INTRODUCTION

A Mutual Fund is a body corporate registered with the Securities and Exchange Board of
India (SEBI) that pools up the money from individual / corporate investors and invests the same
on behalf of the investors /unit holders, in equity shares, Government securities, Bonds, call
money markets etc., and distributes the profits. In other words, a mutual fund allows an investor
to indirectly take a position in a basket of assets.

Unit Trust of India is the first Mutual Fund set up under a separate act, UTI Act in 1963, and
started its operations in 1964 with the issue of units under the scheme US-64.

Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual funds
mentioned above. All the mutual funds must get registered with SEBI. The only exception is the
UTI, since it is a corporation formed under a separate Act of Parliament.

SEBI is the regulatory authority of MFs. SEBI has the following broad guidelines pertaining to
mutual funds:
(1) MFs should be formed as a Trust under Indian Trust Act and should be operated by Asset
Management Companies (AMCs).
(2) MFs need to set up a Board of Trustees and Trustee Companies. They should also have their
Board of Directors.
(3) The net worth of the AMCs should be at least Rs.5 crores.
(4) AMCs and Trustees of a MF should be two separate and distinct legal entities.
(5) The AMC or any of its companies cannot act as managers for any other fund.
(6) AMCs have to get the approval of SEBI for its Articles and Memorandum of Association.
(7) All MF schemes should be registered with SEBI.
(8) MFs should distribute minimum of 90% of their profits among the investors.
(9) There are other guidelines also that govern investment strategy, disclosure norms and
advertising code for mutual funds.
 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.
Mutual funds are considered as one of the best available investments as compare to others they
are very cost efficient and also easy to invest in, thus 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. But the biggest advantage to mutual funds is diversification, by minimizing
risk & maximizing returns.

ADVANTAGES OF THE MUTUAL FUNDS

1. The investors risk is reduced to the minimum.
2. The funds managers maximize the income of the funds.
3. To achieve a similar degree of diversification, an individual investor as to spend
considerable and money.
4. In a mutual fund, it is possible to reinvest the dividend and capital gains.
5. Selection of shares debentures etc. and timing is made available to investors.
NEED OF THE STUDY

1. Mutual funds are dynamic financial intuitions which play crucial role in an economy by
mobilizing savings and investing them in the capital market.
2. The activities of mutual funds have both short and long term impact on the savings in the
capital market and the national economy.
3. Mutual funds, trust, assist the process of financial deepening & intermediation.
4. To banking at the same time they also compete with banks and other financial intuitions.
5. India is one of the few countries to day maintain a study growth rate is domestic savings.
OBJECTIVES

1. To show the wide range of investment options available in MFs by explaining various
schemes offered by different AMCs.
2. To help an investor to make a right choice of investment, while considering the inherent risk
factors.
3. To understand the recent trends in the MF world.
4. To understand the risk and return of the various schemes.
5. To find out the various problems faced by Indian mutual funds and possible solutions.
SCOPE OF THE STUDY

1. The study is limited to the analysis made for a Growth scheme offered by four AMCs.
2. Each scheme is calculated their risk and return using different performance measurement
theories
3. Because of the reason for such performance is immediately analyzed in the issue.
4. Graphs are used to reflect the portfolio risk and return.
RESEARCH METHODOLOGY & TOOLS

This study is basically depends on

1. Primary Data
2. Secondary Data

PRIMARY DATA:

The primary data collected from the different companies through enquiry.

SECONDARY DATA:

The secondary data collected from the different sites, broachers, newspapers, company offer
documents, different books and through suggestions from the project guide and from the faculty
members of our college.

TOOLS USED IN THIS PROJECT

The following parameters were considered for analysis:

Beta
 Alpha
Treynors Ratio
Sharpes Ratio

LIMITATIONS OF THE STUDY

1. The study is conducted in short period, due to which the study may not be detailed in all
aspects.
2. The study is limited only to the analysis of different schemes and its suitability to
different investors according to their risk-taking ability.
3. The study is based on secondary data available from monthly fact sheets, web sites; offer
documents, magazines and newspapers etc., as primary data was not accessible.
4. The study is limited by the detailed study of various schemes.
5. The NAVS are not uniform.
6. The data collected for this study is not proper because some mutual funds are not
disclosing the correct information.
7. Unique risk is completely ignored in all the measure.