Investment management is the professional management of various securities (shares, bonds etc) assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. The term asset management is often used to refer to the investment management of collective investments, whilst the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of private investors may often refer to their services as wealth management or portfolio management.
The different asset classes are stocks, bonds, real-estate and commodities. The exercise of allocating funds among these assets (and among individual securities within each asset class) is what investment management firms are paid for. Asset classes exhibit different market dynamics, and different interaction effects; thus, the allocation of monies among asset classes will have a significant effect on the performance of the fund. Some research suggests that allocation among asset classes has more predictive power than the choice of individual holdings in determining portfolio return. Arguably, the skill of a successful investment manager resides in constructing the asset allocation, and separately the individual holdings, so as to outperform certain benchmarks
There are a range of different styles of fund management that the institution can implement. For example, growth, value, market neutral, small capitalisation, indexed, etc. Each of these approaches has its distinctive features, adherents and, in any particular financial environment, distinctive risk characteristics. For example, there is evidence that growth styles (buying rapidly growing earnings) are especially effective when the companies able to generate such growth are scarce; conversely, when such growth is plentiful, then there is evidence that value styles tend to outperform the indices particularly successfully.
The objective of the research is to understand the growth of Asset Management Companies on the basis of their Asset-Base.
· To study the concept of Mutual Fund
· To study the comparison of Asset under Management (AUM) of June 2006 with that of June 2007 for the companies having an AUM of more than Rs, 15000 crores.
· To study the growth of selected Asset Management Companies on the basis of the increase in their Assets under Management.
Plans taken for comparison are:
· Equity Plan
· Fixed Term Plan
· Floating Plan
· Gilt Plan
· Growth Plan
· Income Plan
· Liquid Plan
· Monthly Income Plan
· Tax Saving Plan
Observations & Conclusions:
In order to study the concept of mutual fund we should note that a mutual fund is a trust that pools the money of several investors and manages investments on their behalf. The fund collects this money from investors through various schemes. Each scheme is differentiated by its objectives of investments or in other words a broadly defined purpose of how the collected money is going to be involved. Investors invests in mutual fund due to following advantages; they have professional management, diversification, convenient administration, return potential, low cost liquidity, ready made portfolio, etc. Some problems with mutual funds are that they don’t give guarantee, charges fees & commission, hidden taxes and management risk.
The term Asset under Management (AUM) means the market value of assets an investment company manages on behalf of investors. AUM reflects the total market value of the portfolio of funds, any deceleration in growth during a stock market boom could only mean investors have been cashing out. From the project it has been observed that out of eight Asset Management Companies which I have selected, there has been an increase in Assets under Management as compared to previous year. It has been observed that all Equity Plan AUM has increased except Kotak Mahindra Mutual Fund whose Assets have decreased by 6.81%.
The Assets under Equity plan of ICICI Prudential Mutual Fund shows the highest increase. But if we see the volume, the maximum growth is of UTI Mutual Fund (Rs.458402.33 lakhs)
In case of Fixed Term Plan overall the investments of all the companies has increased. The maximum percentage growth is of Kotak Mahindra Mutual Fund. If we see the growth in volumes then Reliance Mutual Fund’s assets have increased (Rs.1364909.74 lakhs). The lowest increase is that of SBI Mutual Fund (Rs.61402.64 lakhs). The lowest percentage increase is that of Birla Sunlife Mutual Fund.
In Floating Plan maximum increase in AUM is for Kotak Mahindra Mutual Fund which is Rs.243104.89 lakhs. But maximum percentage increase is of Reliance Mutual Fund which is 312.02%. The maximum decrease is of ICICI Prudential Mutual Fund, i.e., Rs.216443.53 lakhs. But maximum percentage decrease is of UTI Mutual Fund. In Gilt Plan there has been a decrease in AUM of most of the Asset Management Companies.
Maximum growth of AUM is for SBI Mutual Fund which is Rs.8589.25 lakhs. The maximum decrease is of Franklin Templeton Mutual Fund which is Rs.28465.13 lakhs. In case of Growth Plan, AUM of most of the companies has increased.
Maximum increase is that of Reliance Mutual Fund (Rs. 188445.66 lakhs). The maximum decrease is that of Birla Sun Life Mutual Fund (Rs. 20477.92 lakhs).
In Income Plan, there has been decrease in AUM of most of the Asset Management Companies. But HDFC Mutual Fund’s assets have increased to a very large extent which is Rs. 7156207.17 lakhs. The maximum decrease in volume is of Franklin Templeton Mutual Fund.
In Liquid Plan, maximum increase of AUM is of Reliance Mutual Fund which is Rs. 720577.9 lakhs. But highest percentage increase in AUM of Birla Sun Life Mutual Fund. Maximum decrease is of SBI Mutual Fund, i.e. Rs.213587.64 lakhs.
The main reasons for increase or decrease in Assets under Management of the Asset
Management Companies are:-
· Quality of service
· Net asset value
· Tax benefits
· High return
· Security of investments