IMPROVED PROJECT PROPOSAL

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TITLE OF SYNOPSIS
MUTUAL FUND ANALYSIS & TRENDS
at SHAREKHAN LTD

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RATIONALE OF STUDY
Mutual fund industry has emerged as the most dynamic segment of the Indian financial
system. Thanks to the rigorous policy initiatives of the government. Till 1987 the UTI was the
only mutual fund. The industry has witnessed an unprecedented level of growth with the
entry of mutual funds sponsored by nationalized banks and insurance companies. The
objective of this project is to explain the data interpretation and Analysis of Mutual funds
industry.
Description of the Project:
Take a comprehensive look at the overall performance of the MF industry in India:

The origin and development of Mutual Funds.

Regulatory Environment of Mutual Funds.

Mutual fund Industry Its size and growth

Investment pattern of Mutual Funds, includes:

1. Comparison of Returns
2. Investors Behavior
3. Pattern of investments

Evaluation of performance of Mutual Funds includes:

1. Performance of Private sector Funds
2. Performance of Public sector Funds
3. Performance of UTI Funds
4. Problems the industry is facing and measures to overcome these

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problems

MUTUAL FUND
Introduction
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could range
from shares to debentures to money market instruments. The income earned through these
investments and the capital appreciations realized by the scheme are shared by its unit
holders in proportion to 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 in a diversified,
professionally managed portfolio at a relatively low cost. The small savings of all the
investors are put together to increase the buying power and hire a professional manager to
invest and monitor the money. Anybody with an invest-able surplus of as little as a few
thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined
investment objective and strategy.

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Organisation of a Mutual Fund

There are many entities involved and the diagram below illustrates the organisational
set up of a mutual fund:

Three Key players namely Sponsor, AMC, and Mutual Fund Trust are involved in setting up a
Mutual Fund.

Sponsor
Sponser is any person who acting alone or with another body corporate establishes a mutual
fund. The sponsor of a fund is akin to the promoter of a company as he gets the fund
registered with SEBI.

Mutual Fund as Trusts

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A Mutual Fund in India is constituted in the form of a public Trust created under the Indian
Trusts Act, 1882. The sponsor forms the trust and registers it with SEBI. The fund sponsor
acts as the settler of the Trust, contributing to its initial capital and appoints a trustee to hold
the assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the
Trust. The fund then invites investors to contribute their money in the common pool, by
subscribing to units issued by various schemes established by the Trust as evidence of
their beneficial interest in the fund.

Asset Management Company (AMC)

An AMC is a firm that invests the pooled funds of retail investors in securities in line with the
stated investment objectives. For a fee, the investment company provides more
diversification, liquidity, and professional management service than is normally available to
individual investors.

Custodian
A custodian handles the investment back office of a mutual fund. Its responsibility includes receipt
and delivery of securities, collection of income, distribution of income and segregation of asset
between schems. The sponsor of a mutual fund can not act as a custodian to the fund.

History
In 1774 a Dutch merchant invited subscriptions from investors to set up an investment trust
by the name of Eendragt Maakt Magt (Unity Creates Strength), with the objective of
providing diversification at low cost to the investors. Its success caught on, and more
investment trust were launched with verbose and quirky names that, when translated, read,
Profitable and Prudent or small Matters Grow By Consent. The foreign and Colonial
Government Trust, formed in London in 1868, promised the investor of modest means the
same advantage as the large capitalist.by spreading the investment over a number of
stocks.
Mutual funds are not an American invention. The first was started in the Netherlands in 1822,
and the second in Scotland in the 1880's.
Originally called investment trusts, the first American one was the New York Stock Trust,
established in 1889. Most that followed were begun in Boston in the early 1920's, including
the State Street Fund, Massachusetts Investor's Trust (now called MFS), Fidelity, Scudder,

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Pioneer, and the Putnum Fund. The Wellington Fund, the first balanced fund that included
both stocks and bonds, was founded in 1928, and today is part of the giant Vanguard Funds
Group.
In the 1960's there was a phenomenal rise in aggressive growth funds (with very high risk).
Sometimes called "go-go" or "hot-shot" funds, they received the majority of the billions of
dollars flowing into mutual funds at that time. In 1968 and 1969, over 100 of these new
aggressive growth funds were established.
A severe bear market began in the autumn of 1969. People became disillusioned with stocks
and mutual funds. "The market's toast. it'll never get back to where it was!" was echoed by
panicked investors.
Unemployment grew, inflation went crazy, and investors pulled billions back out of the funds.
They should have hung in there! Many funds have risen 9,000% since then.
The 1970's saw a new kind of fund innovation: funds with no sales commission called "no
load" funds. The largest and most successful no load family of funds is the Vanguard Funds,
created by John Bogle in 1977.
At the end of the 1920's there were only 10 mutual funds. At the end of the 1960's there
were 244. Today there are more than 6,500 unique funds and even thousands more that
differ only by their share class (how they are sold, and how their expenses are charged).
Before we continue with all you need to know about mutual funds, here is something that
merits your attention. Since 1940, no mutual fund has gone bankrupt. You sure can't say that
about banks and savings and loans!
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the Government of India and Reserve Bank the. The history of mutual funds
in India can be broadly divided into four distinct phases:

INTRODUCTION - SHAREKHAN
Share khan is one of the leading retail brokerage firms in the country. It is the retail broking
arm of the Mumbai-based SSKI (Shripal Shivlal Kantilal Ishwarlal) Group, which has over
eight decades of experience in the stock broking business. Share khan offers its customers

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a wide range of equity related services including trade execution on BSE, NSE, Derivatives,
depository services, online trading, mutual fund, investment advice etc.
The firm's online trading and investment sitewww.Sharekhan.comwas launched on Feb
8, 2000. The site gives access to superior content and transaction facility to retail customers
across the country. Known for its jargon-free, investor friendly language and high quality
research, the site has a registered base of over one-lakh customers. The number of trading
members currently stands at over 8000. While online trading currently accounts for just over
1 per cent of the daily trading in stocks in India, Share khan alone accounts for 22 per cent
of the volumes traded online .
The content-rich and research oriented portal has stood out among its contemporaries
because of its steadfast dedication to offering customers best-of-breed technology and
superior market information. The objective has been to let customers make informed
decisions and to simplify the process of investing in stocks.
On April 17, 2002 Share khan launched Speed Trade, a net-based executable application
that emulates the broker terminals along with host of other information relevant to the Day
Traders. This was for the first time that a net-based trading station of this caliber was offered
to the traders. In the last six months Speed Trade has become a de facto standard for the
Day Trading community over the net.
Share khans ground network includes over 350 centers in 150 cities in India, of which
130 are fully-owned twigs.
Share khan is lead by a highly regarded management team that has invested corers of
rupees into a world class Infrastructure that provides our clients with real-time service &
24/7 accesses to all information and products. Our flagship Share khan Professional
Network offers real-time prices, detailed data and news, intelligent analytics, and electronic
trading capabilities, right at your fingertips. This powerful technology complemented by our
knowledgeable and customer focused Relationship Managers. We are creating a world of
Smart Investor.
Share khan offers a full range of financial services and products ranging from Equities to
Derivatives enhance your wealth and hence, achieve your financial goals
Share khan has always believed in investing in technology to build its business. The
company has used some of the best-known names in the IT industry, like Sun Microsystems,

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Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial

Technologies India Ltd, Spider Software Pvt. Ltd. to build its trading engine and content. The
Morakhia family holds a majority stake in the company. HSBC, Intel & Carlyle are the other
investors.
With a legacy of more than 80 years in the stock markets, the SSKI group ventured into
institutional broking and corporate finance 18 years ago. Presently SSKI is one of the
leading players in institutional broking and corporate finance activities. SSKI holds a sizable
portion of the market in each of these segments. SSKI's institutional broking arm accounts
for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic
Institutional portfolio investment in the country. It has 60 institutional clients spread over
India, Far East, UK and US. Foreign Institutional Investors generate about 65% of the
organization's revenue, with a daily turnover of over US$ 2 million. The Corporate Finance
section has a list of very prestigious clients and has many 'firsts' to its credit, in terms of the
size of deal, sector tapped etc. The group has placed over US$ 1 billion in private equity
deals. Some of the clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutchison,
Planetasia, and Shopper's Stop.

Services provided by the SHAREKHAN :- Equities

&

Derivatives:

-Comprehensive

services

for

independent

investors,active traders & Non-Resident Indians.

Sharekhan equity analysis: -Premium research on 401+ companies updated
daily.
Depository Services: -Value added services for seamless delivery.

Equities and Derivatives

Our Retail Equity Business caters to the needs of individual Indian and Non-Resident
Indian (NRI) investors. Share khan offers broker assisted trade execution, automated
online investing and access to all IPO's.

Through various types of brokerage accounts, India bulls offers the purchase and sale of
securities which includes Equity, Derivatives and Commodities Instruments listed on

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National Stock Exchange of India Ltd (NSEIL), The Stock Exchange, Mumbai (BSE) and
NCDEX.

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Choose the service options that fit your best.

Share khan Classic account - Comprehensive services including research and

investing guidance for independent investors.
Share khan Fast trade Share khan is dedicated to empower Active Traders
through personal service and advanced trading technology.
Share khan Speed trade plus - With an extensive range of investment products,
you will discover an unwavering commitment to helping you invest in India.

Sharekhan equity analysis

Building and maintaining your ideal portfolio demands objective, dependable information.
Share khan Equity Analysis helps satisfy that need by rating stocks based on carefully
selected, fact-based measures. And because we're not focused on investment banking, we
don't have the same conflicts of interest as traditional brokerage firms. This objectivity is only
one important difference in our ratings

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OBJECTIVE
To study different Mutual funds and their performance in India.
To do a comparative study mutual funds.
To explain the Scope and methodology of mutual funds.
To find out the growing investment opportunity for the investor in mutual
funds.
To find out the ways should do to boost Mutual Fund Industry.
To analyze and focus on an investor to make a right choice of
investment, while considering the inherent risk factors.

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RESEARCH METHODOLOGY
The research would be carried out in the Delhi of India. It is restricted to New Delhi where
ShareKhan has multiple offices. I will have visit people randomly nearby my locality, different
shopping malls, small retailers etc.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research would be done by primary data collection, and primary data is collected
by interacting with various people who would be involved with Mutual Fund. The secondary
data is to be collected through various journals and websites and some special publications
of ShareKhan.
Sampling:
Sampling procedure:
The sample is selected in a random way, irrespective of them being investor or not or
availing the services or not. It would be collected through mails and personal visits to
the known persons, by formal and informal talks and through filling up the
questionnaire prepared. The data would be analyzed by using the measures of
central tendencies like mean, median, mode. The group would be selected and the
analysis is done on the basis statistical tools available.
Sample size:
The sample size of my project is limited to 200 only.
Sample design:
Data would be presented with the help of bar graph, pie charts, line graphs etc.

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EXPECTED CONTRIBUTION
This project will provide me the better platform to understand the history, growth & various
other aspects of mutual fund. It will also help me to understand the behavior of Indian
investor regarding different investment tools. The study also encompasses the trend mutual
fund industry has been following and to find out how good and safe are these as an
investment option.

LIMITATIONS OF THE STUDY

1. The study is limited only to the analysis of different schemes and its suitability to
different investors according to their risk-taking ability.
2. The study is based on secondary data available from monthly fact sheets, websites
and other books, as primary data was not accessible.
3. The study is limited by the detailed study of various schemes of UTI.

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