CHAPTER 4-LITERATURE REVIEW4.1Private sector mutual fund and Public sector mutual fund4.2Research Gap4.3 CRISIL Ranking and Regulatory Trend4.
4 Future of Indian Mutual funds 4.1 MUTUAL FUNDSOF PUBLIC SECTOR AND PRIVATE SECTORPUBLIC SECTOR MUTUALFUNDS 1. State bank ofIndia mutual fund (SBI) 2. Unit trust ofIndia (UTI) 3. Bank of Barodamutual funds 4.
LIC mutualfunds PRIVATE SECTOR MUTUAL FUNDS 1. Kotak Mahindramutual funds 2. Birla sun lifemutual funds 3. HDFC mutualfund 4. PrudentialICICI mutual fund 5. Tata mutualfunds 6. Reliance mutualfunds Growth of AUM by private and public sector mutual fundhousesGraph No. 3 shows annual growth in asset under management(since 207 to 2017 in thousand USD)Source: AMFI Table Showing Over and Under Performing of the SchemesUsing Sharpe’s Ratio (2016-17) Schemes No of Schemes Performance (BSE) Over Performance Under Performance (BSE) Over Performance (NSE) Under Performance (NSE) Public Sector 24 95.
83 01 4.17 23 95.83 01 4.17 Private Sector 56 56 41 67. 1521.42 21.42 3.
52 Table: 1 Mobilization of Funds in Public-Sector andPrivate Sector Mutual Fund year PSU(Cr) Private (Cr) 2003–04 55540.59 534649.28 2004–05. 103245.07 736463.30 2005–06 183446.05 914703.26 2006–07 338619.
53 1599873.44 2007–08 683623.69 3780752.
63 2008–09 1133602.96 4292750.31 2009–10 2320539.26 7698483.37 Source: Compiled from the Annual-Reports Table gives detail of fund mobilization by public sectorsand private sector mutual fund and this quite evidence empirically thatgradually fund is less or more equaland completive this is good sign for Indian mutual fund industry.
Nowwe are living in digital era so everything is part of digital era .So theIndian mutual fund. Recently NSC come up with proposal of EIPO that means nowyou can invest in any IPO without any physical intervention and also the samefacility is given to mutual funds .Now every mutual fund house providing theaccess to buy and sell the mutual fund and more about you can have power toredeem your investment in mutual fund and on maturity you can take your paymenton line after deducting exit load..EmergingTechnology and Investor friendly regulations adopted by private sector mutualfund houses Current initiative Impact Electronic • Evaluation of e-commerce platforms to sell mutual funds is currently underway, and a positive outcome will help unlock the buying power of the 400 million Internet users and 1 billon mobile phone users in India; Financial inclusion • Financial inclusion has received a fillip with the JAM number trinity (Jan Dhan, Aadhar& Mobile), and opening of 192 mn Jan Dhan accounts in 15 months with a deposit base of Rs 27,000 crore. This builds the case for evaluating adoption of a similar model and cross-selling opportunities; Clarity on e-KY More clarity on E-KYC and its subsequent adoption will aid the penetration amongst the hitherto un-served segment Payment mode The recently approved payment banks, with permission to sell third-party mutual fund products are expected to improve the reach E-mutual fund/E- IPO Virtually a network is created to sell and by financial product it is realty for stocks soon It will be realty for mutual than mutual fund 4.
2 RESEARCH GAP WhenI try to do research so I plan my research work to study available researchwork on the subject and the literature related to my study it is found that sofar some researcher deal with statistical method or quantitative technique toanalyze the performance of the mutual fund. All researchers have used one ortwo methods to compare the mutual funds of one or two schemes only. Some of theresearch focused only on particular fund and identified the advantages anddisadvantages of the funds no research has focused on comparing the similar type of open endedschemes in various banks .Research Methodology the present research study hasbeen under taken to fill the gap to compare selected two schemes and two banksby using of different statistical and ratio analysis. And also study about theperception of general people towards mutual fund in tire two city and metro.And try to know about faith of investors toward private mutual funds and publicsector mutual funds4.3 CRISIL RANKING AND REGULATORY TREND Performance of CRISIL rated FundsBalanced funds that have rankings in all quarterly CRISILMutual Fund ranking over a five-year timeframe (2013) Weight ages Rank* Superior return score 50% Fund rank performance50% HDCF Prudence fund 1 2 2 HDFC Balance fund 2 3 1 SBI Magnum Balance fund 3 3 5 Performance ofCRISIL rated Funds Mutual fundindustry highlights Indian mutual funds’ average assets under management (AUM)rose by almost 4% or Rs 302 Billion to Rs 8.17 trillion in the January-March2013 quarter from Rs 7.
87 trillion in the previous quarter (excluding fund offunds) as per the latest numbers released by the Association of Mutual Funds inIndia (AMFI). This is the highestlevel since September 2010, and the fourth successive quarterly gain in AUM mutualfund industry highlights Indian mutual funds’ average assets under management(AUM) rose by almost 4% or Rs 302 Billion to Rs 8.17 trillion in theJanuary-March 2013 quarter from Rs 7.
87 trillion in the previous quarter(excluding fund of funds) as per the latest numbers released by the Associationof Mutual Funds in India (AMFI). This is the highest level since September 2010, and thefourth successive quarterly gain in AUM. The month-end AUM, however, saw asharp decline of around 8% or Rs 586 Billon over the previous quarter to Rs7.
01 trillion at the end of March 2013.Growth in assets in the latest quarter was mainly driven by long-term debt andgilt funds. These funds posted a sharp rise in their assets in the quarter onexpectations of monetary easing from the Reserve Bank of India (RBI).
The RBIlowered its key lending rate, the repo rate, twice in the quarter (January andMarch) by 25 bps each to 7.50%. Assets of long-term debt funds rose by 35% toRs 855 Billon while those of gilt funds gained by 63% to Rs 78 Billion duringthe quarter. Investor interest in the long-term debt category has risen latelyas these funds benefit when the RBI cuts key interest rates. Bond prices andyields Move in opposite directions. Accordingly, a fall in interest ratesresults in a rise in bond prices and positively impacts gilt and long-term debtfund NAVs (returns).
Month end Assets, however, declined in the latest quarterprimarily due to large outflows from liquid funds. These outflows were due tofinancial year-end withdrawals by banks to meet their Capital adequacyrequirements and by corporate to meet their advance tax requirements. AMFI hasalso started disclosing AUM of direct plans that were launched from January 1,2013. These plans enable investors to invest directly through the fund houseinstead of through distributors. The latest AMFI data indicates that averageAUM of direct plans was around 15% of the industry AUM, mostly from shortmaturity debt-oriented funds.The returns of direct plans are higher to the extent ofdistribution expenses in the scheme. AUM of 34 fund houses saw a rise in theMarch quarter. ICICI Prudential Mutual Fund registered the highest growth inabsolute terms, by Rs 64 Billion, to Rs 878 bn.
AMCs, which witnessed a fall inAUM, included UTI Mutual Fund, whose average.AUM fell by Rs 12 bn to Rs 695 bn, and L MutualFund, whose average AUM fell by Rs 9 bn to Rs 112 bn. HDFC Mutual Fund retainedits top position by asset size at Rs 1.02 trillion. The share of top fivemutual funds by AUM was 53% while the share of top 10 funds was 77%. As per theSecurities and Exchange Board of India (SEBI) data, mutual funds sold equitiesworth Rs 73 bn in the March quarter compared to net selling of Rs 76 bn in theprevious quarter. On the debt front, mutual funds were net buyers to the tuneof Rs 1.58 trillion compared to buying of Rs 1.
04 trillion in the previousquarter. Among regulatory developments, SEBI directed mutual funds to labelmutual fund products with pre-determined couler code to help investors assessthe risks associated with the schemes and prevent miss-selling. Productlabeling would include a description of the nature of scheme, its investmenthorizon, its investment objective followed by kind of product i.e.equity/debt.
. SEBI allowed gold exchange traded funds to park up to 20% oftheir AUM in banks’ gold deposit schemes. SEBI notified about setting up a SelfRegulatory Organisation (SRO) to monitor distributors of mutual fund andportfolio Management products. AMFI hasasked fund houses to follow a uniform process for aggregating splittransactions in debt schemes on the basis of the permanent account number (PAN)of investors.
Rs billion Net Inflow/(Outflow) Month. REGULATORY TRENDSIn India Government do not allow unregulated financialproducts There are three main regulatory bodiesv SEBIv IRDAv RBI Basically in case of MF there is big role of SEBI underdifferent regulationsv M F regulation Act 1993v M F regulation Act 1996v M F regulation Act 2003Under the various regulationsthe objectives of SEBI are achieved.· There are three objectives of SEBI· Protection of investors· Promotion of Equity culture· Regulations of Schemes There are some specific schemescarrying welfare of children and women. Regulatory instructed no commission orbrokerage can be paid from such plans. Single planstructure for mutual fund schemes to remove disparity in expense structure ofdifferent plans, the SEBI directed mutual funds / AMCs to launch schemes undera single plan, and ensure that all new investors are subject to a singleexpense structure. Cash investments in mutual funds In order to enhance thereach of mutual fund products amongst small investors who may not be tax payersand who may not have Permanent source of income SEBI and Mutual funds Mutual fundindustry witnessed better growth and light regulation from SEBI since 1996. Themobilization of capital and the number of investors operating in the industryreached new level as investors started showing more interest in mutual funds.Protecting the interests of investors is one of the functions of SEBI.
Consequently, SEBI (Mutual Funds) Regulations, 1996 and certain otherguidelines have been issued by SEBI that sets uniform standards for all mutualfunds in India. All the mutual funds have to be registered with SEBI. Theregulations have laid down a detail procedure for launching of the keyprovisions of the „SEBI Regulations, 1996? include:All the schemes to be launched by the AMC needs to beapproved by the Board of Trustees and copies of offer documents of such schemesare to be filed with SEBI. The offerdocuments shall contain adequate disclosures to enable the investors to beinformed about decisions. The listing ofclose-ended schemes is mandatory and they should be listed on a Recognizedstock exchange within six months from the closure of subscription.
However, thelisting is not mandatory in case the scheme provides for monthly income orcaters to senior citizens, women, and children and physically handicapped;(ii) if the scheme discloses details of repurchase in theoffer document; or (iii) if the scheme opens for repurchase within six monthsof closure of subscription. Units of aclose-ended scheme can be opened for sale or redemption at aPredetermined fixed interval if the minimum and maximum amount of sale,redemption and periodicity is disclosed in the offer document. Units of a close-ended scheme can beconverted into an open-ended scheme with 4.4 Future ofIndian Mutual Funds India is country of millions hope and known and unknownopportunities. Asper the world bank IMF and other rating agencies like Moody and S&Porganizations world repute unanimously declaring India as the fastest growingeconomy of the world. And prediction of world renounce economist that Indiawill be third largest economy up to 2022 and size of GDP will be six trillion USD and stockmarket will also climb high maybe touch 100,000 bases point means three fold oftoday and so the GDP .So mutual is also function of GDP and stock market sothere isno doubt about the brighter future of Indian mutual fund and more very uniqueabout the India its Demography while whole world is aging India is still youngand remain young for quite 35 years or more so young dynamic and productive workforce ready to take more risk by investing in equity oriented schemes whichagain transform saving into capital formation so future of Indian mutual fundis more than bright As per given figure it is more than clear than that still 33% of holding in every mutual fundportfolio still goes in gold and realestate types traditional instruments and very few in energy sector so is thecase of FMCG , auto and energy sectors.
· Asset under management (AUM) by the Indianmutual fund industry recently · As per estimation the growth of AMU increasevery fast from 15 Trillion to 20 Trillion 2017 July· This is the highest CAG in any sector ranges to25-30%· SCHEME WISE COMPOSITION OF ASSETS · The percentage share of equity-oriented schemes · It is now 35.7% of the industry’s assets in July2017, up from 31% in July 2016 in the market is a sore point with the banking andfinancial services industry, with a large amount of savings are converted intogold and real estate rather than the capital market. The GDP growth has sloweddown, sluggish at 5% in 2012-13, with savings and investment rates following adownward trend. In 2010-11, the savings and investment rates were 34% and36.8%, respectively, which declined to 30.8% and 35%, respectively, in 2011-12and 31.8% and 35.4% in 2012-13.
4.5 Rationale of StudyMy study based on the facts andcommon perception of common investors rather than pure assumptions about themutual fund schemes cater for different category of people and give clear understandingabout schemes and break the myth about the mutual that only few selectedinstitutional investor and AMCs are benefited. And rest is loser and expenseratio is hidden and entry load is low and exit load is very high. Everyinvestor has equal awareness about mutual whether belong to tire two cities ormetros.
Picture is quite different all myth about the mutual are came out ofrather serious research. So my research try to answer those entire questionsarise in mind of common investor about the subject. The percentage share of debt-oriented schemesIt is 41.3% of industry assets in July 2017, down from42.3% in July 2016.IN TERMS OF IN ESTOR SHARE IN MUTUAL ASSETSIndividual investors holding I hast higher share of industry’s assets that is around.
48.1% in July 2017, As compare to July 2016. It is 45.2% Institutional investors holdingIt account for 51.9% of the assets, of which corporateare 88%.
The rest are Indian and foreign institutions and banks.