Mutual Funds Project

MUTUAL FUNDS IN INDIA

EXECUTIVE SUMMARY

Investment may be defined as an activity that commits funds in any

financial/physical form in the present with an expectation of receiving

additional return in the future. The expectation brings with it a probability that

the quantum of return may vary from a minimum to a maximum. The

possibility of variation in the actual return is known as investment risk. Thus

every investment involves a return and risk. The investor can choose the

investment funds he wants to invest his money, providing the investor an

opportunity to have a direct stake in the performance of the financial markets.

He can also benefit from attractive tax advantages.

A mutual fund is a professionally managed firm of collective investments that

collects money from many investors and puts it in stocks, bonds, short-term

money market instruments, and/or other securities. The fund manager, also

known as portfolio manager, trades the fund's underlying securities, realizing

capital gains or losses and passing any proceeds to the individual investors.

Today, the worldwide value of all mutual funds totals more than $26 trillion in

assets.

The principal paid are invested in fund/funds of the investor’s choice

(depending on the allocation rate) & units are allocated depending on the

price of units for the fund/funds.

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STATEMENT OF PROBLEM:

The premiums that are collected are invested in different funds like equity

fund, mid-cap fund, debt fund, balanced fund and cash fund. The funds must

be allocated such that their performance is stable and improves so that the

investor gets high returns. Due to the increasing competition it becomes

necessary that the companies fund is the best performing fund with highest

return. Among the different mutual funds this study is to find out the best fund

which will yield high returns to the investor and minimize there risk.

OBJECTIVES OF THE STUDY:

To study the different investment guidelines prescribed by IRDA.

To analyze the present performance of different mutual funds

To analyze the competition among different sectors for investment.

Based on the findings suitable suggestions are given.

PLACE OF THE STUDY:

The study was conducted at Deutsche asset management, Raheza tower,

M.G. Road, Bangalore. Also some of the software companies were covered

including Accenture, Oracle, HP, etc. Even bank ATM’s of Axis Bank in

Wilson garden and ICICI Bank in kormangala were covered.

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DEFINITIONS:-

EQUTY DIVERSIFIED:-

• Equity Fund – This fund provides the scope of high appreciation over a long

term. The fund will primarily invest in equities & is expected to match returns

given by NSE NIFTY. This fund will invest at least 90% in equities and

maximum 10% in cash.

• Equity Gain Fund - The investment objective of this Fund is to provide

capital appreciation through investment in select equity stocks that have the

potential

for high capital appreciation. This fund will invest at least 85% in equities and

maximum 15% in debt & cash instruments.

• Equity MidCap Fund - The Investment objective of this Fund is to achieve

capital appreciation by investing in a diversified basket of mid cap stocks and

large cap stocks. The fund shall primarily invest in mid cap stocks (at least

50% of the investment shall be in mid cap stocks).

Investment portfolio shall also include large cap stocks and cash with cash not

exceeding 20% of the portfolio value.

BALANCE:-

• Balanced Fund – The balanced fund is primarily for those who prefer a mix

of steady returns & growth. The balanced fund will invest 30% to 50% in the

equity fund and 50%to 70% in the debt fund.

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• Cash Fund – The cash fund will invest conservatively in money market &

short-term investments to ensure that return on investments shall never be

negative. 100% of this fund will be invested in money market instruments. The

price of the units in this fund is guaranteed never to go down.(i.e :- gold, govt.

securities, etc)

• Debt Fund - This fund provides the scope for steady returns at low risk

through investment in high quality fixed income securities. This fund will be

invested fully in debt instruments

EQUITY LINKED SAVING SCHEME

ELSS funds have a lock-in period of three years. This could be

restricting, but look at the other side of the picture -- the lock-in

period prevents unnecessary withdrawals and helps your money grow

over a period of time.

If you are wondering why a three-year lock-in period is necessary, it is

because you need to take a long-term view when you invest in equity. The

real potential of equities starts to show only after a few years. This allows

you to ignore the short-term slumps and stay invested for the long haul.

The tax benefit:

Investments in ELSSs fall under Section 80C.

The limit under this section is Rs 100,000.

This is irrespective of how much you earn and under which tax bracket

you fall.

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Also, there are no sub-limits under this overall Rs 100,000 amount.

The dividends you earn in an ELSS are tax free.

METHODOLOGY / RESEARCH DESIGN

Type of Study:

The study at Mahindra finance is a combination of analytical and practical

study. It is based on data collected from records of the company and is

administered to various departmental heads connected with Fund

Management.

Types of Data:

Primary Data: This data was collected from discussions and interactions with

respective departmental heads and clients.

Secondary Data: This data was collected through various newsletters,

publications through researchers in the field of fund management, journals

magazine reports and consolidated records from Mahindra finance.

Sampling plan:

The sampling universe consisted of various mutual funds and their returns.

CONTENT TABLE

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Chapter 1 – Introduction: It contains the subject background and

is a review of fund management.

Chapter 2 – Research Design: Under this a brief introduction

about the subject is given. The problem is formulated and a

suitable procedure is adopted to analyze the problem and arrive at

a feasible solution.

Chapter 3 – My Profile In Mahindra Finance : At Mahindra

Finance we have a wide range of products and services, with

something to suit everyone’s needs. Right from finance for two

wheelers, tractors, farm equipment, cars and utility vehicles to

commercial vehicles and construction equipment, we also have a

group of experts providing investment advice,(i.e.—MUTUAL

FUND, INSURANCE etc.)Surveying available market products

and choosing the most suitable to our customers’ needs.

Chapter 4 – Analysis and interpretation of data: The data

collected is tabulated and compared, analyzed in order to draw

inferences.

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Chapter 5 – Conclusion and recommendations: Based on the

above findings, suitable suggestions and recommendations are

proposed

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CHAPTER 1

INTRODUCTION

An investor earns or expects to earn additional monetary value from the mode

of investment that could be in the form of financial assets.

FUND Instead of directly buying equity shares or fixed income instruments an

investor can participate in various schemes floated by mutual fund. A Mutual

Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital

market instruments such as shares, debentures and other securities. The

income earned through these investments and the capital appreciation

realized are shared by its unit holders in proportion to the number of units

owned by them. Thus a Mutual Fund is the most suitable investment for the

common man as it offers an opportunity to invest in a diversified,

professionally managed basket of securities at a relatively low cost. The flow

chart below describes broadly the working of a mutual fund:

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The advantages of investing in a Mutual Fund are:

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated

There are different types of mutual funds are available in the

investment market. An investor who wants to invest his money in

mutual funds must have the knowledge about different kinds of

mutual funds.

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GOALS OF THE FUND :

Many funds are designed to invest in companies that meet specific

investor goals, like growth, value, dividend or income to name a

few.

Only companies that meet certain criteria will be included in the

fund. For example, a growth fund looks for companies with

significant, untapped growth potential, whereas a value fund will

look for companies that are undervalued by the market as a way to

increase investor returns. Both of these types of funds are

designed for long-term capital appreciation.

If you need the funds to generate income either because you have

retired, are saving to buy a house or are unable to work, you need

to look at funds that will not only grow over time, but will also

provide you with an income. For example, dividend funds are

designed to pay you dividends on a quarterly or annual basis.

DIFFERENT TYPES OF FUNDS:

GROWTH FUNDS:

Are the type of funds where the collected money is invested in

different stocks in order to capital appreciation over a long term.

Value of these mutual funds increase with the upward in stock

market and decrease with a downfall in the stock market.

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The collected money is invested in common stocks of the

companies that have a solid growth rates, as well as a history of

consistent dividend payout.

BOND FUNDS / FIXED INCOME FUND:

Bond funds typically invest in bonds issued by governments and

large companies.

Bond fund returns are based on a combination of interest

payments and price changes of the bonds in the fund.

The market value of bonds is affected by prevailing interest rates.

When interest rates fall, existing bonds will generally rise in value;

when interest rates rise, bonds will generally fall in value. Overall,

bond funds are affected in the same way.

Fund managers attempt to control risk by managing the credit

quality and the average term of the bonds in the fund.

Fixed income funds generally have the potential for higher returns

than money market or guaranteed funds, but there tends to be a

greater risk of a loss.

The risk on a bond fund is that the bond issuer is not able to repay

the borrowed amount.

Under this category funds are invested in the opportunities that

can provide a regular profit on the invested money.

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BALANCED FUNDS / DIVERSIFIED FUND:

Balanced funds invest in a mix of stocks, bonds, and cash

investments. The mix will change as market conditions change, but

it usually stays within pre-determined ranges. (For example, stocks

40-60%, bonds 30-50%, cash 0-30%).

The benefit of a balanced fund is that it provides automatic

diversification by investing in a variety of asset classes and

thereby reduces the risk of one asset class performing poorly.

Balanced funds tend to be more risky than bond funds and less

risky than equity funds. The main objective is to earn a high rate of

return on the invested money.

MONEY MARKET FUND / GUARANTEED FUND:

Money market funds invest primarily in short-term (less than one

year) government Treasury Bills (also called T-Bills) and corporate

notes which pay a fixed rate of interest.

The rate of return of money market funds tends to be lower than

that of funds that are managed for long-term gains, but they are a

very low-risk investment.

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Money market funds are ideal for parking your cash while you

decide where to invest for the long haul, or for money you will need

in the near future.

ASSET ALLOCATION FUNDS :

Asset allocation funds are similar to balanced funds in that they

invest in all of the asset classes.

Asset allocation funds differ from balanced funds because the fund

manager isn't restricted to the percentage of the money they can

put in a specific type of investment (stocks, bonds, and so on).

A tactical asset allocation fund is one where the manager

frequently makes decisions about the best asset allocation,

sometimes every few months.

The manager of a strategic asset allocation fund will generally

revise the fund's asset allocation once a year.

Asset allocation funds provide a "one stop shopping" approach to

asset allocation.

INDEX FUND :

Index funds include stock or bond funds that closely match the

performance of a market index, such as the BSE.

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Over time, index fund performance will slightly lag that of the

actual index as result of cash flows and transaction costs.

Since index fund investments are not actively researched, the

management fees on index funds are generally very low.

The risks associated with index fund investing are similar to those

of bond and equity funds; however, index funds can have

significant exposure to individual stocks when the weighting in the

index is in excess of that allowed for actively managed funds. This

can reduce the diversification in the fund.

The risk level in this category is at the minimum level.

EQUITY FUNDS :

Equity funds invest primarily in stocks.

Because stocks have traditionally risen in value more than other

types of investments, they offer the greatest potential for long-term

growth.

Investing in stocks is also riskier than other investments as stock

prices can fluctuate more than other types of investments.

The market price of a stock will vary with the company's financial

performance, general economic conditions in the country in which

it operates, as well as investor perceptions.

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ALSO, PERHAPS MOST COMMONLY FUNDS ARE DIVIDED BY THEIR

GEOGRAPHIC MARKETS, COMPANY SIZE AND INDUSTRY.

GEOGRAPHY:

Specific countries: Funds can invest primarily in investments in

one country. For example, Canadian equity funds invest primarily

in Canadian companies.

International: These funds can generally invest in any country

around the world except for Canada. Most international funds

invest in the U.S., Europe, Australia and the Far East, sometimes

referred to as the EAFE countries.

Global funds: These funds invest in any country around the globe,

including Canada.

Foreign equity funds provide an opportunity to diversify across

many markets and reduce the risks associated with the health of

any one economy and its stock market.

These funds do have risks associated with political and market

conditions in other countries. In addition, foreign funds are

exposed to currency risk. If the Value of the Canadian dollar rises,

or the currencies of the countries the fund invests in fall, your

return calculated in Canadian dollars will be lower.

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Different accounting practices and securities regulations around

the world may affect the fund managers' ability to value and trade

in some securities. Portfolio managers seek to reduce these risks

by investing in different countries and industries.

COMPANY SIZE :

Many funds restrict the types of stocks they buy for the fund based

on the size of the company. The size of the company is measured

by its market capitalization (market cap - measures the company's

worth by multiplying its stock price by the number of shares

outstanding).

Generally speaking, small cap funds are more risky than large cap

funds as minor changes in a small cap company's stock price can

have a major impact on its market cap. However, if you can take

the ups and downs, there can be greater rewards for investors in

small cap funds.

INDUSTRY :

Some funds concentrate all their investments in a specific sector or

industry of the economy. For example, biotechnology,

communications, natural resources, etc. Industry specific funds

provide an opportunity to capitalize on the strength of a particular

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sector of the economy. Investing a significant portion of your

portfolio in one industry can be risky, especially if that industry falls

on hard times. However, the upside can be equally as good if the

industry performs well. (We have seen this in the technology

sector.) However, if you have a diversified portfolio you may be

able to reap some incremental returns by investing in an industry-

specific fund.

INVESTMENT ALTERNATIVES :

EQUITY SHARES: Equity shares represent ownership capital. As an equity

shareholder, you have an ownership stake in the company. This essentially

means that you have a residual interest in income and wealth. Perhaps the

most

romantic among various investment avenues, equity shares are classified

into the following broad categories by stock market analysts:

Blue chip shares

Growth shares

Income shares

Cyclical shares

Speculative shares

BONDS: Bonds or debentures represent long-term debt instruments. The

issuer of a bond promises to pay a stipulated stream of cash flows. Bonds

may be classified into the following categories:

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Government securities

Government of India relief bonds

Government agency securities

PSU bonds

Debentures of private sector companies

Preference shares

MONEY MARKET INSTRUMENTS: Debt instruments which have a maturity

of less than one year at the time of issue are called money market

instruments. The important money market instruments are:

Treasury bills

Commercial paper

Certificate of deposit

MUTUAL FUNDS: Instead of directly buying equity shares and / or fixed

income instruments, you can participate in various schemes floated by mutual

funds which, in turn, invest in equity shares and fixed income securities. There

are three broad types of mutual fund schemes:

Equity schemes

Debt schemes

Balanced schemes

LIFE INSURANCE: In a broad sense, life insurance may be viewed as an

investment. Insurance premiums represent the sacrifice and the assured sum

the benefit. The important types of insurance policies in India are:

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Endowment assurance policy

Money back policy

Whole life policy

Term assurance policy

INVESTMENT ATTRIBUTES

For evaluating an investment avenue, the following attributes are relevant.

Rate of return

Risk

Marketability/Liquidity

Safety

Tax Shelter

Convenience

RATE OF RETURN:

Investments are made with the primary objective of deriving a return. The

expectation of a return may be from income (yield) as well as through capital

appreciation. The dividend or interest from the investment is the yield.

Different types of investments promise different rates of return. The

expectation of return from an investment depends upon the nature of

investment, maturity period, market demand, and so on.

RISK:

Risk is inherent in any investment. Risk may relate to loss of capital, delay in

repayment of capital, nonpayment of interest, or variability of returns. While

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some investments such as government securities and bank deposits are

almost without risk, others are more risky. The risk of an investment is

determined by the investment’s maturity period, repayment capacity, nature of

return commitment, and so on.

SAFETY:

The safety of investment is identified with the certainty of return of capital

without loss of money or time. Safety is another feature that an investor

desires from investments. Every investor expects to get back the initial capital

on maturity without loss and without delay. Investment safety is gauged

through the reputation established by the borrower of funds. A highly reputed

and successful corporate entity assures the investors of their initial capital.

MARKETABILITY/LIQUIDITY:

An investment that is easily saleable or marketable without loss of money and

without loss of time is said to possess the characteristic of liquidity. Some

investments such as deposits in unknown corporate entities, bank deposits,

post office deposits, national savings certificates, and so on are not

marketable. Investment instruments such as preference shares and

debentures listed on a stock exchange are marketable. The extent of trading

however depends on the demand and supply of such instruments in the

market for the investors. Equity shares of companies listed on recognized

stock exchanges are easily marketable. A well-developed secondary market

for securities increases the liquidity of the instruments traded therein.

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TAX SHELTER:

Some investments provide tax benefits; others do not. They are of three

kinds.

Initial tax benefit referring to tax relief enjoyed at the time of making the

investment. For Eg:, when you make a deposit in a Public Provident Fund

account, we get a tax rebate under section 88 of the Income Tax Act..

Continuing tax benefit represents the tax shield associated with the periodic

returns from the investment. For Eg:, dividend income and income from

certain other sources is tax-exempt, up to a certain limit, in the hands of the

recipient.

Terminal tax benefit Refers to relief from taxation when an investment is

realized or liquidated. For E.g.: a withdrawal from a Public Provident Fund

account is not subject to tax.

CONVENIENCE:

The degree of convenience associated with investments varies widely. At one

end of the spectrum is the deposit in a savings bank account that can be

made

readily and that does not require any maintenance effort. At the other end of

the spectrum is the purchase of a property that may involve a lot of procedural

and legal hassles at the time of acquisition alIot a great deal of maintenance

effort subsequently.

An investor tends to prefer maximization of expected return, minimization of

risk, safety of funds and liquidity of investments

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FOR THE PURPOSE OF FUND MANAGEMENT TYPICALLY THERE IS:

A fund manager or investment manager who manages the investment

decisions.

A trustee or board who safeguards the assets and ensures compliance with

the laws and rules.

The shareholders or unitholders who own (or have rights to) the assets.

A "Marketing" or "Distribution" company to promote and sell the fund.

NET ASSET VALUE:

The Net Asset Value or NAV is the value of a scheme's assets less the value

of 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.The method for

calculating this varies between scheme types and jurisdiction and can be

subject to complex regulation.

OPEN-ENDED FUND:

An open-ended fund is equitably divided into shares (or units) which vary in

price in direct proportion to the variation in value of the funds net asset value.

Each time money is invested new shares or units are created to match the

prevailing share price; each time shares are redeemed the assets sold match

the prevailing share price. In this way there is no supply or demand created

for shares and they remain a direct reflection of the underlying assets.

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http://en.wikipedia.org/wiki/Jurisdiction


CLOSED-ENDED FUND:

A closed-ended fund issues a limited number of shares (or units) in an initial

public offering (or IPO). The shares are then traded on an exchange or

directly through the fund manager to create a secondary market subject to

market forces. If demand for the shares are high they may trade at a premium

to net asset value. If demand is low they may trade at a discount to net asset

value. Further share (or unit) offerings may be made by the scheme if demand

is high although this may affect the share price.The added element of market

forces tends to amplify the performance of the fund increasing investment

risk through increased volatility.

ADVANTAGES OF INVESTING THROUGH FUNDS:

DIVERSITY AND RISK:

One of the main advantages of investment through different fund is the

reduction in investment risk (capital risk) by diversification. An investment

in a single equity may do well, but it may collapse for investment or other

reasons. If your money is invested in such a failed holding you could lose your

capital. By investing in a range of equities (or other securities) the capital risk

is reduced.

The more diversified your capital, the lower the capital risk this investment

principle is often referred to as spreading risk. Collective investments by their

nature tend to invest in a range of individual securities. However, if the

securities are all in a similar type of asset class or market sector then there

is a systematic risk that all the shares could be affected by adverse market

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http://en.wikipedia.org/wiki/Market_sector

http://en.wikipedia.org/wiki/Asset_class

http://en.wikipedia.org/wiki/Diversification

http://en.wikipedia.org/wiki/Investment_risk

http://en.wikipedia.org/wiki/Volatility

http://en.wikipedia.org/wiki/Amplify

http://en.wikipedia.org/wiki/Supply_and_demand

http://en.wikipedia.org/wiki/Supply_and_demand

http://en.wikipedia.org/wiki/IPO

http://en.wikipedia.org/wiki/Initial_public_offering

http://en.wikipedia.org/wiki/Initial_public_offering


changes. To avoid these systematic risk investment managers may diversify

into different non-correlated asset classes. If any one of the three is failing,

because each is Non-correlated (i.e. behaves independently) then by logical

extension at least one of the other two is doing well.

REDUCED DEALING COSTS:

If one investor were to buy a large number of direct investments, the amount

they would be able to invest in each holding is likely to be small. Dealing costs

are normally based on the number and size of each transaction, therefore the

overall dealing costs would take a large chunk out of the capital (affecting

future profits). Pooling your money with that of other investors means you

have the advantages of buying in bulk making dealing costs an insignificant

part of the investment.

DISADVANTAGES OF INVESTING THROUGH FUNDS

COSTS:

The fund manager managing the investment decisions on behalf of the

investors requires remuneration. This is often taken directly from the fund

assets as a fixed percentage each year or sometimes a variable (performance

based) fee. If the investor managed their own investments, this cost would be

avoided.

Often the cost of advice given by a stock broker or financial adviser is built

into the scheme. Often referred to as commission or load (in the U.S.) this

charge may be applied at the start of the plan or as an ongoing percentage of

the fund value each year. While this cost will diminish your returns it could be

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http://en.wikipedia.org/wiki/United_States

http://en.wikipedia.org/wiki/Load

http://en.wikipedia.org/wiki/Commission

http://en.wikipedia.org/wiki/Financial_adviser

http://en.wikipedia.org/wiki/Stock_broker

http://en.wikipedia.org/wiki/Financial_advice

http://en.wikipedia.org/wiki/Asset_class


argued that it reflects a separate payment for an advice service rather than a

detrimental feature of collective investment schemes. Indeed it is often

possible to purchase units or shares direct from the providers without bearing

this cost.

LACK OF CHOICE:

Although the investor can choose the type of fund to invest in, they have no

control over the choice of individual holdings that make up the fund.

LOSS OF OWNER'S RIGHTS:

If the investor holds shares directly, they may be entitled to shareholders'

perks (for example, discounts on the company's products) and the right to

attend the company's annual general meeting and vote on important matters.

Investors in a collective investment scheme often have none of the rights

connected with individual investments within the fund.

INVESTMENT AIMS AND BENCHMARKING:

Each fund has a defined investment goal to describe the remit of the

investment manager and to help investors decide if the fund is right for them.

The investment aims will typically fall into the broad categories of Income

(value)

investment or Growth investment. Income or value based investment tends to

select stocks with strong income streams, often more established businesses.

Growth investment selects stocks that tend to reinvest their income to

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generate growth. Each strategy has its critics and proponents; some prefer a

blend approach using aspects of each.

TYPES OF RISK:

Depending on the nature of the investment, the type of 'investment' risk will

vary. A common concern with any investment is that you may lose the money

you invest - your capital. This risk is therefore often referred to as capital risk.

If the assets you invest in are held in another currency there is a risk that

currency movements alone may affect the value. This is referred to as

currency risk.Many forms of investment may not be readily salable on the

open market (e.g. commercial property) or the market has a small capacity

and can therefore

may take time to sell. Assets that are easily sold are termed liquid therefore

this type of risk is termed liquidity.

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Why Mutual fund?

Investment

option

Rate of

interest (%)

Inflation (%) G D P (%) DIFFERENCE

SAVING A/C 3.75 6 8.5 -2.25(NEGATIVE

RETURN)

FIXED

DEPOSIT

8-9.5 6 8.5 THE

ACCOMMODATE

BY PRESENT

VALUE FACTOR

GOVT.

BOND

7-8 6 8.5 -0.5 (NEGATIVE

RETURN)

REAL

ESTATE

30+ 6 8.5 HIGH AMOUNT

OF MONEY

REQURIED FOR

PURCHASE OF

REAL ESTATE

KISSAN

VIKAS

PATRA

7-8 6 8.5 -1(NEGATIVE

RETURN)

POST

OFFICE

6.5-8.5 6 8..5 AVERAGE

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DEPOSIT

MUTUAL 20-30 6 8.5

CHAPTER 2

RESEARCH DESIGN

METHODOLOGY / RESEARCH DESIGN

Type of Study:

The study at Mahindra finance is a combination of analytical and practical

study. It is based on data collected from records of the company and is

administered to various departmental heads connected with Fund

Management.

Types of Data:

Primary Data: This data was collected from discussions and interactions with

respective departmental heads and clients.

Secondary Data: This data was collected through various newsletters,

publications through researchers in the field of fund management, journals

magazine reports and consolidated records from Mahindra finance.

Sampling Plan:

The sampling universe consisted of various mutual funds and their returns .

SWOT of the organization:-

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SWOT analysis of organizations to provide recommendations on their

performance and growth potential. It is a powerful tool for analyzing both

complex qualitative and quantitative facets of an investment decision.

The results of this analysis have been fed into marketing and organizational

strategic plans and have been highly successful in strategy formulation.

Through our SWOT analysis, our clients have been able to take advantage of

niche markets and focus on product innovation which allows them to capture

greater margins.

Our SWOT analysis identifies strengths and weaknesses and relates them

with forward looking opportunities and threats. This helps to identify company

and industry specific critical drivers and catalysts.

SWOT Analysis identifies your company’s:

Strengths - to build on

Weaknesses - to cover

Opportunities - to capture

Threats - to defend against

SWOT Analysis

Strengths:

* Rich experience of the management.

* Good brand equity

* Giving the very good return from inception

* Stabilized and loyal clients.

* Well combination of new energetic and experienced employees.

* Wide variety of investment product to match with every level of customer

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* Giving the mutual fund exposure

Weakness:

* Insufficient office equipments.

* Not all employees have his/her cabin.

* Work place (back office) is quite congested.

* Not very popular in rural area

Opportunities:

* Stability through increased brand awareness, market penetration and

Service offerings

* Across all categories of financial services.

* Increase in customer’s wallet share.

* Leveraging the latest technology for providing quality and client centric

Services.

Threats;

* Increasing interest rate scenario.

* Execution risk.

* Competition from local and multinational players.

* Rising inflation could reduce savings and investments

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CHAPTER 3

MY JOB PROILE IN DEUTSCHE ASSET

MANAGEMENT COMPANY

On Job Training:

Empanelment:

For empanelment we have to call up the IFA in the Bangalore from the data

base given by the company, have to fix the appointment then have to go for

empanelling them.

Interaction & Calling:

Had meetings with clients to check for their requirements which is based on

satisfying their queries about the companies profile, schemes and it’s

performance in the industry. The main work of the relationship manager is to

build a strong relation between the company and the IFA, keep motivating

them for giving the business to the company, assisting them to remain

updated about the market activities, as they don’t have any sources of getting

the updates of the market.

PERFORMANCE APPARAISAL:

It is the activity used to determine the extent to which an employee performs

work effectively. Other terms of performance evaluation include performance

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review, performance rating, performance appraisal, and employee appraisal

and employee evaluation.

PURPOSE OF PERFORMANCE APPRAISAL:

The purpose of performance appraisal is:

1. DEVELOPMENT:

It is used to find out which employee need training, helps in

subordinate-supervisor counseling relation and encourages subordinate

behavior to help employee.

2. MOTIVATION:

It encourages initiative, develops a sense of responsibility and

stimulates efforts to perform better.

3. COMMUNICATION:

It serves as a basis for ongoing discussion between superior and

subordinate about job related matters and thus they get to know each

other better.

4. LEGAL COMPLIANCE:

It serves as a legally defensible reason for promotion, transfer, reward

and discharges.

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WHO EVALUTE THE EMPLOYEE?

Employees can be evaluated by:

1. Committee of Several supervisors.

2. By employee peers.

3. By employees subordinate.

4. By someone outside the work environment.

5. Self evaluation.

6. By using number of approaches.

The performance appraisal used by the Mahindra finance is usually

done by a subordinate that is employee subordinate. The employee is

rated different areas. The areas are

1. Client interaction

2. Candidate interaction

3. Documentation

4. Job posting

5. Average CV received

6. Head hunting

7. Speed of Response

8. Client response

9. Performance against targets

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10.Attitude

11.Leadership

12.Attendance/Punctuality

13. Integrity

14.Loyalty

15.Additional areas of responsibility you would like to handle:

16.Overall rating

The employee is rated of the areas and finally a cumulative

sum is taken out. The employee would scored high is awarded best employee

of the month (per semester) and the employee scoring low is given training for

the improvement of the work.

COMPENSATION AND BENEFITS

COMPENSATION:

It is the human resource management function that deals with every

type of reward individuals receive in exchange for performing organizational

tasks. compensation consists of pay an employee receives in form of wages,

salaries, bonuses or commission.

Objective of compensation:

The objective of the compensation function is to crate a system of

rewards that is equitable to the employee and employer alike. The desired

outcome is an employee who is attracted to the work and motivated to do a

good job for the employer. Compensation should be

1. Adequate

2. Equitable

3. Balanced

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4. Cost-effective

5. Secure

6. Incentive – providing

7. Acceptable to the employee

CHAPTER 4

ANALYSIS AND INTERPRETATION OF DATA

SEGMENTATION, TARGETING, POSITIONING;

company discovers different needs and groups in the market place, targets

those needs and group that it can satisfy in a superior way, and than positions

its offering in a way so that target market recognizes the company’s distinctive

offering and image. Positioning is the act of designing the company’s offering

and image to occupy a distinctive place in the mind of target market. The end

result of positioning is the successful creation of customer - focused value

proposition, a cogent reason why the target market will buy the product.

REASON BEHIND S.T.P---

A total Market can be defined as people or organization with needs, want,

demand however within the total market there is always some diversity among

buyers, not all consumers who drink hot drink wants tea. Similarly not all

consumers who wear pants wants to wear jeans. So within the same general

market there are group of customer with different needs and buying

preference. Hence a market should never commit the mistake to taking up the

whole market uniformly at a time. The best way is to segment or break the

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market into groups of buyers with similar needs and preference and than

select the more attractive groups/segments as part of their marketing strategy.

POSITIONING-----

Here in the case of Mahindra finance they did the very good segmentation,

targeting, positioning in the market. They have positioned itself very well in the

consumers mind by the way of attractive advertisement and excellent past

record. Now Mahindra finance a brand in the market and its on the consumers

mind as a CASH COW

TARGETING-----

Here in the case of Mahindra finance,Its targeting strategy is simply superb.

Mahindra finance has basically targeting the all type of customer in every

level. They have the vide variety of product range that suit for every customer.

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TABLE OF S.T.P.

SEGMENT TARGET POSITIONING

BACHELOR YOUTH CREDIT CARD, TWO

WHEELER- LOAN

NEWLY MARRIED YOUTH CREDIT CARD,

MUTUAL FUND, ULIP-

PLAN

FULLNEST ONE YOUTH ULIP- PLAN, HOME-

LOAN, INSURANCE,

CAR LOAN

FULLNEST TWO MIDDLE AGE EDUCATION LOAN,

SAFE INVESTMENT,

HEALTH INSURANCE,

RETIREMENT PLAN

EMPTYNESS ONE MIDDLE AGE EASY GROWTH FUND

EMPTYNESS TWO OLD AGE FIXED DEPOSIT

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Comparision of ULIPS vs MFS (India ) :

Below is a brief comparision of ULIP (Unit Linked Insurance Product) vs MF

(Mutual Funds) specific to the Indian market.

Primary Objective:

MFs: Investments

ULIPs: Protection + Investments

Investment Duration:

MFs: Works out for Medium term, Long Term Investors. Risky for Short Term

investors.

ULIPs: Works out for Long Term Investors only.

Flexibility:

MFs: Very flexible. Plenty of scope to correct your mistakes if you made any

wrong investment decisions. You can easily shuffle your portfolio in MFs.

ULIPs: Flexibility is limited to moving across the different funds offered with

your policy. Correcting mistakes can turn out to be expensive. Moving funds

from one ULIP to an other ULIP of a different fund house can be expensive.

Liquidity:

MFs: Very liquid. You can sell your MF units any time(except ELSS). Some

MF's like those from Reliance have introduced redemptions at ATMs.

ULIPs: Limited liquidity. Need to stay invested for the minimum number of

years specified before you can redeem.

Investment Objective:

MFs: MF's can be used as your vechile for investments to achive different

objectives.(Eg: Buying a car three years from now. Downpayment for a home

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http://investment-solutions.blogspot.com/2007/10/comparision-of-ulips-vs-mfs-india.html


five years from now. Childrens education 10 years from now. Childrens

marriage 15 years from now. Retirement planning 25 years from now. Medical

expenses after retirement 25 years from now)

ULIPs: ULIPs can be used for achieving only long term objectives (Childrens

education, Childrens marriage, Retirement planning)

Tax Implications:

MFs: All investments in MF's don't qualify for section 80C. Only investments in

ELSS qualify for 80C.

ULIPs: Provide Tax Benefits under section 80C.

MFs: Returns on equity MF's are exempt from long term capital gains tax.

(Unless tax laws change in the future).

ULIPs: We are moving from EEE to EET. No clarity if ULIPs will be taxed

under EET.

MFs: Tax liabilities when moving across from debt to equity funds.(Returns

from debt MF's are taxed.)

ULIPs: Very flexible in moving between equity and debt funds(not tax

implications until maturity of the policy).

Strings Attached (fine print):

MFs: None so ever. At most you pay a small exit load if any.

ULIPs: Some strings attached for your policy to be in effect. Minimum number

of premiums needs to be paid. Minimum fund balance needs to be always

maintained. (I personally don’t like policies which say pay three years

premium and get insurance cover for the next 25 years since there are a lot of

ifs and butts involved. A lot of assumptions made and nothing is in your hand,

it could turn out your fund balance might be exhausted after just 12 years of

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insurance cover).

ADVANTAGES ULIPS:

Can easily rebalance your risk between equity and debt without any tax

implications.

Best suited for medium risk taking individuals who wish to invest in

equity and debt funds(atleast 40% or higher exposure to debt). No

additional tax burden for those investing mainly in debt unlike in MFs.

ADVANTAGE MFS:

Better returns than ULIPs.

Lower charges than ULIPs.

Very flexible and enables you to switch your investments from non

performing MF's to better performing MFs

Very Liquid can be redeemed at anytime.

Best suited for medium to high risk taking individuals who wish to

invest a significant portion in equity funds(atleast 65% exposure in

equities).

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CHAPTER 5

CONCLUSION AND RECOMMENDATION

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”MUTUAL FUND INVESTMENT IS SUBJECT TO

MARKET RISKS. PLEASE READ THE OFFER

DOCUMENT CAREFULLY BEFORE INVESTING”

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