Birla Sun Life Asset Management

Aditya Birla Sun Life Asset Management Company

Limited

Type Private

Industry Finance

Founded 1994 in India

Areas served 26 countries

Key people A. Balasubramanian (CEO)

Services Investment management

Owner Aditya Birla Group and Sun Life Financial Inc.

Website mutualfund.adityabirlacapital.com

Aditya Birla Sun Life Asset Management Company Ltd. (ABSLAMC) formerly known as Birla
Sun Life Asset Management Company Limited, is an investment managing company registered
under the Securities and Exchange Board of India. It is a joint venture between the Aditya Birla
Group of India and the Sun Life Financial Inc. of Canada. The company offers sector specific
equity schemes, fund of fund schemes, hybrid and monthly income funds, debt and treasury
products and offshore funds.[1][2][3]

Contents

 1History
o 1.1The Aditya Birla Group
o 1.2Sun Life Financial
 2References

History[edit]
Birla Sun Life Asset Management Company was established in 1994 as a joint venture between
the Aditya Birla Group and the Sun Life Financial of Canada.
The Aditya Birla Group[edit]
The Aditya Birla Group is an Indian multinational conglomerate named after Aditya Vikram Birla,
headquartered in the Aditya Birla Centre in Worli, Mumbai, India.[4][5] It operates in 40 countries
with more than 120,000 employees worldwide.[6] The group was founded by Seth Shiv Narayan
Birla in 1857. The group interests in sectors such as viscose staple fibre, metals, cement (largest
in India), viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators,
financial services, telecom (third largest in India), BPO and IT services. The group had a revenue
of approximately US$41 billion in year 2015.[7] It is the third-largest Indian private sector
conglomerate behind Tata Group with revenue of just over US$100 billion and RIL with revenue
of US$74 billion.[citation needed] Aditya Birla Financial Services Group (ABFSG) is the umbrella brand for
all the financial services business of The Aditya Birla Group. ABFSG ranks among the top five
fund managers in India (including LIC) with an AUM of US$23 billion.[citation needed] The company
provides life insurance, asset management, lending (excluding Housing), housing finance, equity
& commodity broking, wealth management and distribution, online money management portal—
Aditya Birla Money MyUniverse, general insurance advisory and private equity and health
insurance businesses, for retail and corporate customers. In FY 2013–14, ABFSG reported
consolidated revenue from these businesses at just under ₹70 billion (US$980 million) and
profits of about ₹7.5 billion (US$110 million).[citation needed] The company has 14,000 employees and
over 6 million customers, with 1,500 points of presence and about 130,000 agents/channel
partners.[citation needed]
Sun Life Financial[edit]
Sun Life Financial, Inc. is a Canada-based financial services company known primarily as a [life
insurance] company. It is one of the largest life insurance companies in the world, and also one
of the oldest, having been founded in 1865. Sun Life Financial provides investment
management with over CAD$734 billion in assets under management operating in a number of
countries.[8] Sun Life ranks number 236 on the Forbes Global 2000 list for 2010 as well as on the
Fortune 500 list.[citation needed] It provides asset management through MFS Investment
Management and Sun Life Global Investments (Canada) Inc. that it launched in 2010, and also
started a third-party asset-management arm in 2014, under the brand name Sun Life Investment
Management, seeking to add fee revenue and distance itself from more capital-intensive
operations such as annuities.[citation needed] The insurer in May 2014 hired Carl Bang from the Qatar
Foundation Endowment as president of Sun Life Investment Management Inc. to help lead a
push with pension clients.[citation needed] Sun Life had about $734 billion of assets under management
as of Dec. 31 2014 including mutual funds and insurance-unit holdings. [citation needed] In January 2015,
Sun Life Financial Inc. announced its purchase of U.S. asset manager Ryan Labs, adding
US$5.1B under management to strengthen its asset management presence in United States. It is
part of the Sun Life Investment Management organization. [citation needed] In July 2015, Sun Life
Financial Inc. completed its purchase of U.S. asset manager Prime Advisors, Inc., adding
US$13B under management. It is part of the Sun Life Investment Management organization. [citation
needed]
 The company operates in India as Aditya Birla Sun Life Asset Management. Established in
1994, Birla Sun Life Asset Management Company Ltd. (BSLAMC), investment manager for Birla
Sun Life mutual fund, has been a joint venture between the Aditya Birla Group and Sun Life
Financial Inc. since 1999. Birla Sun Life Mutual Fund was the fourth largest Fund house in India
based on domestic average assets under management as published by AMFI for the quarter
ended March 31, 2014.[citation needed] Sun Life Financial also provides asset management in
the Philippines. It was currently the largest non-bank affiliated asset management company in
the country with almost P47 billion in assets under management (AUM) as of December 2014.
[citation needed]

ABSTRACT
Mutual funds mobilise the savings of the people and channelise it to the money and capital
market. One of the main advantages of mutual funds over any other investment to small
investor is that they give small investors access to professionally managed, diversified portfolio
of equities, bonds and other securities, which is rather impossible for a small investor to create
with a small amount of capital he/ she owns. Mutual funds constitute a very important
component of the capital market in developed countries and are now becoming vibrant in
emerging markets like India. The origin of mutual funds industry in India can be traced in the
enactment of the Unit Trust of India (UTI) Act in 1963. Due to historic reasons, the UTI enjoyed
the total monopoly in the initial years and until now continues to maintain the largest market
share. The industry has now moved from complete monopoly to that of a monopolistic
competition. Presently, the share of Net Assets of mutual funds is more than 7 percent of India’s
gross domestic product (GDP). Also, the monies accredited to mutual funds form an adequate
part of gross domestic savings (GDS) in the country. This indicates the important place of mutual
funds as an investment vehicle in the country. Majority of the money parked in mutual funds
come from the institutional segment including corporates, banks and foreign institutional
investors (FIIs). In which, corporates segment alone account for about 90 percent of institutional
AUM. The participation of retail investors in AUM stands quite low, which shows the ample
opportunity to be tapped by the industry in coming years. The industry is dominated by the top
10 mutual fund players who control more than 80 percent of the AUM while the bottom 10
mutual fund players control less than 1 percent of the AUM. Geographically, 87 percent of AUM
is covered by the top 15 cities of country. The current situation reveals some hard and
contradictory facts for the industry. Firstly, the Indian mutual fund industry could not establish
its worthiness as the preferred investment vehicle among the general investors till now despite
having more than forty five years of its existence; even though the industry is growing
consistently. Secondly, there are some factors adversely affecting the investors’ confidence in
the industry but at the same time, fostering economic variables are giving faith for its bright
future. This contradictory state of mutual funds in the 2 country prompted the researcher to
conduct a study entitled “Problems and Prospects of Mutual Funds in India”.
INTRODUCTION
The Indian industry of mutual funds is evolving continuously. There are several Indian
industries bodies which are investing in investor education. Investing in Mutual funds is
still considered a risky option. The types of mutual fund options available to an investor
make it one of the most flexible and comprehensive investments that are helpful for the
people who are willing to invest.
The regulations of RBI and SEBI on mutual funds make it a safer option to maximize
your profits and invest money in something useful.
Concept of mutual funds in India
The name itself suggests that a ‘Mutual fund’ is like an investment channel that helps
several investors to combine their resources to purchase stocks, bonds, and other
securities for their earnings.
These combined funds which are referred to as Assets Under Management (AUM) are
then invested in a mutual fund company’s manager who has expertise in it. The mutual
fund company is called as an Asset Management Company (AMC).
This combined underlying holding of the fund is called the ‘portfolio’ and each investor
owns some portion of this portfolio and this portion which the person holds is in the form
of units.
History of mutual funds in India
 In India, the industry dealing with mutual funds was established in the year 1963 with
the development of the Unit Trust of India (UTI) which was an initiative of the Indian
government and the Reserve Bank of India.
 The SBI Mutual Fund became the first NON-UTI mutual fund in India in the year 1987.
 The year 1993 heralded a new era in this industry of mutual funds as it was marked
by the entry of private companies.
 The SEBI Mutual Fund Regulations came into being in 1996 after the passing of the
Securities and Exchange Board of India (SEBI) Act of 1992.
 After this, the Mutual fund companies have extended and grown exponentially with
the help of foreign institutions setting companies in India through joint ventures and
properties.
 The Association of Mutual Funds in India (AMFI), a non-profit organization, was
founded in 1995 as the industry developed. It was formed with the objective of
promoting healthy and ethical marketing practices in the mutual fund industry of India.
 SEBI has made the certificate of AMFI mandatory for all those who are engaged in
marketing mutual fund products.

Objective of mutual funds

The objectives of mutual funds are as follows:
 It helps in generating an additional source of income other than the general earnings.
 It helps in financing some of the future needs a person dreams of, such as buying a
home, post-retirement plans, education of children and their education, legacy planning,
etc.
 It can help in increasing the savings a person possesses.
 It is useful in reducing tax liabilities.
 It helps in protecting your savings from inflation.

What is a mutual fund?

A mutual fund is a commercial product that invests in stocks or bonds. 8
A mutual fund is a pool of investment which is managed professionally for the purpose of
purchasing various securities and culminating them into a strong portfolio that will give
you attractive returns over and it will be above the risk-free returns which are currently
being offered by the market.
How mutual funds work in India
 The working of mutual funds in India is the same as that of the USA. These funds are
regulated by SEBI in India.
 In order to start funding, the starters need to have at least 5-year experience in the
financial industry.
 He should have maintained a net worth for 5 years after he gets registered.
 A minimum start-up capital of about Rs. 500 million and Rs. 200 million is required for
open-ended and close-ended schemes respectively.
 SEBI registration is compulsory. After it, the sponsor should form a trust to hold all
the assets of the fund either by appointing a new company or by choosing any existing
Asset Management Company (AMC).
 The trust’s job is to overlook the funds and it should be done considering the best
interests of the shareholders.
 The Asset Management Company manages the portfolio of the fund and then shares
the information with the shareholders.
 The funds are invested in various sectors like IT, real estate, etc.
 In case one sector is unable to perform well then the others will compensate for it and
average out the loss suffered.
 The fund managers will send the account statements quarterly to the investors. The
financial reports of the fund are also sent to the investors so that they can monitor how
the fund is performing.
 Mutual fund investment is flexible in nature and it can be done in many ways as the
minimum investment amount is Rs. 500.
 An investor can invest offline, online, directly or through fund managers.
 It provides easy liquidity to investors as one can easily encash the money at the time
of need.
 There is a transparency in the investment making since it is under the SEBI
guidelines.
 A monthly report is shared by investors to make the investment more transparent.
 A load fund charges commission on the purchase and sometimes at the time of sale.
But no-loan funds are free from commissions.

Structure of mutual fund in India

 Mutual Funds have a 3-tier system in India.
 The 1st tier is the Sponsor, 2nd tier is Public trust and the 3rd tier is Asset
Management Company.
 A sponsor is a person who establishes a mutual fund and is associated with another
corporation.
 It is necessary for a sponsor to seek approval from the Securities and Exchange Board
of India.
 After the approval, the sponsor has to make the Public Trust as per the Indian Trusts
Act, 1882.
 The Trust itself cannot enter into any contract as it does not have any legal identity.
So, for that purpose trustees are appointed to act on behalf of the Trust.
 The instrument of Trust must be in the form of a deed agreement between the
Sponsor and the trustees of that mutual fund under the Indian Registration Act, 1908.
 After that, the Trust gets registered with SEBI leading to the creation of the fund.
 The trust, when registered, is known as a mutual fund.
 The sponsor and trust are two separate entities.
9
 The Trust acts as an internal regulator of the mutual fund. Its main task is to check
whether the money is managed properly or not as per the objectives.
 Then the Trustees appoint an Asset Management Company (AMC) to manage the
collected money through the mutual fund.
 The approval of SEBI is required for AMCs.
 The Board of Directors of an AMC has at least 50% of independent directors.
 The AMC functions under the control and supervision of its Board of Directors, SEBI
and the directions of the Trust.
 AMC floats new schemes in the name of the Trust and manages these schemes by
selling and buying securities.
 For this purpose, the AMC needs to follow the guidelines given by the SEBI as per the
agreement signed between the company and the Trust.

Regulation of Mutual Funds in India

The term “regulation” means a rule or directive made and controlled by an authority.
 Mutual funds are regulated by the Securities and Exchange Board of India (SEBI).
 In 1996, SEBI formulated the Mutual Fund Regulation.
 SEBI is additionally the apex regulator of capital markets and its intermediaries.
 The issuance and trading of capital market instruments also come under the purview
of SEBI.
 Along with SEBI, mutual funds are regulated by RBI, Companies Act, Stock exchange,
Indian Trust Act and Ministry of Finance.
 RBI acts as a regulator of Sponsors of bank-sponsored mutual funds, especially in the
case of funds offering guaranteed returns.
 In order to provide a guaranteed returns scheme, a mutual fund needs to take
approval from RBI.
 The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority
under SEBI regulations.
 Mutual funds can appeal to the Ministry of finance on the SEBI rulings.

Who regulates mutual funds in India

 Primarily, mutual funds are regulated by the Securities and Exchange Board of India
(SEBI).
 A mutual fund should have the approval of RBI in order to provide a guaranteed
returns scheme.
 The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority
under SEBI regulations.
 The Association of Mutual Funds in India (AMFI) has been made to develop this Mutual
Fund Industry of India on professional and ethical lines and to enhance and maintain
standards in all areas with a view to protect and promote the interests of mutual funds
and their unitholders.

Review of Literature
Jack Treynor (1965) developed a methodology for performance evaluation of a mutual
fund that is referred to as reward to volatility measure, which is defined as average
excess return on the portfolio. This is followed by Sharpe (1966) reward to variability
measure, which is average excess return on the portfolio divided by the standard
deviation of the portfolio.
Sharpe (1966) developed a composite measure of performance evaluation and imported
superior performance of 11 funds out of 34 during the period 1944-63. 10
Michael C. Jensen (1967) conducted an empirical study of mutual funds in the period of
1954-64 for 115 mutual funds. The results indicate that these funds are not able to
predict security prices well enough to 30 outperform a buy the market and hold policy.
The study ignored the gross management expenses to be free. There was very little
evidence that any individual fund was able to do significantly better than which investors
expected from mere random chance.
Jensen (1968) developed a classic study; an absolute measure of performance based
upon the Capital Asset Pricing Model and reported that mutual funds did not appear to
achieve abnormal performance when transaction costs were taken into account.
Carlsen (1970) evaluated the risk-adjusted performance and emphasized that the
conclusions drawn from calculations of return depend on the time period, type of fund
and the choice of benchmark. Carlsen essentially recalculated the Jensen and Shape
results using annual data for 82 common stock funds over the 1948-67 periods. The
results contradicted both Sharpe and Jensen measures.
Fama (1972) developed a methodology for evaluating investment performance of
managed portfolios and suggested that the overall performance could be broken down
into several components.
John McDonald (1974) examined the relationship between the stated fund objectives and
their risks and return attributes. The study concludes that, on an average the fund
managers appeared to keep their portfolios within the stated risk. Some funds in the
lower risk group possessed higher risk than funds in the most risky group.
Dr. Kavita Chavali (2009) has done an empirical study named “Investment performance
of equity – linked saving schemes”. Analysis was made to compare equity linked saving
schemes with other traditional forms of tax saving schemes, analyzed equity linked
saving schemes picked at random on the basis of risk & return and also made an
attempt to understand level of awareness regarding mutual funds among balanced class
and various factors that informed individual investors to invest in equity linked saving
schemes. The analysis has been made by selecting 5 sectors and diversified portfolio
composition of ELSS. The results of the study were based upon comparison of ELSS
funds on the basis of return, risk (SD Beta, Alpha, Sharpe ratio) with its benchmarks
S&P.CNX Nifty. The study is further extended by analyzing the questionnaire filled in by
the investors.
Dr. Hitesh S. Viramgami (2009) in his article “Resource mobilization by Indian mutual
fund industry” has made an attempt to analyze total resource mobilization by the mutual
funds industry for eight year period (2001-2007). The study entitled “Resource
mobilization by Indian Mutual Fund Industry” shows that 70 percent of the resources
mobilized are from liquid / MM Schemes, growth schemes, ELSS and income funds
offered by private sector mutual funds share of public sector has decreased to 8.81
percent over the study period.
Suppa-Aim and Teerapan (2010) in the thesis “Mutual fund performance in emerging
markets the case of Thailand” specifically investigates mutual funds in one of the
emerging economies, Thailand, using a more extensive dataset than previous studies; it
controls for investment policy and tax-purpose differences, as unique characteristics of
mutual funds in Thailand.
Dr. Susheel Kumar Mehta (2010) in the article named “SBI vs. UTI – a comparison of performance of mutual
funds schemes”. has taken 10 UTI and 10 SBI mutual funds and analyzed their performance. The study
concluded that preference of UTI & SBI mutual funds

Research Methodology
For the collection of data regarding the conceptual framework,
performance of the mutual
funds and the preference of mutual fund investors, the data has been
collected through
Primary and Secondary Sources as follows:
Primary Data
For studying the preference of mutual funds, primary data has been
collected with the help
of the questionnaire. Information has been gathered from investors
visiting the local
registrars and AMC branches of mutual funds in Visakhapatnam. The
sample is a convenience
sample and constitutes 300 respondents. People from different groups are
included in the
sample and categorized into male and female, different age groups,
different 53 occupations
viz., public sector, private sector, government, businessmen, self
employed, students,
homemakers and other professionals with different income levels. The
sample size of 300 is
considered because of the primary data is collected through direct
interaction with
theinvestors in the offices of registrars such as CAMS,KARVY, WAY TO
WEALTH and AMC
BRANCHES viz., RELIANCE, UTI, LIC, FRANKLIN TEMPLETON, HDFCetc.
The questionnaire
is aimed to understand the investors’ preferences of mutual funds and its
relationship with
the socio-economic profile of the respondents .
Secondary data
The study has included scheme wise performance appraisal of various
mutual funds. Data
pertaining to the performance of the funds were drawn from secondary
sources through data
published by AMFI, mutualfundsindia.com,moneycontrol.com and
BSE.com,
valueresearch.com, ici.org, mutual funds books, journals and websites of
other mutual funds.