Mutual Fund Project

BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED

LEGENDS

SEBI: Security Exchange Board Of India NSE: National Stock Exchange MCX: Multi Commodity Exchange RBI: Resere Bank Of India !"#C: !ousing "eelo$ment #inance Cor$oration India ICICI: Industrial Credit Inestment Cor$oration Of India %M#I: %ssociation Of Mutual #und in India %&M: %sset &nder Management &'I: &nit 'rust Of India &S()*: &NI' SC!EME O# +,)* &-I.: &nit -inked Insurance .lan N%/: Net %sset /alue %MC: %sset Management Com$any C%MS: Com$uter %ge Management Serice E-SS: E0uity -inked Saing Schemes '(BI--: 'reasury Bill 1(SEC: 1oernment Securities MMM#s: Money Market Mutual #unds MI.s: Monthly Inestment .lans O'CEI: Oer 'he 'rade Exchange Of India CRI-: Credit Resources International -imited BS"-: Birla Sun -ife "istri2ution Com$any -imited M#s: Mutual #unds

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EXECUTIVE SUMMARY

'he $ro6ect title is 7inestment $attern of 2usiness $eo$le8 com$leted in Biral Sun -ife "istri2ution9 'he $ro6ect 5as to study the inestment $attern of the 2usiness men in Mutual #unds9 Biral Sun -ife #inancial Serices offers a range of financial serices for resident Indians and Non Residents Indians9

Mutual #unds are inestment $roducts that o$erate on the $rinci$les of Strength in Num2ers;9 'hey collect money from a large grou$ of inestors4 $ool it together4 and inest it in arious securities in line 5ith their o26ectie9

'he o26ectie of study is to understand the 2ehaior of 2usiness class 5ith res$ect to inestment .attern of 2usiness $eo$le of MI"C
In this regard to I hae collected 2oth $rimary and secondary data9 .rimary data through the 0uestionnaire and interie5 to different ty$es of 2usiness $eo$le in MI"C Bhosari .une9 Secondary data through arious maga>ines4 5e2sites and external ex$erts9

%ccording to the surey conducted on +?? 2usiness men it 5as found that only fe5 inestors had made inestment in mutual funds4 5hile the rest of them had neer looked 2eyond 2ank de$osits and insurance een though their $ercentage of saings is more9 Most of the inestors do not $refer mutual fund9

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Objectives an Resea!c" Met"##$#%&

Objective

+9 'o understand the 2ehaior $attern of 2usiness class 5ith res$ect to inestments9 @9 'o test the a5ar eness of arious inestment $roducts among the 2usin ess class9 A9 Build relations 5ith the ne5ly interested 2usiness class

Resea!c" Met"##$#%&' C#nc$(sive !esea!c"

'he research undertaken 5as conclusie research as the data needs 5ere clear9 'he research 5as conducted to study a2out the inestment $attern of 2usiness $eo$le9

Sa)*$in% *!#cess P#*($ati#n'+ E$e)ent' the research 5as restricted to 2usiness $eo$le9 E,tent' Bhosari Industrial %rea4 .une

Sa)*$e si-e'

'he total sam$le si>e consists of +?? 2usiness $eo$le9 Sa)*$in% )et"#'+

N#n *!#babi$it&'+

'he 2usiness $eo$le 5ere selected on the 2asis of conenience9

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Data C#$$ecti#n'+

#or the research $ur$ose the data is collected in the form of .rimary data and Secondary data9 

.rimary data is collected in the form of Structured uestionnaire9



Secondary data is collected from arious Boucher;s4 Books4 Maga>ines and e2 sites9

P!i)a!& Data'+

.rimary data is collected through direct interie5s and tele$honic interie5s9 'he data is collected from the 2usiness $erson through 0uestionnaires 5hich 5as $re$ared de$ending u$on the need of study9 %

structured

0uestionnaire 5as $re$ared to collect the data

Sec#na!& Data'+

'he source of secondary data 5ere $u2lished Dournals4 maga>ines4 like inestime and 5e2 sites4 .../a)0i/c#) .../iniain0#$in/c#) .../bi!$as(n$i0e/c#) .../)(t(a$0(ninia/c#) .../va$(e!ese!c"#n$ine/c#)

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Li)itati#ns'+



Sam$le si>e is ery small as com$ared to the total $o$ulation9



Most of the 2usiness $eo$le don;t fie out the exact inest figures their assets and their finical $lanning



'he method 5hich is a$$lied for the data collection may not 2e right

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-ack of kno5ledge in the surey sam$le a2out the mutual funds9

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'he result o2tained from the sam$le may not 2e the result of the 5hole $o$ulation9

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Int!#(cti#n t# M(t(a$ F(ns % mutual fund is the ideal inestment ehicle for today;s com$lex F modern financial scenario9 Markets for en0uiry shares 2onds and other fixed income instruments4 real estate4 deriaties and other assets hae 2ecome mature and information drien9 .rice changes in these assets are drien 2y glo2al eents occurr ing in fara5ay $laces9 % ty$ical indiidual is unlikely to hae the kno5ledge4 skills4 incli nation and time to kee$ track of eents4 understand their im$lications and act s$eedily9 %n indiidual also finds it difficult to kee$ track of o5nershi$ of this assets4 inestments4 2rokerage dues F 2ank transactions etc9

% mutual fund is the ans5er to all these situations9 It a$$oints $rofessionally 0ualified and ex$erienced staff that manages each of these functions on a full time 2ases9 'he large $ool of money collected in the fund allo5s it to hire such staff at a eryG lo5 cost to each inestor9 In effect the mutual fund ehicle ex$loits economies of scale in all three areas H research4 inestments4 transaction $rocessing9 hile the conce$t of indiidual coming together to inest the money collectiely is not ne54 the mutual fund th

in its $resent form is a @? century $henomenon9 In fact mutual funds gained $o$ularity only after the Second orld ar9 1lo2ally there are thousands of firms offering tens of thousands of mutual funds 5ith different inestment o26ecties9 'oday mutual funds collectiely manage almost as much as or more money as com$ared to 2anks9

'o get a 2etter understanding of mutual funds it is necessary to kno5 the industry in detail9 In the follo5ing sections a detailed descri$tions of the mutual funds industry 5ill 2e discussed9

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C#nce*t #0 a )(t(a$ 0(n

% mutual fund is a common $ool of money into 5hich inestors $lace their contri2utions that are to 2e inested 5ith a stated o26ectie9 'he o5nershi$ of the fund is thus 6oint or mutual and the fund 2elongs to all inestors9 % single inestor;s o5nershi$ of the fund is in the same ratio as the amount of contri2ution made 2y him or 2ears to the total amount of the fund9

Meanin% #0 M(t(a$ F(n

Mutual #unds are inestment $roducts that o$erate on the $rinci$les of Strength in Num2ers;9 'hey collect money from a large grou$ of inestors4 $ool it together4 and inest it in arious securities in line 5ith their o26ectie9 'hey are an alternatie to inesting directly9 % more conenient alternatie yet no less re5arding9 'ake stocks4 trading into the market 2y yourself 5ould mean kno5ing at the ery least4 ho5 to analy>e and track com$anies4 the 5ay of the market and the intermediaries 5ho 5ill hel$ you 2uy and sell shares9 % mutual fund that inests in stocks reliees you of all such hassles4 5hile giing you the same inestment o$tion for indiidual;s handica$$ed 2y a lack of inesting acumen or time4 or generally disci$lined to take charge of their $ersonal finances9

Mutual funds are not magic inestment ehicles that do it all you;ll hae to come to terms 5ith the fact that they assure neither returns nor the alue of yours srcinal inestment9 ou;ll hae to acce$t the reality that een they4 5ho are su$$osedly ex$erts in inestments matter4 can go 5rong9 'hese are inherent risks4 2ut these can 2e managed9 Mutual funds offer seeral adantages that make them a $o5erful and conenient 5ealth creation ehicle 5orthy of yours consideration

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C"a!acte!istics #0 a M(t(a$ F(n 

% Mutual fund actually 2elongs to the inestors 5ho hae $ooled their funds9 'he o5nershi$ of the mutual funds is in the hands of the inestors9



In case of mutual fund the contri2utors and the 2eneficiaries of the funds are the same class of $eo$le namely the inestors9

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Inestment $rofessionals manage a mutual fund and other serice $roiders4 5ho earn a fee for their serices $roided4 from the fund9



'he $ool of funds is inested in a $ortfolio of marketa2le inestments9 'he alue of the $ortfolio is u$dated eery day9

'he inestor;s share in the fund is denominated 2y 7&NI'S89 'he alue of the units changes 5ith the change in the $ortfolio;s alue4 eeryday9 'he alue of one unit of inestment is called as the net asset alue or N%/ 1O2 ARE T1E MUTUAL FUNDS STRUCTURED3

Mutual funds can 2e structured in the follo5ing 5ays: •

Com$any form4 in 5hich inestors hold shares of the mutual fund9 In this structure4 management of the fund is in the hands of an elected 2oard4 5hich in turn a$$oints inestment managers to manage the fund9

•

'rust form4 in 5hich the funds of the inestors are held 2y a trust4 on 2ehalf of the inestors9 'he trust a$$oints inestment managers and monitors their functioning in the interest of inestors9 'he com$any form of organi>ation is ery $o$ular in the &nited States9 In India4

mutual funds are organi>ed as trusts9 'he trust is created 2y s$onsor4 5ho is the actually the entity interested in creating the mutual fund 2usiness9 'he trust is either managed 2y a Board of trustees4 or 2y a trustee com$any4 formed for this $ur$ose9 'he inestor;s

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funds are held 2y the trust9

T&*es #0 M(t(a$ F(ns

Open-End Funds

%n o$en(ended fund is one that has unit;s aaila2le foe sale and re$urchase at all times9 %n inestor can 2uy or redeem units from the fund itself at a $rice 2ased on the Net %sset /alue
C$#se+En F(ns

&nlike an o$en(end fund4 the unit ca$ital of a closed(ended fund is fixed4 as it makes a one(time sale of a fixed num2er of units9 Closed(ended funds do not allo5 inestors 2ut or redeem units directly from the funds9 !o5eer4 to $roide the much( needed li0uidity to inestors4 any closed(end funds get themseles listed on stock exchanges9 'rading through a stock exchange ena2les inestors to 2uy or sell units of a closed(end mutual fund from each other9

L#a an N#+L#a F(ns

Marketing of a ne5 mutual fund scheme inoles initial ex$enses9 'hese ex$enses may 2e recoered from the inestors in different 5ays at different times9 'hree usual 5ays in 5hich a fundLs sales ex$enses may recoer from the inestors are: +9 %t the time of ine storLs entry into the fundscheme4 2y deducting a s$ecific amount from his Initial contri2ution4 or @9 By charging the fund scheme 5ith a fixed amount each year 4 during the state d num2er of years4 or

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A9 %t the time of the inestorLs exit from the fundscheme4 2y deducting a s$ecified amount from the redem$tion $roceeds $aya2le to the inestor9

'hese charges made 2y the fund managers to the inestors to coer distri2utionsalesmarketing ex$enses often called loads9 'he load charged to the inestor at the time of his entry into a scheme is called 7front(end or entry load9 'he load amount charged to the scheme oer $eriod of time is called a deferred load9 'he load that the inestor $ays at the time his exit is called a 2ack(end or exit load9 Some funds may also charge different amounts of loads to the inestors4 de$ending u$on ho5 many years the inestor is stayed 5ith the fundG the longer the inestor stays 5ith the fund4 less the amount of8 exit load he charged9 'his is called 7contingent deferred sales charge9

#unds that charge front(end4 2ack(end or deferred loads are called load funds9 #unds that make no such charges or loads for sales ex$enses are called no(load funds9

% load fundLs declared N%/ does not include the loads9 !ence4 a ne5 inestor must add any front(end load amount $er unit the N%/ $er unit to calculate his $urchase $rice9 %n outgoing inestor needs to deduct the amount of any 2ack(end load $er unit from his sale $rice $er unit to get to kno5 the net sale $roceeds he 5ould receie

Ta, E,e)*t an N#n+Ta, E,e)*t F(ns

1enerally4 5hen a fund inests in tax(exem$t securities4 it is called a tax(exem$t fund9 In the &9S9%4 #or exam$le4 munici$al 2onds $ay interest that is tax(free4 5hile interest on cor$orate and other 2onds is taxa2le9 In India4 after the +,,, &nion 1oernment Budget4 all of the diidend income receied from many of the Mutual funds is tax(free in the hands of the inestor9 !o5eer4 funds other than E0uity #unds hae to $ay a distri2ution tax4 2efore

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distri2uting income to inestors9 In other 5ords4 e0uity mutual fund schemes are tax( exem$t inestment aenues4 5hile other funds are taxa2le for distri2uta2le income9

hile Indian Mutual funds currently offer tax(free income4 any ca$ital gains arising out of sale of fund nits are taxa2le9 %ll these tax considera tions are im$ortant in the decision on 5here to inest as the tax exem$tions or concessions alter returns o2tained from these inestments9 !ence4 classification Of Mutual funds from the taxa2ility $ers$ectie has great significance for inestors9 B!#a F(n t&*es b& Nat(!e #0 Invest)ents

Mutual funds may inest in e0uities4 2onds or other fixed income securities4 or short(term money market securities9 So 5e hae E0uity4 Bond and Money Market #unds9 %ll of them inest in financial assets9 But there are funds that inest in $hysical assets9 #or exam$le4 5e may hae 1old or other .recious Metals #unds4 or Real Estate #unds9 B!#a F(n T&*es b& Invest)ent Objective

Inestors and hence the mutual funds $ursue different o26ecties 5hile inesting9 'hus4 1ro5th #unds inest for medium to long(term ca$ital a$$reciation9 Income #unds inest to generate regular income4 and less for ca$ital a$$reciat ion9 /alue #unds inest in e0uities that are considered under( alued today4 5hose alue 5ill 2e unlocked in the future9

B!#a F(n T&*es b& Ris4 P!#0i$e

'he nature of a fundLs $ortfolio and its inestment o26ectie im$ly different leels of risk undertaken9 #unds are therefore often grou$ed in order of risk9 'hus4 E0uity funds hae a greater risk of ca$ital loss than a "e2t #und that seeks to $rotect the ca$ital 5hile looking for income9 Money Market #unds are ex$osed to less risk than een the Bond #unds4L since they inest in short(term fixed income securities4 as com$ared to longer(

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term $ortfolios of Bond #unds9

M#ne& Ma!4et F(ns

Often considered the lo5est rung order of risk leel4 Money Market #unds inest in securities of a short(term nature4 5hich generally means securities of less than one(year maturity9 'he ty$ical4 short(term interest(2earing instruments these funds inest in include 'reasury Bills issued 2y goernments9 Certificates of "e$osit issued 2y 2anks and Commercial .a$er issued 2y com$anies9 In India Money market Mutual funds also inest in the inter(2ank call money market9 'he ma6or strengths of money market funds are the li0uidity and safety or $rinci$al that inestors can normally ex$ect from short(term inestments9

Gi$t F(ns

1ilts are goernment securities 5ith medium to long(term maturities4 ty$ically of oer one year
!o5eer4 inestors hae to recogni>e the $otential changes in alues of de2t securities held 2y the funds that are caused L2y changes in the market $rice of de2t securities 0uoted on the stock exchanges
Next in the order of risk leel4 5e hae the general category "e2t #unds9 "e2t funds inest in de2t instruments issued not only 2y goernments4 2ut also 2y $riate com$anies4 2anks and financial institutions and other entities such as infrastructure

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com$aniesutilities9

By inesting in de2t4 these funds target lo5 risk and sta2le income for the inestor as their key o26ecties9 !o5eer4 as com$ared to the money market funds4 they do hae a higher $rice fluctuation risk4 since they inest longer(term securities9 Similarly com$ared to 1ilt #unds4 general de2t funds do hae a higher risk of default 2y their 2orro5ers9 "e2t #unds are largely considered as Income #unds as they do not target ca$ital a$$reciation4 look for high current income4 and therefore distri2ute a su2stantial $art of their sur$lus to inestors9 Income funds that target returns su2stantially a2oe market leels can face more risks9 'he Income #unds fall largely in the category of "e2t #unds as they inest $rimarily in fixed income generating de2t instruments9 %gain4 different inestment o26ecties set 2y the fund managers 5ould result in different risk $rofiles9 Dive!si0ie Debt F(ns

% de2t fund that inests in all aaila2le ty$es of de2t securities4 issued 2y entities across all industries and sectors is a $ro$erly diersified de2t fund9

hile de2t funds offer high income and less risk than e0uity funds4 inestors need to recogni>e that de2t securities are su26ect to risk of default 2y the issuer on $ayment of interest or $rinci$al9 % diersified de2t fund has the 2enefit of risk reduction through diersification and sharing of any defaul t(related losse s 2y a large num2er of inestors9 !ence a diersified de2t fund is less risky than a narro5(focus fund that inests in de2t securities of a $articular sector or industry9

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F#c(se Debt F(ns

Some de2t funds hae a narro5er focus4 5ith less diersification in its inestments9 Exam$les include sector4 s$eciali>ed and offshore de2t funds9

'hese funds are similar to the funds descri2ed later in the e0uity category exce$t that de2t funds hae a su2stantial $art of their $ortfolio ines ted in de2t instruments and are therefore more income oriented and inherently less risky than e0uity funds9 !o5eer Lthe Indian financial markets hae demonstrated that de2t funds should not 2e automatically considered to 2e less risky than e0uity funds4 as there hae 2een relatiely large default 2y issuers of de2t and many funds hae non($erforming assets in their de2t $ortfolios9 It should also 2e recogni>ed that market alues of de2t securities 5ill also fluctuate more as Indian de2t markets 5itness more trading and interest rate olatility in the future9 1i%" Yie$ Debt F(ns

&sually4 "e2t #unds control the 2orro5er default risk 2y inesting in securities issued 2y 2orro5ers 5ho are rated 2y credit rating agencies and are considered to 2e of inestment grade9 'here are !igh ield "e2t #und that seek to o2tain higher returns 2y inesting in de2t instruments that are considered 2elo5 inestment grade89; Clearly4 these funds are ex$osed to higher risk9 In &9S9%94 funds that inest in de2t instruments that are not 2acked 2y tangi2le assets and rated 2elo5 inestment grade <$o$ularly kno5n as 6unk 2onds= are called Dunk Bond #unds9 'hese funds tend to 2e more olatile than other de2t funds4 although they may earn higher returns as a result of the higher risks taken9

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Ass(!e Ret(!n F(ns

#undamentally4 mutual funds hold assets in trust for inestors9 %ll returns and risks are for account of the inestor9 'he role of the fund Manager is to $roide the $rofessional management serice and to ensure the highest $ossi2le return consistent 5ith the inestment o26ectie of the fund9 %ssured return de2t fund certainly reduce the risk leel9

Fi,e Te!) P$ans

#ixed 'erm .lans are closed(end4 2ut usually for shorter term(less than a year9 Being of short duration4 they are not listed on a stock exchange9 %s inestors moe from "e2t #und category to E0uity #unds they face increased risk leel9 !o5eer4 there is a large ariety of E0uity #unds and all of them are not e0ually risk($rone9 Inestors and their adisors need to sort out and select the right e0uity fund that suits their risk a$$etite E0uity funds inest a ma6or $ortion of their cor$us in e0uity shares issued 2y com$anies4 ac0uired directly in initial $u2lic offerings or through the secondary market9 E0uity funds 5ould 2e ex$osed to the e0uity $rice fluctuation risk at the market leel at the industry or sector leel and at the com$any(s$ecific leel9 E0uity #unds Net %sset /alues fluctuate 5ith all these $rice moements9 'hese $rices are caused 2y all kinds of external factors4 $olitical and social as 5ell as economic9 !ence4 E0uity #unds are generally considered at the higher end of the risk s$ectrum among all funds aaila2le in the market9 E0uity funds ado$t different inestment strategic resulting in different leels of risk9 !ence4 they are generally se$arated into different ty$es in terms of their inestment styles9 Some of the ma6or ty$es of e0uity funds4 arranged in order of higher to lo5er risk leel9

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A%%!essive G!#.t" F(ns

'here are many ty$es of stocksshares aaila2le in the marketG Blue Chi$s that are recogni>ed market leaders4 less researched stocks that are considered to hae future gro5th $otential4 and een some s$eculatie stocks of some5hat unkno5n or un$roen issuers9 #und managers seek out and inest in different ty$es of stocks in line 5ith their o5n $erce$tion of $otential returns and a$$etite for risk9

%ggressie gro5th funds target maximum ca$ital a$$reciation4 inest in less researched or s$eculatie shares and may ado$t s$eculatie inestment strategies to attain their o26ectie of high returns for the inestor9 Conse0uently4 they tend to 2e more olatile and riskier than other funds9

G!#.t" F(ns

'hese funds inest in com$anies 5hose earnings are ex$ected to rise at an a2oe aerage rate9 'hese com$anies may 2e o$erating in sectors like technology considered haing a gro5th $otential4 2ut not entirely un$roen and s$eculatie9 'he $rimary o26ectie of 1ro5th #unds is ca$ital a$$reciation oer a three to fie year s$an9 1ro5th funds are therefore less olatile than funds that target aggressie gro5th9

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S*ecia$t& F(ns

'hese funds hae a narro5 $ortfolio orientation and inest in only com$anies that meet $re(defined criteria9 #or exam$le4 at the height of the South %frican a$artheid regime4 many funds in the &9S9 offered $lans that $romised not to inest in South %frican com$anies9 Some funds may 2uild $ortfolios that 5ill exclude 'o2acco com$anies9 #unds that inest in $articular regions such as the Middle East or the %SE%N countries are also an exam$le of s$ecialty funds9 ithin the S$ecialty #unds category4 some funds may 2e 2road(2ased in terms of the ty$es of inestments in the $ortfolio9 !o5eer4 most s$ecialty funds tend to 2e concentrated funds4 since diersification is limited to one ty$e of inestment9 Clearly4 concentrated s$ecialty funds tend to 2e more olatile than diersified funds9

Sect#! F(ns

Sector fundsL $ortfolios consist of inestments in only one industry or sector of the market such as Information on 'echnology4 .harmaceuticals or #ast Moing Consumer 1oods that hae recently 2een launched in India9 Since sector funds do not diersify into multi$le se Offshore #unds9 O00s"#!e F(ns

'hese funds inest in e0uities in one or more foreign countries there2y achieing diersification across the countryLs 2orders9 !o5eer they also hae additional risks ( such as the foreign exchange rate risk ( and their $erform ance de$ends on the economic conditions of the countries they inest in9 Offshore E0uity #unds may inest in a single country
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S)a$$ Ca* E7(it& F(ns

'hese funds inest in shares of com$anies 5ith relatiely lo5er market ca$itali>ation than that of 2ig4 2lue chi$ com$anies9 'hey may thus 2e more olatile than other funds4 as smaller com$aniesL shares are not ery li0uid in the markets9 In terms of risk characteristics4 small com$any funds may 2e aggressie(gro5th or 6ust gro5th ty$e9

O*ti#n Inc#)e F(ns

O$tion Income #unds 5rite o$tions on a significant $art of their $ortfolio9 hile o$tions are ie5ed as risky instruments4 they may actually hel$ to control olatility4 if $ro$erly used9 Conseratie o$tion funds inest in large4 diidend $aying com$anies4 and then sell o$tions against their stock $ositions9 'his ensures a sta2le Income stream in the form of $remium income through selling o$tions and diidends9

Dive!si0ie E7(it& F(ns

% fund that seeks to inest only in e0uities exce$t for a ery small $ortion in li0uid money market securities4 2ut is not focused on any one or fe5 sectors or shares4 may 2e termed a diersified e0uity funds seek to reduce the sector or stock s$ecific risks through diersification9 'hey hae mainly market risk ex$osure9 "iersified funds arc clearly at the lo5er risk leel than gro5th funds

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E7(it& Lin4e Savin% Sc"e)es' An Inian Va!iant

In India4 the inestors hae 2een gien tax concessions to encourage them to inest in e0uity markets through these s$ecial schemes9 Inestment in these schemes entitles the inestor to claim an income tax re2ate4 2ut usually has a lock(in $eriod 2efore the end of 5hich funds cannot 2e 5ithdra5n9 'hese funds are su26ect to the general SEBI inestment guidelines for all e0uity funds4 and 5ould 2e in the "iersified E0uity #und category9 !o5eer4 as there are no s$ecific restrictions on 5hich sectors these funds ought to inest in4 inestors shoul d clearly look for 5here the #und Management Com$any $ro$oses to inest and accordingly 6udge the leel of risk inoled9

E7(it& Ine, F(ns

%n index fund tracks the $erformance of a s$ecific stock market index9 'he o26ectie is to match the $erformance of the stock market 2y tracking an index that re$resents the oerall market9 'he fund inests in shares that constitut e the index and in the same $ro$ortion as the index9 Since they generally inest in a diersified market index $ortfolio4 these funds take only the oerall market risk4 5hile reducing the sector and stock s$ecific risks through diersification9

Va$(e F(ns

/alue #unds try to seek out fundamentally sound com$anies 5hose shares arc currently under($riced in the market9 /alue #unds 5ill add only those shares to their $ortfolios that are selling at lo5 $rice(earnings ratios4 lo5 market to 2ook alue ratios and are underalued 2y other yardsticks9 /alue funds hae the e0uity market $rice fluctuation risks4 2ut stand often at a lo5er end of the risk s$ectrum in com$arison 5ith the 1ro5th #unds9 /alue Stocks may 2e from a

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large num2er of sectors and therefore diersified9

E7(it& Inc#)e 0(ns

&sually income funds are in the "e2t #unds category4 as they target fixed income inestments9 !o5eer4 there are e0uity funds that can 2e designed to gie the inestor a high leel of current income along 5ith some steady ca$ital a$$reciation4 inesting mainly in shares of com$aniesL 5ith high diidend yields9 1&b!i F(ns 8 9(asi E7(it&:9(asi Debt

Money market holdings 5ill constitute a lo5er $ro$ortion in the oerall $ortfolios of de2t or e0uity funds9 'here are funds that4 ho5eer4 seek to hold a relatiely 2alanced holding of de2t and e0uity securities in their $ortfolio9 Such funds are termed hy2rid funds as they hae a dual e0uity2ond focus9

Ba$ance F(n

% 2alanced fund is one that has a $ortfolio com$rising de2t instruments4 conerti2le securities4 and .reference e0uity shares9 'heir assets are generally held in more or less e0ual $ro$ortions 2et5een de2tmoney market securities and e0uities9 By inesting in a mix of this nature4 2alanced funds seek to attain the o26ecties of income4 moderate ca$ital a$$reciation and $reseration of ca$ital4 and are ideal for inestors 5ith a conseratie and long(term orientation9 G!#.t"+an+Inc#)e F(ns

&nlike income(focused or gro5th(focused funds4 these funds seek to strike a 2alance 2et5een ca$ital a$$reciation and income for the inestor9 'heir $ortfolios are a mix 2et5een com$anies 5ith good diidend $aying records and those 5ith $otentia l for ca$ital a$$reciation9 'hese funds 5ould 2e less risky than $ure gro5th funds4 though more risky than income fund9

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C#))#it& F(ns

Commodity funds s$eciali>e in inesting in different commodities directly or through shares of commodity com$anies or through commodity future contracts9 S$eciali>ed funds may inest in a single commodity or a commodity grou$ such as edi2le oils or grains4 5hile diersified commodity funds 5ill s$read their assets oer many commodities9 Rea$ Estate F(ns

S$eciali>ed Real Estate #unds 5ould inest in Real Estate directly4 or may fund real estate deelo$ers4 or lend to them4 or 2uy shares of housing finance com$anies or may een 2uy their securities assets9

'he funds may hae a gro5th orientation or seek to gie inestors regular income9 'here has recently 2een an initiatie to offer such an income fund 2y the !"#C9

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TYPES OF MUTUAL FUND'+ MUTUALFUND TYPE

21O S1OULD INVEST

Ob je ctiv e

I n v e s t )e n t *#!t0#$i#

!igh

Iea$ invest)ent

"iersified e0uity funds

Moderate and aggressie inestors

!ighgro5th

Sector fund

%ggressie inestors Moderate inestors

! igh gro5th

E0uity shares

/ery high

'o generate returns 5hich are similar to the returns of the res$ectie index

.ortfolio like BSE9 Sensex4 Nifty4etc

Returns of N%/4 ery 5ith index $erformance

+(Ayears

+(Ayears

Index fund

E0uityshares

Ris4

+(Ayears

+(Ayears

E0uity linked saing scheme

-ong(term gro5th 5ith tax saing

E 0uityshares

!igh

Balance fund


1ro5th and regular income

Balance ratio of e0uity and de2t fund to ensure higher returns at lo5er risk

Ca$ital market risk and interest rate risk

Oer @ years

Bond funds

Salaried and conseratie inestors

Regular income

.redominantly de2enture goernment securities4 cor$orate 2onds

Credit risk and interest rate risk

Oer ,(+@months

1ilt fund

Salaried and conseratie inestors

Security and income

1oernment securities

Interest rate risk

Oer +@ months

Short(term funds

Inestors 5ith sur$lus short( term fund

-i0uidity and moderate income

Call money commercial $a$ers4 treasury 2ill short(term 1(secs

-inked interest rate risk

A5eeks Amonths

-i0uidity funds

Inestors 5ho $ark their

-i0uidity moderate

'reasury 2ills4 certificate of

Negligi2le Risk

@days A5eeks

fund in current account or short term 2ank fixed

income $reseration of ca$ital

de$osits 4 commercial $a$ers4 securities call money

3ousali Institute of Management Studies4 "har5ad @@

BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED de$osits

Benefits of Mutual Fund 

P#!t# $i# Dive!si0icati#n

Return on inestment from 6ust one industry or sector are su26ect to ho5 5ell or $oorly the industry fares9 But 5ith mutual fund one;s money is inested across different sector9 'his reduces the risk of lo5 returns on inestments4 2ecause rarely do different sectors decline at the same time9



P!#0essi#na$ Mana%e)ent

% mutual fund dra5s on the $rofessional ex$ertise of a team of research analysts and fund managers in inesting one;s saing in a num2er of securities9



Re(cti#n #0 T!ansacti#n C#sts

'he $urchase or sale of financial assets through the exchanges entails a certain $ro$ortion of changes kno5n as transaction made9 Inestments through mutual fund reduce these costs considera2ly as they en6oy the 2enefits of economies of scale9



Li7(iit&

If one inests in an o$en(ended mutual fund4 one can claim the money at net asset alue related $rices from the mutual fund itself9

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

C#nvenience an F$e,ibi$it&

One has access to u$(to(date information on the alue of the inestment in addition to the inestments that hae 2een made 2y the scheme4 the $ro$ortion allocated to different assets and the fund manager;s inestment strategy9



Ret(!n P#tentia$

Inesting in a Mutual #und reduces $a$er5ork and hel$s to aoid many $ro2lems such as 2ad delieries4 delayed $ayments and follo5 u$ 5ith 2rokers and com$anies9 Mutual #unds sae time and make inesting easy and conenient9



T!ans*a!enc&

'hrough features such as regular inestment $lans4 regular 5ithdra5al $lans and diidend reinestment $lans4 one can systematically inest or 5ithdra5 funds according to once needs and conenience9



A00#!abi$it&

Inestors indiidually may lack sufficient funds to inest in high(grade stocks9 % mutual fund 2ecause of its large cor$us allo5s een a small inestor to take the 2enefit of its inestment strategy9

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BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 

2e$$ Re%($ate

%ll Mutual #unds are registered 5ith SEBI and they function 5ithin the $roisions of strict regulations designed to $rotect the interests of inestors9 'he o$erations of Mutual #unds are regularly monitored 2y SEBI9

M(t(a$ F(n In(st!&+A P!#0i$e O!i%in #0 M(t(a$ F(ns

'he Mutual #und industry traces its roots to England in the mid H +K??;s9 'he enactment of t5o British la5s4 the 6oint stock com$anies %cts of +K)@ and +K)J4 $ermitted inestors4 for the first time to share in the $rofits of an inestments enter$rise4 and limited inestor lia2ility to the amount of inestment ca$ital deoted to the enter$rise9 Shortly thereafter4 in +K)K4 the #oreign and Colonial 1oernment 'rust formed in -ondon9 'his trust resem2led a mutual fund in 2asic structure4 $roiding 7the inestor of moderate means the same adantage as the large ca$italistsP 2y s$reading the inestment oer a num2er of different stocks98

'his conce$t of offering the inestment $otential of financial markets to all indiiduals s$a5ned additional 7inestm ent com$anies8 in Britain and Scotland and among other things hel$ed finance the deelo$ment of the $ost(ciil 5as &S economy9 Most of the early British inestment com$anies or trusts resem2led today;s closed(end funds 2y issuing a fixed num2er of shares to grou$s of inestors 5hose 7$ooled8 assets 5ere inested in arious com$anies9 'he Scottish %merican Inestment 'rust4 formed on #e2ruary +4 +KJA 2y fund $ioneer Ro2ert #leming4 5as significant 2ecause it inested in the economic $otential of the &nited States Chiefly through %merican railroad 2onds9 Many other trusts follo5ed that not only target inestment in %merica4 2ut more im$ortantly led to the introduction of inestment fund conce$t on &9 S shares in the late +K??;s and early +,??;s9

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1ist#!& #0 t"e Inian M(t(a$ F(n In(st!&

'he mutual fund industry in India started in +,)A 5ith the formation of &nit 'rust of India4 at the initiatie of the 1oernment of India and Resere Bank the9 'he history of mutual funds in India can 2e 2roadly diided into four distinct $hases

Fi!st P"ase 8 ;<=>+?@ &nit 'rust of India <&'I= 5as esta2lished on +,)A 2y an %ct of .arliament9 It 5as set u$ 2y the Resere Bank of India and functioned under the Regulatory and administratie control of the Resere Bank of India9 In +,JK &'I 5as de(linked from the RBI and the Industrial "eelo$ment Bank of India
Sec#n P"ase 8 ;
+,KJ marked the entry of non( &'I4 $u2lic sector mutual funds set u$ 2y $u2lic sector 2anks and -ife Insurance Cor$oration of India <-IC= and 1eneral Insurance Cor$oration of India <1IC=9 SBI Mutual #und 5as the first non( &'I Mutual #und esta2lished in Dune +,KJ follo5ed 2y Can 2ank Mutual #und <"ec KJ=4 .un6a2 National Bank Mutual #und <%ug K,=4 Indian Bank Mutual #und
3ousali Institute of Management Studies4 "har5ad @)


%t the end of +,,A4 the mutual fund industry had assets under management of Rs9*J4??* crores9

T"i! P"ase 8 ;<<+ 5Ent!& #0 P!ivate Sect#! F(ns6

ith the entry of $riate sector funds in +,,A4 a ne5 era started in the Indian mutual fund industry4 giing the Indian inestors a 5ider choice of fund families9 %lso4 +,,A 5as the year in 5hich the first Mutual #und Regulations came into 2eing4 under 5hich all mutual funds4 exce$t &'I 5ere to 2e registered and goerned9 'he erst5hile 3othari .ioneer
'he +,,A SEBI
'he num2er of mutual fund houses 5ent on increasing4 5ith many foreign mutual funds setting u$ funds in India and also the industry has 5itnessed seeral mergers and ac0uisitions9 %s at the end of Danuary @??A4 there 5ere AA mutual funds 5ith total assets of Rs9 +4@+4K? crores9 'he &nit 'rust of India 5ith Rs9**4*+ crores of assets under management 5as 5ay ahead of other mutual funds9 F#(!t" P"ase 8 since Feb!(a!& 

In #e2ruary @??A4 follo5ing the re$eal of the &nit 'rust of India %ct +,)A &'I 5as 2ifurcated into t5o se$arate entities9 One is the S$ecified &ndertaking of the &nit 'rust of India 5ith assets under management of Rs9@,4KA crores as at the end of Danuary @??A4 re$resenting 2roadly4 the assets of &S )* scheme4 assured return and certain other schemes9 'he S$ecified &ndertaking of &nit 'rust of India4 functioning under an

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administrator and under the rules framed 2y 1oernment of India and does not come under the $urie5 of the Mutual #und Regulations9

'he second is the &'I Mutual #und -td4 s$onsored 2y SBI4 .NB4 BOB and -IC9 It is registered 5ith SEBI and functions under the Mutual #und Regulations9 ith the 2ifurcation of the erst5hile &'I 5hich had in March @??? more than Rs9J)4??? crores of assets under management and 5ith the setting u$ of a &'I Mutual #und4 conforming to the SEBI Mutual #und Regulations4 and 5ith recent mergers taking $lace among different $riate sector funds4 the mutual fund industry has entered its current $hase of consolidation and gro5th9 %s at the end of Se$tem2er4 @??*4 there 5ere @, funds4 5hich manage assets of Rs9+A+?K crores under *@+ schemes9

'he gra$h indicates the gro5th of assets oer the ye GROWTH IN ASSETS UNDER MANAGEMENT

3ousali Institute of Management Studies4 "har5ad @K


Growth of MF 250000 200000 150000 Rs. in Crores 100000 Rs. In Crore

50000 0 Mar- Mar- Mar- Mar- Mar- Mar- Mar65 87 93 03 04 05 06 Year

LIST OF MUTUAL FUNDS IN INDIA M(t(a$F(n

S*#ns#!s

Yea!#0 Ent!&

Bank s$onsored BOB %sset Management Co9 -td Bank of Baroda Can Bank Inestment Management CanaraBank

+,,@ +,KJ

Serices -td94 S9B9I9 #unds Management -td94 &'I %sset Management Co94 .t9

+,KJ +,)A

State Bank of India SBI4 .NB4 BOB4 -IC

-td94

Institutions 19I9C9 %sset Management Co9 -td94 1eneral Insurance

+,,?

Cor$oration F other * Deean Bhima Sahyoga %sset

.S& 1IC -IC

+,K,

Management Co9 -td94 Private Sectors Benchmark %sset Management Co9 NIC!E #inancial

@??+

3ousali Institute of Management Studies4 "har5ad @,


.t9-td94 Chola Mandalam %sset

Serices Chola Mandalam

Management Co9 -td94 Escorts %sset Management -td94 D9 M9 Ca$ital Management .t9

Inestments Escorts #inance D9M9 Shares and Stock

+,,J +,,) +,,*

-td94 Brokers 3otak Mahindra %sset Management 3otak Mahindra Bank

+,,K

Co9 -td94 Reliance Ca$ital %sset

RelianceCa$ital

+,,

Management Co9 -td94 Sahara %sset Management Co9 .t9

Sahara India #inance

+,,)

-td94 Sundaram %sset Management Co9

Sunadaram #inance

+,,)

-td94 'ata%ssetManagement.t9-td94 'ataSons Joint Ventures Predominantly Indian Birla Sun -ife %sset Management Birla 1lo2al #inance .t9 -td94 "9S9.9 Merrill -ynch #und

"9S9.9 Merrill -ynch

Manager -td94 !"#C %sset Management Co9 -td94

!"#C F Std -ife

+,, +,,* +,,) @???

Inestment Foreign Joint Ventures Predominantly %lliance Ca$ital %sset Management %lliance Ca$ital

+,,*

.t9 -td94 "eutsche %sset Management .t9

Management "eutsche %sset

@??@

-td94 #ranklin 'em$leton %sset

Management #ranklin 'em$leton

+,,)

Management .t9 -td94 Inestments !SBC %sset Manageent .t9 -td94 !SBC Security IN1 Ineatment Management .t9 IN11rou$

@??@ +,,,

-td94 Morgan Stanley Inestment

MorganStanley

+,,A

Management .t9 -td94 .rudential ICICI %sset

.rudentialICICI

+,,A

Management .t9 -td94 .rinci$al %sset Management Co9

.rinci$al #inancial

.t9 -td94

Serice

+,,*

3ousali Institute of Management Studies4 "har5ad A?


Standard Charted %sset

Standard Charted Bank

@???

Management -td94 < Source: Outlook Money : -aymen;s guide to M&'&%- #&N" =

Sa$es P!actices in t"e Inian M(t(a$ F(n Ma!4et A%ent c#))issi#ns

%gents are com$ensated 2y the funds through commissions4 commission rates9 In India there are no rules $rescri2ed for goerning the minimum r maximum commissions $aya2le 2y a fund to its agents9 Each fund has discretion to decide the commission structure for its agents9 'hus sundaram $ays commission to its agents as a 2asic rates $lus an incentie that de$ends on the olume of 2usiness9 In recent times funds hae 2een $aying commissions in the range of +9(@ Q on e0uity oriented funds and ?9*(?9K Q on de2t 2ased funds9 !igher commissions are generally $aid in case of inestments that are made 5ith the $ur$ose of taking tax 2enefits4 since inestors are re0uired to lock in their funds for a longer $eriod9

SEBI Re%($ati#ns

%lthough SEBI does not $rescri2e the minimum or maximum amount of commission $aya2le 2y a fund to agents under SEBI ed to charge the inestors are 7entry F exit8 loads to coer the fund distri2ution ex$enses9 'hese loads should not exceed the $ercentage s$ecified in the scheme;s offer document9 In case the agents commissions $aid 2y the fund result in oer all distri2ution ex$enses are to 2e 2orne 2y %MC i9e9 the excess cannot 2e $assed on to the unit holders9 % no H load4 charging no entry or exit loads is authori>ed to charge the schemes 5ith the commissions $aid to agents as $art of the regular management F marketing ex$enses allo5ed 2y SEBI9 SEBI $uts a ca$ on the total ex$enses
3ousali Institute of Management Studies4 "har5ad A+


Ma!4e! P!actice

Some funds $ay the entire commission u$( fronts to the agents e that they $roide useful $rocessing and adisory serices to inestors4 F hae to incur costs in the $rocess that need to 2e coered from their 5ell desere commissions receied from the funds A%ents Ob$i%ati#n

Commissionother arrangements are 2et5een the fund and agent2roker9 Su2( 2rokers sere as agents of the $rinci$le agent and the fund is not ans5era2le for their actiities9 Clearly4 gien the need for and 5ides$read existence of a su2(2roker net5ork in India their role cannot 2e 5ashed a5ay9 But the distri2utors need to make the inestors a5are of 5hom they are dealing 5ith4 5hom the commission re2ate is receied from4 F 5hom should they contact in case of any $ro2lems9 %gents are 5ell adised to $ractice honesty F trans$arency in ex$laining the commission structure F the timing of any re2ate $ayment to the inestors4 5hose trust 5ill 2uild a long(term relationshi$9

3ousali Institute of Management Studies4 "har5ad A@


T"e AMFI C#e #0 Et"ics

One of the o26ects of the %ssociation of Mutual #unds in India <%M#I= is to $romote the inestors; interest 2y defining and maintaining high ethical and $rofessional standards in the mutual fund industry9 In $ursuance of this o26ectie4 %M#I had constituted a Committee under the Chairmanshi$ of Shri %9 .9 .radhan 5ith Shri S9 /9 Doshi4 Shri C9 19 .arekh and Shri M9 -axman 3umar as mem2ers9 'his Committee4 5orking in close co(o$eration 5ith .rice aterhouseH--. under the #IRE .ro6ect of &S%I"4 has drafted the Code4 5hich has 2een a$$roed and recommended 2y the Board of %M#I for im$lementation 2y its mem2ers9 I take o$$ortunity to thank all of them for their efforts9

'he %M#I Code of Ethics4 7'he %CE8 for short4 sets out the standards of good $ractices to 2e follo5ed 2y the %sset Management Com$anies in their o$erations and in their dealings 5ith inestors4 intermediaries and the $u2lic9 SEBI
'his is the first edition of the Code and it may 2e su$$lemented further as may 2e necessary9 I ho$e mem2ers of %M#I 5ould im$lement the code and ensure that their em$loyees are made fully a5are of the Code9

3ousali Institute of Management Studies4 "har5ad AA


;/

INTEGRITY

+9+

Mem2ers and their key $ersonnel4 in the conduct of their 2usiness shall o2sere high standards of integrity and fairness in all dealings 5ith inestors4 issuers4 market intermediaries4 other mem2ers and regulatory and other goernment authorities

+9@

Mutual #und Schemes shall 2e org ani>ed4 o$erated4 managed and t heir $ortfolios of securities selected4 in the interest of all classes of unit holders and not in the interest of 

S$onsors



"irectors of Mem2ers



Mem2ers of Board of 'rustees or directors of the 'rustee com$any



Brokers and other market intermediaries



%ssociates of the Mem2ers



% s$ecial class selected from out of unit holders

/

D(e Di$i%ence

@9+

Mem2ers in the conduct of there %sset Management 2usiness shall at all time9

@9@



Render high standards of serice9



Exercise due diligence9



Exercise inde$endent $rofessional 6udgment9

Mem2ers shall hae and em$loy effectiely ade0uate resources and $rocedures4 5hich are needed for the conduct of %sset Management actiities9

3ousali Institute of Management Studies4 "har5ad A*


/

Disc$#s(!es

A9+

Mem2ers shall ensure timely dissemination to all unit holders of ade0uate4 accurate4 and ex$licit information $resented in a sim$le language a2out the inestment o26ecties4 inestment $olicies4 financial $osition and general affairs of the scheme9

A9@

Mem2ers shall disclose to unit holders inestment $attern4 $ortfolio details4 ratios of ex$enses to net assets and total income and $ortfolio turnoer 5hereer a$$lica2le in res$ect of schemes on annual 2asis9

A9A

Mem2ers shall in res$ect of transactions of $urchase and sale of securities entered into 5ith any of their associates or any significant unit holder9 

Su2mit to the Board of 'rustees details of such transactions4 6ustifying its fairness to the scheme9



"isclose to the unit holders details of the transaction in 2rief through annual and half yearly re$orts9

A9*

%ll transactions of $u rchase an d sale of se curities 2y key $e rsonnel 5ho ar e directly inoled in inestment o$erations shall 2e disclosed to the com$liance officer of the mem2er at least on half yearly 2asis and su2se0uently re$orted to the Board of 'rustees if found haing conflict of interest 5ith the transactions of the fund9

>/

P!#0essi#na$ Se$$in% P!actices

*9+

Mem2ers shall not use any unethical means to sell4 market or induce any inestor

*9@

to 2uy their $roducts and schemes Mem2ers shall not make any exaggerated statement regarding $erformance of any $roduct or scheme9

3ousali Institute of Management Studies4 "har5ad A


*9A

Mem2ers shall endeaor to ensure that at all times



Inestors are $roided 5ith true and ade0uate information 5ithout any misleading or exaggerated claims to inestors a2out their ca$a2ility to render certain serices or their achieements in regard to serices rendered to other clients4



Inestors are made a5are of attendant risks in mem2ers; schemes 2efore the inestors make any inestment decision4



Co$ies of $ros$ectus4 memoranda and related literature is made aaila2le to inestors on re0uest4



%de0uate ste$s are taken for fair allotment of mutual fund units and refund of a$$lication moneys 5ithout delay and 5ithin the $rescri2ed time limits and4

*9*



Com$laints from inestors are fairly and ex$editiously dealt 5ith9



Mem2ers in all their communications to inestors and selling agents shall Not $resent a mutual fund scheme as if it 5ere a ne5 share issue



Not create unrealistic ex$ectations



Not guarantee returns exce$t as stated in the Offer "ocument of the scheme a$$roed 2y SEBI4 and in such case4 the Mem2ers shall ensure that ade0uate resources 5ill 2e made aaila2le and maintained to meet the guaranteed returns9



Coney in clear terms the market risk and the inestment risks of any scheme 2eing offered 2y the Mem2ers9



Not induce inestors 2y offering 2enefits4 5hich are extraneous to the scheme9



Not misre$resent either 2y stating information in a manner calculated to mislead or 2y omitting to state information 5hich is material to making an informed inestment decision9

3ousali Institute of Management Studies4 "har5ad A)


/

Invest)ent P!actice

9+

Mem2ers

shall

manage

all

the

schemes

in

accordance

5ith

the

fundamental inestment o26ecties and inestment $olicies stated in the offer documents and take inestment decisions solely in the interest of the unit holders9

9@

Mem2ers shall not kno5ingly 2uy or sell securities for any of their schemes from or to 

%ny director4 officer4 or em$loyee of the mem2er



%ny trustee or any director4 officer4 or em$loyee of the 'rustee Com$any

=/

O*e!ati#ns

)9+

Mem2ers shall aoid conflicts of interest in managing the affairs of the schemes and shall kee$ the interest of all unit holders $aramoun t in all matters relating to the scheme9

)9@

Mem2ers or any of their directors4 officers or em$loyees shall not indulge in front running <2uying or selling of any securities ahead of transaction of the fund4 5ith access to informati on regarding the transaction 5hich is not $u2lic and 5hich is material to making an inestment decision4 so as to derie unfair adantage=9

)9A

Mem2ers or any of their directors4 officers or em$loyees shall not indulge in self( dealing
)9*

Mem2ers shall not engage in any act4 $ractice or course of 2usiness in connection 5ith the $urchase or sale4 directly or indirectly4 of any security held or to 2e ac0uired 2y any scheme managed 2y the mem2ers4 and in $urchase4 sale and

3ousali Institute of Management Studies4 "har5ad AJ


redem$tion of units of schemes managed 2y the mem2ers4 5hich is fraudulent4 dece$tie or mani$ulatie9

)9

Mem2ers shall not4 in res$ect of any securities4 2e $arty to( 

Creating a false market4



.rice rigging or mani$ulation



.assing of $rice sensitie information to 2rokers4 Mem2ers of stock exchanges and other $layers in the ca$ital markets or take action4 5hich is unethical or unfair to inestors9

)9)

Em$loyees4 off icers and directors of th e Mem2ers shall not 5ork as age nts 2rokers for selling of the schemes of the Mem2ers4 exce$t in their ca$acity as em$loyees of the Mem2er or the 'rustee Com$any9

)9J

Mem2ers shall not make any change in the fundamental attri2utes of a scheme4 5ithout the $rior a$$roal of unit holders exce$t 5hen such change is conse0uent on changes in the regulations9

)9K

Mem2ers shall aoid excessie concentration of 2usiness 5ith any 2roking firm4 and excessie holding of units in a scheme 2y fe5 $ersons or entities9

@/

Re*#!tin% P!actices

J9+

Mem2ers shall follo5 com$ara2le and standardi>ed aluation $olicies in 5ith the SEBI Mutual #und Regulations9

J9@ %ccordance Mem2ers shall foll o5 uniform $erform ance re$orting on the 2asis of total return9 J9A

Mem2ers shall ensure scheme 5ise segregation of cash and securities accounts9

3ousali Institute of Management Studies4 "har5ad AK


?/

Un0ai! C#)*etiti#n

Mem2ers shall not make any statement or 2ecome $riy to any act4 $ractice or com$etition4 5hich is likely to 2e harmful to the interests of

other Mem2ers or is likely to $lace other9 Mem2ers in a disadantageous $osition in relation to a market $layer or inestors4 5hile com$eting for inesti2le funds9

Obse!vance #0 Stat(tes R($es an Re%($ati#ns

Mem2ers shall a2ide 2y the letter and s$irit of the $roisions of the Statutes4 rules and regulations4 5hich may 2e a$$lica2le4 and releant to the actiities carried on 2y the mem2ers9

;/

En0#!ce)ent Me)be!s s"a$$



idely disseminate the %M#I Code to all $ersons and entities coered 2y it



Make o2serance of the Code a condition of em$loyment



Make iolation of the $roisions of the code4 a ground for reocation of contractual arrangement 5ithout redress and a cause for disci$linary action



Re0uire that each officer and em$loyee of the Mem2er sign a statement that



Esta2lish internal controls and com$liance mechanisms4 including assigning

heshe has receied and read a co$y of the Code

su$erisory res$onsi2ility 

"esignate one $erson 5ith $rimary res$onsi2ility for exercising com$liance 5ith $o5er to fully inestigate all $ossi2le iolations and re$ort to com$etent authority

3ousali Institute of Management Studies4 "har5ad A,

BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 

#ile regular re$orts to the 'rustees on a half yearly and annual 2asis regarding o2serance of the Code and s$ecial re$orts as circumstances re0uire



Maintain records of all actiities and transactions for at least three years4 5hich records shall 2e su26ect to reie5 2y the 'rustees



"edicate ade0uate resources to carrying out the $roisions of the Code

St!(ct(!e #0 M(t(a$ F(ns in Inia

-ike other countries4 India has a legal frame5ork 5ithin 5hich mutual funds 2e constituted9 &nlike in the &34 5here t5o distinct trust; and cor$orate; structures are follo5ed 5ith se$arate regulations4 in India o$en(end and closed end funds o$erate under the same regulatory structure and are constituted along one uni0ue structure H as unit trusts9 % mutual fund in India is allo5ed to issue o$en(end and closed(end schemes under a common legal structure9 'herefore4 a mutual fund may hae seeral different schemes
'he structure is re0uired to 2e follo5ed 2y mutual funds in India is laid do5n under SEBI
3ousali Institute of Management Studies4 "har5ad *?


SEBI

TRUSTEE

SPONSOR

OPERATIONS

AMC

FUND MANAGER

MARET : SALES

MUTUAL FUND

SC1EMES

INVESTOR

3ousali Institute of Management Studies4 "har5ad *+


S*#ns#!

hat a $romoter is to a com$any4 a s$onsor is to a mutual fund9 'he s$onsor initiates the idea to set u$ a mutual fund9 It could 2e a financial serices com$any4 a 2ank or a financial institution9 It could 2e Indian of foreign9 It could do it alone or through a 6oint enture9 In order to run a mutual fund in India4 the s$onsor has to o2tain a license from SEBI9 #or this4 it has to satisfy certain conditions4 such as a ca$ital and $rofits4 2ack records
Asset Mana%e)ent C#)*an& 5AMC6

%n %MC is the legal entity formed 2y the s$onsor to run a mutual fund9 It;s the %MC that em$loys fund managers and analyst4 and other $ersonnel9 It;s the %MC that handles all o$erati onal matters of a mutual fund H from launching schemes to managing them to interacting 5ith inestors9

'he $eo$le in the %MC 5ho should matter the most to you are those 5ho take inestment decisions9 'here is the head of the fund house4 generally referred to as the chief executie officer
3ousali Institute of Management Studies4 "har5ad *@


Trustees 'rustees are like internal regulations in a mutual fund4 and their 6o2 is to $rotect the interests of unit holders9 'rustees are a$$ointed or cor$orate 2odies9 In order to ensure

'hey are im$artial and fair4 SEBI rules mandate that at least t5o thirds of the trustees 2e inde$endent that is4 not hae any association 5ith the s$onsor9

'rustees a$$oint the %MC4 su2se0uently seeks their a$$roal for the 5ork it does and re$orts $eriodically to them on ho5 the 2usiness is 2eing run9 'rustees float and market schemes and secure necessary a$$roals9 'hey check if the %MC inestments are 5ithin defined limits and 5hether the funds accounta2le for financial irregularities in the mutual fund9

C(st#ian

% custodian handles the inestment 2ack office of a mutual fund9 Its res$onsi2ilities include recei$t and deliery of securities4 collection of income4 and distri2ution of diidends and segregation of assets 2et5een schemes9 'he s$onsor of a mutual fund cannot act as a custodian to the fund9 'his condition4 formulated in the interest of inestors4 ensures that the assets of a mutual fund are not in the hands of its s$onsor9 #or exam$le "eutsche Bank is a custodian 2ut it cannot serice "eutsche Mutual #und4 its mutual fund arm9

Re%ist!a!

Registrars also kno5n as transfer agents4 handles all inestor related serices9 'his includes issuing and red reaming units9 Sending fact sheet and annual re$orts9 Some fund houses handle such functions in house9 Others outsource it to registrarsG 3ary and C%MS are the more $o$ular ones9 It doesn;t really matter 5hich model your mutual fund

3ousali Institute of Management Studies4 "har5ad *A


o$ts for4 as long as it is $rom$t and efficient in sericing you9 Most mutual funds in addition to registrars also hae inestor serice centers of their o5n in some cities9

Recent T!ens in M(t(a$ F(n In(st!&

'he most im$ortant trend in the mutual fund industry is the aggressie ex$ansion of the #oreign o5ned mutual fund com$anies and the decline of the com$anies floated 2y Nationali>ed Banks and smaller .riate Sector $layers9 Many Nationali>ed 2anks got into the mutual fund 2usiness in the early nineties and got off to a good start due to the stock market 2oom $reailing then9 'hese 2anks did not really understand the mutual fund 2usiness and they 6ust ie5ed it as another kind of 2anking actiity9 #e5 hired s$eciali>ed staff and generally chose to transfer staff from the $arent organi>ation9 'he $erformance of the schemes floated 2y these funds 5as not good9

Some schemes offered guaranteed returns and their $arent organi>ation had to 2ail out these %MCs 2y $aying large amounts of money as the difference 2et5ee n the guaranteed and actual returns9 'he serice leels 5ere also ery 2ad9 Most of these %MCs hae not 2een a2le to retain staff4 float ne5 schemes etc9 and it is dou2tful 5hether4 2arring a fe5 exce$tions they hae serious $lans of continuing the actiity in a ma6or 5ay9 'he ex$erience of some of the %MCs floated 2y $riate sector Indian com$anies 5as also ery similar9 'hey 0uickly reali>ed that the %MC 2usiness4 5hich makes money

3ousali Institute of Management Studies4 "har5ad **


in the long term and re0uires dee$($ocketed su$$ort in the intermediate years9 Some hae sold out to #oreign o5ned com$anies4 some hae merged 5ith others and there is general restructuring going on9

'he #oreign o5ned com$anies hae dee$ $ockets and come in here 5ith the ex$ectation of a long haul9 'hey can 2e credited 5ith introducing many ne5 $ractices such as ne5 $roduct innoation4 shar$ im$roement in serice standards and disclosure4 usage of technology4 2roker education and su$$ort etc9 In fact they hae forced the industry to

&$grade it and serice leels of organi>ations like &'I hae im$roed dramatically in the last fe5 years in res$onse to the com$etition $roided 2y these com$anies9 F(t(!e Scena!i#

'he asset 2ase 5ill continue to gro5 at an annual rate of a2out A? to AQ oer the next fe5 years as inestors shift their assets from 2anks and other traditional aenues9 Some of the older and $riate sector $layers 5ill either close sho$ or 2e taken oer9

In the coming years the market 5ill 5itness a flurry of ne5 $layers entering the arena9 'here 5ill 2e a large num2er of offers from arious %MCs in the time to come9 Some 2ig names like #idelity4 .rinci$al4 and Old Mutual etc9 are looking at Indian market seriously9 One im$ortant reason for it is that most ma6or $layers already hae $resence here and hence these 2ig names 5ould hardly like to get left 2ehind9 'he mutual fund industry is a5aiting the introduction of

3ousali Institute of Management Studies4 "har5ad *


"eriaties in India as this 5ould ena2le it to hedge its risk and this in turn 5ould 2e reflected in its N%/9

SEBI is 5orking out the norms for ena2ling the existing mutual fund schemes to trade in deriaties9 Im$ortantly4 many market $layers hae called on the regulator to initiate the $rocess immediately4 so that the mutual funds can im$lement the changes that are re0uired to trade deriaties9 G$#ba$ Scena!i#

Some 2asic facts 

'he money market mutual fund segment has a total cor$us of  +9*K trillion in the &9S9 against a cor$us of  +?? million in India9



Out of the to$ +? mutual funds 5orld5ide4 eight are 2ank( s$onsored9 Only #idelity and Ca$ital are non(2ank mutual funds in this grou$9



In the &9S9 the total num2er of schemes is higher than that of the listed com$anies 5hile in India 5e hae 6ust @JJ schemes



Internationally4 mutual funds are allo5ed to go short9 In India fund managers do not hae such lee5ay9



In the &9S9 a2out ,9J million households 5ill manage their assets on(line 2y the year @??A4 such a facility is not yet of aail in India9



On( line trading is a great idea to reduce management ex$enses from the current @ Q of total assets to a2out ?9J Q of the total assets9

3ousali Institute of Management Studies4 "har5ad *)


KQ of the core customer 2ases of mutual funds in the to$ ?(2roking firms in the &9S9 are ex$ected to trade on(line 2y @??A9

Internationally4 on( line inesting continues its meteoric rise9 Many hae de2ated a2out the success of e( commerce and its 2reakthroughs4 2ut it is true that this as$ect of technology could and 5ill change the 5ay financial sectors function9 !o5eer4 mutual funds cannot 2e left far 2ehind9 'hey hae reali>ed the $otential of the Internet and are e0ui$$ing themseles to $erform 2etter9

In fact in adanced countries like the &9S9%4 mutual funds 2uy( sell transactions hae already 2egun on the Net4 5hile in India the Net is used as a source of Information . Such changes could facilitate easy access4 lo5er intermediation costs and 2etter serices for all9 % research agency that s$eciali>es in Internet technology estimat es that oer the next four years Mutual #und %ssets traded on( line 5ill gro5 ten folds from  +@K 2illion to  +4@@J 2illionG 5hereas e0uity assets traded on(line 5ill increase during the $eriod from  @*) 2illion to  +4)+ 2illion9 'his 5ill increase the share of mutual funds from A*Q to *?Q during the $eriod 9 Such increases in olumes are ex$ected to 2ring a2out large changes in the 5ay Mutual #unds conduct their 2usiness9

!ere are some of the 2asic changes that hae taken $lace since the adent of the Net9 L#.e! C#sts

"istri2ution of funds 5ill fall in the online trading regime 2y @??A9 Mutual funds could 2ring do5n their administratie costs to ?9JQ if trading is done on( line9 %s $er SEBI regulations4 2ond funds can charge a maximum of @9@Q and e0uity funds can charge @9Q as administratie fees9 'herefore if the administratie costs are lo54 the 2enefits are $assed do5n and hence Mutual #unds are a2le to attract mire inestors and increase their asset 2ase9

3ousali Institute of Management Studies4 "har5ad *J

BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Bette! avice Mutual funds could $roide 2etter adice to their inestors through the Net rather than through the traditional inestment routes 5here there is an additional channel to deal 5ith the Brokers9 "irect dealing 5ith the fund could hel$ the inestor 5ith their financial $lanning / In

India4 2rokers could get more Net say than inestors and could hel$ the inestors 5ith the kno5ledge through get from the Net9

Ne. invest#!s .#($ *!e0e! #n$ine

Mutual funds can target inestors 5ho are young indiiduals and 5ho are Net say4 since sericing them 5ould 2e easier on the Net9 India has around +9) million net users 5ho are $rime target for these funds and this could 6ust 2e the 2eginning9 'he Internet users are going to increase dramatically and mutual funds are going to 2e the 2est 2eneficiary9 ith smaller administratie costs more funds 5ould 2e mo2ili>ed 9% fund manager must 2e ready to tackle the olatility and 5ill hae to maintain sufficient amount of inestments 5hich are high li0uidity and lo5 yielding inestments to honor redem$tion9

Net+base ave!tise)ents

'here 5ill 2e more sites inoled in ads and $romotion of mutual funds9 In the &9S9 sites like %O- offer detailed research and financial details a2out the functioning of different funds and their $erformance statistics9 a is 5itnessing a genesis in this area9 'here are many site s such as indiainfoline.com and indiafn9com that are doing something similar and $roiding adice to inestors regarding their inestments9 In the &9S9 most mutual funds concentrate only on financial funds like e0uity and de2t9 Some like real estate funds and commodity funds also take an ex$osure to $hysical assets9 'he latter ty$e of funds are $referred 2y cor$orate 5ho 5ant to hedge their ex$osure to the commodities they deal 5ith9

3ousali Institute of Management Studies4 "har5ad *K


#or instance4 a ca2le manufacturer 5ho needs +?? tons of Co$$er in the month of Danuary could 2uy an e0uialent amount of co$$er 2y inesting in a co$$er fund9 #or Exam$le4 .ermanent .ortfolio #und4 a conseratie &9S9 2ased fund inests a fixed $ercentage of it;s cor$us in 1old4 Siler4 S5iss francs4 s$ecific stocks on arious 2ourses around the 5orld4 short Hterm and long(term &9S9 treasuries etc9

In &9S9%9 a$art from 2ullion funds there are co$$er funds4 $recious metal funds and real estate funds
In deelo$ed countries like the &9S9% there are funds to satisfy eery2ody;s re0uirement4 2ut in India only the ti$ of the ice2erg has 2een ex$lored9 In the near future India too 5ill concentrate on financial as 5ell as $hysical funds9 C#!*(s'+

Inesting in a scheme is a sim$le $rocess9 Duts 5alk into any office of the mutual fund or that of its re$resentaties9 #ill u$ a short and sim$le form4 and hand oer a che0ue9 ours money gets added to the $ool already 5ith the scheme4 gien to it 2y numerous other inestors like you9 'he total money aaila2le 5ith a scheme at any $oint in time is referred to as the 7Cor$us8 or %sset under management ;the mutual fund4 on your and other inestors 2ehalf inests this cor$us in arious securities in line 5ith its sated o26ecties

Units'

3ousali Institute of Management Studies4 "har5ad *,


Mutual fund issues you units; against your inestment9 % unit is the currency of a fund9 hat a share is to com$any4 a unit is to a fund9

Net asset va$(e

measured $er unit4 is called the Net %sset /alue
Is Rs +?9 ou 5ill 2e allotted +??? units <+????+?= roughly H the fund charges a nominal $rocessing fee9

'he N%/ of any scheme tells ho5 much each units of its is 5orth at any $oint in time4 and is therefore the sim$lest measure of ho5 it is $erforming9 Schemes N%/ is its net assets
3ousali Institute of Management Studies4 "har5ad ?


leae9 If the N%/ of your scheme rises from Rs +? to Rs4 ++ oer a $eriod of time4 your scheme is said to hae generated a return of +?Q9 Similarly4 if its N%/ falls from Rs +? to Rs ,4 it is said to hae lost +?Q

#und house hae to calculate and disclose the N%/;s of their schemes daily fund N%/;s can 2e easily looked u$9 hile dailies gie a random listing of schemes the financial $a$ers are more exhaustie in their coerage9N%/ information is also aaila2le on 5e2site4 of the mutual fund concerned and of inde$endent data $roiders9 hen inested in a scheme4 its N%/ is the figure to track as it 0ualifies your returns and your $urchase $rice and sale $rice 5ill 2e 2ased on it9

L#a'+

%lthough the N%/ re$resents scheme current market alue it is not the exact $rice at 5hich an inestor enters or exits the scheme9 #und houses ley a nominal charge4 on most of their schemes4 to meet their $rocessing costs and to discourage inestors from lacking9 'his charge is referred to as load; and it is $rice you $ay oer and a2oe the fund N%/ 5hen you 2uy or cell units9

ou $ay an entry load; at the time 2uying units and an exit load; 5hile selli ng9 -oads are al5ays ex$ressed as $ercentage of the N%/4 and hae the effect of reducing your returns9 %n entry load increases your N%/4 5hich $laces fe5er units in your hands9 %n exit load decrease you;re N%/ of Rs +? and it leies an entry and exit load of +Q <+? $aisa= each9 So 5hen you 2uy units you;ll $ay Rs +?9+ <+??9+?=$er unit4 not Rs +?9 Similarly if you sell you;ll get Rs ,9,?<+?(?9+?= $er unit4 not Rs +?9 &nder SEBI rules4 the sum of entry and exit loads charged 2y a scheme cannot exceed JQ

C#st #0 invest)ent in )(t(a$ 0(n'+ %nother entry that eats into your return is ex$enses; this is 5hat your fund charges you for managing your only9 #und managers hae to 2e $aid a fee4 as do the

3ousali Institute of Management Studies4 "har5ad +


other constraints inoled in managing your money9 %ll this entails costs4 5hich your scheme recoers from you4 5ithin limits9 Eery year4 a fund charges same amount to your schemes N%/ reducing your returns 2y that amount9 SEBI rules allo5 e0uity schemes to charge a maximum of @9Qof cor$us as ex$enses eery year4 the corres$onding figure for de2t schemes is @9@Q

SEBI also decides 5hat kind of ex$enses a fund can charge its unit holders and 5hat it cannot9 #or e9g9: the cost of running a cam$aign a2out a fund haing 5on an a5ard cannot 2e charged to inestors9

Disc$#s(!es'+

#rom time to time4 your fund house 5ill share 5ith you information relating to your scheme9 It does this in arious 5ays4 in arious degrees9 &nder SEBI rules4 fund houses hae to send to all unit holder;s annual re$orts disclosing the com$lete $ortfol io of all units holders; annul re$orts disclosing the com$lete $ortfolio of all units holders; annul re$orts disclosing the com$ete $ortfolio of all their schemes and $u2lish half(yearly results in ne5s$a$ers9 'hese document shade light on your schemes $erforming oer arious time $eriods4 and ho5 it stands u$4 gien market conditions9

Some fund house goes 2eyond such mandatory information sharing9 hateer information is releant to your inestment they send it to you on a 0uarterly 2asis

4

through fax and ne5sletters9 Most fund houses u$date their scheme $ortfolio on their 5e2site een 0uicker4 the norm 2eing on a monthly 2asis9 'his information you can use to make an inestment in the schemes

Ree)*ti#n'+ heneer you 5ant4 you can sell your units4 $artly or fully 2ack to your fund9 %lthough it;s sale from your $oint of ie5 in mutual fund $arlance it is called 

3ousali Institute of Management Studies4 "har5ad @


re$urchase or redem$tion; you;ll hae to fill u$ another short and sim$le from your Mutual fund 5ill $ay you the schemes N%/ $reailing on that date minus the exit load4 Mail you a che0ue 5ithin three to fie days9

DISTRIBUTION COMPANIES9 % distri2ution com$any has seeral agents and distri2utors 5orking for it4 and is the transitional interface 5ith the mutual fund9 It is institutional agent for a mutual fund4 and earns commissions on funds mo2ili>ed9 "istri2ution com$anies are a ery $o$ular channel 5ith mutual fund today9

C#)*an& P!#0i$e Int!#(cti#n'+

VISION: ”To be the most trusted name in investment and wealth management, to be the preferred employer in the industry and to be a catalyst for growth and excellence of the asset management business in India”.

MISSION: To consistently pursue investor's wealth optimization by: •

Achieving superior and consistent investment results

•

Creating a conducive environment to hone and retain talent •

Providing customer delight 3ousali Institute of Management Studies4 "har5ad A


•

Institutionalizing system-approach in all aspects of functioning

•

Upholding highest standards of ethical values at all times

Biral Sun -ife #inancial Serices offers a range of financial serices for resident Indians and Non Residents Indians9Birla Sun -ife "istri2ution Co9 -td9 a $art of the Doint

/enture 2et5een 'he %ditya Biral 1rou$ and Sun -ife #inancial of Canada9 'he synergy of these t5o accom$lished conglomerates 2rings the glo2al financial kno5(ho5 and local market insight9 It is the aim of the com$any to offer dierse and to$ 0uality financial serices to customers9 'he Mutual #und and Insurance com$anies $roide 5ealth management and $rotection $roducts to customers 5hile the "istri2ution and Securities com$anies $roide 2rokerage and trading serices for inestment in e0uities4 de2t securities4 fixed de$osits4 etc9

It is said that: 'o ac0uire 5ealth is difficul t4 to $resere it more difficult4 2ut to nourish it 5isely4 the most difficult of all9

'he com$any;s commitment to excellence along 5ith a roots u$ a$$roach to research and analysis4 cou$led 5ith technology drien $rocesses has ena2led them to excel at this challenging task and in a s$an of four years emerge as one of the leading distri2ution houses of the country9

no!ledge is a treasure "ut practice is t#e $ey to it%

3ousali Institute of Management Studies4 "har5ad *


'he com$any 2eliees that the desire for kno5ledge increases 5ith the ac0uisition of it9 %t Birla Sun -ife "istri2ution they make the 2est use of intellect and ex$ertise $utting kno5ledge to good $ractice9 %s and 5hen and 5here inestors need it9

#or com$any the conce$t of $erfect serice is contently ex$anding9 'his along 5ith trans$arent 2usiness ethics4 ins$ired and innoatie solutions is 5hat their inestors hae come to ex$ect from them9

% fact4 5hich has 2een reaffirmed 2y recognition and a5ards4 conferred on them 2y the leading names of the India #inancial Serices Industry9

STRUCTURE OF FINANCIAL SERVICES

Bi!$a S(n Li0e Financia$ Se!vices

BirlaSun-ife Mutual#und

BirlaSun-ife Insurance

BirlaSun-ife "istri2ution

:

Biral Sun -ife Mutual #und follo 5s a conseratie long(term a$$roach to inestment4 5hich is 2ased on identifying com$anies that hae good credit(5orthiness and are fundamentally strong9 It $laces a lot of em$hasis on 0uality of management and risk control9 'his is done through extensie analysis that includes factory isits and field research9 It has one of the largest team of research analysts in the industry9 'he com$any

3ousali Institute of Management Studies4 "har5ad 


is one of IndiaLs leading4 $riate mutual funds 5ith a large customer 2ase9 It has 2een recogni>ed nationally 5ith coeted a5ards9

Bi!a$ S(n Li0e Ins(!ance C#)*an& Li)ite' Insurance is not a2out something going 5rong9 ItLs often a2out things going right9 One of the 5onders of human nature is that 5e neer 2eliee anything can actually go 5rong9 Surely4 life has its share of ifs9 %t Biral Sun -ife ho5eer4 com$any 2eliee it has its e0ually $leasant share of 2uts as 5ell9 Biral Sun -ife stand committed to hel$ing $eo$le reali>e those ha$$y moments 5hich make a life9 Be it liing the same lifestyle in their $ost retirement days or $roiding a secure future for their loed ones4 in case something ha$$ens to them9

Bi!$a S(n Li0e Dist!ib(ti#n C#)*an& Li)ite'

VISION: “To be the first performance of our customers as a integrated provider of complete financial services through superior value creation and technology”. %t Birla Sun -ife "istri2ution4 they $ut kno5ledge4 ex$ertise and ex$erience to good use to $resere4 nurture and nourish your 5ealth9 #or customers today and tomorro59 They are a part of the Joint ent!re "et#een The $%itya &ir'a (ro!p an% )!n *ife +inan,ia' of Cana%a. The synery of these t#o a,,op'ishe% ,on'oerates "rins in/estors 'o"a' finan,ia' 0no#-ho# an% 'o,a' ar0et insiht.

3ousali Institute of Management Studies4 "har5ad )


It is sai% that1 "To acquire wealth is difficult, to preserve it more diffcult, but to nourish it wisel, the most difficult of all."

Their ,oitent to e2,e''en,e a'on #ith a roots !p approa,h to resear,h an% ana'ysis3 ,o!p'e% #ith te,hno'oy %ri/en pro,esses has ena"'e% !s to e2,e' at this ,ha''enin tas0 an% in a span of fo!r years eere as one of the 'ea%in %istri"!tion ho!ses of the ,o!ntry.

e& St!en%t"s' •

Research 2ased adice from the s$ecial research team9

•

-iterature for the u$date of kno5ledge4 this is the uni0ue feature of com$any 5here no other com$any $roides literature9

•

.roides the fund u$dates on the 5eekly and monthly 2asis9

•

'he com$any has 2ecome one of the 2igges t distri2ution com$anies in the shortest $eriod of time i9e9 ) years9

•

Country 5ide net 5ork9

.roide 5ide range of serices9

Dist!ib(ti#n Ac"ieve)ent #0 Bi!a$ s(n $i0e C#/Lt'+

•

-eading "istri2ution !ouse in the country Oer +4?4??? customer country5ide

•

??? $lus 2usiness associations

•

3ousali Institute of Management Studies4 "har5ad J


•

Business across all im$ortant segments : industrial4 $riate client 1rou$4 Retail and channel .artners9

•

National $resence in +A cities9

•

-eading cor$orate agent of Biral Sun -ife Insurance9

S(n Li0e Financia$ Se!vices'+ Sunlife financial serices of Canada Inc9is the ne5 holding Co4 for sunlife assurance Co9 of Canada9 Sunlife financial is the ne5 2rand of select grou$ of com$anies $roiding indiiduals and cor$orations 5ith a diersified range of $roducts and serice meeting their needs for 5ealth management as 5ell as $rotection9 %s glo2al enter$rise the sunlife financial grou$ of com$anies o$erates in key markets around the 5orld ma6or o$erating actiities are handled 2y national office in Canada9 'he united sates4 the &nited 3ingdom the .hil $ines and !ong 3ong9

Ana$&sis Aven(es #0 Invest)ent

Invest)ents

Bankde$osits Mutualfund
&espondents

* +?   @? +? 

3ousali Institute of Management Studies4 "har5ad K


!venue of "nvestments &an %eposits

M!t!a' f!n%67!ity8 M!t!a' f!n%9e"t8 10

5 45

20

Ins!ran,e (o'%

55

10 Rea' 6state )to,s

#rom the a2oe gra$h and ta2le it is clear that around *Q of the 2usiness $eo$le inest in 2ank de$osits 5hich are com$aratiely grater than other aenues of inestment9 %round +Q of 2usiness $eo$le inest in Mutual fund of 2oth E0uity and "e2t fund4 Q 2usiness $eo$le in Insurance4 @?Q in 1old4 +?Q in Real estate and Q in Stock

P(!*#se #0 Invest)ent Invest)ents

Retirement .lan ChildrenEducation Buying a !ouse.ro$erty Marriage Others

&espondents

* @? +? @? )

3ousali Institute of Management Studies4 "har5ad ,


#urpose of "nvestment le p o e # s s e in s u % f o . o $

50

45

40 30

20

20

20

10

Respon%ents 6

10 0

t en

e e s er !s ia;th n - :o Marr

n 6%

tire . % ren Re Chi' yi &!

#urpose

#rom the a2oe gra$h and ta2le it can 2e stated that *Q of 2usiness $eo$le inest for their retirement $lanes4 @?Q for children education4 +?Q for 2uying a house$ro$erty4 @?Q for children marriage and )Q 2usiness $eo$le for other reasons

Ave!a%e M#nt"$& Inc#)e

M#nt"$& Inc#)e5Rs6

&$to(@?4??? @?4???to?4??? ?4??? to +4??4??? %2oeH+4??4???

&espondents

@ A @ +

3ousali Institute of Management Studies4 "har5ad )?


Monthl " ncome of %usines s #eopl e e l p 40 o e # 30 . s 20 u % f 10 o . o 0 $

35 25

25 15

20000 to 50000

50000 to 100000

$"o/e = 100000

'he aerage monthly income of @Q2usiness $eo$le is u$ to @?4??? and 2et5een @?4??? to ?4??? of AQ2usiness $eo$le and @Q2usniess $eo$le earn a monthly income of 2et5een ?4??? to +4??4??? and +Q of the 2usiness $eo$le earn more than +4??4??? a month9

Ave!a%e M#nt"$& Savin%s

M#nt"$& Savin%s5Rs6

&$ to H 4??? 4???to+?4??? +?4??? to @?4??? %2oeH@?4???

&espondents

AJ A? @ K

3ousali Institute of Management Studies4 "har5ad )+


!vera&e Monthl 'avin&s of %us. #eople 40

e l p o 30 e # s 20 u % f o 10 . o $ 0

Respon%ents

-10> 10>5> 20>

$"o/e 20>

!mount (Rs)

#rom the a2oe gra$h and ta2le it is clear that most of the 2usiness $eo$les aerage monthly saings are u$ to 4??? and A?Q of the 2usiness $eo$le sae 2et5een 4??? to +?4???4 @Q sae 2et5een +?4??? to @?4??? and KQ of 2usiness $eo$le sae a2oe @?4??? on an monthly saings

Invest)ent 0#! ta, Savin%s

Invest)ents

&espondents

Insurance E-SS

*@ J

..# NSC Bonds

+A @ +?

3ousali Institute of Management Studies4 "har5ad )@


!ousing loan

)

"nvestments for Ta* 'avin&s

10

6 40

24 7

13

Ins!ran,e

*))

??+

@)C

&on%s

:o!sin 'oan

#rom the a2oe ta2le and gra$h it can 2e kno5n that most of the 2usiness $eo$l e inest their saings in Insurance for tax saings

*@Q

2usiness $eo$le inest in

insurance4 JQ in E-SS4+AQ in ..#4@Q in NSC4 +?Q in Bonds and )Q 2usiness $eo$le in housing loan for tax saings 4 insurance occu$y the ma6or $art of the saings9

Ins(!ance an 0a)i$& *!e)i()

Ave!a%e P!e)i() *ai

+)A)

'verage Sum assured

*4A?4@??

3ousali Institute of Management Studies4 "har5ad )A


!vera&e premium paid and sum assured 500000 400000 300000 200000 100000 0 $/era-e prei! pai%

$/era-e s! ass!re% $o!nt

#rom the a2oe gra$h and ta2le it is clear that the aerage sum assured for insurance of the 2usiness $eo$le is *4 A?4@?? and the aerage $remium $aid on the sum assured is +)4A?

Se!vice e,*ectati#n 0!#) &#(! avis#!

Se!vice

Research 2ased adice Monthly fund -iterature to u$date u$date your kno5ledge !andling customer 0ueries

&espondents

@ A? @? @

3ousali Institute of Management Studies4 "har5ad )*


Respon%ents

30 25 20 15 Respon%ents

10 5 0 Resear,h a%/i,e

Mt'y !p%ate

*iterat!re !erries

#rom the gra$h and ta2le of serice ex$ected 2y the 2usiness $eo$le from their adisor it is clear that most of the 2usiness $eo$le $refer monthly fund u$date @Q of 2usiness $eo$le ex$ected Research 2ased adice4 A?Q of ex$ects monthly fund u$date4 @?Q ex$ect literature4 and @Q 2usiness $eo$le ex$ect handling 0uarries

Res*#nent a.a!eness ab#(t BSDL

A.a!eness ab#(t BSDL

&espondents

%5are No a5are

@ J

3ousali Institute of Management Studies4 "har5ad )


%usiness #eople+s !wareness about %',-

25 $#are @o a#are 75

#rom the a2oe gra$h and ta2le it is clear that @Q of the 2usiness $eo$le are a5are of BS"- and JQ of the 2usiness $eo$le are not a5are of BS"-

A.a!eness #0 se!vice *!#vie b& BSDL

Se!vice

Research 2asedadice .ortfoliostatement -iterature to u$date your kno5ledge

&espondents

A +? A?

3ousali Institute of Management Studies4 "har5ad ))


Monthlyfundu$date

@

!wareness of services #rovided b %',35

35 30 25 $o. of %us. 20 15 #eople 10 5 0

30 25 10

Resear,h ?ortfo'io st. *iterat!re Mt'y !p%ate a%/i,e 'ervices Respon%ents

#rom the a2oe ta2le and gra$h of a5areness of serice $roided 2y BS"- it is clear that AQ of 2usiness $eo$le are a5are of research 2ased adice4+?Q2usiness $eo$le are a5are of $ortfolio statement $roided 2y BS"-4 A?Q2usiness $eo$le are a5are of the literature and @Q of the 2usiness $eo$le are a5are of monthly fund u$date $roided 2y the BS"-

Pa!a)ete!s #0 )(t(a$ 0(n

Se!vices

Safe 1ro5th Redem$tion #ormalities &nderstanding a2out scheme

Ran4;/

Ra n 4  /

Ra n 4  /

Ra n 4 > /

Ra n 4 

J +) @

+@ @? @+

*? AJ @,

@) +K +

+ , +?

AK

A?

+K

,



+?

@?

*

@?



3ousali Institute of Management Studies4 "har5ad )J


Ranin& of # arameters of MF 50 40

$o. of %us #eople

30 20 10 0 )afe

(ro#th

Re%tion

+ora'ities

s,hee

#arameters Ran1.

Ran2.

Ran3.

Ran4.

Ran5

#rom the ta2le and gra$h of $arameter of mutual fund it is clear that JQ of the 2usiness $eo$le hae ranked the mutual fund as ery safe 4+)Q 2usiness $eo$le raked mutual fund as high gro5th4 @Q ranked redem$tion easy4 AKQ ranked as formalities are easy and +?Q of the 2usiness $eo$le ranked the $arameters understanding a2out the schemes as ery easy9

Finin%s'+



On an aerage *Q of the 2usiness $eo$le inest in 2ank de$o sits and ery less num2er of 2usiness $eo$le inest in mutual <2oth e0uity and de2t= funds and stock



Business $eo$le main o26ectie of inestment is their retirement $lan9

3ousali Institute of Management Studies4 "har5ad )K


More num2er of 2usiness $eo$le at Bosari MI"C .une are haing the income leel of @?4??? to ?4???



On an aerage the 2usiness $eo$le haing their saings 2et5een ??? to +?4???



Business $eo$le inest in insurance for their tax saings



Business $eo$le ex$ectation s from their adisors are monthly fund u$date 4 research 2ased adice4 literature and handling 0uarries of %c statement



&$ to JQ of the Business $eo$le are not a5are of BS"-



Nearly +Ard of 2usiness $eo$le are a5are a2out the follo5ing serice of BS"-9 Research 2ased adice4 literature to u$date your kno5ledge4 and monthly fund u$dates $roided 2y com$any

Rec#))enati#ns'+



%s $ercentage of a5areness of BS"- among 2usiness $eo$le is ery less thus the com$any should undertake actiities to increase the a5areness among the 2usiness $eo$le

3ousali Institute of Management Studies4 "har5ad ),


Business $eo$le think inesting in mutual fund is risk and only less $ercentage of 2usiness $eo$le hae ranked the safety so the com$any should conduct a5areness $rograms9



%s higher $ercentag e of 2usiness $eo$le inest in insurance for tax saings and only fe5 2usiness $eo$le hae inestments in E-SS for tax saings9 So the com$any should adertise more a2oe the tax saings schemes9



#rom the surey it is clear that there is lack of inestment $lanning among 2usiness $eo$le9 'he BS"- should hel$ and educate the inestors a2out the inestment $lans9

3ousali Institute of Management Studies4 "har5ad J?


ANNEXURES

9(esti#nnai!e I am student of

4#(sa$i Instit(te #0 )ana%e)ent st(ies D"a!.a 9 I am

Conducting surey on 7Inestment .attern of Business .eo$le89 In this regard I re0uest you to s$are fe5 minutes to fill u$ this 0uestionnaire9 'he information $roided 2y you is ke$t confidential and this information 5ill 2e used only for academic $ur$ose

Name

: 

3ousali Institute of Management Studies4 "har5ad J+


%ddress

: 

Business

: 

.hone No :

Off : 

Mo2 : 

E(mail I" :  %ge

:

+9 here hae you 2een inestingT a=Bankde$osits

d=1old

2= Mutual #und
e= Real Estate

c=Mutual#und<"e2t=

f=Stock

@9 .ur$ose of inestmentT a=Retirement.lane

d=Marriage

2= Children Education

e= Others
c= Buying a !ouse.ro$erty

A9 our aerage monthly 2usiness income9 a=u$toRs9@?4??? 2= @?4??? to ?4???

c=Rs9?4???to+4??4??? d= %2oe +4 ??4???

*9 our aerage saings $er monthT a=&$to4???

c=Rs9+?4???to@?4???

2= 4??? to +?4???

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BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED ork

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