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A
Project
on
“ASSET
ASSET ALLOCATION”
BY
VINAY PATAWARI
Page 1 of 22
PERSONAL DETAILS
Course : PGDM
Roll. No : 35
Specialization : Finance
COMPANY DETAILS
Mumbai- 400018.
Page 2 of 22
ACKNOWLEDGEMENT
Page 3 of 22
TABLE OF CONTENT
CONTENT
1. Executive Summary 5
6. Various schemes 12 – 20
7. Conclusion 21
Page 4 of 22
EXECUTIVE SUMMARY
It's a hard fact that investments in mutual fund are always risky.
Investors should always be conscious of the fact that Mutual Funds
invest their funds in capital market instruments such as shares,
debentures, bonds etc and that all the capital market instruments
have risk.
Even there is no one mutual fund that will be suitable to all kinds of
investors. Hence, mutual fund investors need to identify a suitable
scheme for them. It will be the first step towards making successful
investments in mutual funds to make Mutual Funds their “CUP OF
TEA”.
Page 5 of 22
MUTUAL FUND
• Mutual fund is a pool of money, which is collected from many
investors and is invested by an asset management company to
achieve some common objective of the investors.
Page 6 of 22
OVERVIEW OF MUTUAL FUND INDUSTRY IN INDIA
• Indian mutual fund industry’s average asset under
management slid from the record high of Rs.6.02 Lakhs cr in
May 2008 to 5.66 Lakhs cr in June.
• UTI and BIRLA mutual fund continued to figure among the top 5
mutual fund.
• UTI and BIRLA mutual fund were at the 4th and 5th spot with
average assets under management of Rs.50770 cr and
Rs.41093 cr respectively.
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ASSET ALLOCATION
• Asset allocation is the current rage in the mutual fund
industry.
Page 8 of 22
ASSET CLASSES IN ASSET ALLOCATION
• There are three major types of asset classes they are :-
Cash
Stocks
Bonds
Page 9 of 22
STARTEGIC ASSET ALLOCATION
• It recommends adjusting the percentages for each group of
investors after taking into account of their age, financial
circumstances and objectives.
• Distribution phase :-
Older investor - 50/50 (equity/ debt)
Younger investor - 60/40 (equity/ debt)
• Accumulation phase :-
Older investor - 70/30 (equity/ debt)
Younger investor - 80/20 (equity/ debt)
Page 10 of 22
FIXED VS. FLEXIBLE ASSET ALLOCATION
• A fixed ratio of asset allocation means that balance is
maintained by liquidating a part of the position in the asset
class with higher return and reinvesting in the other assets with
lower return.
• This is not what the investor normally do. They tend to increase
their equity position when equity prices tend to climb up and
vice versa.
• As stocks and bonds will give different returns over time, initial
asset allocation will change, generally in favour of equity
portion as its return would be higher than bond portion.
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TACTICAL ASSET ALLOCATION
• Despite the difficulty of forecasting people do it and fund
managers themselves change their asset allocation
percentages in the light of their views on the future movements
in asset prices.
VARIOUS SCHEMES
Equity/growth schemes
Debt/income schemes
Balanced schemes
Page 12 of 22
EQUITY/GROWTH SCHEMES
• The aim of the growth fund is to provide capital appreciation
over the medium to long run.
• Growth schemes are good for the investors having a long term
outlook seeking appreciation over a period of time.
Average returns –
ANALYSIS – Here most of the funds are invested into equities and as
a result the return on the amount invested has increased from
14.11% to 60.72% after the end of 5 years. So here the risk higher is
the return. Here young aged investors can take the advantage of this
kind of the funds.
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DEBT/INCOME SCHEMES
• The aim of the income funds is to provide regular and steady
income to the investors.
Average returns –
Page 16 of 22
SECTOR SPECIFIC SCHEMES
• These are the funds/schemes which invest in the securities of
only those sectors or industries as specified in the offer
document e.g. software, FMCG and etc.
• While these funds may give higher returns and they are more
risky compared to the diversified funds.
Average returns –
Page 17 of 22
PORFOLIO OF RELIANCE DIVERSIFIED POWER SECTOR FUND AS
ON 31ST MARCH, 08
ANALYSIS – Here most of the funds are invested into equities of the
booming sector and as a result the return on the amount invested
has increased from 23.15% to 63.74% after the end of 3 years. Here
risk is high so as the return. This kind of the fund is suitable to
investors who have high risk taking ability.
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BALANCED SCHEMES
• Balanced funds usually invest in equity (shares) and debt (fixed
income instrument).
Average returns –
Page 19 of 22
TOP HOLDINGS AS A % OF TOTAL ASSETS
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CONCLUSION
• Invest systematically.
Mid and small caps to boost returns and large caps to add
stability to your portfolio.
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BIBLIOGRAPHY
• AMFI Workbook
• India Today
• Business World
• ICFAI Journal
WEBLIOGRAPHY
• www.valueresearch.com
• www.myiris.com
• www.amfiindia.com
• www.moneycontrol.com
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