PGPBM 08-

10
NJ INDIA INVEST
PVT. LTD.
By-
PRASHANT GUPTA
MUTUAL FUNDS
A trust that pools the savings of a number of investors who share a common financial
goal. The money thus collected is invested by the fund manager in different types of
securities depending upon the objective of the scheme
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CERTIFICATION
This is to certify that this dissertation Mutual Funds is the work done by
PRASHANT GUPTA, stdent of PGPB! "#-$", %SB&!, N'%(A)
This dissertation has the re*isite standard for the +artia, f,fi,,-ent of the Post
Gradate Pro.ra- in Bsiness Ad-inistration and has been done by nder -y
.idance and s+er/ision drin. the +eriod A+ri, 0""1 to Se+te-ber 0""1) This
dissertation re+ort has not been sb-itted to any other instittion or
or.ani2ation for any kind of assess-ent or consideration, to the best of -y
know,ed.e)
FACULTY MENTOR
Prof) HAR% SR%3ASTA3A
%SB&!, N'%(A
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ACKNOWLEDGEMENT
This re+ort is a syner.etic +rodct of -any -inds) % a- .ratef, for the
ins+iration and wisdo- of a,, those who were with -e in this 5orney) % a-
sincere,y thankf, to %SB&!, Noida for +ro/idin. -e with the o++ortnity to
write a research +a+er in the for- of a dissertation on the to+ic Mutual
Funds.
To be.in with -y fac,ty -entor P!". #a$ S$%asta%a& %SB&!, Noida who
encora.ed -e to do -y best) 6ithot his s++ort it wo,d ha/e been /ery
diffic,t for -e to +re+are the +a+er so -eanin.f,) % a- a,so thankf, to hi-
for his .idance that he,+ed -e i-+ro/e a ,ot)
Besides this % wo,d ,ike to dec,are that this stdy wo,d not ha/e been +ossib,e
withot the .idance of M. Lalu Gad'%$& Asst. Mana() and -y s+eriors at
NJ Ind$a In%)st& N!$da) % thank a,, the +eo+,e whose s++ort -ade it +ossib,e
for -e to f,fi,, this stdy)
Thro.h this research +a+er % ha/e ,earnt a ,ot abot the !ta, 4nds as a
who,e and ho+e that this research +a+er wi,, he,+ a,, those %n/estors which are
a,ready or +,annin. to start the +rocess of 4inancia, +,annin.)
PRAS#ANT GUPTA
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A*sta+t
Today7s csto-ers are ,i/in. in an en/iron-ent of ncertainties ,ike chan.in.
interest rates, -akin. the in/est-ent decision -ore co-+,e8) The de-o.ra+hic
+rofi,e of csto-ers is a,so ra+id,y chan.in. with -ore a.ein. +o+,ation bein.
added, .i/in. rise to different financia, needs) These ha/e ,ed to hei.htened
e8+ectations fro- ser/ice +ro/iders and ad/isors) %n this scenario, it is essentia,
for financia, ad/isors and brokers to ha/e a thoro.h nderstandin. of the
different in/est-ent a/enes and their benefits & risks)
!ta, fnds are the ne8t bi. in/est-ent o++ortnity) Any way yo ,ook at
the- they are winners - be it +erfor-ance, ta8ation or financia, +,annin. for
,ife7s -i,estones) %n de/e,o+ed -arkets in/estors ha/e a,ready seen the benefits
of in/estin. in -ta, fnds) %n %ndia, it is on,y now that benefits are beco-in.
a++arent)
After the fai,re of UT% in/estors ,ost their faith in the -ta, fnds bt in the
crrent scenario de to boo- in the %ndian ca+ita, -arkets there has been an
+ward trend in the +o+,arity of the -ta, fnds) So to know as to how -ch
ad/isors +refer -ta, fnds as an in/est-ent o+tion in co-+arison to other
in/est-ent a/enes, how -ch know,ed.e do they ha/e abot -ta, fnds and
ad/isor9s know,ed.e re.ardin. /arios other as+ects of -ta, fnds, a +ri-ary
research was condcted to know the +erce+tion of ad/isors towards the -ta,
fnds)
The research was ndertaken to i-+art infor-ation, know,ed.e and the
fnctionin. of -ta, fnds a-on. financia, ad/isors which ,ti-ate,y he,+ the
in/estors in takin. in/est-ents decision) A,so it he,+ed to know the awareness
abot benefits of !ta, fnds ad/isory bsiness)
The stdy inc,des ana,ysis of the in/estors on the basis of their
in/est-ent ob5ecti/es, a.e, inco-e etc) %t a,so e8a-ined the +osition of !ta,
4nds :!4; a-on. in/est-ent a/enes a/ai,ab,e for the in/estors and the +ast
+erfor-ances of /arios sche-es fro- the acti/e Asset !ana.e-ent <o-+any
:A!<; in %ndian -arket on the basis of Net Asset 3a,e :NA3; & ti-e) So that
it can he,+ the ad/isors as we,, as in/estors to choose the correct +ortfo,io) The
stdy a,so co/ers the scenario of !4 indstry drin. the =ntry >oad and No
=ntry >oad a++,ications)
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CONTENTS
$) <o-+any o/er/iew? N@ %ndia %n/est P/t) >td)
0) %ntrodction? !ta, 4nds :!4;
A) Brief History
B) !4 Strctre
C) Ad/anta.es and (isad/anta.es of !4
D) <,assification of !4
E) Risks associated with !4
#) Research !ethodo,o.y
1) 'b5ecti/e of stdy
$")(ata co,,ection
$$)Ana,ysis on The Basis of 'b5ecti/e of %n/estor
$0)Ana,ysis on The Basis of A.e of %n/estor
$A)Position of !4 a-on. 3arios %n/est-ent A/enes
$B)=ntry >oad? 6i+e 'ff
$C)3a,e Pack Procre-ent Process
$D)Syste-atic %n/est-ent P,an :S%P;? A co-+anion for a,, ti-es
$E)<ase Stdy? S%P
$#)4indin.s & S..estions? How to in/est in !4
$1)Bib,io.ra+hy
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W)l+!,) t! NJ Ind$a In%)st

(oin. the 7ri.ht7 thin. is a /irte -ost desirab,e) The difference between sccess
and fai,re is often not dictated by know,ed.e or e8+ertise bt by its acta,
a++,ication and +erse/erance) 6hen it co-es to sccessf, wea,th creation for
csto-ers, it is so-ethin. that we be,ie/e & +ractice) 4or s it is -ore than a
-issionF it is what defines or ,i/es and or actions at N@ %ndia%n/est) 6ith this
+assion, we contine to e/o,/e and -ake the ri.ht +rodct accessions and
ser/ice inno/ations in or offerin.s) To the ad/isors, we offer a AD"
co-+rehensi/e bsiness +,atfor- with n-atched %T so,tions, e-+owerin.
the- to set the best +ractice standards and de,i/er rea, /a,e to their csto-ers)
'/er the years, or +assion has seen s .row fro- stren.th to stren.th and
e8+and ra+id,y, settin. new bench-arks in the +rocess) Bt to s, what rea,,y
-atters -ost is the n-ber of ,i/es we ha/e -ana.ed to transfor- and we sti,,
ha/e a ,on. way to .o))
N@ %ndia%n/est P/t) >td) is one of the ,eadin. ad/isors and distribtors of
financia, +rodcts and ser/ices in %ndia) =stab,ished in year $11B, N@ has o/er a
decade of rich e8+osre in financia, in/est-ents s+ace and +ortfo,io ad/isory
ser/ices) 4ro- a h-b,e be.innin., N@ o/er the years has e/o,/ed ot to be a
+rofessiona,,y -ana.ed, *a,ity conscios and csto-er focsed financia, G
in/est-ent ad/isory & distribtion fir-)
N@ +rides in bein. a +rofessiona,,y -ana.ed, *a,ity focsed and csto-er
centric or.ani2ation) The stren.th of N@ ,ies in the stron. do-ain know,ed.e in
in/est-ent cons,tancy and the de,i/ery of sstainab,e /a,e to c,ients with
s++ort fro- cttin.-ed.e techno,o.y +,atfor-, de/e,o+ed in-hose by N@)
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At N@ we be,ie/e in ))

ha/in. sin.,e window, -,ti+,e so,tions that are inte.rated for si-+,icity
and sa+ience
-akin. inno/ations, accessions, /a,e-additions, a constant +rocess

+ro/idin. csto-ers with so,tions for to-orrow which wi,, kee+ the- abo/e
the cr/e, today
N@ had o/er %NR C,C""H <rores of -ta, fnd assets nder ad/ice with a wide
+resence in o/er $AC ,ocationsH in 00 statesH in %ndia) The n-bers are
ref,ections of the trst, co--it-ent and /a,e that N@ shares with its c,ients) At
N@, we contine to inno/ate, enrich or inte,,ect, and ask critica, *estions) 6e
cha,,en.e or own +rocesses and syste-s on constant basis to e-er.e -ore
con/inced) At N@, we contine to e8+and the sco+e and de+th of or offerin.s,
-akin. a+t se of techno,o.ica, s++ort)
V$s$!n - M$ss$!n
Vision:
To be the ,eader in or fie,d of bsiness thro.h,
Tota, <sto-er Satisfaction
<o--it-ent to =8ce,,ence
(eter-ination to Scceed with strict adherence to co-+,iance
Sccessf, 6ea,th <reation of or <sto-ers
Mission:
=nsre creation of the desired /a,e for or csto-ers, e-+,oyees and
associates, thro.h constant i-+ro/e-ent, inno/ation and co--it-ent to
ser/ice & *a,ity) To +ro/ide so,tions which -eet e8+ectations and -aintain
hi.h +rofessiona, & ethica, standards a,on. with the adherence to the ser/ice
co--it-ents)
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D$%$s$!ns
NJ Fund. N)t/!0 is a ni*e, first ti-e in %ndia conce+t that offers sch
co-+rehensi/e bsiness +,atfor- to inde+endent financia, ad/isors)
N@ 4nd2 Network was estab,ished in year 0""A as a dedicated +,atfor-
offerin. co-+rehensi/e ser/ices and s++ort to the inde+endent financia,
ad/isors) The ser/ices offered by N@ 4nd2 Network are increasin.,y
reco.ni2ed as the best and -ost co-+rehensi/e in natre) The sco+e, de+th, and
*a,ity of the ser/ices and s++ort is n-atched in the indstry) N@ 4nd2
Network is +rod to be the +ioneers in %ndia in +ro/idin. the AD"I Ad/isory
+,atfor- to inde+endent ad/isors) 6ith this N@ has -ana.ed to sccessf,,y
transfor- the bsiness of -any inde+endent financia, ad/isors, brin.in. the-
on e*a, footin. or e/en better than the stron.est co-+etitors in the indstry)
N@ has o/er 123334 N@ 4nd2 Network Partners and o/er 5&6334 nor-a,
ad/isors associated with s) N@ +resent,y has o/er Rs) 6&6334 <rores of assets
nder ad/ice) N@ has o/er 1264 PS<s :Partner Ser/ice <enters; in 774 states
s+read across %ndia) The n-bers are ref,ections of the trst, co--it-ent and
/a,e that N@ shares with its c,ients)
At NJ, or e8+erience, know,ed.e and nderstandin. enab,es s to +ro/ide yo
with the e8+ected /a,e, in an enhanced way) As a ,eadin. +,ayer in the
indstry, we contine to sccessf,,y -eet the e8+ectations of or c,ients,
thro.h -eanin.f, and co-+rehensi/e so,tions offered by N@ 4nd2
Network)
Products presently on offer
At the basic +rodct ,e/e, N@ has a basket of the fo,,owin.-
!ta, fnds J co/erin. a,, A!<s & sche-es,
>ife %nsrance :Prdentia, %<%<%;
4i8ed de+osits of co-+anies,
Go/ern-entGRB% bonds,
%nfrastrctre Bonds,
A++ro/ed secrities for charitab,e trsts, etc
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=stab,ished as a distinct entity, N@ 6ea,th Ad/isors P/t) >td) seeks to offer
co-+rehensi/e financia, +,annin. and +ortfo,io ad/isory ser/ices to +re-i-
c,ients) 6ith N@ 6ea,th Ad/isors, N@ seeks to ,e/era.e the stron. financia,
ad/isory and +ortfo,io -ana.e-ent ski,,s .ained in o/er a decade of e8+erience
in the indstry) N@ 6ea,th Ad/isors offers its c,ients with *a,ity, nbiased,
need-based ad/isory ser/ices & in/est-ent so,tions)
This s+oradic .rowth in ter-s of need of +erfor-ers in financia, ad/isory
ser/ices has ,ead to the crnch of a/ai,ab,e +erfor-ers) Tho.h ,ots of
yon.sters are .ettin. into financia, ad/isory ser/ices, bt the .reatest
cha,,en.e is of R%GHT S=>>%NG, for which ade*ate Trainin. is a
+rere*isite) Ad/isory fnction de-ands +dated know,ed.e, backed + by
honed ski,,s to fetch effecti/e bsiness) Bi,din. ,on. ter- re,ationshi+ with
c,ients de+ends +on +ossessin. c,ear ed.e o/er others in the fie,d) Hence
continos +eo+,e de/e,o+-ent has an i-+ortant ro,e in bi,din. this fraternity)
At N@ %ndiaRea,ty we nderstand the cha,,en.es in sha+in. rea,ity fro- yor
rea,ty as+irations) 6ith or f,,y inte.rated end-to-end ser/ice -ode, we offer
so,tions that wo,d enab,e yo to -eet the cha,,en.es of de/e,o+-ent,
fortify yor own transfor-ation and e8+,oit the o++ortnities a/ai,ab,e in the
%ndian rea,ty sector)
At N@ %ndiaRea,ty we ha/e -ade backward & forward inte.ration of /a,e-
added ser/ices to the core-rea,ty ser/ices which ,ie at the heart of the
bsiness) The ser/ices at N@ %ndiaRea,ty enab,e contina, +artnershi+ ri.ht
fro- idea to its rea,ity, enco-+assin. a,, fnctiona, & o+erationa,
ndertakin.s) At N@ %ndiaRea,ty we ai- to +ro/ide yo with sbstanti/e /a,e
in
- (e,i/erin. core rea,ty ser/ices
- =8ection of the other /a,e-added ser/ices
N@ %ndiaRea,ty has a rich e8+erience and a /ast re+ertoire in +ro5ect +,annin.
& e8ection in the rea,ty do-ain) The stron. +rocesses and syste-s in +,ace
ensre the effecti/e & ti-e,y e8ection of the +ro5ects) Hi.h-*a,ity
assrance for-s the nder-crrent in the entire /a,e-chain of ser/ice
de,i/ery)
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N@ %ndiaRea,ty brin.s with it +rofessiona, -ana.e-ent, tota, *a,ity
consciosness, confidence and keenness to offer csto-ers with hi.h-*a,ity
de/e,o+-ent at attracti/e /a,e +ro+ositions) At N@ %ndiaRea,ty we co--it
orse,/es to the continos i-+ro/e-ents, accessions in the /a,e-chain and
the best +ractices ado+ted by the indstry)
Techno,o.y has traditiona,,y been N@7s key stren.th) 'r offerin. on the
techno,o.ica, front is n-atched, /ibrant, and co-+rehensi/e in natre) 'r
focs & co--it-ent on techno,o.y can be .a.ed fro- the fact that we ha/e
set-+ distinct entity with a /ery stron., ta,ented work-force for the so,e +r+ose
of +ro/idin. the best to N@ in ter-s of techno,o.y and s++ort) 4in,o.ic
Techno,o.ies :%ndia; P/t) >td) does a,, the de/e,o+-ent & s++ort work in-
hose on a continos basis) %t has sccessf,,y de/e,o+ed & i-+,e-ented a
+owerf, s++ort syste- for the -ta, fnd distribtion bsiness at N@ with a
+ro/ision for inte.ratin. the sa-e with other in/est-ent +rodcts as we,, as the
financia, accontin. syste-)
P!du+ts
N@ offers ad/isory and distribtion ser/ices on the fo,,owin. +rodcts)
$) Mutual "unds J co/erin. a,, A!<s & a,, sche-es,
0) L$") $nsuan+) J Prdentia, %<%<%
A) F$8)d d)9!s$ts of co-+anies,
B) G!%)n,)nt:R;I *!nds,
C) In"astu+tu) ;!nds,
D) A99!%)d s)+u$t$)s for charitab,e trsts, etc
N@9s -ain focs is tho.h on -ta, fnds ad/isory and distribtion) At N@, we
be,ie/e that -ta, fnds, as an asset c,ass, can be ,ooked at for a,-ost a,, of the
financia, needs)
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P)!9l) - Cultu)
People:
=nthsias-, =nter+rise, =dcation and =thics for- the for +i,,ars at N@) At N@
one can witness the /ibrant ener.y, enthsias- and the enter+risin. dri/e to
e8ce, f,owin. free,y thro.hot the or.anisation) At N@ can a,so e8+erience the
creati/ity, one-to-one res+onsi/eness, co,,aborati/e a++roach and +assion for
de,i/erin. /a,e)
At N@ +eo+,e e/o,/e to be -ore effecti/e, efficient, and res,t oriented)
Know,ed.e is inherent de to the edcation-centric a++roach and the e8+erience
in hand,in. different c,ients .ro+s across di/erse +rodct +rofi,es)
N@ nderstands that the +eo+,e are the -ost i-+ortant assets of the co-+any
and it is not the co-+any that .rows bt the +eo+,e) N@ hence ndertakes
ri.oros trainin. and edcationa, acti/ities for enhancin. the entire tea- at N@)
N@ a,so be,ie/es in the L>earnin. thro.h Res+onsibi,ity9 conce+t for its
e-+,oyees) 4or +eo+,e at N@ sccess is not a new word, bt is a re.,ar
ste++in.-stone to rea,isin. the one /ision that e/eryone shares)
Culture:
At N@ we be,ie/e in transfor-in. the ,i/es of or csto-ers) 6e e8ist to create
a difference J a chan.e towards a better ,ife) The c,tre at N@ ref,ects this
res+onsibi,ity, this drea- of transfor-in. ,i/es) And we at N@ are a,ways
e8cited and enthsed in doin. so)
6e be,ie/e in kee+in. <Y!u F$st=, +ro/idin. yo with +rodcts and ser/ices
that -eet yor stated and nstated needs) <,ient satisfaction and c,ient ser/ice is
the !antra we constant,y recite) This ser/ice oriented +hi,oso+hy rns
thro.hot the or.ani2ation, fro- to+ to botto-)
=-+,oyees are .i/en a-+,e freedo- in their work) The ob5ecti/e is to kee+ an
o+en, hea,thy en/iron-ent with a-+,e sco+e for enter+rise, i-+ro/e-ent,
inno/ations and ot-of-the bo8 so,tions
'r efforts are constant,y en.a.ed in i-+ro/in. or e8istin. ser/ices, offerin.
new and inno/ati/e so,tions that .o beyond yor e8+ectations) This focs has
-ade s one of the -ost res+ected and +referred ser/ice +ro/iders, es+ecia,,y in
the -ta, fnd indstry)
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S)%$+) Standads
Ser/ice is the key to n,ockin. csto-er satisfaction, which a.ain is key for
sstainabi,ity of any bsiness) At N@ we nderstand this /ery we,,) N@ has set
strict +rocesses in +,ace to de,i/er *a,ity ser/ices to csto-ers) At N@ strict
*a,ity ser/ice standards are set and a we,,-defined +rocess is estab,ished and
fo,,owed re,i.ios,y by or *a,ity csto-er ser/ice tea-s) Perfor-ance is
e/a,ated on a fre*ent basis and .,itches are ironed ot)
Bt *a,ity ser/ice a,so in/o,/es *a,ity +eo+,e in addition to +rocesses) N@
.i/es si.nificant focs to the +ro+er trainin. and de/e,o+-ent of the +eo+,e
in/o,/ed in the ser/ice de,i/ery chain)
Fut') we,

Ha/e we,,-defined MPri/acy Po,icyM to kee+ c,ients9 infor-ation confidentia,
& interna, adits done on the sa-e at re.,ar inter/a,s

Recei/e /arios statistics which are ana,ysed on an on.oin. basis to i-+ro/e
the ser/ice standards
6e are co--itted to i-+ro/e and enhance or ser/ices and ndertake new
ser/ice initiati/es) Sch and other ser/ices differentiate s with other ser/ice
+ro/iders in the indstry)
Ou S)%$+) C!,,$t,)nts >
The ser/ice co--it-ents are to .ide the actions of the +eo+,e at N@) <,ear,y
stated, csto-ers can free,y co--nicate any sch actionsGe/ents wherein they
fee, that any of the fo,,owin. co--it-ents ha/e been breached G co-+ro-ised)
At N@ we desire to honor or co--it-ents at a,, +oints of ti-e and to a,, or
csto-ers withot any bias)
To +ro/ide csto-er-focssed need-based /a,ed ser/ices
To +ro/ide re,iab,e, accrate and ti-e,y infor-ation
To -aintain a,, records in +ri/acy
To o+ti-ise ser/icesGbenefits at ,east 5stifiab,e cost
To de/e,o+ and .row the csto-ers 9 bsiness
To +ro/ide constrcti/e after sa,es ser/ice
To honor or ser/ice co--it-ents
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R)+!(n$t$!ns
So-e of the awards & reco.nitions that we ha/e recei/ed in +ast))
Year 2000:
4or 'tstandin. Perfor-ance +resented by <hair-an, Prdentia, P,c) at >ondon
Year 2002:
4or 'tstandin. Perfor-ance +resented by Gro+ <hief =8ecti/e, Prdentia,
P,c) at >ondon
Year 2003:
4or 'tstandin. Perfor-ance +resented by Gro+ <hief =8ecti/e, Prdentia,
P,c) at >ondon
Year 200:
A-on. !ost 3a,ed Bsiness Associates +resented by H(4< Standard >ife at
=dinbr.h, Scot,and
Year 200:
4or 'tstandin. Perfor-ance by (e+ty <=', Prdentia, Sin.a+ore at
!a,aysia
Year 200!:
Award for -obi,isin. the Hi.hest N-ber of S%Ps at Nationa, >e/e, by 4ide,ity
!ta, 4nd P,c at !-bai
Year 200!:
Award J 3ietna-
<o--ents fro- %ndstry Sta,warts?
The essence of in/est-ent cons,tancy ,ies in o+ti-a, asset a,,ocation as a.ainst
secrity se,ection or ti-in. the -arkets for c,ients) N@ nderstands this /ery
we,, and has added si.nificant /a,e to the c,ients thro.h this a++roach) % a-
sre with this new initiati/eF a -ch ,ar.er n-ber of c,ients wi,, be ab,e to
benefit fro- this a++roach) % wish the- a,, the best in this initiati/e - Prashat
@ain, <%', H(4< A!<)
The sccess of any bsiness ,ies in inno/ation ahead of ti-es and N@ has +ro/ed
it ti-e a.ain - Ra5an Krishnan, Princi+a, Pnb A!<)
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Mutual Funds
!ta, fnds +ro/ide in/est-ent o++ortnities de+endin. on in/estor9s risk and
Retrn e8+ectations) !ta, fnds are s+ecia,i2ed in/est-ent /ehic,es that
a,,ow one to +oo, sa/in.s and conso,idate the- into fair,y ,ar.e and di/ersified
+ortfo,io of in/est-ent) The +oo,ed fnds are in/ested in secrities or assets as
+er the ob5ecti/e of the sche-e in which it is co,,ected and the retrnsG.rowth is
distribted to the in/estors) !ta, fnds are -ana.ed by +rofessiona,s and are
we,, re.,ated by S=B% now who kee+ track of indstries Gco-+anies and
-onitor their +erfor-ance which an indi/ida, in/estor finds diffic,t)
%n %ndia, the assred retrn sche-es ha/e been *ite sccessf, de to their
fi8ed inco-e natre and the obsessed -indset of the s-a,, in/estor with fi8ed
or assred retrns) The o++ortnity to in/est at fi8ed rates o/er a ,on. +eriod of
ti-e is ,ike,y to redce) !arket re,ated rate of interest is bein. e8+erienced in
the bankin. sector) The retrns beco-e -ore -arket re,ated and /ary o/er ti-e
and we can see a ,ot of /ariab,e rate +rodcts in the days to co-e)
W'at Is A Mutual Fund?
A -ta, fnd :!4; is a /ehic,e to +oo, -oney fro- in/estors, with a +ro-ise
that the -oney wo,d be in/ested in a +artic,ar -anner, by +rofessiona,
-ana.ers who are e8+ected to honor the +ro-ise)
The idea behind a !4 is that in/estors ,ack ti-e, inc,ination or ski,,s to
-ana.e their own in/est-ents) Professiona, -ana.ers, actin. on beha,f of the
!4, -ana.e the in/est-ents for the benefit of in/estors in retrn for a
-ana.e-ent fee) The or.ani2ation that -ana.es the in/est-ent is the Asset
!ana.e-ent <o-+any :A!<;) %n %ndia, the o+erations of the A!< are
s+er/ised by a Board of TrsteesGTrstee co-+any)
!ta, 4nd in/est-ents are <o,,ecti/e %n/est-ent Sche-es, which
co,,ect contribtion fro- the sbscribers and in/est the- in a /ariety of
transferab,e assets sch as ordinary shares and bonds)
Operational flowchart of Mutual Fund
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These Trsts are rn by e8+erienced %n/est-ent !ana.ers who se their
know,ed.e and e8+ertise to se,ect indi/ida, secrities, which are c,assified to
for- +ortfo,ios that -eet +redeter-ined ob5ecti/es and criteria) These +ortfo,ios
are then so,d to the +b,ic)
Ths a !ta, 4nd is a trst that +oo,s the sa/in.s of a n-ber of
in/estors who share a co--on financia, .oa,) The -oney ths co,,ected is
in/ested by the fnd -ana.er in different ty+es of secrities de+endin. +on the
ob5ecti/e of the sche-e) These co,d ran.e fro- shares to debentres to -oney
-arket instr-ents) The inco-e earned thro.h these in/est-ents and the
ca+ita, a++reciation rea,i2ed by the sche-e are shared by its nit ho,ders in
+ro+ortion to the n-ber of nits owned by the-) Ths a !ta, 4nd is the
-ost sitab,e in/est-ent for the co--on -an as it offers an o++ortnity to
in/est in a di/ersified, +rofessiona,,y -ana.ed +ortfo,io at a re,ati/e,y ,ow cost)
The s-a,, sa/in.s of a,, the in/estors are +t to.ether to increase the byin.
+ower and hire a +rofessiona, -ana.er to in/est and -onitor the -oney)
Anybody with an in/estib,e sr+,s of as ,itt,e as a few thosand r+ees can
in/est in !ta, 4nds) =ach !ta, 4nd sche-e has a defined in/est-ent
ob5ecti/e and strate.y)
Mutual Fund Framewor
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Brief History
The -ta, fnd indstry in %ndia started in $1DA with the for-ation of
Unit Trst of %ndia, at the initiati/e of the Go/ern-ent of %ndia and Reser/e
Bank the) The history of -ta, fnds in %ndia can be broad,y di/ided into for
distinct +hases)
P'as) 1 J : $1DB J $1#E;- Growth of UT%
UT% so,e +,ayer in the indstry, created by an Act of Par,ia-ent ,$1DA
The first +rodct ,anched by UT% was Unit Sche-e $1DB
UT% creates +rodcts sch as U>%P :$1E$;, !%P7s, <hi,dren P,ans:$1#D;
,'ffshore 4nds etc
!AST=RSHAR= :$1#E; J $st (i/ersified =*ity %n/est-ent Sche-e in %ndia
%N(%A 4nd J $st %ndian offshore fnd ,anched in A.st $1#D
P'as) 7 J : $1#E J $11A;- =ntry of Pb,ic Sector 4nds
%n $1#E Pb,ic Sector Banks and 4%7s .ot +er-ission to set + !4)
SB% -ta, fnd was the first non -UT% -ta, fnd, set + in No/e-ber $1#E
This was fo,,owed by <anbank !4, >%< !4, %ndian Bank !4, B'% !4, G%<
and PNB !4
%n $11A, !ta, 4nd %ndstry was o+en to +ri/ate +,ayers
S=B% .ot its re.,atory +owers in $110
P'as) 2 J : $11A-$11D; J =-er.ence of Pri/ate 4nds
%n $11A, !ta, 4nd %ndstry was o+en to +ri/ate +,ayers)
S=B%7s first set of re.,ations for the indstry for-,ated in $11A
Si.nificant inno/ations, -ost,y initiated by +ri/ate +,ayers
P'as) 5 J : $11D-$111; J Growth and S=B% Re.,ation
%-+,e-entation of new S=B% re.,ations ,ed to ra+id .rowth
Bank -ta, fnds were recast as +er S=B% .ide,ines
UT% ca-e nder /o,ntary S=B% s+er/ision
(i/idends -ade ta8 free in $111
!ta, fnds assets in -id-0""0 were a++) $,"",""" crore
(rin. this +hase, both S=B% and A!4% ,anched in/estor awareness
+ro.ra--es
P'as) 6 J :$111-0""B; J =-er.ence of a ,ar.e and nifor- indstry
UT% Act Re+ea,ed in 4ebrary 0""A
AU! by end of 0""C a++) %NR $,C",""" crore
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Ra+id .rowth, si.nificant increase in cor+s of +ri/ate +,ayers
Ta8 break offered created arbitra.e o++ortnities
Bond fnds and ,i*id fnds re.istered hi.hest .rowth
P'as) @ J 4ro- 0""B onwards? <onso,idation and Growth
!er.ers and Ac*isitions witnessed
A,,iance !4 ac*ired by Bir,a Sn,ife
Sn 4&< by Princi+a, PNB !ta, fnd
The .ra+h be,ow i,,strates the .rowth of assets o/er the years)

!iagram " #rowth #raph of Mutual Funds
:A!4% !ta, 4nd Test 6orkbook & 6ebsite;
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Mutual "und #ndustry
Global Mutual Fund Industry
The Emergence
%t a,, started when three Boston secrities e8ecti/es +oo,ed their -oney
to.ether in $10B to create the first -ta, fnd, they had no idea how +o+,ar
-ta, fnds wo,d beco-e)
The idea of +oo,in. -oney to.ether for in/estin. +r+oses started in =ro+e in
the -id-$#""s) The first +oo,ed fnd in the U)S) was created in $#1A for the
fac,ty and staff of Har/ard Uni/ersity) 'n !arch 0$st, $10B the first officia,
-ta, fnd was born) %t was ca,,ed the !assachsetts %n/estors Trst)
After one year, the !assachsetts %n/estors Trst .rew fro- NC",""" in assets
in $10B to NA10,""" in assets :with arond 0"" shareho,ders;) %n contrast, there
are o/er $",""" -ta, fnds in the U)S) today tota,in. arond NE tri,,ion :with
a++ro8i-ate,y #A -i,,ion indi/ida, in/estors;)
The Setback
The stock -arket crash of $101 s,owed the .rowth of -ta, fnds) %n res+onse
to the stock -arket crash, A-erican <on.ress +assed the Secrities Act of $1AA
and the Secrities =8chan.e Act of $1AB) These ,aws re*ire that a fnd be
re.istered with the S=< and +ro/ide +ros+ecti/e in/estors with a +ros+ects)
The S=< :U)S) Secrities and =8chan.e <o--ission; he,+ed create the
%n/est-ent <o-+any Act of $1B" which +ro/ides the .ide,ines that a,, fnds
-st co-+,y with today in United States of A-erica)
The Development
6ith renewed confidence in the stock -arket, -ta, fnds be.an to b,osso-)
By the end of the $1D"s there were arond 0E" fnds with NB# bi,,ion in assets)
%n $1ED, @ohn <) Bo.,e o+ened the first retai, inde8 fnd ca,,ed the 4irst %nde8
%n/est-ent Trst) %t is now ca,,ed the 3an.ard C"" %nde8 fnd and in
No/e-ber of 0""" it beca-e the ,ar.est -ta, fnd e/er with N$"" bi,,ion in
assets)
Present Scenario
'/er the years, strctra, chan.es in the .,oba, econo-ic en/iron-ent ha/e ,ed
to the e-er.ence of a stron. -arket econo-y and faci,itated the .rowth of the
!ta, 4nds
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-ta, fnds indstry) A -arket econo-y de+ends -ore on .rowth ,ed by
financia, -arket than by bank-finance) Since the -ta, fnds indstry is a
stron. +i,,ar of the financia, -arket, it .ot a boost with the e-er.ence of a
stron. -arket econo-y) !ta, fnds fond increasin. acce+tance a,so becase
they ha/e the ca+acity to absorb the instabi,ity and ncertainties that
characteri2e the financia, -arket syste-)
The rise in inf,ation, redction in rea, interest rates and .rowin. co-+,e8ities in
the -arket +ro/ided tre-endos o++ortnities to -ta, fnds) 4or these
reasons, the -ta, fnds indstry be.an to thri/e we,, in not on,y the
de/e,o+ed contries bt a,so the new,y indstria,i2ed and de/e,o+in. contry,
+artic,ar,y drin. the $11"s)

!ta, fnd asset .rowth was boosted by +ositi/e stock -arket retrns in
a,-ost a,, re+ortin. contries and the on.oin. net f,ow of new in/est-ents)
Mutual Fund Industry In India
The 'ri.in and de/e,o+-ent of !ta, fnds in %ndia ha++ened in a +hased
-anner)
The Emergence
The ori.in of the %ndian -ta, fnd indstry can be traced back to $1DB when
the %ndian Go/ern-ent, with a /iew to a.-ent s-a,, sa/in.s within the
contry and to channe,i2e these sa/in.s to the ca+ita, -arkets, set + the Unit
Trst of %ndia :UT%;) The UT% was set+ nder a s+ecific statte, the Unit
Trst of %ndia Act, $1DA) The Unit Trst of %ndia ,anched its first o+en-ended
e*ity sche-e ca,,ed Unit DB in the year $1DB, which trned ot to be one of the
-ost +o+,ar -ta, fnd sche-es in the contry) This is the 4irst +hase in the
history of -ta, fnds in %ndia)
UT% Act re+ea,ed in 0""A
UT% now does not ha/e a s+ecia, stats) :now nder S=B%;
U

Si2e of indstry was $,C",""" crore in 0""C
!er.er and Ac*isitions ha++enin.
4ide,ity, >ar.est !4 has entered %ndia
At the end of !arch 0""D, there were 01 4nds
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The Development
The Second +hase started in $1#E, when the .o/ern-ent +er-itted other +b,ic
sector banks and insrance co-+anies to +ro-ote -ta, fnd sche-es)
Prsant to this re,a8ation, si8 +b,ic sector banks and two insrance
co-+anies9 /i2) >ife %nsrance <or+oration of %ndia and Genera, %nsrance
<or+oration of %ndia ,anched -ta, fnd sche-es in the contry)
A New EraThe Entrance of Private Players
Sbse*ent,y, in $11A, the Secrities and =8chan.e Board of %ndia :MS=B%M;
introdced The Secrities and =8chan.e Board of %ndia :!ta, 4nds;
Re.,ations, $11A, which +a/ed way for the entry of +ri/ate sector +,ayers in
the -ta, fnd indstry) This third +hase of the -ta, fnd indstry, which
co--enced in ,ate $11A, witnessed e8+onentia, .rowth of the indstry, with the
ad/ent of +ri/ate +,ayers therein) Pri/ate sector fnds ha/in. distinct
o+erationa, ad/anta.es, +osed serios co-+etition to the e8istin. +b,ic sector
fnds)
Kothari Pioneer !ta, fnd :now -er.ed with 4rank,in Te-+,eton; was the
first fnd to be estab,ished by the +ri/ate sector in association with a forei.n
fnd) %t ,anched the o+en-ended Pri-a 4nd in No/e-ber $11A) (rin. the
year $11A-1B another for +ri/ate +,ayers ,anched their sche-es? %<%<% !ta,
4nd, 0"th <entry !ta, 4nd, !or.an Stan,ey !ta, 4nd and Tars
!ta, 4nd) %n the first year of o+eration these fi/e fnds ,anched se/en
sche-es, and -obi,i2ed an a-ont of Rs$, CC1)D crores drin. $11A-1B)
The %ndstry tho.h has re-ained f,at for the ,ast co+,e of years :0""$- 0""A;
de to recession, bt has bonced back stron.,y in 0""A- "B to +ost a record of
assets nder -ana.e-ent)
Milestones in $ndian Mutual Fund $ndustry
!ta, 4nds
1$!-$2
%&e '%# (ra
)B# and #*B#
+ere t&e
re,ulators in
p&ases-
1$$3-$8
.(B# is t&e
re,ulator-
(ntry of Pri/ate
players
1$$8 0 Present
Pri/ate players
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.tructure of Mutual "unds #n #ndia
>ike other contries, %ndia has a ,e.a, fra-ework within which -ta, fnds
-st be constitted) %n %ndia, o+en and c,osed-end fnds o+erate nder the sa-e
re.,atory strctre, i)e) in %ndia, a,, -ta, fnds are constitted a,on. one
ni*e strctre-as nit trst) A -ta, fnd in %ndia is a,,owed to isse o+en-
end and c,ose end sche-es nder a co--on ,e.a, strctre) Therefore, a -ta,
fnd -ay ha/e different sche-es :o+en and c,osed-end; nder it i)e) nder one
nit trst, at any +oint of ti-e) The strctre, which is re*ired to be fo,,owed
by -ta, fnds in %ndia, ,ay down nder S=B% :!ta, 4nd; Re.,ations,
$11D)
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%&e "und .ponsor
7S+onsorM is defined nder S=B% re.,ations as any +erson who, actin. A,one or
in co-bination with another body cor+orate, estab,ishes a, -ta, fnd) The
s+onsor of a fnd is akin to the +ro-oter of co-+anies he .ets the fnd
re.istered with S=B%) The s+onsor wi,, for- a Trst and a++oint a board of
Trstees) The s+onsor wi,, a,so .enera,,y a++oint $$ Asset -ana.e-ent
<o-+any :A!<; as fnd -ana.ers) The s+onsor i,, a,so a++oint a <stodian to
ho,d the fnd assets) A,, these a++oint-ent are -ade in accordance with the
S=B% re.,ations) Per the e8istin. S=B% re.,ations, for a +erson to *a,ify as a
s+onsor, -st contribte at ,east B"O of the net worth of the A!< and isses a
sond financia, track o/er fi/e years +rior to re.istration)
Mutual "unds as %rusts
!ta, fnd in %ndia is constitted in the for- of a Pb,ic Trst nder the
%ndian Trsts Act $##0)The fnd in/ites in/estors) <ontribte their -oney in
the co--on +oo, by sbscribin. to nits %ssed by /arios sche-es estab,ished
by the trst as e/idence of their beneficia, interest in the fnd)
The trst or fnd has no ,e.a, ca+acity itse,f rather it is the Trstee:s; who ha/e
,e.a, ca+acity and therefore the trstees take a,, acts in re,ation to the trst on its
beha,f)
%rustees
A board of trstees - a body of indi/ida,s, or a Trst co-+any - a cor+orate
body, -ay -ana.e the Trst) Board of Trstees -ana.es -ost of the fnds in
%ndia)B, The Board or the Trstee <o-+any :body of indi/ida,s, cor+orate
body, for -ana.in. the +ortfo,io, a++oints an Asset !ana.e-ent <o-+any)
The Trst is created thro.h a doc-ent ca,,ed the Trst (eed that is e8ected
by the 4nd S+onsor in fa/ors of the trstees) They are the +ri-ary .ardian of
the nit ho,der7s fnds and assets) They ensre that A!<7s o+erations are a,on.
+rofessiona, ,ines)
)i,&ts of %rustees
A++oint the A!< with the +rior a++ro/a, of S=B%)
A++ro/e each of the sche-es f,oated by the A!<)
Ha/e the ri.ht to re*est any necessary infor-ation fro- the A!<
concernin. the o+erations of /arios sche-es -ana.ed by the A!< as
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often as re*ired, to ensre that the A!< is in co-+,iance with the Trst
(eed and re.,ation)
%t -ay take re-edia, action if they be,ie/e that the condct of the fnds
bsiness is not in accordance with S=B% re.,ations)
(irection of the trstees) The A!< is re*ired to be a++ro/ed and
re.istered with S=B% as an A!<F The Trstees are e-+owered to
ter-inate the a++oint-ent of the A!< and -ay a++oint new A!< with
the +rior a++ro/a, of the Board and ho,ders)
The A!< f,oats and then -ana.es the different in/est-ent sche-es)
The A!< of a -ta, 4nd -st ha/e a net worth of at ,east $' <rores
at a,, the ti-es) The A!< cannot act as a trstee any other -ta, fnd)
The A!< -st re+ort to the trstees with res+ect to its acti/ities)
31li,ations of %rustees
!st enter into an in/est-ent -ana.e-ent a.ree-ent with the A!< in
accordance with the 4orth Sched,e of S=B% :!4; Re.,ations,
$11D)
!st ensre that the fnds transactions are in accordance with the Trst
(eed)
Are res+onsib,e for ensrin. that the A!< has +ro+er syste-s and
+rocedres in +,ace and has a++ointed key +ersonne, inc,din. 4nd
!ana.ers and a <o-+,iance 'fficer besides other constitents sch as
the aditors and re.istrar)
!st ensre de di,i.ence on the +art of the A!< for e-+ane,-ent of
brokers
!st ensre that the A!< is -ana.in. sche-es inde+endent of
other acti/ities and that the interest of nit ho,ders of one sche-e
are not co-+ro-ised with those of other sche-es
!st frnish to S=B% on a ha,f-year,y basis, a re+ort on the fnds
acti/ities and a certificate statin. that the A!< has been -ana.in. the
sche-es inde+endent,y of other acti/ities
4sset Mana,e2ent Co2pany
Acts as an in/est -ana.er of the Trst nder the Board S+er/ision and
direction of the Trstees)
Has to be a++ro/ed and re.istered with S=B%)
6i,, f,oat and -ana.e the different in/est-ent sche-es in the na-e of
Trst and in accordance with S=B% re.,ations)
Acts in interest of the nit-ho,ders and re+orts to the trstees)
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At ,east C"O of directors on the board are inde+endent of the s+onsor or
the trstees)
31li,ations of t&e 4MC and its *irectors
They -st ensre that?
%n/est-ent of fnds is in accordance with S=B% Re.,ations and the
Trst (eed)
Take res+onsibi,ity for the act of its e-+,oyees and others whose ser/ices
it has +rocred
They are answerab,e to the trstees and -st sb-it *arter,y re+orts to
the- on A!< acti/ities and co-+,iance with S=B% Re.,ations
%f the A!< ses the ser/ices of a s+onsor, associate or e-+,oyee, it -st
take a++ro+riate disc,osre to nit ho,ders, inc,din. the a-ont of
brokera.e or co--ission +aid)
(o not ndertake any other acti/ity conf,ictin. with -ana.in. the fnd)
6i,, f,oat sche-es on,y after obtainin. disc,osre to the in/estors in areas
sch as ca,c,ation of NA3 and re+rchase +rice) <ertain s+ecific e/ents,
the trstees ha/e the ri.ht to dis-iss the A!< with the a++ro/a, of S=B%
in accordance with the re.,ations)
Ri.ht to ensre that, based on their *arter,y re/iew of the A!<7s net
worth, any shortfa,, is -ade +)
4,ents
Transfer a.ents are res+onsib,e for issin. and redee-in. nits of the -ta,
fnd and +ro/ide other re,ated ser/ices sch as +re+aration of transfer
doc-ents +datin. in/estors7 records) A fnd -ay choose to ot this acti/ity
in-hose or by an otside transfer a.ent)
*istri1utors
A!<9s sa,,y a++oint (istribtors or Brokers, who se,, nits on beha,f bf the
fnd) So-e fnds re*ire that a,, transactions to be roted thro.h sch brokers)
%n %ndia, besides brokers, inde+endent indi/ida,s are a++ointed as a.ents for
the +r+ose of se,,in. the fnd sche-e to the in/estors) 6hi,e indi/ida,
constitte the ,ar.est se.-ent in the cate.ory of -ta, fnd distribtors, other
distribtors inc,de banks, NB4<s and cor+orate)
!ta, 4nds
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Ban5ers
A fnd7s acti/ities in/o,/e dea,in. with the -oney on a continos basis
+ri-ari,y with res+ect to byin. and se,,in. nits, +ayin. for in/est-ent -ade,
recei/in. the +roceeds on sa,e of in/est-ent and dischar.in. its ob,i.ations
towards o+eratin. e8+enses) A fnds banker therefore +,ay a crcia, ro,e with
res+ect to its financia, dea,in.s by ho,din. its bank accont and +ro/idin. it
with re-ittance ser/ices)
Custodian and *epository
The cstodian is a++ointed by the Board of Trstees for safekee+in. of
secrities in ter-s of +hysica, de,i/ery and e/enta, safe kee+in. or
+artici+atin. in the c,earin. syste- thro.h a++ro/ed de+ository
co-+anies on beha,f of the -ta, fnd and -st f,fi,, its
res+onsibi,ities in accordance with its a.ree-ent with the -ta, fnd)
The %ndian -arkets are -o/in. away fro- ha/in. +hysica, certificates for
secrities, to ownershi+ of these secrities in de-ateria,i2ed for- with a
de+ository) Ths, a (e+ository Partici+ant wi,, ho,d a -ta, fnd9s
de-ateria,i2ed secrities ho,din.s) A fnd7s +hysica, secrities wi,, contine to
be he,d by a cstodian)
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Advantages Of Mutual Funds
To nderstand and a++reciate the different techni*es e-+,oyed by !ta,
4nds to -arket and se,, their nits, it is i-+erati/e that we first nderstand the
ob5ecti/es and ai-s that these fnds ha/e towards their csto-ers) %t is on,y in
this ,i.ht that we wo,d be ab,e to co-+,ete,y co-+rehend their -arketin.
strate.ies) The fo,,owin. ob5ecti/es can be said to be the -a5or dri/in. force for
in/estors to take the !ta, 4nds rote)
D$%)s$"$+at$!n !" R$s0? !ta, 4nds are an e8tre-e,y sond
in/est-ent for the +r+oses of di/ersification) By in/estin. in -any
co-+anies the -ta, fnds can +rotect the-se,/es fro- ne8+ected
dro+ in /a,es of so-e shares) S-a,, in/estors can achie/e wide
di/ersification of their risks by in/estin. in !ta, 4nds, and hence do
not ha/e the fear of +ttin. a,, their e..s in one basket)
E89)t$s) Su9)%$s$!n and C!nt!l !" In%)st,)nts? 6hen in/estors
by -ta, fnd sche-es, an essentia, benefit that they ac*ire is e8+ert
Portfo,io !ana.e-ent of their in/est-ents) The +rofessiona, fnd
-ana.ers who s+er/ise fnd9s +ortfo,io take desirab,e decisions /i2),
what scri+s are to be bo.ht, what in/est-ents are to be so,d and -ore
a++ro+riate decision as to ti-in.s of sch by and se,,)
L!/) C!sts? !ta, fnds ha/e /ery ,ar.e fnds at their dis+osa,, and
hence are in a +osition to rea+ the benefits of econo-ies of sca,e) The
brokera.e and transaction fees or tradin. co--ission is in -ost cases
redced sbstantia,,y)
Sa")tA !" In%)st,)nt? The ,e.is,ation +ro/ides for the safety of
in/est-ents by re.,atin. the !ta, 4nds %ndstry)
S,all $n%)st,)nts? !ta, fnds he,+ yo to rea+ the benefit of retrns
by a +ortfo,io s+read across a wide s+ectr- of co-+anies with s-a,,
in/est-ents) Sch a s+read wo,d not ha/e been +ossib,e withot their
assistance)
P!")ss$!nal Fund Mana(),)nt? Professiona,s ha/in. considerab,e
e8+ertise, e8+erience and resorces -ana.e the +oo, of -oney co,,ected
by a -ta, fnd) They thoro.h,y ana,y2e the -arkets and econo-y to
+ick .ood in/est-ent o++ortnities)
!ta, 4nds
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S9)ad$n( R$s0? An in/estor with a ,i-ited a-ont of fnd -i.ht be
ab,e to in/est in on,y one or two stocks G bonds, ths increasin. his or her
risk) Howe/er, a -ta, fnd wi,, s+read its risk by in/estin. a n-ber of
sond stocks or bonds) A fnd nor-a,,y in/ests in co-+anies across a
wide ran.e of indstries, so the risk is di/ersified at the sa-e ti-e takin.
ad/anta.e of the +osition it ho,ds) A,so in cases of ,i*idity crisis where
stocks are so,d at a distress, -ta, fnds ha/e the ad/anta.e of the
rede-+tion o+tion at the NA3s)
Tans9a)n+A and $nt)a+t$%$tA? !ta, 4nds re.,ar,y +ro/ide
in/estors with infor-ation on the /a,e of their in/est-ents) !ta,
4nds a,so +ro/ide co-+,ete +ortfo,io disc,osre of the in/est-ents -ade
by /arios sche-es and a,so the +ro+ortion in/ested in each asset ty+e)
!ta, 4nds c,ear,y ,ayot their in/est-ent strate.y to the in/estor)
L$Bu$d$tA? <,osed ended fnds ha/e their nits ,isted at the stock
e8chan.e, ths they can be bo.ht and so,d at their -arket /a,e) '/er
and abo/e this the nits can be direct,y redee-ed to the !ta, 4nd as
and when they annonce the re+rchase)
C'!$+)? The ,ar.e a-ont of !ta, 4nds offer the in/estor a wide
/ariety to choose fro-) An in/estor can +ick + a sche-e de+endin.
+on his risk G retrn +rofi,e)
R)(ulat$!ns? A,, the -ta, fnds are re.istered with S=B% and they
fnction within the +ro/isions of strict re.,ation desi.ned to +rotect the
interests of the in/estor)
TAC ;ENEFITS? (i/idend inco-e fro- -ta, fnd nits wi,, be
e8e-+t fro- inco-e ta8 with effect fro- @,y $, $111) 4rther, in/estors
can .et rebate fro- ta8 nder section ## of %nco-e Ta8 Act, $1D$ by
in/estin. in =*ity >inked Sa/in. Sche-es of -ta, fnds)
4rther benefits are a,so a/ai,ab,e nder section CB=A and CB=B with
re.ard to re,ief fro- ,on. ter- ca+ita, .ains ta8 in certain s+ecified
sche-es
M$s+)llan)!us ad%anta()s? %n/estin. in secrities thro.h -ta, fnds
has -any other ad/anta.es ,ike the o+tion to rein/est in di/idends, stron.
+ossibi,ity of ca+ita, a++reciation, re.,ar retrns, etc): @i- Gard, 0""0;
!ta, 4nds
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Disadvantages Of Mutual Funds
N! +!nt!l !%) t') +!sts) Re.,ators ,i-it the e8+enses of !ta,
4nds) 4ees are +aid as +ercenta.e of the /a,e of in/est-ent
N! ta$l! ,ad) 9!t"!l$!s.
Mana($n( a 9!t"!l$! !" "unds) : %n/estor has to ho,d a +ortfo,io for
fnds for different ob5ecti/es ;
'ne fnd can ha/e sche-es of si-i,ar ob5ecti/es so, se,ection beco-es
diffic,t)
!ta, 4nds
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Classifications of Mutual Funds
:The <ate.ori2ation of !ta, 4nds based on different criteria;
Ass)t Class)sDE
The two -ain asset c,asses are debt and e*ity) Po+,ar +erce+tion is that e*ity
is risky, whi,e debt is safe) Howe/er, it needs to be re-e-bered that debt
secrities are ssce+tib,e to dai,y chan.e in /a,es as e*ity secrities) 4rther,
the rea, retrns on debt -ay or -ay not be +ositi/e) =*ity on the other hand,
can be an effecti/e hed.e a.ainst inf,ation, +artic,ar,y in sitations of nor-a,
inf,ation)
Broad,y -ta, fnds can be di/ided into two cate.ories - e*ity-oriented and
debt-oriented) As the na-es s..est, e*ity-oriented -ta, fnds in/est
+redo-inant,y in e*itiesF di/ersified e*ity fnds and ba,anced fnds are the
+o+,ar /ariants)
=*ity /a,ations, on the other hand, /ary with cor+orate +erfor-ance and
+ros+ects, and the o/era,, -arket senti-ent)
<on/erse,y, debt-oriented fnds ho,d a si.nificant +ortion of their +ortfo,ios in
fi8ed inco-e instr-ents ,ike .o/ern-ent secrities, cor+orate bonds, and
treasry bi,,s a-on. others) Howe/er this bifrcation fai,s to re/ea, the /ersati,e
natre of -ta, fnds) >et7s take this discssion a ste+ frther by discssin. the
/arios choices a/ai,ab,e to in/estors in each of the afore-entioned cate.ories
(ifferent !ta, 4nds are +ositioned different,y de+endin. on the strate.y
they ado+t for -akin. in/est-ents) Any -ta, fnd has the -ain ob5ecti/e of
earnin. inco-e and hi.h retrns for its in/estors, i)e), .ettin. increased /a,e of
their in/est-ents) !ost !ta, 4nd co-+anies offer different sche-es of
in/est-ents de+endin. on the re*ire-ents of the tar.et .ro+s) The -ost
efficient -ethod of startin. a c,assification or cate.ori2ation of a,, sche-es that
are offered in the !ta, 4nd %n/est-ents !arket wo,d be to .ro+ these into
two broad c,assifications? Portfo,io <,assification and '+erationa,
<,assification)
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6oad and 7o 6oad "unds
>oad is the oneti-e fee +ayab,e by the in/estor to a,,ow the fnd to -eet initia,
isse e8+enses inc,din. brokersGa.ents9Gdistribtors9 co--issions, ad/ertisin.
and -arketin. e8+enses
%4 the in/estors9 ob5ecti/e is to .et the benefit of co-+ondin. his initia,
in/est-ent by rein/estin. and ho,din. his in/est-ent for a /ery ,on. ter-,
then , a no front ,oad fnd is +referab,e
3perational Classification
'+erationa, c,assification hi.h,i.hts the two -ain ty+es of sche-es, i)e), o+en-
ended and c,ose-ended which are offered by the -ta, fnds)
FaG O9)n End)d S+'),)sD As the na-e i-+,ies the si2e of the sche-e :4nd;
is o+en, and not s+ecified or +re-deter-ined) =ntry to the fnd is a,ways o+en to
the in/estor who can sbscribe at any ti-e) Sch fnd stands ready to by or
se,, its secrities at any ti-e) The nits are nor-a,,y not traded on the stock
e8chan.e bt are re+rchased by the fnd at annonced rates) '+en-ended
sche-es ha/e co-+arati/e,y better ,i*idity des+ite the fact that these are not
,isted) No -inte-to--inte f,ctations in rates hant the in/estors)
F*G Cl!s) End)d S+'),)sD Sch sche-es ha/e a definite +eriod after which
their sharesG nits are redee-ed) Un,ike o+en-ended fnds, these fnds ha/e
fi8ed ca+ita,i2ation, i)e), their cor+s nor-a,,y does not chan.e thro.hot its
,ife +eriod) Their +rice is deter-ined on the basis of de-and and s++,y in the
-arket) A +re-i- -ay e8ist on,y on accont of s+ec,ati/e acti/ities)
!ta, 4nds
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Portfolio Classification of "unds:
The +ortfo,io c,assification of fnds can be di/ided into B kinds)
!ta, 4nds
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8a9 )eturn 1ased classification? The in/estors of the
-ta, fnd sche-es are -ade to en5oy a .ood retrn in for- of re.,ar
di/idends or ca+ita, a++reciation or a co-bination of these both)
1. In+!,) Funds? %nco-e fnds are f,oated for the interest of in/estors who
want to -a8i-i2e crrent inco-e) These fnds distribte +eriodica,,y the
inco-e earned by the-, in the for- of either a constant inco-e at re,ati/e,y ,ow
risk or in the for- of -a8i-- inco-e +ossib,e with hi.her risk by the se of
,e/era.e)
. G!/t' Funds? These Sche-es ha/e the ob5ecti/e to achie/e an increase in
the /a,e of the nder,yin. in/est-ents thro.h ca+ita, a++reciation, and they
in/est in .rowth oriented secrities)
!. C!ns)%at$%) Funds? These fnds offer a b,end of .ood a/era.e retrns and
reasonab,e ca+ita, a++reciation) These fnds are /ery +o+,ar and are idea, for
the in/estors who want both .rowth and inco-e fro- their in/est-ent)
819 #n/est2ent Based Classification? !ta, fnds
-ay a,so be c,assified on the basis of the kind of secrities that they in/est in)
1. E"#ity $#n%s? =*ities are a hi.h risk-hi.h retrn asset c,assF the sa-e
risk +rofi,e s+i,,s o/er to e*ity fnds as we,,) Howe/er in/estors -st take note
of the fact that a ,ar.e n-ber of /ariations e8ist within the 7hi.h risk7 e*ity
fnds se.-ent) 4or e8a-+,e a sector fnd wo,d be on the re,ati/e,y hi.her
sca,e in the risk-retrn +aradi.- when co-+ared to an inde8 fnd, which
si-+,y tracks the -o/e-ents in a chosen bench-ark inde8) The .ra+h dis+,ays
how so-e of the /ariants fro- the e*ity fnds se.-ent rank in ter-s of the
risk-retrn trade-off) %nstead of ado+tin. a Mte8t-bookM -ethod and +,acin. a,,
e*ity fnds on a co--on +,atfor-, in/estors sho,d a++reciate the nances of
each cate.ory) These are intricacies in/estors -st be aware of in order to -ake
an infor-ed in/est-ent decision) These fnds in/est -ost of their in/estib,e
shares in e*ity shares of co-+anies and ndertake the risk associated with the
in/est-ent in e*ity shares) %n a de/e,o+ed -arket, =*ity fnds can be of
different cate.ories) 4or e8a-+,e, Lb,e chi+9, 4!<G, PSUs, etc)
!ta, 4nds
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The e*ity fnds cate.ory can be frther differentiated as fo,,ows?
Ma0)t +a9$tal$.at$!nE*as)d "unds
!arket ca+ita,i2ation is defined as the n-ber of shares issed by a co-+any
-,ti+,ied by the +rice of each share) <o-+anies are .enera,,y di/ided into the
,ar.e ca+, -id ca+ and s-a,, ca+ se.-ents res+ecti/e,y on the basis of their
-arket ca+ita,i2ation) So-e di/ersified e*ity fnds are ,anched with the
-andate to in/est in stocks fro- one or -ore of the stated se.-ents i)e) the
co-+any7s -arket ca+ita,i2ation beco-es the .o/ernin. force) 4or instance,
4rank,in %ndia B,e chi+ 4nd re+resents a ,ar.e ca+ di/ersified e*ity fnd)
The shar+ rn + in stocks fro- the -id ca+ se.-ent in the recent +ast can be
credited for the ,anch in fnds of the -id ca+ and f,e8i ca+ :fnds that in/est in
stocks across -arket se.-ents; /arieties) Sndara- S)!)%)>)=) and H(4<
Pre-ier !,ti-<a+ 4nd are e8a-+,es of f,e8i ca+ fnds)
O99!tun$t$)s "unds
4nd -ana.ers hand,in. o++ortnities fnds ha/e +erha+s the -ost f,e8ib,e
in/est-ent -andates) '++ortnities fnds can in/est in stocks across -arket
se.-ents, sectors and so-e are e/en +er-itted to in/est a si.nificant +ortion of
their cor+s in debt) As the na-e s..ests, the idea is to seek o++ortnities for
c,ockin. .ains fro- any sectorG-arket se.-ent) Howe/er the a.i,e -ana.e-ent
sty,e a,so tends to enhance the risk +rofi,e of these fnds /is-P-/is a
con/entiona, di/ersified e*ity fnd) (SP !> '++ortnities 4nd and HSB<
%ndia '++ortnities 4nd fa,, nder this cate.ory)
T'),)E*as)d "unds
T h e - e - b a s e d fnds are fair,y si-i,ar to sector fnds, howe/er the
differentiatin. factor is the ,e/e, of di/ersification they offer) %nstead of
concentratin. on stocks fro- a sin.,e sectorGindstry, their focs ,ies on a
s+ecific the-e ,ike .,oba,,y co-+etiti/e %ndian co-+anies or -,tinationa,
cor+orations o+eratin. in %ndiaF for e8a-+,e Kotak G,oba, %ndia 4nd and Bir,a
%ndia '++ortnities 4nd) %n ter-s of di/ersification and risk +rofi,es, these
co-+anies tread the +ath between a sector fnd and a con/entiona, di/ersified
e*ity fnd) So-e the-e-based fnds are +ositioned based on their stock-
+ickin. strate.y) (i/idend yie,d fnds are ,anched with the intention of
in/estin. in stocks offerin. a di/idend yie,d abo/e a certain +re-deter-ined
,e/e,) 4or e8a-+,e, Princi+a, (i/idend Qie,d 4nd tar.ets co-+anies with a
di/idend yie,d hi.her than $)C ti-es that of the NS= Nifty on the ear,ier tradin.
day) Si-i,ar,y /a,e fnds +ro+a.ate the /a,e sty,e of in/estin. i)e) +ickin.
!ta, 4nds
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stocks that are fnda-enta,,y stron. and inherent,y .ood bys bt crrent,y ot
of fa/or :for e8a-+,e Te-+,eton %ndia Growth 4nd;)
Ind)8 "unds
%nde8 fnds are ,anched with the -andate of trackin. bench-ark indices ,ike
the BS= Sense8 or S&P <NR Nifty) These fnds in/est in stocks fro- the
inde8 in the sa-e +ro+ortion as the bench-ark, thereby offerin. in/estors the
o++ortnity to ca+tre the .rowth in the chosen inde8) %nde8 fnds are .enera,,y
-ore +o+,ar in de/e,o+ed -arkets where acti/e,y -ana.ed fnds find it
diffic,t to ot+erfor- the bench-ark indices as -arkets are re,ati/e,y better
researchedF a,so their e8+enses :fees, char.es; tend to be ,ower /is-P-/is
acti/e,y -ana.ed fnds) An offshoot of inde8 fnds is the inde8- +,s fnds
cate.ory) %nde8-+,s fnds in/est a +redeter-ined +ro+ortion of their tota,
assets in inde8 stocks and the ba,ance in stocks otside the inde8) H(4< To+
0"" 4nd fa,,s in this cate.ory of fnds)
Fund !" Funds
A re.,ar -ta, fnd in/ests in e*ities, bonds and fi8ed inco-e secrities
de+endin. on its ob5ecti/e) 4nd of 4nds :4o4; e8tend this conce+t by
in/estin. in nits of other -ta, fnd sche-es) By in/estin. in -ore than one
-ta, fnd they take di/ersification to a new ,e/e, 4or e8a-+,e an 4o4 co,d
in/est in fi/e to+ +erfor-in. e*ity fnds and offer a hi.h,y di/ersified
+ortfo,io to the in/estor) Si-i,ar,y others co,d in/est in e*ity and debt fnds
si-,taneos,y, thereby offerin. a +ortfo,io that is di/ersified across asset
c,asses) 'n the f,i+side, 4o4 in/estors -st be wary of hi.her e8+enses on
accont of o/er,a++in. of costs) 4T %ndia >ife Sta.e 4nd is the e8a-+,e of an
4o4)
C!n%)nt$!nal d$%)s$"$)d )Bu$tA "unds
6e ha/e sed the ter- Mcon/entiona,M di/ersified e*ity fnds at /arios +,aces
drin. the corse of this discssion) This is not a /ariantF instead these are
e*ity fnds in their +rest for- and -i.ht see- rather ,ack,ster in the +resent
scenario) Ty+ica,,y, a di/ersified e*ity fnd in/ests in a n-ber of e*ityG
e*ity re,ated instr-ents fro- /arios sectors thereby enab,in. in/estors to
benefit fro- di/ersification) H(4< =*ity 4nd and Sndara- Growth 4nd
can be c,assified as con/entiona, di/ersified e*ity fnds)
!ta, 4nds
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. Debt $#n%s? These 4nds ha/e their +ortfo,io co-+risin. of bonds and
debentres :(ebt %nstr-ents;) These fnds are considered to be /ery secre
with a steady inco-e)
L!n(Et), d)*t "unds
>on.-ter- debt fnds are con/entiona, debtGbond fnds that ha/e been in
e8istence for as ,on. as e*ity fnds) %n/estors +refer to in/est in debt fnds for
the sa-e reasons they choose to in/est in e*ity fnds /i2) they .et benefits of
di/ersification across debt instr-ents and the ser/ices of a +rofessiona, fnd
-ana.er) %n fact, for retai, in/estors, debt fnds are one of the -ost i-+ortant
a/enes for in/estin. in debt secrities ,ike cor+orate bonds and .o/ern-ent
secrities, chief,y becase indi/ida, transactions in debt are of a /ery hi.h
/a,e :rnnin. in -i,,ions of r+ees; and beyond -ost retai, in/estors) This is
n,ike e*ities for instance, where retai, in/estors can in/est on their own in
s-a,,er ,ots)
(ebt fnds in/est across a ran.e of debtGfi8ed inco-e secrities) The cor+s of
,on.-ter- debt fnds co-+rises -ain,y of cor+orate bonds and .o/ern-ent
secrities :.i,tsG.secs;)
6hen these secrities ha/e a resida, -atrity of at ,east $0 -onths, they are
c,assified as ,on.-ter- debt or ,on.er-dated +a+er) (ebt fnds a,so in/est in
shorter-dated +a+er ,ike treasry bi,,s, certificate of de+osit :<(s; and
co--ercia, +a+er to na-e a few) %n addition to this, they a,so a,,ocate a s-a,,
+art of assets to cash) Sndara- Bond Sa/er is an e8a-+,e of a ,on.-ter- debt
fnd) Gi/en that a ,ar.e chnk of the fnd7s assets are in ,on.er-dated +a+er,
these fnds are e8+osed to what is ca,,ed as 7interest rate risk7) This -eans that
in the e/ent of /o,ati,ity in debt -arkets, ,on.-ter- debt fnds wi,, witness
abo/e-a/era.e trb,ence, as there is .reater ncertainty associated with the
,on.er tenre) 'n the other hand, shorter-dated +a+er is re,ati/e,y we,, ins,ated
fro- instabi,ity in debt -arkets) An ana,o.y that in/estors can re,ate to is the
difference in rates on a fi8ed de+osit for $-Qr and A-Qr) The A- Qr fi8ed de+osit
offers a hi.her retrn as there is -ore ncertainty associated with it as a.ainst a
fi8ed de+osit for $- Qr) So -ore ncertainty is rewarded with a hi.her rate to
7incenti/ise7 in/est-ent) >ikewise, ,on.er-dated +a+er offer hi.her co+on rates
as co-+ared to shorter-dated +a+er becase in/estors take on -ore risk)
%n/est-ents in ,on.-ter- debt fnds sho,d be -ade with a ti-e fra-e of at
,east $0 -onths)
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S'!tEt), d)*t "unds
%f yo ha/e nderstood how ,on.er dated +a+er is different fro- shorter dated
+a+er, then yo ha/e a fair,y .ood idea abot what short-ter- debt fnds ha/e
on offer for in/estors) There is a cate.ory of in/estors who ha/e two critica,
needs that short-ter- debt fnds he,+ achie/e) 'ne J they want to be in/ested
for the short-ter- - ,ess than D -onths) Two - o/er this ti-e fra-e, they are
,ookin. at +reser/in. ca+ita, with a retrn that is s+erior to that of a fi8ed
de+osit of a co-+arab,e tenre) The reason why short-ter- debt fnds can
+reser/e ca+ita, better than ,on. ter- debt fnds is becase they are in/ested in
debt instr-ents of a shorter tenre) This cate.ory of debt instr-ents is not as
ad/erse,y affected by /o,ati,ity in debt -arkets as ,on.er dated +a+er) As a
res,t, +rices of shorter-dated debt instr-ents are re,ati/e,y stab,e and ser/e the
needs of risk-a/erse in/estors we,,) Te-+,eton %nco-e Short Ter- is an
e8a-+,e of a short-ter- debt fnd) %n/est-ents in short-ter- debt fnds sho,d
be -ade with a ti-e fra-e of $-D -onths)
L$Bu$d "unds
>i*id fnds in/est in /ery short-ter- debt instr-ents -atrin. in A"-BC days)
Ty+ica,,y this inc,des treasry bi,,s and ca,, -oney) >i*id fnds ser/e needs
*ite si-i,ar to that of short-ter- debt fnds, on,y difference is that ,i*id fnd
in/estors ha/e an e/en shorter in/est-ent ti-e fra-e, at ti-es as short as one
day) %f in/estors are ,ookin. at bein. in/ested for -ore than a -onth, they can
consider short-ter- debt fnds for a -ar.ina,,y hi.her retrn) Grind,ays <ash
4nd is an e8a-+,e of a ,i*id fnd)
L!n(Et), ($lt "unds
A ,on.-ter- .o/ern-ent secrities nd in/ests +ri-ari,y in .o/ern-ent +a+er
:.i,tG.sec; with a resida, -atrity of o/er $0 -onths) This is n,ike
con/entiona, debt fnds that in/est +ri-ari,y in cor+orate bonds with .i,ts
accontin. for a s-a,,er share of net assets) Gi/en their 7in/est-ent bias7 for a
+artic,ar se.-ent of the debt -arket, .i,t fnds can be c,assified as 7sector
fnds7) Gi,t fnds ha/e a hi.her risk +rofi,e than con/entiona, debt fnds
becase their in/est-ents are ,i-ited to a +artic,ar se.-ent of the debt -arket
and they cannot di/ersify across other se.-ents ,ike cor+orate bonds for
instance, %n ti-es of trb,ence) The risk associated with .i,t fnds is frther
co-+onded by the fact that .i,ts de to the hi.her ,i*idity are -ore /o,ati,e
than cor+orate bonds) (e to the ,i*idity, .i,t +rices are -ore c,ose,y ,inked to
de/e,o+-ents in the econo-y) So any +essi-is- in debt -arkets ,inked to
7news7 ,ike inf,ation, risin. crde +rices, .,oba, econo-ic trb,ence, is ,ike,y to
ha/e a .reater i-+act on .i,t +rices than cor+orate bond +rices) This is -ain,y
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why .i,t fnds are -ore /o,ati,e than con/entiona, debt fnds) Te-+,eton Gsec
and Kotak Gi,t are e8a-+,es of ,on.-ter- .i,t fnds) %n/est-ents in ,on.-ter-
.i,t fnds sho,d be -ade with a ti-e fra-e of at ,east $0 -onths)
S'!tEt), ($lt "unds
A short-ter- .i,t fnd in/ests +ri-ari,y n .i,ts of a shorter tenre :,ess than $0
-onths;) The rationa,e for in/estin. in short-ter- .i,t fnds is si-i,ar o that of
short-ter- debt fnds) %n/estors ha/e a shorter in/est-ent ti-e fra-e :,ess than
D -onths; and want to c,ock a s-a,, .ain with ca+ita, +reser/ation bein. the
-ore i-+ortant ob5ecti/e) The reason in/estors choose short-ter- .i,t fnds
o/er short-ter- debt fnds is becase .i,ts can +ro/ide a hi.her ca+ita,
a++reciation /is-P-/is bonds) As e8+,ained ear,ier, this is becase .i,ts, by /irte
of ,i*idity, are -ore c,ose,y ,inked to 7econo-y-re,ated news7 and the +side
and downside of in/estin. in .i,ts is -arked,y hi.her /is-P-/is cor+orate bonds)
Te-+,eton Gsec :Short Ter-; is an e8a-+,e of a short-ter- .i,t fnd)
DAna,$+ d)*t "unds
(yna-ic debt fnds atte-+t to co-bine the benefits of debt fnds and .i,t
fnds) They can in/est across cor+orate bonds and .i,ts withot any restrictions)
They are distinct fro- con/entiona, debt fnds that in/est in .i,ts and cor+orate
bonds becase these fnds sa,,y -aintain a ca+ on their .i,t in/est-ents)
(yna-ic debt fnds tend to increase their .i,t in/est-ents in ti-es of econo-ic
stabi,ity as .i,t +rices tend to ha/e a -ore ,crati/e s+read :i)e) difference
between the by and se,, +rices;) A.ain s+reads on .i,t ha/e an ed.e o/er
s+reads on cor+orate bonds becase of hi.her ,i*idity in the for-er) The fnd
-ana.er wi,, in/est in cor+orate bonds andGor .i,ts de+endin. on the s+read
between the yie,ds of the two instr-ents) He wi,, consider the co-+arati/e
yie,ds and the credit risks associated with the instr-ent and in/est accordin.,y)
%n this way dyna-ic debt fnds try to -a8i-ise retrns for the in/estor at a,,
ti-es) Grind,ays (yna-ic Bond 4nd is an e8a-+,e of a dyna-ic debt fnd)
%n/est-ents in dyna-ic debt fnds sho,d be -ade with a ti-e fra-e of at ,east
$0 -onths)
L!n(Et), "l!at$n( at) "unds
4,oatin. rate fnds in/est in debt instr-ents that ha/e their co+on rates
ad5sted at +eriodic inter/a,s) These instr-ents are ca,,ed 7f,oatin. rate
instr-ents7) The f,oatin. rate +a+er is bench-arked a.ainst a reference +oint
,ike the !%B'R :!-bai %nter-bank 'ffered Rate; for instance) <han.es in the
!%B'R are a ce for the co+on rate on the f,oatin. rate +a+er to be reset
accordin.,y) As o++osed to f,oatin. rate instr-ents, yo ha/e con/entiona,
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fi8ed rate instr-ents wherein the co+on rate is fi8ed ti,, -atrity) As the
co+on rate on f,oatin. rate +a+er is reset +eriodica,,y, there is ,ower +ressre
on its +rice drin. interest rate /o,ati,ity) That is why f,oatin. rate +a+er is ,ess
affected by trb,ence in debt -arkets /is-P-/is fi8ed rate +a+er) <onse*ent,y
o/er the +ast two years, f,oatin. rate fnds ha/e he,d their own in in/estors7
+ortfo,ios, whi,e con/entiona, debt fnds ha/e been ad/erse,y i-+acted by the
instabi,ity in interest rates) Te-+,eton 4,oatin. Rate 4nd :>on. Ter-; is an
e8a-+,e of a f,oatin. rate fnd)
S'!tEt), "l!at$n( at) "unds

Short-ter- f,oatin. rate fnds work on the sa-e ,ines as ,on.-ter- f,oatin. rate
fnds e8ce+t that they in/est in f,oatin. rate +a+er of shorter tenre :,ess than $0
-onths;) %f in/estors are ,ookin. to be in/ested across a shorter ti-e fra-e of $-
D -onths, short-ter- f,oatin. rate fnds sho,d be +referred o/er their
,on.erter- conter+arts) Te-+,eton 4,oatin. Rate 4nd :Short Ter-; is an
e8a-+,e of a short-ter- f,oatin. rate fnd)
F$8)d ,atu$tA 9lans
4i8ed -atrity +,ans :4!Ps; are another 7in/ention7 that beca-e a 7necessity7 to
conter interest rate instabi,ity, a +rob,e- that has beco-e acte o/er the ,ast
two years) Ty+ica,,y, 4!Ps are c,ose-ended fnds) They in/est across debt
instr-ents to arri/e at a +re-deter-ined yie,d) Pre-deter-ined becase the
yie,d is annonced beforehand to in/estors) So 4!Ps ha/e defined in/est-ent
tenre) %f the in/estor7s in/est-ent ti-e-fra-e -atches that of the 4!P, he can
consider in/estin. in it) The benefit of in/estin. in 4!P is that the in/estor
knows in ad/ance the retrn that he wi,, .enerate on his in/est-ent) Knowin.
the retrn on yor debt fnd has ass-ed si.nificance now when con/entiona,
debt fnds are o+eratin. in an ncertain interest rate en/iron-ent, when e/en
ne.ati/e retrns ha/e beco-e a way of ,ife) To nderstand how this works J
take an 4!P, which at the %P' sta.e :initia, +b,ic offerin.; annonces that it
wi,, in/est in +a+er -atrin. in !ay 0""D yie,din. C)0CO interest) The fnd
wi,, in/est in fresh,y-,anched debt +a+er) This is becase in/estin. in an
e8istin. +a+er wi,, distrb the yie,d c a , c , a t i o n s :C)0CO in this case; if
the bond is not +riced fa/orab,y) %n/estors with a definite $-Qear hori2on can
consider in/estin. in the 4!P to yie,d an interest of C)0CO) 4ro- the in/estor7s
+ers+ecti/e, he knows what his in/est-ent wi,, yie,d o/er the ne8t $0 -onths,
so inter-ittent /o,ati,ity in bond +rices does not distrb hi-) So-e fnd hoses
,ike Bir,a !ta, 4nd and @! !ta, 4nd ,anch 4!Ps at re.,ar inter/a,s)
=/en 4rank,in Te-+,eton !ta, 4nd which has a/oided 4!Ps in the +ast has
,anched its -aiden 4!P offerin. to ta+ in/estor interest in this +rodct) 4!Ps
ha/e in/est-ent tenres ran.in. fro- ,ess than a year to -ore than $" years)
!ta, 4nds
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M!nt'lA In+!,) Plans FMIPsG
As a -ta, fnd cate.ory, -onth,y inco-e +,ans :!%Ps; are a re,ati/e,y recent
+heno-enon) !%Ps are hybrid fnds that in/est +redo-inant,y in debt
instr-ents with a s-a,, +ortion of assets in/ested in e*ities) The e*ity
co-+onent is e8+ected to act as a 7kicker7 that wi,, -ake the !%P ot+erfor- a
con/entiona, debt fnd) The rationa,e for a hybrid +rodct ,ike an !%P ca-e to
the fore becase debt fnds weren7t addin. a ,ot of /a,e to the risk-a/erse
in/estor7s +ortfo,io) As a -atter of fact, they were erodin. /a,e) This is
so-ethin. that in/estor7s had ne/er seen before) 4nd hoses introdced !%Ps
to encora.e in/estors to take on a ,itt,e bit of risk so as to earn a s,i.ht,y hi.her
retrn than con/entiona, debt fnds) So we had !%Ps bein. ,anched that .a/e
the fnd -ana.er a -andate to in/est C-A"O of assets in e*ities) <on/entiona,
!%Ps in/est abot C- $CO of assets in e*ities with their a..ressi/e
conter+arts in/estin. as hi.h as 0"-A"O in e*ities) Se/era, fnd hoses ha/e
two distinct !%Ps caterin. to different in/estor .ro+s) 4or instance H(4<
!ta, 4nd has one !%P with a -a8i-- +er-issib,e $CO e*ity co-+onent
and another one with a -a8i-- +er-issib,e 0CO e*ity co-+onent) >ikewise
(SP !> has three fnds in its Sa/in.s P,s series with the e*ity co-+onent
ca++ed at $"O, 0"O and A"O) %n or /iew in/estors sho,d consider in/estin.
in !%Ps with a ti-e fra-e of at ,east $#-0B -onths) %n/estors o+tin. for the
di/idend o+tion sho,d consider ,on.er-inter/a, di/idend o+tions ,ike the
*arter,y or ha,f-year,y di/idend o+tion) This is becase when e*ity -arkets
are /o,ati,e, the fnd -ana.er -ay not be ab,e to dec,are -onth,y di/idends) A
A-D -onth breathin. s+ace .i/es hi- that -ch -ore chance to dec,are a
di/idend)
!iagram " %&pected 'eturn of !ebt Funds
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!. &alance% $#n%" These fnds ha/e their +ortfo,io consistin. of a ba,anced
-i8 of e*ity and bonds) The co-+osition of these fnds -ay /ary de+endin.
+on the ot,ook of the -arket) Ba,anced fnds in/est their cor+s in both
e*ity and debt instr-ents in a +re-deter-ined ratio, say D"?B") The
nder,yin. +hi,oso+hy is to +ro/ide hi.h de.ree of di/ersification by in/estin.
across asset c,asses) Ba,anced fnds ha/e been toted as in/est-ent a/enes
that can offer the best of both wor,ds i)e) .rowth fro- e*ity ho,din.s and
stabi,ity fro- debt ho,din.sF +itches, that .ood fnd -ana.er are ca+ab,e of
f,fi,,in.) An a..ressi/e ba,anced fnd wo,d ty+ica,,y ho,d a hi.her +ortion of
its assets in e*ities -aybe as hi.h as E"O of the tota, assets) 'n the other hand,
a 7disci+,ined7 ba,anced fnd wo,d -aintain a conser/ati/e e*ity a,,ocation
drin. -ost ti-es) H(4< Prdence, (SP !> Ba,anced and !a.n- Ba,anced
are e8a-+,es of ba,anced fnds)
8c9 .ector Based "unds: There are fnds that in/est in a
s+ecified sector of econo-y and they s+ecia,i2e in the said sector) Howe/er,
they rn the risk of not bein. ab,e to di/ersify) Sector based fnds are
a..ressi/e .rowth fnds which -ake in/est-ents on the basis of assessed
bri.ht ftre for a +artic,ar sector) The s+ecia,ty of sector fnds rather odd,y
,ies in the fact that they .o a.ainst the /ery .rain of -ta, fnd in/estin. i)e)
ho,din. a di/ersified +ortfo,io) That is why yo wi,, find so-e Asset
!ana.e-ent <o-+anies that swear a.ainst sector fndsS Sector fnds are
,anched with the intention of ca+ita,i2in. on o++ortnities in a sin.,e sector,
for e8a-+,e the +har-acetica, indstry, the software indstry a-on. others)
The fnd in/ests in /arios stocks fro- the sa-e indstry thereby -akin. it a
hi.h risk-hi.h retrn in/est-ent +ro+osition) Un,ike a con/entiona, di/ersified
e*ity fnd, a sector fnd doesn7t ha/e the safety net of di/ersification :it is
di/ersified, bt on,y within a sector; to fa,, back on if there is a chan.e in
fortnes of its chosen area of o+erations) Howe/er, sectors fnds can ho,d a ,ot
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of a++ea, for infor-ed in/estors who nderstand the intricacies of the sector and
can ti-e the entry and e8it of their in/est-ents) 4rank,in %nfotech 4nd and
!a.n- Phar-a 4nd are e8a-+,es of sector fnds)
C!,,!d$tA Funds
%t wi,, in/est direct,y in co--odities or thro.h shares of the co--odity
co-+anies or thro.h co--odity ftres contract )!ost co--on e8a-+,e of
sch fnd is +recios--eta, fnd, Go,d fnds in/est in Go,d, Go,d ftres or
shares of .o,d -ines
E8+'an() Tad)d Funds
%t co-bines the best featres of o+en end and c,osed strctre) %t tracks a -arket
inde8 and trades ,ike a stock on the stock -arket) =T4s are not the inde8 fnds
)eal (state "unds
%t can ?%n/est in rea, estate, 4nd rea, estate de/e,o+ers, By shares of hosin.
finance co-+anies, By secriti2ed assets)
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TAX BENEFITS OF MF
=>SS : =*ity ,inked sa/in. sche-e ;
A year ,ock in +eriod
!ini-- in/est-ent of 1"O in e*ity -arkets at a,, ti-es
So =>SS in/est-ent ato-atica,,y ,eads to in/est-ent in e*ity shares
'+en or c,osed ended
=,i.ib,e nder Section #" < + to Rs)$ ,akh a,,owed
(i/idends are ta8 free
Benefit of >on. ter- <a+ita, .ain ta8ation
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RS!S ASSOCATED "TH M#T#A$ F#NDS
RISK HRETURN TRADE OFF
The -ost i-+ortant re,ationshi+ to nderstand is the risk-retrn trade-off)
Hi.her the risk .reater the retrnsG,oss and ,ower the risk ,esser the retrnsG,oss)
Hence it is + to yo, the in/estor to decide how -ch risk yo are wi,,in. to
take) %n order to do this yo -st first be aware of the different ty+es of risks
in/o,/ed with yor in/est-ent decision)
MARKET RISK
So-eti-es +rices and yie,ds of a,, secrities rise and fa,,) Broad otside
inf,ences affectin. the -arket in .enera, ,ead to this) This is tre, -ay it be bi.
cor+orations or s-a,,er -id-si2ed co-+anies) This is known as !arket Risk) A
Syste-atic %n/est-ent P,an :S%P; that works on the conce+t of R+ee <ost
A/era.in. :R<A; -i.ht he,+ -iti.ate this risk)
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CREDIT RISK
The debt ser/icin. abi,ity :-ay it be interest +ay-ents or re+ay-ent of
+rinci+a,; of a co-+any thro.h its cash f,ows deter-ines the <redit Risk faced
by yo) This credit risk is -easred by inde+endent ratin. a.encies ,ike <R%S%>
who rate co-+anies and their +a+er) A LAAA9 ratin. is considered the safest
whereas a L(9 ratin. is considered +oor credit *a,ity) A we,,-di/ersified
+ortfo,io -i.ht he,+ -iti.ate this risk)
INFLATION RISK
Thin.s yo hear +eo+,e ta,k abot?
Rs) $"" today is worth -ore than Rs) $"" to-orrow)
Re-e-ber the ti-e when a bs ride costed C" +aiseT
!ehan.ai Ka @a-ana Hai)
The root case, %nf,ation) %nf,ation is the ,oss of +rchasin. +ower o/er ti-e) A
,ot of ti-es +eo+,e -ake conser/ati/e in/est-ent decisions to +rotect their
ca+ita, bt end + with a s- of -oney that can by ,ess than what the +rinci+a,
co,d at the ti-e of the in/est-ent) This ha++ens when inf,ation .rows faster
than the retrn on yor in/est-ent) A we,,-di/ersified +ortfo,io with so-e
in/est-ent in e*ities -i.ht he,+ -iti.ate this risk)
INTEREST RATE RISK
%n a free -arket econo-y interest rates are diffic,t if not i-+ossib,e to +redict)
<han.es in interest rates affect the +rices of bonds as we,, as e*ities) %f interest
rates rise the +rices of bonds fa,, and /ice /ersa) =*ity -i.ht be ne.ati/e,y
affected as we,, in a risin. interest rate en/iron-ent) A we,,-di/ersified
+ortfo,io -i.ht he,+ -iti.ate this risk)
POLITICAL RISK
<han.es in .o/ern-ent +o,icy and +o,itica, decision can chan.e the in/est-ent
en/iron-ent) They can create a fa/orab,e en/iron-ent for in/est-ent or /ice
/ersa)
LIIUIDITY RISK
>i*idity risk arises when it beco-es diffic,t to se,, the secrities that one has
+rchased) >i*idity Risk can be +art,y -iti.ated by di/ersification, sta..erin.
of -atrities as we,, as interna, risk contro,s that ,ean towards +rchase of
,i*id secrities) Qo ha/e been readin. abot di/ersification abo/e, bt what is
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itT (i/ersification the nc,ear wea+on in yor arsena, for yor fi.ht a.ainst
Risk) %t si-+,y -eans that yo -st s+read yor in/est-ent across different
secrities :stocks, bonds, -oney -arket instr-ents, rea, estate, fi8ed de+osits
etc); and different sectors :ato, te8ti,e, infor-ation techno,o.y etc);) This kind
of a di/ersification -ay add to the stabi,ity of yor retrns, for e8a-+,e drin.
one +eriod of ti-e e*ities -i.ht nder+erfor- bt bonds and -oney -arket
instr-ents -i.ht do we,, eno.h to offset the effect of a s,-+ in the e*ity
-arkets) Si-i,ar,y the infor-ation techno,o.y sector -i.ht be farin. +oor,y bt
the ato and te8ti,e sectors -i.ht do we,, and -ay +rotect yo +rinci+a,
in/est-ent as we,, as he,+ yo -eet yor retrn ob5ecti/es)
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R)s)a+' M)t'!d!l!(A
%n the ,ast decade we ha/e seen enor-os .rowth in the si2e of -ta, fnd
indstry in %ndia) =s+ecia,,y the +ri/ate sector has shown tre-endos .rowth)
6ith n-atched ad/ances on the infor-ation techno,o.y, increased ro,e of the
instittiona, in/estors in the stock -arket and the S=B% sti,, in its infancy, the
-ta, fnd indstry +,ayers .ained n+ara,,e,ed and nchecked +ower) To
ensre the safety of in/est-ent of s-a,, in/estors a.ainst whi-s and fancies of
+rofessiona, fnd -ana.ers ha/e beco-e the need of the hor)
The stdy inc,des ana,ysis of the in/estors on the basis of their in/est-ent
ob5ecti/es, a.e etc) %t a,so e8a-ined the +osition of !4 a-on. in/est-ent
a/enes a/ai,ab,e for the in/estors and the +ast +erfor-ances of /arios
sche-es fro- the acti/e A!<s in %ndian -arket on the basis of NA3 & ti-e)
So that it can he,+ the ad/isors as we,, as in/estors to choose the correct
+ortfo,io) The stdy a,so co/ers the scenario of !4 indstry drin. the =ntry
>oad and No =ntry >oad a++,ications)
31:ecti/es of t&e study
The -a5or ob5ecti/e of the stdy was to deter-ine the awareness abot benefits
of !ta, fnds ad/isory bsiness and to i-+art infor-ation, know,ed.e and
the fnctionin. of -ta, fnds a-on. financia, ad/isors)
4o,,owin. are the s+ecific ob5ecti/es?
$) To ana,y2e the in/estors on the basis of their in/est-ent ob5ecti/es, a.e etc)
0) To e8a-ine the +osition of !4 a-on. in/est-ent a/enes a/ai,ab,e for the
in/estors in %ndian -arket)
A) To e8a-ine the +ast +erfor-ances of /arios sche-es fro- the acti/e
A!<s in %ndian -arket on the basis of NA3 & ti-e)
B) The stdy a,so co/ers the scenario of !4 indstry drin. the =ntry >oad
and No =ntry >oad a++,ications)

)esearc& *esi,n
4or stdyin. +erce+tions of financia, ad/isors, a +ri-ary sr/ey was ndertaken
so as to know as to how -ch they +refer -ta, fnds as a +rodct o+tion in
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co-+arison to other in/est-ent instr-ents, how -ch know,ed.e do they
ha/e abot -ta, fnds) 4or this +r+ose, a *estionnaire was desi.ned and
ana,y2ed on the basis of the res+onses .i/en by the ad/isors of Noida) 4rther,
to co-+,ete the other ob5ecti/es data was +ro/ided by N@ in for- of +ersona,
+ortfo,ios of /arios in/estors of Noida and their ad/isors) And the NA3s are
taken fro- the website of Association of !ta, 4nds in %ndia :A!4%;)
Sa,9l) D)s$(n
(rin. the research the res+onses of abot BC" ad/isors were taken and
ana,y2ed to know the awareness of !4)
4or ana,ysis of in/estors on basis of their a.e, they were .ro+ed with inter/a,
of $" years)
R)s)a+' T)+'n$Bu)
Perfor-ance of !4 sche-es
Percenta.e increase U :new NA3 J o,d NA3; H $""
',d NA3
S+!9) !" t') studA
The +resent stdy was been ndertaken to i-+art awareness of the fnctionin.
of -ta, fnds and a,so to +ro/ide infor-ation , know,ed.e and insi.ht for
takin. in/est-ents decision +ra.-atica,,y and a,so si-,taneos,y ward off the
i-+endin. risk in takin. in/est-ents decision) The stdy a,so he,+ed the
ad/isors in se.-entin. and focsin. on a certain in/estor .ro+)
L$,$tat$!ns O" T') StudA
>ack of ti-e on the +art of ad/isors for fi,,in. + the *estionnaire
The stdy focses on,y on the in/estors associated with N@)
4or the +r+ose of e/a,atin. the +erfor-ance of /arios sche-es on the basis
of NA3 has been done, and the bi..est disad/anta.e of sch -ethod is it can9t
be taken as fina, co2 NA3s are sb5ect to chan.e on dai,y basis)
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Data +!ll)+t$!n
4or the +r+ose of the research, data has been co,,ected fro- fo,,owin. 0
sorces?
Pri2ary *ata? 4or stdyin. +erce+tions of financia, ad/isors, a +ri-ary
sr/ey was ndertaken so as to know as to how -ch they +refer -ta, fnds
as a +rodct o+tion in co-+arison to other in/est-ent instr-ents, how -ch
know,ed.e do they ha/e abot -ta, fnds) 4or this +r+ose ,a *estionnaire
was desi.ned and ana,y2ed on the basis of the res+onses .i/en by abot BC"
ad/isors of Noida) A detai,ed discssion abot the +ri-ary research done and
data co,,ected has been done nder the headin. 3a,e Pack Procre-ent)
.econdary *ata? The secondary data was co,,ected fro- the /arios
books, -a.a2ines, Qe,,ow +a.es and /arios financia, websites) The secondary
data was co,,ected to know the theoretica, as+ect of the -ta, fnds and a,so
for the +erfor-ance e/a,ation of /arios -ta, fnd sche-es)
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4nalysis 3n %&e Basis 3f 31:ecti/e 3f
#n/estor
%n/est-ent +rotection ,eads to safer interest .eneratin. asset a,,ocations where
as %n/est-ent Growth ,eads to hi.her /o,ati,ity assets that -ay tend to .row
o/er a +eriod of ti-e)
In%)st,)nt P!t)+t$!n Vs. In%)st,)nt G!/t'
In%)st! C'aa+t)$st$+ In%)st,)nt
G!/t'
In%)st,)nt
P!t)+t$!n
Ti-e Hori2on Short-ter- >on.-ter-
4tre %nco-e Re*ire-ents Steady G Hi.h 3ariab,e G >ow
Risk A/erseness >ow Hi.h
%nf,ation Protection >ow Protection
Needed
Hi.h Protection
Needed
%f yo are a +erson who broad,y fa,,s into the %n/est-ent Growth cate.ory yo
-i.ht be interested in ,ookin. at an A..ressi/e +ortfo,io) 'n the other hand if
yo are ,eanin. towards an interest inco-e with -ini-a, risk in/est-ents yo
-i.ht ,ook at a <onser/ati/e asset a,,ocation) So-eone who wants a bit of
steady inco-e as we,, as asset .rowth -i.ht .o in for a -oderate or a ba,anced
asset a,,ocation)
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AGGR=SS%3= P'R4'>%'
!'(=RAT= P'T4'>%'
<'NS=R3AT%3= P'RT4'>%'
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The chart be,ow can be sed to identify the ty+es of fnds best sited to or
+artic,ar in/est-ent ob5ecti/es)
;as$+
O*J)+t$%)
Fund TA9) T')s) Funds
In%)st P$,a$lA
In
P!t)nt$al
Ca9$tal
A99)+$at$!n
P!t)nt$al
Cu)nt
In+!,)
P!t)nt$al
R$s0
!a8i--
<a+ita,
Growth
-A..ressi/e
Growth
-%nternationa,
<o--on stocks
with +otentia,
for /ery ra+id
.rowth) !ay
e-+,oy certain
a..ressi/e
strate.ies
3ery Hi.h 3ery
>ow
Hi.h to
3ery
Hi.h
Hi.h
<a+ita,
Growth
-Growth
-S+ecia,tyG
Sector
-%nternationa,
<o--on stocks
with ,on.-ter-
.rowth +otentia,
Hi.h to
3ery Hi.h
3ery
>ow
Hi.h
<rrent
%nco-e &
<a+ita,
Growth
-Growth &
%nco-e
<o--on stocks
with +otentia,
for hi.h
di/idends and
ca+ita,
a++reciation
!oderate !oderat
e
!oderate
to Hi.h
Hi.h
<rrent
%nco-e
-4i8ed
%nco-e
-=*ity
%nco-e
Both hi.h-
di/idend-
+ayin. stocks
and bonds
3ery >ow
Hi.h to
3ery
Hi.h
>ow to
!oderate
<rrent
%nco-e &
Protection
of
Princi+a,
-Genera,
!oney
!arket
4nds
!oney -arket
instr-ents None
!oderat
e to Hi.h 3ery
>ow
Ta8-4ree
%nco-e &
Protection
of
Princi+a,
-Ta8-=8e-+t
-!oney
!arket
Short-ter-
-nici+a, notes
and bonds
None
!oderat
e to Hi.h >ow
Ta8-
=8e-+t
%nco-e
-(ob,e &
Tri+,e Ta8-
=8e-+t
A broad ran.e
of -nici+a,
bonds
>ow to
!oderate
!oderat
e to Hi.h
>ow to
!oderate
$nvestment Objective ( Mutual Fund Mapping
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4nalysis 3n %&e Basis 3f 4,e 3f
#n/estor
Another way to ascertain the ri.ht asset a,,ocation is by ,ookin. at yor ,ife
cyc,e) The basis of this theory ,ies in the si-+,e -a8i- that yon.er +eo+,e
with secre 5obs wi,, nor-a,,y o+t for hi.her retrns and take hi.her risks
co-+ared to o,der retired +eo+,e) 'ne -st re-e-ber that these are on,y
indicati/e strate.ies and wi,, +robab,y ha/e to be fine-tned to -eet yor
indi/ida, needs)
A.e !ain 'b5ecti/es Portfo,io Strate.y
0"-01 A..ressi/e Growth J Sow the
seeds, +,an for hosin. and create
a safety cshion
C"-CCO - Growth 4nds
A"-ACO - Ba,anced 4nds
$C-0"O - !oney !arkets G <ash
A"-A1 Growth J Sa/e for hosin.,
chi,dren9s e8+enses :+resent and
ftre J edcation etc); and
safety cshion
BC-C"O - Growth 4nds
0C-A"O - Ba,anced 4nds
"C-$"O - B,e <hi+ Stocks
$C-0"O - !oney !arkets G <ash
B"-B1 Growth J <hi,dren9s e8+enses
:+resent and ftre J edcation
etc); and safety cshion
B"-BCO - Growth 4nds
0C-A"O - Ba,anced 4nds
$"-$CO - B,e <hi+ Stocks
$C-0"O - !oney !arkets G <ash
C"-C1 Retire-ent J Sa/e for retire-ent
and bi,d on safety cshion
0C-A"O - Growth 4nds
B"-BCO - Ba,anced 4nds
"C-$"O - B,e <hi+ Stocks
0"-0CO - !oney !arkets G <ash
D"-D1 Safety J Preser/e in/est-entsG
sa/in.s and o+t for -ini-a,
.rowth
$"-$CO - Ba,anced 4nds
$C-0"O - %nco-e 4nds
"C-$"O - B,e <hi+ Stocks
0"-0CO - (i/idend Stocks
0C-A"O - <ertificates of (e+osits
:Shorter-ter-;
$"-$CO - !oney !arkets G <ash
E" V Safety J Preser/e in/est-entsG
sa/in.s
A"-ACO - %nco-e 4nds
0"-0CO - (i/idend Stocks
AC-B"O - <ertificates of (e+osits
:Shorter-ter-;
"C-$"O - !oney !arkets G <ash
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Position 3f M" 42on, Various
#n/est2ent 4/enues
A+art fro- i,,i*id a/enes ,ike rea, estate, 5ewe,,ery) There are for -a5or
in/est-ent a/enes a/ai,ab,e to yo, na-e,y?
D)*t Instu,)nts
EBu$tA
M!n)A Ma0)t Instu,)nts
Mutual Funds
1- *e1t #nstru2ents
Traditiona,,y debt instr-ents are known for .eneratin. a +redeter-ined
inco-e for a .i/en +eriod of ti-e, other than in cases of defa,t) Hence they are
a,so known as fi8ed inco-e instr-ents) So-e e8a-+,es inc,de?
NB4< (e+osits
<o-+any (e+osits
Bonds
(ebentres
Bank (e+osits :4(s and sa/in.s acconts;
Go/ern-ent S-a,, Sa/in.s Sche-es :=).) PP4;
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The introdction of 4,oatin. Rate secrities -o/es away fro- the conce+t of
recei/in. a fi8ed rate of interest bt s..ests a /ariab,e rate of interest based on
an nder,yin. factor sch as >ondon %nterbank 'ffer Rate :>%B'R; or
!-bai %nterbank 'ffer Rate :!%B'R;) An e8a-+,e of sch a secrity is a
4,oatin. Rate Bond whose interest rate is !%B'R +,s C" basis +oints, where
!%B'R is /ariab,e)
A +reference share is a hybrid instr-ent, which can be cate.ori2ed as a fi8ed
inco-e instr-ent since the in/estors recei/e a fi8ed di/idend before the
re.,ar e*ity ho,ders recei/e their di/idend)
2- (;uity
%s a share in the ownershi+ of a co-+any9s assets and earnin.s) <o-+anies
sa,,y isse e*ity when they re*ire addition ca+ita, to fnd their e8istin.
bsiness or e8+and) At this +oint of ti-e the co-+any se,,s +art of the
ownershi+ of the co-+any to the +b,ic) >isted e*ities are .enera,,y hi.h,y
,i*id since they are traded in the stock e8chan.e)
An in/estor -akes -oney fro- e*ity thro.h di/idends +aid ot by the
co-+any :fro- its +rofits; on a +eriodic basis as we,, as ca+ita, a++reciation as
ref,ected in the stock +rice, which f,ctates in the -arket) Hence an in/estors
retrns are direct,y re,ated to the +erfor-ance of the co-+any9s bsiness)
=*ities do not offer any assred retrns, bt historica,,y +ro-ise the hi.hest
retrn in the ,on. rn)
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3- Money Mar5et #nstru2ents
These are the short-ter- /ersion of debt instr-ents, which ty+ica,,y ha/e a
-atrity of ,ess than one year) Qie,ds are s,i.ht,y abo/e that of the sa/in.s
accont rate in the Banks) These sa,,y tend to +reser/e the in/estor9s initia,
in/est-ent and are sa,,y the ,east risky asset c,ass fro- the for described
here)
- Mutual "unds
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Entry $oad "i%e off
4 Pre2ature step<
%n/estors at ,ar.e, +artic,ar,y the retai, ones ha/e to be .ratef, to the S=B% for
insta,,in. se/era, strin.ent re.,ations desi.ned to +rotect the- a.ainst
frad,ent characters and sca-sters)
Qes, there was a ti-e when sch -easres were an abso,te necessity) The
indstry had beco-e sick, and stron. -edication was re*ired to ensre that it
does not die) The cost of the -edicine is not i-+ortant when it is a *estion of
,ife and death) Bt after the +atient reco/ers and beco-es hea,thy, a .ood doctor
has necessari,y to withdraw the -edicines, which are no -ore re*ired)
'therwise the +atient wo,d sffer side effects, which, -any a ti-es are worse
than the disease)
Granted, -a5ority of the decisions of S=B% are ,adab,e and S=B% has been
thro.hot the years doin. an e8ce,,ent 5ob of re.,atin. the %ndian -ta, fnd
indstry and -akin. it ado+t internationa, best +ractices as far as is +ossib,e)
N! l!ad !n d$)+t )ntants
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4or instance, so-e ti-e a.o S=B% had decided that A!<s sha,, not char.e
entry as we,, as e8it ,oad on bons nits and of nits a,,otted on rein/est-ent of
di/idend)
Si-i,ar,y, there wo,d be no entry ,oad on direct in/est-ents) 3ery .ood
decisions indeed in /iew of the fact that the entry ,oads -ain,y take care of the
co--ission to distribtors) 6here there is no distribtor, it does not -ake sense
to char.e an entry ,oad)
N!/& n! l!ad !n )%)A )ntant
Perha+s, as a -isconstred e8tension of the sa-e idea, S=B% has issed a
circ,ar sti+,atin. that for the +r+oses of e-+owerin. in/estors thro.h
trans+arency in +ay-ent of co--ission and ,oad strctre, there sho,d be no
entry ,oad for -ta, fnd sche-es, e8istin. or new)
The +front co--ission to distribtors sha,, be +aid by the in/estor to the
distribtor direct,y) !oreo/er, the distribtors sha,, disc,ose the co--ission,
trai, or otherwise, recei/ed by the- for different sche-esG-ta, fnds which
they are distribtin. or ad/isin. the in/estors)
>et s /iew this +ro+osa, +ra.-atica,,y)
AnalAs$s
!4s ha/e twin ob5ecti/es in -obi,isin. sa/in.s of the -asses - i; channe,ise
the- into +rodcti/e cor+orate in/est-ents and ii; +ro/ide faci,ities to +ersons
of e/en -odest -eans of ownin. indirect,y, e*ity shares, bonds, debentres
and .o/ern-ent secrities) An !4 is a financia, inter-ediary between the
in/estors and -arkets :stock and debt;)
%t +rotects the in/estor a.ainst ca+ita, risk by .i/in. hi- the benefit of not on,y
di/ersification bt a,so its +rofessiona, e8+ertise in in/est-ent -ana.e-ent)
The !47s constant s+er/ision of the +ortfo,io, which it ho,ds on beha,f of the
in/estor and the di/ersification of ,ar.e fnds o/er a ,ar.e +ortfo,io thro.hot
a s+ectr- of indstries, is of .reat /a,e to the in/estor)
Therefore, the A!< has a ri.ht to char.e a fee based on the tota, si2e of the
+ortfo,io it hand,es) This char.e is co,,ected by the A!< direct,y fro- the
cor+s and not fro- the in/estors) Sre,y, the in/estors sho,d not -ind this
char.e)
The ro,e of a distribtor is to kee+ continos track of the /arios needs,
ob5ecti/es and risk a++etite of his c,ients and s..est to each one of the- a
sche-e best sited to his +rofi,e) This is indeed an oneros task re*irin.
*a,ity ti-e and resorces)
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This is the reason why !4s, S=B% and the Go/ern-ent +ro/ide for si2ab,e
fnds on in/estor edcation +ro.ra--es) The ro,e of a distribtor as a 7+reacher7
is i-+ortant to the c,ient becase in/est-ent is a s+ecia,ised fie,d) The
distribtor a,so +,ays the +art of a 7secretary7 in +ro/idin. after-+rchase ser/ice)
%n short, the distribtor has beco-e an indis+ensab,e factor withot who- the
!4 indstry wi,, ,an.ish) Qes, an infor-ed in/estor has the ca+acity to .o
direct bt wo,d not -ind +ayin. co--ission to the distribtor if he desires to
sa/e the ti-e to take infor-ed decisions)
Unfortnate,y, the ninfor-ed in/estors are ,ar.e in co-+arison and their
-indset wo,d certain,y +ro-+t the- to .o direct in order to sa/e the
co--ission) This wi,, hrt sch in/estors in the ,on. rn) 6hen the e/ent does
occr, he wo,d b,a-e the fnd -ana.er for his ,osses and not hi-se,f :or
S=B%; and -o/e away fro- the !4 indstry)
%t is on,y in a +erfect wor,d that the ninfor-ed in/estor wi,, +ay se+arate,y for
the ad/ice and ser/ice he is .ettin.) !ore often than not, the nifor-ed in/estor
is ninfor-ed abot the fact that he is ninfor-ed
%ncidenta,,y, the a++roach of an honest distribtor sho,d be tota,istic in natre,
o+ti-isin. the inco-e and needs of the entire fa-i,y) He sho,d not be dea,in.
on,y in !4s, bt hand,e a,, other financia, +rodcts sch as RB% Sa/in.s Bonds,
Post office S-a,, Sa/in.s Sche-es, PP4, <o-4(s, etc, and -ost i-+ortant,y
hi.h +ayin. ,ife insrance +rodcts)
'ne can7t he,+ bt wonder whether this S=B% diktat -ay +ro-+t an otherwise
honest distribtor into -o/in. towards +rodcts sch as U>%Ps, which are for
a,, +ractica, +r+oses -ta, fnds with hi.h co--ission strctres)
U>%Ps are nothin. bt -ta, fnds that char.e far hi.her ,oads :fro- $CO; 'f
corse, the char.es co-e down o/er the tenre of the in/est-ent) The +oint is
that those char.es c,ear,y e8ist)
!oreo/er, of ,ate, the way U>%Ps are ad/ertised and +ro-oted, it is diffic,t for
e/en an infor-ed in/estor to differentiate and te,, a+art a -ta, fnd sche-e
fro- an U>%P) Then there are strctred +rodcts issed by +ortfo,io -ana.ers
and ,ar.e brokin. hoses, which too are nothin. bt -ta, fnds that offer
sbstantia,,y hi.her fees to distribtors)
Now, in sch an en/iron-ent where +rodcts with si-i,ar fnctions co-e8ist,
howe/er, with a /ast,y dissi-i,ar incenti/e strctre, c,ear,y, there wo,d be a
who,esa,e she+herdin. and forced -i.ration of not on,y ninfor-ed in/estors
bt a,so infor-ed ones to sch +rodcts) =/en honest +ortfo,io -ana.ers wi,, be
indced to beco-e nderstandab,y a ,itt,e wa/ered)
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That bein. said, we cannot e-+hasise eno.h that it doesn7t -ean that a
know,ed.eab,e in/estor is forced to +ay so-eone for ser/ices that he doesn7t
need) 4or sch a +erson, the syste- of by+assin. the distribtor and in/estin.
direct,y is, thanks to S=B% itse,f, a,ready in +,ace)
The on,y sb-ission is that i-+tin. the in/estor with the res+onsibi,ity of
co-+ensatin. the distribtor wi,, confse and corr+t the -arket +,ace) A
sche-e sho,d be either with a ,oad with a distribtor or withot a ,oad withot
a distribtor)
Since h.e -onetary and h-an resorces are e-+,oyed in the -ta, fnd
sector, the ,e/e, of efficiency obtained therein is increasin.,y conditionin. the
+erfor-ance of the nation7s econo-y) The crrent,y s..ested -easres, if
acce+ted, wo,d not on,y stran.,e a nascent -ta, fnd indstry bt wo,d a,so
be e8tre-e,y detri-enta, for the .rowth of or ca+ita, -arkets) U,ti-ate,y not
on,y -ta, fnds and distribtors bt in/estors too wo,d be ,osers)
Points of t&e circular fro2 .(B#
$) S=B% has been takin. /arios ste+s to e-+ower the in/estors in -ta, fnds
by way of -ore trans+arency in the ,oads borne by the in/estor so that the
in/estor can take infor-ed in/est-ent decisions) Towards this end, S=B% had
ear,ier abo,ished initia, isse e8+enses and -ta, fnd sche-es were a,,owed
to reco/er e8+enses connected with sa,es and distribtion thro.h entry ,oad
on,y)
4rther, in/estors -akin. direct a++,ications to the -ta, fnds were
e8e-+ted fro- entry ,oad)
0) %n ter-s of e8istin. arran.e-ent, tho.h the in/estor +ays for the ser/ices
rendered by the -ta, fnd distribtors, distribtors are re-nerated by Asset
!ana.e-ent <o-+anies :A!<s; fro- ,oads dedcted fro- the in/ested
a-onts or the rede-+tion +roceeds) S=B% :!ta, 4nds; Re.,ations, $11D
a,so +er-it A!<s to char.e the sche-e :nder the anna, recrrin. e8+ense;
for -arketin. and se,,in. e8+enses inc,din. distribtor9s co--ission.
A) 4rther, a,, ,oads inc,din. <ontin.ent (eferred Sa,es <har.e :<(S<; for
the sche-e are -aintained in a se+arate accont and this a-ont is sed by the
A!<s to +ay co--issions to the distribtors and to take care of other
-arketin. and se,,in. e8+enses) %t has been ,eft to the A!<s to credit any
sr+,s in this accont to the sche-e, whene/er fe,t a++ro+riate) %n order to
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incenti/ise ,on. ter- in/estors it is considered necessary that e8it ,oadsG<(S<s
which are beyond reasonab,e ,e/e,s are credited to the sche-e i--ediate,y)
B) %n order to e-+ower the in/estors in decidin. the co--ission +aid to
distribtors in accordance with the ,e/e, of ser/ice recei/ed, to brin. abot
-ore trans+arency in +ay-ent of co--issions and to incenti/ise ,on. ter-
in/est-ent, it has been decided that?
a; There sha,, be no entry ,oad for a,, -ta, fnd sche-es)
b; The sche-e a++,ication for-s sha,, carry a sitab,e disc,osre to the effect
that the +front co--ission to distribtors wi,, be +aid by the in/estor direct,y
to the distribtor, based on his assess-ent of /arios factors inc,din. the
ser/ice rendered by the distribtor)
c; 'f the e8it ,oad or <(S< char.ed to the in/estor, a -a8i-- of $O of the
rede-+tion +roceeds sha,, be -aintained in a se+arate accont which can be
sed by the A!< to +ay co--issions to the distribtor and to take care of other
-arketin. and se,,in. e8+enses) Any ba,ance sha,, be credited to the sche-e
i--ediate,y)
d; The distribtors sho,d disc,ose a,, the co--issions :in the for- of trai,
co--ission or any other -ode; +ayab,e to the- for the different co-+etin.
sche-es of /arios -ta, fnds fro- a-on.st which the sche-e is bein.
reco--ended to the in/estor)
4pplica1ility
C) This circ,ar sha,, be a++,icab,e for
a) %n/est-ents in -ta, fnd sche-es :inc,din. additiona, +rchases and
switch-in to a sche-e fro- other sche-es; with effect fro- A.st $,
0""1 F
b) Rede-+tions fro- -ta, fnd sche-es :inc,din. switch-ot fro- other
sche-es; with effect fro- A.st $, 0""1 F
c) New -ta, fnd sche-es ,anched on and after A.st $, 0""1F and
d) Syste-atic %n/est-ent P,ans :S%P; re.istered on or after A.st $, 0""1)
D) A!<s sha,, fo,,ow the +ro/isions +ertainin. in c,ase C:0;:b; of S=B%
<irc,ar S=B%G%!(G<%R No) CG$0D"1DG"# dated !ay 0A, 0""# re.ardin.
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+dation of Sche-e %nfor-ation (oc-ent :S%(; and Key %nfor-ation
!e-orand- :K%!; in this res+ect)
E) The A!<s sha,, brin. the contents of this circ,ar to the notice of their
distribtors i--ediate,y and -onitor co-+,iance)
#) This circ,ar is issed in e8ercise of +owers conferred nder Section $$ :$; of
the Secrities and =8chan.e Board of %ndia Act, $110, read with the +ro/isions
of Re.,ation EE of S=B% :!ta, 4nds; Re.,ations, $11D, to +rotect the
interests of in/estors in secrities and to +ro-ote the de/e,o+-ent of, and to
re.,ate the secrities -arket)
Effect on N&
N@ %ndia %n/est P/t) >td) 'ne of the -a5or distribtion hose for !ta, 4nds
is a,so affected by this decision of S=B%)
Their bsiness decreased by abot B"O of their +re/ios bsiness /o,-e
in ,ast two -onths) To o/erco-e it N@ +,anned to introdce new +rodcts and
ser/ices) They are?
$) Portfo,io !ana.e-ent Ser/ices :P!S;
0) Rea,ity
A) %nsrance
B) 6ea,th accont
C) =-accont

These are a few new ob5ects added to N@9s +rodct ,ist which he,+ it to
o/erco-e the +ressre of no entry ,oad and wi,, he,+ to create trno/er and
,ti-ate,y to -eet the needs to rn the or.ani2ation)
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'alue (ac) (rocure*ent
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M'%'46 "'7* 4*V#.3)
There e8ists a .reat +otentia, & o++ortnity to estab,ish yor own
-ta, fnd ad/isory +ractice in %ndia) %f yo are an e8istin.
+ro/ider of other in/est-ent or insrance so,tions then yo can
add -ta, fnds to yor basket and -o/e towards bein. a
7co-+,ete financia, ad/isor7)

NJ FUNDZ PARTNER
N@ 4nd2 Network is a dedicated +,atfor- offerin.
co-+rehensi/e and ni*e +rodcts and ser/ices for the
.rowth & de/e,o+-ent of inde+endent financia, ad/isors) N@7s
AD"I Ad/isory P,atfor-, offers ad/isors with cttin. ed.e
so,tions and effecti/e s++ort to create bsiness brand and
offer *a,ity /a,e-added ser/ices to c,ients)
N@ offers yo with a ni*e, co-+rehensi/e bsiness +,atfor- to he,+ yo .row
& de/e,o+ yor ad/isory +ractice in a +owerf,, effecti/e way) The +,atfor-
de,i/ers -ch -ore to yo, kee+in. yo abo/e cr/e - both on yor bsiness
front and on c,ient ser/ices)

3pportunities for you
I" A!u a) a KF)s')K - Bein. an A!4% <ertified !ta, 4nd Ad/isor
6e wo,d +ro/ide yo with co-+,ete Trainin. and edcationa, -ateria, to
a++ear and sccessf,,y c,ear the A!4% !ta, 4nds Ad/isors !od,e, which
is a +rere*isite for ad/isin. and distribtion of !ta, 4nd2) 'n sccessf,
co-+,etion on the sa-e yo beco-e a <ertified !ta, 4nd Ad/isor) The
A!4% trainin. +ro.ra--es are condcted thro.hot the year to the /arios N@
centers across %ndia)
I" A!u a) al)adA a Mutual Fund Ad%$s! - Bein. an N@ 4nd2 Network
Partner
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N@ offers yo with a,, the +rodcts, ser/ices and s++ort that yo -ay need to
beco-e a tr,y so.ht after +rofessiona, ad/isors) At the /ery basic ,e/e,, we
wo,d he,+ yo with the fo,,owin.W
$; =nrich yor ser/ice offerin.s
0; 'ffer Techno,o.ica, So,tions
A; Pro/ide Bsiness P,annin., (e/e,o+-ent and Sa,es S++ort
3!0= 0 4d/isory Platfor2

N@ be,ie/es in AD"I J Ad/isory P,atfor- +hi,oso+hy W
6ith this +hi,oso+hy, we try to offer a,, +ossib,e +rodcts, ser/ices and s++ort
which an Ad/isor wo,d need in his bsiness)
The s++ort fnctions are .enera,,y in the fo,,owin. areas W
Bsiness P,annin. and Strate.y
Trainin. and (e/e,o+-ent J Se,f and of e-+,oyees
Prodcts and Ser/ice 'fferin.s
Bsiness Brandin.
!arketin.
Sa,es and (e/e,o+-ent
Techno,o.y
Ad/isors Resorces - Too,s, <a,c,ators, etc))
Research
<o--nications
6ith this co-+rehensi/e s++ortin. +,atfor-, the N@ 4nd2 Partners stays
ahead of the cr/e in each res+ect co-+ared to other Ad/isorsGco-+etitors in
the -arket)
Need,ess to say, the co-+,ete N@ 4nd2 offerin. is hard to resist
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Syste*atic nvest*ent (lan +S(,
P)$!d$+ $n%)st,)nts $s )"))d t! as a SIP)
That -eans that, e/ery -onth, yo co--it to in/estin., say, Rs $,""" in yor
fnd) At the end of a year, yo wo,d ha/e in/ested Rs $0,""" in yor fnd)
>et7s say the NA3 on the day yo in/est in the first -onth is Rs 0"F yo wi,, .et
C" nits)
The ne8t -onth, the NA3 is Rs 0C) Qo wi,, .et B" nits)
The fo,,owin. -onth, the NA3 is Rs $#) Qo wi,, .et CC)CD nits)
So, after three -onths, yo wo,d ha/e $BC)CD nits) 'n an a/era.e, yo wo,d
ha/e +aid arond Rs 0$ +er nit) This is becase, when the NA3 is hi.h, yo
.et fewer nits +er Rs $,""") 6hen the NA3 fa,,s, yo .et -ore nits +er Rs
$,""")
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SIP H T') *)st /aA "! $n%)st,)nt
Cas) StudA
X !arket hit a hi.h of CBC" in !ar 0""")
X !arket crashed to ,ows of 0D"")
X %t took a,-ost B)C years for the -arket to sca,e back the ,e/e, of CB"" in
Se+ 0""B)
X >et9s see how the S%P in/estors fared in that scenario)
In%)st! 1 H Pan$+ In%)st!s
These in/estors had started their S%P of Rs) 0""" in !ar 0""" +eak) 6ith the
dec,ine in the -arket they +anicked & sto++ed their S%P in a s+an of $A -onths
S%P Start (ate !ar-""
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S%P =nd (ate !ar-"$
No) of insta,,-ents $A
S+'),) Na,) In%)st,)nt Valu) $n Ma 31 R)tuns
Re,iance Growth 0D,""" $#,#BD -BD)$O
H(4< =*ity 4nd 0D,""" 0",#E" -AA)1O
%<%<% Techno,o.y 4nd 0D,""" $B,1BB -DE)AO
Bir,a New !i,,enni- 0D,""" $B,C1D -D1)"O
T')s) $n%)st!s a+tuallA ,ad) a l!ss !n t')$ SIPs *A st!99$n( $t $n t')
d!/ntun>
In%)st! 7 H S,at In%)st!s
These in/estors had started their S%P of Rs) 0""" in !ar 0""" +eak) They
contined their S%P and ke+t on in/estin. in the S%Ps)
S%P Start (ate !ar-""
No) of insta,,-ents CC
S+'),) Na,) In%)st,)nt Valu) $n S)9 35 R)tuns
Re,iance Growth $,$",""" A,0C,EAD C")CO
H(4< =*ity 4nd $,$",""" 0,CA,AAE A#)$O
%<%<% Techno,o.y 4nd $,$",""" $,EB,A"" 0")CO
Bir,a New !i,,enni- $,$",""" $,DB,00B $E)#O
T')s) $n%)st!s 'a%) ,ad) 9')n!,)nal )tuns )%)n t'!u(' ,a0)t 'as
d)l$%))d n! )tun FF!, 6533 l)%)l $n Ma 33 t! 6533 l)%)l $n S)9 35G
In%)st! 2 H N)/ In%)st!
These in/estors started their S%P of Rs) 0""" in !ar 0""$, $ year after the fa,, in
the -arket
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S%P Start (ate !ar-"$
No) of insta,,-ents BA
S+'),) Na,) In%)st,)nt Valu) $n S)9 35 R)tuns
Re,iance Growth #D,""" 0,B#,C0# DD)#O
H(4< =*ity 4nd #D,""" $,1",AB$ B#)AO
%<%<% Techno,o.y 4nd #D,""" $,C",#BB AA)0O
Bir,a New !i,,enni- #D,""" $,BA,1CB A")AO
In%)st!s /'! 'a%) stat)d SIP $n l)an 9)$!d 'a%) ,ad) "antast$+ )tuns
X %n/est-ents of Rs)$""""G- beco-es Rs)0ED1BEG- e/en after se/era, fa,,s
in the NA3 drin. the +eriod of $A Qears)
X And fina,,y, with the crrent correction, its NA3 has fa,,en by C"O A
ti-es o/er the +eriod of +ast $B years)
X =/en after the crrent fa,,, the fnd is sti,, de,i/erin. a <AGR of 01O
wide,y beatin. the inde8 which has .i/en #)AO retrns)
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X The Abso,te retrns fro- the fnd e/en after the crrent fa,, are
sta..erin. AC01)E0O)
X =*ity in/est-ents thro.h !ta, 4nds de,i/er $C-0"O of retrns
o/er >on. ter-)
X B,, and bear -arket cyc,es are natre of =*ity -arkets and are .oin.
to contine in ftre a,so)
"indin,s
4inancia, ad/isors know /ery ,ess abot benefits of !4 and its bsiness)
They ha/e a +erce+tion that there is no +otentia, earnin. in !4 bsiness)
%n/estors of yon.er a.e in/est .enera,,y in e*ity fnds whereas o,der
a.e in/estors in/est in debt fnds)
%n/estin. thro.h !4 is best way for ca+ita, a++reciation within
+rotection in co-+arison to in/estin. direct,y in e*ity -arket and other
in/est-ent a/enes)
So-e sche-es of each A!< +erfor- we,, which ha/e a .ood 4nd
!ana.er and we,, desi.ned Portfo,io)
6i+in. off the entry ,oad affected the indstry bad,y in initia, sta.e) %t
affected N@, other distribtion hoses as we,, as A!<s)
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.u,,estions
>o+ %o #n/est #n Mutual "und
!ta, fnds nor-a,,y co-e ot with an ad/ertise-ent in news+a+ers
+b,ishin. the date of ,anch of the new sche-es) %n/estors can a,so contact the
a.ents and distribtors of -ta, fnds who are s+read a,, o/er the contry for
necessary infor-ation and a++,ication for-s) 4or-s can be de+osited with
-ta, fnds thro.h the a.ents and distribtors who +ro/ide sch ser/ices)
Now a days, the +ost offices and banks a,so distribte the nits of -ta, fnds)
Howe/er, the in/estors -ay +,ease note that the -ta, fnds sche-es bein.
-arketed by banks and +ost offices sho,d not be taken as their own sche-es
and no assrance of retrns is .i/en by the-) The on,y ro,e of banks and +ost
offices is to he,+ in distribtion of -ta, fnds sche-es to the in/estors)
%n/estors sho,d not be carried away by co--issionG.ifts .i/en by
a.entsGdistribtors for in/estin. in a +artic,ar sche-e) 'n the other hand they
-st consider the track record of the -ta, fnd and sho,d take ob5ecti/e
decisions)
There are three -a5or asset c,asses that yo can +t yor -oney into, na-e,y
e*ities, fi8ed inco-e and -oney -arket instr-ents) %n order to decide how
-ch of yor -oney .oes into which in/est-ent c,ass yo -st first consider a
few i-+ortant factors :-ost of these wi,, be tack,ed by yo drin. yor .oa,
definition +hase;?
Retrn e8+ected on yor in/est-ent
A-ont yo wi,, be ab,e to sa/e :+resent as we,, as ftre;
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<ash otf,ows yo -i.ht ha/e at certain +oints of ti-e in the ftre
Risk a++etite
A-ont yo wi,, re*ire for yor retire-ent
>i*idity
A.e
Hence de to the /ariab,e natre of the in/estor9s finances and re*ire-ents
there are no set strate.ies sed by financia, cons,tants) Bt we can +ro/ide yo
with broad strate.ies that yo can ada+t to -eet yo own needs)
.o2e su,,estions for in/estors
Try to sa/e as -ch as yor bd.et a,,ows, as -ore sa/in. ,eads to -ore
in/est-ent that wi,, .row into bi..er ca+ita, base)
P,an yor in/est-ent o/er a ,on.er +eriod of ti-e, kee+in. in -ind yor
a.e, yor financia, tar.ets, yor ,e/e, of risk a/ersion yor sa/in. +attern
and yor in/est-ent ob5ecti/es)
%n/est -ore in stock fnds bt do kee+ a reasonab,e +art of yor
in/est-ent in ,i*id secrities as -oney -arket fnds, short ter- bonds
etc so as to -eet any contin.ent sitation)
(o not in/est in hi.h,y /o,ati,e fnds)
Think before yo in/est) (o co,,ect and ana,y2e eno.h infor-ation
abot the fnds yo +,an to in/est in)
(o not confse yorse,f by s+readin. yor in/est-ent too wide bt
reasonab,e di/ersification of in/est-ent is a -st a,so)
Periodica,,y kee+ re/iewin. ob5ecti/es of yor in/est-ent and try to kee+
yor assets in ba,ance)
>ast,y, -aintain +ro+er record of yor transactions)
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.o2e su,,estions for 7?
As re+orted in the stdy, N@ try to i-+ro/e +on their weak areas re.ardin. the
factors that inf,ence ad/isors decision -akin. as re.ards choice of workin. for
-ta, fnd indstry, the faci,ities or o+tions they e8+ect fro- an A!< or
distribtion hose, the criteria they .enera,,y be,ie/e to be the best is a-ont of
brokera.e +assed to the-) N@ sho,d e8tend f,, s++ort to the ad/isors in ter-s
of?
%n/est-ent ad/isory ser/ice
Gi/in. the- the best a-ont of brokera.e and .ifts for -oti/ation)
=nsrin. f,, disc,osre of re,e/ant and correct infor-ation)
To introdce new +rodcts for their csto-ers n +artners)
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Bi-liogra%.y
Book by A!4%
!a.a2ines
't,ook !oney
Bsiness Today
<a+ita, !arket
!ta, 4nd %nsi.ht
News+a+ers
=cono-ic Ti-es
Bsiness >ine
6ebsites
www)n5indiain/est)co-
www)tata-ta,fnd)co-
www)/a,eresearchon,ine)co-
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www)a-fiindia)co-
www)hdfcfnd)co-
www)-ta,fndsindia)co-
www)in/esto+edia)co-
www)na/india)co-
www)ca+ita,-arkets)co-
www)-yiris)co-
www)indiainfo,ine)co-
www).oo.,e)co-
Anne/ure
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!ta, 4nds