1. Abstract
A mutual fund is a form of collective investment that pools money from many investors, and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. Fund managers who can apply their expertise and dedicate time to research investment options professionally manage it. In the current scenario mutual fund investors face many problems. They gather information about the various schemes through magazines, periodicals or through the company website. However there is a need for aggregation of all this information at a single place as most of this information is decentralized. For example the information about fund A and B that belong to two different companies can be found on their respective website. However it would be more useful if all this information is available with a single login at a centralized location. The investors very often face difficulties in choosing between two funds as a comparative study between funds is a tedious process. For example a person can get information about fund A and fund B however it is difficult to compare these funds based on different parameters. This process gets further complicated with addition of more funds. For an investor it is very important to monitor the current value of his investments. It is essential to know about the worth of his portfolio based on current market situations. This will help him determine his profit/loss and take necessary actions to book his profit/loss based on his expectations from his investment. Investors in mutual fund know the importance of having a diversified portfolio. If an investor holds multiple funds, there may be significant overlaps in their stock holdings. For example if two funds A and B have stakes in same stock or sector his investment will be highly unbalanced. This will hurt portfolio diversification. This project seeks to help the investors through a web based application which aims at solving the above mentioned problems. Through this application it will be possible to get essential data about the top mutual funds in the market with a single login. It will be possible to browse through schemes of various fund companies as shown.
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Fig 1: List of Schemes
The decision making process will be simplified using various information visualization techniques like charts, graphs and context tree maps. The graphs for various parameters like NAVs, Dividend history, CAGR, sectored allocation will be given so that comparing two funds becomes easier. The context Tree Map will be used to show the map of the entire mutual fund market. The performance of the various mutual funds can then be evaluated based on the current market situation. A snapshot of a context tree map is as shown
Fig 2: Context Treemap
The portfolio Tracker allows users to track their mutual fund schemes. User can create several portfolios and add / delete instruments in a portfolio. The tracker is in form of a virtual buy and sells whose portfolio worth and returns are based on current market situations. Finally, the application also facilitates mutual fund portfolio diversification. Tree map Information Visualization is used to represent the stocks held in different funds owned by a person. We map the relative holding or weight of a stock in a portfolio to the area of that stock's rectangle in the tree map view. The web application will help the investor invest more systematically and take appropriate decision for his investments.
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2. Existing System
Introduction: Mutual funds provide professional management, diversification, convenience and liquidity. As with all investments, mutual funds are not risk free. It is essential to make an informed investment decision and choose a mutual fund which is right for depending on the investor’s goal, investment time frame and risk tolerance. 2.1 Details of Existing System Information Gathering: In the existing system the investors gather information about the various schemes through the fact sheets published by the fund companies. These fact sheets contain information about the latest news, dividend declaration, comments from the fund manager and a snapshot of the various schemes. The investors also refer to the business magazines and periodicals available in the market. These periodicals are designed to help individuals manage their investments more effectively. They cover strategies for investing in mutual funds and also address the consumer concerns. Extensive information can also be found on the company website. The information given on the website is as shown.
Fig 3: Scheme Graphs
The process of Decision Making: It is found that many individual investors rely heavily on mutual fund advertising and on raw returns when making fund purchase decisions. Financial advisors place greater importance on objective information sources such as comprehensive data sources and independent rankings, and much less importance on fund advertising and popular press publications. When choosing among mutual funds, the results indicate that financial advisors place greater importance on performance relative to other funds with similar style, fund objective, fund risk, fund manager tenure, and fund manager reputation, while
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placing less importance on sales loads and fees. Some of the fund characteristics used in the decision process includes the fund performance relative to other funds with similar styles, absolute performance, fund risk and fund manager reputation among others. Portfolio Tracker: In the present scenario the investor tracks his investments covering stocks, mutual funds, insurance, fixed deposits, bullion and more. This is done using painstaking manual calculations. The investor has to perform lengthy searches for updated data. Based on the information obtained he has to update his portfolio. Thus it involves long battles with the calculators and sheets of paper. In this way the process of finding one’s net worth becomes a tedious one. The figure below shows a tabular representation of the Reliance mutual fund maintained by an investor.
Fig 4: Tabular Representation of Mutual Fund by Investor
Portfolio Diversification: Recently, many people have become reacquainted with the fact that a certain amount of risk is associated with investments in the stock market. Diversification is a well-known strategy to limit the risk of financial investments. Diversification aims at investing in a variety of stocks, preferably from different sectors. By diversifying a portfolio, the risk of investment is distributed, and losses in one stock or market segment (e.g. The technology sector) can potentially be compensated by profits in other market segments. This principle also holds true for investments in equity mutual funds. A variety of tools are available to support the investors in the selection of funds for a portfolio. Most tools and methods mainly utilize performance indicators such as past performance, expense ratios, fund ratings, etc. and they often use tables of some sort. These visualizations give people little support in determining how a new fund fits into an existing fund portfolio, and how it overlaps with funds already owned.
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3. Problem Definition
3.1 Need for the project: The existing system consists of decentralized information sources like fact sheets, magazines, periodicals and the fund company website. As a result there is a need for aggregation of all this information at a single place. Thus the investor can find all the information he needs at a centralized location which enables him to save the time and efforts required in going through the ordeal of browsing the websites of various mutual funds. Instead he can just browse through a single website and get all the information he wants through a single login. The investors very often face difficulties in choosing between two funds, as a comparative study between funds is a tedious process. The financial advisors place greater importance on performance relative to other funds with similar style, fund objective, fund risk, fund manager tenure, and fund manager reputation, while placing less importance on sales loads and fees. However cross-comparison between these funds becomes difficult due to inconsistent data formats. For example a person can get information about fund A and fund B however it is difficult to compare these funds based on different parameters. This process gets further complicated with addition of more funds. As shown below comparing Kotak 30 and HDFC Growth scheme becomes difficult as information is displayed in an inconsistent manner.
Fig 5: Inconsistent Representation of Data
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For an investor it is very important to monitor the current value of his investments. It is essential to know about the worth of his portfolio based on current market situations. This will help him determine his profit/loss and take necessary actions to book his profit/loss based on his expectations from his investment. All of this, results in a need for an online portfolio tracker where the user will enter his investments into the system and his net worth is calculated based on the current Net Asset Value (NAV). It is equally important that the portfolio tracker monitors the investor’s returns against benchmarks. If the Sensex rises by 10% over two months and the fund's NAV rises by 12%, it is said to have outperformed its benchmark. If the NAV rose by just 8%, it is said to have underperformed the benchmark. But if the Sensex drops by 10% over a period of two months and during that time, the fund's NAV drops by only 6%, then the fund is said to have outperformed the benchmark. Investors in mutual fund know the importance of having a diversified portfolio. If an investor holds multiple funds, there may be significant overlaps in their stock holdings. For example if two funds A and B have stakes in same stock or sector his investment will be highly unbalanced. This will hurt portfolio diversification. It is important that the new visualization technique helps in determining how a new fund fits into an existing fund portfolio and how it overlaps with funds already owned. The classic treemap proposed for the system of portfolio diversification has a limitation that is problematic for communicating portfolio diversity. It only shows the stocks already owned by the investor. It does not support the discovery of unknown parts of the market.
Fig 6: Mapping of Value of Stock to Treemap
Figure above illustrates that the usual suspect, ―lack of screen real estate‖, is not the cause of the problem here. The example shows a tiny market consisting of three stocks A, B, and C. A person has invested two dollars in A, zero in B, and one dollar in C. Both portfolio visualizations, the bar chart and the treemap, have enough screen real estate to adequately present the data. Yet the bar chart more clearly shows the values and relationships of all data points whereas the classic treemap does not show B. Portfolio diversification is as much about the stocks and sectors not invested in as it is about the stocks and market sectors already invested in. What is needed is a treemap that shows not only the tree nodes (stocks) already present, but also their context. Thus there is a need for an application that will help the investor invest more systematically and take appropriate decisions for his investments.
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4. Scope
4.1 Scope of the Project: The application will be developed to help solve the Investors’ Problems by empowering the Investors with various Data Representation and Information Visualization techniques that will assist in Cross Comparison between various Mutual Fund Schemes. The application will also have a Portfolio Tracker for each registered user that will help him to track his investments on the basis of current profit/loss and sectored diversification. Applications of our application can be divided into following sections: 1. Information Pool: Our application will provide users with comprehensive information about various Mutual Fund Schemes in the market. The information will be represented such as to enable best decision-making. The representation will be done using techniques that could be used by a beginner as well as any seasoned investor. 2. Scheme Comparisons: Information is useful if it enables decision-making. The decision making process will be simplified using various Information Visualization techniques like charts, graphs and context tree maps. The graphs for various parameters like NAVs, Dividend history, CAGR, sectored allocation will be given so that comparing two funds becomes easier. The Context Tree Map will be used to represent the entire mutual fund market. The performance of the various mutual funds can then be evaluated based on the current market situation. 3. Portfolio Tracker: The Portfolio Tracker allows users to track their mutual fund schemes. Users can create several portfolios and add / delete mutual funds in a portfolio. The tracker is in the form of a virtual buy and sell environment that will project the portfolio worth and returns based on current market situations.
4.2 Assumptions: 1. Connectivity with AMFI India. 2. Client machine must have Java Runtime Environment (JRE) installed. 4.3 Limitations: 1. Maximum number of users using the service concurrently depends on the hardware configuration of the server (user in queue shall be notified about busy server). 2. Total number of schemes in Fund Database is 25 (5 Mutual Fund Companies * 5 Schemes of each).
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4.4 Design Constraints: 1. Information regarding various Mutual Funds Schemes, comparisons between schemes, tips are some of the major features of the application. Hence, the period for which the application will calculate and maintain the data related to these features is a constraint. 2. Connectivity with AMFI India Website for regular data feeds had been identified as a major design constraint.
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5. Proposed System
5.1 Details of Proposed System Mutual Funds Investment analyst and Portfolio Tracker is a web-based application that provides investors with comprehensive information about various mutual fund schemes in the market, analyses them using Information Visualization and comparison techniques, and manages investment portfolios. The application will be in client-server architecture. At the server side, a database of registered users, mutual fund schemes, NAVs, etc. will be maintained. Programs that will compare schemes to plot graphs, draw charts, etc. will also be on the server’s side. Client will be any investor who logs in to the website. Snapshots of his investments will be output to him in the form of treemaps that will be loaded as applets. Users first need to register to take advantage of the functionalities of the application. Once registered, he will have access to details about various mutual funds in the market. This information, plus comparison between funds as have done by the application will help the investor to take investment decisions. The application will also provide the investor with appropriate tips that will help him to diversify his portfolio. The Portfolio Tracker will give the investor a comprehensive picture of his investments that will include the schemes that he as invested in, as well as the profit/loss that each scheme is making/suffering respectively. Once the user creates his portfolio, he can add the schemes that he has invested in. The application will then fetch the respective NAVs from the database on a daily basis and show how much profit or loss each scheme is making or suffering respectively.
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5.2 Navigational Diagram
Fig: 7 Navigational Diagram
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6. Hardware and Software Platform
6.1 Details of Hardware used in System development Hardware System Requirements 32-bit Processor 800-megahertz (MHz) Pentium III-compatible or faster processor; 1-gigahertz (GHz) or faster processor recommended Memory 512 megabytes (MB) of RAM or more; 768 megabytes (MB) or more recommended Hard Disk Approximately 1 GB of available hard-disk space for the recommended installation; Approximately 2 GB of available hard-disk space for the full installation Drive Display Other Devices CD-ROM or DVD-ROM drive Super VGA (1,024x768) or higher-resolution video adapter and monitor Microsoft Mouse or compatible pointing device
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6.2 Software Specification Software System Requirements 32-bit Operating System • Windows XP with Service Pack 2 or later • Microsoft Windows 2000 Professional with SP4 • Microsoft Windows 2000 Server with Service Pack 4 or later • Windows Server 2003 Standard, Enterprise, or Datacenter editions with Service Pack 1 or later • Windows Server 2003 Web Edition SP1 • Windows Small Business Server 2003 with Service Pack 1 or later J2EE • • Application Server Database Server IDE (Front End) Web Browser Internet Explorer 6.0 Jbuilder, NetBeans, Dreamweaver, JFreeChart SQL Server 2005 Express Edition J2SE Development Kit 5.0 (JDK 5.0) J2SE Runtime Environment 5.0 (JRE 5.0)
Apache Tomcat 5.5
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7. System Design
A) Use Case Description I. Use Case Diagram:
<>
Register
Validate Details <> <>
Request Snapshot
Retrieve Schemes
<> Verify User Investor <> Login <> <> Modify Mutual Funds
<> <> Manage Portfolio <> Portfolio Tracker
Request Comparison Request Treemaps <>
Request News
<> <>
Request Tips
Request NFO's
Request Headlines
Fig 8: Use Case (Investor)
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Create Mutual Fund Administrator
Administrator Approve Scheme Details Delete Investor <> Enter Tips <> Approve Scheme Details Enter News <> Enter Headlines <> Enter NFOs
Add Schemes
Delete Schemes
Update Schemes
Mutual Fund Administrator
Fig 9: Use Case (Administrator/Mutual Fund Administrator)
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The above use-case diagram symbolizes a graphical view of all the actors, use cases and their interactions identified by the system. A use case thus represents a dialog between various actors and the system. The interaction between them shows all the flow of information within the system that causes further development in the working of the system. Scenario Name: Registration Scenario Description: User needs to register to use the features of the application Basic Flow: Form validation successful, go to Homepage Alternate Flow: Form validation unsuccessful, display error message, reload form Pre-condition: Form validation successful Post-condition: User has been registered, gets access to featured of application Scenario Name: Login Scenario Description: User logs on to system. If user is authorized to access the system, he gets logged on, else an error message is displayed Basic Flow: Login Id and Password match, go to Homepage Alternate Flow: Login Id and Password don’t match, display error message Pre-condition: No Pre-condition Post-condition: User gets logged in, access to system, session starts Scenario Name: Scheme snapshots Scenario Description: Scheme snapshots are displayed on request to the user Basic Flow: User requests for snapshots, gets the desired results Alternate Flow: User requests for snapshots, desired information is not available Pre-condition: User is logged in Post-condition: Snapshots are displayed Scenario Name: Portfolio Tracker Scenario Description: User tracks his investment using a Portfolio Tracker Basic Flow: User adds/ deletes schemes, tracks profit/ loss. Alternate Flow: No alternate flow. Pre-condition: User is logged in Post-condition: Portfolio is shown (Current profit/ loss) Scenario Name: Tree Maps Scenario Description: Tree Maps are used to represent the total investment made by the user (Share of each sector/ script will be shown as a fraction of the total investment) Basic Flow: Tree Map requested, applet (Tree Map) loaded Alternate Flow: Tree Map requested, applet not loaded (appropriate error displayed) Pre-condition: User is logged in, investment has been made Post-condition: Applet loaded, investment shown as Tree Map
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II. Activity Diagram
Fig 10: Activity Diagram
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B) Sequence Diagram:
: Investor
: GUI 1: Request Page() 2: Send Page() 3: Display Page 4: Login/Register()
: Application
: Database
5: Verify() 6: Ok 7: Ok 8: Ok 9: Services[Scheme Snapshot/Portfolio Tracker/News] 10: Select service[Scheme Snapshot/Portfolio Tracker/News] 11: Retrive Info() 12: Info 13: Info 14: Output
Fig 11: Sequence Diagram
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C) Class Diagram:
Fig 12: Class Diagram
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8. Introduction to Programming Tools
8.1 Study of Programming Tools: J2EE Java 2 Enterprise Edition, is a programming platform—part of the Java Platform—for developing and running distributed multi-tier architecture Java applications, based largely on modular software components running on an application server J2EE Framework J2EE Framework consists of Enterprise Applications that are distributed systems which contain cooperating units that exchange information across and between machine boundaries, usually over a network. J2EE systems implement a Multi-tiered application model using the J2EE components. Multi-tiered application model I. II. Client-tier component Web-tier component
J2EE components I. Client component: Application clients and applets that run on the client machines. II. Web component: JSP (Java Server Pages) and Java Servlet that run on the application server.
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Fig 13: J2EE Client-Server-Database Model
J2EE component development The Java Development Kit (JDK) is a Sun product aimed at Java developers. Since the introduction of Java, it has been by far the most widely used Java SDK. The primary components of the JDK are a selection of programming tools, including: javac – The compiler, which converts source code into Java bytecode jar – The archiver, which packages related class libraries into a single JAR file javadoc – The documentation generator, which automatically generates documentation from source code comments jdb – The debugger
The JDK also comes with a complete Java Runtime Environment, usually called a private runtime. It consists of a Java Virtual Machine and all of the class libraries that will be present in the production environment, as well as additional libraries only useful to developers, such as the internationalization libraries and the IDL libraries. Also included are wide selections of example programs demonstrating the use of almost all portions of the Java API. Java IDEs like Jbuilder, NetBeans etc depend upon JDK for compilation of Java application and also for generation of documentation form source code comments.
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J2EE component deployment
The Java Runtime Environment, or JRE, is a software bundle from Sun Microsystems that allows a computer system to run a Java application. Java applications are in widespread use and necessary to view many Internet pages. Normal computer users can download the current JRE version by testing their Java Virtual Machine at the Java.com test page. The software bundle consists of the Java Virtual Machine and the application and programming interface (API). The API provides a set of standard class libraries. The virtual machine and API have to be consistent with each other and are therefore bundled together as the JRE. This can be considered a virtual computer in which the virtual machine is the processor and the API is the user interface. Jbuilder JBuilder is an IDE from Borland Corporation. Jbuilder provides a very rich design interface that allows you to easily drag-drop GUI components like text fields, buttons etc to your java application or a JSP page. This greatly helps in reducing the development time of Java application. Manual coding required for creation of GUI is greatly reduced using JBuilder. SQL Server 2005 SQL Server 2005 express edition is a free to download and redistributable database management tool from Microsoft. SQL Server 2005 consists of a Graphical Data management tool called SQL Server Management that helps design databases with ease and saves a lot on developmental time. This developmental tool mainly consists of 5 sections Databases Security Server Objects Replication Management Each of the above section has a simple and easy to use GUI for Database Management activities.
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Tomcat Tomcat is a web server that supports servlets and JSPs. Tomcat comes with the Jasper compiler that compiles JSPs into servlets. Apache Tomcat version 5.5 implements the Servlet 2.4 and JavaServer Pages 2.0 specifications from the Java Community Process, and includes many additional features that make it a useful platform for developing and deploying web applications and web services.Jasper 2 has been redesigned to significantly improve performance over the original Jasper
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9. Bibliography
1. Making Mutual Funds work for you – Investor’s concise guide by AMFI India 2. The Layman’s Guide to Mutual Funds by HSBC Mutual Funds 3. Indian Mutual Funds Handbook by Acatos Sylvia 4. Business Week Guide to Mutual Funds by Laderman Jeffrey M 5. How Mutual Funds work by Fredman Albert I 6. Individual Investor’s Guide to Top Mutual Funds 7. Headfirst Series (JSP & Servlets) 8. Complete Reference (JSP & Servlets)
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