Vous êtes sur la page 1sur 14

INDUSTRIAL PROFILE

MUTUAL FUNDS
A mutual fund is a professionally-managed firm of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments and other securities. It is a trust registered with the Securities and Exchange Board of India (SEBI), which pools up the money from individual or corporate investors and invests the same on behalf of the investors /unit holders, in equity shares, Government securities, Bonds, Call money markets etc., and distributes the profits. The value of each unit of the mutual fund is known as net asset value (NAV) and it is calculated daily. NAV is the total value of the fund divided by the number of shares currently issued and outstanding. The value of all the securities in the portfolio is calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the funds NAV.

HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be divided into four distinct phases. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under control of the Reserve Bank of India. In 1978 Industrial Development Bank of India (IDBI) took over the regulatory control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management(AUM).

Second Phase 1987-1993 (Entry of Public Sector Funds) The second phase marked the entry of public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into existence, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The industry now functions under the SEBI Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. Fourth Phase since February 2003 In February 2003, UTI was divided into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003 The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

CURRENT SCENARIO
The assets under management (AUM) have rised to Rs 4,173 bn in Mar-09 from just Rs 250 mn in Mar-65. In a span of 10 years (from 1999 to 2009), the industry has registered a CAGR of 22.3%.The impressive growth in the Indian Mutual fund industry in recent years is due to

various factors such as rising household savings, regulatory framework, introduction of several new products and role of distributors.

tax policies,

Household financial savings registered growth rate of around 17.4% on an average during the period FY04-FY08 as against 11.8% on an average during the period FY99-FY03. SEBI has introduced various regulatory measures in order to protect the interest of small investors. The Indian Mutual fund industry that started with traditional products like equity fund, debt fund and balanced fund has expanded its product portfolio. Today, the industry has introduced number of products such as liquid/money market funds, sector-specific funds, index funds, gilt funds, capital protection oriented schemes, special category funds, insurance linked funds, exchange traded funds, etc. The wide variety of schemes offered by the Indian Mutual fund industry provides many options of investment to common man.

INDUSTRY STRUCTURE:
The Indian mutual fund industry currently consists of 38 players that have been given regulatory approval by SEBI. The industry has witnessed a drastic change where the number of public sector players reduced from 11 in 2001 to 5 in 2009. Public sector mutual funds comprised 21 percent of the AUM in 2009 as against 72 percent AUM share in 2001.

MAJOR PLAYERS:
o o o o o o o o o o Reliance Mutual Fund (RMF) HDFC Mutual Fund Tata Mutual Fund SBI Mutual Fund DSPs Black Rock Mutual Fund Kotak Mutual Fund Principal Mutual Fund Sundarams BNP Paribas Mutual Fund Templeton Mutual Fund Birla Suns Life Mutual Fund

MARKET SHARES OF MAJOR PLAYERS :

FUND AMOU NT

OTHER S 14327 797

Relian ce Mutua l Fund 10157 660

HDFC Mutua l Fund 86282 24

ICICI Prude ntial Mutua l Fund 73466 10

UTI Mutua l Fund 67188 82

Birla Sun Life Mutua l Fund 63696 19

SBI Mutua l Fund 41671 80

Frankli n Templ eton Mutua l Fund 37882 71

Kotak Mahin dra Mutua l Fund 32202 47

DSP BlackR ock Mutua l Fund 30600 71

Tata Mutua l Fund 22681 10

AMOUNT
3% 20% OTHERS Reliance Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund 6% UTI Mutual Fund Birla Sun Life Mutual Fund 9% 15% SBI Mutual Fund Franklin Templeton Mutual Fund Kotak Mahindra Mutual Fund 10% 12% 11% DSP BlackRock Mutual Fund Tata Mutual Fund

4% 5% 5%

Regulatory Framework: The regulator, Securities and Exchange Board of India(SEBI),


has consistently introduced several regulatory measures that aimed at protecting the interests of the small investor. The implementation of Prevention of Money Laundering (PMLA) Rules issued in December 2008 as part of the risk management practices and procedures is expected to gain further momentum. The current Anti Money Laundering(AML) and Combating Financing of Terrorism (CFT) measures cover two main aspects Know Your Customer (KYC) and Know Your Distributor (KYD). FEE STRUCTURE : Mutual fund companies were charging entry load to the investors and were getting good business out of it. With a view to make the whole process investor friendly, SEBI removed entry load for investing in mutual funds and asserted that the mutual fund companies can charge the customers Fund Management fee separately. SEBIs new guidelines stipulate that investors directly make payments to distributors instead of MF companies deducting it from the investment made in any scheme.

ADVANTAGES OF MUTUAL FUND


Diversification of Risk Diversification reduces risk of loss, as compared to investing directly in one or two shares or other securities. This risk reduction is one of the most important benefits of a investment vehicle like mutual fund. Convenience and Flexibility Mutual fund management companies offer many investor services that a direct market investor cannot get. Investors can easily transfer their holdings from one scheme to the other and get updated market information and so on.

Liquidity An investor can liquidate the investment by selling the units to the fund if open-end or selling them in the market if the fund is close-end, and collect funds at the end of each period specified by the mutual funds. Choice of Schemes The Investor gets choice from various Funds according to his Needs and Objectives. Professional Management Most mutual funds pay topmost professionals to manage their investments. These managers decide what securities the fund will buy and sell. Regulatory Over-sight Mutual funds are subject to many government regulations that protect investors from fraud. Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. DISADVANTAGES OF MUTUAL FUND No Guarantees No investment is risk free. If the entire stock market declines then the value of mutual fund shares also goes down,no matter how balanced the portfolio. Fees and commissions All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners . Management risk When a investor invest in a mutual fund, he depends on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform well then the investor would not make much money as he had expected.

Dilution Its possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often dont make much difference on the overall return.

RISKS ASSOCIATED WITH MUTUAL FUNDS Market Risk Market risk relates to the market value of a security in the future. Market prices fluctuate and are depended on economic and financial trends, supply and demand, and many other factors that cannot be predicted or controlled. Political Risks Changes in the tax laws, trade regulations, administered prices, etc are some of the many political factors that create market risk. Business Risk Business risk is present in all business ventures. The future financial stability of a company cannot be predicted or guaranteed. Economic Risk Economic risk involves uncertainty in the economy, which, in turn, can have an adverse effect on a companys business.

Risk Appetite:

Investors invest in funds depending on their requirements and risk appetite. The greater the risk they are willing to undertake the greater will be the returns and similarly the lesser the risk they are willing to undertake the lesser will be the returns. Depending on the investors risk appetite the investor will choose the funds as follows: LIQUID FUNDS: The investors choose this type of funds when they only wish to save and look for only less returns .All corporate houses that have much money usually save it in liquid funds as there is very less risk and high liquidity. DEBT FUNDS: These are the short term investors who are interested in quick returns with less risk. BALANCED FUNDS: Retired people go for this kind of funds where there is moderate risk and moderate returns. INDEX FUNDS: These are more riskier then the balanced funds. Investor invests in midcap and small cap. EQUITY FUNDS: Investors who seeks higher returns and are willing to take high risk goes for this funds.

SECTORAL FUNDS: The returns are very high and so is the risk because the whole amount is invested on a particular sector.

CATEGORIES OF MUTUAL FUNDS


Mutual funds can be classified as follow: Based on their structure
y

Open-ended funds: Investors can buy and sell the units from the fund at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments cannot be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly.

Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance or even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: o Debt-oriented funds -Investment below 65% in equities. o Equity-oriented funds -Invest at least 65% in equities, remaining in debt. Debt fund: They invest only in debt instruments, and are a good option for investors. They invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put the money into any of these debt funds depending on the investment needs.

y y y y y y y

Liquid funds Gilt funds ST Floating rate funds Gilt funds LT Income funds LT MIPs FMPs

MUTUAL FUNDS: A MONOPOLISTIC COMPETITION y y y y Many firms enter into this industry because of its huge profit potential. The products they offer are mostly similar but slightly differentiated. Their is high level of competition in the industry. Free entry and free exit.

INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

Future of Mutual Funds in India


Financial experts believe that the future of Mutual Funds in India will be very good. It has been predictable that by March-end of 2012, the mutual fund industry will reach Rs 99, 90,000 crore, taking into account the total assets of the Indian commercial banks. The assessment was based on the December-04 asset value of Rs 1, 50,537 crore. In the coming 10 years the annual multiple growth rate is expected to go up by 14.5%. Since the last 5 years, the growth rate was recorded as 9.3% annually. Based on the current rate of growth, it can be forecasted that the mutual fund assets will be double by 2012.

COMPANY PROFILE
HDFC MUTUAL FUNDS VISION To be a dominant Player in the Mutual Fund space recognized for its higher levels of ethical and professional conduct and a commitment towards enhancing Investor Interests. HDFC Asset Management Company Ltd. has a vision of being a leading player in the Mutual Fund business and has achieved significant success in the market. HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing Development Finance Corporation Limited and Standard Life Investments Limited. The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. In 1998, Standard Life Investments Limited became the dedicated investment management company of the Standard Life Group and is owned 100% by The Standard Life Assurance Company. With global assets under management of approximately US$126 billion as at May 15, 2003, Standard Life Investments Limited is one of the world's major investment companies and is responsible for investing money on behalf of five million retail and institutional clients worldwide.

PRODUCTS
Equity/ Growth Fund HDFC mid Cap Opportunities Fund. HDFC Prudence Fund. HDFC Index Fund- Nifty Plan. HDFC Capital builder Fund. HDFC Infrastructure Fund.

HDFC Long term advantage Fund. HDFC Index Fund- Sensex plus Plan. HDFC Core and Satellite Fund. HDFC Growth Fund. HDFC top 200 Fund. HDFC Index Fund- Sensex plan. HDFC Balanced Fund. HDFC Long term Equity Fund. HDFC Equity Fund. HDFC Premiere Multi-cap Fund. HDFC Arbitrage Fund. HDFC Tax saver (ELSS).

Childrens Gift Fund HDFC Childrens Gift Fund Savings Plan. HDFC Childrens Gift Fund Investment Plan.

HDFC Liquid Fund HDFC Cash Management Fund- Savings Plan. HDFC Liquid Fund Premier Plus Plan. HDFC Liquid Plan. HDFC Cash Management Fund- Call Plan. HDFC Liquid Fund Premier Plan.

Debt/Income Funds HDFC Floating rate Income Fund- Long term Plan. HDFC High Interest Fund- Short term Plan. HDFC Multiple Yield Fund- Plan 2005. HDFC Cash Management Fund- Treasury Advantage Fund. HDFC Gilt Fund- Short term Plan. HDFC Income Fund. HDFC Multiple Yield Fund.

HDFC Short term Plan. HDFC Floating rate Income Plan- Short term Plan. HDFC MF Monthly Income Plan- Long term Plan. HDFC High Interest Fund. HDFC Gilt Fund- Long term Plan.

HDFC Quarterly Income Fund HDFC Fixed Maturity Fund

DISTRIBUTION CHANNELS
Mutual funds posses a very strong distribution channel so that the customers doesnt face any difficulty. The various parties involved in distribution of mutual funds are: Direct marketing by the AMCs: The forms could be obtained from the AMCs directly. The investors can approach to the AMCs for the forms. Broker/ sub broker arrangements: The AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can enjoy the advantage of large network of these brokers and sub brokers. Individual agents, Banks, NBFC: Investors can procure the funds through individual agents, independent brokers, banks and several non- banking financial corporations too, whichever he finds convenient for him. ACHIEVEMENTS HDFC Asset Management Company (AMC) is the first AMC in India to have been assigned the CRISIL Fund House Level 1 rating. This is its highest Fund Governance and Process Quality Rating which reflects the highest governance levels and fund management practices at HDFC AMC. It is the only fund house to have been assigned this rating for third year in succession. Over the past, HDFC has won a number of awards and accolades for their performance.

HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent Liquid Fund under CRISIL ~ CPR for the calendar year 2007 (from amongst 5 schemes). ICRA Mutual Fund Awards 2008 : HDFC MF Monthly Income Plan - Long Term Plan Ranked a Seven Star Fund and has been awarded the Gold Award for "Best Performance" in the category of "Open Ended Marginal Equity" for the three year period ending December 31, 2007.