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Mutual funds:
Mutual funds have become a hot favorite of millions of people all over the
world. Insimple words, a mutual fund collects the savings from small investors invest
them in Government and other corporate securities and earn income through interest
and Dividends, besides capital gains.
ULIPS as an investment is a very good vechicle for wealth creation, but we are totally
against the way unit linked insurance schemes are sold by insurance company
representatives andInsurance advisors.
2) Traditional insurance plans, which include term, endowment and whole life
policies, offer Multiple benefits in terms of risk cover, return and safety.
NEED OF THE STUDY
To know the rate of return fund maintenance charges administration charges in mutual
funds&ULIPS, as to calculate the return, the interest rate is assumed as 10% and the
investment is assumed as RS 100000.
A return is the main aspect to the investors, the schemes which give more return will
secureGood position in the market.
OBJECTIVES OF THE STUDY
The study is basically made to analyze the various schemes to highlight the diversity
of investment that mutual fund & ulips offer through the study one would understand
how Common man could fruitfully convert pittance into great penney by wisely
investing intoThe right scheme according to his risk abilities.
RESEARCH METHODOLOGY
1)primary data .
2)secondary data.
Primary data
Secondary data
In this study the total information has obtained from primary data and rest from
secondary data.
LIMITATIONS OF THE STUDY
1. This study is limited due to the analysis of only two companies i.e ICICI of
mutual fund &METLIFE of ulips
2. The study is conducted based on the past 5years data of ICICI MF &
METLIFE of ULIPS plans.
3. The study is mainly based on secondary data.
INDUSTRY PROFILE
Indian markets have recently thrown open a new avenue for retail investors and
traders to participate in: commodity derivatives. For those who want to diversify their
portfolios beyond shares, bonds and real estate, commodities are the best option. Till
some months ago, this wouldn't have made sense. For retail investors could have done
very little to actually invest in commodities such as gold and silver or oilseeds in the
futures market. This was nearly impossible in commodities except for gold and silver
as there was practically no retail avenue for punting in commodities. Whatever it may
be , with the setting up of three multi-commodity exchanges in the country, retail
investors can now trade in commodity futures without having any physical stocks
Commodities actually offer immense potential to become a separate asset class for
market-savvy investors, arbitrageurs and speculators. Retail investors, who claim to
understand the equity markets may find commodities an unfathomable market. But
commodities are easy to understand as far as fundamentals of demand and supply are
concerned. Retail investors should understand the risks and advantages of trading in
commodities futures before taking a leap. Historically, pricing in commodities futures
has been less volatile compared with equity and bonds, thus providing an efficient
portfolio diversification option.
Like any other market, the one for commodity futures plays a valuable role in
information pooling and risk sharing. The market mediates between buyers and sellers
of commodities, and facilitates decisions related to storage and consumption of
commodities. In the process, they make the underlying market more liquid
The trading of commodities consists of direct physical trading and derivatives trading.
The commodities markets have seen an upturn in the volume of trading in recent
years. In the five year up to 2010, the value of global physical exports of commodities
increased by 17% while the notional value outstanding of commodity OTC(over the
counter) derivatives increased more than 500% and commodity derivative trading on
exchanges more than 200%.
Present scenario
Todays commodity market is a global market place not only for agricultural
products, but also currencies and financial instruments such as Treasury bonds and
securities futures. Its a diverse marketplace of farmers, exporter, importers,
manufacturers and speculators. Modern technology has transformed commodities into
a global marketplace where a Kansas farmer can match a bid from a buyer in Europe.
The 2008 global boom in commodity prices- for everything from coal to corn was
fueled by heated demand from the likes of China and India, plus unbridled speculation
in forward markets.
The bubble popped in the closing months of 2008 across the board. As a result,
farmers are expected to face a sharp drop in crop prices, after years of record revenue.
Other commodities, such as steel, are also expected to tumble due to lower demand.
This will be a rare positive for manufacturing industries, which will experience a drop
in some input costs, partly offsetting the decline in downstream demand.
The Indian broking industry is one of the oldest trading industries that have been
around even before the establishment of BSE in 1875.
Inception- The roots of a stock market in India began in the 1860s during the
American Civil War that led to a sudden surge in the demand for cotton from India
resulting in setting up of a number of joint stock companies that issued securities to
raise finance.
Bubble burst- The early stock market saw a boom till 1865, and then in Jul
1865, what was then used to be called the share mania ended with burst of the stock
market bubble. In the aftermath of the crash, banks, on whose building steps share
brokers used to gather to seek stock tips and share news, disallowed them to gather
there, thus forcing them to find a place of their own, which later turned into the Dalal
Street. A group of about 300 brokers formed the stock exchange in Jul 1875, which
led to the formation of a trust in 1887 known as the Native Share and Stock Brokers
Association
Beginning of a new phase- A new phase in the Indian stock markets began in
the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led
to divestment of foreign equity by the multinational companies, which created a surge
in retail investing.
Setting up of SEBI- the Securities and Exchange Board of India (SEBI), which
was set up in 1988 as an administrative arrangement, was given statutory powers with
the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include-
Cash market (spot market) largest traded, the spot market or cash market is a
commodities or securities market in which goods are sold for cash and delivered
immediately. Derivatives market after cash market, the derivatives markets are the
financial markets for derivatives. The market can be divided into two that for
exchange traded derivatives and that for over-the-counter derivatives.
Debt market - The bond market (also known as the debt, credit, or fixed
income market) is a financial market where participants buy and sell debt securities.
There are two basic financial market participant categories, Investor vs. Speculator
and Institutional vs. Retail. Action in financial markets by central banks is usually
regarded as intervention rather than participation.
A market participant may either be coming from the Supply Side, hence supplying
excess money (in the form of investments) in favor of the demand side; or coming
from the Demand Side, hence demanding excess money (in the form of borrowed
equity) in favor of the Supply Side. This equation originated from Keynesian
Advocates. The theory explains that a given market may have excess cash; hence the
supplier of funds may lend it; and those in need of cash may borrow the funds
supplied. Hence, the equation: aggregate savings equals aggregate investments.
The demand side consists of: those in need of cash flows (daily operational needs);
those in need of interim financing (bridge financing); those in need of long-term funds
for special projects (capital funds for venture financing).
The supply side consists of: those who have aggregate savings (retirement funds,
pension funds, insurance funds) that can be used in favor of demand side. The origin
of the savings (funds) can be local savings or foreign savings. So much pensions or
savings can be invested for school buildings; orphanages; (but not earning) or for road
network (toll ways) or port development (capable of earnings).
The earnings go to owner (Savers or Lenders) and the margin goes to the banks.
When the principal and interest are added up, it will reflect the amount paid for the
user (borrower) of the funds. Thus, an interest percentage for the cost of using the
funds.
Investor
However, the term has taken on a specific meaning in finance to describe the
particular types of people and companies that regularly purchase equity or debt
securities for financial gain in exchange for funding an expanding company. Less
frequently the term is applied to parties who purchase real estate, currency,
commodity derivatives, personal property, or other assets.
Speculation
Institutional investor
Retail investor
The India Infoline group, comprising the holding company, India Infoline Limited and
its wholly-owned subsidiaries, straddle the entire financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance,
Fixed deposits, GoI bonds and other small savings instruments to loan products and
Investment banking. India Infoline also owns and manages the websites
www.indiainfoline.com and www.5paisa.com
The company has a network of 596 branches spread across 345 cities and towns. It
has more than 500,000 customers
India Infoline Limited is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also
a member of both the exchanges. It is engaged in the businesses of Equities broking,
Wealth Advisory Services and Portfolio Management Services. It offers broking
services in the Cash and Derivatives segments of the NSE as well as the Cash
segment of the BSE. It is registered with NSDL as well as CDSL as a depository
participant, providing a one-stop solution for clients trading in the equities market. It
has recently launched its Investment banking and Institutional Broking business
VISION
Our vision is to be the most respected company in the financial services space.
MISSION
To become a full-fledged financial services company known for its quality of advice,
personalized services and cutting edge technology
IIFLs philosophy on Corporate Governance
Committee
Audit Committee
Terms of reference & Composition, Name of members and Chairman The Audit
committee comprises Mr Nilesh Vikamsey (Chairman), Mr R Venkataraman, Mr
Kranti Sinha, two of whom are independent Directors. The Chairman along with the
Statutory and Internal Auditors are invitees to the Meeting.
The Terms of reference of this committee are as under - To investigate into any matter
that may be prescribed under the provisions of Section 292A of The Companies Act,
1956 - Recommendation and removal of External Auditor and fixation of the Audit
Fees. - Reviewing with the management the financial statements before submission of
the same to the Board. - Overseeing of Companys financial reporting process and
disclosure of its financial information. - Reviewing the Adequacy of the Internal Audit
Function.
In line with our vision to be the most respected company in the financial services
space, we recognize the importance of contributing to and sustaining social
transformation. With this end in mind, we have setup the IIFL foundation, which will
work for the support and upliftment of the underprivileged sections of society.
The IIFL Foundation focuses on specific areas of need such as healthcare and
education, the foundation will screen and select institutions and developmental
agencies which are working in these domains and will provide necessary aid to
improve the lives of the underprivileged and help them in achieving their potential.
Barsana Camp
We sponsored an Eye and Dental camp, from Jan. 31st to Feb. 3rd, 2012, conducted
by expert Doctors and Surgeons from the Bhaktivedanta Foundation in the village of
Barsana near Mathura.
We also sponsored the Pandharpur Medical Camp, held by the Bhaktivedanta Hospital
in
We organise blood donation drives at camps all across India. Over 800 employees
have participated in these camps so far.
Adopt a Village
To expand our initiatives, we are now exploring the best ways to take education in
rural and tribal areas beyond the key basics of abc. In our Adopt a Village scheme
we hope to impart knowledge about water conservation, waste management,
sanitation, corruption prevention, and many other essential fields.
The content services represent a strong support that drives the broking, commodities,
mutual fund and portfolio management services businesses. Revenue generation is
through the sale of content to financial and media houses, Indian as well as global.
India Infoline Marketing and Services Limited is the holding company of India
Infoline Insurance Services Limited and India Infoline Insurance Brokers Limited
India Infoline Insurance Services Limited is a registered Corporate Agent with the
Insurance Regulatory and Development Authority (IRDA).
It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Limited,
which is India's largest private Life Insurance Company. India Infoline was the first
corporate agent to get licensed by IRDA in early 2007.
India Infoline Insurance Brokers Limited India Infoline Insurance Brokers Limited is
a newly formed subsidiary which will carry out the business of Insurance broking. We
have applied to IRDA for the insurance broking licence and the clearance for the same
is awaited. Post the grant of license, we propose to also commence the general
insurance distribution business
IIFL (Asia) Private Limited is wholly owned subsidiary which has been incorporated
in Singapore to pursue financial sector activities in other Asian markets. Further to
obtaining the necessary regulatory approvals, the company has been initially
capitalized at 1 million Singapore dollars.
THE MANAGEMENT
Nirmal Jain, MBA (IIM, Ahmedabad) and a Chartered and Cost Accountant, founded
Indias leading financial services company India Infoline Ltd. in 1995, providing
globally acclaimed financial services in equities and commodities broking, life
insurance and mutual funds distribution, among others. Mr. Jain began his career in
1989 with Hindustan Levers commodity export business, contributing tremendously
to its growth. He was also associated with Inquire-Indian Equity Research, which he
co-founded in 1994 to set new standards in equity research in India.
Mr. R Venkataraman
Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Infoline
comprises
Mr. Sat Pal Khattar, - Board member since April 2007 - Presidential Council of
Minority Rights member, Chairman of the Board of Trustee of Singapore Business
Federation, is also a life trustee of SINDA, a non profit body, helping the under-
privileged Indians in Singapore. He joined the India Infoline board in April 2007.
Mr. Khattar is a Director of public and private companies in Singapore, India and
Hong Kong; Chairman of Guocoland Limited listed in Singapore and its parent Guoco
Group Ltd listed in Hong Kong, a leading property company of Singapore, China and
Malaysia. A Board member of India Infoline Ltd, Gateway Distriparks Ltd both
listed and a number of other companies he is also the Chairman of the Khattar
Holding Group of Companies with investments in Singapore, India, UK and across
the world.
Mr. Kranti Sinha Board member since January 2010 completed his masters
from the Agra University and started his career as a Class I officer with Life Insurance
Corporation of India. He served as the Director and Chief Executive of LIC Housing
Finance Limited from August 1998 to December 2008 and concurrently as the
Managing Director of LICHFL Care Homes (a wholly owned subsidiary of LIC
Housing Finance Limited). He retired from the permanent cadre of the Executive
Director of LIC; served as the Deputy President of the Governing Council of
Insurance Institute of India and as a member of the Governing Council of National
Insurance Academy, Pune apart from various other such bodies. Mr. Sinha is also on
the Board of Directors of Hindustan Motors Limited, Larsen & Turbo Limited,.
Privacy Policy
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automatically collected through the standard operation of Indiainfoline.com's internet
servers or through the use of "cookies." "Cookies" are small text files a web site can
use to recognize repeat users, facilitate the user's ongoing access to and use of the site
and allow a site to track usage behavior and compile aggregate data that will allow
content improvements and targeted advertising.
Cookies are not programs that come onto a user's system and damage files. Generally,
cookies work by assigning a unique number to the user that has no meaning outside
the assigning site. Users are also being made aware that Indiainfoline.com cannot
control the use of cookies or the resulting information by advertisers or third parties
hosting data for Indiainfoline.com. If a user does not want information collected
through the use of cookies, there is a simple procedure in most browsers that allows
the user to deny or accept the cookie feature; however, users should note that cookies
may be necessary to provide the user with certain features (e.g., customized delivery
of information) available from Indiainfoline.com.
Indiainfoline.com reserves the right to change this policy at any time by notifying
users of the existence of a new privacy statement. This statement and the policies
outlined herein are not intended to and do not create any contractual or other legal
rights in or on behalf of any party.
We use MaxOnline and other third-party advertising companies to serve ads when you
visit our Web site. These companies may use information (not including your name,
address, email address or telephone number) about your visits to this and other Web
sites in order to provide advertisements on this site and other sites about goods and
services that may be of interest to you.
In the course of serving advertisements to this site, our third-party advertiser may
place or recognize a unique cookie on your browser.
Key Features
1. Membership on the Bombay Stock Exchange Limited and the National Stock
Exchange
3. Presence across 19 states through a 177 strong branch networks, with 75,000
online registered users
Equities
India Infoline provided the prospect of researched investing to its clients, which was
hitherto restricted only to the institutions. Research for the retail investor did not exist
prior to India Infoline. India Infoline leveraged technology to bring the convenience
of trading to the investors location of preference (residence or office) through
computerized access. India Infoline made it possible for clients to view transaction
costs and ledger updates in real time.
Over the last five years, India Infoline sharpened its competitive edge through the
following initiatives
The customer can trade on the BSE and NSE, in the cash as well as the derivatives
segment all through the available multiple options of Internet, phone or branch
presence.
Multiple-trading options
The Company harnessed technology to offer services at among the lowest rates in the
business.
Membership
The Company widened client reach in trading on the domestic and international
exchanges.
Technology
Content
The Company has leveraged its research capability to provide regular updates and
investment picks across the short and long-term.
Service
Clients can access the customer service team through various media like toll-free
lines, emails and Internet- messenger chat for instant query resolution. The
Companies customer service executives proactively contact customers to inform them
of key changes and initiatives taken by the Company. Business World rated the
Companies customer service as Best in their survey of online trading sites carried out
in December 2003.
Key features
Membership on the Bombay Stock Exchange Limited and the National Stock
Exchange
Presence across 350 cities and towns with a network of over 850 business
locations Equity client base of over 500,000 clients
Commodities
India Infolines extension into commodities trading reconciles its strategic intent to
emerge as a one stop solutions financial intermediary. Its experience in securities
broking has empowered it with requisite skills and technologies. Increased offering
The Companies commodities business provides a contra-cyclical alternative to
equities broking. The Company was among the first to offer the facility of
commodities trading in Indias young commodities market (the MCX commenced
operations only in 2003). Average monthly turnover on the commodity exchanges
increased from Rs 0.34 bn to Rs 20.02 bn. The commodities market has several
products with different and non-correlated cycles. On the whole, the business is fairly
insulated against cyclical gyrations in the business.
Complete solution
The Company provides a complete - advice to execution solution facilitated by
information and advice on likely commodity trends in the Indian and international
environment.
Technology
The Company has extended the trading terminal to the investors home/workplace
reinforced with real-time commodity information and ledger position.
Rates
The Company harnessed technology to offer services at among the lowest rates in the
business. Membership The Company widened client reach in trading on the domestic
and international exchanges.
Key Features
Enjoys memberships with the MCX and NCDEX, two leading Indian
commodities exchanges
Multi-channel delivery model, making it among the select few to offer online
as well as offline trading facilities
INSURANCE
An entry into this segment helped complete the client's product basket; concurrently,
it graduated the Company into a one stop retail financial solutions provider. To ensure
maximum reach to customers across India, we have employed a multi pronged
approach and reach out to customers via our Network, Direct and Affiliate channels.
Following the opening of the sector in 1999-2000, a number of private sector
insurance service providers commenced operations aggressively and helped grow the
market.
The Companies entry into the insurance sector derisked the Company from a
predominant dependence on broking and equity-linked revenues. The annuity based
income generated from insurance intermediation result in solid core revenues across
the tenure of the policy.
Over the last five years, India Infoline sharpened its competitive edge in this business
segment through the following initiatives
Client base
Grew its 40,000 strong client base through knowledge-led analysis, translating into an
attractive opportunity to cross-sell products and generate referral business.
Distribution network
Hands-on training
Invested aggressively in training its field force more than 100 hours a year in product
attributes across the insurance sector - highlighting various product details and
marketing skills apart from regular meets where best practices are shared.
Technology
Provided clients with advice on diverse investment products based on the customers
existing and prospective financial profile.
Key features
India Infoline was the first corporate in India to get the agency licence in early
2001
The Company is the biggest corporate agency in India for life insurance
products
Our mutual funds are created with these needs in mind we start with you.
Before you choose investments, think about your financial goals, risk tolerance and
time frame.
Then choose investments that match them. For more information about these
topics see the Relevant Links box to the right.
The investment pyramid below shows fund categories that are suitable for
different time frames, with the longest time frames at the top and the shortest at the
base of the pyramid.
CHARACTERISTICS OF MUTUAL FUNDS
1. A mutual fund actually belongs to the investors who have pooled their funds.
The ownership of the mutual fund is in the hands of the investors.
4. The investors share in the fund is denominated by units. The value of the
units changes with the change in the portfolios value, everyday. The value of
one unit of the investment is called as the Net Asset Value or NAV
SPONSOR
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net
worth of the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. The
Sponsor is not responsible or liable for any loss or shortfall resulting from the
operation of the Schemes beyond the initial contribution made by it towards setting up
of the Mutual Fund.
TRUST
TRUSTEE
The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application form,
redemption requests and dispatches account statements to the unit holders. The
Registrar and Transfer agent also handles communications with investors and updates
investor records.
ELIGIBILITY TO BUY MUTUAL FUND UNITS
Mutual Funds usually specify in their offer documents the categories eligible to invest
in a given scheme. Usually all categories of investors except for foreign nationals and
entities are eligible to apply. However there can be special schemes not specific
categories which are not available for other categories of investors. For example, a
fund may have special schemes for trusts and charitable organizations in which other
categories are not eligible to apply. In some cases, the minimum investment limit is
very high, intending to attract institutional and large investors. The following
categories of investors are eligible:
1. Resident individuals
2. Indian companies
4. Banks
6. Insurance companies
7. Provident funds
8. Non-resident Indians
On observing the past trends, it can be seen that certain factors are essential
for he growth of the mutual funds industry. These factors are:
INVESTOR BASE
A Mutual fund makes it possible for investors to earn a higher return on their
capital by pooling the capital of a large number of small investors and investing the
pooled sum in a diversified manner. As the small investors cannot diversity on their
own, their presence acts as a catalyst for the mutual funds to grow. As different
investors have different investment requirements their presence also acts as an
incentive for the mutual funds to come up with new schemes, thus helping in further
evolution of the industry.
RETURNS ON MARKET
Mutual funds invest in a diversified manner; the returns generated by them are
generally reflective of the market returns. Higher the market returns, higher the
expected returns from mutual funds. Higher expected returns attract more investors,
giving a boost to the mutual funds.
INVESTMENT AVENUES
World wide, Mutual Fund or unit trust as it is referred to in some parts of the
world, has a long and successful history. The popularity of Mutual Fund has increase
manifold in developed financial markets, like the United States. As at the end of
March 2006, in the US alone there were 8002 Mutual Fund with total assets of over
US $ 9.36 trillion (Rs. 427 lakh crore)
In India, the Mutual Fund industry started with the setting up of the Unit Trust
of India in 1964. Public sector banks and financial institutions were allowed to
establish MF in 1987. Since 1993, private sector and foreign institutions were
permitted to set up MFs.
In February 2003, following the repeal of the Unit Trust of India Act 1963 the
erstwhile UTI was bifurcated into two separate entities Viz. The specified undertaking
of the Unit Trust of India, representing broadly, the absets of US 64 schemes, assured
the turns and certain others scheme and UTI MF conforming to SEBI MF
Regulations.
As at the end of March 2006, there were 29 MFs, which managed assets of Rs
231862 crores (Us $52 billion) under 592 scheme this fast growing industry is
regulated by the Securities and Exchange Board of India (SEBI)
The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank. The
history of mutual fund in India can be broadly divided into four distinct phases.
INTRODUCTION TO INSURANCE
Early insurance goes back to the Egyptian times. It was known that around 3000 BC,
Chinese merchants dispersed their shipments among several vessels to avoid the
possibility of damage or loss. There are some insurance companies around today in
the United States that provided insurance back in the mid 1700s, as well as some that
provided relief to banks during the 1930s and the Great Depression. Today, there is
insurance for any aspects of daily living: Business, Auto, Health, Life and Travel.
Each of those categories includes sub-categories, branching off into numerous
divisions.
From the beginning human societies sought ways to soften the shocks of existence. Our
ancestors were very much aware that no individual could go it alone, that only by pooling the
resources of the many could the unfortunate few be helped.
This simple notion of mutuality persists like a welcome footpath through the incredible tangle
of human history. While empires have risen and collapsed, through wars, famines and
pestilence, during the ebb and flow of struggling generations, the idea of insurance as the
victory of human thought over the rude violence of life
Even as human society emerged from the darkness of unrecorded time, we see it at once. In
ancient Babylonia, where from the confluence of two rivers, enterprising merchants sent
caravans and ships to trade with all parts of the known world: with Egypt, Phoenicia, India
and China.
To reduce the risk of robbery, plunder and capture for ransom, the Babylonians devised a
system of contracts in which the supplier of capital for a venture agreed to cancel the loan if
the trader was robbed of his goods. The trader who borrowed the capital paid an extra amount
for this protection (a premium) in addition to the usual interest. As for the lender, collecting
these premiums from many traders made it possible for him to absorb the losses of the few.
This arrangement proved to be more appealing and sensible than the earlier one of pledging
not only the traders ships and other tangible property, but also his life (as a slave) and those
of his family as well. Accordingly, the practice was sensibly legalized in the Code of
Hammurab.
These arrangements became well known to the Phoenicians and to the Greeks, Hindus we
discover a comprehensive code of sea laws, including a principle of jettison or general
average. It states that if it becomes necessary to throw goods overboard in order to lighten
the ships, such sacrifice for the common benefit should be made good by a common
contribution. The very word insurance is derived from the Latin word for security.
Unit linked insurance plan (ULIP) is a life insurance solution that provides the client
with the benefits of protection and flexibility in investment. It is a solution which
provides for life insurance where the policy value at any time varies according to the
value of the underlying assets at the time. The investment is denoted as unit and is
represented by the value that it has attained called as Net Asset Value (NAV).
In other words, it is a policy, which provides for life insurance where the policy value
at any time varies according to the value of the underlying assets at the time. ULIP is
life insurance solution that provides for the benefits of protection and flexibility in
investment. The investment is denoted as units and is represented by the value that it
has attained called as Net Asset Value (NAV).
A unit-linked insurance plan provides both insurance and investment benefit. In unit-
linked plans, the premiums paid are invested in funds offered by the company; the
policyholder determines the appropriate ratio of investments into these funds. The
funds are generally invested in equities, debt instruments, money market instruments,
and government securities.
The value of the policy is determined on any day by multiplying the number of units
issued by the value of units on that day. The value of these units is called the Net
Asset Value (NAV) and is normally published in newspapers on a daily basis. Unit-
linked insurance products are risky because the premium money invested is subject to
market risk. The funds do not offer a guaranteed or assured return. Insurance
companies will only show you a projected return, which may or may not be achieved
during the term of the policy.
ULIPs are a category of goal-based financial solutions that combine the safety of
insurance protection with wealth creation opportunities. In ULIPs, a part of the
investment goes towards providing a life cover. The residual portion of the ULIP is
invested in a fund which in turn invests in stocks or bonds; the value of investments
alters with the performance of the underlying fund opted by the customer.
Simply put, ULIPs are structured in such that the protection element and the savings
element are distinguishable, and hence managed according to your specific needs. In
this way, the ULIP plan offers unprecedented flexibility and transparency.
ULIPs came into play in 1960s and became very popular in Western Europe and
America. The reason that is attributed to the wide spread popularity of ULIP is
because of the transparency and the flexibility which it offers to the clients. As time
progressed the plans were also successfully mapped along with life insurance needs to
retirement planning .In todays times ULIP provides solution for all the needs of a
client like insurance planning, financial needs, financial planning for childrens future
and retirement planning.
STRUCTURE OF ULIPs
the different types of fees and charges are given below. However the insurers have the
right to revise or cancel the fees and charges over a period of time.
Mortality Charges
These are charges to provide for the cost of insurance coverage under the plan.
Mortality charges depend on number of factors such as age, amount of coverage, state
of health etc.
These are fees levied for management of the fund(s) and are deducted before arriving
at the Net Asset Value (NAV) .
These are the fees for administration of the plan and levied by cancellation of units.
This could be flat throughout the policy term or vary at a predetermined rate.
Surrender Charges
A surrender charge may be deducted for premature partial or full encashment of units
wherever applicable, as mentioned in the policy conditions.
Generally a limited number of fund switches may be allowed each year without
charge, with subsequent switches, subject to a charge. But now a days many insurers
offer fund switching free of cost.
Before allotment of the units the applicable service tax is deducted from the risk
portion of the premium.
TYPES OF FUNDS UNDER ULIPs
Most insurers offer a wide range of funds to suit ones investment objectives, risk
profile and time horizons. Different funds have different risk
profiles. The potential for returns also varies from fund to fund. The following are
some of the common types of funds available along with an indication of their risk
characteristics.
General description
Nature of investments Risk
category
Primarily invested in
company stocks with the
Equity Funds Medium to High
general aim of capital
appreciation.
Invested in corporate
Medium
income,fixed interest and bonds,government
bond funds securitiess and other fixed
income instruments.
Combining equity
Balanced funds investement with fixed Medium
inerest instruments
ADVANTAGES OF ULIPS
ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one stop solution for everything the customers want. Unit
Linked Insurance Plans (ULIPs) are different from traditional plans purely because,
they are much more transparent, various charges are shared with the customer before
the sale of the product, so as to enable the customer to make an informed decision.
Customers have the flexibility to choose their life cover. Also the customers have the
choice of multiple fund options based on their risk appetite, thereby enabling an
investor to make the desired returns from the investment.
The investment is denoted as unit and is represented by the value that it has attained
called as Net Asset Value (NAV).
UNIT LINKED UNITS UNDERLYING
INSURANCE
POLICIES IN INVESTMENT
FUNDS
ULIP came into play in 1960s and became very popular in Western Europe and
America. The reason that is attributed to the wide spread popularity of ULIP is
because of the transparency and the flexibility which it offers to the clients.
As time progressed the plans were also successfully mapped along with life insurance
needs to retirement planning.
In todays times ULIP provides solution for all the needs of a client like insurance
planning,financial needs,financial planning for childrens future and retirement
planning.
COMPARISON OF ULIP WITH OTHER INVESTMENT MODULES
MIN.
MAX
OTHER TAX
TAX FREE
RATE OF TIME INVES BENE
RISK INVEST
INSTRUME RETURN PERIOD T RETURN
NT FIT
MENT
MENT
Market
ELSS 3years Risky 500 No limit Yes Yes
return
Market Risky
ULIP 5years 500 No limit Yes Yes
return Module
Only
Capital
in
Market Open
MUTUAL High 500 No limit gain @10%
Return Ended for time less ELSS
FUND than 1year Funds
Capital gain
No time Very @10% for
STOCK Variable Variable No limit No
high time less
frame
than 1 year
Save: this is an activity that helps in the asset allocation. It has both a short term &
long term perspective.
Invest: this is an activity that focuses asset creation. It involves making money
from money.
Spend: this is the activity of using the money for our expenses.
ASSET ACCUMULATION
SAVE
ASSET
CREATION
INVEST
ASSET PROTECTION
SPEND
The degree of buying of ULIPs insurance varies from person to person. It depends
upon many factors. The factors can be classified into personal, social, economic,
psychological and company related variables. Age and experience of policyholder are
personal factors, while the coeducation is a social factor. Economic factors include
occupation, income and wealth, and the psychological factors consist of perception,
satisfaction about the services rendered by insurance companies, the impact of
advertisement and personal selling made by insurance companies on policyholders.
The company related variables are the promotional efforts to sell the policies to
prospective buyers. These include advertisement and personal selling too.
COMPARISON OF RETURNSOF HDFC ANNUAL INTERVAL FUND -
SERIES 1 - PLAN A HDFC ANNUAL INTERVAL FUND- SERIES I AND SBI
LIFE KALYAN ULIP, GROUP SHORT TERM PLUS FUND 01-MAR-2016 TO
30-MAY-2016
DATE
INTERPRETATION:
The above graph represents the returns of HDFC Annual Interval Fund and SBI
ULIPS it shows that there is continuous stability in net asset value.
If we see the table the average return is -0.114 and risk is 1.099. Thus it can be said
that risk is very high when compared to returns.
The return on 11-03-2016 is 0.019 and at the end of the study period on 31-05-
2016the return is 0.018.
COMPARISON OF RETURNSOF HDFC ANNUAL INTERVAL FUND -
SERIES 1 - PLAN A HDFC ANNUAL INTERVAL FUND- SERIES I AND SBI
LIFE KALYAN ULIP, GROUP SHORT TERM PLUS FUND JUNE TO
AUGUST 2016
DATE
INTERPRETATION:
The above graph represents the returns of HDFC Annual Interval fund and HDFC
ULIPS it shows that there is continuous fluctuations in net asset value.
If we see the table the average return is 0.032 and risk is 0.0010. Thus it can be said
that risk is very low when compared to returns.
The return on 02-06-2016 is 0.022 and at the end of the study period on 31-08-2016
the return is 0.017.
COMPARISON OF RETURNSOF HDFC ANNUAL INTERVAL FUND -
SERIES 1 - PLAN B HDFC ANNUAL INTERVAL FUND- SERIES I AND SBI
LIFE KALYAN ULIP PLUS (V02), SBI LIFE GROUP DEBT PLUS FUND
IIFROM MARCH TO MAY 2016
HDFC ANNUAL INTERVAL SBI LIFE KALYAN ULIP
FUND
EFFECTIVE NAV
Date NAV RETURNS
DATE RETURNS
01-03-2016 11.942
10-03-2016 11.8563 - -
02-03-2016 11.957
11-03-2016 11.8587 0.020 0.126
03-03-2016 11.968
14-03-2016 11.8658 0.060 0.092
04-03-2016 11.972
15-03-2016 11.8682 0.020 0.032
08-03-2016 11.981
16-03-2016 11.8706 0.020 0.074
09-03-2016 11.989
17-03-2016 11.8729 0.019 0.070
10-03-2016 11.984
18-03-2016 11.8753 0.020 -0.043
11-03-2016 11.995
21-03-2016 11.8823 0.059 0.086
14-03-2016 12.021
22-03-2016 11.8847 0.020 0.221
15-03-2016 12.025
23-03-2016 11.887 0.019 0.030
16-03-2016 12.047
28-03-2016 11.8983 0.095 0.186
17-03-2016 12.084
29-03-2016 11.9004 0.018 0.309
18-03-2016 12.101
30-03-2016 11.9069 0.055 0.137
21-03-2016 12.152
31-03-2016 11.9478 0.343 0.421
22-03-2016 12.157
04-04-2016 11.9614 0.114 0.040
23-03-2016 12.155
05-04-2016 11.9629 0.013 -0.010
28-03-2016 12.165
06-04-2016 11.9588 -0.034 0.078
29-03-2016 12.151
07-04-2016 11.9695 0.089 -0.110
30-03-2016 12.181
11-04-2016 11.9785 0.075 0.240
31-03-2016 12.211
12-04-2016 11.9817 0.027 0.246
01-04-2016 12.211
13-04-2016 11.9865 0.040 0.003
04-04-2016 12.245
18-04-2016 11.9972 0.089 0.277
05-04-2016 12.24
20-04-2016 12.0022 0.042 -0.040
06-04-2016 12.247
21-04-2016 12.0023 0.001 0.061
07-04-2016 12.257
22-04-2016 12.0046 0.019 0.078
08-04-2016 12.26
25-04-2016 12.01 0.045 0.021
11-04-2016 12.299
26-04-2016 12.0122 0.018 0.321
12-04-2016 12.318
27-04-2016 12.0132 0.008 0.159
13-04-2016 12.321
28-04-2016 12.0155 0.019 0.019
18-04-2016 12.346
29-04-2016 12.0173 0.015 0.208
20-04-2016 12.346
02-05-2016 12.0224 0.042 -0.005
21-04-2016 12.327
03-05-2016 12.0237 0.011 -0.155
22-04-2016 12.335
04-05-2016 12.0269 0.027 0.070
25-04-2016 12.325
05-05-2016 12.0288 0.016 -0.083
26-04-2016 12.342
06-05-2016 12.0306 0.015 0.135
27-04-2016 12.346
09-05-2016 12.0382 0.063 0.038
RETURNS OFMUTUAL FUNDS AND ULIPS
0.5
0.4
0.3
0.2
0.1
RETURNS
0
-0.1
-0.2
DATE
INTERPRETATION:
The above graph represents the returns of HDFC Annual Interval fund and SBI ulips it
shows that there is continuous rise and fall in net asset value.
If we see the table the average return is 0.039 and risk is 0.0005. Thus it can be said
that risk is very low when compared to returns.
The return on 11-03-2016 is 0.020 and at the end of the study period on 31-05-2016
the return is 0.017.
COMPARISON OF RETURNSOF HDFC ANNUAL INTERVAL FUND -
SERIES 1 - PLAN B HDFC ANNUAL INTERVAL FUND- SERIES I AND SBI
LIFE KALYAN ULIP PLUS (V02), SBI LIFE GROUP DEBT PLUS FUND II
FROM JUNE TO AUGUST 2016
0.4
0.2
0
RETURNS
-0.2
-0.4
Title
INTERPRETATION:
The above graph represents the returns of HDFC Annual Interval fund and SBI ulips it
shows that there is continuous rise and fall in net asset value.
If we see the table the average return is 0.032 and risk is 0.0001. Thus it can be said
that risk is very low when compared to returns.
The return on 02-06-2016 is 0.022 and at the end of the study period on 31-08-2016
the return is 0.017.
FINDINGS
The returns of HDFC Annual Interval Fund it shows that there is continuous
stability in net asset value.
The return on 11-03-2016 is 0.019 and at the end of the study period on 31-05-
2016the return is 0.018.
The average return is -0.114 and risk is 1.099. Thus it can be said that risk is
very high when compared to returns.
The return on 02-06-2016 is 0.022 and at the end of the study period on 31-08-
2016 the return is 0.017.
The average return is 0.039 and risk is 0.0005. Thus it can be said that risk is
very low when compared to returns.
The return on 02-06-2016 is 0.022 and at the end of the study period on 31-08-
2016 the return is 0.017.
SBI life kalyan ULIP returns is fluctuating during the study period. It is high
when compared to the HDFC annual interval fund.
The return of SBI life kalyan ULIP ranges from 0.150 to 0.307 during June to
July 2016.
The average return is 0.032 and risk is 0.0001. Thus it can be said that risk is
very low when compared to returns.
CONCLUSION
1. The performance of ULIP is better than the HDFC annual interval fund. Its
returns is more than the mutual fund.
2. Any investor who wants to invest in the mutual funds they must go for
professional investment process to achieve the objectives.
3. Investors much know about Mutual funds. Investor should have to see the
performance of mutual funds before investing.
2. Buy stock with a disparity and discrepancy between the situation of the firm -
and the expectations and appraisal of the public (Contrarian approach vs.
Consensus approach).
5. Dont put your trust in only one investment. It is like putting all the eggs in
one basket . This will help lesson the risk in the long term.
6. The investor must select the right advisory body which is has sound
knowledge about the product which they are offering.
8. See whether they have been giving any security on our investments.
10. Select right mutual funds which should have less risk and high profits.
11. See whether any fluctuations in the Dividends. Select those mutual funds
which give high returns with low investments.
BIBLIOGRAPHY
Books
News Papers
Times of India
India Today
Websites
www.amfiindia.com
www.sebi.com
www.google.com
https://nav.sbilife.co.in/UI/HistoricalNAV.aspx