Mutual Funds A simple tool to achieve financial i goals..
What is Mutual Funds? Passed back to Generates Returns = Investor Pools money with Fund House Fund Managers invest in Capital Market
Types of Mutual Funds By Investment Objectives By Constitution Equity Hybrid Debt Others Open End Closed End Interval Diversified Fund ELSS (Tax Saving) Sectoral Funds Index Funds ETFs Equity Oriented Debt Oriented Monthly Income Plans (MIPs) Liquid Funds Floating Rate Funds Income Funds Gilt Funds Fixed Maturity Plans (FMPs) Gold ETFs Arbitrage Funds Fund of Funds
Mutual Funds Risk / Return Return << < >> Debt Hybrid & MIP GILT & Bond Funds Short Term Funds Ultra Short Term Funds >> > Return << Equity Sectoral Funds Diversified Funds (ELSS) Index Fund Balanced Funds Liquid fund Arbitrage Funds Low Med High >> Risk << Low Med High >> Risk <<
Indian Mutual Fund Industry
Industry Growth - AUM Asset Under Management (AUM) In the last 10 years, AUM has grown by 22.70% CAGR Source: AMFI
Worldwide Mutual Fund Assets 30.0000 25.00 20.00 25.77 26.13 24.78 24.63 21.64 18.92 18.16 20.34 22.38 22.95 23.02 21.44 23.07 15.00 10.00 5.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 (trillions of U.S. dollars, end of quarter) Source: Investment Company Institute
MF Industry AUM Composition Indian MF Industry World-wide 80.0% 70.0% 60.0% 71.0% 63.0% 45% 40% 35% 41% 40% 50.0% 46.5% 30% 40.0% 30.0% 20.0% 29.8% 23.7% 25.7% 33.0% 25% 20% 15% 10% 19% 10.0% 3.3% 4.0% 5% 0.0% 0% Mar-00 Mar-05 Mar-11 AUM Rs.113,005 Rs.149,600 Rs.700,538 Debt Equity Hybrid/ Others Sep-10 USD 23.07 trillion Source: AMFI & Investment Company Institute
Worldwide Mutual Fund Assets by Region Europe ; 33% Africa and Asia / Pacific; 13% Americ as; 54% Country 2000 2010;Q3 CAGR % World 11,871 23,696 7.55% United States 6,965 11,267 5.19% France 722 1,669 9.22% Luxembourg 747 2,438 13.26% Japan 432 749 5.96% India 13.5 123 26.22% Brazil 149 923 21.20% Russia 0.177 3.508 36.94% India s share to World MF AUM = 0.52% ( Figures in USD billion) Source: Investment Company Institute
Indian MF Industry Statistics Number of AMCs: 43 Number of Schemes in India: 1,413 Asset Class No. of Schemes Total Net Assets (Cr.) Debt 848 410,453 Equity 416 199,773 Hybrid 149 59,641 Grand Total 1,413 669,868..many schemes are in pipeline.. Number of Schemes in the World:68,863 (There are more than 17,600 schemes in US and more than 35,000 schemes in Europe) Source: Accordfintech; Investment Company Institute
India - Category wise break-up No. of Total Net Equity Schemes Assets (Cr.) Diversified Equity Funds 241 145,625 Index Funds 32 1,483 ETFs Equity 16 1,459 Tax Saving Plans / ELSS 45 23,369 FOF - Equity Oriented 28 4,036 Sectoral Funds 54 23,801 Debt Liquid Funds No. of Schemes Total Net Assets (Cr.) 112 234,841 Floating Rate Funds 17 7,283 FOF - Debt Oriented Gilt Funds 14 737 64 4,283 Income Funds 115 50,347 Fixed Maturity Plans (FMPs) & Interval Plans 526 112,963 Grand Total 416 199,773 Grand Total 848 410,454 Hybrid No. of Schemes Total Net Assets (Cr.) Arbitrage Funds 17 4,163 Balanced Funds 48 19,898 Capital Protection 20 3,079 FOF Hybrid 3 160 Monthly Income Plans (MIPs) 53 29,557 ETFs Gold 8 2,783 Grand Total 149 59,641 Source: Accordfintech
Top 10 AMCs by AUM Rank Mutual Fund Name Average AUM (Rs. Crs) 1 Reliance Mutual Fund 101,577 2 HDFC Mutual Fund 86,282 3 ICICI Prudential Mutual Fund 73,466 4 UTI Mutual Fund 67,189 5 Birla Sun Life Mutual Fund 63,696 6 SBI Mutual Fund 41,672 7 Franklin Templeton Mutual Fund 37,883 8 Kotak Mahindra Mutual Fund 32,202 9 DSP BlackRock Mutual Fund 30,601 10 Tata Mutual Fund 22,681 Average AUM as on 31 March, 2011 Top 5 AMCs constitute 56% of the AUM, whereas top 10 AMCs constitute nearly 80% of the Industry AUM. Source: AMFI
Mutual Fund Performance
Fund Performance - Equity Categories No. of Funds Net Assets (Rs. Crs) Absolute Return Compound Annualized % % YTD 1 Year 2 Year 3 year 5 Year 7 Year Diversified-Large cap 52 45,999-6.73 9.19 32.87 6.67 9.55 19.74 Diversified-Small-Mid cap 50 33,875-7.48 5.83 45.04 6.01 8.05 21.12 Diversified Multi Cap 110 54,539-6.57 8.28 35.04 5.78 8.66 19.59 ETFs Equity 16 1,900-5.23 15.33 39.00 13.59 13.20 18.67 Tax Saving Plans / ELSS 45 23,531-6.83 7.75 35.28 6.20 7.95 18.47 FOF - Equity Oriented 11 1,451-3.41 8.79 28.34 9.58 10.90 17.66 FOF Overseas 17 2,589 0.07 16.01 27.51 1.37 6.86 9.12 Index Nifty 22 1,080-6.55 10.24 28.90 4.98 9.20 16.54 Index - Sensex 10 400-6.59 659 10.85 31.75 540 5.40 906 9.06 17.36 BSE MIDCAP -8.47 2.74 43.27 1.47 5.09 17.79 BSE SENSEX -6.76 9.89 31.61 5.07 9.95 18.57 S&P CNX Nifty -6.42 10.32 30.15 5.00 10.17 17.61 Returns are as on 19 April 2011
Fund Performance - Equity Categories No. of Funds Category Net Assets Absolute Return Compound Annualized % % YTD 1 Year 2 Year 3 year 5 Year 7 Year Sector-Banks 6 2,496-1.35 28.06 53.56 23.38 25.87 28.08 Sector-Energy 4 5,284-10.24-6.52 22.94 0.39 19.10 -- Sector-FMCG 2 119-1.03 25.10 41.62 15.33 11.35 25.80 Sector-Infrastructure 23 14,866-8.29-2.62 28.60 0.99 9.21 18.41 Sector-Media 2 134-7.94-4.65 27.17-1.55 6.87 -- Sector-Pharma 4 830-5.38 14.72 54.60 23.53 12.71 20.43 Sector-Service 4 713-7.12 4.51 36.29 3.58 6.87 -- Sector-TECk 4 398-10.85 8.27 50.80 7.91 8.48 19.12 BSE MIDCAP -8.47 2.74 43.27 1.47 5.09 17.79 BSE SENSEX -6.76 9.89 31.61 5.07 9.95 18.57 S&P CNX Nifty -6.42 10.32 30.15 5.00 10.17 17.61 Returns are as on 19 April 2011
Fund Performance - Hybrid Categories No. of Funds Net Assets Rs. Crs. Absolute Returns % Compound Annualized % YTD 6 Month 1 Year 2 Year 3 year 5 Year Arbitrage- Equity Oriented 16 830 6.67 7.74 7.14 6.76 6.15 6.97 Arbitrage- Debt Oriented 1 3,270 827 8.27 785 7.85 683 6.83 560 5.60 602 6.02 700 7.00 Balanced- Debt Oriented 14 7,661-2.03-7.65 2.06 11.81 5.22 2.86 Balanced- Equity Oriented 34 11,987-13.92-8.84 8.07 27.43 7.45 9.33 Capital Protection 20 3,082 1.25 1.46 4.38 8.16 6.25 -- FOF Hybrid 3 160-3.29-0.45 6.79 20.95 11.95 11.94 Monthly Income Plans (MIPs) 53 29,564 2.45 2.97 5.77 9.59 7.48 7.40 Crisil Balanced Fund Index -12.40-4.33 8.76 21.17 6.68 9.79 Crisil MIP Blended Index 1.45 3.23 6.11 8.09 6.60 7.16 Returns are as on 19 April 2011
Fund Performance - Debt Categories No. of Funds Net Assets Rs. Crs. Annualised Returns % Compound Annualized (%) 1 Month 3 Month 6 Month 1 Year 2 Year 3 Year Liquid Funds 52 124,291 8.14 7.79 7.34 6.24 5.01 5.90 Ultra Short Term Funds 60 101,777 8.93 8.24 7.44 6.32 5.47 6.34 Floating rate Funds - Long Term 7 3,439 9.12 8.54 7.43 6.18 5.73 6.64 Floating rate Funds - Short Term 10 3,466 9.58 8.58 7.81 6.61 5.59 6.57 FOF - Debt Oriented 14 737 22.39 6.65 2.67 5.93 11.02 7.16 Gilt Funds - Long Term 43 3,550 3.05 6.58 6.08 4.96 2.68 6.74 Gilt Funds - Medium Term 3 3 3.95 8.64 6.60 6.19 6.17 7.75 Gilt Funds - Short Term 18 564 4.46 6.13 5.53 4.95 3.49 5.12 Income Funds - Long Term 53 19,318 8.94 7.67 6.72 5.63 4.55 6.94 Income Funds - Medium Term 13 5,661 10.88 8.52 6.80 5.42 4.22 4.44 Income Funds - Short Term 49 24,469 10.25 8.94 7.22 6.06 5.60 7.44 Fixed Maturity Plans (FMPs) 518 109,718 11.93 8.90 6.63 6.58 11.60 5.79 Crisil Composite Bond Fund Index 6.36 7.48 5.37 5.17 4.16 6.08 Crisil Liquid Fund Index 7.81 7.97 7.59 6.41 4.82 6.15 Crisil Short-Term Bond Fund Index 9.94 8.00 6.21 5.40 4.94 6.90 Returns are as on 19 April 2011
Fund Performance - Analysis Sensex: Performance since lowest level till now 09 March 2009 19 April 2011 Abs. Returns % 8,160 19,122 122 134% There are 397 equity funds in existence since 09 March 2009 190 funds out-performed Sensex i.e. ~ 48% funds 336 funds offered more than 100% returns i.e. ~ 84% funds 273% is the highest return earned by DSP BR MicroCap Fund 43% is the lowest return earned by Birla SL CEF-Global Prec Metal
Fund Performance - Analysis Sensex: Performance since previous all time high level till now 08 Jan 2008 19 April 2011 Abs. Returns % 20,873 19,122122-8.39% There are 318 equity funds in existence since 08 Jan 2008 150 funds out-performed Sensex i.e. ~ 47% funds 100 funds offered positive returns i.e. ~ 31% funds 107% is the highest return earned by Franklin Pharma Fund -65% is the lowest return earned by JM Basic Fund
How do I do Investment Planning? Start S early Invest regularly Plan for the future
Start Early Start Investing at age 50yrs 45 yrs 40 yrs 35 yrs 30 yrs 25 yrs Monthly Investment t Rs 5,000 Stop Investing at age 60 yrs Investment Period 10 yrs 15 yrs 20 yrs 25 yrs 30 yrs 35 yrs Total Investment (Rs) 6.0 lacs 9.0 lacs 12.0 lacs 15.0 lacs 18.0 lacs 21.0 lacs Current Value (Rs) 11.6 lacs 25.2 lacs 50.0 lacs 94.9 lacs 1.77 3.25 crores crores * Assumes compounded annual returns of 12% over the entire period Difference in returns is almost Rs 2.30 crores! (Investment amount difference is just Rs. 6 lakhs) the sooner you start, makes a difference! The Power of Compounding is the Eighth Wonder of The World Albert Einstein
I Invest Regularly l Inculcate a HABIT to SAVE a certain sum of money each month It is very easy to spend WEALTH, but very difficult to SAVE Weekend trips Entertainment Apparels Leisure Tickets - movie Holidaying We EARN regularly We SPEND regularly So should we not INVEST regularly? Time in the market is more important than timing the market. - Warren Buffett
Plan for the Future A proper planning is required for accomplishing future financial goals.. Housing Children's Education Retirement Children s Marriage Dream Car Holiday Abroad Plan for the future because that s where you re going to be spending the rest of your life - Mark Twain
Systematic Investment Plan (SIP) It is a method of investing a fixed sum, at a regular interval, in a mutual fund. It is very similar to monthly saving schemes like a recurring monthly deposit / post office deposit Convenience Direct-debit option available. Flexibility Start for amount as low as Rs 500 Continue for as long as you want Monthly or Quarterly Option Choice of dates (i.e. 1 st /7 th /10 th /15 th /25 th etc.) Choice of Tenure (ideal period 10 years)
SIP Performance of Rs 10,000 per month 10 years 15 years Ttl Total Investment t Rs 12 lakhs Rs 18 lakhs Scheme Name Present Value XIRR (%) Present Value XIRR (%) (Rs. lakhs) (Rs. lakhs) Reliance Growth Fund HDFC Equity Fund Franklin India Prima Plus Fund Franklin India Bluechip Fund 75.62 35.03 % 257.72 31.43 % 62.97 31.59 % 242.84 30.75 % 49.26 26.98 % 175.71 27.08 % 48.99 26.88 % 121.09 22.91 % # SIP Returns as on 19 April 2011 Additional Investment of Rs 6 lakhs over 5 yrs; is worth Rs 1.82 crores the sooner you start, makes a difference!
Demystifying NAV Net Asset Value While selecting a fund, the size of the NAV should not be the criteria, A low NAV need not mean that it s a good buy... Scheme Name NAV's on Return % 09 Mar, 2009 19 Apr, 20110 Religare AGILE 3.97 6.77 70.53% LIC Nomura MF Top 100 4.56 8.25 80.69% HSBC Dynamic 5.77 10.38 79.80% HSBC Midcap Equity 9.00 21.09 134.16% Reliance Banking 30.07 108.87 262.07% HDFC TaxSaver 83.66 234.86 180.74% HDFC Equity 91.23 282.99 210.21% Reliance Growth 183.38 464.96 153.55% Clearly the data suggests that there is no correlation between the NAV size and the returns.
Taxation of Mutual Funds In mutual funds there are two sources of Income: 1. Capital Appreciation: Capital Gain Tax is applicable You can make a profit by selling the units at a price higher than at which you bought 2. Income Distribution: Dividend Distribution Tax The fund distributes part of the appreciation to the investors as dividend Dividend Distribution Tax Capital Gains Individual Corporate Short Term $ Long Term Money 27.68% 27.68% As per 20% # (with Market (25% + Surcharge & (25% + Surcharge & Applicable Tax indexation) or Edu Cess) Edu Cess) Slab 10% #, Debt 13 84% 22 15% whichever h is Oriented Equity oriented* 13.84% (12.5% + Surcharge & Edu Cess) 22.15% (12.5% + Surcharge & Edu Cess) Nil Nil 15% # Nil * Implies >65% exposure to equity $ Period of holding less than one year lower
Contact Details Kiran Nate - Analyst Mutual Funds Tel: +91 22-4027 3422 (Dir), Mob: 98208 39890 (E) kiran.nate@ffsil.com (W) http://www.ffsil.com In case you have any operational query, please feel free to contact our MF back office team: Manohar Raut Tel: +91 22-4027 3733 (Dir), (E): manohar@ffsil.com Sandeep Patil Tel: +91 22-4027 3642 (Dir), (E): spatil@ffsil.com Manisha Wadkar Tel: +91 22-4027 3734 (Dir), (E): manisha@ffsil.com Fortune Group 2nd Floor, K K Chambers, Sir P T Marg, Fort, Mumbai, 400 001.
Disclaimer Risk Factors: Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss in the schemes or that the schemes objectives will be achieved. As with any investment in securities, the NAV of the units issued under the schemes can go up or down depending on various factors and forces affecting capital markets. Past performance of the Sponsor /the AMC/the Mutual Fund does not indicate the future performance of the schemes. Please read the scheme information documents of the scheme and the statement of additional information before investing.