A STUDY ON THE GROWTH IN ASSETS AND COMPOSITION OF MUTUAL FUNDS ASSETS IN INDIA WEALTH MANAGEMENT CIA-1 1 GROUP

GROUP MEMBERSVinay, Pranay, Shreepal,Khushbu,Sanjeet,Ayush,Deebadwita,Rishin, Jackson,Nimmy and Shilpa

Asset Classes
Direct Equities

It is a type of securities where the investor buys the ownership of company. Equities are tradable (bought & sold) in the Stock Exchanges Can be a good investment option for a long term horizons Considered as one of the riskiest asset class Risk of loss of capital is very high

Asset Classes
Mutual Fund

Investment avenue offers cost efficiency Professional management Risk diversion Charge fees Often require a minimum investment

Unit Linked Insurance Plan

It gives the benefit of risk cover as well as the returns of equity market as it invest the premium into equity linked instruments Over all limit of permissible deductions under Section 80C is Rs. 1 Lac

Asset Classes
Real Estate

Said as ever green investment option in India It generate higher rate of returns It offers very low level of liquidity It has emerged as one the asset class in recent time Government has allowed investment into listed commodities Commodity trading is available in bullions, base metals and Agri commodities.

Commodities

Risk Free Asset Class

Fixed Deposit

It allows investors to deposit money into bank / corporate for a specific period of time, which in return earns an interest. Rate of returns in fixed deposits are higher than bank saving account Investment into 5 year fix deposit is eligible for tax benefit under section 80 C. Maximum of Rs. 1, 00,000

Risk Free Asset Class

National Savings Certificate (NSC)

It offers a fixed interest It usually have a maturity of 6 years and offers a rate of return of 8% per annum It gives tax benefit under section 80 C and minimum investment amount is Rs. 500

Risk Free Asset Class

Post office MIS

Specially made for the purpose of providing regular pension to the investors Offers 8% per annum, paid on monthly basis Maximum limit for investment is Rs. 4.5 lakh and maturity period is 6 years Can be prematurely enchased after 1 year but before 3 years at the discount of 2% and after 3 years at the discount of 1%

Risk Free Asset Class

Public Provident Fund (PPF)

It is a government backed, long-term small savings scheme of the Central Government. It offers interest rate of 8% per annum It offers tax benefit under section 80 C up to Rs. 70,000.

Risk Free Asset Class

Bonds

It is a form of lending money to government or company. Government or Company pays fix amount of interest on principal.

Pre Liberalization

Mutual Funds made an opening in India in 1963 with UTI. Till 1986-87 it launched 20 schemes and mobilised Rs.4564 crore for 23 years. In 1978 UTI was delinked from RBI and IDBI took over the regulatory and administrative control. Banking Regulation Act was amended in 1986 allowing commercial banks in public sector to set up mutual funds.

By 1988 UTI had Rs 6,700 crore asset under managememt. RBI and Ministry of Finance worked to ensure smooth working of the mutual funds. It failed to line up as per the expectation of customers in terms of after sale service, timely delivery of certificates, warrants etc. By the end of 1993 MFs had asset under management of Rs. 47,004 crores.

Post Liberalization

In 1993-94 a strong opening was seen from private sector mutual funds. Rs. 1559.5 crore i.e. 13.88% of the total resources mobilized by mutual funds was registered by private sector. UTI was still leading with its Rs. 9297 crore (82.69%) share. UTI and other public sector MF started loosing growth against private sectors.

MFs witnessed growth and stricter regulation from SEBI after 1996. 2004 onwards many mergers and acquisitions happened like Alliance Mutual Fund by Birla Sun Life, Sun F&C MF and PNB MF.

Growth of Asset under Management

ASSET UNDER MANAGEMENT

The market value of assets that an investment company manages on behalf of investors. Assets under management (AUM) is looked at as a measure of success against the competition and consists of growth/decline due to both capital appreciation/losses and new money inflow/outflow.

Growth of AUM

The total AUM of Mutual Fund Industry in September 2012 is 7,44,897 crores which was 7,12,742 crore in September 2011. the percentage increase is 4.32%

Asset Class wise AUM

AUM by Geography

AUM and No. of folios

Top 6 companies

HDFC Mutual Fund

Scheme
Hdfc top 200 Hdfc Balanced Fund Hdfc Capital Builder Hdfc Cash Mgmt Hdfc Equity Hdfc Mid Cap Hdfc Tax saver

Crisil ranking Category

1 1 2 3 2 1 1 Large Cap Balanced Diversified Equity liquid Diversified equity Small & mid cap ELSS

1 year return
19.4 16.7 17.7 9.8 18 21.3 14.7

AUM (JUNE 2012)

11,189.82 630.44 461.83 3149.4 9718.7 2012.9 3179.79

TOP 6 MUTUAL FUNDS

HDFC Mutual Fund Reliance Mutual Fund ICICI Prudential Mutual Fund Birla Sun Life Mutual Fund UTI Mutual Fund SBI Mutual Fund Franklin Templeton Mutual Fund

Mutual Fund : Birla Sun Life Mutual Fund

Setup Date: Dec-23-1994 Incorporation Date: Sep-05-1994 Sponsor: Aditya Birla Nuvo Limited, Sun Life (India) AMC Investments Inc. Trustee: Birla Sun Life Trustee Company Private Limited Assets managed: Rs. 72904.49 crore (Sep30-2012)

Top Ranked Schemes By CRISIL

Birla Sun Life MIP II -Savings 5 Plan (G) Category : MIP conservative Latest NAV : 20.25 Return : 11.5% AUM : 323.42 crores

Top Ranked Schemes By Crisil

Birla Sun Life MIP II Category : Small and Mid Cap Latest NAV : 250.17 Return : 21.7% AUM : 290.86 crores

Top Ranked Schemes By Crisil

Birla Sun Life Top 100 Fund (G) Category : Large Cap Latest NAV : 24.4 Return : 21.9% AUM : 282.79 crores

UTI Mutual Fund

Setup Date: Feb-01-2003 Incorporation Date: Nov-14-2002 Sponsor: State Bank of India / Punjab National Bank / Bank of Baroda / Life Insurance Corporation Trustee: UTI Trustee Co (P) Ltd Assets Managed: Rs. 70782.78 crore (Sep30-2012)

Top Ranked Schemes By Crisil

UTI Bond Fund (G) Category : Debt Long Term Latest NAV : 33 Return : 10.7% AUM : 824.43 crores

Top Ranked Schemes By Crisil

UTI Equity Fund (G) Category : Diversified Equity Latest NAV : 59.97 Return : 21.5% AUM : 1973.97 crores

Top Ranked Schemes By Crisil

UTI Liquid Fund - Cash Plan - Institutional (G) Category : Liquid Institutional Latest NAV : 1846.13 Return : 9.7% AUM : 12464.05 crores

Major Funds to Offer Good Returns In Future

MIP conservative Small and Mid Cap Large Cap Debt Long Term Liquid Institutional Diversified Equity Gilt Long Term ELSS

REASONS FOR FAVOURING THE ASSET CLASSES THAT MF HAVE OVER THE YEARS

MF asset classes are preferred over other asset classes because of its multistrategy/ multi-alternative strategies. Alternative strategies offer greater diversification, lower portfolio risk and provide for potentially higher long-term returns. Traditional asset classes such as stocks and bonds Convenience, cost efficiency, liquidity and transparency. Long/Short Equity funds These funds offer investors lower volatility than long-only funds, combined with downside protection and diversification . In comparison with typical hedge funds, long/short mutual funds offer lower investment fees and expenses, liquidity and transparency.

Continued..

Advantageous to the Retail Investors in case of commodity mutual funds: An actively managed commodity mutual fund employs ETFs and futures opportunistically to create liquidity and diversification as well as to buy individual securities when appropriate.
Most part of the investors money is invested in the Fixed Income asset class which provides consistent return and lower risk. The investors are able to lock in for higher yields. It is mostly suited for the risk-averse Indian investors. The asset classes are Professionally Managed. This reduces the risk and provides clear guidelines about the return expected.

The FY Gone by

762 new schemes VS 518 PY. Amount mobilized Rs. 121,357 crore VS Rs.124,890 crore PY. Total Funds mobilized:Rs. 68,19,679 crore VS Rs. 88,59,515 crore (Decline of 23%.) Redemptions at Rs. 68,41,702 crore were 23% lower than the redemptions of Rs. 89,08,921 crore in the previous year.

The Future holds

Retail Segment: Growth Drivers and Impact 1) Demographic + Urbanization Seeking alternative investment vehicle 2) Innovation in Distribution Tier 2 and Tier 3 Cities. 3) Awareness Financial Literacy programs by AMFI and GoI will foster equity culture. 4) Rise of Financial Planners Risk profiling and Proper asset allocation Institutional Segment: Growth Drivers and Impact 1) Rising corporate earning - Demand for sophisticated treasury management products. 2) Maturing capital markets Will bring more people investors, RGESS by GoI.

HOW IT WILL HAPPEN..

Mutual Fund Education Fund: Levy on AMC
Customer Awareness Program: Pan India campaign, mass media campaign through social media Awareness of Financial Planning at School and Graduation level.

Innovative Products: Capital Protection need, Child related needs. Open-ended schemes, Customized ETF

HOW IT WILL HAPPEN..

Distribution Channel: Post office, Tier 3 and 4 Banks, RRB, Co-operative banks. Develop a common online platform for AMC.
Improved Customer service at central level. Educate and keep the distributors updated. NISM And AMFI.

OUR FORECAST
The mutual fund industry, beset by net redemptions by investors and adverse global and local market conditions, shrank by 1.6% in terms of assets under management during the year FY2011-2012 The benchmark BSE Sensex and the assets under management (AuM) for the mutual fund industry have risen in tandem The mutual fund industry is primarily debt-oriented with debt funds (including liquid funds) forming 64% of the AuM

OUR FORECAST

OUR FORECAST

AuM by Geography

AuM Mix by Investor Type

The statistical analysis throws up a few more facts: Over 43% of the AuM is from corporate investors.

Over 90% of corporate investor funds are invested in non-equity schemes.

Almost 85% of corporate investors keep their funds in schemes for less than 12 months.

AuM Mix

With Raining reforms , markets to soar up JP Morgan Chase & Co. has predicted Sensex to reach 23000+ by the end of 2014 Looking at the past trend, MFs AuM to grow with upward moving market. Corporate Investors to come in large numbers. Courtesy policy reforms Investment in non equity schemes. Thus Income and money market schemes to grow.

AuM Mix by Investor type

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