Icici Securities A Comparitive Study Ana
Icici Securities A Comparitive Study Ana
Icici Securities A Comparitive Study Ana
Sumukha Pranesh
7/30/2017
Intern Code-C712457
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Acknowledgement
This project “Comparative study analysis of debt mutual funds and equity mutual
funds – ICICI DIRECT” would not be a successful venture for me without the
guidance, motivation and help of few people who were along with me in all of
my queries and doubts. I would express my gratitude to Mr. Nitesh Kumar &
Mr. Satishram C.P of ICICI Securities Pvt Ltd, Bangalore for memorable,
Knowledgeable support and guidance during my project. Also, I am very
Thankful to Dr. Preetha Chandran Finance professor of CMS-Business School
(Jain University) for her guidance at every critical situation that I faced and gave
her Valuable advice to solve the problems throughout the preparation of this
Project.
Sumukha Pranesh
3rd semester MBA
Finance &Marketing specialisation
CMS B-SCHOOL
Jain university
Bangalore
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Executive summary
This project report is about mutual fund investment and how mutual funds
performs in the market and how to choose correct mutual fund to get the required
returns and it also explains types of mutual fund and how to select a mutual fund
based on certain criteria in accordance with customer needs and mainly it
explains about comparison between equity mutual funds and debt mutual funds
in ICICI DIRECT , how both type of funds performed in last 3 yrs. and under
which circumstance has they had fallen or had a rise in the market
Here the main idea behind this project would be to study the performance of
various mutual funds and its movement in last 3 years so that the investors would
get better picture about the funds before investments and it would help in giving
recommendations from ICICI Direct to their customers.
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Table of contents
1 Introduction 7
1.1 Types of mutual funds - 11
2 Industry profile 18
5 Conclusion 47
6 bibliography 48
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List of graphs and tables
3.1- Graph of NAV of HDFC Dynamic plan - 1st April 2013- 6th august 2016
3.2- Graph showing NAV of Reliance bond fund from April 2013 to August
3.3- Graph of ICICI prudential NAV from 1st march 2013 to august 2016
3.7- Graph of Franklin India NAV from 1st April 2013 to 6 august 2016
3.8- Graph of ICICI Prudential NAV from April 2013 to august 2016
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Introduction
A mutual fund is a pool of money from numerous investors who wish to save or
make money just like you. Investing in a mutual fund can be a lot easier than
buying and selling individual stocks and bonds on your own. Investors can sell
their shares when they want.
There are many different types of mutual funds, each with its own set of goals.
The investment objective is the goal that the fund manager sets for the mutual
fund when deciding which stocks and bonds should be in the fund's portfolio.
ICICI Securities understands the need for insightful research to make the right
investment decision. An independent equity research team provides strong and
timely updates to ensure that customer can avail of market opportunities.
The research team focuses on both large cap as well as small and mid-cap. Large
cap companies provide an overview of industry environments, while small and
mid-cap companies are chosen 'bottom-up', providing a unique perspective to a
generally under-researched end of the market. The focus is on identifying
companies, which we believe are likely to generate wealth for investors on a
sustained basis through in-depth fundamental research.
This project helps the company in giving recommendations and suggestions and
carrying out research for this period market fluctuations in choosing the right
funds for the customer’s requirements.
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History of Mutual Funds
18th Century: "Unity Creates Strength"
The mutual fund was born from a financial crisis that staggered Europe in the
early 1770s. The British East India Company had borrowed heavily during the
preceding boom years to support its ambitious colonial interests, particularly in
North America.
The Dutch were facing their own challenges, expanding and exploring like the
British and taking “copy-cat risks” in a pattern that has drawn parallels to the
banking crisis of 2008.
Against this backdrop, a Dutch merchant, Adriaan van Ketwich, had the foresight
to pool money from a number of subscribers to form an investment trust – the
world’s first mutual fund – in 1774.
The financial risk to the mainly small investors was spread by diversifying across
a number of European countries and the American colonies, where investments
were backed by income from plantations, an early version of today’s mortgage-
backed securities.
Subscription to the closed-end fund, which Van Ketwich called “Eendragt Maakt
Magt” (“unity creates strength”), was available to the public until all 2,000 units
were purchased. After that, participation in the fund was available only by buying
shares from existing shareholders in the open market.
A Ketch’s fund survived until 1824 but the vehicle he created is still a hallmark
of personal investing more than two centuries later with an estimated $27.86
trillion US in global assets in July 2013. In Canada alone, mutual funds represent
$920 billion.
The early mutual funds spread was of the closed-end variety, issuing a fixed
number of shares. They spread from the Netherlands to England and France
before heading to the U.S. in the 1890s.
From here, the investment trust structure flowed towards and into America.
Formed in 1893, The Boston Personal Property Trust became America’s first
closed-end fund. Shortly after several others would launch, including the
important Alexander Fund. This fund was critical in shaping the modern history
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of mutual funds as it allowed investors to make withdrawals on demand. That
feature has many historians calling the Alexander fund the very first mutual fund.
The first modern-day mutual fund, Massachusetts Investors Trust, was created on
March 21, 1924. It was the first mutual fund with an open-end capitalization,
allowing for the continuous issue and redemption of shares by the investment
company. After just one year, the fund grew to $392,000 in assets from $50,000.
The fund went public in 1928 and eventually became known as MFS Investment
Management.
By 1929, there were 19 open-ended mutual funds competing with nearly 700
closed-end funds. With the stock market crash of 1929, the dynamic began to
change as highly-leveraged closed-end funds were wiped out and small open-end
funds managed to survive.
Government regulators also began to take notice of the fledgling mutual fund
industry. The creation of the Securities and Exchange Commission (SEC), the
passage of the Securities Act of 1933 and the enactment of the Securities
Exchange Act of 1934 put in place safeguards to protect investors: mutual funds
were required to register with the SEC and to provide disclosure in the form of a
prospectus. The Investment Company Act of 1940 put in place additional
regulations that required more disclosures and sought to minimize conflicts of
interest.
The mutual fund industry continued to expand. At the beginning of the 1950s, the
number of open-end funds topped 100. In 1954, the financial markets overcame
their 1929 peak, and the mutual fund industry began to grow in earnest, adding
some 50 new funds over the course of the decade. The 1960s saw the rise
of aggressive growth funds, with more than 100 new funds established and
billions of dollars in new asset inflows
Hundreds of new funds were launched throughout the 1960s until the bear market
of 1969 cooled the public appetite for mutual funds. Money flowed out of mutual
funds as quickly as investors could redeem their shares, but the industry's growth
later resumed.
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Modern Times: Index Funds, IRAs & ETFs
The mutual fund industry really got cooking after World War II ended and
America began to boom during the 1950s. By 1951, there were more than 100
mutual funds operating and more than 150 additional funds were created over the
next two decades. The 1960s saw the birth of aggressive growth funds, which bet
on high tech stocks, while the 1970s and 1980s saw some of the biggest
contributions to mutual funds’ history.
One of the biggest contributions was the creation of the index fund – a mutual
fund that would hold all the stocks of a particular market measure. William Fouse
and John McQuown of Wells Fargo established the first index fund in 1971.
However, it was Vanguard’s John Bogle who made it memorable back in 1974
by offering it to retail investors. The First Index Investment Trust—based on the
S&P 500 Index—allowed Mom & Pop investors to own the entire market. The
first money market fund—The Reserve Fund—debuted in 1971, while 1976 saw
the first municipal bond launch. The 1990s saw the rise of the superstar fund
manager, as people like Bill Miller and Peter Lynch became driving forces at the
funds they managed.
Powering the expansion of mutual funds during this time had been the creation
of various retirement and tax vehicles such as the IRA and 401(K) accounts.
These accounts helped to replace traditional pensions at many companies. As
such, money from investors of all sizes and walks of life poured directly into
mutual funds.
Today, the evolution of mutual funds continues with the creation of the exchange
traded fund (ETF). In 1993, Nathan Most developed a way for investors to trade
index funds throughout the day. He dubbed his fund the Standard & Poor’s
Depository Receipts (SPDRs -pronounced spiders) and based it off the S&P 500
Index. The SPDR S&P 500 (SPY) kicked off the ETF revolution and is still one
of the most successful funds.
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Types of Mutual funds
GRAPH 1.1
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BY STRUCTURE- open ended, close ended and interval
GRAPH 1.2
I. Open-Ended - This scheme allows investors to buy or sell units at any point in
time. This does not have a fixed maturity date.
2. Money Market/ Liquid - This is ideal for investors looking to utilize their
surplus funds in short term instruments while awaiting better options. These
schemes invest in short-term debt instruments and seek to provide reasonable
returns for the investors.
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3. Equity/ Growth - Equities are a popular mutual fund category amongst retail
investors. Although it could be a high-risk investment in the short term, investors
can expect capital appreciation in the long run. If you are at your prime earning
stage and looking for long-term benefits, growth schemes could be an ideal
investment.
3.i. Index Scheme - Index schemes is a widely popular concept in the west. These
follow a passive investment strategy where your investments replicate the
movements of benchmark indices like Nifty, Sensex, etc.
3.ii. Sectoral Scheme - Sectoral funds are invested in a specific sector like
infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like
large caps, mid-caps, etc. This scheme provides a relatively high risk-high return
opportunity within the equity space.
3.iii. Tax Saving - As the name suggests, this scheme offers tax benefits to its
investors. The funds are invested in equities thereby offering long-term growth
opportunities. Tax saving mutual funds (called Equity Linked Savings Schemes)
has a 3-year lock-in period.
4. Balanced - This scheme allows investors to enjoy growth and income at regular
intervals. Funds are invested in both equities and fixed income securities; the
proportion is pre-determined and disclosed in the scheme related offer document.
These are ideal for the cautiously aggressive investors.
II. Closed-Ended - In India, this type of scheme has a stipulated maturity period
and investors can invest only during the initial launch period known as the NFO
(New Fund Offer) period.
2. Fixed Maturity Plans (FMPs) - FMPs, as the name suggests, are mutual fund
schemes with a defined maturity period. These schemes normally comprise of
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debt instruments which mature in line with the maturity of the scheme, thereby
earning through the interest component (also called coupons) of the securities in
the portfolio. FMPs are normally passively managed, i.e. there is no active trading
of debt instruments in the portfolio. The expenses which are charged to the
scheme, are hence, generally lower than actively managed schemes.
a) Equity funds
These funds invest the 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 objectives, as follows:
1. Diversified Equity Funds
2. Mid Cap Funds
3. Sector Specific Funds
4. Tax Saving Funds(ELSS)
Equity investments are meant for longer time horizons. Thus equity funds
ranks high on return- risk matrix.
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b) 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 issues 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 in major portion into various debt instruments
such as bonds, corporate debentures and Government Securities
MIPS: invests in 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 schemes rank slightly high on the
risk-return matrix when compared with other debt schemes.
Short term plans (STPS): These are 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 portions of the corpus are also invested in corporate
debentures.
c) Balanced Funds
These funds are combination of equity and debt funds. They invest in both
equities and fixed income securities, which are in line with pre-defined
investment objectives of the scheme. These schemes aim to provide
investors with the best of both the worlds. Equity provides growth and debt
provides stability in returns.
Further the mutual funds can be broadly classified on the basis of
investment parameters each category of funds is backed by an investment
philosophy, which is pre-defined in the objectives of the funds. The
investor can align his own investment needs with the funds objectives and
invest accordingly.
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BY INVESTMENT OPPORTUNITIES
c) Balanced Funds: The aim of balanced funds is to provide both growth and
regular income as such schemes invest both in equity and fixed income
securities in the proportion indicated in their offer document. These are
appropriate for the investors looking for moderate growth. They generally
invest 40% to 60% in equity and debt instruments. These funds are also
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affected due to fluctuations in share price in the stock market. However,
NAVs of such stocks are less volatile as compared with pure equity funds.
d) Money Market or liquid funds: These funds are income funds and their
aim is to provide easy liquidity, preservation of capital and moderate
incomes. These schemes invest in safer short term instruments such as
treasury bills, certificate of deposits, commercial paper and interbank call
money, government securities etc. Returns on these schemes fluctuate
much less as compared with other funds.
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Industry profile
1. Financial service industry growth in India
Introduction
India has a diversified financial sector undergoing rapid expansion, both in terms
of strong growth of existing financial services firms and new entities entering the
market. The sector comprises commercial banks, insurance companies, non-
banking financial companies, co-operatives, pension funds, mutual funds and
other smaller financial entities. The banking regulator has allowed new entities
such as payments banks to be created recently thereby adding to the types of
entities operating in the sector. However, the financial sector in India is
predominantly a banking sector with commercial banks accounting for more than
64 per cent of the total assets held by the financial system.
The Government of India has introduced several reforms to liberalise, regulate
and enhance this industry. The Government and Reserve Bank of India (RBI)
have taken various measures to facilitate easy access to finance for Micro, Small
and Medium Enterprises (MSMEs). These measures include launching Credit
Guarantee Fund Scheme for Micro and Small Enterprises, issuing guideline to
banks regarding collateral requirements and setting up a Micro Units
Development and Refinance Agency (MUDRA). With a combined push by both
government and private sector, India is undoubtedly one of the world's most
vibrant capital markets.
Market Size
During April 2015 to March 2016 period, the life insurance industry recorded a
new premium income of Rs 1.38 trillion (US$ 20.54 billion), indicating a growth
rate of 22.5 per cent over the previous year. The general insurance industry
recorded a 12 per cent growth year-on-year in Gross Direct Premium
underwritten in April 2016 at Rs105.25 billion (US$ 1.55 billion).
India’s life insurance sector is the biggest in the world with about 360 million
policies, which are expected to increase at a Compounded Annual Growth Rate
(CAGR) of 12-15 per cent over the next five years. The insurance industry is
planning to hike penetration levels to five per cent by 2020, and could top the
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US$ 1 trillion mark in the next seven years. The total market size of India's
insurance sector is projected to touch US$ 350-400 billion by 2020.
India is the fifteenth largest insurance market in the world in terms of premium
volume, and has the potential to grow exponentially in the coming years. Life
insurance penetration in India is just 3.9 per cent of GDP, more than doubled from
2000. A fast growing economy, rising income levels and improving life
expectancy rates are some of the many favourable factors that are likely to boost
growth in the sector in the coming years.
Investments/Developments
Kotak Mahindra Bank Limited has bought 19.9 per cent stake in Airtel M
Commerce Services Limited (AMSL) for Rs 98.38 crore (US$ 14.43
million) to set up a payments bank. AMSL provides semi-closed prepaid
instrument and offers services under the ‘Airtel Money’ brand name.
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Tata Capital, the financial services arm of Tata Group, plans to raise Rs
2,000 crore (US$ 293.4 million) for its real estate fund, from State General
Reserve Fund (SGRF), the sovereign wealth fund of Oman.
Insurance firm AIA Group Ltd has decided to increase its stake in Tata
AIA Life Insurance Co Ltd, a joint venture owned by Tata Sons Ltd and
AIA Group from 26 per cent to 49 per cent.
Canada-based Sun Life Financial Inc plans to increase its stake from 26
per cent to 49 per cent in Birla Sun Life Insurance Co Ltd, a joint venture
with Aditya Birla Nuvo Ltd, through buying of shares worth Rs 1,664 crore
(US$ 244.14 million).
Nippon Life Insurance, Japan’s second largest life insurance company, has
signed definitive agreements to invest Rs 2,265 crore (US$ 332.32 million)
in order to increase its stake in Reliance Life Insurance from 26 per cent to
49 per cent.
The Reserve Bank of India (RBI) has also given in-principle approval to
11 entities to open payment banks which are expected to result in widening
the reach of banking services and thereby improve the extent of financial
inclusion as envisaged by the government. The setting up of 11 new
payments banks can potentially free up Rs 1,400,000 crore (US$ 205.4
billion) per annum to fund the infrastructure sector, as per a study by the
State Bank of India.
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Asset management: AUMs have more than doubled since FY07
• The asset management industry in India is among the fastest growing in the
world
• Total AUM of the mutual fund industry clocked a CAGR of 12.8 per cent over
FY07–16 to reach US$ 215.4 billion
The country’s financial services sector consists of the capital markets, insurance
sector and non-banking financial companies (NBFCs). India’s gross domestic
savings (GDS) as a percentage of Gross Domestic Product (GDP) has remained
above 30 per cent since 2004.It is projected that national savings in India will
reach US$ 1,272 billion by 2019. Over 95 per cent of household savings in India
are invested in bank deposits and only 5 per cent in other financial asset classes.
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The asset management industry in India is among the fastest growing in the
world. Total asset under management (AUM) of the mutual fund industry clocked
a Compound Annual Growth Rate (CAGR) of 12.05 per cent over FY07-15 to
reach US$ 179.6 billion. Corporate investors accounted for around 45.9 per cent
of total AUM in India, while High Net Worth Individuals (HNWI) and retail
investors account for 28.6 per cent and 22.9 per cent, respectively
India’s equity market turnover has increased significantly in recent years. The
annual turnover value in the National Stock Exchange (NSE) witnessed a CAGR
of 20.7 per cent between FY96 and FY15 to reach US$ 718 billion.
The Government of India has taken various steps to deepen the reforms in the
capital markets, including simplification of the Initial Public Offer (IPO) process
which allows qualified foreign investors (QFIs) to access the Indian bond
markets.
Despite the renewed interest from retail investors, mutual fund penetration is
Indian is abysmally low. In urban India, just 9% of the households invest in
mutual funds, according to a recent report by Nielson titled—“Building the
Mutual Fund Market in India: The Need for Financial Literacy”. A major reason
for the low participation is the low level of financial literacy among Indian
consumers, which leads the average investor to view options like mutual funds
with suspicion and caution.
The Indian investor chooses safety-first and is easily lured to products with
‘guaranteed’ returns. Not surprisingly, financial safety is one of the main reasons
behind avoiding equity mutual funds, finds the Nielson report. Investors say “they
choose to invest in bank fixed deposits and a life insurance policy, believing that
regularity in savings is more important than the amount saved. Additionally, life
insurance products offer tax savings, insurance coverage and average rates of
return that make them more attractive to the consumer,” mentions the report.
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2.2 - Graph of various financial investment products
Equity mutual funds are not well received because consumers do not perceive
them as high-performance investments. This is a clear case of failure of mutual
funds to communicate. It can even be blamed on regulations that don’t allow
funds to advertise their returns easily. The Indian non-investor also considers
equity mutual funds a risky venture due to its proximity with the stock markets.
Additionally, non-investors believed that equity mutual funds do not yield quick
returns as they are looking at a shorter time period when investing in riskier
assets.
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2.3- Graph of reasons for not investing in MF
The market crash of 2008, once again shook mutual fund investors. Investors
either were not informed about the risks or were miss-sold the schemes.
The biggest battle that mutual fund companies have on their hands is that of
perception. Mutual funds are not well received because consumers do not
perceive them as high-performance investments. Positioning them as a safe way
to invest in the stock market and highlighting past performance are key ways to
shift those perceptions.
Equity mutual funds have great potential. They generate much higher returns than
any other asset class. They have created wealth for those investors who
understood the risks and held their ground through the volatile market conditions.
It is extremely rewarding to hold your mutual funds for long periods, say about
10 years or more. The longer the holding period, the greater is the probability that
you would gain more per year. It is strange that mutual funds and their distributors
and advisors have not been able to communicate it at all even after two decades.
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2. Debt markets in India is not very developed so how MF is
affecting the debt market
Corporate debt consists of broadly two types – bank borrowings and bond.
Corporates borrow from banks and other financial institutions for various
business purposes and for varying durations through non-standardized and
negotiated bank loans. Bank finance takes the form of project loans, syndicated
loans, working capital, trade finance, etc.
Certain typical features of corporate bonds, including but not limited to the
following are –
There are three main pillars that make up the corporate bond market ecosystem –
the institutions, participants and the instruments
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RECENT TRENDS IN CORPORATE DEBT MARKETS IN INDIA
Reserve Bank of India (2011) observes that listed corporate debt forms only 2 per
cent of GDP. This is significantly low compared to other emerging economies,
such as Malaysia, Korea and China. Further, Government of India (2009) makes
an important observation; even today most of the large issuers in the corporate
debt market segment are “quasi-government”.
Therefore, increasingly, there has been a lot of focus on the development of debt
markets in India and it has garnered a lot of policy and regulatory attention. As
such, we see an evolving institutional setup in the debt markets
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The Corporate debt market is primarily regulated by three institutions namely the
Reserve Bank of India, the Securities and Exchange Board of India and the IRDA.
The Reserve Bank of India left its benchmark repo rate unchanged at a five-year
low of 6.5 percent during the meeting held on August 9th, as widely expected.
While awaiting space for policy action, policymakers said the stance of monetary
policy will remain accommodative and continue to emphasize the adequate
provision of liquidity. The central bank also decided to keep the cash reserve at
4.0 percent, to provide liquidity as required but progressively lower the average
ex ante liquidity deficit in the system from one percent of net demand and time
liabilities (NDTL) to a position closer to neutrality. Interest Rate in India
averaged 6.71 percent from 2000 until 2016, reaching an all time high of 14.50
percent in August of 2000 and a record low of 4.25 percent in April of 2009.
Interest Rate in India is reported by the Reserve Bank of India.
2.5-Graph of interest rate and repo rates
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Changes in the RBI repo rate—at which the RBI lends to banks—are now
watched closely as it impacts floating rate bank loans, especially home loans,
interest rates on new bank fixed deposits and returns of debt/gilt mutual funds.
However, in the last one year, debt fund investors have been left flummoxed.
From January 2015 till now, the RBI has cut repo rate by 125 bps—a sizeable
cut—but, in the same period, debt/gilt funds have delivered sub-normal
annualised returns of only 5%-7%. There are multiple reasons for this: lower
transmission of rates by banks, demand-supply gap in government securities (g-
secs) and lower liquidity. But the moot point that investor's should remember is
that the 10-year g-sec has a mind of its. The RBI repo rate changes have only a
marginal impact on the 10-year g-sec yield.
debt and gilt funds, going by the magnitude of the change, there is a significantly
low co-relation between the 10-year g-sec yield and repo rate movements, though
the direction of the move is synchronous. Additionally, during periods when there
are no changes in the RBI repo rate, 10-year g-sec rates still show significant
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movement and thus the assumption that if RBI does not changes the repo rate,
debt mutual funds will deliver coupon rates (minus expenses) does not hold true
at all.
On the contrary, the magnitude of 10-year g-sec moves either during an RBI rate
change cycle or a period of no change is significant either ways, thus equally
affecting debt fund returns. Thus RBI rate changes and more so expectations
thereof cannot serve as a reasonable evaluation for your investment decision in
debt/gilt funds.
The Indian mutual fund industry finds itself in an economic landscape which has
undergone rapid changes over the past three years. The industry achieved a high
water mark when it doubled its AUM from Rs. 3.6 trillion in FY2007 to Rs. 6.13
trillion in FY2010 – clocking an impressive growth rate of 16.2% per year. Since
then the Indian economy (coupled with the emerging economies) has faced a
slowdown – the most severe of which are happening as this report is being
written. From an average GDP growth rate of 8-9% during the 2008-2011 years,
the Indian economy has grown at a lacklustre growth rate of 7.9% in Q4 of 2015.
Coupled with a steep decline in the value of the Indian rupee at 66.84 per 1$ , the
mutual fund industry now finds itself in a capricious global economic
environment. However, there is strong reason to believe that the Indian mutual
fund industry has not yet seen its global peak and if proper measures are taken,
the industry could get back on its former growth path.
yet, for various reasons, mutual funds have not been the investment of choice for
Indian households. Government estimates suggest that investments in security
related investments, including mutual funds, have hovered around 4–5% of
household savings for more than a decade despite significant governmental
concessions. Physical assets such as real estate and gold along with the “safer”
bank deposits continue to be sought after by Indian investors. Aside of structural
reasons, lack of objective and scientific research on mutual funds has also hurt
the promotion of the culture of investing through intermediaries among Indians.
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There is a significant amount of global academic research on mutual funds, and
these studies have, by and large, concentrated on the MF industry in the US
primarily because of data availability. Even in the US, the first serious academic
study on mutual funds came more than forty years after the establishment of the
first modern mutual fund.There has been no serious work on the performance of
the Indian mutual fund industry for lack of data though there have been some
studies that examine short-term impact of regulatory rule changes.
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ICICI COMPANY PROFILE
About the company
ICICI Securities sees its role as 'Creating Informed Access to the Wealth of the
Nation for its diversified set of client that include corporate, financial institutions,
high net-worth individuals and retail investors.
ICICI Securities Inc., the stepdown wholly owned US subsidiary of the company
is a member of the Financial Industry Regulatory Authority (FINRA) / Securities
Investors Protection Corporation (SIPC). ICICI Securities Inc. activities include
Dealing in Securities and Corporate Advisory Services in the United States.
The company was incorporated in 1995 and is based in Navi Mumbai, India.
ICICI Securities Limited is a subsidiary of ICICI Bank Limited.
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Mission of ICICI Securities
ICICI Securities enjoys the first mover and market leader advantage in the
derivatives segment and offers the entire spectrum, from set-up to trading
strategy. The equity group leverages research and distribution reach to domestic
and foreign institutional investors in case of public offerings. The research team
tracks over 15 key sectors of the Indian economy and publishes in-depth research
reports every year. The equity group acts as a bridge for institutional investors
and corporate clients with the markets.
ICICI Securities is the first domestic Investment Bank to organize theme based
conferences in New York, Shanghai, Singapore & Hong Kong.
At ICICI Securities, they base their services on a simple yet powerful philosophy
“we believe in building long term relationships and partnering with them in
legacies for generations to follow.”
They invest substantial time in understanding client’s life goals, your current
conditions, and then work to develop the most optimal solutions through our
advisory platform. The advisory team measures the performance periodically
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against initial expectations, and should the need arise, the investment plan is
recalibrated with the changing market conditions.
ICICI Securities empowers over 3.9 million Indians to seamlessly access the
capital market with ICICIdirect.com, an award winning and pioneering online
broking platform. The platform not only offers convenient ways to invest in
Equity, Derivatives, Currency Futures, Mutual Funds but also other services
Fixed Deposits, Loans, Tax Services, New Pension Systems and Insurance are
available. ICICIdirect.com offers a convenient and easy to use platform to invest
in equity and various other financial products using its unique 3-in-1 account
which integrates customer's saving, trading and demat accounts.
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Methodology and Analysis of the study
Firstly, I have considered five debts mutual funds’ performance comparing with
5 equity mutual funds, what are the fluctuations in performance of these mutual
funds and why have they been caused by market fluctuations.
Investment Objective-
To generate income by investing in a range of debt and money market
instruments of various maturity dates with a view to maximise income
while maintaining the optimum balance of yield, safety and liquidity.
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Load details
Entry Load-N.A.
Exit Load- 0.50%
3.1- Graph of NAV of HDFC Dynamic plan - 1st april 2013- 6th august
2016
This graph can be analysed that in last 3 yrs it has had drastic fall of lowest NAV
of 38.27 on 16 august 2013 and after that it has been recovered in fast pace in
next year of 2014 till 2015 but comparatively it has grown little slowly in 2015
to 2016 year as we can see in the table from 42.41 points it has grown to 46.56
points in last year.
As this is debt mutual fund, the risk and returns both are limited
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2. Reliance Dynamic Bond Fund (G)
Investment Objective-
Scheme details
Plan: Regular
Options: Growth
Fund Type-Open-Ended
Investment Plan- Growth
Launch Date-Nov 01, 2004
Benchmark-CRISIL Composite Bond Fund
Asset Size-Rs 11,157.39 cr (Avg. AUM for qtr Jan-Mar '16)
Minimum Investment-Rs.5000
Fund Manager-Prashant Pimple
Notes
Earlier Call Reliance NRI Income Fund
Load Details
Entry Load-N.A.
Exit Load-1.00%
Load Comments- Exit load - 1.00% of if redeemed within 6 months from the date
of allotment
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3.2- Graph showing NAV of Reliance bond fund from april 2013 to August 2016
This graph shows that the lowest among past 3 yrs was hit in 23rd September 2013
where in NAV of the mutual fund was 13.03 but it has been varying between 14-
13.3 points in last 2 yrs, highest was when it had hit 14.58 points, seeing this one
can analyse it doesn’t have drastic fluctuations, very less when compared to
equity markets so, investors not wanting to take high risks can opt for such funds
SHORT TERM
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Notes
ICICI Prudential Banking & PSU Debt Fund - Premium Plus Plan renamed as
ICICI Prudential Banking & PSU Debt Fund. The scheme is open for fresh
subscriptions/switch-ins.
Load Details
Exit Load - N.A.
3.3- Graph of ICICI prudential NAV from 1st march 2013 to august 2016
In this above graph we can see that the lowest is in 2013 yr which is 12.82 but
gradually it has increased from 23 points to 14.07 in 2014 and from 14 to 15.31
in 2015 but it has had steep growth in last year comparatively as it has increased
from 15.31 to 16.55 and has reached highest till now in 2016 august 17.8 ,
seeing this we can tell that it has a very good scope of growth in future as the
repo rates cuts has affected the mutual funds positively which is a good sign as
people are still interested in investing in the bonds market .
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4) Birla Sun Life Dynamic Bond Fund - Retail Plan (G)
Investment Objective
Scheme details
Fund Type Open-Ended
Investment Plan-Growth
Launch Date-Sep 24, 2004
Benchmark-CRISIL Composite Bond Fund
Asset Size-Rs 8,045.41 cr (Avg. AUM for qtr Apr-Jun '16)
Minimum Investment-Rs.5000
Last Dividend-N.A.
Bonus-N.A.
Fund Manager - Maneesh Dangi
Notes - N.A.
This graph can be analysed as having low NAV of 13.93 in 2013 April and
increased but again slightly it had fallen due to the fall in international markets in
august Dow Jones industrial average and S&P 500 lost between 3-5% that month
it was also called crude august, here we can see relation between markets crashing
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and also the bond markets getting affected and after that we can see gradual
increase in the NAV value from 15.25 in 2014 to 16.66 in 2015 and in 2016 it has
reached highest till date 19.5 NAV
Fund Type-Open-Ended
Investment Plan-Dividend
Launch Date-Dec 10, 2003
Benchmark-CRISIL Short Term Bond Fund
Asset Size Rs 3,064.69 cr (Avg. AUM for qtr Apr-Jun '16)
Minimum Investment-Rs.30000
Last Dividend - Rs.0.11 (Jun-27-2016)
Bonus-N.A.
Fund Manager - Sudhir Agrawal
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This fund is different one as it is institutional fund, here normal public cannot
invest in these funds only institutional investors are eligible to invest in such
funds here the minimum investment amount will also be higher when compared
to other debt mutual funds.
In this graph we can see it has had steep fall between 2014 and 2015 year but
gradually it has picked up its pace and reached NAV of 11.98 in 2016 2nd quarter.
In all this graph common aspect is all have a fall in 2013 as there was Gold
market’s 13 percent crash in April 2013, representing a sudden and steep decline
of $200 per ounce over two momentous days, set the floor for gold’s poor
performance in 2013, which saw its worst showing since 1981. As a result, it has
affected the debt market also.
Fund Type-Open-Ended
Investment Plan-Growth
Launch date-Jan 20, 2006
Benchmark-S&P BSE 100
Asset Size-Rs 4,796.70 cr (Avg. AUM for qtr Apr-Jun '16)
Minimum Investment-Rs.5000
Last Dividend-N.A
Bonus-N.A.
Fund Manager-Sohini Andani
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3.6- Graph of SBI BR NAV from 10 aug 2013 to aug 2016
In this above graph one can see that there has been dip in NAV in aug 2013 but
after that the fund has been consistent with the index and we can say that its beta
was almost 1 in between feb 2014 to aug 2014 and we can observe that this fund
has been in sync with the market maintaining the 1 beta as where all market has
fallen and raise even this fund has very same fluctuations so we can tell this fund
is not more or less volatile when compared to market index its keeping its pace
with the market movements .
Fund Type-Open-Ended
Investment Plan-Growth
Launch date-Sep 28, 1994
Benchmark-NIFTY 500
Asset Size-Rs 6,557.26 cr (Avg. AUM for qtr Apr-Jun '16)
Minimum Investment-Rs.5000
Last Dividend-N.A.
Bonus-N.A.
Fund Manager-R.Janakiraman / Anand Radhakrishnan
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3.7- Graph of Franklin India NAV from 1st april 2013 to 6 august 2016
This graph depicts that basically this fund has had lowest NAV of 218.03 in
august 2013 due to fall in gold market and stock markets crash as most major
exchanges were forced to halt trading in more than 2,700 Nasdaq-listed stocks
for several hours on Thursday,22nd august 2013.
It can be seen that it has a good growth in 2014 year by reaching NAV of 417.45
point ans in 2015-16 it has managed in and around 417 points but finally
improved and has had high point of 483.93 NAV in august 2016.
Scheme details
Fund Type-Open-Ended
Investment Plan-Growth
Launch Date-Jul 23, 2004
Benchmark-NIFTY MIDCAP 100
Asset Size-Rs 10,761.91 cr (Avg. AUM for qtr Apr-Jun '16)
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Minimum Investment-Rs.1000
Last Dividend
N.A.
Bonus
N.A.
Fund Manager-Mrinal Singh
3.8- Graph of ICICI Prudential NAV from April 2013 to august 2016
This graph shows the dip in august 2013 where in all the stocks were affected due
to the gold market fall and gradually all markets picked up and also the brutal
august fall in 2013 crash also has an impact on the funds invested but it has grown
to 156% in 2015-16 and reached high pint of 124.5 NAV.
Scheme details
Fund Type-Open-Ended
Investment Plan- Growth
Launch Date-Aug 27, 1998
Benchmark-S&P BSE 200
Asset Size-Rs 2,095.86 cr (Avg. AUM for qtr Apr-Jun '16)
Minimum Investment-Rs.5000
Last Dividend-N.A.
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Bonus-N.A.
Fund Manager-Anil Shah
Notes-
All Indian schemes of Alliance Capital Mutual Fund have been acquired by Birla
Sun Life AMC with effect from the close of business hours on September 23,
2005.
Load Details
Entry Load-N.A.
Exit Load- 1.00%
Load Comments- Exit Load of 1% if redeemed within 365 Days from the date of
allotment.
3.9.- Graph Birla SL Equityof NAV from 1-4-2013 to 16-8-2016
This graph shows that after the market crash of 2013 august , it has not growth
much till 2014 but from 2014 to 2015 it has grown in a increasingly from 230
points to 392.9 points almost 170% it has increased in that year in 2015 to 2016
it has maintained study pace of around 427 points.
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5) DSP BlackRock Micro Cap Fund - Regular Plan (G)
Investment Objective
An open ended diversified equity growth scheme seeking to generate long term
capital appreciation from a portfolio that is substantially constituted of equity and
equity related securities which are not part of the top 300 companies by market
capitalisation. From time to time, the Investment Manager will also seek
participation in other equity and equity related securities to achieve optimal
portfolio construction.
Scheme details
Fund Type-Open-Ended
Investment Plan-Growth
Launch date-May 04, 2007
Benchmark-S&P BSE SMALLCAP
Asset Size-Rs 2,422.99 cr (Avg. AUM for qtr Apr-Jun '16)
Minimum Investment- Rs.5000
Last Dividend-N.A.
Bonus-N.A.
Fund Manager-Vinit Sambre & Jay Kothari
Notes
DSP BlackRock Micro Cap Fund a 3 years close ended diversified equity, has
been converted into an open-ended scheme with effect from June 15 2010
Load Details
Entry Load-N.A.
Exit Load-1.00%
Load Comments- Exit Load 1% if redeemed within 24 months from the date of
allotment.
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3.10-Graph of NAV from 29th aug 2013 to 6th august 2016
In this graph we can see that the fund has a drastic fall of 13.33 points as a result
of the international market NASDAQ trading glitch most major exchanges were
forced to halt trading in more than 2,700 Nasdaq-listed stocks for several hours
and as a result it had been affected but later in next quarter we can see that the
beta of this fund has been in sync with the market fluctuations or in other words
volatility is not higher that the beta 1 and in august2016 we can see when index
has gone up 84% this fund has gone up by 260%, this shown the high returns
which can be expected from investing in this fund
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Conclusion
After seeing the graphs and types of the funds we can tell that all types of funds
will be affected by the market flections and crashes but it depends on the fund
how much time they take to come back on track with the growing markets and
give effective returns to the investors. The potential of the fund has to be
ascertained by the past performance of the funds and its growth rate after the
crashes and low points and the amount of risk or the velocity of the crash on the
funds have to be seen. like in this report we sae that april 2013 there was gold
market crash also called flash crash, even debt markets were affected by it but
equity markets were more affected and impact was more on equity market and
equity mutual funds have taken time of average 1 year to get back on track and
give good returns.
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Bibliography
http://indiainbusiness.nic.in/newdesign/index.php?param=industryservices_land
ing/401/3
http://www.nielsen.com/in/en/insights/reports/2014/building-the-mutual-fund-
market-in-india.html
http://www.tradingeconomics.com/india/interest-rate
http://content.icicidirect.com/idirectcontent/Home/Home.aspx
http://www.bseindia.com/
https://in.finance.yahoo.com
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