An Industry Research Report On

“Equity Mutual Funds”

(In Partial Fulfilment Of
Course 215 (Industry Analysis –Desk Research)
As Prescribed by University of Pune)

Under the guidance of Mrs. AparnaJawalekar

Prepared By:
Selin Patel(B-40)
Ketan Randive(A-40)
Aditya Purohit(D-37)
Nilesh Bhojwani(A-5)
Shubham Shelke(A-45)
Islmauddin(C-62)
 CERTIFICATE

The Desk Research Report titled-

“EQUITY MUTUAL FUNDS”
Is a bonafide work done by
SelinPatel(B-40)
Ketan Randive(A-40)
Aditya Purohit(D-37)
Nilesh Bhojwani(A-5)
Shubham Shelke(A-45)
Islmauddin(C-62)

For the award of degree of

MASTER OF BUSINESS ADMINISTRATION

______________

Mrs. Aparna Jawalekar

 DECLARATION

We, the undersigned, are the students of Indira Institute of Management, Pune
(IIMP) pursuing the first year of the course of Master of Business Administration
under University of Pune; hereby, we declare that this report submitted is correct
and original as per our knowledge and is not reproduced or copied from any
source. I hereby also declare that this project work is not submitted to any other
college/university.

Selin Patel(B-40)
Ketan Randive(A-40)
Aditya Purohit(D-37)
Nilesh Bhojwani(A-5)
Shubham Shelke(A-45)
Islmauddin(C-62)
 ACKNOWLEDGEMENTS
We take great pleasure in expressing our profound gratitude to our Desk Research
Guide Mrs. Aparna Jawalekar, who have taken keen interest and tremendous
enthusiasm in providing excellent guidance towards the completion of our Desk
Research Project. We would like to thank Dr. Pallavi Sajanapwar (HOD - MBA)
for giving us an opportunity to work on this Desk Research Project. And a whole
hearted Thanks to Dr. Pandit Mali, Director, IIM Pune for permitting us to
undertake this project work and guiding throughout the project span. Our deepest
gratitude to our parents, friends, classmates and those whom we might have
unknowingly forgot to mention.
 CHAPTER 1

INTRODUCTION

HISTORY OF MUTUAL FUND

Phase I – 1964 – 87: In 1963, UTI was set up by Parliament under UTI act and
givenamonopoly.The first equity Fund was launched in 1986

Phase II – 1987 – 93: Non-UTI, Public Sector mutual funds

.
Phase III – 1993 – 96: Introducing private sector funds.as well as open -
end funds.

Phase IV – 1996: Investor friendly regulatory measures Action taken by SEBI to

protect the investor, and To enhance investor’s returns through
taxbenefits.

A mutual fund is a scheme in which several people invest their money for a common
financial cause. The collected money invests in the capital market and the money, which they
earned, is divided based on the number of units, which they hold.

The mutual fund industry started in India in a small way with the UTI Act creating
what was effectively a small savings division within the RBI. Over a period of 25 years this
grew fairly successfully and gave investors a good return, and therefore in 1989, as the next
logical step, public sector banks and financial institutions were allowed to float mutual funds
and their success emboldened the government to allow the private sector to foray into this
area.

The advantages of mutual fund are professional management, diversification,

economies of scale, simplicity, and liquidity.

Mutual funds are easy to buy and sell. You can either buy them directly from the fund
company or through a third party. Before investing in any funds one should consider some
factor like objective, risk, Fund Manager’s and scheme track record, Cost factor etc.
There are many, many types of mutual funds. You can classify funds based Structure
(open-ended & close-ended), Nature (equity, debt, balanced), Investment objective (growth,
income, money market) etc.

Reliance Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, HDFC
Mutual Fund and Birla Sun Life Mutual Fund are the top five mutual fund company in India.

NEED FOR THE STUDY

The main purpose of doing this project was to know about mutual fund and its
functioning. This helps to know in details about mutual fund industry right from its inception
stage, growth and future prospects.
It also helps in understanding different schemes of mutual funds. Because my study
depends upon prominent funds in India and their schemes like equity, income, balance as
well as the returns associated with those schemes.
The project study was done to ascertain the asset allocation, entry load, exit load,
associated with the mutual funds. Ultimately this would help in understanding the benefits of
mutual funds to investors.
 OBJECTIVE:

 To give a brief idea about the benefits available from mutual funds investment.
 To give an idea of the types of schemes available
 To discuss about market trends of mutual fund.
 To study some of the mutual fund schemes
 To study promotion strategies of mutual fund

 Explore the recent developments in the mutual funds in India.

 To give an idea about the regulations of mutual funds.

ADVANTAGES OF MUTUAL FUNDS:

If mutual funds are emerging as the favourite investment vehicle, it is because of the
many advantages they have over other forms and the avenues of investing, particularly for
the investor who has limited resources available in terms of capital and the ability to carry
out detailed research and market monitoring. The following are the major advantages offered
by mutual funds to all investors:

1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to
hold a diversified investment portfolio even with a small amount of investment that would
otherwise require big capital.

2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from the
professional management skills brought in by the fund in the management of the investor’s
portfolio. The investment management skills, along with the needed research into available
investment options, ensure a much better return than what an investor can manage on his
own. Few investors have the skill and resources of their own to succeed in today’s fast
moving, global and sophisticated markets.

3. Reduction/Diversification of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he
places a deposit with a company or a bank, or he buys a share or debenture on his own or in
any other from. While investing in the pool of funds with investors, the potential losses are
also shared with other investors. The risk reduction is one of the most important benefits of a
collective investment vehicle like the mutual fund.

4. Reduction of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the
costs of investing such as brokerage or custody of securities. When going through a fund, he
has the benefit of economies of scale; the funds pay lesser costs because of larger volumes, a
benefit passed on to its investors.

5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell.
When they invest in the units of a fund, they can generally cash their investments any time,
by selling their units to the fund if open-ended, or selling them in the market if the fund is
close-end. Liquidity of investment is clearly a big benefit.

6. Convenience and Flexibility:

Mutual fund management companies offer many investor services that a direct market
investor cannot get. Investors can easily transfer their holding from one scheme to the other;
get updated market information and so on.

7. Tax Benefits:
Any income distributed after March 31, 2002 will be subject to tax in the assessment
of all Unit holders. However, as a measure of concession to Unit holders of open-ended
 equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed
at a concessional rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction uptoRs. 9,000 from
the Total Income will be admissible in respect of income from investments specified in
Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not
subject to Wealth-Tax and Gift-Tax.

TYPE OF MUTUAL FUND SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. thus mutual funds has Variety of flavors,
Being a collection of many stocks, an investors can go for picking a mutual fund might be
easy. There are over hundreds of mutual funds scheme to choose from. It is easier to think of
mutual funds in categories, mentioned below.

A) BY STRUCTURE

1. Open - Ended Schemes:

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.

2. Close - Ended Schemes:

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.
 3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and
close-ended schemes. The units may be traded on the stock exchange or may be open for sale
or redemption during pre-determined intervals at NAV related prices.

B)BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund manager’s
outlook on different stocks. The Equity Funds are sub-classified depending upon their
investment objective, as follows:
 Diversified Equity Funds

 Mid-Cap Funds

 Sector Specific Funds

 Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high
on the risk-return matrix.

2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities,
private companies, banks and financial institutions are some of the major issuers of debt
papers. By investing in debt instruments, these funds ensure low risk and provide stable
income to the investors
3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.

C) BY INVESTMENT OBJECTIVE

Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally invest a
major part of their fund in equities and are willing to bear short-term decline in value for
possible future appreciation.

Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to
provide regular and steady income to investors. These schemes generally invest in fixed
income securities such as bonds and corporate debentures. Capital appreciation in such
schemes may be limited.

Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically
distributing a part of the income and capital gains they earn. These schemes invest in both
shares and fixed income securities, in the proportion indicated in their offer documents
(normally 50:50).

Money Market Schemes:

Money Market Schemes aim 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.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time
you buy or sell units in the fund, a commission will be payable. Typically entry and exit
loads range from 1% to 2%. It could be worth paying the load, if the fund has a good
performance history.

No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is,
no commission is payable on purchase or sale of units in the fund. The advantage of a no
load fund is that the entire corpus is put to work.

OTHER SCHEMES
Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from
time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked
Savings Scheme (ELSS) are eligible for rebate.

Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the
BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks
that constitute the index. The percentage of each stock to the total holding will be identical to
 the stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.

Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries
as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the
performance of the respective sectors/industries. While these funds may give higher returns,
they are more risky compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.







Equity mutual funds

An equity mutual fund is an open or close ended fund that invests primarily in stock allowing
investor to buy into the fund and thus buy a basket of stock more easily than they could purchase
the individual security.

Equity fund categorised as

1. Large cap fund
2. Large and middle cap fund
3. Multi cap fund
4. Thematic cap
5. Contra Equity Fund
6. Focused Equity Fund

Large cap fund

An open capital scheme that invests at least 80% of its assets in shares of large capitalization
companies, that is, in the top 100 companies in terms of market capitalization. Large-cap funds
help you maintain stability in your portfolio, as they are less volatile than their small and mid-
cap counterparts. However, these funds generate relatively lower returns than small cap and mid
cap capital funds.

Large and middle cap fund

An open -ended equity scheme which invests at least 35% of its assets in large cap and 35% of
its assets in mid cap stocks each. Since a large and mid-cap fund invests in both large and mid-
cap stocks, it can give higher returns than purely large cap funds but potentially lower returns
than pure mid cap, small cap or multicap funds.

Multi cap fund

An open-ended equity scheme which invests at least 65% of its assets across large cap, mid cap,
and small cap stocks and equity related instruments. Multi cap funds can provide relatively
higher returns than other funds like large cap, mid cap, and small cap as they have the advantage
of investing across the market. In a multicap fund, the fund manager rebalances between large,
mid and small stocks and this is a lower-cost option than if you had to switch between large, mid
and small cap mutual funds yourself. The latter option can involve exit load and tax, while the
former does not.

Thematic fund
An open-ended scheme which invests at least 80% of its total assets in a particular sector or
theme such as Banking, IT or Pharma. These funds are a risky investment option as their returns
are dependent on a performance of single sector/theme but if timed correctly, can also give
extremely high returns.

Contra Equity Fund

An open ended equity scheme which follows contrarian investment strategy. This fund invests
against the ongoing marketing trends and bets its money on currently underperforming stocks.
This fund assumes that these current underperformers will recover in the long term as and when
the short-term concerns plaguing them are mitigated.

Focused Equity Fund:

An open ended equity scheme which invests a minimum of 65% of its total assets in maximum
30 stocks, mentioning the market capitalisation segments at which it intends to focus. Other
equity funds typically hold 50-100 stocks. These funds thus take higher risks their holdings, than
other types off equity funds but have the potential of giving good returns.
 Trustees
• Created through a document called the Trust Deed thatis executed by the Fund
Sponsor and registered withSEBI.
• The Trust-the mutual fund may be managed by a Board of Trustees- a body of
individuals or a Trust Company- a corporatebody.
• Protector of unit holdersinterests.
• 2/3 of the trustees shall be independent persons and shall not be associated with the person

Rights of Trustees:
• Approveeach of the schemesfloated by theAMC.
• The right to request any necessary informationfrom the AMC.
• May take corrective actionif they believe that the conduct of the fund's business
is not in accordancewith SEBIRegulations.
• Have the right to dismiss theAMC,

DISTRIBUTION CHANNEL

Mutual Funds are primary vehicles for large collective investments, working on
the principle of pooling funds.
A substantial portion of the investments happen at the retail level.
Agents and distributors are a vital link between the mutual funds and investors.

Agents
- Is a broker between the fund and the investor and acts on behalf of the principal.
- He is not exclusive to the fund and also sells other financial services. This in a way
helps him to act as a financialadvisor.
 Distribution Companies
- Is acompanywhich sells mutual funds on behalf of thefund.
- It has several employees or sub-broker underit.
- It manages distribution for several funds and receives commission for its services.

Banks and NBFCs

- Several banks, particularly private and foreign banks are involved in a fund distribution by
providing similar serviceslike that of distributioncompanies.
- They work on commissionbasis
Direct Marketing
- Mutual funds sell their own products through theirsales officers and employees
of theAMC.
- This channel is normally used to mobilize funds from high net worth individuals
and institutionalinvestors.

Agent Commissions

-There are no prescribed rules to regulate the maximum or minimum commissions

payable by a fund to its agents.
- In accordance with the regulations of SEBI, 1996, all initial expenses, including
brokerage fees paid to agents, can not exceed 6% of the resources collected under the
plan.
- The excess of distribution expenses must be assumed by the AMC.
A fund with no charge is authorized to charge the schemes with the commissions paid to the
agents as part of the regular administration and marketing expenses allowed by SEB
 CHAPTER 2
PROMOTERS AND MANAGEMENT ETHOS

2.1 Brief of the selected companies:

Companies Selected
2.2 HDFC MUTUAL FUND
1. Company Name: HDFC
2. Profile: Investment Management Company
3. Company belongs to which sector? Financial services
4. Establishment year: 1999
5. Brief of the company: We believe that one life is all you have, to be
the best you can be. And this belief fuels the
primal desire to create a bigger, better reality
every day, of course with the access to means
as a precondition.
Today, we’re the most diversified non-bank in
the country financing the widest set of
outcomes. The cornerstone of our success lies
in understanding your issues and pain points
in acquiring the means (finance) you need to
be your best self. By keeping your at the
centre, we’ve created products and services to
help you make your tomorrow better.
6. Name of CEO/MD of the company: Mr. MilindBarve
7. Is it multinational company? No
8. Head office/Corporate office Mumbai
9. Is it NSE/BSE listed? Yes. Both BSE and NSE
10. What is their current share price? (in 1560 rs NSE
Rupees)
11. Products and Services offered: Gold ETF,,ThematicEquity,Hybrid,Theme
based Debt,Duration Based Debt
12. Major Competitors: L&T mutual funds, ICICI PRUDENTIAL, Sbi
Mutual Fund Etc.
13. Customer Segments: The company chose to aggressively target the
consumer lending segment post 2008, at a
time when most lenders were exited the space,
enabling it to gain leadership position.

It focuses only on affluent customers across

product lines in the consumer and SME
segments, enabling better cross-selling of
products as well as continuous improvement
in fee income. This strategy makes it distinctly
different from its peers and has paid off well.

14. Brand Endorsement: For the fourth year in a row, HDFC Bank has
turned out to be India’s most valuable brand,
almost doubling its brand value since the
ranking began in 2014 from $9.4bn to $18.0bn
according to the BrandZ™ Top 50 Most
Valuable Indian Brands 2017 by WPP and
Kantar Millward Brown. The study mentioned
that India’s most valuable brands have
increased their brand value by 21 per cent to
$109.3bn last year. This compares with a 2 per
cent decline in 2016 and is well ahead of the 8
per cent value increase of the BrandZ™ Top
100 Most Valuable Global Brands 2017. The
data shows that consumers perceive HDFC
bank as increasingly innovative.
15. Understanding of the job description: HDFC Asset Management Company Ltd. is a
privately owned investment manager. The
firm manages equity, fixed income, and
balanced mutual funds for its clients. The firm
manages equity, fixed income, balanced, and
 real estate portfolios.

2.2.1 Management ethos and philosophy:

1. Customer First Always
2. Spirit of Adventure
3. Trust
4. Shared Ownership
5. High Standards

Philosophy:
The HDFC ASSET MANGEMENT - We believe, that, by giving the investor long-term
benefits, we have to constantly review the markets for new trends, to identify new growth sectors
and share this knowledge with our investors in the form of product offerings. We have come up
with various products across asset and risk categories to enable investors to invest in line with
their investment objectives and risk taking capacity.

Mission:

To be a dominant player in the Indian mutual fund space recognized for its high levels of ethical
and professional conduct and a commitment towards enhancing investor interests.
2.2.2 Brief profile of Top management
1. CEO and Managing Director-Mr.MilindBarve

MilindBarve is the MD & CEO at HDFC Asset Management Company. He joined the company
in 2005. Barve was responsible for the management of HDFC`s Treasury portfolio and for
raising funds from Financial Institutions and Capital Markets. He was also head of marketing for
retail deposit products and responsible for investment advisory relationships for Commonwealth
Equity Fund Mutual Fund and Invesco India Growth Fund. Mr.Barve is a Graduate in Commerce
and an Associate Member of the Institute of Chartered Accountants of India.
2. CFO- Mr.PiyushSurana

PiyushSurana is the CFO of HDFC Asset Management Company Limited.

Piyushsurana has been associated with HDFC AMC since Feb 2013 handling
responsibilities of Finance, Infrastructure and Administration.

2.2.3 CSR POLICY :

In particular, the Company will undertake CSR activities as specified in Schedule VII to the
Companies Act, 2013, but will not be limited to the following:
HDFC Asset Management Company Limited (AMC) is a subsidiary of HDFC Ltd. Being a part
of the HDFC group, corporate social responsibility (CSR) is an important part of AMC's culture
and value systems. AMC had set up a separate Corporate Social Responsibility Fund with the
object of participating and supporting projects undertaken by Non-Governmental organizations
(NGOs), community groups and others; for social/philanthropic causes, investor centric
initiatives, well before the CSR provisions / rules were effective under the Companies Act, 2013
(Act).

As an Investment Manager to HDFC Mutual Fund, one of our unique initiative for CSR was
launching series of Cancer Cure Funds partnering with Indian Cancer Society (ICS) to provide
financial assistance to the needy cancer patients for their treatment by tapping those investors
who would be willing to donate part of the dividend or entire dividend declared, if any, under the
scheme for this purpose.

2.2.4 INITIATIVES TOWARDS SOCIAL INCLUSION:

HDFC Mutual Fund won rating agency ICRA’s best equity fund house award.
Reliance Mutual Fund bagged the best debt fund house award at the 8th ICRA awards function
held in Mumbai .
HDFC Mutual Fund received the maximum number of awards - 16 in the equity category and
two in debt category. Reliance Mutual Fund and Birla Sun life Mutual Fund walked away with
six awards each.
2.3 ICICI Prudential

1. Company Name: ICICI Prudential

2. Profile: ICICI Prudential Asset Management
Company Ltd. is a leading asset
management company (AMC) in the
country focused on bridging the gap
between savings & investments and
creating long term wealth for investors
through a range of simple and relevant
investment solutions....
3. Company belongs to which sector? Finance and Investment
4. Establishment year: 1998
5. Brief of the company: The AMC is a joint venture between ICICI
Bank, a well-known and trusted name in
financial services in India and Prudential
Plc, one of UK’s largest players in the
financial services sectors. Throughout these
years of the joint venture, the company has
forged a position of pre-eminence in the
Indian Mutual Fund industry.

The AMC manages significant Assets

under Management (AUM) in the mutual
fund segment. The AMC also caters to
Portfolio Management Services for
investors, spread across the country, along
with International Advisory Mandates for
clients across international markets in asset
classes like Debt, Equity and Real Estate.

The AMC has witnessed substantial growth

in scale; from 2 locations and 6 employees
at the inception of the joint venture in 1998,
to a current strength of 2125 employees
with a reach across over 300 locations
reaching out to an investor base of more
than 4 million investors (As on December
31, 2018). The company’s growth
momentum has been exponential and it has
 always focused on increasing accessibility
for its investors.

Driven by an entirely investor centric

approach, the organization today is a
suitable mix of investment expertise,
resource bandwidth and process orientation.
The AMC endeavors to simplify its
investor’s journey to meet their financial
goals, and give a good investor experience
through innovation, consistency and
sustained risk adjusted performance.
6. Name of CEO/MD of the company: Nimesh
7. Is it multinational company? No
8. Head office/Corporate office Mumbai
9. Is it NSE/BSE listed? Yes. Both BSE and NSE
10. Products and Services offered: Mutual funds, Portfolio Management, Real
StateInvestment,AIF,Advisory Services
Etc.
11. Major Competitors: SBI MutalFund,ICICIPrudential,Aditya
Birla AMC.
12. Customer Segments:
13. Brand Endorsement: Under the initiative of ‘TarrakiKarein’,
ICICI Prudential Mutual Fund has launched
its latest TV commercial, ‘An opportunity
to grow with Big Companies’ with ICICI
Prudential Bluechip Fund. The campaign
highlights the fund’s investment in a
portfolio of the best companies in India,
and its aim to generate healthy returns for
its investors.

Conceptualised by Lowe Lintas, the

advertisement went on air on September 03,
2018. The campaign is supported by TV
commercials, social media engagements
and on-ground activations.

Speaking about the campaign, Abhijit Shah,

Head Marketing, Digital & Consumer
 Experience, said, “Investors today are more
comfortable with investing in big
companies that are well known and have a
good reputation, as they feel that their
money will be safer. Our latest campaign is
yet another expression of our commitment
to create awareness among the masses
around the benefits of making money work
for them".

14. Current News about the company: .

15. Understanding of the job description: It mainly comprises of sales, risk

management, credit and mutual fund,SIP
functions. The job roles include Meeting
Centre Manager, RCU Executive-MFI etc.
for freshers.

2.3.1 Management Ethos and philosophy:

Co. emphasis being on delivering superior long-term risk-adjusted performance, we follow a

disciplined approach to investment and risk management.

A robust monitoring and risk management process ensures checks and balances at every stage.
Here is what happens through every step of our proprietary investment process - GEM.

1. Generation of ideas: Analysts and fund managers actively identify new ideas: For equity
investing, the search spectrum includes investment team meetings, meetings with a company's
management, competitors, suppliers, industry experts, regulators, external research and reports.
And for fixed income funds, investment ideas are born out of team strategy meetings, in-depth
interaction with issuers and market participants, macro analysis and internal and external
research ideas.

2. Evaluation of companies: Filters such as liquidity, market capitalisation ownership and other
parameters help identify opportunities, which are then thoroughly evaluated for profitability,
business attractiveness, competitive positioning, balance sheet strength, management track
record, corporate governance and valuations for equities. Thorough credit or issuer analysis and
macro analysis underpins the evaluation framework for identifying issuers and instruments for
fixed income portfolios.
3. Manufacturing or Monitoring of portfolios: Among all the ideas that are generated and
evaluated, the fund manager picks those that have the most potential. Portfolios are monitored
continuously to ensure that they are positioned to meet their investment objectives and are within
the set risk framework. A fund manager may decide to exit a holding on achieving the price
target or for other reasons such as weakened business prospects or credit, or if better investment
opportunities wait in the wings

2.3.2 Profile of top management

Nimesh joined ICICI Prudential AMC (IPAMC) in 2007 as MD & CEO.

Prior to joining IPAMC, he was Senior General Manager at ICICI Bank where he handled many
responsibilities including project finance, corporate banking and international banking. He also
led ICICI Bank’s foray into Middle-East and African region and helped establish ICICI’s brand
presence in these geographies and the International arena.
IPAMC has achieved leadership position in the Indian Mutual Fund industry under his
leadership. His focus has been always on being investor-centric, maintaining high levels of
transparency and disclosures besides sticking to basics. This has helped the company to establish
itself as a credible and trust worthy brand.
He is a Chartered Accountant by qualification and has more than 25 years of experience in the
banking and financial services industry.
.

 Chief Financial Officer: Mr.B.Ramakrishna

 Ramakrishna joined IPAMC in September 2004.
 At IPAMC, Ramakrishna is the custodian of finance function and is also responsible for
driving Product Development, ETF & International Business besides overseeing the
Communications function. He plays an integral role in driving the key profitability
agenda through financial & corporate planning, budgetary control and corporate finance.
He is also responsible for driving key initiatives and projects.
 He has 30 years of rich experience across industries like FMCG and banking & financial
services.
 By qualification, Ramakrishna is a Chartered Accountant and a Cost Accountant.

2.3.3 CSR POLICY

A. Introduction
Corporate Social Responsibility (CSR) is the commitment of companies to provide resources
and support activities focused on enhancing economic and social development. It is the effort
made by companies to improve the living conditions of the local area in which they operate and
the society at large. The activities taken up as part of corporate social responsibility reflect the
intent to create a positive impact on society without seeking any commensurate monetary
benefits. CSR has been a long-standing commitment of the ICICI Group (the Group) and forms
an integral part of the Group’s activities. ICICI Foundation for Inclusive Growth (ICICI
Foundation) was established in 2008 with a view to significantly expand the ICICI Group’s
activities in the area of CSR. Over the last few years ICICI Foundation has developed significant
projects in specific areas, and has built capabilities for direct project implementation as opposed
to extending financial support to other organisations. The Company’s objective (either directly or
through ICICI Foundation) is to pro-actively support meaningful socio-economic development in
India and enable a larger number of people to participate in and benefit from India’s economic
progress. This is based on the belief that growth and development are effective only when they
result in wider access to opportunities and benefit a broader section of society. The Corporate
Social Responsibility Policy (CSR Policy) of the Company sets out the framework guiding the
Company’s CSR activities. The Policy also sets out the rules that need to be adhered to while
taking up and implementing CSR activities.
B. Scope of Corporate Social Responsibility policy
The Policy would pertain to all activities undertaken by the Company towards fulfilling its
corporate social responsibility objectives. The Policy would also ensure compliance with section
135 of the Companies Act, 2013 read with Schedule VII, related rules and circulars (the Act).
C. Corporate Social Responsibility Activities
The CSR Committee of the Company would consider and approve the projects or programmes
that the Company should undertake as CSR in India. The Company could also contribute to the
Prime Minister’s National Relief Fund or any other fund set up by the Central Government for
socio-economic development and relief. Any project or programme that is exclusively for the
benefit of the Company’s employees would not be considered as CSR.
1. Skill development and sustainable livelihoods Enabling India’s youth to gain skills that can
provide employment is key to realizing the potential of India’s demographic dividend and
driving inclusive growth. Improving employability of the youth from lower-income sections of
society is hence an important focus area. The ICICI Academy for Skills (ICICI Group Initiative)
has been set up across the country to provide job-oriented skill training to youth. Several centres
have been set up across the country. In this initiative, ICICI Foundation is also leveraging the
skills and training capabilities of large corporates in developing training modules in their
respective domains. ICICI Foundation is also liaising with corporates and businesses to get the
trained youth employed, through a job portal. The Company shall also offer skills in financial
literacy to the trained youth.
2. Education Education represents a critical area of action to realise India’s growth potential as
also makes it inclusive, by enabling children from all sections of society to have access to quality
basic education that equips them for taking up higher education or job-oriented skill training. At
the same time, India’s institutions of higher learning also require investment in capacity building
to support India’s growing and evolving needs and become global centres of excellence. The
Company, either directly or through not-for-profit entities including ICICI Foundation, shall
work with state governments and other not-for-profit organisations to improve the quality of
education in government and municipal schools, which account for the vast majority of
schoolgoing children in the country.
 3. Financial inclusion The Company believes that to improve the overall economic condition of
the low-income population and to empower them with means to overcome adversities or
inequalities, access to financial services is an important factor. Increasing the participation of the
rural population as well as the urban poor and migrant workers in the economic mainstream and
the formal financial system is imperative for India to leverage its growth potential. The
Company’s initiatives in this area include using various channels like its distributor network, and
leveraging technology to spread awareness about financial services. 8
4. Health care The healthcare challenge in India spans a number of dimensions, including access
to affordable healthcare for the poor; awareness of health issues and available facilities/benefits
among the less privileged segments of society and specific vulnerable sections of the population,
and child malnutrition, which impairs the capacity of a child to lead a healthy and productive
life. Addressing these challenges is essential to achieve the objective of inclusive growth. The
Company shall either directly or tie-up with ICICI Foundation to enhance the availability of
affordable healthcare to low income households, improve health seeking behaviour among
lowincome and vulnerable groups through higher awareness and improve child nutrition. The
Company will support initiatives to make available clean and safe drinking water.
5. Sanitation Assuring basic hygiene for one and all in India is a major task. Poor sanitation
affects the health of the people of the country. Women are the most affected by lack of proper
sanitation. Majority of the diseases arise due to lack of clean water and sanitation and due to
improper solid and liquid waste management. The Company believes in promoting better human
health and improved quality of life among people through improved sanitation measures. The
Company shall either directly or tie-up with ICICI Foundation to improve sanitation levels in
various regions through the schools and/or through participation in ‘Swatch Bharat Mission’ or
through any other programme.
6. Support employee engagement in CSR activities The Company supports the involvement of
its employees in CSR activities. The Company will encourage employees to participate in CSR
activities of the Company and ICICI Foundation.
7. Capacity building for corporate social responsibility ICICI Foundation will promote
incubation of expertise for implementing corporate social responsibility initiatives. It will also
work towards providing a platform for organisations engaged in social initiatives, and discussion
and thought leadership on critical challenges to inclusive growth. The Company will support
ICICI Foundation in its initiatives that promote individual and corporate philanthropy.
8. Other areas The Company will continue to provide support to specific needs such as during
natural disasters, through financial as well as logistical support.

2.4 SBI AMC

1 Company Name SBI Mutual fund AMC

2 Profile Long Term & Short Term Investment Company
3 Company belongs to which Financial Services
sector?
4 Establishment year
5 Brief of the company
6 Name of CEO/MD/VP of the
company
7 Is it multinational company?
8 Head Office/Corporate office
9 Is it NSE/BSE listed?
10 What is their share price?
11 How many branches/Unit across
India?
12 Products and services offered
13 Major Competitors(Product
Specific)
14 Brand Endorsements
15 Current News Of the company
With 30 years of rich experience in fund
management, we at SBI Funds Management Pvt.
Ltd. bring forward our expertise by consistently
delivering value to our investors. We have a strong
and proud lineage that traces back to the State Bank
of India (SBI) - India's largest bank. We are a Joint
Venture between SBI and AMUNDI (France), one
of the world's leading fund management companies.
With our network of over 222 points of acceptance
across India, we deliver value and nurture the trust
of our vast and varied family of investors.
Director – Ashwini Bhatia
Yes
Mumbai
Yes
408(NSE) ETF
Mumbai
Long Term Securities
HDFC Mutual Fund,ICICI Prudential
Among 45 odd mutual fund house in India, SBI
AMC is one of the most reputed and oldest names in
India mutual fund industry. It is also one of largest
investment management firms, managing
investment portfolios of more than 5.4 million
investors.
With 30 years of rich experience in fund
management, SBI Funds Management Pvt. Ltd.
brings forward their expertise by consistently
delivering value to their investors in form of
different mutual fund schemes.
The positive turn in macro factors, a continued
earnings recovery, and sustained liquidity are likely
to help equities deliver double-digit returns in 2019,
according to NavneetMunot, Chief Investment
Officer, SBI Mutual Fund.

However, he noted, it will be a roller-coaster ride as

intra-year volatility could be substantially high in
the current calendar year.
Mission
"To be the most preferred and the largest fund house for all asset classes, with a consistent track
record of excellent returns and best standards in customer service, product innovation,
technology and HR practices."

2.4.2TOP MANAGEMENT

Mr.AshwaniBhatia
(MD)
Mr.Ashwani Bhatia is an Officer in the rank of Chief General Manager of State Bank of Ind
ia (SBI) and is on deputation to SBI Funds Management Private Limited since July 09, 2018.
Mr. Bhatia started his career with SBI in 1985 as Probationary Officer. Over a period of 33 years
with SBI, he has traversed through various functions and assignments. Before joining SBI Funds
Management Private Limited, his last assignment was Chief General Manager (Officer on
Special Duty), Corporate Centre in SBI, Mumbai (February 2018– July 2018), where he was
responsible for revamping of Credit Structure and processes of the Bank.

Mr.JashwantRawal
( Indepent Director)
Mr.JashvantRaval is a Practicing Chartered Accountant and is the Principal Partner of JCR &
Co. since its inception in 1972. He has over 43 years of experience in statutory audit, internal
audit, consultancy & investigation etc. Mr.Raval has extensive experience in statutory & internal
audit of various companies including Banking / financial companies as well as advising for
obtaining approval from RBI for Foreign Direct Investments, joint ventures and loans in foreign
currency and rupee loans, Government of India’s approval for external commercial borrowings,
long term finance from Financial institutions, divestments and obtaining required permissions
(Overseas), investment companies abroad on tax laws and compliance in India (Overseas) etc.
He has also handled fraud investigations in a co-operative bank, public company, investigation in
a public interest litigation covering allegation of misappropriation of public issue money,
investigation of a person notified by the Custodian under the Special Courts (TORTS) Act, 1992
etc. Mr.Raval is also a Director on the Board of JCR Consulting Private Limited.

2.4.3CSR POLICY

In every financial year, in which AMC has a net worth of rupees five hundred crore or more, or
turnover of rupees one thousand crore or more or a net profit of rupees five crore or more it will
spend at least two per cent ( or such amount / percentage as may be changed from time to time
under the act) of its average net profits (calculated in terms of the applicable provision of the
Act) made during the three immediately preceding financial years towards CSR activities in
accordance with the Policy. If AMC fails to spend the amount as stipulated in any financial year,
then the reason for not spending the same will be provided in the Directors report of the Board.
In case of any change in the stipulations in the Act, the same will be applicable to the Policy.
GUIDELINES FOR MONETARY CONTRIBUTIONS
The AMC can grant donations to registered trusts / Society/Foundations/ NGOs/ Charitable
institutions registered as Societies or Public Charitable Trusts or a Company established either
by itself or along with its holding entity, subsidiary company or associate company or along with
any other company or holding or subsidiary or associate of such other company under section 8
of the Act or by such institutions in terms of the Act or undertake CSR activities for
implementing its socially oriented projects.
CSR ACTIVITIES
CSR Activities covers the following areas:
i. eradicating hunger, poverty and malnutrition, promoting preventive health care and
sanitation and making available safe drinking water;
ii. ii. promoting education, including special education and employment enhancing vocation
skills especially among children, women, elderly and the differently abled and livelihood
enhancement projects;
iii. iii. promoting gender equality, empowering women, setting up homes and hostels for
women and orphans; setting up old age homes, day care centres and such other facilities
for senior citizens and measures for reducing inequalities faced by socially and
economically backward groups; 3
iv. iv. ensuring environmental sustainability; ecological balance, protection of flora and
fauna, animal welfare, agroforestry, conservation of natural resources and maintaining
quality of soil, air and water.
v. v. protection of national heritage, art and culture including restoration of building and
sites of historical importance and works of art; setting up public libraries; promotion and
development of traditional arts and handicrafts;
vi. vi. measures for the benefit of armed forces veterans, war widows and their dependents;
vii. training to promote rural sports, nationally recognized sports, paralympic sports and
Olympic sports;
vii. viii. contribution to the Prime Minister's National Relief Fund or any other fund set up by
the Central Government for socio-economic development and relief and welfare of the
Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
viii. ix. contribution or funds provided to technology incubators located within academic
institutions which are approved by the Central Government;
ix. x. rural development projects.
x. xi. slum area development
xi. xii. It also covers other activities which may be notified by the Ministry of Corporate
Affairs from

2.5 ADITYA BIRLA SUNLIFE AMC

1 Company Name Aditya Birla AMC
2 Profile
3 Company belongs to which
sector?
4 Establishment year
5 Brief of the company
Investment company
Financial Services
1994
Aditya Birla Sun Life Mutual Fund (ABSLMF), is co-
sponsored by Aditya Birla Capital Limited (ABCL)
and Sun Life (India) AMC Investments Inc.
Having total domestic assets under management
(AUM) of close to Rs.2423 billion for the quarter
ended December 31st, 2018, ABSLMF is one of the
leading Fund Houses in India based on domestic
average AUM as published by the Association of
Mutual Funds of India (AMFI). ABSLMF has an
impressive mix of reach, a wide range of product
offerings across equity, debt, balanced as well as
structured asset classes and sound investment
performance, and around 6.8 million investor folios as
of December 31st, 2018.
Company Information: Aditya Birla Sun Life AMC
Limited (formerly known as Birla Sun Life Asset
Management Company Limited, Investment Manager
for Aditya Birla Sun Life Mutual Fund) One India
Bulls Centre, Tower 1, 17th Floor, Jupiter Mill
Compound, 841, S.B. Marg, Elphinstone Road,
Mumbai - 400 013. Tel.: 4356 8000. Website:
www.adityabirlacapital.com. CIN:
U65991MH1994PLC080811
Aditya Birla Capital Limited (ABCL), is the financial
services platform of the Aditya Birla Group. With a
strong presence across the life insurance, asset
management, private equity, corporate lending,
structured finance, project finance, general insurance
broking, wealth management, equity, currency and
commodity broking, online personal finance
management, housing finance, pension fund
management and health insurance business, ABCL is
 committed to serving the end-to-end financial services
needs of its retail and corporate customers. Anchored
by more than 17,000 employees, ABCL has a
nationwide reach and more than 2,00,000 agents /
channel partners.

6 Name of CEO/MD/VP of the CEO –A Balasubramanian

company
7 Is it multinational company? NA
8 Head Office/Corporate office Mumbai
9 Is it NSE/BSE listed? No
10 Products and services offered Investment management
Mutual
funds,PortfolioMangement,Insuranceservices,advisory
services
11 Major Competitors(Product ICICI Prudential,SBI Mutual Fund,Hdfc Mutual Fund
Specific)

2.5.1 MANAGEMENT ETHOS AND PHILOSOPHY

Our customers place a lot of trust when they choose us as a partner for fulfillment of their dreams
- be it buying a dream home or investing their hard earned money in mutual funds or for meeting
their retirement or child's education or protection needs or taking a business loan for expansion.
At Aditya Birla Capital, our endeavor is to become a preferred financial services brand of choice
for all our customers’ needs across their life cycle - a brand that customers will not only just trust
but also happily endorse. Keeping this customer insight in mind, we have created a unique
strategy & structure to present our spectrum of businesses and offerings under one virtual brand.
From a customer perspective, this offers simplicity & convenience. For our employees, we offer
a world of growth opportunities across all our financial services offerings. And to our
shareholders, this gives the reassurance that we will attract and retain our customers, cost
effectively, across their life-cycle needs.
2.5.2 TOP MANAGEMENT

CEO
Mr. A. Balasubramanian is the Chief Executive Officer for Aditya Birla Sun Life AMC Limited
and has been with the organization since 1994.

He brings with him over 26 years of experience in the Mutual Fund industry as Portfolio
Manager both in Fixed Income and Equity. Prior to assuming the role of the CEO in 2009, Bala
served as Chief Investment Officer from 2006-2009.
As CEO, Bala currently oversees more than US$ 33 billion (as of February 2019) Assets Under
Management at Aditya Birla Sun Life AMC which is one of the largest Asset Manager in India.
He also oversees global mandates through its subsidiary company in Singapore and Dubai,
having assets of more than USD 2 billion (as of February 2019), apart from overseeing Alternate
Investment Funds, Real Estate and PMS.

A very active contributor towards taking Indian Mutual Fund industry on a high growth path,
Bala is closely associated with key Industry Bodies.

Currently, he is on the Board of Governors of National Institute of Securities Markets (NISM),

which is a SEBI established entity. He is also on the Committee of Corporate Bond Market
Development of SEBI. Apart from these prestigious roles, he plays an active role in AMFI as a
Board of Director. He has also held the position of Chairman of AMFI for 2 years from 2016-
2018.

He has done his BSc in Mathematics and MBA, apart from being an Alumnus of IIM Bangalore
and Harvard through Advanced Management Programme

2.5.3CSR POLICY
For us at Aditya Birla Capital, reaching out to under served communities is part of our DNA. We
believe in the trusteeship concept. This entails transcending business interests and grappling with
the “quality of life” challenges that under served communities face, and working towards making
a meaningful difference to them.

Our vision is - “To actively contribute to the social and economic development of the
communities in which we operate. In so doing build a better, sustainable way of life for the
weaker and marginalized sections of society and raise the country’s human development
index”- Mrs.Rajashree Birla, Chairperson, Aditya Birla Centre for Community Initiatives
and Rural Development.
All projects are identified in consultation with the community in participatory manner, literally
sitting with them and gauging their basic needs. We recourse to the participatory rural appraisal
mapping process. Subsequently, based on a consensus and in discussion with the village
panchayats, and other stakeholders, projects are prioritized.

Arising from this our focus areas that have emerged are Education, Health care, Sustainable
livelihood, Infrastructure development, and espousing social causes. All of our community
projects/programmes are carried out under the aegis of The Aditya Birla Centre for Community
Initiatives and Rural Development. Our activities are in line with Schedule VII of the companies
Act, 2013.

2.6 Reliance Mutual Fund Amc

 1. Company Name: Reliance Mutual Fund AMC
2. Profile: Financial services Company
3. Company belongs to which sector? Financial services
4. Establishment year: 1995
5. Brief of the company:
Reliance Mutual Fund (RMF) has been
established as a trust under the Indian Trusts
Act, 1882 with Reliance Capital Limited
(RCL), as the Settler/Sponsor and Reliance
Capital Trustee Co. Limited (RCTC), as the
Trustee.
Reliance Mutual Fund 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 was changed to Reliance
Mutual Fund effective March 11,2004 vide
SEBI's letter no. IMD/PSP/4958/2004 dated
March 11,2004. RMF 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.
.
6. Name of CEO/MD of the company: SandeepSikka
7. Is it multinational company? NA
8. Head office/Corporate office Mumbai
9. Products and Services offered: Diversified Investment,MutualFund,ETF
ETC.
10. Major Competitors: HDFC Mutual Fund ,ADITYA Birla Mutual
Fund,Sbi Mutual Fund Etc.

2.6.1 Management ethos and philosophy

RNAM’s philosophy with respect to Corporate Governance envisages the attainment of the
highest levels of transparency, accountability and equity, in all facets of its operations and in all
its interactions with its stakeholders, including shareholders, employees, the government, lenders
and the society. The Company believes that all its operations and actions must serve the
underlying goal of enhancing long-term shareholder value.
 RNAM’s philosophy of Corporate Governance is guided by the following core principles-
 Transparency - To maintain highest standards of transparency in all aspects of interactions &
dealings;

 Disclosures - To ensure timely dissemination of correct information to the relevant stakeholders

& regulatory authorities;

 Empowerment and Accountability - To demonstrate highest levels of personal accountability in

order to ensure that employees consistently pursue excellence in everything they do;

 Compliances - To timely comply with all the applicable laws and regulations, in letter & spirit;

 Ethical Conduct - To conduct the affairs of the company in an ethical & just manner; and

 Stakeholders’ Interests - To promote the interests of all stakeholders including that of the unit
holders, shareholders, employees, vendors and the community at large.

RNAM’s Board comprises of a just & right mix of individuals, who are well-experienced in their
respective fields & who have a huge and visible credibility alongside their respective names.
Fifty percent of RNAM’s Board is Independent.
Apart from exercising their experience & diligence on the company’s business, RNAM’s Board
has a very high degree of focus on the matters concerning compliances and Corporate
Governance.
The meetings of the Board are conducted in a professionally conducive manner and the thrust is
always there on the principles of complete & fair disclosures, core compliance & accountability.
The Board also ensures that the affairs of the company are always conducted within the
permitted regulatory framework and in the interest of its stakeholders. The Board monitors the
financial performance of the Company and ensures that the financial results are prepared in
accordance with the generally accepted accounting principles and is reported to shareholders and
regulators on a timely and regular basis.
All the critical policies of the company are reviewed & approved by the Board of Directors, at
least once a year or as and when required. Similarly various operational committees of the
company’s senior management, which are required for making the day to day decisions, are also
constituted with the prior approval of the Board and the decisions taken by these committees are
further put up before the Board for their noting.
Further, in line with the statutory requirements, a Audit committee is also in place which
comprises of all the board of directors of the company as its members. The role of the audit
committee is to review the internal control systems and the annual financial statements of the
company.
Further, in accordance with the applicable provisions and as a matter of good Corporate
Governance, the Company has appointed various auditors namely auditor for the various mutual
fund schemes of Reliance Mutual Fund, statutory auditor and internal auditor, all being agencies
of repute and standing. These auditing agencies periodically submit their report, which are
 placed before the audit committee for discussion, review and implementation of
recommendations.
The Company appropriately and timely discloses the required information to its prime regulator
i.e. SEBI and other relevant authorities and its unit holders.
RNAM’s Corporate Governance philosophy envisages attainment of highest levels of integrity,
accountability, performance and ethical behavior in all facets of business and one of the most
critical organizational motto’s is to instill and nurture the culture of “Total Compliance” across
the organization.
2.6.2 TOP MANAGEMENT
CIO
Manish Gunwani is CIO - Equity Investments at Reliance Mutual Fund. Manish graduated from
IIT Chennai with a B.Tech and has a Post Graduate Diploma in Management from IIM
Bangalore.
Manish has 21 years of work experience primarily in equities spanning roles in equity research
and fund management. He has also co-founded a technology company in the document
management space.
During his stint at ICICI Prudential AMC, he managed two flagship funds of the mutual fund
whose assets grew from $1bn to $5bn in 5 years. One of the funds grew from $50m to $3bn
becoming the second largest fund in the industry. As deputy CIO he was instrumental in various
aspects of asset management including setting up research processes, product strategy,
developing talent of the team etc.
Manish has immense experience in equity research and has also spent two years working in a
portfolio management company whose focus was midcaps.
Having traveled extensively across the world, Manish has attended many global investment
conferences and seminars

CEO
Mr.SundeepSikka is the Executive Director & Chief Executive Officer of Reliance Nippon Life
Asset Management Limited (RNLAM). Sundeep has held both Vice-Chairman and Chairman
positions of the industrial body AMFI (Association of Mutual Funds in India). He joined
RNLAM in 2003 and has handled various positions through which he has been instrumental in
building domestic and international operations of the company.
Key positions/memberships:
 Member of Technical Advisory Committee on Money, Foreign Exchange & Government
Securities Markets:Reserve Bank of India

 Member of Executive Committee: Securities Depositary Limited

 Member of Capital Markets Committee: Federation of Indian Chambers of Commerce and
Industry

Other key directorships:

 Reliance Asset Management (Singapore) Pte Limited

 Reliance Asset Management (Mauritius) Limited

 Reliance AIF Management Company Ltd

 Reliance Capital Pension Fund Limited

RNLAM is India’s largest asset manager, managing and advising assets across Mutual Funds,
Managed Accounts, Pension funds and Offshore strategies. It is part of the Reliance Group
which is among India’s top three private sector business houses. RNLAM’s shareholders also
include Nippon Life Insurance, holding a 44.57% stake in the company. Nippon Life Insurance
is the world’s 7th largest life insurer and is the number 1 private life insurance company in Asia
as well as in Japan.
RNLAM has more than 20 years of wealth creation experience exhibiting active and passive
strategies with a large distribution network in India along with a global reach across Singapore,
Mauritius and Dubai. Our clients include retail investors, financial institutions, banks, trusts,
corporate and government entities. RNLAM has a well rounded portfolio of schemes under
various categories such as Equity, Debt, Liquid and Gold.
RNLAM has proven its commitment to the development of the asset management industry, being
the only AMC in India holding mandates to manage funds of both Employees' Provident Fund
Organization (EPFO) and National Pension System (NPS).
.

2.6.3 CSR ACTIVITY

 Grow Trees: All employees gave some amount of money to an NGO ‘Grow Tree’s’, who then
planted a tree in the name of an employee.

 Give India: ‘Give India’ is a not-for-profit organization dedicated to raising funds for NGOs
having strong credentials. Through this voluntary program, an employee can contribute a
minimum amount of Rs. 200 from his/her salary for a cause - educating a child, or helping a
blind person see, or a disabled person walk, and many more. ‘Give India’ has also ensured that
we get a regular progress/feedback report on how the employee's donation is being utilized.

Since the past ten years, GiveIndia has been instrumental in facilitating a culture of giving and in
empowering the nation’s underprivileged. Over 50,000 employees from over 150 corporations
participating in the Payroll Giving Programme have experienced tremendous amount of
satisfaction in bringing a bright ray of hope in the clouded lives of the needy.
 At RNAM too, many employees have already volunteered to be a part of this experience, sharing
a part of their good fortune with the underprivileged and transforming their lives. We highly
encourage employees to join and experience the Joy of Sharing! You would really be amazed to
know how your monthly payroll contributions as small as Rs. 300/- or Rs. 200/- per month can
make a HUGE difference and add tremendous joy to the lives of the underprivileged. Donors
also get to select the various causes for donating their money. Give India also provides details of
required reports, details of beneficiary, etc.

 Reclothe: Reliance Group is one of the few organizations that have the stated objective of being
a socially responsible organization. At Reliance Group, we believe we are the caretakers of
today's world in which the future generations would flourish. We believe in touching lives of all
those around us, sharing and involving our stakeholders as our partners in progress/ growth. Over
the last six years, Reliance Group has organized clothes and utilities collection campaigns across
India, under the title of ‘Reclothe’. The objective is to institutionalize an annual ‘Reclothe’,
utilities and book collection campaigns for the underprivileged through collection of quality
clothes/utilities including books by Reliance employees and other stakeholders.

2.6.4 CORPORATE GOVERNANCE INITIATIVES

RNAM‘s Board and its management firmly believes in an organizational culture of robust &
highest standards of Corporate Governance since the same is critical in order to retain & enhance
the trust of its various stakeholders. Over a period of time, RNAM has achieved considerable
success & visibility in the market and the significant credit for this goes to the practice of strict
adherence of Corporate Governance principles & ethical conduct at the marketplace. The
implementation and observance of ethical processes & policies and good Corporate Governance
has helped RNAM in standing up to the scrutiny of its domestic as well as international investors
and stakeholders.
 Chapter 3 – External Environment And regulations

1.SEBI
The Securities and Exchange Board (SEBI) is the designated regulatory body for finance and
markets in India. The primary function of the board is to protect the interests of the investors in
securities and promote and regulate the securities market. SEBI has laid the ground rules for
investors to become aware of the functioning of the mutual funds by providing necessary
information. They serve to simplify the broad spectrum of mutual fund schemes that may often
seem quite confusing to the investors. The guidelines on the merger and consolidation of mutual
fund schemes issued by SEBI are aimed at simplifying the process of comparing various mutual
fund schemes that are on offer by fund houses.
2. The structure of mutual funds as per SEBI guidelines
The SEBI guidelines define the Guarantor as one who, in his capacity as an individual or in
partnership with a different entity or entities, launches a mutual fund. The role of the guarantor is
to make revenue by putting together a mutual fund and handing it to the fund manager.
A sponsor sets up the mutual funds as per the guidelines of the Indian Trust Act, 1882, for Public
Trust. They are responsible for listing with the SEBI, having provisions for resource
management and ensuring the functioning of the fund takes place as per the SEBI guidelines.
The Trustee or Trust is established through a trust deed that is implemented by the sponsors of
the funds and is accountable to all the investors of the mutual fund. The trustee company is
regulated by the Indian Companies Act 1956, while the firm and the board members are overseen
by the Indian Trust Act, 1882. The Investment management of the trust is done through an Asset
Management Company which is to be listed as per the regulations of Companies Act of 1956.

3. Role of SEBI in Mutual Fund Regulations

As far as Mutual funds are concerned, SEBI makes the policies for mutual funds and also
regulates the industry. It lays guidelines for the mutual funds to safeguard the investors’ interest.
Mutual funds are very distinct in terms of their investment strategy and asset allocation activities.
This requires bringing about uniformity in the functioning of the mutual funds that may be
similar in schemes. This will assist the investors in taking investment decisions more clearly.
To facilitate this standardization and bringing about uniformity in the similar schemes, the
mutual funds have been categorized accordingly as follows.
a. Equity Schemes
b. Debt Schemes
c. Hybrid Schemes
d. Solution Oriented Schemes
e. Other Schemes

The categorization and rationalization of mutual funds into these five broad categories ensures
that the mutual fund houses are only able to have one scheme in each sub-category, with some
exceptions. The categorization helps in simplifying the selection of funds and works in the best
interest of the investors by allowing them to evaluate their risk options prior to making informed
decisions about investing in the right scheme. Following this consolidation of schemes, the
investors can take a more informed decision without much hassle or confusion. In order to fulfill
this purpose, SEBI has come up with some guidelines to help the retail investors in their mutual
funds’ investment decisions.

4. Key Highlights of SEBI guidelines for Mutual Funds

a. Categorization of schemes into five groups – Equity, Debt, Hybrid, Solution Oriented, Others
b. To ensure uniformity, large, mid and small cap has been defined clearly
c. There is a lock-in period specified for solution-oriented schemes

d. Permission of only one scheme in each category, except for Index Funds/ Exchange Traded
Funds (ETF), Sectoral/Thematic Funds and Funds of Funds.

5. SEBI Guidelines to invest in Mutual Funds

SEBI keeps in place the regulatory framework and guidelines that govern and regulate the
financial markets in the country. The guidelines for investors are listed below.

a) Assessment your personal financial situation

Mutual funds present the most diversified form of investment options and therefore may carry a
certain amount of risk factor with it. Investors must be very clear in their assessment of their
financial position and the risk-bearing capacity in the event of poor performance of such
schemes. Investors must, therefore, consider their risk appetite in accordance with the investment
schemes.
b) Obtain researched information on the mutual funds’ investment schemes
Before venturing into mutual fund investment, it is imperative for you as an investor to obtain
detailed information about the mutual fund scheme option. Having the right information when
required to make the necessary decision is the key to making good investments. This may help in
choosing the right schemes, knowing the guidelines to follow and also be informed of the
investors’ rights.

c) Diversify your portfolios

Diversification of portfolios allows investors to spread out their investments over various
schemes thereby increasing chances of maximizing profits or mitigating risk of potentially huge
losses. Diversification is crucial to gaining long-term and sustainable financial advantage.

d) Avoid the clutter of portfolios

Choosing the right portfolio of funds requires managing and monitoring these schemes
individually with care. The investor must not clutter the portfolio and decide on the right number
of schemes to hold so as to avoid overlap and be able to manage each one of them equally
well.Not sure of the right schemes for your portfolio? ClearTax can help simplify this for you.

e) Assign a time dimension to the investment schemes It is advisable for the investors to assign a
time frame to each scheme to encourage the financial growth of the plan. It may help in
containing the volatility and fluctuations in the market if the plans are maintained stably over a
period of time.
6. How will the new categorization Impact an investor. This scheme is fashioned to help the
investors in the following ways:

a. This may reduce the number of schemes on offer, thereby, making it comparatively easier to
choose
b. It may have some schemes get merged with the others
c. It may cause your expense ratio to fall due to the higher AUM per scheme

With the number of funds available and the changes brought about, it can get a little confusing
for a new investor to keep up. This is where ClearTax comes to your aid. Contact us for any
queries you may have regarding the SEBI guidelines for investing in mutual funds.

Action of SEBI on Players in Mutual fund Industry

HDFC ----
HDFC Mutual Fund has settled a case of violations with Securities and Exchange Board of India.
The violations included maturity of a security purchased by a scheme exceeding the maturity of
the scheme; difference in TER for direct and regular plans being lower than the commission paid
to the distributors in certain schemes; NAVs of certain schemes not being published on HDFC
Mutual Fund website for a certain period of time; and error in valuation of unlisted equity shares
of a company.
The allegations were based on a probe on the schemes for the period April 2014 to March 2016.
HDFC Mutual has settled the case by paying a fine of Rs3.79 crore to the capital market has
regulator
ICICI Prudential ----
ICICI Prudential Asset Management Company and its chief executive have settled the case of
violation of mutual fund regulations with market regulator Sebi over its investment in ICICI
Securities IPO (initial public offering) by paying Rs 96.76 lakh as settlement fees.
The Securities and Exchange Board of India had initiated adjudication proceedings against the
asset manager and its CEO. It had issued show-cause notice in this regard on July 13 alleging
violations of mutual fund guidelines.
Subsequently, the fund house sought settlement of securities law violations through the consent
mechanism.
SBI MF----
SBI MF settles Padmini Tech case with Sebi for Rs 140 mn via consent route
October 01 2018
SBI Mutual has settled a case with the Securities and Exchange Board of India (Sebi) through the
consent mechanism. The SBI-backed fund house paid a hefty sum of Rs 140 million as
settlement charges and another Rs 6.2 million towards Sebi's Investor Protection and Education
Fund.
As per the settlement order, the proceedings were initiated through the show cause notice dated
May 28, 2013, for 'fraudulently concealing important facts while dealing in the shares of
Padmini Technologies'.
While the order didn't disclose the details of the violation, as per past reports, the case pertained
to SBI MF's transactions in shares of Padmini Technologies in the early 2000s, which was
allegedly manipulated by Ketan Parekh. Reports suggest the case was also part of a probe by the
Central Bureau of Investigation (CBI).
The settlement order also observed that the applicant (SBI MF) had undertaken that it has
implemented enhanced policies and procedures to prevent securities laws violations. "... it has
also submitted that they (SBI MF) will appoint/retain an independent consultant to review
policies and procedures and has arranged to provide enhanced training and education to its
employees," the order added.

Sahara mutual fund----

Markets regulator Sebi today asked Sahara Mutual Fund to wind up all its schemes..All schemes,
except one, have to be wound up by April 21, 2018. However, the fund house has been allowed
to continue its Sahara Tax Gain Fund' till July 27 but without accepting any new investor. This
particular scheme has to be wound up by August 27, 2018.
Sahara group has been engaged in a long-running regulatory and legal battle with Sebi ever since
the regulator ordered refund of a massive amount of over Rs 24,000 crore by two Sahara entities.

Promotion--
Association of Mutual Funds in India (AMFI), the trade association of mutual funds in India,
launched a media and communication campaign, as a part of the investor awareness outreach
program. The campaign aims to position mutual funds as a preferred investment option for
potential investors.
SEBI has mandated mutual funds to set apart 2 basis points for investor education. Half of this
amount is shared with AMFI for better utilisation of the funds. AMFI has utilised the fund to
start the new media campaign.
The campaign- “Mutual Funds Sahi Hai”- appears in different media such as TV, Digital, radio,
print, cinema and outdoor hoardings in different languages. With everyday situations as the
backdrop, the campaign tries to communicate to prospective investors that mutual funds are the
right option for them.
The campaign was launched by G. Mahalingam, whole time member, SEBI. “It is for the first
time in the history of financial services that all industry participants have come together to
promote the category. This campaign makes it easy for common public to understand about
mutual funds and dispels many myths around them,” Mahalingam said while launching the
campaign.
“There is a need to encourage households to shift from physical savings to financial avenues,
especially mutual funds. With this objective in mind, under SEBI’s guidance, AMFI has
launched this investor awareness outreach program. I am sure the public will find these simple
but powerful messages very thought provoking and will be encouraged to start investing in
mutual funds,” said A Balasubramian, AMFI Chairman.

Securities and Exchange Board of India (SEBI) doubled the maximum investment by angel
funds in venture capital undertakings to Rs 10 crore (US$ 1.37 million).
The Association of Mutual Funds in India (AMFI) is targeting nearly five-fold growth in assets
under management (AUM) to Rs 95 lakh crore (US$ 1.30 trillion) and a more than three times
growth in investor accounts to 130 million by 2025.

India’s GDP is expected to grow 7.5 per cent in 2019-20. This is on account of India’s attempt to
implement reforms to unlock the country's investment potential to improve the business
environment, liberalised FDI policies, quick solution to the corporate disputes, simplified tax
structure, and a boost in both public and private expenditure.
 Chapter 4 –Financials of top firms in India

HDFC

Balance sheet

Mar 2018 Mar 2017 Mar 2016

Particulars
( ).Cr ( ).Cr ( ).Cr

SOURCES OF FUNDS :

Share Capital 105.28 25.17 25.16

Reserves Total 2054.69 1397.77 1126.06

Equity Share Warrants 0.00 0.00 0.00

Equity Application Money 0.00 0.00 0.00

Total Shareholders Funds 2159.97 1422.94 1151.22

Secured Loans 0.00 0.00 0.00

Unsecured Loans 0.00 0.00 0.00

Total Loan Funds 0.00 0.00 0.00

Total Liabilities 2159.97 1422.94 1151.22

APPLICATION OF FUNDS :

Loan / Non-Current Assets 0.00 0.00 0.00

 Mar 2018 Mar 2017 Mar 2016
Particulars
( ).Cr ( ).Cr ( ).Cr

Fixed Assets

Gross Block 192.21 182.37 173.48

Less: Accumulated Depreciation 159.42 151.19 142.32

Less:Impairment of Assets 0.00 0.00 0.00

Net Block 32.79 31.18 31.16

Lease Adjustment 0.00 0.00 0.00

Capital Work in Progress 5.96 2.42 1.10

Investments 1950.56 1236.66 985.79

Current Assets,Loans& Advances

Inventories 0.00 0.00 0.00

Sundry Debtors 90.28 85.09 38.57

Cash and Bank Balance 2.07 1.27 0.98

Loans and Advances 217.56 164.61 253.85

Total Current Assets 309.91 250.97 293.40

Less: Current Liab. & Provisions

Current Liabilities 111.58 96.06 256.50

Provisions 98.30 79.78 0.00

 Mar 2018 Mar 2017 Mar 2016
Particulars
( ).Cr ( ).Cr ( ).Cr

Total Current Liabilites& Provisions 209.88 175.85 256.50

Net Current Assets 100.03 75.13 36.91

Miscellaneous Expenses not written off 0.00 0.00 0.00

Deferred Tax Assets 10.03 9.49 13.97

Deferred Tax Liability 0.30 0.14 0.08

Net Deferred Tax 9.73 9.35 13.89

Total Assets 2099.08 1354.74 1068.85

Contingent Liability 0.64 0.27 0.61

PL Statement

Mar 2018 Mar 2017 Mar 2016

Particulars
( ).Cr ( ).Cr ( ).Cr

INCOME :

Operating Income 1867.00 1568.20 1490.13

Other Income 0.25 19.71 4.22

Total Income 1867.25 1587.91 1494.35

EXPENDITURE :

Operating & Administration 590.20 594.89 607.13

Expenses

Miscellaneous Expenses 28.15 23.71 24.72

 Mar 2018 Mar 2017 Mar 2016
Particulars
( ).Cr ( ).Cr ( ).Cr

Interest 0.00 0.00 0.00

Less: Pre-operative 0.00 0.00 0.00

Expenses Capitalised

Employee Expense 174.95 157.55 143.19

Total Expenditure 793.30 776.15 775.04

Gross Profit 1073.96 811.77 719.31

Depreciation 11.44 11.96 11.06

Profit Before Tax 1062.52 799.81 708.25

Tax 341.28 245.02 230.98

Fringe Benefit tax 0.00 0.00 0.00

Deferred Tax -0.38 4.54 -0.61

Reported Net Profit 721.62 550.25 477.88

Extraordinary Items 0.00 0.00 0.00

Adjusted Net Profit 721.62 550.25 477.88

Adjustment below net profit 0.00 0.00 -100.86

P & L Balance brought forward 1239.81 1023.26 937.12

Appropriations 477.63 333.70 290.87

P & L Balance carried down 1483.80 1239.81 1023.26

 Mar 2018 Mar 2017 Mar 2016
Particulars
( ).Cr ( ).Cr ( ).Cr

Dividend 336.89 231.54 201.31

Preference Dividend 0.00 0.00 0.00

Equity Dividend % 320.00 920.00 800.00

Earnings Per Share-Unit Curr 31.01 199.91 173.62

Earnings Per Share(Adj)-Unit NA NA NA

Curr

Book Value-Unit Curr 102.58 565.40 457.49

Sahara mutual fund –

PL Statement

Current Year / Previous Year

Sahara Banking and Financial Services Fund Period /Period
ended 31/03/2017 ended 31/03/2016
1 INCOME
1.1 Dividend 5.28 12.81
1.2 Interest – 1.04
1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –
1.4 RealisedGains/(Losses)onInterschemesaleofinvestments – –
1.5 RealisedGains/(Losses)onExternalsale/redemptionof investments 88.86 110.58

1.6 Realised Gains / (Losses) on Derivative Transactions – –

1.7 Other Income – –
(A) 94.14 124.43
2 EXPENSES
2.1 Management fees 14.11 20.96
2.2 Service tax on Management fees 2.10 2.89
2.3 Investor Education & Awareness Fees 0.12 0.17
2.4 Transfer agents fees and expenses 0.94 1.46
2.5 Custodian fees – –
2.6 Trusteeship fees and expenses – –
2.7 Commission to Agents – –
2.8 Marketing & Distribution expenses – –
2.9 Audit fees – 0.01
2.10 Deferred Revenue Expenditure – –
2.11 Other operating expenses 0.24 0.26
(B ) 17.51 25.75
3 NET REALISED GAINS / (LOSSES) FOR THE YEAR / PERIOD 76.63 98.68
(A –B = C)
 4 ChangeinUnrealisedDepreciationinvalueofinvestments (D) (16.81) (7.44)
5 NET GAINS / (LOSSES) FOR THE YEAR / PERIOD 93.44 106.12
(E=(C–D))
6 Change in unrealised appreciation in the value of investments (F) 85.89 283.77
7 NET SURPLUS / (DEFICIT) FOR THE YEAR / PERIOD 179.33 389.89
(E + F = G)
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 82.44 (197.88)
7.2 Less: Balance transfer to Unrealised Appreciation Reserve 168.33 85.89
7.3 Add : Income Equalisation Reserve (130.62) (203.39)
8 Total (37.18) (97.27)
9 Dividend appropriation
9.1 Income Distributed during the year / period – –
9.2 Tax on income distributed during the year / period – –
10 Retained Surplus / (Deficit) carried forward to Balance sheet (37.18) (97.27)

Balance sheet

As at As at
Sahara Banking and Financial Services Fund
ended 31/03/2017 ended 31/03/2016
LIABILITIES
1 Unit Capital 228.62 336.86
2 Reserves & Surplus
2.1 Unit Premium Reserve (141.89) (136.40)
2.2 Unrealised Appreciation Reserve 168.33 85.89
2.3 Other Reserve 304.76 341.95
3 Loans & Borrowings – –
4 Current Liabilities & Provisions
4.1 Provision for doubtful Income/Deposits – –
4.2 Other Current Liabilities & Provisions 5.30 7.79
TOTAL 565.12 636.09
ASSETS
1 Investments
1.1. Listed Securities:
1.1.1 Equity Shares 553.64 623.79
1.1.2 Preference Shares – –
1.1.3 Equity Linked Debentures – –
1.1.4 Other Debentures & Bonds – –
1.1.5 Securitised Debt securities – –
1.2 Securities Awaited Listing: – –
1.2.1 Equity Shares – –
1.2.2 Preference Shares – –
1.2.3 Equity Linked Debentures – –
1.2.4 Other Debentures & Bonds – –
1.2.5 Securitised Debt securities – –
1.3 Unlisted Securities – –
1.3.1 Equity Shares – –
1.3.2 Preference Shares – –
1.3.3 Equity Linked Debentures – –
1.3.4 Other Debentures & Bonds – –
1.3.5 Securitised Debt securities – –
1.4 Government Securities – –
1.5 Treasury Bills – –
1.6 Commercial Paper – –
1.7 Certificate of Deposits – –
1.8 Bill Rediscounting – –
1.9 Units of Domestic Mutual Fund – –
1.10 Foreign Securities – –
 Total Investments 553.64 623.79
2 Deposits – –
3 Other Current Assets
3.1 Cash & Bank Balance 7.72 6.51
3.2 Reverse Repo Lending – –
3.3 CollateralizedBorrowingandLendingObligation(CBLO) – –
3.4 Others 3.76 5.79
4 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 565.12 636.09
 MARKET SHEAR

ATEGORY OF NO. OF TOTAL TOTAL NO. OF TOTAL SHARES

SHAREHOLDER SHARE-HOLDERS NO. SHARES HELD IN SHAREHOLDING PLEDGED OR
OF DEMATERIALIZED AS A % OF TOTAL OTHERWISE
SHARES FORM NO. OF SHARES ENCUMBERED
AS A % OF NUMBER OF
(A+B) SHARES
AS A % OF AS A % OF
(A+B+C) TOTAL
NO. OF
SHARES

(A) Shareholding of Promoter and Promoter Group

(1) Indian

Individuals / Hindu Undivided - - - - - -

Family

Central Government / State - - - - - -

Government(s)

Bodies Corporate - - - - - -

Financial Institutions / Banks - - - - - -

Any Others (Specify) 1 112,179,830 112,179,830 52.81 52.81 - -

Sub Total 1 112,179,830 112,179,830 52.81 52.81 - -

(2) Foreign

Individuals (Non-Residents - - - - - -
Individuals / Foreign
Individuals)

Bodies Corporate - - - - - -

Institutions - - - - - -

Qualified Foreign Investor - - - - - -

Any Others (Specify) 1 63,650,615 63,650,615 29.96 29.96 - -

Sub Total 1 63,650,615 63,650,615 29.96 29.96 - -

Total shareholding of 2 175,830,445 175,830,445 82.77 82.77 - -

Promoter and Promoter
Group (A)
(B) Public Shareholding

(1) Institutions

Mutual Funds / UTI 12 2,074,827 2,074,827 0.98 0.98 - -

Financial Institutions / Banks 7 232,183 232,183 0.11 0.11 - -

Central Government / State - - - - - -

Government(s)

Venture Capital Funds - - - - - -

Insurance Companies - - - - - -

Foreign Institutional Investors - - - - - -

Foreign Venture Capital - - - - - -

Investors

Qualified Foreign Investor 97 8,284,035 8,284,035 3.90 3.90 - -

Nominated investors (as def. in - - - - - -

Ch. XA of SEBI (ICDR)
Regulations)

Market Makers - - - - - -

Any Others (Specify) 11 2,376,349 2,376,349 1.12 1.12 - -

Sub Total 127 12,967,394 12,967,394 6.10 6.10 - -

(2) Non-Institutions

Bodies Corporate - - - - - -

Individuals - - - - - -

Individual shareholders holding - - - - - -

nominal share capital up to Rs. 0
1 lakh

Individual shareholders holding 19,789,201 19,789,197 9.32 9.32 - -

nominal share capital in excess 400,096
of Rs. 1 lakh

Qualified Foreign Investor - - - - - -

Any Others (Specify) 5,120 3,853,820 3,853,820 1.81 1.81 - -

Sub Total 405,216 23,643,021 23,643,017 11.13 11.13 - -

 Total Public shareholding (B) 405,343 36,610,415 36,610,411 17.23 17.23 - -

Total (A)+(B) 405,345 212,440,860 212,440,856 100.00 100.00 - -

(C) Shares held by - - - - - - -

Custodians and against
which Depository Receipts
have been issued-m

(1) - - - - - -

(2) - - - - - -

Sub Total - - - - - -

Total (A)+(B)+(C) 405,345 212,440,860 212,440,856 100.00 100.00 - -

ICICI
Icici Prudential Mutual Fund bought shares in

Stock Increase in holding(%)

NTPC Ltd. 0.71 0.71
Lupin Ltd. 0.67 0.67
Tata Chemicals Ltd. 0.29 0.29

Icici Prudential Mutual Fund Net Worth History

Quarter Net worth(Cr)

Dec 2015 3,755.32
Mar 2016 6,340.28 68%
Jun 2016 4,665.8 -26%
Sep 2016 4,673.74 0%
Dec 2016 6,389.34 36%
Mar 2017 8,191.57 28%
Jun 2017 9,072.6 10%
Sep 2017 11,313.51 24%
Dec 2017 21,453.39 89%
Mar 2018 15,987.33 -25%
Jun 2018 17,558.78 9%
Sep 2018 18,332.77 4%
Dec 2018 18,186.82 0%
Mar 2019 18,158.28 0%
Sbim

CATEGORY OF NO. OF TOTAL TOTAL NO. OF TOTAL SHARES PLEDGED

SHAREHOLDER SHARE- NO. SHARES HELD IN SHAREHOLDING AS OR
HOLDERS OF DEMATERIALIZED A % OF TOTAL NO. OTHERWISE
SHARES FORM OF SHARES ENCUMBERED
AS A % OF NUMBER OF
(A+B) SHARES
AS A % OF AS A % OF TOTAL
(A+B+C) NO. OF SHARES

(A) Shareholding of Promoter and Promoter Group

(1) Indian

Individuals / - - - - - -
Hindu Undivided
Family

Central 1 5,149,314,961 5,149,314,961 58.53 58.53 - -

Government /
State
Government(s)

Bodies Corporate - - - - - -

Financial - - - - - -
Institutions /
Banks

Any Others - - - - - -
(Specify)

Sub Total 1 5,149,314,961 5,149,314,961 58.53 58.53 - -

(2) Foreign

Individuals (Non- - - - - - -
Residents
Individuals /
Foreign
Individuals)

Bodies Corporate - - - - - -

Institutions - - - - - -

Qualified Foreign - - - - - -
Investor

Any Others - - - - - -
(Specify)
 Sub Total - - - - - -

Total 1 5,149,314,961 5,149,314,961 58.53 58.53 - -

shareholding of
Promoter and
Promoter Group
(A)

(B) Public Shareholding

(1) Institutions

Mutual Funds / 72 1,163,352,078 1,163,096,778 13.22 13.22 - -

UTI

Financial 65 11,563,269 11,431,867 0.13 0.13 - -

Institutions /
Banks

Central 8 4,462,517 3,242,937 0.05 0.05 - -

Government /
State
Government(s)

Venture Capital - - - - - -
Funds

Insurance 9 974,340,494 974,328,994 11.07 11.07 - -

Companies

Foreign - - - - - -
Institutional
Investors

Foreign Venture - - - - - -
Capital Investors

Qualified Foreign 695 824,000,142 823,025,222 9.37 9.37 - -

Investor

Nominated - - - - - -
investors (as def.
in Ch. XA of SEBI
(ICDR)
Regulations)

Market Makers - - - - - -

Any Others 13 7,924,939 7,924,939 0.09 0.09 - -

(Specify)

Sub Total 862 2,985,643,439 2,983,050,737 33.93 33.93 - -

(2) Non-
Institutions

Bodies Corporate - - - - - -

Individuals - - - - - -

Individual - - - - - -
shareholders
holding nominal 0
share capital up
to Rs. 1 lakh

Individual 466,948,654 382,521,121 5.31 5.31 - -

shareholders
holding nominal
1,462,252
share capital in
excess of Rs. 1
lakh

Qualified Foreign - - - - - -
Investor

Any Others 27,125 196,317,970 192,896,648 2.23 2.23 - -

(Specify)

Sub Total 1,489,377 663,266,624 575,417,769 7.54 7.54 - -

Total Public 1,490,239 3,648,910,063 3,558,468,506 41.47 41.47 - -

shareholding
(B)

Total (A)+(B) 1,490,240 8,798,225,024 8,707,783,467 100.00 100.00 - -

(C) Shares held - - - - - - -

by Custodians
and against
which
Depository
Receipts have
been issued-m

(1) - - - - - -

(2) - - - - - -

Sub Total 1 - 126,362,510 - - - -

Total (A)+(B)+(C) 1,490,241 8,798,225,024 8,834,145,977 100.00 100.00 - -

BOTTOM THREE MARKET SHARE HOLDING PATTERN

Sahara Mutual Fund
Key Information
Mutual Fund Sahara Mutual Fund

Setup Date Jul-18-1996

Incorporation Date Aug-31-1995

Sponsor Sahara India Financial Corporation Ltd.

Trustee Board of Trustees

Chairman N.A

CEO / MD N.A

CIO N.A

Compliance Officer Mr.SudhirKaup

Investor Service Officer Mr.ArunShinde

Assets Managed Rs. 53.99 crore (Dec-31-2018)

Shriram Mutual Fund

Key Information
Mutual Fund Shriram Mutual Fund

Setup Date Dec-05-1994

Incorporation Date Jul-27-1994

Sponsor Shriram Credit Company Ltd.

Trustee Board of Trustees

Chairman N.A

CEO / MD Mr.Akhilesh Kumar Singh

CIO N.A

Compliance Officer Mr.TanmoySengupta

Investor Service Officer Mrs.SnehaJaiswal

Assets Managed Rs. 100.53 crore (Dec-31-2018)

Quantum Mutual Fund
Key Information
Mutual Fund Quantum Mutual Fund

Setup Date Dec-02-2005

Incorporation Date Sep-19-2005

Sponsor Quantum Advisors Private Ltd.

Trustee Quantum Trusteee Co. Private Ltd.

Chairman N.A

CEO / MD Mr. Jimmy Patel

CIO N.A

Compliance Officer Mr. Malay Vora

Investor Service Officer Mrs.MeeraShetty

Assets Managed Rs. 1286.73 crore (Dec-31-2018)

 Chapter 5
Recent Developments

I. Impact of key relevant provisions of the latest Fiscal policy on the

industry and various players therein.

1.Fiscal policy:
Fiscal policy means the use of taxation and public expenditure by the government for
stabilization or growth of the economy.
 Main Objectives of Fiscal Policy in India
 To maintain and achieve full employment.
 To stabilize the price level.
 To stabilize the growth rate of the economy.
 To maintain equilibrium in the Balance of Payments.
 To promote the economic development of underdeveloped countries.

 The fiscal policy is designed to achieve certain objectives as follows: -

 Development by effective Mobilization of Resources
 The financial resources can be mobilized by:
 a. Taxation: Through effective fiscal policies, the government aims to mobilize
resources by way of direct taxes as well as indirect taxes because most important source
of resource mobilization in India is taxation.
 b. Public Savings: The resources can be mobilized through public savings by reducing
government expenditure and increasing surpluses of public sector enterprises.
 c. Private Savings: Through effective fiscal measures such as tax benefits, the
government can raise resources from private sector and households. Resources can be
mobilized through government borrowings by ways of treasury bills, issuance of
government bonds, etc., loans from domestic and foreign parties and by deficit financing.
 Reduction in inequalities of Income and Wealth
 Price Stability and Control of Inflation
 Employment Generation
  Balanced Regional Development
 Reducing the Deficit in the Balance of Payment
 Increases National Income

IMPACTS OF FISCAL POLICTY ON EQUITY MUTUAL FUND:

It can be explained as follows

Capital Gains based Mutual Funds Taxation

A capital gain is a difference between your purchase value and sale value. For instance, if you
have invested Rs 1 lakh in a mutual fund and it is now valued at Rs 1.5 lakh, your capital gain is
Rs 50,000. Mutual funds taxation will only apply on this gain, if you sell your units in the fund.
There is no tax on unrealized or only accrued gain.

The mutual funds taxation depends on how long you have held the fund and what type of
fund it is.

Holding Period for Long

Fund Type Short Term Long Term
Term

Equity Fund 1 year 15% 10%

Aggressive Hybrid
1 year 15% 10%
Equity Fund

If more than 65% of assets in equity, same as equity funds. Otherwise

Other Hybrid Funds
same as debt funds.

Debt Fund 3 years Slab rate 20% with indexation

International Funds 3 years Slab rate 20% with indexation

Capital Gains Annual Exemption:

Long-term capital gains on equity mutual funds are exempt up to Rs 1 lakh per annum. For
example, if your long-term capital gains in FY 2018-19 are Rs 1.5 lakh, only Rs 50,000 will be
taxable.

Adjustment of Capital Gains:

You can also adjust the gains in one fund against the losses in another mutual fund in the same
year, if they are both short term or they are both long term. You can adjust short term capital
losses against both long term and short term capital gains. You can adjust long term capital
losses only against long term capital gains.

Budget 2019: no sops for mutual funds, but tax breaks bring cheer

The mutual fund industry was not expecting much from the interim budget 2019. But it nursed a
faint hope that the finance minister might rollback LTCG tax on equity mutual funds. The
industry also believed that a likely hike in basic tax exemption limit might help the industry
indirectly. On LTCG tax, the industry was in for disappointment. However, income tax sops
announced in the budget made up for `it.

The finance minister did not refer to LTCG tax in his budget speech, but he brought heer to both
the mutual fund industry and investors by announcing a slew of tax sops. The finance minister
said those with a taxable income of up to Rs 5 lakh need not pay any tax at all.

The finance minister also pointed out that if the person invests Rs 1.5 lakh under Section 80C of
the Income Tax Act, the exemption limit would balloon to Rs 6.5 lakh. He also increased the
standard deduction available to salaried taxpayers to Rs 50,000 from Rs 40,000.

The mutual fund industry preferred to overlook the setback on LTCG tax and focused on income
tax sops as they believe the industry stands to gain from it. The industry believes that taxpayers
would invest more out of their savings which will boost the assets managed by mutual funds.
“Generally, the budget is good from consumption point of view. There were a lot of tax benefits,
lot of benefits to the farmers and indirect tax benefits in real estate,” says JineshGopani, Head -
Equity, Axis Mutual Fund.

“I think it is not a euphoric budget, but it is not negative. It is neutral and in line with market
expectations, so I am assuming the markets to be where it is. Market is still trying to understand
the breakup of the money allotted. We are still waiting to read the fine print. Disinvestment
target has been put at Rs 90,000 crores. It is looking like a far cry given the last year and year
before that also,” says LashmiIyer, chief investment officer of debt and head of products, Kotak
Mutual Funds
“We are looking at the fiscal deficit number which will have an impact on the monetary policy.
What will the RBI do now is the question. Markets will be in a little bit of limbo right now. The
govt has not gone frivolous with the numbers which is positive. The global macro is positive. I
am not very confident that there will be a rate cut but certainly there is a case to change the
stance from calibrated tightening to neutral. I am still asking investors to stay in short-duration
funds,” adds Lakshmi Iyer.

Mutual fund participants were hoping for a rollback of LTCG tax. They believed that the finance
minister might do away with the tax as the amount collected was not very significant. However,
the finance minister hasn’t referred to the tax in his budget speech.

The then finance ministerArunJaitely re-introduced LTCG tax on equity mutual funds in his last
budget. The finance minister taxed long-term capital gains of over Rs 1 lakh in a financial year at
a flat rate of 10 per cent. “In view of grandfathering, this change in capital gain tax will bring
marginal revenue gain of about Rs 20,000 crores in the first year. The revenues in subsequent
years may be more,” the finance minister had said in his budget speech.

Indexation:
Indexation applies to long term capital gains in non-equity mutual funds. It reduces your tax rate
to adjust for inflation. The taxable gain is reduced after factoring the Cost Inflation Index (CII)
published by the Income TaxDepartment every year.

For example assume that you buy a debt fund in 2010 for Rs 100 and sell it in 2014 for Rs 150.
Since you have sold it after three years, the gain is long term and a tax of 20% with
indexation will apply. The Cost Inflation Index (CII) in FY 10 was 148 and the CII in FY 14 was
200. As a result your purchase price for tax purposes will rise to 200/148 = 135 and your
taxable gain will be 150 – 135 = 15. The tax payable will be 20% of 15 = Rs 3. Hence even
though you have made a gain of Rs 50, your actual tax is only 3 after applying indexation.

Dividends:

Equity fund dividends are taxed at 10%. Non-equity fund dividends are taxed at 28.84%. In both
cases this tax called Dividend Distribution Tax (DDT) is deducted before paying you the
dividend. Hence you do not have to pay any additional tax. However your actual returns will be
reduced due to the DDT.

TDS on Mutual Funds:

There is no TDS (Tax Deducted at Source) on mutual fund capital gains or dividends, except for
NRIs. However, dividends are paid to you after deducting Dividend Distribution Tax (DDT).
The entire tax is deducted before paying you the dividend and hence the dividend is not taxable
in your hands.

Securities Transaction Tax (STT):

Mutual Funds also deduct Securities Transaction Tax (STT) on equity funds and hybrid equity
funds (those with more than 65%) when you sell a mutual fund. This is deducted at a rate
0.001%. You do not have to pay it separately but it will reduce your returns to a small extent.

KEY PLAYERS IN A MUTUAL FUND:

A mutual fund is set up either in the form of a trust or an investment company. The trust is
established by the Asset Management Company (AMC). The trustee holds the property of the
trust for the benefit of its unit holders. Whereas, under the investment company structure, the
mutual fund is established as a public listed company. The AMC, as sponsor of the mutual fund,
appoints its board of directors to manage its affairs, and a custodian for holding all the assets of
the investment company. An AMC is licensed by the SECP and is eligible to operate the mutual
fund and manage its investments.

1: Asset Management Company:

An Asset Management Company is a Non-Banking Finance Company licensed by the SECP for
the management of mutual fund and for the benefit of the unit holders.

2: Participants:

Participants are the ones investing in a mutual fund and anyone holding valid Indian
computerized national identity card is eligible to become participant to a mutual fund.

3: Trustee:

A trustee in the case of Mutual funds is a holding service who has administrative power for
managing the money, property or assets used in mutual funds. The trustee can be an individual
person, member of the board of directors, a company or a bank appointed with the approval of
the SECP. They are trusted to make decisions in the beneficiary’s best interest.

4: Custodian:

A custodian generally acts as a caretaker or watchdog mainly responsible for monitoring the
operations of the mutual fund and actions of the fund manager and other parties related to the
mutual fund. A custodian ensures that a mutual fund is being managed in accordance with the
requirements stipulated under the regulatory framework and the constitutive documents of the
mutual fund.
5: Registrar:

A registrar of a mutual fund may be an individual or a firm / company. The AMC may itself act
as a registrar, or appoint the registrar to perform following functions:

1. Periodically maintaining and updating the Register of unit holders;

2. Dealing with requests for transfer, transmission, issue, and redemption of units as well as
keeping a record of changes in particulars/information/data with regard to the unit
holders;
3. Issuing account statements and certificates to unit holders;
4. Issuing income distribution warrants and units to unit holders over re-investment of
dividends;
5. Maintaining archives of lien/ pledge/ change on units, transfer/ switching of units, Zakat;
and
6. Keeping a record of changes of address/ other particulars of the unit holders.

TRADE FACILITATION & EASE OF DOING BUSINESS:

TRADE FACILITATION& EASE OF DOING BUSINESS 1.06 Objective Trade facilitation is a
priority of the Government for cutting down the transaction cost and time, thereby rendering
Indian exports more competitive. The various provisions of FTP and measures taken by the
Government in the direction of trade facilitation are consolidated under this chapter for the
benefit of stakeholders of import and export trade. 1.07 DGFT as a facilitator of exports/imports
DGFT has a commitment to function as a facilitator of exports and imports. Focus is on good
governance, which depends on efficient, transparent and accountable delivery systems. In order
to facilitate international trade, DGFT consults various Export Promotion Councils as well as
Trade and Industry bodies from time to time

Exim Bank has, so far, been largely a debt provider with practically no exposure to equity
funding of projects:
NEW DELHI, MARCH 19
Exim Bank of India may consider providing equity- and quasi-equity support for projects in
Africa, said its Managing Director David Rasquinha.

“This is an idea that has come before us. We will explore it. I don’t see Exim Bank putting
equity directly out of our balance sheet or as a standalone activity. But we may create a fund-of-
funds and channelise funds along with other investors into select sectors in Africa,” Rasquinha
told BusinessLine.

Exim Bank has, so far, been largely a debt provider with practically no exposure to equity
funding of projects.

“If we provide equity- or quasi-equity support, we will be a core investor or an anchor investor.
Given our name and experience in Africa, we should be able to catalyse other investors,” he said.

The idea that Exim Bank should consider equity support for African projects (with Indian
industry involvement) came from African countries at the just-concluded 14 CII-Exim Bank
Africa Conclave in the Capital.

Rasquinha said there is an increasing clamour from African countries that they need outside
players like Exim Bank of India to consider providing equity- and quasi-equity support.

“This (providing equity support) is something new to us. We have certain RBI permission to
look at this. But they date back to prior period, and so we have to examine it afresh,” he said.

Global Market for equity fund:

Three notable global index mutual funds follow world stock indexes. The three funds all have
low costs to investors and have had solid returns compared with the indexes they track. All
returns are annualized and based on data for the period ending Dec. 31, 2015.

Vanguard Total World Stock Index Investor Shares:

Vanguard's Total World Stock Index fund is designed to give investors exposure to all of the
world's common stock markets. The fund has $8.4 billion of assets under management (AUM) as
of Dec. 31, 2015. Its portfolio contains more than 7,400 different securities that represent
developed and emerging markets.

The fund uses the FTSE Global All Cap Index as a benchmark. The index contains large-, mid-
and small-cap companies in a capitalization-weighted index. The weighting factor makes this
index highly biased to large-cap U.S. multinational corporations. Nine large U.S. corporations
make up 7.05% of the portfolio, and 55.5% of its assets are invested in North America.

Investors in the Total World Stock Index fund benefit from low investment costs. The fund is no-
load with no 12b-1 fee and a low expense ratio of 0.27%. The fund has an annualized total return
over three years of 7.73% and 6.17% over five years. Investors should not expect very high long-
term returns from this broad-based, passively managed fund. The total return over a longer time
period should be almost equal to world real economic growth added to the world inflation rate.

Northern Global Sustainability Index Fund:

The Northern Global Sustainability Index Fund puts a twist on global index investing by
bringing environmental, social and governance (ESG) factors into the decision-making process.
The fund uses the MSCI World ESG Index as a performance benchmark. The companies in the
index are large- and mid-cap companies that meet standards pertaining to their social
responsibility, ethics and treatment of the environment. Fund managers must invest at least 80%
of net assets in common stocks included in the index with the goal of equaling the return of the
index.

The Global Sustainability Index Fund is a low-cost fund for investors. It is a no-load fund with a
low expense ratio of 0.31%. There is a 2% redemption fee, but that only applies to investors who
liquidate their investment in less than 30 days. The redemption fee is meant to discourage
market-timed trading of the fund's shares.

This Morningstar four-star rated fund has an annualized total return of 9.68% over three years
and 7.46% over five years. This appears to be a victory over Vanguard’s non-ESG index fund,
but the difference could be attributed to the fact that the MSCI World ESG Index does not
include small-cap stocks.

AQR Global Equity Fund Class I:

The AQR Global Equity Fund is not an average mutual fund. Individuals must invest a minimum
of $5 million. That minimum can drop to $100,000 if the investor has a properly qualified
retirement plan. Investors who work with investment advisors that have a relationship with AQR
Funds may face lower minimums as set by their financial advisors.

The AQR Global Equity Fund seeks to track the MSCI World Index. The MSCI World Index
only includes companies from developed markets and does not provide any exposure to
emerging markets. The portfolio managers are not restricted to investing in common stock; they
can make extensive investments in derivatives. Nine of the top 10 holdings, as of Nov. 30, 2015,
were various stock market index futures that represented 23.69% of the fund's net assets. This is
hedge fund-style trading within a mutual fund.

Despite the riskier trading strategy, this no-load fund receives a Morningstar rating of four stars.
The fund has an expense ratio of 0.9% and annualized total returns of 10.85% over three years
and 8.62% over five years. Investors should seriously consider whether the extra return is worth
the extra risk.

A Closer Look at the Performance:

New York based money manager, Alliance Bernstein, has built a reputation of being one of the
leading investment experts. They currently manage $490 Billion in assets, have 47 locations
across 21 different countries, have close to 3,500 employees, and is currently traded on the New
York Stock Exchange (NYSE: AB).

But not all of their news has been good news. In October of 2003, a lawsuit was filed against the
money manager for engaging in, “improper trading practices, in concert with certain institutional
traders, which caused financial injury to the shareholders of the Alliance Bernstein Funds.”
Specifically, the firm, “permitted certain investors, including defendants Canary Capital Partners,
LLC and Canary Investment Management, LLC to illegally engage in “timing” of the Alliance
Bernstein Funds whereby these favored investors were permitted to conduct short-term, “in and
out” trading of mutual fund shares, despite explicit restrictions on such activity in the Alliance
Bernstein Funds’ prospectuses.”

This incident was part of a much wider class action lawsuit against 27 individual fund
management companies that were engaging in similar behavior. It has become known as
the “2003 mutual fund scandal.” Alliance Bernstein (formerly known as Alliance
Capital) settledwith the Securities and Exchange Commission for $250 Million in December of
2003.

Although they have been involved in class action lawsuits that defrauded certain investors, it
doesn’t quite speak to their actual investment acumen. Firms may make mistakes, but are still
excellent money managers, right? This article is going to dissect Alliance Bernstein’s fund lineup
in attempts to uncover the truth about how great of money managers they actually are

impact Five trends in technology that will have a big on Mutual Fund:

1: Online platforms for investors:

In last few years, AMCs, RTAs, industry associations such as AMFI (MF Utility) and stock
exchanges have developed online platforms. These platforms enable investors to transact online
in mutual funds.
One such platform promoted by AMFI, MF Utility (MFU) reported transaction of Rs. 1800 crore
every day. Over the last two years, the trade volumes on MFU have grown five times indicating
the growing popularity of online transaction platforms.

In a recent press release, BSE Star MF an exchange platform reported a growth of over 540% in
the last 2 years.

NSE NMF II, which clocked 76 lakh transactions in the last financial year, has already processed
45 lakh transaction this year.

This rapid growth in business witnessed by these online trading platforms is a clear indicator of
changing transaction landscape.

2: Social media:

Use of social media as a communication channel is gaining wide acceptance in the asset
management industry. Many fund houses are using social media holistically to create awareness
about their products and services, engage with clients, resolve their queries and understand
investor needs.3

3: E-commerce platforms:

The reach of mutual funds will increase exponentially across the country if e-commerce
platforms receive permission to sell mutual funds.

A recent study by IBEF (India Brand Equity Foundation) found that there are 1-1.2 million
transactions per day in e commerce retailing. The market size stands at US$ 38.5 billion as of
2017 and is expected to grow at 20.09% CAGR over the next decade. The mutual funds too can
benefit from the wider reach of these platforms.

4: Robo advisory:

Robo advisory firms use analytics to devise automated programmes, which dispense financial
planning advice to investors. As per the CFA Fintech Investment Survey of 2016, introduction of
financial automated advice tools will have tremendous impact on the asset management industry,
and especially the advisory community. A white paper by FINEXTRA stated that while robo
advisory is unlikely to result in extinction of advisors, it will clearly change their role and the
adoption of robo has implications for the technology and business models of established wealth
managers. In developed markets, robo advisory firms are gaining favour amongst the millennials.
Moreover, they are providing low cost investment solutions to clients. Currently with most
Indians being amateur investors who need hand holding, we may see prominence of hybrid
models where the robo does the initial investment analysis while the advisor adds the final inputs
and provides a personal touch, said the study.

5: Big data analytics:

Data reigns supreme. Using big data analytics mutual funds can statistically analyse the actions
of investors. This will help them get deeper insights on the investor behaviour and devise new
strategies.

The big technology companies are using data to increase sales. Mutual funds too might be able to
offer customised investment solutions to different investors using big data analytics, the report
added.

Corporate wars

1. Sebi is on the war path to lower mutual fund costs

Starting soon your mutual fund will cost less. The capital market regulator, the Securities
and Exchange Board of India (Sebi), has put out rules that further tighten the mutual fund
industry norms to take care of the loopholes found and misused by the industry. You can
read the circular here. There are four changes that impact you.
One, for costs related to the scheme, mutual funds will now pay only out of the
scheme account and not from any other source or account. What was happening was this:
some of the bigger fund houses were using their profits to pay commissions to
distributors to kick up sales. Remember that after a certain scale, it does not cost much
more to run a fund house; so as the fund size grows, costs should actually come down.
But the total expense ratio for equity mutual funds have remained at the maximum limits
allowed by the regulator. The costs came down for plans like the liquid and bond funds
that are used primarily by institutions and high net worth investors, that is for those with
higher bargaining power. But they stayed high for retail investors. It does look as if the
retail is subsidizing the corporate and HNI. The higher profits could have led to lowering
of costs, but were instead used to pay distributors upfront commissions totally ignoring
the industry association (Association of Mutual Funds in India, or Amfi) norm to keep
upfronting of commissions at 1% only.
Some fund houses were paying as much as 5-6% as upfronts dipping into their profits. By
specifying that commissions can only be paid from the scheme and no other head, Sebi is
plugging a loophole that was causing misselling and churning.
But funds can keep all the profit, no? No, because in addition to this, the costs will come
down because of the new cost structure that was announced last month which shaves the
total expense ratio down across the various slabs of assets. You can read more on
this here.
Two, Sebi is banning all upfronts except for a small carve out for the systematic
investment plans (SIPs). Front commissions incentivise sharp sales of financial products.
There is enough evidence globally of this practice and Sebi’s step to ban all incentives for
making the first sale, other than a transaction cost (that already exists), is a step in the
right direction.
Three, the circular says that all fees and expenses in a direct plan under various heads,
including the investment and advisory fees, should not be higher than the same expenses
in a regular plan. What this means is this: those investing directly into mutual funds will
benefit from lower costs.
Remember mutual fund direct plans are the route taken by do-it-yourself investors or fee
paying investors who go direct to save on the commission costs. Direct plans should be
cheaper than regular plans by the amount of the trail commission being paid. But certain
fund houses did some clever interpretation of the rules and began to pad up direct plan
costs, narrowing the gap between the costs of a regular and a direct plan. Sebi’s
intervention will force direct plans to cost less. One difference between a direct and
regular plan is the commission, now the direct plans will have to reflect this difference.
Four, it seems that Sebi found that the additional cost of 30 basis points being allowed for
the smaller towns and cities (called B30, or beyond the top 30 cities) ,was being misused
 by institutional and high net worth investors. Routing an application through the suburb
that fell in the category for higher cost would allow the distributor to earn more and then
share a part of that with the investor. Sebi is curbing this practice by removing all
upfronts from the B30 costs and the commissions will be trail only. Sebi is prohibiting
corporate and institutions from buying via the B30 route. The B30 higher cost was being
paid by all investors. The closing of this loophole will mean lower costs finally for an
average investor.
These changes come into effect immediately and the lower cost circular should be out
once the regulations are amended.
It does look like a cat and mouse game: firms continue to find loopholes and the regulator
continues to modify. I have been following the mutual fund related-regulatory changes in
Sebi for over a decade. All I can say is that the effort and intelligence that some fund
houses spend on gaming the system could be spent on better fund management. It is a
pity that it is the largest fund houses that twist the rules. There is a new Sebi out there
right now that is focused on the rule book. Good news for investors and what is good for
the consumer cannot be bad for the industry and the intermediaries finally.

Sr. References Date

No.

1 www.economictimes.com 1-03-18
2 www.cleartax.in/s/sebi-mutual-fund-guidelines 1-03-18
3 www.wikipedia.com/mutualfunds 2-03-18
4 www.investopedia.com 2-03-18
5 www.moneycontrol.com 3-03-18
6 www.capitaline.com/ 3-03-18
7 www.paisabazzar.com/ 4-03-18
8 www.toffeler.com 4-03-18
9 www.rbi.org.in 5-05-18
10 www.ibef.org/economy/domestic-investments 5-05-18