Presented by:

Smita Rastogi

INTRODUCTION

What is Mutual Funds?- It is an investment vehicle that is made up of a pool of

funds collected from many investors for the purpose on investing in securities such

as stocks, bonds, money market instruments and similar assets.

Channels Through Which You Can Invest In MF’s are-

1. Online/Mobile

2. IFA

3. Bank

4. Broker or fund advisor

5. Wealth management firm

https://www.youtube.com/watch?v=MNEKXrCUV_0

MF’s are managed by professional fund managers.

Allows you to invest your savings across a variety of

securities and diversify your assets according to your

objectives and risk tolerance.

Provides investors to earn on their personal savings.

Offers relatively high liquidity.

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TYPES OF MUTUAL FUND

Equity Funds- Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income.

Fixed Income- Funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cash flow to investors. Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds aren't without risk.

Money market Funds- The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe place to park your money. You won't get great returns, but you won't have to worry about losing your principal.

An Equity Fund is an open or closed-end fund that invests primarily in stocks, allowing investors to buy into the fund and thus buy a basket of stocks more easily than they could purchase the individual securities.

Equity fund categories are:

1. Large cap funds

2. Small and mid-cap funds

3. Multi-cap funds

4. Thematic funds

5. Tax saving funds

6. Equity oriented hybrid funds (ELSS)

Mutual fund

RISK PAST

PERFORMANCE

PRICES TO BUY & SELL

FEES

RETURN

VOLATILITY

FEES STRUCTURE Fund A Fund B Fund C

Shareholder Transaction Expenses

Sales load imposed on purchases None None 4.75%

Sales load imposed on reinvested dividends None None 4.75

Redemption fees None None None

Exchange fees None None None

Annual Fund Operating Expenses

Management and administrative expenses 0.22% 0.60% 0.70%

Investment advisory expenses 0.02 — —

Marketing fees — 0.30 —

Marketing and distribution costs 0.02 — —

Miscellaneous expenses 0.03 0.32 0.26

Total Operating Expenses 0.29% 1.22% 0.96%

Expenses on a Rs10,000 Investment

1 year Rs 30 Rs 124 Rs 587

3 years 93 387 823

5 years 163 670 1,077

10 years 368 1,477 1,805

MF investments are subject to market risks, no assurance and guarantee will be achieved.

NAV of units issued under the schemes can go up or down depending on the factors and

forces affecting the capital markets.

Past performance of Sponsors/AMC/MF does not indicate or guarantee future performance

of schemes of the MF and may not necessarily provide a basis of comparison with other

investments.

The names of the schemes do not indicate either the quality of the schemes, their future

prospects or the returns. Investors urged to study the terms of the offer carefully and consult

their Investment Advisor before they invest in the Schemes.

The Sponsors are not responsible or liable for any loss resulting from the operations of the

MF beyond the contribution of amount of Rs1 lacs towards setting up of the MF.

AMC has the right to limit repurchases / redemptions, under certain circumstances

Investments made by a unit holder in foreign currency in the Schemes are subject

to the risk of fluctuation in the value of the Rupee

A unit holder may invest in the Funds and acquire a substantial portion of the

scheme(s) units

In case of Fixed Income Investment, changes, in prevailing rates of interest will

likely affect the value of the Scheme(s) holdings and value of the Scheme(s') Units

Rate of interest leads to inflation NAV falls

Rate of interest leads to depression NAV rises

Prices of long-term securities fluctuate more in response to interest rate changes than do

short-term securities. Indian debt and government securities markets can be volatile leading

to the possibility of price movements up or down in fixed income securities and thereby to

possible movements in the NAV

Credit risk or Default risk refers to the risk that an issuer of a fixed income security may

default. The greater the credit risk, the greater the yield required for someone to be

compensated for the increased risk

The liquidity of the Scheme's investment may be inherently restricted by trading

volumes, transfer procedures and settlement periods.

Tracking errors are inherent in any index fund and such errors may cause the

scheme to generate returns which are not in line with the performance of

Nifty/SENSEX. To the extent that some funds may be deployed in Stock

Lending/Money Market Operations, the Scheme will be subject to risks relating to

such operations and may also contribute to tracking errors. The deviation of the

NAV of the respective plan from the SENSEX or Nifty is expected to be in the

range of 2-3% per annum

In case of Mid Cap Fund, Trading Volumes and Settlement Periods may restrict

liquidity in equity and debt investments. In case of mid cap companies such

liquidity risks is likely to be high. Further prices of stock in mid cap companies

are also likely to be more volatile

Pursuant to allotment of bonus units, the NAV of schemes would fall in

proportion to bonus allotted and as a result the total NAV held by investor would

remain same

POPULATION: India's population is young, with 54% under the age of 25 and 80% under 45

and the percentage of working population is rising rapidly.

Source: UN, CLSA global growth in working-age population (15-64) over next 5 yrs (bn)

A younger and working age population means – * income levels to rise

* higher savings and consequent flows into equity markets

* increased household consumption

* significant increase of labour supply

* Large population and favourable demographics

MOVEMENT IN GLOBAL MARKETS: If we see the position of BSE SENEX as compared to

other major indexes in the world then we find that BSE has been the best performer.

Source: www.bloomberg.com

This is the major factor which has contributed to mutual fund emerging as a great investment

vehicle for every category of investors and made mutual fund one of the most preferable way to

generate return. Mutual fund invest in equity of various companies for long time and long

investment in equities can help investors in generating good returns, if we invest for long.

INDIA – POTENTIAL 'SERVICES CAPITAL' OF THE WORLD

With services becoming increasingly tradable, India is well placed in terms of costs and skill

sets and over the past 13 years. From 1991-2005, India’s services sector growth has averaged

7.6% year compared with 5.7% for manufacturing.

Source: www.rbi.org.in

INFLATION AFFECTS THE RETURN

Inflation has always been one of the most important macroeconomic factor affection the

country. It represents the general price level of the country inflation has always lowered the

actual return from bank savings except the year 2002

* returns on safe fixed income options such as bank deposits have been moderating.

* Assured' return products are being phased out.

* Inflation and taxes are impacting returns.

Source: bank deposit rate-RBI inflation- CITIGROUP

IMPACT OF VARIOUS CHANGES

In order to detect timely fault lines in the global financial markets and put in

place appropriate corrections, the adoption of international standards and

global benchmark becomes important.

Mutual funds have been a significant source of investment in both government

and corporate securities. It has been for decades the monopoly of the state with

UTI being the key player, with invested funds exceeding rs.300 bn.

The state-owned insurance companies also hold a portfolio of stocks. Presently,

numerous mutual funds exist, including private and foreign companies.

Beta

It measures the systematic risk i.e. the risk inherent to the entire market or an entire market segment. This type of risk is both unpredictable and impossible to completely avoid.

Β<1 less volatile than the market

Β>1 more volatile than the market

Standard Deviation

It measures the total risk i.e. systematic as well as unsystematic risk.

Sharpe Ratio: (E(r) – rf) / σ

This ratio provides the returns per unit of total risk.

Treynors Ratio: (E(r) – rf) / Β

This ratio measures the performance in terms of systematic risk.

Jenson Alpha: Actual Avg. Returns – Fair Returns(CAPM)

This ratio measures the abnormal returns that are generated.

Fund

Category

S.

No. Fund Name

E(r) β σ Sharpe Ratio Treynors Ratio Jenson Alpha

Monthly NAV

(Oct12 to Sep15)

lower the β lower the

volatility

lower the σ lower the

volatility

higher the Sharpe

better the

performance in terms

of total risk

higher the treynors

better the

performance in terms

of systematic risk

positive=undervalued

negative=overvalued

Large Cap

1 Birla Sun Life Top 100 (G) 11.3828 1.0211 0.0452 0.8584 3.8027 0.0754

2 Franklin India Oppor.(G) 11.4176 1.0302 0.0470 0.8339 3.8027 0.0817

3 SBI Blue Chip Fund (G) 11.2327 0.9816 0.0437 0.8550 3.8027 0.0842

Small and Mid Cap

4 Can Robeco Emerg-Equities (G) 11.7484 1.1172 0.0605 0.7017 3.8027 0.1739

5

JP Morgan(I) Mid and Small Cap (G) 11.6019 1.0787 0.0549 0.7475 3.8027 0.1756

6 Principal Emerging Bluechip (G) 11.7162 1.1088 0.0553 0.7620 3.8027 0.1574

Diversified Equity

7 Birla SL India GenNext (G) 11.2414 0.9839 0.0464 0.8058 3.8027 0.1003

8 Franklin High Growth Cos (G) 11.2446 0.9847 0.0475 0.7885 3.8027 0.1579

9

ICICI Pru Value Discovery Fund (G) 11.2282 0.9804 0.0495 0.7538 3.8027 0.1436

10 L & T India Value Fund (G) 11.5537 1.0660 0.0528 0.7674 3.8027 0.1439

11 UTI MNC Fund (G) 10.8057 0.8693 0.0456 0.7248 3.8027 0.1520

Thematic- Infrastructure

12 Can Robeco Infrastructure (G) 12.0166 1.1877 0.0584 0.7730 3.8027 0.0461

13 Franklin Build India Fund (G) 11.7547 1.1189 0.0531 0.8015 3.8027 0.1628

ELSS 14 Axis Long Term Equity Fund (G) 11.3737 1.0187 0.0471 0.8220 3.8027 0.1488

15 Religare Invesco Tax Plan (G) 10.9847 0.9164 0.0426 0.8175 3.8027 0.1038

Index 16 GS Nifty BeES 10.5621 0.8052 0.0442 0.6926 3.8027 0.0064

17 Kotak Nifty ETF 11.2345 0.9821 0.0419 0.8904 3.8027 -0.0043

Balanced 18 Tata Balanced Fund (G) 10.5293 0.7966 0.0373 0.8117 3.8027 0.0921

Benchmark CNX Nifty

Maximum 12.0166 1.1877 0.0605 0.8904 3.8027 0.1756

Minimum 10.5293 0.7966 0.0373 0.6926 3.8027 -0.0043

The top five mutual fund houses HDFC, ICICI Pru, Reliance, Birla Sun Life and UTI AMC,

which together hold about 55 per cent market share in the MF industry

have bought stocks that have been beaten down and were trading at attractive levels in August.

HDFC Mutual Fund bought Tata Steel and Vedanta, while ICICI Pru bought into NTPC and Ambuja Cements

Among midcap stocks, fund houses bought stocks such as Thomas Cook, Sun TV Network and Exide Industries

Funds have invested Rs 10,533 crore in stocks in August, while foreign institutional investors (FIIs) sold stocks worth Rs 16,877 crore during the same period — its highest monthly selloff in more than seven years

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