1.

INTRODUCITON

1
INTRODUCTION

In today’s era of unforeseen incidents savings is a must for every individual. At the outset of the
project report, it is important to know the meaning of an investment.

Now a day’s Indian economy is an growth stage. People are coming forward to invest in
the capital market. If the individuals invest in the share market, they don’t know and don’t have
enough time to look after the risk involved in it. So people are looking for a source, which will
take care of the risk and investment and ensure them the safety of their investment. To do so
mutual funds are coming forward to manage the funds of the investors.

Investment is the employment of funds with the aim of achieving additional income or
growth in value. The essential quality of an investment is that it involves “waiting” for reward. It
involves the commitment of resources, which have been saved or put away from current
consumption in a hope that some benefits will accrue in future.

Mutual funds are one such type of investment. It is a mechanism for pooling the resources
by issuing units to the investors and investing funds in securities in accordance with objectives as
disclosed in offer document. Mutual fund issues units to the investors in accordance with the
quantum of money invested by them. Investors of mutual funds are known as unit holders. The
profit or losses are shared by the investors in the proportion of their investments. The mutual
funds come out with a number of schemes with different investment objectives, which are
launched from time to time. A mutual fund is required to be registered with SEBI, which
regulates securities before it in collect funds from the public. It is set up in the form of a trust,
which has a sponsor, trustees, AMC and custodian.

The most important characteristic of mutual funds is that the contributors & beneficiaries
of the fund are the same class of people, namely the investors.

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual
funds to project the interest of the investors.

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1.1 STUDY OF THE
INDUSTRY

3
MUTUAL FUND INDUSTRY SCENARIO
The Evolution

The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in
the year 1963. The primary objective at that time was to attract the small investors and it was
made possible through the collective efforts of the Government of India and the Reserve Bank of
India. The history of mutual fund industry in India can be better understood divided into
following phases:

Phase1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an
act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under
the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was
transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first
scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of
investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors.
It launched ULIP in 1971, six more schemes between1981-84, Children's Gift Growth Fund and
India Fund (India's first offshore fund) in 1986, Master share (India’s first equity diversified
scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the
end of 1987, UTI's assets under management grew ten times to Rs 6700 cores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the market
in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the
first non-UTI mutual fund in India. SBI Mutual Fund was later followed by can bank Mutual
Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual
Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased
seven times to Rs. 47,004 cores. However, UTI remained to be the leader with about 80% market
share.

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Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management companies
(most of them entering through joint ventures with Indian promoters) to enter the mutual fund
industry in 1993, provided a wide range of choice to investors and more competition in the
industry. Private funds introduced innovative products, investment techniques and investor-
servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the
year 1996. The mobilization of funds and the number of players operating in the industry reached
new heights as investors started showing more interest in mutual funds.

Inventor’s interests were safeguarded by SEBI and the Government offered tax benefits to the
investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by
SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999
exempted all dividend incomes in the hands of investors from income tax. Various Investor
Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an
objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a
trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual
fund players on the same level. UTI was re-organized into two parts: 1. The Specified
Undertaking, 2. The UTI Mutual Fund Presently Unit Trust of India operates under the name of
UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being
gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In
1999, there was a significant growth in mobilization of funds from investors and assets under
management which is supported by the following data:

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 GROSS FUND MOBILISATION (RS. CRORES)
PUBLIC PRIVATE
FROM TO UTI TOTAL
SECTOR SECTOR
01-April-98 31-March-99 11,679 1,732 7,966 21,377
01-April-99 31-March-00 13,536 4,039 42,173 59,748
01-April-00 31-March-01 12,413 6,192 74,352 92,957
01-April-01 31-March-02 4,643 13,613 1,46,267 1,64,523
01-April-02 31-Jan-03 5,505 22,923 2,20,551 2,48,979
01-Feb.-03 31-March-03 * 7,259* 58,435 65,694
01-April-03 31-March-04 - 68,558 5,21,632 5,90,190
01-April-04 31-March-05 - 1,03,246 7,36,416 8,39,662
01-April-05 31-March-06 - 1,83,446 9,14,712 10,98,158

ASSETS UNDER MANAGEMENT (RS. CRORES)

AS ON UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL
31-March-99 53,320 8,292 6,860 68,472

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of which are
acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and
PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutal fund
players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29
funds as at the end of March 2006. This is a continuing phase of growth of the industry through
consolidation and entry of new international and private sector players.

6
Definition:

Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and
are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not
a wise option, as in real terms the value of money decreases over a period of time.

One of the options is to invest the money in stock market. But a common investor is not
informed and competent enough to understand the intricacies of stock market. This is where
mutual funds come to the rescue.

A mutual fund is a group of investors operating through a fund manager to purchase a diverse
portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By
pooling money together in a mutual fund, investors can purchase stocks or bonds with much
lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out
which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification.

Diversification means spreading out money across many different types of investments. When
one investment is down another might be up. Diversification of investment holdings reduces the
risk tremendously.

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ADVANTAGES OF MUTUAL FUNDS:

If mutual funds are emerging as the favourite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the investor
who has limited resources available in terms of capital and the ability to carry out detailed
research and market monitoring. The following are the major advantages offered by mutual funds
to all investors:

1. Portfolio Diversification:

Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold a
diversified investment portfolio even with a small amount of investment that would otherwise
require big capital.

2. Professional Management:

Even if an investor has a big amount of capital available to him, he benefits from the professional
management skills brought in by the fund in the management of the investor’s portfolio. The
investment management skills, along with the needed research into available investment options,
ensure a much better return than what an investor can manage on his own. Few investors have
the skill and resources of their own to succeed in today’s fast moving, global and sophisticated
markets.

3. Reduction/Diversification Of Risk:

When an investor invests directly, all the risk of potential loss is his own, whether he places a
deposit with a company or a bank, or he buys a share or debenture on his own or in any other
from. While investing in the pool of funds with investors, the potential losses are also shared
with other investors. The risk reduction is one of the most important benefits of a collective
investment vehicle like the mutual fund.

4. Reduction Of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the costs of
investing such as brokerage or custody of securities. When going through a fund, he has the
benefit of economies of scale; the funds pay lesser costs because of larger volumes, a benefit
passed on to its investors.

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5. Liquidity:

Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they
invest in the units of a fund, they can generally cash their investments any time, by selling their
units to the fund if open-ended, or selling them in the market if the fund is close-end .Liquidity
of investment is clearly a big benefit.

6. Convenience and Flexibility:

Mutual fund management companies offer many investor services that a direct market investor
cannot get. Investors can easily transfer their holding from one scheme to the other; getup dated
market information and so on.

7. Tax Benefits:

Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit
holders. However, as a measure of concession to Unit holders of open-ended equity oriented
funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional
rate of 10.5%.

In case of Individuals and Hindu Undivided Families a deduction up to Rs. 9,000 from the Total
Income will be admissible in respect of income from investments specified in Section 80L,
including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-
Tax and Gift-Tax.

8. Choice of Schemes:

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

9. Well Regulated:

All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.

10. Transparency:

You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and the
fund manager's investment strategy and outlook.

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DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS:

1. No Control over Costs:

An investor in a mutual fund has no control of the overall costs of investing. The investor pays
investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are payable even if the value of his investments is
declining. A mutual fund investor also pays fund distribution costs, which he would not incur in
direct investing. However, this shortcoming only means that there is a cost to obtain the mutual
fund services.

2. No Tailor-Made Portfolio:

Investors who invest on their own can build their own portfolios of shares and bonds and other
securities. Investing through fund means he delegates this decision to the fund managers. The
very-high-net-worth individuals or large corporate investors may find this to be a constraint in
achieving their objectives. However, most mutual fund managers help investors overcome this
constraint by offering families of funds- a large number of different schemes- within their own
management company. An investor can choose from different investment plans and constructs a
portfolio to his choice.

3. Managing a Portfolio Of Funds:

Availability of a large number of funds can actually mean too much choice for the investor. He
may again need advice on how to select a fund to achieve his objectives, quite similar to the
situation when he has individual shares or bonds to select.

4. The Wisdom of Professional Management:

That's right, this is not an advantage. The average mutual fund manager is no better at picking
stocks than the average nonprofessional, but charges fees.

5. No Control:

Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of
somebody else's car

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6. Dilution:

Mutual funds generally have such small holdings of so many different stocks that insanely great
performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's
total performance.

7. Buried Costs:

Many mutual funds specialize in burying their costs and in hiring salesmen who do not make
those costs clear to their clients.

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk
tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a collection
of many stocks, an investors can go for picking a mutual fund might be easy. There are over
hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in
categories, mentioned below.

A). BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not have
a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value

("NAV") related prices. The key feature of open-end schemes is liquidity.

2. Close - Ended Schemes:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.
The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one
of the two exit routes is provided to the investor.

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3. Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and close ended
schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.

B). BY NATURE

1. Equity Fund:

These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager’s outlook on different
stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:

· Diversified Equity Funds

· Mid-Cap Funds

· Sector Specific Funds

· Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-
return matrix.

2. Debt Funds:

The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

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MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly
high on the risk-return matrix when compared with other debt schemes.

· Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds
primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers
(CPs). Some portion of the corpus is also invested in corporate debentures.

· Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and
preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-
bank call money market, CPs and CDs. These funds are meant for short-term cash management
of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes
rank low on risk-return matrix and are considered to be the safest amongst all categories of
mutual funds.

3. Balanced Funds: As the name suggest they, are a mix of both equity and debt funds. They
invest in both equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter viz; each
category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly.

C). BY INVESTMENT OBJECTIVE:

Growth Schemes:

Growth Schemes are also known as equity schemes. The aim of these schemes is to provide
capital appreciation over medium to long term. These schemes normally invest a major part of
their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.

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Income Schemes:

Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular
and steady income to investors. These schemes generally invest in fixed income securities such
as bonds and corporate debentures. Capital appreciation in such schemes may be limited.

Balanced Schemes:

Balanced Schemes aim to provide both growth and income by periodically distributing a part of
the income and capital gains they earn. These schemes invest in both shares and fixed income
securities, in the proportion indicated in their offer documents (normally 50:50).

Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.

Load Funds:

A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or
sell units in the fund, a commission will be payable. Typically entry and exit loads range from
1% to 2%. It could be worth paying the load, if the fund has a good performance history.

No-Load Funds:

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no
commission is payable on purchase or sale of units in the fund. The advantage of a no load fund
is that the entire corpus is put to work.

OTHER SCHEMES

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to
time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings
Scheme (ELSS) are eligible for rebate.

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Index Schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex
or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the
index. The percentage of each stock to the total holding will be identical to the stocks index
weightage. And hence, the returns from such schemes would be more or less equivalent to those
of the Index.

Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as
specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods
(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of
the respective sectors/industries. While these funds may give higher returns, they are more risky
compared to diversified funds. Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time.

NET ASSET VALUE (NAV):

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his
part. In other words, each share or unit that an investor holds needs to be assigned a value. Since
the units held by investor evidence the ownership of the fund’s assets, the value of the total assets
of the fund when divided by the total number of units issued by the mutual fund gives us the
value of one unit. This is generally called the Net Asset Value (NAV) of one unit or one share.
The value of an investor’s part ownership is thus determined by the NAV of the number of units
held.

Calculation of NAV:

Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it has 10 investors
who have bought 10 units each, the total numbers of units issued are 100, and the value of one
unit is Rs. 10.00 (1000/100). If a single investor in fact owns 3 units, the value of his ownership
of the fund will be Rs. 30.00(1000/100*3). Note that the value of the fund’s investments will
keep fluctuating with the market-price movements, causing the Net Asset Value also to fluctuate.
For example, if the value of our fund’s asset increased from Rs. 1000 to 1200,the value of our
investors holding of 3 units will now be (1200/100*3) Rs. 36. The investment value can go up or
down, depending on the markets value of the fund’s assets.

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MUTUAL FUND FEES AND EXPENSES

Mutual fund fees and expenses are charges that may be incurred by investors who hold mutual
funds. Running a mutual fund involves costs, including shareholder transaction costs, investment
advisory fees, and marketing and distribution expenses. Funds pass along these costs to investors
in a number of ways.

1. TRANSACTION FEES

i) Purchase Fee:

It is a type of fee that some funds charge their shareholders when they buy shares. Unlike a front-
end sales load, a purchase fee is paid to the fund (not to a broker) and is typically imposed to
defray some of the fund's costs associated with the purchase.

ii) Redemption Fee:

It is another type of fee that some funds charge their shareholders when they sell or redeem
shares. Unlike a deferred sales load, a redemption fee is paid to the fund (not to a broker) and is
typically used to defray fund costs associated with a shareholder's redemption.

iii) Exchange Fee:

Exchange fee that some funds impose on shareholders if they exchange (transfer) to another fund
within the same fund group or "family of funds."

2. PERIODIC FEES

i) Management Fee:

Management fees are fees that are paid out of fund assets to the fund's investment adviser for
investment portfolio management, any other management fees payable to the fund's investment
adviser or its affiliates, and administrative fees payable to the investment adviser that are not
included in the "Other Expenses" category. They are also called maintenance fees.

ii) Account Fee:

Account fees are fees that some funds separately impose on investors in connection with the
maintenance of their accounts. For example, some funds impose an account maintenance fee on
accounts whose value is less than a certain dollar amount.

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3. OTHER OPERATING EXPENSES

Transaction Costs:

These costs are incurred in the trading of the fund's assets. Funds with a high turnover ratio or
investing in illiquid or exotic markets usually face higher transaction costs. Unlike the Total
Expense Ratio these costs are usually not reported.

LOADS

Definition of a load

Load funds exhibit a "Sales Load" with a percentage charge levied on purchase or sale of shares.
A load is a type of Commission (remuneration). Depending on the type of load a mutual fund
exhibits, charges may be incurred at time of purchase, time of sale, or a mix of both. The
different types of loads are outlined below.

Front-end load:

Also known as Sales Charge, this is a fee paid when shares are purchased. Also known as a
"front-end load," this fee typically goes to the brokers that sell the fund's shares. Front-end loads
reduce the amount of your investment. For example, let's say you have Rs.10, 000 and want to
invest it in a mutual fund with a 5% front-end load. The Rs.500 sales load you must pay comes
off the top, and the remaining Rs.9500 will be invested in the fund. According to NASD rules, a
front-end load cannot be higher than 8.5% of your investment.

Back-end load:

Also known as Deferred Sales Charge, this is a fee paid when shares are sold. Also known as a
"back-end load," this fee typically goes to the brokers that sell the fund's shares. The amount of
this type of load will depend on how long the investor holds his or her shares and typically
decreases to zero if the investor holds his or her shares long enough.

Level load / Low load:

It's similar to a back-end load in that no sales charges are paid when buying the fund. Instead a
back-end load may be charged if the shares purchased are sold within a given time frame. The
distinction between level loads and low loads as opposed to back-end loads is that this time
frame where charges are levied is shorter.

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No-load Fund:

As the name implies, this means that the fund does not charge any type of sales load. But, as
outlined above, not every type of shareholder fee is a "sales load." A no-load fund may charge
fees that are not sales loads, such as purchase fees, redemption fees, exchange fees, and account
fees.

WORKING OF MUTUAL FUNDS

The mutual fund collects money directly or through brokers from investors. The money is
invested in various instruments depending on the objective of the scheme. The income generated
by selling securities or capital appreciation of these securities is passed on to the investors in
proportion to their investment in the scheme. The investments are divided into units and the
value of the units will be reflected in Net Asset Value or NAV of the unit. NAV is the market
value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of
the scheme divided by the number of units outstanding on the valuation date. Mutual fund
companies provide daily net asset value of their schemes to their investors. NAV is important, as
it will determine the price at which you buy or redeem the units of a scheme. Depending on the
load structure of the scheme, you have to pay entry or exit load.

STRUCTURE OF A MUTUAL FUND:

India has a legal framework within which Mutual Fund have to be constituted. In India open and
close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in
India is allowed to issue open-end and close-end schemes under a common legal structure. The
structure that is required to be followed by any Mutual Fund in India is laid down under SEBI
(Mutual Fund) Regulations, 1996.

The Fund Sponsor:

Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of
another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the
promoter of a company as he gets the fund registered with SEBI. The sponsor forms a trust and
appoints a Board of Trustees. The sponsor also appoints the Asset Management Company as
fund managers. The sponsor either directly or acting through the trustees will also appoint a
custodian to hold funds assets. All these are made in accordance with the regulation and
guidelines of SEBI.

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As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least
40% of the net worth of the Asset Management Company and possesses a sound financial track
record over 5 years prior to registration.

Mutual Funds as Trusts:

A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor
acts as a settler of the Trust, contributing to its initial capital and appoints a trustee to hold the
assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The
fund then invites investors to contribute their money in common pool, by scribing to “units”
issued by various schemes established by the Trusts as evidence of their beneficial interest in the
fund. It should be understood that the fund should be just a “pass through” vehicle. Under the
Indian Trusts Act, the trust of the fund has no independent legal capacity itself, rather it is the
Trustee or the Trustees who have the legal capacity and therefore all acts in relation to the trusts
are taken on its behalf by the Trustees. In legal parlance the investors or the unit-holders are the
beneficial owners of the investment held by the Trusts, even as these investments are held in the
name of the Trustees on a day-to-day basis. Being public trusts, Mutual Fund can invite any
number of investors as beneficial owners in their investment schemes.

Trustees:

A Trust is created through a document called the Trust Deed that is executed by the fund sponsor
in favour of the trustees. The Trust- the Mutual Fund – may be managed by a board of trustees- a
body of individuals, or a trust company- a corporate body. Most of the funds in India are
managed by Boards of Trustees. While the boards of trustees are governed by the Indian Trusts
Act, where the trusts are a corporate body, it would also require complying with the Companies
Act, 1956. The Board or the Trust company as an independent body, acts as a protector of the of
the unit-holders interests. The Trustees do not directly manage the portfolio of securities. For this
specialist function, the appoint an Asset Management Company. They ensure that the Fund is
managed by ht AMC as per the defined objectives and in accordance with the trusts deeds and
SEBI regulations.

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The Asset Management Companies:

The role of an Asset Management Company (AMC) is to act as the investment manager of the
Trust under the board supervision and the guidance of the Trustees. The AMC is required to be
approved and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net
worth of at least Rs. 10 Crore at all times. Directors of the AMC, both independent and non
independent should have adequate professional expertise in financial services and should be
individuals of high morale standing, a condition also applicable to other key personnel of the
AMC. The AMC cannot act as a Trustee of any other Mutual Fund. Besides its role as a fund
manager, it may undertake specified activities such as advisory services and financial consulting,
provided these activities are run independent of one another and the AMC’s resources (such as
personnel, systems etc.) are properly segregated by the activity. The AMC must always act in the
interest of the unit-holders and reports to the trustees with respect to its activities.

Custodian and Depositories:

Mutual Fund is in the business of buying and selling of securities in large volumes. Handling
these securities in terms of physical delivery and eventual safekeeping is a specialized activity.
The custodian is appointed by the Board of Trustees for safekeeping of securities or participating
in any clearance system through approved depository companies on behalf of the Mutual Fund
and it must fulfill its responsibilities in accordance with its agreement with the Mutual Fund. The
custodian should be an entity independent of the sponsors and is required to be registered with
SEBI. With the introduction of the concept of dematerialization of shares the dematerialized
shares are kept with the Depository participant while the custodian holds the physical securities.
Thus, deliveries of a fund’s securities are given or received by a custodian or a depository
participant, at the instructions of the AMC, although under the overall direction and
responsibilities of the Trustees.

Bankers:

A Fund’s activities involve dealing in money on a continuous basis primarily with respect to
buying and selling units, paying for investment made, receiving the proceeds from sale of the
investments and discharging its obligations towards operating expenses. Thus the Fund’s banker
plays an important role to determine quality of service that the fund gives in timely delivery of
remittances etc.

20
Transfer Agents:

Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and provide
other related services such as preparation of transfer documents and updating investor records. A
fund may choose to carry out its activity in-house and charge the scheme for the service at a
competitive market rate. Where an outside Transfer agent is used, the fund investor will find the
agent to be an important interface to deal with, since all of the investor services that a fund
provides are going to be dependent on the transfer agent.

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

The structure of mutual funds in India is guided by the SEBI. Regulations,

1996.Theseregulations make it mandatory for mutual fund to have three structures of sponsor
trustee and asset Management Company. The sponsor of the mutual fund and appoints the
trustees. The trustees are responsible to the investors in 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 affairs of the mutual fund. The AMC and the mutual fund have to be registered
with SEBI.

SEBI REGULATIONS:

-As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds
to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993.
Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital
market. The regulations were fully revised in 1996 and have been amended thereafter from time
to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the
interests of investors.· All mutual funds whether promoted by public sector or private sector
entities including those promoted by foreign entities are governed by the same set of
Regulations. The risks associated with the schemes launched by the mutual funds sponsored by
these entities are of similar type. There is no distinction in regulatory requirements for these
mutual funds and all

Are subject to monitoring and inspections by SEBI.

· SEBI Regulations require that at least two thirds of the directors of trustee company or board of
trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of

21
the directors of AMC must be independent. All mutual funds are required to be registered with
SEBI before they launch any scheme.

· Further SEBI Regulations, inter-alia, stipulate that MFs cannot guarantee returns in any scheme
and that each scheme is subject to 20 : 25 condition [I.e. minimum 20 investors per scheme and
one investor can hold more than 25% stake in the corpus in that one scheme].

· Also SEBI has permitted MFs to launch schemes overseas subject various restrictions and also
to launch schemes linked to Real Estate, Options and Futures, Commodities, etc.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

With the increase in mutual fund players in India, a need for mutual fund association in India was
generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI)
was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered
with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members.
It functions under the supervision and guidelines of its Board of Directors. Association of Mutual
Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy
market with ethical lines enhancing and maintaining standards. It follows the principle of both
protecting and promoting the interests of mutual funds as well as their unit holders. The
Objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the Country. It has
certain defined objectives which juxtaposes the guidelines of its Board of Directors. The
objectives are as follows:

· This mutual fund association of India maintains high professional and ethical standards in all
areas of operation of the industry.

· It also recommends and promotes the top class business practices and code of conduct which is
followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital
markets and financial services also involved in this code of conduct of the association.

· AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund
Industry.

22
1.2 COMPANY PROFILE

23
HDFC Asset Management Company Limited (AMC):
HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company
for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169,
Backbay Reclamation, Churchgate, Mumbai - 400 020.

In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset
Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is
Rs. 25.161 crore.

The present equity shareholding pattern of the AMC is as follows:

Particulars % of the paid up equity capital

Housing Development Finance Corporation Limited 60
Standard Life Investments Limited 40
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review
of its overall strategy, had decided to divest its Asset Management business in India. The AMC
had entered into an agreement with ZIC to acquire the said business, subject to necessary
regulatory approvals.

On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual
Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been
renamed as follows:

Former Name New Name

Zurich India Equity Fund HDFC Equity Fund
Zurich India Prudence Fund HDFC Prudence Fund
Zurich India Capital Builder Fund HDFC Capital Builder Fund
Zurich India TaxSaver Fund HDFC TaxSaver
Zurich India Top 200 Fund HDFC Top 200 Fund
Zurich India High Interest Fund HDFC High Interest Fund
Zurich India Liquidity Fund HDFC Cash Management Fund
Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund*
*HDFC Sovereign Gilt Fund has been wound up in March 2006

24
The AMC is managing 28 open-ended schemes of the Mutual Fund viz. HDFC Growth Fund,
HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite
Fund, HDFC Premier Multi-Cap Fund, HDFC Index Fund, HDFC Long Term Advantage Fund,
HDFC TaxSaver, HDFC Arbitrage Fund, HDFC Mid-Cap Opportunities Fund, HDFC Balanced
Fund, HDFC Prudence Fund, HDFC Children’s Gift Fund, HDFC Gold Exchange Traded Fund,
HDFC MF Monthly Income Plan, HDFC Multiple Yield Fund, HDFC Multiple Yield Fund- Plan
2005, HDFC Income Fund, HDFC High Interest Fund, HDFC Short Term Plan, HDFC Short
Term Opportunities Fund, HDFC Medium Term Opportunities Fund, HDFC Gilt Fund and
HDFC Floating Rate Income Fund , HDFC Liquid Fund, HDFC Cash Management Fund and
HDFC Quarterly Interval Fund.

The AMC is also managing 7 closed ended Schemes of the HDFC Mutual Fund viz. HDFC Long
Term Equity Fund, HDFC Infrastructure Fund, HDFC Fixed Maturity Plans - Series XI, HDFC
Fixed Maturity Plans - Series XII, HDFC Fixed Maturity Plans - Series XIV, HDFC Fixed
Maturity Plans - Series XV and HDFC Fixed Maturity Plans - Series XVII.

The AMC is also providing portfolio management / advisory services and such activities are not
in conflict with the activities of the Mutual Fund. The AMC has renewed its registration from
SEBI vide Registration No. - PM / INP000000506 dated December 21, 2009 to act as a Portfolio
Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration
is valid from January 1, 2010 to December 31, 2012.

Products
Equity / Growth Fund Debt/ Income Fund
Invest primarily in equity and equity Invest in money market and
related instruments. debt instruments and provide
Children's Gift Fund optimum balance of yield, ...
Quarterly Interval Fund
Children's Gift Fund
The primary objective of the
Fixed Maturity Plan
Scheme is to generate regular
Invest primarily in Debt / Money
income through investme...
Market Instruments and Government Exchange Traded Funds
Securities... Invest primarily in equity and
Liquid Funds
equity related instruments.
Provide high level of liquidity by
investing in money market and debt

25
 instruments.

Schemes of HDFC Mutual Fund :

1. Equity Fund
Aims at providing capital appreciation through investments
predominantly in equity oriented securities

Type of Prashant Jain,

Open Ended Fund
Scheme Anand
Manager
Nature Equity Laddha.

Option Growth SIP

Inception STP
Jan 1, 1995
Date SWP

Face Value Expense

10 1.79
(Rs/Unit) ratio(%)

Fund Size in 8206.39 as on Portfolio

Rs. Cr. Oct 31, 2010 Turnover 50.02
Ratio(%)

Last Dividend NA
Declared

Minimum 5000
Investment
(Rs)

Purchase Daily
Redemptions

NAV Daily
Calculation

Entry Load Entry Load is 0%.

If redeemed bet. 0 Year to 1 Year; Exit load is

Exit Load
1%.

2. Balanced Growth Fund

The primary objective of the Scheme is to generate capital appreciation along with current income form a combined
portfolio of equity & equity related and debt & money market instruments.

26
 Type of Scheme Open Ended Chirag Setalvad, Anand
Fund Manager
Nature Equity & Debt Laddha.

SIP
Option Growth
STP
Inception Date Sep 11, 2000
SWP
Face Value (Rs/Unit) 10
Expense ratio(%) 2.15
Fund Size in Rs. Cr. 222.55 as on Oct 31, 2010
Portfolio Turnover
16.53
Ratio(%)

Last Dividend Declared NA

Minimum Investment (Rs) 5000

Purchase Redemptions Daily

NAV Calculation Daily

Entry Load Entry Load is 0%.

Exit Load If redeemed bet. 0 Year to 1 Year; Exit load is 1%.

3. Growth Fund
The primary objective of the Scheme is to generate capital appreciation along with current income form a combined
portfolio of equity & equity related and debt & money market instruments.

Type of Scheme Open Ended Chirag Setalvad, Anand

Fund Manager
Nature Equity & Debt Laddha .

SIP
Option Growth
STP
Inception Date Sep 11, 2000
SWP
Face Value (Rs/Unit) 10
Expense ratio(%) 2.15
Fund Size in Rs. Cr. 222.55 as on Oct 31, 2010
Portfolio Turnover
16.53
Ratio(%)

Last Divdend Declared NA

Minimum Investment (Rs) 5000

Purchase Redemptions Daily

NAV Calculation Daily

Entry Load Entry Load is 0%.

Exit Load If redeemed bet. 0 Year to 1 Year; Exit load is 1%.

27
4. Income Fund
Aims to optimize returns while maintaining a balance of safety, yield and liquidity.

Type of Scheme Open Ended Anand Laddha , Shobhit

Fund Manager
Nature Debt Mehrotra .

SIP
Option Growth
STP
Inception Date Sep 11, 2000
SWP
Face Value (Rs/Unit) 10
Expense ratio (%) 2.02
Fund Size in Rs. Cr. 586.24 as on Oct 31, 2010
Portfolio Turnover
NA
Ratio(%)

Last Dividend Declared NA

Minimum Investment (Rs) 5000

Purchase Redemptions Daily

NAV Calculation Daily

Entry Load Entry Load is 0%.

Exit Load If redeemed bet. 0 Months to 6 Months; Exit load is 0.5%.

5. Children’s Gift (Investment plan) fund

Aims to generate long term capital appreciation.

Type of Scheme Open Ended Chirag Setalvad, Anand

Fund Manager
Nature Equity & Debt Laddha .

SIP
Option Growth
STP
Inception Date Mar 2, 2001
SWP
Face Value (Rs/Unit) 10
Expense ratio(%) 2.10
Fund Size in Rs. Cr. 279.2 as on Oct 31, 2010
Portfolio Turnover
16.74
Ratio(%)

28
Last Divdend Declared 0 % as on Jun 26, 2004

Minimum Investment (Rs) 5000

Purchase Redemptions Daily

NAV Calculation Daily

Entry Load Entry Load is 0%. Entry Load is 0%. Entry Load is 0%.

If redeemed bet. 0 Year to 1 Year; If redeemed bet. 0 Year to 1 Year; If redeemed bet. 0 Year
to 1 Year; Exit load is 3%. If redeemed bet. 1 Year to 2 Year; If redeemed bet. 1 Year to 2
Exit Load
Year; If redeemed bet. 1 Year to 2 Year; Exit load is 2%. If redeemed bet. 2 Year to 3 Year; If
redeemed bet. 2 Year to 3 Year; If redeemed bet. 2 Year to 3 Year; Exit load is 1%.

29
 2. METHODOLOGY

2.1 OBJECTIVES:
• To study the overall mutual fund industry
• To study the equity, balanced, growth Income and children’s gift schemes offered by
HDFC mutual fund.
• To analyse the above schemes performance before and after Financial Crisis.

PROBLEM STATEMENT:
The principle cause behind this thesis is to know the performance of the equity, balanced, growth
Income and children’s gift schemes offered by HDFC and to know the impact of financial crisis
on the performance of these selected schemes.
Purpose and need of study

The purpose of study was to know about the Performance and the impact of financial crisis on
the equity, balanced, growth Income and children’s gift schemes offered by HDFC Mutual Fund.

Scope of present study

30
 The scope of present study is to analyse the performance of selected schemes of HDFC mutual
fund before and after crisis.

2.2 RESEARCH DESIGN:

DATA COLLECTION:
The Data are classified into two types:
1. Primary data
2. Secondary data
Primary data
The primary data are those which are originally collected for the first time by the
researcher in view of objectives. The data are in raw form. This requires refinement through
statistical methods in order to arrive at conclusions. Primary data can be mainly collected with 4
types of methods. They are as follows:
 Observation method
 Interview method
 Questioner method
 Schedules method

Secondary data
Secondary data means data that are already available i.e. they refer to data which have
already been collected by someone else and which have already been passed through the
statistical process.
For the study, the secondary financial data about the selected schemes was available
within the organization in the form of Fact sheets and Broachers. The remaining data is
collected through company websites, key information Memorandum, Internet etc.

Data Analysis plan

• Research Type
o Descriptive
• Data Type
o Secondary data
• Research Tools
o Analysis of returns generated by firms
• Sampling Units

31
 o HDFC schemes
• Sample Size
o Five selected schemes of HDFC Mutual Funds

2.3 Review of Literature

In fact, too many people, investing means buying mutual funds. After all, its common
knowledge that investing in mutual funds is (or at least should be) better than simply letting your
cash waste away in a savings account, but, for most people, that's where the understanding of
funds ends. It doesn't help that mutual fund salespeople speak a strange language that is
interspersed with jargon that many investors don't understand.

Originally, mutual funds were heralded as a way for the little guy to get a piece of the market.
Instead of spending all your free time buried in the financial pages of the Wall Street Journal, all
you had to do was buy a mutual fund and you'd be set on your way to financial freedom. As you
might have guessed, it's not that easy. Mutual funds are an excellent idea in theory, but, in
reality, they haven't always delivered. Not all mutual funds are created equal, and investing in
mutual’s isn’t as easy as throwing your money at the first salesperson who solicits your business.
(Learn about the pros and cons in Mutual Funds Are Awesome - except When they’re Not.)
In this tutorial, we'll explain the basics of mutual funds and hopefully clear up some of the myths
around them. You can then decide whether or not they are right for you.

An Introduction to Mutual Funds

House-Brand (Proprietary) Funds vs. Third-Party Funds

A house-brand, or proprietary, mutual fund is created when the bank or brokerage firm
that distributes the fund also acts an investment advisor for the fund. The mutual fund business
has two components: managing fund assets and distributing (or selling) funds. Each side can be
very profitable and the creation of proprietary mutual funds is considered a form of vertical
integration - not to mention a profitable way to leverage an existing sales force. Typically, these
mutual funds are developed, managed and sold in-house.

Third-party mutual funds, on the other hand, are managed by outside, independent managers.
These include the brand names of the business such as Vanguard, T. Rowe Price, Franklyn and
Fidelity. They might be sold directly to the investor or they may be sold by other companies or
by an independent advisor. Those who sell the funds are often totally independent from those

32
who manage the funds. In theory, this should result in totally unbiased advice when advisors
recommend these funds to their clients.

Sellers of Proprietary Funds

Proprietary funds can normally be found at just about every company that has a large
sales force who can sell mutual funds. This includes banks, credit unions, brokerage firms,
insurance companies and wealth management companies. In-house mutual funds were developed
by companies to be sold by their own distribution networks, and are now part of an overall move
into wealth management.

The brokerage industry entered into the proprietary mutual fund business as a means of
averaging out their revenues. The fees generated from managing assets tend be smoother and
more predictable than the potentially volatile revenues of their traditional lines of business of
investment banking, trading and commissions.

Although most sellers of in-house funds will also offer third-party funds, some advisors or firms
may only sell and promote their own funds. Companies that have their own sales force may only
sell their brand of funds. If an advisor recommends an in-house fund, investors should ask if they
sell third-party funds as well, because they may be required to promote internal funds first.
Issues Surrounding Proprietary Funds

Although there are hundreds of mutual fund companies and thousands of mutual funds to
choose from, if you are purchasing funds from an advisor or a company that is only offering in-
house funds, this narrows your choices considerably.

This could be a problem for a number of reasons:

1. The investment style they use might currently be out of favour and buying from an in-
house fund could result in lagging performances.
2. The bank may not offer an international growth fund among its proprietary offerings,
which may be needed for diversification. (To read more about diversifying your portfolio,
see Introduction To Diversification and The Importance Of Diversification.)
3. If the bank does offer a growth fund, the foreign assets that have been selected for the
fund may be out of favour for the duration of the client's investment horizon. This would
be less likely to occur if there was a larger offering of international growth funds
available.

33
 4. The type of fund or style you desire might not be found within the fund family.
Pricing
Proprietary funds can be priced differently than third-party funds. The sales commissions and
management fees can differ. This will depend on a number of factors:

• First, the in-house funds might be relatively smaller in size to third-party funds. This
means they may not enjoy the same economies of scale, resulting in relatively higher
costs. (To learn more, see what Are Economies of Scale?)
• Secondly, because the same company manages and distributes the funds, it has more
leeway about how to charge. For example, some companies might decide to charge lower
fees on their proprietary funds as a means of building market share and keeping more
money in-house.
• Thirdly, the company has a captive market, which means it can offer advantageous
pricing to catch the "lazy" investors who don't comparison shop and would rather
continue to work with only one broker.
Transferability
Unlike third-party funds, typical proprietary funds may not be transferable from one firm to
another. If an investor wants to move his or her account, the units of the in-house funds will have
to be sold. This can result in additional fees, commissions and administrative costs. Also, there is
some additional market risk between the time the mutual funds are sold and when the proceeds
are reinvested. Investors may purchase proprietary funds without appreciating portability
restriction and the firms do not necessarily tell their clients that the assets of proprietary funds are
not transferable.

Sales Incentives Because there is the potential for advisors to steer client money to in-house
mutual funds that may not be in the clients' best interest , the Financial Industry Regulatory
Authority(FINRA) has outlawed the use of sales incentives for the sale of proprietary funds. The
reason FINRA barred this action is because it gives brokers a financial reason to put their
interests ahead of those of their clients - which is completely prohibited according to advisor
rules

However, some firms may still have incentives in place; although they might meet the letter of
the regulations, they do not meet the spirit of the underlying rules. As a result, some advisors and
customers have taken the opposite position and will not buy or offer their in-house funds at all in
order to avoid any nuance of indiscretion.

34
Further Buying Considerations

Proprietary funds can be found at almost all large financial institutions. Like third-party
funds, they can be excellent investment products. However, before buying these funds, you
should make sure you understand what you are buying and how it will fit in with your portfolio.
The same due diligence that is necessary for buying mutual funds in general should be carried
out when purchasing those developed in-house. Some might argue that even more due diligence
is necessary, especially when an in-house fund is recommended over a third-party fund. Advisors
should be able to disclose all incentives to the client in writing to ensure they do not offer
influenced advice. (To keep reading on due diligence, see Due Diligence In 10 Easy Steps.)
Clients should also check to see if in-house funds can be transferred to other firms and, if so,
whether this transfer would involve any costs or fees.

The Bottom Line

If you are careful in your research of these house-brand funds, you may find that you
don't need to put your money in with the major brands to experience good growth and a
personalized investing experience.

Investor’s Decision: Exchange Traded Funds vs. Index Mutual Funds

ETFs and index mutual funds are two popular options for investors, but knowing the advantages
and disadvantages of each is important before deciding how to invest.
For many years, mutual funds have been the bread and butter of the average investor, including
holders of an IRA or 401(K) or the investor who simply has some money to put into equities but
doesn’t wish to select individual stocks. More recently, the trend has moved toward low-cost
index funds that are designed to track specific indexes, such as the S&P 500, Russell 5000,
Wilshire 2000, and others, and to reduce costs by removing the management aspect from the
equation. Because even the best fund managers typically find it difficult to consistently beat
these indexes, the low costs, diversification and routinely positive returns that they offer have
made index mutual funds a popular choice.

Even more recently, however, a new type of investment has come on the scene that is starting to
aggressively compete with mutual funds for investors’ dollars, and a lot of the rhetoric
surrounding these investments - referred to as Exchange Traded Funds or ETFs - indicates that
they may be a better choice than low-cost index mutual funds. To better understand which option

35
is right for you, we’ll take a look at exactly what each type of investment actually is and the
advantages and disadvantages of each.

Index Mutual Funds

Index mutual funds take the management aspect away and track, as closely as possible, a given
index or exchange. With research and management taken out of the picture, fund expenses go
down, leaving more to the investor. There is a wide variety of low-cost index funds available,
and investors should essentially steer clear of any fund that has a high expense ratio. When more
money comes into a fund, the manager - or computer program, as is often the case with index
funds - simply purchases more shares of the requisite stocks in order to continue to track the
given index. Purchases are made based on the Net Asset Value (or NAV) at the end of the day,
pure and simple.

Exchange Traded Funds

Exchange Traded Funds, just like their index fund counterparts, also track indexes. The
difference is that the stocks of individual companies that comprise a given index are bundled into
an equity-like investment vehicle that is traded on an exchange, exactly like a stock. That means
that those purchasing ETF shares can place orders for them throughout the day, and even use
limit orders to make trades. Because they are traded on an exchange and share many of the
attributes of individual equities, ETFs can also be shorted and offer underlying options as an
investment opportunity.

Advantages and Disadvantages

One particular disadvantage of index funds is that, outside of IRA or retirement plans, the
minimum investment can be quite high. In some instances, this could be relatively low, but in
others minimum investments can be as high as $50,000. For small investors, such minimums are
prohibitive. ETFs, on the other hand, have no minimums, meaning that if you want to purchase a
single ETF share, you can do so easily.

ETFs are, however, subject to brokerage fees. While there are many low-cost brokerage options,
those who wish to dollar cost average with their investment by making monthly contributions
will have to pay that brokerage fee each month. With index funds, investments occur monthly
without charge, representing a cost savings for index funds when investing in this manner. With
the advent of no-cost brokerages, this is overcome to an extent, but you will definitely have to

36
choose such a brokerage in order to match the cost-effectiveness of dollar cost averaging with
index funds. Also worth noting is that when purchasing ETFs, there is a hidden fee, i.e. – like
individual stocks, ETFs have a bid-ask spread (the amount paid to the trader to execute the
trade), so you’ll pay a bit more than the actual price of the ETF at the time of purchase (and
make less at the time of the sale) to pay someone to execute the trade.
ETFs also offer the ability to engage in more advanced investment and trading opportunities.
While mutual funds of all stripes do not offer the ability to buy and sell options, ETFs have
option chains in much the same manner that individual equities do. It is also possible to use ETFs
to short a given index if you feel bearish on a given index or the market in general. Mutual funds,
on the other hand, are almost by their very nature intended as longer term investments and do not
offer options investing or the ability to short an index. For long term investors, including the
average investor, this is not an issue, but it is worth noting that ETFs offer greater flexibility for
more experienced investors and traders.

With mutual funds, dividends can be paid out, but many chose to simply reinvest them
automatically. As with the dollar cost averaging scenario explained above, there is no fee for
reinvesting dividends. With ETFs, on the other hand, dividends are simply placed, as cash, in a
brokerage account, where you can then reinvest on your own, but with the requisite brokerage
fees incurred. Know more about types of investments.

The primary advantage that ETFs purportedly offer is lower taxes. The reality, however, is that
the tax advantages of ETFs is greatly exaggerated. While index funds may be forced to sell
shares if investors decide to redeem shares, thus resulting in capital gains and, by extension,
capital gains taxes, ETFs, by their very nature, have both a buyer and seller in every transaction.
The result is that they are not subject to "forced capital gains." It should be noted however, that
ETFs don’t actually eliminate capital gains, but simply defer them until such time that the shares
are sold. However, indexes change from time to time, and if an ETF is to properly track an index
(which it must do), then such changes will result in buying and selling of shares and, thus, capital
gains in the short term. The long and the short of the tax argument is that ETFs offer only
minimal advantages over index funds from a tax perspective.

It is, of course, ultimately up to the individual investor to determine what he or she wishes to
invest in, but for the "average" investor there is very little reason to invest in ETFs over index
funds. Assuming a low cost ratio and management minimum investments, ETFs simply create a

37
more active investment approach, something that many are trying to avoid. For those who do
wish to be more active in purchase and selling, or who wish to short indexes or engage in options
trading at the index level, ETFs may be a very good choice indeed.
If you stroll down the aisle of any large supermarket today, mixed in with the merchandise of
well-known national brands is similar merchandise in the store's brand. Next to a major brand-
named can of creamed corn, you might also see a can of the house brand of creamed corn. In the
financial supermarkets that house today's large brokerage firms, banks and insurance companies,
banks often sell their own investment products and services alongside of those from
outside suppliers. And, on the virtual shelves of a large financial company, the mutual funds of
major companies - like Fidelity or Franklyn - sit side-by-side with the house brand mutual funds.
In this article, we'll show you how to decide between purchasing a house-brand fund over a
major brand fund. (For other things to consider, read picking the Right Mutual Fund.)

THE PERFORMANCE OF U. S. DOMESTIC EQUITY MUTUAL FUNDS DURING

RECENT RECESSIONS

ABSTRACT
In this study, I investigate the performance of five categories of U.S. domestic equity mutual
funds during the recessions of 1990 and 2001 and during the 12 months following each
recession. I show that recessions identified by the National Bureau of Economic Research
(NBER) are not all the same with regard to their impact on the behavior of common stock prices,
and that investment strategies based on a fixed rule of thumb are likely to lead to disastrous
outcomes. For example, the rule of thumb which dictates picking small capitalization common
stocks in the ensuing 12 months from the end of a recession produced good results after the
recession of 1990, but produced disappointment results after the recession of 2001. During the
recession of 1990, stock-mutual fund performance was higher in the post recession period, which
is in line with past research on the behavior of common stock prices. The funds as a group earned
higher returns than the S&P 500 index during the recession and after. However, during the
recession of 2001, four of the five mutual fund categories and the S&P 500 index realized
negative returns during the recession. Moreover, all of the fund categories and the market
realized negative returns in the 12 months following the recession. Key Words: mutual funds,

38
performance evaluation, recessions, economics cycles, market efficiency, anomalies JEL Codes:
G2, G14, G17, G23, N2

I. INTRODUCTION
According to the National Bureau of Economic Research (NBER), a recession is a significant
decline in economic activity as measured by the real GDP and other indicators of economic
activity, including employment and real income. In contrast, the financial press often defines a
recession as two consecutive quarters of decline in real GDP—a rule of thumb that is not
consistent with the economic cycles in the US and abroad.2 In particular, the recession of 2001
would not have been correctly identified using this rule of thumb. From 1873 to 1982, the US
economy experienced 26 recessions and, most often, stock prices rose as the economy expanded,
and declined as the Global Journal of Finance and Banking Issues Vol. 3. No. 3. 2009. Zakri Y.
Bello 2 economy entered a recession, as observed by Moore and Cullity (1988). Moore (1975)
contends that significant changes in stock prices have been associated with even the milder
slowdowns in economic growth. Similarly, bond prices also moved closely with economic
activity. However, Moore and Cullity contend that there were few substantial swings in stock
prices that were not associated with swings in the business cycle. For example, since 1983 there
were three recessions when stock prices did not decline. Typically, stock prices are leading
economic indicators although, according to Moore and Cullity, stock prices have a propensity to
send false signals. Mills (1988) also argues that stock prices have been unreliable leading
indicators in recent years. Bond yields and other interest rates are either coincident indicators or
lagging indicators. Moreover, Moore and Cullity suggest that investors tend to shift to common
stocks and away from bonds during business cycle upswing and away from common stocks
toward bonds during a recession. Surprisingly, bond prices most often lead stock prices
according to Moore and Cullity (1988). Moore and Cullity argue that it is important for investors
to know when the turn in the business cycle occurs, bearing in mind however that it is difficult to
pick out all of the significant declines in stock prices. Investors often rely on a fixed rule of
thumb which dictates that small capitalization stocks tend to realize higher returns than large
capitalization stocks following recessions. In this study, I use stock-mutual-fund prices to
investigate the return performance of several mutual fund categories in connection with the
usefulness of this rule of thumb during the two most recent NBER identified recessions. My
objective is to show that the most recent economic recessions provide a stark contrast concerning
the behavior of stock prices, and to show that an investor blindly following this rule of thumb

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might have had an unpleasant surprise. In other words, recessions are not all the same for the
purpose of rational investment activity.

II. THE PERFORMANCE OF SMALL CAPS

It is generally agreed that small capitalization common stocks had historically performed quite
well at the beginning of an economic recovery. In the past 40 years, small caps begin to
outperform large caps about six to nine months before the end of a recession, according to Phillip
(1993). However, small caps perform poorly during down markets and recessions (Arshanapalli
and Nelson, 2007). Moreover, Brown (1991) observed that small caps declined 21.6% during
1990 alone while the S&P 500 index declined only 3.2%, although over the long term from 1925
to 1991 small caps returned 12% versus 10.2% for the S&P 500 index. Further, Brown observed
that over the last 65 years the United States had experienced 11 recessions and that during these
recessions, small caps had underperformed the S&P 500 index by a median of -3% and
outperformed the S&P 500 index during periods of economic growth by a median of +2.9%. It is
particularly noteworthy that during the 12 months following a recession, small caps had an
11.2% performance edge on average.
An important caveat however is that it is not easy to predict a turning point in the economic cycle
and this could lead to a disastrous investment performance when a fixed rule of thumb is
depended upon. And even when an investor is able to predict the Global Journal of Finance and
Banking Issues turning point in the economic cycle, they might not be able to pick out the turning
point in the stock market cycle. I use the 2001 recession to illustrate this point. The stock market
cycle coincides with the economic cycle most often, but not all of the time.
III. THE DATA
A. Mutual Fund Data
The mutual fund sample consists of 1065 domestic equity funds randomly selected from five
investment-objective categories including Aggressive Growth, Small Company, Growth, Growth
and Income, and Equity income. A profile of the data is shown in Table 1. My sample excludes
mutual funds that have more than 15% of their portfolio invested in bonds or in non-U.S. stocks.
Moreover, mutual funds that have average net assets below $500 million are not included.

Table 1 Profile of the Mutual Fund Sample

Objective PE PB Destock % Assets Holdings Top-Ten %
($m)
AG 23.16 3.78 93.19 1005.65 134 27.88

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 SC 18.84 2.39 92.17 1020.78 278 21.69
G 19.40 3.21 91.80 1331.37 105 28.16
GI 15.49 2.43 93.95 2733.10 245 27.27
EI 14.58 2.35 89.13 2011.15 100 31.21
Sample 18.09 2.82 92.34 1685.55 174 26.95

Monthly returns were obtained from the Morningstar Principia database. Corresponding returns
on the S&P500 index and on three months Treasury bills were also obtained from the same
source. As shown in Table 1, the average price-to-earnings (P/E) ratio for the entire sample of
1065 domestic-equity funds is 18.09 times. The aggressive Growth category has the highest P/E
ratio of 23.16 times, while the Equity Income category has the lowest ratio of 14.58 times.
Domestic stocks as a percentage of the mutual-fund portfolio (D stock %) is 92.24% for the
entire sample, and foreign stocks as a percentage of the portfolio (F stock %) is quite low at
4.64%. Bonds, although not Global Journal of Finance and Banking Issues shown in the Table,
is only 0.13% of the portfolio. Cash, preferred stock and other investments are also not shown in
Table. The net assets of the average mutual fund is $1,685.55 million, with an average holding of
174 companies, and with 26.95% of the average portfolio invested in the top ten companies it
holds (Top-Ten %). The average holding, coupled with the “Top-Ten %,” gives an indication of
how well diversified the average mutual fund is. In this case, the average mutual fund appears to
have too much of its portfolio invested in the top ten companies it holds, although an average
holding of 174 companies definitely suggests that the average domestic mutual fund is well
diversified.

B. Recession Data:-
Data concerning recessions in the U.S. were obtained from the NBER website. I am using the
data for two recent recessions: July 1990 to March 1991, and March 2001 to November 2001.
Both recessions lasted 9 months. The ensuing 12 months after each recession are used as the post
recession period. The average monthly returns on 1065 mutual fund portfolios are measured over
each of the two recessions and then over each of the two post recession periods. Table 2 and both
Figure 1 and Figure 2 show the average monthly returns arranged by investment objective
category.

Table 2 the Performance of Mutual Funds around the

Most Recent Recessions
Obj. Ave. Ret. % Std. Dev. Ave. Ret. % Std. Dev.

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 Panel A: The Recession of 1990
Recession Post Recession
AG 1.543 9.068 2.228 6.401
SC 0.689 7.485 1.940 4.732
G 1.054 6.044 1.390 4.773
GI 0.883 5.161 1.131 4.062
EI 0.709 4.883 1.168 3.258
Sample 0.958 6.090 1.396 4.563
Market 0.404 5.315 0.731 3.977
Panel B: The Recession of 2001
Recession Post Recession
AG -1.032 9.680 -2.072 6.149
SC 0.190 6.969 -0.721 5.807
G -0.606 6.782 -1.638 5.648
GI -0.425 5.178 -1.404 5.606
EI -0.284 4.141 -1.016 5.117
Sample -0.414 6.423 -1.393 5.664
Market -0.918 5.916 -1.642 5.298

IV. EMPIRICAL RESULTS:-

The results relating to the recession of 1990 are presented in Panel A of Table 2. The
corresponding results for the recession of 2001 are shown in Panel B of that Table. Figure 1 and
Figure 2 present the data pictorially. As shown in Panel A of Table 2, mutual fund performance
was significantly higher in the 12 months following the recession. This phenomenon is exhibited
across all the five categories of domestic equity mutual funds, for the entire sample, and for the
S&P 500 index. For example, for the sample of mutual funds, the average return during recession
was 0.958% per month. The corresponding return for the post recession period was 1.396% per
month. The return for the market was 0.404% per month during the recession, and 0.731%
during the post recession period. As a group, the mutual funds have earned higher return than
Global Journal of Finance and Banking Issues the market during the recession and in the post
recession period. These results are in line with the past studies of common stocks as summarized
by Moore (1975) and Moore and Cullity (1988). The Aggressive Growth category and the Small
Company category outperformed the other categories in the post-recession period.4 This is in
line with both Phillip (1993) and Brown (1991) regarding the return performance of small
capitalization common stocks during the 12 months following a recession. The results for the
second recession, contained in Panel B of Table 2 and illustrated in Figure 2, suggest that
recessions as identified by the NBER are not all alike for the purpose investment activity. All of

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the five categories of mutual funds, the entire sample, and the market experienced a decline in
the post recession period. In the recession period, the Small Company category alone had a
positive return. This same category outperformed the other categories and the market in the post
recession period. These results are not conformable to the past studies of common stock
performance, including Arshanapalli and Nelson (2007), who argue that small cap stocks do
poorly during down markets and recessions. The Aggressive Growth category, which also has
substantial holdings of small cap stocks, however underperforms the other categories as well as
the market during recession and in the post recession period. Apparently the fixed rule of thumb
which dictates that investors are better off shifting to small stocks immediately after a recession
would have done poorly by picking the Aggressive growth category. Again, as with the recession
of 1990, mutual funds as a group outperformed the market during the recession of 2001 and in
the post recession period.

V. SUMMARY AND CONCLUSIONS:-

In this study, I investigate the performance of five categories of domestic equity mutual funds
during a recession and in the 12 months following a recession. My focus is on two recent
recessions of 1990 and 2001. I show that recessions identified by the National Bureau of
Economic Research (NBER) are not all the same with regard to the recession’s impact on stock
mutual fund prices and that any investment strategy based on a fixed rule of thumb is likely to
lead to disastrous outcomes even if the investor were able to correctly pinpoint the turning points
in the economic cycle.
For example, the rule of thumb which dictates picking small capitalization common stocks in the
ensuing 12 months after a recession produced good results after the recession of 1990, but
produced disappointment results after the recession of 2001. The rate of return on common
stocks, and hence on stock mutual funds, during the two recessions was radically different. With
regard to the recession of 1990, stock-mutual fund performance was higher in the post recession
period, which is in line with past research on the behavior of common stock prices. Those funds
that held small cap stocks earned higher returns than the other categories during the 12 months
after the recession. Moreover, each of the 5 fund categories and the market realized higher
returns after the recession. The funds as a group realized higher returns than the S&P Global
Journal of Finance and Banking Issues Vol. 3. No. 3. 2009. Zakri Y. Bello 7
500 index during the recession and after. However, during the recession of 2001, four of the five
fund categories and the S&P 500 index all realized negative returns during the recession, and all
of the five categories and the market realized negative returns in the 12 months following the

43
recession. The aggressive growth category which is known to hold most of its portfolio in small
capitalization stocks realized the lowest return than the other categories and the market

3. Empirical Analysis

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3.1 DATA ANALYSIS

The returns of five selected schemes of HDFC mutual fund were analysed in the excel
sheet. Separate Excel sheets were employed for analysis of each scheme and also to keep it
concise and unambiguous. Data has been analysed using line charts.

The selected five schemes for the study are:

 HDFC EQUITY FUND

 HDFC BALENCED GROWTH FUND
 HDFC GROWTH FUND
 HDFC income fund
 HDFC children’s Gift (Investment plan) fund

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 3.2 RESEARCH ANALYSIS

1. HDFC EQUITY FUND:

Performance of HDFC equity fund

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual
2009 -5 56.9 21.1 -0.2 101.7
2008 -26.2 -13.1 5.3 -23.6 -50
2007 -3.2 20.9 9.7 21.3 51.6
2006 18.6 -13 16.8 9.6 35.6

2005 0.7 8.1 25.2 13.4 61.2

Interpretation:

In 2005 the annual returns from HDFC Equity fund scheme are 61.2%In 2006, the returns
declined to 35.6% and in 2007 the return from the scheme has increased to 51.6% compared to

46
last year and in the recession year of 2008 the scheme has generated negative returns of 50% and
after the recession period, the return has increased to 101.7%.

2. HDFC BALENCED GROWTH FUND:

Performance of HDFC Balanced (G) fund

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual
2009 -1 37.6 14.1 8.5 71.7

2008 -16.5 -7.9 3.5 -19.1 -36.9

2007 -9.4 13.5 7.7 16.9 26.8

2006 14.2 -10 13.6 6.8 26.5

2005 -0.2 2.1 16 3.5 26.5

Interpretation:

In 2005 the annual returns from HDFC Equity fund scheme are 26.5%In 2006, the returns
to 26.5% and in 2007 the return from the scheme has increased to26.8 % compared to last year

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and in the recession year of 2008 the scheme has generated negative returns of 36.9% and after
the recession period, the return has increased to 71.7%.

3. HDFC GROWTH FUND:

Performance of HDFC Growth fund

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual
2009 -8.6 46.7 18.6 6.4 72.3
2008 -23.5 -13.8 5.7 -24.5 -48.8
2007 -6.9 24.8 15.4 25.2 65
2006 22.1 -14.9 19.6 12.2 43.3
2005 -0.6 4.1 22.1 6.3 38.1

Interpretation:

In 2005 the annual returns from HDFC Equity fund scheme are 38.1%In 2006, the returns
increased to 43.3 % and in 2007 the return from the scheme has increased to 65% compared to

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last year and in the recession year of 2008 the scheme has generated negative returns of 48.8%
and after the recession period, the return has increased to 72.3%.

4. HDFC income fund:

Performance of HDFC income fund

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual
2009 -3.8 3.4 -0.6 1.7 1.9
2008 0.1 -0.9 0.8 15.6 15.7
2007 -0.9 1.3 3.3 3.6 7.7
2006 -0.6 0.4 2 0.8 2.7
2005 1.1 1.3 0.8 0.4 3.7

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Interpretation:

In 2005 the annual returns from HDFC Equity fund scheme are 3.7%In 2006, the
returns declined to 2.7% and in 2007 the return from the scheme has increased to 7.7%
compared to last year and in the recession year of 2008 the scheme has generated
negative returns of 15.7% and after the recession period, the return has increased to 1.9%.

5. HDFC children’s Gift (Investment plan) fund:

Performance of HDFC children’s Gift (Investment plan) fund

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual
2009 -1.5 36.8 12.6 7.5 65.5

2008 -20 -5.3 0.7 -19.6 -40.4

2007 -3.8 13.6 8.2 13 30.4

2006 7 -11.1 10.5 3.8 10.6

2005 2.3 2.9 18.6 3.8 32.6

Interpretation:

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 In 2005 the annual returns from HDFC Equity fund scheme are 32.6%In 2006, the
returns declined to 10.5% and in 2007 the return from the scheme has increased to 30.4%
compared to last year and in the recession year of 2008 the scheme has generated
negative returns of 40.4% and after the recession period, the return has increased to
65.5%.

4. FINDINGS

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The following are the findings of the study:

In the year 2008, HDFC Equity fund has generated negative returns compared to other
previous years, Balanced growth funds, Growth funds, Income funds, children’s Gift Investment
plan funds are also generated negative returns.

The main reason for the negative returns is the financial crisis caused due to subprime
crisis which resulted in with the drying up of credit inflows from banks and external commercial
borrowings route, mutual funds witnessed redemption pressure from corporate.During Apr-Sep
08, net mobilization of funds by mutual funds declined sharply by 97.7% to Rs 24.8 bn due to
uncertain conditions prevailing in the domestic stock markets. The redemption pressures
witnessed by mutual funds led to net outflows under both the income/debt-oriented schemes and
growth/equity-oriented schemes.

In an Endeavour to ease liquidity pressures in the system and restore stability in the domestic
financial markets, the RBI announced a slew of measures. The key measures announced by the
RBI include:

• The RBI decided to conduct a special 14 day repo at 9% per annum for a notified amount
of Rs 200 bn from October 14, 2008 with a view to enable banks to meet the liquidity
requirements of mutual funds.
• Scheduled Commercial Banks (SCBs) and All India term lending and refinancing
institutions were allowed to lend against and buy back CDs held by mutual funds for a
period of 15 days.

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 • As a temporary measure, banks were allowed to avail of additional liquidity support
exclusively for the purpose of meeting the liquidity requirements of mutual funds to the
extent of up to 0.5% of their net demand and time liabilities (NDTL). Accordingly on
November 1, 2008, it was decided to extend this facility and allow banks to avail liquidity
support under the LAF through relaxation in the maintenance of SLR to the extent of up
to 1.5% of their NDTL. This relaxation in SLR was provided for the purpose of meeting
the funding requirements of NBFCs and mutual funds.
• The borrowing limit prescribed in Regulation 44(2) of SEBI (Mutual Fund) Regulations,
1996 was enhanced from 20% of net asset of the scheme to 40% of net asset of the
scheme to those mutual funds who approached SEBI. This enhanced borrowing limit was
made available for a period of six months and could be utilized for the purpose of
redemptions/ repurchase of units.
• In order to moderate the exit from close ended debt schemes and in the interest of those
investors who choose to remain till maturity and with a view to ensure that the value of
debt securities reflects the current market scenario in calculation of NAV, the discretion
given to mutual funds to mark up/ mark down the benchmark yields for debt instruments
of more than 182 days maturity was enhanced from 150 basis points to 650 basis points.

The significant reduction in CRR & SLR, net injection of Rs 9,279 bn through the repo window
during Oct-08, the repurchase of MSS bonds worth Rs 200 bn along with the earlier mentioned
liquidity augmentation measures helped to ease liquidity pressures for domestic mutual funds.
The data reveals that about 18 mutual funds borrowed from banks. Further, the increase of
borrowing limits enabled the mutual funds to meet redemption pressures without engaging in a
large scale sale of assets which could have caused systemic instability. As on November 10,
2008, 15 mutual funds had been extended the enhanced borrowing limit as per their requests
made to SEBI.

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5. CONCLUSION:

The tremendous success the fund industry has enjoyed is due to the fact that
it has done more than any other financial services industry to offer investors solid
products tailored to meet real financial needs, and marketed those products
responsibly. But can’t be ignored that rapid changes and market pressures are
challenging. It cannot be afforded to remain “pigeonholed” by out dated thinking
or antiquated business practices. If the long term health of the industry and investor
protection is maintained, the record of success can be maintained in the future.

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 BIBLIOGRAPHY

S.n Author Title of Year of Name of

o Book Publicatio Publisher
n

1. C.R.Kotha Research 2006 New Age

ri Methodolog Internation
y al Ltd.

2. S.Kevin Security 2006 Prentice-

Analysis Hall of
and India
Portfolio Private Ltd.
Managemen
t

3. Gordan Financial 2004 Himalaya

Services & publishers
Markets

Other Sources:

 Company Fact sheets and Brochures.

55
ARTICLES
 Dr. Zakri y. Bello1 central Connecticut state university, u.s.a.
E-mail: [email protected]
 www.scribd.com
 http://links.jstor.org/sici?=00935301%28199009%2917%3A2%3C141%AEOBAOC
%3E2.0.CO%3B2-B
 http://jam.sagepub.com/cgi/content/abstract/31/3/229

Websites referred by the researcher for data collection are:

 www.hdfsec.com

 www.amfiindia.com

 www.nseindia.com

 www.mutualfundindia.com

 www.valueresearchonline.com

 www.mutualfundindustry.com

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