Project Report On

Comparative study of Mutual Fund in

India
Under the guidance of
Ms Barkha Jamwal
(Mentor)
A project submitted in partial fulfilment of the requirement
for degree of Office Management and secretarial practices
(OMSP) University of Delhi

Submitted by
Rahul
College Roll No.: 2K17/OM/05
Examination Roll No.: 17013575050
 Declaration by Student

This is to certify that the material embodied in this study entitled “Comparative study of
Mutual Fund in India” is based on my own research work and my indebtedness to other
work/publications has been acknowledged at the relevant places.

This study has not been submitted elsewhere either wholly or in part for award of any degree.

Name: Rahul

College Roll No.: 2K17/OM/05

Examination Roll No.: 17013575050

 DECLARATION BY THE MENTOR AND THE
TEACHER INCHARGE

This is to certify that the project titled “Comparative study of Mutual Fund in India” done by
Rahul is a part of his academic curriculum for the degree of BA- (Voc) Office Management
And Secretarial Practices (OMSP). It has no commercial implication and is done only for
academic purpose.

“Ms Barkha Jamwal” Dr Meenakshi Agrwal

(Mentor) Teacher in charge
Department of commerce
 ACKNOWLEDGEMENT

The present work is an effort to throw some light on the “Comparative study of Mutual Fund
in India”. The work would not have been possible to come to the present shape without the
able guidance, supervision and help given by a number of people.

With the deepest sense of gratitude I acknowledge the encouragement and guidance received
from my mentor Ms Barkha Jamwal.

She has provided me with valuable guidance, sustained efforts and friendly approach. It
would have been difficult to achieve the results in such a short span of time without her help.

I convey my heartfelt thanks to all those people who helped and supported me during the
course of completion of my project.

Name: Rahul

IIIrd Year Sem. V

College Roll No.: 2K17/OM/05

Examination Roll No.: 17013575050

 INDEX

I. Executive Summary

II. Introduction

III. Literature Survey

IV. Concept of mutual fund

V. Definitions

VI. Principles

VII. Types of Mutual Fund Schemes

VIII. Advantages of mutual funds

IX. Disadvantages of mutual funds Conclusion

X. The Mutual Fund Industry in India: Opportunities and

Challenges

XI. Structure of mutual funds in India

XII. Working of mutual funds

XIII. Procedures and functions

XIV. Case Study

XV. Conclusion

XVI. Bibliography
 Executive Summary

The Indian mutual fund industry is one of the fastest growing and most competitive
segments of the financial sector. As of August 2013, the total AUM stood at Rs. 7.66
trillion. However, growth rates of AMCs have come down from the peak levels seen
in the early 2000s. One of the biggest reasons behind this is the lack of healthy
participation from a large part of the country.

This lack of penetration can be due to two reasons: a. Low demand of mutual funds
from the public outside the major (T-15) cities. This low demand in turn could be
caused by low levels of financial literacy, cultural attitudes towards savings and
investments etc.

Low supply of mutual funds from AMCs outside the major cities. The low supply
could be due to perceived lack of demand from the general retail investor or due to
lack of available manpower in these areas.

The study first documents how Assets under Management (AUM) are unevenly
distributed across the country and then proceed to scrutinize the reasons behind this
uneven penetration. It focuses on the AMCs distribution networks using proxies such
as the distribution of independent financial agents (IFAs) across the country, sales
made by IFAs, distributional efficiency of AMCs etc.

A survey of fund houses was carried out to gain a better understanding of the causes
holding them back from expanding beyond T-15 cities. The study found that low
number of agents (per capita) in sub-urban and rural areas and the slow growth rates
in mutual fund sales in the corresponding areas are closely associated with each other
 Introduction

Although a large number of studies have been carried out on the growth and financial
performance of mutual funds in India (Boston Analytics, 2010), (PWC, 2013), not
much light has been shed on the causes for the low penetration of mutual funds
outside the top fifteen cities. There is research looking at the causes for the variation
of mutual funds industry across developed countries. However, such work typically
does not differentiate between the various regions of the nations included (Khorana et
al., 2005). While such studies may help policymakers in determining the ideal inter-
regional macroeconomic conditions to develop a healthy mutual fund industry, they
rarely explain the differences in mutual fund penetration within a country. It is well
known that mutual funds offer their investors benefits difficult to obtain through other
investment vehicles. Benefits such as diversification, access to equity and debt
markets at low transaction costs and liquidity are some such advantages. Given these
benefits, one would imagine that Indian households, characterized with gross
domestic savings of close to 28% of the total GDP (World Bank, 2012), one of the
highest in the world, would flock to invest their savings I mutual funds. However, a
recent report (PWC, 2013) points out that the distribution of assets under management
(AUM) across cities is highly skewed in favour of the top fifteen (T-15) cities of
India. The T-15 cities contribute to 87% of the entire AUM in the country. Even
within the T-15 cities, the top five cities (Mumbai, Delhi, Chennai, Kolkata and
Bangalore) contribute 85% of the entire AUM at the T-15 level i.e. 74% of the entire
AUM in the country (PWC, 2013). It is important to inquire into the causes of this
skewed investor participation rate. There are several factors which could possibly
explain this variation. Cross-country studies have pointed out that laws, regulations
and governance, supply side
factors, demand side factors and technological issues could all affect the size of mutual
industry in a given country (Khorana et al. 2005). Some of these factors such as laws and
regulations are not applicable to our study since they are uniform across India and do not vary
from one state to another. The factors that we focus in our study are therefore mainly supply
and demand side factors. Our study divides the supply side i.e. delivery mechanisms into
three alternative channels: independent financial advisors (IFAs), banks and in-house
distributors.
We focus on these delivery channels used by Indian mutual fund houses. To begin with, we
document relationships between demographic and economic variables on one hand and
mutual fund penetration on the other to discern the underlying factors which could help
explain the success of a mutual fund in a given part of the country. We do this using data
collected from all the mutual funds aggregated at district levels and by observing time-series
data.
We next survey Indian mutual fund houses to identify the regulatory and distributional
challenges that according to them hold them back from increasing their business in areas
which presently have a low number of mutual funds. We also inquire into human resource
problems that could be holding back their penetration even if the fund houses did want to
increase their presence in the less developed districts of India.
Our study brings out several interesting results which would be of considerable use to the
fund houses, regulators, financial practitioners and scholars in general. We confirm that bulk
of the mutual fund sales outside the T-15 cities are caused by IFAs. We also find that
demographic and social indicators such as adult literacy and bank penetration are only
weakly correlated with mutual fund penetration in a given area. Areas with the highest
mutual fund presence tend to be those where the proportion of households with more than Rs.
300,000 income and IFA presence happen to coincide. We also find that IFAs do not usually
focus on those areas which have the highest propensity to invest in mutual funds (as reflected
by the districts with the highest proportion of the families earning more than Rs. 300,000 per
annum). This suggests that the present AUM levels can be increased by several percentage
points if IFAs were made to apply their efforts in the right areas.

The rest of this study is organized in four sections. The next section presents the opportunities
and challenges in investing in mutual funds. The third section describes the methodology and
the source of our data gathered for the study together with the statistical analysis of the data.
The fourth section presents the responses of the fund houses on what is holding the industry
back from increasing its penetration outside the T-15 cities. The final section of the report
presents the conclusions and suggests directions for future studies.
 Literature Survey

While discussing about various channels of distributions (PWC, CII, June 2013)
points out that Independent Financial Advisors (IFAs) play a crucial role in fund
distribution. They interact with the investors on a regular basis and provide advice
on scheme selection to asset allocation and asset diversification. Thus, they have
the potential to influence the investors' decision and sell the MF products. This
approach has its risks as well. If the IFAs are not empowered with professional
training and education, they run the risk of mis-selling schemes. Without proper
training, it would be difficult for IFAs to explain or convince small town investors
about the advantages of mutual funds over traditional investments like savings
accounts, FDs etc. The AMCs and the regulator need to enhance the financial
literacy across the country through regular programs and campaigns beyond top
15 cities.
Laws, regulation and governance characteristics play an important role in the
development of financial sector. La Porta et al. (1998) examine the role of laws
governing investor protection, transparency of reporting, Insider trading, Taxation,
the quality of enforcement of the laws, potential conflicts of interest between the
fund and the fund investors (Thompson & Choi, 2001) and the ownership
concentration across several countries and their financial development.
Supply side issues, by which we mean the characteristics of the financial services
sector, will affect the size of the mutual fund Industry. Issues like bank
concentration (Nicola & Michele, 2001), breadth of the distribution channels,
restrictions from entering securities business (Barth et. al, 2001), ease of entry into
the fund industry like cost of setting up a new fund, time required to set up a new
fund and presence of government supported competitive financial products are
noted in the literature for their contribution to the growth of the industry.
Several demand side factors can be used to explain the size and diversification of

mutual fund industry in a country. Some of these factors include education,

literacy, presence of information sources, industry age etc. At the same time,

there are some trading characteristics like transparency and transaction costs

(Chiyachanta naetal, 2004) which also can be used to determine some of the

characteristics of the mutual fund industry.

Barber et al., 2005 argue that the purchase decisions of mutual fund investors are

influenced by salient, attention-grabbing information. Investors are more sensitive

to salient in-your-face fees, like front-end loads and commissions, than operating

expenses; they are likely to buy funds that attract their attention through

exceptional performance, marketing, or advertising. They found consistently

negative relations between fund flows and front-end load fees. A negative

relation between fund flows and commissions charged by brokerage firms was

also documented. In contrast, no relation (or a perverse positive relation) was

found between operating expenses and fund flows. Additional analyses indicate

that mutual fund marketing and advertising, the costs of which are often

embedded in a fund’s operating expenses, account for this surprising result.

Müller & Weber, 2010 investigate the consequences of financial literacy in the

context of mutual fund investments. They found that the level of financial literacy

is not related to the performance of the actively managed funds. In contrast,

overconfidence might prevent subjects from investing passively. A positive

relation was found between the belief of being better than average in identifying
superior investments and the likelihood of buying an active fund, thus confirming

this notion. Also, better-than-average thinking is positively correlated with financial

expertise.

Massa et al., 1999 identify a set of systematic factors that explain a significant

amount of the variation in flows. They examined common component to mutual

fund investor behaviour and tried to find out which asset classes may be
regarded as economic substitutes by the participants in the market for mutual
fund shares. They found that flows into equity funds, both domestic and
international, are negatively correlated to flows to money market funds and
precious metals funds. This suggests that investor rebalancing between cash and
equity explains a significant amount of trade in mutual fund shares. The negative
correlation of equities to metals suggests that this timing is not simply due to
liquidity concerns, but rather to sentiment about the equity premium. This paper
also finds that the factors derived from flows alone explain as much as 45 per cent
of the cross-sectional variation in mutual fund returns.
There has been a debate in the mutual fund industry that the abolition of entry
load has reduced the incentives for the distributors to go after new clients. The
restriction of entry load on existing and new mutual funds in 2009 affected the
functioning of the mutual fund industry and leading fund houses and distributors
had to restructure their business and operating models in order to arrive at a
profitable solution. However, researchers (Anagol & Kim, 2012) who have
examined the claim that abolition of entry loads had hampered the penetration
of mutual funds have found no evidence behind such claims.
Concept of mutual fund

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 then invested in capital market

instruments such as shares, debentures and other securities. [The combined holdings

of shares, debentures and securities and assets the fund owns are known as its

portfolio] Thus, the fund is owned jointly by all of the unit-holders. The income

earned through these investments and the capital appreciation realised are shared by them in

proportion to the number of units owned by them. The word 'mutual' in a 'mutual

fund' signifies that such benefits accrue pro rata to all the investors

in proportion to their investment; they share mutually the benefits arising there from. 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 basket of securities at a

relatively low cost.

Definitions

Different scholars have defined Mutual Fund differently. Frank K. Reilly has defined mutual

fund as an investment company, which pools funds belonging to many individuals

that is used to acquire a collection of individual investments such as

stocks, bonds, other publicly traded securities. Haling defines it as a major type of

investment-company that pools the funds of investors who are seeking some general

investment objective and invest them in a number of frequently traded different types of

securities Mutual fund is the institution, which collectively manages the funds from
different small investors. It mobilises savings from the public and provide them attractive

returns, security and liquidity by investing in capital market. It is a fund established in

the form of a Trust by a sponsor to raise monies by the Trustees

through the sale of units to the public under one or more schemes for investing in securities.

It is a diversified portfolio of stocks, bonds, or other securities run by a professional

money manager or, in some cases, a management It provides instant diversification in

a given area within objectives laid. These offer a variety of diversified options for

investments looking into varied risks and returns Regulation of the Securities and

Exchange Board of India (Mutual Funds) Regulations, 1996 defines a mutual fund

as a "fund established in the form of a trust to raise monies through the

sale of units to the public or a section of the public under one or more schemes for investing

in securities, including money market instruments". Thus a mutual fund is an

institutional device or an investment vehicle through which, the investors

pool their funds under the direction of an investment manager. These funds are invested in

wide variety of portfolios of securities in such a way as to minimise risk, while

ensuring safety and steady return.

 Principles

There are four time-honoured principles of mutual fund investing which are (1) broad
diversification, (2) professional management, (3) liquidity, and (4) convenience.
Diversification is essential to eliminate risk. It reduces and can even eliminate the
specific risk that comes with the ownership of just a few individual shares and
securities. Mutual funds provide two types of diversification: diversification within a
portfolio and diversification among portfolios. The second principle of mutual fund
investing is professional management. Managing an investment portfolio means
selecting and supervising the funds in accordance with the fund's investment
objectives and policies. The fund managers have the obligation to add value over and
above the returns generally received from the markets. The third principle of
mutual fund investing is liquidity. The mutual fund units may be purchased or sold at
a moment's notice at the fund's net asset value without incurring any cost or loss. The
fourth basic principle provides for simplicity and convenience for the
mutual fund transactions. A major reason for the remarkable growth in the mutual
fund industry has been the diverse classes of financial assets to which its principles
have been successfully applied.

Types of Mutual Fund Schemes

There are a variety of mutual fund products coming to the market so as to cater to the
requirements of different classes of investors. Figure 3.1 depicts the classification.
These schemes can be classified on the basis of

1. Structure/ constitution: a) Open - ended schemes

b) Close - ended schemes
2. Charges on investors: a) Load fund schemes
b) No-load fund schemes
3. Investment Objectives: a) Income schemes
b) Growth schemes
c) Balanced schemes
d) Tax saving schemes or ELSS
e) Index fund schemes
f) Sector fund schemes
g) Assured Return schemes
h) Miscellaneous schemes
4. Nature of investment a) Financial asset fund schemes
b) Physical asset fund schemes
5. Geography: a) Domestic schemes
b) Offshore schemes or Global schemes
Open-ended Schemes

Funds available for subscription all the year round excluding the period of
book closing are open-ended schemes. These schemes do not have a fixed
maturity and the units can be sold or bought on any day at a price calculated
based on the NAV (Net Asset Value). NAV is the per unit market value of the
assets of the scheme minus its liabilities. The most popular example is Unit 64
of the UTI. SBI magnum Birla Tax Plan, Reliance Growth, Sundararn Tax
Saver, LIC Dhanasahayog, etc. are other examples.

Close-ended Schemes

Schemes have a stipulated maturity period are close ended schemes. Direct
investment in such schemes can be done at the time of the initial issue and
thereafter buying or selling can be done through the stock exchanges where
the scheme is listed. The maturity period may range between 2 to 15 years.
The market prices are expected to be equal to the NAV, but for obvious
reasons they are seldom equal to the NAV, and most of the units are quoted
much below to the NAV. Kothari Pioneer Tax shield, UTI Market Equity Plan
99, Morgan Stanley Growth Fund, Sundaram Tax Saver etc. are examples of
close ended schemes.
Load fund schemes

Mutual fund schemes that collect charges from the investors at the time of entry, exit
or both are called load fund schemes. If the charge is collected at the time of entry it is
front end load and if it is collected at the time of exit it is called repurchase or
backend load.

No-load fund schemes

Schemes that do not collect any such charges are no-load fund schemes.

Income Schemes
Income schemes seek to provide regular and steady returns in the form of dividends.
These schemes invest in fixed debt securities as well as money market instruments.
These schemes are ideal for investors who need some regular income to supplement
their earnings. Alliance Monthly Income Plan, HDFC Income Fund, Escorts Income
Plus, Kothari Income Builder, Templeton India Income Fund etc. are examples.
Growth Schemes

Growth schemes aim to provide capital appreciation over the period of

investment. These schemes normally invest a majority of its funds in equities
and convertible debentures. These schemes are meant for investors seeking
growth over the long term. Can Expo, Franklin India Growth Fund, HDFC
Growth Fund, ING Growth Portfolio, Kotak Mahindra K 30, Zurich Capital
Builder, etc are examples.

Balanced Schemes

These schemes aim to provide both growth and income by periodically

distributing a part of the income and capital gains they earn. They invest in
both shares and funded income securities in the proportion stated in their offer
documents. These schemes are ideal for investors looking for a combination of
income and moderate growth. Can triple, DSP Merill Lynch Balance Fund,
Dundee Balance Fund, Kothari Balanced Fund, Tata Balance Fund, etc are
examples.

Tax Saving Schemes or ELSS

These schemes offer tax incentives to the investors under the Income Tax Act,
1961. Previously deduction of income under Section 80CCB were allowed in
respect of the investment made in ELSS. However, various pension schemes,
unit-linked insurance schemes, etc are other schemes, which can be
categorised under this category. Alliance Tax Relief, BOB ELSS 96, Escorts
Tax Plan, Kothari Pioneer Tax shield, Tata Tax Savings, UTI Equity Tax
Savings Plan etc. are examples.

Index Funds

Schemes that attempt to replicate the performance of a particular stock market

index such as the BSE Sensex or the NSE 50. The returns offered are linked
with the changes in the index. These schemes are ideal for investors who are
satisfied with an equivalent return that of an index. These schemes gather
importance now a days due the present capital market position. UTI Master
 Index Fund, UTI Nifty Index Fund, Franklin India Index Fund etc. are
examples.
Sector funds

These schemes invest in securities of a specified sector of an industry or

market. The risk and potentiality of the specific sector would be reflected in
these funds. Sector fund schemes are ideal for investors who have already
decided to invest in a particular sector or segment. Alliance Basic Industries,
Kothari Pioneer InfoTech, Kothari Pioneer FMCG Fund, Tata Life Sciences
and Technologies, Internet Opportunities Fund, UTI Growth Sectors Fund, etc
are some examples.

Assured Return Schemes

SEBI allows only those mutual funds that have a track record of 5 years to
launch guaranteed return funds. The guarantee of return can be given only for
one year at a time with post-dated cheques.

Financial asset fund schemes

Generally mutual funds are investing their funds in the financial assets like
shares, bonds and government securities. The broad classifications are equity
funds, bond funds and money market funds.

Bond Fund or Gilt Fund Schemes

Schemes to pass the advantages of debt markets to the investors by investing

in a variety of bonds and debentures are Bond Schemes. These carry less risk
as compared to f h d s that have equity shares in their portfolio. Magnum Bond
Fund, UTI Bond Fund, Birla Gilt Plus, etc are examples.

Money Market Schemes

Funds invest wholly in money market instruments such as treasury bills,

certificates of deposits, commercial papers and bill discounting. These funds
aim to provide easy liquidity, preservation of capital and moderate income.
These schemes are meant for corporate and individual investors to invest their
 surplus funds for a short period. IDBI Principal Money Market Fund, Kothari
Pioneer MMF, UTI Money Market Fund, etc are examples.

Physical asset or commodity fund schemes

Mutual funds can also invest the funds in physical assets, which specialise in
investing in different commodities directly or through shares of commodity
companies or through commodity futures contracts. Common examples are
gold funds, other precious metals or real e states.

Domestic Mutual Fund Schemes

Schemes launched with a view to mobilise savings of citizens of the country

are domestic schemes. Almost all the schemes offered by the mutual funds
other than the offshore schemes are domestic schemes.

Offshore Schemes

Mutual fund schemes launched with a view to mobilise thesavings of foreign

countries for the purpose of investment in the Indian securities are offshore
securities. The amount shall be mobilised in foreign currencies. These
schemes are the doors to the Indian capital market to the foreign investors.
India Fund of UTI, hiorgan Stanley India Investment Fund, Jardine Fleming
India Fund, LG India Fund, etc are examples. The list of schemes offered by
different mutual funds as on March 3 1, 2000 is given as Appendix IV.
 Advantages of mutual funds

A mutual fund is generally seen as a portfolio manager, managing the funds of the
unit holders. An investor of mutual fund scheme can automatically reap the benefits
of research and a wider range of low cost information services. The major advantages
of investing in mutual funds are as follows

Professional Management

One of the most important benefits is the availability of low cost, highly
professional management services. Mutual funds are managed by highly
skilled mangers with sound knowledge of the market and wide experience in
investment. Further the cost to the investor is proportionate to investment
because management fees are distributed pro rata basis, with smaller investors
have to pay less than big investors.

Portfolio Diversification

Individual investors have to face company-related risks and market-related

risks. Company-related risks arise due to wrong selection of investments, non-
performance of the company, lack of monitoring of the performance, etc.
Market related risk arise due to the volatility of the market caused by
economic and political factors. Higher returns, however, depend on the higher
level of risk. This risk can be dispersed and reduced through diversification of
portfolio. For a small investor appropriate portfolio diversification may not be
possible due to shortage of minimum required funds, but when a small
investor invests in mutual fund, his portfolio automatically gets diversified.

Higher return

Mutual funds have the potential to provide a comparative higher return as they
invest in a diversified portfolio.
Easy Liquidity

Liquidity is an important consideration for any investor. Mutual fund

investment offers enough liquidity to investors. In the case of open-ended
schemes money invested can be received back from the mutual fund itself at
NAV related prices. In the case of listed close-ended schemes the units can
be either sold at the prevailing market prices or avail of the facility of direct
repurchase at NAV related prices fixed by the mutual fund.:

Transparency

Regular and periodical information on value of investment can be received by

the investors in addition to disclosure on the specific investments made by the
scheme, the proportion invested in each class of assets and the fund manager's
investment strategy and outlook.

Flexibility

Many mutual funds allow investors to switch from one fund to another.
Investors can switch from growth to income funds and vice versa, and
accordingly their objective from capital gains to income and vice versa. The
investor can also systematically invest or withdraw funds through the facilities
like regular investment plans and dividend reinvestment plans.

Choice of schemes

Mutual funds are floating different schemes with a variety of investment

objectives. This creates an opportunity among investors to choose the schemes
on the basis of their objectives, motivations, and requirements

Investment Protection

All mutual funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors.
The operations of mutual funds are regularly monitored by SEBI from the
reports submitted by the mutual funds. Funds must publish details of their
operations for public information. However, no guarantee of investment or
 return can be provided by SEBI or any similar agencies.

Tax Benefits

Mutual funds as well as investors can enjoy certain tax benefits. Any income
of a notified mutual fund is fully exempt from tax under Section 10 (23D) of
the Income Tax Act, 1961. Income of mutual funds by way of dividends,
interests, etc on investment or capital gains will be exempt from payment of
Income Tax. The UTI is also not liable to pay any tax is respect, of any
income, profits or gains. The tax benefits enjoyed by the mutual funds will be
automatically passed on to the investors. The investors of mutual fund
schemes can enjoy income tax benefits both in the form of deduction from
income under Section 80 L and as tax relief under Section 88.. Income
received on units of mutual funds are quaed for a deduction up to Rs.12000
along with other specified securities and deposits under Sec. 80L. Further an
additional deduction of Rs.3000 is also available on dividends from mutual
funds
investments. Twenty percent of the amount invested in mutual funds along
with other investments is deductible from the tax payable subject to a
maximum of Rs.2000.

Convenient Administration and Record keeping

Record keeping is simplified and is handled by the fund, which avoid many
problems such as bad deliveries, delayed payments and unnecessary follow-up
with brokers and companies. Hence, time is saved and made investing easy
and convenient.

Reduced transaction costs

Investors have to bear all the costs of brokerage and custodian charges.
Through mutual funds advantages of economies of scale can be enjoyed.
Mutual funds need to pay a lesser cost than individual investors.
 Disadvantages of mutual funds

Mutual funds have certain disadvantages also. The main among them are as follows:

Higher risk

All mutual funds are subject to risks and those that depend primarily to stock
markets have higher risks. Of course the potential for higher returns is also
higher than in funds that invest in debt markets and government securities,
where there is lower risk profile with steady income.

Our fund managed by others

An investor in a mutual fund has any type of control over the portfolio
management. Investor loses the right of building his own portfolio of shares
and securities as it is delegated to the fund managers and just rely on the due
diligence of the fund managers.

No control over costs

Investors absolutely have no control over the overall costs of investing.

Besides, they have to pay investment management fees and fund distribution
costs only for the sake of obtaining the mutual fund services.

Difficulty of choosing from

As a large number of mutual fund schemes are available the investor has to
make a correct choice. He may need advice of experts on how to select a fund,
which satisfies his investment objectives, which is quite similar in the case of
direct investing in the share market.

Conclusion

In this part, we made an attempt to review the basic concepts of mutual funds. In the
succeeding part an effort is made to explain the structure and legal structure in which
mutual funds work in India.
 Working and regulation of mutual funds in India

Introduction

The structure of mutual funds differs from country to country. The structure
followed in countries like the USA, the UK, Japan and India differ in its
workings and structures. The regulatory environment also differs from country
to country. The structure, working and the regulatory environment of the
mutual funds specific to India are discussed in this part.

Structure of mutual funds in India

Mutual funds have a special structure unlike a joint stock company or a

partnership firm. All the mutual funds (except money market mutual funds,
foreign financial institutions and the UTI) are regulated by the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996, which is given as
Appendix I1 (the annexure part is excluded). As per the regulations a mutual
fund is comprised of four separate participants or constituents, namely the
sponsor, the mutual fund trust, the asset management company (AMC) and the
custodian. There are some more additional entities like depository participant,
bankers, brokers and registrars or transfer agents. The structure of the UTI is
quite unique where the activities of the trustee, the AMC and the custodian are
combined. The pictorial representation of the structure is given in Figure

Sponsor
The sponsor can be any person who, acting alone or in combination with
another body corporate, establishes the mutual fund and gets it registered with
SEBIIO. He must have a sound track record and genera3 reputation of fairness
and integrity and is required to contribute at least 40% of the net worth of the
asset management company.

Mutual fund
The mutual fund shall be constituted in the form of a registered trust under the
Indian Trusts Act, 1882. It is the Board of Trustees who manages the mutual
fund. The Board of Trustees may be either a body of individual or a corporate
 body. Most of the funds in India are managed by Boards of Trustees. While
Board of Trustees are governed by the provisions of the Indian Trusts Act,
where the Trustee is a corporate body, it is required to comply with the
provisions of the Companies Act, 1956.

Asset Management Company (AMC)

The Board or the Trustee Company protects the investors' interests. Instead of
managing by them, Trustees appoint an Asset Management Company (AMC)
to manage the portfolio of securities as per the defined objectives, Trust Deed
and SEBI Regulations. AMC is required to be approved and registered with
SEBI. Chapter IV of the SEBI (MF) Regulations, 1996 contains the
regulations . regarding the appointment, obligations, and the related aspects of
an AMC. The Trust is created by the execution of the Trust Deed. The sponsor
does the execution of the deed in favour of the Trustees. The Trust Deed
should be stamped and registered under the provisions of the Indian
Registration Act and registered with the SEBI. Trust Deed contains clauses
relating to the establishment of the trust, the appointment of Trustees, their
powers, duties and obligations, etc. l2

Custodian
The custodian is responsible for safe keeping of assets of the fund, which may
mainly be in large volumes of securities. He has to get a certificate of
registration to any on the business of custodian of securities under the SEBI
(Custodian of Securities) Regulations, 1996 13. The Board of Trustees
appoints the custodian and enters into a custodian agreement14.

Depository Participant
Instead of having physical certificates of securities they can be dematerialised
with a depository. It is through a Depository Participant mutual funds hold its
dematerialised securities.

Bankers
Financial dealings of mutual funds like buying and selling units, paying for
investments made, receiving the proceeds on sale of investments and paying
the operational expenses are done through banks.
Brokers
It is through brokers, agents and distributors the units of mutual funds are sold.
A broker usually acts on behalf of several mutual funds simultaneously and
may have several sub-brokers and agents under him.

Registrar/ transfer agent

The registrar/ transfer agent's duty is to handle the registry related work of the
unit holders. They are responsible for issuing and redeeming units of mutual
funds and other related services.
 Working of Mutual Funds

The mutual fund raises money through sale of units under one or more
schemes abiding the SEBI guidelines. The trustees see that the schemes
floated and managed by the AMC are in accordance with the trust deeds and
SEBI guidelines. The trustees have the right to obtain relevant information and
quarterly reports from the AMC. They can also dismiss the AMC under
specific conditions. The trustees are required to submit half yearly reports to
SEBI on the activities of the mutual fund. The AMC is appointed by the
trustees to float the mutual fund schemes and manage the funds raised by
selling units under a scheme. The AMC must act as per SEBI guidelines, the
trust deeds and the management agreement between the trustees and the AMC.

The Mutual Fund Industry in India: Opportunities and

Challenges

The Indian mutual fund industry finds itself in an economic landscape which has
undergone rapid changes over the past three years. The industry achieved a high water
mark when it doubled its AUM from Rs. 3.6 trillion in FY2007 to Rs. 6.13 trillion in
FY2010 – clocking an impressive growth rate of 16.2% per year. Since then the
Indian economy (coupled with the emerging economies) has faced a slowdown – the
most severe of which are happening as this report is being written. From an average
GDP growth rate of 8-9% during the 2008-2011 years, the Indian economy is now
growing at a lacklustre 4.8% growth rate in Q2 2013. Coupled with a steep decline in
the value of the Indian rupee, the mutual fund industry now finds itself in a capricious
global economic environment. However, there is strong reason to believe that the
Indian mutual fund industry has not yet seen its global peak and if proper measures
are taken, the industry could get back on its former growth path.
One of the biggest challenges that the mutual fund industry faces is the lack of healthy
participation from a large part of the country. To illustrate this lack of participation,
we first aggregated the AUMs originating out of each district of India. We then rank
ordered all the districts of India in descending order of their domestic product (GDP)
and then partitioned this list into ten parts. The top 60
districts formed the first decile followed by the second decile and so on. We then
aggregated the AUMs and GDPs for each of these deciles and took the ratio of these
two figures. The AUM/GDP ratio is one of the best indicators of how much of the
yearly income in a given district is being invested into mutual funds. While the figure
of rupees 7.5 trillion of AUM may sound impressive on paper, this figure is marred by
a sharp divide in terms of investment in the first decile of districts and the rest of the
country. Chart 1 on the next page presents this stark contrast. For the country as a
whole, the AUM/GDP stands at approx. 6.99%. When this ratio is calculated for the
first decile of districts, the ratio is 29.52% - slightly lower than the world average.
However, the rest of India paints a dismal picture with the AUM/GDP ratio standing
at 1.82%. This skewed origination of AUM in India is its single biggest challenge and
its biggest opportunity at the same time.

Chart 1: AUM/GDP Ratio

This under penetration of financial inclusion is not unique to mutual funds, but a
deeper structural problem characteristic of the Indian financial sector. More than half
of India’s population does not have any access to formal banking services. According
to 2012 World Bank Global Findex, only 35.23% of respondents in India have an
account (either self or together with someone else) at a bank or some other formal
financial institution. Even in savings indicators at formal or informal institutions,
India continues to be a laggard. Even Bangladesh with a 47% lower per-capita Gross
Domestic Product (GDP) based on purchasing power parity performs better in
financial inclusion parameters. We reproduce some of these financial indicators from
World Bank’s Global Findex survey as Charts 2 and 3 to highlight some of the key
areas where India lags

Chart 2: Percentage of people above 15 years of age

operating a Saving/Checking account at a formal institution
 Chart 3: Saving propensity indicators

Financial inclusion has for long been a priority for the policy makers in India. The
Reserve Bank of India (RBI) has permitted the banks to use the services of Business
Facilitators and Business Correspondents. A roll out of Ultra Small Branches (USBs)
in remote locations is one of the steps being taken in this direction. Direct Cash
Transfers and linkages with Aadhaar would be a step forward towards the goal of
financial inclusion and may prove beneficial to mutual fund houses in the long run.
With below poverty households finally coming to own 19 bank accounts, fund houses
could use pre-existing bank channels to offer investment opportunities when these
people finally start earning saving. The advantages of having an active participation
by retail investors in mutual fund are not just limited to financial inclusion. It has been
shown in past studies that institutional investors (in the form of mutual funds) ‘herd’
towards small-cap and mid-cap stock which offer growth prospects thereby increasing
the depth and breadth of capital markets (Wermers, 1999). Institutional buying and
selling of stocks also increases the price-adjustment process in capital markets and
under right conditions institutional investors tend to decrease stock price volatility.
All these effects are desirables as far as financial markets are concerned.
Financial literacy and investment practices

One of the major reasons behind the under-penetration of mutual funds is the
lack of understanding about mutual funds, how they differ from ordinary
investments and how they manage to offer superior returns over traditional
investments. According to a report on mutual funds investments published by
Boston Analytics in 2010, approximately a third of all of respondents from
Tier II Indian cities did not know how and where to invest in mutual funds
(Boston Analytics, 2010). Most people remain unaware of basic financial
concepts such reward (return) to variability (risk) ratio, asset allocation,
benefits of diversification, passive-active investment strategies etc.

Most Indian households tend to be extremely risk averse and wary where they
invest their hard earned savings. As a result, they are conservative with their
savings and tend to invest in ‘safe’ assets. Investors perceive mutual funds as
risky investments (despite the fact that several funds invest in government
bonds, thereby being safer than bank deposits) and tend to invest their savings
in tangible assets such as gold, jewelry, real estate or fixed deposits in banks.
These 20 choices are a result of a mindset which has generally seen investing
in stock markets and other market traded securities as akin to gambling. This
is reflected by the proportion of savings of Indian households in the financial
markets. The gross domestic savings and investment at current market price by
households was 22.3% of GDP 2011-12 (RBI Annual Report, 2012). The
household investment in physical and financial assets was 14.3% and 8.0%
respectively. The investment in shares and debentures as a percentage of gross
financial savings by households was 3.6% during 2011-12. The gross financial
savings by household inmutual funds is estimated at 2.5% out of total 3.1% in
shares/debentures.
Data Collection, Methodology and Descriptive Statistics

Data Collection Procedure and Survey Details

In conjunction with SEBI, we asked all the fund houses currently operating in
India to provide details about their operations throughout India through a
survey. The survey was designed in a manner to gain a better understanding of
the operational details of AMCs at both macro and micro levels. At a macro
level, the survey asked the AMCs to provide the total number of folios and
assets under management at a country level on the last date of the fiscal year
since 2010. The AMCs were also requested to provide a breakup of their folios
at a retail and non-retail level. The AMCs were also asked to provide the
distribution, commission and advertisement costs and total number of schemes
in operation at the end of each fiscal year since 2011. To gain a better
understanding of the geographical reach of the AMCs, we asked the AMCs to
provide all the cities/towns in which they had at least one office and the
number of years since the AMCs were present in that city/town. However,
since a large number of mutual fund sales happen outside dedicated mutual
fund offices (through independent financial agents), we asked AMCs to also
report on the number of folios and assets under management at a
city/town/village level as of the end of fiscal year since 2011. We classified
the distribution and delivery channels of mutual funds in three categories:
distributors, banks and independent financial agents. We asked AMCs to
provide details of the number of agents they employed at each level and the
amount of money spent on marketing and distributions costs at a city/town
level as of 31st March 2013.
We then asked AMCs to provide their opinions and views on a range of issues
such as financial literacy, availability of fresh talent for recruitment, regulatory
framework, distributional efficiencies etc. The AMCs were asked to score
each of these questions based on five-point Likert scale in which scores range
from a “strongly agree” to “strongly disagree”. Lastly, we asked AMCs to
rank order factors which effect penetration from the “least important” to the
“most important” factor. To the best of our knowledge, this is the first study
which takes distribution costs and sales into account at the city/town level.
 Taken as a whole, the availability of the data at this level revealed some
interesting insights about AMCs’ operations – especially their operations
outside the major cities. The actual survey instrument is included at the end of
this paper as Appendix A.

Methodology

Unlike previous studies which have largely used cities as their primary units of
analysis, it was decided the best results could be obtained only if the data was
aggregated at the district level. The reasons behind this were two-fold. The
main reason was that, the survey data revealed the operations of AMCs
extended well beyond Tier I and II cities. While it is true that the scale of
AMCs’ operations in the large cities of India dwarfs their operations in the
smaller cities, it is worth noting that taken as a whole AMCs are present all
across India. The smallest town to have at least one independent financial
agent was the town of Singtam in East Sikkim with a population of just 5431.
In our data, we found that through their independent financial agents and bank
agents, AMCs have extant operations in well over 1,500 towns and cities.
In this regard, the distribution networks of AMCs are far wider and
comprehensive than is often perceived. However, performing an analysis on
such a large number of towns becomes unwieldy and is often accompanied
with a lot of noise. Many towns which are close to large cities (e.g. towns
located in between Indore and Ujjain (which are located just 50 kilometers
from each other) benefit from having two large cities thereby having much
larger fund representation than they otherwise would have had they not been
in between the cities) become outliers which make the results difficult to
interpret. By aggregating all the towns and cities into their respective districts,
the information becomes far easier to understand. The second reason was
purely statistical. Municipal and city level data in India are hard to come
across. While the census results reveal a lot of demographic information at the
district level, the same is not true for city level results. Factors such as literacy
levels, SEC level classification, GDP levels etc. are not easily available or
reliable at a micro level. Often, when the data is available, it is illsuited
 to be used for statistical uses. For these reasons, we decided to take districts as
our unit of analysis.

District Domestic Product and AUM/GDP distribution

One of the most common metric to capture the penetration of mutual funds in
a given country or area is to find the AUM/GDP ratio. This ratio captures the
amount of wealth invested in mutual funds to the earnings of a given region.
It is well known that the geographical distribution of AUMs in India is heavily
lopsided in favor of the large cities. The recent report by CII-PWC highlights
this by pointing out that 74% of the AUMs originate in the top five cities with
another 14% originating from the next ten cities. In other words, the top
fifteen cities contribute an astonishing 88% of the entire mutual fund market
(PWC, CII, June 2013). Before calculating the AUM/GDP distribution, all the
districts of India were ranked in the descending order of their respective
domestic products. This list was then split into ten equal groups (i.e. we took
deciles) and then each decile’s contribution to the nation’s gross domestic
product was calculated. Th resulting distribution is depicted by the vertical
blue bars in Chart 4 below.

Chart 4: Contribution to GDP by Decile

 and EU member nations (41%). The corresponding AUM/GDP ratio for the
second decile is 2.82%. Starting from the fifth decile, AUM comprises less than 1%
of the district GDP. The exact measures are given in Table I.

Table 1: AUM/GDP ratio across Indian districts

Region AUM/GDP
Mumbai 126.10%
1st Decile 29.53%
1st Decile Excluding Mumbai city 12.67%
2nd Decile 2.82%
3rd Decile 3.72%
4th Decile 1.89%
5th to 10th Decile less than 1.00%

However, one thing to note in the above analysis is that Mumbai is the elephant in the
room. Mumbai alone contributes a staggering 58.25% to the entire nation’s AUM. To
put it an alternate way: For every 5 rupees invested in a mutual fund, 3 rupees of that
investment originates in Mumbai. Mumbai’s AUM/GDP ratio is 126.09% which
indicates that money from outside Mumbai is coming to be invested there. So, it
should be kept in mind that any category/decile/state etc. which includes Mumbai as
one of its components will get a boost in its measure. It should also be kept in mind
that approximately 80% of the AUMs invested in Mumbai are institutional or non-
retail in nature. Such large non-retail participation is justified considering that almost
all large companies’ headquarters and financial operations are conducted out of
Mumbai. The inclusion of such high aberrational figures would lead to misleading
results and interpretations if one does not exclude them from the analysis. Therefore,
going forward we report the first decile of districts two times – once including
Mumbai and another time excluding it. If one excludes Mumbai from the first 29
decile of districts, the AUM/GDP ratio drops to 12.67% - a figure comparable to
Japan’s AUM/GDP ratio (12.4%).
Independent Financial Agent distribution by District GDP The above results raised
the question to why there would be such a skewed distribution of AUM distribution
across the country. To shed more light on this, we recalled from the PWC-CII study
that Independent Financial Advisors (IFAs) play a crucial role in fund distribution and
sales. We therefore wished to find out how agents are geographically distributed
across the country. We first sorted the districts into deciles in the same manner
described above. The number of agents working in each district was then calculated
and aggregated into each decile. The results are presented in Chart 5.

Chart 5: IFA by District GDP

Approximately, 75% of all the agents (independent and bank) are located in 20% of
country’s districts. While the geographical distribution of IFAs is clearly 30 skewed in
favor of the first decile, the level of skew is not to the extent it was in AUM
origination where the top 5 cities were contributing to 74% of the total AUMs in the
country. At the same time, it is worth noting that the ratio of the agents is not
commensurate with the GDP distribution – the bottom 50% of districts contribute
17% to the nation’s GDP but have only 4% of all the agents in the country. Even if
people in these districts would like invest their savings into mutual funds, they would
be hard pressed to find agents or distributors who would be willing to sell them these
investment products.

AUM per Agent

We then decided to see how agents are performing across these districts. To do
this, we decided to examine the AUM generated by each agent across all
districts. We again ranked and partitioned the districts as mentioned above and
computed the average AUM generated by each agent.

Chart 6: AUM/Agent (in Million Rupees)

As can be seen, the top 50 districts of the nation clearly dominate the rest of India as
far AUM generation is concerned. Even if we were to exclude Mumbai from the first
decile, the AUM generation potential still dominated the remaining districts of India.
However, there is another implication that can be drawn from the above graph. If the
average AUM generated is significantly higher in a particular area (as it is here), it is
expected that agents would tend to congregate in those areas where they can achieve
maximum sales. Thus, the geographical reach of mutual fund agents is more likely to
be explained by the potential revenue or AUM generation of each district. So, even if
mutual fund houses (or the regulator) push agents into districts other than the first
decile, they are most likely to meet stiff resistance from the agents due to low
potential sales in that region. Looking at the above results, it is clear that the top 50
districts of the country receive a disproportionate amount of attention by AMCs and
agents. Distributional efficiency of Fund Houses However, such overcrowding could
have some other consequences. By having such a large presence in just one location
could lead to inefficiencies. We decided to test this out by examining the distribution
efficiencies of the fund houses. Specifically, we asked how much does one rupee
spent on distribution earn in AUM.

The above graph throws an interesting insight for fund houses: while it may be true
that the potential earnings for 90% of the districts are a fraction of the top decile, the
2nd to 4th decile district offer more “bang for the buck” as far as distribution costs are
concerned. Spending one rupee in a top decile district would earn a fund house an
average of Rs. 270 in AUM. Spending the same amount in the 2rd decile will earn an
average of Rs. 355 in AUM. In other words, due to the untapped potential of these
districts, distribution networks in this decile are 31.5% more efficient than the top
decile. The corresponding figures for the 3th and 4th deciles are 21.3% and 12.3%
respectively.
Growth in AUM since FY2011
We then wanted to examine the growth of assets under management for
individual districts and how they have grown over the last two years. Two
areas where we had expected growth to occur was Bihar and Gujarat given the
high economic growth that these two states have experienced over the past 5-
10 years. We calculated the growth of AUMs in these two states along with
other states which typically lag the national averages – Rajasthan, Uttar
Pradesh, Jharkhand, Madhya Pradesh and Odisha. We computed the CAGR
for these states two times – once for the overall state and once after taking out
the state capital (this is because capital district would tend to crowd out the
AUM growth in the other districts in the state). The results for the states are
given below:

Table 2 Growth Rates of AUM of select states

With the exception of Odihsa, all the states – including Gujarat – lag behind the
country average of 9.88%. However, the growth rate for some states – notably
Madhya Pradesh and Bihar – improves once the capital districts are taken out. We
remove the capital districts because their AUM levels which are often 10-20 times the
AUM levels in smaller districts. If the capital districts are taken out, smaller districts
tend to outperform their larger counterparts is because the AUM levels in these
districts is so low that even a small addition in AUM leads to a large percentage
change in growth. Gujarat and Odihsa are standout states where the bulk of the AUM
growth is coming from their capital districts. Whether this is due to economic factors
or logistical is covered in a separate section of the report. We then proceeded to map
the growth rate of all the districts of India as given in Map 1A. Our findings suggest
that the maximum growth is happening in areas with the least AMC presence. Most of
the places with the maximum growth (75% and above) is happening in parts of
Central India, Haryana, Himachal Pradesh and Bihar. A comprehensive list of the
fastest and slowest growing states is givenin Table 3.

Table 3: Fastest and Slowest Growing States

Map 1a: AUM Growth Rates of Districts (%)
To further understand the characteristics of the spread of mutual funds, we check the
geographical distribution of folio growth in the country. The number of new folios
can be taken to approximate the size of new entrants in the mutual fund market. We
map out the growth in the number of folios from 2011 to 2013 in Map 1B. It seems to
indicate that growth is strongest in the states of Maharashtra, MP, parts of Karnataka
and Andhra Pradesh. Map 1C presents the number of retail folios for every 1000
households. Here, a clear north-south divide seems to be visible. Large parts of North
India have very low presence of mutual funds in the retail space. Exceptions to this
are the north Indian states of Punjab and Haryana where the proportion of retail folios
is relatively higher. Map 1D shows the number of retail folios after controlling for
bank account penetration. This depicts the ratio of folios to the number of thousand
households with bank accounts in 2008 as per the Indicus Analytics database. For
example, a ratio of 60 implies that for 6% of bank holders in a given district have
invested in mutual funds. The map shows that districts with the lowest measure were
in Madhya Pradesh, Uttar Pradesh, Bihar and Jharkhand, as well as some pockets of
Rajasthan and Andhra Pradesh. Map 1E which plots the AUM/GDP ratio as of 2013
summarizes the current penetration scenario and corroborates the T-15 bias already
mentioned. As can be seen in the map, the penetration of mutual funds in most
districts of the country is less than 1%. In the coming section, we attempt an analysis
of the causes of this scenario of geographical distribution of mutual funds.
 PROCEDURES AND FUNCTIONS

The various functional procedures, in detail, like registration of mutual funds, registration of
trust deed, appointment of trustees, AMC, custodian etc. are discussed here.

1. Registration of mutual fund16

For registering a mutual fund the sponsor has to submit an application to the SEBI in the
prescribed form (Form A) accompanied by the prescribed fee of Rs.25000. On receipt of such
an application SEBI can require the sponsor to furnish any further information or
clarifications as may be required by it. Incomplete applications can be rejected only after
giving an opportunity to complete the required formalities. SEBI may register the mutual
fund and a certificate in the prescribed form (Form B) will be issued only if the applicant
pays the registration fee of Rs.25,00,000 and fflis all of following eligibility criteria: 1. The
sponsor should have not less than five years' experience in carrying on business in financial
services with positive net worth in all the years and profit for the last three years including
the last year.

2. The sponsor should have contributed at least 40% to the net worth of the asset
management company.

3. The sponsor or any of its directors should not have been @ty of fraud or has not been
convicted of any economic offence or any offence involving moral turpitude.

4. The modes of appointing trustees and asset managing company should be in accordance
with the provisions of the Regulations.

5. The trustees should have authorised the appointment of the custodian and the custodian
activities.

A registered mutual fund is of the obligation

1. To comply all the provisions of the Regulations, and

2. To pay the yearly se~ce fee of Rs.2,50,000. Besides, mutual fund has to make a fhg fee for
offer documents of Rs.25,000 along with the lounging of every new scheme.
Registration of Trust Deed17

Mutual fund shall be constituted in the form of a trust and the Trust Deed should be
registered under the provisions of the Indian Registration Act. 1908. Such a trust deed should
S2 contain all the clauses mentioned in the Third Schedule annexure to the Regulations.

Appointment of Trustees18

Trustees of mutual funds can be appointed only with the prior approval from the SEBI and in
accordance with the provisions of the Regulations. The eligibility criteria to be fidfiied for
getting appointed as a trustee are as follows:

1. A person should be of ability, integrity and standing

2. He has not been found guilty of moral turpitude

3. He has not been convicted of any economic offence or violation of any securities laws

4. He has furnished all particulars as specified in Form C, and

5. He should not be an officer or employee of the asset management company.

An appointed trustee of any other mutual fund can be appointed as a trustee only if such a
person is an independent trustee and has obtained prior approval from the mutual fund of
which he is a trustee. Two thirds of the 83 trustees should be independent persons and should
not be related or associated with the sponsors. A company can also be appointed as a trustee
and in that case the directors of the company can act as trustees. The trustees and the asset
management company, with the . prior approval from SEBI, then enter into an investment
management agreement. Such an agreement should contain all the clauses mentioned in the
Fourth Schedule of the Regulations. The trustees can enjoy all the rights and are liable for the
obligations as per the Regulation 18.

Appointment of an AMC19
It is the sponsor who appoints an AMC, which has been approved by SEBI under sub-
regulation (2) of regulation 2 1. The trustee can also appoint the AMC if the trust deed so
authorises. The application for approval of the AMC should be made in Form D. The
eligibility criteria for getting the appointment as an AMC are as follows:

1. In case the AMC is an existing AMC it should have a sound track record, general
reputation and fairness in transactions.

2. The AMC should be a fit and proper person.

3. The directors of the AMC must be persons having adequate professional experience in
finance and . financial services related field and not found guilty of moral turpitude or
convicted of any economic offence or violation of any securities laws. 4. The key personnel
of the AMC have not been found @ty of moral turpitude or convicted of economic offence or
violation of securities laws or worked for any AMC or mutual fund or any intermediary
during the period when its registration has been suspended or cancelled at any time by SEBI.

5. The board of directors of such AMC should have at least 50% directors, who are not
associate of, or associated in any manner with, the sponsor or any of its subsidiaries or the
trustees.

6. The chairman of the AMC must not be a trustee of any mutual fund.

7.The AMC should have a net worth of not less than Rs. 10 crores.

The approvals of AMCs are granted on the following conditions:

1. Any director of the AMC shall not hold the office of the director in another AMC unless
such person is an independent director referred to in clause (d) of subregulation (1) of
regulation 21 and approval of the board of AMC of which such person is a director, has been
obtained.

2. The AMC shall forthwith inform SEBI of any material change in the information or
particulars previously furnished, which have a bearing on the approval granted by it.

3. No appointment of a director of an AMC shall be made without prior approval of the

trustees.

4. The AMC must undertake to comply with the SEBI (MF) Regulations.
5. Any change in the controlling interest of the AMC shall be only with the prior approval of
trustees, SEBI and the unit holders (in the case of close ended schemes), and

6. The AMC shall furnish such information and documents to the trustees as and when
required by the trustees.

There are certain restrictions on business activities of the AMC, which are as follows:

1. The AMC should not act as a trustee of mutual fund

2. It should not undertake any other business activities except activities in the nature of
portfolio management services and advisory se~ces to offshore funds, pension funds,
provident funds, venture capital funds, management of insurance funds, financial consultancy
and exchange of research on commercial basis if any of such activities are not in conflict with
the activities of the mutual fmd, and

3. It should not invest in any of its schemes unless full disclosure of its intention to invest has
been made in the offer documents.

The obligations of an AMC are varied which are as follows:

1. It should take all reasonable steps and exercise due diligence to ensure that the investment
of funds pertaining to any scheme is not contrary to the provisions of these regulations and
the trust deed.

2. It should exercise due diligence and care in all its investment decisions as would be
exercised by other persons engaged in the same business

. 3. It should be responsible for the acts of commissions or omissions by its employees or the
persons whose services have been procured by the AMC.

4. It should submit to the trustees quarterly reports of each year on its activities and the
compliance with these regulations. 5.The trustees at the request of the AMC may terminate
the assignment of the AMC at any time, provided that such termination shall become
effective only after the trustees have accepted the termination of assignment and
communicated their decision in writing to the AMC.
6. Notwithstanding anythmg contained in any contract or agreement or termination, the
AMC or its directors or other officers shall not be absolved of liability to the mutual fund for
their acts of commission or omissions, while holding such position or office.

7. An AMC, should not through any broker associated with the sponsor, purchase or sell
securities, which is average of 5% or more of the aggregate purchases and sale of securities
made by the mutual fund in all its schemes.

8. It should not utilise the services of the sponsor or any of its associates, employees or their
relatives, for the purpose of any securities transaction and distribution and sale of securities.

9. It should file with the trustees the details of transactions in securities by the key personnel
of the AMC in their own name or on behalf of the AMC and should also report to SEBI, as
and when required by SEBI.

10. In case the AMC enters into any securities transactions with any of its associates a report
to that effect should be sent to the trustees at its next meeting.

11. In the case any company has invested more than 5% of the net asset value of a scheme,
the investment made by that scheme or by any other scheme of the same mutual fund in that
company or its subsidiaries should be brought to the notice of the trustees by the AMC and be
disclosed in the half yearly and annual accounts of the respective schemes with justification
for such investment provided the latter investment has 90 been made within one year of the
date of the former investment calculated on either side.

12. It should file with the trustees and SEBI detailed biodata of all its directors along with
their interest in other companies within fifteen days of their appointment and any change in
the interests of directors every six months. A quarterly report must also be submitted to the
trustees giving the details and adequate justification about the purchase and sale of the
securities of the group companies of the sponsor or the AMC as the case may be, by the
mutual fund during the said quarter. 13. A statement of holdings in securities of the directors
of AMC should be filed with the trustees with the dates of acquisition of such securities at the
end of each financial year.

14. It should not appoint any persons as key personnel who has been found gwlty of any
economic offence or involved in violation of securities laws.

15. It should appoint registrars and share transfer agents who are registered with the SEBI.
16. It should abide by the Code of Conduct as specified in the Fifth Schedule.

Appointment of Custodian20

A mutual fund can appoint a custodian to carry out the custodial services for the schemes of
the fund and sent intimation of the same to SEBI within 15 days of the appointment of the
custodian. No custodian in which the sponsor or its associates hold 50% or more of the voting
rights of the share capital of the custodian or where 50% or more of the directors of the
custodian represent the interest of the sponsor or its associates should act as custodian for a
mutual fund constituted by the same sponsor or any of its associate or subsidiary company.
The mutual fund should enter into a custodian agreement, which should contain the clauses,
which are necessary for the efficient and orderly conduct of the affairs of the custodian.

Procedure for launching of schemes21

AMC can launch a scheme only after getting approval for the scheme from the trustees and
after having fded a copy of the offer document along with the filing fee of Rs.25,000 with
SEBI. The offer document should contain disclosures, which are adequate in order to enable
the investors to make informed investment decision including the disclosure on maximum
investments proposed to be made by the scheme in the listed securities of the group
companies of the sponsor. Advertisements in respect of every scheme should be in
conformity with the Advertisement Code as specified in the Sixth Schedule and should be
submitted to SEBI within 7 days from the date of issue. The offer document and
advertisement materials should not be misleading or contain any statement or opinion, which
are incorrect or false.

Listing of close-ended schemes22

Every close-ended scheme should be listed in a recognised stock exchange within six months
from the closure of the subscription. Listing is not mandatory in the following cases:

1. If the scheme provides for periodic repurchase facility to all the unit-holders with
restriction, if any, on the extent of such re-purchase, or
2. If the scheme provides for monthly income or caters to special classes of persons like
senior citizens, women, children, widows or physically handicapped or any special class of
persons providing for repurchase of units at regular intervals, or,

3. If the details of such repurchase facility are clearly disclosed in the offer document, or

4. If the said scheme opens for repurchase within a period of six months from the closure of
subscription.

Repurchase of close-ended schemes

The AMC can at its option repurchase or reissue the repurchased units of a close-ended
scheme. The units of closeended scheme can also be converted into open-ended scheme if the
offer document of such scheme discloses the option and the period of such conversion or the
unit-holders are provided with an option to redeem their units in full. It can also be redeemed
at the end of the maturity period.

Allotment of units23

The AMC should issue to the applicant whose application has been accepted, unit certificates
or a statement of accounts speclfylng the number of units allotted to the applicant as soon as
possible but not later than six weeks from the date of closure of the initial subscription list
and from the date of receipt of the request from the unit holders in any open-ended scheme.
The maximum period for which an initial offer can be kept open is 45 days.

Transfer of units24

Unless and otherwise restricted or prohibited under the scheme, all unit certificates are freely
transferable. Within 30 days of receipt of the application the AMC should register the transfer
and return the unit certificate to the transferee.

Guaranteed return25

Guaranteed return can be provided in a scheme onlv if the following conditions are satisfied:
1. Such returns are fully guaranteed by the sponsor or the AMC.

2. A statement indicating the name of the person, who will guarantee the return, is made in
the offer document.

3. The manner in which the guarantee to be met has been stated in the offer document.

Winding up procedure26

The following are the occasions in which mutual fund schemes are wound-up:

1. A closed-ended scheme can be wound up on the expiry of duration fuced in the scheme on
the redemption of the units unless it is rolled-over for a further period under sub-regulation
(4) of regulation 33

2. A scheme of mutual fund can be wound up, after repaying the amount due to the unit-
holders on the happening of any event which, in the opinion of the trustees. requires the
scheme to be wound, if 75% of the unit holders of a scheme pass a resolution that the Q6
scheme be wound up, or if SEBI so directs in the interest of the unit-holders.

3. Where a scheme is to be wound up under subregulation (2), the trustees should give notice
disclosing the circumstances leading to the winding up of the scheme to SEBI and in two
daily newspapers having circulation all over India, a vernacular newspaper circulating at the
place where the mutual fund is formed.

On and from the date of the publication of the notice the trustee or the AMC, as the case may
be, may cease to carry on any business activities in respect of the scheme so wound up, cease
to create or cancel units in the scheme and cease to issue or redeem units in the scheme.

The procedure and manner of winding up are as follows:

1. The trustees should call a meeting of the unit holders to approve by simple majority of the
unit holders present and voting at the meeting resolution for authorising the trustees or any
other person to take 07 steps for winding up of the scheme, provided that a meeting of the
unit holders should not be necessary if the scheme is wound up at the end of maturity period
of the scheme.
2. The trustees or the person authorised should dispose of the assets of the scheme concerned
in the best interest of the unit holders of that scheme.

3. The proceeds of sale realised should be first utilised towards discharge of such liabilities as
are due and payable under the scheme and after making appropriate provision for meeting the
expenses connected with such winding up, the balance should be paid to the unit holders in
proportion to their respective interest in the assets of the scheme as on the date when the
decision for winding up was taken.

4. On completion of the winding up, the trustee should forward to SEBI and the unit holders
a report on the winding up containing particulars such as circumstances leading to the
winding up, the steps 9 8 taken for disposal of assets of the fund before winding up, expenses
of the fund for winding up, net assets available for distribution to the unit holders and a
certificate from the auditors of the fund.

After the receipt of the report, if SEBI is satisfied that all measures for winding up of the
scheme have been complied with, the scheme shall cease to exist
A Critical Analysis of Indian Mutual Funds Sector: A Case Study of Unit
Trust of India (UTI) Mutual Fund, Bank of India (BOI) Mutual Fund and
Tata Mutual Fund
1. Abstract

The Mutual Funds Industry has come of age. It has substantially aligned itself with
the international order. Even though in the recent change with past the growth of the
industry has not been enviable, the potential is enormous provided, however, the trust
and confidence of the investors in won and dept up. They have not only enhanced the
accountability of Fund manager but also strengthened the mechanism of investor
protection, which is much more effective today then over before.
The reason of selecting Unit Trust of India (UTI) and Bank of India (BOI) and Tata
Mutual Funds (TMF) is that three big companies are covering the major market share
in Mutual Fund sector. UTI is distributing 80% of its earning to its shareholders while
the industry average is only 67%. Thus, UTI is a very liberal distributor of income
and an investor’s friendly mutual fund. On the other hand, BOI is also distributing
43% dividend. Therefore, these two companies are very significant in mutual industry
hence these two companies are taken for the case study purposes.

2. MUTUAL FUND

Mutual funds are in the form of Trust (usually called Asset Management
Company) that manages the pool of money collected from various investors
for investment in various classes of assets to achieve certain financial goals.
We can say that Mutual Fund is trusts which pool the savings of large number
of investors and then reinvests those funds for earning profits and then
distribute the dividend among the investors. In return for such services, Asset
Management Companies charge small fees. Every Mutual Fund/launches
different schemes, each with a specific objective. Investors who share the
same objectives invest in that particular Scheme. Each Mutual Fund Scheme is
managed by a Fund Manager with the help of his team of professionals (One
Fund Manage may be managing more than one scheme also).
Many persons have shared their experience insights, research and writings on
mutual fund sector but a comparative study of UTI and BOI and Tata Mutual
Funds has been made yet. This paper includes the origin and development of
mutual funds, regulatory environment of mutual funds, inside of Mutual
funds, mutual funds marketing, mutual fund industry- it size and growth,
type and growth pattern of Mutual funds, investment pattern of mutual
funds, investors protection and mutual funds. Evaluation of performance of
Mutual funds, trace out problem of industry and these two companies and at
 last to provide suggestive mode to the industry and to the above two
companies.

3. HYPOTHESIS

Mutual funds, like securities investments, are subject to market risks and there is no
guarantee against loss in the Scheme or that the Scheme’s objectives will be achieved.
As with any investment in securities, the NAV of the Units issued under the Scheme
can go up or down depending on various factors and forces affecting capital markets.
Past performance of the Sponsor / the AMC / the Mutual Fund does not indicate the
future performance of the schemes of the Mutual Fund. Investors in the Scheme are
not being offered a guaranteed or assured rate of return.
UTI Mutual Fund is the leader of market as compared to BOI Mutual Fund and
TATA Mutual Fund.

4. RESEARCH METHODOLOGY
Stage (1): Firstly, a survey of previous research works and studies existing literature
related to mutual funds sector especially UTI and BOI mutual fund and Tata Mutual
Funds has been made.
Stage (2): At second stage, research design has been made regarding the collection of
data and analysis of data. Exploratory as well as descriptive design has been used in
our research work so as to formulate research problem. Primary as well as secondary
data have been compiled for this purpose by the following methods:-
Collection of primary Data

Through observation;

Through personal interviews;

through questionnaire;

Collection of secondary Data

Company profits & loss A/c and its internal records;

Reports publication of financial institutions;

Trade and technical journals;

Magazines & Newspapers;

Reports prepared by research scholars;

Internet;
 Stage (3): This stage is relating to sampling plan. A sampling plan has been made
regarding the sampling unit, sample size and sampling procedure. To find out various
problem faced by investors relating of UTI, and BOI and Tata mutual funds. we had
circulated our questionnaire to 250 respondents (i.e. to investors) and 75 office bearer
of UTI & BOI, management staff member etc. to get their opinions on various aspect
of mutual funds.
Stage (4): This stage is relating with analysis and interpretation of data. In this stage
we had made analysis regarding closely relate operations such as the mutual fund
industry and growth investment pattern of mutual funds, income & expenditures of
mutual funds. Thereafter, we have drawn our observations. Our findings and
suggestions would hopefully be of immensely useful for planners as well as the
management of the concerned companies.
Stage (5): Preparation of report is the last stage of this research project. Eventually, a
report has been made from what is done by the researcher. In the report the researcher
has made concluding observations and provided suggestive mode.
In India, the mutual fund industry started with the setting up of Unit Trust of India in
1964. Public Sector Banks and financial institutions began to establish mutual funds
in 1987. The private sector and foreign institutions were allowed to set up mutual
funds in 1993. Today there are around 40 mutual funds and over 300 schemes with
total assets of approximately Rs. 97000 crores. This fast growing industry is regulated
by the Securities and Exchange Board of India (SEBI). On problems in regulating
mutual fund we have searched out we have provided appropriate suggestions so that
investors can be protected properly.

The key points of our study are:

(a) To appraise the contribution of UTI and BOI mutual funds and Tata Mutual Funds
in the development of mutual fund industry.

(b) To analyze critically the working, marketing strategies of UTI and BOI mutual
funds and Tata Mutual Funds.
(c) To study the various types of Mutual Funds in India and also to study the various
rules and regulation applied in the formation of Mutual Funds.
(d) To assess the need of regulating of Mutual Funds in India.
(e) To study the role & effectiveness of SEBI in protection of Investors investing in
Mutual Funds. And we have also to make market survey for getting investors’
opinions and AMC Executives Opinions to make this study worthwhile.

5. RESEARCH DESIGN

The research work is based on primary and secondary data. The main sources of
secondary data are various journals, periodicals, News Papers and SEBI’s documents;
 Mutual Fund companies reports…etc. The study is mainly based on data compiled
from Annual Reports of leading mutual funds, Annual Reports of those companies,
Internet reports prepared by Research Scholars.

The Study is based on data of 30 leading Companies of Public and private sector. A
sample survey technique has been adopted to elicit the opinions of various investors,
company officers etc, regarding Mutual Fund operation and regulation by SEBI. For
reaching on the conclusion various statistical techniques like average, ratio,
percentage…etc from collected data have been used.
Technique of pictorial presentation of data like charts and graphs has also been
applied. The time period under this study has been taken from the year 2000 and
onwards. A suitable questionnaire is also prepared for collecting primary data.

6. WHY SEBI TAKEN BIRTH AFTER CAPITAL ISSUES (CONTROL) ACT (CCI)?

In India, Capital Issues (Control) Act, 1947 and the Securities Contracts (Regulation)
Act, 1956 provided the necessary framework of regulation for issue of securities and
the functioning of the securities market till 1992.
 The main purpose of control on issue of capital was to prevent the diversion of
investible resources to non-essential projects. It was used to regulate issue of
bonus shares and capital reorganization of companies with a view to discourage
issue of shares with disproportional voting results and adoption of sound
methods, and techniques in floatation of companies.
 a. Mutual Fund is essentially, in Indian context, a trust formed with the
objective of pooling savings of a number of persons and invests that saving
in a variety of financial instruments viz. shares, debentures, bonds and
other securities. Investments are made in accordance with the objective
defined at the time of pooling savings. People with common investment
objective come together and assign the task of investments to the trust.
7. TYPES OF MUTUAL FUND
Types of mutual Fund can be broadly discussed under two categories
 I. By Structure

 II. By Investment Objective
 7.1 By Structure:
 7.1.1 Open-ended schemes: These schemes would not have a fixed
maturity. Units are bought and sold directly with the Mutual Fund. Nat
Asset Value (NAV) of the scheme is calculated generally, on daily basis
and units are bought and sold on NAV of the day after taking in to account
load structure, if any.
 7.1.2 Close-ended schemes: These schemes will have a predefined fixed
maturity. One can invest in the scheme at the time of initial offering and
thereafter, one can buy and sell units of the schemes through stock
exchanges where they are listed. Generally speaking, market price of units
would vary with the NAV of the scheme and this price would reflect
demand and supply of units, investor’s expectations and a variety of other
conditions. Some close-ended schemes give an exit window at different
interval to sell units directly to Mutual Fund at NAV related price. Net
Asset Value (NAV):
 NAV is sum total of market value of assets of the fund net of liabilities,
if any. NAV is calculated by following simple formula:
 7.2 By Investment Objective:
 Growth Scheme: Objective of these schemes would be providing capital
appreciation from medium to long-term perspective. A person looking for
regular return should not invest in these types of schemes.

8. BENEFITS OF MUTUAL FUND

 Professional Management
 Diversification
 Liquidity
 Transparency
 Flexibility
 Low Cost
 Higher returns
 Well regulated
 9. DRAWBACKS OF MUTUAL FUND

Uncertain returns
Over diversification
High costs and confusing expense disclosures
Uncertain tax liabilities
Fund overload
Unwieldy growth

10. STRUCTURE OF INDIAN MUTUAL FUNDS

The mutual fund is managed by the board of trustees or Trustee Company, and the
sponsor executes the trust deeds in favor of trustees. The mutual fund raises money
through the sale of units under one or more schemes for investment in securities in
accordance with the SEBI guidelines. The trustees must see to it that the schemes
floated and managed by the AMC are in accordance with the trust deeds and SEBI
guidelines. It is also the responsibility to control the capital property of the mutual
fund‘s schemes.

11. PERFORMANCE ANALYSIS OF UTI MUTUAL FUNDS

UTI Mutual Fund is managed by UTI Asset Management Company Private Limited
(Estb: Jan 14, 2003) who has been appointed by the UTI Trustee Company Private
Limited for managing the schemes of UTI Mutual Fund and the schemes transferred /
migrated from UTI Mutual Fund.
 No. of Scheme 107
No. of schemes including options 324
Equity Schemes 59
Debt Schemes 234
Short term debt Schemes 10

Performance Analysis of BOI Mutual Funds

The bank has a century old glorious history. The bank was founded on 7th September
1906 and has a glorious history of maintaining prudence and high standard of
customer service Bank of India is the first Indian bank to open its branches in Japan,
after World War II. Tokyo Branch was opened on 17th May, 1950 and Osaka branch
was established on 20th October 1950. Over fifty-three years of experience in global
banking has endowed the bank with strong assets and correspondent relations with
leading international banks. Investors of the BOIMF schemes are requested to redeem
their investment by approaching the scheme’s Registrars and Transfer Agents at the
addresses given below:

BOI Double Square Plus (1990) Scheme

Rising Monthly Income (RMI-60) Scheme, 1990

Festival Boinanza Growth Scheme (1991)

Boinanza 80CCB Growth cum Tax Saving Scheme, 1992

12. PERFORMANCE ANALYSIS OF TATA MUTUAL FUNDS

Tata Sons Limited (TSL) is the principal investment holding company of TATAs.
Through its operating consultancy divisions Tata Consultancy Services, Tata
Consulting Engineers, Tata Economic Consultancy Services and Tata Financial
Services, it provides a wide range of services in the areas of information technology,
engineering, and financial services. Tata Mutual Funds can be seen as follows:
No. of Schemes 67
No. of schemes including options 233
Equity Schemes 37
Debt Schemes 158
Short-term debt Schemes 14
Note.BOI mutual funds are not available in the market but this company is selling
other company’s financial products.
New Challenges Faced by Mutual funds:
The small investors, is facing a fast-rising challenge in the Exchange-traded Fund.
They are fighting for their investment in terms of dollars. Although ETFs are much
smaller, some experts predict they ultimately will win the long-term confrontation.
 "In a year such as 2008, when returns are low or negative, every 50 basis points [half
of a percentage point] make a difference," said Tom Anderson, head of ETF research
at State Street Global Advisors in Boston. "Because ETF fees on average are
dramatically lower than those of mutual funds, the difference is huge."

13. FINDING AND RECOMMENDATIONS:

The four and a half decades old Indian fund industry has seen a remarkable change in
character only since its deregulation in early 1990s. Indian mutual fund industry in its
present form is still young as compared to most other economics. However, for an
industry so young, it has shown remarkable sings of early maturity. The strong growth
in Assets Under Management (AUM) and the ever increasing number of international
asset managers setting up funds in India are testimony to the increasing attractiveness
of Indian Markets as well as confidence in the overall India story.
Conclusions & Recommendations are as follows:

Cause-related marketing must be clearly differentiated from charitable giving or

sponsorships in any proposal for partnership involving one or more of the five mutual
fund-related sharing concepts.

It is important to recognise the overlap between Corporate Affairs and
Marketing when it comes to cause-related marketing. Research both a
company’s charitable giving strategy as well as its business strategy. Build a
proposal that fits both strategies. Involve both Corporate Affairs and
Marketing in the process.

Mutual fund companies do not perceive themselves as having excess profits

that they should be using for social betterment. They believe that they are
already giving generously to charity. However, they will listen to proposals
that serve their business needs, such as enhanced image, new clients, and
improved client retention. To gain a company’s interest and attention, the
charitable sector must be able to demonstrate clearly how the company’s
business needs can be met through partnership.

A proposal for a partnership that can easily fit with a mutual fund
company’s existing systems and approaches has a higher probability of
support than one which the company perceives as difficult to assimilate or as
requiring significant resources to accommodate.
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.
However, each player will need to develop its own unique growth path and
have the specific 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. The discussion
made in this article indicates that the future of Mutual Funds in India is
bright.
 CONCLUSION

The findings show that mutual funds as an investment option have displayed
tremendous growth potential when the markets are optimistic and when wise
choices are made. They have performed much better than traditional investment
options in the long term and thus help investor beat inflation to some extent. It
is of paramount importance that investors do not make a rash decision simply
by looking at the return figures generated by an individual fund, they should
compare funds based on the risk and return analysis and find out
which fund is giving better returns commensurate to the risk taken. Statistical
analysis helps investors make a wise decision looking at facts based on numbers
instead of just going by their gut feeling. Also compared to the traditional
options, mutual funds provide a more professional approach towards investment
and some amount of diversification. The mutual fund industry in India is still in
its nascent stages when compared to its American and European counterparts,
which means that there is still a huge untapped market and potential for good
returns. A thorough analysis clubbed with timely investments might prove
Mutual Funds to be an excellent form of investment.
BIBLIOGRAPHY

Books

[1]. Unit trust of India (1995): Indian Capital Market Dynamic growth, Mumbai.

[2]. UTI-ICM (1995): Mutual Funds in India- A Fact book, Mumbai

[3]. Agarwal, G.D., “Mutual Fund and Investors’ Interest”, Chartered Secretary, Vol.
XXII, No.1, (January 1992),

[4]. Ansoff, H. I. (1965), Corporate Strategy, Mc Graw-Hill, New York.

[5]. Amiling, Frederic, Investments: An Introduction to Analysis and Management,

Englewood Cliff: Prentice Hall Inc., 1974.

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[1]. International Capital Markets—Development, Prospects and Policy Issues, I.M.F.

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[2]. Joint Parliamentary Committee Report on Irregularities in Securities

Transactions, Government of India, 1994.

[3]. Mutual Fund Fact Book 1995, Investment Company Institute, Washington, 1995.

[4]. Report of the Committee on the Financial System, Government of India, 1991.

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[1]. Charted Financial Analysis, ICFAI, Hyderabad

[2]. Charted Secretary, ICSI, New Delhi

[3]. Management Accountants, ICAI, New Delhi

[4]. Finance India, IIF, New Delhi

Newspaper

[1]. Economic Times

[2]. Business Standard

[3]. Financial Express

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[2]. http://www.pathfinderscience.net

[3]. http://www.mutualfunds.about.com

[4]. http://www.comdirect.de

[5]. http://www.ameritrade.com/education/html/encyclopedia/index.html

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[7]. http://pcpss2.rfc.ucl.ac.uk/mres/handouts/rm_lec8.pdf

[8]. http://www.marketvector.com data/index.htm