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Introduction to Portfolio Management Investing in securities such as shares, debentures, and bonds is profitable as

Introduction to Portfolio Management

Investing in securities such as shares, debentures, and bonds is profitable as well as exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific knowledge as well artistic skill. In such investments both rationale and emotional responses are involved. Investing in financial securities is now considered to be one of the best avenues for investing one savings while it is acknowledged to be one of the best avenues for investing one saving while it is acknowledged to be one of the most risky avenues of investment.

“It is rare to find investors investing their entire savings in a single security. Instead, they tend to invest in a group of securities. Such a group of securities is called portfolio”. Creation of a portfolio helps to reduce risk, without sacrificing returns. Portfolio management deals with the analysis of individual securities as well as with the theory and practice of optimally combining securities into portfolios. An investor who understands the fundamental principles and analytical aspects of portfolio management has a better chance of success.

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Portfolio Management An investor considering investment in securities is faced with the problem of choosing from

Portfolio Management

An investor considering investment in securities is faced with the problem of choosing from among a large number of securities and how to allocate his funds over this group of securities. Again he is faced with problem of deciding which securities to hold and how much to invest in each. The risk and return characteristics of portfolios. The investor tries to choose the optimal portfolio taking into consideration the risk return characteristics of all possible portfolios.

As the risk return characteristics of individual securities as well as portfolios also change. This calls for periodic review and revision of investment portfolios of investors.

An investor invests his funds in a portfolio expecting to get good returns consistent with the risk that he has to bear. The return realized from the portfolio has to be measured and the performance of the portfolio has to be evaluated.

It is evident that rational investment activity involves creation of an investment portfolio. Portfolio management comprises all the processes involved in the creation and maintenance of an investment portfolio. It deals specifically with the security analysis, portfolio analysis, portfolio selection, portfolio revision & portfolio evaluation. Portfolio management makes use of analytical techniques of analysis and conceptual theories regarding rational allocation of funds. Portfolio management is a complex process which tries to make investment activity more rewarding and less risky.

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Selection of Portfolio The selection of portfolio depends upon the objectives of the investor. The selection

Selection of Portfolio

The selection of portfolio depends upon the objectives of the investor. The selection of portfolio under different objectives are dealt subsequently

Objectives and asset mix

If the main objective is getting adequate amount of current income, sixty percent of the investment is made in debt instruments and remaining in equity. Proportion varies according to individual preference.

Growth of income and asset mix

Here the investor requires a certain percentage of growth as the income from the capital he has invested. The proportion of equity varies from 60 to 100 % and that of debt from 0 to 40 %. The debt may be included to minimize risk and to get tax exemption.

Capital appreciation and Asset Mix

It means that value of the investment made increases over the year. Investment in real estate can give faster capital appreciation but the problem is of liquidity. In the capital market, the value of the shares is much higher than the original issue price.

Safety of principle and asset mix

Usually, the risk adverse investors are very particular about the stability of principal. Generally old people are more sensitive towards safety.

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Risk and return analysis

Risk and return analysis The traditional approach of portfolio building has some basic assumptions. An investor

The traditional approach of portfolio building has some basic assumptions. An investor wants higher returns at the lower risk. But the rule of the game is that more risk, more return. So while making a portfolio the investor must judge the risk taking capability and the returns desired.

Diversification

Once the asset mix is determined and risk return relationship is analyzed the next step is to diversify the portfolio. The main advantage of diversification is that the unsystematic risk is minimized.

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Evolution of Portfolio Management Portfolio management is essentially a systematic method of maintaining one‘s investment efficiently.

Evolution of Portfolio Management

Portfolio management is essentially a systematic method of maintaining one‘s investment

efficiently. Many factors have contributed to the existence and development of the

concept.

In the early years of the century analyst used financial statements to find the value of the securities. The first to be analyzed using this was Railroad Securities of the USA. A

booklet entitled ―The Anatomy of the Railroad‖ was published by Thomas F. Woodlock

in 1900. As the time progressed this method became very important in the investment field, although most of the writers adopted different ways to publish there data.

They generally advocated the use of different ratios for this purpose. John Moody in his

book ―The Art of wall Street Investing‖, strongly supported the use of financial ratios to

know the worth of the investment. The proposed type of analysis later on became the ―common-size‖ analysis.

The other major method adopted was the study of stock price movement with the help of price charts. This method later on was known as Technical Analysis. It evolved during 1900-1902 when Charles H. Dow, the founder of the Dow Jones and Co. presented his view in the series of editorials in the Wall Street Journal in USA. The advocates of technical analysis believed that stock prices movement is ordered and systematic and the definite pattern could be identified. There investment strategy was build around the identification of the trend and pattern in the stock price movement.

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Another prominent author who supported the technical analysis was Ralph N. Elliot who published a book

Another prominent author who supported the technical analysis was Ralph N. Elliot who

published a book in the year 1938 titled ―The Wave Principle‖. After analyzing 75 years

data of share price, he concluded that the market movement was quite orderly and followed a pattern of waves. His theory is known as Elliot Wave Theory.

According to J.C. Francis the development of investment management can be traced chronologically through three different phases.

First phase is known as Speculative Phase. Investment was not a wide spread activity, but a cake of few rich people. The process is speculative in nature. Investment management was an art and needed skills. Price manipulation was resorted to by the investors. During this time period pools and corners were used for manipulation. The result of this was the stock exchange crash in the year 1929. Finally the daring speculative ventures of investors were declared illegal in the US by the Securities Act of 1934.

Second phase began in the year 1930. The phase was of professionalism. After coming up of the Securities Act, the investment industry began the process of upgrading its ethics, establishing standard practices and generating a good public image. As a result the investments market became safer place to invest and the people in different income group started investing. Investors began to analyze the security before investing. During this period the research work of Benjamin Graham and David L. Dood was widely publicized and publicly acclaimed. They published a book ―Security Analysis‖ in

1934, which was highly sought after. There research work was considered first work in the field of security analysis and acted as the base for further study. They are considered as pioneers of security analysis as a discipline.

Third phase was known as the scientific phase. The foundation of modern portfolio theory was laid by Markowitz. His pioneering work on portfolio management was described in his article in the Journal of Finance in the year 1952 and subsequent books published later on.

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He tried to quantify the risk. He showed how the risk can be minimized through proper

He tried to quantify the risk. He showed how the risk can be minimized through proper diversification of investment which required the creation of the portfolio. He provided technical tools for the analysis and selection of optimal portfolio. For his work he won the Noble Prize for Economics in the year 1990.

The work of Markowitz was extended by the William Sharpe, John Linter and Jan Mossin through the development of the Capital Asset Pricing Model (CAPM).

If we talk of the present the last two phases of Professionalism and Scientific Analysis are currently advancing simultaneously with investment in various financial instruments becoming safer, with proper knowledge to each and every investor.

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Role of Portfolio Management There was a time when portfolio management was an exotic term. A

Role of Portfolio Management

There was a time when portfolio management was an exotic term. A practice which is beyond the reach of the small investor, but the time has changed now. Portfolio management is now a common term and is widely practiced in INDIA. The theories and concepts relating to portfolio management now find there way in the front pages of the financial newspapers and magazines.

In early 90‘s India embarked on a program of economic liberalization and globalization,

with high participation of private players. This reform process has made the Indian industry efficient, with rapid computerization, increased market transparency, better infrastructure and customer services, closer integration and higher volume. The markets are dominated by large institutional investors with their diversified portfolios. A large number of mutual funds have come up in the market since 1987. With this development investment in securities has gained considerable momentum

Along with the spread of the securities investment way among Indian investors have changed due to the development of the quantitative techniques. Professional portfolio management, backed by research is now being adopted by mutual funds, investment consultants, individual investors and big brokers. The Securities Exchange Board of India (SEBI) is a regulatory body in INDIA. It ensures that the stock market is free from fraud, and of course the main objective is to ensure that the investor‘s money is safe.

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With the advent of computers the whole process of portfolio management has become quite easy. The

With the advent of computers the whole process of portfolio management has become quite easy. The computer can absorb large volumes of data, perform the computations accurately and quickly give out the results in any desired form. Moreover simulation, artificial intelligence etc provides means of testing alternative solutions.

The trend towards liberalization and globalization of the economy has promoted free flow of capital across international borders. Portfolio not only now include domestic securities but foreign too. So financial investments can‘t be reaped without proper management.

Another significant development in the field of investment management is the introduction to Derivatives with the availability of Options and Futures. This has broadened the scope of investment management.

Investment is no longer a simple process. It requires a scientific knowledge, a systematic approach and also professional expertise. Portfolio management is the only way through which an investor can get good returns, while minimizing risk at the same time.

So portfolio management objectives can be stated as: -

  • Risk minimization.

  • Safeguarding capital.

  • Capital Appreciation.

  • Choosing optimal mix of securities.

  • Keeping track on performance.

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WHAT IS MUTUAL FUND ?? A mutual fund is a form of <a href=collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. 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 invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme is 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 portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy. The flow chart below describes broadly the working of a mutual fund. Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-13-2" src="pdf-obj-13-2.jpg">

WHAT IS MUTUAL FUND??

A mutual fund is a form of collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities.

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 invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme is 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 portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

The flow chart below describes broadly the working of a mutual fund.

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A mutual fund is a managed group of owned securities of several corporations. These corporations receive
A mutual fund is a managed group of owned securities of several corporations. These corporations receive

A mutual fund is a managed group of owned securities of several corporations. These corporations receive dividends on the shares that they hold and realize capital gains or losses on their securities traded. Investors purchase shares in the mutual fund as if it was an individual security. After paying operating costs, the earnings (dividends, capital gains or loses) of the mutual fund are distributed to the investors, in proportion to the amount of money invested.

A mutual fund may be either an open-end or a closed-end fund. An open-end mutual fund does not have a set number of shares; it may be considered as a fluid capital stock. The number of shares changes as investors buys or sell their shares. Investors are able to buy and sell their shares of the company at any time for a market price. However the open- end market price is influenced greatly by the fund managers. On the other hand, closed- end mutual fund has a fixed number of shares and the value of the shares fluctuates with the market. But with close-end funds, the fund manager has less influence because the price of the underlining owned securities has greater influence

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 across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time.

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Mutual fund issues units to the investors in accordance with quantum of money invested by them.

Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives, which are launched from time to time.

The concept of mutual fund originated in Belgium by the ―Society Generale de Belgique” in the year 1822. Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations.

A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day-to-day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV

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per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual

per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

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per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual

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TYPES OF MUTUAL FUNDS SCHEMES Mutual fund schemes may be classified on the basis of itsopen-ended means that at the end of every day, the investment management company sponsoring the fund issues new shares to investors and buys back shares from investors wishing to leave the fund. Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-17-2" src="pdf-obj-17-2.jpg">

TYPES OF MUTUAL FUNDS SCHEMES

Mutual fund schemes may be classified on the basis of its structure and its investment objective-:

  • A) By Structure

1) Open-ended Fund

An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. The term Mutual fund is the common name for an open-end investment company. Being open-ended means that at the end of every day, the investment management company sponsoring the fund issues new shares to investors and buys back shares from investors wishing to leave the fund.

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2) Closed-end Funds

2) Closed-end Funds A closed-end fund has a stipulated maturity period which generally ranging from 3

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. 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 they 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 investor. 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.

3) Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

  • B) By Investment Objective

1) Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved

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that returns from stocks, have outperformed most other kind of investments held over the long term.

that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors for a period of time.

2) Income Funds

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.

3) Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

4) Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. Money market funds have relatively low risks, compared to other mutual funds (and most other investments). By law, they can invest in only certain high-quality, short-term investments issued by the U.S. government, U.S. corporations, and state and local governments. Money market funds try to keep their

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net asset value (NAV) — which represents the value of one share in a fund —

net asset value (NAV) which represents the value of one share in a fund at a stable $1.00 per share. But the NAV may fall below $1.00 if the fund's investments perform poorly. Investor losses have been rare, but they are possible. Money market funds pay dividends that generally reflect short-term interest rates, and historically the returns for money market funds have been lower than for either bond or stock funds. That's why "inflation risks" the risk that inflation will outpace and erode investment returns over time can be a potential concern for investors in money market funds.

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HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with
HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with
HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with
HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with
HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with

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

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First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act

First Phase 1964-87 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 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds)

  • 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 June

  • 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund

(Aug 89), Indian Bank Mutual Fund (Nov 89), 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 crores

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 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996 The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and

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acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets

acquisitions. 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 fund

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 Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. 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. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

GROWTH IN ASSETS UNDER MANAGEMENT

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ORGANISATION OF MUTUAL FUND There are many entities involved and the diagram below illustrates the organizational
ORGANISATION OF MUTUAL FUND There are many entities involved and the diagram below illustrates the organizational

ORGANISATION OF MUTUAL FUND

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund:

ORGANISATION OF MUTUAL FUND There are many entities involved and the diagram below illustrates the organizational

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Trends in Transactions on Stock Exchanges by Mutual Funds (since January 2000) Equity Debt (Rs (Rs

Trends in Transactions on Stock Exchanges by Mutual Funds (since January 2000)

 

Equity

Debt (Rs

(Rs in

in

Crores)

Crores)

     

Net

   

Net

Gross

Gross

Purchase/

Gross

Gross

Purchase/

Time

Purchase

Sales

Sales

Purchase

Sales

Sales

Jan 2000-March 2000.

 

11492.19

  • 11070.54 -421.65

2764.72

1864.29

900.43

April 2000 -March 2001.

 

20142.76

  • 17375.78 -2766.98

13512.17

8488.68

5023.49

April 2001-March 2002.

 

15893.99

  • 12098.11 -3795.88

33583.64

22624.42

10959.22

April 2002-March 2003

 

16587.59

  • 14520.89 -2066.70

46663.83

34059.41

12604.42

April 2003-March 2004

 

35355.67

  • 36663.58 63169.93

1307.91

 

40469.18

22700.75

April 2004-March 2005

 

44597.23

  • 45045.25 62186.46

448.02

 

45199.17

16987.29

April 2005-March 2006

100435.90

86133.70

14302.20

109804.91

73003.67

36801.24

April 2006.

12752.47

9631.91

3120.56

11227.96

6800.08

4427.88

May 2006.

18345.43

10452.07

7893.36

15386.47

7774.06

7612.41

June 2006.

7843.52

9820.47

-1976.95

14235.54

8906.90

5328.64

July 2006.

7552.18

7633.89

-81.71

15982.62

8266.41

7716.21

August 2006.

8851.58

8425.14

426.44

16169.28

11853.22

4316.06

September 2006.

10345.23

9005.54

1339.69

12878.65

9591.24

3287.41

October 2006.

9944.46

9947.97

-3.51

10314.44

7929.50

2384.94

November 2006.

12675.21

12700.04

-24.83

13296.65

6961.92

6334.73

December 2006.

13181.43

11554.38

1627.05

7584.70

6256.15

1328.55

January 2007.

11643.60

12985.83

-1342.23

10830.62

8427.46

2403.16

February 2007.

12697.09

12971.14

-274.05

10351.99

7682.98

2669.01

March 2007 (upto 10th)

3844.74

4568.60

-723.86

4784.63

2660.08

2124.55

Total (April '06 - March '07)

129676.94

119696.98

9979.96

143043.55

93110.00

49933.55

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Trends in Transactions on Stock Exchanges by Mutual Funds Equity (Rs in crores) Debt (Rs in

Trends in Transactions on Stock Exchanges by Mutual Funds

 

Equity (Rs in crores)

Debt (Rs in crores)

 

Gross

 

Net

Gross

 

Net

Transactio

Purchase

Gross

Purchase

Purchase

Gross

Purchase

n Date

s

Sales

s / Sales

s

Sales

s/ Sales

01.03.07

767.80

 
  • 796.92 -29.12

845.18

411.54

433.64

02.03.07

442.25

 
  • 567.57 -125.32

238.24

272.74

-34.50

05.03.07

707.38

 

166.14

  • 541.24 591.73

981.15

 

389.42

06.03.07

528.54

 

68.44

  • 460.10 243.93

1148.53

 

904.60

07.03.07

338.20

 
  • 717.76 -379.56

690.76

282.95

407.81

08.03.07

578.23

 
  • 617.99 -39.76

533.50

524.92

8.58

09.03.07

482.34

 
  • 867.02 -384.68

347.27

327.74

19.53

10.03.07

0.00

0.00

0.00

0.00

4.53

-4.53

       
  • 4568.6 2660.0

   

Total

3844.74

0

-723.86

4784.63

8

2124.55

 

Property of Project Guru, www.projectguru.co.cc

 

28

Union Budget 2007-08 & the Mutual Fund Industry The 2007-08 budget presented by the Finance Minister

Union Budget 2007-08 & the Mutual Fund Industry

The 2007-08 budget presented by the Finance Minister was also a low impact budget, compared with the last year, whose fundamental message was for overall growth of the economy and a positive emphasis to be put on agricultural and rural development, as well as education, which will certainly give a long term boost to the growth of the economy. The reduction in fiscal deficit is also a positive step and the government will also increase spending on education by 34%.

Union Budget 2007-08 & the Mutual Fund Industry The 2007-08 budget presented by the Finance Minister

Markets have seen a major correction over the last few trading sessions. On 28 th the markets was hit hard from both sides, internally as well as externally. The budget had a few shockers when the dividend distribution tax was hiked, and on the other side the global market saw major meltdown with the Asian market were beaten the most, Chinese markets alone lost around 9% over the day. The Indian markets could not sustain the beating it got from both ends and saw the maximum decline witnessed in the last eight months. The market was around 200 points down after the markets opened for the day.

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29

But the announcement of the FM to hike dividend distribution tax saw another fall of more

But the announcement of the FM to hike dividend distribution tax saw another fall of more than 300 points which the markets was not able to recover till the end of the day. Among the major sectors Cement is clearly the most hit, and to some extent IT services also got hit, because of bringing both the sector under MAT.

The announcement of MAT of 11.3 % on IT companies was misinterpreted by the market on the budget day, by responding in negative, but saw some recovery, in the next trading day when markets realized that MAT can be used as a deferred tax asset by IT companies post FY 2010 to offset taxes, Secondly SEZs are still MAT free. Hence the impact is not severe as was thought on the budget day. Secondly, as per Finance Minister FBT on ESOP is still under notification.

The Indian Mutual Fund industry also suffered on announcement of the hike in dividend distribution tax. The DDT for the money market and liquid mutual funds has been proposed to be brought at par at 25%. Currently the rate is 12.5% for retail investor and 23% for institutional investors. The FM said that this was being done to restrict the arbitrage opportunities used by these schemes.

Another proposal put up by the Finance Minister was for Mutual Funds to play a bigger role in infrastructure development by launching and operating dedicated infrastructure funds which would directly invest into core sector projects. The Indian Mutual Fund industry already have schemes which are sector specific and invest into infrastructure sector through equities. Now after this particular proposal Mutual Funds can directly invest into infrastructure projects.

FM also allowed delivery based short selling for institutional participants. Mostly in all developed countries short selling is allowed. In India, till recently only the retail investors

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30

were allowed to enjoy this. Along with FII, Mutual Fund houses are also allowed for delivery

were allowed to enjoy this. Along with FII, Mutual Fund houses are also allowed for delivery based short selling.

FM has proposed to bring the asset management services offered by individuals under the service tax bracket. The individuals who provide investment fund management advisory services will now have to pay service tax. The managers will have to register themselves with the Central Excise department and have to pay service tax, if their service fee is more than Rs.8 lakh per annum.

Along with the above the FM also proposed for the retail investor to invest abroad through Mutual Funds. Currently the industry has quite a few mutual fund schemes which invest dedicatedly abroad. A few more schemes invest partially abroad.

On a whole, the budget other than the DDT hike for the liquid and the money market

mutual funds and the infrastructure funds didn‘t have much in store for the Mutual Fund

industry.

To summarize, the Budget will sustain high economic growth through larger investments, increased savings and building of manpower capabilities.

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31

Property of Project Guru, www.projectguru.co.cc
Property of Project Guru, www.projectguru.co.cc
Property of Project Guru, www.projectguru.co.cc

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32

USAGE OF MUTUAL FUND Mutual funds can invest in many different kinds of securities. The mostcash, stock, and bonds, but there are hundreds of sub-categories. Stock funds, for instance, can invest primarily in the shares of a particular industry, such as technology or utilities. These are known as sector funds. Bond funds can vary according to risk (high yield or junk bonds, investment-grade corporate bonds), type of issuers (government agencies, corporations, or municipalities), or maturity of the bonds (short or long term). Both stock and bond funds can invest in primarily US securities (domestic funds), both US and foreign securities (global funds), or primarily foreign securities (international funds). By law, mutual funds cannot invest in commodities and their derivatives or in real estate. However, there do exist real estate investment trusts, or REITs, which invest solely in real estate or mortgages, and mutual funds are allowed to hold shares in REITs. A mutual fund may restrict itself in other ways. These restrictions, permissions, and policies are found in the prospectus, which every open-end mutual fund must make available to a potential investor before accepting his or her money. Most mutual funds' investment portfolios are continually adjusted under the supervision of a professional manager, who forecasts the future performance of investments appropriate for the fund and chooses the ones which he or she believes will most closely match the fund's stated investment objective. A mutual fund is administered through a parent management company, which may hire or fire fund managers. Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-32-2" src="pdf-obj-32-2.jpg">

USAGE OF MUTUAL FUND

Mutual funds can invest in many different kinds of securities. The most common are cash, stock, and bonds, but there are hundreds of sub-categories. Stock funds, for instance, can invest primarily in the shares of a particular industry, such as technology or utilities. These are known as sector funds. Bond funds can vary according to risk (high yield or junk bonds, investment-grade corporate bonds), type of issuers (government agencies, corporations, or municipalities), or maturity of the bonds (short or long term). Both stock and bond funds can invest in primarily US securities (domestic funds), both US and foreign securities (global funds), or primarily foreign securities (international funds).

By law, mutual funds cannot invest in commodities and their derivatives or in real estate. However, there do exist real estate investment trusts, or REITs, which invest solely in real estate or mortgages, and mutual funds are allowed to hold shares in REITs. A mutual fund may restrict itself in other ways. These restrictions, permissions, and policies are found in the prospectus, which every open-end mutual fund must make available to a potential investor before accepting his or her money.

Most mutual funds' investment portfolios are continually adjusted under the supervision of a professional manager, who forecasts the future performance of investments appropriate for the fund and chooses the ones which he or she believes will most closely match the fund's stated investment objective. A mutual fund is administered through a parent management company, which may hire or fire fund managers.

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33

Mutual funds are subject to a special set of regulatory, accounting, and <a href=tax rules. Unlike most other types of business entities, they are not taxed on their income as long as they distribute substantially all of it to their shareholders. Also, the type of income they earn is often unchanged as it passes through to the shareholders. Mutual fund distributions of tax-free municipal bond income are also tax-free to the shareholder. Taxable distributions can either be ordinary income or capital gains, depending on how the fund earned it. ADVANTAGES AND DISADVANTAGES OF MUTUAL FUND ADVANTAGES  Professional Management Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.  Diversification Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.  Convenient Administration Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-33-2" src="pdf-obj-33-2.jpg">

Mutual funds are subject to a special set of regulatory, accounting, and tax rules. Unlike most other types of business entities, they are not taxed on their income as long as they distribute substantially all of it to their shareholders. Also, the type of income they earn is often unchanged as it passes through to the shareholders. Mutual fund distributions of tax-free municipal bond income are also tax-free to the shareholder. Taxable distributions can either be ordinary income or capital gains, depending on how the fund earned it.

ADVANTAGES AND DISADVANTAGES OF MUTUAL FUND

ADVANTAGES

  • Professional Management

Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.

  • Diversification

Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

  • Convenient Administration

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34

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

  • Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

  • Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.

  • Liquidity

In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.

  • Transparency

You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

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35

  • Flexibility

 Flexibility Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans,

Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

  • Affordability

Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.

  • Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

  • Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

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36

DISADVANTAGES

DISADVANTAGES  Costs Despite Negative Returns Investors must pay sales charges, annual fees, and other expenses
  • Costs Despite Negative Returns

Investors must pay sales charges, annual fees, and other expenses (which we'll discuss below) regardless of how the fund performs. And, depending on the timing of their investment, investors may also have to pay taxes on any capital gains distribution they receive even if the fund went on to perform poorly after they

bought

  • Lack of Control

shares.

Investors typically cannot ascertain the exact make-up of a fund's portfolio at any given time, nor can they directly influence which securities the fund manager buys

and

sells

or

the

timing

of

those

trades.

  • Price Uncertainty

With an individual stock, you can obtain real-time (or close to real-time) pricing information with relative ease by checking financial websites or by calling your broker. You can also monitor how a stock's price changes from hour to hour or even second to second. By contrast, with a mutual fund, the price at which you purchase or redeem shares will typically depend on the fund's NAV, which the fund might not calculate until many hours after you've placed your order. In general, mutual funds must calculate their NAV at least once every business day, typically after the major U.S. exchanges close.

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37

HOW TO INVEST IN MUTUAL FUND ?? Step One - Identify your Investment needs Your financial

HOW TO INVEST IN MUTUAL FUND??

Step One - Identify your Investment needs

Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, and level of income and expenses among many other factors. Therefore, the first step is to assess your needs. You can begin by defining your investment objectives and needs which could be regular income, buying a home or finance a wedding or educate your children or a combination of all these needs, the quantum of risk you are willing to take and your cash flow requirements.

Step Two - Choose the right Mutual Fund

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38

The important thing is to choose the right mutual fund scheme which suits your requirements. The

The important thing is to choose the right mutual fund scheme which suits your requirements. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are the track record of the performance of the fund over the last few years in relation to the appropriate yardstick and similar funds in the same category. Other factors could be the portfolio allocation, the dividend yield and the degree of transparency as reflected in the frequency and quality of their communications. For selecting the right scheme as per your specific requirements,

Step Three - Select the ideal mix of Schemes

Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals.

Step Four - Invest regularly

The best approach is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. You can also avail the systematic investment plan facility offered by many open end funds.

Step Five- Start early

It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding

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39

lets you earn income on income and your money multiplies at a compounded rate of return.

lets you earn income on income and your money multiplies at a compounded rate of return.

Step Six - The final step

All you need to do now is to for online application forms of various mutual fund schemes and start investing. You may reap the rewards in the years to come. Mutual Funds are suitable for every kind of investor - whether starting a career or retiring, conservative or risk taking, growth oriented or income seeking

RIGHTS OF A MUTUAL FUND UNIT HOLDER

A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual Funds) Regulations is entitled to:

1) Receive unit certificates or statements of accounts confirming the title within 6 weeks from the date of closure of the subscription or within 6 weeks from the date of request for a unit certificate is received by the Mutual Fund.

2)

Receive

information

about

the

investment

policies,

financial position and general affairs of the scheme.

Property of Project Guru, www.projectguru.co.cc

investment

objectives,

40

3) Receive dividend within 42 days of their declaration and receive the redemption or repurchase proceedsindex fund would. There are also other criticisms levied against mutual funds as a consequence of the first criticism. One critique covers the concept of the sales load, an upfront or deferred fee as high as 8.5 percent of the amount invested in a fund. Firstly, some critics do not believe that this should be charged on a percentage basis instead of a flat fee basis. A so-called flat fee, annual fee or wrap fee does very little for an investor other than insure that they will pay an advisor a commission for as many years as their relationship exists. It helps Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-40-2" src="pdf-obj-40-2.jpg">

3)

Receive dividend within 42 days of their declaration and receive the redemption or repurchase proceeds within 10 days from the date of redemption or repurchase.

4)

Vote in accordance with the Regulations to:-

  • Approve or disapprove any change in the fundamental investment policies of the scheme, which are likely to modify the scheme or affect the interest of the unit holder. The dissenting unit holder has a right to redeem the investment.

  • Change the Asset Management Company.

  • Wind up the schemes.

5). Inspect the documents of the Mutual Funds specified document.

in the scheme's offer

CRITICISM OF MUTUAL FUNDS

The primary criticism of actively managed mutual funds comes from the historical fact that, over long periods of time, most have not returned as much as an index fund would.

There are also other criticisms levied against mutual funds as a consequence of the first criticism. One critique covers the concept of the sales load, an upfront or deferred fee as high as 8.5 percent of the amount invested in a fund. Firstly, some critics do not believe that this should be charged on a percentage basis instead of a flat fee basis. A so-called flat fee, annual fee or wrap fee does very little for an investor other than insure that they will pay an advisor a commission for as many years as their relationship exists. It helps

Property of Project Guru, www.projectguru.co.cc

41

an advisor create predictable (and since most investments trend upwards) increasing income flow. Secondly this paymentmarket timing. More recent criticisms have focused on the fund managers accepting extravagant gifts in exchange for trading stocks through certain investment banks, who presumably overcharge the fund compared to what another, non-gifting investment bank would charge Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-41-2" src="pdf-obj-41-2.jpg">

an advisor create predictable (and since most investments trend upwards) increasing income flow. Secondly this payment for advice and other services seems dubious to these critics because with so many mutual funds underperforming, but yet visibly attracting money, the advice given seemingly would be bad advice.

Mutual funds are also seen by some to have a systemic conflict of interest with regards to their size. Fund companies typically make money by charging a management fee of anywhere between 0.5-2.5 percent of the funds total assets. Although theoretically this could motivate them to cause the fund to perform well, since a well performing fund would cause the amount invested in the fund to rise and thus increasing the fee earned, it also could motivate the fund to focus on attracting more and more new investors, as the new investors adding money to the fund would also cause the assets of the fund to increase. Many investors believe however that the larger the pool of money one works with, the harder it is to invest. Thus the harder it becomes for the mutual fund to perform well. Thus a fund company can be focused on attracting new customers, hurting its existing investors' performance. A great deal of the funds costs are flat and fixed costs, such as the salary for the manager. Thus it can be more profitable to the fund to try and allow it to grow as large as possible, instead of limiting its assets.

Other practices of mutual funds have been criticized from time to time, such as funds allowing market timing. More recent criticisms have focused on the fund managers accepting extravagant gifts in exchange for trading stocks through certain investment banks, who presumably overcharge the fund compared to what another, non-gifting investment bank would charge

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42

TABLE OF MUTUAL FUND SCHEMES Mutual Investment Who should Investment Fund Objective Risk Portfolio invest horizon

TABLE OF MUTUAL FUND SCHEMES

Mutual

         

Investment

Who

should

Investment

Fund

Objective

Risk

 

Portfolio

invest

horizon

 

Type

 
 

Liquidity

+

 

Treasury Bills,

Those who park

 

Moderate

Certificate

of

their

funds

in

Money

Income

+

Negligible

Deposits,

current accounts

2

days

-

3

Market

 

weeks

 

Reservation

Commercial

or

short-term

 

of Capital

Papers, Call Money

bank deposits

 
 

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43

Short- term Call Money, Funds Liquidity + Little Commercial Those with (Floating Moderate Interest Papers, Treasury

Short-

         

term

Call

Money,

Funds

Liquidity

+

Little

Commercial

Those

with

(Floating

Moderate

Interest

Papers,

Treasury

surplus

-

short-

Income

Rate

Bills,

CDs,

Short-

short-term funds

term)

term

Government

securities.

Bond

   

Predominantly

   

Funds

Credit

Risk

Debentures,

Salaried

&

than

(Floating

Regular

Income

&

Interest

Government

conservative

-

Long-

Rate Risk

securities,

investors

term)

Corporate Bonds

 
       

Salaried

&

 

Gilt

Security

&

Interest

Government

conservative

Funds

Income

Rate Risk

securities

 

investors

 
 

Long-term

   

Aggressive

   

Equity

Capital

High Risk

Stocks

investors

with

Funds

long

term

out

Appreciation

look.

 

To

generate

       

returns

that

are

NAV varies

Portfolio

indices

Index

commensurate

with

index

like

BSE,

NIFTY

Aggressive

 

Funds

   

investors.

with

returns

performance

etc

 

of

respective

indices

Balanced

Growth

&

Capital

Balanced

ratio

of

Moderate

&

 

Funds

Regular

Market Risk

equity

and

debt

Aggressive

Property of Project Guru, www.projectguru.co.cc

3

weeks

-

3

months

More

 

9

-

12

months

 

12

months

& more

 

3

years plus

3

years plus

2

years plus

 

44

Income and Interest funds to ensure Risk higher returns at lower risk
Income
and Interest funds
to
ensure
Risk
higher
returns
at
lower risk

FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities. Per

unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date. It is calculated as

Total market value of the assets or securities liabilities in the portfolio of the fund

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45

Number of fu nd‘s units (shares) outstanding Sale Price It is the price you pay when

Number of fund‘s units (shares) outstanding

Sale Price

It is the price you pay when you invest in a scheme. It is also called as Offer Price. It may

include a sales load.

Repurchase Price

It is the price at which a close-ended scheme repurchases its units and it may include a

back-end load. This is also called Bid Price.

Redemption Price

It is the price at which open-ended schemes repurchase their units and close-ended

schemes redeem their units on maturity. Such prices are NAV related.

Sales Load

It is a charge collected by a scheme when it sells the units. Also called as ‗Front-end‘ load. Schemes that do not charge a load are called ‗No Load‘ schemes. Generally it is 2.25% for subscription below Rs. 2 Crores, 1.25% for Rs. 2 Crore to Rs. 5 Crore and nil above Rs. 5 Crore. However the load structure varies from company to company.

Repurchase or „Back-end‟ Load It is a charge collected by a scheme when it buys back the units from the unit holders. It is 2.25% and is charged if the investment is redeemed before six months from the date of investment in a mutual fund.

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46

Property of Project Guru, www.projectguru.co.cc

Property of Project Guru, www.projectguru.co.cc

47

RESEARCH METHODOLOGY RESEARCH:- Property of Project Guru, www.projectguru.co.cc
RESEARCH METHODOLOGY RESEARCH:- Property of Project Guru, www.projectguru.co.cc

RESEARCH METHODOLOGY

RESEARCH:-

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48

Research is a voyage of discovery , a movement from unknown to known. In common parlance,

Research is a voyage of discovery, a movement from unknown to known. In common

parlance, it refers to a scientific and systematic search for pertinent information on a

specific topic. It is the pursuit of truth with the help of study, observation, comparison

and experiment.

RESEARCH METHOD:-

Research methods may be understood as all those method / techniques that are used by

the researcher during the course of studying his research problem.

RESEARCH METHODOLOGY:-

Research methodology is a way to solve the problem scientifically and systematically.

In this we study the various steps that are generally adopted by researcher in studying his

research problem along with the logic behind them.

When we talk about research methodology, we not only talk of the research methods but

also the comparison of the logic behind the method we use in the context of our research

study and explain why we are using a particular method and why not others.

Research Objectives

  • To compare performance of different mutual funds in last 1 year.

  • To compare the return of a mutual fund using different investment ways.

  • To develop a new investment way in mutual funds.

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49

 To compare the different portfolios being maintained by selected mutual funds.  To understand the
  • To compare the different portfolios being maintained by selected mutual funds.

  • To understand the concept and importance of Mutual Fund & Portfolio Management in today‘s scenario.

RESEARCH DESIGN: -

A research design is the arrangement of conditions for collection and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in

procedure. The research design used in my study is basically exploratory in nature.

METHOD OF DATA COLLECTION: -

The study made in use secondary sources.

 To compare the different portfolios being maintained by selected mutual funds.  To understand the

SECONDARY DATA COLLECTION: Secondary data have been collected from

various Books and websites ..

SAMPLING DESIGN: -

A sample design is a definite plan for obtaining a sample from a given population .It refers to the technique or the procedure the researcher would adopt in selecting items for

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50

the sample i.e. the size of the sample. Judgment sampling has been adopted to select the

the sample i.e. the size of the sample. Judgment sampling has been adopted to select the Mutual Funds.

SAMPL E SIZE: -

Nine

ANALYSIS OF DATA: -

The data after collection has to be processed and analyzed with the outline laid for the

purpose at the time of developing the research plan. This is essential for a scientific study

and for insuring that we have all relevant data for

making contemplated comparison and

analysis.

Technically speaking processing implies editing, coding, classification and tabulation of

collected data so that they are amenable to analysis.

The term analysis refer to the computation of certain measures along with searching for

patterns of relationship that exist among data groups .To analyze the data percentages,

graphs, pie charts etc are used. After that interpretations are drawn and finally, a list of

suggestions and recommendations is put forward.

I hope the study will be interesting for a layman, a good experience for the

teacher and a key for the industrial pioneers in understanding and facing challenges.

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51

Introduction to the Topic Property of Project Guru, www.projectguru.co.cc
Introduction to the Topic Property of Project Guru, www.projectguru.co.cc
Introduction to the Topic Property of Project Guru, www.projectguru.co.cc
Introduction to the Topic Property of Project Guru, www.projectguru.co.cc
Introduction to the Topic Property of Project Guru, www.projectguru.co.cc

Introduction to the Topic

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52

The topic of study is “Com parative Analysis of Different Mutual Funds and Investing Ways ”.

The topic of study is “Comparative Analysis of Different Mutual Funds and

Investing Ways”. In it 9 mutual funds have been selected and there performance is

compared in last 1 year starting from 1 st February 2006 to 31 st January 2007. For this

there Net Asset Values is used and portfolio maintained is studied. Further returns of

different investing ways will be compared in the same mutual fund like One Time

Investment, Systematic Investment Plan. Further study would be done to find out that can

we develop a new way of investing in them and if yes than what the pre requisite for its

implementation. The whole study will be carried out in a manner like firstly different

mutual funds will be selected. Than there NAV‘s will be noted from 1 st February 2006 to

31 st January 2007. Using some calculations performance will be compared. Using the

Fact Sheet of the selected mutual fund minute details of each will be studied.

The Mutual Funds under study are as follows: -

  • SBI MAGNUM CONTRA

  • RELIANCE GROWTH FUND

  • FRANKLIN INDIA PRIMA FUND

  • HDFC EQUITY FUND

  • DSPML OPPORTUNITIES FUND

  • KOTAK BOND REGULAR FUND

  • JM INCOME FUND

  • LIC MF BOND

  • UTI BOND

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53

SBI MUTUAL FUND Property of Project Guru, www.projectguru.co.cc
SBI MUTUAL FUND Property of Project Guru, www.projectguru.co.cc
SBI MUTUAL FUND Property of Project Guru, www.projectguru.co.cc
SBI MUTUAL FUND Property of Project Guru, www.projectguru.co.cc

SBI MUTUAL FUND

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54

Incorporated 29 JUNE 1987 Ownership Public Ownership Pattern Foreign - 37%, Domestic-63% Sponsor State Bank of
Incorporated 29 JUNE 1987 Ownership Public Ownership Pattern Foreign - 37%, Domestic-63% Sponsor State Bank of

Incorporated

29 JUNE 1987

Ownership

Public

Ownership Pattern

Foreign - 37%,

Domestic-63%

Sponsor

State Bank of India, Society General Asset Management

Fund

The fund takes contrarian call on the markets. It has given compounded annual returns of 67% in past 5 years against the category average of 46%. It is the top wealth creator for the year 2006-07. The fund has mainly shifted its focus to large cap space. It also contains a large cash component of Rs 120 Crore, which amounts to about 10% of its portfolio. This prudence, along with its successful bet on banking stocks has helped the fund out perform the category.

Magnum Contra-G

Fund Rating

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55

Current Stats & Profile Trailing Returns Latest NAV 34.63 (12/03/07) As on 12 Mar 2007 FundPraj Industries Equity 4.97 Reliance Industries Equity 4.89 Hindustan Zinc Equity 3.78 Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-55-2" src="pdf-obj-55-2.jpg">
Current Stats & Profile Trailing Returns Latest NAV 34.63 (12/03/07) As on 12 Mar 2007 FundPraj Industries Equity 4.97 Reliance Industries Equity 4.89 Hindustan Zinc Equity 3.78 Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-55-4" src="pdf-obj-55-4.jpg">

Current Stats & Profile

Trailing Returns

Latest NAV

34.63 (12/03/07)

As on 12 Mar 2007

Fund

Category

   
 

52-Week High

39.91 (06/02/07)

Year to Date

-7.65

-8.15

   
 

52-Week Low

25.02 (14/06/06)

1-Month

-9.08

-8.49

   
 

Fund Category

Equity: Diversified

3-Month

-0.83

-1.40

   
 

Type

Open End

1-Year

13.17

6.47

   
 

Launch Date

July 1999

3-Year

57.66

33.18

   
 

Risk Grade

Below Average

5-Year

53.60

37.90

   
 

Return Grade

High

Return Since Launch

32.58

--

   
 

Net Assets (Cr)

1,448.78 (28/02/07)

Returns upto 1 year are absolute and over 1 year are

 

annualized.

 

Benchmark

BSE 100

   
   
   
 

Relative Performance (Fund Vs Category Average)

 
Latest NAV 34.63 (12/03/07) As on 12 Mar 2007 Fund Category 52-Week High 39.91 (06/02/07) Year
Current Stats & Profile Trailing Returns Latest NAV 34.63 (12/03/07) As on 12 Mar 2007 FundPraj Industries Equity 4.97 Reliance Industries Equity 4.89 Hindustan Zinc Equity 3.78 Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-55-188" src="pdf-obj-55-188.jpg">

Portfolio

Security

Instrument

% Net Assets

Equity

4.97

Equity

4.89

Equity

3.78

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56

<a href=Mahindra & Mahindra Equity 3.73 Jai Prakash Associates Equity 3.49 Aditya Birla Nuvo Equity 7.47 India Cements Equity 5.19 F A G Bearings India Equity 4.95 Jai Prakash Associates Equity 4.63 Motor Industries Co. Equity 4.42 Motor Industries Co. Equity 4.31 Kansai Nerolac Paints Equity 3.1 Torrent Pharmaceuticals Equity 3.1 India Infoline Equity 2.97 C C L Products (I) Equity 2.88 Cummins India Equity 2.85 T V S Motor Co. Equity 2.84 Ashok Leyland Equity 2.61 Merck Ltd. Equity 2.53 Esab India Equity 2.48 Federal Bank Equity 2.09 Sundaram Fasteners Equity 1.86 Ruchi Soya Inds. Equity 1.81 Sesa Goa Equity 1.8 Raymond Equity 1.72 Indraprastha Gas Equity 1.36 Infotech Enterprises Equity 1.31 Ansal Prop & Infra Equity 1.27 T I L Equity 1.26 Ciba Speciality Chemicals Equity 1.24 Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-56-2" src="pdf-obj-56-2.jpg">

Equity

3.73

Equity

3.49

Equity

7.47

Equity

5.19

Equity

4.95

Equity

4.63

Equity

4.42

Equity

4.31

Equity

3.1

Equity

3.1

Equity

2.97

Equity

2.88

Equity

2.85

Equity

2.84

Equity

2.61

Equity

2.53

Equity

2.48

Equity

2.09

Equity

1.86

Equity

1.81

Equity

1.8

Equity

1.72

Equity

1.36

Equity

1.31

Equity

1.27

Equity

1.26

Equity

1.24

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57

Top Sectors in Portfolio

Top Sectors in Portfolio Basic/Engineering 15.67 Diversified 13.61 Health Care 12.62 Construction 12.37 Automobile 11.13 FMCG

Basic/Engineering

15.67

Diversified

13.61

Health Care

12.62

Construction

12.37

Automobile

11.13

FMCG

5.6

Services

5.53

Chemicals

4.34

Financial Services

3.77

Technology

2.21

Metals & Metal Products

1.8

Textiles

1.72

Energy

10.83

18 12 10 8 6 4 2 0 Composition of Various Sectors 16 14 Basic/Engineerin Health
18
12
10
8
6
4
2
0
Composition of Various Sectors
16
14
Basic/Engineerin
Health Care
Automobile
Services
Financial Services
Metals & Metal
Energy
Sector
% Coposition
Composition of Various
Sectors

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58

RELIANCE MUTUAL FUND Incorporated 30 June 1995 Ownership Private Ownership Pattern Foreign - 0%, Domestic-100% Sponsor

RELIANCE MUTUAL FUND

RELIANCE MUTUAL FUND Incorporated 30 June 1995 Ownership Private Ownership Pattern Foreign - 0%, Domestic-100% Sponsor

Incorporated

30 June 1995

Ownership

Private

Ownership Pattern

Foreign - 0%,

Domestic-100%

Sponsor

Reliance Capital Ltd

About Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital

Trustee

Co.

Limited

(RCTCL),

as

the

Trustee.

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective from March 2004. Reliance Mutual Fund was formed to launch 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.

 

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59

The main objectives of the Trust are: To carry on the activity of a Mutual Fund

The main objectives of the Trust are:

  • To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unit holders;

  • To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their savings and

  • To take such steps as may be necessary from time to time to realize the effects without any limitation.

RELIANCE GROWTH FUND

It is a mid cap fund with around 75% in mid cap and a maximum of 25% in large caps. Large cap exposure gives fund tremendous liquidity but not in bearish time. It uses opportunistic style of investment i.e. looking at companies that are scalable in sectors with growth and management passion to grow. It invests nearly in 60 stocks with a bottom up approach. In top holdings, 5.3% of the assets are invested in Reliance Industries. The fund also invests across sectors such as steel, infrastructure, textile & cement, which move with economic and GDP growth. It is also one of the wealth creators in the year 2006-07. Last year return of this fund is 34.22%.

FUND DATA

Structure Inception Date Corpus Minimum Investment Fund Manager

Open-ended Equity Growth Scheme October 8, 1995 Rs 3214.06 crore (January 31, 2007) Rs 5,000 Mr. Sunil Singhania

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60

Entry Load Exit Load Benchmark SPECIAL FEATURE INVESTMENT OBJECTIVE <2cr - 2.25%; >_2cr<5cr - 1.25 %;>

Entry Load Exit Load Benchmark SPECIAL FEATURE INVESTMENT OBJECTIVE

<2cr - 2.25%; >_2cr<5cr - 1.25 %;> _5cr - Nil Nil BSE 100 Index Reliance Any Time Money Card To achieve long-term growth of capital by investing in Equity and equity related securities through a research- Based investment approach.

PORTFOLIO OF RELIANCE GROWTH FUND

Holdings

Weightage (%)

Equities

87.87

JSW Steels Ltd

4.51

Reliance Industries Ltd

3.93

Bharat Earth Movers Ltd

3.74

Jindal Saw Ltd

3.44

Divis Laboratories Ltd

2.84

Jaiprakash Associates

2.63

Northgate Technologies Ltd

2.55

Gujarat State Fertilizers & Chemicals Ltd

2.22

Cambridge Solutions Ltd

2.15

Adani Enterprises Ltd

2.03

Bombay Dyeing & Mfg Company Ltd

2.03

Bank Of Baroda

1.94

Escort India Ltd

1.94

Jain Irrigation Systems Ltd

1.93

Strides Arcolabs Ltd

1.89

Lupin Ltd

1.87

HCL Technologies Ltd

1.82

State Bank Of India

1.77

Greaves Cotton Ltd

1.61

Dena Bank

1.55

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61

AIA Engineering Ltd 1.52 United Phosphorous Ltd 1.47 Jindal Steel & Power Ltd 1.45 Crompton Greaves

AIA Engineering Ltd

1.52

United Phosphorous Ltd

1.47

Jindal Steel & Power Ltd

1.45

Crompton Greaves Ltd

1.45

Maharashtra Seamless Ltd

1.40

Radico Khaitan Ltd

1.40

Gujarat Mineral Development Corporation

1.39

Bharati Shipyard Ltd

1.38

Orient Paper & Industries Ltd

1.34

Shivvani Oil And Gas Exploration

1.29

Allcargo

Global Logistics Ltd

1.26

NIIT Technologies Ltd

1.24

Mahanagar Telephone Nigam Ltd

1.19

Bharat Petroleum Corp Ltd

1.17

Gammon India Ltd

1.16

Tamilnadu Newsprint Ltd

1.11

GHCL Ltd

1.06

Hexaware Technologies Ltd

1.03

Tata Motors

1.02

Educomp Solutions Ltd

1.02

Equity < 1% Of Corpus

14.11

Derivatives, Cash & Other Receivables

12.13

Grand Total

100.00

SECTOR ALLOCATION

Industry

% Allocation

Ferrous Metals

10.81

Industrial Capital Goods

9.72

Software

8.08

Pharmaceuticals

6.89

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62

Banks 5.27 Petroleum Products 5.11 Chemicals 4.53 Construction 4.14 Auto 3.94 Industrial Products 3.54 Fertilizers 3.39

Banks

5.27

Petroleum Products

5.11

Chemicals

4.53

Construction

4.14

Auto

3.94

Industrial Products

3.54

Fertilizers

3.39

Consumer Non Durables

2.93

Auto Ancillaries

2.72

Information Technology

2.55

Trading

2.03

Pesticides

1.47

Minerals/Mining

1.39

Cement

1.34

Oil

1.29

Transportation

1.26

Telecom - Services

1.19

Paper

1.11

Textiles Cotton

0.97

Net Asset Value

Date

Net Asset Value

Wednesday, February 01, 2006

201.18

Wednesday, March 01, 2006

210.22

Monday, April 03, 2006

229.75

Monday, May 01, 2006

251.68

Thursday, June 01, 2006

215.11

Monday, July 03, 2006

199.51

Tuesday, August 01, 2006

193.2

Friday, September 01, 2006

218.12

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63

Tuesday, October 03, 2006 234.47 Wednesday, November 01, 2006 250.23 Friday, December 01, 2006 261.78 Tuesday,

Tuesday, October 03, 2006

234.47

Wednesday, November 01, 2006

250.23

Friday, December 01, 2006

261.78

Tuesday, January 02, 2007

270.05

FRANKLIN INDIA PRIMA FUND

Fund

FRANKLIN India Prima Fund is a 12 year old diversified equity fund with a specific focus on mid/small cap stocks from India‘s emerging businesses. The investment approach is style-agnostic i.e. neither pure growth nor value addition. This style is chosen keeping in mind that different styles tend to out perform in different market conditions. If Rs. 1,000 is invested every month for last five years than there present value would have

been Rs 2.12 lakh. Its NAV shoot up from Rs 19.95 in 2001 to Rs. 174.84 in 2006. The fund holds around 40 stocks in its portfolio, with the top 10 holdings accounting for 43.04% of its net assets. The fund holds about Rs 172 Crore as cash. The corpus of the

fund is Rs 2,418 Crore. The main feature of the fund is that it hasn‘t seen heavy

redemption pressures throughout its 12 years. It is also one of the wealth creator funds. Last year return of this fund is 20.56%.

Fund Style

Tuesday, October 03, 2006 234.47 Wednesday, November 01, 2006 250.23 Friday, December 01, 2006 261.78 Tuesday,

Property of Project Guru, www.projectguru.co.cc

64

Fund Facts Asset Allocation Portfolio Concentration Equity 94% Top 3 sectors 41.90% Debt 0% Top 5

Fund Facts

 

Asset Allocation

Portfolio Concentration

Equity

94%

Top 3 sectors

41.90%

Debt

0%

Top 5 holdings

26.67%

Other

6%

Top 10 holdings

43.04%

Franklin India Prima-G

Fund Rating

Fund Facts Asset Allocation Portfolio Concentration Equity 94% Top 3 sectors 41.90% Debt 0% Top 5
Current Stats & Profile Trailing Returns Latest NAV 184.17 (12/03/07) As on 12 Mar 2007 Fund
Current Stats & Profile
Trailing Returns
Latest NAV
184.17 (12/03/07)
As on 12 Mar 2007
Fund
Category
52-Week High
220.51 (16/01/07)
Year to Date
-14.08
-8.15
52-Week Low
139.55 (14/06/06)
1-Month
-11.76
-8.49
Fund Category
Equity: Diversified
3-Month
-6.78
-1.40
Type
Open End
1-Year
-2.52
6.47
Launch Date
November 1993
3-Year
35.98
33.18
Risk Grade
Average
5-Year
48.12
37.90
Return Grade
Above Average
Return Since Launch
24.51
--
Net Assets (Cr)
1,583.62 (28/02/07)
Returns
upto
1
year
are absolute and
over
1
year
are
annualised.
Benchmark
S&P CNX 500
Relative Performance (Fund Vs Category Average)
Fund Facts Asset Allocation Portfolio Concentration Equity 94% Top 3 sectors 41.90% Debt 0% Top 5

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65

Portfolio

Portfolio Stock Instrument % Net Assets <a href=Aditya Birla Nuvo Equity 7.47 India Cements Equity 5.19 F A G Bearings India Equity 4.95 Jai Prakash Associates Equity 4.63 Motor Industries Co. Equity 4.42 Ipca Laboratories Equity 4.31 Kansai Nerolac Paints Equity 3.1 Torrent Pharmaceuticals Equity 3.1 India Infoline Equity 2.97 C C L Products (I) Equity 2.88 Cummins India Equity 2.85 T V S Motor Co. Equity 2.84 Ashok Leyland Equity 2.61 Merck Ltd. Equity 2.53 Esab India Equity 2.48 Federal Bank Equity 2.09 Sundaram Fasteners Equity 1.86 Ruchi Soya Inds. Equity 1.81 Sesa Goa Equity 1.8 Raymond Equity 1.72 Indraprastha Gas Equity 1.36 Infotech Enterprises Equity 1.31 Ansal Prop & Infra Equity 1.27 T I L Ciba Speciality Equity 1.26 Chemicals Equity 1.24 Property of Project Guru, www.projectguru.co.cc " id="pdf-obj-65-4" src="pdf-obj-65-4.jpg">

Stock

Instrument

% Net Assets

Equity

7.47

Equity

5.19

Equity

4.95

Equity

4.63

Equity

4.42

Equity

4.31

Equity

3.1

Equity

3.1

Equity

2.97

Equity

2.88

Equity

2.85

Equity

2.84

Equity

2.61

Equity

2.53

Equity

2.48

Equity

2.09

Equity

1.86

Equity

1.81

Equity

1.8

Equity

1.72

Equity

1.36

Equity

1.31

Equity

1.27

Equity

1.26

Equity

1.24

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66

Top Holdings in Portfolio % Sector Composition Basic/Engineering 15.67 Diversified 13.61 Health Care 12.62 Construction 12.37

Top Holdings in Portfolio

 

%

Sector

Composition

Basic/Engineering

15.67

Diversified

13.61

Health Care

12.62

Construction

12.37

Automobile

11.13

FMCG

5.6

Services

5.53

Chemicals

4.34

Financial Services

3.77

Technology

2.21

Metals

&

Metal

Products

1.8

Textiles

1.72

FMCG 6 8 10 12 14 16 18 Basic/Engineering Diversified 4 Health Care Construction Automobile Products
FMCG
6
8
10
12
14
16
18
Basic/Engineering
Diversified
4
Health Care
Construction
Automobile
Products
Services
Chemicals
Financial Services
Metals & Metal
% Composition
0
2
Technology
% Composition
Sector
Textiles

Net Asset Value

Date

Net Asset Value

Wednesday, February 01, 2006

179.74

Wednesday, March 01, 2006

185.56

Monday, April 03, 2006

201.75

Monday, May 01, 2006

209.27

Thursday, June 01, 2006

173.9

Monday, July 03, 2006

162.61

Tuesday, August 01, 2006

160.48

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67

Friday, September 01, 2006 176.04 Tuesday, October 03, 2006 185.8 Wednesday, November 01, 2006 196.98 Friday,

Friday, September 01, 2006

176.04

Tuesday, October 03, 2006

185.8

Wednesday, November 01, 2006

196.98

Friday, December 01, 2006

209.88

Tuesday, January 02, 2007

216.71

HDFC MUTUAL FUND

Friday, September 01, 2006 176.04 Tuesday, October 03, 2006 185.8 Wednesday, November 01, 2006 196.98 Friday,

Incorporated

30 June 2000

Ownership Ownership Pattern

Private Foreign - 0%,

Domestic-100%

Sponsor

Housing Development Finance Corporation Ltd.

Fund Speak

The main feature of this fund is that it has beaten its category for eight consecutive years. The fund is not having large portfolio with number of stocks between 3040. Top 5 stocks account for 35-40%. The funds investment policy is to buy quality and sustainable

businesses at a reasonable price. So even if a sector don‘t perform well now, but has

potential to perform in future, the fund will hold on to it. The fund is also known for quick sector move. The fund doesn‘t offer good returns in 1-2 years, but in long term. It is also the wealth creator fund. Last year return of this fund is 31% nearly.

Property of Project Guru, www.projectguru.co.cc

68

Portfolio

Portfolio Name of Instrument Industry + Quantity Market/ % to Fair Value NAV (Rs. In Lakhs)

Name of Instrument

 

Industry +

Quantity

Market/

% to

 

Fair

Value

NAV

(Rs.

In

Lakhs)

EQUITY

&

EQUITY

 

RELATED

Lanco Infratech Ltd

 

Engineering

48,119

125.59

0.33

Subtotal

125.59

0.33

(a) Listed / awaiting listing on Stock Exchanges

 

Divis Laboratories Ltd.

 

Pharmaceuticals

-

87,707

2,635.60

6.88

Infosys Technologies Ltd.

Software Industrial Capital

117,602

2,563.37

6.69

Bharat Heavy Electricals Ltd.

Goods

80,000

2,004.60

5.23

 

Telecom

Bharti Airtel Ltd.

 

Services

310,000

1,955.17

5.10

Crompton Greaves Ltd.

 

Industrial Capital Goods

700,000

1,854.30

4.84

State Bank of India

Banks

140,000

1,843.87

4.81

Reliance Industries Ltd.

Petroleum

140,000

1,742.23

4.55

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69

Products Apollo Tyres Ltd. Sun Pharmaceutical Industries Auto Ancillaries 472,796 1,726.18 4.51 Ltd. Pharmaceuticals 164,531 1,670.24
 

Products

Apollo Tyres Ltd. Sun Pharmaceutical Industries

Auto Ancillaries

472,796

1,726.18

4.51

Ltd.

Pharmaceuticals

164,531

1,670.24

4.36

Consumer

Non

ITC Ltd.

Durables

900,000

1,665.90

4.35

Consumer

Non

Kansai Nerolac Paints Ltd.

Durables

186,000

1,589.93

4.15

Thermax Ltd. Oil & Natural Gas

Industrial Capital Goods

416,969

1,588.23

4.15

Corporation Ltd.

Oil

172,500

1,487.55

3.88

Sundaram Clayton Ltd.

Auto Ancillaries

112,000

1,367.02

3.57

Grasim Industries Ltd.

Cement

47,500

1,321.90

3.45

Consumer

Non

Hindustan Lever Ltd. Satyam Computer Services

Durables

500,000

1,176.00

3.07

Ltd.

Software

240,000

1,102.80

2.88

Hindustan Petroleum

Petroleum

Corporation Ltd.

Products

325,000

915.85

2.39

Tata Motors Ltd.

Auto

110,000

890.07

2.32

Aditya Birla Nuvo Ltd.

Textile Products

75,928

881.83

2.30

Birla Corporation Ltd.

Cement

224,964

825.84

2.16

 

1,174,66

ISMT Ltd.

Metals

8

811.70

2.12

Hanung Toys & Textiles Ltd

Textile Products

519,066

670.37

1.75

Solar Explosives Ltd.

Chemicals

424,937

590.45

1.54

Eimco Elecon (India) Ltd.

Engineering

145,072

507.10

1.32

Voltamp Transformers Ltd

Power

75,890

452.61

1.18

Phoenix Lamps Ltd.

Auto Ancillaries

308,766

389.82

1.02

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70

Global Vectra Helicorp Ltd Transportation 159,810 256.26 0.67 Chennai Petroleum Petroleum Corporation Ltd. Products 98,859 218.23

Global Vectra Helicorp Ltd

Transportation

159,810

256.26

0.67

Chennai

Petroleum

Petroleum

Corporation Ltd.

Products

98,859

218.23

0.57

Great Eastern Shipping Company Ltd.

Transportation Consumer Non

96,000

209.81

0.55

EID Parry (India) Ltd.

Durables

144,640

201.92

0.53

Great Offshore Ltd.

Transportation

24,000

145.41

0.38

Subtotal

37,262.16

97.27

Total

37,387.75

97.60

MONEY MARKET INSTRUMENTS

 

Reverse Repos

873.55

2.28

Subtotal

873.55

2.28

Total OTHERS

873.55

2.28

Net Current Assets

42.14

0.12

Net Assets

38,303.44

100.00

Top Holding

Sectoral

Assets(%)

Industrial Capital Goods

14.22

Consumer Non Durables

12.10

Pharmaceuticals

11.24

Software

9.57

Auto Ancillaries

9.10

Petroleum Products

7.51

Cement

5.61

Telecom - Services

5.10

Banks

4.81

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71

Textile Products

4.05

Oil

3.88

Auto

2.32

Metals

2.12

Engineering

1.65

Transportation

1.60

Chemicals

1.54

Power

1.18

Money

Market

Instruments/Net

Receivables

2.40

Textile Products 4.05 Oil 3.88 Auto 2.32 Metals 2.12 Engineering 1.65 Transportation 1.60 Chemicals 1.54 Power
Metals 8.00 10.00 12.00 14.00 16.00 Industrial Capital Goods Pharmaceuticals Auto Ancillaries Cement Oil 4.00 Transportation
Metals
8.00
10.00
12.00
14.00
16.00
Industrial Capital
Goods
Pharmaceuticals
Auto Ancillaries
Cement
Oil
4.00
Transportation
Power
Sector
% Assets
Banks
6.00
Assets(%)
0.00
2.00

Net Asset Value

Date

Net Asset Value

Wednesday, February 01, 2006

112.483

Wednesday, March 01, 2006

119.495

Monday, April 03, 2006

130.819

Monday, May 01, 2006

134.053

Thursday, June 01, 2006

112.237

Monday, July 03, 2006

114.59

Tuesday, August 01, 2006

115.648

Friday, September 01, 2006

128.063

Tuesday, October 03, 2006

132.634

Wednesday, November 01, 2006

140.191

Friday, December 01, 2006

147.937

Tuesday, January 02, 2007

147.286

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72

DSP Merrill Lynch Opportunities Fund Fund The fund maintains a complicated portfolio. The fund has constantly

DSP Merrill Lynch Opportunities Fund

DSP Merrill Lynch Opportunities Fund Fund The fund maintains a complicated portfolio. The fund has constantly

Fund

The fund maintains a complicated portfolio. The fund has constantly figured in the top 25% of its category. The funds mandate is to move around promising sectors. The portfolio is highly diversified. Technology stock is the favourite, but fund also has

automobiles, FMCG, metals and engineering. If a sector isn‘t performing the fund

believes in buy and hold strategy. There is no mid and small cap stock in the portfolio as

the exposure doesn‘t typically exceeds 30%. Its fund managers are Mr. Anup Maheshwari and Mr. Soumendra Lahiri. It is also a wealth creator fund. Last year return of this fund is 36.4%.

Type of Scheme:

Open ended growth scheme

Options available:

  • Growth

  • Dividend

 
  • Payout

  • Reinvest

Minimum

Application

First Purchase - Rs. 5,000/-

amount:

 

Subsequent Purchase - Rs. 1,000/-

Entry Load:

For Regular investments

Property of Project Guru, www.projectguru.co.cc

73

2.25% : For investments < Rs 5.0 crs Nil : For investments >= Rs 5.0
  • 2.25% : For investments < Rs 5.0 crs

  • Nil : For investments >= Rs 5.0 crs

  • For SIP investments

    • 1%

Exit Load:

NIL

Contingent Deferred Sales Charge (CDSC):

  • For SIP investments

    • 1.25% : If investment is redeemed before the completion of 2 years

    • Nil : If investment is redeemed on or after the completion of 2 years

Under normal circumstances, it is anticipated that the asset allocation shall be as follows:

Indicative Asset Allocation

 
 

Indicative Allocation (% of

Instrument

 

Corpus)

Risk Profile

 

Equity

and

equity-related

 

securities

 

80% - 100%

Medium to High

   
 

Fixed

income

securities

 

(debt*

and

money

market

0% - 20%

Low to Medium

securities)

 
 

*Debt securities/instruments are deemed to include securitised debts.

 
HIGHLIGHTS Cut Off Time - Subscription 3:00 PM
HIGHLIGHTS
Cut Off Time - Subscription
3:00 PM

Property of Project Guru, www.projectguru.co.cc

74

Cut Off Time -Redemption 3:00 PM Cut Off Time - Switching 3:00 PM Normally within 3

Cut Off Time -Redemption

3:00 PM

 

Cut Off Time - Switching

 

3:00 PM

 
   

Normally within 3 Business Days of the

Redemption cheques issued^

receipt of redemption request

 
 

Systematic Investment Plan (SIP)

 

Monthly and Quarterly Options available

 

Minimum Investment for SIP

 

Rs. 2000/- (Effective November 15,2006)

 
   

Weekly, Monthly and Quarterly Options

Systematic Withdrawal Plan (SWP)

available

 
 

Minimum Withdrawal for SWP

 

Rs. 1,000/-

 
   

Weekly, Monthly and Quarterly Options