final draft ashi

8/8/2019 Final Draft Ashi

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EXECUTIVE SUMMARY

The private and MNC banks in India is today paving through one of its

rough times. Though it has a tremendous growth potential, the competition and

related factors have made the scenario worst. This has really compelled the

banking industry to come out with improved performance with their customers.

ABN AMRO Bank as usual remains vibrant by attracting all the customers.

The Mutual Fund Industry has come a long way since the days of the UTI. The

numbers of mutual funds has also increased over the years. Mutual funds are seen

as an avenue for the retail investors to enter the stock market and bonds. They

provide the professional competence to the retail investor. In India the retail

investor is increasingly seeing mutual fund as an alternative investment avenue to

the low-yielding bank deposits. ABN AMRO has got its own AMC called ABN

AMRO AMC who intelligently manages the funds of their investors, which keep a

good record of their risk and make good yield or return on investment.

I am honored to be associated with ABN AMRO Bank to work on this

project entitled: A Study On“ABN AMRO BANK AND COMPARITIVE STUDY FOR MUTUAL FUND

INVESTMENTS WITH REFERANCE TO ABN AMRO MUTUAL FUNDS”.

The project lasted for 10 week and the project has been conducted in the

year 2005 i.e., from June 20th to August 27th 2005

The study was mainly aimed to understand the performance of ABN

AMRO mutual funds by comparing it with other selected funds and identify the

shortcomings and benefits of ABN AMRO mutual funds. The study covers the

other vital objectives like:

• To find out the best performing scheme for investment by evaluating the

performance of the scheme among various AMC’S over a year’s

performance.

• To compare ABN AMRO’s scheme with the selected schemes and know

the performance and suggest methods to improve shortcomings.

CMR INSTITUTE OF TECHNOLOGY, BANGALORE - 1 -



• Enabling the advisors to suggest the customers to choose among the

schemes by looking upon the needs and requirements of the customers.

• To give necessary suggestions for the improvement of the ABN AMRO’s

funds in the areas of shortcomings.

• To help the bank in the sales of Mutual Fund products through proper and

accurate advises on investments for customers and earn more commission

on it.

• Performance evaluation of the investment, to compare the services of ABN

AMRO AMC with other AMC’S, to know the best performer among

different AMC’S and to suggest remedial measures to increase the market

performances.

• To check the volatility and expenses involved in the ABN AMRO MF

schemes.

• To compare the fund size of each scheme of each AMC’S to identify the

best growing scheme in the market.

• To compare the risk involved and the yield in each scheme.

• To compare the scheme that yields the best in the shortest time period.

The study revealed that market performance, proper advisor-customer interaction

and periodical feedback does have a greater impact on customers interest and

hence success.




1.1 INDUSTRY PFOFILE

BANKING SCENARIO IN INDIA, POST 90’S

Banks in India have traditionally offered mass banking products. Most

common deposit products being Savings Bank, Current Account, Term deposit

Account and lending products being Cash Credit and Term Loans. Due to Reserve

Bank of India guidelines, Banks have had little to do besides accepting deposits at

rates fixed by Reserve Bank of India and lend amount arrived by the formula

stipulated by Reserve Bank of India at rates prescribed by the latter.

PLR (Prime lending rate) was the benchmark for interest on the lending products. But PLR itself was, more often than not, dictated by RBI. Further,

remittance products were limited to issuance of Drafts, Telegraphic Transfers,

Bankers Cheque and Internal Transfer of funds. In view of several developments

in the 1990s, the entire banking products structure has undergone a major change.

As part of the economic reforms, banking industry has been deregulated and made

competitive. New players have added to the competition. IT revolution has made

it possible to provide ease and flexibility in operations to customers.

Rapid strides in information technology have, in fact, redefined the role

and structure of banking in India. Further, due to exposure to global trends after

Information explosion led by Internet, customers - both Individuals and

Corporates - are now demanding better services with more products from their

banks. Financial market has turned into a buyer's market. Banks are also changing

with time and are trying to become one-stop financial supermarkets. Market focus

is shifting from mass banking products to class banking with introduction of value

added and customized products.

A few foreign & private sector banks have already introduced customized

banking products like Investment Advisory Services, SGL II accounts, Photo-

credit cards, Cash Management services, Investment products and Tax Advisory

services.




A few banks have gone in to market mutual fund schemes. Eventually, the

Banks plan to market bonds and debentures, when allowed. Insurance peddling by

Banks will be a reality soon. The recent Credit Policy of RBI announced on

27.4.2000 has further facilitated the entry of banks in this sector. Banks also offer

advisory services termed as 'private banking' - to "high relationship - value"

clients.

The bank of the future has to be essentially a marketing organization that

also sells banking products. New distribution channels are being used; more &

more banks are outsourcing services like disbursement and servicing of consumer

loans, Credit card business. Direct Selling Agents (DSA) of various Banks go out

and sell their products. They make house calls to get the application form filled in

properly and also take your passport-sized photo. Home banking has already

become common, where you can order a draft or cash over phone/internet and

have it delivered home. ICICI bank was the first among the new private banks to

launch its net banking service, called Infinity. It allows the user to access account

information over a secure banking scenario in India, post 90’s.

Banks in India have traditionally offered mass banking products. Most common

deposit products being Savings Bank, Current Account, Term deposit Account

and lending products being Cash Credit and Term Loans. Due to Resensumer

durable loans, education loans, loans against share, finance against gold.

IMPORTANT PHASE IN THE HISTORY OF THE MUTUAL FUND

a) 1963-1987: The Unit Trust of India was the pioneer to start up the

MUTUAL FUNDS in India created by the act of 1963.UTI created a

number of schemes during this Period such as children’s plan, equity

oriented plan schemes and offshore Funds During this period UTI

managed assets of Rs.6700 crores.




1.2 COMPANY PROFILE

Mission, History and Network

Mission:

"ABN AMRO's mission is to create maximum economic value for our

shareholders through a constant relationship focus on the financial services needs

of our chosen client segments and a strict adherence to our financial targets. We

are operating in three principal customer segments, whereby the objective is to

maximize the value of each of these businesses as well as the synergies between

them. Excellence of service to our clients and leadership in our chosen markets are

of paramount importance to our long-term success. The Bank's corporate values

play an integral role in the fulfillment of our mission."

History:

On 29 March 1824 King Willem-I issued a royal decree creating the

Nederlandsche Handel-Maatschappij with the aim of reviving trade between the

Netherlands and the Dutch East Indies. In 1964, NHM merged with De Twentsche

Bank to form Algemene Bank Nederland (ABN), while Amsterdamsche Bank

and Rotterdamsche Bank joined to become Amsterdam-Rotterdam (Amro) Bank.

In 1991, these two banks merged as ABN AMRO Bank. Today, ABN AMRO

Bank has a powerful presence in world markets, building on a tradition of

stimulating international trade.

Network:

As an international bank, they have more than 3,500 branches in over 70

nations across the globe. ABN AMRO, the Network Bank caters to everyone’s

needs both at home and abroad.




ABN-AMRO (MAIN BRANCH)

PROFILE:

The goal of ABN AMRO is to create value for its clients. Key in their

relationship approach is a constant focus on the financial services needs of their

client segments. It is through the professionalism and motivation of their global

staff that they realize this value, resulting in maximum economic value for their

shareholders.

They are active in three principal customer segments: Consumer &

Commercial Clients, Wholesale Clients and Private Clients & Asset Management.

The objective is to maximize the value of each of these businesses as well as thesynergies between them. Excellence of service to their clients and leadership in

their chosen markets are of paramount importance to their long-term success.

The ABN AMRO Corporate Values and Business Principles provide the

framework within which the people working under are carrying out their

operations.

In brief...

ABN AMRO is a prominent international bank, its history going back to 1824.

ABN AMRO ranks 10th in Europe and 22nd in the world based on tier 1 capital,

with over 3,400 branches in more than 60 countries, a staff of 110,000 employees

and total assets of more than EUR 622 billion (as per end December 2004).




ABN AMRO branches in INDIA

With assets over US $504 billion and an AA credit rating, ABN AMRO

Bank ranks among the top 10 banks in the world in size and strength. Their

international network comprises 3,568 branches and offices in over 320 cities and

76 countries and territories, with over 100,000 highly qualified staff. As a global

bank, they can handle the most complicated cross-border transactions, yet they

also understand the subtleties of local markets.

ABN AMRO in India

ABN AMRO Bank (India) has an eight-decade long experience of the

Indian business scenario.

Traditionally known as a strong "diamond-financing bank", it has turned

into a bank providing a comprehensive range of services with a difference.

ABN AMRO (India) has branches in Mumbai, Delhi, Chennai, Kolkata,

Pune, Baroda, Hyderabad, Bangalore and Noida with each branch servicing multi-

product relationships.

Consumer banking offers a suite of products for every one’s personal

financial needs offered through various channels including ATMs, Doorstep

Banking and Net Banking.

ABN AMRO Bank in India enjoys a strong image as a corporate bank with

comprehensive Global Transaction Services. Its investment banking services are

delivered through ABN AMRO (India) Corporate Finance and the Global

Financial Market Teams, which strive to maintain the permanent position, they

have built in the marketplace.

ABN AMRO Bank has launched its Private Banking Services in India

offering a comprehensive range of high quality Portfolio Advisory Services along

with a comprehensive transaction execution platform, complemented by

personalized Banking and custodial services.




Three global Strategic Business Units (SBUs):

I. Consumer & Commercial Clients (C&CC) - for individuals and small-

to medium-sized enterprises requiring day-to-day banking. We serve

approximately 15 million clients, mainly through our major presence in three

home markets: the US Midwest, the Netherlands and Brazil. The Business Unit

New Growth Markets is also expanding its consumer and commercial operations

in selected countries such as India, Hungary and Thailand.

II. Private Clients & Asset Management (PCAM )- for individuals and

institutional investors. ABN AMRO is a leading player in private banking both in

the Netherlands and in France, and has strong positions in Luxembourg, Miami

and Switzerland. Private Clients ranks among the world's top 10, with EUR 96

billion in Assets under Administration. Asset Management has a local presence in

30 countries and EUR 150 billion in Assets under Management.

III. Wholesale Clients (WCS) - for major international corporations and

institutions. This is one of the largest Europe-based wholesale banking business

with around 10,000 clients, 20,000 staff and operations in over 40 countries. With

a global network, specialists in all major industry sectors and a broad range of

products, ABN AMRO provides local and global expertise for complex cross-

border deals.

PROFILE OF ABN AMRO India

ABN AMRO Bank (India) has an 81-year long experience of the Indian business

scenario. Traditionally known as a strong "diamond-financing bank", it has turned

into a bank providing a comprehensive range of services with a difference.

ABN AMRO (India) has had a long-standing presence in India since 1920, in

Kolkata and Mumbai. At that time, the bank mainly worked for diamond clients.

The bank took off in a big way in 1991, after the merger of ABN and AMRO

worldwide. The Delhi branch was functional in the very same year. ABN AMRO




was launched in other cities throughout India between 1994 and 1999. They were

Chennai in 1994, Pune in 1997 and Baroda in 1999, while the Hyderabad and

Bangalore branches were opened in 2001. The bank acquired the retail business of

the Bank of America in 1999. The year 2002 saw the opening of the Noida office.

AA Securities [I] Pvt. Ltd. formed in September 1998.

ABN AMRO’s ACHIEVEMENTS

Second overall in banking industry: Financial Express-BRIS survey 2002

“Best Cash Management Award in September 2002"

The Banker Top Foreign Bank in India: Economic Times - CMIE survey

2002.

Top Foreign Bank in India: Economic Times - CMIE survey 2002.

Corporate Finance India: Ranked Second in M&A in the Investment

Banking arena in 2001 - Economic Times.

ABN AMRO Securities India: Best Foreign Bond House; No 1 Arranger

in Private Sector: Euro money 2000.

Top Bank on "Management Quality" parameter: Business India 'Best

Banks Survey 2000'.

7th Most Admired Commercial Bank in the World: Fortune Magazine,

2000.




The products and services in consumer banking.

Consumer Banking

Credit Card

• Freedom Credit Card

• Smart Gold Card

• Card for you

• Services

• FAQs

Loan Products

• Loans against Securities

• Car Loans

• Personal Loans

Deposit Products

• Savings Accounts

• Value+ Current Accounts

• Easy Draw Fixed Deposits

NRI Services • Value Added Services

• Products and services

Investment Services • Mutual funds

Services

• Debit Card

• Net Banking

• Express Cash

• ATM Services

• 24 Hour Bank by Phone

• Bill Payment

• Doorstep Banking

• Depository Services

• National Access

• 365 Days Banking

• Extended Banking Hours




EQUITY SCHEME

1. ABN AMRO EQUITY FUND

Investment Objectives:

The investment objective of the fund is to generate long-term capital growth

from a diversified actively managed portfolio for equity and equity related

securities. The scheme will invest in a range of companies, with a bias towards

large and medium market capitalization companies.

Fund Manager:

Mr. Mihir Vora

NAV to the date:

Growth: Rs. 13.97

Dividend: Rs. 12.10

Benchmark Index:

S&P CNX Nifty.

Load Structure:

Entry load: In respect of each subscription / switch-in of units for an amount less

than Rs. 5 Crores in value: 2.25% in respect of each subscription of units for an

amount equal to Rs. 5 Crores in value or more: Nil.

No entry load for switch –in from ABN AMRO opportunities fund

Exit load: Nil




2. ABN AMRO OPPORTUNITIES FUND

Investment Objectives:

The investment objective is to generate long-term capital growth from an

actively managed portfolio of equity and equity related securities. The scheme

will aim to identify attractive investment opportunities in companies across all

ranges of market capitalization viz- small, large and medium capitalization and

across all sizes in terms of turnover, balance sheet size etc. The scheme has the

flexibility to actively shift portfolio concentration between different market

capitalization buckets. The scheme also retains the flexibility the flexibility to

hold from time to time relatively concentrated investment in a few sectors than

plain diversified equity funds.

Fund Manager:

Mr. Mihir Vora

NAV to the date:

Growth option: Rs.10.307

Dividend option: Rs. 10.307

Benchmark Index:

BSE200.

Load Structure:

Entry load: In respect of each subscription of units for an amount les than Rs. 5

Crores in value: 2.25% In respect of each subscription for an amount equal to Rs.5

Crores in value or more: Nil.

No entry load payable for switch-in from AMN AMRO Equity Fund.

Exit load: Nil.

Initial Issue expenses: Initial issue expenses to the maximum of 2% of the amount

collected during the IPO (after charging entry load) have been charged to the




scheme. The initial issue expense will be amortized over the period not exceeding

five years or such shorter period as approved by the Trustee.

INCOME SCHEME

ABN AMRO FLEXI DEBT FUND:

Investment Objective:

The primary objective of the scheme is to generate income from investments from

a range of debt and money market instruments of various maturities with a view to

maximize income while managing an optimum balance between yield , safety and

liquidity.

Fund Manager:

Mr. Mahendra Jajoo

NAV to the date:


Quarterly Dividend option: Rs.10.1455

Half yearly Dividend option: Rs. 10.1458

Average Maturity:

37 days

Benchmark Index:

CIRISIL Composite Bond Fund Index.

Load Structure:

Regular Plan: there is no Entry or Exit load.

CDSC: In respect of each subscription of units for an amount less than Rs. 10

lakhs in value, a CDSC of o.50% is payable is payable if the units are redeemed

with in 6 months from the date of allotment. In respect of each subscription of

units equal to Rs. 10 lakhs in value or more, no CDSC is payable.

Institutional Plan:




No entry load or exit load for CDSC.

ABM AMRO MONTHLY INCOME PLANS:


The primary objective of the firm is to generate regular returns through investment

primarily in debt and money market instruments. The secondary objective of the

scheme is to generate long-term capital appreciation by investing a portion of the

scheme’s assets in equity and equity related securities.

Fund Manager:

Mr. Mahendar jajoo

NAV to the date:

Growth option: Rs. 10.7454

Monthly Dividend option: Rs.10.3537

Quarterly Dividend option: Rs.10.4381

Average Maturity:

13 days.

Benchmark Index:

CIRISIL MIP Blended Index

Load Structure:

There is no Entry load or Exit load.

CDSC: In respect of each subscription of units for an amount less than Rs. 10

lakhs in value, a CDSC of 0.50% is payable if units are redeemed with-in 6

months from the date of allotment. In respect of each subscription of units equal to

Rs. 10 lakhs in value or more , no CDSC is payable.




LIQUID SCHEME

ABN AMRO CASH FUND:


The primary objective of the scheme is to enhance income consistent with a high

level of liquidity, through a judicious portfolio mix comprising of money market

and debt investment.

Fund Manager:

Mr. R.Sivakumar

NAV to the date:

Regular plan:


Dividend option: Rs. 10.000

Institutional Plan:


Daily Dividend option: Rs. 10.000

Average Maturity:

132 days.

Benchmark Index:

CIRISIL Liquid Fund Index

Load Structure:

There is no Entry or Exit load or CDSC




ABN AMRO FLOATING RATE FUND:


The primary objective of the fund is to provide income consistent from the

prudent risk from a portfolio comprising substantially of floating rate debt

instruments, fixed rate debt instrument swapped for floating rate return, through

the use of OTC or exchange rate derivatives. The scheme may also invest in fixed

rate and money market instruments and/or floating rate return swapped through

fixed rate return through the use of OTC or exchange trade derivatives.

Fund Manager:

Mr. R.Sivakumar

NAV to the date:

Regular plan:


Monthly Dividend option: Rs. 10.0439

Institutional option:


Daily Dividend option: Rs. 10.000

Monthly Dividend option: Rs.10.0446

Average Maturity:

56days

Benchmark Index:

CRISIL Liquid Fund Index

Load Structure:

There is no Entry or Exit Load or CDSC.




1.4 OPERATIONAL DEFINITION OF CONCEPTS

INTRODUCTION

A mutual fund is a pool of money, collected from the investors, and is

invested according to certain investment objectives.

A mutual fund is created when investors put their money together. it is

therefore a pool of the investors’ funds. The most important characteristic of a

mutual fund is that the contributors and the beneficiaries of the fund are the same

class of people, namely investors. The term mutual fund means that investors

contribute to the pool, and also benefit from the pool. There are no other claimants

to the funds. The pool of funds held mutually by investors is the mutual funds. A

mutual fund’s business is to invest the funds thus collected, according to the

wishes of the investors who created the pool.

CHARACTERASTICS OF A MUTUAL FUND.

1. The ownership of the mutual fund is in the hands of the investors

2. Investment professionals who earn a fee from their services manage the

mutual funds

3. The value of the portfolio is updated every day.

4.The value of one unit of investment is called as the net asset value or NAV.

5. Investment portfolio is created according to the stated investment objective

of the fund.

ADVANTAGES OF MUTUAL FUND TO INVESTORS

1. Portfolio diversification.

2. Professional management.

3. Reduction in risk.

4. Reduction of the transaction cost.

5. Liquiduity




6. Convenience and flexibility.

Investors in the mutual fund industry has choice of around 40 mutual funds,

offering nearly 500 products .It is also possible for the investors to decide the

manner in which their returns would be distributed and choose from daily,

monthly, qarterly or annual payouts or reinvestment of the dividends into the

mutual fund product itself or a growth option that would seek growth in the

investment over distribution of income.

HOW DOES MUTUAL FUND REDUCE RISK

MUTUAL FUND invests in portfolio of securities .This means all the funds are

not invested in the same investment venue. This is done by holding a diversified

investment portfolio in a wise way to reduce risk .Since the investors lack

professional experience the diversified portfolio is usually created by the AMC’S

itself.

PROFESSIONAL MANAGEMENT OF MUTUAL FUNDS

Mutual funds are managed by the investment managers.(AMC) who are

appointed by the trustees.

AMC’S regulated by the SEBI compete for the funds under management

therefore bring professional expertise and are bound by regulatory and trustee

supervision.

Regulations allow trustees to monitor the performance of the AMC, with

regulations to safe guard the interest of the investor.

Investment managers and the funds are bound by the AMFI code of the ethics

which foster professional standards in the industry.

INFORMATION TO THE INVESTORS

A periodical statement of investment regarding the performance is seen to the

investor. They disclose the following:




1. Daily NAV by phone or by

internet.

2. Complete portfolio of the

fund and commentaries of the fund manager on how they are managing fund.

3. Credit quality of the investment and the behavior of the NAV since inception

of the fund.

MUTUAL FUND PRODUCTS

OPEN-ENDED AND CLOSED-ENDED FUNDS

In an open-ended fund, investor can buy and sell units of the fund, at the NAV

related prices, at any time, directly from the fund. The pool of fund is open for

additional sale and repurchases. Therefore the amount of fund the mutual fund

manages and the number of units varies every day. Open ended funds are offered

for sale at a prespecified price and, say Rs.10,in the initial offer period. After pre

specified period, say 30 days, the fund is declared open for further sale and

repurchases. This traction happens at computed NAV price.

A closed-ended fund is open for sale to the investor for a specific period , after

which the sale are closed .Any further repurchasing or buying of the units happens

only in the secondary market. There by new investor can buy from the existing

investor and the existing investor can liquidate their units by selling them to the

other interested buyer. There by the pool of funds are kept constant.

STRUCTURING THE RETURNS TO THER INVESTOR.

Mutual Fund investors has choice of structure for their returns from the.

Dividend option

Growth option

DIVIDEND OPTION




Investor who choose dividend option will receive dividends from the

mutual funds as and when such dividends are declared. Dividends are paid in the

form of warrants or directly credited to the investor’s bank account. In a normal

dividend plan periodicity of the dividends are decide by the fund manager. who

may pay annually or interim dividends variant to the normal dividend plan is the

pre-specified plan which can vary from daily, weekly, monthly, quarterly, half

yearly or annualy.Investor can choose the frequency of dividend distribution that

suits their requirements.

GROWTH OPTION

Investor who do not require periodic income plan can choose the growth plan,

where the incomes earned are retained in the investment portfolio, and allowed to

grow, rather than being distributed to the investors. Investor with long-term

investment horizons and limited requirements for income choose this plan.

PRODUCTS AVAILABLE WITH RESPECT TO INVESTMENT

OBJECTIVES

Depending on the investment portfolio that is created the following are the

types of products that are offered by the mutual funds:

Equity funds

Debt funds

Balanced fund

EQUITY FUNDS

These are those funds that primarily invest in the equity shares of the

company .There are variety of ways in which an equity portfolio can be created

for the investors .These includes.

Simple equity fund

Primary market funds

Sectoral funds




Index funds

Other equity funds

DEBT FUNDS

Debt funds are those funds that are pre-dominantly invested in the debt

securities. Since most debt securities pay periodic rate of interest to the investors,

these funds are also known as income funds. However it must be remembered that

funds investing in debt products can also offer a growth option to their investors.

What is important is that the portfolio is predominantly made up of debt securities.

The universe of debt securities comprises of long term instruments such as bond

issued by the central and the state government , public sector organization ,public

financial institutions and private sector companies and short term instruments

such as call money lending; commercial papers ,certificates of deposits and the

treasury bills. Debt funds tend to create a variety of options for investors by

choosing one or more of these segments of the debt markets in their investment

portfolio.

GILT FUNDS

Gilt invests in securities that are issued by the government, and therefore does

not carry any credit risk. These funds invest in short and long term securities

issued by the government. These funds are preferred by institutional investors who

have to invest only in the government papers. These funds also enable retail

investors to participate in the market of government securities, which otherwise is

a large-ticket market.

STRUCTURE OF MUTUAL FUNDS IN INDIA

The structure of mutual funds in India is governed by the SEBI (Mutual

Funds) Regulations,1996(here in there after referred to as SEBI regulations)




.These regulations make it mandatory for mutual funds to have a three-tier

structure of Sponsor-Trustee-Asset Management Company (AMC).

The sponsor is the promoter of the mutual fund and appoints the Trustees.

The trustees are responsible to investors in the mutual fund and appoint

the AMC for managing the investment portfolio.

The AMC is the business face of the mutual fund as it manages all the

affair of the mutual fund .

The mutual fund and the AMC have to be registered with the SEBI.

SEBI regulations also provide for who can be the sponsor , trustee and the

AMC , and specify the format of the agreement between the these entities. These

agreements provide for the rights, duties obligations of the three entities.

The UTI is also structured as a trust. The important difference though is that

UTI does not have sponsors or a separate AMC .Financial institutions and bank

that contributed to the initial capital of the UTI have their representatives on the

UTI’s board of Trustees, which oversees the operations of the UTI. The chairman

appointed by the Board, who in turn employs managers and the staff to run its

activities, manages UTI.

HOW ARE MUTUAL FUNDS STRUCTURED

Mutual funds can be structured in following:

a. Company form, in which investors hold shares .In this structure, management

of the funds are in the hands of the elected board, which inurn appoints investment

Managers to manage the funds.




b. Trust FORM, in which the funds of the investors are held by trust, on behalf of

the investor the trust appoints the investment managers and monitor their

functioning in interest of the investor

The company form of organization is very popular in the United States. In India

mutual funds are organized as trusts. The trust is created by the sponsor, who is

actually the entity interested in creating the mutual fund business. The trust is

either managed by the Board of trustees, or by a trustee company, formed for this

purpose. The investor’s funds are held by the trust.

WHO ACTUALLY MANAGES THE MUTUAL FUNDS

The sponsors, acting through the trustees, appoint all the functionioners

required for managing investor’s money. These functionaries are as follows:

a. Investment managers, known as the Asset Management Company.(AMC).

b. Registrar and transfer agent

c. Broker

d. Selling agents and distributors

e. Custodian

f. Depository Participants

g. Banker

h. Legal advisor

i. Auditors

ORGANIZATION OF THE INDIAN MUTUAL FUNDS

Though the trust is the mutual fund, the AMC is the is the operation face.

The AMC is the first functionary to be appointed , and is involved in the

appointment of all other functionaries .The AMC structures the mutual fund

products markets them and mobilizes the funds , manages the fund and

services the investors. It seeks the services of other functionaries in carrying

out these functions. All the above noted functionaries are required to report to

the trustees, who lay down the ground rules, and monitor their workings.




TYPES OF AMC’S IN INDIAN CONTEXT

a. AMC’s owned by banks

b. AMC’s owned by financial institutions

c. AMC’s owned by Indian private sector companies

d. AMC’s owned by Foreign Institutional Investors.

e. AMC’s owned jointly by Indian and Foreign sponsors.

LEGAL AND REGULATORY FRAMEWORK

SEBI

Securities and Exchange Board of India is the apex regulator of the capital

markets. Issuance and trading of capital market instruments and the regulation of

capital market intermediaries is under the purview of SEBI. SEBI is the primary

regulator of mutual funds in India

All the mutual funds are required to be mandatory registered with SEBI. Structure

and functions of mutual funds and the appointments of the functionaries,

operations of mutual fund, accounting and disclosure norms, rights and

obligations of the functionaries and investors, investment restrictions, compliance

and penalties are all defined under the SEBI regulations. Mutual funds have to

send half yearly compliance report to SEBI, and also provide all other information

about their operations, as SEBI may require. SEBI is also empowered to

periodically inspect mutual fund organizations to ensure compliance with SEBI

regulations.

REGULATORY JURISDICTION OF RBI OVER MUTUAL FUNDS

RBI is the monetary authority of the country and is also the regulatory of the

banking system.RBI is involved with the mutual fund industry only up to a limited

extend of being regulator of sponsors of bank sponsored mutual funds.




CAPITAL MARKET and PORTFOLIO MANAGEMENT.

EQUITY MARKET AND MUTUAL FUND .

MAJOR TASK OF EQUITY PORTFOLIO.

a. Constructing a portfolio of the equity shares or equity linked

instruments that is consistent with the investment objective of the fund.

b. Managing and constantly re-balancing the portfolio to produce capital

appreciations and earnings that would reward the investors with superior

returns.

INDICATORS OF THE NATURE AND DEPTH OF EQUITY MARKET IN

INDIA.

a. There are 9922 companies listed on the Indian Stock Exchange

b. The market capitalization of these equity shares was Rs. 768863 crores.

c. The ratio of market capitalization of equity shares to the GDP was 54.5%.

d. There are 23 stock exchanges and 9792 brokers.

MEASURING AND EVALUATION OF FUND PERFORMANCE.

RATE OF RETURN TO AN INVESTOR IN MUTUAL FUNDS.

Investors in mutual funds earns from two sources:

a. Income from dividend paid by the mutual fund

b. Capital gains arising out of selling the units at a higher than the acquisition

price.

Since the mutual fund does not commit any specific rate of dividends the rate of

return is not known in advance. The mutual fund does not specify any particular

tenor for its products. The investor is free to enter and exit the fund at any time.




He would do so at the price that depends on the NAV at that time. Since NAV’s

changes are not foreseen the investors are not known about the capital gains or

loss for their investment.

MUTUAL FUNDS DO NOT PROVIDE AN ASSURED LEVEL OF

RETURNS TO THE INVESTORS.

Since the value of the securities can change at any time the mutual fund cannot

assure any fixed rate of return. In case the market value of the securities falls

short if assured returns has to be provided , the short fall has to be made good by

another security.

METHODS OF COMPUTING RETURNS ON INVESTMENT IN

MUTUAL FUND PRODUCT.

a. Percentage change in NAV

b. Simple total return

c. ROI or Total returns dividend re-investment.

RISK AND PERFORMANCE EVALUATION.

Risk as we have seen arises out of facts that do not remain constant or unchanged

.Every change in situation is a risk for the investor. The simplest way to measure

risk is to find out over a period of time, what is the average return from investing

in a fund. We can then find out how the actual returns are distributed among the

actual return of fund. If the actual returns earned by the investor are close to the

average, such a fund is less risk. If the return varies by larger amount, around the

average, the fund is more risky.

The difference between the average return and the dispersion of actual returns

around the average can be measured with the help of statistical measure called

Standard Deviation.




The standard deviation measures what is the average dispersion of returns around

the average value. If the standard deviation is high the risk inherent in the returns

of the mutual fund is high.

MARKET RISK AND HOW IT IS MEASURED.

Market risks refers to the extend to which the fluctuations in the return of a fund

are caused by broad market factors. The changes in the return performance of a

fund may be attributed to changes in the market factors, rather than any factor

specific to the company in the funds portfolio .

There are two ways in which the market risk are measured. :

a. Bogle’s Ex-Marks or R-squared

This measure simply compares the return from a fund and the return from

a market index, over the same period and measures the extent of sympathy in their

movement .For eg. An index funds return would be in complete sympathy with

the movement in the index that it seeks to track. The R-squared of this fund would

be 1, or the ex-marks would be 100%. Lower ex-marks refer to the funds with

lower level of sympathy with market returns. A fund’s risk can be gauged by its

ex-marks in comparison with the market index.

b. Beta co-efficient :

This is a popular measure of the extent to which the fund returns are

impacted by the market factors. The returns of the funds are linearlyrelated the returns from the underlying market. The extent to which the

fund returns are impacted by the market returns is measured by the beta

co-efficient. A fund with higher beta is

More risky than one of lower beta.

MEASURES OF RISK AND RETURN USED TO UNDERSTAND

MUTUAL FUND PERFORMANCE.




Since we know that the mutual funds cannot be expected to deliver a pre-

specified rate of return, the measures of risk and return make little sense,

unless we are able to say something about their adequacy. If the fund

makes 20% in a period and 8% in another we will not be able to say

whether 20% is too high or high enough, or if 8% is too low.

Therefore we should be able to define what we can expect from from the

fund, in terms of risk and return. Since this cannot be done in absolute

terms given that the portfolio varies along with the changes in the market

price of the securities, we have to set relative standards of performance..

This is done using benchmark.

BENCHMARKS.

Benchmarks are independent portfolios that are not managed by any fund

manager, but are representatives of the behavior of return from the

market .For eg; The S&P CNX NIFTY is a port folio of 50 securities

traded in the National Stock Exchange. The BSE Sensitive index is a

portfolio of 30 securities traded in the Bombay Stock Exchange. The

movements in these indices represent the movement in the prices, and

returns of large, actively traded stock in the equity market. If an investor

has invested in the index fund ,the return from the index will have to

compare with the risk and return of the equity index ,which the fund

manager is replicating .If the fund manager is managing an equity

portfolio, it invest only in equity and not in index fund , investor may want

to know how his performance compares with the independent portfolio

like the NIFTY or SENSEX .These independent portfolios, used to

understand fund manager performance , are called BENCHMARKS .

BENCHMARK TO EVALUATE THE PERFORMANCE OF THE

MUTUAL FUND .

Over the same period of time, it is possible to observe how the returns of

the benchmark and the NAV of the mutual fund have behaved. This will




2.1 McKINSEY 7-S-Model

The 7-S-Model is better known as McKinsey 7-S. This is because the two persons

who developed this model, Tom Peters and Robert Waterman, have been

consultants at McKinsey & Co at that time.

Those seven elements are distinguished in so called hard S’s and soft S’s. The

hard elements are feasible and easy to identify. They can be found in strategy

statements, corporate plans, organizational charts and other documentations.

The four soft S’s however, are hardly feasible. They are difficult to describe since

capabilities, values and elements of corporate culture are continuously developing

and changing.

They are highly determined by the people at work in the organization. Therefore it

is much more difficult to plan or to influence the characteristics of the soft

elements. Although the soft factors are below the surface, they can have a great

impact of the hard Structures, Strategies and Systems of the organization.




BANK AND THE AMC


The Hard S’s

Strategy

Actions a company plans in response to or anticipation of changes in its

external environment.

Structure

Basis for specialization and co-ordination influenced primarily by strategy and

by organization size and diversity.

Systems

Formal and informal procedures that support the strategy and structure.

(Systems are more powerful than they are given credit)

The Soft S’s

Style / Culture

The culture of the organization, consisting of two components:

· Organizational Culture: the dominant values and beliefs, and norms, which

develop over time and become relatively enduring features of organizational

life.

· Management Style: more a matter of what managers do than what they say;

How do a company’s managers spend their time? What are they focusing

attention on? Symbolism – the creation and maintenance (or sometimes

deconstruction) of meaning is a fundamental responsibility of managers.

Staff

The people/human resource management – processes used to develop

managers, socialization processes, ways of shaping basic values of

management cadre, ways of introducing young recruits to the company, ways

of helping to manage the careers of employees

Skills

The distinctive competences – what the company does best, ways of

expanding or shifting competences

Shared Values / Super

ordinate Goals

Guiding concepts, fundamental ideas around which a business is built – must

be simple, usually stated at abstract level, have great meaning inside the

organization even though outsiders may not see or understand them.



Since the ABN AMRO AMC has been formed very recently all their workings are

monitored and assisted by the ABN AMRO bank to help them grow to a level

until they establish and have a strong foundation . The Mutual Fund has been

registered with the SEBI dated may 27, 2004. The office at Nariman point,

Mumbai.

THE SPONSOR: ABN AMRO BANK is the sponsor for the ABN AMRO

Mutual Fund. With a contribution of Rs.100000. towards the corpus of MF.

THE TRUSTEE: ABN AMRO Trustee India PVT LTD, accompany

incorporated under the companies act1956 on Nov 4 2003 is appointed as the

Trustee to the Mutual Fund vide.

Since there is Bank and Mutual fund organization, various departments of the

bank are inter-connected inter-related with each other. The specially designed

Information System helps in sharing and transferring information from one

Department to another.

All the details related to Mutual Funds will be coming to the Investment Advisory

Department, which gives information about the investment to all those who are in

need of such information. The details and the information collected by the

investment advisory division will be scrutinized and evaluated. Finally, after the

scrutiny, it is dispatched to Asset Management Company of ABN AMRO Mutual

Funds, for the final record.

The working of all the Departments at AN AMRO is according to the Rules and

Regulations given by SEBI. It obeys and strictly follows all the Banking rules

along with Investment related regulations as stated by SEBI.

STRATEGY




Strategy sets the vision, mission, objectives, major action plans and policies lf the

organization. These set out the picture of the organization in the future typically

spelling out the overall corporate strategy, the SBU (strategic business unit)strategy and the functional strategies.

It can also be defined as the choice of direction and action that the company

adopts to achieve its objectives in a competitive situation. It is the first step that a

company has to take in leading its organization to the ladder of success. The

competitive advantage for the company can be achieved by keeping in mind the

following points.

• What are the company’s sources of sustainable competitive

advantage (e.g. penetration new markets, new product

development, improving customer service)

• What are the company’s key strategic priorities (e.g. penetrating

new markets, new product development, improving customer

service)

Strategies adopted at ABN AMRO Bank:

Strategies adopted at ABN AMRO Bank can be understood under its functions:-

1. Consumer Banking:

• Tap savings potential of affluent urban class.

• Emphasize control and convenience

• Offer a slew of new products and innovations

2. Corporate Banking:

• Leverage its flat structure to facilitate information – flow

and keep the level of NPAs (Non-Performing Assets) is

low.

• Use cash-flow-based funding to check NPAs

• Offer MIS to clients for faster and cost-effective

transaction processing.

3. Fee-based Banking:




• Focus on sectors where there is likelihood of

consolidation, liberalization or regulatory changes.

• Leverage relationships of commercial bank and cross-

sell.

4. Shared Service Business:

• Lower the cost of processing of services for the bank.

• Add to the efficiencies of doing business.

• Consider offering services to other banks at later stage.

Thus by adopting such strategies ABN AMRO Bank seeks to achieve itsobjective of creating value for clients.

STRUCTURE:

Structure includes the policies and procedures that govern the way in

which the organization acts within it and the environment. It provides the

framework for relationships among different parts of organization. It sets out theformal reporting relationships, mode of communication, their respective roles and

rules and regulations for carrying out different task. If not properly defined-

detrimental effect on the effective and efficient working because motivation and

morale is low, decisions are delayed and of poor quality, the expenses rises, orders

are lost due to competition, lack of confidence. Structure of any organization has

to answer the following question-

• What is the basic structural form?

• How centralized versus how decentralized is the organization?

• What is the relative status and power of the organization?





HEAD QUARTER

COUNTRY HEAD

CORPORATEBANK HEAD

RETAIL BANK

HEAD

ORGANIZATIONAL STRUCTURE OF ABN AMRO BANK

REGIONALHEAD

ASSETSALES HEAD

LIABILITY SALESHEAD

SALES MANAGER

TEAM LEADER

Personnel FinancialConsultants (PFC)

Personnel FinancialExecutives (PFE)

TelemarketingExecutives (TME)

HEAD SALESMANAGER

ASSISTANT SALESMANAGER



SYSTEMS:

System in this framework stands for the rules and regulation, procedures and

practices that must be allowed to carry out the tasks in the organization. A goodsystem adds to the efficient in effective working of the entrepreneur.

At ABN AMRO Bank:

The procedure is followed is clear, transparent and complicated. For example in

the Consumer Retail Banking the process for making a deal is as follows;

•

Targets are set for the week and the month as a whole.• The Telemarketing Executive (TME) makes an introductory call to the

potential customer where in the TME introduces and explains about the

company, the financial products and services offered, in brief.

• TME then messages to get an appointment with the interested potential

customer.

• If the customer agrees, the Personal Financial Consultant (PFC) meets the

potential customer at the appointed time and then explains about the products and services, facilities in a detailed manner.

• The customer is asked for few documents and is required to fill in a form.

• These documents are scrutinized by the team leader or the higher authority

(if necessary) and the appropriate decision is taken.

The procedure appears to be simple but a lot of hard work and

dedication is put in by every individual involved in the process at ABN

AMRO Bank, beginning from the TME.




STYLE:

Style includes leadership style of top management and overall operating

style of the organization. Style impacts the norms people follow and how theywork and interact with each and with customers.

• How does top management make decisions- participatory versus top-

down?

• How do managers spend their time-in formal meeting, informal

conversations, in the field, with customers, etc.?

At ABN AMRO Bank:

ABN AMRO Bank follows a very ineffable style of functioning;

• Managers, staff, etc. are approachable, a perfect blend of formal and

informal approach.

• They follow a system of rewarding. Rewards are given according to

the performance .Monetary and non-monetary incentives are given.• Personal attention to every individual especially the external trainees,

helps in gaining additional knowledge on various industries, their

products. The theoretical concepts are made more clearer through their

practical implications

• Informal conversations, which develop loyalty, motivation, dedication

in the employees.

• Every Monday it holds meetings where in the top management and

employees collectively participate-targets for the week is set,

responsibilities are delegated suggestions are invited, etc.

STAFF:

The organization has to look into its people, their backgrounds, and

competencies, staff also includes, the organizations approaches to

recruitment, selection and specialization. How people are developed, how




• Do people have a shared understanding of the vision of the company?

• How do people describe the ways in which the company is distinctive?

(e.g.; focus on quality, emphasis on people).

ABN AMRO Bank is a client/investor-oriented organization that has imbibed thisquality among all its members and employees. The whole unit works today

towards the growth and success of ABN AMRO Bank.

2.2 SWOT ANALYSIS:

STRENGTH:

• ABN AMRO Bank has a reputed name worldwide.

• It is a Cash Rich Bank.

• Recently (2004) been named as” the #1 service provider Bank”,(Free

doorstep banking,365days of bank from 10Am to 7Pm,bancafe after 7Pm

up to 11Pm,free credit card).

• Investment Advisory Services.

• Free Demat Account.

• Pre-approved Overdraft Facility.

• AAA Credit Rating.

• Operating with Centralized Account.

• Free reimbursement account.

• First Bank to tie up with Indian Airlines.

WEAKNESSES:

• Less branches.

• Reach is low.

• Awareness is low-in India it still has to gain tap new markets popularity.

• Elite customer oriented and concentrating on urban market.

• As a private Bank it is less accepted.




OPPORTUNITY:

• Open new branches.

• Tapping new markets.

• Mergers with local Banks.

• Target rural market.

THREATS:

• Other Banks are planning to offer similar/better services.

• May not be opted by many middle class consumers as it is more elite class

oriented, thus lose on market size.

• Economic policies controlled by RBI.

• Minimum balance is so huge that is not affordable for common mass.

SUGGESTION:

The bank should try to make aware the public about their services and

about their AMC and schemes available as the people are rational and like

to earn more through various investments

The bank should build a more customer friendly relation to face the

challenges put before by the competitors and build customers trust.

The AMC should initiate the fund offering by putting up various investor

attractive and beneficial choices so as to attract more investments.




The study also tries to:

1. Compare the performance of ABN AMRO mutual fund with other fund.

2. Compare the risk involved in various scheme

3. To identify the shortcoming of ABN AMRO MF and suggest remedial

measures to improve those.

4. To help the bank in increasing their earnings by selling MF products

according to customers needs and requirements.

3.4 RESEARCH METHODOLOGY

SOURCES OF DATA

The data sources can be classified into 2 categories

1. PRIMARY DATA

2. SECONDARY DATA

1. PRIMARY DATA

Primary data is collected through unstructured interviews from the officials of

band and fund houses.

2. SECONDARY DATA

Secondary data is collected through

The Published websites:

o www.banking/services.com

o www.abnamro.com

o www.international/banking.com

o www.mutualfundsindia.com

o www.personalfn.com


http://www.banking/services.com

http://www.abnamro.com/

http://www.international/banking.com

http://www.mutualfundsindia.com/

http://www.personalfn.com/

http://www.banking/services.com

http://www.abnamro.com/

http://www.international/banking.com

http://www.mutualfundsindia.com/

http://www.personalfn.com/



Materials provided by the company.

Annual report of the company.

Brochures, fact sheets etc.

SAMPLE DESIGN

Sample Units: Data collected through information given by ABN AMRO BANK

Sample Size: 3 Asset Management Companies and 9 schemes

TOOLS AND TECHNIQUES OF DATA COLLECTION

Internet.

Annual Report of the Company.

Fact Sheets.

Newspapers.

3.5 SCOPE OF THE STUDY

1. The study was aimed at understanding and analyzing the market of Mutual

Fund of different fund house in the country.

2. The research was conducted in ABN AMRO bank based on the information

furnished.

3. Various parameters were used in comparing and evaluating the schemes

• Expense Ratio

• NAV Details

•

Asset allocation.• Top Ten holdings

• Benchmark comparison.

• Proportion of Equity and Fixed income holdings.

4. The schemes covered under the study are :

• ABN AMRO OPPORTUBITIES FUND.

• ABN AMRO MONTHLY INCOME PLAN.

• ABN AMRO FLOATING RATE FUND.




• FRANKLIN INDIA OPPORTUNITIES FUND.

• FRANKLIN TEMPLETON MONTHLY INCOME PLAN.

• TEPLETON FLOATING RATE INCOME FUND.

• BIRLA INDIA OPPORTUNITIES FUND.

• BIRLA MONTHLY INCOME FUND.

• BIRLA FLOATING RATE FUND.

3.6 LIMITATIONS OF THE STUDY

As far as possible best efforts have been made to collect the data in thecourse of entire study, study also encountered certain difficulties in collecting data

on certain aspects, and research study has done with whatever data on hand.

• Difficulties are faced while accumulating the required data.

• Data insufficiency in evaluating and suggesting the fund strategy to

improve the fund performance.

•

The fund identified as best may not hold good for long period because performance of a fund might change according to the changes in the

market with respect to the portfolio.

• Performances of the fund are always subjected to the market risk which

can never be predicted or foreseen.

• Choice of selecting the parameters for comparison of funds had to

identify very carefully as the information required has to be given by

every fund.




AN ANALYSIS ON THE BALANCE SHEET

Since the Asset Management Company of ABN AMRO was formed only

recently, the company got approval from SEBI on may 28 2004 and they started

their fund were launched on 28 August 2004 , from that time they had to bear all

the initial expenses and also face tough competition from the other competitors

already established in the market. So the balance sheet exhibited low performance

of the company earning losses for the past two years and also bearing exorbitant

operating cost and personnel cost. This can be found out from the following

figure.

Total income : 37,025,609

Total expenditure : 124,987,997

Loss for the year : 87.962,388

Turn over : 37026

Profit After tax : -87962000 Number of Equity share : 30,360,000

Earnings Per share :-2.90

Interpretation:

Since the company commenced its operation very recently it had to bear

all the expanses prior to obtaining the SEBI’s approval for acting as the

Asset Management Company. Due to the burden of initial operating expenses the company’s expenditure

crossed the income as well as the turnover.

The Profit after tax was got in negative figures, because of which the

Earnings per equity was got as -2.9.

The company must try to reduce travel cost and communication expenses

as the expenses involved in advertisement, remuneration etc are inevitable

part of the business process. If only the company can reduce the expenseswhich do not yield any returns such as fixed assets and non performing




assets the profit and the EPS can be increased and more focus can be

given for public awareness and expansion programmes.

OPPORTUNITIES FUND

Investment Objective.

The investment objective is to generate long tem capital growth from an actively

managed portfolio of equity and equity related securities. The scheme will aim to

identify attractive investment objective in companies across all ranges of market

capitalization viz large, medium and small capitalization and across all sizes in

terms of turnover, balance sheet size etc.The scheme has the flexibility to actively

shift portfolio concentration between different market capitalization buckets. The

scheme also retains the flexibility to hold from time to time relatively more

concentrated investments in a few sectors than plain diversified equity fund.

Who should invest?

Those investors seeking to take advantage of investment opportunities across

sectors and market capitalizations buckets and those who want to invest in a fund

that can hold relatively more concentrated investments in a few sectors compared

to plain diversified equity fund.




ABN AMRO OPPORTUNITIES FUND

Fund Manager : Mr. MIHIR VORAExpense ratio : 2.28%

Load Structure

Entry Load : 2.25%

Exit Load : Nil

Fund Size : 204.68 Cr.

Performance

ABN AMRO Opportunities fund : 3.07%

BSE 200 :9.71%

TABLE NO. 5.1

TOP TEN HOLDINGS AS ON JUNE 30th 2005

Equity Holdings Sector % of net assets Market Value(in

Rs Lacs)

State Bank Of India. Bank 12.75 1,163.19

Jaiprakash Associates ltd. Construction 9.66 1332.37

Voltas LTD. Consumable Durables 3.43 1002.98

Thermax LTD. Industrial Capital

Goods

14.22 1418.35

Siemens LTD. Industrial Capital

Goods

14.22 1123.57

Sintex Industrial LTD. Industrial Products 3.47 1014.86

Oil & Natural Gas

Corporation.

Oil 5.58 1724.06

Reliance Industries Ltd Petroleum Products 5.24 1532.55

Infosys Technologies LTD Software 12.39 1021.41

HCL Technologies LTD Software 12.39 1018.41




FRANKLIN INDIA OPPORTUNITIES FUND

Fund Manager : K.N.Sivasubramanian

Expense Ratio : 2.36%Load Structure

Entry Load : 2.25%

Exit Load : Nil


Performance:

Franklin Templeton Opportunities Fund : 14.88%

BSE 200 : 6.40%

TABLE NO. 5.2



Rs Lacs)

Maruthi Udyog Auto 6.56 1418.75

Tata Motors Auto 4.95 1070.84Icici Bank Bank 4.68 1011.72

Century Textiles &

Industries

Cement 7.69 1663.20

Reliance Industries Petroleum Products 8.60 1858.30

Strides Acrolabs Pharmaceuticals 5.69 1231.00

IPCA Labs Pharmaceuticals 5.20 1123.10

Supply Corporation Power 6.42 1388.77

HCL Technologies Software 4.35 939.28Mahavir Spinning Textile-cotton 5.54 1177.09




BIRLA INDIA OPPORTUNITIES FUND

Fund Manager : Deven Sangoi

Expense Ratio : 2.50%

Load Structure

Entry Load : 2.25%

Exit Load : Nil


Performance:

BIRLA INDIA OPORTUNITIES FUND: 45.27%

S&P CNX 500 : 52.74%

TABLE NO. 5.3



Rs Lacs)

Infosys

Technologies

Software 6.71 598.77

Tata Consultancy

Services


United Phosphorous Pesticides 6.81 607.47

Subex Systems LTD Software 4.81 429.23

Sundaram Fasteners

LTD

Auto ancillaries 5.96 531.98

Geometric software

solution LTD


HCL Info systems

LTD

Hardware 4.90 436.90

Macmillan India

LTD

Consumer Non

Durables

4.41 393.74

Bharat Forge LTD Industrial Products 4.25 379.00

Thermax LTD Industrial Capital

Goods

4.27 380.49




A S S E T A LL O C A T

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

S o f t w a r e

I n d u s t r i a l C a p i t a l

G o o d s

H a r d w a r e

P h a r m a c e u t i c a l s

I n d u s t r i a l

P r o d u c t s

P e s t i c i d e s

A u t o A n c i l l a r i e s

C o n s u m e r N o n

D u r a b l e s

C a s h & C A

O t h e r E q u i t y

Sector

V a l u e H o l d i n g s

Ser ies1

GRAPH 5.3

Interpretation:

• It can be inferred that Birla India opportunities fund has out-performed the

Benchmark fund.

• Since it is an equity fund there also arises high risk in return earnings.

• The fund has majority investment in Software Industry which has a major

affect on its NAV.

• Standard Deviation was found to be 6.32 which show a moderate measure

of risk as the fund is basically of equity holdings.

• Expense ratio came down with respect to growth in fund size.




MONTHLY INCOME PLAN

INVESTMENT OBJECTIVES:

The primary objective of the Scheme is to generate regular returns through

investment primarily in money market instruments and debt. The secondary

objective of the scheme is to generate long term capital appreciation by investing

a portion off the scheme’s assets in equity related securities.

WHO SHOULD INVEST?

Conservative investors seeking the stability offered by the debt & growth potential

of equities. Those who seek regular income through a portfolio of predominantly

high quality fixed income securities with a maximum exposure of 20% of equities.




ABN AMRO MONTHLY INCOME PLAN

Fund Manager : Mr. Mahendra Jajoo


Load StructureEntry Load : Nil

Exit Load : Nil


Performance:

ABN AMRO MONTHLY INCOME PLAN: 7.45%

CIRISIL MIP Blended Index : 6.67%

TABLE NO. 5.4



Rs Lacs)

Cipla LTD Pharmaceuticals 2.75 25.09

Oil & Natural Gas

Corporation

Oil 1.01 24.66

State Bank Of India Bank 2.34 24.55

Jaiprakash

Associates LTD

Construction 1.38 23.76

Glenmark

Pharmaceuticals

LTD

Pharmaceuticals 2.75 22.82

Mahindra &

Mahindra LTD

Auto 0.85 20.78

Golkaldas Export

LTD

Textile Products 0.97 20.28

Karnataka Bank LTD

Bank 2.34 20.25

Fixed Income

Holdings.

Money Market

Instrument

56.12 1373.48

Fixed Income

Holdings.

Corporate Debt 10.25 250.99




Compositon By Assets

0.00%

10.00%

20.00%30.00%

40.00%

50.00%

60.00%

M o n e y M a r k e t

I n s t r u m e n t

C o r p o r a t e D e b t

E q u i t y H o l d i n g s

N e t

r e c e i v a b l e s ( p a y a b

l e )

Sectors

V a l u e H o

l d i n g s

Series1

GRAPH 5.4

Interpretation:

• It can be inferred that ABN AMRO Monthly Income fund has out-

performed the CRISIL MIP Blended index.

• Since it is a moderately balanced fund there is also balance of risk in return

earnings.

• The fund has majority investment in Money Market Instruments which has

a secured earnings & has a major affect on its NAV.

• Standard Deviation could not be found out as the fund was launched only

recently.

• Expense ratio is in the moderate level which will come down with respect

to growth in fund size.

FRANKLIN TEMPLETON INDIA MONTHLY INCOME PLAN




Fund Manager : Mr. Sukumar Rajah, Chellappa,

Sachin Padwal -Desai


Load Structure

Entry Load : Nil

Exit Load : Nil


Performance:

FT Income Monthly Income : 2.35%


TABLE NO. 5.5


Debt Holdings Rating % of net assets Market Value(in

Rs Lacs)

Consumer Finance. AAA 7.47 5679.60

Trust-Bajaj Auto

PTC.

AAA(SO) 6.78 5156.56

Hindalco Industries. AAA 6.77 5144.79

Ultratech Cement AA+ 6.62 5035.45Citicorp Finance AAA 3.29 2500

Citibank Mobile

Trust PTC

AAA(SO) 2.20 1670.71

Neyveli Lignite

Corporation

AAA 10.68 8120.58

Power Finance

Corporation.

AAA 8.54 6489.51

IDFC AAA 3.93 2987.29

IDBI AA+ 2.69 2042.18




Asset Allocation

0.00%5.00%

10.00%15.00%

20.00%25.00%

30.00%

35.00%40.00%

45.00%50.00%

EquityHolding

CorporateDebt

PSU/PFIBonds

Gilt

Sectors

V a l u e

H o l d i n g s

Series1

GRAPH 5.5

Interpretation:

• It can be inferred that FT INDIA Monthly Income plan has almost equaled

the CRISIL MIP Blended index still the fund has potential to grow.


earnings.

• The fund has majority of investment in corporate debt instruments which

has a secured earnings & has a major affect on its NAV.

• Standard Deviation was found to be 0.51 which indicates a low level of

risk in the investment.

• Expense ratio is at a very low level as the risk is minimized by investing in

Corporate Debt instruments which will enable steady returns..

BIRLA MONTHLY INCOME PLAN




Fund Manager : Mr. K.Ramnathan, Nishid Shah


Load Structure

Entry Load : Nil

Exit Load : 0.60%


Performance:

BIRLA MONTHLY INCOME PLAN : 8.26%


TABLE NO. 5.6



Rs Lacs)

ICICI Bank LTD AAA 7.28 2842.57

Bharat Heavy

Electrical LTD

AAA 6.36 2484.58

Reliance Industries

LTD

AAA 5.42 2116.48

Loan Sec Trust-

ICICI Bank

LAAA(so) 5.16 2014.46

Tata Sons LTD AAA 3.90 1523.50

Hindalco Industries

LTD

AAA 3.83 1496.19

L&T Holdings LTD AAA(so) 3.40 1326.26

Power Finance

Corporation.

AAA 2.69 1050.79

HDFC LTD AAA 2.57 1003.78

The great Eastern

Shipping Co. LTD.

AAA 2.43 949.62




Asset Allocatio

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

P S U / P F I B o n d s /

B a n k s

S e c u r e t i s e d

D e b t


E q u i t y

C a s h &

C u r r e n t

a s s e t s

G o v t . B o n d s

F l o a t i n g r a t e

I n s t r u m e n t s


i n s t r u m e n t s

M u t u a l F u n d

U n i t s

Secto

V a l u e

H o l d i n g s

Ser ies1

GRAPH 5.6

Interpretation:• It can be inferred that Birla Monthly Income plan has almost equaled the

CRISIL MIP Blended index but still the fund has potential to grow.


earnings.

• The fund has majority of investment in PSU PFI BONDS which has

secured earnings & has a major affect on its NAV.

• Standard Deviation was found out to be 0.46 which means low risk.

• Expense ratio is a little high when compared with other two funds as the

fund size is low.

FLOATING RATE FUND




Investment Objective

The primary objective of the scheme is to provide income consistent with the

prudent risk from a portfolio comprising substantially of floating rate debt

instruments, fixed rate debt instrument swapped for floating rate return, through

the use of OTC or exchange traded derivatives. The scheme may also invest in

fixed rate and money market instruments and/or floating rate instruments swapped

for fixed rate return through the use of OTC or exchange traded derivatives. The

fund manager strives to minimize the risk arising from interest rate fluctuations.

Who Should Invest?

Investors who seek to insulate themselves for the price volatility caused by

interest rate moments in the debt markets.

ABN AMRO FLOATING RATE FUND




Fund Manager : Mr.R.Sivakumar


Load Structure

Entry Load : Nil

Exit Load : Nil


Performance:

ABN AMRO FLOATING RATE FUND: 3.85%

CIRISIL Liquid Fund Index : 3.57%

TABLE NO. 5.7



Rs Lacs)

Citifinancial

consumer Financial

India LTD

AAA 7.28 5011.80

Indian retail ABStrust

AAA 6.36 3875.25

UMT 1Trust A1+ 5.42 3552.45

Indian Railway

Finance Corporation

AAA 5.16 2500

GE Capital service

India LTD

P1+ 3.90 4372.15

Kotak Mahindra

Bank LTD

P1+ 3.83 2478.13

HDFC AAA 3.40 2000.65BHPC Auto

Securitization Trust

AAA 2.69 1872.05

Retail Pool Trust AAA 2.57 1589.14





Asset Allocation

0.00%10.00%20.00%30.00%40.00%50.00%

60.00%70.00%80.00%



P S U / P F C

D e b t

N e t

R e c i e v a b l e s ( p a y a

b l e )


Sectors

V a l u e H o l d i n g s

Series1

GRAPH 5.7

Interpretation:

• It can be inferred that ABN AMRO Floating rate fund has almost equaled

the CRISIL liquid fund index still the fund has potential to grow.

• Since it is a completely a debt investment fund its risk is also low.

• The fund has majority of investment in corporate debt instruments which

has a secured earnings & has a major affect on its NAV.

• Standard Deviation cannot be found out as it was launched only very

recently.

• Fund size is also small due to initial launch.

• Expense ratio is a little high as the fund size is small but still has the

potentiality to grow,

Templeton Floating Rate Income Fund

Fund Manager : Mr.Sameer Kulkarni, Ninad

Deshpande





Load Structure

Entry Load : Nil

Exit Load : 0.30%


Performance:

Templeton Floating Rate Income Fund : 0.43%CIRISIL Liquid Fund Index : 0.37%

TABLE NO. 5.8

TOP TEN HOLDINGS AS ON JUNE 30

th

2005Debt Holdings Rating % of net assets Market Value(in

Rs Lacs)

HDFC AAA 5.82 7024.48

M&M Financial

Services

AA+ 5.39 6504.65

Trust Series 18 A2 AAA(so) 4.90 5920.42

Rabo India

Finances

AAA 4.14 5000

IDBI AA+ 11.37 13721.74 National Housing

Bank

AAA 4.60 5557.39

GOI 12.00% 2008 SOV 2.85 3442.50

LIC Housing

Finance

AAA 3.31 4000

ICICI Bank P1+ 6.10 7360.92

ICICI Bank A1+ 4.09 49040.31




Asset Allocation

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

C o r p o r a t e

D e b t

M i b o r

l i n k e d

i n s t r u m e n t s

P S U / P F I

B o n d s

M o n e y

M a r k e t


C a l l , C a s h &

o t h e r

A s s e t s G

i l t s

Sectors

V a l u e H o l d i

n g s

Series1

GRAPH 5.8

Interpretation:

•It can be inferred that Franklin Templeton India Floating rate fund hasvery much out-performed the CRISIL liquid fund index.


• The fund has majority of investment in Money Market Instruments which

has secured earnings & has a major affect on its NAV.

• Standard Deviation was found out to be 0.0138 which is very low that

indicates low volatility.

• Fund size is also huge which reduces risk and expense ratio.

• Expense ratio is low due to high and large size of its corpus.

BIRLA FLOATING RATE FUND

Fund Manager : Mr.Satyabrata Mohanty


Load Structure

Entry Load : Nil

Exit Load : 0.50%





Performance:

BIRLA FLOATING RATE FUND : 0.46%CIRISIL Liquid Fund Index : 0.38%

TABLE NO. 5.9



Rs Lacs)

Housing

Development

Finance corporation

AAA 9.29 7325.79


Industrial

development Bank

Of India

AA+ 3.97 3133.32

Indian Retail ABS

Serve

AAA(so) 3.20 2520.88

HDFC LTD LAAA 3.19 2514.98

ICICI Bank LTD A1+ 3.94 3103.07

LIC Housing

Finance LTD

AAA 3.19 2511.70

Housing & urban

development Corp.

AA 2.56 2017.30

The J&K Bank P1+ 3.00 2363.20

Bharat Overseas

bank

A1+ 2.99 2359.62




Asset Allocation

0.00%10.00%20.00%30.00%40.00%

50.00%60.00%70.00%

F l o a t i n g r a t e

i n s t r u m e n t


i n s t r u m e n t

S e c u r i t i i s e d

D e b t

C a s h & C u r r e n t

a s s e t s

P S U / P F I

B o n d s

C o r p o r a t e

D e b t

T r e a s u r y B i l l

Sectors

V a l u e

H o

l d i n g s

Series1

GRAPH 5.9

Interpretation:

• It can be inferred that Birla Floating Rate fund has out-performed the

CRISIL liquid fund index.


• The fund has majority of investment in Floating Rate Instruments which

has secured earnings & has a major affect on its NAV.

• Standard Deviation was found out to be 0.0146 which is very low that

indicates low volatility.

• Fund size is also huge which reduces risk and expense ratio.

• Expense ratio is low due to high and large size of its corpus.

TABLE NO. 5.10

TABLE SHOWING INTER-COMPARISON OF OPPORTUNITY

SCHEMES.

SCHEME EXPE NSERATIO

FUNDPERFORMANCE

BENCHMARK SINCE

LAUNCH DATE

TOP HOLDING FUNDSIZE




SINCEINCEPTION

INCEPTION

ABN AMROOPPRTUNITIESFUND

2.28% 3.07% 9.71% APRIL15 2005

INDUSTRIALCAPITAL GOODS

204.68Cr

FRANKLINOPPORTUNITIES FUND

2.36% 4.50% -21.50% FEB 212000

PHARMACEUTICALS 216.17Cr.

BIRLA INDIAOPPORTUNITIES FUND

2.50% 3.74% 7.64% DEC 271999

SOFTWARE 91.74Cr.

Performance (%) as on June 11,

2005Date

14

days

1

month

3

months

6

months

1

year

Birla India Opportunities Fund -Growth

June11,2005

8.66 1.93 7.19 24.75 39.97

ABN AMRO Opportunities Fund -Growth

June11,2005

9.71 -1.73 10.05 34.72

Franklin India Opportunity Fund -Growth

June11,2005

11.65 -1.52 2.85 36.14 52.61

Average performance of similar category

funds7.7 -1.39 5.13 25.7 47.67

BSE Sensex -2.06 -2.06 7.49 28.73 39.09

Interpretation:

• Birla showed a consistent rate of return over the period with comparison to

sensex and other funds.

• ABN AMRO fund had the lowest expense ratio.

• Franklin Templeton has been the best performer.

• ABN AMRO had come up with high fund size with in a short period it

shows the ability & the effectiveness of the fund manager and the

efficiency distributors.

TABLE NO. 5.11

TABLE SHOWING INTER-COMPARISON OF MONTHLY

INCOME PLANS.

SCHEME EXPENSE

RATIO

FUND

PERFORMANCESINCE

BENCH

MARK SINCE

LAUNC

H DATE

TOP HOLDING FUND

SIZE


http://f/ashis%20project/fund_facts_rpt.asp?scheme=AP004


http://f/ashis%20project/fund_facts_rpt.asp?scheme=AB022


http://f/ashis%20project/fund_facts_rpt.asp?scheme=KP033










INCEPTION INCEPTION

ABN AMROMONTHLYINCOME PLAN

2.25% 7.45% 6.67% SEPT 232004

MONEYMARKETINSTRUMENTS

53.98Cr.

FT INDIAMONTHLYINCOME PLAN

1.83% 12.95% 9.79% SEPT 282000

CORPORATEDEBT

473.94Cr

BIRLAMONTHLYINCOME PLAN

2.25% 10.43% 9.79% NOV 202000

PSU/PFIBONDS

168.50

Cr.

Performance (%) as on June 11,

2005Date

14

days

1

month

3

months

6

months

1

year

Birla MIP - Growth

June

11,2005 1.23 0.29 2.12 5.35 9.4

ABN AMRO MIP - GrowthJune11,2005

1.14 0.03 2.25 5.94 11.49

FT India MIP - Plan A - GrowthJune11,2005

1.62 -0.34 1.49 6.4 11.77


funds0.33 0.27 1.09 2.75 5.76

BSE Sensex -2.06 -2.06 7.49 28.73 39.09

Interpretation:

• Franklin T. has the lowest expense ratio &performed best among funds.

• Birla considers assured returns &less risk for investors by giving

consistent earnings through investing in PSU/PFI Bonds.

• ABN AMRO showed consistent returns trying to establish in the market

along with the competitors.

• Although FT shows high returns it has been highly volatile trying to

maximize its investor’s earnings.

TABLE NO. 5.12

TABLE SHOWING INTER-COMPARISON OF FLOATING RATE

FUNDS.

SCHEME EXPENSERATIO

FUNDPERFORMANCESINCE

INCEPTION

BENCHMARK SINCE

INCEPTION

LAUNCH DATE

TOP HOLDING FUNDSIZE

ABN AMRO 2.25% 3.85% 3.57% SEPT 13 CORPORATE 393.61


http://f/ashis%20project/fund_facts_rpt.asp?scheme=BM017








FLOATINGRATE FUND

2004 DEBT Cr.

TEMPLETONFLOATING

RATEINCOMEFUND

1.00% 5.06% 4.36% FEB 112002

CORPORATEDEBT

1207.2

1 Cr.

BIRLAFLOATINGRATE FUND

1.00% 5.20% 4.21% JUNE 42003

FLOATINGRATEINSTRUMENTS.

788.37Cr.

Performance (%) as on 11, 2005 Date14

days

1

month

3

months

6

months

1

year

Birla Floating Rate Fund - LTP -Growth

June11,2005

0.2 0.42 1.28 2.7 5.41

ABN AMRO FRF - Growth

June11,

2005 0.19 0.41 1.25 2.51 4.93

Franklin Templeton FTF - Series 1 -Growth

June11,2005

3.18 0.91 4.45


funds0.33 0.27 1.09 2.75 5.76

BSE Sensex -2.06 -2.06 7.49 28.73 39.09

Interpretation:

• Birla kept the investors interest by giving them a good returns and assured

earnings by investing in floating rate instruments.

• Although Birla’s fund size is low they were able to keep the expense ratio

low thereby increasing the investors security and trust in their fund.

• FT has been very volatile and so needs to keep up to the constant dividend

return even though they give good returns.

• ABN AMRO had been performing so far good but still has to keep low

expense ratio and increase fund size.

FINDINGS:

• There is a direct positive relationship between the net asset value and the

share price movements in the share market or benchmark movements

• Expense ratio reduces the net asset value of units because before

calculating net asset value, the expenses will be deducted.

• There is a common tool for comparison for each and every fund in every

scheme. For eg. Benchmark for opportunity fund





http://f/ashis%20project/fund_facts_rpt.asp?scheme=TM056









CRISIL MIP Blended index for Monthly income plan.

CRISIL Liquid fund Index for Floating Rate Fund.

• There is an inverse relationship between Expense ratio and Fund size.

•

Entry and Exit loads of the scheme, reduces the investment and receivablesof the investors to that extent respectively. Because loads are deducted

from the investors amount.

• In most of the funds the entry load is Nil thus encouraging the investments

in the funds

• In the opportunities fund, ABN AMRO Fund has only been introduced

very recently so its performance is not up to the mark of Franklin India and

Birla funds. Franklin Templeton has been the best performer.• Even though Birla opportunity fund had been introduced earlier than other

funds their fund size had been kept very 0low may be due to lack of

proper distribution and non proper returns to the investors. Whereas ABN

AMRO which had been introduced late was able to grow its fund size and

decrease its expense ratio.

• In Monthly income plan Franklin Templeton fund has been the best

performer than ABN AMRO and Birla fund. This is due to its large fund

size, less expense ratio and longer player in the market & expert

international experience.

• Franklin Templeton has outperformed all the funds in this sector and

sensex because of its expert & high internationally experienced fund

manager’s decision and best distribution strategy to bring the funds to the

investors awareness.

• Franklin Templeton Monthly Income Plan has a greater fund size in

comparison with other two funds which ensures low expense ratio and low

risk.

• In Floating rate fund Birla floating rate has been the best performer this

may be due to actively managed portfolio, and the least expense ratio and

moreover their experience and expert advice from the international

performance ,as they have already been established internationally.

• Birla is very much investor oriented by securing investors returns through

reduced risk and consistent returns through actively managed portfolios




there by winning customers trust and increasing their investment through

secured future.

• ABN AMRO FLOATING RATE FUND’S expense ratio is a little high

due to its recent entry in the market and the low fund size.• ABN AMRO should try to diversify their portfolio to increase the returns

and reduce the expense ratio there by increasing the investment

opportunities.

SUGGESTIONS:

After the research and findings, I came out with some of the following

suggestions;

1. ABN AMRO Mutual funds need to concentrate on their portfolios and

emphasize in increasing their fund size and decreasing their expense

ratio.




2. The risk involved can be decreased by diversifying the portfolios and

investing in evergreen industries such as Banks, Information

Technology, and Cement etc.

3. Since expense ratio has a greater impact on the NAV of the fund the

bank should try to reduce the expense ratio to increase their NAV,

which respectively will help in increasing their investments.

4. Expense ratio can be reduced by increasing the fund size.

5. The public should be made aware of the ABN AMRO MF

investments through increasing the distributors like banks, private

agencies and consulting services.

6. The distributors should be encouraged to sell more of the ABN

AMROS MF schemes by offering various benefit and increased

commissions.

7. Portfolio should be altered frequently and modified to outperform the

benchmark which is a basic tool for comparison and convincing the

prospective investors.

8. Through more of advertisements on visual Medias and other daily’s

and weekly’s they should attract and make aware the investors about

the schemes offered.

9. There should always retain constant communication and interaction

with the investors to get their feedback and make them aware about

the best performing funds and help them diversify their investments.

They may also help in suggesting and bringing new investors.

10. By reducing the volatility and consistent earnings they can win the

trust and investment interest of the investors.

SUGGESTIONS TO THE BANK

1. Bank can expand its operation in more number of places and capture more

market by following the policy of giving priority to the customer’s needs and

requirements.

2. ABN AMRO can capture the competitors (ICICIPrudential, Birla MF, Fidelity,

Franklin Templeton Reliance, SBI, Sundaram Finance, etc.) Market by creating

new customers.




CONCLUSION

From the analysis & interpretation it can be arrived and inferred that:

The ABN AMRO AMC which came recently was able to increase its fund sizewithin a short span of time, by implementing the suggestions given before, and

with the help of the bank there can be a greater pace in the AMC’s development

with a robust growth.

The ABN AMRO bank has very good services when compared to other banks and

people do appreciate these services. The only thing the customer complains is that

the bank should see the things from customer point of view and the Fund Manager

should formulate an appropriate portfolio within their specifications, there by

becoming a more customer oriented bank than just being a house of business, by

managing the investor’s valuable amount into prospective and good return funds.

Even though the mutual funds performance can never be predicted or foreseen,

banks past performance and their regular customer relation will encourage them to

become the market leader in capturing the MF market share and attain the first

place among the customers choice.

final draft ashi

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