual fund is a professionally-

managed firm of collective investments managed firm of collective investments that pools money from many investors that pools money from many investors and invest it in stocks, bonds etc.and invest it in stocks, bonds etc.

Mutual fund have a fund manager who Mutual fund have a fund manager who invests the money on behalf of the invests the money on behalf of the investors by buying/selling stocks, investors by buying/selling stocks, bonds etc.bonds etc.

A Mutual Fund is a trust registered with A Mutual Fund is a trust registered with the Securities and Exchange Board of the Securities and Exchange Board of India (SEBI).India (SEBI).

The value of each unit of the mutual fund, known as the net asset value (NAV) net asset value (NAV)

NAV = NAV = Net Assets of the scheme…………. Net Assets of the scheme…………. Number of units outstanding Number of units outstanding

Categories of Mutual FundCategories of Mutual Fund

RISK Vs. RETURN

METHODS OF MUTUAL FUNDMETHODS OF MUTUAL FUND

One time payment One time payment Systematic Investment Plan (SIP) (or)Systematic Investment Plan (SIP) (or)

Averaging ValueAveraging Value

SYSTEMATIC INVESTMENT SYSTEMATIC INVESTMENT PLANPLAN

Under this a fixed sum is Under this a fixed sum is invested each month on a invested each month on a fixed date of a month. fixed date of a month.

Payment is made through Payment is made through post dated cheques or post dated cheques or direct debit facilities.direct debit facilities.

The investor gets fewer The investor gets fewer units when the NAV is units when the NAV is high and more units when high and more units when the NAV is low.the NAV is low.

This is called as the This is called as the benefit of Rupee Cost benefit of Rupee Cost Averaging (RCA).Averaging (RCA).

Load structure Load structure

Entry LoadEntry Load Exit loadExit load

WORKING OF MUTUAL FUNDWORKING OF MUTUAL FUND

ORGANISATION OF MUTUAL ORGANISATION OF MUTUAL FUNDFUND

OBJECTIVES OF THE STUDYOBJECTIVES OF THE STUDY

To study the Mutual funds industry in detail.To study the Mutual funds industry in detail. To study the Investment procedure in Mutual To study the Investment procedure in Mutual

funds.funds. To compare Individual plan with SIP in between To compare Individual plan with SIP in between

different AMCs .different AMCs . To Find out the relationship between MARKET To Find out the relationship between MARKET

MOVEMENT and SIP RETURN.MOVEMENT and SIP RETURN. To find out MARKET RISK of SIP PLAN.To find out MARKET RISK of SIP PLAN. To suggest better Investment option according To suggest better Investment option according

to market behavior. to market behavior.

RESEARCH RESEARCH METHODOLOGYMETHODOLOGY

» RESEARCH METHODOLOGYRESEARCH METHODOLOGYResearch ProblemResearch Problem: “INTER FIRM : “INTER FIRM COMPARISON BETWEEN MUTUAL FUND COMPARISON BETWEEN MUTUAL FUND INDUSTRY(2005 - 2009)”.INDUSTRY(2005 - 2009)”.

» Research Design: Research Design: ANALYTICALANALYTICAL» Sample Size:Sample Size: 8 8» Sampling Technique:Sampling Technique: JUDGEMENTAL JUDGEMENTAL» Data Collection Method:Data Collection Method: PRIMARY AND PRIMARY AND

SECONDARY DATASECONDARY DATA» Sampling Methods:Sampling Methods: TABLES , CHARTS, TABLES , CHARTS,

CORRELATION, BETA, GRAPHS.CORRELATION, BETA, GRAPHS.

DATA ANALYSIS DATA ANALYSIS &&

INTERPRETATIONINTERPRETATION

EQUITY DIVERSIFIEDEQUITY DIVERSIFIEDPLAN-1PLAN-1 TATA INFRASTRUCTURE FUND(G) TATA INFRASTRUCTURE FUND(G) PLAN-2PLAN-2 UTI INFRASTRUCTURE FUND(G) UTI INFRASTRUCTURE FUND(G)

““PLAN-1” Vs. “PLAN-2” PLAN-1” Vs. “PLAN-2”

PLAN-1PLAN-1 PLAN-2PLAN-2

Amt. invested - Rs 48000 Amt. invested -Amt. invested - Rs 48000 Amt. invested - Rs 48000 Rs 48000

Amt. Received after 4 years Rs 48629.34 Amt. received-Amt. Received after 4 years Rs 48629.34 Amt. received- Rs 48477.93 Rs 48477.93

RETURNS Rs 629.34 RETURNS Rs 477.93RETURNS Rs 629.34 RETURNS Rs 477.93

CONCLUSIONCONCLUSION: In SIP, plan-1 exceeds from plan-2 with the amount of Rs 151.41: In SIP, plan-1 exceeds from plan-2 with the amount of Rs 151.41

β(Beta) of PLAN-1=6.01β(Beta) of PLAN-1=6.01

β(Beta) of PLAN-2=5.06β(Beta) of PLAN-2=5.06

EARNING LINKED SAVING EARNING LINKED SAVING SCHEMESSCHEMES

PLAN-1PLAN-1 Canara Robeco Equity Tax Saver (G) Canara Robeco Equity Tax Saver (G)

PLAN-2PLAN-2 Sundaram BNP Paribas Tax Saver (OE) (G) Sundaram BNP Paribas Tax Saver (OE) (G)

PLAN-3PLAN-3 HDFC Tax Saver (G) HDFC Tax Saver (G)

““PLAN-1PLAN-1” Vs. “” Vs. “PLAN-2” PLAN-2” Vs.Vs. “PLAN-3” “PLAN-3”

PLAN-1PLAN-1 PLAN-2PLAN-2 PLAN-3PLAN-3

Amt. Invested -Rs 48000 Amt. Invested- Rs 48000 Amt. Invested -Rs 48000 Amt. Invested -Rs 48000 Amt. Invested- Rs 48000 Amt. Invested -Rs 48000

Amt. received -Rs 52530.08 Amt. received- Rs 51565.17 Amt. received-Rs 44605.77Amt. received -Rs 52530.08 Amt. received- Rs 51565.17 Amt. received-Rs 44605.77

RETURNS Rs 4530.08 RETURNS Rs 3565.17 RETURNS Rs (3394.23)RETURNS Rs 4530.08 RETURNS Rs 3565.17 RETURNS Rs (3394.23)

CONCLUSIONCONCLUSION: In SIP, plan-1 exceeds from plan-2 & plan-3 with the amount of Rs : In SIP, plan-1 exceeds from plan-2 & plan-3 with the amount of Rs 964.9 & Rs.7924.3964.9 & Rs.7924.3

CORRELATION BETWEEN NIFTY & PLAN-1 = CORRELATION BETWEEN NIFTY & PLAN-1 = 0.9936730.993673

CORRELATION BETWEEN NIFTY & PLAN-2= CORRELATION BETWEEN NIFTY & PLAN-2= 0.9861210.986121

CORRELATION BETWEEN NIFTY & PLAN-3 = CORRELATION BETWEEN NIFTY & PLAN-3 = 0.5630350.563035

BETA( MARKET RISK)BETA( MARKET RISK)

β(Beta) of PLAN-1= 3.76β(Beta) of PLAN-1= 3.76

β(Beta) of PLAN-2=4.75β(Beta) of PLAN-2=4.75

β(Beta) of PLAN-3=1.72β(Beta) of PLAN-3=1.72

BALANCED SCHEMESBALANCED SCHEMESPLAN-1PLAN-1 Reliance regular savings fund – Balanced option (G) Reliance regular savings fund – Balanced option (G)

PLAN-2PLAN-2 HDFC balanced fund (G) HDFC balanced fund (G)

PLAN-3PLAN-3 ICICI pru balanced fund (G) ICICI pru balanced fund (G)

““PLAN-1PLAN-1” Vs. “” Vs. “PLAN-2” PLAN-2” Vs.Vs. “PLAN-3” “PLAN-3”PLAN-1PLAN-1 PLAN-2PLAN-2 PLAN-3PLAN-3

Amt. Invested -Rs 48000 Amt. Invested- Rs 48000 Amt. Invested -Rs 48000 Amt. Invested- Rs 48000 Amt. Invested -Rs 48000 Amt. Invested -Rs 48000

Amt. received -Rs 53898.83 Amt. received- Rs 49412.37 Amt. received-Rs 45719.15Amt. received -Rs 53898.83 Amt. received- Rs 49412.37 Amt. received-Rs 45719.15

RETURNS Rs 5898.83 RETURNS Rs 1412.37 RETURNS Rs 5898.83 RETURNS Rs 1412.37 RETURNS Rs (2280.85)RETURNS Rs (2280.85)

CONCLUSIONCONCLUSION: In SIP, plan-1 exceeds from plan-2 & plan-3 with the amount of Rs : In SIP, plan-1 exceeds from plan-2 & plan-3 with the amount of Rs 4486.46 & Rs.8179.68 4486.46 & Rs.8179.68

CORRELATION BETWEEN NIFTY & PLAN-1 = CORRELATION BETWEEN NIFTY & PLAN-1 = 0.6608520.660852

CORRELATION BETWEEN NIFTY & PLAN-2= CORRELATION BETWEEN NIFTY & PLAN-2= 0.9790780.979078

CORRELATION BETWEEN NIFTY & PLAN-3 = CORRELATION BETWEEN NIFTY & PLAN-3 = 0.8078670.807867

BETA( MARKET RISK)BETA( MARKET RISK)

β(Beta) of PLAN-1=2.74β(Beta) of PLAN-1=2.74

β(Beta) of PLAN-2=4.61β(Beta) of PLAN-2=4.61

β(Beta) of PLAN-3=0.56 β(Beta) of PLAN-3=0.56

INTERPRETATIONINTERPRETATION

Have you ever invested/ interested to invest in Have you ever invested/ interested to invest in mutual funds?mutual funds?

Maximum number of persons wants to invest his/her money in Maximum number of persons wants to invest his/her money in mutual fund.mutual fund.

YES 135

NO 65

Do you know about mutual fund?Do you know about mutual fund?

65%of the people know about the mutual fund, so they want to 65%of the people know about the mutual fund, so they want to invest their money into mutual fund and other 35% don’t know invest their money into mutual fund and other 35% don’t know about mutual fund.about mutual fund.

Options Percentage

Yes 65

No 35

% OF RESPONDENT

65

35

Yes

No

What option will you choose for investment?What option will you choose for investment?

The result is that more than 50% people want to invest their money The result is that more than 50% people want to invest their money in mutual fund and other chooses the bank, insurance and stock in mutual fund and other chooses the bank, insurance and stock market.market.

Investment Options

Percentage

Bank 15

Insurance 22

Mutual Fund 55

Stock Market 8

15

22

55

8

0

10

20

30

40

50

60

Investment Option

Per

cen

tag

e Bank

Insurance

Mutual Fund

Stock Market

Do you think that mutual fund can give more return then Do you think that mutual fund can give more return then bank deposit?bank deposit?

65% of the respondent said that they think that mutual funds 65% of the respondent said that they think that mutual funds give more return than other investment like bank deposit.give more return than other investment like bank deposit.

Respondent Answer

Percentage

Yes 65

No 35

% OF RESPONDENT

65

35

Yes

No

InfluenceInfluence

Interpretation:- Interpretation:- From the data collected it is clear that most of people From the data collected it is clear that most of people look at the returns that the Mutual funds are providing .They look at look at the returns that the Mutual funds are providing .They look at the returns not the current NAV .However, there is some class of the returns not the current NAV .However, there is some class of people who look at these parameters and their percentage is 23% and people who look at these parameters and their percentage is 23% and some consider both factors while investing in funds and their some consider both factors while investing in funds and their percentage is 21%. percentage is 21%.

23%

56%

21%

0%

10%

20%

30%

40%

50%

60%

BY NAV RETURNS Both

FINDINGSFINDINGS Mutual funds industry is enlarging its size in India. Number of Mutual funds industry is enlarging its size in India. Number of

investors is rising, and number of AMCs is going up. These changes investors is rising, and number of AMCs is going up. These changes are likely to happen.are likely to happen.

Private sector is aggressively participating in mutual funds business. Private sector is aggressively participating in mutual funds business.

Numbers of schemes are much more than earlier.Numbers of schemes are much more than earlier.

This situation pushes investors back from investment. They wait and This situation pushes investors back from investment. They wait and

hold cash rather than investing.hold cash rather than investing.

This study found that investors are willing to invest with high rate of This study found that investors are willing to invest with high rate of

return.return.

RECOMMENDATIONSRECOMMENDATIONS Mutual funds offer a lot of benefit which no other single option could Mutual funds offer a lot of benefit which no other single option could

offer. But most of the people are not even aware of what actually a offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets.the advisors should try to change their mindsets.

The advisors should target for more and more young investors. Young The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time.for advisors due to lack of expertise and time.

Investor can also plan like one mutual fund of diversified equity plan, Investor can also plan like one mutual fund of diversified equity plan, second mutual fund of balanced type and third one you can plan of debt second mutual fund of balanced type and third one you can plan of debt type etc. In this manner the money will get diversified, risk is reduced type etc. In this manner the money will get diversified, risk is reduced and the investor will get excellent profit.and the investor will get excellent profit.

The advisors may try to highlight some of the value added benefits of The advisors may try to highlight some of the value added benefits of MFs such as tax benefit, rupee cost averaging, and systematic transfer MFs such as tax benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc. these benefits are not offered by other options plan, rebalancing etc. these benefits are not offered by other options singlehandedly.singlehandedly.

Thanks for your co-orporation