Mutual Funds in India

An Overview of Mutual Funds
MUTUAL FUNDS IN INDIA

A PROJECT REPORT
Submitted By
Hemant Banthia
In partial fulfillment for the award of
the degree
Of
BACHELOR OF COMMERCE
(HONOURS)
ST.XAVIERS COLLEGE
(AUTONOMOUS)
UNDER UNIVERSITY OF CALCUTTA
APRIL 2011
ROLL NUMBER: 434

ROOM NUMBER: 31

Acknowledgement
At the successful completion of this project, I
would like to express my sincere gratitude to all
the people without whose support this project
would not be completed.
At the onset I would like to thank my institute

St.Xaviers College, Kolkata for giving us this
opportunity to undergo this research project at
the very undergraduation level.
I would also like to acknowledge the constant

help and encouragement of my mentors
DR.S.K.LOBWO who have given their valuable
suggestions and expert guide and support.
I would also like to thank all those who have

directly or indirectly helped me in this report.
Hemant Banthia

EXECUTIVE SUMMARY
There are myriad choices available to the
investor of today. Investment avenues are
galore. There are different investment vehicles
such as stocks and bonds. We however need to
invest carefully, and work out various investment
options and decide on how to make best of our
investment in terms of monetary benefits.
Mutual Funds constitute a part of a wide spectrum of
financial services involving management of funds by
investing in various financial instruments on behalf of
various individuals among others. Individuals
interested to invest in these financial instruments
provide the money to the mutual funds that do the
requisite research and invest it appropriately.Mutual
funds, in its modern version, owe their origin to
Foreign and colonial Government Trust that collected
funds in 1886, for their colonial expansion of the
British Empire. The concept of Mutual Funds caught up
in the United States in the 1920s, and a few decades
later caught up in our country. In countries like the US,
Japan, the UK, Germany and Italy, Mutual Funds
continue to be one of the most important avenues for
investment.Mutual Funds are the ideal investment
vehicle for todays complex and modern financial
scenario. Markets for equity shares, bonds, derivatives
and other assets have become mature and
information-driven. A typical individual is not likely to

have the knowledge, skills, inclination and time to keep
track of and understand the causes and implications of
the price changes and trends.
A Mutual Fund appoints professionally qualified and
experienced managers who carry out each function in
a way to increase the returns on the money invested
by the people. The last few years have been very
exciting for the Mutual Funds industry in India. New
players have come in, while others have decided to
close shop by either selling off or merging with others.
Product innovation is now pass with the game shifting
to performance delivery in fund management as well
as service.
In few years Mutual Fund has emerged as a tool for
ensuring ones financial well being. Mutual Funds have
not only contributed to the India growth story but have
also helped families tap into the success of Indian
Industry. As information and awareness is rising more
and more people are enjoying the benefits of investing
in mutual funds. The main reason the number of retail
mutual fund investors remains small is that nine in ten
people with incomes in India do not know that mutual
funds exist. But once people are aware of mutual fund
investment opportunities, the number who decide to
invest in mutual funds increases to as many as one in
five people. The trick for converting a person with no
knowledge of mutual funds to a new Mutual Fund

customer is to understand which of the potential
investors are more likely to buy mutual funds and to
use the right arguments in the sales process that
customers will accept as important and relevant to
their decision.3
This Project gave me a great learning experience
and at the same time it gave me enough scope to
understand the Indian Mutual Fund industry.
This project can be divided into two parts. The
first part gives an insight about Mutual Fund and
its various aspects. One can have a brief
knowledge about Mutual Fund and its basics
through the Project. The second part gives a
complete brief of the Mutual Fund Industry in
India and its future with an analysis of various
problems faced by it and the plausible solutions.
Contents
7

Serial
No.
1
2
3
4
5
6
7
10
11
Particulars
Page No.
Mutual fund - An
Introduction
History of Mutual Funds
Mutual Funds Industry In
India.
Meaning of Mutual Funds.
Mutual Funds:Fund
Objective
1. Basics of Mutual Funds.
9-11
2. Different Plans that

Mutual Funds Offer.
3.
4. Best Tax-Savings mutual
funds 2010.
5.
6. Securities and Exchange
Board Of India- SEBI.
7.
8. Functions & Objectives of
SEBI.
9.
Working of Mutual fund.
27-28
12-13
14-15
16-18
19-24
25-26
29-30
30-34
35-39
40-41
12
Pros and Cons Of

Investing in Mutual funds.
42-44
13
Types of Mutual Funds.
45-48
14
Investment
Strategy,Guide to
Investment Strategy
Fund Strategy.
49-50
15
51-53

16
Equity Linked Saving

Scheme
Top 10 Tax Saving mutual
Funds (ELSS).
54-63
18
Types of ELSS.
66
19
20
SBI Mutual Fund

Case Studies-Nevo Case
Studies.
67-70
71-74
21
Mutual Fund VS Equity

Fund
Mutual Funds-Conclusion
75-77
17
22
64-65
78-80
Chapter-1:Mutual Fund - An
9

Introduction
A Mutual Fund is a trust that pools the savings of
a number of investors who share a common
financial goal. The money thus collected is
invested by the fund manager in different types
of securities depending upon the objective of the
scheme.The income earned through these
investments and the capital appreciations
realized by the scheme are shared by its unit
holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it
offers an opportunity to invest in a diversified,
professionally managed portfolio at a relatively
low cost. The small savings of all the investors
are put together to increase the buying power
and hire a professional manager to invest and
monitor the money. Anybody with an investible
surplus of as little as a few thousand rupees can
invest in Mutual Funds. Each Mutual Fund
scheme has a defined investment objective and
strategy.
10
M
utual funds make it easy and less costly for
investors to satisfy their need for capital growth,
income and/or income preservation. Mutual fund
brings the benefits of diversification and money
management to the individual investor, providing
an opportunity for financial success that was once
available only to a select few.
Understanding Mutual funds is easy as it's such a
straightforward concept. A mutual fund is a
company that pools the money of many
investors, its shareholders to invest in a variety
of different securities.
Investments may be in stocks, bonds, money
market securities or some combination of these.
Those securities are professionally & efficiently
managed on behalf of the shareholders, and each
investor holds a pro rata share of the portfolio -entitled to any profits when the securities are
sold, but subject to any losses in value as well.A
11

mutual fund, by its very nature, is diversified -its assets are invested in many different
securities. Beyond that, there are many different
types of mutual funds with different objectives
and levels of growth potential, furthering your
odds to diversify.
The benefits that can be accrued from Mutual
Funds are
The schemes could be added to the

portfolio with online updates for monitoring the
performance of your investments in Mutual
Funds.The comprehensive search, which gets you
the fund matching your criteria.
The comparison of various schemes of

different Mutual Funds based on the critical and
most sought after investment criteria.
The analysis of different schemes and the

outlook for the same.
List of new launches in the market

provided continuously.
Basically, Mutual funds are trusts that are formed
to mobilize the savings from the people and pool
them together to invest within the securities
markets. The main advantage of mutual funds is
that it is professionally managed. And the general
idea is for investors to contribute small amounts
into units in the various schemes, which in turn is
deployed in the various markets. This way, any
investor who is not in a position to directly invest
in the markets can take advantage of this route.
12

Chapter-2:History of
MutualFunds
History of Mutual Funds has evolved over
the years and it is sure to appear as something
very interesting for all the investors of the world.
In present world, mutual funds have become a
main form of investment because of its
diversified and liquid features. Not only in the
developed world, but in the developing countries
also different types of mutual funds are gaining
popularity very fast in a tremendous way.
There is an ambiguity about the fact that when
and where the Mutual Fund Concept was
introduced for the first time. According to some
historians, the mutual funds were first introduced
in Netherlands in 1822. In 1822, that idea was
further developed. In 1822, the concept
of Investment Diversification was properly
incorporated in the mutual funds. In fact,
the Investment Diversification is the main
attraction of mutual funds as the
small investors are also able to allocate their
little Funds in a diversified way to lower Risks.
After 1822 in Netherlands, the Mutual Funds
Concept came in Switzerland in 1849 and
thereafter in Scotland in the 1880s. After being
popular in Great Britain and France, Mutual fund
concept traveled to U.S.A in the 1890s. In 1920s
and 1930s, the Mutual Fund popularity reached a
13

new high. There was record investment done in
mutual funds. But, before 1920s, the mutual
funds were not like the modern day mutual
funds.
The modern day mutual funds came into
existence in 1924, in Boston. Massachusetts
Investors Trust introduced the Modern Mutual
Funds and the funds were available from 1928.
At present this Massachusetts Investors Trust is
known
as MFS Investment Management Company.
14

Chapter-3:Mutual Funds
Industry in India
The origin of mutual fund industry in India is with
the introduction of the concept of mutual fund by
UTI in the year 1963. Though the growth was
slow, but it accelerated from the year 1987 when
non-UTI players entered the industry.
In the past decade, Indian mutual fund industry
had seen dramatic improvements, both quality
wise as well as quantity wise. Before, the
monopoly of the market had seen an ending
phase; the Assets under Management (AUM)
were Rs. 67bn. The private sector entry to the
fund family raised the AUM to Rs. 470 bn in
March 1993 and till April 2004; it reached the
height of 1,540 bn.
First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963
by an Act of Parliament. It was set up by the
15

Reserve Bank of India and functioned under the
Regulatory and administrative control of the
Reserve Bank of India.The first scheme launched
by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6, 700 crores of assets under
management.
Second Phase - 1987-1993 (Entry of
Public Sector Funds)
Entry of non-UTI mutualfunds.
SBI Mutual Fund was the first followed by Can
bank Mutual Fund (Dec 87), Punjab National
Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC in 1989 and
GIC in 1990. Third Phase - 1993-2003 (Entry
of Private Sector Funds)
with the entry of private sector funds in 1993, a
new era started in the Indian mutual fund
industry, giving the Indian investors a wider
choice of fund families. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund
registered in July 1993.
Fourth Phase - since February 2003
This phase had bitter experience for UTI. It was
bifurcated into two separate entities.The
Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the
rules framed by Government of India and does
not come under the purview of the Mutual Fund
Regulations.
16

Chapter-4:Meaning Of
MutualFunds
Mutual funds are basically investment funds
where the investment companies collect money
from the investors and invest the same in various
stocks of different companies and government
bonds.
Mutual funds are also affected by the market

fluctuations and different mutual funds have
different prices which vary as per the variations
in the stock market. But the key advantage of
mutual funds is that they are less risky than
stocks because the investment in mutual funds is
generally diversified. The investors have the
option of selling off their units or their share in
the mutual fund as and when they wish. There
are certain types of stocks where there may be a
certain lock in period or a fixed duration during
which the sale may not be allowed.Investors of
mutual funds prefer to sell their units when the
prices of the same have increased to more than
the purchase price and at a time when they are
sure to get profits. While investing in mutual
funds the investors need to check where the
mutual fund is investing the money because
there may be some funds that invest only in
stocks while some may invest only in fixed
income securities and there may be some other
fund which invests partly in stocks and partly in
securities.
17

Diversification means spreading out money
across many different types of investments.
When one investment is down another might be
up. Diversification of investment holdings reduces
the risk tremendously.
Mutual fund is one of the investment

instruments, where you provide your money to a
fund house and authorize them to invest and
manage your money. In return, the fund house
pays back through dividends/bonus. This is
similar to Fixed deposit, where bank pay you
interest for the fixed deposit. Never invest,
because your neighbor is doing so or, someone
says that he is making a fortune from mutual
funds.
There can be different type 1) Equity Oriented (High Risk, High return): Go
for this, if you can take high risk. This type of
fund usually put your 100% money in Equity
market, which is very much volatile
2) Hybrid/Balanced fund [Medium risk, Avg
Return]: this type of fund invest your money in
18

both Equity market and Govt Bonds in 50-50
ratio.
3) Bond MF [Low risk, Return greater than Bank
Fixed deposit]: These funds put money in Govt
bonds, RBI bonds etc, which are generally backed
up for insured return.
Depending on your risk appetite and earning as
well as family liabilities, you must carefully
choose the mf for a nice return.
The name "Mutual Fund" itself reveals you that it
is invested mutually.The point is investment is
not made individually but on behalf of
everyone participating in it.
The process involved here is:
1.You along with your partners pools your money
together.
2. You then take the help of an "investment
manager" to manage your funds and earn returns
from your investments. He acts like a financial
adviser to you and helps you in deciding where
and where not to invest.
3. With the advice given by your manager, you
invest in that fund which is governed by the
"Asset Management Company (AMC)".
AMC controls all the mutual funds and every one
purchases from it.
There are mainly two types of mutual funds:
1.Equity based
2.Debt based
An equity fund invests in equities more
19

commonly known as stocks of companies. This
involves the highest risk but gives you highest
returns.
Chapter-5:Mutual Funds: Fund

Objective
A fund tells you what it wants to achieve and how
it plans to do it.
Each mutual fund has an
investment objective a goal or financial result
it wants to realize. And each fund manager has
an investment style, which is the approach he or
she follows in making investments to achieve the
fund's goal.
Most fund objectives fit into one of several broad
categories, such as growth in value,
current income, or a combination of growth
and income. For example, a growth fund selects
investments that seem likely to increase in value
over time. An income fund, on the other hand,
targets investments that it expects to generate
revenue, such as stock dividends.
Most people have neither the time nor interest to
research and select individual stocks and bonds
for their investment portfolios, and that's where
mutual funds come in. Mutual funds are
composed of stocks, bonds and other assets,
giving you diversification, which means a decline
20

in value in any one stock or bond won't
significantly hurt your overall return. A handful of
well-chosen mutual funds or index funds can
offer a diversified portfolio that allows the
individual investor to spend his or her time on
other pursuits. Thousands of mutual funds are
available that can satisfy the objectives of
different types of investors.
1.Diversification
Investors are often advised that they shouldn't
"put all their eggs in one basket." Investors who
have too high of a percentage of their assets in
one or two stocks can be severely affected if one
of the companies goes belly-up. Most financial
experts say investors should have at least 15
stocks in their portfolios. It takes a lot of time
and effort to keep up with that many companies.
Conversely, mutual funds hold a number of
stocks, which gives investors instant
diversification and protects them from a sharp
decline in any one holding.
2.Growth
Some mutual fund investors are looking for rapid
growth in the value of their funds. Stocks have
historically offered the best long-term returns of
any asset class, though it can be an up-and-down
ride. Stock funds that are labeled "growth"
typically invest in companies with bright
21

prospects, while "value" funds target stocks that
seem inexpensive compared with the company's
earnings.
3.Income
Other fund investors care more about receiving
income from their investments. Numerous stock
funds invest in companies with high dividend
payouts. Bond funds also can provide steady
income, as can funds that invest in real estate
investment trusts, or REITs. All these incomefocused funds pass the yields along to their
investors, usually on a monthly or quarterly
basis. Yields of 3 percent to 7 percent are often
available with income-oriented mutual funds.
4.International Exposure
Some large international firms offer their shares
on U.S. markets, but others don't. For example,
individual investors can have a hard time getting
access to shares in the fast-growing Chinese
market. But international-focused mutual funds
have an easier time investing in these shares.
Because half the world's corporate value is
outside the U.S., it's important to have some
exposure to overseas stocks, and mutual funds
are the easiest way to get this.
22

5.Low Fees
Stock picking can be expensive thanks to broker
commissions, but many "no-load" mutual funds
are available that don't charge investors
anything. Many other funds charge investors less
than 1 percent a year for operational fees.
Investors looking for especially inexpensive funds
might consider index funds, which charge fees as
low as 0.1 percent per year. These funds usually
hold every stock or bond in a given asset class,
which offers tremendous diversification at a low
cost
The Fund's Objective

When a stock mutual fund defines its investment
objective, it is identifying a specific type of stock
though not individual stocks that will be the
core of its portfolio.
Sometimes the objective is quite broad. For
example, the manager of a fund whose objective
is long-term growth may look for a range of
companies whose current market capitalization is
small less than $2.3 billion because he or
she believes they have the potential to increase
significantly in value over several years.
23

Other times, the objective may be quite focused
and reflect social, political, or religious interests.
For example, some socially conscious funds buy
stock in companies whose products and services
are acceptable to investors who want to avoid
tobacco, firearms, gambling, or a range of other
activities. Others, called green funds, buy only
the stocks of environmentally friendly companies.
HANDLING CAPITAL
The money you invest in a mutual fund is called
your capital. If this base amount increases in
value, the growth is called capital appreciation.
Every mutual fund, especially those whose
objective is capital appreciation, carries some risk
that the value of your investment will shrink. This
possibility is known as the risk to capital.
Your capital may be at risk for one of two
reasons:
The fund's underlying investments may

drop in value
The fund might have to sell investments

at a loss to meet its obligation to buy back shares
from investors who want to sell
.
24
Investing Style
Many funds share an investment objective, such
as long-term growth or growth and income. But
those funds are likely to produce different results,
both in the short term and over longer periods.
That's because the managers who make the
fund's buy and sell decisions follow
different investment styles.
For example, one manager might pursue capital
appreciation by buying undervalued stocks in
mature companies whose prices are low because
their products or services are out of favor with
investors, or they have had management or other
problems. The manager's expectation is that
some or all of the prices will rebound and
25

increase the value of the fund. This style is
described as value investing.
Another manager seeking similar results might
concentrate on stocks issued by new or small
companies, or those in a certain sector of the
economy. While these stocks are likely to be
more volatile, carry more risk, and perhaps be
less expensive than others, the manager
anticipates they will continue to increase in value.
This style is described as growth investing
While both investment styles can produce strong
results in certain markets, they rarely do so at
the same time. In the same vein, neither
investment style can prevent losses in a down
market.
Chapter-6:Basics of mutual
fund
The article mentioned below, is for the investors
who have not yet started investing in mutual
funds, but willing to explore the opportunity and
also for those who want to clear their basics for
what is mutual fund and how best it can serve as
an investment tool.Mutual fund is a portfolio, or
collection, of individual securities (some
combination of stocks, bonds, or money market
instruments) managed according to a specific
26

objective spelled out in the fund's prospectus. A
mutual fund allows investors to pool their money,
then the fund invests it on their behalf.
Unlike individual stocks, whose value fluctuates
minute by minute, mutual funds are priced at the
end of each day the market is open, based on
what the securities in the portfolio are worth. The
price per share, or net asset value (NAV).
A mutual fund is a company that pools money
from investors and invests the money in stocks,
bonds and other securities. The income earned
from it is shared by its unit holders based on the
number of units owned by them. The
performance of the mutual fund in India suffered
quantitatively in the 1990s. A set of measures to
create a transparent and a competitive
environment in mutual funds led to a variety of
new schemes to its investors.
27
28

Chapter-7:Different plans that
mutual funds offer
To cater to different investment needs, Mutual
Funds offer various investment options. Some of
the important investment options include:
Growth Option
Dividend is not paid-out under a Growth Option
and the investor realises only the capital
appreciation on the investment (by an increase in
NAV).
Dividend Payout Option
Dividends are paid-out to investors under the
Dividend Payout Option. However, the NAV of the
mutual fund scheme falls to the extent of the
dividend payout.
Dividend Re-investment Option
Here the dividend accrued on mutual funds is
automatically re-invested in purchasing additional
units in open-ended funds. In most cases mutual
funds offer the investor an option of collecting
dividends or re-investing the same.
Retirement Pension Option
Some schemes are linked with retirement
pension. Individuals participate in these options
for themselves, and corporates participate for
their employees.
Insurance Option
Certain Mutual Funds offer schemes that provide
insurance cover to investors as an added benefit.
Systematic Investment Plan (SIP)
29

Here the investor is given the option of preparing
a pre-determined number of post-dated cheques
in favour of the fund. The investor is allotted
units on a predetermined date specified in the
offer document at the applicable NAV.
Systematic Withdrawal Plan (SWP)
As opposed to the Systematic Investment Plan,
the Systematic Withdrawal Plan allows the
investor the facility to withdraw a pre-determined
amount / units from his fund at a pre-determined
interval. The investor's units will be redeemed at
the applicable NAV as on that day.
30

Chapter-8:Best Tax Savings
Mutual Funds 2010

Investment in ELSS Mutual Funds is considered
to be one of the best option to save tax because
of many reasons like low expenses, short lock-in
period of 3 years, high liquidity and high growth
in long-term. Year 2008 and 2009 had been
extremely volatile. Still, many mutual funds have
delivered positive return in past 3 years. To select
mutual funds is not a herculean task, but it
should not be whimsical decision either. To do our
part, we have come out with a list of 5 Best Tax
Saving ELSS Mutual Funds in which investors
should invest this season.
31

Following are the Top 5 funds in alphabetical
order:
Birla Sun Life Tax Relief 2010
3 Years Return 7.90%

5 years return 22.21%
Return since Inception 32.80%
Canara Robeco Can Equity Tax Saver

HDFC Tax Saver

ICICI Prudential Tax Plan

SBI Magnum Tax Gain Scheme 93

32

Chapter-9:Securities and
Exchange Board of India SEBI
What Does Securities And Exchange Board Of

India - SEBI Mean?
The 0regulatory body for the investment market
in India. The purpose of this board is to maintain
stable and efficient markets by creating and
enforcing regulations in the marketplace.
33
Investopedia explains Securities And

Exchange Board Of India - SEBI
The Securities and Exchange Board of India
is similar to the U.S. SEC. The SEBI is
relatively new (1992) but is a vital component in
improving the quality of the financial markets in
India, both by attracting foreign investors and
protecting Indian investors.
Securities and Exchange Board of India

SEBI
34
SEBI Bhavan, Mumbai headquarters

Agency overview
Formed
April 12, 1992
Jurisdiction
Government of India
Headquarters
Mumbai, Maharashtra
35

Employees
525 (2009)[1]
Agency executive
C B Bhave, Chairman
SECURITIES AND EXCHANGE BOARD OF

INDIA
GAZETTE OF INDIA
EXTRAORDINARY
PART II SECTION 3 SUB-SECTION (ii)
PUBLISHED BY AUTHORITY
INDIA
NOTIFICATION
MUMBAI 17th DAY OF FEBRUARY 2000
INDIA (DEBENTURE TRUSTEES)
(AMENDMENT) REGULATIONS, 2000
36

Chapter-10:Functions &
Objectives of SEBI
Functions of SEBI
(SEBI) was first established in the year
1988 as a non-statutory body for regulating
the securities market. It became an
autonomous body in 1992 and more powers
were given through an ordinance. Since
then it regulates the market through its
independent powers.
SEBI is the nodal agency which protects the
interests of an investor in the India market.
Otherwise regulation of the capital markets is
primarily the responsibility of the Securities and
Exchange Board of India (SEBI), which is located
in Bombay. Some of the major functions of SEBI
are:
SEBI is expected to regulate the business in
stock exchanges and any other securities
markets.
Registering and regulating the working of
collective investment schemes, including mutual
37

funds is a responsibility of SEBI.
SEBI is responsible for prohibiting
fraudulent and unfair trade practices relating to
securities markets.
Prohibiting insider trading in securities, with
the imposition of monetary penalties, on erring
market intermediaries.
Regulating substantial acquisition of shares
and takeover of companies.
" Calling for information from, carrying out
inspection, conducting inquiries and audits of the
stock exchanges and intermediaries and self
regulatory organizations in the securities market.
Keeping this in mind, SEBI has issued a new set
of comprehensive guidelines governing issue of
shares and other financial instruments, and has
laid down detailed norms for stock-brokers and
sub-brokers, merchant bankers, portfolio
managers and mutual funds.
To promote investor's education and
training of intermediaries of securities markets.
Fraudulent and Unfair Trade Practices
Keeping in mind the role of SEBI as the
principal agency looking after the investor's
interests , it is vested with powers to take action
against the practices relating to securities market
manipulation and misleading statements to
induce sale/purchase of securities.
Regulates Capital Market.
38
Checks Trading of securities.
Checks the malpractices in securities market.
It enhances investor's knowledge on market by

providing education.
It regulates the stockbrokers and sub-brokers.
To promote Research and Investigation.
Objectives of SEBI
As an important entity in the market it works
with following objectives:
39
It tries to develop the securities market.
Promotes Investors Interest.
Makes rules and regulations for the securities

market.
to protect the interests of investors in

securities;
to promote the development of Securities

Market;
to regulate the securities market and

for matters connected therewith or
incidental thereto.
Since its inception SEBI has been working

targetting the securities and is attending to the
fulfillment of its objectives with commendable
zeal and dexterity. The improvements in the
securities markets like capitalization
requirements, margining, establishment of
clearing corporations etc. reduced the risk of
credit and also reduced the market.
SEBI has introduced the comprehensive

regulatory measures, prescribed registration
norms, the eligibility criteria, the code of
obligations and the code of conduct for different
intermediaries like, bankers to issue, merchant
bankers, brokers and sub-brokers, registrars,
40

portfolio managers, credit rating agencies,
underwriters and others. It has framed bye-laws,
risk identification and risk management systems
for Clearing houses of stock exchanges,
surveillance system etc. which has made dealing
in securities both safe and transparent to the end
investor.
Another significant event is the approval of
trading in stock indices (like S&P CNX Nifty &
Sensex) in 2000. A market Index is a convenient
and effective product because of the following
reasons:
It acts as a barometer for market

behavior;
It is used to benchmark portfolio

performance;
It is used in derivative instruments like

index futures and index options;
It can be used for passive fund

management as in case of Index Funds.
Two broad approaches of SEBI is to integrate the

securities market at the national level, and also
to diversify the trading products, so that there is
an increase in number of traders including banks,
financial institutions, insurance companies,
mutual funds, primary dealers etc. to transact
through the Exchanges. In this context the
41

introduction of derivatives trading through Indian
Stock Exchanges permitted by SEBI in 2000 AD is
a real landmark.
Chapter-11:Working of Mutual
Fund
42

Regulatory Authorities
To protect the interest of the investors, SEBI
formulates policies and regulates the mutual
funds. It notified regulations in 1993 (fully
revised in 1996) and issues guidelines from time
to time. MF either promoted by public or by
private sector entities including one promoted by
foreign entities is governed by these
Regulations.
SEBI approved Asset Management Company
(AMC) manages the funds by making investments
in various types of securities. Custodian,
registered with SEBI, holds the securities of
various schemes of the fund in its custody.
According to SEBI Regulations, two thirds of the
directors of Trustee Company or board of trustees
must be independent.
The Association of Mutual Funds in India (AMFI)
reassures the investors in units of mutual funds
that the mutual funds function within the strict
regulatory framework. Its objective is to increase
public awareness of the mutual fund industry.
AMFI also is engaged in upgrading professional
standards and in promoting best industry
practices in diverse areas such as valuation,
disclosure, transparency etc.
43
Chapter-12:Pros & cons of

investing in mutual funds:
For investments in mutual fund, one must keep in
mind about the Pros and cons of investments in
mutual fund.
Advantages of Investing Mutual

Funds:
1. Professional Management - The basic
advantage of funds is that, they are professional
managed, by well qualified professional.
Investors purchase funds because they do not
have the time or the expertise to manage their
own portfolio. A mutual fund is considered to be
relatively less expensive way to make and
monitor their investments.
2. Diversification - Purchasing units in a mutual
fund instead of buying individual stocks or bonds,
the investors risk is spread out and minimized up
to certain extent. The idea behind diversification
is to invest in a large number of assets so that a
44

loss in any particular investment is minimized by
gains in others.
3. Economies of Scale - Mutual fund buy and
sell large amounts of securities at a time, thus
help to reducing transaction costs, and help to
bring down the average cost of the unit for their
investors.
4. Liquidity - Just like an individual stock,
mutual fund also allows investors to liquidate
their holdings as and when they want.
5. Simplicity - Investments in mutual fund is
considered to be easy, compare to other available
instruments in the market, and the minimum
investment is small. Most AMC also have
automatic purchase plans whereby as little as Rs.
2000, where SIP start with just Rs.50 per month
basis.
Disadvantages of Investing Mutual

Funds:
1. Professional Management- Some funds
dont perform in neither the market, as their
management is not dynamic enough to explore
the available opportunity in the market, thus
many investors debate over whether or not the
so-called professionals are any better than
mutual fund or investor himself, for picking up
45

stocks.
2. Costs The biggest source of AMC income is
generally from the entry & exit load which they
charge from investors, at the time of purchase.
The mutual fund industries are thus charging
extra cost under layers of jargon.
3. Dilution - Because funds have small holdings
across different companies, high returns from a
few investments often don't make much
difference on the overall return. Dilution is also
the result of a successful fund getting too big.
When money pours into funds that have had
strong success, the manager often has trouble
finding a good investment for all the new money.
4. Taxes - when making decisions about your
money, fund managers don't consider your
personal tax situation. For example, when a fund
manager sells a security, a capital-gain tax is
triggered, which affects how profitable the
individual is from the sale. It might have been
more advantageous for the individual to defer the
capital gains liability.
46
Chapter-13:Types of Mutual
Funds
Schemes according to Maturity
Period:
A mutual fund scheme can be classified
into open-ended scheme or closeended scheme depending on its maturity period.
Open-ended Fund
An open-ended Mutual fund is one that is
available for subscription and repurchase on
a continuous basis. These Funds do not have
a fixed maturity period. Investors can
conveniently buy and sell units at Net Asset
Value (NAV) related prices which are declared
on a daily basis. The key feature of open-end
schemes is liquidity.
Close-ended Fund
47

A close-ended Mutual fund has a stipulated
maturity period e.g. 5-7 years. The fund is open
for subscription only during a specified period at
the time of launch of the scheme. Investors can
invest in the scheme at the time of the initial
public issue and thereafter they can buy or sell
the units of the scheme on the stock exchanges
where the units are listed. In order to provide an
exit route to the investors, some close-ended
funds give an option of selling back the units to
the mutual fund through periodic repurchase at
NAV related prices. SEBI Regulations stipulate
that at least one of the two exit routes is
provided to the investor i.e. either repurchase
facility or through listing on stock exchanges.
These mutual funds schemes disclose NAV
generally on weekly basis.
48
Fund according to Investment Objective:

A scheme can also be classified as growth fund,
income fund, or balanced fund considering its
investment objective. Such schemes may be
open-ended or close-ended schemes as described
earlier. Such schemes may be classified mainly as
follows:
Growth / Equity Oriented Scheme
The aim of growth funds is to provide capital
appreciation over the medium to long- term.
Such schemes normally invest a major part of
their corpus in equities. Such funds have
comparatively high risks. These schemes provide
different options to the investors like dividend
option, capital appreciation, etc. and the
investors may choose an option depending on
their preferences. The investors must indicate the
option in the application form. The mutual funds
also allow the investors to change the options at
49

a later date. Growth schemes are good for
investors having a long-term outlook seeking
appreciation over a period of time.
Income / Debt Oriented Scheme
The aim of income funds is to provide regular and
steady income to investors. Such schemes
generally invest in fixed income securities such as
bonds, corporate debentures, Government
securities and money market instruments. Such
funds are less risky compared to equity schemes.
These funds are not affected because of
fluctuations in equity markets. However,
opportunities of capital appreciation are also
limited in such funds. The NAVs of such funds are
affected because of change in interest rates in
the country. If the interest rates fall, NAVs of
such funds are likely to increase in the short run
and vice versa. However, long term investors
may not bother about these fluctuations.
Balanced Fund
The aim of balanced funds is to provide both
growth and regular income as such schemes
invest both in equities and fixed income securities
in the proportion indicated in their offer
documents. These are appropriate for investors
looking for moderate growth. They generally
invest 40-60% in equity and debt instruments.
These funds are also affected because of
fluctuations in share prices in the stock markets.
50

However, NAVs of such funds are likely to be less
volatile compared to pure equity funds.
Money Market or Liquid Fund
These funds are also income funds and their aim
is to provide easy liquidity, preservation of capital
and moderate income. These schemes invest
exclusively in safer short-term instruments such
as treasury bills, certificates of deposit,
commercial paper and inter-bank call money,
government securities, etc. Returns on these
schemes fluctuate much less compared to other
funds. These funds are appropriate for corporate
and individual investors as a means to park their
surplus funds for short periods.
Gilt Fund
These funds invest exclusively in government
securities. Government securities have no default
risk. NAVs of these schemes also fluctuate due to
change in interest rates and other economic
factors as is the case with income or debt
oriented schemes.
Index Funds
Index Funds replicate the portfolio of a particular
index such as the BSE Sensitive index, S&P NSE
50 index (Nifty), etc these schemes invest in the
securities in the same weight age comprising of
an index.There are also exchange traded index
51

funds launched by the mutual funds which are
traded on the stock exchanges.
Chapter-14:Investment
Strategy, Guide to Investment
Strategy
A well-planned investment strategy is essential
before having any investment decisions. A
business strategy is generally based upon long
run period. Formation of business strategy largely
dependent upon the factors such as long-term
goals and risk on the investment.
As the return on investment is not always clear,
so the investors prepare the strategy so as to
face the ongoing challenges in investment. A
balanced investment strategy is generally
required in the process of investment, which
possesses long time period and some risk
tolerance.
In the case, when a strategy is aggressive the
chance of attaining a higher goal is higher. An
efficient strategy can be obtained
from portfolio theory, which shows good
estimates on risk and return.
Investment Strategy is usually considered to
be more of a branch of finance than economics.
It is defined as set of rules, a definite behavior or
procedure guiding an investor to choose his
52

investment portfolio. For example, investing in
mutual funds has recently emerged as a very
favorable investment strategy.
An investment strategy is centered on a riskreturn tradeoff for a potential investor.
High return investment instruments such as real
estate and mutual funds usually have more risks
associated with it than low return-low risk
investment opportunities. Return on investment
can be calculated on past or current investment
or on the estimated return on future investment.
53
Chapter-15:FUND STRATEGY
How to Build a Mutual Fund
Stick with stock funds. As long as you have
five or more years until you need the money,
stock funds will likely provide you with superior
returns over any other investment. But you have
to be patient. In the short term, the market is

very volatile, so don't fret when the market drops
10 percent in a week, or your account seems to
be worth a lot less than it was last month. Over
five, ten, or 20 years, you'll come out much
further ahead by sticking with stock funds.
Think big. When you invest in the big American
companies, companies like
Microsoft, Intel, AT&T, and General Electric; you

don't have to worry much about whether they will
be going out of business any time soon. What's
more, these industry leaders have generated
outsized returns for their shareholders over the
past decades. Bigger isnt an always better, of
course, but large-cap stock like these providing
plenty of solid returns (over the long-term, of
course). Invest in these stocks by buying a large
cap stock fund.
54

Think international. The world is a big place
and getting smaller as we build telephone lines
and Internet connections and satellites that send
signals all around the world. Still, somehow, the
stock markets in other countries always tend to
go down when the U.S. market is up, and vice
versa. You can take advantage of this trend by
including some global stocks in your portfolio
along with big American stocks. You can do this
by buying a fund specializing in large
international stocks.
Think small, too. Every big company once
started out as a small company. If you can buy
good companies when they're small, you'll benefit
as they get to be big and successful companies.
Trouble is, lots of small companies just get
smaller and eventually go out of business. So if
you own big and little companies in your
portfolio, over the long-term, things will more
than balance out in your favor. Do this by buying
a small cap stock fund.
Put it all together. Large cap stock fund. Small
cap stock fund. Large cap international fund .
Divide your portfolio into three and put a third in
each. Now you've got a diversified portfolio in
which at least one sector will be doing okay (or
better than okay) nearly all of the time.
Consider index funds. The Standard & Poor's
500 is one of the best known stock market
indexes, made up of 500 big American companies
55

from all industries. An S&P 500 index fund simply
invests in the 500 stocks in that fund -- the
fund's advisors don't try to pick stocks that will
beat the market. Index funds always match the
performance of the market (or of the sector that
the index tracks), so you don't ever have to
worry about your index fund dogging the market.
As a bonus, these funds have low expenses (the
fees that the fund's managers take off the top)
and that increases your returns.
Avoid overlap. Sometimes people think that if
one large cap fund is good, two or three are
better. When you buy several funds of one type,
more likely than not you'll just end up owning
roughly the same set of stocks. Not only will you
probably not increase your overall returns, you'll
create more work for yourself by having to track
additional funds. Choose one good fund of each
type in your portfolio and, as long as they
continue to perform well, stick with them.
Consider asset allocation funds. Don't want to
be bothered with choosing one fund of each type?
Asset allocation funds are "funds of funds," or
mutual funds those themselves own several funds
of different types. Bear in mind that you'll pay for
this convenience, however. These funds generally
carry higher expenses and, more often than not,
load.
Avoid bond funds. If you have five years until
you will withdraw your investment (like for
56

retirement), then bonds might be appropriate for
perhaps 10 to 20 percent of your portfolio, and
increasing to perhaps 40 percent (at most) when
you are at retirement age. The problem that
most people have is that they think bonds are
"safe" -- but bond returns are still volatile, and
will give you a lower rate of return than stocks
over time.
Chapter-16:Equity-linked
Saving Scheme
57
An equity-linked saving scheme (ELSS) is a great

investment option that offers the twin benefits of
tax saving and capital gains. Earlier, investors
had to spread their investments across different
instruments such as PPF, ELSS, NSC and
infrastructure bonds. But now, its possible to
invest the entire limit of Rs 100,000 available
under Sec 80C in ELSS. According to the new
Income Tax Act, Sec 80C investments in ELSS are
allowed as deduction from the total income, up to
maximum Rs100, 000 in a financial year.
ELSS schemes have a three-year lock-in period,
which works to the investors benefit as the fund
manager can have a portfolio of stocks that can
out-perform over a period of time.
58

When it comes to Tax Saving and ELSS Funds I
prefer to invest in funds where I get maximum
dividend and that way I do not need to invest my
full amount and also get the Tax benefit of full
amount invested. Read how if you still have not
read Full tax saving without investing one lac.
Now many people ask me about how to know the
dividend history of funds and so for them I
have Dividend History of Mutual Funds.
So now using the methods discussed in the above
two articles I would list some of the best Tax
Saving funds. The list of funds I have selected
are based on criteria of consistent dividend for a
longer period of time.
Birla Sun Life Tax Relief 96

Best Dividend ever by any Tax saver fund I know
off.
Record Date
Rate of Dividend
Jun 27, 2008
50 %
Mar 25, 2008
200 %
59

Mar 16, 2007
500 %
Jan 19, 2007
260 %
Dec 8, 2006
250 %
Principal Personal TaxSaver

One more best dividend Tax saver fund I know
off. Principal Personal TaxSaver has given
probably the best dividend in the most difficult
time.
Record Date
Rate of Dividend
Mar 25, 2008
400 %
Feb 26, 2008
200 %
60

Dec 31, 2007
110 %
Oct 30, 2007
110 %
Mar 13, 2006
100 %
SBI Magnum Tax gain

Yet another fund by SBI Mutual Fund house which
has very good track record when it comes to
return as well as dividend.
Record Date
Rate of Dividend
May 29, 2009
28 %
Feb 15, 2008
110 %
Mar 2, 2007
110 %
61
Mar 10, 2006
150 %
Jun 10, 2005
102 %
HDFC Tax Saver

Not into one of the best dividend rate like above
funds but very consistent when it comes to
dividend and also return of this fund is also worth
investing.
Record Date
Rate of Dividend
Mar 6, 2009
50 %
Mar 7, 2008
80 %
62

Mar 8, 2007
75 %
Mar 17, 2006
75 %
Feb 17, 2005
50 %
Canara Robeco Equity Tax Saver

Not as good as above ones, but best when it
comes to return of the fund.
Record Date
Rate of Dividend
Mar 28, 2008
30 %
Mar 15, 2007
60 %
63

Mar 16, 2006
40 %
Mar 18, 2005
25 %
Mar 26, 2004
15 %
Apart from the above old funds I also expect

some good returns for some of the new tax
saving funds which till date have not recorded
good dividend but that is may be because of the
current market situation for last one year or so
and so they deserve mentioning.
Fidelity Tax Advantage
Record Date
Rate of Dividend
Mar 13, 2008
15 %
64
DSP Blackrock Tax Saver
Record Date
Rate of Dividend
Feb 29, 2008
36 %
Kotak Tax Saver
Record Date
Rate of Dividend
Feb 8, 2008
35 %
Feb 20, 2007
30 %
Why should one invest ELSS?
Lock-in for three years helps in staying

invested over a long period
65
Investments in equity over a long-term

delivers better returns
Tax savings and high returns
Through SIPs, one can invest small

amount of Rs 500 in ELSS every month.
SIP Systematic Investment Plan route

for ELSS
One of the best ways to invest in ELSS is to save
and invest on a regular basis. A Systematic
Investment Plan (SIP) in ELSS gives the best
combination of investments available to
investors. The minimum investment in an ELSS
through the SIP route can be as small as Rs
500.
SIP helps an investor take advantage of the
fluctuations in the stock markets by rupee cost
averaging. Rupee cost averaging can be
explained with the help of the following example.
If Rs 1,000 is invested a month at a price of Rs
20 a unit, the investor will have bought 50 units
(1,000/20). But at a price of Rs 10 per unit, he
will have bought 100 units (1000/10). Investing a
fixed sum regularly means averaging out the
cost, as the investor gets fewer units when the
price goes up and more when the price goes
down.
An SIP ensures that an investor buys more when
the markets are falling and less when it's
peaking. But if an investor backs out when the
markets are falling, he won't be buying and this
will not get him to average his price, the primary
66

reason behind the success of investing through
the SIP route.
In the current volatile market, starting an SIP
would be beneficial to an investor as he can take
the benefit of highs as well as the lows and can
average out his purchases. The returns of a few
top performing ELSS through SIP, recommended
by ICICI direct are given in the table below.
Systematic Investments Plan (SIP) in

ELSS
This is very beneficial for an investor as one can
invest as low as Rs.500/- per month in ELSS
through Systematic Investment Plan.
The theory of SIP is that it makes sure that the
investor buys more when the market is declining
and buys less when the market value is rising.
The main reason behind the success of SIP route
is that is an investor does not want to buy when
the market is falling, he can back out from the
market, and this will not get the investor to
average his price.
Investor who has faith in SIP always lands up in
profit. As a human psychology, one will not buy
when the market is falling and he might end up
buying more when the market is at peak. This
results in him buying at high rate and selling at
low rate and thus he ends up in loss. So one
should continue with SIP irrespective of the
market rise and fall.
Risks in ELSS Funds

67
Mutual Fund Problem - The Fund Manager
is a human being and can do mistakes. He might

not always select best stocks.
Commissions - Fund Manager is trying to
help the investor so obviously he will charge

some commission. Even if the Fund Manager
makes the investor invest in the best funds, the
investor has to pay high commissions and thus
reducing the profits.
A Fund Manager cannot perform better
than the market. He might miss out on one year

and if that happens to be the last year, maturity
money will be reduced. Investor might invest
fewer amounts every year but he has to pay
commission to the Fund manager and there is no
guarantee that he will perform better next year.
Apart from the Fund Manager the Investor
also has to learn the market changes. He should

be able to do profit and loss calculations.
Investor might land up in the worst
performing ELS Scheme. In that case the investor

might not be interested in tax savings and capital
gain; he would want his principal amount to be
given back.
There is always a risk involved when the
market goes down.
Five ELSS which are booming are:

Franklin India Tax shield
HDFC Long Term Advantage
(Earlier HDFC Tax plan 2000)
HDFC Tax Saver
68

Prudential ICICI Tax Plan
Sundaram TaxSaver
Advantages of ELSS over NSC and PPF

Maturity period of NSC is 6 years and PPF is 15
years while that of ELSS is 3 years. So with a
lesser lock-in period, one can withdraw the
amount
Earning potential is very high as it is equity linked
scheme.
Investor gains money during the lock-in period
and he also have the option of dividend.
Systematic Investment Plan is a part of ELSS.
Accident death cover insurance is covered in
some ELSS funds.
NSC and PPF gives return of 8% and ELSS gives
return of 30-40%.
69

Chapter-17:Top 10 Tax Saving
Mutual Funds (ELSS)
The following 3 tables lists the Top 10 ELSS
Schemes in descending order of their 5
years, 3 years and 1 year returns. This may
help you in selecting the best ELSS scheme
for your needs.
ELSS Schemes Ranking based on 5 Year Returns
Return (%)
Ran
k
Fund
Name
1
Year
Magnum
Taxgain
Canara
Robeco
Equity
Tax Saver 97.08
70
93.29
NAV for Plan
NAV
as
3
on
Year 5 Year Dividend Growth Date
10.05 32.03
19.21 28.82
44.4
20.29
59.05
11Jan2010
22.28
11Jan2010
Sundaram
BNP
Paribas
Taxsaver 81.83
HDFC
Taxsaver
15.64 28.04
106.03 11.2
Sahara
Tax Gain
ICICI
Prudential
120.85 9.38
Tax Plan
Franklin
India
Taxshield
Birla Sun
Life Tax
Relief 96
71
96.88
86.18
27.09
16.63 25.99
13.3
24.52
23.67
111.64 10.74 22.39
15.03
62.36
18.99
18.51
32.85
88.66
43.92
11Jan2010
200.48
11Jan2010
33.33
11Jan2010
124.12
11Jan2010
181.84
11Jan2010
10.99
11Jan2010
Franklin
India
Index Tax 79.82
10
Principal
Personal
Tax Saver 93.44
9.33
9.76
21.39
21.22
40.2
91.44
n/a
11Jan2010
n/a
11Jan2010
Chapter-18:Types of ELSS
1. Growth: Investor does not get any income

during the tenure of the investment. He will get a
72

lump sum amount at the time of redemption or
on maturity.
2. Dividend: Investor gets a dividend from the

fund house. He has two options:
He can cash on the dividends.
He can opt for dividend re-investment

option.
In most funds you have Growth as well as
Dividend options which you can choose
depending upon your priorities.
Chapter-19:SBI MUTUAL
FUND
SBI Funds Management Pvt. Ltd. is one of the
leading fund houses in the country with an
investor base of over 4.6 million and over 20
years of rich experience in fund management
consistently delivering value to its investors. SBI
Funds Management Pvt. Ltd. is a joint venture
between 'The State Bank of India' one of India's
largest banking enterprises, and Socit
Gnrale Asset Management (France), one of the
world's leading fund management companies
that manages over US$ 500 Billion worldwide.
73

Today the fund house manages over Rs 28500
crores of assets and has a diverse profile of
investors actively parking their investments
across 36 active schemes. The trust reposed on
us by over 4.6 million investors is a genuine
tribute to our expertise in fund management.
SBI Funds Management Pvt. Ltd. serves its vast
family of investors through a network of over
130 points of acceptance, 28 Investor Service
Centres, 46 Investor Service Desks and 56
District Organizers.SBI Mutual is the first banksponsored fund to launch an offshore fund
Resurgent India Opportunities Fund.
PRODUCTS OF SBI MUTUAL FUND
Equity schemes:
The investments of these schemes will
predominantly be in the stock markets and
endeavor will be to provide investors the
opportunity to benefit from the higher returns
which stock market can provide.
74
Magnum
Magnum
Magnum
Magnum
Magnum
Magnum
Magnum
Magnum
MSFU- Emerging Business Fund

MSFU- IT Fund
COMMA Fund
Equity Fund
Global Fund
Index Fund
Midcap Fund
Multicap Fund
Multiplier plus 1993
Sectoral Funds Umbrella
MSFU- Pharma Fund

MSFU- Contra Fund
MSFU- FMCG Fund
SBI Arbitrage Opportunities Fund
SBI Blue chip Fund
SBI Infrastructure Fund - Series I
SBI Magnum Taxgain Scheme
1993
SBI ONE India Fund
SBI TAX ADVANTAGE FUND SERIES I
Debt schemes
Debt Funds invest only in debt instruments such
as Corporate Bonds, Government Securities and
Money Market instruments either completely
avoiding any investments in the stock markets as
in Income Funds or Gilt Funds or having a small
exposure to equities as in Monthly Income Plans
or Children's Plan. Hence they are safer than
equity funds. At the same time the expected
returns from debt funds would be lower.
75
Magnum Childrens benefit Plan

Magnum Gilt Fund
Magnum Income Fund
Magnum Insta Cash Fund
Magnum Income Fund- Floating Rate
Plan
Magnum Income Plus Fund
Magnum Insta Cash Fund -Liquid
Floater Plan
Magnum Monthly Income Plan
Magnum Monthly Income PlanFloater
Magnum NRI Investment Fund

SBI Premier Liquid Fund
BALANCED SCHEMES
Magnum Balanced Fund invests in a mix of
equity and debt investments. Hence they
are less risky than equity funds, but at the
same time provide commensurately lower
returns.
COMPETITORS OF SBI MUTUAL FUND
Some of the main competitors of SBI
Mutual Fund in Dehradoon are as Follows:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
ICICI Mutual Fund

Reliance Mutual Fund
UTI Mutual Fund
Birla Sun Life Mutual Fund
Kotak Mutual Fund
HDFC Mutual Fund
Sundaram Mutual Fund
LIC Mutual Fund
Principal
Franklin Templeton
Equity mutual funds invest more than 65% of the

funds in equities and equity related
instruments.The chart below is regarding the
performance comparison of the equity schemes
available in SBI Mutual Funds.After the
performance is analysed, the schemes are sorted
out based on the performance for the past 1
year.From the data, an investor can choose the
best scheme which are consistently performing
for the past 6 months and 3 years.This would
help one to invest in the best SBI scheme.
76

PERFORMANCE CHART OF SBI EQUITY
MUTUAL FUND AS ON SEPT,2010
C h a p t er - 2 0 Ca s e S t u d i e s
Nevo Case Studies

77
John Hancock Mutual Funds

Financial Information Portal
John Hancock Mutual Funds (JH Funds), a
subsidiary of Manulife, manages more than $50
billion in variety of open- and closed-end mutual
funds and various other investment instruments.
In 2004, Manulife acquired John Hancock, and,
during its analysis of the various acquired
business units, decided that it wanted to elevate
JH Funds, then ranked in the high teens among
U.S. mutual fund providers in terms of assets
under management, to a top-ten provider.
Seizing leadership in the online marketing of
mutual funds was a prominent part of its plan.
JH Funds had been an early pioneer in online
mutual fund marketing, going live with
jhfunds.com in 1999. That website ran on ATG
Dynamo, using an Oracle database and
Interwoven Team site as a content management
system. Dynamo had mostly failed to gain
acceptance as a web development platform, and
the site's look and feel were showing their age.
Requirements
JH Funds decided to undertake a complete
rewrite of the site, with the following goals:
78
Simpler, more intuitive site navigation

A new, fresher look and feel
A full-site search function
Cleaner integrations with third-party
content
Migration to a Manulife-standard web
platform
Improved content management to give
business users more control and allow for more
up-to-date content
Most importantly, the new site had to be up and
running within 8 months, by June of the following
year; so that it could help JH Funds' sales staffs
achieve their goals for that fiscal year. Quality
could not be compromised, but cost was flexible.
Nevo's Solution
JH Funds had already selected a design agency
for the project, Toronto-based Teehan+
Lax (T+L). Nevo immediately set about working
with its staff and with JH Funds marketing to
conduct full requirements gathering, teasing out
the details that T+L's designs necessarily glossed
over. In parallel, Nevo began building an
implementation team and performing design
work, selecting technology platforms, laying out
core components like site authentication, and
refining the content management system
integration strategy.
79

Based on its experience with ASP.NET 2.0's beta
version, Nevo recommended using the newlyreleased development platform, while it
suggested moving to SQL Server 2000, as SQL
Server 2005, while in full release, was not yet a
Manulife standard. While JH Funds was hesitant
to continue using Team site as a CMS, together
with Nevo it decided to hold that component
constant amid all the other change.
Nevo's site component strategy was to use
standard ASP.NET components wherever possible,
digging deep into the code to provide
customization hooks where necessary. Site
authentication was a particularly thorny issue, as
JH Funds wanted to unify authentication and site
navigation across three logical sites, one each for
the public, JH Funds partners, and JH Funds staff.
The original jhfunds.com stored many of its
pages wholesale in a content management
system, depending on content authors to format
it properly. The new system wherever possible
stored snippets of text in a database and
formatted the text in code, removing formatting
responsibility from business users that lacked
web page authoring expertise.
Nevo staffed a team of 1 lead, 2 senior
developers, and 2 junior developers, depending
on JH Funds staff for database design and
80

testing. We believed that this staffing level was
optimal, even ignoring cost; the coordination
overhead of additional developer would have
actually slowed the work. To meet JH Funds' tight
time constraints, Nevo recommended and won
approval for deferring some pieces of
functionality to a second phase, including the
integration of a site search engine.
Results
The redesigned site went live on schedule in June
with the deferred functionality following just a
few months later, in October. T+L's clean designs
impressed everyone involved in the project, and,
with Nevo's concerted effort to produce a site
faithful to their vision, jhfunds.com went on to
win numerous awards, including an Outstanding
Website award from the Web Marketing
Association and 5 different "best" awards from
the Mutual Fund Education Alliance.
Chapter-21:Mutual Fund V/S

Equity Fund
A mutual fund entity is a company that
specializes in investment that pools together the
resources of more than one person together
creating a sort of network. After they gather
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these individuals together they invest the money
according to a prospectus which will contain the
goals of their fund members. Some of these
funds can specialize in investments of different
types such as currency or FOREX Trading, stocks,
or bonds.
Mutual funds are basically tradable securities that
can be sold and bought freely on the stock
market at the current face value that these
securities are invested in.While on the other
hand Equity Investments are different from
Mutual Investment funds. Private Equity, an asset
that contains securities and other holding that
cannot be publically traded on the stock market.
These types of investments dont usually come
from public hands, but from private money that
either invests that money into the company, or
even acquires it outright (which is form of
Strategic Acquisition). Although the above is the
basic term for Equity Investment, there is a
possibility that Equity Investment can mean
something else in a different country.
There are several types of equity
Investments that I will only go briefly over so
that you get the basic understanding on some of
the Equity Investments that you could possibly
have the chance to invest in.
82
Venture Capitalists like to invest in newer and

promising companies rather than ones that have
been fully established. The most famous probably
83

in Venture Capital Investment in those
Technology based company in Silicon Valley.
There are many other ways to invest your time,
and money. A Real Estate purchase from
stressing seller (e.g. thru foreclosure investment
strategy ) could be considered a leveraged
buyout. Both these types of general investments
are generally not available for public trade.
For both of these investments the risk that comes
out of each investment depends on the type. For
example someone investing in venture capital will
be at a higher risk then a leveraged buyout.
More on Investment:
Understanding Common Types of Private

Equity
Conducting Extensive Research Before

Making Equity Investments
Equity Investment Investing in Common

Stock or Preferred Stocks
Investing into the Future of Promising

Enterprise with Private Equity
Advantages of Having a Private Equity

Fund
84
Chapter-22:Conclusion :
A mutual fund brings together a

group of people and invests their money in
stocks, bonds, and other securities.
The advantages of mutuals are

professional management, diversification,
and economies of scale, simplicity and
liquidity.
Fund are selected on quantitative parameters like
volatility, FAMA Model, risk adjusted returns, and
rolling return coupled with a qualitative analysis
of fund performance and investment styles
through regular interactions / due diligence
processes with fund managers.
The mutual fund industry in India has prospered
due to transparency and disclosures. Most fund
houses come out with a fund fact sheet for each
scheme every month..
85
A fund house normally comes out with various

publications which contain the schemes
objectives, fund managers commentary on the
portfolio, market outlook, etc. The aim is to help
an investor take an informed decision to invest,
stay invested or redeem out of the fund. It is
upto the investor i.e. you, to make the best use
of it.
Mutual funds are a method for investors to
diversify risk and to benefit from professional
money management. The prospectus identifies
key information about the fund including its
operating boundaries and its costs. The fund
manager operates within those boundaries and is
a critical to achieving strong results within those
boundaries. They provide much needed impetus
to direct and indirect support to the corporate
sector. Above all, mutual funds have given a new
direction to the flow of personal savings and
enabled small medium investors in remote rural
86

and semi rural area to reap the benefits of stock
markets investments. Indian mutual funds are
thus playing a very crucial development role in
allocating resources in the emerging market
economy.
A perceptible change is sweeping across the
mutual fund landscape in India. Factors such as
changing investors need and their appetite for
risk, emergence of internet as a powerful
servicing platform and above all the growing
commoditization of mutual fund products are
acting as major catalysts putting pressure on
industry players to formulate strategies to stay
the course. In the changed scenario today
product innovation is increasingly becoming one
of the key determinants of success. Building and
sustaining a powerful brand is also becoming an
issue of paramount importance. Distribution has
taken a whole new mode like banks, post offices
and co-branded credit cards are bound meaning
with the introduction of automated trading
clearing and settlement system.
The Indian Mutual Fund industry is set for a
future of sustained growth over the next decade
with increasing participation from the retail
segment. We can expect the industry to mature
further and become a synonym to savings, as is
the case in some of the developed countries. The
retail potential is substantial and the various
stakeholders can make specific interventions to
unlock it. The key drivers to growth for the
various players, in addition to demonstrated
track record, will be investor education,
distribution strength and branding / positioning.
However, each player will need to develop its
own unique growth path and have the specific
87

levers products, distribution, branding
optimized to the journey that it wants to
traverse. Also, while the players need to gear up
for the sustained growth scenario, it is equally
important for the industry participants to build in
sufficient defense mechanisms in their armory to
ensure survival under the potential scenarios of
downturn.
SOURCES AND REFERENCES

Websites of :
Association of Mutual Funds in India
Reserve Bank of India
Census India
IIMS Dataworks
Planning Commission of India
International Forum for Investor Education
Investment Company Institute
Cerulli Associates
88

Monitor Group
Nomura Institute of Capital Markets Research
Press reports from:
http://www.economictimes.com
http://www.livemint.com
http://www.moneycontrol.com
http://www.theindiastreet.com
http://www.mutualfundsindia.com
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An Overview of Mutual Funds