4. Tata mutual funds 6. Reliance mutual funds

4.  CHAPTER 4-
LITERATURE REVIEW

4.1
Private sector mutual fund and Public sector mutual fund

4.2
Research Gap

4.3 CRISIL Ranking and Regulatory Trend

4.4 Future of Indian Mutual funds

 

4.1 MUTUAL FUNDS
OF PUBLIC SECTOR AND PRIVATE SECTOR

PUBLIC SECTOR MUTUAL
FUNDS

 1. State bank of
India mutual fund (SBI)

 2. Unit trust of
India (UTI)

 3. Bank of Baroda
mutual funds

 4. LIC mutual
funds

  PRIVATE SECTOR MUTUAL FUNDS

 1. Kotak Mahindra
mutual funds

 2. Birla sun life
mutual funds

 3. HDFC mutual
fund

 4. Prudential
ICICI mutual fund

 5. Tata mutual
funds

 6. Reliance mutual
funds 

Growth of AUM   by private and public sector mutual fund
houses

Graph 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 Schemes
Using 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 and
Private 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 sectors
and private sector mutual fund and this quite evidence empirically that
gradually   fund is less or more equal
and completive this is good sign for Indian mutual fund industry.

Now
we are living in digital era so everything is part of digital era .So the
Indian mutual fund. Recently NSC come up with proposal of EIPO that means now
you can invest in any IPO without any physical intervention and also the same
facility is given to mutual funds .Now every mutual fund house providing the
access to buy and sell the mutual fund and more about you can have power to
redeem your investment in mutual fund and on maturity you can take your payment
on line after deducting exit load.

.

Emerging
Technology and Investor friendly regulations adopted by private sector mutual
fund 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

When
I try to do research so I plan my research work to study available research
work on the subject and the literature related to my study it is found that so
far some researcher deal with statistical method or quantitative technique to
analyze the performance of the mutual fund. All researchers have used one or
two methods to compare the mutual funds of one or two schemes only. Some of the
research focused only on particular fund and identified the advantages and
disadvantages of the funds no research has focused   on comparing the similar type of open ended
schemes in various banks .Research Methodology the present research study has
been under taken to fill the gap to compare selected two schemes and two banks
by using of different statistical and ratio analysis. And also study about the
perception 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 public
sector mutual funds

4.3 CRISIL   RANKING AND REGULATORY TREND

 

 

Performance of CRISIL rated Funds

Balanced funds that have rankings in all quarterly CRISIL
Mutual 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 of
CRISIL rated Funds

 

 Mutual fund
industry 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-March
2013 quarter from Rs 7.87 trillion in the previous quarter (excluding fund of
funds) as per the latest numbers released by the Association of Mutual Funds in
India    (AMFI). This is the highest
level since September 2010, and the fourth successive quarterly gain in AUM mutual
fund industry 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-March 2013 quarter from Rs 7.87 trillion in the previous quarter
(excluding fund of funds) as per the latest numbers released by the Association
of Mutual Funds in India (AMFI).

This is the highest level since September 2010, and the
fourth successive quarterly gain in AUM. The month-end AUM, however, saw a
sharp decline of around 8% or Rs 586 Billon over the previous quarter to Rs
7.01   trillion at the end of March 2013.
Growth in assets in the latest quarter was mainly driven by long-term debt and
gilt funds. These funds posted a sharp rise in their assets in the quarter on
expectations of monetary easing from the Reserve Bank of India (RBI). The RBI
lowered its key lending rate, the repo rate, twice in the quarter (January and
March) by 25 bps each to 7.50%. Assets of long-term debt funds rose by 35% to
Rs 855 Billon while those of gilt funds gained by 63% to Rs 78 Billion during
the quarter. Investor interest in the long-term debt category has risen lately
as these funds benefit when the RBI cuts key interest rates. Bond prices and
yields Move in opposite directions. Accordingly, a fall in interest rates
results in a rise in bond prices and positively impacts gilt and long-term debt
fund NAVs (returns). Month end Assets, however, declined in the latest quarter
primarily due to large outflows from liquid funds. These outflows were due to
financial year-end withdrawals by banks to meet their Capital adequacy
requirements and by corporate to meet their advance tax requirements. AMFI has
also started disclosing AUM of direct plans that were launched from January 1,
2013. These plans enable investors to invest directly through the fund house
instead of through distributors. The latest AMFI data indicates that average
AUM of direct plans was around 15% of the industry AUM, mostly from short
maturity debt-oriented funds.

The returns of direct plans are higher to the extent of
distribution expenses in the scheme. AUM of 34 fund houses saw a rise in the
March quarter. ICICI Prudential Mutual Fund registered the highest growth in
absolute terms, by Rs 64 Billion, to Rs 878 bn. AMCs, which witnessed a fall in
AUM, included UTI Mutual Fund, whose average.

AUM fell by Rs 12 bn to Rs 695 bn, and L Mutual
Fund, whose average AUM fell by Rs 9 bn to Rs 112 bn. HDFC Mutual Fund retained
its top position by asset size at Rs 1.02 trillion. The share of top five
mutual funds by AUM was 53% while the share of top 10 funds was 77%. As per the
Securities and Exchange Board of India (SEBI) data, mutual funds sold equities
worth Rs 73 bn in the March quarter compared to net selling of Rs 76 bn in the
previous quarter. On the debt front, mutual funds were net buyers to the tune
of Rs 1.58 trillion compared to buying of Rs 1.04 trillion in the previous
quarter. Among regulatory developments, SEBI directed mutual funds to label
mutual fund products with pre-determined couler code to help investors assess
the risks associated with the schemes and prevent miss-selling. Product
labeling would include a description of the nature of scheme, its investment
horizon, its investment objective followed by kind of product i.e.
equity/debt.. SEBI allowed gold exchange traded funds to park up to 20% of
their AUM in banks’ gold deposit schemes. SEBI notified about setting up a Self
Regulatory Organisation (SRO) to monitor distributors of mutual fund and
portfolio Management   products. AMFI has
asked fund houses to follow a uniform process for aggregating split
transactions in debt schemes on the basis of the permanent account number (PAN)
of investors. Rs billion Net Inflow/(Outflow) Month.

 

 

 

 

 

REGULATORY TRENDS

In India Government do not allow unregulated financial
products

 

There are three main regulatory bodies


SEBI


IRDA


RBI

Basically in case of MF there is big role of SEBI under
different regulations


M F regulation Act 1993


M F regulation Act 1996


M F regulation Act 2003

Under the various regulations
the 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 schemes
carrying welfare of children and women. Regulatory instructed no commission or
brokerage can be paid from such plans.

 Single plan
structure for mutual fund schemes to remove disparity in expense structure of
different plans, the SEBI directed mutual funds / AMCs to launch schemes under
a single plan, and ensure that all new investors are subject to a single
expense structure.

Cash investments in mutual funds In order to enhance the
reach of mutual fund products amongst small investors who may not be tax payers
and who may not have Permanent source of income

  SEBI and Mutual funds

  Mutual fund
industry witnessed better growth and light regulation from SEBI since 1996. The
mobilization of capital and the number of investors operating in the industry
reached 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 other
guidelines have been issued by SEBI that sets uniform standards for all mutual
funds in India. All the mutual funds have to be registered with SEBI. The
regulations have laid down a detail procedure for launching of the key
provisions of the „SEBI Regulations, 1996? include:

All the schemes to be launched by the AMC needs to be
approved by the Board of Trustees and copies of offer documents of such schemes
are to be filed with SEBI.  The offer
documents shall contain adequate disclosures to enable the investors to be
informed about decisions.  The listing of
close-ended schemes is mandatory and they should be listed on a Recognized
stock exchange within six months from the closure of subscription. However, the
listing is not mandatory in case the scheme provides for monthly income or
caters to senior citizens, women, and children and physically handicapped;

(ii) if the scheme discloses details of repurchase in the
offer document; or (iii) if the scheme opens for repurchase within six months
of closure of subscription.  Units of a
close-ended scheme can be opened for sale or redemption at a

Predetermined 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 be
converted into an open-ended scheme with

 

 

4.4 Future of
Indian Mutual Funds

 

India is country of millions hope and known and unknown
opportunities. As
per the world bank IMF and other rating agencies like Moody and S&P
organizations world repute unanimously declaring India as the fastest growing
economy of the world. And prediction of world renounce economist that India
will be third largest economy up to 2022 and size of   GDP will be six trillion USD and stock
market will also climb high maybe touch 100,000 bases point means three fold of
today and so the GDP .So mutual is also function of GDP and stock market so
there

is
no doubt about the brighter future of Indian mutual fund and more very unique
about the India its Demography while whole world is aging India is still young
and remain young for quite 35 years or more so young dynamic and productive work
force ready to take more risk by investing in equity oriented schemes which
again transform saving into capital formation so future of Indian mutual fund
is more than bright

  

 

As per given figure it is more than clear than that  still 33% of holding in every mutual fund
portfolio still goes in  gold and real
estate types traditional instruments and very few in energy sector so is the
case of FMCG , auto and energy sectors.

·       
Asset under management (AUM) by the Indian
mutual fund industry recently

·       
As per estimation the growth of AMU increase
very fast from 15 Trillion to 20 Trillion 2017 July

·       
This is the highest CAG in any sector ranges to
25-30%

·       
SCHEME WISE COMPOSITION OF ASSETS

·       
The percentage share of equity-oriented schemes

·       
It is now 35.7% of the industry’s assets in July
2017, up from 31% in July 2016

 

 

in the market is a sore point with the banking and
financial services industry, with a large amount of savings are converted into
gold and real estate rather than the capital market. The GDP growth has slowed
down, sluggish at 5% in 2012-13, with savings and investment rates following a
downward trend. In 2010-11, the savings and investment rates were 34% and
36.8%, respectively, which declined to 30.8% and 35%, respectively, in 2011-12
and 31.8% and 35.4% in 2012-13.

4.5 Rationale of Study

My study based on the facts and
common perception of common investors rather than pure assumptions about the
mutual fund schemes cater for different category of people and give clear understanding
about schemes and break the myth about the mutual that only few selected
institutional investor and AMCs are benefited. And rest is loser and expense
ratio is hidden and entry load is low and exit load is very high. Every
investor has equal awareness about mutual whether belong to tire two cities or
metros. Picture is quite different all myth about the mutual are came out of
rather serious research. So my research try to answer those entire questions
arise in mind of common investor about the subject.

 

The percentage share of debt-oriented schemes

It is 41.3% of industry assets in July 2017, down from
42.3% in July 2016.

IN TERMS OF IN ESTOR SHARE IN MUTUAL ASSETS

Individual 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 holding

It account for 51.9% of the assets, of which corporate
are 88%.

The rest are Indian and foreign institutions and banks.