Anda di halaman 1dari 82




Submitted To





Guided By MR. RAKESH SUD Professor, (AIMS), Bangalore

For the partial fulfillment of

Post Graduate Diploma in Management


I hereby undertake and declare that this submission is my original work and, to the best of my knowledge and belief, it contains no material previously published or written by another person nor material which has been accepted for the award of any other degree or diploma of any Institute or other University of higher learning except where due acknowledgement has been made in the text.

Signature :

Name of Student AIMA Registration Number

Sumit Kumar Lalwani 421020516

Certificate by Guide
This is to certify that work entitled Project title Equity Mutual Funds is a piece of work done by Students name Sumit Kumar Lalwani under my guidance and supervision for the partial fulfillment of degree of PGDM, Acharya Institute of Management and Sciences, Bangalore.

To the best of my knowledge and belief the thesis:

a. Embodies the work of the candidate himself. b. Has duly been completed. c. Fulfills the requirements of the rules and regulations relating to the summer internship of the institute. d. Is up-to the standard both in respect to contents and language for being referred to the examiner

Signature of the Faculty Guide

Name of Faculty Guide: Mr. Rakesh Sud


This is to certify that the report entitled:


Submitted by Mr. Sumit Kumar Lalwani (Regn.No 421020516), Acharya Institute of Management and Sciences (AIMS), Bangalore towards partial fulfillment of the requirements for the award of the degree of Post Graduate Diploma in Management (PGDM) is a bona fide record of the work carried out by him under the guidance of Mr. Rakesh Sud, Professor, Acharya Institute of Management and Sciences (AIMS), Bangalore

With regard to my Project with Equity Mutual Funds I would like to thank each and every one who offered help, guideline and support whenever required.

First and foremost I would like to express gratitude to Manager BAJAJ CAPITAL and other staffs for their support and guidance in the Project work. I am extremely grateful to my guide, Mr. Sambit Mohanty for his valuable guidance and timely suggestions.

I would like to thank my faculty guide Mr. Rakesh Sud, Acharya Institute of Management and Sciences (AIMS), Bangalore for constant encouragement and valuable guidance & support for this project.

Sumit Kumar Lalwani Bangalore

Page No.

Chapter I Objectives Scope Limitations

Chapter II Introduction Company Profile Product profile

Chapter III Review of Literature Research Methodology


Chapter IV


Mutual funds (Description & Classification)

Chapter V Equity Mutual Funds and Its Performance Risks associated with Mutual Funds How to Select an Equity Fund Data Analysis and Interpretation Findings Conclusion


Annexure Bibliography





The overall objectives of this project are as under:

To know market status of equity funds.

To know performance of equity funds.

To know the cause of choosing equity funds.

To know how equity funds work.

To know the best equity fund available in the market

To undergo through the Summer Training for the partial fulfillment of the PGDM program of


All the fingers of a hand are not the same. People differ from each other upon their income, expenditure, saving habits, environment, etc. Their requirement also differs from each other as per the above factors. Due to this the financial requirement and ability to get the investment requirement differ from person to person so the financial market especially the Mutual Fund market caters to a vast area from each of these aspects stated above.

This project is based on the Equity funds, which is a brief analysis on the equity or growth mutual funds. As the project report is fully based on secondary data and it can be used to have the exact figure of investment in Mutual Funds, especially in equity funds. Also the report can be used for decision making by knowing the opinion of customer, the management can take decision accordingly. The proper analysis on the equity funds and the past performance of these funds will help the layman to take decision for investing in mutual funds and maximizing the percentage of equity funds in his portfolio.




There is vast information about mutual funds, which cannot be given at a time in the report.


Some comparisons cannot be done due to the nature of the funds.


New funds are entering the market and booming, so their past records cannot be given for their non-existence in the market.


As mutual funds performance is calculated by comparing the current records with its past performances of a long period (1 yr.,3 yr.,5 yr,) one cannot do research by giving only current data.


Chapter II





Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies. Stocks represent part ownership, or equity, in companies, and the aim of stock ownership is to see the value of the companies increase over time. Stocks are often categorized by their market capitalization (or caps), and can be classified in three basic sizes: small, medium, and large. Many mutual funds invest primarily in companies of one of these sizes and are thus classified as large-cap, mid-cap or small-cap funds. Equity fund managers employ different styles of stock picking when they make investment


decisions for their portfolios. Some fund managers use a value approach to stocks, searching for stocks that are undervalued when compared to other similar companies. Another approach to picking is to look primarily at growth, trying to find stocks that are growing faster than their competitors, or the market as a whole. Some managers buy both kinds of stocks, building a portfolio of both growth and value stocks. Since equity funds invest in stocks, they have the potential to generate more returns. On the other hand they carry greater risks too.

Though still now the financial crisis is going on except the past week, the stock market had a bad time going on the equity mutual funds are continuously giving more and more returns to the customers. So the equity funds are on the peak now. As mutual funds are slowly and steadily becoming the most preferable investment now a day, the preference for equity funds is growing.

Instead of market downside, more and more people are now investing; new investors are entering the market. Household saving contribute about 75 to 80 percent to the level of national savings. From about 10 percent saving of GDP in 1950, domestic savings have increased to 27.40 percent of GDP in 2004-2005. During these five decades, the level of GDP has grown substantially and with that, the level of savings too has grown in absolute and relative terms. The level of savings can be stepped up to 30 percent or even more of GDP, provided investors are assured of a reasonable rate of return and are offered adequate fiscal incentives. Mutual Funds, especially the equity fund especially the equity funds investment market.


Company Profile
History and Corporate Profile of Bajaj Capital Limited
Bajaj Capitals Limited was incorporated in 1964 at New Delhi. It started as an investment consultancy company rendering advice for profitable investments in Company Deposits and Shares. Since then the organizations has grown by leaps and bounds, at present they have a network of 65 self-owned offices and thousands of Broker Associates spread across the country enable them to be one of the India's largest retail fund which mobilizes for debit instruments. And in 34 years , they have also became Indias best known corporate fund raiser in the shape of fixed

deposits/debentures/bonds/unit /mutual funds/gift-hedged securities, equity shares/inter corporate deposits etc. They are also providing Car finance, Insurance both life and general, specialized NRI services, Financial Planning etc. services for our clients. They added a new dimension to the industrial finance in India in each in early 60's by innovating a new financial instrument: Company Deposits.

About 5,000 prospective investors daily visit our various offices throughout the country to seek our expert investment guidance. Bajaj Capital started its operations from New Delhi. After its success in New Delhi, it extended its activities to other metropolitan cities of India i.e. Bombay, Calcutta and Madras in order to cater to the needs of lakhs of investors and thousands of corporate clients. After its success in these metropolitan cities, Bajaj Capital opened offices in other important cities of India like Bangalore, Ahmedabad, Hyderabad, Lucknow, Chandigarh, Ghaziabad, Noida, Faridabad, etc.. In addition to its offices at


these places Bajaj Capital has about 8,000 representatives Broker Associates in all the nooks and corners of India.

In order to help its non-resident Indian investor clients, to make investments in corporate and other securities in India, Bajaj Capital has its associates in UK, i.e. Bajaj Capital (UK) Limited. Bajaj Capital has NRI clients in USA, UK, West Germany, Italy, Netherland, Denmark, Australia, Canada, France, New Zealand, Mauritius, Thailand, Singapore, UAE, Kuwait, Dubai, Egypt, Saudi Arabia, etc. and is providing them a complete range of services.

Now after 34 years of its working, Bajaj Capital is geographically present in all the nooks and corners of India and also has presence in important countries of the world through its Broker Associates and Clients.

Bajaj Capital is one of the largest mobilizer of Public savings in India in shape of various financial instruments like Companies Fixed Deposits, Unit trust of India's Schemes, Mutual Funds, Bonds, Debentures, Small Savings Schemes, Equities, etc.

They have one of the largest retail network among all the financial intermediaries country today with 63 full-fledged offices manned by about 300 financial experts and a strong team of over 6000 agents/representatives strategically located in every nook and corner of India.


Over the last 34 years of operations they have developed a loyal and dedicated clientele of over 525000 individually investors and nearly 2000 institutional investors.

In addition to investment planning and services, they are offering to their clients a complete range of personal Financial Planning products including Insurance, Auto Finance and Finance against property/Securities, etc.

Main Group of Companies

1. Bajaj Capital Limited SEBI approved Merchant Bankers and Investment Consultants/Dealer on OTC Exchange of India. 2. Bajaj Capital Financial Services Member, Delhi Stock Exchange Association Ltd. 3. Bajaj Capital (UK) Limited Investment Services for NRIs & FIIs


Meaning of the BAJAJ CAPITAL Logo

Our logo depicts Lord Ganesha who is the source of all our values and ethics in business. The large ears of Lord Ganesha remind us to hear more. We listen carefully to our clients to understand their needs. The weight of the trunk on the mouth symbolises silence. We work silently, without blowing our own trumpet. The long trunk symbolises continuous exploration. We explore all avenues to provide the best investment opportunities for our clients. The heavy posture of Ganesha symbolises stability. We help our clients to attain financial stability through wise investments. Lord Ganesha is known as the remover of obstacles and bestower of prosperity. We emulate His example and try our best to help our clients attain prosperity by proper financial planning. Our logo has a yellow background. Yellow is the colour of gold, which symbolises wealth. According to Vedic lore, it is also the colour associated with Brihaspati, the guru and counsellor of the Gods. We offer our clients sage counsel to make their wealth grow. The letters are in red. Red is the colour of rajas, symbolising power and incessant activity. It symbolises our aggressive quest for your well-being and happiness. The white streak represents the trunk of Lord Ganesha. White is the colour of satva guna, and implies our selfless commitment to your life-long happiness.


First Time First

Bajaj Capital Limited is the first Corporate Body in India engaged in financial Services/merchant banking activities. It was incorporated in 1963. Bajaj Capital is the first Merchant Banking company in India which introduced new financial instruments, i.e, Company Deposits in early 1960's First Fixed Deposit Receipt and Application Form were designed by them on behalf of Oberoi Hotels EIL Limited (Formly known as Associated Hotels of India Ltd.) Bajaj Capital is the first Merchant Banking company in India to start fullyfledged Merchant Banking activities i.e. Financial Supermarket way back in 1963: managing public issues, dealing in Equity/Preference shares, bonds, Fixed Deposits, Inter Corporate Deposits, Tax Savings schemes, mutual Fund Schemes, etc. Bajaj Capitals is the first Merchant Banking company in India to open branches throughout the country. Now, we have 65 branches, 7000 sub brokers and 5 lacs regular investor clients in every nook and corner of India. Bajaj Capital is the first and the only Retail Merchant Banking company in India where about 7000 to 8000 prospective investors visit everyday in its various offices. Bajaj Capital is the first Merchant Banking/Financial services Company which has a team of 300 professionals like Chartered Accountants, MBA's, Bankers, Financial Experts, etc. Bajaj Capital is the first Merchant Banking company which has its own in-house Credit Rating Department in order to protect the interests of its investor clients.


Bajaj Capitals is the first company which has its in-house Legal Cell which provides free legal aid to its clients.

Bajaj Capital is the first Merchant Banking Company in India to open an office in United Kingdom Bajaj Capital (UK) Ltd.





1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Chairman Managing Director Vice President Director and Chief Executive Director & Head Director & Head (SD) Financial Controller Manager (Institutional Investment) Company Secretary Manager (Money Market) Manager (Accounts & taxation) Manager (EDP) Manager (Administration) Manager (HRD) Regional Co-ordination Manager Regional Co-ordination Manager Regional Co-ordination Manager Regional Co-ordination Manager Regional Manager (South) Regional Manager (West) Regional Manager (East) Regional Manager (East) Manager (Sub-Brokers Division)

Mr. K.K. Bajaj Mr. Rajiv Bajaj Mr. Sanjiv Bajaj Mr. Anil K. Chopra Mr. C.P. Bhatia Mr. Ravi Kapoor Mr. B.B. Suri Mr. Vijay Pal Singh Mr. Raman Bawa Mr. Ranpreet Singh Mr. P. K. Birla Mr. Rakesh Sharma Col. J.S. Oberoi Ms. Anita Gambhir Mr. Raj K. Dhall Mr. Rajiv Sharma Mr. R.S. Barthwal Mr. K.S. Rana Mr. George Thomas Mr. Harish Sabharwal Mr. Biman Chakravarthy Mr. P.K. Mitra Mr. Manish Chopra


8 Reasons why to invest through Bajaj Capital Limited

1. Old Establishment Bajaj Capital is one of the oldest and largest Investment Consultancy Company in India in operation since 1964. In fact, companies Fixed Deposit line was introduced for the first time in India in early 1960's by Bajaj Capital. 2. Vast and Modern Infrastructure Bajaj Capital has a vast network of 65 offices spread all over the country. It covers all Metros and other important financial centers. They have a team of over 300 highly experienced employees including MBAs, CAs, Financial Analysts, Investment Consultants, Law Graduates and Stock Market experts and their operations are also fully computerised. 3. SEBI Authorisation Bajaj Capital is authorised by Securities & Exchange Board of India (SEBI), a Government body specially created for investor's protection. As notification SEBI has warned that Dealing with unregistered Brokers is risky and SEBI will not be in a position to entertain any complaints against such unregistered Brokers. 4. After Sales Service Service with a smile is their motto. They are specially trained to provide highly personalized and professional advice to their investor clients. Their role does not end when the client has made the investment. They are known for their excellent After Sales Services. 5. Vast Variety of Schemes They offer the largest variety of investment schemes suited to individual requirements of their clients keeping in view their return expectation. They are full fledged Financial Supermarket offering advice to their clients for investment in the following schemes:-15-


Fixed Deposit with Government Companies and other rep (choice of over 200 companies)

ii) iii) iv) v) vi) vii) viii)

Mutual Funds Both Growth and Income Schemes Unit trust of India All Schemes New issues of Share/Debenture Taxable and Tax-free Bonds Portfolio Advisory Services for high net worth clients. Trading in UTI 1964 and Public Sector Bonds Taxable and Tax free Investment Advisory Services for Non Resident Indians.


Investor Protection They have a full fledged investor protection cell which currently monitors/analyses performance and health of companies helping them give unbiased investment advice.


Large Number of Satisfied Clients Last but not the least, their biggest strength is their vast and dedicated clientele of around 52,500 individual investor spread all over India. The list of their clients includes cream of Indian Society retired Governors, Diplomats, Bureaucrats and top Corporate Executives, Army and Civil officers and Housewives etc. Around 2000 Trusts and institutions also value their expert professional advice and deal through them.


Mission, Aims & Objectives of Bajaj Capital

Bajaj Capital's Mission Statement The focus of our organization is to be the most useful, reliable and efficient provider of Financial Services. It is our continuous Endeavour to be a trustworthy advisor to our clients, helping them to achieve their financial goals.

Our Aims To serve our clients with utmost dedication and integrity so that we exceed their expectations and build enduring relationships. To offer unparalleled quality of service through complete knowledge of products, constant innovation in services and use of the latest technology. To always give honest and unbiased financial advice and earn our clients' everlasting trust. To serve the community by educating individuals on the merits of Financial Planning and in turn help shape a financially strong society. To create value for all stake holders by ensuring profitable growth. To build an amicable environment that accords respect to every individual and permits their personal growth. To utilize the power of teamwork to function as a family and build a seamless organization.

Strength of Bajaj Capital

SEBI Registration Bajaj Capital Limited is a category I Merchant Banker registered with SEBI, bearing Registration No. INM000010544, valid through September 30, 2008


Professionals at your service Bajaj Capital's Investment Banking Services are delivered by the Investment Banking Group, a crack team of highly qualified, experienced and motivated professionals. Comprehensive Service We provide a range of highly specialized services that are customized to meet your specific needs. We are capable of handling everything, right from basic paperwork to devising creative, innovative and sophisticated solutions to meet the unique problems of our clients. Strong Research Base Bajaj Capital is a strongly research-driven organization. The Bajaj Capital Centre for Investment Research comprises highly qualified and talented professionals who constantly monitor the market and collect, collate, analyses and disseminate valuable information. BCCIR works in close coordination with the Investment Banking Group, providing vital inputs on a daily basis. Unparalleled Reach With over 120 offices in 50 cities and a network of over 10,000 Advisor Associates, we assure you a pan-India reach. Unblemished Reputation Bajaj Capital has an unblemished track record of over 40 years, and is among one of the most respected Financial Services companies in the country.


Excellent Industry Relationships Bajaj Capital enjoys extremely cordial relationships with major institutions in the financial markets such as banks, insurance companies, mutual fund houses, PF Trusts, educational trusts, etc. The company is also given the THE BEST WORKPLACES 2008 & THE SMART WORKPLACE AWARD.

Services of Bajaj Capital

We offer a wide spectrum of Investment Banking Services to our clients in the Private and Public sectors. IPOs/FPOs As part of our Issue Management services, we Lead Manage public offerings of Equity and Debt under Book Built as well as Fixed Price Methods. Provide issue management services Syndicate, underwrite and distribute the securities to a nationwide client base We have consistently been one of the largest mobilisers of funds for debt and fixed income securities. -19-

Private Placements/Preferential Issues As part of our Private Placement and Preferential Issues services, we Advice our clients on regulatory norms and compliance requirements. Structure and design the instrument(s) along with their valuations. Draft the necessary resolutions and shareholders agreements/documents. Identify the prospective investors. Negotiate the terms of investment.

Takeovers/Acquisitions/Consolidation We provide advisory services to our clients on potential takeover targets with the objective of taking over of the management/assets/businesses/brands. This includes

Working out takeover strategies as friendly as well as hostile. Offering advice on regulatory and compliance norms. Working out takeover/acquisition costs and budget. Drafting advertisements, offer documents, share purchase agreements/documents. Offering advice on funding options and post-acquisition consolidation strategies. Buy-backs and De-listing. Buy-back and de-listing are reverse corporate interventions in the capital of the enterprise. Our services in this regards includes a) Advising our clients on necessity, need and requirement of buy-backs given certain capital market conditions, working out optimal buy-back pricing strategies offering advice on the most suitable mode and method of buy-back apart from relevant regulatory and compliance norms.


b) Drafting offer documents, advising on funding options and post buy-back business strategies. Project Finance/Term Loans/ Working Capital

Syndication We work very closely with a large number of banks in public and private sector apart from the government-owned banks negotiating interest rates and other terms and conditions with the interested banks and obtaining sanction letters Offering advice on loan agreements and documents, and loan drawl schedules.

Advisory Services for Corporate and Capital Structuring and Restructuring Consolidation and divestment of businesses, entities, and units have become very prominent activity with regard to consolidation of shareholding; enhancing the Market Valuation and generating Cash Reserves. We advise our clients on Corporate and Capital Structuring and Restructuring with the clear objective of enhancing valuations of the enterprise in the long-term. FCCBs/GDRs/ADRs We provide advisory and consultancy services to corporate on how to raise funds from the overseas capital markets. Our overseas associates facilitate and advise our clients through us. Accordingly, we help our clients to design and structure the instruments, and prepare term sheets. In addition, we also offer advice on regulatory and compliance norms documentation, raising funds from identified investors listing and trading in securities.

Wide range services of Bajaj Capital


We offer a comprehensive range of services including financial planning and investment advice, and the entire gamut of financial instruments and investment products of almost all major companies, both public and private. In addition, we also provide investment assistance by helping you complete all the formalities, and help you keep regular track of your investments. These services and products are delivered through our network of 109 Bajaj Capital Investment Centers located all over the country. We are also a SEBI-approved Category I Merchant Banker. We raise resources for over 1,000 top institutions and corporate houses every year, and offer specialized services to Non-Resident Indians (NRIs)and High Net worth Clients. What you can expect from of Bajaj Capital Sound, research-based advice. Unbiased, independent and need-based service. Prompt courteous services. Honest, ethical dealings, Accessibility.

FINANCIAL PLANNING SERVICES Investment planning Retirement planning Insurance planning Children's future planning Tax planning Short term cash flow planning


They have a well trained professional team comprising MBA's, CA's, CS's, Financial Analysts, Financial Planners, Investment Experts Insurance Experts, and Law Graduates.

Generations of Trust:
Families have trusted them with their investment over three generations from Father to Son to Grandson. They have used their Investment Advisory and Financial Planning schemes to achieve lifetime investment success. They believe that experience can be bought but trust has to be earned. 1. Their Greatest asset is the trust of their clients which they have reposed in them for over 4 decades. 2. They enjoy the patronage of over half a million investors across India.

Clientele Their Biggest Asset

They are recognized as one of the largest fund mobilisers in the country. The investors constitute a community of over 6 lac individual investors and over 2500 institutions like Corporates, Charitable Trusts, Educational institutions, NGO's and Scientific Research Organizations. They are truly independent and unbiased investment advisors, suggesting products and services that are best suited for them. As one of the oldest investment Advisory Companies, they have a research team that helps them scan through hundreds of products from across the market place, to pick only those that truly meet their needs. They can be doubly sure that the advice they will give to them will be totally impartial. -23-

What is an investment Centre?

Bajaj Capitals innovated the concept of Investment centers back in 1964. An investment Centre is a retail shop where you can walk in to get free advice on where, when and how to invest your money. Bajaj Capitals complete range of Investment Advisory products and Financial Planning Services are available through its chain of investments Centres all over India.

Investment Advisory Products offered by Bajaj Capitals

Company Fixed Deposits Company fixed deposits offer better returns than bank deposits with minimum lock-in-periods. Bajaj Capitals offer you a range of 300 Company Fixed Deposits.

Bonds and Debentures Bajaj Capital arranges Government of India Relief Bonds, which are tax free bonds. We also offer infrastructure Bonds (Tax Saving Bonds), Capital Gains Tax Saving Bonds, Bonds from Central and State Government institutions.

Mutual Funds Mutual Funds are the only investment option that gives you market related, realistic returns through proper diversification of risks by investing in debt and equity instruments. Bajaj Capitals offers you a range of over 100 Equity Funds, Debt Funds, and Liquid Funds.


Life Insurance Life insurance provides for dependants in case of a mishap. It replaces earning power if disabled, and protects your ability to meet accumulation, education and marriage goals.

General Insurance General insurance provides for auto, home and personal liability protection to protect you from a stroke of misfortune that would take away the wealth you earned for so many years.

Pension Schemes A Pension Schemes is a savings plan that provides you with income during retirement.

Housing Loans They arrange for housing loans at their doorsteps, from leading Housing Finance Companies, offering competitive interest rates.

Car/Scooter insurance They offer automobile solutions to safeguard their vehicle from every mishap, ensuring them very easy and hassle-free procedures.

Financial Planning Services Offered By Bajaj Capitals

Financial Planning is the process of meeting their life's goal through proper management of their finances. At Bajaj Capitals they are dedicated to the Financial Planning approach and give them advice only after understanding their financial needs.


Financial Planning Includes

Investment Planning At Bajaj Capitals they help their clients to plan investments so that they may reach their personal goals by investing according to the risks that they can bear. After planning they implement their recommend mix of investments. Cash Flow Budgeting They analyses clients income expenses, assets and liabilities to see which budgeting techniques can help them reach their current and long term financial goals. Protection for yourself and your family (Insurance Planning) The insurance policies helps them protect themselves and their dependents (if any) against any unforeseen odds. Future Goals Funding Children's education and marriage planning They help their clients start planning and saving for their children's higher education and marriage well in advance by suggesting prudent investment avenues. Asset Purchase They help them accumulate funds to purchase a house, car or other assets by suggesting monthly savings plans and other investment instruments to make your money grow to required amounts. Tax Planning They help them reach their personal goals by planning their taxes and by helping them to invest in tax saving instruments that fit their personal portfolio and situation. Retirement Planning To ensure that their clients enjoy their retirement without financial hardships, they urge them to make their own pension plans like Public Provident Fund, with their help. -26-

Bajaj Capital's Specialty Service Groups

PREMIER CLIENT GROUP offers Wealth Management Services for High Net worth Individuals. They offer tailor made investments Advisory and Financial Planning Services exclusively to meet the needs of high net worth individuals. Some of the additional services offered are Value added service assignments. Dedicated relationship Managers Periodic portfolio reviews Regular updates of portfolio valuation Need-Based advice.

FINANCIAL PLANNING GROUP offers comprehensive Financial Planning Services for long term investors. In order to plan their future, they take a comprehensive approach by including each financial plan, solutions in all the following areas Investment Planning Insurance Planning Cash Flow Budgeting Goal Planning Tax planning Retirement planning


Bajaj Capitals Value Added Services

Regular Information Update They keep their clients updated on the latest opportunities in the World of Investments. Need based Advice They give their clients customized advice only after understanding their needs and priorities. Research Based Advice Their professional research helps their clients with advice that is thorough and based on dynamics, Government policies and a close monitoring of global developments. Free investment health check They help their clients achieve their financial goals by assessing their risks tolerance level and recommend them a suitable asset allocation model. Door-to-door service They have a vast network of all branches all over India, helping you to get services at your doorsteps. Regular Information They keep their clients updated on the latest opportunities in the world of investments through their in-house publications. Accessibility They have branches spread out across India, covering almost every nook and corner of the country. Tailor made Solutions Clients get easy transactions through our investment Centres even with a mere phone call. Specialisation in all Client Segments They offer Financial Planning for housewives, celebrities, professionals, ambassadors, army officers and others. 24-Hour Availability They are available to their clients 24 hours a day, on their websites,


Bajaj Capital's in-house publications for investors

Bajaj Capital investors India A monthly magazine that helps their clients take the right decision in matters relating to investments, based on the principles of financial planning. Money Multiplying News A fortnightly magazine that helps clients choose their best options available for them for investments during that period. Investors Select Lists A monthly list of the latest investment options covering all financial products like Company FDs, Equity Mutual Funds, Debt Mutual Funds, Insurance Schemes others. Investment Outlook A monthly research report that gives an overview of the debt and equity markets, also gives a technical trend analysis of the market. Tax Planning Guide An annual guide that educates the client how on how to avail certain exemptions, deductions, rebates, and relieves, in order to minimize their tax liability. Guide to Financial Independence A practical financial guide on how to be financially independent. Voluntary Retirement Scheme Guide A special guide that helps clients plan their finances according to their needs after they take voluntary retirement

Reasons why invest only through Bajaj Capitals?

40 Years of service to investors Bajaj Capital is one of the oldest and largest Investment Advisory Companies in India, in operation since 1964.


Nationwide Presence and modern Infrastructure Bajaj Capitals has a vast network of 96 offices all over the country and a team of over 450 highly motivated professionals. Their operations are fully computerised. SEBI Authorization Securities and Exchange Board of India (SEBI) is an authorized merchant bankers, investment advisors and financial planners. After sales service Their role doesn't end when clients have made their investments. They feel obliged to solve their queries even after they have invested with them. Vast variety of schemes They are full-fledged Financial Supermarket offering advice to their clients on a large variety of financial products. Research Centre They have large Research Centre, where experts constantly monitor and analyse the industry, economy and various schemes performances to give them unbiased investment advice. Independent Investment Advice They are one of India's few independent Investment Advisory companies. They are not promoted by any bank, mutual fund or NBFC, and are hence able to give truly neutral advice. Strength Their largest strength is their vast and dedicated clientele of around 6 lacs individual investors all over India. Bajaj Capital now introduces 360 degree financial investments.


Experience the power of Bajaj Capital's 360 Financial Planning

The only thing permanent in life is change. People change. So does life. You expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill all your dreams and aspirations. But what happens if things take an untoward turn or, if there is an eventuality? Perhaps it's time for you to change the way you plan your investment


Product Profile
Fixed Deposits



Equity Funds
SBI Magnum Sector Fund umbrella SBI Magnum Index Fund SBI Magnum Multicap Fund SBI Magnum Multiplier SBI Magnum Tax Gain SBI Growth Fund Tata Growth Fund -33-

Birla Advantage Fund DSP ML Equity Fund DSP ML TOP 100 Equity Fund Franklin India Bluechip Fund HDFC Equity Fund HDFC Growth Fund HDFC TOP 200 Fund Prudential ICICI Discovery Fund Prudential ICICI Growth Fund Prudential ICICI Power Fund Reliance Growth Fund Sundaram India Leadership Fund Sundaram Select Focus Fund ABN AMRO Equity Fund HDFC MUTUAL Fund

Balanced Fund
Duetche Mutual fund Sundaram Debt fund UTI debt funds SBI Debt fund series Sundaram balanced funds SBI Mutual fund Birla Balance Fund -34-

DSP ML Balanced Fund FT India Balanced Fund HDFC Balanced Fund HDFC Prudence Fund Prudential ICICI Balance Fund Sundaram Balanced Fund Tata Balanced Fund Birla sunlife Mutual Fund

Debt Funds
HDFC HSBC SBI Magnum Income Plus Fund SBI Magnum gilt fund SBI Magnum Income Fund SBI Magnum Monthly Income Plan Templeton Floating Rate Income Fund STP Birla Floating Rate Income Fund STP Templeton Floating Rate Income Fund LTP Deutsche Floating Rate Fund HDFC Floating Rate Income Fund STP HDFC Floating Rate Income Fund LTP Deutsche Floating Rate Fund


Grindlays Floating Rate Fund LTP Grindlays Floating Rate Fund STP SBI Magnum fund NRI Prudential ICICI Floating Rate Fund STP

Liquid Funds
Duetche Mutual fund Institutional Income Fund SBI Magnum Insta Cash Fund SBI Magnum Insta Cash Sundaram Equity funds SBI Sector Umbrella UTI Equity funds


Chapter III




To give a complete shape of project report, the researcher has given through the following books, journals and websites about which I have given detail below.

BOOK INVESTMENT by BODIE, MARCUS,PITABAS MOHANTY Findings: To know about the investments done in the market JOURNALS & REPORTS PORTFOLIO ORGANSIER OF ICFAI UNIVERSITY PRESS Findings: Current knowledge about mutual fund and equity market INVESTORS INDIA OF BAJAJ CAPITAL Findings: All information about investment instruments ECONOMIC TIMES AMFI (BASIC MODULE) Findings: complete knowledge about mutual funds WEBSITES Findings: complete knowledge about mutual funds Findings: Security Exchange Board of Indias home website, which gives knowledge about both mutual funds and Equity Market

-38- Findings: To find out whether these funds are performing better or not with Comparison to the benchmarks Findings: Investors switch between different funds at different times, and dynamically manage their portfolio in order to achieve high returns. This task of managing the mutual funds portfolio is done on their behalf by fund of funds.


Research Design Research design of my project is analytical Sources of data The data which I have collected are from secondary sources from the industry profile, different journals, books and different websites written above.


Chapter-IV MUTUAL FUNDS (Description & Classification)


Mutual Funds
Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as Unitholders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives, which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.


Investments may be in stocks, bonds, money market securities or some combination of these. Those securities are professionally & efficiently managed on behalf of the shareholders, and each investor holds a pro rata share of the portfolio entitled to any profits when the securities are sold, but subject to any losses in value as well. A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. The investors profit and loss are determined as per the units of mutual funds they hold as per the NAVs. NAV = Total value of the Fund. No. of shares currently issued and outstanding

History of the Indian Mutual Fund Industry

The government of India set up Unit Trust of India in 1963 by an act on parliament. UTI functioned under the regulatory and administrative control of the Reserve Bank of India till 1978. The Industrial Development Bank of India took over the regulatory and administrative control that year. The first scheme launched by UTI was Unit Scheme 1964 or the infamous Unit 64. The second phase of the mutual fund industry began with the public sector banks and Life Insurance Corporation of India and General Insurance Corporation of India setting up their own mutual funds in 1987. Finally, in 1993 Kothari


Pioneer (now merged with Franklin Templeton) became the first private sector mutual fund to start operations in the country. A host of private sector as well as foreign funds set up shop after that. In 1996, a comprehensive and revised Mutual Fund regulation was put in place. The industry now functions under SEBI (Mutual Fund) Regulations, 1996.

The industry faced its toughest challenge when the US 64 fiasco shattered the confidence of investors. However, in 2003, the government bifurcated the erstwhile UTI. One entity manages the assets of US 64 and some assured return schemes. The other is a regular mutual fund working under the SEBI regulations. Thanks to the boom in the stock market, UTI managed to clean up its act and continue to enjoy the confidence of several investors. The whole industry also came out of the controversy without any major setbacks.

Categories of Mutual Funds

Mutual funds can be classified as follows

Based on their structure:

Open-Ended Funds Investors can buy and sell the units from the fund, at any point of time. Close-ended Funds These funds raise money from investors only once. Therefore, after the offer period, fresh investments cannot be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (e.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity. -43-

Based on their Investment objective

Equity Funds These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as Index Fund In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightages. 2. Equity Diversified Fund 100% of the capital is invested in equities spreading across different sectors and stocks. 3. Dividend Yield Fund It is similar to the equity diversified funds except that they invest in companies offering high dividend yields. 4. Thematic Fund Invest 100% of the assets in sectors which are related through some theme, e.g., an infrastructure fund invests in power, construction, cements sectors etc. 5. Sector Fund Invest 100% of the capital in a specific sector. e.g., a banking sector fund will invest in banking stocks. 6. ELSS Equity Linked Saving Scheme provides tax benefit to the investors.



Balanced Fund Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes. a) b) Debt-oriented Funds Investment below 65% in equities. Equity-oriented Funds Invest at least 65% in equities, remaining in debt.

Debt Fund They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. a) Liquid Fund These funds invest 100% in money market instruments, a large portion being invested in call money market. b) Gilt Fund ST They invest 100% of their portfolio in government securities of and T-Bills. c) Floating rate Funds Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. d) Arbitrage Fund They generate income through arbitrage opportunities due to mis-pricicng between cash market and derivatives market. Funds are allocated to equities, derivatives andmoney markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities.



Gilt Fund LT They invests 100% of their portfolio in long-term government securities.


Income Fund LT Typically, such funds invest a major portion of the portfolio in long-term debt papers.


MIPs Monthly Income Plans have an exposure of 70% - 90% to debt and an exposure of 10%-30% to equities.


FMPs Fixed Monthly Plans invest in debt papers whose maturity is in line with that of the fund.

Figure: Risk v/s Return


Figure: Working of Mutual Fund


Chapter V Equity Mutual Funds and Its Performance Risks associated with Mutual Fund How to Select an Equity Fund Data Analysis and Interpretation Findings Conclusions


Equity Funds
Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies. Stock funds can be distinguished by several properties. Funds may have a specific style, for example, value or growth stocks represent part ownership, or equity, in companies, and the aim of stock ownership is to see the value of the companies increase over time. Stocks are often categorized by their market capitalization (or caps), and can be classified in three basic sizes: small, medium, and large. Many mutual funds invest primarily in companies of one of these sizes and are thus classified as large-cap, mid-cap or small cap funds. Funds which involve some component of stock picking are said to be actively managed, whereas index funds try as well as possible to mirror specific stock market indices Equity fund managers employ different styles of stock picking when they make investment decisions for their portfolios. Some fund managers use a value approach to stocks, searching for stocks that are undervalued when compared to other similar companies. Another approach to picking is to look primarily at growth, trying to find stocks that are growing faster than their competitors, or the market as a whole. Some managers buy both kinds of stocks, building a portfolio of both growth and value stocks. Since equity funds invest in stocks, they have the potential to generate more returns. On the other hand they carry greater risks too. Fund assets are typically mainly in stock, with some amount of cash, which is generally quite small, as opposed to bonds, notes, or other securities. The objective of an equity fund is long term growth through capital gains, although historically dividends have also been an important source of total return. Specific equity funds may focus on a certain sector of the market or may be geared toward a certain level of risk. -49-

Equity Funds are of following types

Index Funds - Index Funds invest in securities to mirror a market index, such
as the S&P 500. An Index Fund buys and sells securities in a manner that mirrors the composition of the selected index. The fund's performance tracks the underlying index's performance. Turnover of securities in an index fund's portfolio is minimal. As a result, an index fund generally has lower management costs than other types of fund. Index Funds replicate he portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc these schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as tracking error in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.




Growth Funds - A Growth Fund invests in the stocks of companies that are
growing rapidly. Growth companies tend to reinvest all or most of their profits for research and development rather than pay dividends. Growth funds are focused on generating capital gains rather than income. Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks. They focus on those companies, which are experiencing significant earnings or revenue growth, rather than companies that pay out dividends. Growth Funds tend to look for the fastest -growing companies in the market. Growth managers are willing to take more risk and pay a premium for their stocks in an effort to build a portfolio of companies with above- average earnings momentum or price appreciation. In India, growth funds became popular after the tremendous growth of the Indian companies during the post economic reforms period. The rapid growth of Indian industry attracted investors money to sectors of high growth and as a result growth funds came into being.

Objectives of Growth Funds

The objective of growth funds is to achieve capital appreciation by in stocks of those companies, which are registering significant earnings or revenue growth. Growth funds offer tremendous opportunities for growth, when the financial market is bullish. In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets. Only aggressive investors, or those with enough time to make up for short-term market losses, should buy these funds. -52-

Dividend Yield Funds or Value Funds This is a fund that invests in

"value" stocks. Companies rated as value stocks usually are older, established businesses that pay dividends. In these types of mutual fund, the co. gives part of it profit to mutual fund holders, which is called dividends.

Thematic Funds Thematic funds identify themes based on global trends or

unique criteria as part of their stock picking guidelines. Some funds may focus on just one major theme as the backbone for their investment process. DWS Global Themes Equity Fund and DBS Shenton Global Opportunities Fund are example of global equity funds that have explicit global themes. A thematic fund invests in a single theme, but there are several sectors within it, maybe as many as 12-15 sectors, so its pretty diversified in that sense. The theme is not just one or two sectors, rather a broader opportunity encompassing several sectors. For instance, the outsourcing opportunity is not restricted to technology; it includes manufacturing and pharma among other sectors. The capital goods and infrastructure theme includes several sectors.

Sectoral Funds These are the funds/schemes which invest in the securities of
only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.




Diversified Equity Funds A mutual fund scheme that achieves the

benefits of diversification by investing in the stocks of companies across a large number of sectors, as a result, it minimizes the risk of exposure to a single company or sector. Diversified equity fund is a fund seeks to invest only on equities, except for a very small portion in liquid money market securities, but is not focused on any one or few sectors or shares, may be termed a diversified equity fund. While exposed to all equity price risk diversified equity fund seek to reduce the sector or stock specific risk through diversification. They have mainly market risk expose. Such general proposal proposes but diversified funds are clearly at the lower risk level than the growth funds



ELSS Equity Linked Saving Scheme provides tax benefit to the investors. They
operate like any other growth fund (and thats why are as risky). However, as investor in these schemes gets an income-tax rebate of 20 per cent (for a maximum of Rs 10,000) under section 88. Essentially an incentive for the investor (who is otherwise investing in fixed income instruments like the Public Provident Fund primarily for saving tax on his or her annual salary or business income) a chance to participate in capital appreciation that can be delivered by investing in equity shares. Thats also why


these schemes also come with a three-year lock- in period. Also while other tax planning schemes guarantees returns, an ELSS offers no such assurance.



Risks Associated with Mutual Funds

1. Risk-Return Trade off The most important relationship to understand is the risk-return trade-off. Higher the risk greater the returns/loss and lower the risk lesser the returns/loss. 2. Market Risk Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan (SIP) that works on the concept of Rupee Cost Averaging (RCA) might help mitigate this risk. 3. Interest Rate Risk In a free market economy interest rates are difficult if not impossible to predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa. A welldiversified portfolio might help mitigate this risk. 4. Political Risk Changes in government policy and political decision can change the investment environment. They can create a favorable environment for investment or vice versa. 5. Liquidity Risk Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk controls that lean towards purchase of liquid securities.


Mutual Funds are invested in different securities which may be equities or bonds, depending upon the funds objectives. Different schemes are having different risks depending on the portfolio composition. In general, Mutual Funds are subjected to the following risks which are listed below

Systemic Risk Systemic Risks or Market Risks refer to risks that affect the entire market and have an impact on the entire class of assets. The value of an investment may decline over a period of time because of economic changes or other events that affect the overall market. Systemic risks include risks related to interest rates, inflation, exchange rates and political events, etc.

Non-Systemic Risk Non-systemic risks refer to risks associated with investments in a particular sector or industry or stock. Sector-specific schemes invest in equities of a particular industry or sector, owing to which they are subject to higher risks than other diversified schemes. For example, tax benefits to a particular sector of the economy would affect the shares of companies belonging to that sector and thus, affect the returns of funds investing in that sector.

Other factors that have a greater impact on the performance of a mutual fund include the skill and experience of the fund manager and the research team, the size of the corpus, redemption pressures, etc.



Risk and return for a mutual fund depends on the type of fund. Smallcapitalization funds typically own stocks of companies with less than $1 billion in market capitalization. These funds can generate high returns but at high risk. Mid-cap funds invest in companies with median capitalization between $1 billion and $8 billion. Large-cap funds invest in companies with market capitalization of $8 billion or more. These funds tend to focus on income from dividends, which can mean a stable if not spectacular return.

Value funds invest in stocks that are undervalued, while growth funds invest in stocks that have high potential to grow. Value and growth funds tend be associated with higher returns and higher risk, compared with other types of funds, such as balanced funds, which contain both stocks and bonds. An example of large-cap index funds is the Vanguard 500 Index fund, which invests in companies in the Standard & Poor's 500 Index. The performance of the fund will mimic its index's performance. This type of fund is appropriate for long-term investment, with small short-term returns but stable long-term growth.


A mutual fund's fact sheet often contains information on risk versus return as represented by four statistics: alpha, beta, standard deviation and the Sharpe Ratio.


Beta indicates a fund's past price volatility in relation to a standard stock market index, like the S&P 500. Beta typically ranges from 0.85 to 1.05. Other, more aggressive funds might have higher values of beta. Alpha measures the fund's expected return based on its beta. A positive alpha means a fund returns more than what is expected, given its beta. A negative alpha indicates that the fund returns less than expected, based on the beta. Standard deviation measures the variability of actual returns in comparison with historical data. Higher the standard deviation, more volatile would the fund.

Risk Identification

There are many risks associated with investing in mutual funds, which must be taken into account when choosing a fund. The stock market tends to move in cycles, and if the market declines, there is a good chance the value of your fund will drop too.

Funds that invest in foreign stock markets, such as Vanguard Emerging Markets, tend to be riskier than funds based on the U.S. market. Other types of risks involve the political and economic conditions in countries where the fund invests, currency risk, income risk, manager risk and inflation risk.


A diversified mix of mutual funds reduces risk. In his book "New Guide to Financial Independence," Charles Schwab recommends a mixture of growth funds, income funds, international funds and, most important, index funds. In any given year, only one in five mutual funds outperforms the market, while index funds aim to match the market. -61-


If you do not want to deal with the risks associated with mutual funds, you can choose money market funds, which have a stable share price, unlike a stock or bond mutual fund. Your return will be much less than what you can expect from mutual funds, but your risk is minimized.

How to Select an Equity Fund

Compare a Fund with its Peers: One of the basic fundamental of benchmarking is to evaluate funds within the same category. For example, if you are evaluating the performance of a thematic fund, say IT based fund, then you should compare its performance with another similar IT based fund. Comparing it with banking sector fund for example will not give the correct picture. Comparing a fund over stock market cycle (boom and bust) will give investors a good idea about how the fund has fared. Compare returns against those of the Benchmark Index Every fund mentions a benchmark index in the Offer Document. It can be BSE 100, BSE 200, Nifty or any other index. The benchmark index serves as a guidepost for both the fund manager and the investor. Compare how the fund has fared against the period of 3-5 years. The funds that have outperformed their benchmark indices during stock market volatility must be given a close look


Compare against the Fund's own Performance

Apart from comparing a fund with its peers and benchmark, index, investors should evaluate its historical performance. By evaluating a fund against its own historical performance, you can get an idea about consistent performers.

Current Scenario of Equity Funds

With stock markets reigning at its all time high, Equity is the buzzword these days. All kinds of investors without caring a damn about their risk profiles are looking at investing in Equities or Equity Funds. Large corporate houses too have been lured by the equity mania. As a result of this, Mutual Funds are raking in huge monies in the equity segment. The total AUM of the industry stood at Rs. 164674.07 crores as on June 2007. Out of this Rs. 42,461 crores representing almost 26% was in the equity segment. This is an increase of over 80% in the last one year. The mutual fund with highest Equity Funds under management is UTI MF, having almost Rs. 7,800 crores in its kitty. Among the private sector players, Franklin Templeton is at the top with an equity corpus of Rs. 6637.4 crores. HDFC MF comes next with Rs. 4559.24 crores in its equity segment. The five top funds in this category account for 58% of the total equity funds in the mutual funds industry. True to the general perception about mutual funds that they are a means of diversifying across stocks, the diversified equity schemes had the highest corpus with over 80% of the funds in equities among the top 5 players below.


Over the last six months the equity corpus of the industry swelled by more than Rs. 12,000 crores. In this the diversified schemes and tax planning schemes saw rise of about Rs. 12,650 crores and Rs. 232.2 crores respectively. But there was a fall in the corpus of Index and sectoral schemes. Major gainers in the equity segment over last 6 months remained Reliance MF, which mopped up Rs. 1888 crores. Franklin closely followed at Rs. 1809 crores. HDFC Mutual Fund was at a distant third place growing by Rs. 1435 crores and Tata MFs equity corpus inflated by Rs. 1151 crores, but the major factor helping in this growth remained the New Fund Offer made by each of these AMCs.


So diversified equity funds has the better preference than the other equity funds because of its diversification of stocks and ELSS schemes are giving better return due to their locking system of 3 years as long term investments.

Yearly Return of Equity Mutual Funds Sector Wise (Table-1)

INTERPRETATION The above table shows return of sector-wise mutual funds in 2007 and 2008. In auto sector, both of the funds give better return in 2008 than 2007. This effect is done due to the upside of the automobile market done due to the upside of the automobile market sectorised mutual funds have given better result in comparison to its return in the equity market. In case of the banking sectors, 2007 was the more profitable than 2008, both


in the equity sector and in the mutual fund industry. The banking sector faced a heavy loss in 2007. Thats why it affected the banking funds. Except the Allahabad Bank no bank gave better return than the previous year. In case of the FMCG sector equity funds, one fund have given better result in 2008 and the other two funds had comparatively less return than 2007.And the index funds are depended on the index SENSEX & NIFTY , and the stock market is volatile in its nature, some earned better return and others earned poor return.

Fig: Return of equity funds monthly, quarterly, half-yearly, yearly and in 3 years Funds which gave good return as on 18th June 2009 (Table-2)


The Table-2 is showing the best equity funds return as per 1 month, 3 months, 6 months, 1 year and 3 years. From the above funds, TAURUS INFRASTRUCTURE FUND GROWTH has the best return in 1 month, 3 months, and 6 months. In 1 year, JM MIDCAP FUND GROWTH and in 3 years, SUNDARAM BNP PARIBAS CAPEX OPPORTUNITIES FUND GROWTH is the best performer, but from the overall point of view, all midcap funds have given the good return and all good performers are the growth funds. So, it is clear that mid-cap funds and growth funds are the good performers in the mutual fund field. Also the mid cap companies are performing well in the recession time, they are also the good performers in mutual fund.



The above table shows the equity funds, which gave bad return. Two of the above tables are arbitrage funds and the other twos are derivatives fund. As derivatives are related to the anticipation, and the security market is in the recession period, these funds are giving more and less return.


INTERPRETATION In Pharma sector, in 1 month and 3 months SBI MAGNUM UMBRELLA has the best return, in 6 months, FRANKLIN PHARMA FUND has the best return. But in long term periods, RELIANCE PHARMA FUND is the best. Pharma sector is the only sector, which is giving always a reasonable return to its customers, even in the recession period. Both in the share market and equity funds, it is not a looser. This sector is a trusted sector for investment. Ranbaxy, Dr.Reddys are giving reasonable return always in spite of slowdown. This also affects the pharma sector equity funds.



INTERPRETATION Here, in 1 month, 3 months, 6 months and in 1 year performance, the TATA LIFE SCINCES AND TECHNOLOGY FUNDS APPR has the best return and in 3 years, DSP BLACKROCK TECHNOLOGY.COM FUND has the best return. As here given returns are the returns of the top performers of these sectors, it shows that this sector is not giving better return in comparison with other sectors.



INTERPRETATION In one month return of all are below than 1. In 3 months and 6 months SAHARA BANKING AND FINANCIAL SERVICES FUND has the highest return. In 1 year, SUNDARAM BNPPARIBAS FINANCIAL SERVICES FUND is the best and in 3 years, there exists only the RELIANCE BANKING FUND and it also gave good return 32.49%. So, overall SAHARA BANKING AND FINANCIAL SERVICES FUND is the better scheme in banking and financial service sector. This sector is going in loss now. No bank except Allahabad Bank gave better result in 2008. Though SBI and some other banks have given reasonable return 2009, banking sector funds are still giving negative return. Here it can be seen that in 3 month return, they have given good result, but in one month, their return is poor, because currently fall of banking stocks.



INTERPRETATION As per the above table, TAURUS INFRASTRUCTURE FUND is the leader, which is giving the best return, but in long term periods (1 year and 3 years), SAHARA INFRASTRUCTURE FUND is the best player. The infrastructure sector has the growth period now and it is the sector, which is giving the best return in the equity funds. Infrastructure funds are also the leaders in the overall equity funds. AMCs are now introducing more and more NFOs in this sector.



INTERPRETATION This table shows the tax saving schemes return. In 1 month, ING TAX SAVING FUND is the best return giver. In 3 months and 6 months, DBS CHOLA TAXSAVER is the best player. But in long term period both in 1 year and 3 years, the SAHARA TAXGAIN GROWTH FUND is the fund which gave the highest return. Though most of them are the new comers in the market, but SAHARA TAXGAIN is the best player in the tax saver schemes.


Equity funds are the funds having both high risk and high return. Pure equity funds are volatile in nature. Growth equity funds are giving good return. Mid cap equity funds are also giving good return. Sectoral equity funds have also high risk high return and they can be volatile as the share market. Though equity funds have risks, they are still giving better return and also the preference of the mutual fund holders. In 2007 and 2008, Diversified equity funds were the best preferences, but now it is the equity funds has the better market.

The Mutual fund industry is on uprising moment. It have a good prospect in our country. Due to the pure volatility in the stock market, people are now looking for the mutual fund market for their big investments. As share market has high risk high return, and people are looking for better return but with safety, they choose mutual funds and mainly the equity funds those are giving better return in the market. As People have better knowledge about the share markets, they are choosing equity funds for their investment, but I have done my research in an analytical view, thats why I m presented the analysis for what people should choose the equity funds for their investments. The NFOs are entering the market, mainly based on the infrastructure sectorised funds. The equity funds are the only market, in which more and more types of funds can be created as per the situations. Now a global fund, which contains -73-

the investment in foreign companies are a new concept of equity funds Though equity funds are not always affected by the stock market, but it can be affected by its volatility. So, the investors should have better knowledge about the portfolio of the funds before investing in it. It is no doubt that equity funds have a bright future in Indian Investment Market and it is now is in the way of the excellence.



To prepare my report I have taken the help of some websites & books. These are: INVESTMENT BY BODDI, KANE, MARCUS, PITABAS MOHANTY