Professional Documents
Culture Documents
Analysis of Ebitda of Southwest
Analysis of Ebitda of Southwest
Analysis of Ebitda of Southwest
PGDM 2015-17
Submitted by
PROF. S.BHATTACHARYA
(Faculty Guide)
Professor - Finance
NMIMS, Hyderabad
&
Mr.VENUGOPAL YARABATI
(Company Guide)
Deputy Manager
Page | 1
NARSEE MONJEE INSTITUTION OF MANAGEMENT STUDIES, HYDERABAD
DECLARATION CERTIFICATE
I, hereby declare that the work entitled “Performance analysis of selective equity
mutual fund schemes” from 11th April-28th May is submitted in partial fulfillment of
the requirement for the award of the degree in POST GRADUATE DIPLOMA IN
MANAGEMENT, NMIMS is a record of my own work carried out me during the
academic year 2015 – 2016 under the supervision and guidance of
Prof.S.Bhattacharya, Faculty Mentor – Summer Internship and Mr.Venugopal
Yarabati, Mentor, Birla Sun Life Mutual Fund ,Hyderabad. The project embodies the
result of original work and studies carried out by the student himself.
I certify that the declaration made above by the candidate is true to the best of my
knowledge.
AMIT AGARWAL-80011315002
Page | 2
PREFACE
The successful completion of this project was a unique experience for me and I achieved a
better knowledge about mutual fund industry in India. The experience which I got by doing
this project is essential to me for my future. The information in this project being submitted
by me contains detailed analysis of the research undertaken by us. The research provides an
opportunity to me to devote my skills, knowledge and competencies during the knowledge
gathering sessions of marketing management. The research is on the topic “Comparative
Study on performance evaluation of equity mutual fund schemes of Indian Companies”.
Page | 3
ACKNOWLEDGEMENT
I, Amit Agarwal would like to take the opportunity to express my gratitude and deep regards
to my college mentor Prof.S.Bhattacharya for his guidance, monitoring and constant
encouragement throughout the course of my internship. The blessing, help and guidance
given by him shall carry me a long way in journey of my life on which I am about to embark.
Amit Agarwal
Page | 4
EXECUTIVE SUMMARY OF THE PROJECT
Executive Summary
The title of the project is “Performance analysis of selective equity
mutual fund schemes” It is about comparative analysis of equity funds
offered by players in the mutual fund industry, the advantages of investing
in Birla Sun Life, returns pattern, behavioral pattern of investors .To do the
comparative analysis I have taken the four main players of this industry so
that the true picture comes out after doing the analysis.
Page | 5
TABLE OF CONTENT
Preface........................................................................................................................................(iii)
Acknowledgement......................................................................................................................(ii)
1.1Corporate Profile…………………………………................................................................1
1.2Our Vision………………………………..............................................................................2
1.4Our Values……………………………………………….....................................................4
2.2.4Fourth Phase.......................................................................................................................10
3.1 SEBI......................................................................................................................................14
Page | 6
4.2 Closed ended fund………………………………………………………………………..
Chapter 6-Types of Mutual fund schemes offered by Birla Sun Life in equity……………
Page | 7
Chapter 1- Introduction –Company Overview
1.1 Corporate Profile
Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment
manager for Birla Sun Life Mutual Fund, is a joint venture between the Aditya
Birla Group and the Sun Life Financial Inc. of Canada. The joint venture brings
together the Aditya Birla Group's experience in the Indian market and Sun Life's
global experience.
Birla Sun Life has been established in 1994, it has emerged as one of India's
leading flagships of Mutual Funds business managing assets of a large investor
base. Our solutions offer a range of investment options, including diversified and
sector specific equity schemes, fund of fund schemes, hybrid and monthly income
funds, a wide range of debt and treasury products and offshore funds.
Birla Sun Life Asset Management Company has one of the largest team of research
analysts in the industry, dedicated to tracking down the best companies to invest in.
Birla Sun life Asset Management Company strives to provide transparent, ethical
and research-based investments and wealth management services.It is India’s
fourth largest mutual fund in terms of asset.
To be a leader and role model in a broad based and integrated financial services
business.
Integrity
Commitment
Page | 8
Passion
Seamlessness
Speed
A mutual fund is basically a pool of money of various investors with the same
motive that their money will grow in future. The collected money is invested in
equity market, debt market, money market, bond market etc.
The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India, at the initiative of the Government of India and Reserve Bank of India.
The history of mutual funds in India can be broadly divided into four distinct
phases
Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was
set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. 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.
1987 marked the entry of non-UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund
established in June 1987 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 established its
mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.
Page | 9
47,004 cr.
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.
Also, 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs. 44,541 crores
of assets under management was way ahead of other mutual funds.
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs. 29,835 crores as at the
end of January 2003, representing broadly, the assets of US 64 scheme, assured
return and certain other schemes. 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.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth.
Page | 10
1996-SEBI
1995-
AMFI
1985-SBI
First Mutual
Fund
1963-UTI
Formation
Page | 11
Chapter-3 Regulatory Framework for Mutual
Fund
3.1 Security and Exchange Board of India
The Government of India constituted Securities and Exchange Board of India, by
an Act of Parliament in 1992, the apex regulator of all entities that either raise
funds in the capital markets or invest in capital market securities such as shares and
debentures listed on stock exchanges. Mutual funds have emerged as an important
institutional investor in capital market securities. Hence they come under the
purview of SEBI. SEBI requires all mutual funds to be registered with them. It
issues guidelines for all mutual fund operations including where they can invest,
what investment limits and restrictions must be complied with, how they should
account for income and expenses, how they should make disclosures of
information to the investors and generally act in the interest of investor protection.
To protect the interest of the investors, SEBI formulates policies and regulates the
mutual funds. 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.
Page | 12
Chapter 4-Types of Mutual Fund
Mutual Funds
Page | 13
as an arbitrageur)
In an open ended fund, when investors on a large scale redeem funds, the
funds have to sell its portfolio of securities resulting in capital gain tax
liability. However in ETF, we have in “in kind” redemption i.e., the fund
does not have to sell its portfolio thereby avoiding capital gain tax liability.
Before jumping into investing van wagon of mutual funds, an investor must be
aware of the risk he is taking. Below figure shows risk and return attached to funds
category wise.
Page | 14
Benefits of Mutual Fund
Expert
money
manageme
nt
Tax Diverse
saving Portfolio
Key
benefits
of MFs
Affordibil
Liquidity
ity
Page | 15
Chapter 5-Comparison between Bank and
Mutual Fund in India
Mutual Funds are now also competing with commercial banks in the race for retail
investor’s savings and corporate float money. The power shift towards mutual
funds has become obvious. The coming few years will show that the traditional
saving avenues are losing out in the current scenario. Many investors are realizing
that investments in savings accounts are as good as locking up their deposits in a
closet. The fund mobilization trend by mutual funds indicates that money is going
to mutual fund in a big way.
Page | 16
6.Types of Mutual fund schemes offered by Birla
Sun Life AMC in equity
Page | 17
Scheme Birla Sun Life New Millennium Fund
About the Scheme A thematic fund that invests in IT sector like hardware,
peripheral components, media,internet and other
technology.
Inception Date January,2000
Fund Manager Mr.Naysar Shah
Page | 18
4 Birla Sun Life Dividend Stocks of Nifty 500 Relative high
Yield Plus dividend paying dividend yield
companies
5 Birla Sun Life MNC Fund Securities of Nifty MNC Long term growth
MNCs
6 Birla Sun Life Balanced '95 60% Equity + Nifty 50 Long term growth
Fund 10% Debt
7 Birla Sun LifeTax Relief '96 80% Equity + Nifty 50 ELSS
20% Debt
8 Birla Sun Life Top 100 Top 100 by S&P BSE Medium to long
Fund Market Cap SENSEX term
9 Birla Sun Life Cash Debt and Money CRISIL Short maturity
Manager Market INDEX
10 Birla Sun Life Dynamic High Quality CRISIL Returns with high
Bond Fund Debt and Money INDEX liquidity
Market
11 Birla Sun Life Medium Debt and Money CRISIL Regular Dividend
Term Plan Market INDEX Payments
12 Birla Sun Life Short Term Fixed income CRISIL Short maturity
Opportunities Fund Securities INDEX
/Money Market
All the various equity funds are classified under these funds:-
Sectoral
Index
Equity Funds
Diversified
Page | 19
.
Sectoral Scheme - Sectoral funds are invested in a specific sector like infrastructure, IT,
pharmaceuticals, etc. or segments of the capital market like large caps, mid-caps, etc.
This scheme provides a relatively high risk-high return opportunity within the equity
space.
Tax Saving - As the name suggests, this scheme offers tax benefits to its investors. The
funds are invested in equities thereby offering long-term growth opportunities. Tax
saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period.
Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.
Why
High Convenien
Mutual
Return ce
Funds?
Economic
Liquidity
al
Diversifica
tion
Beat Inflation:
Mutual funds generate better inflation adjusted returns without involving much time and energy
from investors
Page | 20
Experts Managers:
A mutual fund company provide an expert manager to look after the investments in best possible
way as these managers are well equipped to analyse the market and prospects available
Convenience:
Low investment options, any business day to sell or buy, expert guardian of the investment etc.
make mutual funds very convenient for thee investors
Low Cost:
Investor can invest as low as 500. Investment cost is very less than as of equity investment
directly
Diversification:
Mutual funds mitigate the risk by large extent by distributing the investment to diverse range of
assets
Liquidity:
Investors can get their money promptly, in case of opened ended based on Net asset value
scheme where as in case of closed ended scheme it can be traded in stock exchange
Based on the medium to long term investment, as investment is diversified, mutual funds offer
higher return potential
Regular update from fund manager about the current value of the assets and their strategy about
the future
Page | 21
8. Comparative Analysis
For comparison ,I have taken the top four AMC in India i.e Birla Sun Life
AMC,ICICI Mutual Fund,SBI Mutual Fund and Reliance Mutual Fund.
Now Let us see the various equity based fund schemes of SBI Mutual
Fund,Reliance Mutual Fund and ICICI Mutual Fund.
8.1 About SBI Mutual Fund Schemes in equity
Page | 22
Fund Manager Mr.Saurabh Pant
Page | 23
investments in a diversified basket of equity stocks of
companies whose market capitalization is at least equal to
or more than the least market capitalized stock of BSE 100
Index.
Inception Date 2006
Fund Manager Mr.Sohini Andani
Page | 24
securities. Although, the objective of the Fund is to
generate optimal returns, the objective may or may not
be achieved.
Inception Date 2014
Fund Manager Mr.Sunil SInghnia
For Comparison, I have taken the monthly returns of the last 5 years of the above
schemes available in various AMC.
For Analysis, I have calculated the Standard deviation and Sharpe Ratio for all the
equity based funds.
Page | 25
deviation is applied to the annual rate of return of an investment to measure the
investment volatility. It is also known as historical volatility and is used by
investors as a gauge for the amount of expected volatility.
Sharpe Ratio-The Sharpe ratio is a measure for calculating risk adjusted return
and the ratio has become the industry standard for such calculations. The sharpe
ratio is the average return earned in excess of the risk free rate per unit of
volatility or total risk. Subtracting the risk free rate from the mean return, the
performance associated with risk taking activities can be isolated.
Information Ratio- The Information ratio is a ratio of portfolio returns above the
returns of a benchmark to the volatility of those returns. The information ratio
measures a portfolio managers ability to generate excess returns relative to a
benchmark but also attempts to identify the consistency of the investor. This ratio
will identify if a manager has beaten the benchmark by a lot in a few months or a
little every month.
Page | 26
Chapter 9-Analysis Result
Microsoft Office
Word Document
Page | 27
Conclusion
From the analysis, I came to know that SBI Equity Saving fund gave the highest
return for 1 % of the risk taken by the investors and thus the best fund scheme
available among all the available mutual schemes.
Page | 28
BIBLIOGRAPHY
http://economictimes.indiatimes.com/
www.moneycontrol.com
http://mutualfund.birlasunlife.com
www.financialexpress.com
Page | 29
Industry Analysis-Mutual Fund
Mutual Fund Industry Synopsis
In Financial year 2015-2016 there was an inflow of Rs 103288 Cr into the
Indian mutual fund industry .Out of the Rs 103288 Cr, Rs 74024 Cr came in
equity and ELSS funds. Income funds were able to collect Rs 14738 Cr.
Total AUM at the end of the financial year was Rs 1232824 Cr, increase in
14% of which 46% was held by income funds and 31% by equity funds.
In April 2016, there was a net inflow of Rs 170161 Cr, of which Rs 31448
Cr was in income funds and Rs 4438 Cr in equity funds.
Growth of AUM
Page | 30
Category wise inflow/outflow in financial year 2015-2016
Source-icicidirect.com,Research
Page | 31
Equity Market
After recovering sharply in April and May 2016 from the fall in equity
market at the start of the year, Indian equity market consolidated in 2016.
Inflation rose to 5.39% in April from a six month low of 4.83% in March. It
happens because of an increase in food price index mainly led by an increase
in the price of vegetables, fruits and sugar prices. The increase in food prices
can be because of water shortages, high temperature, etc.
Beaten down sectors like banking, real estate, consumer goods and capital
goods outperformed since Budget in the market recovery. PSU’s in India
also underperformed because of negative outlook.
Outlook
Currently Indian market is being dominated by global factors. Therefore,
any development in global capital markets is likely to have an impact on the
Indian equity market.
Page | 32
various Government projects on roads, railways, etc are set to provide the
much needed fillip to the economic activity.
India equity market has been growing and recovering some of their gains
post budget. Sectorally, most companies among auto, private
banks,NBFC,cement etc have declared good results .Also the earning growth
is likely to pickup much fast .So the earning growth for the coming years
will be more better as compared to 2015.
Growth Drivers
Improvement in Key economic drivers- An improvement in the economic
environment over the last 3-4 years helped to increase the investment in
mutual funds. Indian household saving pattern shown a decline after 15
years in saving physical assets and same has been channelized to financial
assets.
Among sector funds, all delivered negative returns with IT and FMCG the
exception delivering positive returns of 6.9% and 4.1% respectively.
Page | 34
Source-Crisil Fund Analyzer
Exposure to banks and finance stocks together accounts for 25% of equity
assets followed by technology and pharma.
Indian market after been in a decline trend from March 2015 to Feb 2016,
recovering some of their gain post budget .Market has been really improved
now.
Page | 35
The sectors which were not doing well like banking, FMCG, Real estate are
going good after budget announcement but the PSU’s are not doing well.
Global markets also seem to have stabilized after a rebound in crude oil
price. Markets have triggered a positive structural post budget.
This fund is quiet attractive and will continue to improve. Thus one can
invest in this type of fund.
Both the short term and the long term are positive in term of investment.
PSU banks have seen a growth in GNPA to Rs 390443 Cr .On the other
hand private banks reported a profit of Rs 11364 Cr in the third quarter of
the last year.
Equity FMCG
FMCG growth has been increased by 4.9% and I believe that expected
normal monsoons may spur volume growth in rural India while urban
market in India continues to remain slow.
Page | 36
On the back of subdued commodity prices, RM cost is expected to fall by
1%.But companies will come out with innovative products to increase the
sales and thus the profit. Our FMCG coverage universe is expected to
witness 16.5% increase in net profit.
After outperforming the broader indices for the last five years, the NIFTY
pharma index underperformed .Paradoxically, the fiscal witnessed highest
number of USFDA products approval in the last five years.
This sector looks positive because of the forecasted growing rate of 16% in
the coming years .The views for this are positive because of the consistent
earning cash flow ,healthy operating margins, relatively low leverage, etc.
Due to the healthy deal signs in digital technologies. , this sector will surely
outperform in the coming years.
Page | 37
Currently,this sector is not that attractive as compared to earlier years but
because of various signs with other countries in digital technologies,
railways etc, this sector will surely outperform in the coming years.
ETF
Equity Index Liquid Gold
An equity index ETF tracks a particular equity index such as the BSE
Sensex,NSE Nifty,Nifty Junior,etc.
An equity index ETF scores higher the index funds on several grounds. The
expense of investing in ETF is lower than that of index funds, The expense
ratio is in the range of .50-.75% excluding brokerage fees while for the
index fund the expense ratio is in the range of 1-1.5% excluding brokerage
fees.
ETF are liquid funds as they are traded on exchange and investors may
subscribe or redeem them even on intra day basis. This is unavailable in
index funds which are redeemed on NAV basis.
There are over 400 ETF traded globally. Also they are efficient and cost
effective. The decision on which ETF to buy should be largely governed by
the decision on getting exposure in that asset class.
Volume is high only on Goldman Sachs benchmark ETF and the tracking
error is also low.
Page | 38
AUM s in ETF
Source-ICICIdirect.com
Balanced Fund
There was an inflow of Rs 19743 in financial year 2016.AUM of balanced
fund has increased from Rs 26368 Cr in March 2015 to Rs 39146 Cr in
March 2016.Over the years, the balanced funds has emerged as one of the
fastest growing equity category
Balanced funds are hybrid funds .More than 65% of the overall portfolio is
invested in equities. Hence as per the provision of Income tax act, any
capital gain over one year is free. Also dividends declared are tax free.
In case one separately invests 35% of one’s investible corpus in a debt fund,
they have to pay the higher tax. However if the whole fund is invested in
balance funds, 100% shall have lower taxation applicable as mentioned
above.
After a sharp rally in equity market, the funds can be preferred as a debt
proportion serves to protect in intermediate relief rallies or the downturn
while providing 65% participation on further upsides.
Page | 39
Inflow into balance funds remained volatile
Source:-AMFI
Source: AMFI
Page | 40
DEBT MARKET
The yield on the bond remained steady. Benchmark 10 years G-Sec yields
remained absolutely flat during April 2016 at around 7.45%
Increasing liquidity helped reduce yields in money market like CDs, CPs.
Consumer price index for April 2016 came in much higher than expected at
5.39% where in the previous month it was 4.83% as food inflation climbed
to 6.32% from 5.39% on account of ongoing heat waves ,water shortages
etc.
Outlook
Liquidity measure announced is extremely positive for the funds at the short
to medium terms maturity papers. Ultra short term debt funds and liquid
funds are going to benefit from the fall in short term yields.
Also the Government securities yield turns flat for higher maturities.
Page | 41
Source-Bloomberg
Page | 42
Similarly if the interest rates are slashed to 7% then with the coupon
rate of 8% will become superior and the demand in the market will
increase of such bonds. Now the bond trades at higher price than face
value. If the bond trades at 1050, the yield of the bond will be 7.62%
and which is lower compared to initial rate of 8%.
So the decrease in the interest rates will create more demand of
existing bond in secondary market and increases the bond price.
Likewise the increase in interest rate, the existing bonds will be traded
at below their face value.
DEBT FUNDS
Category average return
Source: ICICIdirect.com
Investment into securities with maturity less than 90 days and more than 1
year dominate total investment by mutual funds,
Page | 43
Source-ICICIdirect.com
Liquid Funds
Liquid fund return moderated to 8-8.5 % return pretax from over 9% earned
in the previous year. Liquid fund witnessed as inflow of Rs 17109 Cr in
financial year 2016.Returns, going forward, may be lower as the money
market yield curve has shifted lower on improved liquidity.
The RBI proactively liquidity management operations ensured that call rates
stayed range bound around the policy rate reducing day to day volatility.
With an improvement in liquidity conditions, the certificate of deposit and
commercial paper rates in the three month bracket also eased over 1% to the
7.5-8% range.
For less than a year, individuals in the higher tax bracket should opt for
dividend option as the dividend distribution tax @28.325 % is marginally
lower. Also though the tax arbitrage has reduced, they still earn better pretax
returns over banking savings and current accounts.
Page | 44
Call rate near Repo rates graph
Source:ICICIdirect.com
Source –ICICIdirect.com
Page | 45
AUM increases drastically in April 2016
Source-Bloomberg, ICICIdirect.com
The liquid funds look attractive and are expected to give high returns in the coming years.
Income Funds
In income funds category, long terms debt funds delivered 7.99%
absolute return last year as 10 year Government securities yield have
corrected to 7.45% levels from 7.78 levels after the union budget.
Page | 46
Income fund witness inflow in April
Source-ICICIdirect.com
Dynamic bond funds are suitable for all types of investors and for longer
duration. They can take exposure to all durations as per the interest rate
outlook and switch between Government securities and corporate bonds.
Gilt Fund
Gilt fund delivered 7.76% absolute returns as on May 16, 2016 as lower
inflation kept further rate cut expectation high. The Government adherence
to fiscal discipline by maintaining the fiscal deficit target for FY16-17 at
3.5% and a sharp cut in small savings deposit rates have led to a much
anticipated rally in Government securities. Benchmark 10 year G-security
yield has witnessed a correction of around 35bps.
The liquidity situation was tight at the start of the year 2016 but eased off
significant post March.
Inflation is not a policy concern currently with the RBI governor saying
inflation on a projected trajectory. Overall assuming normal monsoon and
current levels of Oil and Exchange rates, the RBI expects CPI to be inertial
and be around 5% by the end of financial year 2017.
Page | 47
The Government has increased the FPI limit in Government bond of total
outstanding Government securities in a staggered manner by March
2018.Currently FPI holding is 3.8%.
The central Government has signed a memorandum with the Reserve Bank
of India setting out a clear inflation objective to bring the inflation to the mid
point of the band of 4+- 2%.CPI as per our assessment should average close
to 5% for financial year 2016.
Source-ICICIdirect.com
Gold Funds
The year 2016 has turned the wave in favor of safe haven demand amid
extreme global capital market uncertainty. Global gold prices rallied around
20% since the start of 2016.
Page | 48
Gold prices have been consolidating since March 2016 after rallying
significantly in a short time at around Rs 30000 per 10 gram.
The near term outlook is positive on the dovis rate hike stance of the US
Fed ,a weak US dollar ,an uncertain global economic outlook on weak
global growth and lack of investment options for investors.
The steep fall in industrial commodity prices, including crude oil led to a
sharp fall in inflation and inflationary expectations across the globe and
particularly in developed countries.
Source-ICICIdirect.com
Page | 49
Gold price in India
Source-ICICIdirect.com
Page | 50
Breakup of fund allocation of various investors
Page | 51
Distribution Channels of Mutual Fund
Direct Channel- In this channel the investor buy and redeem the units
directly from fund, or more precisely through the fund agent. Fund
companies sponsoring the fund do not provide investment advice so
investors prefer to do their own research.
Advice Channel- The principal feature of advice channel is the provision
of investment guidance, assistance and advice by financial professionals.
Page | 52
Retirement Plan Channel-The retirement plans, such as 401(k) plans,
became one of the primary sources through which investors buy mutual
funds.
Supermarket Channel-The introduction of the first mutual fund
supermarket by a discount broker in 1992 showed a significant innovation in
the distribution of mutual funds. Many other discount brokers, some
attached with mutual fund companies, have since organized fund
supermarkets.
Institutional Channel-The institutional channel comprises a variety of
institutions purchasing fund units for their own accounts. These institutions
include financial institutions, endowments, businesses, foundations, and
state and local governments. Fund sponsors often create special unit classes
or funds for institutional investors.
Page | 53
3. Threats of New Competitors-
High Capital is required
High sunk cost limit competition
Strong distribution network required
Advance technology is required
Patent limits new competition
Geographic factors limit competition
4. Bargaining power of suppliers-
High competition among suppliers
Low concentration of suppliers
Diverse distribution channel
Inputs have little impact on costs
Volume is critical to suppliers
5. Bargaining power of Customers
Buyers require special customization
Low dependency on distributors
Product is important to customer
Large number of customers
Limited buyer choice
Page | 54
SWOT ANALYSIS
Strength-
Large number of potential customers-The number of customers is high as
all the potential customers are not tapped to invest in mutual fund.
Government support-The Government is also supporting the mutual
support industries in India by lowering the interest rates to increase the
liquidity in the market.
Liquidity-Liquidity is high as any can enter and exit in the mutual fund at
any point of time.
Varieties of Products-All the mutual fund company offer varieties of
products and any one can buy any product as per his/her choice.
Weakness
All the retail customers who do not invest in stock markets are not aware of
mutual funds. Either they have no knowledge about mutual fund or they
fear to invest.
Many mutual fund companies do not offer good services to the customers
and that is why the customers don’t invest in mutual fund schemes.
Many mutual fund companies under perform which creates fear in the
mind of the people.
Opportunities
The rural areas are untapped and one cap taps those areas to increase the
liquidity of the funds.
In India, the mindset of the people is to save the maximum money they ear.
One can make those people aware about the mutual fund schemes and the
return that they can get from the mutual fund.
Investment opportunities are very good in India as the Government always
tries to deregulate the policies.
Page | 55
Threats
Large numbers of players are already there in the market and one has to
come out with innovative ways of investing money so that the retail
customers can get high return.
The volatility that is risk is too high in stock market .So the mutual fund
companies can decrease the level of volatility by buying Government
bonds, Commercial papers of highly rated companies etc.
Also the regulatory bodies can become more stringent over the period of
time and this can harm all the financial institutions in the country.
Strength Weakness
Opportunities
Threats
Page | 56
Page | 57