Mutual Funds: Project Report ON

1
Comparative Study Of Mutual Funds
PROJECT REPORT
ON
MUTUAL FUNDS
SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (MBA)
(SESSION 2015-16)
UNDER THE GUIDANCE OF: SUBMITTED BY:
ARYABHATTA GROUP OF INSTITUTES
BARNALA
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DECLARATION
I hereby declare that the Training Report was submitted by me under the supervision and guidance of
Mr. HARISH NAGPAL, MUTUAL FUNDS, LUDHIANA STOCK AND CAPITAL LIMITED
in partial fulfillment of MBA 2 nd , Aryabhatta Group of Institutes, Barnala. I further declare that I am
solely responsible for omission and commission of errors if any.

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COMPANY PROFILE
1.1 Introduction
Ludhiana Stock and Capital Limited (Formerly Ludhiana Stock Exchange Limited) was established
in 1981, by Sh. S.P. Oswal of Vardhman Group and Sh. B.M. Munjal of Hero Group, leading
industrial luminaries, to fulfil a vital need of having a Stock Exchange in the region of Punjab
Himachal Pradesh Jammu & Kashmir and Union territory of Chandigarh.
Ludhiana Stock and Capital Limited (Formerly Ludhiana Stock Exchange Limited) was one of the
leading Regional Stock Exchange and has been in the forefront of other Stock Exc hanges in every
spheres, whether it was formation of Subsidiary for providing the platform of trading to investors, for
brokers etc. in the era of Screen based trading introduced by National Stock Exchange and Bombay
Stock Exchange, entering into the field of Commodities trading or imparting education to the Public
at large.
It played an important role in channelizing savings into capital for various industrial and commercial
units of the state of Punjab and other parts of the country thereby facilitated the mobilization of funds
by entrepreneurs from the public which contributed in the overall, economic, industrial and social
development of region under its jurisdiction.
Keeping in view the changing Business environments and recent Regulatory guidelines,
Shareholders of the Company approved resolution for Voluntary surrender of re-cognition and Exit
as an Exchange in the EGM held on 15th July, 2013. SEBI allowed the Exit o f Ludhiana Stock
Exchange Limited as Stock Exchange, vide EXIT order dated 30.12.2014.
In the light of above and in terms of Clause 3 of SEBI circular no. MRD/DOP/SE/Cir-36/2008 dated
December 29, 2008 upon de-recognition of Ludhiana Stock Exchange Ltd, SEBI registration
certificates as Trading Members of Exchange stand cancelled. However, SEBI registration
certificates of the Trading Members as Sub-Brokers of LSE Securities Limited on NSE and/ or BSE
shall continue to be valid. All the Investors of Sub-Brokers shall continue to trade through LSE
Securities Limited and avail DP Services without any interruption.
The Company has 295 members out of which 171 are registered with National Stock Exchange as
Sub-Broker and 124 with Bombay Stock Exchange as Sub-Brokers through our subsidiary.
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DETAILS OF PRESIDENTS AND VICE PRESIDENTS
1.2 Presidents/ vice presidents

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BOARD OF DIRECTOR
1.3 Board of Director
The Governing Board of the Company comprises of eight Directors, out of which six are elected
Directors and two are Professional Directors who are eminent persons in the fields of Finance and
Accounts, Education etc.
The present composition of the Governing Board is as under:-

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INTRODUCTION OF MUTUAL FUNDS

2.1 AN OVERVIEW ON MUTUAL FUNDS:
HISTORY OF MUTUAL FUNDS:

In 1774, A Dutch merchant invited subscriptions from investors to set up an investment trust by the
name of Eendragt Maakt Magt (translated into English, it means, unity Creates Strength) with the
objective of providing diversification at low cost to small investors. Its success caught on, and more
investment trust was launched, with verbose and quirky names that when translated read profitable
and prudent or small maters grow by consent. The foreign and colonial Govt. trust, formed in
London in 1868, promised start the investor of modest means the same advantages as the large
capitalist by spreading the investment over a number of when three Boston securities executives
pooled their money together in 1924 to create the first mutual fund, they had no idea how popular
mutual funds would become. The idea of pooling money together for investing purposes started in
Europe in the mid-1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and
staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was
called the Massachusetts Investors Trust. After one year, the Massachusetts Investors Trust grew
from $50,000 in assets in 1924 to $392,000 in assets (with around 200 shareholders). In contrast,
there are over 10,000 mutual funds in the U.S. today totalling around $7 trillion (with approximately
83 million individual investors) according to the Investment Company Institute.
DEFINITION
“A mutual fund is an investment that pools your money with the money of an unlimited number of
other investors. In return, you and the other investors each own shares of the fund. The fund’s assets
are invested according to an investment objective into the fund’s portfolio of investment. Aggressive
growth funds seek long term capital growth by investing primarily in stock of fast growing smaller
companies or market segments. Aggressive growth funds are also ca led capital appreciation funds”
CONCEPT OF MUTUAL FUND

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 then invested in capital market instruments such as
equities, debentures and other securities. The income earned through these investments and the
capital appreciation realized (after deducting the expenses and profits of mutual fund managers) is
shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund
strives to meet the investment needs of the common man by offering him or her opportunity to invest
in a diversified, professionally managed basket of securities 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 a surplus of as little as a few thousand
rupees can invest in Mutual Funds.
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HISTORY OF MUTUAL FUNDS IN INDIA:

The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the
year 1963. The primary objective at that time was to attract the small investors and it was made
possible through the collective efforts of the Government of India and the Reserve Bank of India.
The history of mutual fund industry in India can be better understood divided into following Phases:
Phase I. Establishment and Growth of Unit Trust of India - 1964-87: Unit Trust of India (UTI)
enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI
was set up by the Reserve Bank of India and it continued to operate under the regulatory control of
the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of
Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit
Scheme 1964 (US-64), which attracted the largest number of investors in any single investment
scheme over the years. UTI launched more innovative schemes in 1970s and 80s to suit the needs of
different investors. It launched ULIP in 1971, six more schemes between1981 -84, Children's Gift
Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (India’s first equity
diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s.
By the end of 1987, UTI's assets under management grew ten times to Rs 6700 Cr.
Phase II. Entry of Public Sector Funds - 1987-1993: The Indian mutual fund industry witnessed a
number of public sector players entering the market in the year 1987. In November 1987, SBI
Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI
Mutual Fund was later followed by can bank Mutual fund, LIC Mutual Fund, Indian Bank Mutual
Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets
under management of the industry increased seven times to Rs. 47,004 cr. However, UTI remained
to be the leader with about 80% market share.
Phase III. Emergence of Private Sector Funds - 1993-96: The permission given to private sector
funds including foreign fund management companies (Most of them entering through joint ventures
with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to
investors and more competition in the industry. Private funds introduced innovative products,
investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds
had launched their scheme
Phase IV. Growth and SEBI Regulation - 1996-2004: The mutual fund industry witnessed robust
growth and stricter regulation from the SEBI after the year 1996. The mobilisation of funds and the
number of players operating in the industry reached new heights as investors started showing more
interest in mutual funds.
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Inventors' interests were safeguarded by SEBI and the Government offered tax benefits to the
investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by
SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted
all dividend incomes in the hands of investors from income tax. Various Investor Awareness
Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate
investors and make them informed about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust
formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund
players on the same level.
UTI was re -organised into two parts:
1. The Specified Undertaking,

2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like
US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still
the largest player in the industry. In 1999, there was a significant growth in mobilisation of funds
from investors and assets under management which is supported GROSS FUND MOBILISATION
(RS. CRORES)
Phase V. Growth and Consolidation - 2004 Onwards: The industry has also witnessed several
mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual
Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund.
Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin
Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing
phase of growth of the industry through consolidation and entry of new international and private
sector players.
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MUTUAL FUNDS IN INDIA

In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India invited investors
or rather to those who believed in savings, to park their money in UTI Mutual Fund. For 30 years it
goaled without a single second player. Though the 1988 year saw some new mutual fund companies,
but UTI remained in a monopoly position.
The performance of mutual funds in India in the initial phase was not even closer to satisfactory
level. People rarely understood, and of course investing was out of question. But yes, some 24
million shareholders were accustomed with guaranteed high returns by the beginning of
liberalization of the industry in 1992. This good record of UTI became marketing tool for new
entrants. The expectations of investors touched the sky in profitability factor. However, people were
miles away from the preparedness of risks factor after the liberalization.
The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the
year 1992. Those days, the market regulations did not allow portfolio shifts into alternative
investments. There was rather no choice apart from holding the cash or to further continue investing
in shares. One more thing to be noted, since only closed-end funds were floated in the market, the
investors disinvested by selling at a loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the
losses by disinvestments and of course the lack of transparent rules in the where abouts rocked
confidence among the investors. Partly owing to a relatively weak stock market performance, mutual
funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net
asset value.
The securities and Exchange Board of India (SEBI) came out with comprehensive regulation in 1993
which defined the structure of Mutual Fund and Asset Management Companies for the first time.
The supervisory authority adopted a set of measures to create a transparent and competitive
environment in mutual funds. Some of them were like relaxing investment restrictions into the
market, introduction of open-ended funds, and paving the gateway for mutual funds to launch
pension schemes.
The measure was taken to make mutual funds the key instrument for long-term saving. The more the
variety offered, the quantitative will be investors.
Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the private
players has risen rapidly since then. Currently there are 34 Mutual Fund organizations in India
managing 1, 02,000 crores.
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At last to mention, as long as mutual fund companies are performing with lower risks and higher
profitability within a short span of time, more and more people will be inclined to invest until and
unless they are fu ly educated with the dos and don’ts of mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds world wide. In the
past few months there has been a consolidation phase going on in the mutual fund industry in India.
Now investors have a wide range of Schemes to choose from depending on their individual profiles.
MUTUAL FUND COMPANIES IN INDIA
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987
marked the existence of only one mutual fund company in India with Rs. 67bn assets under
management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the
80s decade, few other mutual fund companies in India took their position in mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund,
Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993,
the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the
fund families. In the same year the first Mutual Fund Regulations came into existence with re-
registering all mutual funds except UTI. The regulations were further given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now merged
with Franklin Templeton. Just after ten years with private sector player’s penetration, the total assets
rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.
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Major Mutual Fund Companies in India

I. ABN AMRO Mutual Fund
II. Reliance Mutual Fund
III. Birla Sun Life Mutual Fund
IV. Standard Chartered Mutual Fund
V. Bank of Baroda Mutual Fund
VI. Franklin Templeton India Mutual Fund
VII. HDFC Mutual Fund
VIII. Morgan Stanley Mutual Fund India
IX. HSBC Mutual Fund
X. Escorts Mutual Fund
XI. ING Vysya Mutual Fund
XII. Alliance Capital Mutual Fund
XIII. Prudential ICICI Mutual Fund
XIV. Benchmark Mutual Fund
XV. State Bank of India Mutual Fund
XVI. Canbank Mutual Fund
XVII. Tata Mutual Fund
XVIII. Chola Mutual Fund
XIX. Unit Trust of India Mutual Fund
XX. LIC Mutual Fund
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Market Share '15

Reliance Mutual Fund
HD FC Mutual Fund
Birla S un Life Mutual Fund
ICI CI Prudential M utua l Fund
Kota k Ma hindra Mutual Fund
UTI M utua l Fund
LIC Mutual F und
SBI Mutual Fund ID
FC Mutual Fund
TATA M utua l Fund
Franklin templeton M utua l Fund
DSP Bl ack Mutual Fund
23 others players
14% 14%
3%
4%
3%
3% 20%
4%
4%
9% 9%
4% 9%
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2.2 MUTUAL FUNDS DISTRIBUTION CHANNELS, WORKING AND

STRUCTURE.
Distribution channels:
Investors have varied investment objectives and can be classified as aggressive, moderate and
conservative, depending on their risk profile. For each of these categories, asset management
companies (AMCs) devise different types of fund schemes, and it is important for investors to buy
those that match their investment goals.
Funds are bought and sold through distribution channels, which play a significant role in explaining
to the investors the various schemes available, their investment style, costs and expenses. There are
two types of distribution channels-direct and indirect. In case of the former, the investors buy units
directly from the fund AMC, whereas indirect channels include the involvement of agents.
Consi der the di stri buti on channel s i n detai l :
Direct channel: This is good for investors who do not need the advisory services of agents and
are well-versed with the fundamentals of the fund industry. The channel provides the benefit of low
cost, which significantly enhances the returns in the long run.
Indirect channel: This channel is widely prevalent in the fund industry. It involves the use of
agents, who act as intermediaries between the fund and the investor. These agents are not exclusive
for mutual funds and can deal in multiple financial instruments. They have an in-depth knowledge
about the functioning of financial instruments and are in a position to act as financial advisers.
Here are some of the pl ayers i n the i ndi rect di stri buti on channel s:
1. Independent financial advisers (IFA): These are individuals trained by AMCs for selling
their products. Some IFAs are professionally qualified CFPs (certified financial planners).
They help investors in choosing the right fund schemes and assist them in financial planning.
IFAs manage their costs through the commissions that they earn by selling funds.
2. Organized distributors: They are the backbone of the indirect distribution channel. They
have the infrastructure and resources for managing administrative paperwork, purchases and
redemptions. These distributors cater to the diverse nature of the investor community and the
vast geographic spread of the country by establishing offices in rural and semi urban
locations.
3. Banks: They use their network to sell mutual funds. Their existing customer base serves as a
captive prospective investor base for marketing funds. Banks also handle wealth management
for their clients and manage portfolios where mutual funds are one of the asset classes. The
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players in the indirect channel assist investors in buying and redeeming fund units. They try
to understand the risk profile of investors and suggest fund schemes that best suits their
objectives. The indirect channel should be preferred over the direct channel when investors
want to seek expert advice on the risk-return mix or need help in understanding the features
of the financial securities in which the fund invests as well as other important attributes of
mutual funds, such as benchmarking and tax treatment.
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WORKING OF MUTUAL FUNDS
The mutual fund collects money directly or through brokers from investors. The money is invested
in various instruments depending on the objective of the scheme. The income generated by selling
securities or capital appreciation of these securities is passed on to the investors in proportion to their
investment in the scheme. The investments are divided into units and the value of the units will be
reflected in Net Asset Value or NAV of the unit. NAV is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the
number of units outstanding on the valuation date. Mutual fund companies provide daily net asset
value of their schemes to their investors. NAV is important, as it will determine the price at which
you buy or redeem the units of a scheme. Depending on the load structure of the scheme, you ha ve to
pay entry or exit load.
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STRUCTURE OF A MUTUAL FUND

India has a legal framework within which Mutual Fund have to be constituted. In India open and
close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in
India is allowed to issue open-end and close-end schemes under a common legal structure. The
structure that is required to be followed by any Mutual Fund in India is laid down under SEBI
(Mutual Fund) Regulations, 1996.
The Fund Sponsor: Sponsor is defined under SEBI regulations as any person who,
acting alone or in combination of another corporate body establishes a Mutual Fund. The
sponsor of the fund is akin to the promoter of a company as he gets the fund registered with
SEBI. The sponsor forms a trust and appoints a Board of Trustees. The sponsor also appoints
the Asset Management Company as fund managers. The sponsor either directly or acting
through the trustees will also appoint a custodian to hold funds assets. All these are made in
accordance with the regulation and guidelines of SEBI.
As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least
40% of the net worth of the Asset Management Company and possesses a sound financial
track record over 5 years prior to registration.
Mutual Funds as Trusts: A Mutual Fund in India is constituted in the form of Public trust
Act, 1882. The Fund sponsor acts as a settlor 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
common pool, by scribing to “units” issued by various schemes established by the
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Trusts as evidence of their beneficial interest in the fund. It should be understood that the
fund should be just a “pass through” vehicle.
Under the Indian Trusts Act, the trust of the fund has no independent legal capacity itself,
rather it is the Trustee or the Trustees who have the legal capacity and therefore all acts in
relation to the trusts are taken on its behalf by the Trustees. In legal parlance the investors or
the unit-holders are the beneficial owners of the investment held by the Trusts, even as these
investments are held in the name of the Trustees on a day-to-day basis. Being public trusts,
Mutual Fund can invite any number of investors as beneficial owners in their investment
schemes.
Trustees: A Trust is created through a document called the Trust Deed that is executed by the
fund sponsor in favour of the trustees. The Trust- the Mutual Fund – may be managed by a
board of trustees- a body of individuals, or a trust company- a corporate body. Most of the
funds in India are managed by Boards of Trustees. While the boards of trustees are governed
by the Indian Trusts Act, where the trusts are a corporate body, it would also require
complying with the Companies Act, 1956.
The Board or the Trust company as an independent body, acts as a protector of the of the
unit-holders interests. The Trustees do not directly manage the portfolio of securities. For this
specialist function, appoint an Asset Management Company. They ensure that the Fund is
managed by ht AMC as per the defined objectives and in accordance with the trusts dee ds
and SEBI regulations.
The Asset Management Companies: The role of an Asset Management Company

(AMC) is to act as the investment manager of the Trust under the board supervision and the
guidance of the Trustees. The AMC is required to be approved and registered with SEBI as
an AMC. The AMC of a Mutual Fund must have a net worth of at least Rs. 10 Crores at all
times. Directors of the AMC, both independent and non-independent, should have adequate
professional expertise in financial services and should be individuals of high morale standing,
a condition also applicable to other key personnel of the AMC. The AMC cannot act as a
Trustee of any other Mutual Fund. Besides its role as a fund manager, it may undertake
specified activities such as advisory services and financial consulting, provided these
activities are run independent of one another and the AMC’s resources (such as personnel,
systems etc.) are properly segregated by the activity. The AMC must always act in the
interest of the unit-holders and reports to the trustees with respect to its activities.
Custodian and Depositories: Mutual Fund is in the business of buying and selling of
securities in large volumes. Handling these securities in terms of physical delivery and
eventual safekeeping is a specialized activity. The custodian is appointed by the Board of
Trustees for safekeeping of securities or participating in any clearance system through
approved depository companies on behalf of the Mutual Fund and it must fulfil its
responsibilities in accordance with its agreement with the Mutual Fund. The custo dian should
be an entity independent of the sponsors and is required to be registered with SEBI. With the
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introduction of the concept of dematerialization of shares the dematerialized shares are kept
with the Depository participant while the custodian holds the physical securities. Thus,
deliveries of a fund’s securities are given or received by a custodian or a depository
participant, at the instructions of the AMC, although under the overall direction and
responsibilities of the Trustees.
Bankers: A Fund’s activities involve dealing in money on a continuous basis primarily with
respect to buying and selling units, paying for investment made, receiving the proceeds from
sale of the investments and discharging its obligations towards operating expenses. Thus
the Fund’s banker plays an important role to determine quality of service that the fund gives
in timely delivery of remittances etc.
Transfer Agents: Transfer agents are responsible for issuing and redeeming units of the
Mutual Fund and provide other related services such as preparation of transfer documents and
updating investor records. A fund may choose to carry out its activity in-house and charge the
scheme for the service at a competitive market rate. Where an outside Transfer agent is used,
the fund investor will find the agent to be an important interface to deal with, since all of the
investor services that a fund provides are going to be dependent on the transfer agent.
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:
The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These regulations
make it mandatory for mutual fund to have three structures of sponsor trustee and asset Management
Company. The sponsor of the mutual fund and appoints the trustees. The trustees are responsible to
the investors in mutual fund and appoint the AMC for managing the investment portfolio. The AMC
is the business face of the mutual fund, as it manages all the affairs of the mutual fund. The AMC
and the mutual fund have to be registered with SEBI.
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2.3 PERFORMANCE COMPARISON OF MUTUAL FUNDS OF FIVE

COMPANIES
1. HDFC MidCap Opportunities (G)

2. UTI Mid Cap (G)
3. Birla SL Midcap Fund (G)
4. Kotak Mid-Cap Fund – (G)
5. Tata Mid Cap Growth Fund (G)
HDFC MUTUAL FUNDS
HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act,
1956, on December 10, 1999, and was approved to act as an Asset Management Company for
the HDFC Mutual Fund by Securities and Exchange Board of India (SEBI) vide its letter
dated July 3, 2000. The registered office of the AMC is situated at “HUL House”, 2nd Floor,
H. T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai - 400 020. The
Company Identification Number (CIN) is U65991MH1999PLC123027. .
In terms of the Investment Management Agreement, the HDFC Trustee Company Ltd has
appointed the HDFC Asset Management Company Limited (AMC) to manage schemes of the
Mutual Fund. The paid up capital of the AMC is Rs. 25.241 crore as on September 30, 2013.
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HDFC ASSESTS
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UTI MUTUAL FUND

UTI Asset Management Company Ltd. (UTI AMC) was incorporated on November 14, 2002 and
commenced operations from February 1, 2003. UTI AMC has been promoted by four sponsors,
namely, State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab
National Bank and each of them hold 25% of the paid up capital of UTI AMC. UTI AMC was
converted from a private limited company to a limited company with effect from November 14,
2007. On January 20, 2010 T.Rowe Price Group Inc. through its wholly owned subsidiary T.Rowe
Price Global Investment Services Ltd. U.K.(TRP) acquired 26% stake in UTIAMC after obtaining all
the requisite approvals from the Government of India, SEBI and the RBI. Directors representing TRP
have been inducted on UTIAMC board.
UTI AMC is the investment manager to the schemes of UTI Mutual Fund. It also manages offshore
funds and provides support to the Specified Undertaking of the Unit Trust of India. It is the holding
company for UTI Venture Funds Management Company which manages venture funds and UTI
International Ltd., which markets offshore funds to overseas investors.
UTI AMC is a SEBI registered Portfolio Manager bearing registration number PM/INP000000860.
UTI AMC has been managing/advising the portfolios of domestic/offshore funds and mandates since
inception in 2004. Some of the key offshore mandates/funds that the PMS Division has been
advising/managing are:
1. Shinsei India Fund, an equity fund based in Japan,

2. Rainbow Fund, registered in Mauritius as a multi-class equity fund,
3. India allocation of the United China-India Dynamic Growth Fund, based out of Singapore.
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UTI PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST ALLOCATION

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BIRLA SUN LIFE MUTUAL FUNDS
Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment manager of
Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun
Life Financial Inc. of Canada. The joint venture brings together the Aditya Birla Group's
experience in the Indian market and Sun Life's global experience.
Established in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading
flagships of Mutual Funds business managing assets of a large investor base. Our solutions
offer a range of investment options, including diversified and sector specific equity schemes,
fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury
products and offshore funds.
Birla Sun Life Asset Management Company has one of the largest team of research analysts
in the industry, dedicated to tracking down the best companies to invest in. BSLAMC strives
to provide transparent, ethical and research-based investments and wealth management
services.
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B IRLA SUN LIFE PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST
ALLOCATION
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KOTAK MAHINDRA MUTUAL FUND

Kotak Mahindra is one of India's leading financial institutions, offering complete financial
solutions that encompass every sphere of life. From commercial banking, to stock broking, to
mutual funds, to life insurance, to investment banking, the group caters to the financial needs
of individuals and corporates. The group has a net worth of Rs.7,911 crore and employs
around 20,000 employees across its various businesses, servicing around 7 million customer
accounts through a distribution network of 1,716 branches, franchisees and satellite offices
across more than 470 cities and towns in India and offices in New York, California, San
Francisco, London, Dubai, Mauritius and Singapore.
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KOTAK MAHINDRA PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST

ALLOCATION
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TATA MUTUAL FUND
Tata Mutual Fund manages around 28,045 crores (average AUM for the quarter of April –
June 2015) worth of assets across its varied offerings. Tata Mutual Fund offers an investment
option for everyone, whether you are a businessman or salaried professional, a retired person
or housewife, an aggressive investor or a conservative capital builder.
The Tata Asset Management philosophy is centred on seeking consistent, long-term results.
Tata Asset Management aims at overall excellence, within the framework of transparent and
rigorous risk controls.
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TATA PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST ALLOCATION

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COMPARE MUTUAL FUND’S SCHEME
You must have read a lot of material on how to evaluate a mutual fund scheme as well as on how
not to evaluate a mutual fund scheme. And to make things difficult there a plethora of mutual fund
schemes available in the market to choose from. With 44 asset management companies (AMC)
currently in the mutual fund industry offering more than 450 schemes (under diversified equity
category) the choice is not that easy. So it can be a challenge for you when it comes down to
identifying a handful of mutual fund schemes from this rather large universe. The good news for you
is that based on performance, most of these schemes fall short of making the grade. But then the real
challenge lies in finding those few schemes that do make the grade and are worthy enough to be a
part of a well performing mutual fund portfolio. But when it comes to investment decisions many of
you appear confused due to similar looking schemes in terms of investment objective, risks a nd
returns. The simplest of decisions prove elusive to you. Moreover, this confusion is further enhanced
by misrepresentation or false sales pitch made by some self-centric mutual fund agents. Thus, to
make things easy for you, we provide you with a 5-step strategy to select a diversified equity.
1. Compare returns across funds within the same category.

2. Compare returns against those of the benchmark index.
3. Compare against the fund's own performance.
4. Check the cost associated with the mutual fund scheme.
5. Risk related parameter.
Compare returns across funds within the same category: Compare return across funds
within the same category one of the most basic forms of benchmarking involves comparing
funds within a category. For instance, if you are evaluating a large cap for investment, you
should compare its returns with other predominantly large cap diversified equity funds.
Comparing it with mid cap funds for example, will deliver erroneous results, because the
risk-reward relationship between mid cap and large cap funds are not comparable. As equities
are best equipped to deliver returns over longer time frames (3-5 years), investments in
diversified equity funds should be made with a long-term perspective. Hence, while
comparing returns, investors must consider longer time frames (of 3-5 years) before taking a
conclusive decision about investing in a fund. Comparing a fund over a longer time frame
will also give investors a good idea about how the fund has fared over a stock market cycle
(boom and bust). Performance of the fund across different market phases compared with the
category average will help in gauging the consistency of the returns generated by the fund.
Compare returns against those of the benchmark index: Regulations demand that every
fund mentions a benchmark index in its Offer Document. The benchmark index serves the
dual purpose of being a guidepost for both the fund manager and the investor community. All
eyes must be on the benchmark index and how the fund has fared against it. Again with a
diversified equity fund, investors should consider the performance of the fund over the longer
time frame, while comparing it to its benchmark index. In the Indian context, most equity
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funds outperform their benchmark indices over the long-term (3-5 years). However, during
market turbulence, like the one witnessed over November 2010 till date, investors will find
many equity funds trailing their benchmark indices. This is something we have observed on
more than one occasion. The funds that can outperform their benchmark indices during stock
market volatility must be marked closely. Check out the performance of Diversified Equity
Funds.
Compare against the fund's own performance: Besides comparing a fund with its peers
and benchmark index, investors should evaluate its historical performance as well. Not all
funds show stability in performance over the years. Many of them plunge during the market
downturn, sometimes even more than their benchmarks or the category average; only a few
manage to sustain their performance year after year, market cycle after market cycle. By
evaluating a fund against its own historical performance, you ensure that you get the most
consistent performers in your mutual fund portfolio.
Check the cost associated with the mutual fund scheme: scheme Apart from analysing the
performance of the mutual fund scheme, you should also pay attention to the costs associated
with investing in that particular scheme as this has a direct bearing on the net returns you earn
from the mutual fund scheme. Expense ratio should be checked before making the final
decision of investing in a mutual fund scheme. Also, beware of the exit load (charges levied
by a mutual fund scheme in case of redemption within the stipulated period) while requesting
for redemption from a mutual fund scheme. However, if you hold on to your investments
from a long term point of view, you need not bother about the exit load whatsoever.
Risk related parameter: While NAV returns are important, one area, which should never be
ignored by investors is the risk undertaken by the fund to generate returns. Mutual funds
being market-linked are prime candidates for stock market related risks. The two aspects that
investors should take into account are volatility of the fund as indicated by the Standard
Deviation (SD) and risk-adjusted returns as calculated by the Sharpe Ratio (SR). While SD
shows the degree of risk taken on by the fund, SR shows the return generated by the fund per
unit of risk taken. The SD (volatility) of a fund should be lower than its peers; on the other
hand, the SR should be higher. The best fund is the one with the lowest SD and the highest
SR within its peer group. Again, it is advisable for investors to evaluate the SD a nd SR of the
fund on a historical basis so as to identify the most consistent performers.
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32
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How to compare mutual funds
Choosing a mutual fund seems to have become a very complex affair lately. There are no dearths of
funds in the market and they all clamor for attention. The most crucial factor in determining which
one is better than the rest is to look at returns. Returns are the easiest to measure and compare across
funds.
At the most trivial level, the return that a fund gives over a given period is just the percentage
difference between the starting Net Asset Value (price of unit of a fund) and the ending Net Asset
Value.
Returns by themselves don't serve much purpose. The purpose of calculating returns is to make a
comparison. Either between different funds or time periods. And, you must be careful not to make a
mistake here. Or else, you could end up investing in the wrong funds.
Invest in various funds, not one
Absolute returns: Absolute returns measure how much a fund has gained over a certain period. So
you look at the NAV on one day and look at it, say, six months or one year or two years later. The
percentage difference will tell you the return over this time frame. But when using this parameter to
compare one fund with another, make sure that you compare the right fund. To use the age -old
analogy, don't compare apples with oranges.
So if you are looking at the returns of a diversified equity fund (one that invests in different
companies of various sectors), compare it with other diversified equity funds. Don't compare it with
a sector fund which invests only in companies of a particular sector. Don't even compare it with a
balanced fund (one that invests in equity and fixed return instruments).
Why has my fund not declared a dividend?
Benchmark returns: This will give you a standard by which to make the comparison. It basically
indicates what the fund has earned as against what it should have earned. A fund's benchmark is an
index that is chosen by a fund company to serve as a standard for its returns. The mark et watchdog,
the Securities and Exchange Board of India, has made it mandatory for funds to declare a benchmark
index. In effect, the fund is saying that the benchmark's returns are its target and a fund should be
deemed to have done well if it manages to beat the benchmark. Let's say the fund is a diversified
equity fund that has benchmarked itself against the Sensex.
Now if the markets are doing fabulously well and the Sensex keeps climbing upwards steadily, then
anything less than fabulous returns from the fund would actually be a disappointment. If the Sensex
rises by 10% over two months and the fund's NAV rises by 12%, it is said to have outperformed its
benchmark. If the NAV rose by just 8%, it is said to have underperformed the benchmark. But if the
34
Sensex drops by 10% over a period of two months and during that time, the fund's NAV drops by
only 6%, then the fund is said to have outperformed the benchmark. A fund's returns compared to its
benchmark are called its benchmark returns. At the current high point in the stock market, almost
every equity fund has done extremely well but many of them have negative benchmark returns,
indicating that their performance is just a side-effect of the markets' rise rather than some brilliant
work by the fund manager
The best mutual fund scheme for you
Time period: The most important thing while measuring or comparing returns is to choose an
appropriate time period. The time period over which returns should be compared and evaluated has
to be the same over which that fund type is meant to be invested in. If you are comparing equity
funds then you must use three to five year returns. But this is not the case of every other fund. For
instance, cash funds are known as ultra short-term bond funds or liquid funds that invest in fixed
return instruments of very short maturities. Their main aim is to preserve the principal and earn a
modest return. So the money you invest will eventually be returned to you with a little something
added. Investors invest in these funds for a very short time frame of around a few months. So it is
alright to compare these funds on the basis of their six month returns.
Market conditions
It is also important to see whether a fund's return history is long enough for it to have seen all kinds
of market conditions.
For example, at this point of time, there are equity funds that were launched one to two years ago and
have done very well. However, such funds have never seen a sustained declining market (bear
market). So it is a little misleading to look at their rate of return since launch and compare that to
other funds that have had to face bad markets.
PRESENT POSITION OF MUTAL FUND

Mutual funds play vital role in resource mobilization and their efficient allocation in a transitional
economy like India. Economic transition is usually marked by changes in the financial mechanism,
institutional integration, market regulation, re-allocation of savings and investments, and changes in
the inter-sector relationships. These changes often imply negativity which shakes investor‘s
confidence in the capital market. Mutual funds perform a crucial task as efficient alligators of
resources in such a transitional period. Throughout the world, mutual funds have worked as reliable
instruments of change in financial intermediation, development of the capital market, and growth of
the corporate sector. The active involvement of mutual funds in promoting economic development
can also be seen in their dominant presence in the money and capital markets. Mutual funds make a
significant contribution in vibrating both the markets. The spread of equity cult has further increased
reliance of the corporate sector on equity financing. The role of mutual funds in the financing of
corporate has substantially increased after the SEBI allowed the corporate sector to reserve 20% of
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their public issues for Indian mutual The percentage share of corporate equity and debentures in the
household investors, together with UTI units, have increased from 3.7% in 1980-81 to 17.2% in
1992-93, while the share of less liquid assets like LIC, PF, and pension have shown a marginal
increase from 25.1% to 27.2% during the same period. Mutual funds have been the fastest growing
institution during this period in the household savings sector. Growing market complications and
investment risk in the stock market with high inflation have pushed households further towards
mutual funds.
FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA

Financial experts believe that the future of Mutual Funds in India will be very bright. It has been
estimated that by March-end of 2010, the mutual fund industry of India will reach Rs 40,90,000
crore, taking into account the total assets of the Indian commercial banks. In the coming 10 years the
annual composite growth rate is expected to go up by 13.4%.
i. 100% growth in the last 6 years.

ii. Numbers of foreign AMC’s are in the queue to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management worldwide.
iii. Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual
funds sector is required.
iv. We have approximately 29 mutual funds which is much less than US having more than 800.
There is a big scope for expansion.
v. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating
on the 'A' class cities. Soon they will find scope in the growing cities.
vi . Mutual fund can penetrate rural like the Indian insurance industry with simple and limited
products.
vii. SEBI allowing the MF's to launch commodity mutual funds.
viii. Emphasis on better corporate governance.
ix. Trying to curb the late trading practices.
x. Introduction of Financial Planners who can provide need based advice.
Looking at the past developments and combining it with the current trends it can be concluded that
the future of Mutual Funds in India has lot of positive things to offer to its investors.
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2.4 Why Select Mutual Funds?

The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly
he can expect higher returns and vise-versa if he pertains to lower risk instruments, which would be
satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate
return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit -
bonds that give out more return which is slightly higher as compared to the bank deposits but the risk
involved also increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide
professional management, diversification, convenience and liquidity. That doesn’t mean mutual fund
investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are less riskier
but are also invested in the stock markets which involves a higher risk but can expect higher returns.
Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is
considered very volatile.
RETURN RISK M ATRIX
HIGHIER RISK HIGHER RISK

MODERATE RETURNS HIGHIER RETURNS
Venture
Capital Equity
Bank FD
Mutual
Funds
Postal
Savings
LOWER RISK LOWER RISK

LOWER RETURNS HIGIER RETURNS
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The graph i ndi cates the growth of assets under management over the years.
GROWTH IN ASSETS UNDER MANAGEMENT
(Source:http://www.amfiindia.com/research- information/mf-history)
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2.5 ADVANTAGES OF MUTUAL FUNDS

If mutual funds are emerging as the favourite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the investor who
has limited resources available in terms of capital and the ability to carry out detailed research and
market monitoring. The following are the major advantages offered by mutual funds to all investors:
1. Portfolio Diversification: Each investor in the fund is a part owner of a l the fund’s assets,
thus enabling him to hold a diversified investment portfolio even with a small amount of
investment that would otherwise require big capital.
2. Professional Management: Even if an investor has a big amount of capital available to

him, he benefits from the professional management skills brought in by the fund in the
management of the investor’s portfolio. The investment management ski ls, along with the
needed research into available investment options, ensure a much better return than what an
investor can manage own. Few investors have the skill and resources of their own to succeed in
today’s fast moving, global and sophisticated markets.
3. Reduction/Diversification Of Risk: When an investor invests directly, all the risk of

potential loss is his own, whether he places a deposit with a company or a bank, or he buys a
share or debenture on his own or in any other from. While investing in the pool of funds with
investors, the potential losses are also shared with other investors. The risk reduction is one of the
most important benefits of a collective investment vehicle like the mutual fund.
4. Reduction of Transaction Costs: What is true of risk as also true of the transaction costs?
The investor bears all the costs of investing such as brokerage or custody of securities. When
going through a fund, he has the benefit of economies of scale; the funds pay lesser costs because
of larger volumes, a benefit passed on to its investors.
5. Liquidity: Often, investors hold shares or bonds they cannot directly, easily and quickly sell.
When they invest in the units of a fund, they can generally cash their investments any time, by
selling their units to the fund if open-ended, or selling them in the market if the fund is close-end.
Liquidity of investment is clearly a big benefit.
6. Convenience and Flexibility: Mutual fund management companies offer many investor
services that a direct market investor cannot get. Investors can easily transfer their holding from
one scheme to the other; get updated market information and so on.
7. Tax Benefits: Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit holders of open-
ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be
39
taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a
deduction up to Rs. 9,000 from the Total Income will be admissible in respect of income from
investments specified in Section 80L, including income from Units of the Mutual Fund. Units of
the schemes are not subject to Wealth-Tax and Gift-Tax.
8. Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over
a lifetime.
9. Well Regulated: All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. The operations of
Mutual Funds are regularly monitored by SEBI.
10. Transparency: You get regular information on the value of your investment in addition to
disclosure on the specific investments made by your scheme, the proportion invested in each
class of assets and the fund manager's investment strategy and outlook.
2.6 DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS
1. No Control over Costs: An investor in a mutual fund has any control of the overall costs of
investing. The investor pays investment management fees as long as he remains with the fund,
albeit in return for the professional management and research. Fees are payable even if the value
of his investments is declining. A mutual fund investor also pays fund distribution costs, which
he would not incur in direct investing. However, this shortcoming only means that there is a cost
to obtain the mutual fund services.
2. No Tailor-Made Portfolio: Investors who invest on their own can build their own
portfolios of shares and bonds and other securities. Investing through fund means he delegates
this decision to the fund managers. The very-high-net-worth individuals or large corporate
investors may find this to be a constraint in achieving their objectives. However, most mutual
fund managers help investors overcome this constraint by offering families of funds- a large
number of different schemes- within their own management company. An investor can choose
from different investment plans and constructs a portfolio to his choice.
3. Managing A Portfolio Of Funds: Availability of a large number of funds can actually
mean too much choice for the investor. He may again need advice on how to select a fund to
achieve his objectives, quite similar to the situation when he has individual shares or bonds to
select.
4. The Wisdom of Professional Management: That's right, this is not an advantage. The
average mutual fund manager is no better at picking stocks than the average nonprofessional, but
charges fees.
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5. No Control: Unlike picking your own individual stocks, a mutual fund puts you in the
passenger seat of somebody else's car.
6. Dilution: Mutual funds generally have such small holdings of so many different stocks that
insanely great performance by a fund's top holdings still doesn't make much of a difference in a
mutual fund's total performance.
7. Buried Costs: Many mutual funds specialize in burying their costs and in hiring salesmen
who do not make those costs clear to their clients.
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2.7 TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

W ide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk
tolerance and return expectations etc. thus mutual funds has Variety of flavours, Being a collection
of many stocks, an investors can go for picking a mutual fund might be easy. There are over
hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in categories,
mentioned below.
TYPES OF MUTUAL
FUNDS
BY STRUCTURE BY NATURE BY INVESTMENT OTHER SCHEMES

OBJECTIVE
Ope n - Ende d Inde x Sche mes

Sche me s Equity Fund Growth Sche mes
Clos e - Ende d Se ctor Spe cific

Sche me s De bt Funds Income Schemes Sche me s
Tax Saving
Inte rval Sche mes B alance d Funds B alance d Sche mes Sche me s
Mone y Market
Sche me s
A) BY STRUCTURE
1. Open Ended Schemes: An open end fund is one that is available for subscription all through
the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net
Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
2. Close Ended Schemes: A closed end fund has a stipulated maturity period which generally
ranging from 3 to 15 years. The fund is open for subscription only during a specified period.
Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or
sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit
route to the investors, some close-ended funds give an option of selling back the units to the Mutual
Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one
of the two exit routes is provided to the investor.
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3. Interval Schemes: Interval Schemes are that scheme, which combines the features of open-
ended and close-ended schemes. The units may be traded on the stock exchange or may be open for
sale or redemption during pre-determined intervals at NAV related prices.
B) BY NATURE
1. Equity Fund: These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund manager’s outlook on
different stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:
Diversified Equity Funds

Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk -
return matrix.
2. Debt Funds: The objective of these Funds is to invest in debt papers. Government authorities,
private companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the investors.
Debt funds are further classified as:
Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks
slightly high on the risk-return matrix when compared with other debt schemes.
Short Term Plans (STPs): Meant for investment horizon for three to six months. These
funds primarily invest in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also invested in corporate
debentures.
Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity
and preservation of capital. These schemes invest in short-term instruments like Treasury
Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon of 1day to 3
43
months. These schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.
3. Balanced Funds: As the name suggest they, are a mix of both equity and debt funds. They
invest in both equities and fixed income securities, which are in line with pre -defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the worlds.
Equity part provides growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly.
C) BY INVESTMENT OBJECTIVE
Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes
normally invest a major part of their fund in equities and are willing to bear short-term
decline in value for possible future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The aim of these
schemes is to provide regular and steady income to investors. These schemes generally invest
in fixed income securities such as bonds and corporate debentures. Capital appreciation in
such schemes may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing a part of the income and capital gains they earn. These schemes
invest in both shares and fixed income securities, in the proportion indicated in their offer
documents (normally 50:50).
Money Market Schemes: Money Market Schemes aim to provide easy liquidity,
preservation of capital and moderate income. These schemes generally invest in safer, short-
term instruments, such as treasury bills, certificates of deposit, commercial paper and inte r-
bank call money.
Load Funds: A Load Fund is one that charges a commission for entry or exit. That is, each
time you buy or sell units in the fund, a commission will be payable. Typically entry and exit
loads range from 1% to 2%. It could be worth paying the load, if the fund has a good
performance history.
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No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or
exit. That is, no commission is payable on purchase or sale of units in the fund. The
advantage of a no load fund is that the entire corpus is put to work.
OTHER SCHEMES
Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax
laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made
to any Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme
is suited for young people as they have the ability to take on higher risk. The ELSS funds
should invest more than 80 per cent of their money in equity and related instruments. It is
ideal to invest in them when the markets are down. These funds are now open all the year
round. The other way of investing in these funds could be a systematic investment, which
essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked
security and therefore there will
Index Schemes: Index schemes attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only
those stocks that constitute the index. The percentage of each stock to the total holding will
be identical to the stocks index weight age. And hence, the returns from such schemes would
be more or less equivalent to those of the Index.
Best way to start invest for any age

1. SIP: SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme. SIP
allows one to buy units on a given date each month, so that one can implement a saving plan
for themselves. An SIP is generally preferred for an equity scheme and can be started with as
small as Rs 500 per month.
2. Lump-sum: A lump sum amount is defined as a single complete sum of money. A
lump sum investment is of the entire amount at one go.
Sector Specific Schemes: 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.
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HOW RISKY MUTUAL FUNDS ARE?

Investors always judge a fund by the return it gives, never by the risk it took. In any historical
analysis of a mutual fund, the return is remembered but the risk is quickly forgotten. So a fund
manager may have used very high-risk strategies (that are bound to fail disastrously in the long run),
hoping that his wins will be remembered (as they often are), but the risk he took will soon be
forgotten.
What is risk?
Risk can be defined as the potential for harm. But when anyone analyzing mutual funds uses this
term, what is actually being talked about is volatility. Volatility is nothing but the fluctuation of the
Net Asset Value (price of a unit of a fund). The higher the volatility, the greater the fluctuations of
the NAV. Generally, past volatility is taken as an indicator of future risk and for the task of
evaluating mutual fund; this is an adequate (even if not ideal) approximation.
Defining Mutual fund risk: Mutual funds face risks based on the investments they hold. For
example, a bond fund faces Interest rate risk and income risk. Bond values are inversely related to
interest rates. If interest rates go up, bond values will go down and vice versa. Bond income is also
affected by the change in interest rates. Bond yields are directly related to interest rates falling as
interest rates fall and rising as interest rise. Income risk is greater for a short-term bond fund than for
a long-term.
Similarly, a sector stock fund (which invests in a single industry, such as telecommunications) is at
risk that its price will decline due to developments in its industry. A stock fund that invests across
many industries is more sheltered from this risk defined as industry risk.
Following is a glossary of some risks to consider when investing in mutual funds:

CALL RISK
The possibility that falling interest rates will cause a bond issuer to redeem or call its high yielding
bond before the bond's maturity date. The possibility that political events (a war, national elections),
financial problems (rising inflation, government default), or natural disasters (an earthquake, a poor
harvest) will weaken a country's economy and cause investments in that country to decline. The
possibility that a bond issuer will fail to repay interest and principal in a timely manner. Also the
possibility that returns could be reduced for Americans investing in foreign securities because of a
rise in the value of the U.S. dollar against foreign currencies. Also called exchange -The possibility
that a fixed-income fund's dividends will decline as a result of falling overall the possibility that a
group of stocks in a single industry will decline in price due to developments in that industry. The
possibility that increases in the cost of living will reduce or eliminate a fund's real inflation-
INTEREST RATE RISK: The possibility that a bond fund will decline in value because of an
increase in interest rates. The possibility that an actively managed mutual fund's investment adviser
will fail to execute the fund's investment strategy effectively resulting in the failure of stated
objectives. The possibility that stock fund or bond fund prices overall will decline over short or even
extended periods. Stock and bond markets tend to move in cycles, with periods when prices rise and
46
other periods when prices fall. The possibility that an investment will go down in value, or "lose
money," from the original.
HOW TO CHECK THE FUND’S RISK: So how would you figure out how risky a mutual
fund is? Value Research a mutual fund research outfit, carries out a rating every month
which is also carried on rediff.com. If you would like to take a look at the latest ratings, click
on the relevant month via March, April, and May. In this rating, each fund is given a star. The
funds with a 5-star rating are the best.
Those with a 1-star rating are the worst. This star rating is based on risk-adjusted return. In a
very simple way, it gives investors an understanding of whether a fund is taking an
acceptable amount of risk in generating the kind of Risk Return Matrix in different sources of
investments:
THINGS TO BE SEE WHILE INVESTING IN MUTUAL FUNDS:
1. Don't just look at the NAV, also look at the risk: Alliance Buy India and Alliance Equity both
have 3 stars. That does mean their NAV is identical. In fact, the NAV of Alliance Equity is 91.66
while that of Buy India is 16.05. However, Alliance Buy India took an average risk and delivered an
average return, while Alliance Equity took an above average risk to get the a bove average returns.
Hence their stars are identical, despite one having a higher NAV.
2. Higher rating does not mean better returns: A fund with more stars does not indicate a higher
return when compared with the rest. All it means is that you will get a good return without putting
your money at too much risk. Birla Equity Plan has a 4-star rating while Alliance Tax Relief '96 has
a 2-star rating. However, the fund with the 2-star rating has a higher NAV (131.96) than the one with
the 4-star rating 3. Higher rating does not mean more risk: Birla Advantage has an NAV of 67.09
while Franklin India Prima has an NAV of 122.92. This does not necessarily mean that Franklin
India Prima is offering a higher risk since the return is higher. In fact, according to our ratings,
Franklin India Prima is a 5-star fund while (risk is below average) while Birla Advantage is a 2-star
fund (risk is above average). When you decide to invest in a mutual fund, you must look at risk and
return. Always ask yourself one question: What are the chances of my losing money? Do not get
misled by high returns. You could also end up losing a substantial part of your
47
2.8 TERMS IN MUTUAL FUNDS AND SELECTION PARAMETERS FOR

MUTUAL FUND
NET ASSET VALUE (NAV): Since each owner is a part owner of a mutual fund, it is
necessary to establish the value of his part. In other words, each share or unit that an investor
holds needs to be assigned a value. Since the units held by investor evidence the ownership of
the fund’s assets, the value of the total assets of the fund when divided by the total number of
units issued by the mutual fund gives us the value of one unit. This is generally called the Net
Asset Value (NAV) of one unit or one share. The value of an investor’s part ownership is
thus determined by the NAV of the number of units held.
Calculation of NAV: Let us see an example. If the value of a fund’s assets stands at Rs. 100 and
it has 10 investors who have bought 10 units each, the total numbers of units issued are
100, and the value of one unit is Rs. 10.00 (1000/100). If a single investor in fact owns 3
units, the value of his ownership of the fund will be Rs. 30.00(1000/100*3). Note that the
value of the fund’s investments wi l keep fluctuating with the market-price movements,
causing the Net Asset Value also to fluctuate. For example, if the value of our fund’s asset
increased from Rs. 1000 to 1200, the value of our investors holding of 3 units will now be
(1200/100*3) Rs. 36. The investment value can go up or down, depending on the markets
value of the fund’s assets.
REPURCHASE PRICE: Is the price at which a close-ended scheme repurchases its units and
it may include a back-end load? This is also called bid Price.
REDEMPTION PRICE: Is the price at which open-ended schemes repurchase their units and
close-ended schemes redeem their units on maturity? Such prices are NAV related. Turnover
is a measure of the fund's securities transactions, usually calculated over a year's time, and
usually expressed as a percentage of net asset value. This value is usually calculated as
the value of all transactions (buying, selling) divided by 2 divided by the fund's total holdings;
Le. The fund counts one security sold and another one bought as one "turnover". Thus
turnover measures the replacement of holdings. Mutual funds bear expenses similar to other
companies.
MANAGEMENT FEES: The management fee for the fund is usually synonymous with the
contractual investment advisory fee charged for the management of a fund's investments.
However, as many fund companies include administrative fees in the advisory fee
component, when attempting to compare the total management expenses of different funds, it
is helpful to define management fee as equal to the contractual advisory fee + the contractual
administrator fee. This "levels the playing field" when comparing management fee
components across multiple funds.
48
NON-MANAGEMENT EXPENSES: Apart from the management fee, there are certain non-
management expenses which most funds must pay. Some of the more significant (in terms
of amount) non-management expenses are: transfer agent expenses (this is usually the person
you get on the other end of the phone line when you want to purchase/sell shares of a fund),
custodian expense (the fund's assets are kept in custody by a bank which charges a custody
fee), legal/audit expense, fund accounting expense, registration expense (the SEC charges a
registration fee when funds file registration statements with it), board of directors/trustees
expense (the disinterested members of the board who oversee the fund are usually paid a fee
for their time spent at meetings), and printing and postage expense (incurred when printing
and delivering shareholder reports).
BROKERAGE/COMMISSIONS: An additional expense which does not pass through the

statement of operations and cannot be controlled by the investor is brokerage commissions.
Brokerage commissions are incorporated into the price of the fund and are reported usually 3
months after the fund's annual report in the statement of additional information. Brokerage
commissions are directly related to portfolio turnover (portfolio turnover refers to the number
of times the fund's assets are bought and sold over the course of a year). Usually the higher
the rate of the portfolio turnover, the higher the brokerage commissions. The advisors of
mutual fund companies are required to achieve "best execution" through brokerage
arrangements so that the commissions charged to the fund will not be excessive. And buys
back shares from investors wishing to leave the fund.
EXCHANGE-TRADED FUNDS: A relatively recent innovation, the exchange-traded fund or

ETF, is often structured as an open-end investment company. ETFs combine
characteristics of both mutual funds and closed-end funds. ETFs are traded throughout the
day on a stock exchange, just like closed-end funds, but at prices generally approximating the
ETF's net asset value. Most ETFs are index funds and track stock market indexes. Shares are
issued or redeemed by institutional investors in large blocks (typically of 50,000). Most
investors purchase and sell shares through brokers in market transactions. Because the
institutional investors normally purchase and redeem in kind transactions, ETFs are more
efficient than traditional mutual funds (which are continuously issuing and redeeming
securities and, to effect such transactions, continually buying and selling securities and
maintaining liquidity positions) and therefore tend to have lower expenses.
INVESTOR FEES AND EXPENSES: Fees and expenses borne by the investor vary based on
the arrangement made with the investor's broker. Sales loads (or contingent deferred sales loads
(CDSL) are not included in the fund's total expense ratio (TER) because they do not pass
through the statement of operations for the fund. Additionally, funds may charge early
redemption fees to discourage investors from swapping money into and out o f the fund.
Quickly, which may force the fund to make bad trades to obtain the necessary liquidity? For
example, Fidelity Diversified International Fund (FDIVX) charges a 1 percent fee on money
removed from the fund in less.
49
Most FOFs of invest in affiliated funds (mutual funds managed by the same advisor),
although some invest in funds managed by other (unaffiliated) advisors. The cost associated
with investing in an unaffiliated underlying fund is most often higher than investing in an
affiliated underlying because of the investment management research involved in investing in
fund advised by a different advisor. Recently, FoFs have been classified into those that are
actively managed (in which the investment advisor reallocates frequently among the
underlying funds in order to adjust to changing market conditions) and those that are
passively managed (the investment advisor allocates assets on the basis of on an allocation
model which is rebalanced on a regular basis).
The allocation mixes usually vary by the time the investor would like to retire:
2020, 2030, 2050, etc. The more distant the target retirement date, the more aggressive the asset
Hedge funds in the United States are pooled investment funds with loose regulation and should not
be confused with mutual funds. Some hedge fund managers are required to register with SEC as
investment advisers under the Investment Advisers Act. The Act does not require an adviser to
follow or avoid any particular investment strategies, nor does it require or prohibit Hedge funds
typically charge a management fee of 1% or more, plus a "performance fee" of 20% of the hedge
fund's profits. There may be a "lock-up" period, during which an investor cannot cash in shares. A
variation of the hedge strategy is the 130-30 fund for individual
SELECTION PARAMETERS FOR MUTUAL FUND
Your objective: The first point to note before investing in a fund is to find out whether
your objective matches with the scheme. It is necessary, as any conflict would directly affect
your prospective returns. Similarly, you should pick schemes that meet your specific needs.
Examples: pension plans, children’s plans, sector-specific schemes, etc.
Your risk capacity and capability: This dictates the choice of schemes. Those with no
risk tolerance should go for debt schemes, as they are relatively safer. Aggressive
investors can go for equity investments. Investors that are even more aggressive can try
schemes that invest in specific industry or sectors.
Fund Manager’s and scheme track record: Since you are giving your hard earned
money to someone to manage it, it is imperative that he manages it well. It is also essential
that the fund house you choose has excellent track record. It also should be professional and
maintain high transparency in operations. Look at the performance of the scheme against
relevant market benchmarks and its competitors. Look at the performance of a longer period,
as it will give you how the scheme fared in different market conditions.
Cost factor: Though the AMC fee is regulated, you should look at the expense ratio of the
fund before investing. This is because the money is deducted from your investments. A
50
higher entry load or exit load also will eat into your returns. A higher expense ratio can be
justified only by superlative returns. It is very crucial in a debt fund, as it will devour a few
percentages from your modest returns.
Also, Morningstar rates mutual funds. Each year end, many financial publications list the
year’s best performing mutual funds. Naturally, very eager investors will rush out to purchase
shares of last year's top performers. That's a big mistake. Remember, changing market
conditions make it rare that last year's top performer repeats that ranking for the current year.
Mutual fund investors would be well advised to consider the fund prospectus, the fund
manager, and the current market conditions. Never rely on last year's top performers.
51
NEED, OBJECTIVES & SCOPE
3.1 NEED FOR THE STUDY:
The main purpose of doing this project was to know about mutual fund and its functioning.
This helps to know in details about mutual fund industry right from its inception stage,
growth and future prospects.
It also helps in understanding different schemes of mutual funds. Because my study depends
upon prominent funds in India and their schemes like equity, income, balance as well as the
returns associated with those schemes.
The project study was done to ascertain the asset allocation, entry load, exit load, associated
with the mutual funds. Ultimately this would help in understanding the benefits of mutual
funds to investors.
52
OBJECTIVE OF MUTUAL MUNDS
3.2 OBJECTIVEOF MUTUAL FUNDS:
1. To give a brief idea about the benefits available from Mutual Fund investment.
2. To give an idea of the types of schemes available.
3. To study some of the mutual fund schemes.
4. To study Marketing strategies, Distribution Channels, Working and structure of
Mutual Funds.
5. Explore the recent developments in the mutual funds in India.
53
SCOPE OF MUTUAL FUNDS
3.3 SCOPE OF MUTUAL FUNDS:
Scope of Mutual Funds has grown enormously over the years. In the first age of mutual
funds, when the investment management companies started to offer mutual funds, choices
were few. Even though people invested their money in mutual funds as these funds of fered
them diversified investment option for the first time. By investing in these funds they were
able to diversify their investment in common stocks, preferred stocks, bonds and other
financial securities.
At the same time they also enjoyed the advantage of liquidity. With Mutual Funds, they got
the scope of easy access to their invested funds on requirement.
But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimes
take long time to decide the mutual fund type, they are goi ng to invest in. Several Investment
Management Companies have emerged over the years who offer various types of Mutual
Funds, each type carrying unique characteristics and different beneficial features.
54
REVIEW OF LITERATURE
An attempt has been made to review some existing literature available and having broad relatively
with the subjective area.
1. Treynor, Jeck L. (1965), How to Rate the Management of Investment Funds,

Harvard
The Treynor give you an idea about scheme rate and fund manager investment style.
The fund manager success in the side of selection of the scrip, fund provided first-rate
return. He had evaluated NAV of selected fund and shows the fluctuations on unit
price.
2. E.J. Elton And M.J. Gurber (1996), Past performance is predictive of future risk
adjusted performance
He have tried to prove that past performance is predictive of future risk adjusted
performance and form a combination of actively managed portfolios with the same
risk as a portfolio of index fund but higher mean return. The research paper weight on
portfolio index return means market return and could fund provided same return.
3. Shapre W.F. (1963), “A simplified Model for portfolio Analysis ”

Model of Capital Assets Pricing Model, explained the Portfolio Analysis and risk free
return cover under the portfolio return and Mutual Fund return. The Model simplified
with illustrates the beta of the fund.
4. Obaidullah M. (1992), “Earnings Ratios Indicators of Future Investment

Performance of funds”
The future investment means portfolio diversification, every time need to adjustment
of fund risk, that wise portfolio diversification. The Fund Performance also confirmed
how Foreign Institutional Investors purchased Mutual Fund, might the Fund
diversification of the portfolio.
5. Carhart, Mark M., 1997, “On pe rs is te nce in mutual fund pe rformance ”

On determination of the fund performance need to identification risk and measures fund
return. The paper demonstrate how to identified scheme and diversification of the
portfolio. The portfolio need to adjustment risk.
6. Jayadev, M (1996), “Mutual Fund Performance: An Analysis of Monthly

Returns, Finance India”
The Mutual Fund Performance shows the how the investor trade on unit, would Fund
provided same return liked capital market provide. Expenses on purchasing and
selling reduce the fund return also security transaction costs. Mutual Fund
Performance does based on luck but fund manger skill and intelligence to trade on
international market and generate profits.
55
RESEARCH METHODOLOGY
5.1 Research methodology
Research methodology is a way to systematically solve the research problem. It may be understood
as a science of studying how research is done scientifically. In ii researcher pursue various steps that
are generally adopted by a researcher in studying his research problem along with the logic behind
them. It is necessary to know not only the research methods and techniques but also the
methodology. Researcher not only needs to know how to develop certain indices or tests, how to
calculate mean, standard deviation and beta.
Research method part of research methodology, research methodology start with title of the research
problem and researcher set the objectives of the research, which helpful for society, and other
researcher for further research. After objectives need to review of literatures means idea generation
and inspired to do the research.
Research methodology included sample design. Sample design shows types of sampling method,
sample size, sampling period.
Research methodology follow the step, after sampling design then need to identified the hypothesis
means set of assumption for study. Mutual Fund set assumption regarding equity schemes provided
same return and risk. Researcher goes behind financial and statistical tool to arrive at conclusion.
This Report is based on primary as well as secondary data, however primary data collection was
given more important since it is overhearing factor in attitude studies.
One of the most important users of Research Methodology is that it helps in identifying the problem,
collecting, analyzing the required information or data and providing an alternative solution to the
problem. It also helps in collecting the vital information that is required by the Top Management to
assist them for the better decision making both day to day decisions and critical ones.
Introduction: Mutual Fund is one of the financial instruments in capital market, here the study
based on the empirical investigation on the performance of Mutual Fund schemes, main purpose of
the study is to identify which of the month and year schemes provided highest return and minimize
the risk. Research need because of the capital market is unexpected volatility and some time reaction
was positive and negative. Good and bad news affects price movement, that needs to identify how
much market or bench mark provided return. On years 2008 started with large IPO offering of
Reliance Power, which sucked the liquidity from the market and more companies have lined up plans
to raise money from the markets. Investors need to identify trade – off return and risk. The year 2009
had unprecedented global liquidity crisis that led to a share slowdown in growth. The industrial
growth index was zero. Time valuations are attractive for investment decision and strategies for
active diversification of portfolio. March 2009 sensex and Nifty down by 37% & 36 % respectively.
56
Mutual fund industry has been affected by stock market movements. Mutual fund increased their
stock/ scrip fund holding from 4.1% to 21.2% of the total market capitalization. It had opportunity to
research in this field, with focus on competitive structure of the mutual fund industry. Equity
diversified fund directly affect the stock movements while index, income and balance fund are less
affects.
Assets Management Company design fund for particular investors and sectors like information
technology, fast moving consumer goods, and international financial instruments So mutual fund
industry is high competitive and fund manager investment style and research team also affecting risk
and return of the funds. An important practical motivation for mutual fund performance evaluation is
to help an investor decide in which funds to invest.
Indian capital market is extremely unanticipated due to political risk, liquidity risk and others factors
affecting it. The Indian equity markets rallied smartly ever-increasing on December 2009, it gains by
the end of the December month. The Sensex and Nifty fell 2.31 % and 2.85% respectively while mid
cap index was down sharply by 10%.
5.2 RESEARCH DESIGN
The research design is the conceptual framework within which researcher study is conducted and it
construct the blue print for collection of data, measurement of data, statistical tools for analysis and
analysis of variance. Research design included an outline of what the researche r will do from writing
the hypothesis and its operational implication to the final analysis of data.
Decisions regarding what, when, how much, by what means concerning an inquiry or a research
study constitute a research design, further more researcher design means arrangement of conditions
for collection and analysis of data in a manner that aims to 11 combine relevance to the research
purpose with economy in procedure. Good researcher design is often features like flexible,
appropriate, efficient, and economical. Here hypothesis testing research is those where the researcher
tests the hypothesis of casual relationship between variables. Researcher ensures the minimization of
bias and maximization reliability of the evidence collected. Coding should be done carefully to avoid
error in coding and for this purpose the reliability of researcher to be believed.
Fund managers of the assets management company also do the researcher to identify the market and
would find period to buy, to hold and to sell the scrip. Fund managers having good researcher team
who continuous analysis of economic market, fundamental analysis, efficient market and technical
analysis of the particular index. Today researcher team should identify the international financial
market and how international financial instruments value could identified. Financial crisis affect
market total risk and total return, its indicate how to diversified the portfolio, how to totally remove
the unsystematic risk.
Researcher decided proper plan to action and define variable. Variable also identified dependent and
independent. Researcher specified research processing and analyzing of the data.
57
5.3 PROBLEM IDENTIFICATION
As per the past research, no of articles and research papers should highlight the performance of
mutual fund industry. As we have been seen that research is very essential for this filed because it’s
guide the investors when and how to take decision about which of the financial instrument select for
invest. Capital market is not so easy to predict, so many point need to count the predict the capital
market like fundamental analysis, efficient market, technical analysis and theory of portfolio
management like Markowitz, portfolio optimization, single index model, factor analysis and Sharpe
index model.
Here the researcher took many tools for analysis of performance of mutual fund. Its’ included Price
Earnings Ratio, Book Price Ratio, Return and Net Asset value and Assets Under Management.
Further take to considering the performance index model. Sharpe performance evaluation model,
model represents return on security with risk free return on investment and then take into considering
the variance on security. Jenson model represents same liked sharper’s model difference is that under
these model beta considering for portfolio measurement. Treynors performance model indicates
alpha from market return. Pricing earnings ratio, price book ratio researcher follow the model of F –
test, test of one way classification of rows and columns. The model indicates rows variance from the
average and columns variance from the average of the averages.
The study constructs portfolio with maximum Sharpe ratios from an equity diversified schemes and
income, balance and index to identified the selection of funds.
TITLE OF THE PROBLEM:
Here the schemes of the mutual funds

a) Equity funds
b) balance funds,
c) index funds,
d) monthly income funds,
e) long term & short term
SAMPLING DESIGN:
Universe: The universe of the study consists of the all the assets management companies (AMC),
included selected five start mutual funds under the different objective of the study.
Sampling Unit: The sample unit included Equity Schemes Diversification Funds, Balanced
Schemes, Income Balanced Schemes, Monthly Income Funds, Long – Term and Short – Term
Funds. All the schemes rating the five starts by Mutual fund Insight.
Sources List: Sample should collect on primary as well as secondary sources. It’s included the
mutual fund fact sheet and magazine the Mutual Fund Insight. and addition to others journals,
58
magazines, articles, books and the publisher and unpublished documents of the mutual funds have
been consider in the research.
Sample Period: Sample study should take from period January 2010 to December 2015.
Sample Size: Sample size of the study was as below:
Equity Dive rsifie d M utual Fund 19th Sche me s

01) Birla Sun Life Equity Fund
02) DSPML Equity Fund
03) Franklin India Prima Fund
04) HDFC Equity Fund
05) Prudential Growth Fund
06) Kotak Opportunities Fund
07) Magnum Contra Fund
08) Reliance Growth Fund
09) Tata Pure Equity Fund
Balance , Inde x and Income 15th Sche me s

01) Birla Sun Life Midcap Fund
02) HDFC Balance Fund
03) HDFC Prudence Fund
04) Magnum Balanced Fund
05) Principal Child Benefits Fund
06) UTI Mahila Unit Fund
07) Birla Sun Life Index Fund
08) UTI Sunder Fund
09) Franklin Infotech Fund
Long and short te rm Pe riod 10th Sche me s

01) Birla Bond Index Fund
02) DSPML Bond Retail Fund
03) Kotak Bond Regular Fund
04) Templeton India Income Fund
05) UTI Bond Advantages Fund
06) Birla Monthly Income Plan
07) LIC Monthly Income Plan Fund
08) Prudential Monthly Income Plan Fund
09) Tata Monthly Income Plan Fund
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5.4 SIGNIFICANE OF THE RESEARCH
Mutual fund is one of the financial instruments play in capital market, after 2002 high growth of
mutual fund industry in India. Mutual fund provides more benefit to small investors, who cannot
easily play in capital market. Mutual fund pool the money for saving to investment.
Mutual Fund main feature is to analysis before investment how much risk and return. The
confidential level or reliability is the expected percentages of times that the actual value will fall
within the stated precision limits. The significance level indicates the likelihood that the answer will
fall outside that range.
DATA COLLECTION: This study is completely based on the primary and secondary data. This
data is collected from various source specially from the journal Mutual Funds Insight based on Value
Research Magazines, and addition to others journals, magazines, articles, books and the publisher
and unpublished documents of the mutual funds have been consider in the research.
5.5 FINANCIAL AND STATISTICAL TOOLS FOR MEASUREMENT
Here the researcher has used following techniques to study the performance of Mutual Funds which
are as under:
Average: Average means numbers or names, arrays or references that contained numbers. Other
words average means number representations of numbers.
Standard Deviation: The Standard Deviation is a measure of how widely values are dispersed from
the average value (the mean). Standard Deviation assumes that its arguments are a sample of the
population. If data represents the entire population, then compute the Standard is calculating suing
the n-1 method.
Beta: A relative measure of the sensitivity return on security is to change in the broad market index
return. Beta measure the systematic risk, it shows how prices of securities respond to the market
forces. Beta is calculated by relating the return on a security with return for the market. Market will
have 1.0, if the beta is greater than 1 than the stock is said to be very riskier than market risk, beta
less than 1 than the stock is said to be not that much riskier as compare to the market risk. Beta
involved market risk, and market risk involved political risk, inflation risk, and interest rate risk.
R – Square: R – Square measures the funds correlations to the market R – Square are between the 0
and 1.
Sharpe– Ratio: A Sharpe ratio indicates the risk premium of portfolio relative to the total amount of
risk in the portfolio. Sharpe ratio summarizes. The risk and return of a portfolio in a single measure
60
that categories the performance of funds on the risk adjusted basis. The larger the Sharpe ratio, the
portfolio is over performing the market and vice – versa.
Earnings per Share: P / E Ratio are the weighted average price to earnings ratio of all the stocks in
fund’s portfolio. P/E ratios are ratios of share prices to earnings. The P/E ratio of a stock is e qual to
the price of a share of the stock divided by per share earnings of the stock. The focus of this article,
however, is the P/E ratio of the overall stock market index rather than P/E ratios of individual stocks.
For a stock index, the P/E ratio is calculated the same way the average share price of the firms in the
index is divided by the average earnings per share of these firms. Two types of measurement issues
arise in computing P/E ratios. One of them concerns the time period over which share prices and
earnings are measured. The price in a P/E ratio is usually the current market price of the stock or
index, such as the weekly or monthly average of the daily closing prices.
NAV: NAV means the market value of the assets minus the liabilities on the day of valuation. In the
other words, it is the amount which the shareholder will collectively get if the fund is dissolved or
liquidated.
Assets + Accrued Income – Liabilities – Accrued Liabilities
NAV =
Number of Share or Units Outstanding
Price to Book Ratio: A very basic price ratio for a company is price book ratio; sometimes called
the market book ratio. A price book ratio is measured as the market value of a company’s equity
issued divided by its book value of equity.
Price book ratio is applying because book values represents in principle historical costs. The stoc k
price is an indicator of current value. So a price book ratio simply measures what the equity is worth
today relative to what it cost.
PERIOD OF STUDY: The Performance of sampled scheme would be plan review for two and half
years.
TOOLS OF ANALYSIS
Sharpe’s Performance : Sharpe’s performance index gives a single value to be used for the
performance ranking of various funds or portfolios. Sharpe Index measures the risk premium of the
portfolio relative to the total amount of the risk in the portfolio. This risk premium is the Different
between the portfolio’s average rate of return and the risk less rate of return. The standard deviation
indicates portfolio the risk. The index assigns the highest values to assets that have best risk adjusted
average rate of return.
St = Rp – Rf / 6p
Sharpe’s index = portfolio average return – risk free rate of return / S.D. Of the portfolio
return
61
Jenson Measure: The absolute risk adjusted return measure was developed by Michael Jensen and
commonly known as Jensen’s measure. It is mentioned as a measure of absolute performance
because a definite standard is set and against that the performance is measured. The standard is based
on the manager’s predictive ability successful prediction of security price would enable the
manager’s to earn higher returns than the ordinary investor expects to earn in a given level of risk.
Jenson = Portfolio Average Return – Risk Free Rate of Return/Beta
Treynor’s Performance Index: The Treynor index, an investor should know the concept of
characteristic line. The relationship between a given market return and the fund’s return is given by
the characteristic line. The fund’s performance is measured in relation to the market performanc e.
The ideal fund’s return rises at a faster rate than the general market performance when the market is
moving upwards and its rate of return declines slowly than the market return, in the decline. The
ideal fund may place its fund in the treasury bills or short sell the stock during the decline and earn
positive return.
Rp = a + B (Rm – Rf)
Rp = Average return of portfolio
Rf = Risk less rate of return
a = The intercept
B = A measure of systematic risk
Rm = Average market return
62
Data Analysis & Interpretation

1. Analyzing to according to Age
Table no 1. The following table shows analysis to according to age-
Age Percentage of investor
Below 30 3%
31-35 12%
36-40 35%
41-45 22%
46-50 18%
Above 30 10%
Total 100%
Diagram no 1. The diagram shows analysis to according to age-
40
35
30
25
20
No. of In vestors
15
10
0
>=30 31-35 36-40 41-45 46-50 >50
Interpretation: Here, it is been found that most of the investors i.e,35% of the investors who
invest in Mutual Fund lies in between the age group of 36-40, they are more reluctant as well as
experienced in this field of Mutual Fund.
Then the Second highest age group lies in between the age group of 41-45 (22%), they are also
aware of the benefits in investing in mutual fund.
That most of the investors’ i.e., 3% of the investors who invest in Mutual Fund lie in between the age
group of below 30. The least interested group is the Youth Generations.
63
2. Analyzing according to Qualification

Table no 2. The following table shows analysis to according to Qualification-
Qualification Percentage
Undergraduates 71%
Graduates 16.67%
Post graduations 12.5%
Total 100%
Diagram no 2. The diagram shows analysis to according to Qualification-
Qualification of Investors
70
60
50
40
30
20
10
0
Undergradua tes Graua dtes Post graduation Others
Interpretation: Out of my survey of 100 people, 71% of the investors are Graduates and Post
Graduates and 16.67% are Under Graduates and Others, around 12.5%, which may include persons
who have passed their 10th standard or 12th standard invests in Mutual Funds.
64
3. Analyzing according to Occupation

Table no 3. The following table shows analysis to according to Occupation-
Occupation Percentage
Government 24%
Private 46%
Business 25%
Others 5%
Total 100%
Diagram no 3. The diagram shows analysis to according to Occupation-
50
45
40
35
30
25
20
15
10
5
0
Government Private Busi ness Others
Interpretation: Here it is amazed to see that around 46% of the investment is been invested by
the persons working in Private sectors, according to them investing in Mutual Funds is more safer as
well as more gainer.
Then we find that the businessmen of around 25%gives more preference in investing in mutual
funds, they think that investing in mutual fund is better than investing in shares as well as Post o ffice.
Next we see that the persons working in Government sectors of around 24% only invests in Mutual
Fund and others occupation around 5%.
65
4. Analyzing according to Monthly Family Income

Table no 4. The following table shows analysis to according to monthly income-
Monthly Family Income Percentage
Below 30000 43%
20001-30000 39%
10001-20000 18%
Above 10000 0%
Total 100%
Diagram no 4. The following diagram shows analysis to according to monthly income-
Income of Investors
50
45
40
35
30
25
43
20 39
15
10 18
5
0 0
<=10000 10001-20000 20001-30000 >30000
Interpretation: Here, we find that investors of around 43% with the monthly income of Rs.
>30000 are the most likely to invest in Mutual fund, than any other income group.
66
5. Analyzing data according to factors seen before investing

Table no 5. The following table shows analysis to according to factors seen before investing-
Factors Percentage
Liquidity 6%
Low-risk 56%
High-return 27%
Trust 11%
Total 100%
Diagram no 5. The following diagram shows analysis to according to factors seen before investing-
60
50
40
30
56
20
27
10
11
6
0
Liquidity Low-risk Hig h-return Trust
Interpretation: As it can be clearly stated from the above Diagram that investors before
investing, the main criteria that they used to give more Preference is Low Risk. According to them, if
a scheme is low risk, it may or may not give a very good return, but still 56% of the investors choose
low risk as the option while investing in Mutual Funds.
Then we see that 27% of the investors take High return as one of their most important criteria.
According to them, if there is no high return then we should opt for Post office and not mutual fund.
11% of the investors take trust as one of their important factors. Only 4% of the Investors think
liquidity as their most preferable options.
67
6. Analyzing data according to mode of investment

Table no 6. The following table shows analysis to according to mode of investing-
Mode of investment Percentage
Long Term 28%
Short Term 82%
Total 100%
Diagram no 6. The following diagram shows analysis to according to mode of investing-
Mode of investment
90
80
82
70
60
50
40
30
20
18
10
0
Long Term Short Term
Interpretation: It can be clearly stated from the above Figure that 82% of the investors like to
invest in SIP, as the investor feels that they are more comfortable to save via SIP than the Long term.
While 18% of the investors find SIP as very burdensome, and they are more reluctant to save in
Long term investment.
68
7. Analyzing data according to objective of investment

Table no 7. The following table shows analysis to objective of investing-
Objective of investment Percentage
Preservation 36%
Current Income 22%
Conversation Growth 15%
Aggressive Growth 27%
Total 100%
Diagram no 7. The following diagram shows analysis to according to objective of investing-
Objective of investment
40
35
36
30
25 27
20 22
15
15
10
0
Preservation Current Income Conservation Growth Aggressive Growth
Interpretation: Here we see that 36% of the investor’s objectives are to preserve the principal
amount, so that it can be used as a savings for the future period. While 22% investors invest to get
derive their current income through investing in Mutual Funds. While 15% and 17% of the investors
invest to get a conservative as well as aggressive growth.
69
8. Analyzing data according to awareness about Mutual Fund

Table no 8. The following table shows analysis to awareness about Mutual Fund-
Awareness Percentage
Yes 96%
No 4%
Total 100%
Diagram no 8. The following diagram shows analysis to awareness about Mutual Fund-
Awarness about Mutual Fund

120
100
80
No. of Investors
60
40
20
0
Yes No
Knowledge about Mutual Fund
Interpretation: From The total lot of 100 people, 96 people are actually aware of the fact of Mutual
fund and are regular investors of Mutual Funds. 4 People were there who have just heard the name or
rather are just aware of the fact of existence of the word called Mutual Fund, b ut doesn’t know
anything else about Mutual Funds.
70
9. Analyzing data according to from where they came to know about Mutual
Fund.
Table no 9. The following table shows analysis to where they came to know about Mutual Fund -
Where they came to know about Percentage

Mutual Fund?
Advertisement 24%
Peer group 21%
Bank 9%
Financial Advisors 46%
Total 100%
Diagram no 9. The following diagram shows analysis to where they came to know about Mutual
Fund-
46
24 21
9
Adverti sement Peer Group Ba nk Fina ncia l Advi sors
Interpretation: Here from the Line Graph it can be clearly stated that around 46% of the investors
came to know the benefits of Mutual Fund from Financial Advisors. According to the suggestions
given by the financial advisors, people use to choose Mutual Funds Scheme.
Then Secondly, 24% and 21% of the people used to know from Advertisement and Peer group
respectively.
Lastly 9% of the investors do invests after being intimated by the Banks about the benefits of Mutual
Funds.
71
10. Analyzing data according to investors choice of investing in different

Mutual Fund Companies.
Table no 9. The following table shows analysis to investor’s choice of investing in different mutual
funds companies-
Mutual Fund Companies Percentage
Reliance 45%
SBI 17%
HDFC 15%
UTI 10%
Others 13%
Total 100%
Diagram no 10. The following diagram shows analysis to investor’s choice of investing in different
mutual funds companies-
50
45
40
35
30
25
45
20
15
10
17 15
5 13
10
0
Reliance SBI HD FC UTI Others
Interpretation: From this above Pie Chart it can be clearly stated that 45% , 17%of the people like
to invest in large cap companies where return is comparatively less but risk is low thus they invest in
Reliance, SBI respectively. 15%, 10% of the people like to invest in Mutual Fund Companies like
HDFC, UTI, etc. where risk is slightly higher than the above two mentioned companies as well as
return is also slightly high. 13% of the investors like to invest in the Sma l Cap’s and Mid Cap’s
companies.
72
LIMITATIONS OF STUDY
The research done only selected a scheme which was related with five rating star and the
value research magazine.
The research analysis was based on the past performance of the only selected Equity
Diversified Scheme.
The research had been based on the Net Assets Value, that NAV continuous fluctuation
The research analysis compares the Net Assets Value and Expense Ratio, but NAV
continuous fluctuation.
Fund manager investment style based on capital market situation. It could not possible always
pursue the mentioned objectives.
Equity Diversified schemes having different objectives due to sector wise allocation of the
fund.
Performance measurement techniques should not give equal weight to each of the schemes.
Sharpen Performance evaluation is based on variance, not cover market risk and that risk also
affect fund return.
73
FINDINGS, SUGGESTIONS & CONCLUSION

8.1 Findings
The concept of mutual funds is not new. It was started in 1822 as an investment trust called
‘Societe General de Belgique’ in Belgium. This trust used diversification as means to
minimize risk. The modern day mutual funds are based on this concept. They mobilize
resources from small and big investors and invest on their behalf thus offering benefit of
professional management and diversification. It was due to this very advantage that mutual
funds operation was started in India by the enactment of the Unit Trust of India (UTI) Act in
1963. The first scheme to be launched in India was US-64. The objective of launching this
scheme was to provide an opportunity of investment to small and marginal investor who
themselves could not invest in stock market.
Mutual funds entered the Indian capital market in 1964 with a view to provide the retail
investors the benefit of diversification of risk, assured returns, professional management.
Since then they have grown phenomenally in terms of number, size of operations, investor
base and scope. With the ushering in of economic reforms in the early 1990s, the
Government of India opened the way for the entry of private sector and foreign players into
this industry. Consequently, this has emerged as a highly competitive financial service
industry today. In India, the mutual fund industry came into being with the establishment of
Unit Trust of India in 1964. Public sector banks and financial institutions began to establish
mutual funds in 1987. The private sector and foreign institutions were allowed to set up
mutual funds in 1993.
Today three different types of players are operating in the Indian Market that includes UTI,
non-UTI public sector mutual funds and private sector mutual funds (including foreign
mutual funds).
Entry of private sector mutual funds adversely affected the prospects of banks sponsored and
other public sector mutual funds. As the share net resource mobilization of these institutio n
supported mutual funds has gone down gradually since the inception of private sector mutual
funds.
Association of mutual funds industry (AMFI) represents the AMCs in India. It was
established as non-profit organization on 22 August, 1995. It is dedicated to developing the
Indian mutual fund industry on professional, healthy and ethical lines and to enhance and
maintain standards in all areas with a view to protecting the interests of the mutual fund and
their unit holders.
The asset under management in India is 10% of GDP that is quite low compared to 74% in
US 100% percent in Australia and 45% in Brazil.
There are 180 million households in India, of which only 11.8 million, i.e., 6.7%, invest in
mutual funds. In urban areas, 13.7% of the households invest in mutual funds and in rural
areas it is just about 3.8%. Thus, the Indian small investors do not prefer to invest in mutual
funds.
74
The industry comprises of 37 AMCs, 956schemes that has crossed 36 million folios. The
majority of the funds in India, approximately 96% are open-ended type and the remaining 4%
are close-ended type. The MF industry is growing at an average rate of 16-17% because of
the entry of commercial banks and the private players coupled with the rapid growth of the
Indian capital market. Even then India ranks 25th in the AUM of the global MF industry.
The Indian MF industry is mostly concentrated in urban areas and among High Net worth
Individuals (HNWIs). Irrespective of the many players, the MFs today have neither gathered
a large investor base nor garnered huge AUMs. The urban investors are playing a major role
in the industry and it should be diversified into rural and suburban areas, where there is a vast
potential market. High costs, low awareness and low penetration remain the biggest bugbears
in the MF industry. And they are also competing with insurance companies that have
launched a range of products with a similar structure, for the same set of investors. The
Securities and Exchange Board of India (SEBI) bars MFs from getting celebrities to advertise
their schemes and this has two effects one, on the positive side, it will reduce the costs of
MFs and two, on the negative side, it restricts the creation of awareness .
The consistency in the performance of MFs has been a major factor that has attracted many investors.
The MFs are declaring double-digit dividends. This is one of the reasons why people are
now opting for mutual funds investment.
Though India enjoys a good saving rate, the mutual fund industry gets a very little share out of
those savings. To match the international markets like the US and Australia etc., these
savings need to be channelized through mutual funds. One of the major reasons that Indian
mutual fund industry is not matching the likes of the markets of these developed countries is
lack of deeper distribution networks and channels in India. This has been a major concern for
the mutual funds industry in India, which has not been able to penetrate deeper into the rural
parts of the country and major focus has been on the metro cities and `A' class cities. The
rural markets and `B' and `C' class cities, which also hold a lot of potential, should be
addressed properly by the players in the industry.
Lack of awareness about the mutual funds products among investor is another reason for the
low penetration of mutual funds products.
Political instability is another factor often becomes reason for the poor performance of
mutual funds. This has become more evident due to coalition politics.
By offering tailored made products for the various categories of investors open- ended mutual
funds scheme has become a big boon in India. This evident from the fact those 592 open-
ended schemes were in operation as on March 2008. However the popularity of close-ended
scheme has decreased in India since 1991. As during 1990-91, 18 scheme were launched out
of which 15(83%) were close ended and 3 (17%) were open-ended. But in 2008 out of 956
schemes, 364(38%) were close-ended and 592(62%) were open-ended.
The investments of mutual funds are permitted only in transferable securities that include money
market and capital market instruments or debt. These holdings shall not exceed 10 percent
with respect to growth funds and 40 percent in case of income funds. It is mandatory that the
debt instruments are rated by approved credit rating agencies if this is not so then the
75
approval of the board of AMC is required. Beside this mutual funds cannot invest more than
5 percent of their amount through any of their schemes in one single company or own more
than 5 percent of any company's paid up capital containing voting rights.
The investors participating in the mutual funds investment have no proper knowledge of its
working mechanism. In the absence of proper knowledge they some time become prey to
luring advertisement offering higher rate of return. When they fail to earn the required rate of
return offered in the advertisement they get dissuaded from investing in mutual funds.
The share of mutual funds savings in total financial savings of the household sector savings has
declined over the years.
The impact of liberalization on the net resource mobilization of mutual funds industry in
India is responsible for 56.2 percent of the funds mobilized. This implies that there are many
other macro economic factors which have indirectly affected of quantum of net resource
mobilization by mutual funds in India. Further the impact of time on the net resource
mobilization is insignificant but the impact of policy and policy and time is significant on the
net resource mobilization.
There are 4.33 crore investor accounts holding units of Rs. 507669.99 crore. Out of this total
number of investor accounts, 4.20 crore are individual investors accounts and contribute Rs.
187463.98 crore which is 36.93 percent of the total net assets. While corporate and
institutions who form only 1.16 percent of the total number of investors account in the mutual
funds, contribute a sizable amount of Rs. 287109.01 crore which is 56.55 percent of the total
net assets in the mutual funds industry. NRIs and FIIs constitute a very small percentage of
investors accounts (1.98%) and contribute Rs. 33098.01 crore (6.52%) of the net assets.
The total share of equity in HDFC Balanced Fund is 68.59. The reliance industries limited has
maximum of 6.99 percent followed by Coramandal Fertilizers Ltd. ICICI Bank Ltd. has the
least share of 3.45 percent. The debt and money market instruments together constitute a share
of 28 percent.
The maxim investment of 8.97 percent of the HDFC equity scheme is in ICICI Bank Ltd. The
total share of equity and equity related holding is 99.3 percent while an investment in other
assets is 0.69 percent.
The maximum investment of HFC Growth fund is made in ITC Ltd. (6.88%). This is
followed by SBI (6.43%). The total equity and equity related a holding is 90.13 percent while
the investment in other avenue other than equity is 9.47 percent.
The maximum investment of HDFC TaxSaver is in ITC Ltd. followed by Larsen and Turbo
Ltd. with a share of 6.46 and 5.43 percent respectively. The total equity and equity related
holding is 94.64 percent while 5.36 percent in invested in other class of assets.
The total investment of HDFC Top 200 schemes in equity and equity related holdings is
95.95 percent while the remaining 4.05 percent is invested in other current assets.
76
8.2 Suggestions
The mutual funds industry should focus on managing investor money and other function such as
accounting and other allied services can be outsourced. This will save both money and
energy to concentrate in other profitable ventures.
The rate of attrition is very high amongst the fund manger of various schemes as they are
frequently changing their job to get higher package. This is cause of major concern as it is
impacting the profitability and long term objectives of the schemes Mutual funds industry at
present having minuscule share of house hold savings as majority of people still prefer to
park their savings in banks and other safer avenue of investments. To overcome this customer
education programme should be under taken by AMFI in collaboration with other fund
houses.
To increase the pace of growth of the industry use of information technology should be
promoted at a larger scale. This will reduce the time of transaction.
The broker often engages in unethical practices of false projection about funds performance in
order to generate brokerage on mobilized investment. This create negative image about the
mutual funds industry and dissuade investors from investments.
Mutual funds can be offered online to the investors through the stock exchange. This can in
one hand lower the cost of servicing the fund holder and on the other increase the penetration
of mutual funds.
The investors should have through knowledge about the funds before they make any
investment. Therefore investment should be preceded by tracking the performance of the
funds over a period of time and different business cycles.
The Indian mutual funds industry should develop product separately for the institutio nal and
retail investors. This would prevent undesirable practices and protects the interest of the retail
investors.
The tax benefit should be made available only to retail investors and necessary regulations
should be framed in this context.
The institutional investors at present have share of 55 percent of the corpus this should be
gradually reduced and the share of retail investors increased gradually.
The net worth of the asset management company’s (AMC) should be gradua ly raised from
Rs 10 crore to Rs 50 crore.
The existence of variety of schemes and their different variant confuses the investors. This
should be controlled and reduced gradually. The number of schemes launched should be
directly proportional to the net owned funds.
77
The inter-schemes transfer of funds should be gradually reduced and in no case permitted
over the prescribed limits. As this will give undue advantage to one scheme at the cost of
another.
The grievance redressal system in mutual funds is not matured as different mutua l funds
follow its own system of dealing with customer problems. Therefore there is an urgent need
that a uniform system is developed by the SEBI to address the grievances of the client.
To give relief to mutual funds investors suffering due to delay in grievance redressed SEBI
can appoint MF Ombudsmen. This can bring relief to customer and instill confidence in them
to invest in mutual funds.
The SEBI should frame a code of conduct for the Indian mutual funds industry wherein a
minimum service standard can be prescribed for each mutual funds operating in India. If any
mutual funds are found violating these codes certain fine can be imposed.
The existing regulatory framework can be strengthened. Norms regarding valuations and
disclosures should be formed.
Mutual funds can be allowed to launch new products like pension funds. This will give boost to
existing business.
The entry and exit load should be abolished to ease the burden on inve stors. This will
increase the participation of retail investors who finds this cost too high to bear.
To make investment in mutual funds more attractive a transparent fund utilization mechanism
should be developed whereby investors are informed where their money will be invested..
78
8.3 Conclusion
We can infer from the analysis that the concept of mutual fund in the place like Ludhiana is still in its
growing phase. With the growing importance of mutual fund in other areas in the country, this place
is witnessing the same rate of growth in mutual funds. Apart from these facts the following are some
other important facts which can easily be inferred from the paper---Huge opportunities of Mutual
funds exist in the Meerut. In short the market in this city is a growing market as because many
companies exist in this market, competition is cut to throat. Mindsets of the investors are not towards
mutual funds. They still think of investing in traditional investment alternatives. Customers are not
properly educated about the mutual funds.
Few private sectors banks like ICICI, HDFC, UTI, ING VYSYA etc. sell mutual funds through their
branches only specialized agents of mutual funds are rarely seen. Financial advisors are not seen
there who can educate the investors. Posters, banners or other promotional activities are rarely seen
in this market. Mutual fund companies do not have aggressive strategies. Insurance products are and
can be the main competitors of mutual funds.
Mutual fund investors are confined to the upper-middle and upper social class in this market. Upper-
lower class and lower-upper class people are still untouched.
More than half of the respondents have wrong perception about the mutual funds. They feel mutual
funds are very risky investment alternative Most of the respondents are satisfied with their current
return from their investment. Most of the respondents neither do not want to take risk in investing
their money in mutual funds.
79
BIBLIOGRAPHY
BOOKS:
Common Sense on Mutual Funds, John C. Bogle, David F. Swensen, By John Wiley & Sons,
148 Page, 2nd paragraph.
Everything you wanted to know About Investing in Mutual Funds, Deepa

Venkatraghavan, By Network 18 Publications , 84 page, 2nd paragraph.
Study of the Performance of Mutual Funds in India, Dr. Preeti Singh, By Galgotia
publications Pvt Ltd 79 page, 4th paragraph.
Management of Financial Services, Sandeep K. Bansal, Rama Bansal, By Kalyani

Publishers, 4.20 page, 4th paragraph.
Mutual Funds: Risk and Performance Analysis for Decision making, John Haslem,
Published by Wiley Blackwell, 214 page, 1 st paragraph.
Morning Guide to Mutual Funds: 5 Star Strategies for Success, Christine Benz, Peter Di
Teresa, Russel Kinnel, Don Phillips, Published by Wiley Blackwell, 56 page, 5 th
paragraph.
REFERENCES:
Jeck L. Treynor, How to Rate the Management of Investment Funds, Harvard Business
Review, Vol 43, No.1, pp. 63-75.
Turan, M.S., Bodla, B.S. and Mehta, Sushil Kumar, Performance Evaluation of
Schemes of Mutual Fund, vol 15, pp. 38 -66.
Wermers, Russ, Mutual Fund Performance, An Empirical Decomposition into Stock

Picking Talent, Style, Transaction Costs, and Expenses, the Journal of finance, Vol. 55,
pp. 1655-1703.
Che, Joseph Hong, Harrison Ming and Kubik, Jeffery D, Does Fund Size Erode Mutual
Fund Performance? The role of liquidity and organization, The American Economic
Review. Vol. 94, No.5, pp.1276 – 1302.
Jenson, Michal C., The Performance of Mutual Funds in the Period 1945 – 1964, The
Journal of Finance, Vol 23, No. 2, pp.389 – 416.
80
WEBSITES:
http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUAL-FUNDS-IN-
INDIA.aspx
http://www.moneycontrol.com/mutualfundindia/learn/
http://www.forbes.com/sites/investopedia/2013 /06/19/when-to-buy-a- mutual-fund/
www.valueresearchonlineIndia.com
https://www.amfiindia.com/research- information
http://www.amfiindia.com/research-information/mf-history
http://www.sebi.gov.in/sebiweb/home/list/3/39/0/1/Mutual-Funds
http://www.bseindia.com/static/markets/mutualfunds/BSES tarMF.aspx?expandable=1
81
QUESTIONNAIRE
A study of preferences of the investors for investment in mutual funds.
1. What ki nd of i nvestments you prefer most? Ti ck (√). Al l appl i cabl e
Saving Account Fixed deposits Insurance Mutual funds
Post office-NSC, etc Share/ Debentures Gold/Slivers Real Estate
PPF PF
2. Whi l e i nvesti ng your money, whi ch factor you prefer most? Any one
Liquidity Low Risk High Return Company Reputation
3. Have you ever i nvested your money i n mutual fund?
YES NO
If yes,
a) Whe re do you find yours e lf as a mutual fund inve s tor?
Totally ignorant []
Partial knowledge of mutual funds []
Aware only of any specific scheme in which you invested []
Fully aware []
b) In which kind of mutual you would like to inve s t?
Public [] Private []
c) How do you come to know about Mutual Fund?
Advertisement Peer group Banks Financial Advisors
d) Which mutual fund s che me have you us e d?
Open-ended Close-ended
82
Liquid fund Mid- Cap
Growth fund Regular Income fund
Long-Cap Sector fund
If no,
a) If not inve s ted in Mutual Fund the n why?
Not aware of MF Higher risk Not any specific reason
4. Whi ch feature of the mutual funds al l ure you most?
Diversification []
Better return and safety []
Reduction in risk and transaction cost []
Regular Income []
Tax benefit []
5. In which Mutual Fund you have invested? Please tick (√). All applicable
SBIMF
UTI
HDFC
Reliance
ICICI prudential funds
JM mutual funds
Other. Specify
6. When you invest in Mutual Funds which mode of investment will you prefer?
One Time Investment (Lump-Sum) Systematic Investment Plan (SIP)

83
7. Where from you purchase mutual funds?
Directly from the AMCs []

Brokers only []
Brokers/ sub-brokers []
Other sources []
8. Which AMC will you prefer to invest?
Assets Management Co.
SBIMF
UTI
Reliance
HDFC
Kotak
ICICI
JM finance
9. Which sector are you investing in mutual fund sector?
General 1st
Oil and petroleum
Gold fund
Diversified equity fund
Power sector
Debt fund
Banking fund
Real estate fund

84
10. How would you like to receive the returns every year?
Dividend payout Dividend re-investment Growth in NAV
11. Personal Details:
(a). Name:-
(b). Add: - Contact No:-
(c). Age:-
(d). Qualification:-
Graduation/P G Under Graduate Others
(e). Occupation. Tick (√)
Govt. Sec Pvt. Sec Business Agriculture Others
(g). what is your monthly family income approximately? Tick (√).
Up to Rs.10,000 Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001 to

15,000 20,000 30,000 above

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1

Comparative Study Of Mutual Funds

UNDER THE GUIDANCE OF: SUBMITTED BY:

ARYABHATTA GROUP OF INSTITUTES

solely responsible for omission and commission of errors if any.

DETAILS OF PRESIDENTS AND VICE PRESIDENTS

1.2 Presidents/ vice presidents

The present composition of the Governing Board is as under:-

INTRODUCTION OF MUTUAL FUNDS

HISTORY OF MUTUAL FUNDS:

CONCEPT OF MUTUAL FUND

HISTORY OF MUTUAL FUNDS IN INDIA:

UTI was re -organised into two parts:

1. The Specified Undertaking,

MUTUAL FUNDS IN INDIA

MUTUAL FUND COMPANIES IN INDIA

Major Mutual Fund Companies in India

Market Share '15

2.2 MUTUAL FUNDS DISTRIBUTION CHANNELS, WORKING AND

Consi der the di stri buti on channel s i n detai l :

WORKING OF MUTUAL FUNDS

STRUCTURE OF A MUTUAL FUND

The Asset Management Companies: The role of an Asset Management Company

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

2.3 PERFORMANCE COMPARISON OF MUTUAL FUNDS OF FIVE

1. HDFC MidCap Opportunities (G)

HDFC MUTUAL FUNDS

UTI MUTUAL FUND

1. Shinsei India Fund, an equity fund based in Japan,

UTI PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST ALLOCATION

BIRLA SUN LIFE MUTUAL FUNDS

B IRLA SUN LIFE PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST

KOTAK MAHINDRA MUTUAL FUND

KOTAK MAHINDRA PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST

TATA MUTUAL FUND

TATA PORTFOLIO HOLDINGS, SECTOR ALLOCATION AND ASSEST ALLOCATION

COMPARE MUTUAL FUND’S SCHEME

1. Compare returns across funds within the same category.

How to compare mutual funds

Invest in various funds, not one

Why has my fund not declared a dividend?

The best mutual fund scheme for you

PRESENT POSITION OF MUTAL FUND

FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA

i. 100% growth in the last 6 years.

2.4 Why Select Mutual Funds?

RETURN RISK M ATRIX

HIGHIER RISK HIGHER RISK

LOWER RISK LOWER RISK

GROWTH IN ASSETS UNDER MANAGEMENT

2.5 ADVANTAGES OF MUTUAL FUNDS

2. Professional Management: Even if an investor has a big amount of capital available to

3. Reduction/Diversification Of Risk: When an investor invests directly, all the risk of

2.6 DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS

2.7 TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

BY STRUCTURE BY NATURE BY INVESTMENT OTHER SCHEMES

Ope n - Ende d Inde x Sche mes

Clos e - Ende d Se ctor Spe cific

Diversified Equity Funds

Best way to start invest for any age

HOW RISKY MUTUAL FUNDS ARE?

Following is a glossary of some risks to consider when investing in mutual funds:

THINGS TO BE SEE WHILE INVESTING IN MUTUAL FUNDS: